[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

(Former name, former address and former fiscal year, if changed since last report)

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 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. [X] Yes [ ] No

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). [X] Yes [ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.

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. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No

As of ~~June 30,~~November 20, 2020, there were ~~1,489,063,164~~3,263,811,170 shares outstanding of the registrant’s common stock, $0.001 par value per share.

As disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”), on May 15, 2020, we delayed the filing of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, due to the impact of the coronavirus COVID-19 (“COVID-19”) pandemic. As a result of the COVID-19 outbreak and the chain reactions it has caused throughout the world, the Company has been adversely affected due to its location and inability to work as normal. This has affected the efficiency of the Company’s quarterly report and the overall timeline of the Company’s preparation of the 10-Q to be filed with the SEC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ ~~DEFICIT~~EQUITY (DEFICIT)

Ozop ~~Surgical Corp.~~Energy Solutions, Inc. (the” Company,” “we,” “us” or “our”) was originally incorporated as Newmarkt Corp. on July 17, 2015, under the laws of the State of Nevada.

On October 29, 2020, the Company formed a new wholly owned subsidiary, Ozop Surgical Name Change Subsidiary, Inc., a Nevada corporation (“Merger Sub”). The Merger Sub was formed under the Nevada Revised Statutes for the sole purpose and effect of changing the Company’s name to “Ozop Energy Solutions, Inc.” That same day the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with the Merger Sub and filed Articles of Merger (the “Articles of Merger”) with the Nevada Secretary of State, merging the Merger Sub into the Company, which were stamped effective as of November 3, 2020. As permitted by the Section 92.A.180 of the ~~renting different kind~~Nevada Revised Statutes, the sole purpose and effect of ~~Segways and bicycles, dual wheels self-balancing electric scooters and related safety equipment. Following~~ the ~~acquisition~~filing of ~~OZOP Surgical,~~Articles of Merger was to change the name of the Company to “Ozop Energy Solutions, Inc. (“Ozop”) as discussed below, we have been engaged in the business of inventing, designing, developing, manufacturing and distributing innovative endoscopic instruments, surgical implants, instrumentation, devices and related technologies, focused on spine, neurological and pain management procedures and specialties.”

On ~~February 28,~~July 10, 2020, the Company entered into a ~~Binding Letter of Intent~~Stock Purchase Agreement (the ~~“LOI”~~“SPA”) with Power Conversion Technologies, Inc., a Pennsylvania corporation (“PCTI”), and Catherine Chis (“Chis”), PCTI’s Chief Executive Officer (“CEO”) and its sole shareholder. ~~Pursuant to~~Under the terms of the ~~LOI,~~SPA, the Company ~~will acquire 100%~~acquired one thousand (1,000) shares of PCTI, which represents all of the ~~issued and~~ outstanding shares of PCTI, ~~(the “PCTI Shares”)~~ from Chis in ~~consideration of (a)~~exchange for the issuance ~~by the Company to Chis~~ of ~~(i)~~ 47,500 shares of the Company’s Series C Preferred Stock, ~~(ii)~~ 18,667 shares of the Company’s Series D Preferred Stock, ~~(pursuant to a certificate of designation to be filed prior to closing), (iii)~~and 500 shares of the Company’s Series E Preferred Stock ~~(pursuant~~ to Chis. The Acquisition is being accounted for as a ~~certificate of designation to be filed~~business combination and was treated as a reverse acquisition for accounting purposes with PCTI as the accounting acquirer in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). In accordance with the accounting treatment for a reverse acquisition, the Company’s historical financial statements prior to ~~closing);~~the reverse merger were and ~~(b)~~will be replaced with the ~~Company paying $400,000~~historical financial statements of PCTI prior to ~~PCTI by execution~~the reverse merger, in all future filings with the U.S. Securities and Exchange Commission (the “SEC”). The consolidated financial statements after completion of the reverse merger have and will include the assets, liabilities and results of operations of the combined company from and after the closing date of ~~a definitive purchase agreement or at such other date as shall be agreed to by~~ the ~~parties (the “Acquisition”). $100,000 was paid May 26, 2020,~~reverse merger.

PCTI designs, develops, manufactures and ~~$300,000 was paid June 26,2020.PCTI operates in the very high-power niche of the~~distributes standard and custom power ~~electronics market, designing and manufacturing leading edge equipment for use in power conversion applications.~~electronic solutions. PCTI serves clients in several industries including energy storage, shore power, DEWs, microgrid, telecommunications, military, transportation, renewable energy, aerospace and mission critical defense systems. ~~PCTI’s clients~~Customers include ~~Fortune 500 companies, all branches of~~ the ~~US Department of Defense including the US Army and the US Air Force, NASA as well as~~United States military, other global military ~~organizations. On June 26, 2020,~~organizations and many of the world’s largest industrial manufacturers. All of its products are manufactured in the United States. Because of the Company’s product scope and the high-power niche that their products occupy, the Company ~~PCTI~~is aggressively targeting the rapidly growing renewable and ~~Chis signed a Stock Purchase Agreement (the “SPA”). Pursuant to the SPA, the Acquisition~~energy storage markets. The Company’s mission is to ~~close by July 10, 2020, and is in the best interests~~be a global leader for high power electronics with a standard of ~~the Company and its’ shareholders.~~

On August 23, 2019, the Company entered into an Exclusive License Agreement (the “Agreement”) with Spinal Resources, Inc. (“SRI”). Pursuant to the Agreement, SRI granted to the Company an exclusive license, for products, as defined in the Agreement, and utilized in spine and related surgical procedures. In accordance with ASC 805, the Company has determined to account for the Agreement as a business combination. As consideration for the Agreement, the Company agreed to pay license fees equal to $1,500,000, over the eighteen- month term of the Agreement. The Company recorded the liability at its present value of $1,234,089. Additionally, the Company has agreed to issue 6,000 shares of restricted common stock on a quarterly basis, pursuant to the terms of the Agreement, of which 1,000 shares were issued on August 23, 2019. The Company valued the shares issued at $49,000 (based on the market price of the common stock) and included the $49,000 as part of the consideration of the transaction. The remaining 5,000 shares to be issued has been recorded as a $245,000 liability to be paid in common stock and was included in the total consideration issued in the transaction. The Company also issued a Promissory Note (the “Note”) to SRI for $723,524 for the purchase of the inventory of the Products (as defined in the Agreement). This note has a stated interest rate of six percent (6%) and payment terms of this note are in eighteen equal installments, beginning on October 1, 2019. Either party may terminate the Agreement upon written notice if the other party has failed to remedy a material breach within 30 days (or 15 days in the case of a breach of a payment obligation). SRI also granted the Company an option to purchase the Company on or before the termination date of the license for a minimum of $5,500,000 which could have been increased based on the revenue rate at the time the option would be exercised. If the Company did not elect to exercise their option to purchase SRI, SRI can “put” the Acquisition to the Company. Any payments made for the license, this note and other liabilities assumed by the Company can be net against the option to buy price. The Company calculated the net minimum purchase price to be $3,093,604 and recorded the liability at its present value of $2,834,692. The difference of $258,912 was charged to interest expense over the option period.continued innovation.

The Company utilized the Option Pricing Method (the “OPM”) to value the transaction. The OPM method treats all equity linked instruments as call options on the enterprise value, with exercise prices and liquidation preferences based on the terms of the various common, preferred, options, warrants, and convertible debt. Under this method, the common stock only has value if the funds available for distribution to the shareholders exceed the liquidation preferences of the preferred stock and face value of the convertible debt. The timing of a liquidity event is required to utilize this method. The OPM considers the various terms of the stockholder agreements—including the level of seniority among the securities, dividend policy, conversion ratios, and cash allocations—upon liquidation of the enterprise. In addition, the method implicitly considers the effect of the liquidation preference as of the future liquidation date, not as of the valuation date. A feature of the OPM is that it explicitly recognizes the option-like payoffs of the various share classes utilizing information in the underlying asset (that is, estimated volatility) and the risk-free rate to adjust for risk by adjusting the probabilities of future payoffs. The following table summarizes the preliminary value of the consideration issued and the preliminary purchase price allocation of the fair value of assets acquired and liabilities assumed in the ~~transaction:~~transaction . The company preliminarily recorded the excess as goodwill and will analyze within the measurement period if there should be an allocation to identifiable intangible assets:

~~The total purchase price~~Included in the Unaudited Condensed Consolidated Statements of ~~$5,810,692 has~~Comprehensive Loss for the nine months ended September 30, 2020, are the results of Ozop, the accounting acquiree, of revenues of $-0- and a loss before income taxes of $6,228,022.The following table provides unaudited pro forma results of operations for the nine months ended September 30, 2020, and 2019, as if the acquisition had been ~~allocated on a preliminary basis to the tangible and intangible assets acquired and liabilities assumed based on preliminary estimated fair values~~consummated as of the ~~completion~~beginning of that period presented. The pro forma results include the effect of certain purchase accounting adjustments, such as the estimated changes in depreciation and amortization expense on the acquired intangible assets. However, pro forma results do not include any anticipated cost savings (if any) of the ~~transaction. These allocations reflect various preliminary estimates that~~combined companies. Accordingly, such amounts are ~~currently available and are subject to change upon~~not necessarily indicative of the ~~valuation being finalized within~~results if the ~~measurement period.~~acquisition has occurred on the date indicated, or which may occur in the future.

On January 16, 2020, the Company received from SRI notice that the Agreement dated August 23, 2019, between SRI and the Company has been revoked, as the Company did not make the required January 6, 2020, license payment nor cure the default. Based on the termination of the Agreement, the Company recorded an impairment charge to goodwill of $274,854 as of December 31, 2019. The impairment charge was calculated as the difference of the carrying values of the assets acquired compared to the consideration and liabilities assumed in the transaction.

The Company recorded a gain of $86,856 for the three months ended March 31, 2020 based on the difference of the carrying values of the assets acquired and liabilities that were assumed in the transaction as follows:

OZOP was originally incorporated in Switzerland on November 28, 1998 under the name Perma Consultants Holding AG (“Perma”). On July 19, 2016, Mr. Eric Siu (“Siu”), a former director purchased 100% of the outstanding capital stock of Perma and changed the name from Perma to Ozop Surgical AG (“Ozop AG”). On February 1, 2018, Ozop AG was re-domiciled as a Delaware corporation and changed its name to Ozop Surgical, Inc. On July 28, 2016, Ozop formed as the sole member, Ozop Surgical, LLC (“Ozop LLC”), a Wyoming limited liability company. On October 28, 2016, Ozop acquired 100% of Ozop Surgical Limited (“Ozop HK”), from Siu, the sole shareholder of Ozop HK. Ozop HK, is a private limited company incorporated in Hong Kong.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.On January 16, 2020, the Company received from SRI notice that the Agreement dated August 23, 2019, between SRI and the Company has been revoked, as the Company did not cure a payment default within the cure period.As of ~~March 31,~~September 30, 2020, the Company had ~~a stockholders’~~an accumulated deficit of ~~$9,702,996~~$8,173,098 and a working capital deficit of ~~$10,062,742.~~$4,635,877. In addition, the Company has generated losses since inception. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern.

In December 2019, a novel strain ofcoronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to most other countries and infections have been reported globally. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. The ultimate impact of theCOVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of theCOVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but it may have a material adverse impact on our business, financial condition and results of operations. Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.

As a public company, management believes it will be ableto access the public equities market for fund raising for product development and regulatory approvals, sales and marketing and as we expand our distribution in the US market, we will need to meet increasing inventory requirements.

On ~~February 28,~~July 10, 2020, the Company entered into the ~~LOI~~SPA with PCTI, and Chis, PCTI’s CEO and its sole shareholder (see Note 1). This transaction takes PCTI public, and allows us to drive future investments into the energy storage market, which Forbes estimates will grow from $59 billion in 2019 to $546 billion by 2035, PCTI’s products, technologies and expertise are a linchpin of this emerging industry.

The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of ~~March 31,~~September 30, 2020, and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended ~~March 31,~~September 30, 2020, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in theCompany’s Current Report on Form ~~10-K~~8-K/A filed on ~~May 14, 2020.~~September 25, 2020, which includes the historical financial information of PCTI.

The unaudited condensed consolidated financial statements include the accounts of the Companyand ~~Ozop~~PCTI and ~~its~~the Company’s other wholly owned subsidiaries Ozop LLC, Ozop HK and Spinus, LLC (“Spinus”). All intercompany accounts and transactions have been eliminated in consolidation.

The Company qualifies as an “emerging growth company” under the 2012 JOBS Act. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. As an emerging growth company, the Company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to take advantage of the benefits of this extended transition period.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates.

The Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash and cash equivalent balances may, at certain times, exceed federally insured limits

Following is a summary of customers who accounted for more than ten percent (10%) of the Company’s revenues for the three and nine months ended ~~March 31,~~September 30, 2020, and 2019, and their accounts receivable balance as of ~~March 31,~~September 30, 2020:

As disclosed in the above table, PCTI, historically does not have year to year many recurring clients as the Company produces capital equipment for its’ customers.

The Company records accounts receivable at the time products and services are delivered. An allowance for losses is established through a provision for losses charged to expenses. Receivables are charged against the allowance for losses when management believes collectability is unlikely. The allowance (if any) is an amount that management believes will be adequate to absorb estimated losses on existing receivables, based on evaluation of the collectability of the accounts and prior loss experience.

~~Inventory, which consists of finished goods, is~~Inventories are valued at the lower of cost or net realizable ~~value. Cost is~~value, with cost determined ~~using~~on the ~~first in first out (FIFO) method. Provision for potentially obsolete or slow-moving~~first-in, first-out basis. Inventory costs include material, labor and manufacturing overhead. In evaluating the net realizable value of inventory, ~~is made based on~~ management ~~analysis or inventory levels~~also considers, if applicable, other factors, including known trends, market conditions, currency exchange rates and ~~future sales forecasts.~~other such issues.

The components of inventories at September 30, 2020, and December 31, 2019, are as follows:

The principal purchases by the Company is comprised of ~~finished goods~~parts and raw materials that the Company assembles and manufactures and sells to its customers. Following is a summary of suppliers who accounted for more than ten percent (10%) of the Company’s purchases for the three and nine months ended ~~March 31,~~September 30, 2020, and 2019:

Suppliers to the Company vary from period to period dependent upon our customer’s order specifications. In any specific reporting period, we may be relying on certain vendors, however these vendors will vary dependent on the parts and materials needed. The Company believes its relationships with all of the above vendors is good, and we are not reliant on any particular vendor for future needs.

Property and equipment are stated at cost, and depreciation is provided by use of a straight-line method over the estimated useful lives of the assets.

The Company reviews property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amounts of assets may not be recoverable. The estimated useful lives of property and equipment is as follows:

Depreciation expense was ~~$664~~$3,562 and ~~$799~~$6,784 for the three and nine months ended ~~March 31,~~September 30, 2020, respectively, and $1,815 and $5,445 for the three and nine months ended September 30, 2019, respectively.

Intangible assets primarily represent purchased patent and license rights. The Company amortizes these costs over the shorter of the legal life of the patent or its estimated economic life using the straight-line method. The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future undiscounted cash flows to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the ~~year ended December 31, 2019, the Company impaired $44,200 of tradenames as management has decided not to go forward with the use of the trade name Spinus.For the~~ three and nine months ended ~~March 31,~~September 30, 2020, ~~and 2019,~~ the Company recorded amortization expense of ~~$10,418 and $10,417, respectively.~~$10,417. In accordance with ASC 350,“Intangibles—Goodwill and Other,”goodwill and other intangible assets with indefinite lives are no longer subject to amortization but are tested for impairment annually or whenever events or changes in circumstances indicate that the asset might be impaired.

Goodwill is measured as the excess of consideration transferred and the net of the acquisition date fair value of assets acquired, and liabilities assumed in a business acquisition. During the year ended December 31, 2019, the Company recorded goodwill of $2,277,168, included in assets of discontinued operations in the accompanying balance sheet at December 31, 2019, related to the SRI transaction. The Company reviews the goodwill allocated to each of our reporting units for possible impairment annually and whenever events or changes in circumstances indicate carrying amount may not be recoverable. When assessing goodwill for impairment, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its’ carrying amount. ~~If, after assessing the totality~~

Goodwill is tested annually for impairment on January 1, and at any time upon occurrence of certain events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is less than its’ carrying amount, then the Company performs a two-step impairment test. If the Company concludes otherwise, then no further action is taken. The Company also has the option to bypass the qualitative assessment and only perform a quantitative assessment, which is the first step of the two-step impairment test. In the two-step impairment test, the Company measures the recoverability of goodwill by comparing a reporting unit’s carrying amount, including goodwill, to the estimated fair value of the reporting unit. During the year ended December 31, 2019.changes in circumstances. the Company recorded an impairment of goodwill of $274,854, for the termination of the SRI License Agreement due to no known future cash flows being provided by the assets, and as of January 16, 2020, the Company wrote off the remaining Goodwill balance associated with SRI transaction of $2,002,314.

In assessing the qualitative factors, the Company assesses relevant events and circumstances that may impact the fair value and the carrying amount of the reporting unit. The identification of relevant events and circumstances, and how these may impact a reporting unit’s fair value or carrying amount involve significant judgments and assumptions. The judgment and assumptions include the identification of macroeconomic conditions, industry, and market considerations, cost factors, overall financial performance and share price trends, and making the assessment as to whether each relevant factor will impact the impairment test positively or negatively and the magnitude of any such impact.

The carrying amount of each reporting unit is determined based upon the assignment of our assets and liabilities, including existing goodwill and other intangible assets, to the identified reporting units. Where an acquisition benefits only one reporting unit, the Company allocates, as of the acquisition date, all goodwill for that acquisition to the reporting unit that will benefit. Where the Company has had an acquisition that benefited more than one reporting unit, The Company has assigned the goodwill to our reporting units as of the acquisition date such that the goodwill assigned to a reporting unit is the excess of the fair value of the acquired business, or portion thereof, to be included in that reporting unit over the fair value of the individual assets acquired and liabilities assumed that are assigned to the reporting unit.

~~If the carrying amount~~The transaction with PCTI resulted in recognizing goodwill of a reporting unit is in excess of its fair value, an impairment may exist, and the Company must perform the second step of the impairment analysis to measure the amount of the impairment loss, by allocating the reporting unit’s fair value to its assets and liabilities other than goodwill, comparing the carrying amount of the goodwill to the resulting implied fair value of the goodwill, and recording an impairment charge for any excess.

~~In accordance with ASC 205-20~~~~Presentation of Financial Statements: Discontinued Operations~~, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinued operations criteria the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations. .

~~On January 16, 2020, the Company pursuant to the termination of the SRI transaction Agreement~~$11,201,145 (see Note 1) which meets the definition of a discontinued operation. Accordingly, the operating results of the SRI business are reported as a gain from discontinued operations in the accompanying condensed consolidated financial statements for the three months ended March 31, 2020. For additional information, see Note 12- Discontinued Operations..

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. Under ASC 606, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. Other than The Company has no outstanding contracts with any of its’ customers. ~~Revenues from Spinus were $47,602~~The Company recognizes revenue when title, ownership, and risk of loss pass to the customer, all of which occurs upon shipment or delivery of the product and is based on the applicable shipping terms.

For contracts with customers, ownership of the goods and associated revenue are transferred to customers at a point in time, generally upon shipment of a product to the customer or receipt of the product by the customer and without significant judgments. Advance payments are typically required for ~~the three months ended March 31, 2019, and are recognized as an agent~~commercial customers and are recorded ~~at net.~~ as current liability until revenue is recognized. Advance payments are not required for government customers. The majority of contracts typically require payment within 30 to 60 days after transfer of ownership to the customer.

For the periods covered herein, we did not have post shipment obligations such as training or installation, customer acceptance provisions, credits and discounts, rebates and price protection, or other similar privileges.

There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three and nine months ended ~~March 31,~~September 30, 2020, and 2019.

The Company expenses advertising and marketing costs as incurred. For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, and 2019, the Company recorded ~~$-0-~~$47,325 and ~~$56,802,~~$232, respectively, of advertising and marketing expenses.

Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. For the ~~years~~three and nine months ended ~~March 31,~~September 30, 2020, and 2019, the Company ~~recorded $-0- and $53,204 of~~did not record any research and development ~~expenses, respectively.~~expenses.

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of this note transaction and the effective conversion price embedded in this note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

The Company measures assets and liabilities at fair value based on an expected exit price as defined by the authoritative guidance on fair value measurements, which represents the amount that would be received on the sale of an asset or paid to transfer a liability, as the case may be, in an orderly transaction between market participants. As such, fair value may be based on assumptions that market participants would use in pricing an asset or liability. The authoritative guidance on fair value measurements establishes a consistent framework for measuring fair value on either a recurring or nonrecurring basis whereby inputs, used in valuation techniques, are assigned a hierarchical level.

The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, other current assets, accounts payable and accrued expenses, certain notes payable and notes payable - related party, approximate their fair values because of the short maturity of these instruments.

The following table represents the Company’s derivative instruments that are measured at fair value on a recurring basis as of ~~March 31,~~September 30, 2020, ~~and December 31, 2019,~~ for each fair value hierarchy level:

Effective July 10, 2020, the Company began accounting for leases under ASU 2016-02 (see Note 14), applying the package of practical expedients to leases that commenced before the effective date whereby the Company elected to not reassess the following: (i) whether any expired or existing contracts contain leases; (ii) the lease classification for any expired or existing leases; and (iii) initial direct costs for any existing leases. For contracts entered into on or after the effective date, at the inception of a contract the Company assess whether the contract is, or contains, a lease. Our assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and (3) whether we have the right to direct the use of the asset. We allocate the consideration in the contract to each lease component based on its relative stand-alone price to determine the lease payments.

Operating lease ROU assets represent the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company use an incremental borrowing rate of 7.5%, based on the information available at the adoption date in determining the present value of future payments. Operating lease expense is recognized pursuant to on a straight-line basis over the lease term and is included in rent in the condensed consolidated statements of operations.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. 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 on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance on deferred tax assets is established when management considers it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Tax benefits from an uncertain tax position are only recognized if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate resolution. Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense. The Company has not recognized any tax benefits from uncertain tax positions for any of the reporting periods presented.

The accounts of the Company’s Hong Kong subsidiary are maintained in Hong Kong dollars and the accounts of the U.S. companies are maintained in USD. The accounts of the Hong Kong subsidiary were translated into USD in accordance with Accounting Standards Codification (“ASC”) Topic 830, Foreign Currency Matters. According to Topic 830, all assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders’ equity is translated at historical rates and statement of comprehensive income items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, Comprehensive Income. Gains and losses resulting from the foreign currency transactions are reflected in the statements of comprehensive income.

Relevant exchange rates used in the preparation of the consolidated financial statements are as follows for the ~~periods~~period ended ~~March 31,~~September 30, 2020, ~~and December 31, 2019,~~ (Hong Kong dollar per one U.S. dollar):

The Company reports earnings (loss) per share in accordance with ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. As of ~~March 31,~~September 30, 2020, and 2019, the Company’s dilutive securities are convertible into approximately ~~469,312,620 and 2,045~~9,744,058,757 shares of common ~~stock, respectively.~~stock. There were no dilutive securities as of September 30, 2019. This amount is not included in the computation of dilutive loss per share because their impact is antidilutive. The following table represents the classes of dilutive securities as of ~~March 31, 2020, and December 31, 2019:~~September 30, 2020:

In February 2016, the FASB issued ASU No. 2016-02, Leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases (with the exception of short-term leases) at the commencement date. The ASU is effective for fiscal years and interim periods within those years beginning after December 15, 2018.

In January 2017, the FASB issued ASU No. 217-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment. The amendments simplify the subsequent measurement of goodwill and eliminate the two-step goodwill impairment test. The Company will perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the reporting unit’s carrying amount exceeds its fair value. If fair value exceeds the carrying amount, no impairment should be recorded. Any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Impairment losses on goodwill cannot be reversed once recognized. The ASU is effective prospectively for fiscal years and interim periods within those years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not anticipate any material impact on the condensed consolidated financial statements.

Other than the above there have no recent accounting pronouncements or changes in accounting pronouncements during the period ended ~~March 31,~~September 30, 2020, that are of significance or potential significance to the Company.

Patents as of ~~March 31,~~September 30, 2020, ~~and December 31, 2019,~~ consist of the following:

Amortization expense for the three and nine months ended ~~March 31,~~September 30, 2020, ~~and 2019,~~ was ~~$10,418 and $10,417, respectively.~~$10,417.

~~During~~Since the year ended December 31, 2017, OZOP issued 19 convertible promissory notes (the “2017 Notes”), in amounts of $10,000 to $50,000. OZOP received proceeds of $710,000 in the aggregate. The 2017 Notes matured on their one- year anniversary and bear interest at ten percent (10%). The initial conversion feature allowed the holders to convert this note and any unpaid interest due, into shares of the Company’s common stock on the 15^th business day that the Company becomes listed, at conversion prices equal to discounts of 35%-50% of the average of the three lowest closing prices of the common stock. In August 2018, the Company offered any noteholder to convert their principal and interest into shares of common stock at $0.50 per share. OZOP also issued $25,500 of convertible notes for consulting fees. During the year ended December 31, 2018, the Company issued a $50,000 convertible promissory note (the “March 2018 Note”) and received proceeds of $50,000.The Company determined that the conversion feature of the 2017 Notes and the March 2018 Note (together, the “Notes”) did not meet the criteria of an embedded derivative and therefore the conversion feature was not bi-furcated andtransaction with PCTI is being accounted for as a ~~derivative because~~business combination and was treated as a reverse acquisition for accounting purposes with PCTI as the accounting acquirer in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). In accordance with the accounting treatment for a reverse acquisition, the Company’s historical financial statements prior to the reverse merger were and will be replaced with the historical financial statements of PCTI prior to the reverse merger. The consolidated financial statements after completion of the reverse merger have and will include the assets, liabilities and results of operations of the combined company from and after the closing date of the reverse merger. Accordingly, as of July 10, 2020, PCTI assumed the liabilities of the Company, ~~was a private company, there was no quoted price and no active market for~~including the ~~Company’s common stock.~~

~~On April 13, 2018, the Company determined the conversion feature of this notes represented an embedded derivative since this~~convertible note were convertible into a variable number of shares upon conversion. Accordingly, on April 13, 2018, this note were not considered to be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. Accordingly, the fair value of the derivative instruments of this notes that occurred prior to April 13, 2018, were recorded as a liability on April 13, 2018, with the corresponding amount recorded as a discount to this note. Such discount was amortized from the date of issuance to the maturity dates of this notes. The change in the fair value of the liability for derivative contracts are recorded in other income or expenses in the reporting period, with the offset to the derivative liability on the balance sheet. The embedded feature included in this note resulted in an initial debt discount of $620,075, interest expense of $14,000 and initial derivative liability of $634,075. On August 29, 2019, pursuant to a Debt Purchase Agreement, one investor sold the principal balance of $15,000, accrued and unpaid interest of $2,624 and a repayment balance of $5,250 to third party investor, for a total purchase price of $22,874 (see below). Also, on August 29, 2019, pursuant to a Debt Purchase Agreement, a second investor sold the principal balance of $25,000, accrued and unpaid interest of $4,248 and a repayment balance of $8,750 to third party investor, for a total purchase price of $37,998 (see below). On February 18, 2020, an investor purchased two $50,000 convertible notes from investors (see below). As of March 31, 2020, and December 31, 2019, the outstanding principal balance of the 2017 Notes was $75,000 and $175,000, respectively.balances.

On April 13, 2018, we issued a convertible promissory note in the principal amount of $442,175, pursuant to a Securities Purchase Agreement we entered into with an investor dated April 1, 2018. This note bears interest at the rate of 12% per annum and is due and payable on April 13, 2019. This note is convertible at any time following the funding of this note into a variable number of the Company’s common stock, based on a conversion ratio of 55% of the average of the lowest trading price for the 25 days prior to conversion. This note was funded on April 13, 2018, when the Company received proceeds of $350,000, after OID of $57,675, and disbursements for the lender’s transaction costs, fees and expenses of $34,500, of which $25,000 were recorded as discounts against the debt to be amortized into interest expense through maturity. Periodic payments are due by us on this note at the rate of $850 per dayJuly 10, 2020, PCTI (the “Repayment Amount”) via direct withdrawal from our bank account, beginning on April 27, 2018 and to last for a 30-day period. Following this period, the Repayment Amount increased to $1,100 per day until this note is satisfied in full. On June 28, 2018, this note was amended to increase the Repayment Amount to $1,750 per day. On August 29, 2018, the parties agreed to stop the Repayment Amount, and on November 20, 2018, the parties agreed to restart the Repayment Amount at $1,000 per day. From time to time the investor waives any Repayment Amount for a period of time as agreed upon. The embedded conversion feature included in this note resulted in an initial debt discount of $359,500 interest expense of $150,730 and an initial derivative liability of $510,230. During the year ended December 31, 2019, the investor sold $30,000 of this note to another investor. This note is in default and during the year ended December 31, 2019, the Company recorded additional interest expense of $26,188 and added that amount to the principal amount outstanding. As of March 31, 2020, and December 31, 2019, the outstanding principal balance and carrying value of this note was $78,563. The balance of this note was converted during the three months ended June 30, 2020.

In connection with our obligations under this note, our executive officers at the time, and the Company entered into a Pledge Agreement (the “Pledge Agreement”) whereby they pledged as collateral for this note an aggregate of 19,900 shares of our common stock and we pledged the shares of our subsidiary OZOP Surgical, Inc. (collectively, the “Collateral”). Upon a default under the terms of this note, the investor may, among other things, collect or take possession of the Collateral, proceed with the foreclosure of the security interest in the Collateral or sell, lease or dispose of the Collateral.

On August 29, 2018, we issued a convertible promissory note in the principal amount of $339,250, pursuant to a Securities Purchase Agreement we entered into with the investor. This note bears interest at the rate of 12% per annum and is due and payable on August 29, 2019. This note is convertible at any time following the funding of this note into a variable number of the Company’s common stock, based on a conversion ratio of 55% of the average of the lowest trading price for the 25 days prior to conversion. This note was funded on August 29, 2018, when the Company received proceeds of $280,000, after OID of $44,250, and disbursements for the lender’s transaction costs, fees and expenses of $15,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity. Periodic payments are due by us on this note at the rate of $1,000 per day (the “Repayment Amount”) via direct withdrawal from our bank account, beginning on August 30, 2018, until this note is satisfied in full. From time to time the investor waives any Repayment Amount for a period of time as agreed upon. The embedded conversion feature included in this note resulted in an initial debt discount of $280,000 interest expense of $112,403 and an initial derivative liability of $392,403. This note is in default and during the year ended December 3, 2019, the Company recorded additional interest expense of $87,390 and added that amount to the principal amount outstanding. For the three months ended March 31, 2020, the investor converted a total of $10,044 of the face value and $2,899 of accrued interest into 428,477 shares of common stock. As of March 31, 2020, and December 31, 2019, the outstanding principal balance and carrying value of this note was $177.086 and $187,130, respectively. The balance of this note was converted during the three months ended June 30, 2020.

On November 15, 2018, the Company issued a 12% convertible promissory note, in the principal amount of $500,000, pursuant to a Securities Purchase Agreement we entered into with the investor. This note matures November 15, 2019. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to the lesser of (1) the lowest trading price during the previous 20 trading day period ending on the last completed trading date prior to the date of this note and (2) 65% multiplied by the average of the 3 lowest trading prices of the Company’s common stock during the 20 day trading period ending on the latest completed trading day of the common stock prior to the date of conversion of this note. Pursuant to this note, the Company agreed to include on its next registration statement filed with the Securities and Exchange Commission, all shares issuable upon conversion of this note. Pursuant to the Security Agreement, all of the obligations under this note are secured by a first security interest in and to all of the Company’s rights, title and interests in, to and under all assets and all personal property of the Company. The Security Agreement includes customary representations, warranties and covenants by the Company. This note was funded on November 19, 2018, when the Company received proceeds of $458,500 after OID of $37,500, and disbursements for the lender’s transaction costs, fees and expenses of $4,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $363,806. For the three months ended March 31, 2020, the investor converted a total of $12,446 of the face value and $32,879 of accrued interest and fees into 695,877 shares of common stock. As of March 31, 2020, and December 31, 2019, the outstanding principal balance and carrying value of this note was $432,914 and $445,360, respectively. The balance of this note was converted during the three months ended June 30, 2020.

On January 7, 2019, the Company issued an 8% convertible promissory note, in the principal amount of $150,000, pursuant to a Securities Purchase Agreement we entered into with the investor. This note matured January 7, 2020. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to the lesser of (1) the lowest trading price during the previous 20 trading day period ending on the last completed trading date prior to the date of this note and (2) 65% multiplied by the average of the 3 lowest trading prices of the Company’s common stock during the 20 day trading period ending on the latest completed trading day of the common stock prior to the date of conversion of this note. This note was funded on January 9, 2019, when the Company received proceeds of $133,250 after OID of $14,000, and disbursements for the lender’s transaction costs, fees and expenses of $2,750, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $111,500. For the three months ended March 31, 2020, amortization of the debt discounts of $2,416 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $150,000 with a carrying value of $150,000 and $147,584, as of March 31, 2020, and December 31, 2019, respectively.net of unamortized discounts of $2,416. The balance of this note was converted during the three months ended June 30, 2020.

On February 5, 2019, the Company issued an 8% convertible promissory note (the “Master Note”) in the aggregate principal amount of up to $165,000 in exchange for an aggregate purchase price of up to $148,500 with an original issue discount of $16,500 to cover the Investor’s accounting fees, due diligence fees, monitoring and other transactional costs incurred in connection with the purchase and sale of the Master Note, which is included in the principal balance of this note. On February 8, 2019, the Investor funded the first tranche under the Master Note, with a maturity date of February 8, 2020, and the Company received $49,500 ($47,500 after payment of $2,000 of the Investor’s legal fees) for this first tranche of $55,000 under the Master Note and on the same date, the Company issued this note to the Investor. This note is convertible into shares of the Company’s common stock, beginning on the date which is 180 days from the issuance date of the Master Note, at a conversion price equal to the lesser of (1) the lowest trading price during the previous 20 trading day period ending on the last completed trading date prior to the date of conversion of the Master Note and (2) 65% multiplied by the average of the 3 lowest trading prices of the Company’s common stock during the 20 day trading period ending on the latest completed trading day of the common stock prior to the date of conversion of the Master Note. The embedded conversion feature included in the Master Note resulted in an initial debt discount and derivative liability of $38,502. For the three months ended March 31, 2020, amortization of the debt discounts of $4,496 was charged to interest expense. For the three months ended March 31, 2020, the investor converted a total of $4,905 of the face value and $1,500 of fees into 349,000 shares of common stock. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of the Master Note was $6,735 and $11,640, respectively, with a carrying value as of March 31, 2020, and December 31, 2019, of $6,735 and $7,144, respectively. The balance of this note was converted during the six months ended June 30, 2020. In connection with the issuance of this Note, the Company issued warrants to acquire 55,000 shares of common stock, for a three-year period with an exercise price of $1,50 per share, subject to price adjustments. For the three months ended March 31, 2020, the Company valued the warrant on the Black Shoals option pricing model at $12,962 and recorded the amount as derivative expense with the offset to derivative liabilities.

On March 7, 2019, the Company issued a 12% convertible promissory note, in the principal amount of $85,000, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock, at a conversion price equal to 58% of the average of the two lowest trading prices of the Company’s common stock for the previous 20 trading day period ending on the date the notice of conversion of this note is received by the Company. This note was funded on March 11, 2019, when the Company received proceeds of $77,900 after OID of $3,000, and disbursements for the lender’s transaction costs, fees and expenses of $4,100, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $77,394. For the three months ended March 31, 2020, amortization of the debt discounts of $15,714 was charged to interest expense. For the three months ended March 31, 2020, the investor converted a total of $31,800 of the face value and $4.327 of accrued interest into 446,416 shares of common stock. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $-0- and $31,800, respectively, with a carrying value as of December 31, 2019, of $16,086, net of unamortized discounts of $15,714.

On May 29, 2019, the Company issued a 12% convertible promissory note, in the principal amount of $80,000, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock, at a conversion price equal to 58% of the average of the two lowest trading prices of the Company’s common stock for the previous 20 trading day period ending on the date the notice of conversion of this note is received by the Company. This note was funded on March 29, 2019, when the Company received proceeds of $73,300 after OID of $2,800, and disbursements for the lender’s transaction costs, fees and expenses of $3,900, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $70,418. For the three months ended March 31, 2020, amortization of the debt discounts of $19,280 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $80,000 with a carrying value of $67,259 and $47,979, net of unamortized discounts of $12,741 and $32,021, respectively. During the three months ended June 30, 2020, the investor converted a portion and soldacquirer) assumed the balance of ~~this note to~~ a ~~third party.~~

~~On June 5, 2019, an investor (the “Purchaser”) pursuant to an Assignment Agreement, purchased a~~past-due 15% convertible note issued by the Company on December 5, 2018. The Purchaser paid $93,391 to acquire this note. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 65% multipliedAugust 18, 2017, and purchased by the average of the lowest two trading prices during the 15- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. The embedded conversion feature pursuant to the Assignment Agreement resulted in an initial debt discount and derivative liability of $59,909. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of assigned note was $93,391. During the three months ended June 30, 2020, the Purchaser sold this note to a third-party investor.

On June 7, 2019, an investor (the “Purchaser”) pursuant to an Assignment Agreement, purchased a convertible note issued by the Company on October 19, 2018. The Purchaser paid $77,000 to acquire this note. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 65% multiplied by the average of the lowest two trading prices during the 15- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. The embedded conversion feature pursuant to the Assignment Agreement resulted in an initial debt discount and derivative liability of $49,335. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of assigned note was $77,000. During the three months ended June 30, 2020, the Purchaser sold this note to a third-party investor.

On July 22, 2019, the Company issued a 10% convertible promissory note, in the principal amount of $38,900, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock, at a conversion price equal to 60% of the lowest closing bid price of the Company’s common stock for the previous 20 trading day period ending on the date the notice of conversion of this note is received by the Company. This note was funded on July 24, 2019, when the Company received proceeds of $30,000 after OID of $3,900, and disbursements for the lender’s transaction costs, fees and expenses of $5,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $31.452. For the three months ended March 31, 2020, amortization of the debt discounts of $10,088 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $38,900 with a carrying value of $26,401 and $16,313, net of unamortized discounts of $12,499 and $22,587, respectively. The balance of this note was converted during the three months ended June 30, 2020.

On August 2, 2019, the Company issued a 12% convertible promissory note, in the principal amount of $157,500, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 60% multiplied by the average of the lowest two trading prices during the 20 trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. This note was funded on August 2, 2019, when the Company received proceeds of $150,000 after disbursements for the lender’s transaction costs, fees and expenses of $7,500, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $125,982. For the three months ended March 31, 2020, amortization of the debt discounts of $33,371 was charged to interest expense. For the three months ended March 31, 2020, the investor converted a total of $17,650 of the face value and $1,303 of accrued interest into 788,350 shares of common stock. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $139,850 and $157,500, respectively, with a carrying value of $95,377 and $79,656, net of unamortized discounts of $44,473 and $77,844, respectively.

On August 21, 2019, the Company issued a 12% convertible promissory note, in the principal amount of $55,125, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 58% multiplied by the average of the lowest two trading prices during the 20- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. This note was funded on August 21, 2019, when the Company received proceeds of $50,000 after OID of $2,625, and disbursements for the lender’s transaction costs, fees and expenses of $2,500, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $47,117. For the three months ended March 31, 2020, amortization of the debt discounts of $33,479 was charged to interest expense. For the three months ended March 31, 2020, the investor converted a total of $3,825 of the face value and $247 of accrued interest into 77,144 shares of common stock, and on March 9, 2020, sold the remining portion of this note to a third part investor (see below) for $76,000. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $-0- and $55,125, respectively, with a carrying value of $21,646, as of December 31, 2019, net of unamortized discounts of $33,479. The Company also issued a warrant for $25,000 to the investor in consideration of the sale of this note. The Company valued the warrant based on the Back Scholes option pricing model of $56,049 and recorded the amount to derivative expense with the offset to derivative liabilities.

On August 19, 2019, the Company issued an 8% convertible promissory note, in the principal amount of $85,000, pursuant to a Securities Purchase Agreement we entered into with the investor. This note matures May 19, 2020. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to the lesser of (1) the lowest trading price during the previous 20 trading day period ending on the last completed trading date prior to the date of this note and (2) 65% multiplied by the average of the 3 lowest trading prices of the Company’s common stock during the 20 day trading period ending on the latest completed trading day of the common stock prior to the date of conversion of this note. This note was funded on August 22, 2019, when the Company received proceeds of $75,000 after OID of $7,250, and disbursements for the lender’s transaction costs, fees and expenses of $2,750, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $54,802. For the three months ended March 31, 2020, amortization of the debt discounts of $21,601 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $85,000 with a carrying value of $72,945 and $51,344, net of unamortized discounts of $12,055 and $33,656, respectively. The balance of this note was converted during the three months ended June 30, 2020.

On August 23, 2019, the Company issued to a third-party investor a convertible redeemable promissory note with a face value of $37,800, including an original issue discount of $1,800. This note matures on May 23, 2020, has a stated interest of 10% and is convertible into a variable number of the Company’s common stock, based on a conversion ratio of 58% of the average of the two lowest trading prices for the 20 days prior to conversion. This note was funded on August 26, 2019, when the Company received proceeds of $33,500, after disbursements for the lender’s transaction costs, fees and expenses of $2,500, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $32,229. For the three months ended March 31, 2020, amortization of the debt discounts of $12,176 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $37,800 with a carrying value of $30,737 and $18,561, net of unamortized discounts of $7,063 and $19,239, respectively. During the three months ended June 30, 2020, the investor converted a portion of this note and sold the balance of this note to a third party.

On August 29, 2019, the Company issued a 10% convertible promissory note, in the principal amount of $45,000, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 60% multiplied by the average of the lowest two trading prices during the 20 trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. This note was funded on September 4, 2019, when the Company received proceeds of $40,000 after disbursements for the lender’s transaction costs, fees and expenses of $5,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $35,794. For the three months ended March 31, 2020, amortization of the debt discounts of $10,199 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $45,000 with a carrying value of $28,632 and $18,434, net of unamortized discounts of $16,368 and $26,566, respectively. The balance of this note was converted during the three months ended June 30, 2020.

~~On August 29, 2019,~~ an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement, ~~purchased a convertible note issued by the Company on September 1, 2017 (see above). The Purchaser paid $22,874 to acquire this note.~~dated February 18, 2020. This note, as amended, is convertible into common stock at a conversion price equal to a ~~35%~~70% discount to the ~~average of the 3~~ lowest closing prices of the common stock for ~~fifteen~~the thirty prior trading days including the day upon which a notice of conversion is received. The embedded conversion feature pursuant to the Assignment Agreement resulted in an initial debt discount and derivative liability of 13,793. For the year ended December 31, 2019, amortization of the debt discounts of $13,793 was charged to interest expense. For the three months ended March 31, 2020, the investor converted a total of $15,874 of the face value and $968 of accrued interest into 217,331 shares of common stock. As of ~~March 31,~~September 30, 2020, and ~~December 31, 2019,~~July 10, 2020, the outstanding principal balance of assigned note was ~~$-0- and $15,874, respectively.~~$2,086.

On ~~August 29, 2019, an investor~~July 10, 2020, PCTI (the ~~“Purchaser”) pursuant to~~accounting acquirer) assumed the balance of a ~~Debt Purchase Agreement, purchased a~~past-due 15% convertible note issued by the Company on October 2, 2017 (see above). The Purchaser paid $37,998 to acquire this note. This note, as amended, is convertible into common stock at a conversion price equal to a 35% discount to the average of the 3 lowest closing prices of the common stock for fifteen prior trading days including the day upon which a notice of conversion is received. The embedded conversion feature pursuant to the Assignment Agreement resulted in an initial debt discount and derivative liability of $22,953. For the three months ended March 31, 2020, the investor converted a total of $5,000 of the face value into 117,494 shares of common stockSeptember 13, 2017. As of ~~March 31,~~September 30, 2020, and ~~December 31, 2019, the outstanding principal balance of assigned note was $32,998 and $37,998, respectively. The balance of this note was converted during the three months ended June 30, 2020.~~

On October 1, 2019, the Company issued a 12% convertible promissory note, in the principal amount of $68,000, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 61% multiplied by the lowest closing bid price during the 20- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. This note was funded on October 2, 2019, when the Company received proceeds of $65,000 after disbursements for the lender’s transaction costs, fees and expenses of $3,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $52,457. For the year ended December 31, 2019, amortization of the debt discounts of $13,864 was charged to interest expense. As of March 31,July 10, 2020, ~~and December 31, 2019,~~ the outstanding principal balance of this note was $68,000 with a carrying value of $40,280 and $26,416, net of unamortized discounts of $27,720 and $41,584, respectively. The balance of this note was converted during the three months ended June 30, 2020.$25,000.

On ~~October 8, 2019,~~July 10, 2020, PCTI (the accounting acquirer) assumed the ~~Company issued~~balance of a 12% convertible ~~promissory~~ note inissued by the ~~principal amount of $66,000,~~Company on February 26, 2020, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock, at a conversion price equal to 60% of the average of the two lowest trading prices of the Company’s common stock for the previous 20 trading day period ending on the date the notice of conversion of this note is received by the Company. This note was funded on October 10, 2019, when the Company received proceeds of $57,000 after OID of $6,000, and disbursements for the lender’s transaction costs, fees and expenses of $2,300, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $52,281. For the three months ended March 31, 2020, amortization of the debt discounts of $15,320 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $66,000 with a carrying value of $33,772 and $18,452, net of unamortized discounts of $32,228 and $47,548, respectively. The balance of this note was converted during the three months ended June 30, 2020.

On October 24, 2019, the Company issued a convertible promissory note in the principal amount of $248,400, pursuant to a Securities Purchase Agreement we entered into with the investor. This note bears interest at the rate of 12% per annum and matures 12 months after the date of issuance. This note is convertible at any time following the funding of this note into a variable number of the Company’s common stock, based on a conversion ratio of 60% of the lowest trading price for the 25 days prior to conversion. This note was funded on October 28, 2019, when the Company received proceeds of $200,000, after OID of $32,400, and disbursements for the lender’s transaction costs, fees and expenses of $16,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $203,637. For the three months March 31, 2020, amortization of the debt discounts of $63,009 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $248,400, with a carrying value of $89,277 and $26,717, net of unamortized discounts of $158,673 and $221,683, respectively. During the three months ended June 30, 2020, the investor converted a portion of this note and sold the balance of this note to a third party.

On October 24, 2019, the Company issued a 12% convertible promissory note, in the principal amount of $225,000, pursuant to a Securities Purchase Agreement we entered into with the investor. This note matures October 24, 2020. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to the lesser of (1) $0.05 and (2) 58% multiplied by the average of the 2 lowest trading prices of the Company’s common stock during the 20 day trading period ending on the latest completed trading day of the common stock prior to the date of conversion of this note. This note was funded on October 31, 2019, when the Company received proceeds of $202,250 after OID of $20,000, and disbursements for the lender’s transaction costs, fees and expenses of $2,750, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $144,302. For the three months ended March 31, 2020, amortization of the debt discounts of $41,738 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $225,000 with a carrying value of $119,049 and $77,311, net of unamortized discounts of $105,951 and $147,689, respectively. The balance of this note was converted during the three months ended June 30, 2020.

On October 25, 2019, the Company issued a convertible promissory note in the principal amount of $36,750, pursuant to a Securities Purchase Agreement we entered into with the investor. This note bears interest at the rate of 12% per annum and matures 12 months after the date of issuance. This note is convertible at any time following the funding of this note into a variable number of the Company’s common stock, based on a conversion ratio of 58% of the average of the two lowest closing bid prices for the 20 days prior to conversion. This note was funded on October 25, 2019, when the Company received proceeds of $33,000, after OID of $1,750, and disbursements for the lender’s transaction costs, fees and expenses of $2,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $31,316. For the three months March 31, 2020, amortization of the debt discounts of $8,767 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $36,750, with a carrying value of $14,411 and $5,644, net of unamortized discounts of $22,340 and $31,106, respectively. The balance of this note was converted during the three months ended June 30, 2020.

On November 27, 2019, the Company issued a 12% convertible promissory note, in the principal amount of $53,000, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 56% multiplied by the lowest closing bid price during the 20- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. This note was funded on December 2, 2019, when the Company received proceeds of $50,000 after disbursements for the lender’s transaction costs, fees and expenses of $3,000, which were recorded as discounts against the debt to be amortized into interest expense through maturity. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $49,808. For the three months ended March 31, 2020, amortization of the debt discounts of $13,202 was charged to interest expense. As of March 31, 2020, and December 31, 2019, the outstanding principal balance of this note was $53,000 with a carrying value of $17,828 and $4,626, net of unamortized discounts of $35,172 and $48,374, respectively. During the three months ended June 30, 2020, the investor sold this note a third-party investor.

On January 8, 2020, the Company entered into a securities purchase agreement (the “SPA”) with an investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor a 12% Convertible Promissory Note, in the principal amount of $38,000 in exchange for a purchase price of $35,000. This note was funded by the Investor on January 13, 2020, and on such date pursuant to the SPA, the Company reimbursed the Investor for expenses for legal fees and due diligence of $3,000. This note proceeds will be used by the Company for general working capital purposes.Agreement. The SPA includes customary representations, warranties and covenants by the Company and customary closing conditions. ~~The embedded conversion feature included in~~In conjunction with this note, ~~resulted in~~the Company issued a warrant to purchase 2,212,500 shares of common stock at an ~~initial debt discount~~exercise price of $0.03, subject to adjustments and ~~derivative liability of $29,063. For~~expiring on the ~~three months ended March 31, 2020, amortization~~five-year anniversary of the ~~debt discounts of $7,348 was charged to interest expense.~~Issuance Date. As of ~~March 31,~~July 10, 2020, the outstanding principal balance of this note was ~~$38,000~~$132,750 with a carrying value of ~~$13,285,~~$66,176, net of unamortized discounts of ~~$24,715. During~~$66,574. For the ~~three months ended June~~period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $66,574 was charged to interest expense. For the period from July 11, 2020 to September 30, 2020, the investor ~~sold~~converted a total of $132,750 of the face value and $7,943 of accrued interest into 83,214,457 shares of common stock at an average conversion price of $0.0017. As of September 30, 2020, the outstanding principal balance of this note ~~a third-party investor.~~was $-0-.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 12% convertible note issued by the Company on February ~~18,~~26, 2020, and purchased by an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement, ~~purchased~~dated March 3, 2020 with a ~~convertible note issued by the Company on August 18, 2017 (see above). The Purchaser agreed to pay $50,000 to acquire this note.~~maturity date of February 26, 2021. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. For the three months ended March 31, 2020, the Company recorded additional interest expense of $111,350 due to various defaults of this note and the amount was added to the principal balance owed the Purchaser. The embedded conversion feature pursuant to the Assignment Agreement resulted in interest expense of $607,950 with the offset recorded to derivative liabilities. For the three months ended March 31, 2020, the investor converted a total of $29,249 accrued interest and fees into 1,533,400 shares of common stock. As of ~~March 31,~~July 10, 2020, the outstanding principal balance of assigned note was ~~$161,350. A portion~~$798,750. For the period from July 11, 2020 to September 30, 2020, the investor converted a total of $798,750 of the face value and $147,549 of accrued interest into 496,756,528 shares of common stock at an average conversion price of $0.0019. As of September 30, 2020, the outstanding principal balance of this note was ~~converted during the three months ended June 30, 2020.~~$-0-.

~~Also,~~On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 12% convertible note issued by the Company on ~~February 18, 2020,~~August 21, 2019, and purchased by an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement, ~~purchased~~with a ~~convertible note issued by the Company on~~maturity date of August ~~18, 2017 (see above). The Purchaser agreed to pay $50,000 to acquire this note.~~21, 2020. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. For the three months ended March 31, 2020, the Company recorded additional interest expense of $111,350 due to various defaults of this note and the amount was added to the principal balance owed the Purchaser. The embedded conversion feature pursuant to the Assignment Agreement resulted in interest expense of $607,950 with the offset recorded to derivative liabilities. As of ~~March 31,~~July 10, 2020, the outstanding principal balance of assigned note was ~~$161,350. A portion~~$155,632. For the period from July 11, 2020 to September 30, 2020, the investor converted a total of $155,632 of the ~~balance~~face value and $48,306 of ~~this note was converted during the three months ended June 30, 2020.~~

~~On February 26, 2020, the Company entered~~accrued interest into ~~a securities purchase agreement (the “SPA”) with~~219,963,737 shares of common stock at an investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor a 12% secured convertible promissory note in the aggregate principal amount of $132,750 in exchange for a purchaseaverage conversion price of $117,750. Pursuant to the SPA, the Company agreed to pay the Investor $15,000 to cover the Investor’s due diligence expenses incurred in connection with the SPA and Note, which is to be offset against the proceeds of this note. This note was funded by the Investor on February 26, 2020, and on such date pursuant to the SPA, the Company reimbursed the Investor for expenses for legal fees and due diligence of $2,750. This note proceeds will be used by the Company for general working capital purposes. The SPA includes customary representations, warranties and covenants by the Company and customary closing conditions. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $86,001. For the three months ended March 31, 2020, amortization of the debt discounts of $8,646 was charged to interest expense.$0.0009. As of ~~March 31,~~September 30, 2020, the outstanding principal balance of this note was ~~$132,750 with a carrying value of $37,645, net of unamortized discounts of $95,105.~~$-0-.

On ~~February 26,~~July 10, 2020, PCTI (the accounting acquirer) assumed the ~~Company and an investor (the “Investor”) agreed to convert $330,000~~balance of ~~notes payable into~~ a 12% convertible note with a face value of $330,000. This note is convertible into common stock at a conversion price equal to a 44% discount to the lowest trading price of the common stock for the 20 prior trading days including the day upon which a notice of conversion is received. The embedded conversion feature included in this note resulted in an initial derivative expense of $365,757 with the offset to derivative liabilities. On March 3, 2020, a third-party investor (the “Purchaser”), pursuant to a Debt Purchase Agreement, purchased this note. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. For the three months ended March 31, 2020, the Company recorded additional interest expense of $25,000 due to a default of this note and the amount was added to the principal balance owed the Purchaser. The embedded conversion feature pursuant to the Assignment Agreement resulted in an initial derivative expense of $1,321,618 with the offset recorded to derivative liabilities. As of March 31, 2020, the outstanding principal balance of assigned note was $355,000.

~~On March 9, 2020, an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement, purchased a convertible~~promissory note issued by the Company on August 21, 2019 (see above). The Purchaser paid $76,000 to acquire this note. This note, as amended, is convertible into common stock at a conversion price equal to a 50% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. The embedded conversion feature pursuant to the Assignment Agreement resulted in an initial debt discount and derivative liability of 76,000. For the three months ended March 31, 2020, amortization of the debt discounts of $6,365 was charged to interest expense. For the three months ended March 31, 2020, the investor converted a total of $4,403 of the face value and $2,000 of fees into 285,901 shares of common stock. As of March 31, 2020, the outstanding principal balance of assigned note was $71,597, with a carrying value of $1,962, net of unamortized discounts of $69,635. The balance of this note was converted during the three months ended June 30, 2020.

On March 9, 2020, (the “Issuance Date”) ~~the Company issued a 12% convertible promissory note, in the principal amount of $80,000,~~ to an investor. This note matures 6 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at $.25 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) $.25 or 50% of the lowest trading price for the thirty trading days prior to the conversion. The embedded conversion feature included in this note resulted in an initial debt discount and derivative liability of $57,000. For the three months ended March 31, 2020, amortization of the debt discounts of $8,933 was charged to interest expense. As of ~~March 31,~~July 10, 2020, the outstanding principal balance of this note was $80,000 with a carrying value of ~~$8,933,~~$53,333, net of unamortized discounts of ~~$71,067.~~$26,667. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $26,667 was charged to interest expense. As of September 30, 2020, the outstanding principal balance and carrying value of this note was $80,000.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a past-due 22% convertible note issued by the Company on December 5, 2018, and purchased by an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement on April 17, 2020. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. As of July 10, 2020, the outstanding principal balance of assigned note was $352,695. For the period from July 11, 2020 to September 30, 2020, the investor converted a total of $352,695 of the face value and $89,295 of accrued interest into 273,028,909 shares of common stock at an average conversion price of $0.0016. As of September 30, 2020, the outstanding principal balance of this note was $-0-.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a past-due 22% convertible note issued by the Company on October 19, 2018, and purchased by an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement on April 24, 2020. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. As of September 30, 2020, and July 10, 2020, the outstanding principal balance of assigned note was $67.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 15% convertible promissory note issued by the Company on April 27, 2020, (the “Issuance Date”) to an investor. This note matures on April 27, 2021 and is convertible into shares of common stock at a conversion price equal to 50% of the lowest traded price for the twenty-five prior trading days including the day upon which a conversion notice is received by the Company. As of July 10, 2020, the outstanding principal balance of this note was $60,000 with a carrying value of $11,500, net of unamortized discounts of $48,500. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $13,500 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $60,000 with a carrying value of $25,000, net of unamortized discounts of $35,000.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a convertible note issued by the Company on August 23, 2019, with a maturity date of May 23, 2020, and purchased by an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement on April 28, 2020. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. As of September 30, 2020, and July 10, 2020, the outstanding principal balance of assigned note was $14,831.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 12% convertible promissory note issued by the Company on April 28, 2020, (the “Issuance Date”) to an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 58% multiplied by the lowest closing bid price during the 20- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. As of July 10, 2020, the outstanding principal balance of this note was $53,000 with a carrying value of $10,158, net of unamortized discounts of $42,842. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $11,925 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $53,000 with a carrying value of $22,083, net of unamortized discounts of $30,917.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 12% convertible promissory note issued by the Company on May 4, 2020, (the “Issuance Date”) to an investor, pursuant to a Securities Purchase Agreement. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to the lower of $0.50 or 58% multiplied by the average of the two lowest closing trading price or bid price during the 20- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. In conjunction with this note, the Company issued a warrant to purchase 3,666,666 shares of common stock at an exercise price of $0.015, subject to adjustments and expiring on the five-year anniversary of the Issuance Date. As of July 10, 2020, the outstanding principal balance of this note was $110,000 with a carrying value of $18,860, net of unamortized discounts of $91,140. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $25,369 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $110,000 with a carrying value of $44,229, net of unamortized discounts of $65,771.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 12% convertible promissory note issued by the Company on May 5, 2020, (the “Issuance Date”) to an investor, pursuant to a Securities Purchase Agreement. This note matures 6 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at $03 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) $.03 or 50% of the lowest trading price for the thirty-five trading days prior to the conversion. As of July 10, 2020, the outstanding principal balance of this note was $162,000 with a carrying value of $62,100, net of unamortized discounts of $99,900. In conjunction with this note, the Company issued a warrant to purchase 4,325,000 shares of common stock at an exercise price of $0.02, subject to adjustments and expiring on the five-year anniversary of the Issuance Date. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $72,900 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $162,000 with a carrying value of $135,000, net of unamortized discounts of $27,000.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 12% convertible promissory note issued by the Company on May 7, 2020, (the “Issuance Date”) to an investor, pursuant to a Securities Purchase Agreement. This note matures on May 7, 2021 and is convertible into shares of common stock at a conversion price equal to 50% of the lowest traded price for the twenty-five prior trading days including the day upon which a conversion notice is received by the Company. As of July 10, 2020, the outstanding principal balance of this note was $30,000 with a carrying value of $5,000, net of unamortized discounts of $25,000. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $6,875 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $30,000 with a carrying value of $11,875, net of unamortized discounts of $18,125.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a convertible note issued by the Company on January 8, 2020, with a maturity date of January 8, 2021, and purchased by an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement on May 15, 2020. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. As of July 10, 2020, the outstanding principal balance of assigned note was $115,500, with a carrying value of $56,306, net of unamortized discounts of $59,194. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $59,194 was charged to interest expense. For the period from July 11, 2020 to September 30, 2020, the investor converted a total of $115,067 of the face value and $2,408 of accrued interest and fees into 88,500,000 shares of common stock at an average conversion price of $0.00133. As of September 30, 2020, the outstanding principal balance of this note is $433.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a convertible note issued by the Company on November 27, 2019, with a maturity date of November 27, 2020, and purchased by an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement on May 15, 2020. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. As of September 30, 2020, and July 10, 2020, the outstanding principal balance of assigned note was $296.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 15% convertible promissory note issued by the Company on May 28, 2020, (the “Issuance Date”) to an investor, pursuant to a Securities Purchase Agreement. This note matures on May 28, 2021 and is convertible into shares of common stock at a conversion price equal to 50% of the lowest traded price for the twenty-five prior trading days including the day upon which a conversion notice is received by the Company. As of July 10, 2020, the outstanding principal balance of this note was $30,000 with a carrying value of $3,250, net of unamortized discounts of $26,750. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $6,750 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $30,000 with a carrying value of $10,000, net of unamortized discounts of $20,000.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a past-due convertible note issued by the Company on May 29, 2019, with a maturity date of May 29, 2020, and purchased by an investor (the “Purchaser”) pursuant to a Debt Purchase Agreement on May 28, 2020. This note, as amended, is convertible into common stock at a conversion price equal to a 70% discount to the lowest closing prices of the common stock for thirty prior trading days including the day upon which a notice of conversion is received. As of July 10, 2020, the outstanding principal balance of assigned note was $31,043. For the period from July 11, 2020 to September 30, 2020, the investor converted a total of $31,043 of the face value and $53,337 of accrued interest and fees into 86,262,262 shares of common stock at an average conversion price of $0.001. As of September 30, 2020, the note balance is $-0-.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 12% convertible promissory note issued by the Company on June 1, 2020, (the “Issuance Date”) to an investor, pursuant to a Securities Purchase Agreement. This note matures 6 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at $0.025 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) $.025 or 50% of the lowest trading price for the thirty-five trading days prior to the conversion. As of July 10, 2020, the outstanding principal balance of this note was $127,500 with a carrying value of $27,625, net of unamortized discounts of $99,875. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $57,375 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $127,500 with a carrying value of $85,000, net of unamortized discounts of $42,500. In conjunction with this note, the Company issued a warrant to purchase 6,375,000 shares of common stock at an exercise price of $0.02, subject to adjustments and expiring on the five-year anniversary of the Issuance Date.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 12% convertible promissory note issued by the Company on June 11, 2020, (the “Issuance Date”) to an investor, pursuant to a Securities Purchase Agreement. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 58% multiplied by the lowest closing bid price during the twenty- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. As of July 10, 2020, the outstanding principal balance of this note was $53,000 with a carrying value of $4,417, net of unamortized discounts of $48,583. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $11,792 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $53,000 with a carrying value of $16,209, net of unamortized discounts of $36,791.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 15% convertible promissory note issued by the Company on June 30, 2020, (the “Issuance Date”) to an investor, pursuant to a Securities Purchase Agreement. This note matures 6 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at $0.025 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) $.025 or 50% of the lowest trading price for the thirty-five trading days prior to the conversion. As of July 10, 2020, the outstanding principal balance of this note was $129,500 with a carrying value of $8,375, net of unamortized discounts of $121,125. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $ was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $129,500 with a carrying value of $65,750, net of unamortized discounts of $63,750. In conjunction with this note, the Company issued a warrant to purchase 6,375,000 shares of common stock at an exercise price of $0.02, subject to adjustments and expiring on the five-year anniversary of the Issuance Date.

On July 10, 2020, PCTI (the accounting acquirer) assumed the balance of a 15% convertible promissory note issued by the Company on July 8, 2020, (the “Issuance Date”) to an investor, pursuant to a Securities Purchase Agreement. This note matures 6 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at $0.025 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) $.025 or 50% of the lowest trading price for the thirty-five trading days prior to the conversion. As of July 10, 2020, the outstanding principal balance of this note was $250,000 with a carrying value of $-0-, net of unamortized discounts of $250,000. For the period from July 11, 2020 to September 30, 2020, amortization of the debt discounts of $114,583 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note is $250,000 with a carrying value of $114,583, net of unamortized discounts of $135,417. In conjunction with this note, the Company issued a warrant to purchase 12,500,000 shares of common stock at an exercise price of $0.02, subject to adjustments and expiring on the five-year anniversary of the Issuance Date.

On February 26, 2020, (the “Issuance Date”) PCTI issued a 12% Convertible Promissory Note (the “Note”), in the principal amount of $106,950, to an investor. This note matures 12 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at 55% of the lowest trading price for the twenty-five trading days prior to the conversion. If the trading price cannot be calculated for such security on such date, the trading price shall be the fair market value as mutually determined by the Company and the investor for which the calculation of the trading price is required in order to determine the conversion price. PCTI received proceeds of $85,000 on February 26, 2020, and the Note included an original issue discount of $13,950 and lender costs of $8,000. This note proceeds will be used by the Company for general working capital purposes. The Note also requires a daily payment via ACH of $400. On June 25, 2020, the Note was amended to add $111,225 of additional principal to the outstanding balance. Pursuant to the PCTI transaction with Ozop, on July 10, 2020, the conversion price is equal to 45% multiplied by the lowest closing bid price during the twenty-five-trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. Accordingly, the Company determined the conversion feature of the Notes represented an embedded derivative since the note is convertible into a variable number of shares upon conversion, as the note was not considered to be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability. The embedded feature included in the note resulted in an initial debt discount of $85,000, interest expense of $135,786 and initial derivative liability of $220,786. For the nine months ended September 30, 2020, amortization of the debt discounts of $54,793 was charged to interest expense. For the nine months ended September 30, 2020, principal payments of $56,400 were paid. As of September 30, 2020, the outstanding principal balance of this note was $161,775 with a carrying value of $116,935, net of unamortized discounts of $44,840.

On July 15, 2020, (the “Issuance Date”) the Company issued a 15% convertible promissory note, in the principal amount of $127,500, to an investor. This note matures 6 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at $0.011 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) $.025 or 50% of the lowest trading price for the thirty-five trading days prior to the conversion. The Company received proceeds of $102,000 on July 22, 2020, and this note included an original issue discount of $25,500. This note proceeds will be used by the Company for general working capital purposes. In conjunction with this note, the Company issued a warrant to purchase 6,375,000 shares of common stock at an exercise price of $0.02, subject to adjustments and expiring on the five-year anniversary of the Issuance Date. The Company allocated the proceeds to the debt of $82,068 and to the warrant $19,932 based on the relative fair value. The embedded conversion feature included in this note resulted in an initial derivative liability of $207,699, a debt discount of $82,068 with the excess of $125,541 charged to interest expense of $125,541. For the nine months ended September 30, 2020, amortization of the debt discounts of $53,125 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note was $127,500 with a carrying value of $53,125, net of unamortized discounts of $74,375.

On July 29, 2020, (the “Issuance Date”) the Company issued a 15% convertible promissory note, in the principal amount of $127,500, to an investor. This note matures 6 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at $0.011 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) $.025 or 50% of the lowest trading price for the thirty-five trading days prior to the conversion. The Company received proceeds of $100,000 on August 3, 2020, and this note included an original issue discount of $25,500. This note proceeds will be used by the Company for general working capital purposes. In conjunction with this note, the Company issued a warrant to purchase 12,750,000 shares of common stock at an exercise price of $0.01, subject to adjustments and expiring on the five-year anniversary of the Issuance Date. The Company allocated the proceeds to the debt $61,733 and warrant $40,267 based on the relative fair value. The embedded conversion feature included in this note resulted in an initial derivative liability of $198,239, a debt discount of $61,733 with the excess of $136,506 charged to interest expense. For the nine months ended September 30, 2020, amortization of the debt discounts of $42,500 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note was $127,500 with a carrying value of $42,500, net of unamortized discounts of $85,000.

A summary of the convertible note balance as of ~~March 31,~~September 30, 2020, ~~and December 31, 2019,~~ is as follows:

The Company determined the conversion feature of ~~this~~the convertible notes, which all contain a variable conversion ~~rate,~~rates, represented an embedded derivative since the notes were convertible into a variable number of shares upon conversion. Accordingly, the notes are not considered to be conventional debt under ASC 815 and the embedded conversion feature was bifurcated from the debt host and accounted for as a derivative liability.

The Company valued the derivative liabilities at ~~March 31,~~September 30, 2020, ~~and December 31, 2019,~~ at ~~$6,534,591 and $2,462,490, respectively.~~$2,250,953. The Company used the Monte Carlo simulation valuation model with the following assumptions as of ~~March 31,~~September 30, 2020, risk free interest rates ~~from 0.15% to 0.17%~~at 0.11%, and volatility of ~~67%~~85% to ~~75% and as of December 31, 2019, risk-free interest rates from 1.57% to 1.77% and volatility of 31% to 36%~~94%. The initial derivative liabilities for convertible notes issued ~~during the three months ended March 31,~~from July 11, 2020 to September 30, 2020, used the following assumptions; risk-free interest rates from 0.12% to ~~1.57%~~0.17% and volatility of ~~36%~~96% to ~~70%~~106%.

A summary of the activity related to derivative liabilities for the ~~three months ended March 31,~~period from July 10, 2020 ~~and the year ended December 31, 2019,~~to September 30, 2020, is as follows:

On ~~February~~October 26, 2016, PCTI entered into a $210,000 note payable with a bank. On July 24, 2020, due to defaults with the terms of the note, the note was amended with the outstanding balance due December 26, 2020 and the ~~Company~~interest rate changed to 7.75%. Borrowings are collateralized by substantially all of the assets of PCTI and ~~this noteholder agreed to convert $330,033~~the personal guarantee of ~~principal~~PCTI’s President. At September 30, 2020 and December 31, 2019, $150,646 and $174,444, respectively, was outstanding on the note ~~balances to a 12% convertible~~payable.

On September 25, 2019, PCTI renewed their $350,000 promissory note with a bank that provides for borrowings of up to $350,000. Interest is due monthly and the principal was due on April 12, 2020, however, on July 24, 2020, due to PCTI being in default with agreement was amended with a change in the maturity date to December 26, 2020, and the interest rate changed to the prime rate plus 3.25% (6.5% at September 30, 2020). Borrowings are collateralized by substantially all of the assets of PCTI and the personal guarantee of PCTI’s President. At September 30, 2020 and December 31, 2019, $347,588 and $349,962, respectively, was outstanding on the promissory note.

On August 24, 2020 (the “Issue Date”), the Company entered into a 12%, $750,000 face value promissory note with a third-party (the “Holder”) due August 24, 2021 (the “Maturity Date”). Principal payments shall be made in six instalments of ~~$330,000 (see~~$125,000 commencing 180 days from the Issue Date and continuing each 30 days thereafter for 5 months and the final payment of principal and interest due on the Maturity Date. The Holder shall have the right from time to time, and at any time following an event of default, as defined on the agreement, to convert all or any part of the outstanding and unpaid principal, interest and any other amounts due into fully paid and non-assessable shares of common stock of the Company, at the lower of i) the Trading Price (as defined in the agreement) during the previous five trading days prior to the Issuance Date or ii) the volume weighted average price during the five trading days ending on the day preceding the conversion date. The Company received proceeds of $663,000 on August 25, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $87,000. For the nine months ended September 30, 2020, amortization of the costs of $9,063 was charged to interest expense. In conjunction with this Note, ~~5).~~the Company issued 2 common stock purchase warrants; each warrant entitles the Holder to purchase 122,950,819 shares of common stock at an exercise price of $0.0061, subject to adjustments and expires on the five-year anniversary of the Issue Date. The warrants issued resulted in a debt discount of $471,307, with the offset to additional paid in capital. For the nine months ended September 30, 2020, amortization of the debt discount of $49,094 was charged to interest expense. As of September 30, 2020, the outstanding principal balance of this note was $750,000 with a carrying value of $249,839, net of unamortized discounts of $500,151.

On April 20, 2020, PCTI was granted a loan from a bank in the amount of $100,400, pursuant to the Paycheck Protection Program (“PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The loan matures on April 20, 2022 and bears interest at a rate of 1.0% per annum, payable monthly beginning on November 20, 2020. The loan may be prepaid at any time prior to maturity with no prepayment penalties. Under the terms of the loan, a portion or all of the loan is forgivable to the extent the loan proceeds are used to fund qualifying payroll, rent and utilities during a designated twenty-four-week period. Payments are deferred until the SBA determines the amount to be forgiven. The Company intends to utilize the proceeds of the PPP loan in a manner which will enable qualification as a forgivable loan. However, no assurance can be provided that all or any portion of the PPP loan will be forgiven. The balance on this PPP loan was $10,400 as of September 30, 2020 and has been classified as a long-term liability in notes payable.

On July 14, 2020, PCTI received $10,000 grant under the Economic Injury Disaster Loan (“EIDL”) program. Up to $10,000 of the EIDL can be forgiven as long as such funds were utilized to provide working capital. The first payment due is deferred one year. The entirety of the loan as of September 30, 2020 and has been classified as a long-term liability in notes payable.

The following notes were assumed on July 10, 2020, pursuant to the PCTI transaction:

On June 23, 2020 (the “Execution Date”), the Company entered into a Loan and Securities Purchase Agreement with a third- party (the “Lender”). Pursuant to the agreement in exchange for a $210,000 Promissory Note, inclusive of an original issue discount of $35,000 the Company received proceeds of $175,000 from the Lender. The note carries an interest rate of 18% and matures and is due in one lump sum on the 24- month anniversary (the “Maturity Date”) of the Execution Date. For the first nine months interest may accrue on a monthly basis, and the Company has the option to pay the monthly interest or add such interest to the principal balance of the note. Commencing on the tenth month of the note, all accrued interest, if any, shall be added to the principal amount of the note, and interest on the new principal amount shall become due and payable on a monthly basis. Should the Company default on making any interest payments following the initial nine-months, or paying the note by the Maturity Date, the note shall automatically be converted into an 18% convertible debenture.

On June 25, 2020 (the “Issue Date”), the Company entered into a 12%, $203,000 face value promissory note with a third-party (the “Holder”) due June 25, 2021 (the “Maturity Date”). Principal payments shall be made in six instalments of $33,333 commencing 180 days from the Issue Date and continuing each 30 days thereafter for 5 months and the final payment of principal and interest due on the Maturity Date. The Holder shall have the right from time to time, and at any time following an event of default, as defined on the agreement, to convert all or any part of the outstanding and unpaid principal, interest and any other amounts due into fully paid and non-assessable shares of common stock of the Company, at the lower of i) the Trading Price (as defined in the agreement) during the previous five trading days prior to the Issuance Date or ii) the volume weighted average price during the five trading days ending on the day preceding the conversion date. The Company received proceeds of $176,000 on June 26, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $27,000. In conjunction with this Note, the Company issued 2 common stock purchase warrants; each warrant entitles the Holder to purchase 10,000,000 shares of common stock at an exercise price of $0.02, subject to adjustments and expires on the five-year anniversary of the Issue Date.

On September 2, 2020, PCTI entered into an Agreement (the “Agreement”) with a third- party. Pursuant to the terms of the Agreement, in exchange for $750,000, PCTI agreed to pay the third-party a perpetual three percent (3%) payment of revenues, as defined in the Agreement. Payments are due ninety (90) days after each calendar quarter, with the first payment due on or before March 31, 2021, for revenues for the quarter ending December 31, 2020. The Company has recorded the $750,000 as deferred liability on the September 30, 2020, consolidated condensed balance sheet.

On July 10, 2020, pursuant to the PCTI transaction, the Company assumed an employment contract entered into on February 28, 2020, between the Company and Mr. Conway ~~entered into an employment agreement~~ (the “Employment Agreement”). Pursuant to the terms of the Employment Agreement, Mr. Conway is to receive an annual salary of $120,000, for his position of CEO of the Company, payable monthly. Mr. Conway was ~~also~~ issued 2,500 shares of Series C Preferred Stock. The Company valued the shares at $5,000. On August 28, 2020, Mr. Conway was issued 1,333 shares of Series D Preferred stock and 500 shares of series E Preferred Stock. The Series D Preferred Stock is convertible in the aggregate into three times the number of shares of common stock outstanding at the time of conversion. Mr. Conway owns 6.67% of the issued and outstanding Series D Preferred Stock, and based on the 3,107,037,634 shares outstanding on August 28, 2020, Mr. Conway’s Preferred Stock is convertible into 621,253,401 shares of common stock. Based on the share price of the common stock on that date of $0.0065, the shares were valued at $4,286,648 and recognized as compensation on the accompanying unaudited condensed consolidated Statement of Comprehensive Loss.

For the three and nine months ended ~~March 31,~~September 30, 2020, and 2019, the Company recorded expenses to its officers in the following amounts:

As of ~~March 31,~~September 30, 2020, and December 31, 2019, included in ~~accounts payable and accrued expenses,~~ related party payable is ~~$456,185~~$10,308 and ~~$470,886,~~$27,909, respectively, for the ~~following~~ amounts owed the ~~Company’s former officers for accrued fees, accounts payable and loans made. The loans have no terms~~CEO of ~~repayment.~~

~~(1)The former CEO, parent resigned February 28, 2020, pursuant to the LOI with~~ PCTI.

~~(3) The Former COO and CCO resigned from those positions on October 1, 2018, and March 4, 2019, respectively.~~

~~(5) The former CFO resigned effective February 28, 2020, pursuant to the LOI with PCTI.~~

~~On February 9, 2018, the Company recorded a stock subscription receivable from its officers and directors of $7,600 related to the issuance of 7,600,000 shares of common stock.~~

On October 25, 2019 PCTI executed a non-cancellable lease of office and industrial space totaling 11,800 square feet in Zelienople, PA., which began December 1, 2019 and expires on November 30, 2022. The lease terms include a monthly rent of $7,000 (see Note 12). The Company also pays $3,400 on a month to month basis for its corporate office in Warwick, New York.

On February 1, 2018, Spinus entered into an Intellectual Property Licensing Agreement (the “Licensing Agreement”). The Company assumed the obligations under the Licensing Agreement and pledged the assets of Spinus as security. Pursuant to the terms of the Licensing Agreement, in consideration of $250,000 Spinus has the exclusive rights to certain patents and the non-exclusive rights to other patents. The patents surround mechanical or inflatable expandable interbody implant products. The Company paid the $250,000 on November 20, 2018. The Company also will pay a royalty of 7% of net sales on any product sold utilizing any of the patents. There have not been any sales of the licensed products and accordingly, no royalties have been incurred.

On March 4, 2019, the Company entered into a Separation Agreement (the “Separation Agreement”) with Salman J. Chaudhry, pursuant to which Mr. Chaudry resigned immediately from his positions as the CCO and Secretary of the Company and as a member of the Board and from all positions with the Company effective immediately and pursuant to which the Company agreed to pay Mr. Chaudry $227,200 (the “Outstanding Fees”) in certain increments as set forth in the Separation Agreement. ~~Mr. Chaudry’s resignation wasnot the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.~~ As of ~~March 31,~~September 30, 2020, and December 31, 2019, the balance owed Mr. Chaudhry is $162,085.

On ~~March 24, 2019,~~July 10, 2020, PCTI assumed a contract entered into by the Company on June 5, 2020, for media relations services with a third-party. Pursuant to the Agreement, the Company will pay the consultants $10,000 per month for the development and ~~Newbridge Securities Corporation (“Newbridge”)~~execution of a comprehensive media relations plan.

On July 24, 2020, PCTI, the Company’s wholly owned subsidiary, entered into ~~an Investment Banking Engagement Agreement (the “Agreement”). Under~~a three- month consulting agreement with a third-party. Pursuant to the ~~terms of~~agreement, the ~~Agreement, Newbridge~~Company will pay the consultant $10,000 per month and the consultant will provide ~~investment banking and financial advisory~~ services, ~~to the Company,~~ including, but not limited to, ~~assisting~~identifying PCTI’s best path forward into the ~~Company with an up-listing process to a national exchange~~renewable energy and energy storage industries as well as advance their presence in the United States, introducing the Company to other investment banking firms focused on servicing emerging growth companies; rendering advice related to capital structures, capital market opportunities, evaluating potential capital raise transactions and assisting the Company to develop growth optimization strategies. The term of the Agreement is 12 months from the date of the Agreement, however either party may terminate the Agreement anytime upon 15 days written notice. As compensation for its services under the Agreement, Newbridge and its assignees received 172 shares of the Company’s common stock. The Agreement contains customary terms relating to payment of expenses, indemnification and other matters. The Agreement also includes customary representations, warranties and covenants by the Company. The Company valued the shares at $77,130, based on the market price of the common stock on the date of the agreement, to be amortized over the one-year term of the contract. For the three months ended March 31, 2020, the Company amortized $17,783 as stock-based compensation expense. As of March 31, 2020, the expense has been fully recognized.

On September 2, 2019, the Company entered Consulting Agreement (the “Agreement”) with a consultant to act as the Company’s Executive Vice President, Sales and Marketing (the “EVP”) through December 31, 2019, and to provide the Company with customary services of an EVP. The Company has agreed to compensate the consultant $10,000 per month. Either party may terminate the Agreement in its sole and absolute discretion. The parties have agreed that they will negotiate follow up agreement with terms and conditions to include salary, commission, bonuses and stock and or option grants or awards, to be consistent with industry standards for like size companies prior to the termination of the Agreement. For the year ended December 31, 2019, the Company has expensed $30,000. As of March 31, 2020, and December 31, 2019, the Company owes the EVP $10,000, included in liabilities of discontinued operations.

On September 3, 2019, the Company entered into an Investor Relations Agreement (the “Agreement”) with a consultant. Under the terms of the Agreement, the consultant will provide consulting services to the Company, including, but not limited to assisting the Company in the conception and implementation of the Company’s corporate and business development plan. The term of the Agreement is 6 months from the date of the Agreement. As compensation for its services under the Agreement, the consultant received 1,250 shares of the Company’s common stock. The Agreement contains customary terms relating to payment of expenses, indemnification and other matters. The Agreement also includes customary representations, warranties and covenants by the Company. The Company valued the shares at $46,875, based on the market price of the common stock on the date of the agreement, to be amortized over the term of the contract. For the three months ended March 31, 2020, the Company amortized $15,625 as stock-based compensation expense. As of March 31, 2020, the expense has been fully recognized.maritime/transportation industry.

On ~~September 3, 2019, the Company~~July 29, 2020, PCTI entered into a ~~Consulting~~three-month Performance Solutions Agreement (the “PSA”), with automatic monthly renewals, until terminated either arty on a thirty (30) day written notice to the other party. Pursuant to the PSA, the Company will pay a monthly fee of $5,000 for services including social media and search engine optimization.

On September 2, 2020, PCTI entered into an Agreement (the “Agreement”) with a ~~consultant. Under~~third- party. Pursuant to the terms of the Agreement, in exchange for $750,000, PCTI agreed to pay the ~~consultant will provide consulting services to the Company, including, but not limited to assisting the Company~~third-party a perpetual three percent (3%) payment of revenues, as defined in ~~its general strategy for corporate communications. The term of~~ the Agreement is 6 months from the date of the Agreement. As compensation for its services under the Agreement, the consultant received 1,250 shares of the Company’s common stock. The Agreement contains customary terms relating to payment of expenses, indemnification and other matters. The Agreement also includes customary representations, warranties and covenants by the Company. The Company valued the shares at $46,875, based on the market price of the common stock on the date of the agreement, to be amortized over the term of the contract. For the three months ended March 31, 2020, the Company amortized $15,625 as stock-based compensation expense. As of March 31, 2020, the expense has been fully recognized.(see Note 7).

The Company was incorporated in the United States and has operations in two tax jurisdictions - the United States and Hong Kong. The Company’s HK subsidiary is subject to a 16.5% profit tax based on its taxable net profit. The Company’s U.S. operations are subject to income tax according to U.S. tax law.

~~A reconciliation of the provision for income taxes determined at the U.S. statutory rate to the Company’s effective income tax rate is as follows:~~

As of March 31, 2020, the Company has approximately $4,618,000 and $595,000 net operating loss carryforwards available in the United States and Hong Kong, respectively, to reduce future taxable income. The net operating loss from Hong Kong operations can be carried forward with no time limit from the year of the initial loss pursuant to relevant Hong Kong tax laws and regulations.For U.S. purposes the NOL deduction for a tax year is equal to the lesser of (1) the aggregate of the NOL carryovers to such year, plus the NOL carry-backs to such year, or (2) 80% of taxable income (determined without regard to the deduction). Generally, NOLs can no longer be carried back but are allowed to be carried forward indefinitely. The special extended carryback provisions are generally repealed, except for certain farming and insurance company losses. The amendments incorporating the 80% limitation apply to losses arising in tax years beginning after Dec. 31, 2017.It is more likely than not that the deferred tax assets cannot be utilized in the future because there will not be significant future earnings from the entity which generated the net operating loss. Therefore, the Company recorded a full valuation allowance on its deferred tax assets.

As of March 31, 2020, and December 31, 2019, the Company has no material unrecognized tax benefits which would favorably affect the effective income tax rate in future periods, and does not believe that there will be any significant increases or decreases of unrecognized tax benefits within the next twelve months. No interest or penalties relating to income tax matters have been imposed on the Company during the three months ended March 31, 2020, and 2019, and no provision for interest and penalties is deemed necessary as of March 31, 2020, and 2019.

Since the Company’s foreign subsidiaries have not generated income since inception, the Company believes that Tax Act will not have significant impact on the Company’s consolidated financial statements.

On January 21, 2020, the Company filed an amendment to its Certificate of Incorporation, with the Nevada Secretary of State, for 1-for-1,000 reverse stock split of our common stock (the “Reverse Stock Split”) effective February 10, 2020. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of one- thousand and no fractional shares were issued. All historical share in this report have been adjusted to reflect the Reverse Stock Split. There were no changes to the authorized number of shares and the par value of our common stock.

~~On July 5, 2019, the Company entered into an~~~~Equity Financing Agreement~~ (the “Equity Agreement”) with GHS Investments, LLC, a Nevada limited liability company (the “Investor”), with the Investor committing to purchase up to $7,000,000 of the Company’s common stock in tranches of up to $400,000, following an effective registration of the shares and subject to restrictions regarding the timing of each sale and total percentage stock ownership held by the Investor. The purchase price for the shares will be 85% of the lowest closing price during the 10-day period prior to each sale, and with each sale, the Investor will receive an issuance premium of 5% to cover the Investor’s transaction costs associated with selling the shares and payable by the Company to the Investor in registered shares. The obligation of the Investor to purchase shares pursuant to the Equity Agreement is subject to several conditions, including (i) that the Company has filed a registration statement (the “Registration Statement”) with the United States Securities and Exchange Commission (the “SEC”) registering the shares to be sold to the Investor within 30 calendar days from the date of the Equity Agreement, with the Registration Statement being declared effective prior to sale of any shares to the Investor; and (ii) that the purchase of shares by the Investor pursuant to the Equity Agreement shall not cause the Investor to own more than 4.99% of the outstanding shares of the Company’s common stock.

~~In connection with the Equity Agreement, on July 5, 2019, the Company also entered into a~~~~Registration Rights Agreement~~ ~~with the Investor (the “Registration Rights Agreement”). On October 1, 2019, the SEC issued a Notice of Effectiveness of the Company’s Registration Statement.~~

During the ~~three months ended March 31,~~period from July 11, 2020 to September 30, 2020, holders of an aggregate of ~~$105,947~~$1,585,937 in principal and ~~$75,373~~$259,418 of accrued interest and fees of convertible notes issued by the Company and assumed by PCTI on July 10, 2020, converted their debt into ~~4,939,400~~1,181,993,984 shares of our common stock at an average conversion price of ~~$0.0367~~$0.0016 per share. The Company also issued 106,528,473 shares of common stock upon the cashless exercise of common stock purchase warrants.

As of ~~March 31,~~September 30, 2020, the Company has 4,990,000,000 shares of $0.001 par value common stock authorized and there are ~~5,158,493~~3,140,453,186 shares of common stock issued and outstanding.

For the year ended December 31, 2019, the Company recorded 1,350 shares of common stock to be issued, and valued the shares at $410,370, based on the market price of the common stock on the date of the shares being earned. For the year ended December 31, 2019, the company amortized $410,370 as stock-based compensation expense. As of March 31, 2020, and December 31, 2019, there are 1,350 shares of common stock to be issued.

As of ~~March 31,~~September 30, 2020, 10,000,000 shares have been authorized as preferred stock, par value $0.001 (the “Preferred Stock”), which such Preferred Stock shall be issuable in such series, and with such designations, rights and preferences as the Board of Directors may determine from time to time.

On March 28, 2019, the Company filed a Certificate of Designation with the Secretary of State of Nevada to designate 1,000,000 shares as Series B Preferred Stock. The Series B Preferred Stock is not convertible into common stock, nor does the Series B Preferred Stock have any right to dividends and any liquidation preference. The Series B Preferred Stock entitles its holder to a number of votes per share equal to 50 votes. On April 1, 2019, the Company issued 1,000,000 shares of Series B Preferred Stock to the Company’s CEO at the time. This resulted in a change in control of the Company.

On September 18, 2019, the Company filed a Certificate of Designation with the Secretary of State of Nevada to designate 50,000 shares as Series C Preferred Stock. Each share of Series C Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance, into one share of fully paid and non-assessable share of common stock. Each share of Series C Preferred Stock shall entitle the holder thereof to ten thousand (10,000) votes on all matters submitted to a vote of the stockholders of the Company.

On September 19, 2019, the Company issued 50,000 shares of its Series C Preferred Stock to the Company’s CEO and Director, at the time, in consideration of the cancellation and return of 1,000,000 shares of the Company’s Series B Preferred Stock.On September 20, 2019, the Company filed a Certificate of Withdrawal of Certificate of Designation (the “Certificate of Withdrawal”) for the Company’s Series B Preferred Stock, pursuant to which the prior designation of the Company’s Series B Stock was cancelled. As of March 31, 2020, and December 31, 2019, there are 50,000 shares of Series C Preferred Stock outstanding and no shares of Series B Preferred Stock outstanding.

~~On February 4,~~July 7, 2020, the Company filed an Amended and Restated Certificate of Designation with the State of Nevada of the Company’s Series C Preferred Stock. Under the terms of the Amendment to Certificate of Designation of Series C Preferred Stock, 50,000 shares of the Company’s preferred remain designated as Series C Preferred Stock. The ~~voting~~holders of Series C Preferred Stock have no conversion rights ~~associated with~~and no dividend rights. For so long as any shares of the Series C Preferred Stock ~~were amended whereby each share of Series C Preferred Stock~~remain issued and outstanding, the Holder thereof, voting separately as a class, shall ~~entitle~~have the ~~holder thereof to have voting rights equal to two times the sum of all the number of shares of other classes of Company capital stock eligible~~right to vote on all shareholder matters ~~submitted~~equal to ~~a vote~~sixty-seven (67%) percent of the ~~stockholders of~~total vote. On July 10, 2020, pursuant to the SPA with PCTI, the Company ~~divided by the number~~issued 47,500 shares of Series C preferred Stock to Chis. As of September 30, 2020, there were 50,000 shares of Series D Preferred Stock issued and outstanding, ~~at the time~~ of ~~voting.~~which 2,500 are issued to Mr. Conway.

On ~~February 28,~~July 7, 2020, the Company filed a Certificate of Designation with the State of Nevada of the Company’s Series D Preferred Stock. Under the terms of the Certificate of Designation of Series D Preferred Stock, 20,000 shares of the Company’s preferred stock have been designated as Series D Convertible Preferred Stock. The holders of the Series D Convertible Preferred Stock shall not be entitled to receive dividends. The holders as a group may, at any time convert all of the shares of Series D Convertible Preferred Stock into a number of fully paid and nonassessable shares of common stock determined by multiplying the number of issued and outstanding shares of common stock of the Company on the date of conversion, by 3. Except as provided in the Certificate of Designation or as otherwise required by law, no holder of the Series D Convertible Preferred Stock shall be entitled to vote on any matter submitted to the shareholders of the Company for their vote, waiver, release or other action. The Series D Convertible Preferred Stock shall not bear any liquidation rights. On July 10, 2020, pursuant to ~~a share redemption agreement between~~the SPA with PCTI, the Company ~~and Mr. Chermak pursuant to which, the Company agreed to redeem his 50,000~~issued 18,667 shares of Series ~~C Preferred~~D preferred Stock ~~for $100,000, ($2 per share),~~to Chis, and on August 28, 2020. Pursuant to Mr. Conway’s employment agreement, the Company ~~redeemed 2,500 shares of series C Preferred Stock from Mr. Chermak, and~~ issued ~~2,500~~1,333 shares of Series CD Preferred Stock to Mr. ~~Conway,~~Conway. As of September 30, 2020, there were 20,000 shares of Series D Preferred Stock issued and outstanding.

On July 7, 2020, the Company filed a Certificate of Designation with the State of Nevada of the Company’s Series E Preferred Stock. Under the terms of the Certificate of Designation of Series E Preferred Stock, 3,000 shares of the Company’s preferred stock have been designated as Series E Preferred Stock. The holders of the Series E Convertible Preferred Stock shall not be entitled to receive dividends. No holder of the Series E Preferred Stock shall be entitled to vote on any matter submitted to the shareholders of the Corporation for their vote, waiver, release or other action, except as may be otherwise expressly required by law. At any time, the Corporation may redeem for cash out of funds legally available therefor, any or all of the outstanding Preferred Stock (“Optional Redemption”) at $1,000 (one thousand dollars) per share. The shares of Series E Preferred Stock have not been registered under the Securities Act of 1933 or the laws of any state of the United States and may not be transferred without such registration or an exemption from registration. On July 10, 2020, pursuant to the SPA with PCTI, the Company issued 500 shares of Series E preferred Stock to Chis, and on August 28, 2020. Pursuant to Mr. Conway’s employment ~~agreement. The~~agreement, the Company ~~valued the 2,500~~issued 500 shares ~~issued~~of Series E Preferred Stock to Mr. ~~Conway at $5,000 ($2 per share).~~

~~On February 9, 2018, the Company recorded a stock subscription receivable from its officers and directors~~Conway. As of ~~$7,600 related to the issuance of 7,600~~September 30, 2020, there were 1,000 shares of ~~common stock.~~Series E Preferred Stock issued and outstanding.

NOTE 12 ~~– DISCONTINUED OPERATIONS~~- OPERATING LEASE RIGHT-OF-USE ASSETS AND OPERATING LEASE LIABILITIES

~~ASC 205-20 “Discontinued Operations” establishes that the disposal or abandonment of~~On October 25, 2019 PCTI executed a ~~component of an entity or a group of components of an entity should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect~~non-cancellable lease for office and industrial space which began December 1, 2019 and expires on an entity’s operations and financial results. As a result, the component’s results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. Accordingly, theNovember 30, 2022. Operating lease right-of-use assets and liabilities are recognized at the present value of ~~this component are separately reported~~the future lease payments at the lease commencement date. The interest rate used to determine the present value is our incremental borrowing rate, estimated to be 7.5%, as ~~“assets~~the interest rate implicit in most of our leases is not readily determinable. Prior to July 10, 2020, PCTI recorded monthly lease expense pursuant to the lease agreement and liabilities held for disposal” as of December 31, 2019. The results of operations of this component, for all periods, are separately reported as “discontinued operations”. There have been no transactions betweeneffective July 10, 2020, pursuant to the PCTI transaction, operating lease expense is recognized pursuant to ASC Topic 842. Leases (Topic 842) over the lease term. During the three and nine months ended September 30, 2020, the Company recorded $21,278 and ~~SRI since~~$63,278, respectively, and $21,125 and $63,375 for the ~~termination.~~three and nine months ended September 30, 2019, respectively, for this lease.

In adopting Topic 842, the Company has elected the ‘package of practical expedients’, which permit it not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company did not elect the use-of-hindsight or the practical expedient pertaining to land easements; the latter is not applicable to the Company. In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. During the nine months ended September 30, 2019, upon adoption of ASC Topic 842, the Company recorded right-of-use assets and lease liabilities of $185,139.

A reconciliation of the major classes of line items constituting the gain from discontinued operations, net of income taxes as is presented in the Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2020,Right-of- use assets are summarized ~~below; there was no activity of the SRI business for the three months ended March 31, 2019.~~below:

~~Liabilities of discontinued operations at March 31, 2020, of $75,270 consist of accounts payable and accrued expenses related to SRI.~~Operating lease liabilities are summarized as follows:

Maturity of ~~carrying amounts of major classes of assets and~~lease liabilities ~~of the Company classified~~are as ~~discontinued operations in the condensed consolidated balance sheet at December 31, 2019:~~follows:

From ~~April~~October 1, 2020, through ~~June 30,~~November 20, 2020, the Company has issued ~~1,416,298,485~~123,357,984 shares of common stock upon the conversion of ~~$3,261,774~~$293,449 of principal, accrued interest and fees of convertible notes. ~~The Company also issued 67,606,186 shares of common stock upon the cashless exercise of warrants.~~

On ~~April 27,~~October 8, 2020, the Company, ~~issued~~through its wholly owned subsidiary, PCTI entered into a ~~15% convertible redeemable note~~Consortium Agreement (the “Consortium Agreement”) with Sterling PBES Energy Solution Ltd. (“SPBES”). Under the terms of the Consortium Agreement, PCTI shall offer proposal, execution and service of contracts to supply agreed upon product solutions on behalf of SPBES in the ~~principal amount of $60,000. This note matures on April 27,2021~~following markets: Marine Industrial Charging Sub-Stations, North America, Europe, the Middle East and ~~is convertible into shares of common stock at a conversion price equal to 50%~~North Africa, Southeast Asia, South East Asia, South America and Australasia. SPBES shall be responsible for the project management of the ~~lowest traded price~~product solutions.

On October 29, 2020, the Company formed a new wholly owned subsidiary, Ozop Surgical Name Change Subsidiary, Inc., a Nevada corporation (“Merger Sub”). The Merger Sub was formed under the Nevada Revised Statutes for the ~~twenty-five prior trading days including~~sole purpose and effect of changing the Company’s name to “Ozop Energy Solutions, Inc.” That same day ~~upon~~the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with the Merger Sub and filed Articles of Merger (the “Articles of Merger”) with the Nevada Secretary of State, merging the Merger Sub into the Company, which ~~a conversion notice is received~~were stamped effective as of November 3, 2020. As permitted by the ~~Company.~~Section 92.A.180 of the Nevada Revised Statutes, the sole purpose and effect of the filing of Articles of Merger was to change the name of the Company to “Ozop Energy Solutions, Inc.”

On November 13, 2020 (the “Issue Date”), the Company entered into a 12%, $1,000,000 face value promissory note with a third-party (the “Holder”) due November 13, 2021 (the “Maturity Date”). Principal payments shall be made in six instalments of $166,667 commencing 180 days from the Issue Date and continuing each 30 days thereafter for 5 months and the final payment of principal and interest due on the Maturity Date. The Company received proceeds of ~~$50,000~~$890,000 on ~~April 27, 2020, and this note included an original issue discount of $10,000. This note proceeds will be used by the Company for general working capital purposes.~~

On April 28, 2020, the Company issued a 12% convertible promissory note, (the “Note”) in the principal amount of $53,000, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 58% multiplied by the lowest closing bid price during the 20- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. The Company received proceeds of $50,000 (including direct payments from the lender to certain Company vendors) on May 4,November 20, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of ~~$3,000. This note proceeds will be used by~~$110,000. In conjunction with this Note, the Company ~~for general working capital purposes.~~issued 2 common stock purchase warrants; each warrant entitles the Holder to purchase 125,000,000 shares of common stock at an exercise price of $0.008, subject to adjustments and expires on the five-year anniversary of the Issue Date.

On May 4, 2020, the Company issued a 12% convertible promissory note, (the “Note”) in the principal amount of $110,000, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to the lower of $0.50 or 58% multiplied by the average of the two lowest closing trading price or bid price during the 20- trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. The Company received proceeds of $96,250 on May 6, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $13,750. This note proceeds will be used by the Company for general working capital purposes.

~~On May 5,~~November 16, 2020, (the “Issuance Date”) the Company issued a ~~12% convertible~~ promissory note, ~~(the “Note”)~~ in the principal amount of ~~$162,000,~~$250,000, to an investor. ~~This~~The note ~~matures 6 months after~~carries a guaranteed interest payment of 15%, which is added to the principal on the Issuance Date. Principal payments shall be made in six instalments of $57,500 commencing May 21, 2021, and continuing each 30 days thereafter for 4 months. The Holder shall have the right from time to time, and at any time following an event of default, as defined on the agreement, to convert all or any part of the outstanding and unpaid principal, interest and any other amounts due into fully paid and non-assessable shares of common stock of the Company, This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at ~~$03~~$0.01 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) ~~$.03~~$.01 or ~~50%~~the volume weighted average price of the ~~lowest trading price for~~common stock during the ~~thirty-five trading days~~five (5) Trading Day period ending on the day prior to ~~the~~ conversion. The Company received proceeds of ~~$100,000~~$200,000 on ~~May 13,~~November 19, 2020, and this note included an original issue discount of ~~$62,000.~~$50,000. This note proceeds will be used by the Company for general working capital purposes.

~~On May 7, 2020,~~ In conjunction with this note, the Company issued a ~~15% convertible redeemable note in the principal amount of $30,000. This note matures on May 7,2021 and is convertible into~~warrant to purchase 35,000,000 shares of common stock at ~~a conversion~~an exercise price ~~equal~~of $0.25, subject to ~~50%~~adjustments and expiring on the five-year anniversary of the lowest traded price for the twenty-five prior trading days including the day upon which a conversion notice is received by the Company. The Company received proceeds of $25,000 on May 7, 2020, and this note included an original issue discount of $5,000. This note proceeds will be used by the Company for general working capital purposes.

~~On May 26, 2020, the Company paid $100,000 to PCTI, pursuant to the LOI with PCTI.~~

On May 28, 2020, the Company issued a 15% convertible redeemable note in the principal amount of $30,000. This note matures on May 28, 2021 and is convertible into shares of common stock at a conversion price equal to 50% of the lowest traded price for the twenty-five prior trading days including the day upon which a conversion notice is received by the Company. The Company received proceeds of $25,000 on May 28, 2020, and this note included an original issue discount of $5,000. This note proceeds will be used by the Company for general working capital purposes.

On June 1, 2020, (the “Issuance Date”) the Company issued a 12% convertible promissory note, (the “Note”) in the principal amount of $127,500, to an investor. This note matures 6 months after the Issuance Date. This note is convertible into shares of the Company’s common stock beginning on the Issuance Date at $0.025 for the first three months after the Issuance Date. After the first three months after the Issuance Date, the conversion price shall be equal to the lower of (i) $.025 or 50% of the lowest trading price for the thirty-five trading days prior to the conversion. The Company received proceeds of $100,000 on June 1, 2020, and this note included an original issue discount of $27,500. This note proceeds will be used by the Company for general working capital purposes.

On June 11, 2020, the Company issued a 12% convertible promissory note, (the “Note”) in the principal amount of $53,000, pursuant to a Securities Purchase Agreement we entered into with an investor. This note matures 12 months after the date of issuance. This note is convertible into shares of the Company’s common stock beginning on the date which is 180 days from the issuance date of this note, at a conversion price equal to 58% multiplied by the lowest closing bid price during the twenty trading day period ending on the last completed trading date in the OTC Markets prior to the date of conversion. The Company received proceeds of $50,000 on June 12, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $3,000. This note proceeds will be used by the Company for general working capital purposes.

On June 23, 2020 (the “Execution Date”), the Company issued a 18% promissory note to an investor in the principal amount of $210,000. This note matures on the twenty forth month following the Execution Date. For the first nine months of this note, interest can be paid or added to the principal balance. Commencing on the tenth month following the Execution Date, all accrued interest is due and payable on a monthly basis (the “Monthly Interest Payment”). If any default arises from non-payment of the Monthly Interest Payment this note automatically converts to an 18% convertible debenture. The Company received proceeds of $175,000 on June 24, 2020, and this note included an original issue discount of $35,000. This note proceeds will be used by the Company for general working capital purposes.

On June 25, 2020, (the “Issuance Date”) the Company issued a 12% promissory note to an investor in the principal amount of $203,000. The maturity date of this note is June 25, 2021. Principal payments are due in six installments of $33,833 each, beginning 180 days after the Issuance Date. The investor has the right to convert any part of this note at the lower of i) the Trading Price (as defined in the agreement) during the previous five trading days prior to the Issuance Date or ii) the volume weighted average price during the five trading days ending on the day preceding the conversion date. The Company received proceeds of $176,000 on June 26, 2020, and the Company reimbursed the investor for expenses for legal fees and due diligence of $27,000. This note proceeds will be used by the Company for general working capital purposes.

On June 26, 2020, the Company signed the SPA with PCTI and Chis (See Note 1) and paid $300,000 ($400,000 in the aggregate with the May 26, 2020 $100,000 paid) to PCTI pursuant to the terms of the LOI with PCTI. The Acquisition is scheduled to close July 10, 2020.

The Company has evaluated subsequent events through the date the financial statements were issued. The Company has determined that there are no other such events that warrant disclosure or recognition in the financial statements, except as stated herein.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This quarterly report and other reports filed by Ozop Surgical Corp. (“we,” “us,” “our,” or the “Company”), from time to time contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates.

The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q.

Ozop ~~Surgical Corp.~~Energy Solutions, Inc. (the “Company,” “we,” “us” or “our”) was originally incorporated as Newmarkt Corp. on July 17, 2015, under the laws of the State of ~~Nevada, for the purpose of renting out Segways and bicycles. Following~~Nevada. On May 8, 2018, following the acquisition of ~~OZOP~~Ozop Surgical, Inc., we have been engaged in the business of inventing, designing, developing, manufacturing and globally distributing innovative endoscopic instruments, surgical implants, instrumentation, devices and related technologies, focused on spine, neurological and pain management procedures and specialties. On May 8, 2018, we amended our Articles of Incorporation (the “Amendment”) to change our name from Newmarkt Corp. to Ozop Surgical Corp. in order to reflect more accurately, at that time, the name of our core service offering and operations.

On January 21, 2020, the Company filed an amendment to its Certificate of Incorporation, with the Nevada Secretary of State, for 1-for-1,000 reverse stock split of our common stock (the “Reverse Stock Split”) effective FebruaryJuly 10, 2020. The number of shares of common stock subject to outstanding options, warrants and convertible securities were also reduced by a factor of one- thousand and no fractional shares were issued. All historical share in this report have been adjusted to reflect the Reverse Stock Split. There were no changes to the authorized number of shares and the par value of our common stock.

On February 4, 2020, the Company filed an Amended and Restated Certificate of Designation with the State of Nevada of the Company’s Series C Preferred Stock (the “Preferred Stock”). The voting rights associated with the Preferred Stock were amended whereby each share of Preferred Stock shall entitle the holder thereof to have voting rights equal to two times the sum of all the number of shares of other classes of Company capital stock eligible to vote on all matters submitted to a vote of the stockholders of the Company, divided by the number of shares of Preferred Stock issued and outstanding at the time of voting.

OZOP was originally incorporated in Switzerland on November 28, 1998 under the name Perma Consultants Holding AG (“Perma”). On July 19, 2016, Mr. Eric Siu (“Siu”), one of our directors purchased 100% of the outstanding capital stock of Perma and changed the name from Perma to Ozop Surgical AG (“Ozop AG”). On February 1, 2018, Ozop AG was re-domiciled as a Delaware corporation and changed its name to Ozop Surgical, Inc. On July 28, 2016, Ozop formed as the sole member, Ozop Surgical, LLC (“Ozop LLC”), a Wyoming limited liability company. On October 28, 2016, Ozop acquired 100% of Ozop Surgical Limited (“Ozop HK”), from Siu, the sole shareholder of Ozop HK. Ozop HK, is a private limited company incorporated in Hong Kong.

~~On February 16, 2018, OZOP acquired the 100% membership interest (the “Membership Interest”) in Spinus, LLC, a Texas limited liability company (“Spinus~~”), from RWO Medical Consulting LLC (“RWO”), a Texas limited liability company (the “Acquisition”). OZOP purchased the Membership Interest from RWO in exchange for; (i) 5,000,000 shares OZOP’s common stock and ii) the assumption of all liabilities of Spinus, including an obligation of $250,000 pursuant to a license agreement by and between Spinus and a third party (the “Assumed Debt”). The Assumed Debt was paid in November 2018.

On August 23, 2019, the Company entered into the License Agreement (see note 1) with SRI. Pursuant to the License Agreement, SRI granted to the Company an exclusive license, for products, as defined in the License Agreement, and utilized in spine and related surgical procedures.~~Under the License Agreement, SRI will continue to market the Swedge platform along with the existing portfolio to existing US and International customers.~~ Ozop purchased all existing inventory of SRI instruments and implants and will utilize SRI as a distributor. On January 16, 2020, the Company received via email from SRI notice that the Agreement dated August 23, 2019, between SRI and the Company has been revoked, as the Company did not cure a payment default within the cure period.

~~On February 28,~~ 2020, the Company entered into a ~~Binding Letter of Intent~~Stock Purchase Agreement (the ~~“LOI”~~“SPA”) with Power Conversion Technologies, Inc., a Pennsylvania corporation (“PCTI”), and Catherine Chis (“Chis”), PCTI’s Chief Executive Officer (“CEO”) and its sole shareholder. ~~Pursuant to~~Under the terms of the ~~LOI,~~SPA, the Company ~~will acquire 100%~~acquired one thousand (1,000) shares of PCTI, which represents all of the ~~issued and~~ outstanding shares of PCTI, ~~(the “PCTI Shares”)~~ from Chis in ~~consideration of (a)~~exchange for the issuance ~~by the Company to Chis~~ of ~~(i)~~ 47,500 shares of the Company’s Series C Preferred Stock, ~~(ii)~~ 18,667 shares of the Company’s Series D Preferred Stock, ~~(pursuant to a certificate of designation to be filed prior to closing), (iii)~~and 500 shares of the Company’s Series E Preferred Stock ~~(pursuant~~ to Chis. The Acquisition is being accounted for as a ~~certificate of designation to be filed~~business combination and was treated as a reverse acquisition for accounting purposes with PCTI as the accounting acquirer in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). In accordance with the accounting treatment for a reverse acquisition, the Company’s historical financial statements prior to ~~closing);~~the reverse merger were and ~~(b)~~will be replaced with the ~~Company paying $400,000~~historical financial statements of PCTI prior to ~~PCTI by execution~~the reverse merger, in all future filings with the U.S. Securities and Exchange Commission (the “SEC”). The consolidated financial statements after completion of the reverse merger have and will include the assets, liabilities and results of operations of the combined company from and after the closing date of ~~a definitive purchase agreement or at such other date as shall be agreed to by~~ the ~~parties (the “Acquisition”).~~reverse merger.

PCTI ~~operates in the very high-power niche of the~~designs, develops, manufactures and distributes standard and custom power ~~electronics market, designing and manufacturing leading edge equipment for use in power conversion applications.~~electronic solutions. PCTI serves clients in several industries including energy storage, shore power, DEWs, microgrid, telecommunications, military, transportation, renewable energy, aerospace and mission critical defense systems. ~~PCTI’s clients~~Customers include ~~Fortune 500 companies, all branches of~~ the ~~US Department of Defense including the US Army and the US Air Force, NASA as well as~~United States military, other global military ~~organizations.~~ organizations and many of the world’s largest industrial manufacturers. All of its products are manufactured in the United States. Because of the Company’s product scope and the high-power niche that their products occupy, the Company is aggressively targeting the rapidly growing renewable and energy storage markets.The Company’s mission is to be a global leader for high power electronics with a standard of continued innovation.

On ~~June 26,~~October 29, 2020, the Company ~~PCTI~~formed a new wholly owned subsidiary, Ozop Surgical Name Change Subsidiary, Inc., a Nevada corporation (“Merger Sub”). The Merger Sub was formed under the Nevada Revised Statutes for the sole purpose and ~~Chis signed a Stock Purchase~~effect of changing the Company’s name to “Ozop Energy Solutions, Inc.” That same day the Company entered into an Agreement and Plan of Merger (the ~~“SPA”~~“Merger Agreement”)~~. Pursuant~~ with the Merger Sub and filed Articles of Merger (the “Articles of Merger”) with the Nevada Secretary of State, merging the Merger Sub into the Company, which were stamped effective as of November 3, 2020. As permitted by the Section 92.A.180 of the Nevada Revised Statutes, the sole purpose and effect of the filing of Articles of Merger was to change the ~~SPA, the Acquisition is to close by July 10, 2020, and is in the best interests~~name of the Company ~~and its’ shareholders.~~to “Ozop Energy Solutions, Inc.”

Results of Operations for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019:

For the three and nine months ended ~~March 31,~~September 30, 2020, the Company’s revenues were $246,951 and ~~2019, the Company generated total revenue of $-0-~~$1,493,592, respectively, compared to $176,582 and ~~$47,602, respectively. For~~$416,778 for the three and nine months ended ~~March 31, 2020, the Company did not recognize any~~September 30, 2019.The increase in revenues ~~due~~is a result of a delay in 2019, by a customer in making a substantial change to the ~~termination of~~specification and issuing a modification after the ~~agreements with SRI (see above).The 2019 revenues are from the sale of Spinus’s spine surgery products. Revenues from Spinus are recognized as an agent and are recorded at net.~~purchase order was released for production. The project subsequently shipped in 2020.

Total operating expenses for the three and nine months ended ~~March 31,~~September 30, 2020, were $4,830,641 and ~~2019, were $178,740~~$5,151,483, respectively, compared to $101,820 and ~~$768,569,~~$314,433 for the three and nine months ended September 30, 2019, respectively. The operating expenses were comprised of:

All of the above amounts include expenses incurred by PCTI for the entire three- and nine-month periods ended September 30, 2020, and 2019, respectively, and expenses incurred by Ozop for the period July 11, 2020 through September 30, 2020.

Wages and management fees- related parties, includes compensation paid to our CEO and to the President of PCTI, our wholly-owned subsidiary. Currently, the President is compensated $13,000 per month and the Company’s CEO monthly base compensation is $10,000. Both the CEO and President are eligible for additional bonuses as approved by the Board of Directors of the Company. For the three and nine months ended September 30, 2020, the Company’s CEO’s total compensation was $96,771 and PCTI’s President was compensated $32,500.

On February 28, 2020, pursuant to the LOI with PCTI (see above) our CEO and CFO at the time resigned and Mr. Brian Conway was named CEO. Through that date the former CEO and CFO were compensated $22,205 and $20,000, respectively. The Company entered into an employment agreement with Mr. Conway, which includes a monthly salary of $10,000 and the immediate issuance of 2,500 shares of Series C Preferred Stock. The Company valued the Series C Preferred stock at $5,000 and is included in management fees for the three months ended March 31, 2020, along with his monthly compensation of $10,000. For the three months ended March 31, 2019, management fees consisted of monthly fees to our CEO, COO and CFO of $15,000, $15,000 and $10,000, respectively.

Stock based compensation for the three and nine months ended ~~March 31,~~September 30, 2020, of $4,286,648, is ~~comprised of:~~related to 1,333 shares of Series D Preferred Stock issued to Mr. Conwy on August 28, 2020, pursuant to his employment agreement. The Series D Preferred Stock is convertible in the aggregate into three times the number of shares of common stock outstanding at the time of conversion. Mr. Conway’s owns 6.67% of the issued and outstanding Series D Preferred Stock, and based on the 3,107,037,634 shares outstanding on August 28, 2020, Mr. Conway’s Preferred Stock is convertible into 621,253,401 shares of common stock. Based on the share price of the common stock on that date of $0.0065, the shares were valued at $4,286,648.

Wages, taxes and benefits increased for the three and nine months ended September 30, 2020, compared to the same periods in 2019. The increase was a result of increased sales and administrative personnel at PCTI, in support of the increased revenues as well as personnel hired for additional customer recruitment.

~~Stock based compensation~~Professional and consulting increased in the three and nine months ended September 30, 2020, compared to the same periods in 2019. The increase was due to accounting and auditing expenses of PCTI, necessary in preparation of the transaction with Ozop, as well as expenses incurred by Ozop for their public company filing requirements

Advertising and marketing expenses increased in the three and nine months ended September 30, 2020, compared to the same periods in 2019. The increase was related to marketing programs during the three months ended ~~March 31, 2019 is comprised of:~~September 30, 2020, including brand awareness programs for both PCTI and Ozop.

~~Research~~Rent, office expense and ~~development costs of $-0- and $53,204~~supplies include utilities as well. The expenses for the three and nine months ended ~~March 31, 2020, and 2019, respectively, were all costs related~~September 30, 2010 increased compared to ~~development~~the same periods in 2019. The increase was the result of ~~new product.~~

~~Total general and operating expenses, other, were $46,777 and $152,389~~including in the current three-and nine-month periods, rent expense of $9,200 for ~~the three months ended March 31, 2020, and 2019, respectively, and were comprised of:~~Ozop beginning in July 2020.

Other expenses, net, for the three and nine months ended ~~March 31,~~September 30, 2020, was $1,708,061 and ~~2019, were $5,551,040~~$1,838,113, respectively, compared to other expenses, net of $12,203 and ~~$183,189,~~$41,656 for the three and nine months ended September 30, 2019, respectively, and were as follows.

The increase in other expense is primarily a result of ~~increases in~~amortization of debt discounts and losses on changes in fair values of derivatives and interest expense ~~and amortization of debt discounts and losses~~ on ~~extinguishment of debt for~~ the ~~three months ended March 31,~~convertible notes assumed by PCTI on July 10, 2020.

The net loss for the three and nine months ended ~~March 31,~~September 30, 2020, was $6,563,262 and ~~2019, was $5,672,071~~$6,862,676 respectively, compared to $70,708 and ~~$904,156~~$371,975 for the three and nine months ended September 30, 2019, respectively. The increases are a result of the changes discussed above.

Currently, we have limited operating capital. The Company anticipates that it will require a minimum of $1,000,000 of working capital to complete substantially all of its desired business activity for the next twelve months, including the closing of the PCTI transaction and bringing new products to market. The Company currently is not generating any revenues from its business operations. Our current capital and our other existing resources will be sufficient ~~only~~ to provide ~~a limited amount of~~the working capital ~~and, to date, the revenues generated from~~needed for our current business, ~~operations have not been sufficient to fund our operations or planned growth. As noted above, we will require~~however, additional capital will be required to ~~continue to close the PCTI transaction, to operate~~meet our ~~business,~~debt obligations, and to further expand our business. We may be unable to obtain the additional capital required. Our inability to generate capital or raise additional funds when required will have a negative impact on our ~~operations,~~ business development and financial results.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we primarily funded our business operations with ~~$207,000~~$750,000 of proceeds received pursuant to an agreement to provide future perpetual payments of 3% of revenues, $673,000 from the issuances of promissory notes, $289,000 of proceeds from the issuances of convertible note financings as well as ~~$80,000~~$400,000 advance from ~~the sale of 160,000 shares of common stock at $0.50 per share.~~affiliate and $42,420 received from shareholders. Of the proceeds, ~~$50,000~~$82,757 was used ~~to redeem 2,500 shares of Series C Preferred Stock from the Company’s former CEO and~~ for ~~working capital. We may continue to rely on the issuance~~repayment of convertible ~~promissory~~ notes and notes payable and $69,470 was paid back to ~~fund our business operations.~~shareholders.

As of ~~March 31,~~September 30, 2020, we had cash of ~~$35,209~~$1,706,257 as compared to ~~$10,877~~$27,382 at December 31, 2019. As of ~~March 31,~~September 30, 2020, we had current liabilities of ~~$10,101,743~~$6,590,839 (including ~~$6,534,591~~$2,250,953 of non-cash derivative liabilities), compared to current assets of ~~$39,001,~~$1,954,962, which resulted in a working capital deficit of ~~$10,062,742.~~$4,635,877. The current liabilities are comprised of accounts payable, accrued expenses, convertible debt, derivative liabilities ~~liabilities of discontinued operations~~ and notes payable.

In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to most other countries and infections have been reported globally. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but it may have a material adverse impact on our business, financial condition and results of operations. Management expects that its business will be impacted to some degree, but the significance of the impact of the COVID-19 outbreak on the Company’s business and the duration for which it may have an impact cannot be determined at this time.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, net cash used in operating activities from continuing operations was ~~$221,253,~~$878,327 compared to ~~$286,717~~$36,262 for the ~~three~~nine months ended ~~March 31,~~September 30, 2019. For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, our net cash used in operating activities ~~from continuing operations~~ was primarily attributable to the net loss of ~~$5,729,780,~~$6,862,676, adjusted by stock-based compensation of $4,286,648, the non-cash expenses of interest and amortization and depreciation of ~~$3,699,843,~~$1,447,935 and losses on the fair value changes in derivatives ~~and on extinguishment~~ of ~~debt of $1,534,173 and $195,509, respectively and stock-based compensation of $54,033, partially offset by the gain on the license termination of $86,856.~~$189,612. Net changes of ~~$111,825~~$72,960 in operating assets and liabilities reduced the cash used in operating activities.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2019, ~~our~~ net cash used in operating activities of $36,262 was primarily attributable to the net loss of ~~$904,156, a gain of $47,610 on the change in fair value of derivative liabilities and gains of $136,675 in extinguishment of debt,~~$371,975, adjusted ~~by the~~ non-cash expenses of ~~interest and amortization and~~ depreciation of ~~$342,898~~$5,445, and ~~stock-based compensation of $395,720. Net~~net changes of ~~$63,106~~$330,268 in operating assets and liabilities reduced the cash used in operating activities.

~~There were no~~For the nine months ended September 30, 2020, the net cash provided by investing activities was $1,577,566, compared to $6,967 for the ~~three~~nine months ended ~~March 31,~~September 30, 2019. For the nine months ended September 30, 2020, the Company received proceeds of $750,000 pursuant to an obligation to pay a perpetual 3% fee of revenues, acquired $470,849 cash, $400,0 advance from affiliate and ~~2019.~~$42,240 from shareholders. During the nine months ended September 30, 2020, the Company purchased $16,233 of office furniture and equipment and repaid $69,470 to shareholders.

For the nine months ended September 30, 2019, the principal investing activity included receiving $110,000 from shareholders and the repayment of $99,891 to shareholders and the purchase of $3,142 of fixed assets.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2020, the net cash provided by financing activities was ~~$157,000,~~$979,643, compared to ~~$291,650~~cash used in financing activities of $10,193 for the ~~three~~nine months ended ~~March 31,~~September 30, 2019. During the ~~three~~nine months ended ~~March 31,~~September 30, 2020, we received ~~$207,000~~$289,000 of proceeds from the issuances of convertible note financings, ~~and the Company purchased 2,500 shares of Series C Preferred Stock for $50,000.~~

~~During the three months ended March 31, 2019, we received $295,650 of proceeds~~$673,000 from the issuances of ~~convertible note financings, as well as $80,000~~promissory notes and $100,400 from the ~~sale~~Payroll Protection Program. During the nine months ended September 30, 2020, the Company repaid $82,757 of ~~160,000 shares~~principal of ~~common stock at $0.50 per share. The~~convertible notes and notes payable.

For the nine months ended September 30, 2019, the Company made payments on ~~convertible debt~~notes payable of ~~$84,000.~~

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

Our significant accounting policies are described in more details in ~~this~~the notes to our financial statements appearing elsewhere in this Quarterly Report on Form 10-Q. We believe the following accounting policies to be most critical to the judgement and estimates used in the preparation of our unaudited financial statements:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of ~~March 31,~~September 30, 2020, and the results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended ~~March 31,~~September 30, 2020, are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in theCompany’s ~~Annual Report on~~ Form ~~10-K~~8-K/A filed on ~~Ma 14,~~September 25, 2020.

Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products by: (1) identify the contract (if any) with a customer; (2) identify the performance obligations in the contract (if any); (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract (if any); and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. The Company has no outstanding contracts with any of is’ customers. Revenues from Spinus of $47,602 for the three months ended March 31, 2020, are recognized as an agent and are recorded at net. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three months ended March 31, 2020 and 2019.

Costs and expenses that can be clearly identified as research and development are charged to expense as incurred. For the three months ended March 31, 2019, the Company recorded $53,204 of research and development expenses.

The Company computes net loss per share in accordance with FASB ASC 260, “Earnings per Share.” ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible notes and stock warrants, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options, warrants and conversion of convertible notes. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive.

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 Chief 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 Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as of ~~March 31,~~September 30, 2020. 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 and Chief Financial Officer concluded that our disclosure controls and procedures were not effective for the reasons discussed below.

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 ~~March 31,~~September 30, 2020, the Company determined that there were control deficiencies that constituted material weaknesses, as described below.

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.

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

There has been no change in our internal control over financial reporting occurred during the three months ended ~~March 31,~~September 30, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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 any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

During the three months ended ~~March 31,~~September 30, 2020, holders of an aggregate of ~~$105,947~~$1,443,821 in principal and ~~$75,373~~$239,428 of accrued interest and fees of convertible notes issued by the Company, converted their debt into ~~4,939,400~~1,181,993,894 shares of our common stock at an average conversion price of ~~$0.0367~~$0.0014 per share. The Company also issued 106,528,473 shares of common stock upon the cashless exercises of warrants.

The ~~issuances~~shares described above ~~related~~were issued pursuant to ~~the conversion of debt were made in reliance on~~ the exemption from registration ~~provided by Sections 3(a)(9)~~requirements relying on Section 4(a)(2) of the Securities Act.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[ ]	Smaller reporting company	[X]
(Do not check if a smaller reporting company)		Emerging growth company	[X]

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
None		N/A		N/A

INDEX

PART I. FINANCIAL INFORMATION

	ITEM 1	Financial Statements (Unaudited)
		Condensed Consolidated Balance Sheets as of ~~March 31, 2019~~September 30, 2020 and December 31, ~~2018~~2019 (Unaudited)	1
		Condensed Consolidated Statement of Comprehensive Loss for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)	2
		Condensed Consolidated Statement of Changes in Stockholders’ ~~Deficit~~Equity (Deficit) for the three and nine months ended ~~March 31,~~September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)	3
		Condensed Consolidated Statement of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2020 and 2019 ~~and 2018~~ (Unaudited)	4
		Notes to Interim Unaudited Condensed Consolidated Financial Statements	5
	ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3126
	ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	3731
	ITEM 4.	Controls and Procedures	3732

PART II. OTHER INFORMATION
			38
	ITEM 1.	Legal Proceedings	3833
	ITEM 1A.	Risk Factors	3833
	ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3833
	ITEM 3.	Defaults Upon Senior Securities	3833
	ITEM 4.	Mine Safety Disclosures	3833
	ITEM 5.	Other Information	3833
	ITEM 6.	Exhibits	3933

	SIGNATURES		4136

	March 31,			December 31,
	2020			2019
ASSETS
Current Assets
Cash	$	35,209		$	10,877
Prepaid expenses		3,792			5,417
Assets of discontinued operations		-			5,462,195
Total Current Assets		39,001			5,478,489

Property and equipment, net		3,337			4,001
Goodwill		194,951			194,951
License Rights, net of accumulated amortization		161,457			171,875
TOTAL ASSETS	$	398,747		$	5,849,316

LIABILITIES AND STOCKHOLDERS’ DEFICIT
Liabilities
Current Liabilities
Accounts payable and accrued expenses	$	441,071		$	370,640
Accounts payable and accrued expenses, related parties		456,185			470,886
Convertible notes payable, net of discounts		2,499,627			1,694,227
Current portion of notes payable		95,000			425,033
Derivative liabilities		6,534,591			2,462,940
Liabilities of discontinued operations		75,270			5,592,706
Total Current Liabilities		10,101,744			11,016,432

Stockholders’ Deficit
Preferred stock (10,000,000 shares authorized, par value $0.001, no shares issued and outstanding) Series C Preferred Stock (50,000 shares authorized and issued and outstanding, par value $0.001)		50			50
Common stock (4,990,000,000 shares authorized par value $0.001; 5,158,493 and 219,035 shares issued and outstanding March 31, 2020, and December 31, 2019, respectively)		5,158			219
Deferred stock compensation		-			(49,033	)
Common stock to be issued (1,350 shares issuable)		1			1
Additional paid in capital		6,173,895			5,090,936
Accumulated Deficit		(15,880,976	)		(10,208,905	)
Stock subscription receivable		(7,600	)		(7,600	)
Accumulated comprehensive gain		6,475			7,216
Total Stockholders’ Deficit		(9,702,997	)		(5,167,116	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	398,747		$	5,849,316

	September 30,			December 31,
	2020			2019
ASSETS
Current Assets
Cash	$	1,706,257		$	27,382
Prepaid assets		15,826			12,715
Accounts receivable		60,699			19,774
Inventory		172,180			971,813
Total Current Assets		1,954,962			1,031,684

Operating lease right-of-use asset, net		167,500			-
Property and equipment, net		35,560			15,199
Goodwill		11,396,096			-
License Rights, net of accumulated amortization		140,624			-
TOTAL ASSETS	$	13,694,742		$	1,046,883

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Liabilities
Current Liabilities
Accounts payable and accrued expenses	$	1,513,704		$	1,043,179
Related party liabilities		10,308			27,909
Convertible notes payable, net of discounts		861,507			-
Current portion of notes payable, net of discounts		1,025,962			524,406
Customer deposits		104,460			684,822
Deferred liability		750,000			-
Derivative liabilities		2,250,953			-
Operating lease liability, current portion		73,945			-
Total Current Liabilities		6,590,839			2,280,316

Long Term Liabilities
Note payable, net of discount, net of current portion		290,140			-
Operating lease liability, net of current portion		93,555			-
TOTAL LIABILITIES		6,974,534			2,280,316

Stockholders’ Equity (Deficit)
Preferred stock (10,000,000 shares authorized, par value $0.001)
Series C Preferred Stock (50,000 shares authorized and 50,000 (2020) and 47,500 (2019) issued and outstanding, par value $0.001)		50			48
Series D Preferred Stock (20,000 shares authorized and 20,000 (2020) and 18,667 (2019) issued and outstanding, par value $0.001)		20			19
Series E Preferred Stock (2,500 shares authorized and 1,000 (2020) and 500 (2019) issued and outstanding, par value $0.001)		1			1
Common stock (4,990,000,000 shares authorized par value $0.001; 3,140,453,186 (2020) and -0- (2019) shares issued and outstanding)		3,140,453			-
Additional paid in capital		11,752,789			76,922
Accumulated Deficit		(8,173,908	)		(1,310,422	)
Accumulated comprehensive gain		(7	)		-
Total Stockholders’ Equity (Deficit)		6,720,208			(1,233,433	)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	13,694,742		$	1,046,883

	For the Three Months Ended March 31,
	2020			2019
Revenue	$	-		$	47,602

Operating expenses:
General and administrative, related parties		57,505			120,000
General and administrative, other		121,235			595,365
Research and development		-			53,204
Total operating expenses		178,740			768,569

Operating loss		(178,740	)		(720,967	)

Other (income) expenses:
Interest expense		3,821,325			367,474
Loss (Gain) on change in fair value of derivatives		1,534,173			(47,610	)
Loss (Gain) on extinguishment of debt		195,542			(136,675	)
Total Other Expenses		5,551,040			183,189

Loss from continuing operations before income taxes		(5,729,780	)		(904,156	)
Income tax provision		-			-
Loss from continuing operations		(5,729,780	)		(904,156	)
Discontinued operations:
Loss from discontinued operations, net of income taxes		(29,147	)		-
Gain from license termination, net of income taxes		86,856			-
Net loss	$	(5,672,071	)	$	(904,156	)
Other comprehensive income (loss):
Foreign currency translation adjustment		(741	)		187
Comprehensive loss	$	(5,672,812	)	$	(903,969	)

Loss per share	$	(4.81	)		(30.95	)

Weighted average shares outstanding
Basic and diluted		1,191,395			29,214

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019
Revenue	$	246,951		$	176,582		$	1,493,592		$	416,778
Cost of goods sold		271,510			133,267			1,366,672			432,664
Gross profit (loss)		(24,559	)		43,315			126,920			(15,886	)
Operating expenses:
General and administrative, related parties		4,415,919			-			4,415,919			-
General and administrative, other		414,722			101,820			735,564			314,433
Total operating expenses		4,830,641			101,820			5,151,483			314,433

Loss from operations		(4,855,200	)		(58,505	)		(5,024,563	)		(330,319	)

Other (income) expenses:
Interest expense		1,531,256			12,203			1,661,308			41,656
Loss on change in fair value of derivatives		189,612			-			189,612			-
Gain on extinguishment of debt		(12,807	)		-			(12,807	)		-
Total Other Expenses		1,708,061			12,203			1,838,113			41,656

Loss before income taxes		(6,563,262	)		(70,708	)		(6,862,676	)		(371,975	)
Income tax provision		-			-			-			-
Net loss	$	(6,563,262	)	$	(70,708	)	$	(6,862,676	)	$	(371,975	)
Other comprehensive loss:
Foreign currency translation adjustment		(7	)		-			(7	)		-
Comprehensive loss	$	(6,563,269	)	$	(70,708	)	$	(6,862,683	)	$	(371,975	)

Loss per share basic and fully diluted	$	(0.00	)	$	N/A		$	(0.01	)		N/A

Weighted average shares outstanding
Basic and diluted		2,667,510,771			N/A			1,045,384,629			N/A

					Common stock				Series C						Deferred			Stock			Accumulated			Additional						Total Stockholders’
	Common stock				to be issued				Preferred Stock						Stock			Subscription			comprehensive			Paid-in			Accumulated			Equity
	Shares		Amount		Shares		Amount		Shares			Amount			Compensation			Receivable			income			Capital			Deficit			(Deficit)
Balances January 1, 2020		219,035	$	219		1,350	$	1		50,000		$	50		$	(49,033	)	$	(7,600	)	$	7,216		$	5,090,936		$	(10,208,905	)		(5,167,116	)

Shares issued for conversions of note and interest payable		4,939,400		4,939		-		-		-			-			-			-			-			1,127,959			-			1,132,899

Adjustment for rounding of reverse split		58		-		-		-		-			-			-			-			-			-			-			-

Redemption Series C Preferred stock		-		-		-		-		(2,500	)		(3	)		-			-			-			(49,998	)		-			(50,000	)

Issuance Series C Preferred stock as compensation		-		-		-		-		2,500			3			-			-			-			4,998			-			5,000

Amortization of deferred stock compensation		-		-		-		-		-			-			49,033			-			-			-			-			49,033

Foreign currency translation adjustment		-		-		-		-		-			-			-			-			(741	)		-			-			(741	)

Net loss		-		-		-		-		f			-			-			-			-			-			(5,672,071	)		(5,672,071	)
Balances March 31, 2020		5,158,493	$	5,158		1,350	$	1		50,000		$	50		$	-		$	(7,600	)	$	6,475		$	6,173,895		$	(15,880,976	)	$	(9,702,997	)

	Common stock				Series C Preferred Stock				Series D Preferred Stock				Series E Preferred Stock				Accumulated comprehensive			Additional Paid-in			Accumulated			Total Stockholders’ Equity
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		income			Capital			Deficit			(Deficit)
Balances January 1, 2020		-	$	-		47,500	$	48		18,667	$	19		500	$	1	$	-		$	76,922		$	(1,310,422	)		(1,233,434	)

Net income		-		-		-		-										-			-			87,549			87,549
Balances March 31, 2020		-		-		47,500		48		18,667		19		500		1		0			76,922			(1,222,873	)		(1,145,886	)

Net loss		-		-		-		-										-			-			(1,014	)		(1,014	)
Balances June 30, 2020		-		-		47,500		48		18,667		19		500		1		0			76,922			(1,223,887	)		(1,146,898	)

Reverse merger transaction		1,851,930,729		1,851,931		-		-		-		-		-		-		-			(1,033,489	)		-			818,442

Shares issued for conversions of note and interest payable		1,181,993,984		1,181,994		-		-		-		-		-		-		-			7,997,730			-			9,179,724

Shares issued upon cashless exercise of warrants		106,528,473		106,528		-		-		-		-		-		-		-			(106,528	)		-			-

Warrants issued in connection with issuance of debt		-		-		-		-		-		-		-		-		-			531,507			-			531,507

Shares issued pursuant to CEO contract		-		-		2,500		3		1,333		1		500		1		-			4,286,648			-			4,286,652

Foreign currency translation adjustment		-		-		-		-		-		-		-		-		(7	)		-			-			(7	)

Net loss		-		-		-		-		-		-		-		-		-			-			(6,949,211	)		(6,949,211	)
Balances September 30, 2020		3,140,453,186	$	3,140,453		50,000	$	50		20,000	$	20		1,000	$	1	$	(7	)	$	11,752,789		$	(8,173,098	)	$	6,720,208

					Common stock				Series C					Deferred			Stock			Accumulated		Additional					Total Stockholders’
	Common stock				to be issued				Preferred Stock					Stock			Subscription			comprehensive		Paid-in		Accumulated			Equity
	Shares		Amount		Shares		Amount		Shares		Amount			Compensation			Receivable			income		Capital		Deficit			(Deficit)
Balances January 1, 2019		29,068	$	29		-	$	-		-	$		$		(269,167	)	$	(7,600	)	$	8,228	$	1,988,897	$	(4,068,747	)	$	(2,348,360	)

Shares issued for conversions of note and interest payable		231		-		-		-		-		-			-			-			-		51,750		-			51,750

Shares issued in private placement		160		-		-		-		-		-			-			-			-		80,000		-			80,000

Share issued and to be issued for services		171		-		450		1		-		-			(422,100	)		-			-		422,099		-			-

Reclassification of derivatives for payments of convertibe notes		-		-		-		-		-		-			-			-			-		18,479		-			18,479

Amortization of deferred stock compensation		-		-		-		-		-		-			395,720			-			-		-		-			395,720

Unrealized gain on foreign translation		-		-		-		-		-		-			-			-			187		-		-			187

Net loss		-		-		-		-		-		-			-			-			-		-		(904,156	)		(904,156	)
Balances March 31, 2019		29,630	$	29		450	$	1		-	$	-		$	(295,547	)	$	(7,600	)	$	8,415	$	2,561,225	$	(4,972,903	)	$	(2,706,380	)

	Purchase Price Allocation
Fair value of consideration issued	$	5,286,305
Liabilities assumed		524,387
Total purchase price	$	5,810,692
Assets acquired	$	723,524
Intellectual Property/Technology		2,810,000
Goodwill		2,277,168
	$	5,810,692

	Purchase Price Allocation
Fair value of OZOP equity consideration issued	$	818,444
Assets acquired	$	1,229,917
Goodwill		11,201,145
Liabilities assumed		(11,612,618	)
	$	818,444

Assets
Inventory	$	374,500
Instruments, net		350,825
Patent rights, net		2,714,204
Goodwill		2,002,314
Total assets as of January 16, 2020	$	5,441,843

Consideration issued and liabilities assumed
Common Stock payable	$	245,000
License fee payable		1,234,089
Equity Line payable		45,359
Iberia Note		447,153
Inventory and Instrument note		640,699
Accrued interest		16,979
Option to buy		2,899,420
Total consideration and liabilities assumed balances	$	5,528,699
Gain on termination of license	$	86,856

	Unaudited pro forma results nine months ended September 30, 2020			Unaudited pro forma results nine months ended September 30, 2019
Revenues	$	1,493,592		$	501,931
Loss before income taxes		(40,027,669	)		(4,809,301	)
Basic and fully diluted loss per share	$	(0.02	)	$	(0.14	)

	2020		2019

Raw materials	$	116,953	$	116,329
Work in process		45,585		845,218
Finished goods		9,643		10,266
	$	172,181	$	971,813

		~~Purchase % Three~~ ~~Months Ended~~ ~~March 31, 2020~~				~~Purchase % Three~~ ~~Months Ended~~ ~~March 31, 2019~~
~~Supplier A~~			~~N/A~~				~~100~~	%

		Sales % Three Months Ended March 31, 2020				Sales % Three Months Ended March 31, 2019				Accounts receivable balance March 31, 2020
Customer A			N/A				100	%		$	-0-

	Sales % Three Months Ended September 30, 2020			Sales % Three Months Ended September 30, 2019			Sales % Nine Months Ended September 30, 2020			Sales % Nine Months Ended September 30, 2019			Accounts receivable balance September 30, 2020
Customer A		29	%		-	%		60	%		-	%	$	-
Customer B		19	%		-	%		14	%		-	%		-
Customer C		23	%		-	%		-	%		-	%		34,011
Customer D		12	%		-	%		-	%		-	%		-
Customer E		-	%		29	%		-	%		12	%		-
Customer F		-	%		16	%		-	%		-	%		-
Customer G		-	%		12	%		-	%		-	%		-
Customer H		-	%		-	%		-	%		31	%		-
Customer I		-	%		14	%		-	%		-	%		-

	Purchase % Three Months Ended September 30, 2020			Purchase % Three Months Ended September 30, 2019			Purchase % Nine Months Ended September 30, 2020			Purchase % Nine Months Ended September 30, 2019
Supplier A		11	%		-	%		-	%		-	%
Supplier B		15	%		-	%		10	%		-	%
Supplier C		18	%		-	%		-	%		-	%
Supplier D		-	%		17	%		-	%		-	%
Supplier E		-	%		14	%		-	%		-	%
Supplier F		-	%		-	%		15	%		-	%
Supplier G		-	%		-	%		26	%		-	%

	March 31, 2020			December 31, 2019			September 30, 2020			December 31, 2019
Office equipment	$	9,590		$	9.590		$	113,025		$	78,851
Less: Accumulated Depreciation		(6,253	)		(5,589	)		(77,465	)		(63,642	)
Property and Equipment, Net	$	3,337		$	4,001		$	35,560		$	15,199

	●	Level 1 - Observable inputs that reflect quoted market prices in active markets for identical assets or liabilities.
	●	Level 2 - Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
	●	Level 3 - Unobservable inputs reflecting the Company’s assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

March 31, 2020	Derivative Liabilities		Total
September 30, 2020					Derivative Liabilities		Total
Level I	$	-	$	-	$	-	$	-
Level II	$	-	$	-	$	-	$	-
Level III	$	6,534,591	$	6,534,591	$	2,250,953	$	2,250,953

	March 31,2020		December 31,2019
Balance sheet date		.1290		.1284
Average rate for statements of operations and comprehensive loss		.1287		.1276

	March 31, 2020		March 31, 2019
Common stock to be issued		1,350		450
Convertible preferred stock		50,000		-
Convertible notes payable		469,261,270		4,035,679
		469,312,620		4,036,129

	September 30, 2020
Common stock to be issued		1,350
Convertible preferred stock		9,421,359,558
Convertible notes payable		322,697,849
		9,744,058,75

	March 31, 2020			December 31, 2018			September 30, 2020

Principal balance	$	3,247,433		$	2,500,230		$	1,544,489
Unamortized discount		(747,806	)		(806,003	)		(682,982	)
Ending balance, net	$	2,499,627		$	1,694,227		$	861,507

Balance- January 1, 2019	$	1,199,514
Balance- July 10, 2020, assumed pursuant to PCTI transaction				$	8,743,231
Issued during period		1,460,123			626,534
Converted or paid		(850,248	)		(7,308,426	)
Change in fair value recognized in operations		653,551			189,614
Balance- December 31, 2019		2,462,940
Issued during the period		3,295,095
Converted or paid		(757,617	)
Change in fair value recognized in operations		1,534,173
Balance December 31, 2019	$	6,534,591
Balance- September 30, 2020				$	2,250,953

	March 31, 2020		December 31, 2019
Note payable, interest at 8%, matured September 6, 2018, in default	$	-	$	330,033
Notes payable, interest at 8%, matures January 5, 2020, currently in default		45,000		45,000
Other, due on demand, interest at 6%		50,000		50,000
Total notes payable	$	95,000	$	425,033

	September 30, 2020		December 31, 2019
Note payable bank, interest at 7.75%, matures December 26,2020	$	156,648	$	174,444
Note payable bank, interest at 6.5%, matures December 26, 2020		341,400		349,962
Economic Injury Disaster Loan		10,000		-
Paycheck Protection Program loan		100,400		-
Notes payable, interest at 8%, matured January 5, 2020, currently in default		45,000		-
Other, due on demand, interest at 6%		50,000		-
Note payable $210,000 face value, interest at 18%, matures June 23, 2022, net of discount of $30,260		179,740		-
Note payable $203,000 face value, interest at 12%, matures June 25, 2021, net of discount of $19,935		183,065		-
Note payable $750,000 face value, interest at 12%, matures August 24, 2021, net of discount of $500,151		249,839		-
Sub- total notes payable		1,316,102		542,406
Less long-term portion, net of discount		290,140		-
Current portion of notes payable, net of discount	$	1,015,962	$	542,406

	Three months ended March 31,
	2020		2019
CEO (incudes $5,000 stock-based compensation)	$	15,000	$	-
CEO, former		22,505		45,000
COO, former		-		45,000
CFO, former		20,000		30,000
Total	$	57,505	$	120,000

	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
CEO, parent	$	96,771	$	-	$	96,771	$	-
President, subsidiary		32,500		-		32,500		-
Total	$	129,271	$	-	$	129,271	$	-

	March 31, 2020		December 31, 2019
Former CEO, former (1)	$	9,630	$	125
Former CEO, subsidiary (2)		145,370		144,639
Former COO and CCO (3)		162,085		162,085
Former COO (4)		112,500		112,500
Former CFO (5)		26,500		51,537
CEO		100		-
Total	$	456,185	$	470,866

	Three Months Ended
	March 31,
	2020			2019
Pre-tax loss	$	(5,672,070	)	$	(904,155	)
U.S. federal corporate income tax rate		21	%		21	%
Expected U.S. income tax credit		(1,191,935	)		(189,873	)
Tax rate difference between U.S. and foreign operations		-			231
Permanent differences		1,145163			111,325
Change of valuation allowance		45,972			78,317
Effective tax expense	$	—		$	—

	March 31, 2020			December 31, 2019
Net operating losses carried forward	$	1,068,042		$	1,022,071
Less: Valuation allowance		(1,068,042	)		(1,022,071	)
Net deferred tax assets	$	—		$	—

Cost of goods sold	$	4,326
Operating expenses:
Depreciation expense		13,805
Rent expense		2,222
Interest expense		8.794
Total operating expenses		24,821
Loss from discontinued operations	$	(29,147	)

Gain from license termination	$	86,856

	September 30, 2020
Office and warehouse lease	$	185,139
Less accumulated amortization		(17,639	)
Right-of-us assets, net	$	167,500