What changed in this filing

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Item 1. Financial Statements

2021-09-09 compared with 2021-09-02 · 867 added, 942 removed, 191 unchanged (90% of the section changed)

Financial Statements

BOXSCORE BRANDS, INC.

Condensed Consolidated Balance Sheets

Consolidated Balance Sheets

Current assets

22 unchanged sentences

Stockholders’

Common stock, $.001 par value, 600,000,000 shares authorized, 37,717,755 and 37,717,755 shares issued and outstanding, respectively

Common stock, $.001 par value, 600,000,000 shares authorized, 37,717,755 shares issued and outstanding

Additional paid in capital

4 unchanged sentences

Total liabilities and stockholders’

The accompanying notes are an integral part of

the condensed consolidated unaudited financial statements.

BOXSCORE BRANDS, INC.

Condensed Consolidated Statements of Operations

Three Months Ended

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

Consolidated Statements of Operations

Six Months Ended

Cost of goods sold

Gross Profit (Loss)

Operating Expenses

3 unchanged sentences

Other Expenses (Income)

Loss on change in fair value of derivative liabilities

Gain on change in fair value of derivative liabilities

Gain on settlement of liabilities

3 unchanged sentences

Total other expenses (income)

Income (loss) from operations before income taxes

Loss from operations before income taxes

Provision for income taxes

Net income (loss)

$ (1,063,526 )

Net loss per share –

2 unchanged sentences

basic and diluted

The accompanying notes are an integral part of

the condensed consolidated unaudited financial statements.

BOXSCORE BRANDS, INC.

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

Statements of Changes in Stockholders’

Paid in Capital

Accumulated Deficit

Stockholders' Deficit

Stockholders’

Balance as of December 31, 2018

4 unchanged sentences

Reclassification of warrant liability to equity related to adoption of ASU 2017-11

Balance as of March 31, 2019

Balance as of June 30, 2019

$ (13,365,517 )

2 unchanged sentences

(14,198,142 )

Fair value of warrants

Balance as of June 30, 2020

(14,635,298 )

2 unchanged sentences

$ (7,157,735 )

The accompanying notes are an integral part of

the condensed consolidated unaudited financial statements.

BOXSCORE BRANDS, INC.

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Shares issued for services

Balance as of June 30, 2019

$ (13,365,518 )

$ (7,251,368 )

Balance as of March 31, 2020

(14,416,338 )

Fair value of warrants

Balance as of June 30, 2020

$ (14,635,298 )

$ (8,399,385 )

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

Consolidated Statements of Cash Flows

Six Months Ended

Cash Flows from Operating Activities

$ (1,063,526 )

Adjustments to reconcile net loss to net cash used in operating activities:

4 unchanged sentences

Gain on change in fair value of derivative liabilities

Loss on sale of assets

Loss on sale of asset

Changes in operating assets and liabilities:

12 unchanged sentences

Repayments of capital lease obligations

Repayment of convertible note

Repayments of promissory notes

Net cash provided by (used in) financing activities

Net increase (decrease) in cash

Net decrease in cash

Cash, beginning of period

2 unchanged sentences

Interest paid

Income taxes paid

Supplemental disclosures of non-cash investing and financing activities:

Supplemental disclosures of non-cash items:

Accounts payable and accrued payable exchanged for convertible note

Note payable converted to equity

The accompanying notes are an integral part of

the condensed consolidated unaudited financial statements.

BOXSCORE BRANDS, INC.

Notes to Condensed Consolidated Financial Statements

For the Three Ended March 31, 2020 and 2019

Note 1 –

Nature of the

BoxScore Brands, Inc.

(formerly U-Vend Inc.) (the

“Company”) formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands

throughout North America.

Due to the nationwide shutdown related to the COVID-19 pandemic, the Company spent a portion of 2020 restructuring

and retiring certain corporate debt and obligations.

The Company focused on implementing a new operational direction.

After a thorough

evaluation process, the Company found that there is a substantial long-term demand for specific commodities relating to battery and new

energy technologies.

This presents a timely and unique opportunity based on rising demand characteristics.

By capitalizing on market

trends and current sustainable energy government mandates and environmental, social and corporate governance (ESG) initiatives, we will

focus on bringing a vertically-integrated solution to market.

On March 18, 2019, the Company approved an asset

sale of the assets related to the legacy MiniMelts brand for $350,000 in cash, which was approved by a majority of its stockholders.

MiniMelts assets generated 100% of the revenue reported during the year ended December 31, 2019.

During the year ended December 31, 2018,

MiniMelts sales accounted for approximately $1,100,000, or 85%, of the revenue reported during that period.

Part of the proceeds from

the sale was used to retire certain lease obligations as well as for general operating purposes.

Note 2 –

Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited consolidated financial

statements have been prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) for interim financial

information and with the instructions to Form 10-Q.

Accordingly, they do not include all the information and footnotes required by GAAP

for complete financial statements.

In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary

for a fair and non-misleading presentation of the financial statements have been included.

Operating results for the three months ended

March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

The balance sheet

as of December 31, 2019 has been derived from the audited consolidated financial statements at that date but does not include all the

Liabilities converted into convertible notes

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

to Condensed Consolidated Financial Statements

the Six Months Ended June 30, 2020 and 2019

Nature of the Business

(formerly U-Vend Inc.) (the “Company”) formerly developed, marketed and distributed various self-serve electronic

kiosks and mall/airport co-branded islands throughout North America.

Due to the nationwide shutdown related to the COVID-19 pandemic,

the Company spent a portion of 2020 restructuring and retiring certain corporate debt and obligations.

The Company focused on implementing

a new operational direction.

After a thorough evaluation process, the Company found that there is a substantial long-term demand

for specific commodities relating to battery and new energy technologies.

This presents a timely and unique opportunity based on rising

demand characteristics.

By capitalizing on market trends and current sustainable energy government mandates and environmental,

social, and corporate governance (ESG) initiatives, we will focus on bringing a vertically-integrated solution to market.

March 18, 2019, the Company approved an asset sale of the assets related to the legacy MiniMelts brand for $350,000 in cash, which was

approved by a majority of its stockholders.

These MiniMelts assets generated 100% of the revenue reported during the year ended December

During the year ended December 31, 2018, MiniMelts sales accounted for approximately $1,100,000, or 85%, of the revenue reported

during that period.

Part of the proceeds from the sale was used to retire certain lease obligations as well as for general operating

Summary of Significant Accounting Policies

of Presentation and Principles of Consolidation

accompanying unaudited consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles

(“GAAP”) for interim financial information and with the instructions to Form 10-Q.

Accordingly, they do not include all the

information and footnotes required by GAAP for complete financial statements.

These interim consolidated financial statements should be

read in conjunction with the December 31, 2019 audited consolidated financial statements and the notes thereto contained in our Annual

Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities and Exchange Commission on May 12, 2021.

The accompanying consolidated financial statements

include the accounts of BoxScore Brands, Inc.

and the operations of its wholly owned subsidiaries, U-Vend America, Inc., U-Vend Canada,

Inc., and U-Vend USA LLC.

In the opinion of management, all adjustments consisting

of normal recurring accruals considered necessary for a fair and non-misleading presentation of the financial statements have been included.

Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year

ending December 31, 2020.

The balance sheet as of December 31, 2019 has been derived from the audited consolidated financial statements

at that date but does not include all the information and footnotes required by GAAP for complete financial statements.

These interim

consolidated financial statements should be read in conjunction with the December 31, 2019 audited consolidated financial statements

and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the Securities

and Exchange Commission on May 12, 2021.

accompanying consolidated financial statements include the accounts of BoxScore Brands, Inc.

and the operations of its wholly owned subsidiaries,

U-Vend America, Inc., U-Vend Canada, Inc.

U-Vend USA LLC.

All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements

in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements

and accompanying notes.

Actual results could differ from those estimates and be based on events different from those assumptions.

events and their effects cannot be predicted with certainty;

estimating, therefore, requires the exercise of judgment.

Thus, accounting

estimates change as new events occur, as more experience is acquired, or as additional information is obtained.

Property and Equipment

Property and equipment are stated at cost less

depreciation.

Depreciation is provided using the straight-line method over the estimated useful life of the assets.

Equipment has estimated

useful live between three and seven years.

Expenditures for repairs and maintenance are charged to expense as incurred.

Impairment of Long-lived Assets

Long-lived assets, such as property and equipment

and intangible assets subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the

carrying amount of an asset group may not be recoverable.

Recoverability of assets to be held and used is measured by comparing the carrying

amount to the estimated future undiscounted cash flows expected to be generated by the asset group.

If it is determined that an asset

group is not recoverable, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its

Common Shares Issued and Earnings Per Share

Common shares issued are recorded based on the

value of the shares issued or consideration received, whichever is more readily determinable.

The Company presents basic and diluted earnings

Basic earnings per share reflect the actual weighted average of shares issued and outstanding during the period.

Diluted earnings

per share are computed including the number of additional shares that would have been outstanding if dilutive potential shares had been

In a loss period, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential

common shares is anti-dilutive.

As of March 31, 2020 and December 31, 2019, respectively,

there were approximately 159.9 million shares potentially issuable under convertible debt agreements, options, and warrants that could

dilute basic earnings per share in the future that were excluded from the calculation of diluted earnings per share because their inclusion

would have been anti-dilutive to the Company’s losses during the periods presented.

Preferred Stock Authorized

The Company has authorization for “blank

preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to common stock.

March 31, 2020 and December 31, 2019, there are 10,000,000 shares of preferred stock authorized, and no shares issued or outstanding.

Derivative Financial Instruments

The Company evaluates its financial instruments

to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

Certain warrants issued by

the Company contain terms that result in the warrants being classified as derivative liabilities for accounting purposes.

For derivative

financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value

and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations.

does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.

Fair Value of Financial

For certain of the Company’s

financial instruments, including cash and equivalents, accounts receivable, accounts payable, accrued liabilities and short-term debt,

the carrying amounts approximate their fair values due to their short maturities.

ASC Topic 820, “Fair Value Measurements and Disclosures,”

preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect

amounts reported in the financial statements and accompanying notes.

Actual results could differ from those estimates and be based on

events different from those assumptions.

Future events and their effects cannot be predicted with certainty;

estimating, therefore, requires

the exercise of judgment.

Thus, accounting estimates change as new events occur, as more experience is acquired, or as additional information

and Equipment

and equipment are stated at cost less depreciation.

Depreciation is provided using the straight-line method over the estimated useful

life of the assets.

Equipment has estimated useful live between three and seven years.

Expenditures for repairs and maintenance are charged

to expense as incurred.

of Long-lived Assets

assets, such as property and equipment and intangible assets subject to amortization are reviewed for impairment whenever events or changes

in circumstances indicate that the carrying amount of an asset group may not be recoverable.

Recoverability of assets to be held and

used is measured by comparing the carrying amount to the estimated future undiscounted cash flows expected to be generated by the asset

If it is determined that an asset group is not recoverable, an impairment charge is recognized for the amount by which the carrying

amount of the asset group exceeds its fair value.

Shares Issued and Earnings Per Share

shares issued are recorded based on the value of the shares issued or consideration received, whichever is more readily determinable.

The Company presents basic and diluted earnings per share.

Basic earnings per share reflect the actual weighted average of shares issued

and outstanding during the period.

Diluted earnings per share are computed including the number of additional shares that would have

been outstanding if dilutive potential shares had been issued.

In a loss period, the calculation for basic and diluted earnings per share

is considered to be the same, as the impact of potential common shares is anti-dilutive.

of June 30, 2020 and December 31, 2019, there were approximately 163.9 million and 159.9 million shares, respectively, potentially

issuable under convertible debt agreements, options, and warrants that could dilute basic earnings per share in the future that were

excluded from the calculation of diluted earnings per share because their inclusion would have been anti-dilutive to the

Company’s losses during the periods presented.

Stock Authorized

Company has authorization for “blank check”

preferred stock, which could be issued with voting, liquidation, dividend and

other rights superior to common stock.

As of June 30, 2020 and December 31, 2019, there are 10,000,000 shares of preferred stock authorized,

and no shares issued or outstanding.

Financial Instruments

Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded

Certain warrants issued by the Company contain terms that result in the warrants being classified as derivative liabilities

for accounting purposes.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially

recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated

statement of operations.

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency

Value of Financial Instruments

certain of the Company’s financial instruments, including cash and equivalents, accounts receivable, accounts payable, accrued

liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.

ASC Topic 820, “Fair

Value Measurements and Disclosures,”

requires disclosure of the fair value of financial instruments held by the Company.

ASC Topic 825, “Financial Instruments,”

defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure

requirements for fair value measures.

The three levels of valuation hierarchy are defined as follows:

Unadjusted quoted

prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

The Company considers

active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing

information on an ongoing basis

Quoted prices in markets

that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

This category includes those derivative instruments that the Company values using observable market data.

Substantially all of these

inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported

by observable levels at which transactions are executed in the marketplace.

Measured based on

prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective

sources (i.e.

825, “Financial Instruments,”

defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair

value measurement that enhances disclosure requirements for fair value measures.

The three levels of valuation hierarchy are defined

quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume

to provide pricing information on an ongoing basis

prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full

term of the asset or liability.

This category includes those derivative instruments that the Company values using observable market

Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can

be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.

based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable

from objective sources (i.e.

supported by little or no market activity).

Level 3 instruments include derivative warrant instruments.

The Company does

not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2.

Certain of the Company’s debt and equity

instruments include embedded derivatives that require bifurcation from the host contract under the provisions of ASC 815-40, “Derivatives

and Hedging.”

Certain warrants were issued between June 2013 and December 2014 were derivative liabilities outside the exception

of applying ASU 2017-11, “Accounting for Certain Financial Instruments with Down Round Features.”

When determining whether

certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity

classification when assessing whether the instrument is indexed to an entity’s own stock.

On January 1, 2020, the Company adopted

ASU 2017-11 on its consolidated financial statements and reclassified $118,675 as equity form derivative liabilities.

The estimated fair

value of the derivative warrant instruments was calculated using a Black Scholes valuation model.

The following table sets forth by level within

the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis As of March 31,

2020 and December 31, 2019 31, 2019:

The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level

of the Company’s debt and equity instruments include embedded derivatives that require bifurcation from the host contract under

the provisions of ASC 815-40, “Derivatives and Hedging.”

Certain warrants were issued between June 2013 and December 2014

were derivative liabilities outside the exception of applying ASU 2017-11, “Accounting for Certain Financial Instruments with Down

Round Features.”

When determining whether certain financial instruments should be classified as liabilities or equity instruments,

a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s

On January 1, 2019, the Company adopted ASU 2017-11 on its consolidated financial statements and reclassified $118,675 as

equity form derivative liabilities.

The estimated fair value of the derivative warrant instruments was calculated using a Black Scholes

valuation model.

following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair

value on a recurring basis as of June 30, 2020 and December 31, 2019:

Fair Value Measurement at

March 31, 2020

June 30, 2020

Derivative liabilities, debt and equity instruments

2 unchanged sentences

Derivative liabilities, debt and equity instruments

Stock-Based Compensation

The Company accounts for stock-based compensation

in accordance with ASC 718, “Compensation –

Company accounts for stock-based compensation in accordance with ASC 718, “Compensation –

Stock Compensation,”

that requires all stock-based awards granted to employees,

directors, and non-employees to be measured at grant date fair value of the equity instrument issued, and recognized as expense.

compensation expense is recognized on a straight-line basis over the requisite service period of the award, which is generally equivalent

to the vesting period.

The fair value of each stock option granted is estimated using the Black-Scholes option pricing model.

The measurement

date for the non-forfeitable awards to nonemployees that vest immediately is the date the award is issued.

Gain on Liabilities Settlement

During the three months ended March 31, 2019,

creditors forgave aggregate amount of $156,709, of which approximately $64,000 were associated accrued expenses, $45,000 related to conversion

of approximately $105,000 of accounts payable to a $60,000 convertible note, and $47,000 was connected to forgiveness of accounts payable.

Other amounts due to related parties

Amounts due from related parties represent past

amounts owed for compensation and operating expenses paid by the related party on behalf of the Company.

During the year ended December

31, 2019, the Company reclassified approximately $185,000 from due to related parties to accrued expenses, as a result of the individual

no longer being an officer of the Company during 2019, and paid net $63,370 to related parties, resulting in a balance of $67,022 owed

at December 31, 2019.

During the three months ended March 31, 2020, this amount was reclassed to accrued expenses.

Revenue Recognition

Revenue is recognized at the time each vending

transaction occurs, the payment method is approved, and the product is disbursed from the machine.

Wholesale revenue, including revenue

earned under contracts with major sports organizations, are recognized at the time the products are delivered to the customer based on

the agreement with the customer.

We recognize revenue under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers

(“ASC 606”), the core principle of which is that an entity should recognize revenue to depict the transfer of control for

promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange

for those goods or services.

In applying the revenue recognition principles, an entity is required to identify the contract(s) with a

customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations

and recognize revenue as the performance obligations are satisfied (i.e., either over time or at a point in time).

ASC 606 further requires

that companies disclose sufficient information to enable readers of financial statements to understand the nature, amount, timing and

uncertainty of revenue and cash flows arising from contracts with customers.

Recently Issued and Adpoted Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02,

“Leases”, which requires that lease arrangements longer than 12 months result in an entity recognizing a right-of-use asset

and liability.

ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted.

As of the reporting date, the Company has not adopted ASU 2016-02 and has elected to defer implementation until January 1, 2022, as allowed

by ASU 2019-10.

The Company is still determining the impact ASC 842 will have on its financial position, results of operations, and cash

In July 2017, the FASB

issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging

requires all stock-based awards granted to employees, directors, and non-employees to be measured at grant date fair value of the equity

instrument issued, and recognized as expense.

Stock-based compensation expense is recognized on a straight-line basis over the requisite

service period of the award, which is generally equivalent to the vesting period.

The fair value of each stock option granted is estimated

using the Black-Scholes option pricing model.

The measurement date for the non-forfeitable awards to nonemployees that vest immediately

is the date the award is issued.

on Liabilities Settlement

the six months ended June 30, 2019 creditors forgave aggregate amount of $156,709, of which approximately $64,000 were associated accrued

expenses, $45,000 related to conversion of approximately $105,000 of accounts payable to a $60,000 convertible note, and $47,000 was

connected to forgiveness of accounts payable.

amounts due to related parties

due from related parties represent past amounts owed for compensation and operating expenses paid by the related party on behalf of the

During the year ended December 31, 2019, the Company reclassified approximately $185,000 from due to related parties to accrued

expenses, as a result of the individual no longer being an officer of the Company during 2019, and paid net $63,370 to related parties,

resulting in a balance of $67,022 owed at December 31, 2019.

During the six months ended June 30, 2020, this amount was reclassed to

accrued expenses.

is recognized at the time each vending transaction occurs, the payment method is approved, and the product is disbursed from the machine.

Wholesale revenue, including revenue earned under contracts with major sports organizations, are recognized at the time the products

are delivered to the customer based on the agreement with the customer.

We recognize revenue under Accounting Standards Codification

Topic 606, Revenue from Contracts with Customers (“ASC 606”), the core principle of which is that an entity should recognize

revenue to depict the transfer of control for promised goods or services to customers in an amount that reflects the consideration to

which the entity expects to be entitled in exchange for those goods or services.

In applying the revenue recognition principles, an entity

is required to identify the contract(s) with a customer, identify the performance obligations, determine the transaction price, allocate

the transaction price to the performance obligations and recognize revenue as the performance obligations are satisfied (i.e., either

over time or at a point in time).

ASC 606 further requires that companies disclose sufficient information to enable readers of financial

statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers.

Accounting Pronouncements

February 2016, the FASB issued ASU 2016-02, “Leases”, which requires that lease arrangements longer than 12 months result

in an entity recognizing a right-of-use asset and liability.

ASU 2016-02 is effective for interim and annual periods beginning after

December 15, 2019, and early adoption is permitted.

As of the reporting date, the Company has not adopted ASU 2016-02 and has elected

to defer implementation until January 1, 2022, as allowed by ASU 2019-10.

The Company is still determining the impact ASC 842 will have

on its financial position, results of operations, and cash flows.

July 2017, the FASB issued ASU 2017-11, “Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and

Derivatives and Hedging (Topic 815):

Accounting for Certain Financial Instruments with Down Round Features;

Replacement of the Indefinite Deferral for

Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests

with a Scope Exception, (ASU 2017-11).”

Part I of this update addresses the complexity of accounting for certain financial instruments

with down round features.

Down round features are features of certain equity-linked instruments (or embedded features) that result in

the strike price being reduced on the basis of the pricing of future equity offerings.

Current accounting guidance creates cost and complexity

for entities that issue financial instruments (such as warrants and convertible instruments) with down round features that require fair

value measurement of the entire instrument or conversion option.

Part II of this update addresses the difficulty of navigating Topic

480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content in the FASB Accounting Standards

Codification.

This pending content is the result of the indefinite deferral of accounting requirements about mandatorily redeemable financial

instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests.

The amendments in Part II of this

update do not have an accounting effect.

This ASU is effective for fiscal years, and interim periods within those years, beginning after

December 15, 2019.

Replacement of the

Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable

Noncontrolling Interests with a Scope Exception, (ASU 2017-11).”

Part I of this update addresses the complexity of accounting for

certain financial instruments with down round features.

Down round features are features of certain equity-linked instruments (or embedded

features) that result in the strike price being reduced on the basis of the pricing of future equity offerings.

Current accounting guidance

creates cost and complexity for entities that issue financial instruments (such as warrants and convertible instruments) with down round

features that require fair value measurement of the entire instrument or conversion option.

Part II of this update addresses the difficulty

of navigating Topic 480, Distinguishing Liabilities from Equity, because of the existence of extensive pending content

in the FASB Accounting Standards Codification.

This pending content is the result of the indefinite deferral of accounting requirements

about mandatorily redeemable financial instruments of certain nonpublic entities and certain mandatorily redeemable non-controlling interests.

The amendments in Part II of this update do not have an accounting effect.

This ASU is effective for fiscal years, and interim periods

within those years, beginning after December 15, 2019.

The Company adopted ASU 2017-11 on its consolidated financial statements.

Upon adoption the Company derecognized 39,512,502

number of warrants based on review of contracts that determined the derivative treatment was specific to a feature in the instrument that

reduced the strike price if the Company issued additional shares for an amount less than the strike price.

As a result of this analysis

the Company recorded a cumulative effect adjustment of $118,675 on January 1, 2019.

The Company has examined

all other recent accounting pronouncements and determined that they will not have a material impact on its financial position, results

of operations, or cash flows.

Note 3 –

adoption the Company derecognized 39,512,502 number of warrants based on review of contracts that determined the derivative treatment

was specific to a feature in the instrument that reduced the strike price if the Company issued additional shares for an amount less

than the strike price.

As a result of this analysis the Company recorded a cumulative effect adjustment of $118,675 on January 1, 2019.

Company has examined all other recent accounting pronouncements and determined that they will not have a material impact on its financial

position, results of operations, or cash flows.

Going Concern

The accompanying consolidated financial statements

have been prepared on a going concern basis.

The Company reported net loss of $218,196 for the three months ended March 31, 2020 and has

incurred accumulated losses totaling $14,416,338 through March 31, 2020.

In addition, the Company has incurred negative cash flows from

operating activities since its inception.

The Company has relied on the proceeds from loans and private sales of its stock, in addition

to its revenues, to finance its operations.

These factors, among others, indicate that the Company may be unable to continue as a going

The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

With the onset of the Covid 19 pandemic, the reduction

of foot traffic and closure of retail locations, management has been proactively looking at new business models and opportunities to stabilize

revenues and continue to grow the Company.

Until the Company can generate significant cash from operations, its ability to continue as

a going concern is dependent upon obtaining additional financing.

The Company hopes to raise additional financing, potentially through

the sale of debt or equity instruments, or a combination, to fund its operations for the next 12 months and allow the Company to continue

the development of its business plans and satisfy its obligations on a timely basis.

Should additional financing not be available, the

Company will have to negotiate with its lenders to extend the repayment dates of its indebtedness.

There can be no assurance that the

Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional financing.

These conditions

have raised substantial doubt as to the Company’s ability to continue as a going concern for one year from the issuance of the financial

statements, which has not been alleviated.

Note 4 –

accompanying consolidated financial statements have been prepared on a going concern basis.

The Company reported net loss of $437,156

for the six months ended June 30, 2020 and has incurred accumulated losses totaling $14,635,298 through June 30, 2020.

In addition, the

Company has incurred negative cash flows from operating activities since its inception.

The Company has relied on the proceeds from loans

and private sales of its stock, in addition to its revenues, to finance its operations.

These factors, among others, indicate that the

Company may be unable to continue as a going concern.

The consolidated financial statements do not include any adjustments that might

result from the outcome of these uncertainties.

the onset of the Covid 19 pandemic, the reduction of foot traffic and closure of retail locations, management has been proactively looking

at new business models and opportunities to stabilize revenues and continue to grow the Company.

Until the Company can generate significant

cash from operations, its ability to continue as a going concern is dependent upon obtaining additional financing.

The Company hopes

to raise additional financing, potentially through the sale of debt or equity instruments, or a combination, to fund its operations for

the next 12 months and allow the Company to continue the development of its business plans and satisfy its obligations on a timely basis.

Should additional financing not be available, the Company will have to negotiate with its lenders to extend the repayment dates of its

indebtedness.

There can be no assurance that the Company will be able to successfully restructure its debt obligations in the event it

fails to obtain additional financing.

These conditions have raised substantial doubt as to the Company’s ability to continue as

a going concern for one year from the issuance of the financial statements, which has not been alleviated.

Property and Equipment

Property and equipment consist of the following as of March 31, 2020

and December 31, 2019:

and equipment consist of the following as of June 30, 2020 and December 31, 2019:

Freezers and other equipment

1 unchanged sentence

accumulated depreciation

Depreciation expense amounted to $0 and $62,728, respectively for the

three months ended March 31, 2020 and 2019.

During the three months ended March 31, 2020,

the Company recorded gain on sale of assets of $12,074 related to sale of the certain freezers and other equipment.

Note 5 –

Senior Convertible Notes

During the year ended December 31, 2018, a Senior

Convertible Note in the aggregate principal amount of $310,000 and a maturity date of December 31, 2018 payable to Cobrador Multi-Strategy

Partners, LP (“Cobrador 1”), was extended until December 31, 2019.

The Company also extended the expiration dates of Series

A Warrants issued in connection with Cobrador 1 by one year.

The fair value of the Series A Warrants did not materially change due to

the extension.

On June 30, 2016, the Company issued a Senior

Convertible Note in the face amount of $108,804 to Cobrador (“Cobrador 2”) in settlement of previously accrued interest, additional

interest, fees and penalties.

The additional interest, fees and penalties was $72,734 and this amount was charged to operations as debt

discount amortization during the year ended December 31, 2016.

The Senior Convertible Note was extended during the year ended December

31, 2018 and was due on December 31, 2019.

It is convertible into shares of common stock at a conversion price $0.05 per share and bears

interest at 7% per annum.

The Company determined that Cobrador 2 had a beneficial conversion feature based on the difference between the

conversion price and the market price on the date of issuance and allocated $87,043 as debt discount representing the beneficial conversion

feature which was fully amortized at December 31, 2017.

During December 2017, the Company issued a Senior

Convertible Note in the amount of $25,000 to Cobrador.

The note bears interest at 7%, was due in December 2019, and is convertible into

common shares at a conversion price of $0.05 per share.

In addition, in conjunction with this note, the Company issued 500,000 warrants

to purchase common shares at $0.05 with a contractual term of 5 years.

The estimated value of the warrants was determined to be $1,421

and was recorded as interest expense during 2017 and a warrant liability due to the down round provision in the note agreement.

At March 31, 2020 and December 31, 2019, the Cobrador

notes had a carrying value of $443,804.

As of the date of release of these financial statements,

all senior convertible notes were in default.

Promissory Notes Payable

During 2014, the Company issued an unsecured promissory

note to a former employee of U-Vend Canada.

The original amount of this note was $10,512 has a term of 3 years and accrues interest at

17% per annum.

The total principal outstanding on this promissory note at March 31, 2020 and December 31, 2019 was $6,235.

Starting in 2015, the Company entered into a series

of promissory notes from the same lender.

All of the notes bear interest at a rate of 19% per annum and are payable together with interest

over a period of six (6) months from the date of borrowing.

As of December 31, 2015, we had note balance of $11,083.

In 2016, the Company

borrowed $76,500 and repaid $63,497.

The balance outstanding on these notes was $24,116 at December 31, 2016.

In 2017, the Company borrowed

$36,400 and repaid $44,449.

The balance outstanding on these notes was $16,067 at December 31, 2017.

In 2018, the Company borrowed $143,908

and repaid $125,931.

The balance outstanding on these notes was $34,044 at December 31, 2018.

During the year ended December 31, 2019,

the Company borrowed additional $38,325 and recorded additional original discount in the amount of $3,325 associated with the new borrowing.

During the year ended December 31, 2019, the Company repaid $46,584 in principal and fully amortized $3,325 of debt discount.

31, 2020 and December 31, 2019, the balance outstanding on these notes was $25,784.

During the year ended December 31, 2016, the Company

issued two unsecured promissory notes and borrowed an aggregate amount of $80,000.

The promissory notes bear interest at 10% per annum,

with a provision for an increase in the interest rate upon an event of default as defined therein and were due at various due dates in

May and September 2017.

expense amounted to $0 and $81,356, respectively for the six months ended June 30, 2020 and 2019.

the six months ended June 30, 2020 and 2019, the Company recorded loss on sale of assets of $12,074 and $27,465, respectively, related

to sale of the certain freezers and other equipment.

Convertible Notes

the year ended December 31, 2018, a Senior Convertible Note in the aggregate principal amount of $310,000 and a maturity date of December

31, 2018 payable to Cobrador Multi-Strategy Partners, LP (“Cobrador 1”), was extended until December 31, 2019.

also extended the expiration dates of Series A Warrants issued in connection with Cobrador 1 by one year.

The fair value of the Series

A Warrants did not materially change due to the extension.

June 30, 2016, the Company issued a Senior Convertible Note in the face amount of $108,804 to Cobrador (“Cobrador 2”) in

settlement of previously accrued interest, additional interest, fees and penalties.

The additional interest, fees and penalties was $72,734

and this amount was charged to operations as debt discount amortization during the year ended December 31, 2016.

The Senior Convertible

Note was extended during the year ended December 31, 2018 and was due on December 31, 2019.

It is convertible into shares of common stock

at a conversion price $0.05 per share and bears interest at 7% per annum.

The Company determined that Cobrador 2 had a beneficial conversion

feature based on the difference between the conversion price and the market price on the date of issuance and allocated $87,043 as debt

discount representing the beneficial conversion feature which was fully amortized at December 31, 2017.

December 2017, the Company issued a Senior Convertible Note in the amount of $25,000 to Cobrador.

The note bears interest at 7%, was

due in December 2019, and is convertible into common shares at a conversion price of $0.05 per share.

In addition, in conjunction with

this note, the Company issued 500,000 warrants to purchase common shares at $0.05 with a contractual term of 5 years.

The estimated value

of the warrants was determined to be $1,421 and was recorded as interest expense during 2017 and a warrant liability due to the down

round provision in the note agreement.

of June 30, 2020 and December 31, 2019, the Cobrador notes had a carrying value of $443,804.

of the date of release of these financial statements, all senior convertible notes were in default.

Notes Payable

2014, the Company issued an unsecured promissory note to a former employee of U-Vend Canada.

The original amount of this note was $10,512

has a term of 3 years and accrues interest at 17% per annum.

The total principal outstanding on this promissory note as of June 30, 2020

and December 31, 2019 was $6,235.

on 2015, the Company entered into a series of promissory notes from the same lender.

All of the notes bear interest at a rate of 19%

per annum and are payable together with interest over a period of six (6) months from the date of borrowing.

As of December 31, 2015,

we had note balance of $11,083.

In 2016, the Company borrowed $76,500 and repaid $63,497.

The balance outstanding on these notes was

$24,116 at December 31, 2016.

In 2017, the Company borrowed $36,400 and repaid $44,449.

The balance outstanding on these notes was $16,067

at December 31, 2017.

In 2018, the Company borrowed $143,908 and repaid $125,931.

The balance outstanding on these notes was $34,044

at December 31, 2018.

During the year ended December 31, 2019, the Company borrowed additional $38,325 and recorded additional original

discount in the amount of $3,325 associated with the new borrowing.

During the year ended December 31, 2019, the Company repaid $46,584

in principal and fully amortized $3,325 of debt discount.

As of June 30, 2020 and December 31, 2019, the balance outstanding on these

notes was $25,784.

the year ended December 31, 2016, the Company issued two unsecured promissory notes and borrowed an aggregate amount of $80,000.

promissory notes bear interest at 10% per annum, with a provision for an increase in the interest rate upon an event of default as defined

therein and were due at various due dates in May and September 2017.

The due dates of both notes were extended to December 31, 2019.

As of March 31, 2020 and December 31, 2019, the

balance outstanding on these notes was $80,000.

In December 2017, the Company issued promissory

notes in the aggregate principal balance of $28,000 to Cobrador.

The notes accrue interest at 7% and have a two-year term.

31, 2020 and December 31, 2019, the balance outstanding on these notes was $28,000.

On July 18, 2018, the Company issued a promissory

note in the principal amount of $187,500 with net proceeds of $147,000.

The Company agreed to pay $1,143 per business day for 164 days.

As of June 30, 2020 and December 31, 2019, the balance outstanding on these notes was $80,000.

December 2017, the Company issued promissory notes in the aggregate principal balance of $28,000 to Cobrador.

The notes accrue interest

at 7% and have a two-year term.

As of June 30, 2020 and December 31, 2019, the balance outstanding on these notes was $28,000.

July 18, 2018, the Company issued a promissory note in the principal amount of $187,500 with net proceeds of $147,000.

The Company agreed

to pay $1,143 per business day for 164 days.

The Company recorded $40,500 to debt discount.

During 2018, the Company repaid $128,050 in principal and amortized $40,500 of debt discount

resulting in an unamortized debt discount of $0 and carrying value of $59,450 at December 31, 2018.

During the year ended December 31,

2019, this note was paid off.

On April 13, 2018, the Company issued a promissory

note in the principal amount of $115,000.

This note bears interest at the rate of 7% per annum, due on December 31, 2019.

Company borrowed an additional $25,000 and repaid $60,000.

The balance outstanding on this note at March 31, 2020 and December 31, 2019,

In October 2014, January 2015 and October 2015,

the Company entered into three (3) separate 24-month equipment financing agreements (the “Agreements”) with Perkins Industries,

LLC (“Perkins”) for equipment in the aggregate amount of $387,750 with an annual interest rate of 15%.

The assets financed

consisted of self-service electronic kiosks placed in service in the Company’s Southern California region.

The Company is obligated

to make monthly interest only payments in accordance with the Agreements.

The Agreements include a put/call option at the end of year

one and the end of year two.

During 2018, the Company repaid $128,050

in principal and amortized $40,500 of debt discount resulting in an unamortized debt discount of $0 and carrying value of $59,450 at

December 31, 2018.

During the year ended December 31, 2019, this note was paid off.

April 13, 2018, the Company issued a promissory note in the principal amount of $115,000.

This note bears interest at the rate of 7%

per annum, due on December 31, 2019.

In 2019, the Company borrowed an additional $25,000 and repaid $60,000.

The balance outstanding

on this note as of June 30, 2020 and December 31, 2019, was $80,000.

October 2014, January 2015 and October 2015, the Company entered into three (3) separate 24-month equipment financing agreements (the

“Agreements”) with Perkins Industries, LLC (“Perkins”) for equipment in the aggregate amount of $387,750 with

an annual interest rate of 15%.

The assets financed consisted of self-service electronic kiosks placed in service in the Company’s

Southern California region.

The Company is obligated to make monthly interest only payments in accordance with the Agreements.

The Agreements

include a put/call option at the end of year one and the end of year two.

Neither of these options were exercised.

During 2017 $100,000 was paid down on the notes.

The carrying value

as of December 31, 2018 was $287,750.

Maturities of these notes were extended to December 31, 2019.

During the year ended December 31,

During 2017 $100,000

was paid down on the notes.

On April 1, 2019, total principal and accrued interest in the amount of $321,824 were restructured

into two converted notes below.

The carrying value as of March 31, 2020 and December 31, 2019 was $0.

Pursuant to the Agreements Perkins received a

warrant to purchase an aggregate of 310,200 shares at an exercise price of $0.35 per share with a contractual term of three (3) years.

The warrant was recorded as a debt discount and a warrant liability in the aggregate amount of $3,708 due to the down round provision,

pursuant which the exercise price of the warrants was revised to $0.26 at December 31, 2016.

In October 2016, the Company and Perkins agreed

to extend the termination date of two of the Agreements to October 17, 2017 and January 5, 2018.

In consideration of this extension, the

Company issued an additional 200,000 warrants with an exercise price of $0.05 per share and a five-year contractual term.

The fair value

of the warrants was not material and was charged to operations in the accompanying statement of operations for the year ended December

During the year ended December 31, 2018 the Agreements

were purchased by a third party and the due dates were extended to December 31, 2019.

On November 19, 2018, the Company issued a promissory

note in the principal amount of $124,000 with net proceeds of $112,840.

This note matures in 64 weeks.

The Company recorded $11,160 to

debt discount.

During the year ended December 31, 2018, the Company repaid $9,784 in principal and amortized $872 of debt discount resulting

in an unamortized debt discount of $10,288 and carrying value of $103,928 at December 31, 2018.

The carrying value as of December 31, 2018 was $287,750.

Maturities of these notes were extended to December

During the year ended December 31, 2019, $39,266 was paid down on the notes.

On April 1, 2019, total principal and accrued

interest in the amount of $321,824 were restructured into two convertible notes below.

The carrying value as of June 30, 2020 and December

31, 2019 was $0.

to the Agreements Perkins received a warrant to purchase an aggregate of 310,200 shares at an exercise price of $0.35 per share with

a contractual term of three (3) years.

The warrant was recorded as a debt discount and a warrant liability in the aggregate amount of

$3,708 due to the down round provision, pursuant which the exercise price of the warrants was revised to $0.26 at December 31, 2016.

October 2016, the Company and Perkins agreed to extend the termination date of two of the Agreements to October 17, 2017 and January

In consideration of this extension, the Company issued an additional 200,000 warrants with an exercise price of $0.05 per share

and a five-year contractual term.

The fair value of the warrants was not material and was charged to operations in the accompanying statement

of operations for the year ended December 31, 2016.

the year ended December 31, 2018 the Agreements were purchased by a third party and the due dates were extended to December 31, 2019.

November 19, 2018, the Company issued a promissory note in the principal amount of $124,000 with net proceeds of $112,840.

matures in 64 weeks.

The Company recorded $11,160 to debt discount.

During the year ended December 31, 2018, the Company repaid $9,784

in principal and amortized $872 of debt discount resulting in an unamortized debt discount of $10,288 and carrying value of $103,928

at December 31, 2018.

During the year ended December 31, 2019, the Company repaid $48,154 in principal and amortized $9,744 of debt discount

resulting in an unamortized debt discount of $544 and carrying value of $65,518 at December 31, 2019.

During the six months ended June

30, 2020, the Company fully amortized $544 of debt discount.

As of June 30, 2020, the balance outstanding on these notes was $66,062.

December 12, 2018, the Company issued a promissory note in the principal amount of $112,425 with net proceeds of $64,500.

agreed to pay $937 per business day for 120 days.

The Company recorded $47,925 to debt discount.

During the year ended December 31, 2018,

the Company repaid $48,154 in principal and amortized $9,744 of debt discount resulting in an unamortized debt discount of $544 and carrying

value of $65,518 at December 31, 2019.

During the three months ended March 31, 2020, the Company fully amortized $544 of debt discount.

As of March 31, 2020, the balance outstanding on these notes was $66,062.

On December 12, 2018, the Company issued a promissory

note in the principal amount of $112,425 with net proceeds of $64,500.

The Company agreed to pay $937 per business day for 120 days.

Company recorded $47,925 to debt discount.

During the year ended December 31, 2018, the Company repaid $9,370 in principal and amortized

$3,744 of debt discount resulting in an unamortized debt discount of $44,181 and carrying value of $58,874 at December 31, 2018.

the year ended December 31, 2019, the Company repaid $103,055 in principal and fully amortized $44,181 of remaining debt discount resulting

in carrying value of $0 at December 31, 2019.

On March 5, 2019, the Company issued a non-equity

linked promissory note for $100,000 to an investor with an annual 10% rate of interest and a one (1) year maturity.

This investor also

received a warrant for 500,000 shares at a strike price of $0.07 per share with a five (5) year maturity.

The fair value of warrant was

not material.

As of March 31, 2020 and December 31, 2019, the outstanding balance was $100,000.

During the year ended December 31, 2019, the Company

issued two promissory notes in the aggregate principal amount of $135,000, bearing interest of 7% and mature on August 8, 2019.

March 31, 2020 and December 31, 2019, the balance outstanding on these notes was $135,000.

As of the date of release of these financial statements,

all promissory notes were in default.

Convertible Notes Payable

the Company repaid $9,370 in principal and amortized $3,744 of debt discount resulting in an unamortized debt discount of $44,181 and

carrying value of $58,874 at December 31, 2018.

During the year ended December 31, 2019, the Company repaid $103,055 in principal and

fully amortized $44,181 of remaining debt discount resulting in carrying value of $0 at December 31, 2019.

March 5, 2019, the Company issued a non-equity linked promissory note for $100,000 to an investor with an annual 10% rate of interest

and a one (1) year maturity.

This investor also received a warrant for 500,000 shares at a strike price of $0.07 per share with a five

(5) year maturity.

The fair value of warrant was not material.

As of June 30, 2020 and December 31, 2019, the outstanding balance was

the year ended December 31, 2019, the Company issued two promissory notes in the aggregate principal amount of $135,000, bearing interest

of 7% and mature on August 8, 2019.

As of June 30, 2020 and December 31, 2019, the balance outstanding on these notes was $135,000.

of the date of release of these financial statements, all promissory notes were in default.

Notes Payable

Stock Purchase Agreement

In 2014 and 2015 the Company entered into the

2014 Securities Purchase Agreement (the “2014 SPA”) pursuant to which it issued eight (8) convertible notes in the aggregate

face amount of $146,000 due at various dates between August 2015 and March 2016.

The principal on these notes is due at the holder’s

option in cash or common shares at a conversion rate of $0.30 per share.

In connection with these borrowings the Company granted a total

of 360,002 warrants with an exercise price of $0.35 per share and a 5 year contractual term.

The warrants issued have a down round provision

and as a result are classified as a liability in the accompanying consolidated balance sheets.

Pursuant to the down round provision, the

exercise price of the warrants was reduced to $0.22 at December 31, 2016.

During 2017 the Company repaid one of the notes in the amount

On May 1, 2018, the Company granted 1,000,000 warrants with an exercise price of $0.15 per share and a 5 year contractual

term, valued at $2,841, which was recorded as debt discount.

As of March 31, 2020, December 31, 2019 and 2018, outstanding balances of

these notes were $121,000.

2014 and 2015 the Company entered into the 2014 Securities Purchase Agreement (the “2014 SPA”) pursuant to which it issued

eight (8) convertible notes in the aggregate face amount of $146,000 due at various dates between August 2015 and March 2016.

The principal

on these notes is due at the holder’s option in cash or common shares at a conversion rate of $0.30 per share.

In connection with

these borrowings the Company granted a total of 360,002 warrants with an exercise price of $0.35 per share and a 5 year contractual term.

The warrants issued have a down round provision and as a result were classified as a liability in the consolidated balance sheets.

to the down round provision, the exercise price of the warrants was reduced to $0.22 at December 31, 2016.

During 2017 the Company repaid

one of the notes in the amount of $50,000.

On May 1, 2018, the Company granted 1,000,000 warrants with an exercise price of $0.15 per

share and a 5 year contractual term, valued at $2,841, which was recorded as debt discount.

As of June 30, 2020 and December 31, 2019,

outstanding balance of these notes was $121,000.

As of the date of release of these financial statements, these notes were in default.

The Company and Cobrador held three of the convertible

notes in the aggregate face amount of $45,000 and agreed to extend the repayment date to November 17, 2020.

The Company agreed to a revised

conversion price of $0.05 per share and a revised warrant exercise price of $0.07 per share.

The change in the value of warrants was not

material and was charged to operations during the year ended December 31, 2017.

As of March 31, 2020 and December 31, 2019, outstanding

balances of these notes were $45,000.

Company and Cobrador held three of the convertible notes in the aggregate face amount of $45,000 and agreed to extend the repayment date

to November 17, 2020.

The Company agreed to a revised conversion price of $0.05 per share and a revised warrant exercise price of $0.07

The change in the value of warrants was not material and was charged to operations during the year ended December 31, 2017.

As of June 30, 2020 and December 31, 2019, outstanding balance of these notes was $45,000.

Stock Purchase Agreement

During the year ended December 31, 2015, the Company

issued eleven subordinated convertible notes bearing interest at 9.5% per annum with an aggregate principal balance of $441,000 pursuant

to the 2015 Stock Purchase Agreement (the “2015 SPA”).

The notes were due in December 2017 and are payable at the noteholder’s

option in cash or common shares at a conversion rate of $0.30 per share.

The conversion rate was later revised to $0.05 due to down round

provisions contained in the 2015 SPA, and the due date was extended to November 17, 2020.

In connection with these borrowings, the Company

issued a warrant to purchase 735,002 shares of the Company’s common stock at an exercise price of $0.40 per share and a 5 year contractual

The exercise price was later revised to $0.22 per share pursuant to the down round provisions in the 2015 SPA.

The Company allocated

$8,113 of proceeds received to debt discount based on the computed fair value of the convertible notes and warrants issued.

year ended December 31, 2016, the noteholder converted one note in the face amount of $35,000 into 700,000 shares of common stock.

of March 31, 2020 and December 31, 2019, the 2015 SPA had a balance of $406,000.

the year ended December 31, 2015, the Company issued eleven subordinated convertible notes bearing interest at 9.5% per annum with an

aggregate principal balance of $441,000 pursuant to the 2015 Stock Purchase Agreement (the “2015 SPA”).

The notes were due

in December 2017 and are payable at the noteholder’s option in cash or common shares at a conversion rate of $0.30 per share.

conversion rate was later revised to $0.05 due to down round provisions contained in the 2015 SPA, and the due date was extended to November

In connection with these borrowings, the Company issued a warrant to purchase 735,002 shares of the Company’s common

stock at an exercise price of $0.40 per share and a 5 year contractual term.

The exercise price was later revised to $0.22 per share

pursuant to the down round provisions in the 2015 SPA.

The Company allocated $8,113 of proceeds received to debt discount based on the

computed fair value of the convertible notes and warrants issued.

During the year ended December 31, 2016, the noteholder converted one

note in the face amount of $35,000 into 700,000 shares of common stock.

As of June 30, 2020 and December 31, 2019, the 2015 SPA had a

balance of $406,000.

The debt discount was fully amortized as of December 31, 2016.

As of the date of release of these financial statements, these notes were in default.

Stock Purchase Agreement

On June 30, 2016, the Company entered into the

2016 Stock Purchase Agreement (the “2016 SPA”) pursuant to which it issued five convertible notes in the aggregate principal

amount of $761,597.

The 2016 SPA notes are due in November 2020 and bear interest at 9.5% per annum.

The notes are convertible into shares

June 30, 2016, the Company entered into the 2016 Stock Purchase Agreement (the “2016 SPA”) pursuant to which it issued five

convertible notes in the aggregate principal amount of $761,597.

The 2016 SPA notes are due in November 2020 and bear interest at 9.5%

The notes are convertible into shares of common stock at a conversion price of $0.17 per share.

With this note, the Company

satisfied its obligations for:

previously issued promissory notes of $549,000, accrued interest of $38,615, lease principal installments

of $47,466, previously accrued registration rights penalties of $22,156, due to a former officer of $81,250, and additional interest,

expenses, fine and penalties of $23,110.

The Company charged additional interest, expenses, fines and penalties $23,110 to operations

as amortization of debt discount and deferred financing costs during the year ended December 31, 2016.

connection with the 2016 SPA, the Company granted a total of 2,239,900 warrants with an exercise price of $0.30 per share which was later

revised to $0.05 per share due to down round provisions, with a 5 year contractual life.

The Company allocated $19,242 to debt discount

based on the computed fair value of the convertible notes and warrants issued and classified the debt discount is as a warrant liability

due to the down round provision in the warrants.

July 11, 2019, $85,000 in principal were converted into 1,700,000 shares of common stock.

of June 30, 2020 and December 31, 2019, the 2016 SPA had a carrying value of $676,597.

As of the date of release of these financial statements,

these notes are in default.

2016 Financings

the year ended December 31, 2016, the Company issued four convertible notes (the “Cobrador 2016 Notes”) in the aggregate

principal amount of $115,000.

The Cobrador 2016 Notes have a 2 year term, bear interest at 9.5% per annum, and are convertible into shares

of common stock at a conversion price of $0.17 per share.

With this note, the Company satisfied its obligations for:

previously issued

promissory notes of $549,000, accrued interest of $38,615, lease principal installments of $47,466, previously accrued registration rights

penalties of $22,156, due to a former officer of $81,250, and additional interest, expenses, fine and penalties of $23,110.

charged additional interest, expenses, fines and penalties $23,110 to operations as amortization of debt discount and deferred financing

costs during the year ended December 31, 2016.

In connection with the 2016 SPA, the Company granted

a total of 2,239,900 warrants with an exercise price of $0.30 per share which was later revised to $0.05 per share due to down round provisions,

with a 5 year contractual life.

The conversion price was subsequently revised to $0.05 per the down round provisions

and the maturity date was extended to September 26, 2021.

In connection with the Cobrador 2016 Notes, the Company granted a total of

338,235 warrants with an exercise price of $0.30 per share which was subsequently revised to $0.05 per share due to down round provisions

with a 5 year contractual term.

The Company allocated $1,994 to debt discount based on the computed fair value of the convertible notes

and warrants issued and classified the debt discount is as a warrant liability due to the down round provision in the warrants.

On July 11, 2019, $85,000 in principal was converted

into 1,700,000 shares of common stock.

As of March 31, 2020 and December 31, 2019, the

2016 SPA had a carrying value of $676,597.

As of the date of release of these financial statements, these notes are in default.

Other 2016 Financings

During the year ended December 31, 2016, the Company

issued four convertible notes (the “Cobrador 2016 Notes”) in the aggregate principal amount of $115,000.

The Cobrador 2016

and warrants issued and classified the debt discount as a warrant liability due to the down round provision in the warrants.

year ended December 31, 2019, $20,000 was converted into 400,000 shares.

As of June 30, 2020 and December 31, 2019, the Cobrador 2016

Notes had a carrying value of $95,000.

the fourth quarter of 2016, the Company issued three additional convertible notes in the aggregate principal amount of $250,000.

notes have a 2 year term, bear interest at 9.5% per annum and are convertible into shares of common stock at a conversion price of $0.05

The conversion price was subsequently revised to $0.05 per the down round provisions and the maturity date was extended to

September 26, 2021.

In connection with the Cobrador 2016 Notes, the Company granted a total of 338,235 warrants with an exercise price

of $0.30 per share which was subsequently revised to $0.05 per share due to down round provisions with a 5 year contractual term.

Company allocated $1,994 to debt discount based on the computed fair value of the convertible notes and warrants issued and classified

the debt discount as a warrant liability due to the down round provision in the warrants.

During the year ended December 31, 2019, $20,000

was converted into 400,000 shares.

As of March 31, 2020 and December 31, 2019, the Cobrador 2016 Notes had a carrying value of $95,000.

During the fourth quarter of 2016, the Company

issued three additional convertible notes in the aggregate principal amount of $250,000.

The notes have a 2 year term, bear interest at

9.5% per annum and are convertible into shares of common stock at a conversion price of $0.05 per share.

In connection with these borrowings,

the Company granted warrants to purchase 5,000,000 shares of common stock with an exercise price of $0.07 per share.

The Company allocated

$27,585 to debt discount based on the computed fair value of the convertible notes and warrants issued, and the debt discount was classified

as a warrant liability due to the down round provision in the warrants.

As of March 31, 2020 and December 31, 2019, the carrying value

of the notes was $250,000.

In connection with these borrowings, the Company granted warrants to purchase 5,000,000 shares of common stock with an exercise

price of $0.07 per share.

The Company allocated $27,585 to debt discount based on the computed fair value of the convertible notes and

warrants issued, and the debt discount is classified as a warrant liability due to the down round provision in the warrants.

30, 2020 and December 31, 2019, the carrying value of the notes was $250,000.

As of the date of release of these financial statements,

these notes were in default.

the year ended December 31, 2017, the Company entered into 19 separate convertible notes agreements (the “2017 Convertible Notes)”

in the aggregate principal amount of $923,882.

The 2017 Convertible Notes each have a 2 year term, bear interest at 9.5%, and are convertible

into shares of common stock at a conversion price of $0.05 per share.

In connection with the 2017 Convertible Notes, the Company issued

a total of 16,537,926 warrants with an exercise price of $0.07 per share with a 5 year term.

The Company allocated $59,403 to a debt

discount based on the computed fair value of the convertible notes and warrants issued and classified the debt discount as a warrant

liability due to the down round provision in the warrants.

During the year ended December 31, 2018, the Company amortized $31,940 of

debt discount resulting in unamortized debt discount of $13,278 and carrying value of $910,608 at December 31, 2018.

During the year

ended December 31, 2019, the Company fully amortized remaining $13,278 of debt discount.

As of June 30, 2020 and December 31, 2019, the

carrying value of the notes was $924,282.

As of the date of release of these financial statements, these notes were in default.

2017 Financings

During the year ended December 31, 2017, the Company

entered into 19 separate convertible notes agreements (the “2017 Convertible Notes)”

the year ended December 31, 2018, the Company entered into seventeen separate convertible notes agreements (the “2018 Convertible

Notes)”

in the aggregate principal amount of $537,500.

The 2017 Convertible Notes each have a 2 year term, bear interest at 9.5%, and are convertible into shares of common stock at

a conversion price of $0.05 per share.

In connection with the 2017 Convertible Notes, the Company issued a total of 16,537,926 warrants

with an exercise price of $0.07 per share with a 5 year term.

The Company allocated $59,403 to a debt discount based on the computed fair

value of the convertible notes and warrants issued and classified the debt discount as a warrant liability due to the down round provision

in the warrants.

During the year ended December 31, 2018, the Company amortized $31,940 of debt discount resulting in unamortized debt

discount of $13,278 and carrying value of $910,608 at December 31, 2018.

During the year ended December 31, 2019, the Company fully amortized

remaining $13,278 of debt discount.

As of March 31, 2020 and December 31, 2019, the carrying value of the notes was $924,282.

date of release of these financial statements, these notes were in default.

2018 Financings

During the year ended December 31, 2018, the Company

entered into seventeen separate convertible notes agreements (the “2018 Convertible Notes)”

in the aggregate principal amount

The 2018 Convertible Notes each have a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and

are convertible into shares of common stock at a conversion price of $0.05 per share.

In connection with the 2018 Convertible Notes, the

Company issued a total of 10,750,000 warrants with an exercise price of $0.07 per share with a 5 year term.

The Company allocated $33,384

to a debt discount based on the computed fair value of the convertible notes and warrants issued and classified the debt discount as a

warrant liability due to the down round provision in the warrants.

During the year ended December 31, 2018, the Company amortized $12,803

of debt discount resulting in an unamortized debt discount of $20,581 and carrying value of $516,919 at December 31, 2018.

year ended December 31, 2019, the Company amortized $16,692 of debt discount resulting in an unamortized debt discount of $3,889 and carrying

value of $533,611 at December 31, 2019.

During the three months ended March 31, 2020, the Company amortized $2,113 of debt discount resulting

in an unamortized debt discount of $1,776 and carrying value of $535,724 at March 31, 2020.

As of the date of release of these financial

statements, convertible notes in aggregate amount of $340,000 were in default.

On November 20, 2018, two officers converted $436,500

accrued compensation into two convertible note agreements in the principal amount of $436,500.

The notes have a 2 year term, bear interest

at 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.05 per

The 2018 Convertible Notes each have a 2 year term, bear interest at 9.5%

if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.05 per share.

In connection with the 2018 Convertible Notes, the Company issued a total of 10,750,000 warrants with an exercise price of $0.07 per

share with a 5 year term.

The Company allocated $33,384 to a debt discount based on the computed fair value of the convertible notes

and warrants issued and classified the debt discount as a warrant liability due to the down round provision in the warrants.

year ended December 31, 2018, the Company amortized $12,803 of debt discount resulting in an unamortized debt discount of $20,581 and

carrying value of $516,919 at December 31, 2018.

During the year ended December 31, 2019, the Company amortized $16,692 of debt discount

resulting in an unamortized debt discount of $3,889 and carrying value of $533,611 as of December 31, 2019.

During the six months ended

June 30, 2020, the Company amortized $3,516 of debt discount resulting in an unamortized debt discount of $373 and carrying value of

$537,127 as of June 30, 2020.

As of the date of release of these financial statements, convertible notes in aggregate amount of $325,000

were in default.

November 20, 2018, two officers converted $436,500 accrued compensation into two convertible note agreements in the principal amount

of $436,500 in exchange.

The note has a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and is convertible

into shares of common stock at a conversion price of $0.05 per share.

year ended December 31, 2018, the Company entered into three convertible notes agreements in the aggregate principal amount of $240,500

with a net proceed of $214,000.

These notes had a 1-year term, and bear interest at 8%-12%.

The notes are convertible into common stock

at 60% to 61% multiplied by the lowest one to two trading price(s) during fifteen to twenty-five trading day period prior to the Conversion

The embedded conversion features were valued at $59,027, which were recorded as debt discount.

In addition, the Company also recorded

$26,500 as original debt discount.

These notes were in default due to failure to comply with the reporting requirements of the Exchange

Act, as the result, the Company recorded additional $120,250 penalty in principal as of December 31, 2018.

During the year ended December

the Company entered into three convertible notes agreements in the aggregate principal amount of $240,500 with a net proceed of $214,000.

These notes had a 1-year term, and bears interest at 8%-12%.

The notes are convertible into common stock at 60% to 61% multiplied by the

lowest one to two trading price(s) during fifteen to twenty-five trading day period prior to the Conversion Date.

The embedded conversion

features were valued at $59,027, which were recorded as debt discount.

In addition, the Company also recorded $26,500 as original debt

These notes were in default due to failure to comply with the reporting requirements of the Exchange Act, as a result, the Company

recorded an additional $120,250 penalty in principal as of December 31, 2018.

During the year ended December 31, 2018, the Company amortized

$21,382 of debt discount resulting in unamortized debt discount of $64,145 and carrying value of $296,605 at December 31, 2018.

the year ended December 31, 2019, the Company repaid $64,300 in principal and amortized $21,381 of debt discount, recorded $42,764 in

accretion of debt discount, resulting in unamortized debt discount of $0 and carrying value of $296,450 at December 31, 2019.

three months ended March 31, 2020, the repayment in the amount of $400 was returned to the Company resulting in carrying value of $296,850

at March 31, 2020.

2019 Financings

On March 18, 2019, the Company issued a convertible

promissory note for $85,250 with net proceed of $75,000 to an investor with an 8.0% rate of interest and a nine-month maturity.

has the option to pre-pay the note (principal and accrued interest) in cash within the 1st 90 days from issuance at a 25% premium, and

40% premium 91-180 days from the issuance date.

Subsequent to 181 days, the Company shall have no right of prepayment and the holder may

convert at a 40% discount to the prevailing market price.

31, 2018, the Company amortized $21,382 of debt discount resulting in unamortized debt discount of $64,145 and carrying value of $296,605

at December 31, 2018.

During the year ended December 31, 2019, the Company repaid $64,300 in principal and amortized $21,381 of debt

discount, recorded $42,764 in accretion of debt discount, resulting in unamortized debt discount of $0 and carrying value of $296,450

at December 31, 2019.

During the six months ended June 30, 2020, the repayment in the amount of $400 was returned to the Company resulting

in carrying value of $296,850 as of June 30, 2020.

March 18, 2019, the Company issued a convertible promissory note for $85,250 with net proceed of $75,000 to an investor with an 8.0%

rate of interest and a one (1) year maturity.

The Company has the option to pre-pay the note (principal and accrued interest) in cash

within the 1st 90 days from issuance at a 25% premium, and 40% premium 91-180 days from the issuance date.

Subsequent to 181 days, the

Company shall have no right of prepayment.

The note matured on December 11, 2019.

The note is convertible into shares of

common stock at the lesser of 1) lowest trading price of twenty-five days prior to March 18, 2019 or 2) 60% of lowest trading price of

twenty-five days prior to the Conversion Day.

In addition, the Company also recorded $10,250 as original debt discount.

These notes were

in default due to failure to comply with the reporting requirements of the Exchange Act, as a result, the Company recorded an additional

$42,625 penalty in principal as of December 31, 2019.

During the year ended December 31, 2019, the Company amortized $23,384 of debt

discount resulting in unamortized debt discount of $0.

As of March 31, 2020 and December 31, 2019, the carrying value of the note was

As of the date of release of these financial statements, convertible note was in default.

On March 14, 2019, the Company converted accounts

payable of approximately $105,000 payables into a convertible note agreement in the principal amount of $60,000, remaining balance of

the amount owed was released and recorded as a settlement of liability.

The note has a 2 year term, bears interest at 9.5% if paid in

cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.05 per share.

On April 1, 2019, The Company converted an aggregate

amount of principal and accrued interest of Perkins promissory note in the amount of $321,824 and accounts payable of $10,000 into two

convertible notes.

Both Notes have a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and are convertible

into shares of common stock at a conversion price of $0.05 per share.

The outstanding principal balance was $331,824 at March 31, 2020

and December 31, 2019.

On April 15, 2019, the Company converted an accrued

payable of $108,572, which was used to purchase vending machine, into a convertible note.

The Note has a 2 year term, bear interest at

9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.07 per

The outstanding principal balance was $108,572 at March 31, 2020 and December 31, 2019.

2019, the Company issued a series of convertible notes under a $250,000 revolving Senior Secured credit facility to an investor, for working

capital purposes.

The note is convertible into shares of common stock

at the lesser of 1) lowest trading price of twenty-five days prior to March 18, 2019 or 2) 60% of lowest trading price of twenty-five

days prior to the Conversion Day.

The embedded conversion features were valued at $0 due to default.

In addition, the Company also recorded

$10,250 as original debt discount.

These notes were in default due to failure to comply with the reporting requirements of the Exchange

Act, as the result, the Company recorded additional $42,625 penalty in principal as of December 31, 2019.

During the year ended

December 31, 2019, the Company amortized $23,384 of debt discount resulting in unamortized debt discount of $0.

As of June 30, 2020 and

December 31, 2019, the carrying value of the note was $127,875.

As of the date of release of these financial statements, convertible

note was in default.

March 14, 2019, the Company converted accounts payable of approximately $105,000 payables into a convertible note agreement in the principal

amount of $60,000, remaining balance of the amount owed was released and recorded as a settlement of liability.

The note has a 2 year

term, bears interest at 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion

price of $0.05 per share.

April 1, 2019, the Company converted an aggregate amount of principal and accrued interest of Perkins promissory note in the amount of

$321,824 and accounts payable of $10,000 into two convertible notes.

Both Notes have a 2 year term, bear interest at 9.5% if paid in

cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.05 per share.

The outstanding

principal balance was $331,824 as of June 30, 2020 and December 31, 2019.

April 15, 2019, the Company converted an accrued payable of $108,572, which was used to purchase vending machine, into a convertible

The Note has a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares

of common stock at a conversion price of $0.07 per share.

The outstanding principal balance was $108,572 as of June 30, 2020 and December

May 30, 2019, the Company issued a series of convertible notes under a $250,000 revolving Senior Secured credit facility to an investor,

for working capital purposes.

The notes carry an interest rate of 9.5% and a two-year term.

The notes are convertible into common stock at $0.07 per

share and are redeemable after one-year at the Company’s option.

The notes also contain a 4.99% limitation of ownership on conversion.

The notes are convertible into common stock

at $0.07 per share and are redeemable after one-year at the company’s option.

The notes also contain a 4.99% limitation of ownership

on conversion.

During the six months ended June 30, 2020, the agreement was modified formally to increase the limit on the facility by

The investor had consented to higher draws on the facility in excess of the limit per the initial agreement.

As of March 31, 2020 and

December 31, 2019, $451,231 and $426,303 was drawn under the agreement, respectively.

Subsequent to March 31, 2020, the agreement was

modified formally to increase the limit on the facility by $206,231.

During the year ended December 31, 2019, the Company

entered into several convertible notes agreements in the amount of $68,000.

The Notes have a 2 year term, bear interest at 9.5% if paid

in cash, 15% if paid in common stock, and are convertible into shares of common stock at a conversion price of $0.07 per share.

The outstanding

principal balance was of $68,000 at March 31, 2020 and December 31, 2019.

During the year ended December 31, 2019, the Company

entered into a convertible notes agreement in the amount of $50,000.

The Note has a 6 month term, bears interest at 9.5% if paid in cash,

15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.01 per share.

In connection with

the Note, the Company issued 10,000,000 warrants with an exercise price of $0.02 per share with a 5 year term.

The outstanding balance

was of $50,000 at March 31, 2020 and December 31, 2019.

2020 Financings

On January 1, 2020, the Company issued a convertible

note in the amount of $8,500 in conversion of accrued liabilities.

The Note has a 2 year term, bears interest of 9.5% if paid in cash,

15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.05 per share.

The outstanding

principal balance was $8,500 as of March 31, 2020.

On March 1, 2020, the Company issued a convertible

note in the amount of $17,899 in conversion of accrued liabilities.

The Note has a 2 year term, bears interest of 9.5% if paid in cash,

15% if paid in common stock, and is convertible into shares of common stock at a conversion price of $0.05 per share.

The outstanding

principal balance was $17,899 as of March 31, 2020.

Scheduled maturities of debt remaining as of March 31, 2020 for each

respective fiscal year end are as follows:

During the six

months ended June 30, 2020, $38,086 was drawn under the agreement, including $10,500 in cash proceeds and $22,586 in repayment of accrued

As of June 30, 2020 and December 31, 2019, $464,389 and $426,303 was drawn under the agreement, respectively.

the year ended December 31, 2019, the Company entered into several convertible notes agreements in the amount of $68,000.

The Notes have

a 2 year term, bear interest at 9.5% if paid in cash, 15% if paid in common stock, and are convertible into shares of common stock at

a conversion price of $0.07 per share.

The outstanding principal balance was of $68,000 as of June 30, 2020 and December 31, 2019.

the year ended December 31, 2019, the Company entered into a convertible notes agreement in the amount of $50,000.

The Note has a 6 month

term, bears interest at 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion

price of $0.01 per share.

In connection with the Note, the Company issued 10,000,000 warrants with an exercise price of $0.02 per share

with a 5 year term.

The outstanding balance was of $50,000 as of June 30, 2020 and December 31, 2019.

January 1, 2020, the Company issued a convertible note in the amount of $8,500 in conversion of accrued liabilities.

The Note has a 2

year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion

price of $0.05 per share.

The outstanding principal balance was $8,500 as of June 30, 2020.

March 1, 2020, the Company issued a convertible note in the amount of $17,899 in conversion of accrued liabilities.

The Note has a 2

year term, bears interest of 9.5% if paid in cash, 15% if paid in common stock, and is convertible into shares of common stock at a conversion

price of $0.05 per share.

The outstanding principal balance was $17,899 as of June 30, 2020.

maturities of debt remaining as of June 30, 2020 for each respective fiscal year end are as follows:

unamortized debt discount

The following table reconciles, for the three

months ended March 31, 2020 and 2019, the beginning and ending balances for financial instruments related to the embedded conversion features

that are recognized at fair value in the consolidated financial statements.

following table reconciles, for the six months ended June 30, 2020 and year ended December 31, 2019, the beginning and ending balances

for financial instruments related to the embedded conversion features that are recognized at fair value in the consolidated financial

Balance of embedded derivative at the beginning of the period

3 unchanged sentences

Balance of embedded derivatives at the end of the period

Note 8 –

Capital Lease Obligations

The Company acquired capital assets under capital

lease obligations.

Pursuant to the agreement with the lessor, the Company makes quarterly lease payments and will make a guaranteed residual

payment at the end of the lease as summarized below.

At the end of the lease, the Company will own the equipment.

In August 2016, the Company and the lessor agreed

to extend the term of the lease until December 31, 2020.

As a consideration of the extension, the Company issued warrants to acquire 150,000

shares of common stock.

The warrants have an exercise price of $0.30 per share, a term of three years, and were recorded as a debt discount

and warrant liability due to the down round provision and as such are marked to market each reporting period.

During the year ended December 31, 2018 the Company

entered into various capital lease agreements.

The leases expire at various points through the year ended December 31, 2023.

The following schedule provides minimum future

rental payments required as of March 31, 2020, under the current portion of capital leases.

Company acquired capital assets under capital lease obligations.

Pursuant to the agreement with the lessor, the Company makes quarterly

lease payments and will make a guaranteed residual payment at the end of the lease as summarized below.

At the end of the lease, the

Company will own the equipment.

August 2016, the Company and the lessor agreed to extend the term of the lease until December 31, 2020.

As a consideration of the extension,

the Company issued warrants to acquire 150,000 shares of common stock.

The warrants have an exercise price of $0.30 per share, a term

of three years, and were recorded as a debt discount and warrant liability due to the down round provision and as such are marked to

market each reporting period.

the year ended December 31, 2018 the Company entered into various capital lease agreements.

The leases expire at various points through

the year ended December 31, 2023.

following schedule provides minimum future rental payments required as of June 30, 2020, under the current portion of capital leases.

Total minimum lease payments

1 unchanged sentence

Present value of minimum lease payments and guaranteed residual value

Note 9 –

Capital Stock

The Company has authorized 600,000,000 shares

of common stock.

During the three months ended March 31, 2019, the Company issued 3,271,000

shares of its common stock, comprised of 2,871,096 shares of common stock with a fair value of $41,003 for services rendered, and 400,000

shares in conversion of $20,000 of convertible notes.

There were no common stock issuances during the three months ended December 31,

Note 10 –

Company has authorized 600,000,000 shares of common stock.

the six months ended June 30, 2019, the Company issued 3,841,096 shares of its common stock, including 3,441,096 shares of common stock

with a fair value of $251,240 for services rendered, and 400,000 shares in conversion of $20,000 of convertible notes.

Stock Options and Warrants

At March 31, 2020 the Company had the following warrant securities

December 31, 2020 the Company had the following warrant securities outstanding:

2015 Warrants - 2015 SPA convertible debt

22 unchanged sentences

February 2025

During the three months ended March 31, 2020,

the Company issued warrants exercisable into 3,000,000 shares of common stock to its officer.

The fair value of warrants was determined

to be $12,594, and was estimated using the Black-Scholes-Merton option-pricing model with the following assumptions:

expected volatility

of 339%, risk-free interest rate 1.35%, expected dividend yield of 0%.

A summary of all warrants activity for the three months ended March

31, 2020 is as follows:

the six months ended June 30, 2020, the Company issued warrants exercisable into 3,000,000 shares of common stock to its officer.

fair value of warrants was determined to be $12,594, and was estimated using the Black-Scholes-Merton option-pricing model with the following

expected volatility of 339%, risk-free interest rate 1.35%, expected dividend yield of 0%.

summary of all warrants activity for the six months ended June 30, 2020 is as follows:

Balance outstanding at December 31, 2020

Balance outstanding at March 31, 2020

Exercisable at March 31, 2020

The following table provides a summary of changes

in the warrant liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months

ended March 31, 2020 and the year ended December 31, 2019.

Balance outstanding at June 30, 2020

Exercisable at June 30, 2020

following table provides a summary of changes in the warrant liabilities measured at fair value on a recurring basis using significant

unobservable inputs (Level 3) for the six months ended June 30, 2020 and the year ended December 31, 2019.

Balance of embedded derivative at the beginning of the period

3 unchanged sentences

Balance of embedded derivatives at the end of the period

Equity Incentive Plan

On July 22, 2011, the Board of Directors of the

Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”) and on July 26, 2011, stockholders holding a

majority of shares of the Company approved, by written consent, the Plan and the issuance under the Plan of 5,000,000 shares.

16, 2017, the Board of Directors approved an increase of 10,000,000 shares to be made available for issuance under the Plan.

the total number of shares of common stock available for issuance under the Plan is 15,000,000 shares.

Awards may be granted to employees,

officers, directors, consultants, agents, advisors and independent contractors of the Company and its related companies.

may be designated at the time of grant as either incentive stock options or nonqualified stock options.

Stock-based compensation includes

expense charges related to all stock-based awards.

Such awards include options, warrants and stock grants.

Generally, the Company issues

stock options that vest over three years and expire in 5 to 10 years.

A summary of all stock option activity for the

three months ended March 31, 2020 is as follows:

Incentive Plan

July 22, 2011, the Board of Directors of the Company approved the Company’s 2011 Equity Incentive Plan (the “Plan”)

and on July 26, 2011, stockholders holding a majority of shares of the Company approved, by written consent, the Plan and the issuance

under the Plan of 5,000,000 shares.

On November 16, 2017, the Board of Directors approved an increase of 10,000,000 shares to be made

available for issuance under the Plan.

Accordingly, the total number of shares of common stock available for issuance under the Plan

is 15,000,000 shares.

Awards may be granted to employees, officers, directors, consultants, agents, advisors and independent contractors

of the Company and its related companies.

Such options may be designated at the time of grant as either incentive stock options or nonqualified

stock options.

Stock-based compensation includes expense charges related to all stock-based awards.

Such awards include options, warrants

and stock grants.

Generally, the Company issues stock options that vest over three years and expire in 5 to 10 years.

summary of all stock option activity for the six months ended June 30, 2020 is as follows:

Balance outstanding at December 31, 2020

Cancelled or expired

Balance outstanding at March 31, 2020

Exercisable at March 31, 2020

Note 11 –

Balance outstanding at June 30, 2020

Exercisable at June 30, 2020

Commitments and Contingencies

Major League Baseball Properties, Inc.

In March 2016, the Company entered into a license

agreement beginning April 1, 2016 through December 31, 2019 with Major League Baseball Properties, Inc.

League Baseball Properties, Inc.

License Agreement

March 2016, the Company entered into a license agreement beginning April 1, 2016 through December 31, 2019 with Major League Baseball

Properties, Inc.

(“MLB”

“Licensor”)

for the non-exclusive right to certain proprietary intangible property of the Licensor to be used in connection with the manufacturing,

distribution, promotion and advertisement of the Company’s products sold within the U.S., the District of Columbia and U.S.

Under the license agreement, the Company is scheduled to pay the following guaranteed payments;

$150,000 during 2016, $275,000 during

2017, $100,000 during 2018, and $115,000 during 2019.

The Company is obligated to pay the licensor a royalty based on the product sold

or advertising sold.

The royalty paid will offset all or a portion of the guaranteed payments.

The agreement is subject to customary default

and termination clauses.

The Company paid $0 during the three months ended March 31, 2019 and 2020, and has accrued $115,000 at December

31, 2019 and March 31, 2020.

As of March 31, 2020, the agreement with MLB has

“Licensor”) for the non-exclusive right to certain proprietary intangible property of

the Licensor to be used in connection with the manufacturing, distribution, promotion and advertisement of the Company’s products

sold within the U.S., the District of Columbia and U.S.

Under the license agreement, the Company is scheduled to pay the

following guaranteed payments;

$150,000 during 2016, $275,000 during 2017, $100,000 during 2018, and $115,000 during 2019.

is obligated to pay the licensor a royalty based on the product sold or advertising sold.

The royalty paid will offset all or a portion

of the guaranteed payments.

The agreement is subject to customary default and termination clauses.

The Company paid $0 during the six

months ended June 30, 2019 and 2020, and has accrued $115,000 at December 31, 2019 and June 30, 2020.

of June 30, 2020, the agreement with MLB has expired.

The Company will not be continuing the relationship.

Note 12 –

Subsequent Events

The Company has evaluated events occurring subsequent to March 31,

2020 through the date these financial statements were issued and determined the following significant events require disclosure:

Subsequent to March 31, 2020, the Company issued

a convertible promissory note in the principal amount of $147,000 to an unaffiliated investor to support the Company’s working capital

requirements.

The note bears interest at the rate of 9.5% per annum and is due and payable in two years.

The note is convertible into

shares of the Company’s common stock at $0.03 per share and is redeemable at the principal amount plus accrued unpaid interest after

one year, at the Company’s option.

Subsequent to March 31, 2020, the Company issued

multiple convertible promissory notes in the aggregate principal amount of $561,719 to unaffiliated investors.

The notes bear interest

at the rate of 9.5% per annum and are due and payable in two years.

The notes are convertible into shares of the Company’s common

stock at $0.05 per share and are redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s

Subsequent to March 31, 2020, the Company issued

a convertible note for deferred compensation in the principal amount of $94,600.

The notes bear interest at the rate of 9.5% per annum

and is due and payable in two years.

The note is convertible into shares of the Company’s common stock at $0.05 per share and is

redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s option.

Subsequent to March 31, 2020, the Company issued

188,886,284 of its common stock in conversion of $689,096 of convertible notes.

Subsequent to March 31, 2020, the Company hired Patrick Avery as the

Company’s Chief Operating Officer with a salary of $84,000.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Forward-Looking Statements

Certain statements contained herein constitute

“forward-looking statements”

within the meaning of the Private Securities Litigation Reform Act of 1995 (the “1995 Reform

Company has evaluated events occurring subsequent to June 30, 2020 through the date these financial statements were issued and determined

the following significant events require disclosure:

to June 30, 2020, the Company issued a convertible promissory note in the principal amount of $147,000 to an unaffiliated investor to

support the Company’s working capital requirements.

The note bears interest at the rate of 9.5% per annum and is due and payable

in two years.

The note is convertible into shares of the Company’s common stock at $0.03 per share and is redeemable at the principal

amount plus accrued unpaid interest after one year, at the Company’s option.

to June 30, 2020, the Company issued multiple convertible promissory notes in the aggregate principal amount of $561,719 to unaffiliated

The notes bear interest at the rate of 9.5% per annum and are due and payable in two years.

The notes are convertible into

shares of the Company’s common stock at $0.05 per share and are redeemable at the principal amount plus accrued unpaid interest

after one year, at the Company’s option.

to June 30, 2020, the Company issued a convertible note for deferred compensation in the principal amount of $94,600.

The notes bear

interest at the rate of 9.5% per annum and is due and payable in two years.

The note is convertible into shares of the Company’s

common stock at $0.05 per share and is redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s

to June 30, 2020, the Company issued 188,886,284 of its common stock in conversion of $689,096 of convertible notes.

to June 30, 2020, the Company hired Patrick Avery as the Company’s Chief Operating Officer with a salary of $84,000.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking

statements contained herein constitute “forward-looking statements”

within the meaning of the Private Securities Litigation

Reform Act of 1995 (the “1995 Reform Act”).

BoxScore Brands, Inc.

desires to avail itself of certain “safe harbor”

provisions of the 1995 Reform Act and

is therefore including this special note to enable us to do so.

Except for the historical information contained herein, this report contains

forward-looking statements (identified by the words “estimate,”

provisions of the 1995 Reform Act and is therefore including this special note to enable us to do so.

Except for the historical information

contained herein, this report contains forward-looking statements (identified by the words “estimate,”

“project,”

6 unchanged sentences

“strategy”

and similar expressions),

which are based on our current expectations and speak only as of the date made.

These forward-looking statements are subject to various

risks, uncertainties and factors that could cause actual results to differ materially from the results anticipated in the forward-looking

statements, including, without limitation, those discussed under Part I, Item 1A “Risk Factors”

in the Annual Report on Form

10-K for the year ended December 31, 2019, and those described herein that could cause actual results to differ materially from the results

anticipated in the forward-looking statements, and the following:

● Our limited operating history with our business model;

● The low cash balance and limited financing currently available

We may in the near future have a number of obligations that we will be unable to meet without generating additional income or

raising additional capital;

● Further cost reductions or curtailment in future operations

due to our low cash balance and negative cash flow;

● Our ability to effect a financing transaction to fund our

operations which could adversely affect the value of our stock;

● Our limited cash resources may not be sufficient to fund

continuing losses from operations;

● The failure of our products and services to achieve market

● The inability to compete in our market, especially against

established industry competitors with greater market presence and financial resources.

The following discussion and analysis provides

information that our management believes is relevant to an assessment and understanding of our results of operations and financial condition,

and should be read in conjunction with the consolidated financial statements and footnotes that appear elsewhere in this report.

BoxScore Brands, Inc.

(formerly U-Vend Inc.) (the

“Company”) formerly developed, marketed and distributed various self-serve electronic kiosks and mall/airport co-branded islands

throughout North America.

Due to the nationwide shutdown related to the COVID-19 pandemic, the Company spent a portion of 2020 restructuring

and retiring certain corporate debt and obligations.

The Company focused on implementing a new operational direction.

After a thorough

evaluation process, the Company found that there is a substantial long-term demand for specific commodities relating to battery and new

energy technologies.

This presents a timely and unique opportunity based on rising demand characteristics.

By capitalizing on market

trends and current sustainable energy government mandates and ESG initiatives, we will focus on bringing a vertically-integrated solution

Results of Operations

Three Months Ended March 31, 2020 Compared

to Three Months Ended March 31, 2020

For the three months ended March 31, 2020, the

Company had no revenue compared to revenues of $49,773 during the three months ended March 31, 2019.

decrease in revenue was due to the sale of our revenue-generating MiniMelts assets in March 2019 (see note 1).

Cost of Goods Sold

For the three months ended March 31, 2020, the

Company had no cost of goods sold compared to cost of goods sold of $64,399 during the three months ended March 31, 2019.

The Company’s

gross margin during the three months ended March 31, 2019 was (29)%.

The decrease in 2020 was because all inventory was liquidated during

the quarter ended March 31, 2019 prior to the sale of the MiniMelts assets (see Note 1).

Selling Expenses

Selling expenses for three months ended March

31, 2020 were $0 compared to $61,474 during the three months ended March 31, 2020.

During the three months ended March 31, 2019, the Company

expensed $38,333 for sponsorship and media commitment fees in connection with the Major League Baseball Properties, Inc.

and similar expressions), which are based on our current expectations and speak only as of the date made.

forward-looking statements are subject to various risks, uncertainties and factors that could cause actual results to differ materially

from the results anticipated in the forward-looking statements, including, without limitation, those discussed under Part I, Item 1A

“Risk Factors”

in the Annual Report on Form 10-K for the year ended December 31, 2019, and those described herein that could

cause actual results to differ materially from the results anticipated in the forward-looking statements, and the following:

limited operating history with our business model;

low cash balance and limited financing currently available to us.

We may in the near future have a number of obligations that we will

be unable to meet without generating additional income or raising additional capital;

cost reductions or curtailment in future operations due to our low cash balance and negative cash flow;

ability to effect a financing transaction to fund our operations which could adversely affect the value of our stock;

limited cash resources may not be sufficient to fund continuing losses from operations;

failure of our products and services to achieve market acceptance;

inability to compete in our market, especially against established industry competitors with greater market presence and financial resources.

following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of

our results of operations and financial condition, and should be read in conjunction with the consolidated financial statements and footnotes

that appear elsewhere in this report.

(formerly U-Vend Inc.) (the “Company”) formerly developed, marketed and distributed various self-serve electronic

kiosks and mall/airport co-branded islands throughout North America.

Due to the nationwide shutdown related to the COVID-19 pandemic,

the Company spent a portion of 2020 restructuring and retiring certain corporate debt and obligations.

The Company focused on implementing

a new operational direction.

After a thorough evaluation process, the Company found that there is a substantial long-term demand

for specific commodities relating to battery and new energy technologies.

This presents a timely and unique opportunity based on rising

demand characteristics.

By capitalizing on market trends and current sustainable energy government mandates and ESG initiatives,

we will focus on bringing a vertically-integrated solution to market.

of Operations

months Ended June 30, 2020 Compared to Three months Ended June 30, 2019

the three months ended June 30, 2020 and 2019, the Company had no revenue.

of Goods Sold

the three months ended June 30, 2020 and 2019, the Company had no cost of goods sold.

expenses for three months ended June 30, 2020 were $0 compared to $41,473 during the three months ended June 30, 2020.

During the three

months ended March 31, 2020, there were no fees recorded under the agreement with MLB as it expired on December 31, 2019.

General and Administrative Expenses

General and administrative expenses for the three

months ended March 31, 2020 were $51,582, a decrease of $63,030 or 55%, compared to $114,612 for the three months ended March 31, 2020.

The decrease in general and administrative expenses was mainly due to decrease in professional

fees as a result of our reduction in operations as we contemplated our business restructuring .

Gain on settlement of liability

During the three months ended March 31, 2019,

the Company recorded a gain on settlement of liabilities of $156,709.

During the three months ended March 31, 2020, the Company there

were no liability settlements.

Gain on Fair Value of Derivative Liabilities

Certain warrants issued by the Company have a

“down round provision”.

As such, the warrants have been recorded as derivative liabilities and are subject to remeasurement

at each balance sheet date.

The warrants are valued using the Black Scholes method and will continue to be adjusted each reporting period

for changes in fair value until the warrant is exercised or expires.

Gains or losses on revaluation are recorded as a component of other

expense (income) on the accompanying consolidated statements of operations.

During the three months ended March 31, 2020,

the Company recognized a loss on the change in fair value of derivative liabilities in the amount $394, as compared to $338,063 during

the three months ended March 31, 2019, which was largely due to the volatility of our stock price.

Amortization of Debt Discount and Deferred

Financing Costs

Amortization of debt discount and deferred financing

costs for the three months ended March 31, 2020 were $2,657, compared to $134,292 for the three months ended March 31, 2019, due to the

majority of the discount being amortized in prior periods.

Interest Expense

Interest expense for the three months ended March

31, 2020 was $151,489, as compared to $163,105 during the three months ended March 31, 2019.

Gain on sale of asset

During the three months ended March 31, 2020,

the Company recorded $12,074 in loss on sale of assets.

During the three months ended March 31, 2019, the Company sold certain equipment

and recorded $27,465 in loss on sale of assets.

As a result of the foregoing, the net loss for

the three months ended March 31, 2020 was $218,196 as compared to $759,656 incurred during the three months ended March 31, 2019.

Liquidity and Capital Resources

The accompanying consolidated financial statements

have been prepared on a going concern basis.

The Company had net loss of $218,196 during the three months ended March 31, 2020, has accumulated

losses totaling $14,416,338, and has a working capital deficit of $7,092,427 at March 31, 2020.

These factors, among others, indicate

that the Company may be unable to continue as a going concern.

The consolidated financial statements do not include any adjustments that

might result from the outcome of these uncertainties.

The Company will need to raise additional financing

in order to fund the its operations for the next 12 months, and to allow the Company to continue the development of its business plans

and satisfy its obligations on a timely basis.

Should additional financing not be available, the Company will have to negotiate with its

lenders to extend the repayment dates of its indebtedness.

There can be no assurance that the Company will be able to successfully restructure

its debt obligations in the event it fails to obtain additional financing.

Operating Activities

During the three months ended March 31, 2020,

the Company used $15,079 of cash in operating activities primarily as a result of the Company’s net loss of $218,196, offset by

loss on change in fair value of derivative liabilities of $394, loss on sale of asset of $12,074, $2,657 in amortization and accretion

of debt discount, and net changes in operating assets and liabilities of $187,992.

During the three months ended March 31, 2019,

we used $343,527 of cash in operating activities primarily as a result of our net loss of $759,656, offset by loss on change in fair value

of derivative liabilities of $338,063, loss on sale of asset of $27,465, share-based compensation of $41,003, $62,728 in depreciation

expense, $134,292 in amortization and accretion of debt discount, loss on default of convertible notes of $42,625, gain of settlement

of debt $156,709 and net changes in operating assets and liabilities of $(73,338).

Investing Activities

During the three months ended March 31, 2020,

investing activities provided $18,000 in cash in proceeds from sale of property and equipment.

During the three months ended March 31, 2019,

investing activities provided $350,000 in cash in proceeds from sale of property and equipment.

Financing Activities

During the three months ended March 31, 2020,

we used $2,921 in financing activities, resulting from $7,500 in proceeds from convertible notes and $10,421 in repayments of capital

lease obligations.

During the three months ended March 31, 2019,

we used $55,587 in financing activities.

Financing activities provided $270,000 in proceeds from promissory notes and $75,000 in proceeds

from convertible notes.

The Company used $226,593 in repayments of promissory notes and $173,994 in repayments of capital lease obligations.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet

arrangements that have, or are reasonably likely to have, an effect on its financial condition, financial statements, revenues or expenses.

Although the Company’s operations are influenced

by general economic conditions, it does not believe that inflation had a material effect on its results of operations during the last

two years as it is generally able to pass the increase in material and labor costs to its customers or absorb them as it improves the

efficiency of its operations.

Critical Accounting Policies

The preparation of financial statements and related

disclosures in conformity with accounting principles generally accepted in the United States requires management to make judgments, assumptions

and estimates that affect the amounts reported in our consolidated financial statements and accompanying notes.

months ended June 30, 2019, the Company expensed $38,333 for sponsorship and media commitment fees in connection with the Major League

Baseball Properties, Inc.

During the three months ended June 30, 2020, there were no fees recorded under the agreement with MLB as it

expired on December 31, 2019.

and Administrative Expenses

and administrative expenses for the three months ended June 30, 2020 were $63,302, a decrease of $335,982 or 85%, compared to $419,284

for the three months ended June 30, 2020.

The decrease in general and administrative expenses was mainly due to decrease in stock

compensation expenses and professional fees as a result of our reduction in operations as we contemplated our business restructuring.

on Fair Value of Derivative Liabilities

warrants issued by the Company have a “down round provision”.

As such, the warrants have been recorded as derivative liabilities

and are subject to remeasurement at each balance sheet date.

The warrants are valued using the Black Scholes method and will continue

to be adjusted each reporting period for changes in fair value until the warrant is exercised or expires.

Gains or losses on revaluation

are recorded as a component of other expense (income) on the accompanying consolidated statements of operations.

the three months ended June 30, 2020, the Company recorded a gain on the change in fair value of derivative liabilities of $394, as compared

to a gain on the change in fair value of derivative liabilities $357,837 during the three months ended June 30, 2019, resulting primarily

from the fluctuation in volatility of our stock price.

of Debt Discount and Deferred Financing Costs

of debt discount and deferred financing costs for the three months ended June 30, 2020 were $1,403, compared to $22,370 for the three

months ended June 30, 2019, due to the majority of the discount being amortized in prior periods.

expense for the three months ended June 30, 2020 was $154,649, as compared to $159,952 during the three months ended June 30, 2019.

a result of the foregoing, the net loss for the three months ended June 30, 2020 was $218,960 as compared to $303,870 incurred during

the three months ended June 30, 2019.

months Ended June 30, 2020 Compared to Six months Ended June 30, 2019

the six months ended June 30, 2020, the Company had no revenue compared to revenues of $49,773 during the six months ended June 30, 2019.

decrease in revenue was due to the sale of our revenue-generating MiniMelts assets in March 2019 (see note 1).

of Goods Sold

the six months ended June 30, 2020, the Company had no cost of goods sold compared to cost of goods sold of $64,399 during the six months

ended June 30, 2019.

The Company’s gross margin during the six months ended June 30, 2019 was (29)%.

The decrease in 2020 was because

all inventory was liquidated during the period ended June 30, 2019 prior to the sale of the MiniMelts assets (see Note 1).

expenses for six months ended June 30, 2020 were $0 compared to $102,947 during the six months ended June 30, 2020.

During the six months

ended June 30, 2019, the Company expensed $76,667 for sponsorship and media commitment fees in connection with the Major League Baseball

Properties, Inc.

During the six months ended June 30, 2020, there were no fees recorded under the agreement with MLB as it expired on

December 31, 2019.

and Administrative Expenses

and administrative expenses for the six months ended June 30, 2020 were $114,884, a decrease of $419,012 or 78%, compared to $533,896

for the six months ended June 30, 2020.

The decrease in general and administrative expenses was mainly due to decrease in stock

compensation expenses and professional fees as a result of our reduction in operations as we contemplated our business restructuring.

on settlement of liability

the six months ended June 30, 2019, the Company recorded a gain on settlement of liabilities of $156,709.

During the six months ended

June 30, 2020, the Company did not have any similar liability settlements.

on Fair Value of Derivative Liabilities

warrants issued by the Company have a “down round provision”.

As such, the warrants have been recorded as derivative liabilities

and are subject to remeasurement at each balance sheet date.

The warrants are valued using the Black Scholes method and will continue

to be adjusted each reporting period for changes in fair value until the warrant is exercised or expires.

Gains or losses on revaluation

are recorded as a component of other expense (income) on the accompanying consolidated statements of operations.

the six months ended June 30, 2020, there was no change in fair value of derivative liabilities, as compared to a gain on the change

in fair value of derivative liabilities $19,774 during the six months ended June 30, 2019.

of Debt Discount and Deferred Financing Costs

of debt discount and deferred financing costs for the six months ended June 30, 2020 were $4,060, compared to $156,662 for the six months

ended June 30, 2019 due to the majority of the discount being amortized in prior periods.

expense for the six months ended June 30, 2020 was $306,138, as compared to $323,057 during the six months ended June 30, 2019.

on sale of asset

the six months ended June 30, 2020, the Company recorded $12,074 in loss on sale of assets.

During the six months ended June 30, 2019,

the Company sold certain equipment and recorded $27,465 in loss on sale of assets.

a result of the foregoing, the net loss for the six months ended June 30, 2020 was $437,156 as compared to $1,063,526 incurred during

the six months ended June 30, 2019.

and Capital Resources

accompanying consolidated financial statements have been prepared on a going concern basis.

The Company had net loss of $437,156 during

the six months ended June 30, 2020, has accumulated losses totaling $14,635,298, and has a working capital deficit of $7,289,943 at June

These factors, among others, indicate that the Company may be unable to continue as a going concern.

The consolidated financial

statements as of March 31, 2020 describe the significant accounting policies and methods used in the preparation of the consolidated financial

Actual results could differ from those estimates and be based on events different from those assumptions.

Future events and

their effects cannot be predicted with certainty;

estimating therefore, requires the exercise of judgment.

Thus, accounting estimates

change as new events occur, as more experience is acquired or as additional information is obtained.

The following critical accounting

policies are impacted significantly by judgments, assumptions and estimates used in the preparation of our consolidated financial statements:

Fair Value of Financial

For certain of the Company’s

financial instruments, including cash and equivalents, accounts receivable, accounts payable, accrued liabilities and short-term debt,

the carrying amounts approximate their fair values due to their short maturities.

ASC Topic 820, “Fair Value Measurements and Disclosures,”

statements do not include any adjustments that might result from the outcome of these uncertainties.

Company will need to raise additional financing in order to fund the its operations for the next 12 months, and to allow the Company

to continue the development of its business plans and satisfy its obligations on a timely basis.

Should additional financing not be available,

the Company will have to negotiate with its lenders to extend the repayment dates of its indebtedness.

There can be no assurance that

the Company will be able to successfully restructure its debt obligations in the event it fails to obtain additional financing.

the six months ended June 30, 2020, the Company used $12,980 of cash in operating activities primarily as a result of the Company’s

net loss of $437,156, offset loss on sale of asset of $12,074, share-based compensation of $2,624, $4,060 in amortization and accretion

of debt discount, and net changes in operating assets and liabilities of $405,418.

the six months ended June 30, 2019, we used $539,852 of cash in operating activities primarily as a result of our net loss of $1,063,526,

offset by loss on change in fair value of derivative liabilities of $19,774, loss on sale of asset of $27,465, share-based compensation

of $251,240, $81,356 in depreciation expense, $156,662 in amortization and accretion of debt discount, loss on default of convertible

notes of $42,625, gain of settlement of debt $156,709 and net changes in operating assets and liabilities of $140,809.

the six months ended June 30, 2020, investing activities provided $18,000 in cash in proceeds from sale of property and equipment.

the six months ended June 30, 2019, investing activities provided $350,000 in cash in proceeds from sale of property and equipment.

the six months ended June 30, 2020, we used $5,020 in financing activities, resulting from $10,500 in proceeds from convertible notes

and $15,520 in repayments of capital lease obligations.

the six months ended June 30, 2019, financing activities provided $126,774.

Financing activities provided $270,000 in proceeds from promissory

notes and $347,705 in proceeds from convertible notes.

The Company used $293,488 in repayments of promissory notes, $13,200 in repayment

of convertible notes, and $184,243 in repayments of capital lease obligations.

Sheet Arrangements

Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on its financial condition,

financial statements, revenues or expenses.

the Company’s operations are influenced by general economic conditions, it does not believe that inflation had a material effect

on its results of operations during the last two years as it is generally able to pass the increase in material and labor costs to its

customers or absorb them as it improves the efficiency of its operations.

Accounting Policies

preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United

States requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial

statements and accompanying notes.

The consolidated financial statements as of June 30, 2020 describe the significant accounting policies

and methods used in the preparation of the consolidated financial statements.

Actual results could differ from those estimates and be

based on events different from those assumptions.

Future events and their effects cannot be predicted with certainty;

estimating therefore,

requires the exercise of judgment.

Thus, accounting estimates change as new events occur, as more experience is acquired or as additional

information is obtained.

The following critical accounting policies are impacted significantly by judgments, assumptions and estimates

used in the preparation of our consolidated financial statements:

Value of Financial Instruments

certain of the Company’s financial instruments, including cash and equivalents, accounts receivable, accounts payable, accrued

liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities.

ASC Topic 820, “Fair

Value Measurements and Disclosures,”

requires disclosure of the fair value of financial instruments held by the Company.

ASC Topic 825, “Financial Instruments,”

defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure

requirements for fair value measures.

The three levels of valuation hierarchy are defined as follows:

Unadjusted quoted

prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

The Company considers

active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing

information on an ongoing basis

Quoted prices in markets

that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability.

This category includes those derivative instruments that the Company values using observable market data.

Substantially all of these

inputs are observable in the marketplace throughout the term of the derivative instruments, can be derived from observable data, or supported

by observable levels at which transactions are executed in the marketplace.

Measured based on

prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective

sources (i.e.

825, “Financial Instruments,”

defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair

value measurement that enhances disclosure requirements for fair value measures.

The three levels of valuation hierarchy are defined

quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume

to provide pricing information on an ongoing basis

prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full

term of the asset or liability.

This category includes those derivative instruments that the Company values using observable market

Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instruments, can

be derived from observable data, or supported by observable levels at which transactions are executed in the marketplace.

based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable

from objective sources (i.e.

supported by little or no market activity).

Level 3 instruments include derivative warrant instruments.

The Company does

not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level 2.

Derivative Financial Instruments

The Company evaluates its financial instruments

to determine if such instruments are derivatives or contain features that qualify as embedded derivatives.

Certain warrants issued by

the Company contain terms that result in the warrants being classified as derivative liabilities for accounting purposes.

For derivative

financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair market value

and then is revalued at each reporting date, with changes in fair value reported in the consolidated statement of operations.

does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02,

“Leases”, which requires that lease arrangements longer than 12 months result in an entity recognizing a right-of-use asset

and liability.

ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted.

As of the date of this report, the Company has not adopted ASU 2016-02 and has elected to defer implementation until January 1, 2022,

as allowed by ASU 2019-10.

The Company is still determining the impact ASC 842 will have on its financial position, results of operations,

and cash flows.

Quantitative and Qualitative Disclosures about Market

Not required for smaller reporting companies.

The Company does not have sufficient corroborating evidence to support classifying these assets and liabilities as Level 1 or Level

Financial Instruments

Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded

Certain warrants issued by the Company contain terms that result in the warrants being classified as derivative liabilities

for accounting purposes.

For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially

recorded at its fair market value and then is revalued at each reporting date, with changes in fair value reported in the consolidated

statement of operations.

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency

Accounting Pronouncements

February 2016, the FASB issued ASU 2016-02, “Leases”, which requires that lease arrangements longer than 12 months result

in an entity recognizing a right-of-use asset and liability.

ASU 2016-02 is effective for interim and annual periods beginning after

December 15, 2019, and early adoption is permitted.

As of the date of this report, the Company has not adopted ASU 2016-02 and has elected

to defer implementation until January 1, 2022, as allowed by ASU 2019-10.

The Company is still determining the impact ASC 842 will have

on its financial position, results of operations, and cash flows.

Quantitative and Qualitative Disclosures about Market Risk

required for smaller reporting companies.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements