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 endedSeptember 30, ~~2018~~2019

☐

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

Commission file number:000-31549

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

~~4235 Commerce Street, Little River, SC~~

(Address of principal executive offices)

~~29566~~

(Zip Code)

(843) 390-7900

(Registrant’s telephone number, including area code)

Indicate by check m~~ark~~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)~~

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 s~~tock~~stock as of ~~November 19, 2018~~April 10, 2020 was ~~44,459,238,~~527,813,393 which does not include ~~4,039,707~~427,186,607 shares of common stock reserved against ~~default on~~default/conversion of convertible debt.

TABLE OF CONTENTS

Part I – Financial Information		Page

Item 1.	~~Financial Statements~~	3

	~~Condensed Consolidated Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017~~	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	1833

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2240

Item 4.	Controls and Procedures	2240

Part II – Other Information

Item 1.	Legal Proceedings	2341

Item 1A.	Risk Factors	2341

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2341

Item 3.	Defaults Upon Senior Securities	2345

Item 4.	Mine Safety Disclosures	2345

Item 5.	Other Information	2345

Item 6.	Exhibits	2447

	Signatures	2548

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The financial information set forth below with respect to our statements of operations for the ~~three and~~ nine month periods ended September 30, ~~2018~~2019 and ~~2017~~2018 is unaudited. This 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 month periods ended September 30, 2019 and 2018 are not necessarily indicative of results to be expected for any subsequent period.

~~PCT LTD~~

~~Financial Statements~~

~~September 30, 2018~~

~~(Unaudited)~~

PCT LTD

Condensed Consolidated Balance Sheets

SEPTEMBER 30,
2018
DECEMBER 31, 2017
ASSETS (Unaudited)
CURRENT ASSETS
Cash $ 8,062 $ 7,838
Accounts receivable, net 27,385 12,637
Inventory 34,535 10,526
Prepaid expenses 487,751 7,210
Current portion of deposits 57,110 2,110
Total current assets 614,843 40,321

FIXED ASSETS
Property and Equipment, net 362,195 383,254

OTHER ASSETS
Intangible assets, net 4,102,323 4,325,107
Deposits, net of current portion 5,499 5,499
Total other assets 4,107,822 4,330,606

TOTAL ASSETS $ 5,084,860 $ 4,754,181

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 181,751 $ 134,613
Accrued expenses – related party 34,958 8,656
Accrued expenses 310,389 178,712
Deferred revenue 25,000 —
Current portion of notes payable 204,000 421,217
Current portion of notes payable – related party 80,000 713,000
Current portion of convertible notes payable, net 151,754 —
Total current liabilities 987,852 1,456,198

LONG TERM LIABILITIES
    Notes payable, net of current portion 248,247 —
Notes payable – related party, net of current portion 730,577 —
Convertibles notes payable, net of current portion 386,570 —
TOTAL LIABILITIES 2,353,246 1,456,198
STOCKHOLDER’S EQUITY
Preferred stock, $0.001 par value; 10,000,000 authorized; nil issued and outstanding at September 30, 2018 and December 31, 2017 —   —
Common stock, $0.001 par value; 300,000,000 authorized; 44,459,238 and 41,179,238 issued and outstanding at September 30, 2018 and December 31, 2017, respectively 44,460 41,180
Additional paid-in-capital 11,571,130 10,001,323
Accumulated deficit (8,883,976 ) (6,744,520 )
TOTAL STOCKHOLDERS’ EQUITY 2,731,614 3,297,983

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,084,860 $ 4,754,181

	September 30, 2019			December 31, 2018
ASSETS		(Unaudited)
CURRENT ASSETS
Cash	$	6,669		$	4,893
Accounts receivable		103,872			49,140
Inventory		4,803			7,105
Prepaid expenses		44,980			218,494
Other current assets		2,110			2,110
Total current assets		162,434			281,742

Property and equipment, net		446,346			499,972

OTHER ASSETS
Intangible assets, net		3,782,652			4,059,775
Operating lease right-of-use asset		7,878			—
Deposits		5,499			5,499
Total other assets		3,796,029			4,065,274

TOTAL ASSETS	$	4,404,809		$	4,846,988

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	359,817		$	350,593
Accrued expenses – related parties		72,137			54,033
Accrued expenses		670,872			362,436
Operating lease liability		9,125			—
Current portion of notes payable – related parties, net		834,886			93,000
Current portion of notes payable, net		278,100			399,664
Current portion of convertible notes payable, net		1,334,040			161,280
Derivative liability		5,538,198			322,976
Preferred series A stock liability		—			144,352
Total current liabilities		9,097,175			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		—			392,534
TOTAL LIABILITIES		9,097,175			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 September 30, 2019 and December 31, 2018, respectively		60,398			—
Preferred stock series B, $0.001 par value; 1,000,000 authorized; 1,000,000 and nil issued and outstanding at September 30, 2019 and December 31, 2018, respectively		155,000			—
TOTAL MEZZANINE EQUITY		215,398			—

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock series C, $0.001 par value; 5,500,000 authorized; nil issued and outstanding at September 30, 2019 and December 31, 2018		—			—
Common stock, $0.001 par value; 1,000,000,000 authorized; 262,360,042 and 44,559,238 issued and outstanding at September 30, 2019 and December 31, 2018, respectively		262,361			44,560
Additional paid-in-capital		14,971,340			11,588,030
Accumulated deficit		(20,141,465	)		(9,927,003	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(4,907,764	)		1,705,587

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	4,404,809		$	4,846,988

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

PCT LTD

Condensed Consolidated Statements of Operations

(Unaudited)

	For the three months ended September 30,						For the nine months ended September 30,							For the three months ended September 30,						For the nine months ended September 30,
	2018			2017			2018				2017			2019			2018			2019			2018
REVENUES
Product	$	13,624		$	58,123		$	86,837			$	80,352		$	110,739		$	13,624		$	209,578		$	86,837
Licensing		8,000			—			8,000				—			29,500			8,000			108,000			8,000
Equipment leases		19,500			—			58,500				—			79,794			19,500			217,274			58,500
Total Revenue		41,124			58,123			153,337				80,352			220,033			41,124			534,852			153,337

OPERATING EXPENSES
General and administrative		827,168			389,376			1,885,962				1,346,955			468,897			827,168			1,554,992			1,885,962
Research and development		—			32,490			—				102,402
Cost of product, licensing and equipment		39,216			22,682			59,690				42,019
Cost of product, licensing and equipment leases															51,483			39,216			148,214			59,690
Depreciation and amortization		84,070			92,457			250,928				205,881			84,467			84,070			253,568			250,928
Total operating expenses		950,454			537,005			2,196,580				1,697,257			604,847			950,454			1,956,774			2,196,580

Net loss before other expenses		(909,330	)		(478,882	)		(2,043,243	)	��		(1,616,905	)		(384,814	)		(909,330	)		(1,421,922	)		(2,043,243	)

OTHER INCOME (EXPENSES)
Loss on change in fair value of derivative liability															(4,169,978	)		—			(7,121,619	)		—
Gain (loss) on change in fair value of preferred series A stock liability															—			—			72,473			—
Gain on sale of intangible assets															—			—			52,498			—
Gain on sale of equipment		16,185			—			16,185				—			—			16,185			—			16,185
Gain (Loss) on settlement of debt															16,706						(67,703	)		—
Interest expense		(46,950	)		(21,654	)		(112,398	)			(50,100	)		(1,225,906	)		(46,950	)		(1,728,189	)		(112,398	)
Total other expenses		(30,765	)		(21,654	)		(96,213	)			(50,100	)
Total other income (expenses)															(5,379,178	)		(30,765	)		(8,792,540	)		(96,213	)

Loss from operations before Income taxes		(940,095	)		(500,536	)		(2,139,456	)			(1,667,005	)		(5,763,992	)		(940,095	)		(10,214,462	)		(2,139,456	)

Income taxes		—			—			—				—			—			—			—			—

NET LOSS	$	(940,095	)	$	(500,536	)	$	(2,139,456	)		$	(1,667,005	)	$	(5,763,992	)	$	(940,095	)	$	(10,214,462	)	$	(2,139,456	)

Basic and diluted net loss per share	$	(0.02	)	$	(0.01	)	$	(0.05	)		$	(0.04	)	$	(0.03	)	$	(0.02	)	$	(0.10	)	$	(0.05	)

Basic and diluted weighted average shares outstanding		44,448,368			39,981,485			43,184,183				39,041,968			206,524,228			44,448,368			102,223,061			43,184,183

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

PCT LTD

Condensed Consolidated Statements of Cash Flows

(Unaudited)

For the nine months ended
September 30,
2018 2017
Cash Flows from Operating Activities
Net loss $ (2,139,456 ) $ (1,667,005 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 250,928 214,006
Amortization of debt discount 30,518 10,906
Common stock issued for services 903,946 —
Stock-based compensation —   415,964
Gain on sale of equipment (16,185 ) —
Expenses paid on behalf of company —   14,722
Changes in operating assets and liabilities:
Accounts receivable (14,748 ) 1,018
Inventory (24,009 ) (270,138 )
Prepaid expenses (1,487 ) 448
Deposits (55,000 ) 28,570
Accrued expenses related party 26,302 9,975
Accounts payable and accrued liabilities 178,815 196,966
Deferred revenue 25,000 —
Net cash provided by (used in) operating activities (835,376 ) (1,044,568 )

Cash Flows from Investing Activities
    Proceeds from sale of equipment 22,500 —
Purchase of fixed assets (equipment) (3,900 ) (2,709 )
Purchase of intangible assets (9,500 ) (158,424 )
Net cash provided by (used in) investing activities 9,100 (161,133 )

Cash Flows from Financing Activities
Proceeds from notes payable – related parties 109,000 410,500
Proceeds from notes payable 287,500 225,000
Proceeds from convertible notes payable 350,000 —
Repayment of notes payable (20,000 ) (23,535 )
Repayment of notes payable – related parties (15,000 ) (63,610 )
Proceeds from issuance of common stock 115,000 660,000
Net cash provided by financing activities 826,500 1,208,355

Net change in cash 224 2,654
Cash and cash equivalents at beginning of period 7,838 21,078
Cash and cash equivalents at end of period $ 8,062 $ 23,732

Supplemental Cash Flow Information
Cash paid for interest $ 20,060 $ 20,028
Cash paid for Income taxes $ —   $ —

Non-Cash Investing and Financing Activities
Beneficial conversion feature $ 75,087 $ —
Extinguishment of notes payable $ 250,000 $ —
Common stock issued for intellectual property $ —   $ 4,405,050
Debt discount from issuance costs (original issuance discount) $ 42,464 $ —
Common stock issued for prepaid expenses $ 1,383,000 $ —

	For the nine months ended September 30,
	2019			2018
Cash Flows from Operating Activities
Net loss	$	(10,214,462	)	$	(2,139,456	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		253,568			250,928
Amortization of debt discount		735,582			30,518
Amortization of operating lease right-of-use asset		35,452			—
Common stock issued and issuable for services		151,391			903,946
Loss on change in fair value of derivative liability		7,121,619			—
Gain on change in fair value of preferred series A stock liability		(72,473	)		—
Series B preferred stock issued for services		155,000			—
Loss on settlement of debt		67,703			—
Gain on sale of intangible assets		(52,498	)		—
Gain on sale of equipment		—			(16,185	)
Changes in operating assets and liabilities:
Accounts receivable		(137,092	)		(14,748	)
Inventory		21,707			(24,009	)
Prepaid expenses		173,514			(1,487	)
Other assets		—			(55,000	)
Operating lease liability		(34,205	)		—
Accounts payable		66,737			178,815
Accrued expenses – related party		18,104			26,302
Accrued expenses		1,113,652			—
Deferred revenue		—			25,000
Net cash used in operating activities		(596,701	)		(835,376	)

Cash Flows from Investing Activities
Proceeds from sale of intangible assets		111,323			—
Proceeds from the sales of equipment		—			22,500
Purchase of property and equipment		(2,516	)		(3,900	)
Purchase of intangible assets		(5,000	)		(9,500	)
Net cash provided by investing activities		103,807			9,100

Cash Flows from Financing Activities
Proceeds from notes payable – related parties		17,544			109,000
Proceeds from notes payable		138,600			287,500
Proceeds from convertible notes payable		480,750			350,000
Proceeds from common stock issued		—			115,000
Repayment of notes payable – related parties		(20,044	)		(15,000	)
Repayment of notes payable		(31,180	)		(20,000	)
Repayment of convertible notes payable		(91,000	)		—
Net cash provided by financing activities		494,670			826,500

Net change in cash		1,776			224	)
Cash and cash equivalents at beginning of period		4,893			7,838
Cash and cash equivalents at end of period	$	6,669		$	8,062

Supplemental Cash Flow Information
Cash paid for interest	$	40,914		$	20,060
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	$	610,125		$	84,087
Modification of notes payable	$	20,590		$	—
Common stock issued in conversion of convertible notes payable	$	2,644,325		$	—
Accounts receivable netted against notes payable	$	28,090		$	—
Initial operating lease right-of-use asset and liability	$	43,330		$	—
Default penalty on convertible notes payable	$	665,731		$	—
Preferred series A stock reclassification from liability to mezzanine equity	$	60,398		$	—
Extinguishment of notes payable	$	175,814		$	250,000
Common stock issued for prepaid expenses	$	—		$	1,383,000
Property plant & equipment transferred to inventory	$	19,405		$	—

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

PCT LTD

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited)

					Additional					Total Stockholders’
	Common Stock				Paid-in		Accumulated			Equity’
	Shares		Amount		Capital		Deficit			(Deficit)
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	)
Common stock issued and issuable for services		1,000,000		1,000		28,339		—			29,339
Common stock issued from exercise of warrants		12,030,881		12,031		220,803		—			232,834
Common stock issued in conversion of convertible notes payable		172,469,200		172,470		1,951,645		—			2,124,115
Net loss		—		—		—		(5,763,992	)		(5,763,992	)
Balance – September 30, 2019		262,360,042	$	262,361	$	14,971,340		(20,141,465	)	$	(4,907,764	)


					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
Common stock issued for services		1,000,000		1,000		354,000		—			355,000
Net loss		—		—		—		(940,095	)		(940,095	)
Balance – September 30, 2018		44,459,238	$	44,460	$	11,571,130	$	(8,883,976	)	$	2,731,614

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

PCT LTD

Notes to the Unaudited

Condensed Consolidated Financial Statements

~~SEPTEMBER~~September 30, ~~2018~~2019

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

The unaudited interim condensed consolidated financial statements of PCT LTD ~~(“the Company”~~(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 (deficit), 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, ~~2017~~2018 audited financial statements as reported in its Form 10-K, filed on April ~~17, 2018.~~15, 2019.

Nature of Operations

PCT LTD (formerly Bingham Canyon ~~Corporation),~~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,” “PCT Corp,” or PCT Corp., the wholly-owned operating subsidiary”~~Paradigm”) to 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, PCT Corp,~~share exchange agreement, Paradigm, the operating company, is considered the accounting acquirer.

~~PCT Corp.~~Paradigm is located in Little River, SC and was formed June 6, 2012 under the name of EUR-ECA, Ltd. On September 11, 2015, its Board of Directors authorized EUR-ECA ~~Ltd.~~Ltd to file with the Nevada Secretary of State to change its ~~names~~name to Paradigm Convergence Technologies Corp. ~~PCT Corp.~~Paradigm is a technology licensing ~~OEM and sales/leasing~~ company specializing in ~~environmentally-responsible~~environmentally safe solutions for global sustainability. ~~PCT LTD, the public~~The company ~~and “parent” of PCT Corp.~~ holds a ~~United States Patent No. 9,679,170 B2 with a recently granted Canadian Allowance, as well as owning future and pending international patent(s) (response to examiners comments in process),~~patent, intellectual property and/or distribution rights to innovative products and technologies. ~~PCT Corp.~~Paradigm provides innovative products and technologies for eliminating ~~bacterial~~biocidal contamination ~~in healthcare facilities, the agricultural market~~from water supplies, industrial fluids, hard surfaces, food processing equipment, and ~~in the oil & gas industry. PCT Corp.’s~~medical devices. Paradigm’s overall strategy is to ~~design, assemble,~~ market ~~sell and/or lease equipment, fluids and proprietary “certifications” of its~~new products and ~~technologies. PCT Corp., utilizes~~technologies through the use of equipment leasing, ~~program (“System Service Agreements”),~~ joint ventures, licensing, distributor agreements and partnerships.

Effective on ~~March 23,~~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, ~~PCT~~Paradigm Convergence Technologies Corporation (“Paradigm” or “PCT Corp.”).

Principles of Consolidations

The accompanying consolidated financial statements include the accounts of PCT LTD (“Parent”) and ~~PCT Corp.~~its wholly owned 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 ~~$8,062~~$6,669 and ~~$7,838~~$4,893 as of September 30, ~~2018~~2019 and December 31, ~~2017, respectively.~~2018, respectively, represents cash on deposit in various bank accounts. There were no cash equivalents as of September 30, ~~2018~~2019 and December 31, ~~2017.~~ 2018.

~~Accounts Receivable~~

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 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, 2018 and December 31, 2017.

~~Inventory~~

~~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. Accumulated depreciation for period ending September 30, 2018 and December 31, 2017 were $65,369 and $46,725, 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 30, 2019, consisted of the following:

	Total fair value at September 30, 2019 $		Quoted prices in active markets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $
Description:
Derivative liability (1)		5,538,198		—		—		5,538,198
Total		5,538,198		—		—		5,538,198

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 September 30, 2019, and December 31, ~~2017.~~2018, the Company had a $5,538,198 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.

810

~~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 September 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 September 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 September 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 September 30, 2019 and December 31, 2018 of such supplies and equipment not yet placed in service amounted to $276,428 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~~during the nine months ended September 30, 2018 and December 31, 2017. Impairment tests are conducted on an annual basis or when facts or circumstances indicate a carrying value in excess of fair value, additional impairment changes may be required. 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 ~~a U.S. patent (with international~~several patents ~~in process)~~ and proprietary ~~property~~ 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 ~~These assets are stated at cost, net of accumulated amortization. An impairment charge is recognized and the carrying~~ amount exceeds the fair value of the intangible assets as determined by ~~the~~ projected discounted net future cash flows. The recorded impairment expense ofwas nil for the ~~periods ending~~nine months ended September 30, ~~2018 and December 31, 2017. Accumulated amortization was $612,666 and $380,382 as of September 30, 2018 and December 31, 2017, 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

InOn 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).~~

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 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 the 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.

~~Reclassifications~~

~~Certain prior period amounts~~The Company has disclosed disaggregated revenue via revenue stream on the face of the statement of operations. The Company did not have ~~been reclassified to disaggregate revenue into multiple categories to provide additional information regarding revenue to users.~~any contract assets or liabilities at September 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. As of September 30, ~~2018~~2019, there were outstanding common share equivalents (options, warrants, convertible debt and ~~convertible notes payable)~~preferred series A stock) which amounted to ~~3,388,261~~960,689,801 shares of common stock. These common share equivalents were not included in the computation of diluted loss per share as their effect would have been anti-dilutive.

Recent Accounting Pronouncements

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

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 ~~$8,883,976,~~$20,141,465 and has negative cash flows from operations. As of September 30, ~~2018,~~2019, the Company had a working capital deficit of ~~$373,009~~.$8,934,741. 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 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 ranges from 3 to 7 years once placed into service. Depreciation expense does not begin until documentation or 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 ~~$18,644~~$18,947 and ~~$12,390~~$18,644 for the nine months ended September 30, 2019 and 2018, ~~and 2017,~~ respectively.

Property and ~~Equipment~~equipment at September 30, 2019 and December 31, 2018 consisted of the ~~following as of September 30, 2018 and December 31, 2017:~~following:

	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
Machinery and leased equipment	$	129,076		$	129,076		$	151,719		$	138,209
Machinery and equipment not yet in service		275,664			278,079			321,565			369,754
Office equipment and furniture		20,064			20,064			20,064			20,064
Website		2,760			2,760			2,760			2,760
Total, property and equipment		427,564			429,979

Total property and equipment							$	496,108		$	530,787
Less: Accumulated Depreciation		(65,369	)		(46,725	)		(49,762	)		(30,815	)
Property and Equipment, Net	$	362,195		$	383,254

Property and equipment, net								446,346			499,972

On July 30, 2019, the Company transferred $17,790 of equipment not yet in service and offset accounts receivable of $23,209 in exchange for $13,939 and the settlement of accounts payable and accrued liabilities of $43,766. As result the Company recorded a gain on the settlement of debt of $16,706.

NOTE 4. INTANGIBLE ASSETS

Amortization is computed using the straight-line method and is recognized over the estimated useful lives of the intangible assets, which ~~ranges~~range from 1 to 15 years. Amortization expense was ~~$232,284~~$234,621 and ~~$201,616~~$232,284 for the nine months ended September 30, 2019 and 2018, ~~and 2017,~~ respectively.

~~The components of intangible~~ Intangible assets at September 30, ~~2018~~2019 and December 31, ~~2017 were as follows:~~2018 consisted of the following:

	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
Patents	$	4,514,989		$	4,505,489		$	4,505,489		$	4,514,989
Technology rights		200,000			200,000			200,000			235,500
Intangibles, at Cost		4,714,989			4,705,489
Less Accumulated Amortization		(612,666	)		(380,382	)
Intangible, at cost								4,705,489			4,750,489
Less: Accumulated amortization								(922,837	)		(690,714	)
Net Carrying Amount	$	4,102,323		$	4,325,107		$	3,782,652		$	4,059,775

Estimated Future Amortization Expense:

	$
For year ending December 31, 2019		76,947
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		3,782,652

On May 10, 2019, the Company sold intangible assets with a carrying value of $92,502 for $111,323 of cash and the settlement of $33,677 of liabilities owed to the buyer. The Company recorded a gain on sales of intangible assets of $52,498.

1013

NOTE ~~5. Debt~~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 ~~summarizes~~sets forth the ROU assets and liabilities as of September 30, 2019:


	September 30, 2019
Operating lease right-of-use asset	$	7,878

Operating lease liability:
Current operating lease liability	$	9,125
Noncurrent operating lease liability		—
Total operating lease liability	$	9,125

Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the nine months ended September 30, 2019, the Company recognized operating lease expense of $44,447. 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 $43,200 for the nine months ended September 30, 2019. During the nine months ended September 30, 2019, the Company reduced its ROU liabilities by $34,205 from cash paid.

Our weighted average discount rate is 41% and the weighted average remaining lease term is 2 months. Lease payments over the next five years and thereafter are as follows:


	September 30, 2019
2019 - remaining	$	9,600
2020 and thereafter		—
Total lease payments		9,600
Less: imputed interest		(475	)
Total ROU liabilities	$	9,125

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 September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:

Type	Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at 30-Sep-18				Balance at 31-Dec-17				Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at September 30, 2019				Balance at December 31, 2018
Note Payable(v) ***																				$	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 ~~(b)~~(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																				$	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)		$	150,000		5/18/2016		6/1/2019		13.00	%		$	150,000			$	150,000			$	52,063		4/8/2020		4/8/2020		41.38	%		$	42,854			$	—
Note Payable (f) *		$	50,000		10/18/2016		8/18/2017		5.00	%		$	—			$	50,000
Note Payable (f) *		$	25,000		4/12/2017		10/12/2017		5.00	%		$	—			$	25,000
Note Payable ~~(b)~~(a)		$	25,000		5/8/2017		6/30/2018		0.00	%		$	27,500			$	25,000
Note Payable (f) *		$	25,000		7/25/2017		9/25/2017		5.00	%		$	—			$	25,000
Note Payable (d)																				$	40,000		6/20/2019		12/31/2019		8.00	%		$	40,000			$	—
Note Payable (e)		$	50,000		9/1/2017		12/31/2017		8.00	%		$	—			$	50,000			$	6,741		6/21/2019		4/8/2020		41.38	%		$	6,741			$	—
Note Payable (e)		$	25,000		9/27/2017		12/31/2017		8.00	%		$	—			$	25,000
Note Payable (e)		$	37,500		10/11/2017		10/11/2018		8.00	%		$	—			$	37,500
Note Payable (f) *		$	20,000		10/24/2017		4/24/2018		5.00	%		$	—			$	20,000
Note Payable **		$	56,000		12/1/2017		1/10/2018		8.00	%		$	—			$	20,000
Note Payable (a)		$	150,000		1/5/2018		4/3/2018		8.00	%		$	—			$	—
Note Payable (e)		$	12,500		2/16/2018		4/15/2018		8.00	%		$	—			$	—
Note Payable (a)		$	250,000		2/27/2018		4/30/2018		8.00	%		$	—			$	—
Note Payable (e)		$	130,000		6/20/2018		1/2/2020		8.00	%		$	130,000			$	—
Note Payable (f) *		$	126,964		6/20/2018		1/2/2020		6.00	%		$	126,964			$	—
Note Payable (d)		$	26,500		6/26/2018		7/31/2018		10.00	%		$	26,500			$	—			$	90,596		9/15/2019		3/16/2020		8.00	%		$	90,596			$	—
Subtotal												$	460,964			$	427,500													$	284,420			$	529,664
Debt Discount												$	(8,717	)		$	(6,283	)												$	(6,320	)		$	(3,293	)
Balance, net												$	452,247			$	421,217													$	278,100			$	526,371
Less current portion												$	(204,000	)		$	(421,217	)												$	(278,100	)		$	(399,664	)
Total long-term												$	248,247			$	—													$	—			$	126,707

* Indicates a re-classification from a related party to a non-related party note, as of January 1, 2018
** Paid off during the period
*** Currently in default																			*** Currently in default

~~(a)~~a)

On January ~~5, 2018,~~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 $28,090 was applied to the note during the nine months ended September 30, 2019.

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 ~~an unrelated~~a non-related party for ~~$150,000.~~$40,000. The note is due ~~April 3, 2018,~~December 31, 2019, is unsecured and bears an interest rate of ~~8.0%~~8% per annum. ~~Effective February 27, 2018~~On September 15, 2019, the Company ~~extinguished its January 5, 2018 promissory note of $150,000 with~~received an ~~unrelated party~~additional $50,000 from the lender and ~~consolidated this amount into~~issued a new promissory note for ~~$250,000 (an~~$90,596 which was equal to the original $40,000 note, $596 of accrued interest and the additional ~~$100,000 received).~~$50,000 advanced. The promissory note is due ~~on April 30, 2018,~~March 16, 2020, is unsecured and bears an interest rate of ~~8.0%~~8% per annum. On March 28, 2018 the Company extinguished its February 27, 2018 promissory note of $250,000 with an unrelated party and consolidated this amount into a convertible note for $450,000 (receiving $100,000 in the first quarter of 2018 and the remaining $100,000 in the second quarter of 2018). See under convertible notes table below for additional details of the convertible note.

~~(b)~~

On May 29, 2018, the Company entered into a Guarantee Agreement with a non-related party. The Company owed an unrelated party $27,500 that was due on October 10, 2017. In consideration for increasing the principal amount of the loan to $30,000 and a personal guarantee by the Company’s CEO, the lender agreed to extend the maturity date of the loan to June 30, 2018. The Company evaluated the modification pursuant to ASC 470-60 Troubled Debt Restructuring by Debtors, and ASC 470-50 Modification and Extinguishment. The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditors have not granted a concession the guidance contained in ASC 470-60 does not apply. As the original and new debt instruments are not considered substantially different, extinguishment accounting does not apply, and the Company accounted for the revised note as a debt modification. The carrying amount of the payable was not adjusted and the effects of the changes are reflected in future periods by computing the constant effective interest rate and applying it to the carrying amount of the payable each period until maturity.

~~(c)~~e)

On June 1, 2018, the Company signed an agreement to extend its $150,000 note dated May 18, 2016 for one year, for a total extension fee of $7,500 ($6,000 broker fee and $1,500 lender fee). The Company paid one-half of the total fee ($3,750), recorded as interest expense. The remainder of the extension fee, ($3,750), is past due and upon payment to the non-related note-holder, the loan shall be extended through June 1, 2019. The terms of the note remain the same, with interest set at 13.0%.

~~(d)~~

~~On June 26, 2018,~~21, 2019, the Company entered into a promissory ~~note~~bank loan with ~~an unrelated~~a non-related party for ~~$26,500.~~$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 ~~July 31, 2018, is unsecured~~on April 8, 2020 and ~~bears~~results in an ~~interest~~annual percentage rate of 10% per annum. Payment of the note and interest are past due as of September 30, 2018 and the Company has temporarily granted the lender permission to waive the lender’s obligation as a royalty-paying licensee of $1,500 per month in minimum fluid solution payments until the Company is able to satisfy the terms of this note.41.38%.

~~(e)~~

~~On June 20, 2018, the Company had the following notes, to a non-related party, outstanding:~~

~~$50,000 issued September 1, 2017~~

~~$25,000 issued September 27, 2017~~

~~$37,500 issued October 11, 2017~~

~~$12,500 issued February 16, 2018~~

On June 20, 2018, the Company issued a new note that consolidated into one the notes above as well as any outstanding interest owed. The new note has a principal of $130,000, bears interest at 8% per annum and is due on January 2, 2020. As the debt is being exchanged with the lender, the Company evaluated the modification pursuant to ASC 470-60~~Troubled Debt Restructuring by Debtors, and ASC 470-50~~~~Modification and Extinguishment~~.

The indicators of financial difficulty contained in ASC 470-60 were reviewed and it was concluded that the Company is experiencing financial difficulty. The Company then determined that a concession was granted. As the creditors have granted a concession the troubled debt restructuring model contained in ASC 470-60 was applied. The carrying amount of the payable was not adjusted and the effects of the changes are reflected in future periods by computing the constant effective interest rate and applying it to the carrying amount of the payable each period until maturity.

~~(e)~~

~~On June 20, 2018, the Company had the following notes, to a non-related party, outstanding:~~

~~$50,000 issued October 18, 2016~~

~~$25,000 issued April 12, 2017~~

~~$25,000 Issued July 25, 2017~~

~~$20,000 issued October 24, 2017~~

On June 20, 2018, the Company issued a new note that consolidated into one note the notes above as well as any outstanding interest owed. The new note has a principal of $126,964, bears interest at 6% per annum. The Company must repay $66,964 of the note on August 31, 2018, and the remaining $60,000 on January 2, 2020. If the Company fails to make the $66,664 on August 31, 2018 the entire amount owed under the original notes becomes due immediately. As the debt is being exchanged with the lender, the Company evaluated the modification pursuant to ASC 470-60 Troubled Debt Restructuring by Debtors, and ASC 470-50 Modification and Extinguishment.

The indicators of financial difficulty contained in ASC 470-60 were reviewed and it was concluded that the Company is experiencing financial difficulty as there is significant doubt that the Company is a going concern and that there is no assurance that the Company will have sufficient cash flows to service the debt through its maturity. The Company then proceeded to assess whether the creditors granted a concession. The Company determined that a concession was granted as the effective borrowing rate on the restructured debt is lower than the effective borrowing rate of the old debt. As the creditors have granted a concession the troubled debt restructuring model contained in ASC 470-60 was applied. The carrying amount of the payable was not adjusted and the effects of the changes are reflected in future periods by computing the constant effective interest rate and applying it to the carrying amount of the payable each period until maturity.

~~At September 30, 2018, the Company has not repaid the $66,964 due on August 31, 2018; hence making $66,964 and $60,000, and interest, due immediately.~~

1215

The following table summarizes notes payable, related parties as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:

Type Amount
Origination
Date
Maturity
Date
Annual
Interest
Rate
Balance at
30-Sep-18

Balance at
31-Dec-17
Note Payable, RP (j) $ 25,000 4/27/2017 4/27/2018 3.00 % $ —   $ 17,500
Note Payable, RP (k) $ 15,000 5/15/2017 5/15/2018 5.00 % $ —   $ 15,000
Note Payable, RP (j) $ 10,000 6/12/2017 6/12/2018 3.00 % $ —   $ 10,000
Note Payable, RP (j) $ 5,500 7/3/2017 6/30/2018 3.00 % $ —   $ 5,500
Note Payable, RP  ** $ 2,000 7/5/2017 6/30/2018 3.00 % $ —   $ 2,000
Note Payable, RP  ** $ 3,000 7/6/2017 6/30/2018 3.00 % $ —   $ 3,000
Note Payable, RP  ** $ 2,500 7/10/2017 6/30/2018 3.00 % $ —   $ 2,500
Note Payable, RP  ** $ 2,500 7/12/2017 6/30/2018 3.00 % $ —   $ 2,500
Note Payable, RP (j) $ 25,000 7/13/2017 6/30/2018 3.00 % $ —   $ 25,000
Note Payable, RP (j) $ 5,000 8/14/2017 6/30/2018 3.00 % $ —   $ 5,000
Note Payable, RP (i) * $ 275,000 9/27/2017 10/1/2018 7.50 % $ —   $ 275,000
Note Payable, RP (j) $ 250,000 11/15/2017 12/15/2018 1.00 % $ —   $ 250,000
Note Payable, RP (i) $ 100,000 11/15/2017 10/1/2018 7.50 % $ —   $ 100,000
Note Payable, RP (g) $ 30,000 4/10/2018 1/15/2019 3.00 % $ 30,000 $ —
Note Payable, RP (h) (j) $ 24,000 5/31/2018 6/30/2019 3.00 % $ —   $ —
Note Payable, RP (i) * $ 380,000 6/20/2018 1/2/2020 8.00 % $ 380,000 $ —
Note Payable, RP (j) $ 350,000 6/20/2018 1/2/2020 5.00 % $ 350,000 $ —
Note Payable, RP (k) $ 17,000 6/20/2018 1/2/2020 5.00 % $ 17,000 $ —
Note Payable, RP (l) $ 5,000 7/13/2018 6/30/2019 3.00 % $ —   $ —
Note Payable, RP (m) $ 50,000 7/27/2018 11/30/2018 8.00 % $ 50,000 $ —
Subtotal $ 827,000 $ 713,000
Debt Discount $ (16,423 ) $ —
Balance, net $ 810,577 $ 713,000
Less current portion $ (80,000 ) $ (713,000 )
Total long-term $ 730,577 $ —
* Indicates a note that is collateralized by a patent (Note 4)
** Paid off during the period

Type	Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at September 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	%		$	—			$	—
Note Payable, RP (g)		$	15,000		8/16/2019		2/16/2020		8.00	%		$	15,000				—
Subtotal												$	837,500			$	840,000
Debt Discount												$	(2,614	)		$	(13,174	)
Balance, net												$	8,34,886			$	826,826
Less current portion												$	(834,886	)		$	(93,000	)
Total long-term												$	—			$	733,826
Paid off during the period *Currently in default

~~(g)~~f)

On ~~April 10, 2018 the Company entered into a promissory note with an entity owned by the CEO of the Company for $30,000. The note is due~~ January ~~15,~~3, 2019, ~~is unsecured and bears an interest rate of 3.0% per annum.~~

~~(h)~~

~~On May 31, 2018~~ the Company entered into a promissory note with the Chairman and ~~CEO~~President of the Company for ~~$24,000.~~$2,544. The note is due ~~June 30, 2019, is unsecured and bears an interest rate of 3.0% per annum~~

~~(i)~~

~~On June 20, 2018, the Company had the following notes to an employee and Director of the Company outstanding:~~

~~$275,000 issued~~ September ~~27, 2017~~

~~$100,000 issued November 15, 2017~~

On June 20, 2018, the Company issued a new note that consolidated into one note the notes above as well as any outstanding interest owed. The new note has a principal of $380,000, bears interest at 8% per annum and is due on January 2, 2020. As the debt is being exchanged with the lender, the Company evaluated the modification pursuant to ASC 470-60 Troubled Debt Restructuring by Debtors, and ASC 470-50 Modification and Extinguishment.

The indicators of financial difficulty contained in ASC 470-60 were reviewed and it was concluded that the Company is experiencing financial difficulty and that a concession was granted. As the creditor granted a concession the troubled debt restructuring model contained in ASC 470-60 was applied. The carrying amount of the payable was not adjusted and the effects of the changes are reflected in future periods by computing the constant effective interest rate and applying it to the carrying amount of the payable each period until maturity.

~~(j)~~

~~On June 20, 2018,the Company had the following notes to the Chairman and CEO of the Company outstanding:~~

~~$17,500 issued April 27, 2017~~

~~$10,000 issued June 12, 2017~~

~~$5,500 Issued July 3, 2017~~

~~$25,000 issued July 13, 2017~~

~~$5,000 issued August 14, 2017~~

~~$250,000 issued November 15, 2017~~

~~$24,000 issued May 31, 2018~~

On June 20, 2018, the Company issued a new note that consolidated into one note the notes above as well as any outstanding interest owed. The new note has a principal of $350,000, bears interest at 5% per annum and is due on January 2, 2020. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment.

The Company concluded that the Company is experiencing financial difficulty and that a concession was not granted. As the creditor has not granted a concession, the guidance contained in ASC 470-60 was applied. The Company accounted for the new note as a debt modification. The carrying amount of the payable was not adjusted and a new effective interest rate was determined on the modification date that equates the revised cash flows to the carrying amount of the original debt.

~~(k)~~

On June 20, 2018, the Company had a $15,000 note to the CEO of the Company’s spouse outstanding. On June 20, 2018, the Company issued a new note that consolidated the note above as well as any outstanding interest owed. The new note has a principal of $17,000, bears interest at 5% per annum and is due on January 2, 2020. The Company evaluated the transaction under the guidance found in ASC 470-50 Modification and Extinguishment.

~~(l)~~

~~On July 13, 2018 the Company entered into a promissory note with the Chairman and CEO of the Company for $5,000. The note is due June~~ 30, 2019, is unsecured and bears an interest rate of 3.0% per annum. ~~This~~At September 30, 2019, the remaining balance of this note was ~~repaid during the period ended September 30, 2018~~$0.

~~(m)~~g)

On ~~July 27, 2018,~~August 16, 2019, the Company entered into a ~~short-term~~ promissory note with ~~an employee and~~a Director of the Company for ~~$50,000 to be used in operations.~~$15,000. The note is unsecured, incorporates the purchase of a piece of SurvivaLyte® equipment at cost and grants a three-year (from installation of equipment), non-exclusive US EPA sub-registration for markets (with specific exceptions) in a specific geographical location with a per gallon royalty feature as added benefits,due February 16, 2020, is ~~due on November 15, 2018,~~unsecured and bears an interest rate of 8%8.0% per annum. The Note Payable agreement was extended through November 30, 2018 on November 19, 2018, the additional benefit section of the note was removed, the equipment was never transferred to the Officer and Director, the equipment was never installed, and no related sales occurred nor related royalties were earned by the Company, through September 30, 2018 and through the date of this filing.

1416

The following table summarizes convertible notes payable as of September 30, ~~2018~~2019 and December 31, ~~2017:~~2018:

Type	Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at 30-Jun-18				Balance at 31-Dec-17			Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at September 30, 2019				Balance at December 31, 2018
Convertible Note Payable ~~(n)~~(h)		$	450,000		3/28/2018		3/31/2021		8.00	%		$	450,000			$	—		$	450,000		3/28/2018		3/31/2021		8.00	%		$	—			$	450,000
Convertible Note Payable (o)		$	68,000		6/5/2018		6/5/2019		12.00	%		$	68,000			$	—
Convertible Note Payable (p)		$	38,000		7/25/2018		7/25/2019		12.00	%		$	38,000			$	—
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 (i) *																			$	50,000		12/6/2018		12/6/2019		5.00	%		$	36,123			$	50,000
Convertible Note Payable (j) *																			$	65,000		12/6/2018		12/6/2019		5.00	%		$	43,599			$	65,000
Convertible Note Payable(k) ***																			$	63,000		12/12/2018		12/5/2019		22.00	%		$	42,800			$	63,000
Convertible Note Payable (h)																			$	539,936		1/15/2019		1/15/2020		8.00	%			—				—
Convertible Note Payable (l) ***																			$	33,000		1/16/2019		1/15/2020		22.00	%		$	49,500			$	—
Convertible Note Payable (m) ***																			$	100,000		1/18/2019		1/16/2020		8.00	%		$	100,000			$	—
Convertible Note Payable (n) *																			$	60,000		1/29/2019		1/22/2020		8.00	%		$	60,000			$	—
Convertible Note Payable (o) *																			$	50,000		2/1/2019		10/22/2019		12.00	%		$	50,000			$	—
Convertible Note Payable (p) *																			$	60,000		2/21/2019		2/14/2022		0.00	%		$	60,000			$	—
Convertible Note Payable (q)		$	53,000		8/27/2018		8/27/2019		12.00	%		$	53,000			$	—		$	55,125		2/21/2019		2/20/2020		8.00	%		$	55,125			$	—
Convertible Note Payable (r) ***																			$	53,000		2/26/2019		2/20/2020		22.00	%		$	79,500			$	—
Convertible Note Payable (s)***																			$	75,000		3/18/2019		12/13/2019		12.00	%		$	75,000			$	—
Convertible Note Payable (t) ***																			$	38,000		5/2/2019		4/29/2020		22.00	%		$	57,000			$	—
Convertible Note Payable (u) ***																			$	26,000		9/16/2019		9/11/2022		0.00	%		$	26,000			$	—
Convertible Note Payable (v)																			$	175,814		9/27/2019		9/25/2020		8.00	%		$	175,814			$	—
Subtotal												$	609,000			$	—												$	1,334,040			$	719,000
Debt Discount												$	(70,676	)		$	—												$	—			$	(165,186	)
Balance, net												$	538,324			$	—												$	1,334,040			$	553,814
Less current portion												$	(151,754	)		$	—												$	(1,334,040	)		$	(161,280	)
Total long-term												$	386,570			$	—												$	—			$	392,534

* Embedded conversion feature accounted for as a derivative liability ** Paid off during the period																		* Embedded conversion feature accounted for as a derivative liability ** Paid off during the period

~~(n)~~h)

On January 15, 2019, the Company executed a new, consolidated convertible note with a non-related party by extinguishing the March 28, 2018 ~~the Company extinguished its February 27, 2018 promissory note of $250,000 with an unrelated party and consolidated this amount into a~~ convertible note ~~for $450,000 (receiving $100,000~~ in the ~~first quarter~~amount of $450,000 with interest due of $28,898 and a $60,000 term note, dated October 31, 2018 ~~and the remaining $100,000~~with interest due of $1,038. The new convertible note is in the ~~second quarter~~amount of ~~2018). The note~~$539,936, is due on ~~March 31, 2021~~or before January 15, 2022, has an 8% per annum interest rate and ~~is convertible~~may be converted into ~~common stock at a conversion price of $0.4285 and bears interest of 8.0% per annum. This note also contains an anti-dilution clause, which becomes effective in the event the Company 60,000,000 issued~~ shares ~~of its stock. Due to the fact that the trading price~~ 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 ~~greater than~~$292,651. The company recorded a loss on extinguishment of debt of $350,117 equal to the ~~stated conversion rate~~initial fair value of ~~this note~~derivative liability on the ~~date~~new note and the previous unamortized debt discount balance of ~~issuance,~~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 ~~total discount~~gain on settlement of ~~$78,087 for~~debt of $359,857 equal to the ~~beneficial~~difference between both the fair value of the common shares of $523,867 and the fair value of the conversion ~~was recorded against~~feature at conversion of $335,038 compared to the carrying value of the note and ~~will be amortized against interest expense through~~interest.

During the ~~life~~nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $26,390 added to the principal of the note. ~~As of~~During the nine months ended September 30, ~~2018,~~2019, $44,723 of principal ($42,223) and interest ~~expense of $11,658 was recorded as part~~($2,500) of the ~~amortization~~convertible note payable was converted into 76,154,631 shares of the ~~beneficial conversion feature of this note. As of September 30, 2018, the note had a principal balance of $450,000.~~Company’s common stock.

~~(o)~~j)

~~On June 5,~~During the nine months ended September 30, 2019, the Company defaulted on the note. During the nine months ended September 30, 2019, $64,558 of principal ($58,058) and interest ($6,500) of the convertible note payable was converted into 66,290,000 shares of the Company’s common stock.

In the prior year, on December 12, 2018, the Company entered into a convertible promissory with ~~an unrelated~~a non-related party for ~~$68,000.~~$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 ~~June~~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 $32,650 added to the principal of the note and the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $74,200 of the convertible note payable was converted into 18,559,816 shares of the Company’s common stock.

On January 16, 2019, the Company entered into a convertible promissory with a non-related party 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 ~~17% to 22% to 27% to 32% to~~ 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the ~~notice~~note which is not paid when due shall bear interest at the rate of ~~22.0%~~22% per annum from the due date until paid. ~~The Company must, at all times, reserve six times that number of shares that would be issuable upon full conversion of the note, with an initial reserved share amount of 1,592,506 shares.~~ 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 ~~average 3~~ lowest trading ~~prices~~price during the ~~15 trading~~15-trading day period prior to the conversion date. ~~Due to this provision,~~On June 19, 2019, the Company ~~considered whether~~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 ~~qualifies~~qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. AsThe initial fair value of the conversion feature was $116,540 and resulted in a discount to the note ~~isn’t~~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 ~~following~~of the date of issuance nointo 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.

On July 17, 2019, the embedded conversion option qualified for derivative ~~liability~~accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $239,668 and resulted in a discount to the note payable of $90,000 and an initial derivative expense of $149,668. Due to the note being in default, the remaining discount was accelerated and recognized ~~as of~~to interest expense. During the nine months ended September 30, ~~2018.~~2019, $4,508 of the convertible note payable and $179 of accrued interest was converted into 5,207,600 shares of the Company’s common stock.

~~(p)~~n)

On January 29, 2019, the Company entered into a convertible promissory note with a non-related party 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.

On July 28, 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 $640,053 and resulted in a discount to the note payable of $49,000 and an initial derivative expense of $591,053. During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $214,690 added to the principal of the note. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $8,640 of the convertible note payable was converted into 7,500,000 shares of the Company’s common stock.

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 attributed to the conversion price. During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $104,382 added to the principal of the note.

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. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $2,196 of the convertible note payable and $953 of accrued interest was converted into 4,999,000 shares of the Company’s common stock.

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. During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $40,000 added to the principal of the note.

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. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $5,000 of the convertible note payable was converted into 5,555,555 shares of the Company’s common stock.

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.

On August 20, 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 $172,120 and resulted in a discount to the note payable of $50,000 and an initial derivative expense of $122,120. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $13,000 of the convertible note payable was converted into 3,054,511 shares of the Company’s common stock.

On ~~July 25, 2018,~~February 26, 2019, the Company entered into a convertible promissory with a non-related for $53,000 of which $3,000 was an ~~unrelated party for $38,000.~~original issue discount resulting in cash proceeds to the Company of $50,000. The note is due on ~~July 25, 2019~~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 ~~17% to 22% to 27% to 32% to~~ 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the ~~notice~~note which is not paid when due shall bear interest at the rate of ~~22.0%~~22% per annum from the due date until paid. ~~The Company must, at all times, reserve six times that number of shares that would be issuable upon full conversion of the note, with an initial reserved share amount of 1,038,251 shares.~~ 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 ~~average 3~~ lowest trading ~~prices~~price during the ~~15 trading~~15-trading day period prior to the conversion date. ~~Due to this provision,~~On June 19, 2019, the Company ~~considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. As~~defaulted on the note, ~~isn’t~~resulting in the note becoming immediately convertible ~~until 180 days following issuance, no derivative liability was recognized as~~and a default penalty of ~~September 30, 2018.~~$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.

~~(q)~~s)

On ~~August 27, 2018,~~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. During the nine months ended September 30, 2019, the Company defaulted on the note, resulting in a default penalty of $185,618 added to the principal of the note.

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. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense. During the nine months ended September 30, 2019, $27,804 of the convertible note payable and $5,287 of accrued interest was converted into 11,490,000 shares of the Company’s common stock

On May 2, 2019, the Company entered into a convertible promissory with ~~an unrelated~~a non-related party for ~~$53,000.~~$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 ~~August 27, 2019~~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 ~~17% to 22% to 27% to 32% to~~ 37%, dependent upon the timeframe of repayment during the note’s term) and any part of the ~~notice~~note which is not paid when due shall bear interest at the rate of ~~22.0%~~22% per annum from the due date until paid. ~~The Company must, at all times, reserve six times that number of shares that would be issuable upon full conversion of the note, with an initial reserved share amount of 1,408,950 shares.~~ 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 ~~average 3~~ lowest trading ~~prices~~price during the ~~15 trading~~15-trading day period prior to the conversion date. ~~Due to this provision,~~On June 19, 2019, the Company ~~considered whether the embedded conversion option qualifies for derivative accounting under ASC 815-15 Derivatives and Hedging. As~~defaulted on the note, ~~isn’t~~resulting in the note becoming immediately convertible ~~until 180 days following issuance, no derivative liability was recognized as~~and a default penalty of ~~September 30, 2018.~~$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.

On September 16, 2019, the Company entered into a convertible promissory note with a non-related party for $26,000 of which $6,000 was an original issue discount resulting in cash proceeds to the Company of $20,000. The note is due on September 11, 2022 and bears interest on the unpaid principal balance at a rate of 0% per annum and a default interest rate of 0% per annum. 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 $0.10 per share and subject to adjustment for dilutive issuances and cashless exercise. 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 60% of the lowest trading price during the 20-trading day period prior to the conversion date. As the closing sales price fell below $0.01, an additional 10% discount was 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 $58,453 and warrants $2,768 resulted in a discount to the note payable of $20,000 and an initial derivative expense of $41,221. Due to the note being in default, the remaining discount was accelerated and recognized to interest expense.

1520

During the nine months ended September 30, 2019, the $150,000 note and $25,814 of accrued interest was repaid by a cosigner to the loan. On September 25, 2019, the Company entered into a convertible promissory note with the non-related party for $175,814 in consideration for repaying the note. The note is due on September 25, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum and a default interest rate of 8% per annum. The Note will be repaid in cash or by conversion to common shares at a mutually acceptable rate not less than the market price of the Company’s common stock.

NOTE ~~6. RELATED PARTY TRANSACTIONS~~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.

	September 30, 2019			December 31, 2018
Balance at the beginning of period	$	322,976		$	—
Original discount limited to proceeds of notes		540,750			100,000
Fair value of derivative liabilities in excess of notes proceeds received		1,653,887			247,033
Settlement of derivative instruments		(2,447,147	)		—
Change in fair value of embedded conversion option		5,467,732			(24,057	)
Balance at the end of the period	$	5,538,198		$	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	128-394%	1.60-2.51%		0	%	0.49-5.00
At September 30, 2019	225-480%	1.55-1.91%		0	%	0.06-4.95

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 ~~has agreements~~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 ~~related parties~~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 ~~consulting~~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 ~~notes~~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 ~~options. See Notes~~ to ~~Financial Statements numbers 5 and 7.~~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 7.8 - STOCKHOLDERS’ DEFICIT

Preferred Stock

Series A Preferred Shares

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 September 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 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 September 30, ~~2018~~2019, there were ~~-0-~~500,000 shares of Series A Convertible Preferred Stock issued or outstanding.

Series B Preferred Shares

Effective August 13, 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 –Preferred Stock. The principal terms of the Series B Preferred Shares are as follows:

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.

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.

Conversion Rights

The Series B Preferred Stock is not convertible into shares of Common Stock of the Corporation.

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:

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 Corporation is disposed of;

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

Dividends

None.

Preference of Liquidation

None.

Upon designation, the Company issued 500,000 shares of the Series B preferred stock ~~issued.~~to each of its CEO and President (1,000,000 shares in total) pursuant to their employment agreements. As the Series B Preferred Shares represent share-based payments that are not classified as liabilities but that could require the employer to redeem the equity instruments for cash or other assets the Company classified the initial redemption amount of the shares of $155,000 as temporary equity or “mezzanine”.

As of September 30, 2019, there were 1,000,000 shares of Series B Preferred Stock issued or outstanding.

Series C Preferred Shares

Pursuant to the September 18, 2019 majority consent of stockholders in lieu of an annual meeting (including the consent of the Series A Convertible Preferred Stockholders), the Registrant filed a Certificate of Designation with the Nevada Secretary of State designating 5,500,000 shares of its authorized preferred stock as Series C Convertible Preferred Stock. The Registrant is awaiting the file stamped Certificate of Designation from the Nevada Secretary of State. The rights and preferences of such preferred stock are as follows:

The number of shares constituting the Series C Convertible Preferred Stock shall be 5,500,000. 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 C 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 C Convertible Preferred Stock.

Conversion Rights

Each Share shall be convertible into shares of the Company’s Common Stock at a price per share of $0.01 (1 Share converts into 100 shares 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 (5th) day prior to a 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.

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:

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;

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

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

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

amend the Company’s Articles of Incorporation or bylaws.

Other Rights

There are no other rights, privileges, or preferences attendant or relating to in any way the Shares, including by way of illustration but not limitation, those concerning dividend, ranking, other conversion, other redemption, participation, or anti-dilution rights or preferences.

At September 30, 2019, there were no Series C Preferred Shares 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.~~300,000,000 shares. Effective October 4, 2019, 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 300,000,000 to 1,000,000,000 shares. The number of shares outstanding of the registrant’s common stock as of September 30, 2019 was 262,360,042.

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 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’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. On January 1, 2019 the fair value of the restricted stock award totaled $240,000 which will be expensed over vesting period. As of September 30, ~~2018~~2019, 375,000 shares were issued and ~~December 31, 2017 there were 44,459,238~~the Company had recognized $102,391 of expense.

On January 28, 2019, the Company agreed to convert $131,327 of principal and ~~41,179,238~~interest of the notes payable described in Note 6(a) into 987,421 shares of the Company’s common stock.

On March 25, 2019, the Company issued 200,000 shares of common stock to two employees of the Company as compensation in lieu of commission on sales of the Company’s products. The Company 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 ~~respectively.~~and a $55,830 loss on settlement of debt was recognized.

During the nine months ended September 30, 2019, the Company issued a total of 76,154,631 shares of the Company’s common stock upon the conversion of $44,723 of principal ($42,223) and interest ($2,500) pursuant to the convertible note payable described in Note 6(i).

During the nine months ended September 30, 2019, the Company issued a total of 66,290,000 shares of the Company’s common stock upon the conversion of $64,558 of principal ($58,058) and interest ($6,500) pursuant to the convertible note payable described in Note 6(j).

During the nine months ended September 30, 2019, the Company issued a total of 18,559,816 shares of the Company’s common stock upon the conversion of $74,200 of the convertible note payable pursuant to the convertible note payable described in Note 6(k).

During the nine months ended September 30, 2019, the Company issued a total of 5,207,600 shares of the Company’s common stock upon the conversion of $4,508 of the convertible note payable and $179 of accrued interest pursuant to the convertible note payable described in Note 6(m).

During the nine months ended September 30, 2019, the Company issued a total of 7,500,000 shares of the Company’s common stock upon the conversion of $8,640 of principal pursuant to the convertible note payable described in Note 6(n).

During the nine months ended September 30, 2019, the Company issued a total of 4,999,000 shares of the Company’s common stock upon the conversion of $2,196 of principal and $953 of interest pursuant to the convertible note payable described in Note 6(o).

During the nine months ended September 30, 2019, the Company issued a total of 5,555,555 shares of the Company’s common stock upon the conversion of $5,000 of principal pursuant to the convertible note payable described in Note 6(p).

During the nine months ended September 30, 2019, the Company issued a total of 3,054,511 shares of the Company’s common stock upon the conversion of $13,000 of principal pursuant to the convertible note payable described in Note 6(q).

During the nine months ended September 30, 2019, the Company issued a total of 11,490,000 shares of the Company’s common stock upon the conversion of $27,804 of the convertible note payable and $5,287 of accrued interest pursuant to the convertible note payable described in Note 6(s).

On ~~January 2, 2018,~~August 16, 2019, the Company ~~sold 110,000~~issued 5,989,500 shares of common stock upon the cashless exercise of 6,000,000 warrants.

On September 24, 2019, the Company issued 6,041,381 shares of common stock upon the cashless exercise of 6,057,143 warrants.

On August 1, 2019, the Company entered into a consulting agreement for ~~$55,000.~~investor relations services through September 30, 2019. The agreement called for 1,000,000 restricted shares of common stock to be issued to the consultant. As of September 30, 2019, the Company recorded $15,000 in additional paid-in capital for the consulting expense related to the consulting services provided, due to the fact that the 1,000,000 common shares were issued subsequently on March 11, 2020.

NOTE 9 – STOCK OPTIONS

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

Below is a table summarizing the options issued and outstanding as of September 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, September 30, 2019		382,500			1.24

As at September 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		0.25		12/31/2019		25,000
	01/01/2016		90,000		90,000		0.33		0.25		12/31/2019		30,000
	09/15/2016		10,000		10,000		1.00		0.25		12/31/2019		10,000
	10/01/2016		7,500		7,500		1.00		0.25		12/31/2019		7,500
	01/26/2017		200,000		200,000		2.00		2.33		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 September 30, 2019 was $Nil.

NOTE 10 – WARRANTS

As described in Note 6, from February 14 through September 11, 2019, the Company issued 487,500 warrants subject to an exercise price of $0.20 per share for 5 years and 300,000 warrants subject to an exercise price of $0.10 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 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 was calculated using the Binomial Model as described in Note 7.

The following table summarizes the continuity of share purchase warrants:

	Number of warrants			Weighted average exercise price $
Balance, December 31, 2018		650,000			0.09233
Adjustment to warrants outstanding		431,007,738			0.00041
Granted		787,500			0.00131
Settled		(12,130,881	)		0.00117
Balance, September 30, 2019		420,314,357			0.00053

As at September 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	*		2.16		11/28/2021	$	50,000
	12/3/2018		500,000			500,000			0.10			4.18		12/3/2023		50,000
	2/14/2019		159,397,690	*		159,397,690	*		0.00035	*		4.38		2/14/2024		55,789
	3/13/2019		107,142,857	*		107,142,857	*		0.00035	*		4.45		3/13/2024		37,500
	9/11/2019		10,416,667	*		10,416,667	*		0.00288	*		4.95		9/11/2024		30,000
			420,314,357			420,314,357									$	223,289

*The number of warrants outstanding and exercisable is variable based on adjustments to the exercise price of the warrant due to dilutive issuances.

The intrinsic value of warrants outstanding at September 30, 2019 was $2,513,523.

NOTE 11 – RELATED PARTY TRANSACTIONS

The Company has agreements with related parties for consulting services, accrued rent, accrued interest, notes payable and stock options. See Notes to Financial Statements numbers 6, 9, 8 and 12 for more details.

NOTE 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~~up listing and expansion of the Company’s shareholder base. ~~Per the terms of the agreement, the~~The consulting company received a $5,000 non-refundable ~~$5,000~~ initial fee ~~will receive~~and the agreement included $2,500 per month ~~beginning in April 2018,~~through March 14, 2019 and ~~was issued~~received 2,000,000 ~~fully vested non-forfeitable shares of restricted common stock, valued at $1,000,000 ($0.50 per shares). The 2,000,000 common~~ shares of the Company’s ~~stock were issued on June 12, 2018. As of September 30, 2018 the Company recorded the fair value of the~~restricted common shares of $1,000,000 in common stock and additional paid in capital and has recorded $545,205 for the consulting expense related to the portion of the 12-month service agreement that has been completed.stock.

On ~~April 10, 2018 the Company issued 120,000 shares of common stock at $0.50 per share to an employee and Director of the Company for cash proceeds of $60,000.~~

~~On June 12,~~July 2, 2018, the Company entered into a 6-month service contract for investor relations services through January 2, 2019. The agreement ~~expiring on December 12, 2018,~~called for business development and the development of financial reports. Per the terms of the agreement, the consulting company was issued 50,000 shares of restricted stock on June 29, 2018. As of September 30, 2018 the Company recorded the fair value of the common shares of $28,000 in common stock and additional paid in capital and has recorded $16,831 for the consulting expense related to the portion of the 12-month service agreement that has been completed.

~~On October 2, 2018 the Company’s Board of Directors authorized the issuance of~~ 1,000,000 restricted shares of common stock to ~~Life Sciences Journeys, Inc., for six months of services outlined in the July 2, 2018 services agreement. The 1,000,000 restricted shares of common stock were~~be issued to Life Sciences Journeys, Inc. The shares were issued on October 9, 2018. The Company ~~has~~ placed a stop transfer order on the shares, ~~has disputed~~discussed the benefits of services ofprovided by Life Sciences Journeys and ~~is currently in negotiation~~rescinded its stop transfer, allowing the contract to cancel the shares. As of September 30, 2018 the Company recorded the fair value of the common shares of $355,000 in common stock and additional paid in capital and has recorded $355,000 for the consulting services.

~~Stock Options~~

~~Below is a table summarizing the options issued and outstanding as of September 30, 2018:~~

Date Number Number Exercise Weighted Average Remaining Contractual Expiration
Intrinsic
Value
September 30,
Issued Outstanding Exercisable Price $ Life (Years) Date 2018
05/21/2014 1,875,000 1,875,000 0.13 0.64 05/20/2019 $ 553,125
01/01/2016 90,000 90,000 0.33 1.25 12/31/2019 8,550
01/01/2016 75,000 75,000 0.33 1.25 12/31/2019 7,125
09/15/2016 10,000 10,000 1.00 1.25 12/31/2019 —
10/01/2016 7,500 7,500 1.00 1.25 12/31/2019 —
01/01/2017 30,000 30,000 2.00 0.25 01/01/2019 —
01/26/2017 200,000 200,000 2.00 3.33 01/26/2022 —
2,287,500 2,287,500 $ 568,800

~~The weighted average exercise prices is $0.34 for the options outstanding and exercisable.~~

~~NOTE 8. COMMITMENTS AND CONTINGENCIES~~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~~the consultant received 100,000 restricted shares of the Company’s common stock for the services.

On August 1, 2019, the Company entered into a consulting agreement for investor relations services through September 30, 2019. Pursuant to the agreement the Company issued 1,000,000 restricted shares of common stock with a fair value of $15,000. As described in ~~Little River, South Carolina.~~Note 13, on October 1, 2019 the Company entered into a second agreement with the consultant for the provision of investor relations services through March 31, 2020. The ~~lease was~~agreement called for a cash payment of $25,000 and 12,000,000 0restricted shares of common stock to be issued to the consultant. The Company issued the 12,000,000 common shares to the consultant on March 16, 2020.

In addition to contracts for service, the Company also regularly uses the professional services of securities attorneys, a 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 Vice President for Business Development and Director of 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, including four weeks paid vacation.

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 ~~December~~March 1, ~~2016~~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 ~~a rate of $4,800~~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. On August 12, 2019, the Company amended the Employment Contract with F. Jody Read, CEO, whereby 500,000 Preferred Series B shares were issued to Read. All other terms of the January 1, 2019 employment agreement remain in effect.

On August 12, 2019, the Company entered into a four-year employment agreement with Gary, J. Grieco, its President, whereby Mr. Grieco will continue to receive $24,000 per year for services to Company as its President and whereby 500,000 Preferred Series B shares were issued to Grieco. The employment agreement begins on August 12, 2019, is automatically renewable for two years unless terminated earlier as per the terms of the agreement.

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 ~~period of three years.~~fixed fee. The Company paid $5,000 on execution of the agreement and has ancontinued 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 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.

On July 12, 2019, the Company entered into a binding Letter of Intent (“LOI”) to negotiate in good faith a transaction with 2705908 Ontario Inc. for a definitive loan and option agreement to include the acquisition of at least 51% control of the Company, in addition to the other terms and commitments. On July 30, 2019, the LOI due diligence and negotiations were slated to terminate, but both parties agreed to extend the ~~lease for two periods~~term of ~~three years each. The option~~the LOI through August 19, 2019. On August 19, 2019 the Company and 2705908 Ontario Inc. allowed the LOI 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.~~expire.

NOTE 9.13. SUBSEQUENT EVENTS

On October ~~9, 2018~~1, 2019, the Company entered into a consulting agreement for investor relations services through March 31, 2020. The agreement called for a cash payment of $25,000 and 12,000,000 restricted shares of common stock to be issued to the consultant. The Company issued the 12,000,000 common shares to the consultant on March 16, 2020.

On October 3, 2019, the Company entered into a promissory note with a ~~then employee and Director of the Company,~~non-related party for ~~$5,000.~~$50,000. The note is due on April 3, 2020 and bears interest at a rate of 12%. On October 9, 2020, the Company had repaid $12,599 of the loan. On March 8, 2020, the Company agreed to settle the remaining $39,054 of principal and accrued interest outstanding on the note through the issuance of 39,000 Shares of Series A Preferred Stock and the payment of $54.

On October 4, 2019, F. Jody Read stepped down from his position as Chief Executive Officer of the Registrant due to increased workload in the Registrant’s wholly-owned operating subsidiary. Mr. Read remains as a director and Chief Operating Officer of the Registrant. Concurrent with Mr. Read stepping down from the position of Chief Executive Officer, the Registrant appointed Mr. Gary J. Grieco to act as President and Chief Executive Officer of the Registrant.

On October 7, 2019, the Company entered into a convertible promissory with a non-related party 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 October 7, 2020 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, 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 ~~re-paid as soon as possible,~~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 October 8, 2019, the Company issued 6,399,302 shares of common stock upon the cashless exercise of 6,424,286 warrants.

On October 22, 2019, the Company issued 6,498,105 shares of common stock upon the cashless exercise of 6,528,571 warrants.

On October 29, 2019, the Company entered into a convertible promissory with a non-related party for $50,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $47,000. The note is ~~considered~~due on October 29, 2020 and bears interest on the unpaid principal balance at a ~~short-term~~rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, 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 November 12, 2019, the Company entered into a promissory note with a non-related party for $17,500. The note is due November 12, 2020, is unsecured and bears an interest rate of ~~0.0%~~8% per annum.

On ~~October 19, 2018~~December 12, 2019, the Company entered into ~~another promissory note~~a loan with a ~~then employee and Director~~non-related party for $12,250 of which $2,250 was the loan fee or original issue discount resulting in cash proceeds to the Company ~~for $5,000.~~of $10,000. The note is to be ~~re-paid~~repaid through 12 monthly payments ending on May 12, 2020.

On December 19, 2019, the Company sold future receivables of $83,400 in consideration for $58,200. The advance is to be repaid through $3,208 weekly payments. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and inventory.

On December 20, 2019, the Company sold future receivables of $148,362 in consideration for $100,000. The advance is to be repaid through $2,958 weekly payments.

On December 31, 2019, the Company sold future receivables of $87,540 in consideration for $60,000. The advance is to be repaid through $3,651 weekly payments. The Company paid $3,625 of finance fees and includes default fees of up to $2,500 and a default rate of interest of 9%. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and inventory. As of the date of filing the Company had only received advances of $15,575.

On January 1, 2020, the Company entered into a four-year employment agreement with Gary, J. Grieco, its President and CEO, whereby Mr. Grieco will receive $48,000 per year commencing April 1, 2020, and receive 15,000,000 shares of the Company’s common stock for services to the Company as ~~soon~~its President and CEO. In addition, once monthly revenue exceeds monthly expenses the salary will be increased and Mr. Grieco will be issued an additional 10,000,000 shares of the Company’s common stock. The employment agreement begins on January 1, 2020, and is automatically renewable for two years unless terminated earlier as ~~possible,~~per the terms of the agreement.

On February 11, 2020, the Company received a $1,500 advance from the President of the Company and a $2,000 advance from a Director of the Company. The advances are unsecured, non-interest bearing and due on demand.

On February 18, 2020, the Company sold future receivables of $32,978 in consideration for $22,000. The advance is ~~considered~~to be repaid through daily payments of $660. The Company paid $794 of finance fees and the agreement includes default fees of up to $15,000. In connection with the advance, the Company granted the lender a ~~short-term~~security interest in all accounts, equipment, intangibles and inventory.

On February 18, 2020, the Company received an additional tranche of $8,888 pursuant to the convertible note described in Note 6(i). The additional tranche consisted of a $888 original issue discount resulting in cash proceeds to the Company of $8,000.

On February 28, 2020, the Company entered into a promissory note with a non-related party for $20,000. The note is due May 28, 2020, is unsecured and bears an interest rate of ~~0.0%~~8% per annum.

On ~~October 23, 2018~~March 2, 2020, the Company entered into a convertible promissory ~~note~~ with ~~the then CEO and Chairman~~a non-related party for $45,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company ~~for $2,000.~~of $42,000. The note is ~~to be re-paid as soon as possible, is considered a short-term note, is unsecured~~due on March 2, 2021 and bears an interest on the unpaid principal balance at a rate of ~~0.0%~~12% per annum. ~~Subsequently,~~Stringent pre-payment terms apply (from 15% to 40%, dependent upon the ~~$2,000~~timeframe of repayment during the note’s term) and any part of the note ~~was~~which is not paid ~~in full on October 31, 2018, leaving a remaining balance~~when due shall bear interest at the rate of ~~$0 owed~~22% per annum from the due date until paid. The Note may be converted by the ~~Company.~~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 March 5, 2020, the Company received an additional tranche of $30,000 pursuant to the convertible note described in Note 6(i). The additional tranche consisted of a $3,000 original issue discount resulting in cash proceeds to the Company of $27,000.

On March 9, 2020, the Company entered into an agreement to settle the $175,814 convertible note payable described in Note 6(v) and $5,279 of interest accrued on the note through the issuance of 181,000 Shares of Series A Preferred Stock and the payment of $93.

As of April 6, 2020, the Company sold 270,000 Series C Convertible Preferred Shares for $270,000.

From October ~~24, 2018~~1, 2019 through March 25, 2020, the Company issued a total of 265,453,351 shares of common stock upon the conversion of $286,043 of principal, $20,306 of interest and of fees pursuant to the convertible notes payable described in Note 6.

On April 1, 2020, the Company entered into a ~~promissory note with~~settlement agreement to settle the ~~then CEO~~$60,000 and ~~Chairman of~~$26,000 convertible notes described in Notes 6(p) and (u). The Company agreed to pay $100,000 to settle the principal and accrued interest and penalties relating to the two convertible notes.

On April 1, 2020, the Company ~~for $3,000. The note is to be re-paid as soon as possible, is considered a short-term note, is unsecured and bears an interest rate~~issued 4,623,093 shares of ~~0.0% per annum.~~

~~On October 30, 2018~~common stock upon the ~~Company entered into a promissory note with an unrelated party, for $60,000. The note is due on December 30, 2018, is considered a short-term note, is unsecured and bears an interest rate~~cashless exercise of ~~8.0% per annum.~~

On November 8, 2018 the Company’s Board of Directors accepted the resignation of Gary Grieco as the Company’s CEO and appointed F. Jody Read as its CEO. Gary Grieco remains as the Chairman of the Board of Directors and the Corporation’s President. F. Jody Read now fulfills the roles of CEO and COO of the Company and remains a Director.

On November 15, 2018 the Company entered into a promissory note with an unrelated party, for $8,700. The note is due on June 30, 2019, is considered a short-term note, is unsecured and bears an interest rate of 10.0% per annum.

4,640,371 warrants.

1631

~~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;
•	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 “PCT ~~LTD, “Bingham Canyon,” “Bingham,”~~LTD”, “the ~~Company,”~~Company”, “we,” “us,” “our” and similar terms refer to PCT LTD (formerly Bingham Canyon Corporation) and its wholly owned operating subsidiary, Paradigm Convergence Technologies Corporation (“~~Paradigm,~~PCT Corp.” ~~“PCT Corp.”~~or “Paradigm”).

1732

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

Executive Overview

On August 31, 2016, 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 PCT LTD after the exchange transaction. PCT LTD is a holding company, which through Paradigm is engaged in the business of marketing new products and technologies through licensing and joint ventures.

PCT 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 ~~$940,095 for the three months ended September 30, 2018 and $2,139,456~~$10,214,462 for the nine months ended September 30, ~~2018~~2019 and accumulated losses of ~~$8,883,976~~$20,141,465 from inception through September 30, ~~2018.~~2019.

PCT LTD remains dependent upon additional financing to continue operations. The Company intends to raise additional financing through private placements of its common stock and note payable issuances. We expect that we would issue such stock pursuant to exemptions to the registration requirements provided by 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:

continuation of commercial launch of non-toxic sanitizing, disinfecting and sterilizing products and technologies 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 units including those designed for on-site deployment at customers’ facilities;

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

acquiring available complementary ~~and continuations of~~ technology ~~rights (patents);~~rights;

payment of short-term debt;

hiring of additional personnel in ~~2018;~~2019; and

general and administrative operating costs.

Management projects these costs to total approximately $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 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, management believes that the Company expects to be ~~at or~~ close to profitability by the end of the ~~second~~fourth quarter of ~~2019.~~2020.

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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	September 30, 2018			December 31, 2017			September 30, 2019			December 31, 2018
Cash and cash equivalents	$	8,062		$	7,838		$	6,669		$	4,893
Total current assets		614,843			40,321			162,434			281,742
Total assets		5,084,860			4,754,181			4,404,809			4,846,988
Total liabilities		2,353,246			1,456,198			9,097,175			3,141,401
Accumulated deficit		(8,883,976	)		(6,744,520	)		(20,141,465	)		(9,927,003	)
Total stockholders’ equity	$	2,731,614		$	3,297,983
Total stockholders’ equity (deficit)							$	(4,907,764	)	$	1,705,587

At September 30, ~~2018,~~2019, the Company recorded a net loss for the nine month period of ~~$2,139,456~~$10,214,462 and had a working capital deficit of ~~$373,009.~~$8,934,741. We have recorded ~~a relatively small amount of~~ revenues from operations, ~~since inception and we~~but these have ~~not established an ongoing source of revenue sufficient~~been insufficient to cover our operating costs. During the ~~years~~nine months ended ~~2018~~2019 and ~~2017~~2018 we have primarily relied upon advances and loans from 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 ~~$8,062~~$6,669 in cash at September 30, ~~2018,~~2019, compared to ~~$7,838~~$4,893 in cash at December 31, ~~2017.~~2018. We had total liabilities of ~~$2,353,246~~$9,097,175 at September 30, ~~2018~~2019 compared to ~~$1,456,198~~$3,141,401 at December 31, ~~2017.~~2018.

Our current cash flow is not sufficient to meet our monthly expenses of approximately $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~~our securities for additional 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. We do not have material commitments for future capital 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~~securities in lieu of cash to convert debt or pay for expenses.

Commitments and Obligations

At September 30, ~~2018~~2019, the Company recorded notes payable ~~and convertible notes payable~~ totaling approximately ~~$1,801,148~~$2,447,026 (net of debt discount) compared to notes payable totaling ~~$1,134,217~~$1,907,011 (net of debt discount) at December 31, ~~2017.~~2018. These notes payable represent cash advances received and expenses paid from third parties and related parties. All of the notes payable carry interest from 0% to ~~13%~~25% and are due ranging from on demand to ~~March 21, 2021.~~February 14, 2022.

The Company headquarters and operations isare located in Little River, South Carolina. The South Carolina lease amounts to $4,800 per month, expires on November 30, 2019 and includes an option to renew for two additional three-year periods. ~~Currently, the Company is 4 months in arrears in paying rent on this facility.~~

1934

Results of Operations

SUMMARY OF OPERATIONS Three-month period ended
September 30,
(Unaudited)
2018 2017
Revenues $ 41,124 $ 58,123

Total operating expenses $ 950,454 $ 537,005
Total other expense $ (30,765 ) $ (21,654 )
Net loss $ (940,095 ) $ (500,536 )
Basic and diluted loss per share $ (0.02 ) $ (0.01 )

Three Months Ended September 30, 2019

SUMMARY OF OPERATIONS	Three months period ended September 30,
	(Unaudited)
	2019			2018			Increase/(Decrease)
Revenues	$	220,033		$	41,124		$	178,909

Total operating expenses	$	604,847		$	950,454		$	(345,607	)
Total other expenses	$	5,379,178		$	30,765		$	5,348,413
Net loss	$	5,763,992		$	940,095		$	4,823,897
Basic and diluted loss per share	$	(0.03	)	$	(0.02	)	$	0.01

Revenues ~~decreased~~increased to $220,033 for the three months ended September 30, 2019 (the “2019 third quarter”) compared to $41,124 for the three months ended September 30, 2018 (the “2018 third quarter”) ~~compared to $58,123 for the three months ended September 30, 2017 (the “2017 third quarter”)~~. The revenue ~~decrease~~increase for the period was due to the ~~lack~~increased volume of ~~an outright sale of large-volume equipment during~~fluids sold, the ~~2018 third quarter, in comparison to the outright~~ sale of a ~~large-volume piece of equipment during the third quarter of 2017. The lack of a one-time sale of equipment during the third quarter of 2018 was somewhat offset by an increase in steady~~US EPA registration (duplicate), licensing revenue from ~~fluid~~EPA sub registrations, equipment sales ~~(including monthly minimum royalties), parts sales, license fees~~ and the additional revenue from recurring leased-equipment income.

Total operating expenses ~~increased~~decreased to $604,847 during the 2019 third quarter compared to $950,454 during the 2018 third ~~quarter compared to $537,005 during the 2017 third~~ quarter. The ~~increase~~decrease during the third quarter of ~~2018~~2019 was primarily due to ~~an increase~~a decrease in ~~personnel, salaries and~~ stock-based compensation, an increase in audit fees, accounting and commercial market development as well as purchases of components and other increased operating necessities. The cost of product during this period decreased due to the significantly less expense associated with producing fluids for sale and/or royalties from the sale of fluids in comparison to the production of equipment.compensation.

General and administrative expenses ~~increased~~decreased to ~~$827,168~~$468,897 for the ~~2018~~2019 third quarter compared to ~~$389,376~~$827,168 during the ~~2017~~2018 third quarter. The ~~increase~~decrease during the third quarter of ~~2018~~2019 was primarily due to ~~an increase in personnel, salaries and stock-based compensation, insurance, and other overhead expense.~~

~~Research and development expenses decreased to $nil for the 2018 third quarter compared to $32,490 during the 2017 third quarter. The~~a decrease in ~~research and development~~stock-based compensation expense during the third quarter of ~~2018 was primarily due~~2019 as compared to the ~~Company having reached its primary standard goals for developing most~~third quarter of ~~its equipment product lines for its markets in the prior periods.~~2018.

Depreciation and amortization expenses ~~decreased~~increased slightly to $84,467 during the 2019 third quarter compared to $84,070 during the 2018 third ~~quarter compared to $92,457 during~~quarter. Depreciation and amortization were comparable between the ~~2017 third quarter. The decrease was primarily due to a slight decrease in the value of certain intangible assets and the amortization associated with the decrease.~~two periods.

Total ~~interest~~other expenses increased to ~~$46,950~~$5,379,178 for the 2019 third quarter compared to $30,765 during the 2018 third ~~quarter compared to $21,654 during the 2017 third~~ quarter. ~~Total~~The overall increase was a result of an increase in interest expense, ~~increased during the 2018 third quarter due to a greater number~~ and loss on change in fair value of ~~loans in effect during the period.~~derivatives.

As a result of the changes described above, net loss from operations after income taxes increased to $5,763,992 during the 2019 third quarter compared to $940,095 during the 2018 third ~~quarter compared to $500,536 during the 2017 third~~ quarter.

Nine Months Ended September 30, 2019

SUMMARY OF OPERATIONS	Nine-month period ended September 30,						Nine months period ended September 30,
	(Unaudited)						(Unaudited)
	2018			2017			2019			2018			Increase/(Decrease)
Revenues	$	153,337		$	80,352		$	534,852		$	153,337		$	381,515

Total operating expenses	$	2,196,580		$	1,697,257		$	1,956,774		$	2,196,580		$	(239,806	)
Total other expense	$	(96,213	)	$	(50,100	)
Total other expenses							$	8,792,540		$	96,213		$	8,696,327
Net loss	$	(2,139,456	)	$	(1,167,005	)	$	10,214,462		$	2,139,456		$	8,075,006
Basic and diluted loss per share	$	(0.05	)	$	(0.04	)	$	(0.10	)	$	(0.05	)	$	0.05

Revenues increased to $534,852 for the nine months ended September 30, 2019 compared to $153,337 for the nine months ended September 30, ~~2018 compared to $80,352 for the nine months ended September 30, 2017.~~2018. The revenue increase for the period was due to the ~~increase in steady~~increased volume of fluids sold, the sale of a duplicate US EPA Registration, licensing revenue from ~~fluid~~EPA sub registrations, equipment sales ~~(including monthly minimum royalties), parts sales, license fees~~ and the additional revenue from ~~leasing equipment under contract and the~~ recurring leased-equipment income.

Total operating expenses ~~increased~~decreased to $1,956,774 during the nine months ended September 30, 2019 compared to $2,196,580 during the nine months ended September 30, ~~2018 compared to $1,697,257~~2018. The decrease during ~~the nine month period ended September 30, 2017. The increase for~~ the period was primarily due to a decrease in stock-based compensation. This was offset by an increase in ~~personnel, salaries and stock-based compensation,~~cost of sales as a result of an increase in audit fees, accounting and commercial market development as well as purchases of components and other increased operating necessities. The cost of product during this period decreased due to the significantly less expense associated with producing fluids for sale and/or royalties from the sale of fluids in comparison to the production of equipment.revenues.

General and administrative expenses ~~increased~~decreased to $1,554,992 for the nine months ended September 30, 2019 compared to $1,885,962 during the nine months ended September 30, ~~2018 compared to $1,346,955 during the nine month period ended September 30, 2017.~~2018. The increase during the period was primarily due to ~~an increase~~a decrease in ~~personnel, salaries and~~ stock-based compensation ~~insurance, and other overhead~~ expense.

Research and development expenses decreased to $nil for the nine months ended September 30, 2018 compared to $102,402 during the nine month period ended September 30, 2017. The decrease in research and development expense during the period was primarily due to the Company having reached its base goals for developing most of its equipment and technologies in the prior periods.

Depreciation and amortization expenses increased slightly to $253,568 during the nine months ended September 30, 2019 compared to $250,928 during the nine ~~month period~~months ended September 30, ~~2018~~2018. Depreciation and amortization was comparable between the two periods.

Total other expenses increased to $8,792,540 for nine months ended September 30, 2019 compared to ~~$205,881~~$96,213 during the nine ~~month period~~months ended September 30, ~~2017.~~2018. The overall increase was ~~primarily due to having more equipment depreciating and higher amortization expenses.~~

~~Total interest expenses increased to $112,398 during the nine month period ended September 30, 2018 compared to $50,100 during the nine month period ended September 30, 2017. Total~~a result of an increase in interest expense, ~~increased during the 2018 second quarter due to a greater number~~ and loss on change in fair value of ~~loans~~derivatives and settlement of debt. This was offset by a gain on the sale of assets and a gain on change in ~~effect during the period.~~fair value of preferred series A stock liabilities.

As a result of the changes described above, net loss from operations after income taxes increased to $10,214,462 during the nine months ended September 30, 2019 compared to $2,139,456 during the nine ~~month period~~months ended September 30, ~~2018 compared to $1,667,005 during the nine month period ended September 30, 2017.~~2018.

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 September 30, 2019, and December 31, 2018, the Company had a $5,538,198 and $322,976 derivative liability, respectively and preferred series A stock liabilities of $0 and $144,352, respectively.

Accounts Receivable -

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

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 nine months ended September 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 stockholder advisory votes, such as “say-on-pay” and “say-on-frequency”~~

~~Obtain stockholder 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 September 30, 2019.

Recent Accounting Developments

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 ~~does~~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.

~~We have continued to refine our 5-step qualifying approach to FASB ASC Topic 606 “Revenue Recognition of Contracts” and will continue to monitor progress in determining correct reported revenues.~~

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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

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. ~~Our President,~~Gary J. Grieco, our Chief Executive Officer, who ~~served~~serves as our principal executive officer and principal financial officer, ~~through the end of the period,~~has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this 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 ~~President~~principal executive officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our ~~President~~principal executive officer concluded that as of September 30, ~~2018,~~2019, our disclosure controls and procedures were not effective.

Notwithstanding 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 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~~quarter ended September 30, 2018, 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 President has determined that2019, there were no changes in our internal control over financial reporting ~~for period ended September 30, 2018 and the year ended December 31, 2017, was 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 2018 that have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting.~~

~~Internal control systems, no matter how well designed~~reporting (as defined in Exchange Act Rules 13a-15(f) 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 systems15d-15(f) under the Securities Exchange Act of ~~internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.~~1934).

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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 were 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.

On August 8, 2019, we received notice from Annihilare, Inc. that certain intellectual properties developed jointly between us and Annihilare are to be discontinued from use by us 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. We have engaged counsel to assist us with this dispute and are evaluating potential litigation on this matter. However, as of the date of this filing no litigation has been initiated.

ITEM 1A. RISK FACTORS

We are 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, ~~2017.~~2018.

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

~~The disclosure set forth below under Item 5 (Other Information) pertaining to~~TFK Investments LLC Note Conversions

During the quarter ended September 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 ~~Notes and~~Lending Group Ltd Note Conversions

During the quarter ended September 30, 2019, the Company issued Power Up ~~Agreements is incorporated by reference into this Item 2. The Power Up Notes described in Item~~Lending Group LTD shares of its common stock upon partial conversion of the promissory note dated December 5, ~~below were~~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

During the quarter ended September 30, 2019, the Company issued ~~in reliance~~Crown Bridge Partners, LLC shares of its common stock upon ~~exemptions from registration pursuant to Section 4(a)(2) under~~partial conversion of the ~~Securities Act~~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

During the quarter ended September 30, 2019, the Company issued GS Capital Partners, LLC shares of ~~1933,~~its common stock upon partial conversion of the promissory note dated January 16, 2019 as ~~amended,~~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

During the quarter ended September 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

During the quarter ended September 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 Conversion and Rule 506 promulgated thereunder. The Power UP Agreements executed in connection therewith contains representations to support our reasonable belief that Power Up had access to information concerning our operations and financial condition, is acquiringWarrant Exercise

During the ~~securities for~~quarter ended September 30, 2019, the Company issued Peak One Opportunity Fund, LP shares of its ~~own account and not with a view to~~common stock upon partial conversion of the ~~distribution thereof, and is an “accredited investor”~~promissory note dated February 14, 2019 as ~~such term is defined in Rule 501(a) of Regulation D promulgated under~~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

On August 16, 2019, the ~~Securities Act. At the time of their issuance, the Power Up Notes and any~~Company issued Peak One Opportunity Fund, LP 5,989,500 shares of common stock upon the cashless exercise of 6,000,000 warrants.

Adar Alef LLC Note Conversion

During the quarter ended September 30, 2019, the Company issued Adar Alef LLC shares of its common stock upon partial conversion ~~thereof will be deemed to be restricted securities for purposes~~ of the ~~Securities Act and~~promissory note dated February 20, 2019 as follows:

Date of Conversion

Principal Amount Converted

Conversion Price

Number of

Shares Issued

Principal Balance Remaining

9/19/2019

13,000

0.004256

3,054,511

42,125

Peak One Investments LLC Warrant Exercise

On September 24, 2019, the ~~certificates representing the securities shall bear legends to that effect. We have initially reserved 4,039,707~~Company issued Peak One Investments LLC 6,041,381 shares of common stock ~~for issuance under~~upon the ~~terms~~cashless exercise of 6,057,1431 warrants.

Auctus Fund LLC

During the quarter ended September 30, 2019, the Company issued Auctus Fund LLC shares of its common stock upon partial conversion of the promissory note dated March 13, 2019 as follows:

Date of Conversion

Principal Amount Converted

Conversion Price

Number of

Shares Issued

Principal Balance Remaining

9/27/2019

$27,804.21 plus $4,536.99 in interest and $750 in fees

0.00288

11,490,000

47,195.79

Subsequent Issuances after Quarter-End

Peak One Opportunity Fund Note Conversions

Subsequent to the quarter ended September 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
	10/4/2019	$	7,000	$	0.0011		6,363,636	$	48,000
	10/22/2019	$	7,000	$	0.001		7,000,000	$	41,000
	11/6/2019	$	11,000	$	0.00085		12,941,176	$	30,000
	Total	$	25,000				37,849,867

Power Up ~~Notes.~~Lending Group Ltd Note Conversions

Subsequent to the quarter ended September 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

10/8/2019

$21,450 plus $3,780 in interest

0.002

12,615,000

0.00

Subsequent to the quarter ended September 30, 2019, the Company issued Power Up Lending Group LTD shares of its common stock upon partial conversion of the promissory note dated January 15, 2019 as follows:

Date of Conversion		Principal Amount Converted	Conversion Price		Number of Shares Issued		Principal Balance Remaining
	10/15/2019	$23,500	$	0.0018		13,055,556	$	26,000	*
	10/16/2019	$22,500	$	0.0015		15,000,000	$	3,500	*
	10/21/2019	$3,500 plus $1,980 in interest	$	0.0012		4,566,667	$	0.00
	Total	$49,500				32,622,223

* Includes default amount

Subsequent to the quarter ended September 30, 2019, the Company issued Power Up Lending Group LTD shares of its common stock upon partial conversion of the promissory note dated February 21, 2019 as follows:

Date of Conversion		Principal Amount Converted			Conversion Price		Number of Shares Issued		Principal Balance Remaining
	10/22/2019	$	13,000		$	0.0012		11,083,333	$	66,200	*
	10/23/2019	$	18,900		$	0.0012		15,750,000	$	47,300	*
	10/25/2019	$	14,100		$	0.0012		11,750,000	$	33,200	*
	10/28/2019	$	18,900		$	0.0012		15,750,000	$	14,300
	10/29/2019		$14,300 plus $3,180 in interest		$	0.0012		14,566,667	$	0.00
	Total	$	79,200	*				68,900,000

* Includes default amount

Subsequent to the quarter ended September 30, 2019, the Company issued Power Up Lending Group LTD shares of its common stock upon partial conversion of the promissory note dated April 29, 2019 as follows:

Date of Conversion		Principal Amount Converted			Conversion Price		Number of Shares Issued		Principal Balance Remaining
	11/4/2019	$	15,700		$	0.001		15,700,000	$	41,300	*
	11/5/2019	$	15,600		$	0.001		15,600,000	$	25,700	*
	11/6/2019	$	20,100		$	0.001		20,100,000	$	5,600
	11/11/2019		$5,600 plus $2,280 in interest		$	0.00098		8,040,816	$	0.00
	Total	$	57,000	*				59,440,816

* Includes default amount

Peak One Investments LLC Warrant Exercises

On ~~July 2, 2018,~~October 8, 2019, the Company ~~entered into a 1-year services agreement which called for~~issued Peak One Investments LLC 6,399,302 shares of common stock upon the ~~issuance~~cashless exercise of ~~1,000,000~~6,424,286 warrants.

On October 22, 2019, the Company issued Peak One Investments LLC 6,498,105 shares of common stock upon the cashless exercise of 6,528,571 warrants.

On April 1, 2020, the Company issued Peak One Investments LLC 4,623,093 shares of common stock upon the cashless exercise of 4,640,371 warrants.

Crown Bridge Partners, LLC Note Conversions

Subsequent to the quarter ended September 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
	1/9/2020	$6,491.25 plus $500 in fees	$	0.000595		11,750,000	$	1,286.87
	1/13/2020	$10,601.48 plus $2,506.52 of interest and $500 in fees	$	0.00056		24,300,000	$	5,685.39
	Total					36,050,000

On March 16, 2020, the Company issued 12,000,000 shares of restricted common ~~stock. As of September 30, 2018, the Company had not issued the 1,000,000 shares common stock. The 1,000,000 restricted shares of common~~ stock ~~were issued on~~to a consultant for public relations services performed in October ~~9, 2018.~~2019.

~~All~~As of the above-described issuances/grants 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 eitherApril 6, 2020, the Company or any person acting 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 orhas sold ~~absent registration or pursuant to an exemption therefrom.~~270,000 Series C Convertible Preferred Shares for $270,000.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended September 30, ~~2018.~~2019.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

We have entered into a number of promissory notes, ~~three~~some of which are in default as of September 30, ~~2018,~~2019, or went into default before the filing of this Quarterly Report (See Note 6 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

~~Resignation~~On July 12, 2019, the Company entered into a binding Letter of Intent (“LOI”) to negotiate in good faith a transaction between 2705908 Ontario Inc. and ~~Appointment~~PCT LTD for a definitive loan and option agreement to include the acquisition of ~~Executive Officer~~

~~Effective November 8, 2018, Gary Grieco gave notice~~at least 51% control of ~~his resignation, effective immediately. Mr. Grieco continues~~PCT LTD, in addition to ~~serve as our president~~the terms and ~~chairman. We are not aware~~commitments written in the letter of ~~any disagreements Mr. Grieco may have with us on any matter relating~~intent. On July 30, 2019 the LOI due diligence and negotiations were slated to ~~our operations, policies or practices.~~

~~Effective November 8, 2018, upon acceptance of Mr. Grieco’s resignation, we appointed Francis J. Read, our current Chief Operating Officer and a director, as our new Chief Executive Officer.~~

~~Francis J. Read~~ ~~– is a director~~terminate, but both parties agreed to extend the term of the ~~Company. In 2017, Mr. Read became~~LOI. On August 2, 2019, the ~~Chief Operations Officer~~Company and 2705908 Ontario Inc. executed an extension for ~~Paradigm Convergence Technologies Corp.,~~ the ~~Company’s wholly-owned operating subsidiary. In 1998, Mr. Read founded and since 2016 has served as~~terms of the CEO of CSA Service Solutions, a $44m million field support company specializing in providing support solutions for large equipment manufacturers. CSA has over 350 employees nationwide with over 270 engineers operating in the Healthcare, Clinical Education, Life Sciences, Security, and Power Industries. Mr. Read holds a MBA from Tulane University and a BS, electronic Engineering from DeVry Institute of Technology.

~~Power Up Notes~~July 10, 2019 LOI to continue until August 19, 2019. The extension expired on August 19, 2019.

On ~~June 5, 2018,~~ July ~~25, 2018~~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 ~~August 27, 2018 (each a “Closing Date”), we completed~~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 ~~sale~~Company’s common stock in November of ~~three Convertible Promissory Notes (the “Power Up Notes”)~~2016). The settlement agreement included credit to the Company by Prime ITS in the ~~principal amounts~~gross amount of ~~$68,000, $38,000~~$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 ~~$53,000, respectively,~~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.

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 ~~interest rates~~Annihilare on this point.

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 were issued to Read. All other terms of ~~12%~~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.

On January 1, 2020, the Company entered into a four-year employment agreement with Gary, J. Grieco, its President and CEO, whereby Mr. Grieco will receive $48,000 per ~~annum pursuant~~year commencing April 1, 2020, and receive 15,000,000 shares of the Company’s common stock for services to the Company as its President and CEO. In addition, once monthly revenue exceeds monthly expenses the salary will be increased and Mr. Grieco will be issued an additional 10,000,000 shares of the Company’s common stock. The employment agreement begins on January 1, 2020, and is automatically renewable for two years unless terminated earlier as per the terms of three Securities Purchase Agreements between Power Up Lending Group Ltd. (“Power Up”), a Virginia corporation, and us (the “Power Up Agreements”). The Power Up Notes mature on June 5, 2019, July 25, 2019, and August 27, 2019 respectively (the “Maturity Dates”). We reimbursed Power Up $7,500 for its legal fees and paid Power Up a $1,500 due diligence fee, resulting in net proceeds to us from the ~~Power Up Notes of $65,000, $35,000, and $50,000 respectively.~~agreement.

The Power Up Notes may be prepaid in whole or in part, at any time during the period beginning on each Closing Date and ending on the date which is 180 days following the issue date, beginning at 112% of the outstanding principal and accrued interest increasing by 5% for every 30 day period thereafter until the 180^th ~~day following the Closing Date. After the expiration of the 180 days following the Closing Date, we may not prepay the Note for any reason.~~

At any time after 180 days after the date the Power Up Notes are issued, the Power Up Notes are convertible into our common stock, at Power Up’s option, at a 39% discount to the market price, which is defined as 61% of the average of the lowest three (3) closing bid prices for the our common stock during the fifteen (15) trading days prior to the conversion date. The conversion price is subject to proportional adjustment in the event of stock splits, stock dividends, and similar corporate events. Further, if we fail to deliver shares to Power Up upon conversion through willful or deliberate hindrance on our part we shall pay to Power Up $2,000 in cash per day as liquidated damages or, at Power Up’s option, such amount being added to the principal amount of the Power Up Notes.

Power Up has agreed to restrict its ability to convert the Power Up Notes and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The Power Up Notes are a debt obligation arising other than in the ordinary course of business, which constitutes a direct financial obligation of us. The Power Up Notes also provide for penalties and rescission rights if we do not deliver shares of common stock upon conversion within the required timeframes set forth in the Power Up Agreements. We must, at all times, reserve six times that number of shares that would be issuable upon full conversion of the Power Up Notes, with an initial reserved share amount of 1,592,506, 1,038,251, and 1,408,950 shares, respectively.

The Power Up Notes contain default events which, if triggered and not timely cured (if curable), will result in a default payment equal to 150% the amount owed to Power Up and a default interest at the rate of 22% per annum.

The above description of certain material terms of the Power Up Notes and Power Up Agreements are not a complete description of all terms of the financing transaction and is qualified in its entirety by reference to the Power Up Notes and Power Up Agreements, which are attached hereto as Exhibits 4.1, 4.2, 4.3, 10.6, 10.7, and 10.8, respectively.

2345

ITEM 6. 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)
3.1	Amended Articles of Incorporation increasing authorized shares (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed on October 25, 2019)
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 (Incorporated by reference to Exhibit 4.1 of Form 10-Q, filed on September 16, 2019)
4.2	Certificate of Designation of Series B – Super Voting Convertible Preferred Stock (Incorporated by reference to Exhibit 4.2 of Form 10-Q, filed on September 16, 2019)
4.3	Certificate of Designation of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed on October 25, 2019)
4.4	Power Up Note dated June 5, 2018 (Incorporated by reference to Exhibit 4.1 of Form 10-Q, filed August 20, 2018)
~~4.2~~4.5	Second Power Up Note dated July 25, 2018 (Incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018)
~~4.3~~4.6	Third Power Up Note dated August 27, 2018 (Incorporated by reference to Exhibit 4.3 of Form 10-Q, filed November 21, 2019)
4.7	Fourth Power Up Note dated December 5, 2018 (Incorporated by reference to Exhibit 4.6 of Form 10-Q, filed on September 16, 2019)
4.8	Fifth Power Up Note dated January 15, 2019 (Incorporated by reference to Exhibit 4.7 of Form 10-Q, filed on September 16, 2019)
4.9	Sixth Power Up Note dated February 22, 2019 (Incorporated by reference to Exhibit 4.8 of Form 10-Q, filed on September 16, 2019)
4.10	GS Capital Note dated January 16, 2019 (Incorporated by reference to Exhibit 4.9 of Form 10-Q, filed on September 16, 2019)
4.11	JSJ Note dated January 22, 2019 (Incorporated by reference to Exhibit 4.10 of Form 10-Q, filed on September 16, 2019)
4.12	EMA Note dated January 22, 2019 (Incorporated by reference to Exhibit 4.11 of Form 10-Q, filed on September 16, 2019)
4.13	Adar Note dated February 20, 2019 (Incorporated by reference to Exhibit 4.12 of Form 10-Q, filed on September 16, 2019)
4.14	Peak One Note dated February 21, 2019 (Incorporated by reference to Exhibit 4.13 of Form 10-Q, filed on September 16, 2019)
4.15	Auctus Note dated March 13, 2019 (Incorporated by reference to Exhibit 4.14 of Form 10-Q, filed on September 16, 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 ~~(Incorporated by reference to Exhibit 10.5 of Form 10-Q, filed May 21, 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)~~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 (Incorporated by reference to Exhibit 10.9 of Form 10-Q, filed on September 16, 2019)
10.10	Fifth Power Up Agreement dated January 15, 2019 (Incorporated by reference to Exhibit 10.10 of Form 10-Q, filed on September 16, 2019)
10.11	Sixth Power Up Agreement dated February 22, 2019 (Incorporated by reference to Exhibit 10.11 of Form 10-Q, filed on September 16, 2019)
10.12	GS Capital Agreement dated January 16, 2019 (Incorporated by reference to Exhibit 10.12 of Form 10-Q, filed on September 16, 2019)
10.13	JSJ Agreement dated January 22, 2019 (Incorporated by reference to Exhibit 10.13 of Form 10-Q, filed on September 16, 2019)
10.14	EMA Agreement dated January 22, 2019 (Incorporated by reference to Exhibit 10.14 of Form 10-Q, filed on September 16, 2019)
10.15	Adar Agreement dated February 20, 2019 (Incorporated by reference to Exhibit 10.15 of Form 10-Q, filed on September 16, 2019)
10.16	Peak One Agreement dated February 21, 2019 (Incorporated by reference to Exhibit 10.16 of Form 10-Q, filed on September 16, 2019)
10.17	Auctus Agreement dated March 13, 2019 (Incorporated by reference to Exhibit 10.17 of Form 10-Q, filed on September 16, 2019)
10.18†	Read Employment Agreement (Incorporated by reference to Exhibit 10.18 of Form 10-Q, filed on September 16, 2019)
10.19†	Read Addendum to Employment Agreement (Incorporated by reference to Exhibit 10.19 of Form 10-Q, filed on September 16, 2019)
10.20†	Grieco 2019 Employment Agreement (Incorporated by reference to Exhibit 10.20 of Form 10-Q, filed on September 16, 2019)
10.21†	Grieco 2020 Employment Agreement
31.1	Principal Executive Officer Certification
31.2	Principal Financial Officer Certification
32.1	Section 1350 Certification
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.

2446

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.

		PCT LTD


Date: ~~November 21, 2018~~April 13, 2020	By:	/s/~~F. Jody Read~~ Gary J. Grieco
		~~F. Jody Read,~~Gary J. Grieco, Principal Executive Officer, Principal Financial Officer
		Chief Executive Officer and Director
		~~Principal Financial Officer~~

2547

SUMMARY OF OPERATIONS	Three-month period ended September 30,
	(Unaudited)
	2018			2017
Revenues	$	41,124		$	58,123

Total operating expenses	$	950,454		$	537,005
Total other expense	$	(30,765	)	$	(21,654	)
Net loss	$	(940,095	)	$	(500,536	)
Basic and diluted loss per share	$	(0.02	)	$	(0.01	)