AMERICAN BATTERY MATERIALS, INC. 10-K

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements BOXSCORE BRANDS, INC. December 31, 2021 and 2020 Page Report of Independent Registered Public Accounting Firm (PCAOB ID 6117 ) F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-4 Consolidated Statements of Operations for the years ended December 31, 2021 and 2020 F-5 Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2021 and 2020 F-6 Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020 F-7 Notes to Consolidated Financial Statements for the years ended December 31, 2021 and 2020 F-8 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders BoxScore Brands, Inc. Las Vegas, NV Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of BoxScore Brands, Inc. (the Company) as of December 31, 2021 and 2020, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Going Concern Considerations The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses since inception and has not achieved profitable operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audits of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Going Concern – Disclosure The financial statements of the Company are prepared on a going concern basis, which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations. As noted in “Going Concern Considerations” above, the Company has a history of recurring net losses, a significant accumulated deficit and currently has net working capital deficit. The Company has contractual obligations, such as commitments for repayments of accounts payable, accrued liabilities, notes payable, convertible notes payable, and amounts due under capital lease (collectively “obligations”). Currently, management’s forecasts and related assumptions illustrate their ability to meet the obligations through management of expenditures, implementation of a new operational direction, obtaining additional debt financing, and issuance of capital stock for additional funding to meet its operating needs. Should there be constraints on the ability to implement its new business operations or access financing through stock issuances, the Company will continue to manage cash outflows and meet the obligations through debt financing. F- 2 We identified management’s assessment of the Company’s ability to continue as a going concern as a critical audit matter. Management made judgments to conclude that it is probable that the Company’s plans will be effectively implemented and will provide the necessary cash flows to fund the Company’s obligations as they become due. Specifically, the judgments with the highest degree of impact and subjectivity in determining it is probable that the Company’s plans will be effectively implemented include its ability to manage expenditures, its ability to access funding from the capital market, its ability to obtain debt financing, and the successful implementation of its new operational direction. Auditing the judgments made by management required a high degree of auditor judgment and an increased extent of audit effort. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included the following, among others: (i) evaluating the probability that the Company will be able to access funding from the capital market; (ii) evaluating the probability that the Company will be able to manage expenditures (iii) evaluating the probability that the Company will be able to obtain debt financing, and (iv) evaluating the planned implementation of its new business operational direction. /s/ Pinnacle Accountancy Group of Utah We have served as the Company’s auditor since 2021. Pinnacle Accountancy Group of Utah (a dba of Heaton & Company, PLLC) Farmington, Utah March 31, 2022 F- 3 BOXSCORE BRANDS, INC. Consolidated Balance Sheets December 31, December 31, Assets 2021 2020 Current assets Cash $ 8,291 $ 23,586 Prepaid expenses and other assets 1,763 9,789 Total current assets 10,054 33,375 Noncurrent assets Property and equipment (net) - 61,600 Mineral claims 100,000 - Total assets $ 110,054 $ 94,975 Liabilities and Stockholders’ Deficit Current Liabilities: Accounts payable $ 303,248 $ 314,533 Accrued expenses 348,217 390,398 Accrued interest 2,104,964 1,720,766 Senior convertible notes 95,804 402,704 Promissory notes payable 473,269 406,081 Convertible notes payable 4,664,624 4,769,400 Current capital lease obligation 36,254 146,734 Total current liabilities 8,026,380 8,150,616 Noncurrent liabilities: Promissory notes payable - 118,250 Convertible notes payable 915,000 481,350 Capital lease obligation - 34,890 Derivative liabilities 211,345 3,083,255 Total noncurrent liabilities 1,126,345 3,717,745 Total Liabilities 9,152,725 11,868,361 Stockholders’ deficit Common stock, $ .001 par value, 600,000,000 shares authorized, 335,778,778 and 75,828,064 shares issued and outstanding, respectively 335,778 75,828 Additional paid in capital 6,989,540 6,281,241 Accumulated deficit ( 16,367,989 ) ( 18,130,455 ) Total stockholders’ deficit ( 9,042,671 ) ( 11,773,386 ) Total liabilities and stockholders’ deficit $ 110,054 $ 94,975 The accompanying notes are an integral part of the consolidated financial statements. F- 4 BOXSCORE BRANDS, INC. Consolidated Statements of Operations Year Ended Year Ended December 31, December 31, 2021 2020 Operating Expenses General and administrative $ 393,376 $ 245,811 Total operating expenses 393,376 245,811 Operating loss ( 393,376 ) ( 245,811 ) Other Income (Expenses) Gain (loss) on change in fair value of derivative liabilities 2,871,910 ( 3,069,702 ) Gain on settlement of liabilities 62,095 11,000 Loss on sale of assets - ( 12,074 ) Write-off of assets ( 17,500 ) - Amortization and accretion of debt discount and deferred financing costs - ( 4,432 ) Interest expense ( 760,663 ) ( 611,294 ) Total other income (expenses) 2,155,842 ( 3,686,502 ) Income (loss) from operations before income taxes 1,762,466 ( 3,932,313 ) Provision for income taxes - - Net Income (Loss) $ 1,762,466 $ ( 3,932,313 ) Net loss per share – basic $ 0.01 $ ( 0.09 ) Net loss per share – diluted $ ( 0.00 ) $ ( 0.09 ) Weighted average common shares – basic 210,477,658 41,943,712 Weighted average common shares – diluted 374,389,986 41,943,712 The accompanying notes are an integral part of the consolidated financial statements. F- 5 BOXSCORE BRANDS, INC. Consolidated Statements of Changes in Stockholders’ Deficit Year ended December 31, 2021 and 2020 Common stock Additional Paid in Accumulated Total Stockholders' Shares Amount Capital Deficit Deficit Balance as of December 31, 2019 37,717,755 $ 37,716 $ 6,195,573 $ ( 14,198,142 ) $ ( 7,964,853 ) Shares issued for note conversion 38,110,309 38,112 79,896 - 118,008 Vesting of warrants - - 5,772 - 5,772 Net loss - - - ( 3,932,313 ) ( 3,932,313 ) Balance as of December 31, 2020 75,828,064 $ 75,828 $ 6,281,241 $ ( 18,130,455 ) $ ( 11,773,386 ) Shares issued for note conversion 259,950,714 259,950 702,003 - 961,953 Vesting of warrants - - 6,296 - 6,296 Net income - - - 1,762,466 1,762,466 Balance as of December 31, 2021 335,778,778 $ 335,778 $ 6,989,540 $ ( 16,367,989 ) $ ( 9,042,671 ) The accompanying notes are an integral part of the consolidated financial statements. F- 6 BOXSCORE BRANDS, INC. Consolidated Statements of Cash Flows Year Ended Year Ended December 31, December 31, 2021 2020 Cash Flows from Operating Activities Net income (loss) $ 1,762,466 $ ( 3,932,313 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock based compensation 6,296 5,772 Amortization and accretion of debt discount and deferred financing costs - 4,432 Gain on settlement of liabilities ( 62,095 ) ( 11,000 ) (Gain) loss on change in fair value of derivative liabilities ( 2,871,910 ) 3,069,702 Loss on sale of assets - 12,074 Write-off of assets 17,500 - Changes in operating assets and liabilities: Accounts receivable - 1,530 Prepaid expenses and other assets 2,000 ( 2,000 ) Accounts payable and accrued expenses 38,922 283,432 Accrued interest 714,376 594,999 Other amounts due to related parties - ( 67,022 ) Net cash used in operating activities ( 392,445 ) ( 40,394 ) Cash Flows from Investing Activities: Acquisition of mineral claims ( 100,000 ) - Proceeds from sale of property and equipment - 18,000 Net cash provided by (used in) investing activities ( 100,000 ) 18,000 Cash Flows from Financing Activities Proceeds from convertible notes 885,000 76,500 Repayments of capital lease obligations ( 82,000 ) ( 15,520 ) Repayment of convertible notes ( 300,850 ) Repayments of promissory notes ( 25,000 ) ( 15,000 ) Net cash provided by financing activities 477,150 45,980 Net increase (decrease) in cash ( 15,295 ) 23,586 Cash, beginning of period 23,586 - Cash, end of period $ 8,291 $ 23,586 Supplemental disclosures: Income taxes paid $ - $ - Interest paid $ - $ - Supplemental disclosures of non-cash investing and financing activities: Accounts payable and accrued payable exchanged for convertible note $ 94,600 , $ 228,947 Convertible notes converted to common stock $ 589,150 $ 118,008 Accrued interest on convertible notes converted to common stock $ 372,803 $ - The accompanying notes are an integral part of the consolidated financial statements. F- 7 BOXSCORE BRANDS, INC. Notes to Consolidated Financial Statements For the Years Ended December 31, 2021 and 2020 Note 1 – Nature of the Business BoxScore Brands, Inc. (formerly U-Vend Inc.) (the “Company”) is a US based Renewable Energy company focused on the extraction, refinement and distribution of technical minerals. 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. Through the corporate reorganization and repositioning process, the Company found itself with the unique opportunity to expand its management team and acquire mining claims that historically reported high levels of Lithium and other Tech Minerals. The Company hired and affiliated itself with industry veterans that bring decades of experience, credibility and relationships. On November 5, 2021, the Company acquired the rights to 102 Federal Mining Claims located in San Juan County, Utah. The acquisition decision was driven by historical mineral data from seven (7) existing wells with brine aquifer access. The independent third-party Technical Report made clear that further investment and development in the claims were warranted. The Company has been executing on the necessary steps to prove the findings through the completion of NI-43-101 reporting standard. Note 2 – Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The Company’s fiscal year end is December 31. 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. 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. 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. 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 lives 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 fair value. Mineral Rights and Properties The Company capitalizes acquisition costs until the Company determines the economic viability of the property. Since the Company does not have proven and probable reserves as defined by Securities and Exchange Commission ("SEC") regulation S-K 1300, exploration expenditures are expensed as incurred. The Company expenses mineral lease costs and repair and maintenance costs as incurred. The Company reviews the carrying value of our properties for impairment, including mineral rights upon the occurrence of events or changes in circumstances that indicate the related carrying amounts may not be recoverable. F- 8 Earnings (Loss) Per Share The Company presents basic and diluted earnings (loss) per share in accordance with ASC 260, “Earnings per Share.” Basic earnings (loss) 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. As of December 31, 2021 and 2020, there were approximately 164 million and 166 million shares, respectively, potentially issuable under convertible debt agreements, options, and warrants that could dilute basic earnings per share if converted. These if-converted shares were included in the calculation of diluted earnings per share for the year ended December 31, 2021, but were excluded from the year ended December 31, 2020 because their inclusion would have been anti-dilutive to the Company’s losses during those periods. Year Ended December 31, 2021 2020 Numerator: Net income (loss) $ 1,762,466 $ ( 3,932,313 ) (Gain) loss on change in fair value of derivatives $ ( 2,871,910 ) $ - Interest on convertible debt $ 760,663 $ - Net income (loss) - diluted $ ( 348,781 ) $ ( 3,932,315.00 ) Denominator: Weighted average common shares outstanding 210,477,658 41,943,712 Effect of dilutive shares 163,912,328 - Diluted 374,389,986 41,943,712 Net income (loss) per common share: Basic $ 0.01 $ ( 0.09 ) Diluted $ ( 0.00 ) $ ( 0.09 ) 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. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. Fair Value of Financial Instruments 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,” 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: ● Level 1: 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 ● Level 2: 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. ● Level 3: 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. 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. F- 9 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.” 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 December 31, 2021 and 2020: Fair Value Measurement at Carrying December 31, 2021 Value Level 1 Level 2 Level 3 Derivative liabilities, debt and equity instruments $ 211,345 — — $ 211,345 Fair Value Measurement at Carrying December 31, 2020 Value Level 1 Level 2 Level 3 Derivative liabilities, debt and equity instruments $ 3,083,255 — — $ 3,083,255 Stock-Based Compensation The 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. 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. Gain on Liabilities Settlement During the year ended December 31, 2021 creditors forgave an aggregate amount of $ 19,959 associated with accrued expenses and $ 26,062 related to notes payable. In addition, the Company recorded a gain on capital lease settlement of $ 16,074 as detailed in Note 6, resulting in total gain on settlement of liabilities of $ 62,095 . During the year ended December 31, 2020 creditors forgave an aggregate amount of $ 11,000 associated with accrued expenses. Revenue Recognition We recognize revenue under ASC 606, “Revenue from Contracts with Customers,” 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. The Company recognized $ 0 revenue during the year ended December 31, 2021 and 2020. Income Taxes Income taxes are accounted for under the liability method in accordance with ASC 740, “Income Taxes.” Under the liability method, future tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statements and their respective tax bases. Future tax assets and liabilities are measured using enacted or substantially enacted income tax rates expected to apply when the asset is realized, or the liability settled. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax law and rates on the date of enactment. F- 10 Recent Accounting Pronouncements On August 5, 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. This ASU is effective for public business entities, excluding smaller reporting companies, for fiscal years beginning after December 15, 2021, and for all other entities for fiscal years beginning after December 15, 2023. Early adoption is permitted for all entities no earlier than for fiscal years beginning after December 15, 2020. The Company is currently evaluating the effects this ASU will have on its financial statements. 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 – Going Concern The accompanying consolidated financial statements have been prepared on a going concern basis. The net income reported by the Company of $ 1,779,967 for the year ended December 31, 2021 was comprised primarily of a gain on change in derivative liability of $ 2,871,910 reported in other income (expenses). The Company did not generate any revenues during the years ended December 31, 2021 and 2020, and has incurred accumulated losses totaling $ 16,367,989 through December 31, 2021. 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. 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 – Property and Equipment Property and equipment consist of the following as of December 31, 2021 and 2020: December 31, 2021 December 31, 2020 Freezers and other equipment $ - $ 61,600 Total $ - $ 61,600 During the year ended December 31, 2020, the Company received proceeds of $ 18,000 for the sale of certain freezers and other equipment, resulting in a loss on sale of assets of $ 12,074 . During the year ended December 31, 2021, the Company remitted leased assets with a carrying value of $ 44,100 back to the lessors in settlement of the underlying lease liability (Note 6). The remaining $ 17,500 in property and equipment was written-off during the year ended December 31, 2021 resulting in $ 0 balance at December 31, 2021. Note 5 – Debt 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. During the year ended December 31, 2020, principal and accrued interest in the amount of $ 55,788 were converted into 14,760,086 shares of common stock. The carrying value as of December 31, 2020 was $ 268,900 . During the year ended December 31, 2021, total principal of $ 218,900 and accrued interest in the amount of $ 153,686 were converted into 98,024,360 shares of common stock resulting in carrying value of $ 50,000 as of December 31, 2021. F- 11 On December 31, 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. As of December 31, 2020 the carrying value was $ 108,804 . During the year ended December 31, 2021, total principal in the amount of $ 88,000 was converted into 23,157,894 shares of common stock resulting in carrying value of $ 20,804 as of December 31, 2021. 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. The carrying value as of December 31, 2021 and December 31, 2020, was $ 25,000 . As of the date of release of these financial statements, all senior convertible notes were in default with an interest rate increased to 15 %. 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 as of December 31, 2021 and December 31, 2020, was $ 6,235 . Starting of 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, note balance was $ 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 December 31, 2021 and December 31, 2020, 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. The due dates of both notes were extended to December 31, 2019. As of December 31, 2021 and December 31, 2020, 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. As of December 31, 2021 and December 31, 2020, the balance outstanding on these notes was $ 28,000 . 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. In 2019, the Company borrowed an additional $ 25,000 and repaid $ 60,000 . The balance outstanding on this note as of December 31, 2021 and December 31, 2020, was $ 80,000 . 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. 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 year ended December 31, 2020, the Company repaid $ 15,000 in principal and fully amortized $ 544 of debt discount. As of December 31, 2020, the balance outstanding on this note was $ 51,062 . During the year ended December 31, 2021, the Company fully repaid $ 25,000 in principal, remaining balance of the amount owed was released and recorded as a settlement of liability. As of December 31, 2021 the balance outstanding on this note was $ 0 . 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 31, 2019. As of December 31, 2021 and December 31, 2020, the balance outstanding on these notes was $ 135,000 . As of the date of release of these financial statements, promissory notes were in default with an interest rate increased by 2 % over the original interest rate. F- 12 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 December 31, 2019, the outstanding balance was $ 100,000 . On December 23, 2020, total principal and accrued interest in the amount of $ 118,250 were converted into a new promissory note in the principal amount of $ 118,250 with an annual 10 % rate of interest and mature on January 15, 2022. As of December 31, 2021 and December 31, 2020, the outstanding balance was $ 118,250 . Convertible Notes Payable 2014 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 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 December 31, 2020, outstanding balance of these notes was $ 121,000 . During the year ended December 31, 2021, one of the notes in the principal amount of $ 25,000 and accrued interest in the amount of $ 30,387 were converted into 14,575,645 shares of common stock resulting in carrying value of $ 96,000 as of December 31, 2021. 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. As of December 31, 2021 and December 31, 2020, outstanding balance of these notes was $ 45,000 . As of the date of release of these financial statements, these notes were in default with an interest rate increased to 15 %. 2015 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 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. During the year ended December 31, 2021, principal in the amount of $ 100,000 and accrued interest in the amount of $ 138,245 were converted into 62,696,053 shares of common stock resulting in carrying value of $ 306,000 as of December 31, 2021. 2016 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 were due in November 2020 and bear interest at 9.5 % per annum. The notes are convertible into shares of common stock at a conversion price of $ 0.17 per share. With these notes, 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. 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 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. On July 11, 2019, $ 85,000 in principal were converted into 1,700,000 shares of common stock. F- 13 As of December 31, 2021 and December 31, 2020, the 2016 SPA had a carrying value of $ 676,597 . As of the date of release of these financial statements, these notes were in default with an interest rate increased to 18 %. 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 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. 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 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 December 31, 2021 and December 31, 2020, 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 is classified as a warrant liability due to the down round provision in the warrants. As of December 31, 2020, the carrying value of the notes was $ 250,000 . During the year ended December 31, 2021, principal in the amount of $ 47,000 was converted into 12,368,421 shares of common stock resulting in carrying value of $ 203,000 as of December 31, 2021. As of the date of release of these financial statements, these notes were in default with an interest rate increased to 18 %. 2017 Financings During 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 December 31, 2021 and December 31, 2020, the carrying value of the notes was $ 924,282 . As of the date of release of these financial statements, these notes were in default with an interest rate increased to 18 %. 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 of $ 537,500 . 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. 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 year ended December 31, 2020, the Company fully amortized $ 3,889 of debt discount resulting in carrying value of $ 537,500 as of December 31, 2020. During the year ended December 31, 2021, principal in the amount of $ 25,000 was converted into 6,578,947 shares of common stock resulting in carrying value of $ 512,500 as of December 31, 2021. As of the date of release of these financial statements, convertible notes were in default. F- 14 On 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 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. As of December 31, 2021 and December 31, 2020, the carrying value of the notes was $ 436,500 . As of the date of release of these financial statements, convertible notes were in default. During the 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 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 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 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 year ended December 31, 2020, total principal and accrued interest in the amount of $ 37,712 were converted into 9,924,132 shares of common stock resulting in carrying value of $ 281,250 as of December 31, 2020. During the year ended December 31, 2021, the Company repaid $ 206,250 in principal, $ 38,750 in accrued interest. Accrued interest in the amount of $ 31,860 was converted into 7,737,705 shares of common stock resulting in carrying value of $ 75,000 as of December 31, 2021. As of the date of release of these financial statements, convertible notes were in default with an interest rate increased to 18 %. 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 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 and the holder may convert at a 40% discount to the prevailing market price. 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. 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 fully amortized $ 23,384 of debt discount. During the year ended December 31, 2020, accrued interest in the amount of $ 24,508 was converted into 13,426,091 shares of common stock resulting in carrying value of $ 127,875 as of December 31, 2020. During the year ended December 31, 2021, total principal of $ 85,250 and accrued interest in the amount of $ 18,623 were converted into 34,811,689 shares of common stock resulting in carrying value of $ 0 as of December 31, 2021. 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. The outstanding principal balance was $ 60,000 as of December 31, 2021 and December 31, 2020. As of the date of release of these financial statements, convertible note was in default with an interest rate increased to 24 %. F- 15 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 as of December 31, 2021 and December 31, 2020. As of the date of release of these financial statements, convertible notes were in default with an interest rate increased to 18 %. 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 share. The outstanding principal balance was $ 108,572 as of December 31, 2021 and December 31, 2020. As of the date of release of these financial statements, convertible note was in default. On 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 investor had consented to higher draws on the facility in excess of the limit per the initial agreement. On April 15, 2020, the Company issued a convertible note in the amount of $ 206,231 . 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. On December 24, 2020, the Company issued a convertible promissory note in the amount of $ 147,000 . 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 $ 0.03 per share and is redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s option. As of December 31, 2021 and December 31, 2020, $ 603,231 was drawn under these agreements. 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 as of December 31, 2021 and December 31, 2020. As of the date of release of these financial statements, convertible notes were in default with an interest rate increased to 18 %. 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 as of December 31, 2021 and December 31, 2020. As of the date of release of these financial statements, convertible note was in default with an interest rate increased to 18 %. 2020 Financings During the year ended December 31, 2020, the Company entered into several convertible notes agreements in the amount of $ 73,118 . The notes have a 2 year term, bear interest of 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 $ 73,118 as of December 31, 2021 and December 31, 2020. F- 16 2021 Financings During the year ended December 31, 2021, the Company entered into several convertible notes agreements in the amount of $ 365,000 . The notes have a 2 year term, bear interest of 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 $ 365,000 as of December 31, 2021. On July 13, 2021, the Company issued a convertible note in the amount of $ 150,000 . The note has a 3 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 $ 150,000 as of December 31, 2021. On September 21, 2021, the Company issued a convertible note in the amount of $ 100,000 . 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 $ 0.03 per share. The outstanding principal balance was $ 100,000 as of December 31, 2021. On March 1, 2021, the Company issued a convertible note for deferred compensation in the principal amount of $ 94,600 . 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 $ 0.05 per share and is redeemable at the principal amount plus accrued unpaid interest after one year , at the Company’s option. During the year ended December 31, 2021, the Company fully repaid $ 94,600 in principal resulting in carrying value of $ 0 as of December 31, 2021. During the year ended December 31, 2021, the Company recorded additional principal of $ 30,000 for deferred compensation under the same terms. On October 14, 2021, the Company issued a convertible note in the amount of $ 20,000 . 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 $ 0.03 per share. The outstanding principal balance was $ 20,000 as of December 31, 2021. On November 2, 2021, the Company issued 2 convertible notes - $150,000, $100,000 - to fund an asset acquisition, continue funding operations and reconciling a debt. 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 $0.03 per share and are redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s option. The notes also contain a 4.99% limitation on the investor’s beneficial ownership of the Company’s outstanding common stock upon conversion. Scheduled maturities of debt remaining as of December 31, 2021 for each respective fiscal year end are as follows: 2021 $ 4,689,098 2022 544,599 2023 765,000 2024 150,000 Total 6,148,697 Less: unamortized debt discount - Total $ 6,148,697 The following table reconciles, for the year ended December 31, 2021 and 2020, 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. December 31, 2021 December 31, 2020 Balance of embedded derivative at the beginning of the period $ 3,083,255 $ 13,553 Change in fair value of conversion features ( 2,871,910 ) 3,069,702 Balance of embedded derivatives at the end of the period $ 211,345 $ 3,083,255 F- 17 Note 6 – 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. 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 . During the year ended December 31, 2021, the Company settled lease liability amounts totaling $ 142174 by paying the lessors $ 82,000 and returning the leased property and equipment with a carrying value of $ 44,100 , resulting in a gain on settlement of liability of $ 16,074 . The following schedule provides minimum future rental payments required as of December 31, 2021, under the current portion of capital leases. 2021 36,692 Total minimum lease payments 36,692 Less: Amount represented interest ( 438 ) Present value of minimum lease payments and guaranteed residual value $ 36,254 Note 7 – Capital Stock Preferred Stock The 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 December 31, 2021 and December 31, 2020, there are 10,000,000 shares of preferred stock authorized, and no shares issued or outstanding. Common Stock The Company has authorized 600,000,000 shares of common stock. During the years ended December 31, 2021 and 2020, the Company issued 259,950,714 and 38,110,309 shares of its common stock, in conversion of $ 961,953 and $ 118,008 , respectively, of convertible notes and accrued interest. Total common shares issued and outstanding at December 31, 2021 and December 31, 2020 were 335,778,778 and 75,828,064 , respectively. F- 18 Note 8 – Stock Options and Warrants Warrants At December 31, 2021 the Company had the following warrant securities outstanding: Warrants Exercise Price Expiration 2016 Warrants issued with Convertible Notes 5,000,000 $ 0.07 May-June 2022 2017 Warrants – 2017 financing 15,109,354 $ 0.07 December 2022 2018 Warrants – 2019 financing 9,991,905 $ 0.07 January - November 2023 2018 Warrants for services 2,250,000 $ 0.07 October - December 2023 2019 Warrants – 2020 financing 10,500,000 $ 0.07 March 2024 2019 Warrants for services 3,500,000 $ 0.07 March 2024 2020 Warrants for services 3,000,000 $ 0.05 February 2025 Total 49,351,259 During the year ended December 31, 2020, the Company issued warrants exercisable into 3,000,000 shares of common stock to its officer. The fair value of warrants 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 %. During the year ended December 31, 2021 and 2020, the Company recorded $ 6,296 and $ 5,772 , respectively, in warrant expense related to vesting of these warrants. A summary of all warrants activity for the year ended December 31, 2021 and 2020 is as follows: Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding at December 31, 2019 51,276,404 $ 0.06 2.24 Granted 3,000,000 $ 0.05 4.84 Exercised - - - Forfeited - - - Cancelled - - - Expired ( 1,296,919 ) $ 0.12 - Balance outstanding at December 31, 2020 52,979,485 $ 0.06 2.34 Exercisable at December 31, 2019 52,979,485 $ 0.06 2.34 Number of Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding at December 31, 2020 52,979,485 $ 0.06 2.34 Granted - - - Exercised - - - Forfeited - - - Cancelled - - - Expired ( 3,628,226 ) 0.05 - Balance outstanding at December 31, 2021 49,351,259 $ 0.06 1.96 Exercisable at December 31, 2021 49,351,259 $ 0.06 1.96 F- 19 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. 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. A summary of all stock option activity for the years ended December 31, 2021 and 2020 is as follows: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding at December 31, 2019 3,155,100 $ 0.25 1.5 Granted - - - Exercised - - - Cancelled or expired ( 3,152,600 ) - - Balance outstanding at December 31, 2020 2,500 $ 60 0.5 Exercisable at December 31, 2020 2,500 $ 60 0.5 Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Balance outstanding at December 31, 2020 2,500 $ 60 0.5 Granted - - - Exercised - - - Cancelled or expired ( 2,500 ) - - Balance outstanding at December 31, 2021 - $ - - Exercisable at December 31, 2021 - $ - - F- 20 Note 10 - Income Taxes Loss from operations before provision (benefit) for income taxes and associated tax provision (benefit) are summarized in the following table: Years ended December 31, 2021 2020 Net Income (Loss) Domestic $ ( 263,180 ) $ ( 3,954,316 ) Foreign - - $ ( 263,180 ) $ ( 3,954,316 ) Current Federal $ - $ - State - - Foreign - - Total Current $ 3,285 $ - Deferred Federal $ ( 54,817 ) $ ( 770,342 ) State ( 13,976 ) ( 207,471 ) Foreign - - Total Deferred ( 68,793 ) ( 977,813 ) Less Increase in Allowance 68,793 977,813 Net Deferred $ - $ - Total Income Tax Provision (Benefit) $ - $ - The significant components of the deferred tax assets and liabilities are summarized below: Years ended December 31, 2021 2020 Deferred Tax Assets (Liabilities): Net Operating Loss Carry-Forwards $ 3,319,927 $ 3,023,143 Depreciable and Amortizable Assets ( 20,520 ) ( 20,520 ) Stock Based Compensation 51,957 50,297 Beneficial Conversion Feature 609,101 838,752 Loss Reserve 457 457 Accrued Compensation 35,146 35,146 Other 29,908 29,908 Total 4,025,976 3,957,183 Less Valuation Allowance ( 4,025,976 ) ( 3,957,183 ) Net Deferred Tax Assets (Liabilities) $ - $ - At December 31, 2021 and 2020, the Company has available net operating loss carry-forwards for federal and state income tax purposes of approximately $ 12.2 million and $ 11.9 million, respectively. Of the federal net operating loss carryforward, $ 8.9 million, if not utilized earlier, expires through 2037 and $ 3.3 million will carry-forward indefinitely. The state net operating loss carryforwards expire through 2040, if not utilized earlier. Due to the uncertainty as to the Company’s ability to generate sufficient taxable income in the future and utilize the net operating loss carry-forwards before they expire, the Company has recorded a valuation allowance to fully offset the net operating loss carry-forwards, as well as the total net deferred tax assets. F- 21 Internal Revenue Code Section 382 (“Section 382”) imposes limitations on the availability of a company’s net operating losses and other corporate tax attributes as certain significant ownership changes occur. As a result of the historical equity instrument issuances by the Company, a Section 382 ownership change may have occurred and a study will be required to determine the date of the ownership change, if any. The amount of the Company’s net operating losses and other tax attributes incurred prior to any ownership change may be limited based on the Company’s value. A full valuation allowance has been established for the Company’s deferred tax assets, including net operating losses and any other corporate tax attributes. During the years ended December 31, 2021 and 2020, the Company had no unrecognized uncertain tax positions. The Company’s policy is to recognize interest accrued and penalties related to unrecognized uncertain tax positions in tax expense. The Company files income tax returns in the U.S. federal jurisdiction, as well as the states of California, Florida, Illinois and New York. The tax years 2018-2021 generally remain open to examination by the U.S. federal and state taxing authorities. In addition, the 2016 tax year is still open to examination by the state of California. A reconciliation of the income tax provision using the statutory U.S. income tax rate compared with the actual income tax provision reported on the consolidated statements of operations is summarized in the following table: Years ended December 31, 2021 2020 Statutory United States federal rate 21.00 % 21.00 % State income tax, net of federal benefit 5.31 4.14 Change in valuation allowance ( 26.14 ) ( 24.72 ) Permanent differences ( 0.17 ) ( 0.42 ) Effective tax rate benefit (provision) ( 0.00 )% 0.00 % Note 11 – Subsequent Events The Company has evaluated events occurring subsequent to December 31, 2021 through the date these financial statements were issued and determined the following significant events require disclosure: Subsequent to December 31, 2021, the Company issued a convertible promissory note in the principal amount of $ 50,000 to an unaffiliated investor. 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 are redeemable at the principal amount plus accrued unpaid interest after one year, at the Company’s option. Subsequent to December 31, 2021, the Company issued a secured convertible promissory note in the principal amount of $ 150,000 to an unaffiliated investor. The note bears interest at the rate of 15 % per annum and is due and payable in one years. The note is convertible into shares of the Company’s common stock at $ 0.01 per share and are redeemable at the principal amount plus accrued unpaid interest after one year , at the Company’s option. Subsequent to December 31, 2021, the Company issued 49,789,365 of its common stock in conversion of $ 189,200 of convertible notes and accrued interest. F- 22 ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.