What changed in this filing

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Item 9A. Controls and Procedures

2021-05-17 compared with 2020-05-29 · 730 added, 617 removed, 528 unchanged (72% of the section changed)

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of Disclosure Controls and Procedures

of December 31, 2019, we carried out an evaluation, under the supervision and with the participation of management, including

our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer),

of the effectiveness of the design and operation of our disclosure controls and procedures.

Based upon that evaluation, management

concluded that our disclosure controls and procedures were not effective as of December 31, 2019, to provide reasonable assurance

that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed,

summarized, and reported within the periods prescribed by U.S.

Securities and Exchange Commission and that such information is

accumulated and communicated to management, including our Certifying Officer, as appropriate, to allow timely decisions regarding

required disclosure.

of December 31, 2020, we carried out an evaluation, under the supervision and with the participation of management, including our principal

executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), of the effectiveness

of the design and operation of our disclosure controls and procedures.

Based upon that evaluation, management concluded that our disclosure

controls and procedures were not effective as of December 31, 2020, to provide reasonable assurance that the information required to

be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the

periods prescribed by U.S.

Securities and Exchange Commission and that such information is accumulated and communicated to management,

including our Certifying Officer, as appropriate, to allow timely decisions regarding required disclosure.

on Effectiveness of Controls

designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter

how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives.

the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be

considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can

provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

These inherent limitations

include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or

The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events,

and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well

designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives.

Also, the design of a

control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that

all control issues and instances of fraud, if any, have been detected.

These inherent limitations include the realities that judgments

in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

The design of any system of controls

is based, in part, upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will

succeed in achieving its stated goals under all potential future conditions.

Management’s

Report on Internal Control over Financial Reporting

management is responsible for establishing and maintaining adequate internal control, as is defined in the Exchange Act.

internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that

disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable.

inherent limitations in the effectiveness of any system of internal controls, including the possibility of human error and overriding

Consequently, an effective internal control system can only provide reasonable, not absolute, assurance with respect

to reporting financial information.

management is responsible for establishing and maintaining adequate internal controls, as defined in the Exchange Act.

These internal

controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are

adequate and that the judgments inherent in the preparation of financial statements are reasonable.

There are inherent limitations in

the effectiveness of any system of internal controls, including the possibility of human error and overriding of controls.

Consequently,

an effective internal control system can only provide reasonable, not absolute, assurance with respect to reporting financial information.

internal control over financial reporting includes policies and procedures that:

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(ii) provide reasonable assurance that transactions are recorded as necessary

for preparation of our financial statements in accordance with GAAP and the receipts and expenditures of company assets are made

and in accordance with our management and directors authorization;

and (iii) provide reasonable assurance regarding the prevention

or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial

has undertaken an assessment of the effectiveness of our internal control over financial reporting based on the framework and

criteria established in the Internal Control –

Integrated Framework issued by the Committee of Sponsoring Organizations

of the Treadway Commission (“COSO”).

Based upon this evaluation, management concluded that our internal control over

financial reporting was not effective as of December 31, 2019.

on that evaluation, management concluded that, during the period covered by this report, such internal controls and procedures

were not effective due to the following material weakness identified:

for preparation of our financial statements in accordance with GAAP and the receipts and expenditures of company assets are made and

in accordance with our management and directors authorization;

and (iii) provide reasonable assurance regarding the prevention or timely

detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.

has undertaken an assessment of the effectiveness of our internal control over financial reporting based on the framework and criteria

established in the Internal Control –

Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway

Commission (“COSO”).

Based upon this evaluation, management concluded that our internal control over financial reporting

was not effective as of December 31, 2020.

on that evaluation, management concluded that, during the period covered by this report, such internal controls and procedures were not

effective due to the following material weakness identified:

of appropriate segregation of duties,

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transactions.

annual report does not include an attestation report of our registered public accounting firm regarding internal control over

financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm pursuant

to rules of the SEC that permit us to provide only the management’s report in this annual report.

annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial

Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the

SEC that permit us to provide only the management’s report in this annual report.

or Planned Remedial Actions in Response to the Material Weaknesses

will continue to strive to correct the above noted weakness in internal control once we have adequate funds to do so.

appointing a director who qualifies as a financial expert will improve the overall performance of our control over our financial

We believe appointing

a director who qualifies as a financial expert will improve the overall performance of our control over our financial reporting.

of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of

any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes

in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Projections of any evaluation

of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that

the degree of compliance with the policies or procedures may deteriorate.

in Internal Control over Financial Reporting

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and Executive Officers

names of our director and executive officers as of December 31, 2019, and their ages, positions, and biographies are set forth

names of our director and executive officers as of December 31, 2020, and their ages, positions, and biographies are set forth below.

Our executive officers are appointed by, and serve at the discretion of, our board of directors.

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Before his involvement with our company, Mr.

Hawatmeh was the Processing Engineering Manager for Tandy Corporation, Salt Lake City, Utah, overseeing that company’s contract

manufacturing printed circuit board assembly division.

In addition, he was responsible for developing and implementing Tandy’s

facility Quality Control and Processing Plan model.

Hawatmeh earned an MBA from University of Phoenix and a BS in Electrical

and Computer Engineering from Brigham Young University.

Hollinger has been with CirTran since 2000 as our controller, except for a brief period during 2017 in which she also acted as

chief executive officer.

the Processing Engineering Manager for Tandy Corporation, Salt Lake City, Utah, overseeing that company’s contract manufacturing

printed circuit board assembly division.

In addition, he was responsible for developing and implementing Tandy’s facility Quality

Control and Processing Plan model.

Hawatmeh earned an MBA from University of Phoenix and a BS in Electrical and Computer Engineering

from Brigham Young University.

Hollinger has been with CirTran since 2000 as our controller, except for a brief period during 2017 in which she also acted as chief

executive officer.

She has been involved with the day-to-day accounting and finance functions throughout her term with us.

Hollinger studied mathematics and accounting at Northridge University (now Cal.

studied mathematics and accounting at Northridge University (now Cal.

State University Northridge) in California.

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are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified.

Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders

and until their successors have been elected and qualified.

currently do not have nominating, compensation, or audit committees or committees performing similar functions and we do not have

a written nominating, compensation, or audit committee charter.

Our board of directors believes that it is not necessary to have

these committees, at this time, because the directors can adequately perform the functions of such committees.

are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their

successors have been elected and qualified.

currently do not have nominating, compensation, or audit committees or committees performing similar functions and we do not have a written

nominating, compensation, or audit committee charter.

Our board of directors believes that it is not necessary to have these committees,

at this time, because the directors can adequately perform the functions of such committees.

Relationships

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16(a) Beneficial Ownership Reporting Compliance

16(a) of the Exchange Act requires our directors, executive officers, and persons that own more than 10% of a registered class

of our equity securities to file with the U.S.

Securities and Exchange Commission initial reports of ownership and reports of

changes in ownership of our equity securities.

Officers, directors, and greater than 10% stockholders are required to furnish

us with copies of all Section 16(a) forms they file.

16(a) of the Exchange Act requires our directors, executive officers, and persons that own more than 10% of a registered class of our

equity securities to file with the U.S.

Securities and Exchange Commission initial reports of ownership and reports of changes in ownership

of our equity securities.

Officers, directors, and greater than 10% stockholders are required to furnish us with copies of all Section

16(a) forms they file.

solely upon a review of Forms 3, 4, and 5 and amendments thereto filed with the U.S.

Securities and Exchange Commission for the

year ended December 31, 2019, no person that, at any time during the most recent fiscal year, was a director, officer, beneficial

owner of more than 10% of any class of our equity securities, or any other person known to be subject to Section 16 of the Exchange

Act failed to file, on a timely basis, reports required by Section 16(a) of the Exchange Act.

expect that all of our directors, officers, and employees will maintain a high level of integrity in their dealings with us and

on our behalf and will act in our best interests.

We have adopted a Code of Business Conduct and Ethics that provides principles

of conduct and ethics for our directors, officers, and employees.

This Code of Ethics is available on our website at www.cirtran.com

under “Investor Relations—Corporate Governance.”

Securities and Exchange Commission for the year

ended December 31, 2020, no person that, at any time during the most recent fiscal year, was a director, officer, beneficial owner of

more than 10% of any class of our equity securities, or any other person known to be subject to Section 16 of the Exchange Act failed

to file, on a timely basis, reports required by Section 16(a) of the Exchange Act.

expect that all of our directors, officers, and employees will maintain a high level of integrity in their dealings with us and on our

behalf and will act in our best interests.

We have adopted a Code of Business Conduct and Ethics that provides principles of conduct

and ethics for our directors, officers, and employees.

This Code of Ethics is available on our website at www.cirtran.com under “Investor

Relations—Corporate Governance.”

EXECUTIVE COMPENSATION

Compensation Table

following table sets forth, for each of our last two completed fiscal years, the dollar value of all cash and noncash compensation

earned by any person who was our principal executive officer and each of our three most highly compensated other executive officers

or persons who were serving in such capacities during the preceding fiscal year (“Named Executive Officers”):

and Principal Position

Awards ($) (1)

Equity Incentive Plan Compen- sation

in Pension Value and Non- Qualified Deferred Compen- sation Earnings ($)

Other Compen- sation ($)

President, Chief Executive

following table sets forth, for each of our last two completed fiscal years, the dollar value of all cash and noncash compensation earned

by any person who was our principal executive officer and each of our three most highly compensated other executive officers or persons

who were serving in such capacities during the preceding fiscal year (“Named Executive Officers”):

Name and Principal Position

Year Ended Dec.

Stock Award(s) ($)

Option Awards ($) (1)

Non Equity Incentive Plan Compen- sation

Change in Pension Value and Non- Qualified Deferred Compen- sation Earnings ($)

All Other Compen- sation ($)

President, Chief Executive Officer

Kathryn Hollinger (4)

Hawatmeh waived his compensation in 2019 and 2018.

amount is the fair value of the option awards on the date of grant in accordance with Financial Accounting Standards Board

Accounting Standards Codification Topic 718.

Hawatmeh waived his compensation in 2019 and accrued, but has not yet received, the compensation in 2020.

amount is the fair value of the option awards on the date of grant in accordance with Financial Accounting Standards Board Accounting

Standards Codification Topic 718.

See note 2 to our consolidated financial statements.

$12,000 for car allowance for each 2019 and 2018 and $26,603 and $26,535 for medical insurance premiums for 2019 and 2018.

$12,000 for car allowance for each of 2020 and 2019 and $5,417 and $26,535 for medical insurance premiums for 2020 and 2019.

Hollinger’s compensation listed in this table is for her services as our controller.

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In July 2017, Mr.

Hawatmeh resigned all

positions with us to pursue other business activities, thereby effectively terminating the agreement.

However, in September 2017,

we reinstated Mr.

Hawatmeh resigned all positions

with us to pursue other business activities, thereby effectively terminating the agreement.

However, in September 2017, we reinstated

Hawatmeh to his previous positions and reinstated his employment agreement.

Among other things, the reinstated

employment agreement:

(a) grants options to purchase a minimum of 6,000 shares of our stock each year, with an exercise price

equal to the market price of our common stock as of the grant date, for the maximum term allowed under our stock option plan;

(b) provides for health insurance coverage, cell phone, car allowance, life insurance, and director and officer liability insurance,

as well as any other bonus approved by our board;

Among other things, the reinstated employment agreement:

(a) grants options to purchase a minimum of 6,000 shares of our stock each year, with an exercise price equal to the market price of

our common stock as of the grant date, for the maximum term allowed under our stock option plan;

(b) provides for health insurance coverage,

cell phone, car allowance, life insurance, and director and officer liability insurance, as well as any other bonus approved by our board;

(i) a quarterly bonus

equal to 5% of our earnings before interest, taxes, depreciation and amortization for the applicable quarter;

(ii) bonuses equal

to 1% of the net purchase price of any acquisitions we complete that are directly generated and arranged by Mr.

(iii) an annual bonus (payable quarterly) equal to 1% of our gross sales of all products, net of returns and allowances.

amounts payable to Mr.

Hawatmeh in excess of an aggregate of $120,000 per year are accrued and will not be paid until the secured

convertible debenture is paid or converted to common stock.

Hawatmeh waived his compensation in 2019 and 2018.

(i) a quarterly bonus equal to 5% of our earnings before interest, taxes,

depreciation and amortization for the applicable quarter;

(ii) bonuses equal to 1% of the net purchase price of any acquisitions we complete

that are directly generated and arranged by Mr.

and (iii) an annual bonus (payable quarterly) equal to 1% of our gross sales

of all products, net of returns and allowances.

All cash amounts payable to Mr.

Hawatmeh in excess of an aggregate of $120,000 per year

are accrued and will not be paid until the secured convertible debenture is paid or converted to common stock.

Hawatmeh waived his

compensation in 2019.

to the employment agreement, Mr.

Hawatmeh’s employment may be terminated for cause, or upon death or disability, in which

event we are required to pay him any unpaid base salary and unpaid earned bonuses.

Hawatmeh’s employment may be terminated for cause, or upon death or disability, in which event

we are required to pay him any unpaid base salary and unpaid earned bonuses.

In the event that Mr.

Hawatmeh is terminated

without cause, we are required to pay to him:

(i) within 30 days following such termination, any benefit, incentive, or equity

plan, program, or practice paid when such would have been paid to him if employed (the “Accrued Obligations”);

within 30 days following such termination (or on the earliest later date as may be required by Internal Revenue Code Section 409A

to the extent applicable), a lump sum equal to 30 months’

Hawatmeh is terminated without cause,

we are required to pay to him:

(i) within 30 days following such termination, any benefit, incentive, or equity plan, program, or practice

paid when such would have been paid to him if employed (the “Accrued Obligations”);

(ii) within 30 days following such termination

(or on the earliest later date as may be required by Internal Revenue Code Section 409A to the extent applicable), a lump sum equal to

30 months’

annual base salary;

(iii) bonuses owing for the two-year period

after the date of termination (net of any bonus amounts paid as Accrued Obligations) based on actual results for the applicable

quarters and fiscal years;

and (iv) within 12 months following such termination (or on the earliest later date as may be required

by Internal Revenue Code Section 409A to the extent applicable), a lump sum equal to 30 months’

(iii) bonuses owing for the two-year period after the date of termination (net of any bonus amounts

paid as Accrued Obligations) based on actual results for the applicable quarters and fiscal years;

and (iv) within 12 months following

such termination (or on the earliest later date as may be required by Internal Revenue Code Section 409A to the extent applicable), a

lump sum equal to 30 months’

annual base salary;

Hawatmeh is terminated without cause in contemplation of, or within one year, after a change in control, then two

times his annual base salary and bonus payment amounts.

the years ended December 31, 2019, 2018, 2017, 2016, and 2015, we accrued for 6,000 stock options relating to this employment

The fair market value of the options issued during the year ended December 31, 2019, was $600, using the following

estimated five-year term, estimated volatility of 567%, and a risk-free rate of 2.31%.

The fair market value of the

options issued during the year ended December 31, 2018, was $600, using the following assumptions:

estimated seven-year term,

estimated volatility of 567%, and a risk-free rate of 2.38%.

provided that if Mr.

Hawatmeh is terminated without cause in contemplation of,

or within one year, after a change in control, then two times his annual base salary and bonus payment amounts.

the years ended December 31, 2020, 2019, 2018, 2017, and 2016, we accrued for 6,000 stock options relating to this employment agreement.

The fair market value of the options issued during the year ended December 31, 2020, was $42, using the following assumptions:

five-year term, estimated volatility of 91%, and a risk-free rate of 1.61%.

The fair market value of the options issued during the year

ended December 31, 2019, was $600, using the following assumptions:

estimated seven-year term, estimated volatility of 567%, and a risk-free

rate of 2.31%.

Equity Awards at Fiscal Year End

following table summarizes information regarding unexercised options, stock that has not vested, and equity incentive plan awards

owned by the Named Executive Officers as of December 31, 2019:

following table summarizes information regarding unexercised options, stock that has not vested, and equity incentive plan awards owned

by the Named Executive Officers as of December 31, 2020:

Option Awards

Kathryn Hollinger

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AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information, as of May 26, 2020, respecting the beneficial ownership of our outstanding common

following table sets forth certain information, as of May 6, 2021, respecting the beneficial ownership of our outstanding

common stock by:

(i) any holder of more than 5%;

(ii) each of the Named Executive Officers (defined as any person who was principal executive

officer during the preceding fiscal year and each other highest compensated executive officers earning more than $100,000 during

the last fiscal year) and directors;

and (iii) our directors and Named Executive Officers as a group, based on 4,500,417 shares

of common stock outstanding.

All share and per-share amounts have been adjusted to give retroactive effect to a 1000-to-one reverse

split of our common stock effective September 2019:

of Person or Group (1)

(ii) each of the Named Executive Officers (defined as any person who was principal

executive officer during the preceding fiscal year and each other highest compensated executive officers earning more than $100,000

during the last fiscal year) and directors;

and (iii) our directors and Named Executive Officers as a group, based on 4,720,417

shares of common stock outstanding.

All share and per-share amounts have been adjusted to give retroactive effect to a 1,000-to-one

reverse split of our common stock effective September 2019:

Name of Person or Group (1)

Nature of Ownership

Principal Stockholders:

Kathryn Hollinger

Executive Officers and

as a Group (2 persons):

All Executive Officers and

Directors as a Group (2 persons):

Options (2)(3)

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for all stockholders is 6360 S Pecos Road, Suite 8, Las Vegas, NV 89120.

options to purchase up to 30,000 shares that have been accrued for services provided during each of 2015, 2016, 2017, 2018,

options to purchase up to 30,000 shares that have been accrued for services provided during each of 2016, 2017, 2018, 2019, and 2020.

These options can be exercised any time at an exercise price of $0.01 per share

options to purchase up to 30,000 shares that have been accrued for services provided during each of 2015, 2016, 2017, 2018,

options to purchase up to 10,000 shares that have been accrued for services provided during each of 2016, 2017, 2018, 2019, and 2020.

These options can be exercised any time at an exercise price of $0.01 per share

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Beneficial ownership is determined according to the rules of the U.S.

Securities and Exchange

Commission, and generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting

or investment power over that security.

Each director, officer, or 5% or more stockholder, as the case may be, has furnished the

information respecting beneficial ownership.

ownership is determined in accordance with the rules of the SEC which generally attribute beneficial ownership of securities to

persons who possess sole or shared voting power and/or investment power with respect to those securities.

Unless otherwise indicated,

voting and investment power are exercised solely by the person named above or shared with members of such person’s household.

This includes any shares such person has the right to acquire within 60 days.

are no arrangements, known to us, including any pledge by any person of our securities, the operation of which may at a subsequent

date result in a change in our control.

Securities and Exchange Commission,

and generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power

over that security.

Each director, officer, or 5% or more stockholder, as the case may be, has furnished the information respecting beneficial

ownership is determined in accordance with the rules of the SEC which generally attribute beneficial ownership of securities to persons

who possess sole or shared voting power and/or investment power with respect to those securities.

Unless otherwise indicated, voting

and investment power are exercised solely by the person named above or shared with members of such person’s household.

This includes

any shares such person has the right to acquire within 60 days.

are no arrangements, known to us, including any pledge by any person of our securities, the operation of which may at a subsequent date

result in a change in our control.

CERTAIN RELATIONSHIPS AND

TRANSACTIONS, AND DIRECTOR INDEPENDENCE

is set forth below for any transaction during the three years ended December 31, 2019, to which we were a party and in which any

of our officers and directors or any holder of more than 10% of any class of our stock had or is deemed to have a material interest.

is set forth below for any transaction during the three years ended December 31, 2019, to which we were a party and in which any of our

officers and directors or any holder of more than 10% of any class of our stock had or is deemed to have a material interest.

Related-Party

2007, we issued a 10% promissory note to a family member of our president in exchange for $300,000.

The note was due on demand

after May 2008.

The note was due on demand after

There were no repayments made during the periods presented.

At December 31, 2019 and 2018, the principal amount

owing on the note was $151,833 and $151,833, respectively.

At December 31, 2020 and 2019, the principal amount owing on the

note was $151,833 and $151,833, respectively.

March 31, 2008, we issued to this same family member, along with two other company shareholders, promissory notes totaling $315,000 ($105,000

($105,000 each).

Under the terms of these three $105,000 notes, we received total proceeds of $300,000 and agreed to repay the

amount received plus a 5% borrowing fee.

The notes were due April 30, 2008, after which they were due on demand, with interest

accruing at 12% per annum.

Under the terms of these three $105,000 notes, we received total proceeds of $300,000 and agreed to repay the amount received

plus a 5% borrowing fee.

The notes were due April 30, 2008, after which they were due on demand, with interest accruing at 12% per annum.

We made no payments towards the outstanding notes during the periods presented.

The principal balance

owing on the notes as of December 31, 2019 and 2018, totaled $72,466 and $72,466, respectively, and are presented in liabilities

from discontinued operations.

The principal balance owing on the notes as of December

31, 2020 and 2019, totaled $72,466 and $72,466, respectively, and are presented in liabilities from discontinued operations.

the year ended December 31, 2020, we received cash advances from related parties of $11,500.

Additionally, a related party forgave

outstanding payables of $92,000 and related parties paid expenses totaling $241,734 directly to vendors on our behalf.

$873,721 and $520,608 of short-term advances due to related parties as of December 31, 2018 and 2017, respectively.

are due on demand and as such included in current liabilities.

have agreed to issue options to Iehab Hawatmeh, our president, as compensation for services provided as our chief executive officer.

The terms of this employment agreement require us to grant options to purchase 6,000 shares of our stock each year, with an exercise

price equal to the fair market price of our common stock as of the grant date.

During the year ended December 31, 2019, we accrued

for 6,000 stock options relating to this employee agreement, resulting in 30,000 stock options as of December 31, 2019 and 2018,

respectively.

Additionally, related parties paid expenses

totaling $1,940 directly to vendors on our behalf.

There were $287,776 and $738,655 of short-term advances due to related parties as

of December 31, 2020 and 2019, respectively.

The advances are due on demand and are included in current liabilities.

terms of our employment agreement with Iehab Hawatmeh, our president, require us to grant options to purchase 6,000 shares of our stock

each year, with an exercise price equal to the fair market price of our common stock as of the grant date, as compensation for his services

provided as our chief executive officer.

During the year ended December 31, 2020, we issued options to purchase 6,000 shares of our common

stock relating to this employment agreement, resulting in outstanding options to purchase 30,000 shares of stock and options to purchase

30,000 shares of stock held by Mr.

Hawatmeh as of December 31, 2020 and 2019, respectively.

See Note 6 –

Other Accrued Liabilities and Note 14 –

Other Accrued Liabilities

and Note 14 –

Stock Options and Warrants.

of December 31, 2020 and 2019, we owed our president a total of $868,528 and $903,740, respectively, in unsecured advances.

Additionally,

30,000 stock options with a fair market value of $3,000 were accrued as of December 31, 2019.

The advances and short-term bridge

loans were approved by our board of directors under a 5% borrowing fee.

The borrowing fees were waived by our president on these

the definition of independent directors found in Nasdaq Rule 5605(a)(2), which is the definition we have chosen to apply, none

of our directors is independent.

and short-term bridge loans were approved by our board of directors under a 5% borrowing fee.

The borrowing fees were waived by our president

on these loans.

the definition of independent directors found in Nasdaq Rule 5605(a)(2), which is the definition we have chosen to apply, none of our

directors is independent.

PRINCIPAL ACCOUNTING FEES AND SERVICES

firm of Sadler, Gibb and Associates has served as our independent registered public accounting firm since 2013.

firm of Fruci & Associates has served as our independent registered public accounting firm since July 2020.

our fiscal year ended December 31, 2020, we were billed approximately $28,500 for professional services rendered for the audit

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our fiscal years ended December 31, 2020 and 2019, we did not incur any audit-related fees.

our fiscal years ended December 31, 2019 and 2018, we were not billed for professional services rendered for tax compliance, tax

advice, and tax planning.

did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31,

2019 and 2018.

our fiscal years ended December 31, 2020 and 2019, we were not billed for professional services rendered for tax compliance, tax advice,

and tax planning.

did not incur any other fees related to services rendered by our principal accountant for the fiscal years ended December 31, 2020 and

and Non-Audit Service Preapproval Policy

accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, our board

of directors has adopted an informal approval policy that it believes will result in an effective and efficient procedure to preapprove

accordance with the requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, our board of

directors has adopted an informal approval policy that it believes will result in an effective and efficient procedure to preapprove

services performed by the independent registered public accounting firm.

of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally

provided by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved

by our board of directors.

services include the annual financial statement audit (including quarterly reviews) and other procedures required to be performed

by the independent registered public accounting firm to be able to form an opinion on our consolidated financial statements.

board of directors preapproves specified annual audit services engagement terms and fees and other specified audit fees.

audit services must be specifically preapproved by the board of directors.

The board of directors monitors the audit services

engagement and may approve, if necessary, any changes in terms, conditions, and fees resulting from changes in audit scope or

of the professional services rendered by principal accountants for the audit of our annual financial statements that are normally provided

by the accountant in connection with statutory and regulatory filings or engagements for last two fiscal years were approved by our board

of directors.

services include the annual financial statement audit (including quarterly reviews) and other procedures required to be performed by

the independent registered public accounting firm to be able to form an opinion on our consolidated financial statements.

directors preapproves specified annual audit services engagement terms and fees and other specified audit fees.

All other audit services

must be specifically preapproved by the board of directors.

The board of directors monitors the audit services engagement and may approve,

if necessary, any changes in terms, conditions, and fees resulting from changes in audit scope or other items.

Audit-Related

1 unchanged sentence

services are assurance and related services that are reasonably related to the performance of the audit or review of our consolidated

financial statements, which historically have been provided to us by the independent registered public accounting firm and are

consistent with the Securities and Exchange Commission’s rules on auditor independence.

The board of directors preapproves

specified audit-related services within preapproved fee levels.

All other audit-related services must be preapproved by the board

of directors.

financial statements, which historically have been provided to us by the independent registered public accounting firm and are consistent

with the Securities and Exchange Commission’s rules on auditor independence.

The board of directors preapproves specified audit-related

services within preapproved fee levels.

All other audit-related services must be preapproved by the board of directors.

board of directors preapproves specified tax services that it believes would not impair the independence of the independent registered

public accounting firm and that are consistent with Securities and Exchange Commission’s rules and guidance.

directors must specifically approve all other tax services.

The board of directors

must specifically approve all other tax services.

Other Services

services are services provided by the independent registered public accounting firm that do not fall within the established audit,

audit-related, and tax services categories.

The board of directors preapproves specified other services that do not fall within

any of the specified prohibited categories of services.

services are services provided by the independent registered public accounting firm that do not fall within the established audit, audit-related,

and tax services categories.

The board of directors preapproves specified other services that do not fall within any of the specified

prohibited categories of services.

proposals for services to be provided by the independent registered public accounting firm, which must include a detailed description

1 unchanged sentence

The chief financial officer authorizes services that have been preapproved by the board of directors.

The chief financial

officer submits requests or applications to provide services that have not been preapproved by board of directors, which must

include an affirmation by the chief financial officer and the independent registered public accounting firm that the request or

application is consistent with the Securities and Exchange Commission’s rules on auditor independence, to board of directors

for approval.

The chief financial officer

submits requests or applications to provide services that have not been preapproved by board of directors, which must include an affirmation

by the chief financial officer and the independent registered public accounting firm that the request or application is consistent with

the Securities and Exchange Commission’s rules on auditor independence, to board of directors for approval.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

2 unchanged sentences

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2020 and 2019

7 unchanged sentences

Articles of Incorporation

by reference from our Current Report on Form 8-K filed July 17, 2000

Incorporated by reference from our Current Report on Form 8-K filed July 17, 2000

Amended and Restated Bylaws

by reference from our Current Report on Form 8-K filed August 18, 2011

Incorporated by reference from our Current Report on Form 8-K filed August 18, 2011

Articles of Amendment to Articles of Incorporation of CirTran Corporation

by reference from our Current Report on Form 8-K filed August 18, 2011

Incorporated by reference from our Current Report on Form 8-K filed August 18, 2011

Second Amendment to Articles of Incorporation of CirTran Corporation

by reference from our Current Report on Form 8-K filed May 8, 2015

Incorporated by reference from our Current Report on Form 8-K filed May 8, 2015

Defining the Rights of Security Holders, Including Debentures

Specimen stock certificate

Incorporated by reference from our Annual Report on Form 10-K for the year ended December 31, 2019, filed May 29, 2020

Amended, Restated, and Consolidated Secured Convertible Debenture No.

6 unchanged sentences

1 to Secured Convertible Debenture between CirTran Corporation and Tekfine, LLC, effective April 20, 2018

Incorporated by reference from quarterly

report on Form 10-Q for the quarter ended June 30, 2018, filed August 14, 2018.

by reference from the registration statement on Form 10 filed May 11, 2018

Amendment No.

2 to Secured Convertible Debenture between CirTran Corporation and Tekfine, LLC, effective May 12, 2020

by reference from our Annual Report on Form 10-K for the year ended December 31, 2019, filed May 29, 2020

extension/amendment]

Employment Agreement with Iehab Hawatmeh dated August 1, 2009

17 unchanged sentences

Schedule of Subsidiaries

by reference from our Annual Report on Form 10-K for the year ended December 31, 2019, filed May 29, 2020

of Experts and Counsel

Consent of Sadler, Gibb & Associates, LLC

Consent of Fruci & Associates, LLC

of Sadler, Gibb & Associates, LLC

13a-14(a)/15d-14(a) Certifications

8 unchanged sentences

Taxonomy Extension Label Linkbase

exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and

the number following the decimal indicating the sequence of the particular document.

Omitted numbers in the sequence refer

to documents previously filed with the SEC as exhibits to previous filings, but no longer required.

exhibits are numbered with the number preceding the decimal indicating the applicable SEC reference number in Item 601 and the number

following the decimal indicating the sequence of the particular document.

Omitted numbers in the sequence refer to documents previously

filed with the SEC as exhibits to previous filings, but no longer required.

each management contract or compensatory plan or arrangement required to be filed.

of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed

or part of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section

18 of the Exchange Act of 1934 and otherwise are not subject to liability.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report

to be signed on its behalf by the undersigned, thereunto duly authorized.

of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part

of a registration statement or Annual Report for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the

Exchange Act of 1934 and otherwise are not subject to liability.

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed

on its behalf by the undersigned, thereunto duly authorized.

Iehab Hawatmeh

2 unchanged sentences

Principal Financial Officer)

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Iehab Hawatmeh

4 unchanged sentences

Hollinger, Director

31, 2019 and 2018 (Revised)

Audited Financial

Statements for the Years Ended December 31, 2019 and 2018 (Revised):

of Independent Registered Public Accounting Firm

Consolidated Balance

Sheets as of December 31, 2019 and 2018

Consolidated Statements

of Operations for the Years Ended December 31, 2019 and 2018

Consolidated Statements

of Stockholders’

31, 2020 and 2019

Financial Statements for the Years Ended December 31, 2020 and 2019:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2020 and 2019

Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019

Consolidated Statements of Stockholders’

Deficit for the Years Ended December 31, 2020 and 2019

Consolidated Statements

of Cash Flows for the Years Ended December 31, 2019 and 2018

Notes to the Consolidated

Financial Statements

Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Shareholders of CirTran Corporation:

the Board of Directors and Stockholders of CirTran Corporation

on the Financial Statements

have audited the accompanying consolidated balance sheets of CirTran Corporation (“the Company”) as of December 31,

2019 and 2018 (revised), the related consolidated statements of operations, stockholders’

deficit (revised), and cash flows

for each of the years in the two-year period ended December 31, 2019 and the related notes (collectively referred to as the “financial

statements”).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial

position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the

years in the two-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United

States of America.

Paragraph Regarding Going Concern

have audited the accompanying consolidated balance sheet of CirTran Corporation (“the Company”) as of December 31, 2020,

and the related consolidated statements of operations, stockholders’

deficit, and cash flows for the year 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, 2020, and the results of its operations and its cash flows for the

year then ended, in conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency

that raise substantial doubt about its ability to continue as a going concern.

As discussed in Note

3 to the financial statements, the Company has an accumulated deficit, net losses, and working capital deficiencies.

These factors raise

substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans in regard to these matters

are also described in Note 3.

The financial statements do not include any adjustments that might result from the outcome of this

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

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.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

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.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit,

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.

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.

Sadler, Gibb & Associates, LLC

We have served as the Company’s

auditor since 2013.

Salt Lake City, UT

audit 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 audit 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 audit provides

a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that:

(1) relate 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

matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

of Investments

of the Critical Audit Matter

discussed in Note 2 to the consolidated financial statements, the Company has investments in a private entity which require the Company

to periodically evaluate potential impairment by assessing whether the carrying value of the investment exceeds the fair value.

management’s analysis includes tests that are complex and highly judgmental due to the estimation required to determine the fair

value of the underlying investees.

In particular, fair value estimates are sensitive to significant assumptions and factors such as expectations

about future market and economic conditions, revenue growth rates, strategic plans, and historical operating results, among other factors.

the Critical Audit Matter Was Addressed in the Audit

principal audit procedures to evaluate management’s valuation of investments consisted of the following, among others:

and test management assumptions and analysis.

and review the financial position and operating result data of the investee entity directly.

management’s key indicators regarding impairment considerations compared to tests of underlying data.

have served as the Company’s auditor since 2020.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Shareholders of CirTran Corporation:

on the Financial Statements

have audited the accompanying consolidated balance sheet of CirTran Corporation (“the Company”) as of December 31, 2019,

the related consolidated statements of operations, stockholders’

deficit, and cash flows for the year ended December 31, 2019 and

the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements referred

to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of

its operations and its cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in

the United States of America.

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.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit 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 audit, 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.

audit 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 audit 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 audit provides

a reasonable basis for our opinion.

served as the Company’s auditor from 2013 to 2020.

801-783-2950 |

801-783-2960 | 344

West 13800 South, Suite 250,

Draper, UT 84020

| sadlergibb.com

BALANCE SHEETS

Current assets

Deposits on inventory

Deposits on inventory - related party

Accounts receivable

Other current assets

from discontinued operations

current assets

Investment in securities

and equipment, net of accumulated depreciation

LIABILITIES AND

STOCKHOLDERS’

Total current assets

Investment in securities at cost

Right of use asset

Property and equipment, net of accumulated depreciation

LIABILITIES AND STOCKHOLDERS’

Current liabilities

1 unchanged sentence

Accounts payable

Lease liability, current

Related-party payable

Short-term advances

payable - related parties

Short-term advances payable

Short-term advances payable - related parties

Accrued liabilities

Accrued payroll

and compensation expense

Accrued interest,

current portion

Convertible debenture,

current portion, net of discounts

Note payable, current

Note payable to

stockholders and members

Accrued payroll and compensation expense

Accrued interest, current portion

Convertible debenture, current portion, net of discounts

Note payable, current portion

Note payable to stockholders and members

Derivative liability

from discontinued operations

current liabilities

Accrued interest,

net of current portion

Note payable, net

of current portion

debenture, net of current portion, net of discount

Commitments and

contingencies

Liabilities from discontinued operations

Total current liabilities

Lease liability, long term

Accrued interest, net of current portion

Note payable, net of current portion

Convertible debenture, net of current portion, net of discount

Total liabilities

Commitments and contingencies

Stockholders’

Common stock, par

value $0.001;

Common stock, par value $0.001;

100,000,000 shares authorized;

4,500,417 and 4,500,417 shares issued and outstanding at December 31, 2019 and

2018, respectively

Additional paid-in

(78,461,806 )

(77,234,267 )

stockholders’

(41,234,691 )

(40,007,152 )

liabilities and stockholders’

and 4,500,417 shares issued and outstanding at December 31, 2020 and 2019, respectively

Additional paid-in capital

Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

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

3 unchanged sentences

Operating expenses

general and administrative expenses

operating expenses

Loss from operations

Employee costs

Selling, general and administrative expenses

Total operating expenses

Income (loss) from operations

Other income (expense)

Interest expense

Loss on derivative

on settlement of debt

other income (expense)

Loss from continuing

from discontinued operations

$ (1,227,539 )

$ (1,111,221 )

from continuing operations per common share, basic and diluted

loss from discontinued operations per common share, basic and diluted

per common share, basic and diluted

and diluted weighted average common shares outstanding

Loss on disposal of equipment

Loss on derivative valuation

Gain of write off of accounts payable

Gain on settlement of debt

Total other income (expense)

Net income (loss) from continuing operations

Loss from discontinued operations

Net income (loss)

Net income (loss) from continuing operations per common share, basic

Net income (loss) from continuing operations per common share, diluted

Net income (loss) from discontinued operations per common share, basic

Net income (loss) from discontinued operations per common share, diluted

Net income (loss) per common share, basic

Net income (loss) per common share, diluted

Basic weighted average common shares outstanding

Diluted weighted average common shares outstanding

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

STATEMENTS OF STOCKHOLDERS’

THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (REVISED)

THE YEARS ENDED DECEMBER 31, 2020 AND 2019

Additional Paid-in

Balance, December 31, 2018

1 unchanged sentence

$ (40,007,152 )

Correction of common shares outstanding

Forgiveness of related-party loan

Net loss, year ended December 31, 2019

2 unchanged sentences

(41,234,691 )

Stock option expense

Common stock issued for conversion of accrued interest

Net loss, year ended December 31, 2020

2 unchanged sentences

$ (40,698,101 )

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

STATEMENTS OF CASH FLOWS

Year Ended December 31,

Cash flows from operating

loss from continuing operations

$ (1,078,973 )

Adjustments to reconcile

net loss to net cash used in operating activities

Cash flows from operating activities

Net income (loss) income from continuing operations

Adjustments to reconcile net income (loss) to net cash provided

by (used in) operating activities

Depreciation expense

Gain on fair value

measurement of derivative liability

Loss on derivative valuation

Debt discount amortization

Interest expense

recorded on initial measurement of derivative liability

Expenses paid for

company by a related party

Loss on disposal of equipment

Stock option expense

Gain on write-off of accounts payable

Interest expense recorded on initial measurement of derivative liability

Amortization of right of use asset to rent expense

Expenses paid on behalf of Company by a related party

Changes in operating assets and liabilities:

Deposits on inventory

Deposits on inventory - related party

Accounts receivable

Other current assets

Accounts payable

Related-party payable

Accrued liabilities

Accrued payroll

and compensation

Payments for lease liability

Accrued payroll and compensation

Accrued interest

Net cash used in

continuing operating activities

Net cash provided

by (used in) discontinued operations

cash used in operating activities

Cash flows from financing

Proceeds from bank

Proceeds from convertible

loans payable

Proceeds from related-party

Repayments of related-party

Proceeds from loans

of loans payable

Net cash provided

by continuing financing activities

Cash used in discontinued

financing activities

cash provided by financing activities

Related-party payables

Net cash provided by (used in) continuing operating activities

Net cash provided by (used in) discontinued operations

Net cash provided by (used in) operating activities

Cash flows from investing activities

Purchase of equipment

Net cash used in investing activities

Cash flows from financing activities

Proceeds from bank overdraft

Proceeds from convertible loans payable

Proceeds from related-party loans

Repayments of related-party loans

Proceeds from loans payable

Repayments of loans payable

Cash provided by (used in) financing activities

Cash used in discontinued financing activities

Net cash provided by (used in) financing activities

Net change in cash

Cash, beginning

Supplemental disclosure

of cash flow information

paid for interest

paid for income taxes

Supplemental disclosure

of non-cash investing activities

measurement of derivative liability

of related-party loan

of common shares outstanding

Cash, beginning of period

Cash, end of period

Supplemental disclosure of cash flow information

Cash paid for interest

Cash paid for income taxes

Supplemental disclosure of non-cash investing activities

Initial measurement of derivative liability

Related-party note entered into in exchange for account payable

Related-party note entered into in exchange for accrued liability

Common stock issued for conversion of accrued interest

Initial measurement of right of use asset

and related operating lease liability

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

1 unchanged sentence

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2019 AND 2018 (Revised)

31, 2020 AND 2019

1 - ORGANIZATION AND NATURE OF OPERATIONS

4 unchanged sentences

international markets.

devoted most of 2019 to exploring a number of potential product opportunities.

In late 2019, we entered into a new, five-year

manufacturing and distribution agreement with an unrelated party to manufacture, distribute, and sell condoms, electronic tobacco

products, cigars, energy drinks, water beverages, and related merchandise, all using the HUSTLER®

the year ended December 31, 2020, we executed on our business plan, fulfilling our obligations under a distribution agreement

to manufacture, distribute, and sell condoms, electronic tobacco products, cigars, energy drinks, water beverages, and related

merchandise, all using the HUSTLER®

brand name under a December 2019 five-year manufacturing and distribution agreement with

an unrelated party.

We devoted most of 2019 to exploring a number of potential product opportunities and preparing for the HUSTLER®

brand name products launch.

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Consolidation

consolidate all of our majority-owned subsidiaries, companies over which we exercise control through majority voting rights, and

companies in which we have a variable interest and we are the primary beneficiary.

We account for our investments in common stock

of other companies that we do not control, but over which we can exert significant influence, using the cost method.

consolidated financial statements as of and for the year ended December 31, 2020, include the accounts of CirTran Corporation

3 unchanged sentences

and transactions have been eliminated.

The results of CirTran Beverage Corp., CirTran Online Corp., CirTran Media Corp., and Racore

Network have been included through the dates of each dissolution during the three months ended March 31, 2019, and the liabilities

have been included in the balance sheet as of March 31, 2020 and December 31, 2019.

consolidated financial statements as of and for the year ended December 31, 2019, include the accounts of CirTran Corporation

11 unchanged sentences

Adoption of ASC 606 did not have a significant impact on our financial

We recognize revenue upon transfer of control of promised products or services to customers in an amount that reflects

the consideration expected to be received in exchange for those products or services.

Revenue is recognized net of allowances

for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

We did not recognize

revenue during the years ended December 31, 2019 and 2018.

We generate revenue by providing product design services and through the sales of tangible product.

We recognize revenue

upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to

be received in exchange for those products or services.

We determine the transaction price associated with each deliverable based

on a unique customer purchase order, which is considered to be a stand-alone contract that we retain the right to accept or reject.

Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to

governmental authorities.

the year ended December 31, 2020, we recognized revenues of $515,000 related to the performance obligations under product development

service agreements with customers.

These contracts are long term in nature and revenue is recognized at certain milestone intervals

upon our delivery and customer acceptances of work product related to those milestones, namely product design, packaging, branding

display, and prototypes.

There were no costs to obtain the contracts identified and, as such, no asset has been recorded for customer

acquisition costs.

Additionally, we have not recognized impairment losses related to the receivables from these contracts during

the year ended December 31, 2020.

Additionally,

we recognized revenues of $1,217,625 during the year ended December 31, 2020, related to the delivery of product to our customers.

Each delivery is based on a unique customer purchase order which is considered to be a stand-alone contract that we retain the

right to accept or reject.

Upon acceptance, we oblige delivery of such product to the customer at an agreed-upon place, time,

We recognize revenue under the unique purchase order contract upon fulfillment of our performance obligations therein,

typically limited to the delivery of product.

and Cash Equivalents

1 unchanged sentence

did not hold any cash equivalents as of December 31, 2020 or 2019.

February 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842), which superseded

guidance in ASC 840, Leases, which we adopted for the year ended December 31, 2019, under the modified retrospective transition

approach by applying the new standard to all leases existing at the date of initial application.

We account for short term leases,

those lasting fewer than 12 months, using the practical expedient as outlined in the guidance, which does not include recording

such leases on the balance sheet.

The adoption of the

standard resulted in recording right-of-use (“ROU”) assets and operating lease liabilities of $50,409 as of December 31,

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum

lease payments over the lease term at commencement date.

As the lease does not provide an implicit rate, we use our incremental

borrowing rate based on information available at the commencement date in determining the present value of future payments.

operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred.

Lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that option.

considered, we determined in appropriate to exclude future renewal terms from the capitalization of our operating lease.

have one lease in effect requiring minimum monthly payments of $2,500 through October 2022.

We have determined the appropriate discount

rate to be 5% based on our other borrowings secured by assets.

A summary of future payments due under the terms of the lease as of December

31, 2021 is as follows:

Total future payments

Implied interest

Operating lease liability as of December 31, 2021

in Securities

13 unchanged sentences

The capitalized cost, net of accumulated depreciation, associated with

molds and dies included in property and equipment at December 31, 2019 and 2018, was $9,772 and $12,065, respectively.

molds and dies included in property and equipment at December 31, 2020, and December 31, 2019, was $0 and $9,772, respectively.

All property and equipment that was in service during the year ended December 31, 2019, was disposed of during the current period.

During the year ended December 31, 2020, we purchased a vehicle for $18,672 and recorded depreciation expense of $373,

leaving a net book value of $18,299 as of December 31, 2020.

expense is recognized in amounts equal to the cost of depreciable assets over estimated service lives.

25 unchanged sentences

We have estimated the

fair value of these embedded derivatives using a Multi-NomialLattis model.

fair value of these embedded derivatives using a Monte Carlo simulation.

The fair values of the derivative instruments are measured

each reporting period.

the year ended December 31, 2017, our common stock was suspended from trading.

Because of this, the convertible notes no longer

met the criteria to bifurcate the instrument under FASB ASC 815, Derivatives and Hedging .

Accordingly, we determined the

underlying common stock of the instruments being accounted for as derivative liabilities had no value.

As a result, the fair value

of the derivative liabilities, as of the date our common stock was no longer available to trade, was written off to additional

paid-in capital in accordance with ASC 815-15-35-4.

During the year ended December 31, 2018, we became current with our filing

requirements with the SEC, and FINRA approved our common stock to continue trading during the year ended December 31, 2019.

we recorded derivative liabilities as of the date our stock resumed trading, or September 13, 2019, and revalued the liability

as of December 31, 2019.

are stated at the lower of average cost or market value.

Cost on manufactured inventories includes labor, material, and overhead.

are stated at the lower of average cost or net realizable value.

Cost on manufactured inventories includes labor, material, and

Overhead cost is based on indirect costs allocated to cost of sales, work-in-process inventory, and finished goods inventory.

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the benefit of indirect manufacturing costs to the manufacturing process.

Inventories consist solely of finished goods.

there is evidence that the inventory’s value is less than original cost, the inventory is reduced to market value.

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customers that require them to purchase their inventory items in the event they cancel their business with us.

time to time, we will place deposits on inventory to be delivered in the future.

These deposits are carried as a separate balance

sheet component and totaled $53,900 (non-related-party) and $319,333 (related-party) as of December 31, 2020.

There were no deposits

on inventory as of December 31, 2019.

balances consisted of the following:

December 31, 2020

December 31, 2019

Finished goods

Raw materials

Reserves for obsolescence

have outstanding stock options to directors and employees, which are described more fully in Note 13 –

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The three levels of inputs are defined as follows:

Level 1—Level

1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2—Level

2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or

liability, such as quoted prices for similar assets or liabilities in active markets;

quoted prices for identical assets or

liabilities in markets with insufficient volume or infrequent transactions (less active markets);

or model-derived valuations

in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3—Level

3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant

to the measurement of the fair value of the assets or liabilities.

Accounts payable

and related-party payables have fair values that approximate the carrying value due to the short-term nature of these instruments.

1—Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets

or liabilities.

2—Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for

the asset or liability, such as quoted prices for similar assets or liabilities in active markets;

quoted prices for identical

assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets);

or model-derived

valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market

3—Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that

are significant to the measurement of the fair value of the assets or liabilities.

payable and related-party payables have fair values that approximate the carrying value due to the short-term nature of these

Derivative liabilities have been valued using level 3 inputs.

financial assets and liabilities carried at fair valued measured on a recurring basis as of December 31, 2019 and 2018, consisted

of the following:

Total Fair Value

at December 31,

Quoted prices in

payable and related-party payables have fair values that approximate the carrying value due to the short-term nature of these

Derivative liabilities are measured using level 3 inputs.

active markets

Significant other

inputs (Level 2)

Derivative liabilities

Total Fair Value

at December 31,

Quoted prices in active markets

Significant other observable

inputs (Level 3)

inputs (Level

Derivative liabilities

Total Fair Value at December 31, 2019

Quoted prices in active markets (Level 1)

Significant other observable inputs (Level 2)

Significant unobservable inputs (Level 3)

Derivative liabilities

loss per share (EPS) is calculated by dividing net loss available to common shareholders by the weighted-average number of common

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losses per common share.

There were 167,731,552 such shares included for the year ended December 31, 2020.

have short-term advances with various individuals.

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and that do not require adoption until a future date are not expected to have a material impact on our financial statements upon

Reclassification of Prior Year Expenses

Certain prior year items have been reclassified

to conform to current year presentation.

Notably, $125,733 of employee-related costs previously included in selling, general

and administrative expenses on the consolidated statements of operations have been reclassified and presented as a separate line

3 - GOING CONCERN AND REALIZATION OF ASSETS

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ruling in our suit against Playboy Enterprises, Inc.

accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted

in the United States of America, which contemplate our continuation as a going concern.

We had a working capital deficiency of

$37,994,597 and $36,177,119 as of December 31, 2019 and 2018, respectively, and a net loss from continuing operations of $1,078,973

and $946,166 during the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2019 and 2018, we had an accumulated

deficit of $78,461,806 and $77,234,267, respectively.

These conditions raise substantial doubt about our ability to continue as

a going concern.

The accompanying audited

consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States

of America, which contemplate our continuation as a going concern.

We had a working capital deficiency of $37,059,342 and $37,994,597

as of December 31, 2020 and 2019, respectively, and a net income (loss) from continuing operations of $78,414 and $(406,558) during

the years ended December 31, 2020 and 2019, respectively.

As of December 31, 2020 and 2019, we had an accumulated deficit of $77,929,672

and $78,461,806, respectively.

These conditions raise substantial doubt about our ability to continue as a going concern.

ability to continue as a going concern is dependent upon our ability to successfully accomplish our business plan described in

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and equipment and estimated service lives consist of the following:

December 31, 2020

December 31, 2019

Useful Life (years)

Furniture and office equipment

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Property and equipment, net

was $2,293 and $2,292 of depreciation expense recorded during the years ended December 31, 2019 and 2018, respectively.

the year ended December 31, 2020, we disposed of all of our remaining assets as part of our adoption of our new agreement to develop

and distribute certain products.

There was no consideration received upon disposal resulting in a net loss of $9,771 during the year ended December 31, 2020.

There was $373 and $2,293 of depreciation expense recorded during

the years ended December 31, 2020 and 2019, respectively.

5 - RELATED-PARTY TRANSACTIONS

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The principal balance

owing on the notes as of December 31, 2019 and 2018, totaled $72,466 and $72,466, respectively, and are presented in liabilities

from discontinued operations.

the years ended December 31, 2019 and 2018, we received cash advances from related parties of $84,987 and $203,380, respectively.

Additionally, related parties paid expenses on our behalf totaling $(77,180) and $241,734 during the years ended December 31,

2019 and 2018, respectively.

The advances are non-interest-bearing, due on demand, and are included in current liabilities.

advances from related parties were:

Related party A

Related party B

have agreed to issue options to Iehab Hawatmeh, our president, as compensation for services provided as our chief executive officer.

The terms of this employment agreement require us to grant options to purchase 6,000 shares of our stock each year, with an exercise

price equal to the fair market price of our common stock as of the grant date.

During the year ended December 31, 2019, we accrued

for 6,000 stock options relating to this employee agreement, resulting in 30,000 stock options as of December 31, 2019 and 2018,

respectively.

See Note 6 –

owing on the notes as of December 31, 2020 and 2019, totaled $72,466 and $72,466, respectively.

the year ended December 31, 2020, we made repayments to related parties of $467,409 and advances of $11,500 were received from

related parties.

Additionally, related parties paid expenses totaling $1,940 directly to vendors on our behalf.

There were $287,776

and $738,655 of short-term advances due to related parties as of December 31, 2020 and 2019, respectively.

The advances are due

on demand and as such included in current liabilities.

terms of our employment agreement with Iehab Hawatmeh, our president, require us to grant options to purchase 6,000 shares of

our stock each year, with an exercise price equal to the fair market price of our common stock as of the grant date, as compensation

for services provided as our chief executive officer.

During the year ended December 31, 2020, we granted options to purchase

6,000 shares of common stock relating to this employment agreement.

There were also options to purchase 6,000 shares of common

stock that expired during the year ended December 31, 2020.

There were outstanding options to purchase 30,000 shares of common

stock and options to purchase 30,000 shares of common held by Iehab Hawatmeh as of December 31, 2020 and 2019, respectively.

Note 6 –

Other Accrued Liabilities and Note 12 –

Stock Options and Warrants .

of December 31, 2019 and 2018, we owe our president a total of $903,740 and $893,000, respectively, in unsecured advances.

Additionally,

30,000 stock options with a fair market value of $3,000 were owed as of December 31, 2019 and 2018.

The advances and short-term

bridge loans were approved by our board of directors under a 5% borrowing fee.

The borrowing fees were waived by our president

on these loans.

of December 31, 2020 and 2019, we owed our president a total of $868,528 and $903,740 in unsecured advances.

The advances and

short-term bridge loans were approved by our board of directors under a 5% borrowing fee.

The borrowing fees were waived by our

president on these loans.

These amounts are included in our liabilities from discontinued operations.

of December 31, 2020 and 2019, we owed a total of $13,740 to a related party through trade payables incurred in the normal course

These amounts are shown as a separate related-party payable on the balance sheet as of each reporting date.

the year ended December 31, 2020, we made deposits with a related-party inventory supplier totaling $319,333.

The related party

is an entity controlled by our CEO.

All transactions were at a 2% markup over the related-party’s cost paid for inventory

in arm’s-length transactions.

Total inventory purchases from the related party were $643,772 during the year ended December

6 - OTHER ACCRUED LIABILITIES

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accrued liabilities as of December 31, 2020 and 2019, include a non-interest-bearing payable totaling $45,000 that is due on demand.

Additionally, customer deposits totaling $226,030 were included in other accrued liabilities as of December 31, 2019.

Additionally, other accrued liabilities as of December 31, 2020 include customer deposits totaling $751,645.

During the year ended

December 31, 2020, our CEO made tax payments totaling $364,202 directly to the IRS on our behalf to reduce the tax liabilities owing.

payroll and compensation liabilities consist of the following:

December 31, 2020

December 31, 2019

Stock option expenses

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Bonus expenses

Administrative

option expenses consist of accrued employee stock option expenses.

Options granted during the years ended December 31, 2018 and

2019, were issued during the year ended December 31, 2019 (see Note 14 –

Stock Options and Warrants for further

were 8,000 stock options accrued during the year ended December 31, 2019.

During the year ended December 31, 2019, we accrued

for 6,000 stock options relating to the employment agreement with Mr.

The fair market value of the options was $600,

using the following assumptions:

estimated five-year term, estimated volatility of 567% and a risk-free rate of 2.31%.

Administrative payroll

the year ended December 31, 2020, the statute of limitations on certain liabilities carried in accounts payable passed.

we recognized a gain of $1,023,471 from the write-off of accounts payable included in continuing operations and $233,382

included in gains from discontinued operations.

option expenses consist of employee stock option expenses.

During the year ended December 31, 2020, we resumed accruing wages

for our CEO, which are included in administrative payroll.

A total of $345,000 was accrued during the year ended December 31,

2020, of which $172,500 are included in cost of sales as a direct labor cost of fulfilling performance obligations related to

our revenue recognized and $172,500 are included in operating expenses.

The allocation of wages to cost of sales and operating

expenses is based on the percentage of time spent by our CEO to directly deliver on certain performance obligations under our

contracts with our customers.

Our CEO spent 100% of his time as such during the six months ended June 30, 2020, with 0% of his

time spent as such during the third and fourth quarters of 2020.

7 - COMMITMENTS AND CONTINGENCIES

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The monthly payments are to continue until the

account balances are paid in full or until the collection statute of limitation expires on October 6, 2020.

There was $1,048,756

account balances are paid in full or until the collection statute of limitation expired on October 6, 2020.

We are currently

in communication with the IRS regarding the statute of limitations on this settlement and appropriate next steps.

$673,645 and $1,048,756 due as of December 31, 2020 and 2019, respectively.

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(payable quarterly) equal to 1% of our gross sales of all products, net of returns and allowances.

addition to the employment agreement above, we have verbal contracts with our employees that require payment of noncash compensation

in a fixed number of shares.

During the years ended December 31, 2019 and 2018, we granted options to purchase 8,000 and 8,000

shares of common stock, respectively, to two employees.

We recorded expenses totaling $800 and $480 during the years ended December

31, 2019 and 2018, respectively, for employee options relating to the employment contracts of these employees.

On January 1, 2020, we resumed

accruing wages for our CEO.

A total of $345,000 was accrued during the year ended December 31, 2020.

also have an oral agreement with our other director that requires us to issue options to purchase 2,000 shares of our common stock

the years ended December 31, 2020 and 2019, we granted options to purchase 8,000 and 8,000 shares of common stock to Mr.

Hollinger, respectively.

We recorded expenses totaling $56 and $800 during the years ended December 31, 2020 and 2019,

respectively, for these options.

have no other agreements requiring the grant of options.

License Agreements

We have entered into

agreements whereby we are required to pay certain royalties for the manufacture and distribution of licensed products.

Fees are based

on a percentage of sales and remitted quarterly.

Such costs are included in cost of sales for financial reporting purposes.

8 - NOTES PAYABLE

payable consisted of the following:

Note payable to former

service provider for past due account payable (current)

Note payable for settlement of debt

December 31, 2020

December 31, 2019

Note payable to former service provider for past due account payable (current)

Note payable for settlement of debt (long term)

Small Business Administration loan

was $205,165 and $157,535 of accrued interest due on these note as of December 31, 2020 and 2019, respectively.

2 unchanged sentences

Convertible debentures consisted of the following:

Convertible debenture, 5%

stated interest rate, secured by all of our assets, due on November 12, 2020

Convertible debenture, 5% stated interest

rate, secured by all of our assets, due on June 3, 2020

Convertible debenture, 5% stated interest

rate, secured by all of our assets, due on August 8, 2020

Convertible debenture, 5% stated interest

rate, secured by all of our assets, due on December 23, 2020

Convertible debenture,

5% stated interest rate, secured by all of our assets, due on April 30, 2027

December 31, 2020

December 31, 2019

Convertible debenture, 5% stated interest rate, secured by all of our assets, due on May 30, 2021

Convertible debenture, 5% stated interest rate, secured by all of our assets, due on December

Convertible debenture, 5% stated interest rate, secured by all of our assets, due on February 8, 2021

Convertible debenture, 5% stated interest rate, secured by all of our assets, due on December

Convertible debenture, 5% stated interest rate, secured by all of our assets, due on April 30, 2027

current portion

Long term portion

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As of December 31, 2020 and

2018, the debentures were convertible into 568,989,796 and an undeterminable number of shares of our common stock.

2019, the debentures, including accrued but unpaid interest, were convertible into 167,761,552 and 568,989,796 shares of our common

DERIVATIVE LIABILITIES

1 unchanged sentence

with the outstanding principal and interest being convertible at the holder’s option into common stock of the company at

the lesser of $100 (notes one through four) or $0.10 (note 5 due December 23, 2020) or the lowest closing bid price in the prior

20 trading days.

Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities

in our balance sheet.

We measure these instruments at their estimated fair value and recognize changes in their estimated fair

value in results of operations during the period of change.

We have estimated the fair value of these embedded derivatives for

convertible debentures and associated warrants using a Monte Carlo simulation model as of December 31, 2019, using the following

Rick Free Rates

the lesser of $100 (notes one through four) or $0.10 (note five) or the lowest closing bid price in the prior 20 trading days.

Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in our balance

We measure these instruments at their estimated fair value and recognize changes in their estimated fair value in results

of operations during the period of change.

We have estimated the fair value of these embedded derivatives for convertible debentures

and associated warrants using a Monte Carlo simulation as of December 31, 2020, using the following assumptions:

78.5% - 93.8 %

Risk-free rates

0.06% - 0.51 %

Remaining life

fair values of the derivative instruments are measured each quarter, which resulted in a loss of $80,640 during the year ended

December 31, 2019.

As of December 31, 2019, and December 31, 2018, the fair market value of the derivatives aggregated $894,079

and $0, respectively.

sublease from an unaffiliated party at $5,000 per month on a month to month basis for the use of office space and utilities.

to the short-term nature of the lease, we have not recorded a right of use asset or related payable.

We recorded rent expense

of $21,000 and $42,000 for the years ended December 31, 2019 and 2018, respectively.

0.25- 6.33 years

fair values of the derivative instruments are measured each reporting period, which resulted in a loss on the fair value of derivative

liabilities of $22,822 and $80,640 during the years ended December 31, 2020 and 2019.

As of December 31, 2020 and 2019, the fair

market value of the derivatives aggregated $922,654 and $894,079, respectively.

11—STOCKHOLDERS’

are authorized to issue up to 100,000,000 shares of $0.001 par value common stock.

During the year ended December 31, 2020, we

issued a total of 220,000 shares of common stock for the conversion of $4,400 of accrued interest payable under our convertible

We had a total of 4,720,417 and 4,500,417 common shares issued and outstanding as of December 31, 2020 and 2019, respectively.

During the year ended December 31, 2019, we effected a 1:1000 reverse stock split of our outstanding stock.

The impacts of the

reverse stock split have been retroactively stated.

12 - INCOME TAXES

13 unchanged sentences

All of our tax returns remain open.

of December 31, 2019 and 2018, we had net operating loss carryforwards for tax reporting purposes of approximately $19.1

million and $26.7 million, respectively.

These net operating loss carryforwards, if unused, begin to expire in 2020.

the year ended December 31, 2019, we dissolved four subsidiaries that had total net operating loss carryforwards of approximately

$8.9 million, which were forfeited upon dissolution, reducing our deferred tax asset by approximately $1.9 million.

the realization of tax benefits relating to net operating loss carryforwards is limited due to the settlement related to amounts

previously due to the IRS, as discussed in Note 6 –

of December 31, 2020 and 2019, we had net operating loss carryforwards for tax reporting purposes of approximately $19.0 million

and $19.1 million, respectively.

During the year ended December 31, 2019, we dissolved four subsidiaries that had total net operating

loss carryforwards of approximately $8.9 million, which were forfeited upon dissolution, reducing our deferred tax asset by approximately

$1.9 million.

In addition, the realization of tax benefits relating to net operating loss carryforwards is limited due to the

settlement related to amounts previously due to the IRS, as discussed in Note 6 –

Other Accrued Liabilities .

2 unchanged sentences

The sources and tax effects of the differences for the periods presented are as follows:

Income tax provision at

the federal statutory rate

Income tax provision at the federal statutory rate

Effect on operating losses

deferred tax assets consisted of the following:

December 31, 2020

December 31, 2019

Net operating loss carryforward

2 unchanged sentences

reconciliation of income taxes computed at the statutory rate is as follows:

Computed federal income

tax benefit (expense) at statutory rate of 21% and 21%

December 31, 2020

December 31, 2019

Computed federal income tax benefit (expense) at statutory rate of 21% and 21%

Depreciation and amortization

1 unchanged sentence

Stock option expense

Amortization of debt discount

Change in derivative liability

Change in valuation

Change in valuation allowance

Income tax expense

13 - STOCKHOLDERS’

are authorized to issue up to 100,000,000 shares of $0.001 par value common stock.

No shares were issued during the periods presented.

We had a total of 4,500,417 common shares issued and outstanding as of December 31, 2019 and 2018.

the year ended December 31, 2019, we effected a 1:1000 reverse stock split.

The impacts of the reverse stock split have been retroactively

13 - STOCK OPTIONS AND WARRANTS

Incentive Plans

the year ended December 31, 2019, we granted options to purchase 8,000 shares of common stock, less forfeitures of options to

purchase 8,000 shares of common stock from a previous year, relating to the employment of our president and one of our employees.

The fair market value of the accrued stock options aggregated $800, using the following assumptions:

seven-year term, volatility

of 567%, a risk-free rate of 2.31%, and exercise price of $0.0001.

the year ended December 31, 2018, we granted options to purchase 8,000 shares of common stock, less forfeitures of options to

purchase 8,000 shares of common stock from a previous year, relating to the employment of our president and one of our employees.

The fair market value of the accrued stock options aggregated $800, using the following assumptions:

seven-year term, volatility

of 567%, a risk-free rate of 2.38%, and exercise price of $0.0001.

of December 31, 2019, we had no unrecognized compensation costs related to outstanding options that have not yet vested at year-end

that would be recognized in subsequent periods.

the year ended December 31, 2020 and 2019, we granted to employees 8,000 and 8,000 options to purchase shares of common stock,

respectively.

8,000 options granted during the year ended December 31, 2020, were valued using the following assumptions:

estimated five-year

term, estimated volatility of 91%, and a risk-free rate of 1.61%.

the year ended December 31, 2019, we granted 6,000 and 2,000 stock options relating to the employment agreements

Hawatmeh and Ms.

The fair market value of the options was $600, using the following assumptions:

seven-year term, estimated volatility of 567%, and a risk-free rate of 2.31%.

of December 31, 2020 and 2019, we had no unrecognized compensation related to outstanding options that have not yet vested at

year-end that would be recognized in subsequent periods.

See Note 6 –

Other Accrued Liabilities for a description of amounts

of option expenses included in accrued payroll and compensation expense.

Other Accrued Liabilities for a description

of amounts of option expenses included in accrued payroll and compensation expense.

the year ended December 31, 2020, we issued a total of 8,000 options to purchase common stock, and a total of 8,000 options expired unexercised.

As of December 31, 2020, there were 40,000 options issued and vested with a weighted average exercise price of $0.01 and a weighted average

remaining life of 2.92 years.

Outstanding options as of December 31, 2020 consisted of:

14 - DISCONTINUED OPERATIONS

7 unchanged sentences

Assets from Discontinued Operations:

assets from discontinued operations

Liabilities from

Discontinued Operations:

Total assets from discontinued operations

Liabilities from Discontinued Operations:

Accounts payable

1 unchanged sentence

Accrued interest

Accrued payroll

and compensation expense

Current maturities

of long-term debt

Accrued payroll and compensation expense

Current maturities of long-term debt

Related-party payable

advances payable

liabilities from discontinued operations

Short-term advances payable

Total liabilities from discontinued operations

losses from discontinued operations were comprised of the following components:

Ended December 31,

Year Ended December 31,

Cost of sales

Operating expenses

general and administrative expenses

Selling, general and administrative expenses

Total operating expenses

1 unchanged sentence

Interest expense

Total other income

Net loss from

discontinued operations

16 - REVISION TO PRIOR YEAR FINANCIAL STATEMENTS

the year ended December 31, 2019, we identified an error in the presentation and accounting for option-based liabilities in prior

years, dating to the year ended December 31, 2008.

We have performed an analysis and determined it appropriate to correct the

error on a cumulative basis as of December 31, 2017, resulting in a decrease in accrued liabilities and retained earnings of $476,253

as of December 31, 2017.

The impacts on accrued liabilities and retained earnings were also $476,253 as of and for the year ended

December 31, 2018.

The balance sheet and statement of stockholders’

deficit for the year then ended has been revised to

correct the error.

Accrued payroll and compensation expense

Total current liabilities

Total liabilities

Accumulated deficit

$ (77,710,520 )

$ (77,234,267 )

Total stockholders’

$ (40,483,405 )

$ (40,007,152 )

Loss from continuing operations

Loss from discontinued operations

$ (1,111,221 )

Gain on write of off accounts payable

Total other income (expense)

Net income (loss) from discontinued operations

15 - SUBSEQUENT EVENTS

have evaluated all events occurring subsequent to the financial statements and determined there are no additional items to disclose.

on March 11, 2020, the World Health Organization characterized COVID-19 as a global pandemic.

We are monitoring the situation

closely and our response to the COVID-19 pandemic continues to evolve.

We have taken measures to mitigate the impact on our business

operations and overall financial performance, which continue to evolve.

March 29, 2021, we accepted a request from a convertible debenture holder to convert $6,750 of accrued but unpaid interest for

225,000 shares of common stock.

March 11, 2020, the World Health Organization characterized COVID-19 as a global pandemic.

This situation is ongoing, and we are

monitoring it closely.

Although our response to the COVID-19 pandemic continues to evolve, we have taken measures to mitigate

the impact on our business operations and overall financial performance.

We are also constantly evaluating and responding to the

5 unchanged sentences

modifications will be reflected in current and future reporting periods.

March 30, 2020, we filed a Current Report on Form 8-K to indicate our reliance on the Order of the U.S.

Securities and Exchange

Commission (Release No.

34-88465) in connection with filing our Annual Report on Form 10-K for the year ended December 31, 2019,

as a result of the circumstances set forth below.

Specifically, our executive team and contract outside accountant that live in

Salt Lake City, Utah, were dislocated and delayed as they began working remotely in a “shelter-at-home”

in response to the COVID-19 pandemic that precluded face-to-face meetings.

The difficulty of operating in the COVID-19 “shelter-at-home”

environment was then exacerbated by a 5.7 Richter scale earthquake and persistent ongoing aftershocks in the Salt Lake Valley.

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-K

Item 9A. Controls and Procedures