UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑

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

For the quarterly period ended~~September~~June 30, ~~2019~~2020

☐

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

4235 Commerce Street Little River, South Carolina	29566
(Address of principal executive offices)	(Zip Code)

(843) 390-7900

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during ~~the~~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 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:

Large accelerated filer☐

Non-accelerated filer☑

Accelerated filer☐

Smaller reporting company☑

Emerging growth company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

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

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

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

The number of shares outstanding of the registrant’s common stock as of ~~April 10,~~August 27, 2020 was ~~527,813,393~~598,982,574 which does not include ~~427,186,607~~400,267,426 shares of common stock reserved against ~~default/conversion~~ default on convertible debt and 750,000 shares for vesting of ~~convertible debt.~~executive shares.

TABLE OF CONTENTS

Part I – Financial Information		Page

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3322

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4025

Item 4.	Controls and Procedures	4025

Part II – Other Information

Item 1.	Legal Proceedings	4126

Item 1A.	Risk Factors	4127

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4127

Item 3.	Defaults Upon Senior Securities	4528

Item 4.	Mine Safety Disclosures	4528

Item 5.	Other Information	4528

Item 6.	Exhibits	4729

	Signatures	4830

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The financial information set forth below with respect to our statements of operations, stockholders’ equity (deficit), and cash flows for the ~~nine month~~three and six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 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 ~~nine month~~three and six-month periods ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 are not necessarily indicative of results to be expected for any subsequent period.

PCT LTD

~~Condensed~~ Consolidated Balance Sheets

							June 30, 2020			December 31, 2019
	September 30, 2019			December 31, 2018				(Unaudited)
ASSETS		(Unaudited)
CURRENT ASSETS
Cash	$	6,669		$	4,893
Accounts receivable		103,872			49,140
Inventory		4,803			7,105
Cash and cash equivalents							$	29,260		$	67,613
Accounts receivable, net								319,128			111,915
Prepaid expenses		44,980			218,494			51,395			43,100
Other current assets		2,110			2,110			17,110			2,110
Total current assets		162,434			281,742			416,893			224,738

PROPERTY AND EQUIPMENT
Property and equipment, net		446,346			499,972			401,233			440,109

OTHER ASSETS
Intangible assets, net		3,782,652			4,059,775			3,552,267			3,704,429
Operating lease right-of-use asset		7,878			—
Deposits		5,499			5,499			2,526			5,499
Total other assets		3,796,029			4,065,274			3,554,793			3,709,928

TOTAL ASSETS	$	4,404,809		$	4,846,988		$	4,372,919		$	4,374,775

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable	$	359,817		$	350,593		$	447,805		$	315,228
Accrued expenses – related parties		72,137			54,033			98,311			84,538
Accrued expenses		670,872			362,436			912,393			890,104
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
Notes payable – related parties, net								826,214			826,957
Notes payable, net								408,617			468,153
Convertible notes payable, net								980,254			1,187,633
Derivative liability		5,538,198			322,976			18,419,365			10,517,873
Preferred series A stock liability		—			144,352
Total current liabilities		9,097,175			1,888,334			22,092,959			14,290,486

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			22,092,959			14,290,486

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			—
Preferred series A stock, $0.001 par value; 1,000,000 authorized; 500,000 and 500,000 issued and outstanding at June 30, 2020 and December 31, 2019, respectively								60,398			60,398
Preferred series B stock, $0.001 par value; 1,000,000 authorized; 1,000,000 and 1,000,000 issued and outstanding at June 30, 2020 and December 31, 2019, respectively								158,247			158,247
Preferred series C stock, $0.001 par value; 5,500,000 authorized; 440,000 and nil issued and outstanding at June 30, 2020 and December 31, 2019, respectively								484,000			—
TOTAL MEZZANINE EQUITY		215,398			—			702,645			218,645

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
STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value; 1,000,000,000 authorized; 584,201,486 and 498,880,300 issued and outstanding at June 30, 2020 and December 31, 2019, respectively								584,202			498,881
Additional paid-in-capital		14,971,340			11,588,030			18,056,637			15,872,330
Accumulated deficit		(20,141,465	)		(9,927,003	)		(37,063,524	)		(26,505,567	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		(4,907,764	)		1,705,587
TOTAL STOCKHOLDERS’ DEFICIT								(18,422,685	)		(10,134,356	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	4,404,809		$	4,846,988
TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT							$	4,372,919		$	4,374,775

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 June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
REVENUES
Product	$	110,739		$	13,624		$	209,578		$	86,837		$	582,389		$	11,745		$	745,037		$	98,839
Licensing		29,500			8,000			108,000			8,000			77,000			34,000			84,000			78,500
Equipment leases		79,794			19,500			217,274			58,500			221,783			73,117			324,317			137,480
Total Revenue		220,033			41,124			534,852			153,337
Total Revenues														881,172			118,862			1,153,354			314,819

OPERATING EXPENSES
General and administrative		468,897			827,168			1,554,992			1,885,962			592,042			415,339			1,140,828			1,082,303
Research and development														5,000			3,792			5,000			3,792
Cost of product, licensing and equipment leases		51,483			39,216			148,214			59,690			415,855			24,077			564,705			96,731
Depreciation and amortization		84,467			84,070			253,568			250,928			81,348			84,189			164,369			169,101
Total operating expenses		604,847			950,454			1,956,774			2,196,580			1,094,245			527,397			1,874,902			1,351,927

Net loss before other expenses		(384,814	)		(909,330	)		(1,421,922	)		(2,043,243	)
Loss from operations														(213,073	)		(408,535	)		(721,548	)		(1,037,108	)

OTHER INCOME (EXPENSES)
OTHER INCOME (EXPENSE)
Loss on change in fair value of derivative liability		(4,169,978	)		—			(7,121,619	)		—			(1,092,845	)		(2,789,342	)		(10,387,607	)		(2,951,641	)
Gain (loss) on change in fair value of preferred series A stock liability		—			—			72,473			—			—			(3,004	)		—			72,473
Gain on sale of intangible assets		—			—			52,498			—			—			52,498			—			52,498
Gain on sale of equipment		—			16,185			—			16,185
Gain (Loss) on settlement of debt		16,706						(67,703	)		—
Gain (loss) on settlement of debt														1,759,539			—			1,715,539			(84,409	)
Interest expense		(1,225,906	)		(46,950	)		(1,728,189	)		(112,398	)		(459,930	)		(381,764	)		(894,341	)		(502,283	)
Total other income (expenses)		(5,379,178	)		(30,765	)		(8,792,540	)		(96,213	)
Total other income (expense)														206,764			(3,121,612	)		(9,566,409	)		(3,413,362	)

Loss from operations before Income taxes		(5,763,992	)		(940,095	)		(10,214,462	)		(2,139,456	)
Loss before Income taxes														(6,309	)		(3,530,147	)		(10,287,957	)		(4,450,470	)

Income taxes		—			—			—			—			—			—			—			—

NET LOSS	$	(5,763,992	)	$	(940,095	)	$	(10,214,462	)	$	(2,139,456	)	$	(6,309	)	$	(3,530,147	)	$	(10,287,957	)	$	(4,450,470	)
Preferred series C stock deemed dividends														—			—			(270,000	)		—
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS’													$	(6,309	)	$	(3,530,147	)	$	(10,557,957	)	$	(4,450,470	)

Basic and diluted net loss per share	$	(0.03	)	$	(0.02	)	$	(0.10	)	$	(0.05	)	$	(0.00	)	$	(0.07	)	$	(0.02	)	$	(0.09	)

Basic and diluted weighted average shares outstanding		206,524,228			44,448,368			102,223,061			43,184,183			569,964,666			52,755,139			557,809,456			49,208,103

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,
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)~~(deficit)

For the Three and Six Months Ended June 30, 2020 and 2019

(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

					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 for the three-months ended March 31, 2019		—		—		—		(920,323	)		(920,323	)
Balance – March 31, 2019		50,518,048	$	50,518	$	12,486,394	$	(10,847,326	)	$	1,689,586
Stock-based compensation		—		—		23,125		—			23,125
Common stock issued in conversion of convertible notes payable		26,341,913		26,342		261,034		—			287,376
Net loss for the three-months ended June 30, 2020		—		—		—		(3,530,147	)		(3,530,147	)
Balance – June 30, 2019		76,859,961	$	76,860	$	12,770,553	$	(14,377,473	)	$	(1,530,060	)

					Additional					Total Stockholders’
	Common Stock				Paid-in		Accumulated			Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance – December 31, 2019		498,880,300	$	498,881	$	15,872,330	$	(26,505,567	)	$	(10,134,356	)
Common stock issued for services		15,525,000		15,525		103,538		—			119,063
Common stock issued in settlement of debt		250,000		250		7,975		—			8,225
Common stock issued in conversion of convertible notes payable		36,050,000		36,050		360,660		—			396,710
Beneficial conversion feature on preferred series C stock		—		—		270,000		(270,000	)		—
Net loss for the three-months ended March 31, 2020		—		—		—		(10,281,648	)		(10,281,648	)
Balance – March 31, 2020		550,705,300	$	550,706	$	16,614,503	$	(37,057,215	)	$	(19,892,006	)
Common stock issued for cash		4,250,000		4,250		135,750		—			140,000
Stock-based compensation		—		—		14,182		—			14,182
Common stock issued in settlement of debt		15,000,000		15,000		826,500		—			841,500
Common stock issued in cashless exercise of warrants		9,246,186		9,246		420,702		—			429,948
Common stock issued in conversion of preferred series C stock		5,000,000		5,000		45,000		—			50,000
Net loss for the three-months ended June 30, 2020		—		—		—		(6,309	)		(6,309	)
Balance – June 30, 2020		584,201,486	$	584,202	$	18,056,637	$	(37,063,524	)	$	(18,422,685	)

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 Six Months Ended June 30,
	2020			2019
Cash Flows from Operating Activities
Net loss	$	(10,287,957	)	$	(4,450,470	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		164,369			169,101
Amortization of debt discounts		280,188			300,703
Amortization of operating lease right-of-use asset		—			23,635
Common stock issued for services		133,245			122,052
Loss on change in fair value of derivative liability		10,387,607			2,951,641
Gain on change in fair value of preferred series A stock liability		—			(72,473	)
(Gain) loss on settlement of debt		(1,715,539	)		84,409
Gain on sale of intangible assets		—			(52,498	)
Default penalties on convertible notes payable		13,762			87,500
Changes in operating assets and liabilities:
Accounts receivable		(207,213	)		(81,166	)
Inventory		26,669			644
Prepaid expenses		(8,295	)		177,475
Other assets		(12,027	)		—
Operating lease liability		—			(21,626	)
Accounts payable		132,577			59,265
Accrued expenses – related party		13,773			8,245
Accrued expenses		620,188			215,811
Contract liabilities		—			24,532
Net cash used in operating activities		(458,653	)		(453,220	)

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

Cash Flows from Financing Activities
Proceeds from notes payable – related parties		3,500			2,544
Proceeds from notes payable		155,525			88,600
Proceeds from convertible notes payable		413,000			460,750
Proceeds from common stock subscriptions		140,000			—
Proceeds from preferred series C stock subscriptions		270,000			—
Repayments of notes payable – related parties		(4,286	)		(16,044	)
Repayments of notes payable		(245,551	)		(9,209	)
Repayments of convertible notes payable		(311,888	)		(91,000	)
Net cash provided by financing activities		420,300			435,641

Net change in cash		(38,353	)		32,405
Cash and cash equivalents at beginning of period		67,613			4,893
Cash and cash equivalents at end of period	$	29,260		$	37,298

Supplemental Cash Flow Information
Cash paid for interest	$	53,645		$	51,639
Cash paid for income taxes	$	—		$	—

Non-Cash Investing and Financing Activities:
Preferred series C stock deemed dividend	$	270,000		$	—
Original debt discounts against notes payable	$	23,917		$	10,204
Original debt discounts against convertible notes payable	$	197,888		$	395,125
Modification of notes payable	$	—		$	20,590
Common stock issued in conversion of convertible notes payable	$	396,710		$	287,376
Common stock issued in cashless exercise of warrants	$	429,948		$	—
Common stock issued in conversion of preferred series C stock	$	50,000		$	—
Accounts receivable netted against notes payable	$	—		$	18,000
Initial operating lease right-of-use asset and liability	$	—		$	43,330
Preferred series A stock reclassification from liability to mezzanine equity	$	—		$	60,398
Property plant and equipment transferred to inventory	$	26,669		$	—

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~~June 30, ~~2019~~2020

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

The unaudited interim condensed consolidated financial statements of PCT LTD (the “Company”) have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of our balance ~~sheet,~~sheets, 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, ~~2018~~2019 audited financial statements as reported in its Form 10-K, filed on August 3, 2020.

COVID-19

In December 2019 COVID-19 emerged in Wuhan, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to almost all other countries, including the United States, and infections have been reported globally. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future.

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on our business, financial condition and results of operations. The significance of the impact of the COVID-19 outbreak on the Company’s businesses and the duration for which it may have an impact cannot be determined at this time. At a minimum, the COVID-19 pandemic caused the Company to restrict travel of its personnel and to initiate distributor installations of certain of the Company’s equipment, as possible. The Company adapted to the immediate need for its US EPA registered disinfectant at the end of March and beginning of April, ~~15, 2019.~~

2020, by installing greater storage reserves and by assembling more of it higher-volume equipment to produce the hospital grade disinfectant known as Hydrolyte®. There were hard costs associated with these adaptations to the Little River, SC facility, but the Company continues to benefit from its fluid production capacities over the longer term. As the Federal, state and other restrictions associated with the pandemic have lessened, the Company is able to act more effectively in obtaining new contracts for its healthcare equipment, the Annihilyzer® and other equipment.

Nature of Operations

PCT LTD (formerly Bingham Canyon Corporation, (the “Company,” “PCT Ltd,” or “Bingham”), a Delaware corporation, was formed on ~~August~~February 27, 1986. The Company changed its domicile to Nevada on August 26, ~~1999.~~1998. The Company acquires, develops and provides sustainable, environmentally safe disinfecting, cleaning and tracking technologies. The Company specializes in providing cleaning, sanitizing, and disinfectant fluid solutions and fluid-generating equipment that creates environmentally safe solutions for global sustainability.

On August 31, 2016, the Company entered into a Securities Exchange Agreement with Paradigm Convergence Technologies Corporation (“Paradigm”) to affect the acquisition of Paradigm as a wholly-owned subsidiary. Under the terms of the agreement, Bingham issued 16,790,625 restricted common shares of Bingham stock to the shareholders of Paradigm in exchange for all 22,387,500 outstanding common shares of Paradigm stock. In addition, Bingham issued options exercisable into 2,040,000 shares of the 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 share exchange agreement, Paradigm, the operating company, is considered the accounting acquirer.

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

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

~~Principles of Consolidations~~Significant Accounting Policies

The accompanying consolidated financial statements include the accounts of PCT LTD (“Parent”) and its wholly owned subsidiary, Paradigm Convergence Technologies Corporation (“Paradigm” or “Subsidiary”). All intercompany accounts

There have been ~~eliminated upon consolidation.~~

~~Use of Estimates~~

~~The preparation~~no changes to the significant accounting policies of the ~~condensed consolidated financial statements requires management to make estimates and assumptions that affect~~Company from the ~~reported amounts of assets and liabilities and the disclosure of contingencies at the date~~information provided in Note 1 of the ~~financial statements as well as~~Notes to the ~~reported amounts of revenues and expenses during~~Consolidated Financial Statements in 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.Company's most recent Form 10-K.

~~Cash and Cash Equivalents~~Reclassification

~~Cash~~

Certain balances on the previously issued statements of operations and cash ~~equivalents are considered~~flows have been reclassified to be ~~cash and highly liquid securities~~consistent with ~~original maturities of three months~~the current period presentation. The reclassification had no impact on total financial position, net loss, or less. The cash of $6,669 and $4,893 as of September 30, 2019 and December 31, 2018, respectively, represents cash on deposit in various bank accounts. There were no cash equivalents as of September 30, 2019 and December 31, 2018.stockholders’ equity (deficit).

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 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.

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.

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 and liabilities carried at fair value measured on a recurring basis as of ~~September~~June 30, ~~2019,~~2020, consisted of the following:

									Total fair value at June 30, 2020 $		Quoted prices in active markets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $
	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		18,419,365		—		—		18,419,365
Total		5,538,198		—		—		5,538,198		18,419,365		—		—		18,419,365

Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, ~~2018,~~2019, 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

	Total fair value at December 31, 2019 $		Quoted prices in active markets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $

Description:
Derivative liability (1)		10,517,873		—		—		10,517,873
Total		10,517,873		—		—		10,517,873

(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, 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.

109

~~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 fair value. Under similar analysis no impairment was recorded during the nine months ended September 30, 2019.

~~Intangible Assets~~

Costs to obtain or develop patents are capitalized and amortized over the remaining life of the patents, and technology rights are amortized over their estimated useful lives. The Company currently has the right to several patents and proprietary technology. Patents and technology are amortized from the date the Company acquires or is awarded the patent or technology right, over their estimated useful lives, 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.

~~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 a process is completed and the process has been determined to be commercially viable.

~~Leases~~

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

~~Revenue Recognition~~

~~On May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customer (Topic 606)~~. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. 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 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.

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

Basic and Diluted Loss 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~~June 30, ~~2019,~~2020, there were outstanding common share equivalents (options, warrants, convertible ~~debt~~notes payable, preferred series A stock and preferred series AC stock) which amounted to ~~960,689,801~~573,019,281 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

In August 2018, the FASB issued Accounting Standards Update No. 2018-13 (“ASU 2018-13”), Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements relating to fair value measurements as outlined in Topic 820, Fair Value Measurement. ASU 2018-13 is applicable to all entities that are required, under GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments outlined in ASU 2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted for any removed or modified disclosures upon issuance of ASU 2018-13. The Company ~~has reviewed all other FASB issued~~adopted ASU ~~accounting pronouncements~~2018-13 on January 1, 2020 and ~~interpretations thereof that have effective dates during~~ the ~~period reported and in future periods. The Company has carefully considered the new pronouncements that alter the previous GAAP and do~~adoption of ASU 2018-13 did not ~~believe that any new or modified principles will~~ have a material ~~impact~~effect on the ~~Company’s reported~~consolidated financial ~~position or operations in the near term.~~statements.

NOTE 2. GOING CONCERN

The accompanying ~~unaudited~~consolidated 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~~an accumulated deficit of ~~$20,141,465~~$37,063,524 and has negative cash flows from operations. As of ~~September~~June 30, ~~2019,~~2020, the Company had a working capital deficit of ~~$8,934,741.~~$21,676,066. 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.

1210

NOTE 3. PROPERTY AND EQUIPMENT

~~Depreciation expense was $18,947 and $18,644 for the nine months ended September 30, 2019 and 2018, respectively.~~ Property and equipment at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 consisted of the following:

	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Machinery and leased equipment	$	151,719		$	138,209		$	151,719		$	151,719
Machinery and equipment not yet in service		321,565			369,754			294,896			321,565
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	$	496,108		$	530,787		$	469,439		$	496,108
Less: Accumulated Depreciation		(49,762	)		(30,815	)		(68,206	)		(55,999	)

Property and equipment, net		446,346			499,972			401,233			440,109

~~On July~~Depreciation expense was $12,207 and $12,701 for the six-months ended June 30, 2020 and 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.respectively.

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 range from 1 to 15 years. Amortization expense was $234,621 and $232,284 for the nine months ended September 30, 2019 and 2018, respectively. Intangible assets at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 consisted of the following:

	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Patents	$	4,505,489		$	4,514,989		$	4,505,489		$	4,505,489
Technology rights		200,000			235,500			200,000			200,000
Intangible, at cost		4,705,489			4,750,489
Intangibles, at cost								4,705,489			4,705,489
Less: Accumulated amortization		(922,837	)		(690,714	)		(1,153,222	)		(1,001,060	)
Net Carrying Amount	$	3,782,652		$	4,059,775		$	3,552,267		$	3,704,429

Amortization expense was $152,162 and $156,400 for the six-months ended June 30, 2020 and 2019, respectively.

Estimated Future Amortization Expense:

	$
For year ending December 31, ~~2019~~2020 - remaining		~~76,947~~
~~For year ending December 31, 2020~~		~~303,613~~151,002
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~~302,003
For year ending December 31, 2024		302,003
Thereafter		2,193,253
Total		~~3,782,652~~3,552,267

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.

~~NOTE 5 – LEASES~~

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

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

~~The following table sets forth the ROU assets and liabilities as of 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

1411

NOTE 6.5. Notes Payable

The following tables summarize notes payable as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

Type 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 (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) $ 52,063 4/8/2020 4/8/2020 41.38 % $ 42,854 $ —
Note Payable (d) $ 40,000 6/20/2019 12/31/2019 8.00 % $ 40,000 $ —
Note Payable (e) $ 6,741 6/21/2019 4/8/2020 41.38 % $ 6,741 $ —
Note Payable (d) $ 90,596 9/15/2019 3/16/2020 8.00 % $ 90,596 $ —
Subtotal $ 284,420 $ 529,664
Debt Discount $ (6,320 ) $ (3,293 )
Balance, net $ 278,100 $ 526,371
Less current portion $ (278,100 ) $ (399,664 )
Total long-term $ —   $ 126,707

***  Currently in default

Type	Original Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at June 30, 2020				Balance at December 31, 2019
Note Payable **		$	25,000		05/08/2017		06/30/2018		0	%		$	27,500			$	27,500
Note Payable **		$	130,000		06/20/2018		01/02/2020		8	%		$	112,500			$	130,000
Note Payable **		$	8,700		11/15/2018		06/30/2019		10	%		$	8,700			$	8,700
Note Payable (e)		$	90,596		09/15/2019		05/28/2020		8	%		$	—			$	90,596
Note Payable (k)		$	50,000		10/03/2019		04/03/2020		12	%		$	—			$	37,500
Note Payable (e)		$	17,500		11/12/2019		11/12/2020		8	%		$	—			$	17,500
Note Payable **		$	83,400		12/20/2019		06/19/2020		150	%		$	38,491			$	80,192
Note Payable		$	148,362		12/20/2019		11/27/2020		80	%		$	68,496			$	145,404
Note Payable (a)		$	25,782		01/08/2020		05/13/2020		313	%		$	—			$	—
Note Payable (b)		$	33,660		02/19/2020		04/30/2020		585	%		$	—			$	—
Note Payable (c)(e)		$	20,000		02/28/2020		05/28/2020		8	%		$	—			$	—
Note Payable (d)		$	100,000		03/31/2020		08/01/2020		30	%		$	50,000			$	—
Note Payable (e)		$	118,644		05/05/2020		05/05/2021		8	%		$	118,644			$	—
Subtotal												$	424,331			$	537,392
Debt discount												$	(15,714	)		$	(69,239	)
Balance, net												$	408,617			$	468,153
Less current portion												$	(408,617	)		$	(468,153	)
Total long-term												$	—			$	—

** Currently in default

On January ~~28, 2019,~~8, 2020, 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~~sold future receivables with a non-related party for ~~$52,063~~up to $87,540. During the period $25,782 was sold, of which ~~$9,563~~$10,207 was ~~the~~ loan ~~fee or~~fees and original issue discount resulting in cash proceeds to the Company of ~~$42,500.~~$15,575. The advance was repaid through $1,450 weekly payments. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and inventory. This note ~~is due on April 8, 2020 and results in an annual percentage rate of 41.38%.~~was repaid during the period.

d)b)

On ~~June 20, 2019~~February 19, 2020, the Company sold future receivables with a non-related party for $33,660, of which $13,710 was loan fees and original issue discount resulting in cash proceeds to the Company of $19,950. The advance was repaid through $660 daily payments. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and inventory. This note was repaid during the period.

On February 28, 2020, the Company entered into a promissory note with a non-related party for ~~$40,000.~~$20,000. The note is due ~~December 31, 2019,~~May 28, 2020, is unsecured and bears an interest rate of 8% per annum. On ~~September 15, 2019,~~May 5, 2020, the Company ~~received an additional $50,000 from~~consolidated this note with two others as described in Note 6(e).

On March 31, 2020, the ~~lender and issued~~Company entered into a ~~new~~ promissory note with a non-related party for ~~$90,596 which was equal to the original $40,000 note, $596 of accrued interest and the additional $50,000 advanced.~~$100,000. The ~~promissory~~ note is due ~~March 16,~~August 1, 2020, is unsecured and bears an interest ~~rate~~at $2,500 per month, repayable in four monthly payments of ~~8% per annum.~~$27,500 commencing May 1, 2020. Additionally, the Company issued the lender 250,000 shares of the Company’s common stock with a fair market value of $8,225 as additional consideration for the loan. During the period, the Company repaid $50,000 of the note.

On ~~June 21, 2019,~~May 5, 2020, the Company ~~entered~~consolidated three notes with principal amounts of $90,596, $17,500 and $20,000 as well as accrued interest into a ~~promissory bank loan~~new note with a ~~non-related party for $6,741~~principal amount of ~~which $641 was~~$118,644 and a maturity date of May 5, 2021. The note bears interest at 8% per annum and in connection with the ~~loan fee or original issue discount resulting in cash proceeds to~~consolidation the Company issued the lender 15,000,000 shares of ~~$6,100. The note is due~~the Company’s common stock with a fair value of $841,500. As the instruments were substantially different, the old notes were considered to be extinguished and the Company recognized a loss on ~~April 8, 2020 and results in an annual percentage rate~~settlement of ~~41.38%.~~debt of $826,500.

1512

The following table summarizes notes payable, related parties as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

Type	Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at September 30, 2019				Balance at December 31, 2018				Original Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at June 30, 2020				Balance at December 31, 2019
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 **																				$	30,000		04/10/2018		01/15/2019		3	%		$	30,000			$	30,000
Note Payable, RP **																				$	380,000		06/20/2018		01/02/2020		8	%		$	380,000			$	380,000
Note Payable, RP **																				$	350,000		06/20/2018		01/02/2020		5	%		$	322,214			$	325,000
Note Payable, RP **																				$	17,000		06/20/2018		01/02/2020		5	%		$	17,000			$	17,000
Note Payable, RP **																				$	50,000		07/27/2018		11/30/2018		8	%		$	50,000			$	50,000
Note Payable, RP		$	5,000		10/9/2018		Demand		0.00	%		$	5,000			$	5,000			$	5,000		10/09/2018		Demand		0	%		$	5,000			$	5,000
Note Payable, RP		$	5,000		10/19/2018		Demand		0.00	%		$	5,000			$	5,000			$	5,000		10/19/2018		Demand		0	%		$	5,000			$	5,000
Note Payable, RP **		$	3,000		10/24/2018		Demand		0.00	%		$	—			$	3,000			$	15,000		08/16/2019		02/16/2020		8	%		$	15,000			$	15,000
Note Payable, RP (f)**		$	2,544		1/3/2019		6/30/2019		3.00	%		$	—			$	—
Note Payable, RP (f)																				$	1,500		02/11/2020		Demand		0	%		$	—			$	—
Note Payable, RP (g)		$	15,000		8/16/2019		2/16/2020		8.00	%		$	15,000				—			$	2,000		02/11/2020		Demand		0	%		$	2,000			$	—
Subtotal												$	837,500			$	840,000													$	826,214			$	827,000
Debt Discount												$	(2,614	)		$	(13,174	)
Debt discount																														$	—			$	(43	)
Balance, net												$	8,34,886			$	826,826													$	826,214			$	826,957
Less current portion												$	(834,886	)		$	(93,000	)												$	(826,214	)		$	(826,957	)
Total long-term												$	—			$	733,826													$	—			$	—
Paid off during the period *Currently in default

** Currently in default

On ~~January 3, 2019,~~February 11, 2020, the Company entered into a promissory note with the Chairman and ~~President~~CEO of the Company for ~~$2,544.~~$1,500. The note is due ~~September 30, 2019,~~on demand, is unsecured and bears an interest rate of ~~3.0%~~0% per annum. ~~At September 30, 2019, the remaining balance of this~~The note was ~~$0.~~repaid during the period.

On ~~August 16, 2019,~~February 11, 2020, the Company entered into a promissory note with athe COO and Director of the Company for ~~$15,000.~~$2,000. The note is due ~~February 16, 2020,~~on demand, is unsecured and bears an interest rate of ~~8.0%~~0% per annum.

1613

The following table summarizes convertible notes payable as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018:~~2019:

Type Amount
Origination
Date
Maturity
Date
Annual
Interest
Rate
Balance at
September 30,
2019
Balance at
December 31, 2018
Convertible Note Payable (h) $ 450,000 3/28/2018 3/31/2021 8.00 % $ —   $ 450,000
Convertible Note Payable ** $ 38,000 7/30/2018 7/25/2019 12.00 % $ —   $ 38,000
Convertible Note Payable ** $ 53,000 8/29/2018 8/27/2019 12.00 % $ —   $ 53,000
Convertible Note Payable (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) $ 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 $ 1,334,040 $ 719,000
Debt Discount $ —   $ (165,186 )
Balance, net $ 1,334,040 $ 553,814
Less current portion $ (1,334,040 ) $ (161,280 )
Total long-term $ —   $ 392,534
* Embedded conversion feature accounted for as a derivative liability
** Paid off during the period

Type	Original Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at June 30, 2020				Balance at December 31, 2019
Convertible Note Payable (h) * **		$	50,000		12/06/2018		12/06/2019		12	%		$	5,685			$	22,777
Convertible Note Payable * **		$	65,000		12/06/2018		12/06/2019		12	%		$	46			$	46
Convertible Note Payable (i) * **		$	100,000		01/18/2019		01/16/2020		24	%		$	105,041			$	95,492
Convertible Note Payable (r)		$	60,000		01/29/2019		01/22/2020		18	%		$	—			$	266,050
Convertible Note Payable * **		$	50,000		02/01/2019		10/22/2019		24	%		$	154,330			$	154,330
Convertible Note Payable (o)		$	60,000		02/21/2019		02/14/2022		0	%		$	—			$	74,000
Convertible Note Payable (j) * **		$	55,125		02/21/2019		02/20/2020		24	%		$	46,338			$	42,125
Convertible Note Payable * **		$	75,000		03/18/2019		12/13/2019		24	%		$	232,814			$	232,814
Convertible Note Payable (o)		$	26,000		09/16/2019		09/11/2022		0	%		$	—			$	26,000
Convertible Note Payable (k)		$	175,814		09/27/2019		09/25/2020		8	%		$	—			$	175,814
Convertible Note Payable		$	53,000		10/08/2019		10/07/2020		12	%		$	—			$	53,000
Convertible Note Payable		$	50,000		10/31/2019		10/29/2020		12	%		$	—			$	50,000
Convertible Note Payable (l)		$	8,888		02/19/2020		02/18/2021		12	%		$	—			$	—
Convertible Note Payable (m) * **		$	30,000		03/06/2020		03/05/2021		12	%		$	30,000			$	—
Convertible Note Payable (n)		$	45,000		03/09/2020		03/02/2021		12	%		$	45,000			$	—
Convertible Note Payable (p) * **		$	150,000		04/10/2020		04/09/2021		12	%		$	150,000			$	—
Convertible Note Payable (q)		$	128,000		04/16/2020		04/09/2021		12	%		$	128,000			$	—
Convertible Note Payable (s)		$	83,000		05/12/2020		11/08/2021		12	%		$	83,000			$	—
Subtotal												$	980,254			$	1,192,448
Debt discount												$	—			$	(4,815	)
Balance, net												$	980,254			$	1,187,633
Less current portion												$	(980,254	)		$	(1,187,633	)
Total long-term												$	—			$	—
* Embedded conversion feature accounted for as a derivative liability at period end ** Currently in default

~~On January 15, 2019,~~During the ~~Company executed a new, consolidated~~period ended June 30, 2020, $17,092 of principal and $3,507 of interest of the convertible note with a non-related party by extinguishing the March 28, 2018 convertible note in the amount of $450,000 with interest due of $28,898 and a $60,000 term note, dated October 31, 2018 with interest due of $1,038. The new convertible note is in the amount of $539,936, is due on or before January 15, 2022, has an 8% per annum interest rate and may bepayable was converted into 36,050,000 shares of the Company’s common stock.

During the period ended June 30, 2020, the Company was further assessed default penalties and interest on this convertible note as the note reached maturity. Additional default and penalties were assessed in the amount of $118,295 of which $9,549 was recorded as a principal addition and $108,746 was recorded in accrued interest. to the note.

On February 7, 2020, the Company extinguished both promissory note (totaling $39,000) and convertible note (totaling $181,000), including accrued interest with a non-related party through the issuance of 220,000 shares of preferred series C stock. The Company recorded the difference between the fair value of the preferred series C stock ~~at $0.20 per share.~~of $264,000 and the debt outstanding of $220,000 as a loss on extinguishment of debt of $44,000.

On February 19, 2020, the Company received another tranche on a convertible note originally dated December 6, 2018. The new tranche had a principal amount of $8,888, with an original issue discount of $888. The convertible note ~~incorporates~~is due 365 days from issuance, bears interest at 12% per annum and is convertible into common shares of the Company at 65% multiplied by the lowest traded price or lowest closing bid price during the 25 days the Company’s stock is tradable prior to the conversion date. Further, if at any time the stock price is less than $0.30 an ~~anti-dilution feature~~additional 20% discount is applied and if at any time the conversion price is less than $0.01 and additional 10% is applied. Further, an additional 15% is applied if the Company ~~issues more than 60,000,000 shares of~~fails to comply with its ~~common stock.~~ reporting requirements. During the period, all these additional discounts were triggered.

The embedded conversion option qualified for derivative accounting and bifurcation under ASC ~~815-15 Derivatives and Hedging.~~815-15. The initial fair value of the conversion feature was ~~$292,651. The company recorded~~$70,719 and resulted in a ~~loss on extinguishment of debt of $350,117 equal~~discount to the note payable of $8,000 and an initial ~~fair value~~derivative expense of ~~derivative liability on~~$62,719.

During the ~~new note and~~period ended June 30, 2020, the ~~previous unamortized debt discount balance of one the old notes.~~entire amount was repaid.

On March ~~27, 2019,~~6, 2020, the Company ~~agreed to convert $548,686 of principal ($539,936) and interest ($8,750) of its~~received another tranche on a convertible note ~~payable~~originally dated December 6, 2018. The new tranche had a principal amount of $30,000, with an original issue discount of $4,000. The convertible note is due 365 days from issuance, bears interest at 12% per annum and is convertible into ~~3,597,989~~common shares of the Company at 65% multiplied by the lowest traded price or lowest closing bid price during the 25 days the Company’s ~~common stock. The company recorded a gain on settlement of debt of $359,857 equal~~stock is tradable prior to the ~~difference between both~~conversion date. Further, if at any time the ~~fair value of~~stock price is less than $0.30 an additional 20% discount is applied and if at any time the ~~common shares of $523,867~~conversion price is less than $0.01 and additional 10% is applied. Further, an additional 15% is applied if the Company fails to comply with its reporting requirements. During the period, all these additional discounts were triggered.

The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15. The initial fair value of the conversion feature ~~at conversion of $335,038 compared~~was $391,837 and resulted in a discount to the ~~carrying value~~note payable of ~~the note~~$26,000 and ~~interest.~~

an initial derivative expense of $365,837.

During the 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. During the nine months ended September 30, 2019, $44,723 of principal ($42,223) and interest ($2,500) of the convertible note payable was converted into 76,154,631 shares of the Company’s common stock.

j)n)

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,~~On March 9, 2020, the Company entered into a convertible promissory with a non-related party for ~~$63,000~~$45,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of ~~$60,000.~~$42,000. The note is due on December 5, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum. Any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days (June 10, 2019) of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the average 3 lowest trading prices during the 15-trading day period prior to the conversion date.

One June 10, 2019, the embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature was $142,265 and resulted in a discount to the note payable of $60,000 and an initial derivative expense of $82,265. On June 19, 2019, the Company defaulted on the note, resulting in a default penalty of $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, 2020March 2, 2021 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from ~~12%~~15% to ~~37%~~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 June 19, 2019, the Company defaulted on~~As the note ~~resulting in the note becoming immediately~~isn’t convertible ~~and a default penalty~~until 180 days following issuance, no derivative liability was recognized as of ~~$16,500 added to the principal of the note.~~

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

30, 2020.

m)o)

On ~~January 18, 2019,~~April 1, 2020, the Company entered into a settlement agreement to settle convertible notes with principal amounts of convertible notes. The Company agreed to pay $100,000 to settle the principal and accrued interest and penalties relating to the two convertible notes. The Company recorded a gain on settlement of debt of $312,269.

On April 10, 2020, the Company entered into a convertible promissory note with a non-related party for ~~$100,000~~$150,000 of which $5,000 was an original issue discount and $5,000 was paid directly to third parties resulting in cash proceeds to the Company of $90,000. The note is due on January 16, 2020 and bears interest on the unpaid principal balance at a rate of 8% per annum. Stringent pre-payment terms apply (from 10% to 30%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 24% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 64% of the average 2 lowest trading prices during the 10-trading day period prior to the conversion date.

On July 17, 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 $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 to interest expense. During the nine months ended September 30, 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.

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~~$18,000 was an original issue discount resulting in cash proceeds to the Company of ~~$45,000.~~$132,000. The note is due on ~~October 22, 2019~~April 9, 2021 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%~~to 65% of the lowest trading price during the ~~20-trading~~25-trading day period prior to the conversion date. ~~As the closing sales price fell below $0.03,~~Further, an additional 15% is applied if the Company fails to comply with its reporting requirements. During the period, this additional 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.~~

triggered.

The embedded conversion option qualified for derivative accounting and bifurcation under ASC ~~815-15 Derivatives and Hedging.~~815-15. The initial fair value of the conversion feature was ~~$158,142~~$507,847 and resulted in a discount to the note payable of ~~$50,000~~$132,000 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.

$375,847.

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 ~~February 26, 2019,~~April 16, 2020, the Company entered into a convertible promissory with a non-related party for ~~$53,000~~$128,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of ~~$50,000.~~$125,000. The note is due on ~~February 20, 2020~~April 9, 2021 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from ~~12%~~15% to ~~37%~~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 June 19, 2019, the Company defaulted on~~As the note ~~resulting in the note becoming immediately~~isn’t convertible ~~and a default penalty~~until 180 days following issuance, no derivative liability was recognized as of ~~$26,500 added to the principal of the note.~~June 30, 2020.

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.

On May 11, 2020, the Company entered into a settlement agreement to settle the $60,000 convertible note. The Company agreed to pay $100,000 to settle the principal and accrued interest and penalties relating the convertible note. The Company recorded a gain on settlement of debt of $2,273,770.

On March 18, 2019, the Company entered into a convertible promissory note with a non-related party for $75,000 of which $10,250 was an original issue discount resulting in cash proceeds to the Company of $64,750. The Company also issued a warrant with a term of five years to purchase up to 187,500 shares of common stock of the Company at an exercise price of $0.20 per share and subject to adjustment for dilutive issuances and cashless exercise. The note is due on December 13, 2019 and bears interest on the unpaid principal balance at a rate of 12% per annum and a default interest rate of 24% per annum. The Note may be converted by the Lender at any time after the date of issuance into shares of Company’s common stock at a conversion price equal to 50% of the lowest trading price during the 25-trading day period prior to the conversion date. 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,~~12, 2020, the Company entered into a convertible promissory with a non-related party for ~~$38,000~~$83,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of ~~$35,000.~~$80,000. The note is due on ~~April 29, 2020~~November 8, 2021 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from ~~12%~~15% to ~~37%~~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 June 19, 2019, the Company defaulted on~~As the note ~~resulting in the note becoming immediately~~isn’t convertible ~~and a default penalty~~until 180 days following issuance, no derivative liability was recognized as of ~~$19,000 added to the principal of the note.~~June 30, 2020.

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.

2015

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 ~~7 –~~6. DERIVATIVE ~~AND PREFERRED SERIES A STOCK~~ LIABILITIES

The embedded conversion option of (1) the convertible ~~debentures~~notes payable described in Note 6;5; (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 6,5, 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,~~9, 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

	June 30, 2020			December 31, 2019

Balance at the beginning of period	$	10,517,873		$	322,976
Original discount limited to proceeds of notes		166,000			540,750
Fair value of derivative liabilities in excess of notes proceeds received		804,403			1,653,887
Settlement of derivative instruments		(2,652,115	)		(3,258,054	)
Change in fair value of embedded conversion option		9,583,204			11,258,314
Balance at the end of the period	$	18,419,365		$	10,517,873

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~~

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

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

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

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

At issuance during the period	336-358%	0.25-1.47%		0	%		1.00
At June 30, 2020	236-320%	0.16-0.18%		0	%		0.68-3.70

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

Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years)
At April 12, 2019 170% 2.36% 0 % 3.00

NOTE ~~8 -~~7. STOCKHOLDERS’ DEFICIT

Preferred Stock

~~Series A Preferred Shares~~

~~Effective March 23, 2018,~~On February 7, 2020, the Company ~~amended~~extinguished a promissory note and convertible note, including accrued interest through the ~~articles~~issuance of ~~incorporation and authorized 10,000,000~~220,000 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.series C stock. The Company ~~was unable to issue~~recorded the ~~subscriber~~difference between 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 AC stock of $264,000 and the debt outstanding of $220,000 as a loss on ~~April 12, 2019 was $60,398 and was valued by using the Binomial Model based on various assumptions.~~

Asextinguishment of ~~September 30, 2019, there were 500,000 shares~~debt of ~~Series A Convertible Preferred Stock issued or outstanding.~~$44,000.

~~Series B Preferred Shares~~

~~Effective August 13, 2019,~~During the period ended June 30, 2020, 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~~sold 270,000 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~~series C stock 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~~proceeds 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 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:$270,000.

The ~~number of shares constituting~~preferred series C stock sold during the ~~Series C Convertible Preferred Stock shall be 5,500,000. Such number of shares may be increased or decreased by resolution of~~period contained a beneficial conversion feature as the ~~Board; provided, that no decrease shall reduce the number of shares of Series C Convertible Preferred Stock to a number~~conversion price was less than the ~~number~~fair value of the common stock which the instrument is convertible at the commitment date. During the six-months ended June 30, 2020, the intrinsic value of the 270,000 shares ~~then outstanding plus~~sold was $270,000. As the ~~number of shares reserved for~~preferred series C stock are have no stated maturity date and are convertible at any time, the discount created in the preferred series C stock is fully amortized at 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.~~as a deemed dividend.

~~Conversion Rights~~

~~Each Share shall be convertible into~~On June 24, 2020, 50,000 shares of ~~the Company’s Common Stock at a price per~~preferred series C stock was converted into common stock (1 share ~~of $0.01 (1 Share~~ converts into 100 shares of ~~Common Stock) (the “Conversion Price”)~~common stock), atresulting in 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~~5,000,000 shares of ~~this Company or any transfer agent for such~~common 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 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 valued at $240,000, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, ~~2020;~~2020, 375,000 shares on March 1, 2021 and the final 375,000 shares on March 1, 2022. On ~~January 1,~~October 4, 2019, F. Jody Read resigned from the ~~fair value~~position of CEO and moved back into the ~~restricted stock award totaled $240,000 which will be expensed over vesting period.~~role of COO. The terms of his employment agreement remained unchanged. As of ~~September~~June 30, ~~2019, 375,000~~2020, 750,000 shares were issued and the Company had recognized ~~$102,391~~$145,093 of ~~expense.~~stock-based compensation.

~~On January 28, 2019,~~During the ~~Company agreed to convert $131,327~~period ended June 30, 2020, $17,092 of principal and $3,507 of interest of ~~the notes~~a convertible note payable ~~described in Note 6(a)~~was converted into ~~987,421~~36,050,000 shares of the Company’s common ~~stock.~~stock as further described in Note 5(h).

~~On March 25, 2019,~~During the period ended June 30, 2020, the Company issued ~~200,000~~9,246,186 shares of common stock ~~to two employees~~upon the cashless exercise of 9,280,742 warrants.

On January 1, 2020, the Company ~~as compensation in lieu of commission on sales~~issued 15,000,000 fully vested shares of the Company’s ~~products.~~common stock to Gary J. Grieco, its President and CEO, pursuant to an employment agreement. 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~~$99,000 as related to the March 15, 2018 agreement between UCAP and us. The settlement terms include acknowledgement that the Company owes UCAP $25,000 as payment for said services; that UCAP purchased and fully paid for Series A Preferred Stock and Warrants from the Company on December 3, 2018 (100,000 Preferred Series A Shares and 100,000 warrants to purchase common shares at $0.10/share); the settlement is outlined as follows: the Company shall issue 164,000 shares of its common stock as payment in full for the services rendered on the consulting contract; the Company shall accept UCAP’s conversion and exercise of the purchased 100,000 Preferred Series A shares into 100,000 shares of the Company’s common stock and the Company shall accept the cashless conversion of UCAP’s 100,000 warrant into 34,400 shares of the Company’s restricted common stock; and, as inducement for and consideration for the settlement of the Company’s debt to UCAP, the Company agrees to grant 500,000 additional shares of the Company’s restricted stock. As a result of this transaction, 3,597,989 shares of Company’s common stock were issued and a $55,830 loss on settlement of debt was recognized.

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).stock-based compensation.

On ~~August 16, 2019,~~March 20, 2020, the Company 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 investor relations services through September 30, 2019. The agreement called for 1,000,000 restricted~~150,000 shares of common stock to ~~be issued to~~a consultant. The Company recorded the ~~consultant. As~~fair value of ~~September 30, 2019,~~the common shares of $5,880 in consulting expense.

On March 31, 2020, the Company issued 250,000 shares of common stock pursuant to a loan agreement. The Company recorded ~~$15,000 in additional paid-in capital for~~ the ~~consulting expense related to~~fair value of the ~~consulting services provided, due to the fact that the 1,000,000~~ common shares ~~were~~of $8,225 in interest expense.

On April 27, 2020, the Company issued ~~subsequently on March 11, 2020.~~1,000,000 shares of common stock to an employee of the Company for cash proceeds of $10,000.

On April 27, 2020, the Company issued 2,750,000 shares of common stock for cash proceeds of $110,000.

On May 5, 2020, the Company issued 15,000,000 shares of common stock as part of the note extinguishment and consolidation agreement described in Note 5(e).

On May 19, 2020, the Company issued 500,000 shares of common stock for cash proceeds of $20,000.

On June 24, 2020, 50,000 shares of preferred series C stock was converted into common stock (1 share converts into 100 shares of common stock), resulting in the issuance of 5,000,000 shares of common stock.

2617

NOTE ~~9 –~~8. 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~~June 30, ~~2019:~~2020:

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

	Number of options		Weighted average exercise price $
Balance, December 31, 2019		200,000		2.00
Granted		—		—
Expired		—		—
Settled		—		—
Balance, June 30, 2020		200,000		2.00

As at ~~September~~June 30, ~~2019,~~2020, the following share stock options were outstanding:

Date	Date	Number		Number		Exercise		Weighted Average Remaining Contractual		Expiration		Proceeds to Company if		Date	Number		Number		Exercise		Weighted Average Remaining Contractual		Expiration		Proceeds to Company if
Issued	Issued	Outstanding		Exercisable		Price $		Life (Years)		Date		Exercised		Issued	Outstanding		Exercisable		Price $		Life (Years)		Date		Exercised
	01/01/2016		75,000		75,000		0.33		0.25		12/31/2019		25,000	01/26/2017		200,000		200,000		2.00		1.58		01/26/2022		400,000
	01/01/2016		90,000		90,000		0.33		0.25		12/31/2019		30,000			200,000		200,000							$	400,000
	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~~$2.00 for the options outstanding and exercisable, respectively. The intrinsic value of stock options outstanding at ~~September~~June 30, ~~2019~~2020 was ~~$Nil.~~$nil.

NOTE ~~10 –~~9. 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 7.6.

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

	Number of warrants			Weighted average exercise price $

Balance, December 31, 2019		413,816,252			0.00053
Adjustment to warrants outstanding		43,154,762			0.00056
Granted		—			—
Exercised		(9,280,742	)		0.00035
Balance, June 30, 2020		447,690,272			0.00049

As at ~~September~~June 30, ~~2019,~~2020, the following share purchase warrants were outstanding:

Date	Date	Number			Number			Exercise			Weighted Average Remaining Contractual		Expiration		Proceeds to Company if		Date	Number			Number			Exercise			Weighted Average Remaining Contractual		Expiration		Proceeds to Company if
Issued	Issued	Outstanding			Exercisable			Price $			Life (Years)		Date		Exercised		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	11/28/2018		142,857,143	*		142,857,143	*		0.00035	*		1.41		11/28/2021	$	50,000
	12/3/2018		500,000			500,000			0.10			4.18		12/3/2023		50,000	12/3/2018		500,000			500,000			0.10			3.43		12/3/2023		50,000
	2/14/2019		159,397,690	*		159,397,690	*		0.00035	*		4.38		2/14/2024		55,789	2/14/2019		143,618,843	*		143,618,843	*		0.00035	*		3.63		2/14/2024		50,267
	3/13/2019		107,142,857	*		107,142,857	*		0.00035	*		4.45		3/13/2024		37,500	3/13/2019		107,142,857	*		107,142,857	*		0.00035	*		3.70		3/13/2024		37,500
	9/11/2019		10,416,667	*		10,416,667	*		0.00288	*		4.95		9/11/2024		30,000	9/11/2019		53,571,429	*		53,571,429	*		0.00056	*		4.20		9/11/2024		30,000
			420,314,357			420,314,357									$	223,289			447,690,272			447,690,272									$	217,767

*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~~June 30, ~~2019~~2020 was ~~$2,513,523.~~$15,796,926.

NOTE ~~11 –~~10. 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,~~5, 7, 8 and 1211 for more details.

NOTE ~~12 –~~11. COMMITMENTS AND CONTINGENCIES

Consulting Agreements –

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

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

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

On November 28, 2018, the Company re-engaged the services of a prior contractor for finance assistance related to obtaining a line of 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 in the healthcare market. The contract is in place through June 3, 2019 and 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 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 agreement called for a cash payment of $25,000 and 12,000,000 ~~0restricted~~restricted shares of common stock to be issued to the consultant. ~~The~~As of December 31, 2019, the Company ~~issued~~recorded the ~~12,000,000 common~~fair value of the shares of $61,200 for the consulting expense related to the ~~consultant~~consulting services provided. The expense was recognized over the service period, ending on March ~~16,~~31, 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 March 1, 2019 and increasing to $120,000 once the Company’s revenue exceeds monthly expenses, then incrementally over time and with certain operation results, up to $200,000/year. The salary may be paid, at the employee’s discretion, either in cash or in common stock. A $1,000 per month allowance will be granted to the executive for housing near the Company’s South Carolina facility. The employment agreement awards the CEO 1,500,000 restricted shares of the Company’s restricted stock, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020, 375,000 shares on March 1, 2021 and the final 375,000 shares on March 1, 2022. On August 12, 2019, the Company amended the Employment Contract with F. Jody Read, CEO, whereby 500,000 ~~Preferred Series~~preferred series B ~~shares~~stock were issued to Read. All other terms of the January 1, 2019 employment agreement remain in effect. On October 4, 2019, F. Jody Read resigned from the position of CEO and moved back into the role of COO.

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~~preferred series B ~~shares~~stock 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. Gary Grieco entered the role of CEO of the Company upon F. Jody Read’s resignation on October 4, 2019 and entered into a four-year employment agreement with the Company on January 1, 2020. Pursuant to the agreement 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 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 the agreement.

Other Obligations and Commitments–

On ~~April 12, 2018,~~March 20, 2020, the Company entered into a Purchase agreement with a third party to purchase its exclusive rights to US EPA Product Registration No. 83241-1 for a fixed fee. The Company paid $5,000 on execution of the agreement and has continued to make periodic installment payments for the purchase of this Registration.

~~On March 27, 2019, the Company entered into a letter of intent (the “LOI”) with Magnolia Columbia Limited (“Magnolia”), a Canadian company traded on the TSXV under the symbol “MCO”.~~consulting agreement. Pursuant to the ~~terms of~~agreement 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.~~consultant will provide investor relations services for a ~~definitive loan and option agreement to include~~period of six months. The Company had issued the ~~acquisition~~consultant 150,000 shares of ~~at least 51% control~~common stock with a fair value 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 term of the LOI through August 19, 2019. On August 19, 2019 the Company and 2705908 Ontario Inc. allowed the LOI to expire.$5,880 for services received.

2919

NOTE ~~13.~~12. SUBSEQUENT EVENTS

On ~~October 1, 2019,~~July 6, 2020, the Company entered into a consulting agreement. Pursuant to the agreement ~~for~~the consultant will provide investor relations services ~~through March 31, 2020. The agreement called~~ for a ~~cash payment~~period of ~~$25,000~~one year in consideration for $3,000 per month 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 non-related party for $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~~1,000,000 common shares 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 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.Company.

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 due on October 29, 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 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 8% per annum.~~

On December 12, 2019, the Company entered into a loan with a 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 of $10,000. The note is to be 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 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 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 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 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,~~July 7, 2020, the Company entered into a promissory note with a non-related party for ~~$20,000.~~$150,000. The note is due ~~May 28,~~October 5, 2020, is unsecured and bears an interest rate of 8%10% per annum.

On ~~March 2,~~July 8, 2020, the Company entered into a ~~convertible promissory with a non-related party for $45,000 of which $3,000 was an original issue discount resulting in cash proceeds~~consulting agreement. Pursuant to the ~~Company~~agreement the consultant will provide operational business development and introductory services for a period of ~~$42,000. The note is due on March 2, 2021 and bears interest on~~five years in consideration for the ~~unpaid principal balance at a rate~~issuance 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~~1,000,000 common shares of the ~~note which is not~~Company and a 5% commission, 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~~in shares, for 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.investments brokered.

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 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,~~July 15, 2020, the Company entered into a ~~settlement agreement to settle the $60,000 and $26,000 convertible notes described~~promissory note with a non-related party for $119,200. The note is repayable 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.~~$7,450 weekly payments.

On ~~April 1,~~August 11, 2020, 75,000 shares of preferred series C stock was converted into common stock (1 share converts into 100 shares of common stock), resulting in the issuance of 7,500,000 shares of common stock.

On August 18, 2020, the Company ~~issued 4,623,093~~settled the $100,000 note described in Note 5(i). Pursuant to the settlement agreement, the Company will issue the lender 5,281,088 shares of common stock ~~upon~~and pay the ~~cashless exercise~~lender $140,000 in four monthly installments of ~~4,640,371 warrants.~~$35,000 commencing August 19, 2020 and ending November 19, 2020.

On August 21, 2020, the Company sold future receivables with a non-related party for $50,000. The advance is repayable through daily payments of $1,071 totaling $74,950.

3120

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.

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 global impact of COVID-19 on the United States economy and out operations;
•	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 10-Q references to “PCT LTD”, “the 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 (“~~PCT Corp.” or “Paradigm”~~Paradigm”).

COVID-19

The current and potential effects of coronavirus may impact our business, results of operations and financial condition.

Actual or threatened epidemics, pandemics, outbreaks, or other public health crises could materially and adversely impact or disrupt our operations, adversely affect the local economies where we operate and negatively impact our customers’ spending in the impacted regions or depending upon the severity, globally, which could materially and adversely impact our business, results of operations and financial condition. For example, since December 2019, a strain of novel coronavirus (causing “COVD-19”) surfaced in China and has spread into the United States, Europe and most other countries of the world, resulting in certain supply chain disruptions, volatilities in the stock market, lower oil and other commodity prices due to diminished demand, massive unemployment, and lockdown on international travels, all of which has had an adverse impact on the global economy. There is significant uncertainty around the breadth and duration of the business disruptions related to COVID-19, as well as its impact on the U.S. economy. Moreover, an epidemic, pandemic, outbreak or other public health crisis, such as COVID-19, could adversely affect our ability to adequately staff and manage our business. The extent to which COVID-19 impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain, rapidly changing and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions take to contain it or treat its impact.

3221

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 ~~$10,214,462~~$10,287,957 for the ~~nine months~~six-months ended ~~September~~June 30, ~~2019~~2020 and accumulated losses of ~~$20,141,465~~$37,063,524 from inception through ~~September~~June 30, ~~2019.~~2020.

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 technology rights;

payment of short-term debt;

hiring of additional personnel in ~~2019;~~2020; and

general and administrative operating costs.

Management projects these costs to total approximately ~~$2,500,000.~~$2,700,000. 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 ~~close to profitability~~ covering its fixed operating expenses (“burn rate”)by the end of the ~~fourth~~third quarter of 2020.

3322

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,
2019 December 31,
2018
Cash and cash equivalents $ 6,669 $ 4,893
Total current assets 162,434 281,742
Total assets 4,404,809 4,846,988
Total liabilities 9,097,175 3,141,401
Accumulated deficit (20,141,465 ) (9,927,003 )
Total stockholders’ equity (deficit) $ (4,907,764 ) $ 1,705,587

SUMMARY OF BALANCE SHEET	June 30, 2020			December 31, 2019
Cash and cash equivalents	$	29,260		$	67,613
Total current assets		416,893			224,738
Total assets		4,372,919			4,374,775
Total liabilities		22,092,959			14,290,486
Accumulated deficit		(37,063,524	)		(26,505,567	)
Total stockholders’ deficit	$	(18,422,685	)	$	(10,134,356	)

At ~~September~~June 30, ~~2019,~~2020, the Company recorded a net loss ~~for the nine month period~~ of ~~$10,214,462~~$10,287,957 and ~~had~~ a working capital deficit of ~~$8,934,741. We~~$21,676,066. While we have recently recorded an increase in the amount of revenues from operations, ~~but these have been insufficient~~since inception and we had not established an ongoing source of revenue sufficient to cover our operating costs. During the ~~nine months~~six-months ended June 30, 2020 and 2019 ~~and 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 ~~$6,669~~$29,260 in cash at ~~September~~June 30, ~~2019,~~2020, compared to ~~$4,893~~$67,613 in cash at December 31, ~~2018.~~2019. We had total liabilities of ~~$9,097,175~~$22,092,959 at ~~September~~June 30, ~~2019~~2020 compared to ~~$3,141,401~~$14,290,486 at December 31, ~~2018.~~2019.

Our current cash flow is not sufficient to meet our monthly expenses of approximately ~~$210,000~~$250,000 and to fund future research and ~~development.~~development adequately. We intend to rely on additional debt financing, loans from existing stockholders and private placements of ~~our securities~~common stock 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 ~~securities~~common stock in lieu of cash to convert debt or pay for expenses.

Commitments and Obligations

At ~~September~~June 30, ~~2019,~~2020 the Company recorded notes payable totaling approximately ~~$2,447,026 (net~~$2,215,085 (related, non-related and convertible, net of debt discount) compared to notes payable totaling ~~$1,907,011 (net~~$2,482,743 (related, non-related and convertible, net of debt discount) at December 31, ~~2018.~~2019. These notes payable represent cash advances received and expenses paid from third parties and related parties. All of the notes payable carry effective interest from 0% to ~~25%~~585% and are due ranging from on demand to ~~February 14, 2022.~~November 8, 2021.

The Company headquarters and operations ~~are~~is located in Little River, South Carolina. The South Carolina lease ~~amounts~~payment was to $4,800 per month ~~expires on~~through November 30, ~~2019~~2019. The building was sold and ~~includes an option to renew for two additional three-year periods.~~the Company is on a month-to-month lease with the new Landlord, while negotiating a new annual lease, which will likely include monthly lease payments of $7,500/month.

3423

Results of Operations

Three Months Ended ~~September~~June 30, ~~2019~~2020

SUMMARY OF OPERATIONS	Three months period ended September 30,									Three-month period ended June 30,
	(Unaudited)									(Unaudited)
	2019			2018			Increase/(Decrease)			2020			2019
Revenues	$	220,033		$	41,124		$	178,909		$	881,172		$	118,862

Total operating expenses	$	604,847		$	950,454		$	(345,607	)		1,094,245			527,397
Total other expenses	$	5,379,178		$	30,765		$	5,348,413
Total other income (expense)											206,764			(3,121,612	)
Net loss	$	5,763,992		$	940,095		$	4,823,897			(6,309	)		(3,530,147	)
Preferred series C stock deemed dividends											—			—
Net loss attributable to common stockholders’											(6,309	)		(3,530,147	)
Basic and diluted loss per share	$	(0.03	)	$	(0.02	)	$	0.01		$	(0.00	)	$	(0.07	)

Revenues increased to ~~$220,033~~$881,172, for the ~~three months~~three-months ended ~~September~~June 30, 2020 (the “2020 second quarter”) compared to $118,862 for the three-months ended June 30, 2019 (the “2019 ~~third quarter”) compared to $41,124 for the three months ended September 30, 2018 (the “2018 third~~second quarter”). The revenue increase for the period was due to the increased volume of fluids sold, as a result of the ~~sale of a~~Company adapting to the COVID-19 pandemic and heightened need for an effective US ~~EPA registration (duplicate), licensing revenue from EPA sub registrations, equipment sales and~~EPA-registered disinfectant, as well as the additional revenue from recurring leased-equipment income.

Total operating expenses ~~decreased~~increased to ~~$604,847~~$1,094,245 during the 2020 second quarter compared to $527,397 during the 2019 ~~third quarter compared to $950,454~~second quarter. The increase during the ~~2018 third quarter. The decrease during the third~~second quarter of ~~2019~~2020 was primarily due to ~~a decrease~~an increase in ~~stock-based compensation.~~general and administrative expenses and an increase in cost of product, licensing, and equipment leases associated with increased revenue.

General and administrative expenses ~~decreased~~increased to ~~$468,897~~$592,042 for the ~~2019 third~~2020 second quarter compared to ~~$827,168~~$415,339 during the ~~2018 third~~2019 second quarter. The ~~decrease~~increase during the ~~third~~second quarter of ~~2019~~2020 was primarily due to ~~a decrease in stock-based compensation expense during the third quarter of 2019 as compared~~hiring new employees and expenses related to ~~the third quarter of 2018.~~legal and accounting work.

Depreciation and amortization expenses ~~increased~~decreased slightly to ~~$84,467~~$81,348 during the 2020 second quarter compared to $84,189 during the 2019 ~~third quarter compared to $84,070 during the 2018 third~~second quarter. Depreciation and amortization ~~were~~was comparable between the two periods.

Total other income was $206,764 for the 2020 second quarter compared to other expense of $3,121,612 during the 2019 second quarter. The overall change was a result of a gain on settlement of debt and a decrease in the loss on change in fair value of derivatives during the second quarter of 2020.

As a result of the changes described above, net loss decreased to $6,309 during the 2020 second quarter compared to $3,530,147 during the 2019 second quarter.

Six Months Ended June 30, 2020

SUMMARY OF OPERATIONS	Six months period ended June 30,
	(Unaudited)
	2020			2019
Revenues	$	1,153,354		$	314,819

Total operating expense	$	1,874,902		$	1,351,927
Total other expense	$	9,566,409		$	3,413,362
Net loss	$	(10,287,957	)	$	(4,450,470	)
Preferred series C stock deemed dividends		(270,000	)		—
Net loss attributable to common stockholders’		(10,557,957	)		(4,450,470	)
Basic and diluted loss per share	$	(0.02	)	$	(0.09	)

Revenues increased to $1,153,354 for the six months ended June 30, 2020 compared to $314,819 for the six months ended June 30, 2019. The revenue increase for the period was due to the increased volume of fluids sold as a result of the Company adapting to the COVID-19 pandemic and heightened need for an effective US EPA-registered disinfectant, as well as the additional revenue from recurring leased-equipment income.

Total operating expenses increased to $1,874,902 during the six months ended June 30, 2020 compared to $1,351,927 during the six months ended June 30, 2019. The increase during the period was primarily due to an increase in cost of product, licensing, and equipment leases associated with increased revenue.

General and administrative expenses increased slightly to $1,140,828 for the six months ended June 30, 2020 compared to $1,082,303 during the six months ended June 30, 2019. General and administrative was comparable between the two periods.

Depreciation and amortization expenses decreased slightly to $164,369 during the six months ended June 30, 20120compared to $169,101 during the six months ended June 30, 2019. Depreciation and amortization was comparable between the two periods.

Total other expenses increased to ~~$5,379,178~~$9,566,409 for ~~the 2019 third quarter~~six months ended June 30, 2020 compared to ~~$30,765~~$3,413,362 during the ~~2018 third quarter.~~six months ended June 30, 2019. The overall increase was a result of an increase in interest expense, and loss on change in fair value of derivatives. This was offset by a gain on the settlement of debt during the six months ended June 30, 2020.

As a result of the changes described above, net loss ~~from operations after income taxes~~ increased to ~~$5,763,992~~$10,287,957 during the ~~2019 third quarter~~six months ended June 30, 2020 compared to ~~$940,095~~$4,450,470 during the ~~2018 third quarter.~~six months ended June 30, 2019.

3524

~~Nine Months Ended September 30, 2019~~

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

Total operating expenses $ 1,956,774 $ 2,196,580 $ (239,806 )
Total other expenses $ 8,792,540 $ 96,213 $ 8,696,327
Net loss $ 10,214,462 $ 2,139,456 $ 8,075,006
Basic and diluted loss per share $ (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. The revenue increase for the period was due to the increased volume of fluids sold, the sale of a duplicate US EPA Registration, licensing revenue from EPA sub registrations, equipment sales and the additional revenue from recurring leased-equipment income.

Total operating expenses 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. The decrease during the period was primarily due to a decrease in stock-based compensation. This was offset by an increase in cost of sales as a result of an increase in revenues.

General and administrative expenses 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. The increase during the period was primarily due to a decrease in stock-based compensation expense.

Depreciation and amortization expenses increased slightly to $253,568 during the nine months ended September 30, 2019 compared to $250,928 during the nine months ended September 30, 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 $96,213 during the nine months ended September 30, 2018. The overall increase was a result of an increase in interest expense, and loss on change in fair value of derivatives and settlement of debt. This was offset by a gain on the sale of assets and a gain on change in 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 months ended September 30, 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

~~Derivative~~Our financial statements and ~~Preferred Series A Stock Liabilities~~

~~The Company accounts for derivative instruments~~accompanying notes have been prepared in accordance with ~~ASC Topic 815, “~~~~Derivatives~~United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and ~~Hedging” and all derivative instruments are reflected as either assets or liabilities at fair value in~~assumptions that affect the ~~balance sheet. The Company uses estimates~~reported amounts 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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in ~~active markets, where available. When these~~the notes to our financial statements. In general, management’s estimates 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,~~historical experience, on information from third party professionals, 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.~~

~~Fair value estimates~~on various other assumptions that 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.

~~Accounts Receivable~~

~~Property and Equipment~~

~~Impairment of Long-lived Assets~~

~~Intangible Assets~~

~~Leases~~

~~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 expectsbelieved to be ~~entitled in exchange for~~reasonable under the facts and circumstances. Actual results could differ from 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~~

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

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

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. ~~Gary J. Grieco,~~F. Jody Read, our Chief Executive Officer, who serves as our principal executive officer and principal financial officer, 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 principal executive officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive officer concluded that as of ~~September~~June 30, ~~2019,~~2020, 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

During the quarter ended ~~September~~June 30, ~~2019,~~2020, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).

4025

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,~~report, other than described below, 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.~~

Annihilare Litigation

On August 8, 2019, we received notice from Annihilare ~~Inc.~~Medical Systems, Inc (“Annihilare”) that certain intellectual properties developed jointly between us and Annihilare ~~are~~were 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 May of 2020, we filed a complaint in ~~discussions~~the United States District Court for the Western District of North Carolina (Charlotte Divisions – Civil Action No. 3:20-cv-00287), against Annihilare, Marion E. Paris, Jr. and Clay Parker Sipes. Seeking damages for:

1. Two counts of Patent infringement;

2. Trademark infringement;

3. Federal unfair competition, false designation of origin, and false and misleading description of representation;

4. Trademark dilution;

5. Federal cybersquatting;

6. Violation of Defend Trade Secrets Act;

7. Violation of North Carolina’ Trade Secrets Protection Act;

8. Violation of North Carolina and common law unfair competition

9. Breach of fiduciary duty;

10. Breach of duty of loyalty and faithless service;

11. Breach of consulting agreements;

12. Breach of employment agreements;

13. Tortious interference with ~~Annihilare on this point. We have engaged counsel to assist~~prospective business relationships;

14. Unjust enrichment;

15. Conversion;

16. Civil conspiracy; and

17. Injunctive relief.

These claims arise from several consulting agreements and an acquisition agreements between us ~~with this dispute~~ and ~~are evaluating potential litigation on this matter. However, as~~the Defendants surrounding the purchase of Annihilyzer® Intellectual property by us and subsequent infringement of the ~~date of this filing no litigation has been initiated.~~intellectual properties. The case is currently ongoing.

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, ~~2018.~~2019.

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

~~TFK Investments LLC Note Conversions~~

~~During the quarter ended September 30, 2019,~~On April 27, 2020, the Company issued ~~TFK Investments LLC shares of its common stock upon partial conversion of the promissory note dated November 28, 2018 as follows:~~

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

~~Power Up Lending Group Ltd Note Conversions~~

~~During 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
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 Crown Bridge Partners, LLC shares of its common stock upon partial conversion of the promissory note dated November 28, 2018 as follows:~~

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

~~GS Capital Partners, LLC Note Conversions~~

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

Date of Conversion Principal Amount Converted Conversion Price
Number of
Shares Issued
Principal Balance Remaining
7/19/2019 $4,508 plus
$179 of interest $ 0.0009 5,207,600 $ 95,492

~~JSJ Investments Inc. Note Conversions~~

~~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 Warrant Exercise~~

During 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
8/9/2019 $ 5,000 $ 0.0009 5,555,555 $ 55,000

~~On August 16, 2019, the Company issued Peak One Opportunity Fund, LP 5,989,500~~1,000,000 shares of common stock ~~upon the cashless exercise~~to an employee of ~~6,000,000 warrants.~~

~~Adar Alef LLC Note Conversion~~

~~During the quarter ended September 30, 2019,~~ the Company ~~issued Adar Alef LLC shares~~for cash proceeds of ~~its common stock upon partial conversion of the 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 Company issued Peak One Investments LLC 6,041,381 shares of common stock upon the 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 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 October 8, 2019, the Company issued Peak One Investments LLC 6,399,302 shares of common stock upon the cashless exercise of 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.~~$10,000.

On April 1,27, 2020, the Company issued ~~Peak One Investments LLC 4,623,093~~2,750,000 shares of common stock ~~upon the cashless exercise~~for cash proceeds of ~~4,640,371 warrants.~~$110,000.

~~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,~~May 5, 2020, the Company issued ~~12,000,000~~15,000,000 shares of ~~restricted~~ common stock ~~to a consultant for public relations services performed~~as part of the note extinguishment and consolidation agreement described in ~~October 2019.~~Note 5(e).

AsOn May 19, 2020, the Company issued 500,000 shares of ~~April~~common stock for cash proceeds of $20,000.

Subsequent Issuances After Quarter-End

On July 6, 2020, the Company ~~has sold 270,000 Series C Convertible Preferred Shares~~entered into a consulting agreement. Pursuant to the agreement the consultant will provide investor relations services for ~~$270,000.~~a period of one year in consideration for $3,000 per month and the issuance of 1,000,000 common shares of the Company.

On July 8, 2020, the Company entered into a consulting agreement. Pursuant to the agreement the consultant will provide operational business development and introductory services for a period of five years in consideration for the issuance of 1,000,000 common shares of the Company and a 5% commission, paid in shares, for any investments brokered.

On August 11, 2020, 75,000 shares of preferred series C stock was converted into common stock (1 share converts into 100 shares of common stock), resulting in the issuance of 7,500,000 shares of common stock.

On August 18, 2020, the Company settled the $100,000 note described in Note 5(i). Pursuant to the settlement agreement, the Company will issue the lender 5,281,088 shares of common stock and pay the lender $140,000 in four monthly installments of $35,000 commencing August 19, 2020 and ending November 19, 2020.

All of the above-described issuances were exempt from registration pursuant to Section 4(a)(2) and/or Regulation D of the Securities Act as transactions not involving a public offering. With respect to each transaction listed above, no general solicitation was made by either the Company or any person 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 or sold absent registration or pursuant to an exemption therefrom.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended ~~September~~June 30, ~~2019.~~2020.

4427

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

We have entered into a number of promissory notes, some of which are in default as of ~~September~~June 30, ~~2019,~~2020, or went into default before the filing of this Quarterly Report (See Note 65 to the financial statements).

~~In addition,~~A significant portion of our current debt is in default, which may subject us to litigation by the debt holders.

As of June 30, 2020, we only had cash and cash equivalents of $29,260 and had a significant amount of short-term debt in default. The short-term debt agreements provide legal remedies for satisfaction of defaults, including increased interest rates, default fees and other financial penalties. As of the date of this Annual Report none of the lenders have ~~insufficient~~pursued their legal remedies, although several lenders have sent us demand letters. Management’s plan is to raise additional funds in the form of debt or equity in order to continue to fund losses until such time as revenues are able to sustain the Company. To date, the main source of funding has been through the issuance of convertible notes with provisions that allow the holder to convert the debt and accrued and unpaid interest at substantial discounts to the trading price of our common ~~stock reserves~~stock. The effect of the conversions in the year ended December 31, 2019 and the period ended June 30, 2020 for the convertible notes ~~we have outstanding, which places each~~has been to substantially dilute existing holders of common stock of our Company. However, there is no assurance that management will be successful in being able to continue to obtain additional funding or defend potential litigation by note ~~into default.~~holders.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

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 PCT LTD for a definitive loan and option agreement to include the acquisition of at least 51% control of PCT LTD, in addition to the terms and commitments written in the letter of intent. On July 30, 2019 the LOI due diligence and negotiations were slated to terminate, but both parties agreed to extend the term of the LOI. On August 2, 2019, the Company and 2705908 Ontario Inc. executed an extension for the terms of the July 10, 2019 LOI to continue until August 19, 2019. The extension expired on August 19, 2019.

Not applicable.

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

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

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

On August 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 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.

4528

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)
4.5	Second Power Up Note dated July 25, 2018 (Incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018)
4.6	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)
4.16	Peak One Opportunity Fund Note dated September 16, 2019 (Incorporated by reference to Exhibit 4.16 of Form 10-Q, filed on August 14, 2020)
4.17	Power-Up #8 Note dated October 8, 2019 (Incorporated by reference to Exhibit 4.17 of Form 10-Q, filed on August 14, 2020)
4.18	Power-Up #9 Note dated October 31, 2019 (Incorporated by reference to Exhibit 4.18 of Form 10-Q, filed on August 14, 2020)
4.19	Power-Up #10 Note dated March 2, 2020 (Incorporated by reference to Exhibit 4.19 of Form 10-Q, filed on August 14, 2020)
4.20	TFK Investments Note dated April 10, 2020 (Incorporated by reference to Exhibit 4.20 of Form 10-Q, filed on August 14, 2020)
4.21	Power-Up #11 Note dated April 16, 2020 (Incorporated by reference to Exhibit 4.21 of Form 10-Q, filed on August 14, 2020)
4.22	Herschbach 2005 Trust Consolidated Note dated May 5, 2020 (Incorporated by reference to Exhibit 4.22 of Form 10-Q, filed on August 14, 2020)
4.23	Power-Up #12 Note dated May 12, 2020 (Incorporated by reference to Exhibit 4.23 of Form 10-Q, filed on August 14, 2020)
4.24	Digital Ally Note dated July 7, 2020 (Incorporated by reference to Exhibit 4.24 of Form 10-Q, filed on August 14, 2020)
4.25	Reserve Capital Management Note dated July 15, 2020 (Incorporated by reference to Exhibit 4.25 of Form 10-Q, filed on August 14, 2020)
10.1	Agreement with Annihilyzer, Inc. dated November 29, 2016 (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed April 20, 2017)
10.2	Amendment to Agreement with Annihilyzer, Inc. dated April 6, 2017 (Incorporated by reference to Exhibit 10.2 of Form 8-K, filed April 20, 2017)
10.3	Read Consolidated Promissory Note dated September 27, 2017 (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed October 4, 2017)
10.4†	Paris Employment Agreement (Incorporated by reference to Exhibit 10.5 of Form 10-Q, filed November 14, 2017)
10.5	Strategic Planning Services Agreement dated March 15, 2018
10.6	Power Up Agreement dated June 5, 2018 (Included in Exhibit 4.1, which is incorporated by reference to Exhibit 4.1 of Form 10-Q, filed August 20, 2018)
10.7	Second Power Up Agreement dated July 25, 2018 (Included in Exhibit 4.2, which is incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018
10.8	Third Power Up Agreement dated August 27, 2018 (Included in Exhibit 4.3, which is incorporated by reference to Exhibit 4.3 of Form 10-Q, filed November 21, 2019)
10.9	Fourth Power Up Agreement dated December 15, 2018 (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 Incorporated by reference to Exhibit 10.21 of Form 10-Q, filed on April 13, 2020)
10.22	Peak One Opportunity Fund Agreement dated September 16, 2019 (Incorporated by reference to Exhibit 10.22 of Form 10-Q, filed on August 14, 2020)
10.23	Power-Up #8 Agreement dated October 8, 2019 (Incorporated by reference to Exhibit 10.23 of Form 10-Q, filed on August 14, 2020)
10.24	Power-Up #9 Agreement dated October 31, 2019 (Incorporated by reference to Exhibit 10.24 of Form 10-Q, filed on August 14, 2020)
10.25	Power-Up #10 Agreement dated March 2, 2020 (Incorporated by reference to Exhibit 10.25 of Form 10-Q, filed on August 14, 2020)
10.26	TFK Investments Agreement dated April 10, 2020 (Incorporated by reference to Exhibit 10.26 of Form 10-Q, filed on August 14, 2020)
10.27	Power-Up #11 Agreement dated April 16, 2020 (Incorporated by reference to Exhibit 10.27 of Form 10-Q, filed on August 14, 2020)
10.28	Herschbach 2005 Trust Agreement dated May 12, 2020 (Incorporated by reference to Exhibit 10.28 of Form 10-Q, filed on August 14, 2020)
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.

4629

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: ~~April 13,~~August 31, 2020	By:	/s/ Gary J. Grieco
		Gary J. Grieco, Principal Executive Officer, Principal Financial Officer
		Chief Executive Officer and ~~Director~~
		Chairman

47 30

	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


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

	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

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

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

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