UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY |
For the quarterly period ended September 30, 20172023
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT |
For the transition period from _______________ to _______________.
Commission file number000-55572
Healthy Extracts Inc.
(Exact name of registrant as specified in its charter)
Nevada | ||
(State or other jurisdiction of | ||
incorporation or organization) | 47-2594704 (I.R.S. Employer Identification No.) | |
7375 Commercial Way, Suite 125 Henderson, NV | ||
(Address of principal executive offices) | 89011 (Zip Code) | |
Registrant’s telephone number, including area code (702) 463-1004
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the previous 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes �� ☒ 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). 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. (Check one):
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
(Do not check if a smaller reporting company) | Emerging growth company | ☐ |
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☐No☒
Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ____ No ____
As of November 15, 2017,10, 2023, there were 140,770,136354,492,442 shares of common stock, $0.001 par value, issued and outstanding.
GREY CLOAK TECHHEALTHY EXTRACTS INC.
PART I – FINANCIAL INFORMATION
This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading: “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
-1-
ITEM 1Financial Statements
GREY CLOAK TECH INCHEALTHY EXTRACTS, INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022
(Unaudited)
|
| SEPTEMBER 30 |
| DECEMBER 31, |
| 2023 |
| 2022 | |
ASSETS |
|
|
|
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
Cash |
| $46,391 |
| $65,651 |
Accounts receivable |
| 109,224 |
| 105,794 |
Inventory, net |
| 1,527,575 |
| 1,819,128 |
Offering costs |
| 135,202 |
| - |
Prepaid acquisition costs |
| - |
| 53,015 |
Right of use asset, net |
| 86,279 |
| - |
Total current assets |
| 1,904,671 |
| 2,043,587 |
|
|
|
|
|
Fixed assets |
| 3,855 |
| 5,501 |
Patents/Trademarks |
| 521,881 |
| 521,881 |
Deposit |
| 16,890 |
| 16,890 |
Goodwill |
| 193,260 |
| 193,260 |
Total other assets |
| 735,885 |
| 737,531 |
|
|
|
|
|
TOTAL ASSETS |
| $2,640,556 |
| $2,781,118 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Accounts payable |
| $68,537 |
| $91,316 |
Accrued liabilities |
| 188,770 |
| 94,554 |
Lease liabilities - current |
| 62,989 |
| - |
Lease liabilities - long-term |
| 26,187 |
| - |
Notes payable |
| 401,630 |
| 275,370 |
Notes payable - related party |
| 83,366 |
| 866 |
Convertible debt, net of discount |
| 595,638 |
| 317,284 |
Accrued interest payable |
| 52,876 |
| 21,387 |
Accrued interest payable - related party |
| 380 |
| - |
Derivative liabilities |
| 135,698 |
| 102,011 |
Total current and total liabilities |
| 1,616,071 |
| 902,788 |
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
|
Preferred stock, $0.001 par value, 75,000,000 shares authorized, none and none shares issued and outstanding, respectively |
| - |
| - |
Common stock, $0.001 par value, 2,500,000,000 shares authorized, 354,492,442 shares issued and outstanding as of September 30, 2023, and 345,172,442 shares issued and outstanding as of December 31, 2022, respectively |
| 354,492 |
| 345,172 |
Additional paid-in capital |
| 18,691,050 |
| 17,459,899 |
Accumulated deficit |
| (18,021,058) |
| (15,926,742) |
Total stockholders' equity |
| 1,024,485 |
| 1,878,330 |
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
| $2,640,556 |
| $2,781,118 |
SEPTEMBER 30, | DECEMBER 31, | |||||||
2017 | 2016 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 63,478 | $ | 24,102 | ||||
Accounts receivable | 47,000 | 66,000 | ||||||
Prepaid expenses | 5,244 | 7,433 | ||||||
Note receivable | 79,295 | 46,295 | ||||||
Accrued interest receivable | 791 | — | ||||||
Total current assets | 195,808 | 143,830 | ||||||
Fixed assets, net of accumulated depreciation of $890 and $395, respectively | 1,881 | 1,186 | ||||||
Website, net of accumulated amortization of $2,333 and $1,633, respectively | 467 | 1,167 | ||||||
Total other assets | 2,348 | 2,353 | ||||||
TOTAL ASSETS | $ | 198,156 | $ | 146,183 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
LIABILITIES | ||||||||
Accounts payable | $ | 35,641 | $ | 4,000 | ||||
Accounts payable - related party | 26,369 | 19,799 | ||||||
Accrued payroll and taxes | 11,874 | 6,111 | ||||||
Notes payable - related party | 10,000 | 15,000 | ||||||
Convertible debt, net of discount of $235,111 and $54,653, respectively | 439,489 | 405,097 | ||||||
Accrued interest payable | 35,089 | 16,130 | ||||||
Accrued interest payable - related party | 1,300 | 513 | ||||||
Derivative liabilities | 2,038,605 | 2,038,952 | ||||||
Total current and total liabilities | 2,598,367 | 2,505,602 | ||||||
STOCKHOLDERS' DEFICIT | ||||||||
Preferred stock, $0.001 par value, 75,000,000 shares authorized, no shares issued and outstanding | — | — | ||||||
Common stock, $0.001 par value, 500,000,000 shares authorized, 59,996,539 and 17,156,276 shares issued and outstanding, respectively | 59,997 | 17,156 | ||||||
Additional paid-in capital | 3,810,221 | 1,744,732 | ||||||
Accumulated deficit | (6,270,429 | ) | (4,121,307 | ) | ||||
Total stockholders' deficit | (2,400,211 | ) | (2,359,419 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 198,156 | $ | 146,183 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
HEALTHY EXTRACTS, INC. |
CONSOLIDATED STATEMENT OF OPERATIONS |
FOR THE THREE AND NINE MONTHS ENDING SEPTEMBER 30, 2023 AND 2022 |
(Unaudited) |
|
| FOR THE 3 MONTHS ENDING |
| FOR THE 9 MONTHS ENDING | ||||
|
| SEPTEMBER 30 |
| SEPTEMBER 30 | ||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |
|
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
|
Revenue |
| $613,541 |
| $499,653 |
| $1,816,968 |
| $1,432,850 |
Net revenue |
| 613,541 |
| 499,653 |
| 1,816,968 |
| 1,432,850 |
|
|
|
|
|
|
|
|
|
COST OF REVENUE |
|
|
|
|
|
|
|
|
Cost of goods sold |
| 120,309 |
| 68,551 |
| 760,825 |
| 402,788 |
Total cost of revenue |
| 120,309 |
| 68,551 |
| 760,825 |
| 402,788 |
|
|
|
|
|
|
|
|
|
GROSS PROFIT |
| 493,233 |
| 431,102 |
| 1,056,143 |
| 1,030,062 |
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES |
|
|
|
|
|
|
|
|
General and administrative |
| 754,026 |
| 485,568 |
| 2,977,998 |
| 1,744,326 |
Total operating expenses |
| 754,026 |
| 485,568 |
| 2,977,998 |
| 1,744,326 |
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
Interest expense, net of interest income |
| (24,502) |
| (11,336) |
| (138,774) |
| (68,657) |
Change in fair value on derivative |
| 37,371 |
| (104,421) |
| (33,687) |
| (246,260) |
Gain on sale of asset |
| - |
| - |
| - |
| 2,643 |
|
|
|
|
|
|
|
|
|
Total other income (expense) |
| 12,869 |
| (115,757) |
| (172,461) |
| (312,274) |
|
|
|
|
|
|
|
|
|
Net income/(loss) before income tax provision |
| (247,924) |
| (170,223) |
| (2,094,316) |
| (1,026,538) |
|
|
|
|
|
|
|
|
|
NET INCOME/(LOSS) |
| $(247,924) |
| $(170,223) |
| $(2,094,316) |
| $(1,026,538) |
|
|
|
|
|
|
|
|
|
Income/(Loss) per share - basic and diluted |
| $(0.00) |
| $(0.00) |
| $(0.01) |
| $(0.00) |
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding - basic and diluted |
| 348,284,383 |
| 341,619,198 |
| 349,849,154 |
| 342,514,810 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
HEALTHY EXTRACTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
|
| FOR THE NINE MONTHS | ||
|
| ENDING | ||
|
| SEPTEMBER 30 | ||
| 2023 |
| 2022 | |
Cash Flows from Operating Activities: |
|
|
|
|
Net Income/(Loss) |
| $(2,094,316) |
| $(1,026,538) |
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
Depreciation and amortization |
| 1,646 |
| 329 |
Warrants issued for services |
| 1,275,471 |
| 402,100 |
Change in fair value on derivative liability |
| 33,687 |
| 246,260 |
Changes in operating assets and liabilities: |
|
|
|
|
Accounts receivable |
| (3,430) |
| 32,585 |
Inventory |
| 291,553 |
| 91,523 |
Offering Costs |
| (135,202) |
| - |
Cost in acquisition of Hyperion/OP&M |
| 53,015 |
| - |
Right of use asset, net |
| (86,279) |
| - |
Deposits |
| - |
| (16,890) |
Accounts payable |
| (22,778) |
| 76,799 |
Accrued liabilities |
| 94,216 |
| (52,330) |
Accrued interest payable |
| 31,489 |
| 16,621 |
Accrued interest payable - related party |
| 380 |
| (14,118) |
Lease liability - current |
| 62,989 |
| - |
Lease liability - long-term |
| 26,187 |
| - |
Net Cash used in Operating Activities |
| (471,373) |
| (243,658) |
|
|
|
|
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
|
|
Purchase of fixed assets |
| - |
| (7,987) |
Gain on sale of asset |
| - |
| 2,643 |
Cash flows provided by (used in) Investing Activities: |
| - |
| (5,344) |
|
|
|
|
|
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock |
| (35,000) |
| (11,386) |
Proceeds from issuance of convertible debt, |
| 350,000 |
| 445,826 |
Payments for repayment of convertible debt |
| (110,535) |
| (256,826) |
Proceeds from issuance of noted payable |
| 627,000 |
| 93,174 |
Payments for repayment of notes payable |
| (530,740) |
| - |
Proceeds from issuance of noted payable - related party |
| 82,500 |
| - |
Payments for repayment of noted payable - related party |
| - |
| (170,000) |
Loan origination fees |
| 68,888 |
| - |
Net Cash provided by Financing Activities |
| 452,113 |
| 100,788 |
|
|
|
|
|
Increase (decrease) in cash |
| (19,260) |
| (148,214) |
Cash at beginning of period |
| 65,651 |
| 222,098 |
Cash at end of period |
| $46,391 |
| $73,884 |
The accompanying notes are an integral part of these unaudited consolidated financial statements.
HEALTHY EXTRACTS, INC. |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) |
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 2023 AND 2022 |
(Unaudited) |
|
|
|
| Additional |
|
|
|
| ||
|
| Common Stock |
| Paid-In |
| Accumulated |
|
| ||
| Shares |
| Amount |
| Capital |
| Deficit |
| Total | |
|
|
|
|
|
|
|
|
|
|
|
Balance - December 31, 2021 |
| 338,384,171 |
| $338,384 |
| 17,075,974 |
| $(14,943,620) |
| $2,470,738 |
|
|
|
|
|
|
|
|
|
|
|
Cancelation of common stock for debt |
| (800,267) |
| (800) |
| (53,013) |
| - |
| (53,813) |
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for cash |
| 507,917 |
| 508 |
| 24,888 |
| - |
| 25,396 |
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services |
| 6,740,000 |
| 6,740 |
| 395,360 |
| - |
| 402,100 |
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock - Note Conversion |
| 340,621 |
| 341 |
| 16,690 |
| - |
| 17,031 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) for the period |
| - |
| - |
| - |
| (1,026,538) |
| (1,026,538) |
|
|
|
|
|
|
|
|
|
|
|
Balance - September 30, 2022 |
| 345,172,442 |
| $345,173 |
| 17,459,899 |
| $(15,970,158) |
| $1,834,913 |
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock for services |
| 320,000 |
| 320 |
| 15,680 |
| - |
| 16,000 |
|
|
|
|
|
|
|
|
|
|
|
Fair value of restricted stock units |
| - |
| - |
| 76,047 |
| - |
| 76,047 |
|
|
|
|
|
|
|
|
|
|
|
Fair value of options and warrants issued |
| - |
| - |
| 698,424 |
| - |
| 698,424 |
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock-restricted stock units issued |
| 9,000,000 |
| 9,000 |
| 441,000 |
| - |
| 450,000 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) for the period |
| - |
| - |
| - |
| (2,094,316) |
| (2,094,316) |
|
|
|
|
|
|
|
|
|
|
|
Balance - September 30, 2023 |
| 354,492,442 |
| 354,492 |
| 18,691,050 |
| (18,021,058) |
| 1,024,485 |
The accompanying notes are an integral part of these financial statements.
-2-
GREY CLOAK TECH INC
STATEMENT OF OPERATIONS
(unaudited)HEALTHY EXTRACTS, INC.
For the | For the | For the | For the | |||||||||||||
three months | three months | nine months | nine months | |||||||||||||
ended | ended | ended | ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
REVENUE | $ | 34,500 | $ | 42,500 | $ | 114,000 | $ | 122,750 | ||||||||
OPERATING EXPENSES | ||||||||||||||||
Direct cost of revenue | 12,000 | 5,231 | 29,659 | 16,834 | ||||||||||||
General and administrative | 47,925 | 244,931 | 498,574 | 606,028 | ||||||||||||
General and administrative - related party | 48,500 | 44,000 | 157,500 | 135,650 | ||||||||||||
Total operating expenses | 108,425 | 294,162 | 685,733 | 758,512 | ||||||||||||
OTHER INCOME (EXPENSE) | ||||||||||||||||
Interest expense, net of interest income | (249,629 | ) | (574,114 | ) | (1,807,713 | ) | (630,449 | ) | ||||||||
Interest expense - related party | (202 | ) | (210 | ) | (787 | ) | (210 | ) | ||||||||
Change in fair value on derivative | (1,160,652 | ) | (1,694 | ) | 442,636 | (1,694 | ) | |||||||||
Loss on extinguishment of debt | (35,072 | ) | (47,969 | ) | (211,525 | ) | (47,969 | ) | ||||||||
Total other income (expense) | (1,445,555 | ) | (623,987 | ) | (1,577,389 | ) | (680,322 | ) | ||||||||
Net loss before income tax provision | (1,519,480 | ) | (875,649 | ) | (2,149,122 | ) | (1,316,084 | ) | ||||||||
Income tax provision | — | — | — | — | ||||||||||||
NET LOSS | $ | (1,484,408 | ) | $ | (875,649 | ) | $ | (2,149,122 | ) | $ | (1,316,084 | ) | ||||
Loss per share - basic and diluted | $ | (0.05 | ) | $ | (0.06 | ) | $ | (0.09 | ) | $ | (0.09 | ) | ||||
Weighted average number of shares outstanding - basic and diluted | 32,650,304 | 15,668,614 | 25,247,049 | 15,339,720 |
The accompanying notes are an integral part of these financial statements.
-3-
GREY CLOAK TECH INC
STATEMENT OF CASH FLOWS
(unaudited)
For the | For the | |||||||
nine months | nine months | |||||||
ended | ended | |||||||
September 30, | September 30, | |||||||
2017 | 2016 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net Loss | $ | (2,149,122 | ) | $ | (1,316,084 | ) | ||
Adjustments to reconcile net loss to net cash | ||||||||
used in operating activities: | ||||||||
Depreciation and amortization | 1,194 | 964 | ||||||
Loss on disposal of assets | — | 2,664 | ||||||
Warrants issued for services | — | 315,019 | ||||||
Non-cash fees including penalties | 97,464 | — | ||||||
Non-cash interest | 1,755,834 | 612,470 | ||||||
Change in fair value on derivative liability | (442,636 | ) | 1,694 | |||||
Loss on extinguishment of debt | 211,525 | 47,969 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 19,000 | (9,500 | ) | |||||
Prepaid expenses | 2,189 | 1,395 | ||||||
Accrued interest receivable | (791 | ) | — | |||||
Accounts payable | 31,641 | (12,892 | ) | |||||
Accounts payable - related party | 6,570 | 5,799 | ||||||
Accrued payroll and taxes | 5,763 | (379 | ) | |||||
Accrued interest payable | 42,647 | 7,217 | ||||||
Accrued interest payable - related party | 787 | 210 | ||||||
Net Cash used in Operating Activities | (417,935 | ) | (343,454 | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Purchase of fixed assets | (1,189 | ) | (1,581 | ) | ||||
Payments for note receivable | (33,000 | ) | — | |||||
Cash flows used from Investing Activities: | (34,189 | ) | (1,581 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of notes payable | — | 35,000 | ||||||
Proceeds from issuance of convertible debt, net of original issue discount of $52,500 and $37,250, respectively | 682,750 | 295,000 | ||||||
Payments for repayment of convertible debt | (186,250 | ) | — | |||||
Payments for repayment of notes payable - related party | (5,000 | ) | — | |||||
Proceeds from modification of warrants | — | 50,000 | ||||||
Proceeds from exercise of warrants | — | 37,500 | ||||||
Net Cash provided by Financing Activities | 491,500 | 417,500 | ||||||
Increase in cash | 39,376 | 72,465 | ||||||
Cash at beginning of period | 24,102 | 1,536 | ||||||
Cash at end of period | $ | 63,478 | $ | 74,001 | ||||
Supplemental disclosure of cash flow information of non-cash financing activities: | ||||||||
Beneficial conversion feature and warrants recognized as a discount | $ | — | $ | 260,422 | ||||
Conversion of debt for shares of common stock | $ | 743,936 | $ | 53,804 |
The accompanying notes are an integral part of these financial statements.
-4-
GREY CLOAK TECH INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBERSeptember 30, 20172023 and 2022
(unaudited)
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Grey Cloak TechHealthy Extracts Inc. (the “Company”) was incorporated in the State of Nevada on December 19, 2014.2014 as Grey Cloak Tech Inc. On October 23, 2020, we changed our name from Grey Cloak Tech Inc. to Healthy Extracts Inc. to more accurately reflect our business. The Company was formedhas acquired BergaMet NA, LLC and Ultimate Brain Nutrients, LLC which market and sell health supplemental products.
On January 13, 2023 the Company entered into definitive agreement to provide cloud based software to detect advertising fraud onacquire nutraceutical manufacturer, Hyperion, and its digital marketing affiliate, Online Publishing and Marketing. The total purchase price for the internet.acquisitions will be $1,750,000 in cash, $1,300,000 in the form of secured promissory notes, which will be due in twelve months once the purchase has occurred, and $1,250,000 worth of our common stock.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited 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 United States Securities and Exchange Commission (“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 consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of September 30, 20172023 and the results of operations and cash flows for the periods presented. The results of operations for the nine months ended September 30, 20172023 are not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s form 10-K for the year ended December 31, 20162022 filed with the SEC on April 17, 2017.March 31, 2023.
Use of Estimates
The preparation of financial statements in conformity with GAAPaccounting 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 disclosure of contingent assets and liabilities at the date of the financial statementsstatements. The estimates and judgments will also affect the reported amount ofamounts for certain revenues and expenses during the reporting period. Actual results could differ from these good faith estimates and judgments.
In regards to inventory write-offs and allowances, our Company determines the net realizable value by using the various factors as following: excess or slow-moving inventories (12 months or more of inventory on hand), expiration dates (within 12 months of the current reporting period), current and future product demand, production planning, and market conditions. If any of these factors are found in the reporting period, management will review each item and determine if any additional allowances or write-offs need to be made. A change in any of these variable’s factors could result in an adjustment to inventory. Management has provided for any risks in the current inventory allowance booked.
As for revenue adjustments for discounts, allowances and refunds, we treat each of these items differently. When it comes to revenue discounts, we will create the invoice for the product sold which will include any discounts given. These discounts usually happen for a short period of time for sales that we will offer around holidays. Due to the revenue being recognized once the order has shipped, less any applicable discount, we book this transaction at the net order transaction amount. In regards to allowances and refunds for revenue adjustments, due to our refund percentage is less than 1% we decided the need for an estimated adjustment for allowances and refunds was not material. If we do receive any returned orders, we will directly book those estimates.orders as refunds the day we receive the call from the customer requesting the refund. We will book the credit memo at the full value of the customer original order.
Cash
Cash includes cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value.
Accounts Receivables
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Accounts receivables are recorded at the invoice amount and do not bear interest.
Inventory
Inventories consist of health supplements held for sale in the ordinary course of business. The Company uses the weighted average cost method to value its inventories at the lower of cost and net realizable value. In pursuant to ASC 330-10-50-6, the components of inventory cost include raw materials, labor, and overhead. Additionally, the weighted average cost per unit is used as a basis to determine the cost amounts removed from inventory as the aggregate number of units expected to be delivered under each order. Finally, the net realizable value is determined by using the various factors as following: excess or slow-moving inventories (12 months or more of inventory on hand), expiration dates (within 12 months of the current reporting period), current and future product demand, production planning, and market conditions. If any of these factors are found in the reporting period, management will review each item and determine if any additional allowances or write-offs need to be made. A change in any of these variable’s factors could result in an adjustment to inventory.
An allowance for inventory was established in 2018 and is evaluated each quarter to determine if all items are still sellable due to the factors listed above. As of September 30, 2023 and December 31, 2022, the total of inventory allowance was $1,643,585 and $1,914,891. The following are the classes held in inventory as of September 30, 2023 and December 31, 2022:
|
| SEPTEMBER 30, |
| DECEMBER 31, |
| 2023 |
| 2022 | |
Inventory |
|
|
|
|
|
|
|
|
|
Inventory Classes: |
|
|
|
|
Raw Materials |
| $3,135,059 |
| $3,398,655 |
Finished Goods |
| 5,788 |
| 310,600 |
Work in process |
| 30,313 |
| 24,764 |
Total inventory |
| 3,171,160 |
| 3,734,019 |
Inventory allowance |
| (1,643,585) |
| (1,914,891) |
Total inventory, net |
| 1,527,575 |
| 1,819,128 |
Property and Equipment
The Company’s property and equipment are recorded at cost and depreciated using the straight-line method over the useful lives of Contents
GREY CLOAK TECH INCthe assets, generally from three to seven years. Upon sale or disposal of property and equipment, the related asset cost and accumulated depreciation or amortization are removed from the respective accounts and any gain or loss is reflected in current operations.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)
Indefinite-Lived Intangible Assets
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUING)
Indefinite-lived intangible assets established in connection with business combinations consist of patents, trademarks, and trade names. The impairment test for identifiable indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with it carrying value. If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. With the acquisition of Ultimate Brain Nutrients on April 3, 2020 the Company added a purchasing value of $315,604 in patents to its balance sheet.
As of September 30, 2023, the Company believes that based upon qualitative factors, no impairment of indefinite-lived intangible assets is necessary.
Goodwill
In accordance with Goodwill and Other Intangible Assets, goodwill is defined as the excess of the purchase price over the fair value assigned to individual assets acquired and liabilities assumed and is tested for impairment at the reporting unit level on an annual basis in the Company's fourth fiscal quarter or more frequently if indicators of impairment exist. The performance of the test involves a two-step process. The first step of the impairment test involves comparing the fair value of the Company's reporting units with each respective reporting unit's carrying amount, including goodwill. The fair value of reporting units is generally determined using the income approach. If the carrying amount of a reporting unit exceeds the reporting unit's fair value, the second step of the goodwill impairment test is performed to determine the amount of any impairment loss. The second step of the goodwill impairment test involves comparing the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. No goodwill impairment indicators were present, for the goodwill listed on the books as of September 30, 2023, after working through our analysis of goodwill during the months ended September 30, 2023.
The Company has determined that the method applied represents the fair value of the asset group principally because the valuation of the intangibles with the asset group is based on the anticipated cash flows related to the revenue stream from its customers. The asset group excludes goodwill, long term non-operational assets and liabilities and cash. As such, the principal value from the asset group relates to the cash inflows from its customers and the cash outflows required to service these customers. The fair value for the asset group consists of the following:
·Fair value of net revenues: computed using the income approach. The key input to these computations is the anticipated cash inflows from customers. These valuations include 100% of the cash inflows related to the customer base, and taking cash outflows into consideration.
·Fair value of working capital (including accounts receivable, inventory, accrued expenses, and accounts payables). Due to the short-term nature of the working capital, book value has been determined to be fair value. These accounts represent either avoided future outflows (inventory, prepaids) or future cash flows (accrued expense, AP and AR) related to customer sales.
·Fair value of five years of revenue (2022 to 2026): we discounted our cash flows to the anticipated cash projected to be received. We also projected the anticipated cash outflows required to service these customers. If the asset group was to be valued as a whole, we would expect an income approach based on the revenues being generated from the customers and expenses required to service those customers, appropriately adjusted for the working capital position. The sum of these values reasonably approximates this approach.
The Company’s revenue streams align directly with the intangibles, which were recorded as a result of the BergaMet acquisition in fiscal 2019. For purposes of the Step 2 recoverability test under ASC 360 subsection 2.3., the net revenues from BergaMet customers base were used. The revenue stream fairly reflects anticipated future cash flows; accordingly, the intangibles associated with these revenue streams have been tested with the expected cash flows.
Due to the purchase of Ultimate Brian Nutrients, LLC being a related party transaction and the new division recording no revenue as of June 30, 2020, the Company found the goodwill to be impaired. Due to the impairment the Company expensed the goodwill related to the purchase as of June 30, 2020.
Debt with Warrants
In accordance with ASC Topic 470-20-25, when the Company issues debt with warrants, the Company treats the fair value of the warrants as a debt discount, recorded as a contra-liability against the debt, and amortizes the balance over the life of the underlying debt as amortization of debt discount expense in the consolidated statements of operations using the straight-line method. The offset to the contra-liability is recorded as either equity or liability in the Company’s consolidated balance sheets depending on the accounting treatment of the warrants. If the debt is retired early, the associated debt discount is then recognized immediately as amortization of debt discount expense in the consolidated statements of operations.
Convertible Debt – Derivative Treatment
When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: (a) one or more underlying’s, typically the price of our common stock; (b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; (c) no initial net investment, which typically excludes the amount borrowed; and (d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both (a) indexed to its own stock; and (b) classified in stockholders’ equity in its balance sheet.
If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using a Black-Scholes Option-Pricing model upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt using the straight-line method.
Revenue Recognition
We recognizeThe Company applies Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) topic 606, Revenue from Contracts with Customers (ASC 606). ASC 606 establishes a single comprehensive model for entities to use in accounting for revenue whenarising from contracts with customers and supersedes all of the following conditions are satisfied: (1) thereexisting revenue recognition guidance. This standard requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 requires us to identify distinct performance obligations. A performance obligation is persuasive evidence of an arrangement; (2) the producta promise in a contract to transfer a distinct good or service has been provided to the customer; (3)customer. When distinct performance obligations exist, the amountCompany allocates the contract transaction price to each distinct performance obligation. The standalone
selling price is used to allocate the transaction price to the separate performance obligations. The Company recognizes revenue when, or as, the performance obligation is satisfied.
Mostly, revenues are recognized at the time of feesshipment to the customer with the price being fixed and determinable and collectability assured, provided title and risk of loss is transferred to the customer. Most of our shipping and handling costs are built into the transaction price, but if the customer asks for express shipping, the costs charged to customers are classified as sales, and the shipping and handling costs incurred are included in cost of sales.
The Company’s subsidiary, BergaMet N.A., LLC, recognizes revenue from our main source – e-commerce revenue. Here is a list of all the sales channels which include the Company’s subsidiary website channel or any other selling channel like Amazon, doctors’ offices, and walk-in sales. All of our customer sales for Healthy Extracts, Inc. and Ultimate Brain Nutrients, LLC are recognized as revenue under the subsidiary of BergaMet N.A., LLC. All three divisions of the Company sell plant-based nutraceuticals to our end using customers.
The Company evaluates the criteria pursuant to ASC 606-10-55. Some of the different considerations that we use because of their significance are as follows: Collectability - payment has to be made prior to shipment unless the customer has agreed upon terms. Guaranties – we offer a money back to customers if they are unhappy with our products. Principal versus Agent Considerations - currently we are the principal and have not engaged an agent at this time and we have not recognized any revenues under the agent considerations.
Revenue is recognized when, or as, control of a promised merchandise or service is shipped to the customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring title of those products or services and are recorded net of and discounts or allowances. Shipping costs paid by the customer is fixed or determinable; and (4)are included in revenue. Merchandise sales are fulfilled with inventory held in our warehouse in Henderson, NV. Therefore, the collectionCompany’s contracts have a single performance obligation (shipment of our fees is probable.product).
TheIf the Company will record revenue when it is realizable and earned and the computer programming services or marketing services have been rendered to the customers. Additionally,receives a request for refund on a customer obligation, the Company will recordrefund the full cost of the obligation due to our money back guarantee. Historically, we have done a valuation of our sales allowance account (customer returns). In 2022 our return percentage was 0.009% of sales and 2021 was 0.01% of sales. Due to the low refund percentage management decided there was not a need for an estimated adjustment for allowances and refunds due to materiality.
Revenue recognition is evaluated through the following five-step process:
1.identification of the contract with a customer;
2.identification off the performance obligations in the contract;
3.determination of the transaction price;
4.allocation of the transaction price to the performance obligations in the contract; and
5.recognition of revenue fromwhen or as a performance obligation is satisfied.
These steps are met when an order is received, a price agreed and the sale of its software when the software isproduct shipped or delivered to the customer or it will be recognized ratably throughout the term of the contract.that customer.
Concentration
One customer accountedThere is no concentration of revenue for 100% of total revenue earned during the nine months ended September 30, 20172022 and 2016. 100% offor the accounts receivable is due from this customer atmonths ended September 30, 2017 and December 31, 2016.2023 because the revenue was earned from multiple customers.
Income Taxes
The Company accountsuses the liability method of accounting for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides thatunder which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reportingaccounting bases and the tax bases of the Company’s assets and liabilities and for operating loss and tax credit carry forwards. Deferredliabilities. The deferred tax assets and liabilities are measuredcomputed using the currently enacted tax rates and laws that will be in effect whenfor the year in which the temporary differences are expected to reverse.
The Company's deferred income taxes include certain future tax benefits. The Company records a valuation allowance to reduceagainst any portion of those deferred income tax assets towhen it believes, based on the amount thatweight of available evidence, it is believed more likely than not that some portion or all of the deferred income tax asset will not be realized.
The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized. As ofrealized upon its ultimate settlement. At September 30, 2017, the Company did not have any amounts recorded pertaining to2023 and 2022, there were no uncertain tax positions.positions that required accrual.
Fair Value Measurements
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including cash and cash equivalents are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
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GREY CLOAK TECH INC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUING)
Level 1 — quoted prices in active markets for identical assets or liabilities
Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The derivative liability in connection with the conversion feature of the convertible debt, classified as a Level 3 liability, is the only financial liability measure at fair value on a recurring basis. If the convertible debt is viewed as short-term, management chooses to expense the full debt discount in the period incurred is recorded as a gain or loss in the consolidated statement of operations.
The Company measures and reports certain financial instruments as liabilities at fair value on a recurring basis. The fair value of these instruments as of September 30, 2023 and December 31, 2022 was as follows:
|
| Fair Value |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Fair Value at December 31, 2021 | $ |
| 92,527 |
|
|
| - |
|
|
| - |
|
| $ | 92,527 |
|
Derivative liability |
|
| 102,011 |
|
|
| - |
|
|
| - |
|
|
| 102,011 |
|
Fair Value at December 31, 2022 | $ |
| 102,011 |
|
|
| - |
|
|
| - |
|
| $ | 102,011 |
|
Derivative liability |
|
| 135,698 |
|
|
| - |
|
|
| - |
|
|
| 135,698 |
|
Fair Value at September 30, 2023 | $ |
| 135,698 |
|
|
| - |
|
|
| - |
|
| $ | 135,698 |
|
September 30, 2023
Level 1 | Level 2 | Level 3 | Total | |||||
Derivative liability | - | - | 135,698 | $135,698 |
December 31, 2022
Level 1 | Level 2 | Level 3 | Total | |||||
Derivative liability | - | - | 102,011 | $102,011 |
The details of derivative liability transactions for the period ended September 30, 2023 and December 31, 2022 are as follows:
The change in Level 3 financial instrument fair value is as follows:
Balance, January 1, 2017 | $ | 2,038,952 | ||
Issued during the nine months ended September 30, 2017 | 1,867,043 | |||
Change in fair value recognized in operations | (442,635 | ) | ||
Converted during the nine months ended September 30, 2017 | (1,424,756 | ) | ||
Balance, September 30, 2017 | $ | 2,038,605 |
Balance, December 31, 2021 | $92,527 | |
Issued during the months ended December 31, 2022 | 264,952 | |
Derivative liabilities debt premium | (43,269) | |
Change in fair value recognized in operations | (212,199) | |
Converted during the months ended December 31, 2022 | (0) | |
Balance, December 31, 2022 | $102,011 | |
Issued during the months ended September 30, 2023 | 145,067 | |
Derivative liabilities debt discount | 29,167 | |
Change in fair value recognized in operations | (102,375) | |
Converted during the months ended September 30, 2023 | (38,172) | |
Balance, September 30, 2023 | $135,698 |
The Company did not transfer any assets or liabilities measured at fair value on a recurring basis between levels during the period ending September 30, 2023 and December 31, 2022.
The Company determines the fair value of the derivative liability based on Level 3 inputs using the Black-Scholes option pricing model. The significant unobservable input assumptions that can significantly change the fair value includes common share price; amount of principal and accrued interest convertible into shares as of the conversion date, and the number of shares issuable upon conversion; expected exercise price; expected term; volatility; and risk-free interest rate.
Convertible Instruments
Convertible debt – derivative treatment
The Company evaluates and accountaccounts 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 standingfree-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.
If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative using the Black-Sholes option pricing model upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. If the convertible debt is viewed as short-term, management chooses to expense the full debt discount in the period incurred is recorded as a gain or loss in the consolidated statement of operations. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the consolidated statement of operations.
Convertible debt – beneficial conversion feature
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, any discounts, if applicable, 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 the note transaction and the effective conversion price embedded in the note. Debt discounts, if applicable, under these arrangements are amortized over the term of the related debt to their stated date of redemption.
Debt modifications and extinguishments
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 under change in fair value on derivative, in the consolidated operation statements, as a gain or loss on extinguishment of the two separate accounting liabilities. During the nine months endingended September 30, 2017,2023, the Company issued $388,888 of convertible debt.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements of five–step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract cost, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting period beginning after December 15, 2016, and early adoption is prohibited. Entities can transition to the standard either retrospectively or as a losscumulative-effect adjustment as of the date of adoption.
The Company’s revenues are recognized when control of the promised goods or services is transferred to our clients (upon shipment of goods) in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: (1) Identify the contract with a client; (2) Identify the performance obligations in the contract; (3) Determine the transaction price; (4) Allocate the transaction price to performance obligations in the contract; and (5) Recognize revenues when or as the Company satisfies a performance obligation.
We adopted ASC 2014-09 on extinguishmentJanuary 1, 2019. Although the new revenue standard is expected to have an immaterial impact, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities with them.
The Company leases its office and warehouse space under non-cancellable capital leases. The Company accounts for this lease in accordance with ASC 842. Right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of $211,525lease payments over the expected lease term. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the conversionlease. Since our lease arrangements do not provide an implicit rate, we use our estimated incremental borrowing rate for the expected remaining lease term at commencement date in determining the present value of convertible debtfuture lease payments.
The lease agreements do not contain any material residual value guarantees or material restrictive covenants.
Capital lease expense is recognized on a straight-line basis over the lease term. Variable lease payments are not included in the lease payments to measure the lease liability and are expensed as incurred.
Finance lease expense is comprised of both interest expense, which is recognized using the effective interest method, and amortization of the right-of-use assets. These expenses are presented consistently with a bifurcated conversion option.the presentation of other interest expense and amortization or depreciation of similar assets.
Common area maintenance fees (or CAMs) and other charges related to leases are expensed as incurred. See Note 5 — Right-of-Use Assets and Lease Liabilities for further discussion of the Company’s lease activities.
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GREY CLOAK TECH INC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUING)
Common Stock Purchase Warrants
The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide a choice of net-cash settlement or settlement in the Company’s own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40 ("(“Contracts in Entity's Own Equity"Equity”). The Company classifies as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement). The Company assesses classification of common stock purchase warrants and other free standingfree-standing derivatives at each reporting date to determine whether a change in classification is required.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has generated minimal revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start upstartup costs and expenses. As a result, the Company incurred accumulated net losses from Inception (December 19, 2014) through the period ended September 30, 20172023 of $6,270,429.$18,021,058. Due to our negative cash flow, the Company has substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. In addition, the Company’s development activities since inception have been financially sustained through equity financing. Management plans to seekkeep seeking funding through debt and equity financing.financing which are intended to mitigate the conditions that have raise substantial doubt about the entity’s ability to continue as a going concern.
NOTE 4 – RELATED PARTY
For the nine months ended September 30, 20172023 and 2016,December 31, 2022, the Company had expenses totaling $72,000$0 and $80,000,$1,000 respectively, to an officer and director for salaries, which is included in general and administrative expenses – related party on the accompanying consolidated statement of operations.
Note |
| Issuance Date |
| Maturity Date |
| Interest Rate |
| Original Principal Amount |
| Balance at September 30, 2023 |
| Balance at December 31, 2022 |
Unsecured debt A |
| March 2019, March and June 2020 |
| No due date |
| 0% |
| $ 866 |
| $ 866 |
| $ 866 |
Unsecured debt H |
| September 1, 2023 |
| January 1, 2024 |
| 10% |
| $ 82,500 |
| $ 82,500 |
| $ 866 |
Total notes payable |
|
|
|
|
|
|
| $ 83,366 |
| $ 83,366 |
| $ 866 |
Debt discount and deferred financing costs |
|
|
|
|
|
|
| - |
| - |
| - |
Total notes payable, net |
|
|
|
|
|
|
| $ 83,366 |
| $ 83,366 |
| $ 866 |
Unsecured debt A: On March 2, 2020, the Company received an unsecured loan of $200 from a shareholder. Additionally, during in March and June 2019, the Company received an additional loan of $666 from another shareholder. Both of these notes are unsecured and do not have a payment due date at an interest rate of 0.00%.
Unsecured debt H: On September 1, 2023, the Company received an unsecured line of credit in the principal of up to $82,500 with a loan origination fee in the amount of $7,500, which was amortized over the life of the line of credit. The net proceeds from this line of credit were $75,000. The loan is unsecured and is due for repayment on January 1, 2024. Interest will accrue at an interest rate of 10% per annum on any unpaid principal amount. If the Company defaults on the loan, the holder of the note can declare all or any portion of the unpaid balance with all accrued interest immediately due and payable. As of September 30, 2017, there was $0 in accounts payable – related party.
For2023, the nine months ended September 30, 2017 and 2016, the Company had expenses totaling $85,500 and $55,650, respectively to a company owned by an officer and director for consulting fees, which is included in general and administrative expenses – related party on the accompanying statementoutstanding principal balance of operations. As of September 30, 2017, there was $26,369 in accounts payable – related party.unsecured debt G totaled $75,000.
NOTE 5 – NOTES PAYABLE – RELATED PARTYRIGHT-OF-USE ASSETS AND LEASE LIABILITIES
In February 2022, the Company entered into a lease agreement for our warehouse facilities located at 7375 Commercial Way Suite 125, Henderson, Nevada 89011 with a term of 35 month 25 days and will expire in 2025. Prior to February 4, 2022 the company was leasing a warehouse facility on a month-to-month lease. The average monthly base rent for the first 12 months is approximately $5,333. For the next 24 months of the lease, the average monthly base rent will be approximately $5,694. As part of the agreement the Company will be responsible to share any property operating expenses estimated as $1,017 per month. Pursuant to ASC 842, the estimated operating expenses was included with the base rent and was included in the calculations of the right of use assets. The Company recorded operating lease right-of-use of $175,765 and lease liabilities for operating lease of $175,765.
Supplemental statements of operations information related to leases are as follows:
Months Ended | ||
September 30, 2023 | ||
Lease Cost | ||
Cash paid for amounts included in the measurement of lease liabilities for the first quarter 2022 | $- | |
Weighted average remaining lease term – operating leases (in years) | 1.33 | |
Average discount rate – operating leases | 9.8% | |
September 30, 2023 | ||
Operating leases | ||
Right-of-use assets, net of amortization of $75,142 | $86,279 | |
Short-term operating lease liabilities | $(62,989) | |
Long-term operating lease liabilities | (26,187) | |
Total operating lease liabilities | $(89,176) |
The following table summarizes the future undiscounted cash payments reconciled to the lease liability:
Year Ending | Operating Leases | |
2022 (remaining eleven months) | $- | |
2023 | 16,779 | |
2024 | 69,635 | |
2025 | 5,822 | |
2026 and thereafter | - | |
Total lease payments | $92,182 | |
Less: Imputed interest/present value discount | $(3,005) | |
Present value of lease liabilities | $89,176 |
NOTE 6 – NOTES PAYABLE
As of September 30, 2023, the Company had the following:
Note |
| Issuance Date |
| Maturity Date |
| Interest Rate |
| Original Principal Amount |
| Balance at September 30, 2023 |
| Balance at December 31, 2022 |
Unsecured debt B |
| February 22, 2022 |
| February 15, 2023 |
| 10% | $ | 200,000 | $ | - | $ | 75,370 |
Secured debt C |
| October 7, 2022 |
| October 7, 2023 |
| 12.99% |
| 200,000 |
| - |
| 200,000 |
Unsecured debt D |
| March 20, 2023 |
| August 17, 2024 |
| 10% |
| 330,000 |
| 236,564 |
| - |
Secured debt E |
| May 19, 2023 |
| May 18, 2024 |
| 12.99% |
| 131,000 |
| - |
| - |
Secured debt G |
| July 26, 2023 |
| May 18, 2024 |
| 12.99% |
| 196,000 |
| 165,066 |
| - |
Total notes payable |
|
|
|
|
|
| $ | 1,057,000 | $ | 401,630 |
| $ 275,370 |
Debt discount and deferred financing costs |
|
|
|
|
|
|
| - |
| - |
| - |
Total notes payable, net |
|
|
|
|
|
| $ | 1,057,000 | $ | 401,630 |
| $ 275,370 |
Unsecured debt B: On July 28, 2016,February 22, 2022, the Company received an unsecured loan in the principal of $200,000 with a loan origination fee in the amount of $15,000$20,000, which was fully expensed as interest expense in this period. The net proceeds from an officerthis loan were $180,000. The loan is unsecured and directorthe initial payment of $17,804 was due on April 22, 2022. There will be ten monthly payments due on the 22nd day of each following month, beginning on May 22, 2022 through Feb 15, 2023. During fourth quarter of 2022, the note holder agreed to forgo two months of payments and add them to the back end of the Company.note, which extended the due date of the note to April 25, 2023. Interest will accrue at an interest rate of 10% per annum on any unpaid principal amount. If the Company defaults on the loan, the default interest will increase to 16% per annum. During 2022, the Company made a total in principal payments of $124,630 towards unsecured debt B. During 2023, the Company has made additional principal payments towards unsecured debt B totaling $75,370 which settled the entire principal balance in full. As of September 30, 2023, the principal balance of the note was paid off.
Secured debt C: On October 7, 2022, the Company agreed to a secured loan by any consigned inventory held at fulfillment centers and any rights, title or interest in their account. The principal loan amount was $200,000 and will have a loan term of twelve months with an annual interest rate of 12.99%, with a default rate of 14.99%. The first three months of payment will be interest only payments of $2,165 and the remaining nine payments will be principal and interest payments of $23,442. Interest payments will begin November 8, 2022 and Installment payments, including principal and interest, will begin February 8, 2023. During 2023, the Company has made principal payments totaling $200,000 towards the secured debt C which settled the entire principal balance in full. As of September 30, 2023 the principal balance of secured debt C was paid off.
Unsecured debt D: On March 20, 2023, the Company received an unsecured loan in the principal of $330,000 with a loan origination fee in the amount of $30,000, which was fully expensed as interest expense in this period. The net proceeds from this loan were $300,000. The loan bearsis unsecured and the initial payment of $23,359 will be due on June 17, 2023. There will be fourteen monthly payments due on the 17th day of each following month, beginning on July 17, 2023 through August 17, 2024. Interest will accrue at an interest at 8%rate of 10% per annum and due the earlier of January 27, 2017 or whenon any unpaid principal amount. If the Company receives financingdefaults on the loan, the default interest will increase to 16% per annum. During 2023, the Company made a total in principal payments of over $45,000.$93,437 towards the unsecured debt D. As of September 30, 2023, the outstanding principal balance of unsecured debt D totaled $236,564.
Secured debt E: On May 19, 2023, the Company agreed to a secured loan by any consigned inventory held at fulfillment centers and any rights, title or interest in their account. The principal loan amount was $131,000 and will have a loan term of twelve months with an annual interest rate of 12.99%, with a default rate of 14.99%. The first payment of principal and interest will be $11,700 and will be due June 19, 2023 with an additional eleven payments due each 19th of the month. During 2023, the nineCompany has made principal payments totaling $10,282 towards the secured debt E. As of September 30, 2023 the principal balance of secured debt E was paid off.
Secured debt F: On July 26, 2023, the Company agreed to a secured loan by any consigned inventory held at fulfillment centers and any rights, title or interest in their account. The principal loan amount was $196,000 and will have a loan term of twelve months with an annual interest rate of 12.99%, with a default rate of 14.99%. The first payment of principal and interest will be $17,505 and will be due August 26, 2023 with an additional eleven payments due each 26th of the month. During 2023, the Company has made principal payments totaling $30,934 towards the secured debt E. As of September 30, 2023 the principal balance of secured debt E was $165,066.
Total interest expense for notes payable to was $12,830 and $5,000 for the three months ended September 30, 2017,2023 and 2022, respectively. The Company paid $5,653 and $0 in interest for the Company repaid $5,000 in principal.
During the ninethree months ended September 30, 2017, the Company recorded2023 and 2022, respectively.
Consolidated Statements of Operations – Interest expense, net of interest expense of $787. As of the date of this filing, the loan is in default.income
-8-
|
| September 30, |
| September 30, |
| 2023 |
| 2022 | |
Interest Income |
| $(10,061) |
| $(8,660) |
Interest Expense |
| 79,947 |
| 57,317 |
Origination Fees |
| 68,888 |
| 20,000 |
Total of Interest Expense |
| $138,774 |
| $68,657 |
GREY CLOAK TECH INC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)
NOTE 67 – CONVERTIBLE DEBT
As of September 30, 2023, the Company had the following convertible debt outstanding:
Note |
| Issuance Date |
| Maturity Date |
| Interest Rate |
| Original Principal Amount |
| Balance at September 30, 2023 |
| Balance at December 31, 2022 |
Convertible promissory note #1
|
| July 28, 2016 |
| January 19, 2017 |
| 8% | $ | 15,000 | $ | 6,750 | $ | 6,750 |
Convertible promissory note #2
|
| May 25, 2022 |
| August 5, 2023 |
| 10% |
| 154,000 |
| - |
| 110,535 |
Convertible promissory note #3 |
| May 12, 2022 |
| May 1, 2023 |
| 12% |
| 200,000 |
| 200,000 |
| 200,000 |
Convertible promissory note #4 |
| January 24, 2023 |
| October 24, 2023 |
| 0% |
| 388,888 |
| 388,888 |
| - |
Total notes payable |
|
|
|
|
|
| $ | 757,888 | $ | 595,638 | $ | 317,285 |
Debt discount and deferred financing costs |
|
|
|
|
|
|
| - |
| - |
| - |
Total notes payable, net |
|
|
|
|
|
| $ | 757,888 | $ | 595,638 | $ | 317,285 |
Convertible promissory note #1:
On September 22,July 28, 2016, the Company executed athe convertible promissory note #1 in the principal amount of $15,000, which is in default but management has not been able to make contact with this party, due to them living out of the country. The due date for $5,000.this note was January 19, 2017 at an interest rate of 8%, with a default interest rate of 18%. We have calculated the derivative liability as if it is in default (but the note’s default interest rate stays the same at 8%) and will still accrue appropriate interest until the note is fully satisfied or converted into the Company’s common stock. The conversion option for this note coverts at a 54% discount to the market price based on the lowest trading prices in the last 20 days trading period. The outstanding balance on convertible promissory note #1 as of September 30, 2023 was $6,750.
The fair value of the derivative as of September 30, 2023 was determined to be $10,574 using the Black-Scholes option pricing model based on the following assumptions: common share price of $0.05275 per share; expected exercise price of $0.0251 per share; volatility of 105%; expected dividend yield of zero; and annual risk-free interest rate of 5.40%. The derivatives are classified as liabilities as they represent an obligation to deliver a variable number of shares of common stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period. The Company originally recorded a derivative liability in the amount of $9,649. The fair value of the derivative liability is remeasured each reporting period using the Black-Scholes option pricing model, and the change in fair value is recorded as an adjustment to the derivative
liabilities account with the unrealized gains or losses reflect in other income – change in fair value on derivative.
Convertible promissory note #2:
On May 25, 2022, the Company executed the convertible promissory note #2 in the principal amount of $154,000 with a loan origination fee in the amount of $15,400, which was fully expensed as interest expense in this period. The net proceeds from this note were $138,600. The loan bearsis unsecured and the initial repayment of $14,488 was due on October 5, 2022. There will be ten additional monthly payments due on the 5th day of each following month, beginning on November 5, 2022 through August 5, 2023. Interest will accrual at an interest rate of 10% per annum on any unpaid principal amount. If the Company defaults on the loan, the default interest will increase to 16% per annum. During 2022, the Company has made principal payments totaling $43,465 towards the outstanding balance on convertible promissory note #2. During 2023, the Company has made additional principal payments towards convertible promissory note #2 totaling $110,535 which settled the entire principal balance in full. As of September 30, 2023, the principal balance of the note was paid off the principal balance of the note was paid off.
The fair value of the derivative was determined to be $0, due to being paid off, using the Black-Scholes option pricing model based, prior to the note being paid off, on the following assumptions: common share price of $0.05275 per share; expected exercise price of $0.05 per share; volatility of 105%; expected dividend yield of zero; and annual risk-free interest rate of 5.40%. The derivatives are classified as liabilities as they represent an obligation to deliver a variable number of shares of common stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period. The Company originally recorded a derivative liability in the amount of $89,895. The fair value of the derivative liability is remeasured each reporting period using the Black-Scholes option pricing model, and the change in fair value is recorded as an adjustment to the derivative liabilities account with the unrealized gains or losses reflect in other income – change in fair value on derivative.
Convertible promissory note #3:
On May 12, 2022, the Company executed the convertible promissory note #3 in the principal amount of $200,000. The loan is unsecured and the principal and any unpaid accrued interest shall be due and payable on May 12, 2023. Interest shall accrue at the rate of 12% per annum. The loan is dueoutstanding balance on December 31, 2016. Inconvertible promissory note #3 as of September 30, 2023 was $200,000. At any time on or after July 24, 2023, the event of default,holder shall have the interest rate increases to 22% per annum. During default the lender has the right, at his option, to convert the principal amount andof the note, or any portion of such principal amount, plus accrued but unpaid interest into shares of the loan at a rateCompany’s common stock. The Company has been advised the holder of eitherconvertible promissory note #3 will be converting the lesser of $0.20 or 60%full value of the lowest trading price during the prior 20 days of conversion. During the nine months ended September 30, 2017 the entire balance ofoutstanding principal and interest in the near future. The conversion price shall be $0.05 per share.
The fair value of the derivative was converted into 219,462determined to be $74,762 using the Black-Scholes option pricing model based on the following assumptions: common share price of $0.05275 per share; expected exercise price of $0.05 per share; volatility of 105%; expected dividend yield of zero; and annual risk-free interest rate of 5.40%. The derivatives are classified as liabilities as they represent an obligation to deliver a variable number of shares of common stock.stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period. The Company originally recorded a derivative liability in the amount of $184,011. The fair value of the derivative liability is remeasured each reporting period using the Black-Scholes option pricing model, and the change in fair value is recorded as an adjustment to the derivative liabilities account with the unrealized gains or losses reflect in other income – change in fair value on derivative.
Convertible promissory note #4:
On October 5, 2016,January 24, 2023, the Company executed athe convertible promissory note for $55,000#4 in the principal amount of $388,888 with a loan origination fee in the amount of $38,888, which was fully expensed as interest expense in this period, additionally there were $12,500 of legal costs and $31,500 of agent fees in which were also fully expenses in this period. The net proceeds from this loan were $306,000. The loan is unsecured and the principal and any unpaid accrued interest shall be due and payable on October 24, 2023 with an original issue discountinterest rate of $10,000. The loan bears0%. Any unpaid balance at that time will start to accrue interest at 12%a default rate of 20% per annum. The loan is dueoutstanding balance on December 31, 2016. Inconvertible promissory note #4 as of September 30, 2023 was $388,888. The holder shall have the event of default, the interest rate increases to 22% per annum. During default the lender has the right, at his option, to convert the principal amount andof the note, or any portion of such principal amount, plus accrued but unpaid interest into shares of the loan at a rate of either the lesser of $0.20 or 60%Company’s common stock. The conversion price means ninety percent (90%) of the lowest trading price duringVWAP of our common stock for the prior 20 daysfive (5) consecutive Trading Days immediately preceding the date of conversion. During the nine months ended September 30, 2017 the entire balanceissuance of principal and interest was converted into 1,874,854 shares of common stock.a Conversion Election.
On January 23, 2017, the Company executed three convertible promissory notes totaling $100,000. The loans bear interest at 8% per annum and are due on January 23, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of the lower of $0.04 per share or 60% of the lowest trading price during the prior 20 days of conversion. During the nine months ended September 30, 2017 a portion of the principal totaling $17,250 was converted into 3,450,000 shares of common stock.
On February 24, 2017, the Company executed a convertible promissory note for $24,000 with an OID of $4,000. The loan is due on February 24, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of the lower of $0.03 per share or 60% of the lowest trading price during the prior 20 days of conversion.
On February 28, 2017, the Company executed a convertible promissory note for $36,000 with an OID of $6,000. The loan is due on February 28, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of the lower of $0.03 per share or 60% of the lowest trading price during the prior 20 days of conversion. During the nine months ended September 30, 2017 the entire balance of principal and interest was converted into 6,360,000 shares of common stock.
On March 3, 2017, the Company executed a convertible promissory note for $90,000. The loan bears interest at 12% per annum and is due on December 1, 2017. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of 55% of the lowest trading price during the prior 20 days of conversion.
-9-
GREY CLOAK TECH INC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)
NOTE 6 – CONVERTIBLE DEBT (CONTINUED)
On March 7, 2017, the Company executed three convertible promissory notes totaling $90,000. The loans bear interest at 10% per annum and are due on March 9, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of the lower of $0.03 per share or 55% of the lowest trading price during the prior 20 days of conversion. During the nine months ended September 30, 2017 a portion of the principal totaling $20,000 was converted into 4,000,000 shares of common stock.
On March 8, 2017, the Company executed two convertible promissory notes totaling $60,000. The loans bear interest at 10% per annum and are due on March 9, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of the lower of $0.03 per share or 55% of the lowest trading price during the prior 20 days of conversion.
On March 9, 2017, the Company executed a convertible promissory note for $66,000. The loan bears interest at 12% per annum and is due on December 1, 2017. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of 50% of the lowest trading price during the prior 20 days of conversion. During the nine months ended September 30, 2017 a portion of the principal totaling $38,400 and a portion of interest totaling $2,530 was converted into 11,135,581 shares of common stock.
On March 14, 2017, the Company executed a convertible promissory note for $15,000. The loan bears interest at 10% per annum and is due on March 9, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of the lower of $0.03 per share or 55% of the lowest trading price during the prior 20 days of conversion.
On April 10, 2017, the Company executed a convertible promissory note for $30,000. The loan bears interest at 10% per annum and is due on April 10, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of the lower of $0.03 per share or 55% of the lowest trading price during the prior 20 days of conversion.
On August 22, 2016, the Company executed a convertible promissory note for up to $300,000 and has received a total of $30,000 with an original issue discount of $5,000 in the first tranche. The loan bears interest at 8% per annum. The first tranche is due on August 22, 2017. In the event of default, the interest rate increases to 22% per annum. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of 56% of the lowest trading price during the prior 20 days of conversion. However, if the stock price is below $0.10 then the loan can convert at a rate of 46% of the lowest trading price during the prior 20 days of conversion. Additionally, the Company issued 60,000 warrants as part the convertible promissory note. The warrants have an exercise price of $0.50 and can be exercised for 5 years. The fair value of the warrants werederivative was determined to be $50,362 using the Black-Scholes option pricing model based on the following assumptions: common share price of $0.05275 per share; expected exercise price of $0.0464 per share; volatility of 105%; expected dividend yield of zero; and annual risk-free interest rate of 5.40%. The derivatives are classified as liabilities as they represent an obligation to deliver a variable number of shares of common stock in the future and are therefore required to be initially and subsequently measured at fair value each reporting period. The Company originally recorded a derivative liability in the amount of $174,234. The fair value of the derivative liability is remeasured each reporting period using the Black-Scholes option pricing model, and the change in fair value is recorded as a debt discountan adjustment to the derivative liabilities account with the unrealized gains or losses reflect in other income – change in fair value on derivative.
Total interest expense for notes payable to was $6,138 and amortized over one year. On October 27, 2016,$9,988 for the Company received the second tranche of $30,000 with an original issue discount of $5,000. The second tranche is due on October 27, 2017. On April 20, 2017, the Company received the third tranche of $45,000 with an original issue discount of $10,750. The third tranche is due on April 20, 2018. During the ninethree months ended September 30, 2017,2023 and 2022, respectively. The Company paid $0 and $17,031 in interest for the lender converted $30,000 of principal and $1,819 of interest into 6,253,733 shares of common stock. As ofthree months ended September 30, 2017, the principal balance owed is $45,000.
-10-
GREY CLOAK TECH INC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)2023 and 2022, respectively.
NOTE 68 – CONVERTIBLE DEBT (CONTINUED)DERIVATIVE LIABILITY
On May 12, 2017,The Company evaluated the notes under the requirements of ASC 480 “Distinguishing Liabilities From Equity” (ASC 480) and concluded that the notes do not fall within the scope of ASC 480. The Company next evaluated the notes under the requirements of ASC 815 “Derivatives and Hedging Activities” and determined that the scope exception to ASC 815’s derivative accounting provisions does not apply. The Company then evaluated the embedded derivative criteria in ASC 815, and concluded that the conversion features meet all the embedded derivative criteria in ASC 815, and therefore, the conversion features meet the definition of an embedded derivative that should be separated from the notes and accounted for as a derivative liability.
The derivative liabilities were valued using a Black-Scholes option pricing model with the following average assumptions:
September 30, 2023 | Upon Issuance 2023 | December 31, 2022 | Upon Issuance 2022 | ||||
Stock Price | $0.05275 | $0.048 | $0.04 | $0.043-0.066 | |||
Exercise Price | $0.025-0.05 | $0.045 | $0.0224-0.05 | $0.0224-0.05 | |||
Expected Life | 0-0.07 | 0.75 | 0-0.59 | 1.0-1.2 | |||
Volatility | 105% | 145% | 168% | 194.52-197.12% | |||
Dividend Yield | 0% | 0% | 0% | 0% | |||
Risk-Free Interest Rate | 5.40% | 4.57% | 4.02% | 0.53-0.61% | |||
Convertible Notes | 595,638 | 388,888 | 317,285 | 356,000 | |||
Total Fair Value | $135,698 | $174,234 | $102,011 | $273,906 |
The expected life of the note was based on the remaining contractual term of the instruments. The Company uses the historical volatility of its Common Stock to estimate the future volatility for its Common Stock. The expected dividend yield was based on the fact that the Company executed a convertible promissory note for $60,000 with an OID of $3,000.has not paid
dividends in the past and does not expect to pay dividends in the future. The loan bears interest at 12% per annum and is due on February 20, 2018. In the event of default, therisk-free interest rate increases to 22% per annum. The lender haswas based on rates established by the right to convert the principal amount and unpaid interest of the loan beginning 180 days after original loan date at a rate of 61% of the average of the two lowest trading price during the prior 15 days of conversion.Federal Reserve Bank.
On June 22, 2017, the Company executed a convertible promissory note for $33,000 with an OIDConsolidated Statement of $3,000. The loan bears interest at 12% per annum and is dueOperations – Change in fair value on February 20, 2018. In the event of default, the interest rate increases to 22% per annum. The lender has the right to convert the principal amount and unpaid interest of the loan beginning 180 days after original loan date at a rate of 61% of the average of the two lowest trading price during the prior 15 days of conversion.
On July 5, 2017, the Company executed a convertible promissory note for $50,000 with an OID of $7,500. The loan bears interest at 9% per annum and is due on June 26, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of 58% of the average of the lowest trading price during the prior 15 days of conversion. This loan has prepayment penalties.
On September 27, 2017, the Company executed a convertible promissory note for $53,000 with an OID of $3,000. The loan bears interest at 12% per annum and is due on June 30, 2018. In the event of default, the interest rate increases to 22% per annum. The lender has the right to convert the principal amount and unpaid interest of the loan beginning 180 days after original loan date at a rate of 61% of the average of the two lowest trading price during the prior 15 days of conversion.derivative
During the nine monthsyear ended December 31, 2022, , the following transactions were recorded in the account “change in fair value on derivative”: (i) as a result of the issuance of convertible notes, the Company recorded derivative liabilities of $(264,952); (ii) the Company viewed the convertible debt derivatives as short term and thus chose to record as other income the debt premium associated with the derivative liabilities incurred during this period in the amount of $43,269; and (iii) the change in the fair value of these derivative liabilities for the year ended December 31, 2022 resulted in a gain of $212,199.
During the period ended September 30, 2017,2023, the following transactions were recorded in the account “change in fair value on derivative”: (i) as a result of the issuance of convertible notes, the Company recorded interestderivative liabilities of $(145,067); (ii) the Company viewed the convertible debt derivatives as short term and thus chose to expense the debt discounts associated with the derivative liabilities incurred during this period in the amount of $50,513$(29,167); (iii) the changes in the fair value of these derivative liabilities for the period ended September 30, 2023 resulted in a gain of $102,375; and amortization(iv) the Company recorded a gain on debt extinguishment of $38,172 to account for the extinguishment of derivative liabilities associated with the settlement or the conversion of the convertible debt discount of $434,542.accounted for as a derivative liability.
The Company has determined thatdetails of derivative liability transactions for the conversion feature embeddedperiod ended September 30, 2023 and December 31, 2022 are as follows:
The change in Level 3 financial instrument fair value is as follows:
Balance, December 31, 2021 | $92,527 | |
Issued during the months ended December 31, 2022 | 264,952 | |
Derivative liabilities debt premium | (43,269) | |
Change in fair value recognized in operations | (212,199) | |
Converted during the months ended December 31, 2022 | (0) | |
Balance, December 31, 2022 | $102,011 | |
Issued during the months ended September 30, 2023 | 145,067 | |
Derivative liabilities debt discount | 29,167 | |
Change in fair value recognized in operations | (102,375) | |
Converted during the months ended September 30, 2023 | (38,172) | |
Balance, September 30, 2023 | $135,698 |
NOTE 9 – INCOME TAXES
The effective income tax rate for the notes referred to above that contain a potential variable conversion amount constitutes a derivative which has been bifurcatedyears ended September 30, 2023 and 2022 differs from the note and recorded as a derivative liability, with a corresponding discount recordedU.S. Federal statutory rate due to the associated debt.following:
September 2023 | September 2022 | |||
Federal statutory income tax rate | $562,157 | $(166,169) | ||
Change in valuation allowance | (562,157) | 166,169 | ||
$- | $- |
-11-
The components of Contents
GREY CLOAK TECH INCthe deferred tax assets and liabilities at September 30, 2023 and 2022 are as follows:
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)
September 2023 | September 2022 | |||
Long-term deferred tax assets: | ||||
Federal net operating loss carryforwards | $562,157 | $166,169 | ||
Valuation allowance | (562,157) | (166,169) | ||
Net long-term deferred tax assets | $- | $- |
NOTE 710 – STOCKHOLDERS’ EQUITY
Authorized Stock
The Company has authorized 500,000,00075,000,000 common shares with a par value of $0.001 per share and 75,000,000 preferred shares with a par value of $0.001 per share. Each common share entitles the holder to one vote on any matter on which action of the stockholders of the corporation is sought.
Common Share Issuances
On During February 3, 2017, the Company issued 1,555,119increased the authorized number of shares to 500,000,000. Also, the Company increased the authorized preferred stock to 75,000,000 shares and designated 25,000,000 shares of preferred stock to Series A Convertible Preferred Stock. During January 2018, the Company increased its authorized number of common stock forshares to 1,000,000,000. During April 2018, the conversionCompany increased its authorized number of debt totaling $139,961 and gaincommon shares to 2,500,000,000. The Board of Directors, in the future, has the authority to increase the authorized capital up to 4,000,000,000 shares based on settlement of debt of $10,886.shareholder approval.
On February 22, 2017, theThe Company issued 289,000 shareseffectuated a reverse stock split of common stock for the conversion1-for-250 as of debt totaling $8,011 and gain on settlement of debt of $20,889.
On March 1, 2017, the Company issued 300,000 shares of common stock for the conversion of debt totaling $8,100 and gain on settlement of debt of $17,700.
On March 6, 2017, the Company issued 616,895 shares of common stock for the conversion of debt totaling $142,771 and loss on settlement of debt of $80,465.
On March 13, 2017, the Company issued 1,578,926 shares of common stock for the conversion of debt totaling $206,721 and loss on settlement of debt of $21,987.
On March 28, 2017, the Company issued 711,111 shares of common stock for the cashless exercise of 60,000 warrants.
On April 28, 2017, the Company issued 937,427 shares of common stock for the conversion of debt totaling $25,311 and gain on settlement of debt of $31,455.
On April 28, 2017, the Company issued 219,462 shares of common stock for the conversion of debt totaling $5,925 and gain on settlement of debt of $3,672.
On May 10, 2017, the Company issued 360,000 shares of common stock for the conversion of debt totaling $8,061 including fees of $500 and loss on settlement of debt of $20,739.
On May 24, 2017, the Company issued 219,462 shares of common stock for the conversion of debt totaling $5,925 and gain on settlement of debt of $8,155.
On May 24, 2017, the Company issued 468,714 shares of common stock for the conversion of debt totaling $12,655 and loss on settlement of debt of $31,873.
On May 24, 2017, the Company issued 468,713 shares of common stock for the conversion of debt totaling $12,655 and loss on settlement of debt of $31,872.
-12-
GREY CLOAK TECH INC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)
NOTE 7 – STOCKHOLDERS’ EQUITY (CONTINUED)
On June 12, 2017, the Company issued 438,468 shares of common stock for the conversion of debt totaling $15,000 and loss on settlement of debt of $18,762.
On July 31, 2017, the Company issued 800,000 shares of common stock for the conversion of debt totaling $7,920 including fees of $500 and loss on settlement of debt of $45,556.
On August 3, 2017, the Company issued 909,090 shares of common stock for the conversion of debt totaling $10,000 and loss on settlement of debt of $30,158.
On August 29, 2017, the Company issued 6,360,000 shares of common stock for the conversion of debt totaling $38,160 including interest of $2,160 and gain on settlement of debt of $31,073.
On August 30, 2017, the Company issued 1,348,000 shares of common stock for the conversion of debt totaling $4,853 including fees of $500 and loss on settlement of debt of $9,233.
On September 8, 2017, the Company issued a total of 3,412,074 shares of common stock for the conversion of debt totaling $17,246 including interest $1,740 and fees of $4,256 and loss on settlement of debt of $35,968.
On September 12, 2017, the Company issued 3,450,000 shares of common stock for the conversion of debt totaling $17,250 and gain on settlement of debt of $2,811.
On September 13, 2017, the Company issued 2,075,000 shares of common stock for the conversion of debt totaling $7,470 including fees of $500 and loss on settlement of debt of $15,982.
On September 15, 2017, the Company issued 4,000,000 shares of common stock for the conversion of debt totaling $20,000 and gain on settlement of debt of $8,125.
On September 21, 2017, the Company issued 1,670,733 shares of common stock for the conversion of debt totaling $6,015 including interest of $1,819 and fees of $500 and gain on settlement of debt of $33,681.
On September 22, 2017, the Company issued 833,433 shares of common stock for the conversion of debt totaling $4,584 including interest of $2,084 and gain on settlement of debt of $42,396.
On September 25, 2017, the Company issued 4,657,247 shares of common stock for the conversion of debt totaling $18,874 including interest of $1,129 and fees of $745 and loss on settlement of debt of $104,151.
On September 27, 2017, the Company issued 5,161,389 shares of common stock for the conversion of debt totaling $18,874 including interest of $1,133 and fees of $754 and gain on settlement of debt of $87,891.
Warrant Issuances
As of September 30, 2017, there were 9,696,250 warrants outstanding, of which 2,696,250 are fully vested.
-13-
GREY CLOAK TECH INC
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2017
(unaudited)
NOTE 8 – SUBSEQUENT EVENTS
In October and November 2017, the Company issued a total of 80,773,597 shares of common stock for the conversion of debt including principal of $281,345, interest of $21,873 and fees of $4,508.23, 2018.
On October 16, 2017, the Company filed an Amended and Restated Certificate of Designation of the Rights, Preferences, Privileges and Restrictions of the Series A Convertible Preferred Stock (the “Amended Certificate”) with the Secretary of State of the State of Nevada. The Amended Certificate reduces the number of preferred shares designated as Series A Preferred Stock from 25,000,000 shares to 1,333,334 shares. The Amended Certificate also changes the conversion and voting rights of the Series A Preferred Stock. The Series A Preferred Stock is now convertible into the number of shares of our common stock equal to 0.00006% of our outstanding common stock upon conversion. The voting rights of the Series A Preferred Stock are now equal to the number of shares of common stock into which the Series A Preferred Stock may convert.
On October 17, 2017,As of September 30, 2023, there are no outstanding shares of preferred stock. All the preferred stock was converted in common stock on February 4, 2019.
Common Share Issuances
During the months ended March 31, 2023, the Company issued 320,000 shares of common stock. During the months ended June 30, 2023, the Company did not issue any shares of common stock. During the months ended September 30, 2023, the Company issued 9,000,000 shares of common stock for the Restricted Stock Units which were executed. The holders paid the Company $0.01 for each share of common stock and the value of each share was $0.05.
There were no shares issued during the fourth quarter 2022. During the third quarter 2022, the Company issued 340,000 shares of common stock for consulting fees along with issuing 340,621 shares of common stock to convert an outstanding note payable to a shareholder. On May 19, 2022, the Company issued 4,400,000 shares of common stock for broker and consulting fees. On April 22 and 25, 2022, the Company issued 2,000,000 shares of common stock for broker and funding fees. On February 4, 2022, the Company issued 507,917 shares of common stock in a direct security purchase agreement. On January 10, 2022, the Company cancelled 200,267 shares of common stock. Further, on March 4, 2022, the Company cancelled 600,000 shares of common stock.
Warrant Issuances
During the month ending March 31, 2022, the Company issued 7,421,544 warrants to 2 unrelated parties at a per share price of $0.04716. On February 2, 2022, the Company issued 2,000,000 warrants to an individual at a per share price of $0.05. As of September 30, 2023, there were 23,421,544 warrants outstanding, of which 16,000,000 warrants are fully vested.
Weighted- | ||||
Weighted- | Average | |||
Average | Remaining | Aggregate | ||
Exercise | Contractual | Intrinsic | ||
Warrants | Price | Life (Years) | Value | |
Outstanding at December 31, 2022 | 16,000,000 | $0.06 | 2.17 | - |
Granted | 7,421,544 | 0.05 | 4.31 | - |
Forfeited | - | - | - | - |
Exercised | - | - | - | - |
Outstanding at September 30, 2023 | 23,421,544 | $0.06 | 2.34 | $- |
Vested and expected to vest at September 30, 2023 | 23,421,544 | $0.06 | $- | |
Exercisable at September 30, 2023 | 23,421,544 | $0.06 | $- |
At September 30, 2023, the intrinsic value of these stock warrants was $0 as the exercise price of these stock warrants were greater than the market price.
Stock Issued for Services
On March 6, 2023, the Company issued 320,000 shares of common stock for consulting fees at a per share price of $0.05.
On September 13, 2022, the Company issued 340,000 shares of common stock for consulting fees at a per share price of $0.05. During the period ending June 30, 2022, the Company issued 6,400,000 shares of common stock for broker, consulting, and funding fees at a per share price of $0.05.
Share Conversion Agreements
All of the holders of the Company’s Series A Convertible Preferred Stock (the “Preferred Holders”) entered into a Share Exchange Agreement with Eqova Life Sciences (“Eqova”)Preferred Stock Conversion Agreement. Pursuant to the Conversion Agreements, the Preferred Holders converted their shares of preferred stock into common stock, effective as of the Exchange. As a result, no shares of the Company’s Series A Convertible Preferred Stock are outstanding. An aggregate of 15,592,986 shares of common stock were issued to the Preferred Holders. The Preferred Holders agreed to convert each share of Series A Convertible Preferred Stock into eighteen (18) shares of common stock and issued 1,100,000agreed to retire a total of 467,057 shares of Series A Convertible Preferred Stock. The Company cancelled the retired shares.
Omnibus Stock in exchange for 100% of Eqova. The shares are convertible into approximately 66% of the total outstanding common stock as of the date of the closing. Of the total shares issued to Eqova only 550,000 shares are vestedGrant and the remaining 550,000 shares will vest upon sales of $100,000 for three consecutive months or $300,000 gross sales in any calendar quarter. Any unvested shares as of October 17, 2019, will be repurchased by the Company at a price of $0.01 per share. As part of the acquisition, Patrick Stiles, is currently the President and CEO of the Company and is a member of the board of directors.Option Plan
On October 17, 2017,December 31, 2021, the Company entered into an employment agreement with Patrick Stiles and has agreed to pay Mr. Stiles and annual base salary of $140,000 and may receiveapproved stock options as determined by the board of directors. If Mr. Stiles is terminated without cause he will receive three months severance and has non-compete and non-solicitation provisions for a period of one year after his termination.
On October 17, 2017, the Company entered into an employment agreement with William Bossung and has agreed to pay Mr. Bossung and annual base salary of $140,000 and may receive stock options as determined by the board of directors. If Mr. Stiles is terminated without cause he will receive three months severance and has non-compete and non-solicitation provisions for a period of one year after his termination.
On October 17, 2017, the Company issued a Convertible Promissory Note,option agreements in the amount of $30,000,7,500,000 shares with a strike price of $0.05 to twenty-one individuals. These options are immediately vest and will expire in five years.
The following summary of options activity for the three months ended September 30, 2023 is presented below:
Weighted- | ||||
Weighted- | Average | |||
Average | Remaining | Aggregate | ||
Exercise | Contractual | Intrinsic | ||
Options | Price | Life (Years) | Value | |
Outstanding at December 31, 2022 | 3,850,000 | $0.05 | 2.84 | 10,588 |
Granted | 750,000 | 0.05 | 3.67 | 2,063 |
Forfeited | - | - | - | - |
Exercised | - | - | - | - |
Outstanding at September 30, 2023 | 4,600,000 | $0.05 | 2.59 | $12,650 |
Vested and expected to vest at September 30, 2023 | 4,600,000 | $0.05 | $12,650 | |
Exercisable at September 30, 2023 | 4,600,000 | $0.05 | $12,650 |
At September 30, 2023, the intrinsic value of these stock options was $12,650 as the exercise price of these stock options were less than the market price.
On December 26, 2022, the Company canceled 12,150,000 stock options with a warrant to purchase 1,200,000 sharesstrike price of our common$0.05.
The following summary of restricted stock to Fred Covely to satisfy obligations owed to Mr. Covely byunits’ activity for the Company. three months ended September 30, 2023 is presented below:
|
|
|
|
| Weighted- |
| ||
|
|
|
|
| Weighted- |
| ||
|
|
|
|
| Average |
| ||
|
|
|
|
| Grant Date |
| ||
|
| Shares |
|
| Fair Value |
| ||
|
|
|
|
|
|
| ||
Non-vested at December 31, 2022 |
|
| - |
|
|
| - |
|
Granted |
|
| 15,975,000 |
|
|
| 0.05 |
|
Vested |
|
| (8,900,000 | ) |
|
| 0.05 |
|
Forfeited |
|
| - |
|
|
| - |
|
Non-vested at September 30, 2023 |
|
| 7,075,000 |
|
|
| 0.05 |
|
The Convertible Promissory Note has a maturity datetotal fair value of October 17, 2018 and is convertible into shares of our commonrestricted stock at a conversion price equal to fifty percent (50%) of the average of the closing trading price for our common stockunits vested during the three trading day period endingmonths ended June 30, 2023 was $445,000 and is included in selling, general and administrative expenses in the accompanying consolidation statements of operations. As of September 30, 2023, the amount of unvested compensation related to issuances of restricted stock units’ fair value was $353,750. This amount will be amortized and expensed over the life of the contract and will be included in selling, general and administrative expenses in the accompanying consolidation statements of operations.
The fair value of share options, units, and warrants are estimated using the Black-Scholes option pricing method based on the last trading day priorfollowing weighted-average assumptions:
|
| Three Months Ended September 30, |
| |||||
|
| 2023 |
|
| 2022 |
| ||
Risk-free interest rate |
|
| 5.18 | % |
|
| 2.75 | % |
Average expected term (years) |
|
| 4.7 years |
|
|
| 4.75 years |
|
Expected volatility |
|
| 106.5 | % |
|
| 194.8 | % |
Expected dividend yield |
|
| - |
|
|
| - |
|
NOTE 11 – BUSINESS SEGMENT INFORMATION
As of September 30, 2023, the Company operated in two reportable segments (Corporate and Health Supplements) supported by a corporate group which conducts activities that are non-segment specific. The following table presents selected financial information about the Company’s reportable segments for the quarter September 30, 2023.
CONSOLIDATED | HEALTH SUPPLEMENTS | CORPORATE | ||
BergaMet | UBN | |||
Revenue | 1,816,968 | 1,816,968 | - | - |
Cost of Revenue | 760,825 | 760,825 | - | - |
Long-lived Assets | 732,030 | 229,303 | 502,727 | - |
Gain (Loss) Before Income Tax | (2,094,316) | (328,433) | (6,113) | (1,759,877) |
Identifiable Assets | 1,636,798 | 1,636,798 | - | - |
Depreciation and Amortization | 1,646 | 1,646 | - | - |
As of September 30, 2022, the Company operated in two reportable segments (Corporate and Health Supplements) supported by a corporate group which conducts activities that are non-segment specific. The following table presents selected financial information about the Company’s reportable segments for the quarter ended September 30, 2022.
CONSOLIDATED | HEALTH SUPPLEMENTS | CORPORATE | ||
BergaMet | UBN | |||
Revenue | 1,668,105 | 1,668,105 | - | - |
Less Selling Fees | (235,255) | (235,255) | ||
Cost of Revenue | 382,038 | 382,038 | - | - |
Long-lived Assets | 732,030 | 193,260 | 538,771 | - |
Gain (Loss) Before Income Tax | (1,026,538) | (83,534) | (313) | (942,691) |
Identifiable Assets | 1,866,442 | 1,866,442 | - | - |
Depreciation and Amortization | 329 | 329 | - | - |
Currently, all of our customers are located in the United States of American and Canada. Our revenues to our customers are not material to our overall total sales. Our largest customers, Natural Grocers and Emerson Ecologics, LLC, account for less than 1% of our total sales in the months ending 2023 and 2022.
NOTE 12 – SUBSEQUENT EVENTS
The key terms for the 15,975,000 RSU are as follows: the effective grant date for all RSU’s is April 28, 2023. Each of the RSU’s will have a purchase price of $0.01 (prior to the conversion date. The warrantsreverse split). 8,900,000 of the RSU’s had an expiration date of June 30, 2023 and are all immediately vested once granted. All of the 8,900,000 shares of common stock were issued on July 5, 2023. 7,075,000 of the RSU’s will have an exercise priceexpiration date of $0.25 per share, mayMarch 31, 2024 and will vest on January 1, 2024. Any of the RSU will be exercised immediately and expire on October 17, 2020.forfeited without any payment or consideration by the holder. The RSU’s comply with Section 409A.
On October 17, 2017,The Company evaluated its September 30, 2023 financial statements for subsequent events through November 5, 2023, the Company issued 41,403date the financial statements were available to be issued.
ITEM 2Management’s Discussion and 146,330 sharesAnalysis of Series A Convertible Preferred Stock, restricted in accordance with Rule 144, to Fred CovelyFinancial Condition and William Bossung, respectively.
On October 31, 2017, the Company a totalResults of 45,601 shares of Series A Convertible Preferred Stock and purchased domain names from the officers of the Company.Operations
-14-
Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.
Although the forward-looking statements in this Quarterly Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, its unaudited financial statements and related notes elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.
Summary Overview
We were formed in December 2014. We are a platform for acquiring, developing, a cloud based softwarepatenting, marketing, and distributing plant-based nutraceuticals. Our products have not been evaluated by the FDA or any similar regulatory body for safety and efficacy. Our proprietary and patented products target select high-growth categories within the multibillion-dollar nutraceuticals market, such as heart, brain and immune health. Our mission is to detect advertising fraud on the internet. We had revenues of approximately $163,000 in the year ended December 31, 2016, 100% of which was from a single customer. We had revenues of $34,500 for the three months ended September 30, 2017, all of which was from the same customer.acquire or create products with health and performance benefits that have mass consumer appeal.
With the acquisition of Eqova Life Sciences,Guided by this mission, our first two acquisitions formed our current operating subsidiaries, Bergamet, which offers nutraceutical heart and immune health products, and UBN, which offers nutraceutical products for brain health. Based on published research from third-party sources, we will nowbelieve our Bergamet products have two lines of business. Eqova Life Sciences is focused on the productionbeen shown to support heart health, support immune response, and sale of hemp oil products through the medical practitioner market. Our legacy business will continue to provide software enterprise platform services.address metabolic syndrome.
Eqova Life Sciences
On October 17, 2017, we acquired Eqova Life Sciences, a Nevada corporation, through an exchange of shares of our Series A Convertible Preferred Stock for all of the outstanding equity interest of Eqova Life Sciences. As part of the Exchange, we have brought on Eqova Life Sciences’ PresidentOur Financial Condition and Director, Patrick Stiles, to serve as our President and Chief Executive Officer and as a Director on our Board of Directors.
-15-
Eqova Life Sciences is a medically-focused CBD company that develops clinical grade full spectrum hemp oil products, sold exclusively via partnerships with licensed medical practitioners to use with their patients. To date, we know of no other hemp oil company exclusively focuses on the practitioner market, leaving it largely underserved. According to The Hemp Business Journal, CBD products marketplace are projected to grow by 700% by 2020 with annual sales reaching $2.1 billion. With a head start in a growing marketplace, we believe that Eqova Life Sciences provides us with a prime growth opportunity with an established business.
Going Concern Issues
As a result of our financial condition, we have received a report from our independent registered public accounting firm for our financial statements for the years ended December 31, 20152022 and 2016, which2021 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern. SinceFrom inception we have been engaged substantially in financing activities and developing our business plan and incurring startup costs and expenses. As a result,(December 19, 2014) through the end of December 31, 2022, we have incurred accumulated net losses of $15,926,742. In order to continue as a going
concern we must effectively balance many factors and generate more revenue so that we can fund our operations from inception (December 19, 2014)our sales and revenues. If we are not able to do this, we may not be able to continue as an operating company. At our current revenue and burn rate, we have an immediate cash need, and thus we must raise capital by issuing debt or through the period ended September 30, 2017sale of $6,270,429. In addition, our development activities since inception have been financially sustained through equity financing. Management plansstock. However, there is no assurance that our existing cash flow will be adequate to seek funding through debtsatisfy our existing operating expenses and equity financing.capital requirements.
Results of Operations for the Three and Nine Monthsmonths Ended September 30, 20172023 and 20162022
Introduction
We had revenues of $34,500$613,541 and $1,816,968 for the three months ended September 30, 2017, compared to $42,500 for the three months ended September 30, 2016. Our operating expenses were $108,425 for the three months ended September 30, 2017, compared to $294,162 for the three months ended September 30, 2016, a decrease of $185,737, or approximately 171%.
We had revenues of $114,000 for theand nine months ended September 30, 2017,2023, compared to $122,750$499,653 and $1,432,850 for the three and nine months ended September 30, 2016.2022. Our operating expenses were $685,733cost of revenue for the three and nine months ended September 30, 2017,2023 were $120,309 and $760,825, compared to $758,512$68,551 and $402,788 for the three and nine months ended September 30, 2016, a decrease of $72,779, or approximately 10%.2022.
Our operating expenses were $754,026 and $2,977,998 for the three and nine months ended September 30, 2023, compared to $485,568 and $1,744,326 for the three and nine months ended September 30, 2022. Our operating expenses consisted mostlyentirely of general and administrative expenses, including general and administrative expenses to a related party.expenses.
Our net loss was $247,924 and $2,094,316 for the three and nine months ended September 30, 2023, compared to $170,223 and $1,026,538 for the three and nine months ended September 30, 2022.
-16-
Revenues and Net Operating Loss
Our revenue, operating expenses, net operating loss,other income (expense), and net loss for the three and nine months ended September 30, 20172023 and 20162022 were as follows:
Three Months | Three Months | Nine Months | Nine Months | |||||||||||||||||||||
September 30, | September 30, | Increase/ | September 30, | September 30, | Increase / | |||||||||||||||||||
2017 | 2016 | (Decrease) | 2017 | 2016 | (Decrease) | |||||||||||||||||||
Revenue | $ | 34,500 | $ | 42,500 | $ | (8,000 | ) | $ | 114,000 | $ | 122,750 | $ | (8,750 | ) | ||||||||||
Operating expenses: | ||||||||||||||||||||||||
Direct cost of revenue | 12,000 | 5,231 | 6,769 | 29,659 | 16,834 | 12,825 | ||||||||||||||||||
General and administrative | 47,925 | 244,931 | (197,006 | ) | 498,574 | 606,028 | (107,454 | ) | ||||||||||||||||
General and administrative - related party | 48,500 | 44,000 | 4,500 | 157,500 | 135,650 | 21,850 | ||||||||||||||||||
Total operating expenses | 108,425 | 294,162 | (185,737 | ) | 685,733 | 758,512 | (72,779 | ) | ||||||||||||||||
Net operating loss | 73,925 | 251,662 | (177,737 | ) | 571,733 | 635,762 | (64,029 | ) | ||||||||||||||||
Other income (expense) | (1,445,555 | ) | (623,987 | ) | 821,568 | (1,577,389 | ) | (680,322 | ) | 897,067 | ||||||||||||||
Net loss | $ | 1,519,480 | $ | 875,649 | $ | 643,831 | $ | 2,149,122 | $ | 1,316,084 | $ | 833,038 |
|
| Three Months Ended |
| Three Months Ended |
| Nine Months Ended |
| Nine Months Ended |
|
| September 30, |
| September 30, |
| September 30, |
| September 30, |
|
| 2023 |
| 2022 |
| 2023 |
| 2022 |
|
|
|
|
|
|
|
|
|
Revenue | $ | 613,541 | $ | 499,653 |
| 1,816,968 |
| 1,432,850 |
|
|
|
|
|
|
|
|
|
Cost of Revenue |
| 120,309 |
| 68,551 |
| 760,825 |
| 402.788 |
|
|
|
|
|
|
|
|
|
Gross Profit |
| 493,233 |
| 431,102 |
| 1,056,143 |
| 1,030,062 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
General and administrative |
| 754,026 |
| 485,568 |
| 2,977,998 |
| 1,744,326 |
Total operating expenses |
| 754,026 |
| 485,568 |
| 2,977,998 |
| 1,744,326 |
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
Interest expenses, net of interest income |
| (24,502) |
| (11,336) |
| (138,774) |
| (68,657) |
Change in fair value on derivative |
| 37,371 |
| (104,421) |
| (33,687) |
| (246,260) |
Gain on sale of asset |
| - |
| - |
| - |
| 2,643 |
Total other income (expense) |
| 12,869 |
| (115,757) |
| (172,461) |
| (312,274) |
|
|
|
|
|
|
|
|
|
Net income (loss) | $ | (247,924) | $ | (170,223) |
| (2,094,316) |
| (1,026,538) |
Revenues
We had revenues of $613,541 and $1,816,968 for the three and nine months ended September 30, 2023, compared to $499,653 and $1,432,850 for the three and nine months ended September 30, 2022, an increase of $113,889, or 23%, and $384,118, or 27%, respectively. Revenues for the three and six months ended June 30, 2023 were $34,500$588,484 and $1,203,427, respectively. We expect strong growth to increase as our direct consumer sales and marketing efforts continue to perform.
Cost of Revenue
Our cost of revenue for the three and nine months ended September 30, 2023 were $120,309 and $760,825, compared to $68,551 and $402,788 for the three and nine months ended September 30, 2022, an increase of $51,758, or 76%, and $358,037, or 89%, respectively. Gross profit for the three and nine months ended September 30, 2023 was $493,233 and $1,056,143, compared to $431,102 and $1,030,062 for the three and nine months ended September 30, 2022, an increase of $62,131, or 14%, and $26,081, or 3%, respectively.
Cost of revenue as a percentage of revenues was 20% and 42% for the three and nine months ended September 30, 2023, compared to 14% and 28% for the three and nine months ended September 30, 2022. Cost of revenue was higher in 2023 compared to 2022 because of higher material and shipping costs.
General and Administrative
Our general and administrative expenses were $754,026 and $2,977,998 for the three and nine months ended September 30, 2023, compared to $485,568 and $1,744,326 for the three and nine months ended September 30, 2022, an increase of $268,458, or 55%, and $1,233,672, or 71%, respectively. In the three months ended September 30, 2017, compared to $42,500 for2023, general and administrative expenses consisted mainly of consulting fees of $140,593, stock based compensation $125,614, advertising of $271,978, accounting and legal fees of $86,948, and salary and wages of $79,520. In the three months ended September 30, 2016, a decrease2022, general and administrative expenses consisted mainly of $8,000, or approximately 19%. Nearly alladvertising of the total revenue came from a single customer. The decrease was due to the decrease in needs from our customer.
Revenues were $114,000 for the nine months ended September 30, 2017, compared to $122,750 for the nine months ended September 30, 2016, a decrease$ 139,563, consulting fees of $8,750, or approximately 7%. Nearly all$160,465, professional fees of the total revenue came from a single customer. The decrease was due to the decrease in needs from our customer.
Direct Cost$23,773, and salary and wages of Revenue
Direct cost of revenue expenses was $12,000 for$37,428. During the three months ended September 30, 2017,2023, part of the increase in costs were due to a catch up of stock compensation that occurred. Additionally, some of the incremental costs of the Company’s potential acquisition have been included.
Other Income (Expense)
Other income (expense) was $12,869 and $(172,461) for the three and nine months ended September 30, 2023, compared to $5,231$(115,757) and $(312,274) for the three and nine months ended September 30, 2022, an increase of $128,626, or 111%, and a decrease of $139,813, or 45%, respectively. In the three months ended September 30, 2016,2023, other income (expense) consisted of interest expenses, net of interest income of $(24,502) and increasechange in fair value on derivative of $6,769, an increase of approximately 129%. The increase was due to an increase in costs from hosting charges.
Direct cost of revenue expenses was $29,659 for the nine months ended September 30, 2017, compared to $16,834 for the nine months ended September 30, 2016, an increase of $12,825, or approximately 76%. The increase was due to an increase in costs from hosting charges.
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General and Administrative
General and administrative expenses were $47,925 for$37,371. In the three months ended September 30, 2017, compared2022, other income (expense) consisted of interest expense, net of interest income of $(138,774) and change in fair value on derivative of $(333,687). Change in fair value of derivative was related to $244,931the conversion of convertible debts into common stock shares.
Net Income (Loss)
Net income (loss) was $(247,924) and $(2,094,316), or $0.00 and $0.01 per share, for the three months ended September 30, 2016, a decrease of $197,006, or 80%. The decrease was due to normal fluctuations in the business operations. General and administrative expenses – related party were $48,500 for the three months ended September 30, 2017, compared to $44,000 for the three months ended September 30, 2016, an increase of $4,500, or approximately 10%.
General and administrative expenses were $498,574 for the nine months ended September 30, 2017,2023, compared to $606,028$(170,223) and $(1,026,538), or $0.00 and $0.00 per share, for the three and nine months ended September 30, 2016, a decrease of $107,454, or approximately 18%. General and administrative expenses – related party were $157,500 for the nine months ended September 30, 2017, compared to $135,650 for the nine months ended September 30, 2016, an increase of $21,850, or approximately 16%.2022.
Operating Loss
Net operating loss was $73,925 forOur net income (loss) varies from period to period primarily because of the three months ended September 30, 2017, compared to $251,662 for the three months ended September 30, 2016, a decrease of $177,737, or approximately 71%. Net operating loss decreased, as set forth above, primarily due to a decreasechange in generalfair value on derivative and administrative expenses.
Net operating loss was $571,733 for the nine months ended September 30, 2017, compared to $635,762 for the nine months ended September 30, 2016, a decrease of $64,029, or approximately 10%. Net operating loss increased, as set forth above, primarily due to anour increase in general and administrative expenses.
Other Income (Expense)Liquidity and Capital Resources
Other expense was $1,445,555 forIntroduction
During the three months ended September 30, 2017, compared to other expense of $623,987 for the three months ended September 30, 2016, an increase of $821,568.
Other expense was $1,577,389 for theand nine months ended September 30, 2017, compared2023, we were unable to other expense of $680,322 for the nine months ended September 30, 2016, an increase of $897,067.
Other expense consisted of interest expense, net of interest income. Other income (expense) for both periods consisted primarily of a change in fair value on derivativegenerate sufficient revenues and loss on extinguishment of debt offset by interest expense, net of interest income. The increase in interest expense is attributable to new debt issuances. The Company had derivative liabilities which was part of the loss for the period.
Net Loss
Net loss was $1,519,480 for the three months ended September 30, 2017, or $0.05 per share, compared to $875,649 for the three months ended September 30, 2016, or $0.06 per share, an increase of $643,831. Net loss decreased, as set forth above, primarily due to a change in the fair value on derivative offset by an increase in interest expense from new debt issuances and an increase in general and administrative expenses.
Net loss was $2,149,122 for the nine months ended September 30, 2017, or $0.09 per share, compared to $1,316,084 for the nine months ended September 30, 2016, or $0.09 per share, an increase of $833,038. Net loss increased, as set forth above, primarily due to an increase in general and administrative expenses and interest expense from new debt issuances, offset by a change in the fair value on derivative.
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Liquidity and Capital Resources
Introduction
During the three months ended September 30, 2017, because we generated only nominal revenues, we had negative operating cash flows. Our cash on hand as of December 31, 2022 was $65,651 and as of September 30, 20172023 was $63,478, which was derived from the exercise of warrants and the sale of stock, notes and convertible promissory notes to investors.$46,391. Our monthly cash flow burn rate for 2016the nine months ended September 30, 2023 was approximately $45,000. Although we$39,000. We have moderatestrong short term cash needs, as our operating expenses increase we will face strongand medium to long term cash needs. We anticipate that these needs will be satisfied through increased revenues and the issuance of debt or the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.
Our cash, current assets, total assets, current liabilities, and total liabilities as of September 30, 20172023 and December 31, 2016,2022, respectively, are as follows:
September 30, | December 31, | Increase/ | September 30, |
| December 31, |
| Increase/ | |||||||||||||
2017 | 2016 | (Decrease) | 2023 |
| 2022 |
| (Decrease) | |||||||||||||
|
|
|
|
| ||||||||||||||||
Cash | $ | 63,478 | $ | 24,102 | $ | 39,376 | $ | 46,391 |
| $ | 65,651 |
| $ | (19,260) | ||||||
Total Current Assets | 195,808 | 143,830 | 51,978 | 1,904,671 |
|
| 2,043,587 |
| (138,916) | |||||||||||
Total Assets | 198,156 | 146,183 | 51,973 | 2,640,556 |
|
| 2,781,118 |
| (140,562) | |||||||||||
Total Current and total Liabilities | 2,598,367 | 2,505,602 | 92,765 | |||||||||||||||||
Total Current and Total Liabilities | 1,616,071 |
|
| 902,788 |
| 713,283 |
Our cash increased slightly because we were able to raise capital from the sale of warrants, notes and convertible notes. Our total current assets increased primarily because of this increase in cash and a note receivable. Our total current liabilities increasedassets decreased slightly during the nine months ended September 30, 20172023 primarily becauseas a result of the issuanceour decrease in inventory of new convertible debt and$291,553, offset in part by an increase in payables.our offering costs of $135,202 and right of use asset of $86,279. Our accumulated deficit increased during the nine months ended September 30, 20172023 by $2,149,122$2,094,316 to $6,270,429 while our total stockholders’ deficit increased by $40,792 to $2,400,211, primarily due to issuances of stock upon conversion of our convertible notes.$18,021,058.
In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.
Cash Requirements
Our cash on hand as of September 30, 20172023 was $63,478.$46,391. Based on our nominalcurrent level of revenues and current monthly burn rate of approximately $45,000$39,000 per month, we will need to continue to fund operations by raising capital from the sale of our stock and debt financings.
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Sources and Uses of Cash
Operating Activities
We had net cash used in operating activities of $417,935$471,373 for the nine months ended September 30, 2017,2023, compared to $343,454$243,658 for the nine months ended September 30, 2016. For2022. We
use our cash for normal business operations. Our net cash used in operating activities for the nine months ended September 30, 2017, the net cash2023 consisted primarily of our net loss of $2,149,122,$2,094,316, offset in part by our warrants issued for services of $1,275,471 and the increase in the fair valueinventory of our derivative liabilities of $442,636, offset primarily by non-cash amortization of debt discount of $1,755,834 and increases$291,553. Our net cash used in accounts payable, accrued liabilities, notes payable and convertible notes. Foroperating activities for the nine months ended September 30, 2016, the net cash used in operating activities2022 consisted primarily of our net loss of $1,316,084,$1,026,538, offset in part by our warrants issued for services expenses of $315,019$402,100 and non-cash interest including penaltieschange in fair value on derivative liability of 612,470. The cash used during this period went to fund business operations of the Company.$246,260.
Investing Activities
We had $34,189 netzero cash used inflows provided by investing activities for the nine months ended September 30, 2017, and $1,581 net cash used in investing activities2023, compared to $(5,344) for the nine months ended September 30, 2016. The primary reason for the difference between these periods are payments made for notes receivable of $33,000.2022.
Financing Activities
Our net cash provided by financing activities for the nine months ended September 30, 20172023 was $491,500, all of which was proceeds from convertible notes payable,$452,113, compared to $417,500$100,788 for the nine months ended September 30, 2016, all2022. Our net cash provided by financing activities consisted of which was proceeds from the issuance of notes payable of $627,000 and proceeds from the issuance of convertible debt of $350,000, offset by repayment of notes payable warrantsof $530,740 and the exerciserepayment of warrants.convertible debt of $110,535.
ITEM 3Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 4Controls and Procedures
(a)Disclosure Controls and Procedures
We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of September 30, 2017,2023, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2017,2023, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in our Annual Report on Internal Control Over Financial Reporting filed in our Annual Report on Form 10-K.
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Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all errors and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the 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. Because of 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 the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
(b)Changes in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report, the three month period ended September 30, 2017,2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 1Legal Proceedings
WeThere are not a partyno updates to or otherwise involvedthe disclosure of legal proceedings in any legal proceedings.our Annual Report on Form 10-K.
In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.
ITEM 1ARisk Factors
As a smaller reporting company, we are not required to provide the information required by this Item.
ITEM 2Unregistered Sales of Equity Securities and Use of Proceeds
Except as discussed below, we have not issued unregistered securities during the period covered by this report:
Common Share Issuances
On July 31, 2017, we issued 800,000 shares of common stock for the conversion of debt totaling $7,920 including fees of $500 and loss on settlement of debt of $45,556.
On August 3, 2017, we issued 909,090 shares of common stock for the conversion of debt totaling $10,000 and loss on settlement of debt of $30,158.
On August 29, 2017, we issued 6,360,000 shares of common stock for the conversion of debt totaling $38,160 including interest of $2,160 and gain on settlement of debt of $31,073.
On August 30, 2017, we issued 1,348,000 shares of common stock for the conversion of debt totaling $4,853 including fees of $500 and loss on settlement of debt of $9,233.
On September 8, 2017, we issued a total of 3,412,074 shares of common stock for the conversion of debt totaling $17,246 including interest $1,740 and fees of $4,256 and loss on settlement of debt of $35,968.
On September 12, 2017, we issued 3,450,000 shares of common stock for the conversion of debt totaling $17,250 and gain on settlement of debt of $2,811.
On September 13, 2017, we issued 2,075,000 shares of common stock for the conversion of debt totaling $7,470 including fees of $500 and loss on settlement of debt of $15,982.
On September 15, 2017, we issued 4,000,000 shares of common stock for the conversion of debt totaling $20,000 and gain on settlement of debt of $8,125.
On September 21, 2017, we issued 1,670,733 shares of common stock for the conversion of debt totaling $6,015 including interest of $1,819 and fees of $500 and gain on settlement of debt of $33,681.
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On September 22, 2017, we issued 833,433 shares of common stock for the conversion of debt totaling $4,584 including interest of $2,084 and gain on settlement of debt of $42,396.
On September 25, 2017, we issued 4,657,247 shares of common stock for the conversion of debt totaling $18,874 including interest of $1,129 and fees of $745 and loss on settlement of debt of $104,151.
On September 27, 2017, we issued 5,161,389 shares of common stock for the conversion of debt totaling $18,874 including interest of $1,133 and fees of $754 and gain on settlement of debt of $87,891.
Convertible Notes
On July 5, 2017, we executed a convertible promissory note for $50,000 with an original issue discount of $7,500. The loan bears interest at 9% per annum and is due on June 26, 2018. The lender has the right to convert the principal amount and unpaid interest of the loan at a rate of 58% of the average of the lowest trading price during the prior 15 days of conversion. This loan has prepayment penalties.
On September 22, 2016, we executed a convertible promissory note for $5,000. The loan bears interest at 12% per annum. The loan was due on December 31, 2016. In the event of default, the interest rate increased to 22% per annum. During default the lender had the right to convert the principal amount and unpaid interest of the loan at a rate of either the lesser of $0.20 or 60% of the lowest trading price during the prior 20 days of conversion. During the nine months ended September 30, 2017 the entire balance of principal and interest was converted into 219,462 shares of common stock.
On September 27, 2017, we executed a convertible promissory note for $53,000 with an original issue discount of $3,000. The loan bears interest at 12% per annum and is due on June 30, 2018. In the event of default, the interest rate increases to 22% per annum. The lender has the right to convert the principal amount and unpaid interest of the loan beginning 180 days after original loan date at a rate of 61% of the average of the two lowest trading price during the prior 15 days of conversion.
All of the issuances of securities above were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, the investors were sophisticated and familiar with our operations, and there was no solicitation in connection with the offering.
ITEM 3 Defaults Upon Senior Securities
There have been no events which are required to be reported under this Item.
ITEM 3Defaults Upon Senior Securities
There have been no events which are required to be reported under this Item.
ITEM 4Mine Safety Disclosures
Not applicable.
ITEM 5Other Information
None.
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ITEM 6Exhibits
(a)Exhibits
Exhibit No. | Name and/or Identification of Exhibit | |||
3.1 (1) | Articles of Incorporation of Grey Cloak Tech Inc. | |||
3.2 (2) | Certificate of Amendment | |||
3.3 (1) | Bylaws of Grey Cloak Tech Inc. | |||
31.1 | ||||
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | ||||
31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | |||
32.1 | ||||
32.2 | ||||
100.INS | XBRL Instance Document | |||
100.SCH | XBRL Schema Document | |||
100.CAL | XBRL Calculation Linkbase Document | |||
100.DEF | XBRL Definition Linkbase Document | |||
100.LAB | XBRL Labels Linkbase Document | |||
100.PRE | XBRL Presentation Linkbase Document |
(1)Incorporated by reference from our Registration Statement on Form S-1 dated and filed with the Commission on March 6, 2015.
(2)Incorporated by reference from our Annual Report on Form 10-K dated and filed with the Commission on February 19, 2021.
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SIGNATURES
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.
Healthy Extracts Inc. | |
Dated: November | /s/ |
By: | |
Its: | |
President |
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