UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended~~September~~June 30, ~~2017~~2019

☐

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

Commission file number:000-31549

~~BINGHAM CANYON CORPORATION~~PCT LTD

(Exact name of registrant as specified in its charter)

Nevada

90-0578516

(State or other jurisdiction of incorporation or organization)

~~90-0578516~~

(I.R.S. Employer Identification No.)

4235 Commerce Street

Little River, South Carolina

29566

~~10457 W. 84~~^th ~~Terrace, Lenexa, Kansas~~

(Address of principal executive offices)

~~66214~~

(Zip Code)

~~(913) 353-4560~~(843) 390-7900

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☑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☐The registrant does not have a Web site.

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

Act:

Large accelerated filer☐

Non-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☑

Securities registered pursuant to Section 12(b) of the Act:

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

The number of shares outstanding of the registrant’s common stock as of ~~November 13, 2017~~September 12, 2019 was ~~40,379,238.~~240,774,150 which does not include 59,225,850 shares of common stock reserved against default/conversion of convertible debt.

TABLE OF CONTENTS

Part I – Financial Information		Page

Item 1.	~~Financial Statements~~	3

	~~Condensed Consolidated Balance Sheets (Unaudited)~~	4

	~~Condensed Consolidated Statements of Operations (Unaudited)~~	5

	~~Condensed Consolidated Statements of Cash Flows (Unaudited)~~	6

	~~Notes to the Unaudited~~ Condensed Consolidated Financial Statements (Unaudited)	73

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1624

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1929

Item 4.	Controls and Procedures	1929

Part II – Other Information

Item 1.	Legal Proceedings	2030

Item 1A.	Risk Factors	2030

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2030

Item 3.	Defaults Upon Senior Securities	2033

Item 4.	Mine Safety Disclosures	2033

Item 5.	Other Information	2033

Item 6.	Exhibits	2137

	Signatures	2238

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The ~~condensed consolidated~~ financial information set forth below with respect to our statements of operations for the ~~three and nine~~six month periods ended ~~September~~June 30, ~~2017~~2019 and ~~2016~~2018 is unaudited. This ~~condensed consolidated~~ financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the ~~three and nine~~six month periods ended ~~September~~June 30, ~~2017~~2019 and 2018 are not necessarily indicative of results to be expected for any subsequent period.

PCT LTD

Condensed Consolidated Balance Sheets

~~BINGHAM CANYON CORPORATION~~

	June 30, 2019			December 31, 2018
ASSETS		(Unaudited)
CURRENT ASSETS
Cash	$	37,298		$	4,893
Accounts receivable		121,129			49,140
Inventory		6,461			7,105
Prepaid expenses		41,019			218,494
Other current assets		2,110			2,110
Total current assets		208,017			281,742

PROPERTY AND EQUIPMENT
Property and equipment, net		489,787			499,972

OTHER ASSETS
Intangible assets, net		3,860,873			4,059,775
Operating lease right-of-use asset		19,695			—
Deposits		5,499			5,499
Total other assets		3,886,067			4,065,274

TOTAL ASSETS	$	4,583,871		$	4,846,988

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	384,860		$	350,593
Accrued expenses – related parties		62,278			54,033
Accrued expenses		488,841			362,436
Operating lease liability		21,704			—
Deferred revenue		24,532			—
Current portion of notes payable – related parties, net		819,863			93,000
Current portion of notes payable, net		406,306			399,664
Current portion of convertible notes payable, net		488,141			161,280
Derivative liability		3,349,099			322,976
Preferred series A stock liability		—			144,352
Total current liabilities		6,045,624			1,888,334

LONG-TERM LIABILITIES
Notes payable – related parties, net of current portion and discounts		—			733,826
Notes payable, net of current portion and discounts		—			126,707
Convertible notes payable, net of current portion and discounts		7,909			392,534
TOTAL LIABILITIES		6,053,533			3,141,401

MEZZANINE EQUITY
Preferred stock series A, $0.001 par value; 1,000,000 authorized; 500,000 and nil issued and outstanding at June 30, 2019 and December 31, 2018, respectively		60,398			—

STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, $0.001 par value; 300,000,000 authorized; 76,859,961 and 44,559,238 issued and outstanding at June 30, 2019 and December 31, 2018, respectively		76,860			44,560
Additional paid-in-capital		12,770,553			11,588,030
Accumulated deficit		(14,377,473	)		(9,927,003	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(1,530,060	)		1,705,587

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	4,583,871		$	4,846,988

~~Financial Statements~~

~~September 30, 2017~~

~~(Unaudited)~~

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~BINGHAM CANYON CORPORATION~~PCT LTD

Condensed Consolidated ~~Balance Sheets~~Statements of Operations

(Unaudited)

SEPTEMBER 30,
2017
DECEMBER 31, 2016
ASSETS (Unaudited)
CURRENT ASSETS
Cash $ 23,732 $ 21,078
Accounts receivable, net 3,000 4,018
Inventory 312,844 42,706
Prepaid expenses 6,704 7,152
Deposits 48,820 77,543
Total current assets 395,100 152,497

FIXED ASSETS
Equipment, net 68,569 78,250

OTHER ASSETS
Intangible assets, net 4,404,715 42,857
Deposits 5,403 5,250
Total other assets 4,410,118 48,107

TOTAL ASSETS $ 4,873,787 $ 278,854

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 131,165 $ 52,144
Accrued expenses – related party 12,461 2,486
Accrued expenses 130,900 12,955
Current portion of notes payable – related party 445,414 358,802
Current portion of notes payable, net 341,822 —
Total current liabilities 1,061,762 426,387

LONG TERM LIABILITIES
Notes payable – related party 275,000 —
Notes payable, net —   129,451
TOTAL LIABILITIES 1,336,762 555,838

STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, $0.001 par value; 100,000,000 authorized; 40,001,572 and 37,117,572 issued and outstanding at September 30, 2017 and December 31, 2016, respectively 40,002 37,118
Additional paid-in-capital 9,187,012 3,708,882
Accumulated deficit (5,689,989 ) (4,022,984 )
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) 3,537,025 (276,984 )

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 4,873,787 $ 278,854

	For the three months ended June 30,						For the six months ended June 30,
	2019			2018			2019			2018
REVENUES
Product	$	11,745		$	50,572		$	98,839		$	73,213
Licensing		34,000			—			78,500			—
Equipment leases		73,117			19,500			137,480			39,000
Total Revenue		118,862			70,072			314,819			112,213

OPERATING EXPENSES
General and administrative		419,131			613,569			1,086,095			1,058,794
Cost of product, licensing and equipment leases		24,077			4,756			96,731			20,474
Depreciation and amortization		84,189			80,162			169,101			166,858
Total operating expenses		527,397			698,487			1,351,927			1,246,126

Net loss before other expenses		(408,535	)		(628,415	)		(1,037,108	)		(1,133,913	)

OTHER INCOME (EXPENSES)
Loss on change in fair value of derivative liability		(2,789,342	)		—			(2,951,641	)		—
Gain (loss) on change in fair value of preferred series A stock liability		(3,004	)		—			72,473			—
Gain on sale of intangible assets		52,498			—			52,498			—
Loss on settlement of debt		—						(84,409	)		—
Interest expense		(381,764	)		(39,644	)		(502,283	)		(65,448	)
Total other income (expenses)		(3,121,612	)		(39,644	)		(3,413,362	)		(65,448	)

Loss from operations before Income taxes		(3,530,147	)		(668,059	)		(4,450,470	)		(1,199,361	)

Income taxes		—			—			—			—

NET LOSS	$	(3,530,147	)	$	(668,059	)	$	(4,450,470	)	$	(1,199,361	)

Basic and diluted net loss per share	$	(0.07	)	$	(0.02	)	$	(0.09	)	$	(0.03	)

Basic and diluted weighted average shares outstanding		52,755,139			43,407,809			49,208,103			42,541,614

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~BINGHAM CANYON CORPORATION~~PCT LTD

Condensed Consolidated Statements of ~~Operations~~Cash Flows

(Unaudited)

For the three months ended
September 30,

For the nine months ended
September 30,
2017 2016 2017 2016
REVENUES
Revenue $ 58,123 $ 4,750 $ 80,352 $ 83,811
Cost of Goods sold 22,682 7,183 42,019 37,789
Gross profit 35,441 (2,433 ) 38,333 46,022

OPERATING EXPENSES
General and administrative 389,376 186,816 1,346,955 517,711
Research and development 32,490 13,326 102,402 90,330
Depreciation and amortization 92,457 2,124 205,881 15,683
Total operating expenses 514,323 202,266 1,655,238 623,724

Net loss before other expenses (478,882 ) (204,699 ) (1,616,905 ) (577,702 )

OTHER EXPENSES
Interest expense (21,654 ) (22,226 ) (50,100 ) (37,321 )
Loss on settlement convertible debt — — — (48,872 )
Total other expenses (21,654 ) (22,226 ) (50,100 ) (86,193 )

Loss from operations before Income taxes (500,536 ) (226,925 ) (1,667,005 ) (663,895 )

Income taxes — — — —

NET LOSS $ (500,536 ) $ (226,925 ) $ (1,667,005 ) $ (663,895 )

Basic and diluted net loss per share $ (0.01 ) $ (0.01 ) $ (0.04 ) $ (0.04 )

Basic and diluted weighted average shares outstanding 39,981,485 23,319,196 39,041,968 18,473,821

	For the six months ended June 30,
	2019			2018
Cash Flows from Operating Activities
Net loss	$	(4,450,470	)	$	(1,199,361	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		169,101			166,858
Amortization of debt discount		300,703			15,470
Amortization of operating lease right-of-use asset		23,635			—
Common stock issued for services		122,052			295,904
Loss on change in fair value of derivative liability		2,951,641			—
Gain on change in fair value of preferred series A stock liability		(72,473	)		—
Loss on settlement of debt		84,409			—
Gain on sale of intangible assets		(52,498	)		—
Changes in operating assets and liabilities:
Accounts receivable		(81,166	)		(27,274	)
Inventory		644			(17,493	)
Prepaid expenses		177,475			3,371
Other assets		—			(44,500	)
Operating lease liability		(21,626	)		—
Accounts payable		59,265			3,703
Accrued expenses – related party		8,245			17,125
Accrued expenses		303,311			95,812
Deferred revenue		24,532			—
Net cash used in operating activities		(453,220	)		(690,385	)

Cash Flows from Investing Activities
Proceeds from sale of intangible assets		57,500			—
Purchase of property and equipment		(2,516	)		(3,900	)
Purchase of intangible assets		(5,000	)		(5,000	)
Net cash provided by (used in) investing activities		49,984			(8,900	)

Cash Flows from Financing Activities
Proceeds from notes payable – related parties		2,544			54,000
Proceeds from notes payable		88,600			287,500
Proceeds from convertible notes payable		460,750			265,000
Proceeds from issuance of common stock		—			115,000
Repayment of notes payable – related parties		(16,044	)		(10,000	)
Repayment of notes payable		(9,209	)		(20,000	)
Repayment of convertible notes payable		(91,000	)		—
Net cash provided by financing activities		435,641			691,500

Net change in cash		32,405			(7,785	)
Cash and cash equivalents at beginning of period		4,893			7,838
Cash and cash equivalents at end of period	$	37,298		$	53

Supplemental Cash Flow Information
Cash paid for interest	$	51,639		$	14,750
Cash paid for income taxes	$	—		$	—

Non-Cash Investing and Financing Activities:
Debt discounts on notes payable – related parties	$	—		$	20,000
Debt discounts on notes payable	$	10,204		$	13,464
Debt discounts on convertible notes payable	$	395,125		$	78,087
Modification of notes payable	$	20,590		$	—
Common stock issued in conversion of convertible notes payable	$	287,376		$	—
Accounts receivable netted against notes payable	$	18,000		$	—
Initial operating lease right-of-use asset and liability	$	43,330		$	—
Default penalty on convertible notes payable	$	87,500		$	—
Preferred series A stock reclassification from liability to mezzanine equity	$	60,398		$	—
Extinguishment of notes payable	$	—		$	250,000
Common stock issued for prepaid expenses	$	—		$	1,028,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~BINGHAM CANYON CORPORATION~~PCT LTD

Condensed Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity

(Unaudited)

For the nine months ended
September 30,
2017 2016
Cash Flows from Operating Activities
Net loss $ (1,667,005 ) $ (663,895 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 214,006 15,684
Amortization of debt discount 10,906 6,540
Common stock issued for services —   20,000
Stock-based compensation 415,964 14,697
Expenses paid on behalf of company 14,722 10,000
Loss on settlement —   48,872
Changes in operating assets and liabilities:
Accounts receivable 1,018 (12,299 )
Inventory (270,138 ) (14,344 )
Prepaid expenses 448 5,208
Deposits 28,570 (78,091 )
Accounts payable and accrued liabilities 196,966 79,257
Accounts payable and accrued liabilities related party 9,975 9,138
Deferred revenue —   (1,398 )
Net cash used in operating activities (1,044,568 ) (560,631 )

Cash Flows from Investing Activities
Purchase of fixed assets (2,709 ) (5,837 )
Purchase of intangible assets (158,424 ) —
Net cash used in investing activities (161,133 ) (5,837 )

Cash Flows from Financing Activities
Proceeds from notes payable – related parties 410,500 381,500
Proceeds from notes payable 225,000 128,421
Proceeds from advances —   18,807
Repayment of notes payable – related parties (63,610 ) (66,500 )
Repayment of notes payable (23,535 ) —
Common stock issued for cash 660,000 120,000
Net cash provided by financing activities 1,208,355 582,228

Net increase in cash 2,654 15,760
Cash and cash equivalents at beginning of period 21,078 42,486
Cash and cash equivalents at end of period $ 23,732 $ 58,246

Supplemental Cash Flow Information
Cash paid for interest $ 20,028 $ 12,161
Cash paid for Income taxes $ —   $ —

Non-Cash Investing and Financing Activities
Common stock issued in conversion of debt $ —   $ 50,000
Debt discount from issuance costs $ —   $ 29,079
Assets and liabilities assumed in share exchange $ —   $ 276,690
Common stock issued for intellectual property $ 4,405,050 $ —

					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balance – December 31, 2018		44,559,238	$	44,560	$	11,588,030	$	(9,927,003	)	$	1,705,587
Common stock issued for services		575,000		575		98,352		—			98,927
Common stock issued in settlement of debt		5,383,810		5,383		800,012		—			805,395
Net loss		—		—		—		(920,323	)		(920,323	)
Balance – March 31, 2019		50,518,048	$	50,518	$	12,486,394	$	(10,847,326	)	$	1,689,586
Common stock issued for services		—		—		23,125		—			23,125
Common stock issued in conversion of convertible notes payable		26,341,913		26,342		261,034		—			287,376
Net loss		—		—		—		(3,530,147	)		(3,530,147	)
Balance – June 30, 2019		76,859,961	$	76,860	$	12,770,553	$	(14,377,473	)	$	(1,530,060	)


					Additional					Total
	Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balance – December 31, 2017		41,179,238	$	41,180	$	10,001,323	$	(6,744,520	)	$	3,297,983
Common stock issued for cash		110,000		110		54,890		—			55,000
Common stock payable for services		—		—		43,836		—			43,836
Beneficial conversion feature		—		—		58,401		—			58,401
Net loss		—		—		—		(531,302	)		(531,302	)
Balance – March 31, 2018		41,289,238	$	41,290	$	10,158,450	$	(7,275,822	)	$	2,923,918
Common stock issued for cash		120,000		120		59,880		—			60,000
Common stock issued for services		2,050,000		2,050		982,114		—			984,164
Beneficial conversion feature		—		—		16,686		—			16,686
Net loss		—		—		—		(668,059	)		(668,059	)
Balance – June 30, 2018		43,459,238	$	43,460	$	11,217,130	$	(7,943,881	)	$	3,316,709

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

~~Bingham Canyon Corporation~~PCT LTD

Notes to the Unaudited

Condensed Consolidated Financial Statements

~~SEPTEMBER~~June 30, ~~2017~~2019

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited interim condensed consolidated financial statements of ~~Bingham Canyon Corporation (“the Company”~~PCT LTD (the “Company”) have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of our balance sheet, statements of operations, stockholders’ equity, and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, ~~2016~~2018 audited financial statements as reported in its Form 10-K, filed ~~with the United States Securities and Exchange Commission~~ on April ~~14, 2017.~~15, 2019.

Nature of Operations

PCT LTD (formerly Bingham Canyon Corporation, (the “Company,” “PCT Ltd,” or “Bingham”), a Delaware corporation, was formed on August 27, 1986. The Company changed its domicile to Nevada on August 26, 1999.

On August 31, 2016, the Company entered into a Securities Exchange Agreement with Paradigm Convergence Technologies Corporation (“Paradigm”) to ~~effect~~affect the acquisition of Paradigm as a wholly-owned subsidiary. Under the terms of the agreement, ~~the Company~~Bingham issued 16,790,625 restricted common shares of ~~Company~~Bingham stock to ~~all of~~ the shareholders of Paradigm in exchange for all 22,387,500 outstanding common shares of Paradigm ~~common~~ stock. In addition, ~~the Company~~Bingham issued options exercisable into 2,040,000 shares of the ~~Company’s~~Bingham’s common stock (with exercise prices ranging between $0.133 and $0.333) in exchange for 2,720,000 outstanding Paradigm stock options (with exercise prices ranging between $0.10 and $0.25). These 2,040,000 options have been adjusted at the same exchange rate of 75% that the outstanding common shares were exchanged. As a result of this ~~reverse recapitalization,~~share exchange agreement, Paradigm, the operating company, is considered the accounting acquirer.

Paradigm is located in Little River, SC and was formed June 6, 2012 under the ~~original~~ name of EUR-ECA, Ltd.~~, transitioned~~ On September 11, 2015, its ~~headquarters from Lenexa, Kansas~~Board of Directors authorized EUR-ECA Ltd to file with the Nevada Secretary of State to change its ~~office, research and development and production facilities in Little River, South Carolina.~~name to Paradigm Convergence Technologies Corp. Paradigm is a technology licensing ~~and equipment manufacturing~~ company specializing in environmentally safe solutions for global sustainability. ~~Paradigm~~The company holds a patent, intellectual property and/or distribution rights to innovative products and technologies. Paradigm provides innovative products and technologies for eliminating biocidal contamination from water supplies, industrial fluids, hard surfaces, food processing equipment, and medical devices. Paradigm’s overall strategy is to market new products and technologies through the use of equipment leasing, joint ventures, licensing, distributor agreements and partnerships.

Effective on February 29, 2018, the Company changed its name from Bingham Canyon Corporation to PCT LTD to more accurately identify the Company’s direction and to develop the complimentary relationship and association with its wholly-owned operating company, Paradigm Convergence Technologies Corporation (“Paradigm” or “PCT Corp.”).

Principles of Consolidations

The accompanying consolidated financial statements include the accounts of ~~Bingham Canyon Corporation~~PCT LTD (“Parent”) and its wholly owned ~~operating~~ subsidiary, Paradigm Convergence Technologies Corporation (“Paradigm” or “Subsidiary”). All intercompany accounts have been eliminated upon consolidation.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Estimates are based on historical experience and on various other market-specific and other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents are considered to be cash and a highly liquid ~~security~~securities with original maturities of three months or less. ~~There was~~The cash of ~~$23,732~~$37,298 and ~~$21,078~~$4,893 as of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016, respectively.~~2018, respectively, represents cash on deposit in various bank accounts. There were no cash equivalents as of ~~September~~June 30, ~~2017~~2019 and December 31, ~~2016.~~

2018.

~~Accounts Receivable~~

Accounts receivable are carried at their estimated collectible amounts. The Company provides allowances for uncollectible accounts receivable equal to the estimated collection losses that will be incurred in collection of all receivables. Accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current financial condition. That Company’s management determines which accounts are past due and if deemed uncollectible, the Company charges off the receivable in the period the determination is made. Based on management’s evaluation, the allowance for doubtful accounts was $12,000 at September 30, 2017 and December 31, 2016.

~~Inventory~~

The inventory consists of raw materials $88,950 and finished goods $223,894 in the combined amount of $312,844 at September 30, 2017. Inventory is valued based upon first-in first-out (“FIFO”) cost, not in excess of market. The Company recorded a reserve allowance against inventory of nil and nil for the periods ending September 30, 2017 and December 31, 2016, respectively.

Fair Value Measurements

The Company follows ASC 820,~~“Fair~~ “Fair Value Measurements and Disclosures,” which 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value:

~~Level 1:~~

~~Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities.~~

Level 1 - Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities.

~~Level 2:~~

Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 2 - Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

~~Level 3:~~

Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of our financial instruments, including, cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to the short maturities of these financial instruments. ~~We do not~~

Derivative liabilities and preferred series A stock liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Our financial assets orand liabilities ~~that are measured~~carried at fair value measured on a recurring basis as of ~~September~~June 30, ~~2017~~2019, consisted of the following:

	Total fair value at June 30, 2019 $		Quoted prices in active markets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $

Description:
Derivative liability (1)		3,349,099		—		—		3,349,099
Total		3,349,099		—		—		3,349,099

Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2018, consisted of the following:

	Total fair value at December 31, 2018 $		Quoted prices in active markets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $

Description:
Preferred series A stock liability (1)		144,352		—		—		144,352
Derivative liability (1)		322,976		—		—		322,976
Total		467,328		—		—		467,328

(1) The Company has estimated the fair value of these liabilities using the Binomial Model.

Derivative and Preferred Series A Stock Liabilities

The Company accounts for derivative instruments in accordance with ASC Topic 815, “Derivatives and Hedging” and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company’s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As of June 30, 2019, and December 31, ~~2016.~~2018, the Company had a $3,349,099 and $322,976 derivative liability, respectively and preferred series A stock liabilities of $0 and $144,352, respectively.

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 7 for additional information.

~~Valuation~~Accounts Receivable

Trade accounts receivable are recorded at the time product is shipped or services are provided including any shipping and handling fees. The Company provided allowances for uncollectible accounts receivable equal to the estimated collection losses that will be incurred in collection of all receivables. Accounts receivable is periodically evaluated for collectability bases on past credit history with customers and their current financial condition. The Company’s management determines which accounts are past due and if deemed uncollectible, the Company charges off the receivable in the period the determination is made. Based on management’s evaluation, the Company provided an allowance for doubtful accounts of $0 at June 30, 2019 and December 31, 2018, respectively.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined by using the first in, first out (FIFO) method. We record the value of our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand, future pricing and market conditions. As of June 30, 2019 and December 31, 2018, the inventory consisted of parts for equipment sold as replacement parts to existing customers or sold to new customers. The Company has recorded a reserve allowance of $0 and $0 as of June 30, 2019 and December 31, 2018, respectively. The Company has determined that some of the supplies inventory is necessary to be placed into service, after assembly into equipment to be used in product manufacturing and classified as Machinery and Equipment. The balance at June 30, 2019 and December 31, 2018 of such supplies and equipment not yet placed in service amounted to $306,225 and $319,735, respectively.

Property and Equipment

Property and equipment are stated at purchased cost and depreciated utilizing a straight-line method over estimated useful lives ranging from 3 to 7 years after the asset has been placed in service. Upon selling equipment that had been under a lease agreement, the company discontinues the depreciation on that piece of equipment, as it transfers ownership to another entity. Additions and major improvements that extend the useful lives of property and equipment are capitalized. Maintenance and repairs are charged to operations as incurred. Upon trade-in, sale or retirement of property and equipment, the related cost and accumulated depreciation are removed from the accounts and any related gains or losses are recorded in the results of operations.

Impairment of Long-lived Assets

The carrying values of the Company’s long-lived assets are reviewed for impairment annually and whenever events or changes in circumstances indicate that they may not be recoverable. When projections indicate that the carrying value of the long-lived asset is not recoverable, the carrying value is reduced by the estimated excess of the carrying value over the ~~projected undiscounted cash flows.~~fair value. Under similar analysis no impairment was recorded ~~as of September~~during the six months ended June 30, ~~2017 and December 31, 2016. Impairment tests are conducted on an annual basis and, should they indicate a carrying value in excess of fair value, additional impairment changes may be required.~~

~~Property and Equipment~~

Property and equipment are stated at purchased cost and depreciated on a straight-line method over estimated useful lives ranging from 5 to 15 years. Upon disposition of property and equipment, related gains and losses are recorded in the results of operations. Accumulated depreciation for period ending September 30, 2017 and December 31, 2016 was $42,869 and $30,479, respectively. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expenses as incurred.2019.

Intangible Assets

Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, ofwhich range from 1 to 15 years. ~~These assets are stated at cost, net of accumulated amortization.~~ An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by ~~the~~ projected ~~undiscounted~~discounted net future cash flows. The ~~Company~~ recorded impairment expense ~~of nil and~~was nil for the ~~periods ending September~~six months ended June 30, ~~2017 and December 31, 2016, respectively. Accumulated amortization was $309,198 and $107,582 as of September 30, 2017 and December 31, 2016, respectively.~~2019.

Research and Development

Research and development costs are recognized as an expense during the period incurred, which is until the conceptual formulation, design, and testing of ~~the~~a process is completed and the process has been determined to be commercially viable.

Leases

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. We adopted ASC 842 on January 1, 2019 using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did not require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets and lease liabilities for our lease agreements with original terms of greater than one year. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $43,330 and operating lease liability of $43,330. Due to the simplistic nature of the Company's leases, no retained earnings adjustment was required. See Note 5 for further details.

Revenue Recognition

On May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customer (Topic 606). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is ~~recognized when persuasive evidence~~recognized. The core principal is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an ~~arrangement exists, services have been provided~~amount that reflect the consideration to which the entity expects to be entitled in exchange for those goods or ~~goods delivered,~~services.

The Company has the ~~price~~following three revenue streams:

1)product sales (equipment and/or fluid solutions);

2)licensing (contract-based use of the Company’s US EPA Product Registration, returning revenue in licensing fees and/or royalties from minimum or actual fluid sales); and

3)equipment leases (under systems service agreements, usually 3-year contracts for the provision of the Company’s equipment and service of such, under contract to ~~the buyer is fixed or determinable and collectability is reasonably assured. Revenue~~customers, with renewable terms).

The Company recognizes revenue from the sale of products when the performance obligation is ~~recorded at~~satisfied by transferring control of the product to a customer.

The Company recognizes revenue from the leasing of equipment as the entity provides the equipment and the customer simultaneously receives and consumes the benefits through the use of the equipment. This revenue generating activity would meet the criteria for a performance obligation satisfied over time. As a result, the Company recognizes revenue over time by using the output method, as the Company can measure progress of the performance obligation using the time elapsed under each obligation.

The Company’s licenses provide a right to use and create performance obligations satisfied at a point in time. The Company recognizes revenue from licenses when the performance obligation is satisfied through the transfer of ~~shipment to~~ the ~~customers. Revenue from contracts to license technology to others is immediately recognized since it is a non-refundable deposit.~~license. For licenses that include royalties the Company will recognize royalty revenue as the underlying sales or usages occur, as long as this approach does not result in the acceleration of revenue ahead of the entity’s performance.

The Company has disclosed disaggregated revenue via revenue stream on the face of the statement of operations. The Company did not have any contract assets or liabilities at June 30, 2019.

Basic and Diluted Loss ~~per~~Per Share

Basic loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted loss per share is computed by dividing net loss by the weighted-average number of common shares and dilutive potential common shares outstanding during the period. ~~The weighted-average number~~As of June 30, 2019, there were outstanding common share equivalents (options, warrants, convertible debt and preferred series A stock) which amounted to 721,585,416 shares of common ~~shares outstanding for computing basic EPS was 39,041,968 at September 30, 2017 as compared to 18,473,821 at September 30, 2016, respectively. At September 30, 2017 and September 30, 2016 there~~stock. These common share equivalents were ~~1,589,875 and 1,467,250 common stock equivalents from stock options that were excluded from~~not included in the computation of diluted ~~EPS calculation~~loss per share as their effect iswould have been anti-dilutive.

Recent Accounting Pronouncements

In March, 2016, the FASB issued ASU 2016-09, "Stock Compensation." ASU 2016-09 was issued to simplify the accounting for stock compensation. It focuses on income tax accounting, award classification, estimating forfeitures, and cash flow presentation. For public companies, ASU 2016-09 became effective for annual periods beginning after December 15, 2016 and for interim periods within those annual periods. The Company adopted ASU 2016-09 effective January 1, 2017. ASU 2016-09 has no material effect on the Company’s financial statements.

In January, 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” ASU 2017-01 issues an initial required screen that, if met, eliminates the need for further assessment. Under the new guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset, or group of similar assets, the assets acquired would not represent a business.

A public company with a calendar year end and which is a Securities and Exchange Commission (SEC) filer should adopt the amendments in ASU 2017-01 effective January 1, 2018. Early adoption is permitted for interim or annual dates after September 30, 2016. The Company adopted ASU 2017-01 effective January 1, 2017.

In January 2017, the FASB issued ASU 2017-04, “Intangible, Goodwill & Other.” ASU 2017-04 simplifies how all entities assess impairment by implementing a one-step test. As amended, the impairment test will compare the fair value with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds fair value.

A public company which is a Securities and Exchange Commission (SEC) filer should adopt the amendments in ASU 2017-04 for its annual or interim period within its annual period in fiscal years beginning December 31, 2019. Early adoption is permitted for interim or annual dates after January 1, 2017. The Company adopted ASU 2017-04 effective January 1, 2017. ASU 2017-04 has no material effect in the Company’s financial statements.

The Company has reviewed all other FASB issued ASU accounting pronouncements and interpretations thereof that have effective dates during the period reported and in future periods. The Company has carefully considered the new pronouncements that alter the previous GAAP and do not believe that any new or modified principles will have a material impact on the Company’s reported financial position or operations in the near term.

910

NOTE 2. GOING CONCERN

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has limited assets, has incurred losses since inception of ~~$5,689,989~~$14,377,473 and has negative cash flows from operations. As of ~~September~~June 30, ~~2017,~~2019, the Company had a working capital deficit of ~~$666,662.~~$5,837,607. The Company has relied on raising debt and equity capital in order to fund its ongoing day-to-day operations and its corporate overhead. The Company will require additional working capital from either cash flow from operations, from debt or equity financing, or from a combination of these sources. These factors raise substantial doubt about the ability of the Company to continue as a going ~~concern.~~concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3. PROPERTY AND EQUIPMENT

Depreciation is computed using the straight-line method and is recognized over the estimated useful lives of the property and equipment, which range from 3 to 7 years once placed into service. Depreciation expense does not begin until documentation of equipment placed in service is provided. Machinery and leased equipment is not intended to be sold to the customer at the end of the lease term. Depreciation expense was $12,701 and $12,946 for the six months ended June 30, 2019 and 2018, respectively. Property and ~~Equipment consist of the following as of September~~equipment at June 30, ~~2017~~2019 and December 31, ~~2016:~~2018 consisted of the following:

September 30, 2017 December 31, 2016
  Machinery and equipment $ 94,931 $ 92,673
  Office equipment and furniture 14,107 13,656
  Leasehold improvements 2,400 2,400
  Property and Equipment, at Cost 111,438 108,729
  Less: Accumulated Depreciation (42,869 ) (30,479 )
Property and Equipment, Net $ 68,569 $ 78,250

Depreciation expense was $12,390 for the nine months ended September 30, 2017, of which $8,126 is included in cost of goods sold and $4,264 is included in operating expenses. Depreciation expense was $10,662 for the nine months ended September 30, 2016 of which nil is included in cost of goods sold and $10,662 is included in operating expenses.

	June 30, 2019			December 31, 2018
Machinery and leased equipment	$	151,719		$	138,209
Machinery and equipment not yet in service		358,760			369,754
Office equipment and furniture		20,064			20,064
Website		2,760			2,760

Total property and equipment	$	533,303		$	530,787
Less: Accumulated Depreciation		(43,516	)		(30,815	)

Property and equipment, net		489,787			499,972

NOTE 4. INTANGIBLE ASSETS

~~On March 10, 2017,~~Amortization is computed using the ~~Company entered into a three-year Efficacy Test Data License Agreement~~straight-line method and ~~Efficacy Test Data Assignment Agreement (the “Agreement”) with a third party for $25,000. Under~~is recognized over the ~~Agreement,~~estimated useful lives of the ~~Company can use certain Efficacy Test Data~~intangible assets, which range from 1 to 15 years. Amortization expense was $156,400 and ~~purchases the rights to other Efficacy Test Data to be added to its EPA Registration number 83241-4. The Company paid $25,000~~$153,912 for the ~~use~~six months ended June 30, 2019 and 2018, respectively. Intangible assets at June 30, 2019 and December 31, 2018 consisted of ~~certain Efficacy Test Data and purchase of other Efficacy Test Data. The $25,000 was paid on April 28, 2017.~~the following:

	June 30, 2019			December 31, 2018
Patents	$	4,505,489		$	4,514,989
Technology rights		200,000			235,500
Intangible, at cost		4,705,489			4,750,489
Less: Accumulated amortization		(844,616	)		(690,714	)
Net Carrying Amount	$	3,860,873		$	4,059,775

Estimated Future Amortization Expense:

	$
For year ending December 31, 2019		155,168
For year ending December 31, 2020		303,613
For year ending December 31, 2021		302,003
For year ending December 31, 2022		302,003
For year ending December 31, 2023 to December 31, 2034		2,798,086
Total		3,860,873

On ~~March 13, 2017,~~May 10, 2019, the Company ~~entered into a Registration Transfer Agreement (“Transfer Agreement”) and a Data License and Assignment Agreement (“Data Agreement”)~~sold intangible assets with a ~~third party. Pursuant~~carrying value of $92,502 for $111,323 of cash of which $53,823 was received subsequent to June 30, 2019, and the settlement of $33,677 of liabilities owed to the ~~Transfer Agreement, the Company received United States Environmental Protection Agency’s (“EPA”) Registration number 82341-4 for Excelyte® VET for a one-time fee of $125,000.~~buyer. The Company ~~agreed to pay $75,000 at the time of executing the agreement and remaining $50,000 within 30 days. The $50,000 was paid~~recorded a gain on ~~April 7, 2017.~~

On April 6, 2017, the Company acquired intangible assets by issuing 2,250,000 shares of common stock at a deemed value of $1.96 per share ($4,405,050) to Annihilyzer Inc. in order to close on the amended agreement dated April 6, 2017. Pursuant to the terms of the Agreement, as amended, the Company acquired an Annihilyzer patent and all associated intellectual property. In addition, Paradigm granted Annihilyzer Inc, a three-year license and sub-registration under Paradigm’s EPA Product Registration #82341-4. Annihilyzer, Inc. had no activity under this sub-registration agreement as of September 30, 2017.

~~The components~~sales of intangible assets ~~at September 30, 2017 and December 31, 2016 were as follows:~~

September 30, 2017 December 31, 2016
Patents $ 4,513,913 $ 100,439
Technology rights 200,000 50,000
Intangibles, at Cost 4,713,913 150,439
Less Accumulated Amortization (309,198 ) (107,582 )
Net Carrying Amount $ 4,404,715 $ 42,857

~~Amortization expense was $201,616 and $5,022 for the nine months ended September 30, 2017 and, 2016, respectively.~~of $52,498.

~~NOTE 5. NOTES PAYABLE~~

~~The following tables summarize notes payable as of September 30, 2017 and December 31, 2016:~~

September 30, 2017 December 31, 2016
Notes payable, related parties $ 720,414 $ 358,802
Notes payable 351,465 150,000
Subtotal 1,071,879 508,802
Less debt discount (9,643 ) (20,549 )
Subtotal, net 1,062,236 488,253
Less current portion (787,236 ) (358,802 )

Net Long-Term Liabilities, net $ 275,000 $ 129,451

Original Issuance Maturity Interest Balance Balance
Type Amount Date Date Rate 09/30/2017 12/31/2016
Notes Payable, Related Party $ 25,000 12/10/15 06/10/16 5.00 % $ —   $ 8,000
Notes Payable, Related Party 7,500 03/11/16 09/11/16 5.00 % —   7,500
Notes Payable, Related Party(6) 50,000 10/18/16 12/31/17 5.00 % 50,000 50,000
Notes Payable, Related Party(7) 293,302 01/01/17 01/01/18 3.50 % 249,802 293,302
Notes Payable, Related Party(6) 25,000 04/12/17 12/31/17 5.00 % 25,000 —
Notes Payable, Related Party(8) 25,000 04/27/17 04/27/18 3.00 % 25,000 —
Notes Payable, Related Party(9) 15,000 05/15/17 05/15/18 5.00 % 15,000 —
Notes Payable, Related Party(8) 10,000 06/12/17 06/12/18 3.00 % 10,000 —
Notes Payable, Related Party(8) 112 07/01/17 06/30/18 3.00 % 112 —
Notes Payable, Related Party(8) 5,500 07/03/17 06/30/18 3.00 % 5,500 —
Notes Payable, Related Party(8) 2,000 07/05/17 06/30/18 3.00 % 2,000 —
Notes Payable, Related Party(8) 3,000 07/06/17 06/30/18 3.00 % 3,000 —
Notes Payable, Related Party(8) 2,500 07/10/17 06/30/18 3.00 % 2,500 —
Notes Payable, Related Party(8) 2,500 07/12/17 06/30/18 3.00 % 2,500 —
Notes Payable, Related Party(8) 25,000 07/13/17 06/30/18 3.00 % 25,000 —
Notes Payable, Related Party(6) 25,000 07/25/17 09/25/17 5.00 % 25,000 —
Notes Payable, Related Party(8) 5,000 08/14/17 06/30/18 3.00 % 5,000 —
Notes Payable, Related Party(10) 275,000 09/27/17 10/01/18 7.50 % 275,000 —
Notes Payable(1) 150,000 05/18/16 06/01/18 13.00 % 150,000 150,000
Notes Payable(2) 25,000 05/08/17 10/10/17 0.00 % 25,000 —
Notes Payable(3) 125,000 05/15/17 08/31/17 10.00 % 101,465 —
Notes Payable(4) 50,000 09/01/17 12/31/17 8.00 % 50,000 —
Notes Payable(5) 25,000 09/27/17 12/31/17 8.00 % 25,000 —
Subtotal 1,071,879 508,802
Debt Discount (9,643 ) (20,549 )
Total Notes Payable, Net $ 1,062,236 $ 488,253

NOTE 5 – LEASES

In February 2016, the FASB issued ASU No. 2016-02,Leases, which introduced a lessee model that requires the majority of leases to be recognized on the balance sheet. On January 1, 2019, the Company adopted the ASU using the modified retrospective transition approach and elected the transition option to recognize the adjustment in the period of adoption rather than in the earliest period presented. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed us to carry forward the historical lease classification. Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $43,330 and $43,330 respectively, as of January 1, 2019. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The depreciable lives of operating lease assets and leasehold improvements are limited by the expected lease term. The Company's leases generally do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The Company used incremental borrowing rates as of January 1, 2019 for operating leases that commenced prior to that date.

The following table sets forth the ROU assets and liabilities as of June 30, 2019:

	June 30, 2019
Operating lease right-of-use asset	$	19,695

Operating lease liability:
Current operating lease liability	$	21,704
Noncurrent operating lease liability		—
Total operating lease liability	$	21,704

Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the six months ended June 30, 2019, the Company recognized operating lease expense of $30,809. Operating lease costs are included within selling, administrative and other expenses on the condensed consolidated statements of income.

Cash paid for amounts included in the measurement of operating lease liabilities were $28,800 for the six months ended June 30, 2019. During the six months ended June 30, 2019, the Company reduced its ROU liabilities by $21,626 from cash paid.

Our weighted average discount rate is 41% and the weighted average remaining lease term is 5 months. Lease payments over the next five years and thereafter are as follows:

	June 30, 2019
2019 - remaining	$	24,000
2020 and thereafter		—
Total lease payments		24,000
Less: imputed interest		(2,296	)
Total ROU liabilities	$	21,704

As previously disclosed in our 2018 Form 10-K under the prior guidance of ASC 840, minimum payments under operating lease agreements as of December 31, 2018 were as follows:

	December 31, 2018
2019	$	52,950
2020		—
Total	$	52,950

NOTE 6.Notes Payable

The following tables summarize notes payable as of June 30, 2019 and December 31, 2018:

Type	Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at June 30, 2019				Balance at December 31, 2018
Note Payable***		$	150,000		5/18/2016		6/1/2019		19.00	%		$	150,000			$	150,000
Note Payable ***		$	25,000		5/8/2017		6/30/2018		0.00	%		$	27,500			$	27,500
Note Payable		$	130,000		6/20/2018		1/2/2020		8.00	%		$	130,000			$	130,000
Note Payable (a)		$	126,964		6/20/2018		8/31/2018		6.00	%		$	—			$	126,964
Note Payable (b)		$	26,500		6/26/2018		10/1/2019		10.00	%		$	10,090			$	26,500
Note Payable (g)		$	60,000		10/30/2018		12/30/2018		8.00	%		$	—			$	60,000
Note Payable ***		$	8,700		11/15/2018		6/30/2019		10.00	%		$	8,700			$	8,700
Note Payable (c)		$	52,063		4/8/2020		4/8/2020		41.38	%		$	42,854			$	—
Note Payable (d)		$	40,000		6/20/2019		12/31/2019		8.00	%		$	40,000			$	—
Note Payable (e)		$	6,741		6/21/2019		4/8/2020		41.38	%		$	6,741			$	—
Subtotal												$	415,885			$	529,664
Debt Discount												$	(9,579	)		$	(3,293	)
Balance, net												$	406,306			$	526,371
Less current portion												$	(406,306	)		$	(399,664	)
Total long-term												$	—			$	126,707

*** Currently in default

On January 28, 2019, the Company agreed to convert $131,327 of principal and interest of its note payable with a non-related party into 987,421 shares of the Company’s common stock. The company recorded a loss on settlement of debt of $38,319 equal to the difference between the fair value of the common shares of $177,736 and the carrying value of the note and interest.

On February 1, 2019, the Company modified note by extending the maturity date to October 1, 2019. Further, the Company and the lender agreed that the customer’s minimum monthly royalty payments of $1,500 would be applied to reduce the principal and interest of the note. Total accounts receivable from the noteholder of $18,000 was applied to the note during the six months ended June 30, 2019. At June 30, 2019, the remaining balance of the note was $10,090.

On April 8, 2019, the Company entered into a promissory bank loan with a non-related party for $52,063 of which $9,563 was the loan fee or original issue discount resulting in cash proceeds to the Company of $42,500. The note is due on April 8, 2020 and results in an annual percentage rate of 41.38%.

On June 20, 2019 the Company entered into a promissory note with a non-related party for $40,000. The note is due December 31, 2019, is unsecured and bears an interest rate of 8% per annum.

On June 21, 2019, the Company entered into a promissory bank loan with a non-related party for $6,741 of which $641 was the loan fee or original issue discount resulting in cash proceeds to the Company of $6,100. The note is due on April 8, 2020 and results in an annual percentage rate of 41.38%.

The following table summarizes notes payable, related parties as of June 30, 2019 and December 31, 2018:

Type	Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at June 30, 2019				Balance at December 31, 2018
Note Payable, RP ***		$	30,000		4/10/2018		1/15/2019		3.00	%		$	30,000			$	30,000
Note Payable, RP		$	380,000		6/20/2018		1/2/2020		8.00	%		$	380,000			$	380,000
Note Payable, RP		$	350,000		6/20/2018		1/2/2020		5.00	%		$	339,000			$	350,000
Note Payable, RP		$	17,000		6/20/2018		1/2/2020		5.00	%		$	17,000			$	17,000
Note Payable, RP ***		$	50,000		7/27/2018		11/30/2018		8.00	%		$	50,000			$	50,000
Note Payable, RP		$	5,000		10/9/2018		Demand		0.00	%		$	5,000			$	5,000
Note Payable, RP		$	5,000		10/19/2018		Demand		0.00	%		$	5,000			$	5,000
Note Payable, RP **		$	3,000		10/24/2018		Demand		0.00	%		$	—			$	3,000
Note Payable, RP (f)**		$	2,544		1/3/2019		6/30/2019		3.00	%		$	—			$	—
Subtotal												$	826,500			$	840,000
Debt Discount												$	(6,637	)		$	(13,174	)
Balance, net												$	819,863			$	826,826
Less current portion												$	(819,863	)		$	(93,000	)
Total long-term												$	—			$	733,826
Paid off during the period *Currently in default

On January 3, 2019, the Company entered into a promissory note with the Chairman and President of the Company for $2,544. The note is due June 30, 2019, is unsecured and bears an interest rate of 3.0% per annum. At June 30, 2019, the remaining balance of this note was $0.

The following table summarizes convertible notes payable as of June 30, 2019 and December 31, 2018:

Type	Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at March 31, 2019				Balance at December 31, 2018
Convertible Note Payable (g)		$	450,000		3/28/2018		3/31/2021		8.00	%		$	—			$	450,000
Convertible Note Payable **		$	38,000		7/30/2018		7/25/2019		12.00	%		$	—			$	38,000
Convertible Note Payable **		$	53,000		8/29/2018		8/27/2019		12.00	%		$	—			$	53,000
Convertible Note Payable (h) *		$	50,000		12/6/2018		12/6/2019		5.00	%		$	36,123			$	50,000
Convertible Note Payable (i) *		$	65,000		12/6/2018		12/6/2019		5.00	%		$	43,599			$	65,000
Convertible Note Payable(j) ***		$	63,000		12/12/2018		12/5/2019		22.00	%		$	42,800			$	63,000
Convertible Note Payable (g)		$	539,936		1/15/2019		1/15/2020		8.00	%			—				—
Convertible Note Payable (k) ***		$	33,000		1/16/2019		1/15/2020		22.00	%		$	49,500			$	—
Convertible Note Payable (l)		$	100,000		1/18/2019		1/16/2020		8.00	%		$	100,000			$	—
Convertible Note Payable (m)		$	60,000		1/29/2019		1/22/2020		8.00	%		$	60,000			$	—
Convertible Note Payable (n) *		$	50,000		2/1/2019		10/22/2019		12.00	%		$	50,000			$	—
Convertible Note Payable (o) *		$	60,000		2/21/2019		2/14/2022		0.00	%		$	60,000			$	—
Convertible Note Payable (p)		$	55,125		2/21/2019		2/20/2020		8.00	%		$	55,125			$	—
Convertible Note Payable (q) ***		$	53,000		2/26/2019		2/20/2020		22.00	%		$	79,500			$	—
Convertible Note Payable (r)		$	75,000		3/18/2019		12/13/2019		12.00	%		$	75,000			$	—
Convertible Note Payable (s) ***		$	38,000		5/2/2019		4/29/2020		22.00	%			57,000
Subtotal												$	708,647			$	719,000
Debt Discount												$	(212,597	)		$	(165,186	)
Balance, net												$	496,050			$	553,814
Less current portion												$	(488,141	)		$	(161,280	)
Total long-term												$	7,909			$	392,534
* Embedded conversion feature accounted for as a derivative liability ** Paid off during the period

g)	On January 15, 2019, the Company executed a new, consolidated convertible note with a non-related party by extinguishing the March 28, 2018 convertible note in the amount of $450,000 with interest due of $28,898 and a $60,000 term note, dated October 31, 2018 with interest due of $1,038. The new convertible note is in the amount of $539,936, is due on or before January 15, 2022, has an 8% per annum interest rate and may be converted into shares of the Company’s common stock at $0.20 per share. The new note incorporates an anti-dilution feature if the Company issues more than 60,000,000 shares of its common stock. The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $292,651. The company recorded a loss on extinguishment of debt of $350,117 equal to the initial fair value of derivative liability on the new note and the previous unamortized debt discount balance of one the old notes.

	On March 27, 2019, the Company agreed to convert $548,686 of principal ($539,936) and interest ($8,750) of its convertible note payable into 3,597,989 shares of the Company’s common stock. The company recorded a gain on settlement of debt of $359,857 equal to the difference between both the fair value of the common shares of $523,867 and the fair value of the conversion feature at conversion of $335,038 compared to the carrying value of the note and interest.

During the six months ended June 30, 2019, $14,877 of principal ($13,877) and interest ($1,000) of the convertible note payable was converted into 9,355,000 shares of the Company’s common stock.

During the six months ended June 30, 2019, $23,401 of principal ($21,401) and interest ($2,000) of the convertible note payable was converted into 9,040,000 shares of the Company’s common stock.

j)	In the prior year, on December 12, 2018, the Company entered into a convertible promissory with a non-related party for $63,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $60,000. The note is due on December 5, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum. Any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days (June 10, 2019) of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the average 3 lowest trading prices during the 15-trading day period prior to the conversion date.

	One June 10, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $142,265 and resulted in a discount to the note payable of $60,000 and an initial derivative expense of $82,265. On June 19, 2019, the Company defaulted on the note, resulting in a default penalty of $25,500 added to the principal of the note and the remaining discount was accelerated and recognized to interest expense. During the six months ended June 30, 2019, $45,700 of the convertible note payable was converted into 7,946,913 shares of the Company’s common stock.

k)	On January 16, 2019, the Company entered into a convertible promissory with a non-related for $33,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $30,000. The note is due on January 15, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On June 19, 2019, the Company defaulted on the note, resulting in the note becoming immediately convertible and a default penalty of $16,500 added to the principal of the note.

	On June 19, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $116,540 and resulted in a discount to the note payable of $30,000 and an initial derivative expense of $86,540. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense.

On January 18, 2019, the Company entered into a convertible promissory note with a non-related party for $100,000 of which $5,000 was an original issue discount and $5,000 was paid directly to third parties resulting in cash proceeds to the Company of $90,000. The note is due on January 16, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 24% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 64% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The note isn’t convertible until 180 days following funding and no derivative liability was recognized as of June 30, 2019.

On January 29, 2019, the Company entered into a convertible promissory note with a non-related for $60,000 of which $3,000 was an original issue discount and $8,000 was paid directly to third parties resulting in cash proceeds to the Company of $49,000. The note is due on January 22, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 18% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to the lower of 64% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date or $0.12. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The note isn’t convertible until 180 days following funding and no derivative liability was recognized as of June 30, 2019.

n)	On February 1, 2019, the Company entered into a convertible promissory note with a non-related party for $50,000 of which $5,000 was an original issue discount resulting in cash proceeds to the Company of $45,000. The note is due on October 22, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum and a default interest rate of 24% per annum. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal 50% of the lowest trading price during the 20-trading day period prior to the conversion date. As the closing sales price fell below $0.03, an additional 15% discount was be attributed to the conversion price.

	The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $158,142 and resulted in a discount to the note payable of $50,000 and an initial derivative expense of $113,142. During the period ended June 30, 2019, the Company recorded accretion of $18,326 increasing the carrying value of the note to $18,326.

o)	On February 21, 2019, the Company entered into a convertible promissory note with a non-related party for $60,000 of which $5,000 was an original issue discount and $8,000 was paid directly to third parties resulting in cash proceeds to the Company of $47,000. The Company also issued a warrant with a term of five years to purchase up to 300,000 shares of common stock of the Company at an exercise price of $0.20 per share and subject to adjustment for dilutive issuances and cashless exercise. The note is due on February 14, 2022 and bears interest on the unpaid principal balance at a rate of 0% per annum. Stringent pre-payment terms apply (from 10% to 40%, dependent upon the timeframe of repayment during the note’s term) and in the event of default an additional 40% of the principal and interest balance shall be owed. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to the lower of 60% of the lowest trading price during the 20-trading day period prior to the conversion date or $0.12. If at any time the closing sales price falls below $0.01, then an additional 10% discount will be attributed to the conversion price.

	The embedded conversion option and warrant qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature of $124,796 and the warrant of $51,856 resulted in a discount to the note payable of $60,000 and an initial derivative expense of $129,652. During the period ended June 30, 2019, the Company recorded accretion of $7,909 increasing the carrying value of the note to $7,909.

On February 21, 2019, the Company entered into a convertible promissory note with a non-related party for $55,125 of which $2,500 was an original issue discount and $2,625 was paid directly to third parties resulting in cash proceeds to the Company of $50,000. The note is due on February 20, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 24% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 64% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date. Due to this provision, the Company considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. The note isn’t convertible until 180 days following funding and no derivative liability was recognized as of June 30, 2019.

q)	On February 26, 2019, the Company entered into a convertible promissory with a non-related for $53,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $50,000. The note is due on February 20, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On June 19, 2019, the Company defaulted on the note, resulting in the note becoming immediately convertible and a default penalty of $26,500 added to the principal of the note.

	On June 19, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $187,924 and resulted in a discount to the note payable of $50,000 and an initial derivative expense of $137,924. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense.

r)	On March 18, 2019, the Company entered into a convertible promissory note with a non-related party for $75,000 of which $10,250 was an original issue discount resulting in cash proceeds to the Company of $64,750. The Company also issued a warrant with a term of five years to purchase up to 187,500 shares of common stock of the Company at an exercise price of $0.20 per share and subject to adjustment for dilutive issuances and cashless exercise. The note is due on December 13, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum and a default interest rate of 24% per annum. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to 50% of the lowest trading price during the 25-trading day period prior to the conversion date.

	The embedded conversion option and warrant qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature of $139,196 and the warrant of $25,401 resulted in a discount to the note payable of $75,000 and an initial derivative expense of $99,847. During the period ended June 30, 2019, the Company recorded accretion of $18,430 increasing the carrying value of the note to $18,430.

s)	On May 2, 2019, the Company entered into a convertible promissory with a non-related for $38,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $35,000. The note is due on April 29, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 12% to 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. On June 19, 2019, the Company defaulted on the note, resulting in the note becoming immediately convertible and a default penalty of $19,000 added to the principal of the note.

	On June 19, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $135,455 and resulted in a discount to the note payable of $35,000 and an initial derivative expense of $100,455. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense.

NOTE 7 – DERIVATIVE AND PREFERRED SERIES A STOCK LIABILITIES

The embedded conversion option of (1) the convertible debentures described in Note 6; (2) preferred series A stock liability; (3) warrants; contain conversion features that qualify for embedded derivative classification. The fair value of the liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments.

Upon the issuance of the convertible notes payable described in Note 6, the Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible notes, warrants and options. The Company elected to reclassify contracts from equity with the earliest inception date first. As a result, none of the Company’s previously outstanding convertible instruments qualified for derivative reclassification, however, any convertible securities issued after the election, including the warrants described in Note 10, qualified for derivative classification. The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities.

	June 30, 2019			December 31, 2018

Balance at the beginning of period	$	322,976		$	—
Original discount limited to proceeds of notes		331,750			100,000
Fair value of derivative liabilities in excess of notes proceeds received		749,825			247,033
Settlement of derivative instruments		(257,268	)		—
Change in fair value of embedded conversion option		2,201,816			(24,057	)
Balance at the end of the period	$	3,349,099		$	322,976

The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option and warrant liabilities as their fair values were determined by using the Binomial Model based on various assumptions.

Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:

	Expected Volatility	Risk-free Interest Rate	Expected Dividend Yield			Expected Life (in years)

At issuance	128-301%	2.11-2.51%		0	%	0.49-5.00
At June 30, 2019	160-336%	1.71-2.23%		0	%	0.32-4.71

On December 1, 2018, the Company’s Board of Director authorized an offering for 1,000,000 Preferred Series “A” stock at $0.10 per share and with 100%, regular or cashless exercise at $0.10 per share of common stock warrant coverage. At December 31, 2018, the Company received $60,000 of subscriptions for the issuance of 600,000 shares of Preferred Series “A” stock to three accredited investors who are related parties. On December 1, 2018, the Company issued 600,000 warrants subject to cashless exercise at $0.10 per share for 5 years.

The Company was unable to issue the subscriber the preferred shares until the Company filed a Certificate of Designation and the Preferred Series “A” stock had been duly validly authorized. As the Company had not filed the Certificate of Designation, and as the Company could not issue the preferred shares to settle the proceeds received, it was determined the subscriptions were settleable in cash. As a result, the Company classified the subscriptions received as a liability in accordance with ASC 480 Distinguishing Liabilities from Equity. The fair value of the liability of the preferred series A stock at December 31, 2018 was $144,352.

On March 29, 2019, the Company executed a settlement agreement that included the settlement of 100,000 of the Series A Preferred Shares and 100,000 of the warrants subscribed for as part of the December 1, 2018 offering. The Company agreed to issue 164,000 shares of its common stock as payment in full $25,000 owed to the subscriber for services rendered; the Company agreed to accept conversion and exercise of the purchased 100,000 Preferred Series A shares into 100,000 shares of the Company’s common stock and the Company shall accept the cashless conversion of 100,000 warrant into 34,400 shares of the Company’s restricted common stock; and, as inducement for and consideration for the settlement of the Company’s debt, the Company agrees to grant 500,000 additional shares of the Company’s restricted stock. The Company recorded the fair value of the shares issued of $103,792 and recorded a loss on the settlement of the subscriptions and the amounts payable of $55,830.

On April 12, 2019, the Company filed the Certificate of Designation for the Series A Convertible Preferred Stock. The fair value of the liability of the preferred series A stock on April 12, 2019 was $60,398. On April 12, 2019, the Company adjusted the fair value of the preferred series A stock to $60,398 and reclassified the fair value of the preferred series A stock to mezzanine equity.

The Company uses Level 3 inputs for its valuation methodology for the preferred series A stock liability as their fair values were determined by using the Binomial Model based on various assumptions.

	Expected Volatility	Risk-free Interest Rate	Expected Dividend Yield			Expected Life (in years)

At April 12, 2019	170%	2.36%		0	%	3.00

NOTE 8 - STOCKHOLDERS’ DEFICIT

~~Notes Payable~~Preferred Stock

Effective March 23, 2018, the Company amended the articles of incorporation and authorized 10,000,000 shares of preferred stock with a par value of $0.001 per share; of which 1,000,000 shares were designated as Series A Convertible Preferred Stock as of June 30, 2019. The preferred stock may be issued from time to time by the board of directors as shares of one or more classes or series.

On ~~May 18, 2016,~~December 1, 2018, the Company’s Board of Director authorized an offering for 1,000,000 Preferred Series “A” stock at $0.10 per share and with 100%, regular or cashless exercise at $0.10 per share of common stock warrant coverage. At December 31, 2018, the Company received $60,000 of subscriptions for the issuance of 600,000 shares of Preferred Series “A” stock to three accredited investors who are related parties. The Company was unable to issue the subscriber the preferred shares until the Company filed a Certificate of Designation and the Preferred Series “A” stock has been duly validly authorized. See Note 7 for liabilities related to the Company’s commitment to issue shares of Series A stock upon the designation.

On April 12, 2019, the Company filed a Certificate of Designation with the Nevada Secretary of State designating 1,000,000 shares of its authorized preferred stock as Series A Convertible Preferred Stock. The principal terms of the Series A Preferred Shares are as follows:

Issue Price

The stated price for the Series A Preferred shall be $0.10 per share.

Redemption

This Company may at any time following the first anniversary date of issuance (the “Redemption Date”), at the option of the Board of Directors, redeem in whole or in part the Shares by paying in cash in exchange for the Shares to be redeemed a price equal to the Original Series A Issue Price ($0.10) (the “Redemption Price”). Any redemption affected pursuant to this provision shall be made on a pro rata basis among the holders of the Shares in proportion to the number of Shares then held by them.

Dividends

None.

Preference of Liquidation

In the event of any liquidation, dissolution or winding up of the Company, the holders of Shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of this Company to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the sum of (i) $0.10 for each outstanding Share (the “Original Series A Issue Price”) and (ii) an amount equal to 6% of the Original Series A Issue Price for each 12 months that has passed since the date of issuance of any Shares (such amount being referred to herein as the “Premium”).

For purposes of this provision, a liquidation, dissolution or winding up of this Company shall be deemed to be occasioned by, or to include, (A) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company); or (B) a sale of all or substantially all of the assets of the Company; unless the Company’s stockholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity.

If upon the occurrence of such liquidation, dissolution or winding up event, the assets and funds thus distributed among the holders of the Shares shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of series of preferred stock that may from time to time come into existence, the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the Shares in proportion to the preferential amount each such holder is otherwise entitled to receive.

In any of such liquidation, dissolution or winding up event, if the consideration received by the Company is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:

Securities not subject to investment letter or other similar restrictions on free marketability (covered by (B) below):

If traded on a securities exchange (NASDAQ, AMEX, NYSE, etc.), the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty day period ending three (3) days prior to the closing;

If traded on a quotation system, such as the OTC:QX, OTC:QB or OTC Pink Sheets, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty day period ending three (3) days prior to the closing; and

If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Company and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock.

The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by the Company and the holders of at least a majority of the voting power of all then outstanding shares of such Preferred Stock.

Voting

The holder of each Share shall not have any voting rights, except in the case of voting on a change in the preferences of Shares.

Conversion

Each Share shall be convertible into shares of the Company’s Common Stock at a price per share of $0.10 (1 Share converts into 1 share of Common Stock), at the option of the holder thereof, at any time following the date of issuance of such Share and on or prior to the fifth day prior to the Redemption Date, if any, as may have been fixed in any Redemption Notice with respect to the Shares, at the office of this Company or any transfer agent for such stock. Each Share shall automatically be converted into shares of Common Stock on the first day of the thirty-sixth (36th) month following the original issue date of the Shares, at the Conversion Price per share.

The Company was unable to issue the subscribers the preferred shares until the Company filed a Certificate of Designation and the Preferred Series “A” stock had been duly validly authorized. As the Company had not filed the Certificate of Designation, and as the Company could not issue the preferred shares to settle the proceeds received, it was determined the subscriptions were settleable in cash. As a result, the Company classified the subscriptions received as a liability in accordance with ASC 480 Distinguishing Liabilities from Equity. The filing of the Certificate of Designation and issuance of the preferred shares resulted in the reclassification of the Series A Preferred Shares from a liability to temporary equity or “mezzanine” because the preferred shares include the liquidation preferences described above. The fair value of the preferred series A stock on April 12, 2019 was $60,398 and was valued by using the Binomial Model based on various assumptions.

As of June 30, 2019, there were 500,000 shares of Series A Convertible Preferred Stock issued or outstanding.

Common Stock

Effective March 23, 2018, the Company amended the articles of incorporation and increased the authorized shares of common stock with a par value of $0.001 per share from 100,000,000 to 300,000,000 shares. The number of shares outstanding of the registrant’s common stock as of June 30, 2019 was 76,859,961.

On January 1, 2019, the Company entered into a ~~loan~~four-year employment agreement ~~for $150,000~~ with ~~an unrelated individual.~~F. Jody Read in his role as Chief Executive Officer. The ~~note is due on June 1, 2018. The note is secured by a mortgage or deed of trust on a property located in Fuquay Varina, North Carolina, owned by a minority shareholder, and by a personal guarantee~~terms of the ~~President~~contract call for an annual salary of $90,000 for the first year, effective March 1, 2019 and increasing to $120,000 once the Company’s revenue exceeds monthly expenses, then incrementally over time and with certain operational results, up to $200,000/year. The salary may be paid, at the employee’s discretion, either in cash or in common stock. A $1,000 per month allowance will be granted to the executive for housing near the Company’s South Carolina facility. The employment agreement awards the CEO 1,500,000 restricted shares of the ~~Company. The note bears an interest rate of 13% per annum~~Company’s restricted stock, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020; 375,000 shares on March 1, 2021 and ~~a default rate of 19% per annum. The Company paid an origination fee of 10%~~the final 375,000 shares on March 1, 2022. On January 1, 2019 the fair value of the ~~loan value~~restricted stock award totaled $240,000 which will be expensed over vesting period. As of June 30, 2019, 375,000 shares were issued and ~~a broker’s commission~~the Company had recognized $88,052 of 3%expense.

On January 28, 2019, the Company agreed to convert $131,327 of principal and interest of the loan value. There was also appraisal, underwriting, loan service, and attorney fees of approximately $9,500. The Company recorded a debt discount of approximately $29,079 resulting from these issuance costs which is being amortized over the lifenotes payable described in Note 6(a) into 987,421 shares of the ~~loan. As of September 30, 2017, the note has a remaining balance of $150,000 and a debt discount balance of $9,643(1).~~Company’s common stock.

On ~~May 8, 2017,~~March 25, 2019, the Company entered into a 2-month term promissory note with an unrelated party for $25,000 to be used in operations. The note was extended on July 8, 2017 to a new due date of October 10, 2017. The note is secured by 50,000issued 200,000 shares of common stock ~~as collateral and guarantees interest in the amount of $5,000 at the time of repayment. As of September 30, 2017, the note has a remaining balance of $25,000(2).~~

~~On May 15, 2017, the Company entered into a 45-day promissory note with an unrelated party for $125,000~~ to ~~be used in operations. The note was extended on August 1, 2017 to a new due date of August 31, 2017. The note is secured personally by the President~~two employees of the Company ~~and bears an interest rate~~as compensation in lieu of ~~10% per annum.~~commission on sales of the Company’s products. The Company ~~made payments~~recorded the fair value of the common shares of $34,000 in consulting expense.

On March 29, 2019, the Company executed a settlement agreement with a contractual consultant, UCAP Partners, LLC for the settlement of $25,000 owed to the contractor for the provision of services as related to the March 15, 2018 agreement between UCAP and us. The settlement terms include acknowledgement that the Company owes UCAP $25,000 as payment for said services; that UCAP purchased and fully paid for Series A Preferred Stock and Warrants from the Company on December 3, 2018 (100,000 Preferred Series A Shares and 100,000 warrants to purchase common shares at $0.10/share); the settlement is outlined as follows: the Company shall issue 164,000 shares of its common stock as payment in full for the services rendered on the consulting contract; the Company shall accept UCAP’s conversion and exercise of the purchased 100,000 Preferred Series A shares into 100,000 shares of the Company’s common stock and the Company shall accept the cashless conversion of UCAP’s 100,000 warrant into 34,400 shares of the Company’s restricted common stock; and, as inducement for and consideration for the settlement of the Company’s debt to UCAP, the Company agrees to grant 500,000 additional shares of the Company’s restricted stock. As a result of this transaction, 3,597,989 shares of Company’s common stock were issued and a $55,830 loss on settlement of debt was recognized.

From June 11, 2019 to June 27, 2019, the Company issued a total of 9,040,000 shares of common stock upon the conversion of $23,401 of principal ($21,401) and interest ($2,000) pursuant to the convertible note payable described in Note 6(i).

From June 12, 2019 to June 27, 2019, the ~~amount~~Company issued a total of ~~$25,000~~9,355,000 shares of common stock upon the conversion of $14,877 of principal ($13,877) and interest ($1,000) pursuant to the convertible note payable described in Note 6(h).

From June 19, 2019 to June 27, 2019, the Company issued a total of 7,946,913 shares of common stock upon the conversion of $45,700 of principal pursuant to the convertible note payable described in Note 6(j).

NOTE 9 – STOCK OPTIONS

The Company did not grant any stock options during the year ended December 31, 2018 or the six months ended June 30, 2019.

Below is a table summarizing the options issued and outstanding as of June 30, 2019:

	Number of warrants			Weighted average exercise price $

Balance, December 31, 2018		2,287,500			0.34
Granted		—			—
Expired		(1,905,000	)		0.16
Settled		—			—
Balance, June 30, 2019		382,500			1.24

As at June 30, 2019, the following share stock options were outstanding:

Date		Number		Number		Exercise		Weighted Average Remaining Contractual		Expiration		Proceeds to Company if
Issued		Outstanding		Exercisable		Price $		Life (Years)		Date		Exercised
	01/01/2016		75,000		75,000		0.33		0.50		12/31/2019		25,000
	01/01/2016		90,000		90,000		0.33		0.50		12/31/2019		30,000
	09/15/2016		10,000		10,000		1.00		0.50		12/31/2019		10,000
	10/01/2016		7,500		7,500		1.00		0.50		12/31/2019		7,500
	01/26/2017		200,000		200,000		2.00		2.58		01/26/2022		400,000
			382,500		382,500							$	472,500

The weighted average exercise prices are $1.24 for the options outstanding and exercisable, respectively. The intrinsic value of stock options outstanding at June 30, 2019 was $Nil.

NOTE 10 – WARRANTS

As described in Note 6, on from February 14 through March 13, 2019, the Company issued 487,500 warrants subject to an exercise price of $0.20 per share for 5 years. If the Company issues any common stock or common stock equivalents at an effective price per share less than the warrant’s exercise price of $0.20, the exercise price of the warrants will be reduced to the lower price. In addition, the number of common shares issuable upon conversion of the warrants is increased so that the number of shares issuable multiplied by the exercise price equals the aggregate exercise price of the warrants immediately prior to the exercise reduction. During period, convertible notes were exercised at a price less than the original exercise price of these warrants, resulting in an adjustment to the number of warrants and exercise price.

The Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible instruments. The initial fair value of the warrants issued during the period ~~ended September 30, 2017. The payments represented $23,535 of principal and $1,465 of interest. As of September 30, 2017,~~was calculated using the ~~note is~~Binomial Model as described in ~~default and has a remaining balance of $101,465(3).~~ Note 7.

~~From July 3, 2017~~The following table summarizes the continuity of share purchase warrants:

	Number of warrants			Weighted average exercise price $

Balance, December 31, 2018		650,000			0.17
Adjustment to warrants outstanding		420,891,071			0.00035
Granted		487,500			0.20
Settled		(100,000	)		0.10
Balance, June 30, 2019		421,928,571			0.00047

As at June 30, 2019, the following share purchase warrants were outstanding:

Date		Number			Number			Exercise			Weighted Average Remaining Contractual		Expiration		Proceeds to Company if
Issued		Outstanding			Exercisable			Price $			Life (Years)		Date		Exercised
	11/28/2018		142,857,143	*		142,857,143	*		0.00035	*		2.42		11/28/2021	$	50,000
	12/3/2018		500,000			500,000			0.10			4.43		12/3/2023		50,000
	2/14/2018		171,428,571	*		171,428,571	*		0.00035	*		4.63		2/14/2024		60,000
	3/13/2018		107,142,857	*		107,142,857	*		0.00035	*		4.71		3/13/2024		37,500
			421,928,571			421,928,571									$	197,500

*The number of warrants outstanding and exercisable is variable based on adjustments to ~~August 30, 2017,~~ the ~~Company entered into three short term promissory notes with an unrelated party totaling $50,000~~exercise price of the warrant due to be used in operations. The notes were unsecured and had an interest rate of 8%. On September 1, 2017, these notes were consolidated with this same unrelated party into one promissory note in the amount of $50,000. This note is unsecured and bears an interest rate of 8%. The note is due December 31, 2017. As of September 30, 2017 the note has a remaining balance of $50,000.~~(4)~~On September 27, 2017, the Company entered into a promissory note with this same unrelated party for $25,000 to be used in operations. This note is unsecured and bears an interest rate of 8%. The note is due December 31, 2017. As of September 30, 2017 the note has a remaining balance of $25,000~~(5).~~

~~Notes Payable – Related Parties~~dilutive issuances.

~~From October 18, 2016 to July 25, 2017, the Company entered into three promissory notes with a related party for a total~~The intrinsic value of ~~$100,000 to be used in operations. These notes are unsecured and bear an interest rate of 5% per annum. As of September~~warrants outstanding at June 30, ~~2017, the notes have a total remaining balance of $100,000(6).~~

On January 1, 2017, the Company consolidated its outstanding promissory notes with the Company’s President and CEO, into one promissory note totaling $293,302. The note is unsecured and bears an interest rate of 3.5% and is due January 1, 2018. As of September 30, 2017 the note has a remaining balance of $249,802~~(7).~~From April 27, 2017 to August 14, 2017 the Company entered into ten promissory notes with the Company’s president, a related party, for a total of $80,612 to be used in operations. The notes are unsecured and bear an interest rate of 3% per annum and are due 9-12 months from issuance. As of September 30, 2017, these notes have a total remaining balance of $80,612~~(8).~~

On May 15, 2017, the Company entered into a one-year term promissory note with a related party for $15,000 to be used in operations. The note is unsecured and bears interest at a rate of 5% per annum. As of September 30, 2017, the note has a remaining balance of $15,000~~(9).~~

From June 13, 2017 to August 31, 2017, the Company entered into three short-term promissory notes with a related party for a total of $275,000 to be used in operations. The notes were unsecured and had an interest rate of 3-7.5% per annum and are due 1-3 months from issuance. On September 27, 2017, these notes were consolidated with the same related party into one promissory note in the amount of $275,000. The note is secured by the Company’s June 13, 2017 patent (US Patent #9,679,170 B2 “Material Tracking System”), is due October 1, 2018, and bears an interest rate of 7.5%. As of September 30, 2017, the note has a remaining balance of $275,000~~(10).~~

2019 was $1,959,643.

NOTE 6.11 – RELATED PARTY TRANSACTIONS

The Company has agreements with related parties for consulting services, accrued rent, accrued interest, notes payable ~~commitments and contingencies~~ and stock options. See Notes to Financial Statements numbers ~~5, 7,~~6, 9, 8 and 9.12 for more details.

1220

~~NOTE 7. STOCKHOLDERS’ DEFICIT~~

~~Common Stock~~

The Company has 100,000,000 shares of common stock authorized with a par value of $0.001 per share. As of September 30, 2017 and December 31, 2016 there were 40,001,572 and 37,117,572 shares of common stock issued respectively.

~~On January 6, 2017, the Company issued 25,000 shares of common stock at $1.00 per share to an unrelated party for cash proceeds of $25,000.~~

~~From January 26, 2017 through March 13, 2017, the Company issued a combined total of 400,000 shares of common stock at $1.00 per share to a related party for cash proceeds of $400,000.~~

~~On April 12, 2017, the Company issued 100,000 shares of common stock at $1.00 per share to a related party for cash proceeds of $100,000.~~

~~On April 14, 2017, the Company issued 5,000 shares of common stock at $1.00 per share to an unrelated party for cash proceeds of $5,000.~~

~~On June 16, 2017, the Company issued 20,000 shares of common stock at $1.25 per share to an unrelated party for cash proceeds of $25,000.~~

~~On June 27, 2017, the Company issued 10,000 shares of common stock at $1.25 per share to a related party for cash proceeds of $12,500.~~

~~On July 13, 2017, the Company issued 12,000 shares of common stock at $1.25 per share to an unrelated party for cash proceeds of $15,000~~

~~On July 13, 2017, the Company issued 12,000 shares of common stock at $1.25 per share to an unrelated party for cash proceeds of $15,000.~~

~~On July 27, 2017, the Company issued 30,000 shares of common stock at $1.25 per share to an unrelated party for cash proceeds of $37,500.~~

~~On August 9, 2017, the Company issued 20,000 shares of common stock at $1.25 per share to an unrelated party for cash proceed of $25,000.~~

~~Stock Options~~

On January 1, 2017 the Company issued 30,000 stock options to a related party with an exercise price of $2.00 per share. The options vest on January 1, 2018. The Company used the Black-Scholes methodology to value the stock-based compensation expense for options. Compensation expense is recognized on a straight-line basis over the vesting period. As of September 30, 2017, the Company recognized $42,165 in compensation expense, leaving $14,055 in compensation expense to be recognized through December 31, 2017.

On January 26, 2017, the Company issued 200,000 stock options to a related party with an exercise price of $2.00 per share. The options vested immediately. The Company used the Black-Scholes methodology to value the stock-based compensation expense for options. As of September 30, 2017, the Company recognized $373,800 in compensation expense, leaving $0 to be recognized in remaining compensation expense.

~~In applying the Black-Scholes methodology to the options granted through September 30, 2017, the fair value of our stock-based awards was estimated using the following assumptions ranging from:~~

~~Risk-free interest rate~~	~~1.22 - 1.95%~~
~~Expected option life~~	~~2 - 5 years~~
~~Expected dividend yield~~	~~0.00%~~
~~Expected price volatility~~	~~165.72 - 199.94%~~

~~Below is a table summarizing the options issued and outstanding as of September 30, 2017:~~

Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if
Issued Outstanding Exercisable Price $ Life (Years) Date Exercised
05/21/2014 1,875,000 1,875,000 0.13 1.64 05/20/2019 $ 250,000
01/01/2016 90,000 90,000 0.33 2.25 12/31/2019 30,000
01/01/2016 75,000 75,000 0.33 2.25 12/31/2019 25,000
09/15/2016 10,000 10,000 1.00 2.25 12/31/2019 10,000
10/01/2016 7,500 7,500 1.00 2.25 12/31/2019 7,500
01/01/2017 30,000 — 2.00 1.25 01/01/2019 60,000
01/26/2017 200,000 200,000 2.00 4.33 01/26/2022 400,000
2,287,500 2,257,500 $ 782,500

~~The weighted average exercise prices are $0.34 and $0.32 for the options outstanding and exercisable, respectively.~~

NOTE 8.12 – COMMITMENTS AND CONTINGENCIES

Consulting Agreements –

On January 1, 2018, the Company entered into a contract for consulting services with a Florida-based agricultural advocacy group. The agreement included a $5,000 initial engagement fee and $1,250 per month through January 1, 2019.

On March 15, 2018, the Company entered into a 12-month service agreement, expiring on March 15, 2019, for strategic planning, financing, capital formation, up listing and expansion of the Company’s shareholder base. The consulting company received a $5,000 non-refundable initial fee and the agreement included $2,500 per month through March 14, 2019 and received 2,000,000 shares of the Company’s restricted common stock.

On July 2, 2018, the Company entered into a 6-month service contract for investor relations services through January 2, 2019. The agreement called for 1,000,000 restricted shares of common stock to be issued to Life Sciences Journeys, Inc. The shares were issued on October 9, 2018. The Company placed a stop transfer order on the shares, discussed the benefits of services provided by Life Sciences Journeys and rescinded its stop transfer, allowing the contract to continue through its end.

On November ~~21, 2016,~~28, 2018, the Company ~~signed~~re-engaged the services of a ~~lease~~prior contractor for ~~approximately 12,000 square feet~~finance assistance related to obtaining a line of ~~office, research &~~credit based on the Company’s equipment and/or contracts, through November 27, 2019. If the Company obtains a line of credit based on the Company’s equipment and/or contracts the Company will incur a fee of 4% of financings from $1,000,000 to $5,000,000, 3% of financings from $5,000,001 to $10,000,000, and 0.25% of financings over $10,000,000.

On December 3, 2018, the Company engaged a consultant for services related to business development ~~warehouse,~~in the healthcare market. The contract is in place through June 3, 2019 and ~~production space in Little River, South Carolina. The lease was effective December 1, 2016 at~~the consultant received 100,000 restricted shares of the Company’s common stock for the services.

In addition to contracts for service, the Company also regularly uses the professional services of securities attorneys, a rate of $4,800 per month for a period of three years. The Company has an option to extend the lease for two periods of three years each. The option to extend the first three-year period is at a rate of $5,100 per month. The option to extend the second three-year period is at a rate of $5,400 per month.US EPA specialist, professional accountants and other public-company specialists.

Employment Agreements –

On September 1, 2017, the Company entered into a five-year employment agreement with Marion E. Paris, Jr. to be the ~~president~~Vice President for Business Development and Director of ~~the Annihilyzer Division of Paradigm. Mr. Paris is a director of the Company and~~Intellectual Properties for Paradigm. Under the terms of the employment agreement, Mr. Paris is to be paid an annual base salary of $90,000 and other benefits, ~~associated with an executive officer,~~ including four weeks paid vacation. ~~In addition,~~

On January 1, 2019, the Company entered into a four-year employment agreement with F. Jody Read in his role as Chief Executive Officer. The terms of the contract call for an annual salary of $90,000 for the first year, effective March 1, 2019 and increasing to $120,000 once the Company’s revenue exceeds monthly expenses, then incrementally over time and with certain operation results, up to $200,000/year. The salary may be paid, at the employee’s discretion, either in cash or in common stock. A $1,000 per month allowance will be granted to the executive for housing near the Company’s South Carolina facility. The employment agreement awards the CEO 1,500,000 restricted shares of the Company’s restricted stock, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020, 375,000 shares on March 1, 2021 and the final 375,000 shares on March 1, 2022.

Other Obligations and Commitments–

On April 12, 2018, the Company entered into a Purchase agreement with a third party to purchase its exclusive rights to US EPA Product Registration No. 83241-1 for a fixed fee. The Company paid $5,000 on execution of the agreement and has continued to make periodic installment payments for the purchase of this Registration.

On March 27, 2019, the Company entered into a letter of intent (the “LOI”) with Magnolia Columbia Limited (“Magnolia”), a Canadian company traded on the TSXV under the symbol “MCO”. Pursuant to the terms of the LOI, the parties agreed to ~~pay Mr. Paris~~negotiate and enter into a ~~signing bonus of $40,000 ($20,000~~definitive agreement on or before ~~November 1, 2017, with an additional $20,000 on January 1, 2018).~~April 27, 2019. As of ~~September 30, 2017, the Company has paid $7,500 in salary to Mr. Paris and~~April 28, 2019, we had not ~~paid the initial $20,000~~entered into a definitive agreement with Magnolia or agreed to any extensions of the ~~signing bonus which is due on or before November 1, 2017.~~LOI, therefore the LOI terminated.

~~On August 1, 2017 the Company terminated its month-to-month lease for office space in Lenexa, Kansas and transitioned its headquarter to its Little River, South Carolina facility.~~

~~NOTE 9 - PAYROLL LIABILITIES~~

The Company has past due federal and state payroll liabilities for unpaid payroll taxes, penalties and interest for the second and third quarters of 2017. As of September 30, 2017, the past due balance, excluding penalties, interest, and fees, totaled $116,946. The Company anticipates paying these liabilities before December 31, 2017, or negotiating a payment plan with the IRS and various States for payment over time.

NOTE ~~10.~~13. SUBSEQUENT EVENTS

2705908 Ontario Inc.

On ~~October 11, 2017,~~July 12, 2019, the Company entered into a ~~one-year promissory note~~binding Letter of Intent (“LOI”) to negotiate in good faith a transaction with 2705908 Ontario Inc. for a ~~non-related party for $37,500~~definitive loan and option agreement to ~~be used~~include the acquisition of at least 51% control of the Company, in ~~operations. This note is unsecured~~addition to the other terms and ~~bears an interest rate~~commitments. On July 30, 2019, the LOI due diligence and negotiations were slated to terminate, but both parties agreed to extend the term of ~~8%. The note is due October 11, 2018.~~the LOI through August 19, 2019. On August 19, 2019 the Company and 2705908 Ontario Inc. allowed the LOI to expire but continue discussions.

On ~~October 24, 2017,~~July 30, 2019, the Company accepted a settlement proposal from Annihilare, Inc. (a sub-registrant of the Company’s US EPA Registration No. 92108-1) and its affiliated company, Prime ITS (a prior owner of Annihilyzer Inc, which transferred previously noted intangible IT assets to PCT LTD for 2,250,000 shares of the Company’s common stock in November of 2016). The settlement agreement included credit to the Company by Prime ITS in the gross amount of $23,209 on the Company’s payable to Prime ITS for a combination of a portion of Marty Paris’ salary, a resignation from Marty Paris effective July 31, 2019, and equal valued amount of PCT’s inventory, for net credit to PCT in the amount of $13,939, which was received by the Company on July 31, 2019. The transaction was completed on August 1, 2019.

On August 8, 2019, the Company received notice from PRIME ITS that certain technology services utilized by the Company shall cease to be provided, effective September 8, 2019. The Company will obtain competitive quotes from other technology services providers.

On August 8, 2019, the Company received notice from Annihilare, Inc. that certain intellectual properties developed jointly between the Company and Annihilare are to be discontinued from use by the Company and its customers. The Company disputes the claims from Annihilare that the intellectual properties are exclusively Annihilare’s and are in discussions with Annihilare on this point. Until this issue is resolved, the impact to the Company is minimal because the Company’s healthcare customers primarily benefit from the disinfecting fluid solutions utilized by deploying the Company’s Annihilyzer Infection Control System, along with the Company-owned, patent-protected RFID disinfectant/material tracking system. The disputed issue is relative to a protocol software system, which is not a necessary feature of the Company’s Annihilyzer Infection Control System. The protocol software system is considered a complimentary feature and the Company expended employee time and expertise in its development.

On August 12, 2019, the Company amended the Employment Contract with F. Jody Read, CEO, whereby 500,000 Preferred Series B shares will be issued to Read as soon as the Preferred Series B shares are designated with the State of Nevada. All other terms of the January 1, 2019 employment agreement remain in effect.

On August 12, 2019, the Company entered into a ~~promissory note~~four-year employment agreement with ~~a related party~~Gary, J. Grieco, its President, whereby Mr. Grieco will continue to receive $24,000 per year for ~~$20,000~~services to Company as its President and whereby 500,000 Preferred Series B shares will be ~~used in operations. This note~~issued to Grieco as soon as the Preferred Series B shares are designated with the State of Nevada. The employment agreement begins on August 12, 2019, is ~~unsecured and bears an interest rate~~automatically renewable for two years unless terminated earlier as per the terms of ~~5%. The note is due on April 24, 2018.~~the agreement.

~~On October 25, 2017,~~Effective August 20, 2019, the Company filed a Certificate of Designation with the Nevada Secretary of State thereby designating 1,000,000 shares of its authorized preferred stock as Series B – Super Voting Convertible Preferred Stock. Holders of the Series B Preferred Stock are entitled to cast five hundred votes for each share held on all matters presented to stockholders for vote, which shall vote along with holders of the Company’s common stock. In addition, the Series B Preferred Stock shall be redeemed at par value by the Company upon the successful receipt by the Company of at least $1,000,000 in equity capital following the issuance of the Series B Preferred Stock.

From July 1, 2019 through August 9, 2019, the Company issued ~~40,000~~a total of 157,924,689 shares of common stock ~~at $0.75 per share~~upon the conversion of $113,847 of principal, $7,132 of interest and of fees pursuant to ~~an unrelated party for cash proceeds of $30,000.~~the convertible notes payable described in Note 6.

On ~~October 24, 2017 and October 27, 2017~~August 16, 2019, the Company ~~revised the share price relating to~~issued 5,989,500 shares of common stock ~~sold during~~upon the ~~period from September 1, 2016 through October 30, 2017 down to $0.75 per share. As a result~~cashless exercise of ~~the revised share price, the Company issued an additional 337,666 shares of common stock to fifteen investors, including 191,667 shares to related parties.~~6,000,000 warrants.

1422

~~FORWARD LOOKING~~FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in this Quarterly Report on Form 10-Q, future Quarterly Reports on Form 10-Q, our Annual Report on Form 10-K and Current Reports on Form ~~8-K and other reports we file under the Exchange Act.~~8-K.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

•	our ability to efficiently manage and repay our debt obligations;
•	our inability to raise additional financing for working capital;
•	our ability to generate sufficient revenue in our targeted markets to support operations;
•	significant dilution resulting from our financing ~~activities;~~activities, including conversion of debt;
•	actions and initiatives taken by both current and potential competitors;
•	supply chain disruptions for components used in our products;
•	manufacturers inability to deliver components or products on time;
•	our ability to diversify our operations;
•	the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;
•	adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
•	changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
•	deterioration in general or global economic, market and political conditions;
•	inability to efficiently manage our operations;
•	inability to achieve future operating results;
•	the unavailability of funds for capital expenditures;
•	our ability to recruit, hire and retain key employees;
•	the inability of management to effectively implement our strategies and business plans; and
•	the other risks and uncertainties detailed in this report.

In this ~~Form~~form 10-Q references to ~~“Bingham Canyon,” “Bingham,”~~“PCT LTD”, “the ~~Company,”~~Company”, “we,” “us,” “our” and similar terms refer to PCT LTD (formerly Bingham Canyon ~~Corporation~~Corporation) and its wholly owned operating subsidiary, Paradigm Convergence Technologies Corporation (“~~Paradigm,~~PCT Corp.” or ~~“PCT Corp.”~~“Paradigm”).

1523

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

On August ~~10,~~31, 2016, ~~Bingham~~PCT LTD entered into a Securities Exchange Agreement (the “Exchange Agreement”) with Paradigm Convergence Technologies Corporation, a Nevada corporation (“Paradigm”). Pursuant to the terms of the Exchange Agreement, Paradigm became the wholly-owned subsidiary of ~~Bingham~~PCT LTD after the exchange transaction. ~~Bingham~~PCT LTD is a holding company, which through Paradigm is engaged in the business of ~~designing, assembling and/or building equipment, acquiring and~~ marketing new products and technologies through licensing and joint ventures.

Bingham is a holding company and Paradigm is the wholly-owned subsidiary of Bingham. Paradigm is a technology company specializing in the development and commercialization of environmentally-safe products and solutions for global sustainability. We hold patent, intellectual property and/or distribution rights to innovative products and technologies; most specifically, our on-site generation and applications systems for Hydrolyte®, GoGreenlyteFirst™, PCT An-O-Lyte™, PCT Cath-O-Lyte™ and Annihilyte™ disinfectant and microbicide fluids and our comprehensive “Green Cleaning” and disinfecting system and program, the Annihilyzer™ System with its patented^[1] tracking, monitoring and reporting system. Our overall strategy is to market new products and technologies using direct sales; system and service agreements; fluid sales; equipment sales and leasing; licensing and distributor agreements; and, joint ventures, and partnerships. We intend to also continue our constant pursuit of new technologies (through acquisition or invention) upon which we can build and expand our joint venture and licensing core business. However, Paradigm may not be able to identify suitable license or joint venture opportunities, nor guarantee that any such agreements will be profitable.

~~Bingham~~LTD had not recorded revenues for the two fiscal years prior to its acquisition of Paradigm and was dependent upon financing to continue basic operations. Paradigm has recorded revenue since it initiated operations in 2012; however, those revenues have not been sufficient to finance operations. The Company recorded a net loss of ~~$1,667,005~~$4,450,470 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 and accumulated losses of ~~$5,689,989~~$14,377,473 from inception through ~~September~~June 30, ~~2017.~~2019.

~~Bingham~~PCT LTD remains dependent upon additional financing to continue operations. The Company intends to raise additional ~~equity~~ financing through private placements of its common stock and ~~debt financing on an as-needed basis.~~note payable issuances. We expect that we would issue such stock pursuant to exemptions to the registration requirements provided by ~~and in accordance with,~~ federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs, as discussed below, and the available exemptions to the registration requirements of the Securities Act of 1933. We also note that if we issue more shares of our common stock, then our stockholders may experience dilution in the value per share of their common stock.

The expected costs for the next twelve months include:

~~a major~~
continuation of commercial launch of non-toxic sanitizing, disinfecting and sterilizing products and technologies ~~particularly the Annihilyzer™ System,~~ with a strong emphasis on health care facilities, including hospitals, nursing homes, assisted living facilities, clinics and medical, dental and veterinarian offices;

continued research and development on product generation ~~systems~~units including those designed for on-site deployment at customers’ facilities;

accelerated research and development and initial commercialization on ~~crop decontamination~~ applications of the products in the agricultural sector, most ~~immediately~~specifically with respect to abatement of a ~~bacterial~~specific crop disease crisis caused by a ~~specific~~ bacterium ~~carried by Asian Psyllids~~ in the U.S. and elsewhere;

acquiring available complementary technology rights;

payment of short-term debt;

hiring of additional personnel ~~throughout 2017~~in 2019; and ~~into 2018; and,~~

general and administrative operating costs.

Management projects these costs to total approximately ~~$1,500,000.~~$2,500,000. To minimize these costs, the Company intends to maintain its practice of controlling operating overheads with efficient facilities commitments, generally below market salaries and consulting fees, and rigorous prioritization of ~~expenditures.~~

expenditure requirements. Based on its understanding of the commercial readiness of its products and technologies, the capabilities of its personnel (current and being hired), established business relationships and the general market ~~conditions;~~conditions, management believes that the Company ~~should~~expects to be ~~at or~~ close to profitability ~~during fiscal 2018.~~

by the end of the fourth quarter of 2019.

1624

Liquidity and Capital Resources

A critical component of our operating plan impacting our continued existence is the ability to obtain additional capital through additional equity and/or debt financing. We do not anticipate generating sufficient positive internal operating cash flow until such time as we can deliver our products to market and generate substantial revenues, which may take the next full year to fully realize, if ever. In the event we cannot obtain the necessary capital to pursue our strategic plan, we may have to significantly curtail our operations. This would materially impact our ability to continue operations.

SUMMARY OF BALANCE SHEET	June 30, 2019			December 31, 2018
Cash and cash equivalents	$	37,298		$	4,893
Total current assets		208,017			281,742
Total assets		4,583,871			4,846,988
Total liabilities		6,053,533			3,141,401
Accumulated deficit		(14,377,473	)		(9,927,003	)
Total stockholders’ equity (deficit)	$	(1,530,060	)	$	1,705,587

SUMMARY OF BALANCE SHEET Period ended
September 30,
2017 Year ended
December 31,
2016
Cash and cash equivalents $ 23,732 $ 21,078
Total current assets 395,100 152,497
Total assets 4,873,787 278,854
Total liabilities 1,336,762 555,838
Accumulated deficit (5,689,989 ) (4,022,984 )
Total stockholders’ equity (deficit) $ 3,537,025 $ (276,984 )

At ~~September~~June 30, ~~2017,~~2019, the Company recorded a net loss of ~~$1,667,005~~$4,450,470 and a working capital deficit of ~~$666,662.~~$5,837,607. We have ~~generated minimal~~recorded a relatively small amount of revenues from operations since inception and we have not established an ongoing source of revenue sufficient to cover our operating costs. During ~~2017~~the six months ended 2019 and ~~2016~~2018 we have primarily relied ~~primarily~~ upon advances and loans from ~~related~~stockholders and third parties to fund our operations. The Company has relied on raising debt and equity capital in order to fund its ongoing day-to-day operations and its corporate overhead. We had ~~$23,732~~$37,298 in cash at ~~September~~June 30, ~~2017,~~2019, compared to ~~$21,078~~$4,893 in cash at December 31, ~~2016.~~2018. We had total liabilities of ~~$1,336,762~~$6,053,533 at ~~September~~June 30, ~~2017~~2019 compared to ~~$555,838~~$3,141,401 at December 31, ~~2016.~~

~~The increase in current assets was primarily the result of an increase in inventory, as a result of gearing up to produce equipment; both for parts and finished machines.~~

The increase in total liabilities was primarily the result of an increase in debt used for operations and the unusual and non-recurring expenses associated with securing the right to use the EPA production registration (EPA Registration #82341-4 “Excelyte® VET” label) for a period of time.2018.

Our current cash flow is not sufficient to meet our monthly expenses of approximately ~~$125,000~~$210,000 and to fund future research and development. We intend to rely on additional debt financing, loans from existing stockholders and private placements of common stock for additional ~~funding;~~funding in addition to the increasing our recognized revenue from the leasing and/or sale of products; however, there is no assurance that additional funding will be available. ~~Although we~~We do not ~~yet~~ have material commitments for future capital ~~expenditures,~~expenditures. However, we cannot assure you that we will be able to obtain short-term financing, or that sources of such financing, if any, will continue to be available, and if available, that they will be on favorable terms.

During the next 12 months we anticipate incurring additional costs related to the filing of Exchange Act reports. We believe we will be able to meet these costs through funds provided by management, significant stockholders and/or third parties. We may also rely on the issuance of our common stock in lieu of cash to convert debt or pay for expenses.

Commitments and Obligations

~~During the year,~~At June 30, 2019 the Company ~~operated under two leases for office space: one located in Lenexa, Kansas~~recorded notes payable totaling approximately $1,722,219 (net of debt discount) compared to notes payable totaling $1,907,011 (net of debt discount) at December 31, 2018. These notes payable represent cash advances received and expenses paid from third parties and related parties. All of the ~~second~~notes payable carry interest from 0% to 22% and are due ranging from on demand to February 14, 2022.

The Company headquarters and operations is located in Little River, South Carolina. The office space lease cost totaled $6,300 per month. The Company terminated its lease in Lenexa, Kansas effective June 30, 2017. For the three months ended September 30, 2017, the Company operated under one lease for its facility in Little River, South Carolina ~~at a cost of~~lease amounts to $4,800 per ~~month.~~month, expires on November 30, 2019 and includes an option to renew for two additional three-year periods. We are currently in arrears in our monthly lease payments.

1725

Results of Operations

SUMMARY OF OPERATIONS Three month period ended
September 30, Nine month period ended
September 30,
(Unaudited) (Unaudited)
2017 2016 2017 2016
Revenues, net $ 58,123 $ 4,750 $ 80,352 $ 83,811
Cost of sales (22,682 ) (7,183 ) (42,019 ) (37,789 )
Gross Profit 35,441 (2,433 ) 38,333 46,022
Total operating expenses (514,323 ) (202,266 ) (1,655,238 ) (623,724 )
Total other expense (21,654 ) (22,226 ) (50,100 ) (86,193 )
Income tax provision — — — —
Net loss $ (500,536 ) $ (226,925 ) $ (1,667,005 ) $ (663,895 )
Net earnings (loss) per share both (basic) and diluted $ (0.01 ) $ (0.01 ) $ (0.04 ) $ (0.04 )

Three Months Ended June 30, 2019

SUMMARY OF OPERATIONS	Three months period ended June 30,
	(Unaudited)
	2019			2018
Revenues	$	118,862		$	70,072

Total operating expenses	$	527,397		$	698,487
Total other expenses	$	3,121,612		$	39,644
Net loss	$	3,530,147		$	668,059
Basic and diluted loss per share	$	(0.07	)	$	(0.02	)

Revenues increased to ~~$58,123~~$118,862 for the three months ended ~~September~~June 30, ~~2017~~2019 (the “2019 second quarter”) compared to ~~$4,750~~$70,072 for the three months ended ~~September~~June 30, ~~2016. Revenues decreased to $80,352 for the nine months ended September 30, 2017 compared to $83,811 for the nine months ended September 30, 2016.~~2018 (the “2018 second quarter”). The revenue increase for the ~~three months ended September 30, 2017~~period was due to ~~machinery sales.~~the increased volume of fluids sold, the sale of a US EPA registration (duplicate), licensing revenue from EPA sub registrations, equipment sales and the additional revenue from recurring leased-equipment income.

Total operating expenses decreased to $527,397 during the 2019 second quarter compared to $698,487 during the 2018 second quarter. The ~~revenue decreased for~~decrease during the ~~nine months ended September 30, 2017~~second quarter of 2019 was primarily due to a decrease in stock-based compensation.

General and administrative expenses decreased to $419,131 for the 2019 second quarter compared to $613,569 during the 2018 second quarter. The decrease during the second quarter of 2019 was primarily due to a decrease in stock-based compensation expense during the second quarter of 2019 as compared to the second quarter of 2018.

Depreciation and amortization expenses increased slightly to $84,189 during the 2019 second quarter compared to $80,162 during the 2018 second quarter. Depreciation and amortization were comparable between the two periods.

Total other expenses increased to $3,121,612 for the 2019 second quarter compared to $39,644 during the 2018 second quarter. The overall increase was a result of an increase in interest expense, loss on settlement of debt, and loss on change in fair value of derivatives. This was offset by a gain on the sale of ~~fluids.~~assets and a gain on change in fair value of preferred series A stock liabilities.

~~Cost~~As a result of ~~sales~~the changes described above, net loss from operations after income taxes increased to ~~$22,682~~$3,530,147 during the 2019 second quarter compared to $668,059 during the 2018 second quarter.

Six Months Ended June 30, 2019

SUMMARY OF OPERATIONS	Six months period ended June 30,
	(Unaudited)
	2019			2018
Revenues	$	314,819		$	112,213

Total operating expenses	$	1,351,927		$	1,246,126
Total other expenses	$	3,413,362		$	65,448
Net loss	$	4,450,470		$	1,199,361
Basic and diluted loss per share	$	(0.09	)	$	(0.03	)

Revenues increased to $314,819 for the ~~three~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$7,183~~$112,213 for the ~~three~~six months ended ~~September~~June 30, ~~2016. Cost of sales increased to $42,019~~2018. The revenue increase for the ~~nine months ended September 30, 2017 compared to $37,789 for the nine months ended September 30, 2016. The cost of sales increases for both periods~~period was due to the increased volume of fluids sold, the sale of a duplicate US EPA Registration, licensing revenue from EPA sub registrations, equipment sales and ~~types of sales for~~ the ~~periods; purchasing inventory for the production of equipment for sale is more expensive than utilizing existing equipment to produce fluid solutions to sell.~~additional revenue from recurring leased-equipment income.

Total operating expenses increased to ~~$514,323 for~~$1,351,927 during the ~~three~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$202,266 for~~$1,246,126 during the ~~three~~six months ended ~~September~~June 30, ~~2016. Total operating expenses increased to $1,655,238 for~~2018. The increase during the ~~nine months ended September 30, 2017 compared to $623,724 for the nine months ended September 30, 2016. The total operating expense increases for both periods were~~period was primarily due to ~~stock option expenses~~an increase in operations and ~~hiring new employees.~~travel as a result of increased activities associated with increased revenue, revenue costs, offset by a decrease in stock-based compensation.

General and administrative expenses increased to ~~$389,376~~$1,086,095 for the ~~three~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$186,816 for~~$1,058,794 during the ~~three~~six months ended ~~September~~June 30, ~~2016. General and administrative expenses increased to $1,346,955 for~~2018. The increase during the ~~nine months ended September 30, 2017 compared to $517,711 for the nine months ended September 30, 2016. General and administrative expense increases for both periods were~~period was primarily due to stock option expenses and hiring new employees. General and administrative expenses are anticipated to stabilize at current levels, with no significant increases until additional production staff and other ancillary general staff are required to facilitate building more equipment anda decrease in ~~supporting sales.~~

Research and development expenses increased to $32,490 for the three months ended September 30, 2017 compared to $13,326 for the three months ended September 30, 2016. Research and development expenses increased to $102,402 for the nine months ended September 30, 2017 compared to $90,330 for the nine months ended September 30, 2016. Research and development expenses increased for both periods due to field testing required for EPA certification and market/industry requirements.stock-based compensation expense.

Depreciation and amortization expenses increased slightly to ~~$92,427 for~~$169,101 during the ~~three~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$2,124 for~~$166,858 during the ~~three~~six months ended ~~September~~June 30, ~~2016.~~2018. Depreciation and amortization ~~expenses increased to $205,881 for~~was comparable between the nine months ended September 30, 2017 compared to $15,683 for the nine months ended September 30, 2016. Depreciation and amortization expenses increased for both periods due to fixed asset and intangible asset acquisitions during thosetwo periods.

Total ~~interest expense~~other expenses increased to ~~$21,654~~$3,413,362 for ~~the three~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$22,226 for~~$65,448 during the ~~three~~six months ended ~~September~~June 30, ~~2016. Total interest expense increased to $50,100 for the nine months ended September 30, 2017 compared to $37,321 for the nine months ended September 30, 2016.~~2018. The ~~change~~overall increase was a result of an increase in interest expense, ~~during both periods is due directly to~~loss on settlement of debt, and loss on change in fair value of derivatives. This was offset by a gain on the ~~borrowings for continued operations during the periods.~~sale of assets and a gain on change in fair value of preferred series A stock liabilities.

~~The Company incurred~~As a ~~loss on convertible debt in~~result of the ~~amount of $48,872 during the second quarter of 2016. This expense was associated with the election by two holders of convertible debentures to convert the debentures solely to common stock.~~

~~Net~~changes described above, net loss from operations ~~and~~ after income taxes increased to ~~$500,536 for~~$4,450,470 during the ~~three~~six months ended ~~September~~June 30, ~~2017~~2019 compared to ~~$226,925 for~~$1,199,361 during the ~~three~~six months ended ~~September~~June 30, 2016. Net loss from operations and after income taxes increased to $1,667,005 for the nine months ended September 30, 2017 compared to $663,895 for the nine months ended September 30, 2016. Net loss from operations and after income taxes increased for both periods primarily due to increased general and administrative expenses and depreciation and amortization expenses.2018.

1826

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Critical Accounting Policies

~~Emerging Growth~~Derivative and Preferred Series A Stock Liabilities

The Company accounts for derivative instruments in accordance with ASC Topic 815, “Derivatives and Hedging” and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company’s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As of June 30, 2019, and December 31, 2018, the Company had a $3,349,099 and $322,976 derivative liability, respectively and preferred series A stock liabilities of $0 and $144,352, respectively.

Accounts Receivable -

Property and Equipment

Impairment of Long-lived Assets

Intangible Assets

Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, which range from 1 to 15 years. An impairment charge is recognized if the carrying amount is not recoverable and the carrying amount exceeds the fair value of the intangible assets as determined by projected discounted net future cash flows. The recorded impairment expense was nil for the six months ended June 30, 2019.

Leases

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"), which requires lessees to recognize right-of-use ("ROU") assets and related lease liabilities on the balance sheet for all leases greater than one year in duration. We ~~qualify~~adopted ASC 842 on January 1, 2019 using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach did not require any transition accounting for leases that expired before the earliest comparative period presented. The adoption of this standard resulted in the recording of ROU assets and lease liabilities for our lease agreements with original terms of greater than one year. Upon implementation, the Company recognized an initial operating lease right-of-use asset of $43,330 and operating lease liability of $43,330. Due to the simplistic nature of the Company's leases, no retained earnings adjustment was required. See Note 5 for further details.

Revenue Recognition

On May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customer (Topic 606). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principal is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflect the consideration to which the entity expects to be entitled in exchange for those goods or services.

The Company has the following three revenue streams:

1)product sales (equipment and/or fluid solutions);

2)licensing (contract-based use of the Company’s US EPA Product Registration, returning revenue in licensing fees and/or royalties from minimum or actual fluid sales); and

3)equipment leases (under systems service agreements, usually 3-year contracts for the provision of the Company’s equipment and service of such, under contract to customers, with renewable terms).

The Company recognizes revenue from the sale of products when the performance obligation is satisfied by transferring control of the product to a customer.

The Company recognizes revenue from the leasing of equipment as ~~an “emerging growth company” under~~ the ~~recently enacted Jumpstart Our Business Startups Act~~entity provides the equipment and the customer simultaneously receives and consumes the benefits through the use of ~~2012 (the “JOBS Act”).~~the equipment. This revenue generating activity would meet the criteria for a performance obligation satisfied over time. As a result, ~~we are permitted~~the Company recognizes revenue over time by using the output method, as the Company can measure progress of the performance obligation using the time elapsed under each obligation.

The Company’s licenses provide a right to use and ~~intend to, rely on exemptions~~create performance obligations satisfied at a point in time. The Company recognizes revenue from ~~certain disclosure requirements.~~licenses when the performance obligation is satisfied through the transfer of the license. For solicenses that include royalties the Company will recognize royalty revenue as the underlying sales or usages occur, as long as ~~we are an emerging growth company, among other things, we will~~this approach does not ~~be required to:~~

~~Have an auditor report on our internal controls over financial reporting pursuant to Section 404(b)~~result in the acceleration of revenue ahead of the ~~Sarbanes-Oxley Act;~~

~~Submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency”~~

~~Obtain shareholder approval of any golden parachute payments not previously approved; and~~

Disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executives compensation to median employee compensation.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.entity’s performance.

~~We will remain an “emerging growth company” until~~The Company has disclosed disaggregated revenue via revenue stream on the ~~earliest of (i) the last day~~face of the ~~first fiscal year in which our total annual gross revenues exceed $1 billion; (ii) the fifth anniversary~~statement of our first sale of common equity pursuant to an effective registration statement; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that are held by non-affiliates exceeds $700 million as of the last business day of our most recently completed third fiscal quarter;operations. The Company did not have any contract assets or ~~(iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.~~liabilities at June 30, 2019.

Recent Accounting Developments

WeThe Company has reviewed all ~~recent~~other FASB issued ASU accounting pronouncements ~~issued by~~and interpretations thereof that have effective dates during the ~~FASB (including~~period reported and in future periods. The Company has carefully considered the ~~Emerging Issues Task Force),~~new pronouncements that alter the ~~AICPA,~~previous GAAP and ~~the SEC and we did~~do not believe that any new or ~~are not believed by management to~~modified principles will have a material impact on ~~our present~~the Company’s reported financial position or ~~future financial statements.~~operations in the near term.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~Our Principal~~We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow our management to make timely decisions regarding required disclosure. F. Jody Read, our Chief Executive Officer, who serves as our principal executive officer and ~~Principal Financial Officer, Gary Grieco,~~principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) ~~under~~and Rule 15d-15(e) of the ~~Securities~~ Exchange ~~Act of 1934, as amended)~~Act) as of the end of the period covered by this ~~Report.~~report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our principal executive officer as appropriate to allow timely decisions regarding required disclosure. Based on ~~the~~that evaluation, ~~Mr. Grieco~~our principal executive officer concluded that as of June 30, 2019, our disclosure controls and procedures ~~are ineffective in timely alerting him to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings.~~ were not effective.

Notwithstanding ~~the~~this finding of ineffective disclosure controls and procedures, we concluded that the consolidated financial statements included in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States.

Changes in Internal Control Over Financial Reporting

Our management is responsible to establish and maintain adequate internal control over financial reporting. Our principal executive officer is responsible to design or supervise a process that provides reasonable assurance regardingDuring the ~~reliability of financial reporting and the preparation of financial statements for external purposes~~quarter ended June 30, 2019, there were no changes in ~~accordance with generally accepted accounting principles. The policies and procedures include:~~

~~maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,~~
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and
~~provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.~~

For the period ended September 30, 2017, management has relied on the Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Internal Control - Integrated Framework,” to evaluate the effectiveness of our internal control over financial reporting. Based upon that framework, our principal executive officer has determined that our internal controls over financial reporting for period ended September 30, 2017 and the year ended December 31, 2016, were not effective.

The material weaknesses relate to the limited number of persons responsible for the recording and reporting of financial information, the lack of separation of financial reporting duties, and the limited size of our management team in general. We are in the process of evaluating methods of improving our internal control over financial reporting including the possible addition of financial reporting staff and the increased separation of financial reporting responsibility, and intend to implement such steps as are necessary and possible to correct these material weaknesses.

~~Our management determined~~ that ~~there were no changes made in our internal controls over financial reporting during the third quarter of 2017 that have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting.~~

~~There has been no change~~reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Company’s internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

Internal control systems, no matter how well designed and operated, have inherent limitations. Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented. Our systemsSecurities Exchange Act of ~~internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.~~1934).

1929

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We may become involved in various routine legal proceedings incidental to our business. To our knowledge as of the date of this Report, there are no material pending legal proceedings to which we are a party or to which any of our property is subject. We are named as a defendant in a case for $6,010 to be paid to a HVAC contractor, which we maintain is our landlord’s responsibility. This legal dispute has been fully satisfied.

ITEM 1A. RISK FACTORS

We are ~~an emerging growth~~a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. However, we detailed significant business risks in Item 1A to our Form 10-K for the year ended December 31, ~~2016, to which reference is made herein.~~2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On ~~July 13, 2017,~~April 26, 2019, the Company ~~sold 24,000~~issued 600,000 shares of Series A Convertible Preferred Stock at $0.10 per share for cash proceeds of $60,000 received during the year ended December 31, 2018.

TFK Investments LLC Note Conversions

From June 11, 2019 through June 27, 2019, the Company issued TFK Investments LLC shares of its common stock upon partial conversion of the promissory note dated November 28, 2018 as follows:

Date of Conversion		Principal Amount Converted	Conversion Price		Number of Shares Issued		Principal Balance Remaining
	6/11/2019	$4,293 plus $500 in fees	$	0.0192		250,000	$	60,708
	6/15/2019	$8,863 plus $500 in fees	$	0.0037		2,500,000	$	51,845
	6/25/2019	$3,763 plus $500 in fees	$	0.0015		2,900,000	$	48,082
	6/27/2019	$4,483 plus $500 in fees	$	0.0015		3,390,000	$	43,599
	Total	$23,401				9,040,000

Power Up Lending Group Ltd Note Conversions

From June 12, 2019 through June 27, 2019, the Company issued Power Up Lending Group LTD shares of its common stock upon partial conversion of the promissory note dated December 5, 2018 as follows:

Date of Conversion		Principal Amount Converted		Conversion Price		Number of Shares Issued		Principal Balance Remaining
	6/12/2019	$	12,000	$	0.0323		371,517	$	51,000
	6/19/2019	$	15,000	$	0.0063		2,380,952	$	61,500	*
	6/25/2019	$	9,400	$	0.0036		2,611,111	$	52,100	*
	6/27/2019	$	9,300	$	0.0036		2,583,333	$	42,800	*
	Total	$	45,700				7,946,913

* Includes default amount

Crown Bridge Partners, LLC Note Conversions

From June 12, 2019 through June 30, 2019, the Company issued Crown Bridge Partners, LLC shares of its common stock upon partial conversion of the promissory note dated November 28, 2018 as follows:

Date of Conversion		Principal Amount Converted		Conversion Price		Number of Shares Issued		Principal Balance Remaining
	6/12/2019		$4,580 plus $500 in fees	$	0.0192		265,000	$	45,420
	6/19/2019		$7,060 plus $500 in fees	$	0.0028		2,700,000	$	38,360
	6/26/2019		$1,047	$	0.0004		2,990,000	$	37,313
	6/27/2019		$1,190	$	0.0004		3,400,000	$	36,123
	Total		$14,877				9,355,000

Subsequent Issuances After Quarter-End

TFK Investments LLC Note Conversions

Subsequent to the quarter ended June 30, 2019, the Company issued TFK Investments LLC shares of its common stock upon partial conversion of the promissory note dated November 28, 2018 as follows:

Date of Conversion		Principal Amount Converted	Conversion Price		Number of Shares Issued		Principal Balance Remaining
	7/2/2019	$5,100 plus $500 in fees	$	0.0014		4,000,000	$	38,499
	7/10/2019	$3,874 plus $500 in fees	$	0.0009		4,628,000	$	34,625
	7/15/2019	$3,360 plus $500 in fees	$	0.0007		5,252,000	$	31,265
	7/17/2019	$2,990 plus $500 in fees	$	0.0006		5,540,000	$	28,275
	7/19/2019	$3,494 plus $500 in fees	$	0.0006		6,340,000	$	24,781
	7/22/2019	$3,501 plus $500 in fees	$	0.0006		6,350,000	$	21,280
	7/23/2019	$4,483 plus $500 in fees	$	0.0006		7,910,000	$	16,797
	7/24/2019	$4,962 plus $500 in fees	$	0.0006		8,670,000	$	11,835
	7/29/2019	$4,893 plus $500 in fees	$	0.0006		8,560,000	$	6,942
	Total	$41,157				57,250,000

Power Up Lending Group Ltd Note Conversions

Subsequent to the quarter ended June 30, 2019, the Company issued Power Up Lending Group LTD shares of its common stock upon partial conversion of the promissory note dated December 5, 2018 as follows:

Date of Conversion		Principal Amount Converted		Conversion Price		Number of Shares Issued		Principal Balance Remaining
	7/1/2019	$	8,100	$	0.0031		2,612,903	$	34,700	*
	7/5/2019	$	10,400	$	0.0026		4,000,000	$	24,300	*
	7/8/2019	$	10,000	$	0.0025		4,000,000	$	14,300	*
	Total	$	28,500				10,612,903

* Includes default amount

Crown Bridge Partners, LLC Note Conversions

Subsequent to the quarter ended June 30, 2019, the Company issued Crown Bridge Partners, LLC shares of its common stock upon partial conversion of the promissory note dated November 28, 2018 as follows:

Date of Conversion		Principal Amount Converted	Conversion Price		Number of Shares Issued		Principal Balance Remaining
	7/8/2019	$1,470	$	0.0004		4,200,000	$	34,653
	7/9/2019	$1,610	$	0.0004		4,600,000	$	33,043
	7/16/2019	$1,820	$	0.0004		5,200,000	$	31,223
	7/17/2019	$1,942	$	0.0004		5,550,000	$	29,281
	7/19/2019	$2,226	$	0.0004		6,360,000	$	27,055
	7/22/2019	$2,415	$	0.0004		6,900,000	$	24,640
	7/23/2019	$2,660	$	0.0004		7,600,000	$	21,980
	7/24/2019	$4,617 plus $500 in fees	$	0.0006		8,600,000	$	17,363
	7/29/2019	$4,617 plus $500 in fees	$	0.0006		8,600,000	$	12,746
	8/1/2019	$4,968 plus $500 in fees	$	0.0006		9,189,631	$	7,778
	Total	$29,845				66,799,631

GS Capital Partners, LLC Note Conversions

Subsequent to the quarter ended June 30, 2019, the Company issued GS Capital Partners, LLC shares of its common stock upon partial conversion of the promissory note dated January 16, 2019 as follows:

Date of Conversion

Principal Amount Converted

Conversion Price

Number of

Shares Issued

Principal Balance Remaining

7/19/2019

$4,508 plus
$179 of interest

0.0009

5,207,600

95,492

JSJ Investments Inc. Note Conversions

Subsequent to the quarter ended June 30, 2019, the Company issued JSJ Investments Inc. shares of its common stock upon partial conversion of the promissory note dated January 22, 2019 as follows:

Date of Conversion

Principal Amount Converted

Conversion Price

Number of

Shares Issued

Principal Balance Remaining

7/29/2019

8,640

0.0012

7,500,000

51,360

EMA Financial LLC Note Conversions

Subsequent to the quarter ended June 30, 2019, the Company issued EMA Financial LLC shares of its common stock upon partial conversion of the promissory note dated January 22, 2019 as follows:

Date of Conversion

Principal Amount Converted

Conversion Price

Number of

Shares Issued

Principal Balance Remaining

8/1/2019

$2,196 plus
$953 of interest

0.0006

4,999,000

72,804

Peak One Opportunity Fund Note Conversions

Subsequent to the quarter ended June 30, 2019, the Company issued Peak One Opportunity Fund, LP shares of its common stock upon partial conversion of the promissory note dated February 14, 2019 as follows:

Date of Conversion

Principal Amount Converted

Conversion Price

Number of

Shares Issued

Principal Balance Remaining

8/9/2019

5,000

0.0009

5,555,555

55,000

In addition, on August 16, 2019, the Company issued Peak One Opportunity Fund, LP 5,989,500 shares of common stock ~~at $1.25 per share to two unrelated parties for cash proceeds~~upon the cashless exercise of ~~$30,000.~~6,000,000 warrants.

~~On July 27, 2017, the Company sold 30,000~~As of September 12, 2019, there are 59,225,850 shares of our common stock ~~at $1.25 per share to an unrelated party for cash proceeds~~held in reserve in the event of ~~$37,500.~~

~~On August 9, 2017, the Company sold 20,000 shares of common stock at $1.25 per share to an unrelated party for cash proceed of $25,000~~.

~~Subsequent Issuances After Quarter-End~~

~~On October 25, 2017, the Company issued 40,000 shares of common stock at $0.75 per share to an unrelated party for cash proceeds of $30,000.~~

On October 24, 2017 and October 27, 2017, the Company revised the share price relating to shares of common stock sold during the period from September 1, 2016 through October 30, 2017 down to $0.75 per share. As a result of the revised share price, the Company issued an additional 337,666 shares of common stock to15 investors, including 191,667 shares to related parties.

All of the above-described issuances were exempt from registration pursuant to Section 4(a)(2) and/or Regulation D of the Securities Act as transactions not involving a public offering. With respect to each transaction listed above, no general solicitation was made by either the Company or any person actingdefault/conversion on its behalf. All such securities issued pursuant to such exemptions are restricted securities as defined in Rule 144(a)(3) promulgated under the Securities Act, appropriate legends have been placed on the documents evidencing the securities, and may not be offered or sold absent registration or pursuant to an exemption there from.certain convertible notes.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended ~~September~~June 30, ~~2017.~~2019.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

We have entered into a number of promissory notes, some of which are in default as of ~~September~~June 30, ~~2017,~~2019, or went into default before the filing of this ~~Current~~Quarterly Report (See Note 56 to the financial statements).

In addition, we have insufficient common stock reserves for the convertible notes we have outstanding, which places each note into default.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Magnolia Columbia Limited LOI

On ~~September 1, 2017,~~March 27, 2019, we entered into a letter of intent (the “LOI”) with Magnolia Columbia Limited (“Magnolia”), a Canadian company traded on the TSXV under the symbol “MCO”. Pursuant to the terms of the LOI, the parties agreed to negotiate and enter into a definitive agreement on or before April 27, 2019. As of April 28, 2019, we had not entered into a definitive agreement with Magnolia or agreed to any extensions of the LOI, therefore the LOI terminated. However, we continue to negotiate with Magnolia for a potential future transaction. Negotiations ceased and with no definitive agreement in place.

27059089 Ontario Inc. LOI

On July 12, 2019, the Company entered into a ~~five-year employment~~binding Letter of Intent (“LOI”) to negotiate in good faith a transaction between 2705908 Ontario Inc. and PCT LTD for a definitive loan and option agreement ~~with Marion E. Paris, Jr.~~ to beinclude the ~~president~~acquisition of at least 51% control of PCT LTD, in addition to the ~~Annihilyzer Division~~terms and commitments written in the letter of ~~Paradigm. Mr. Paris is a director~~intent. On July 30, 2019 the LOI due diligence and negotiations were slated to terminate, but both parties agreed to extend the term of the LOI. On August 2, 2019, the Company and ~~Paradigm. Under~~2705908 Ontario Inc. executed an extension for the terms of the ~~employment agreement, Mr. Paris is~~July 10, 2019 LOI to ~~be paid an annual base salary of $90,000 and other benefits associated~~continue until August 19, 2019. The extension expired on August 19, 2019 with an executive officer, including four weeks paid vacation. In addition, the Company agreed to pay Mr. Paris a signing bonus of $40,000 ($20,000 on or before November 1, 2017, with an additional $20,000 on January 1, 2018). As of September 30, 2017, the Company had paid $7,500 in salary to Mr. Paris. As of September 30, 2017, the Company had not paid the initial $20,000 of the signing bonus which is due on or before November 1, 2017. The foregoing description of the employment agreement does not purport to be complete and is qualified in its entirety by reference to the agreement, a copy of which is attached to this report as Exhibit 10.5.discussion still ongoing.

Annihilare Settlement

On July 30, 2019 the Company accepted a settlement proposal from Annihilare, Inc. (a sub-registrant of the Company’s US EPA Registration No. 92108-1) and its affiliated company, Prime ITS (a prior owner of Annihilyzer Inc, which transferred previously noted intangible IT assets to PCT LTD for 2,250,000 shares of the Company’s common stock in November of 2016). The settlement agreement included credit to the Company by Prime ITS in the gross amount of $23,209.19 on the Company’s payable to Prime ITS for a combination of a portion of Marty Paris’ salary, a resignation from Marty Paris effective July 31, 2019, and equal valued amount of PCT’s inventory, for net credit to PCT in the amount of $13,939.19, which was received by the Company on July 31, 2019. The transaction was completed on August 1, 2019.

On August 8, 2019 the Company received notice from Annihilare, Inc. that certain intellectual properties developed jointly between the Company and Annihilare are to be discontinued from use by the Company and our customers. We dispute the claims from Annihilare that the intellectual properties are exclusively Annihilare’s and are in discussions with Annihilare on this point.

On August 8, 2019 the Company received notice from PRIME ITS that certain technology services utilized by the Company shall cease to be provided, effective September 8, 2019.

Employment Agreements

On August 12, 2019 the Company made an addendum to its Employment Contract with F. Jody Read, CEO, whereby 500,000 Preferred Series B shares will be issued to Read as soon as the Preferred Series B shares are established through the State of Nevada. All other terms of the January 1, 2019 employment agreement remain in effect.

On August 12, 2019 the Company executed a new Employment Contract with Gary J. Grieco, President, whereby 500,000 Preferred Series B shares of PCT LTD will be issued to Grieco as soon as the Preferred Series B shares are established through the State of Nevada. Mr. Grieco’s prior employment had expired and this new agreement called for typical executive terms and an annual salary of $24,000, in addition to the 500,000 Preferred Series B shares.

2033

Series A Convertible Preferred Stock

In April of 2019, the Company filed a Certificate of Designation with the Nevada Secretary of State designating 1,000,000 shares of its authorized preferred stock as Series A Convertible Preferred Stock. The Company currently has 500,000 shares of Series A Convertible Preferred Stock issued and outstanding. The rights and preferences of such preferred stock are as follows:

The number of shares constituting the Series A Convertible Preferred Stock shall be 1,000,000. Such number of shares may be increased or decreased by resolution of the Board;provided, that no decrease shall reduce the number of shares of Series A Convertible Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Company convertible into Series A Convertible Preferred Stock.

DESIGNATION. The Shares are designated as the Company’s Series A Convertible Preferred Stock (the “Shares”).

Redemption.

(a) This Company may at any time following the first anniversary date of issuance (the “Redemption Date”), at the option of the Board of Directors, redeem in whole or in part the Shares by paying in cash in exchange for the Shares to be redeemed a price equal to the Original Series A Issue Price, as defined in Section 4 below (the “Redemption Price”). Any redemption affected pursuant to this provision shall be made on a pro rata basis among the holders of the Shares in proportion to the number of Shares then held by them.

(b) Subject to the rights of series of preferred stock which may from time to time come into existence, at least ten (10) but no more than sixty (60) days prior to each Redemption Date, written notice shall be mailed, first class postage prepaid, to each holder of record (at the close of business on the business day next preceding the day on which notice is given) of the Shares to be redeemed, at the address last shown on the records of this Company for such holder, notifying such holder of the redemption to be effected, specifying the number of shares to be redeemed from such holder, the Redemption Date, the Redemption Price, the place at which payment may be obtained and calling upon such holder to surrender to this Company, in the manner and at the place designated, his, her or its certificate or certificates representing the Shares to be redeemed (the “Redemption Notice”). Except as provided in subsection (3)(c) on or after the Redemption Date, each holder of Shares to be redeemed shall surrender to this Company the certificate or certificates representing such shares, in the manner and at the place designated in the Redemption Notice, and thereupon the Redemption Price of such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof and each surrendered certificate shall be cancelled. In the event less than all the Shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed Shares.

(c) From and after the Redemption Date, unless there shall have been a default in payment of the Redemption Price, all rights of the holders of shares of Shares designated for redemption in the Redemption Notice as holders of Shares (except the right to receive the Redemption Price without interest upon surrender of their certificate or certificates) shall cease with respect to such Shares, and such Shares shall not thereafter be transferred on the books of this Company or be deemed to be outstanding for any purpose whatsoever. Subject to the rights of series of preferred stock which may from time to time come into existence, if the funds of the Company legally available for redemption of Shares on any Redemption Date are insufficient to redeem the total number of Shares to be redeemed on such date, those funds which are legally available will be used to redeem the maximum possible number of such Shares ratably among the holders of such Shares to be redeemed based upon their holdings of Shares. The Shares not redeemed shall remain outstanding and entitled to all the rights and preferences provided herein. Subject to the rights of series of preferred stock which may from time to time come into existence, at any time thereafter when additional funds of the Company are legally available for the redemption of shares of Shares, such funds will immediately be used to redeem the balance of the Shares which the Company has become obliged to redeem on any Redemption Date but which it has not redeemed.

Conversion. The holders of the Shares shall have conversion rights as follows (the “Conversion Rights”):

(a)Right to Convert. Each Share shall be convertible into shares of the Company’s Common Stock at a price per share of $0.10 (1 Share converts into 1 share of Common Stock) (the “Conversion Price”), at the option of the holder thereof, at any time following the date of issuance of such Share and on or prior to the fifth (5^th) day prior to the Redemption Date, if any, as may have been fixed in any Redemption Notice with respect to the Shares, at the office of this Company or any transfer agent for such stock.

(b)Automatic Conversion. Each Share shall automatically be converted into shares of Common Stock on the first day of the thirty-sixth (36^th) month following the original issue date of the Shares, at the Conversion Price per share.

(c)Mechanics of Conversion. Before any holder of Shares shall be entitled to convert the same into shares of Common Stock, he shall surrender the certificate or certificates therefor, duly endorsed, at the office of this Company or of any transfer agent for the Shares, and shall give written notice to this Company at its principal corporate office, of the election to convert the same and shall state therein the name or names in which the certificate or certificates for shares of Common Stock are to be issued. This Company shall, as soon as practicable thereafter, issue and deliver at such office to such holder of Shares, or to the nominee or nominees of such holder, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Shares to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock as of such date.

(d)No Impairment. This Company will not, by amendment of its Articles of incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by this Company, but will at all times in good faith assist in the carrying out of all the provisions of this section and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of the Shares against impairment.

(e)Reservation of Stock Issuable Upon Conversion. This Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Shares, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Shares; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Shares, in addition to such other remedies as shall be available to the holder of such Shares, this Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Company’s Certificate of incorporation.

(f)Notice. Any notice required by the provisions of this section to be given to the holders of Shares shall be deemed given if deposited in the United States mail, postage prepaid, and addressed to each holder of record at his address appearing on the books of this Company.

Liquidation Preference.

(a) In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, subject to the rights of series of preferred stock that may from time to time come into existence, the holders of Shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of this Company to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the sum of (i) $0.10 for each outstanding Share (the “Original Series A Issue Price”) and (ii) an amount equal to 6% of the Original Series A Issue Price for each 12 months that has passed since the date of issuance of any Shares (such amount being referred to herein as the “Premium”). If upon the occurrence of such event, the assets and funds thus distributed among the holders of the Shares shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of series of preferred stock that may from time to time come into existence, the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the Shares in proportion to the preferential amount each such holder is otherwise entitled to receive.

(b) Upon the completion of the distribution required by subparagraph (a) above and any other distribution that may be required with respect to series of preferred stock that may from time to time come into existence, the remaining assets of the Company available for distribution to stockholders shall be distributed among the holders of Shares and Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of all such Shares).

(i)For purposes of this provision, a liquidation, dissolution or winding up of this Company shall be deemed to be occasioned by, or to include, (A) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company); or (B) a sale of all or substantially all of the assets of the Company;unless the Company’s stockholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise) hold at least 50% of the voting power of the surviving or acquiring entity.

(ii)In any of such events, if the consideration received by the Company is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:

Securities not subject to investment letter or other similar restrictions on free marketability (covered by (B) below):

If traded on a securities exchange (NASDAQ, AMEX, NYSE, etc.), the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty-day period ending three (3) days prior to the closing;

If traded on a quotation system, such as the OTC:QX, OTC:QB or OTC Pink Sheets, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty-day period ending three (3) days prior to the closing; and

B.The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by the Company and the holders of at least a majority of the voting power of all then outstanding shares of such Preferred Stock.

(iii)In the event the requirements of this provision are not complied with, this Company shall forthwith either:

A.cause such closing to be postponed until such time as the requirements of this provision have been complied with; or

B.cancel such transaction, in which event the rights, preferences and privileges of the holders of the Shares shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice referred to in subsection 3(c)(iv) hereof.

(iv)The Company shall give each holder of record of Shares written notice of such impending transaction not later than ten (10) days prior to the stockholders’ meeting called to approve such transaction, or ten (10) days prior to the closing of such transaction, whichever is earlier, and shall also notify such holders in writing of the final approval of such transaction. The first of such notices shall describe the material terms and conditions of the impending transaction and the provisions of this Section 4, and the Company shall thereafter give such holders prompt notice of any material changes. The transaction shall in no event take place sooner than twenty (20) days after the Company has given the first notice provided for herein or sooner than ten (10) days after the Company has given notice of any material changes provided for herein; provided, however, that such periods may be shortened upon the written consent of the holders of Shares that are entitled to such notice rights or similar notice rights and that represent at least a majority of the voting power of all then outstanding shares of such Shares.

Voting Rights. The holder of each Share shall not have any voting rights, except in the case of voting on a change in the preferences of Shares.

Protective Provisions. So long as any Shares are outstanding, this Company shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of Shares which is entitled, other than solely by law, to vote with respect to the matter, and which Shares represents at least a majority of the voting power of the then outstanding Shares:

(a) sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly-owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of;

(b) alter or change the rights, preferences or privileges of the Shares so as to affect adversely the Shares;

(c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of preferred stock;

(d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Shares with respect to upon liquidation, or (ii) having rights similar to any of the rights of the Preferred Stock; or

(e) amend the Company’s Articles of Incorporation or bylaws.

Series B – Super Voting Convertible Preferred Stock

In August of 2019, the Company filed a Certificate of Designation with the Nevada Secretary of State designating 1,000,000 shares of its authorized preferred stock as Series B – Super Voting Convertible Preferred Stock. Upon designation, the Company issued 500,000 shares of the Series B preferred stock to each of its CEO and President (1,000,000 shares in total). The rights and preferences of such preferred stock are as follows:

Section 1.Designation and Amount. There is hereby authorized to be issued out of the authorized and unissued shares of preferred stock of the Corporation a class of preferred stock designated as the “Series B – Super Voting Convertible Preferred Stock” (“Series B Preferred Stock”) and the number of shares constituting such class shall be 1,000,000.

Section II.Voting Rights. Holders of the Series B Preferred Stock shall be entitled to cast five hundred (500) votes for each share held of the Series B Preferred Stock on all matters presented to the stockholders of the Corporation for stockholder vote which shall vote along with holders of the Corporation’s Common Stock on such matters.

Section III.Redemption Rights. The Series B Preferred Stock shall be redeemed by the Corporation upon the successful receipt by the Corporation of at least $1,000,000 in equity capital following the issuance of the Series B Preferred Stock.

Section IV.Conversion Rights. The Series B Preferred Stock isnot convertible into shares of Common Stock of the Corporation.

Section V.Protective Provisions. So long as any shares of Series B Preferred Stock are outstanding, this Corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the Holders of the Series B Preferred Stock which is entitled, other than solely by law, to vote with respect to the matter, and which Preferred Stock represents at least a majority of the voting power of the then outstanding shares of such Series B Preferred Stock:

(b) alter or change the rights, preferences or privileges of the shares of Series B Preferred Stock so as to affect adversely the shares;

(c) increase or decrease (other than by redemption or conversion) the total number of authorized shares of preferred stock;

(d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Series B Preferred Stock with respect to dividends or upon liquidation, or (ii) having rights similar to any of the rights of the Series B Preferred Stock; or

(e) amend the Corporation’s Articles of Incorporation or bylaws

Section VI.Other Rights. Except as otherwise stated herein, there are no other rights, privileges, or preferences attendant or relating to in any way the Series B Preferred Stock, including by way of illustration but not limitation, those concerning dividend, ranking, other conversion, other redemption, participation, or anti-dilution rights or preferences.

Section VII.Definitions. As used in herein, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires:

“Common Stock” means any and all shares of the Corporation’s $0.001 par value common stock.

“Corporation” means PCT LTD, a Nevada corporation, and its successors.

“Series B Preferred Stock” has the meaning ascribed to it in Section I hereof.

“Holder” means a holder of a share or shares of Series B Preferred Stock as reflected in the stock books of the Corporation.

ITEM 6. EXHIBITS

~~Part I Exhibits~~

Exhibit No.	Description
3(i)	Amended and Restated Articles of Incorporation, as currently in effect (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed April 13, 2018)
3(ii)	Amended and Restated Bylaws, as currently in effect (Incorporated by reference to Exhibit 3.2 of Form 8-K, filed April 13, 2018)
4.1	Certificate of Designation of Series A Convertible Preferred Stock
4.2	Certificate of Designation of Series B – Super Voting Convertible Preferred Stock
4.3	Power Up Note dated June 5, 2018 (Incorporated by reference to Exhibit 4.1 of Form 10-Q, filed August 20, 2018)
4.4	Second Power Up Note dated July 25, 2018 (Incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018)
4.5	Third Power Up Note dated August 27, 2018 (Incorporated by reference to Exhibit 4.3 of Form 10-Q, filed November 21, 2019)
4.6	Fourth Power Up Note dated December 5, 2018
4.7	Fifth Power Up Note dated January 15, 2019
4.8	Sixth Power Up Note dated February 22, 2019
4.9	GS Capital Note dated January 16, 2019
4.10	JSJ Note dated January 22, 2019
4.11	EMA Note dated January 22, 2019
4.12	Adar Note dated February 20, 2019
4.13	Peak One Note dated February 21, 2019
4.14	Auctus Note dated March 13, 2019
10.1	Agreement with Annihilyzer, Inc. dated November 29, 2016 (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed April 20, 2017)
10.2	Amendment to Agreement with Annihilyzer, Inc. dated April 6, 2017 (Incorporated by reference to Exhibit 10.2 of Form 8-K, filed April 20, 2017)
10.3	Read Consolidated Promissory Note dated September 27, 2017 (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed October 4, 2017)
10.4†	Paris Employment Agreement (Incorporated by reference to Exhibit 10.5 of Form 10-Q, filed November 14, 2017)
10.5	Strategic Planning Services Agreement dated March 15, 2018
10.6	Power Up Agreement dated June 5, 2018 (Included in Exhibit 4.1, which is incorporated by reference to Exhibit 4.1 of Form 10-Q, filed August 20, 2018)
10.7	Second Power Up Agreement dated July 25, 2018 (Included in Exhibit 4.2, which is incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018
10.8	Third Power Up Agreement dated August 27, 2018 (Included in Exhibit 4.3, which is incorporated by reference to Exhibit 4.3 of Form 10-Q, filed November 21, 2019)
10.9	Fourth Power Up Agreement dated December 15, 2018
10.10	Fifth Power Up Agreement dated January 15, 2019
10.11	Sixth Power Up Agreement dated February 22, 2019
10.12	GS Capital Agreement dated January 16, 2019
10.13	JSJ Agreement dated January 22, 2019
10.14	EMA Agreement dated January 22, 2019
10.15	Adar Agreement dated February 20, 2019
10.16	Peak One Agreement dated February 21, 2019
10.17	Auctus Agreement dated March 13, 2019
10.18†	Read Employment Agreement
10.19†	Read Addendum to Employment Agreement
10.20†	Grieco Employment Agreement
31.1	Principal Executive Officer Certification
31.2	Principal Financial Officer Certification
32.1	Section 1350 Certification

~~Part II Exhibits~~

~~No.~~	~~Description~~
~~3(i)~~	~~Articles of Incorporation (Incorporated by reference to exhibit 3.1 to Form 10-SB, filedSeptember 18, 2000)~~
~~3(ii)~~	~~Bylaws of Bingham Canyon (Incorporated by reference to exhibit 3.3 to Form 10-SB filedSeptember 18, 2000)~~
~~10.1~~	~~Sublease Agreement between Paradigm and United Resource Holdings, LLC, dated August 1, 2015, as amended (incorporated by reference to Exhibit 10.1 to the Form 8-K/A filed on September 2, 2016)~~
~~10.2~~	~~Agreement with Annihilyzer, Inc. dated November 29, 2016 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on April 20, 2017)~~
~~10.3~~	~~Amendment to Agreement with Annihilyzer, Inc. dated April 6, 2017 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on April 20, 2017)~~
~~10.4~~	~~Read Consolidated Promissory Note dated September 27, 2017 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 4, 2017)~~
~~10.5†~~	~~Paris Employment Agreement~~
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

† Indicates management contract or compensatory plan or arrangement.

2137

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.

		~~BINGHAM CANYON CORPORATION~~PCT LTD


Date: ~~November 14, 2017~~September 16, 2019	By:	/s/~~Gary J. Grieco~~ F. Jody Read
		~~Gary J. Grieco,~~F. Jody Read, Principal Executive Officer, Principal Financial Officer
		~~President~~Chief Executive Officer and Director
		~~Principal Financial Officer~~

	SEPTEMBER 30, 2017			DECEMBER 31, 2016
ASSETS		(Unaudited)
CURRENT ASSETS
Cash	$	23,732		$	21,078
Accounts receivable, net		3,000			4,018
Inventory		312,844			42,706
Prepaid expenses		6,704			7,152
Deposits		48,820			77,543
Total current assets		395,100			152,497

FIXED ASSETS
Equipment, net		68,569			78,250

OTHER ASSETS
Intangible assets, net		4,404,715			42,857
Deposits		5,403			5,250
Total other assets		4,410,118			48,107

TOTAL ASSETS	$	4,873,787		$	278,854

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	131,165		$	52,144
Accrued expenses – related party		12,461			2,486
Accrued expenses		130,900			12,955
Current portion of notes payable – related party		445,414			358,802
Current portion of notes payable, net		341,822			—
Total current liabilities		1,061,762			426,387

LONG TERM LIABILITIES
Notes payable – related party		275,000			—
Notes payable, net		—			129,451
TOTAL LIABILITIES		1,336,762			555,838

STOCKHOLDERS’ EQUITY (DEFICIT)
Common stock, $0.001 par value; 100,000,000 authorized; 40,001,572 and 37,117,572 issued and outstanding at September 30, 2017 and December 31, 2016, respectively		40,002			37,118
Additional paid-in-capital		9,187,012			3,708,882
Accumulated deficit		(5,689,989	)		(4,022,984	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		3,537,025			(276,984	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	4,873,787		$	278,854

	For the three months ended September 30,						For the nine months ended September 30,
	2017			2016			2017			2016
REVENUES
Revenue	$	58,123		$	4,750		$	80,352		$	83,811
Cost of Goods sold		22,682			7,183			42,019			37,789
Gross profit		35,441			(2,433	)		38,333			46,022

OPERATING EXPENSES
General and administrative		389,376			186,816			1,346,955			517,711
Research and development		32,490			13,326			102,402			90,330
Depreciation and amortization		92,457			2,124			205,881			15,683
Total operating expenses		514,323			202,266			1,655,238			623,724

Net loss before other expenses		(478,882	)		(204,699	)		(1,616,905	)		(577,702	)

OTHER EXPENSES
Interest expense		(21,654	)		(22,226	)		(50,100	)		(37,321	)
Loss on settlement convertible debt		—			—			—			(48,872	)
Total other expenses		(21,654	)		(22,226	)		(50,100	)		(86,193	)

Loss from operations before Income taxes		(500,536	)		(226,925	)		(1,667,005	)		(663,895	)

Income taxes		—			—			—			—

NET LOSS	$	(500,536	)	$	(226,925	)	$	(1,667,005	)	$	(663,895	)

Basic and diluted net loss per share	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.04	)

Basic and diluted weighted average shares outstanding		39,981,485			23,319,196			39,041,968			18,473,821


	September 30, 2017			December 31, 2016
Machinery and equipment	$	94,931		$	92,673
Office equipment and furniture		14,107			13,656
Leasehold improvements		2,400			2,400
Property and Equipment, at Cost		111,438			108,729
Less: Accumulated Depreciation		(42,869	)		(30,479	)
Property and Equipment, Net	$	68,569		$	78,250

	September 30, 2017			December 31, 2016
Notes payable, related parties	$	720,414		$	358,802
Notes payable		351,465			150,000
Subtotal		1,071,879			508,802
Less debt discount		(9,643	)		(20,549	)
Subtotal, net		1,062,236			488,253
Less current portion		(787,236	)		(358,802	)

Net Long-Term Liabilities, net	$	275,000		$	129,451

	Original		Issuance		Maturity		Interest			Balance			Balance
Type	Amount		Date		Date		Rate			09/30/2017			12/31/2016
Notes Payable, Related Party	$	25,000		12/10/15		06/10/16		5.00	%	$	—		$	8,000
Notes Payable, Related Party		7,500		03/11/16		09/11/16		5.00	%		—			7,500
Notes Payable, Related Party(6)		50,000		10/18/16		12/31/17		5.00	%		50,000			50,000
Notes Payable, Related Party(7)		293,302		01/01/17		01/01/18		3.50	%		249,802			293,302
Notes Payable, Related Party(6)		25,000		04/12/17		12/31/17		5.00	%		25,000			—
Notes Payable, Related Party(8)		25,000		04/27/17		04/27/18		3.00	%		25,000			—
Notes Payable, Related Party(9)		15,000		05/15/17		05/15/18		5.00	%		15,000			—
Notes Payable, Related Party(8)		10,000		06/12/17		06/12/18		3.00	%		10,000			—
Notes Payable, Related Party(8)		112		07/01/17		06/30/18		3.00	%		112			—
Notes Payable, Related Party(8)		5,500		07/03/17		06/30/18		3.00	%		5,500			—
Notes Payable, Related Party(8)		2,000		07/05/17		06/30/18		3.00	%		2,000			—
Notes Payable, Related Party(8)		3,000		07/06/17		06/30/18		3.00	%		3,000			—
Notes Payable, Related Party(8)		2,500		07/10/17		06/30/18		3.00	%		2,500			—
Notes Payable, Related Party(8)		2,500		07/12/17		06/30/18		3.00	%		2,500			—
Notes Payable, Related Party(8)		25,000		07/13/17		06/30/18		3.00	%		25,000			—
Notes Payable, Related Party(6)		25,000		07/25/17		09/25/17		5.00	%		25,000			—
Notes Payable, Related Party(8)		5,000		08/14/17		06/30/18		3.00	%		5,000			—
Notes Payable, Related Party(10)		275,000		09/27/17		10/01/18		7.50	%		275,000			—
Notes Payable(1)		150,000		05/18/16		06/01/18		13.00	%		150,000			150,000
Notes Payable(2)		25,000		05/08/17		10/10/17		0.00	%		25,000			—
Notes Payable(3)		125,000		05/15/17		08/31/17		10.00	%		101,465			—
Notes Payable(4)		50,000		09/01/17		12/31/17		8.00	%		50,000			—
Notes Payable(5)		25,000		09/27/17		12/31/17		8.00	%		25,000			—
Subtotal											1,071,879			508,802
Debt Discount											(9,643	)		(20,549	)
Total Notes Payable, Net										$	1,062,236		$	488,253

SUMMARY OF BALANCE SHEET	Period ended September 30, 2017			Year ended December 31, 2016
Cash and cash equivalents	$	23,732		$	21,078
Total current assets		395,100			152,497
Total assets		4,873,787			278,854
Total liabilities		1,336,762			555,838
Accumulated deficit		(5,689,989	)		(4,022,984	)
Total stockholders’ equity (deficit)	$	3,537,025		$	(276,984	)

SUMMARY OF OPERATIONS	Three month period ended September 30,						Nine month period ended September 30,
	(Unaudited)						(Unaudited)
	2017			2016			2017			2016
Revenues, net	$	58,123		$	4,750		$	80,352		$	83,811
Cost of sales		(22,682	)		(7,183	)		(42,019	)		(37,789	)
Gross Profit		35,441			(2,433	)		38,333			46,022
Total operating expenses		(514,323	)		(202,266	)		(1,655,238	)		(623,724	)
Total other expense		(21,654	)		(22,226	)		(50,100	)		(86,193	)
Income tax provision		—			—			—			—
Net loss	$	(500,536	)	$	(226,925	)	$	(1,667,005	)	$	(663,895	)
Net earnings (loss) per share both (basic) and diluted	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.04	)