What changed in this filing

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Item 9A. Controls and Procedures

2022-04-15 compared with 2021-05-17 · 669 added, 765 removed, 493 unchanged (74% of the section changed)

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

Management’s

Report on Internal Control over Financial Reporting

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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”).

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

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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.

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

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OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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Before his involvement with our company, Mr.

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.

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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.”

to file, on a timely basis, reports required by Section 16(a) of the Exchange Act, except that two officers failed to report options

earned and options that expired during the fiscal year.

expect that all 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

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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 ($)

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 Officer

Kathryn Hollinger (4)

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

Hawatmeh accrued his full salary in 2020 and $296,500 of his salary in 2021, he has not yet received any of his 2020 salary.

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

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$12,000 for car allowance for each of 2021 and 2020 and $3,600 and $5,417 for medical insurance premiums for 2021 and 2020.

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

accrued as director compensation.

Agreements—Change in Control

engage Iehab Hawatmeh, our president and chief executive officer, through an employment agreement entered in August 2009 and amended

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All cash amounts payable to Mr.

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

Hawatmeh more than 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.

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(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;

30 months’ annual base salary;

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

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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;

lump sum equal to 30 months’ annual base salary;

provided that if Mr.

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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%.

the year ended December 31, 2021, we were obligated to issue options to purchase 6,000 shares to Mr.

Hawatmeh but did not issue the options

until after the end of the period.

the years ended December 31, 2021 and 2020, we accrued for 6,000 and 6,000 stock options, respectively, relating to this employment agreement.

The fair market value of the options issued during the year ended December 31, 2021 and 2020, was $139 and $42, respectively.

Equity Awards at Fiscal Year End

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by the Named Executive Officers as of December 31, 2021:

Option Awards

of Securities Underlying Unexer- cised Options (#) Exer- cisable

of Securities Underlying Unexercised Options (#) Unexer- cisable (1)

Incentive Plan Awards:

Number of Securities Underlying Unexer- cised Unearned Options(#)

Exercise Price($)

Expiration Date

Shares or Units of Stock

Held That Have Not Vested(#)

Value of Shares or Units of Stock That Have Not Vested($)

Incentive Plan Awards:

Number of Unearned Shares, Units or Other Rights That Have Not Vested(#)

Incentive Plan Awards:

Market or Payout Value of Unearned Shares, Units or Other Rights That

Have Not Vested($)

Iehab Hawatmeh

Kathryn Hollinger

Iehab Hawatmeh

Kathryn Hollinger

Iehab Hawatmeh

Kathryn Hollinger

Iehab Hawatmeh

Kathryn Hollinger

Iehab Hawatmeh

Kathryn Hollinger

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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

common stock by:

MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table sets forth certain information, as of March 15, 2022, respecting the beneficial ownership of our outstanding common stock

(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 4,720,417

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:

(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 4,945,417 shares of common stock outstanding.

Name of Person or Group (1)

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Kathryn Hollinger

All Executive Officers and

Directors 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 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 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

options to purchase shares that have been accrued for services provided during the preceding fiscal years and that have not expired.

These options can be exercised any time at exercise prices ranging from $0.10 to $0.01 per share.

options to purchase shares that have been accrued for services provided the preceding fiscal years and that have not expired.

options can be exercised any time at exercise prices ranging from $0.10 to $0.01 per share.

persons named in the above table have sole voting and dispositive power respecting all shares beneficially owned, subject to community

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over that security.

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

Each director, officer, or 5% or more stockholder 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

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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

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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 preceding fiscal year 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

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There were no repayments made during the periods presented.

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

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

At December 31, 2021, the principal amount owing on the note was

No demand for payment has been made.

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

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, 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, 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 –

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.

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 notes accrue interest at 12% per annum and are due on demand.

We made no payments towards the outstanding notes during 2021.

The principal balance owing on the notes as of December 31, 2021, of $72,466 is included in liabilities from discontinued operations.

the year ended December 31, 2021, we made repayments to related parties of $188,877 and had other noncash reductions of $82,018.

were $21,882 of short-term advances due to related parties as of December 31, 2021.

The advances are due on demand and included in current

No demand for payment has been made.

of December 31, 2021, we owed our president a total of $433,379 in unsecured advances due on demand.

of December 31, 2021, we owed $13,740 to a related party through trade payables incurred in the normal course of business.

the year ended December 31, 2021, we had a net decrease in deposits with a related-party inventory supplier totaling $232,291.

party is an entity controlled by our chief executive officer.

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 $1,186,645 during the year

ended December 31, 2021.

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

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PRINCIPAL ACCOUNTING FEES AND SERVICES

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

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

our fiscal year ended December 31, 2021, we were billed approximately $18,000 for professional services rendered for the audit

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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

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.

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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

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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.

The board of directors

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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

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

EXHIBITS and FINANCIAL STATEMENT SCHEDULES

following financial statements are filed as part of this report:

Consolidated Financial Statements for the Years Ended December 31, 2021 and 2020:

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, 2020 and 2019

Notes to the Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Balance Sheets as of December 31, 2021 and 2020

Statements of Operations for the Years Ended December 31, 2021 and 2020

Statements of Stockholders’ Deficit for the Years Ended December 31, 2021 and 2020

Statements of Cash Flows for the Years Ended December 31, 2021 and 2020

to the Consolidated Financial Statements

following exhibits are filed as part of this report:

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Articles of Incorporation

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

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

Amended and Restated Bylaws

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

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

Articles of Amendment to Articles of Incorporation of CirTran Corporation

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

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

Second Amendment to Articles of Incorporation of CirTran Corporation

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

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

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.

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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

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by reference from our Registration Statement on Form S-8 filed August 26, 2013

Settlement Agreement between CirTran Corporation and Joueboire, LLC, dated April 19, 2017

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

Settlement Agreement between CirTran Corporation and YA Global Investments, LP, dated April 20, 2017

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

Agreement between Tekfine, LLC and CirTran Corporation dated April 20, 2017

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

Amendment No.

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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 Fruci & Associates, LLC

of Sadler, Gibb & Associates, LLC

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

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Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Instance Document

Taxonomy Extension Schema

Taxonomy Extension Calculation Linkbase

Taxonomy Extension Definition Linkbase

Taxonomy Extension Label Linkbase

XBRL Instance Document

XBRL Taxonomy Extension Schema

XBRL Taxonomy Extension Calculation Linkbase

XBRL Taxonomy Extension Definition Linkbase

XBRL 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.

following the decimal indicating the sequence of the 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.

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on its behalf by the undersigned, thereunto duly authorized.

April 15, 2022

Iehab Hawatmeh

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registrant and in the capacities and on the dates indicated.

April 15, 2022

Iehab Hawatmeh

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Principal Financial Officer)

April 15, 2022

Kathryn Hollinger

Hollinger, Director

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, 2020 and 2019

Notes to the Consolidated Financial Statements

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

the Board of Directors and Stockholders of CirTran Corporation

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

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, 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.

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

31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the

years in the two-year period ended December 31, 2021, and the related notes (collectively referred to as the financial statements).

our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December

31, 2021 and 2020 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31,

2021, 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.

As discussed in Note

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

3 to the financial statements, the Company has a significant accumulated deficit and working capital deficiency.

These factors raise

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

Management’s plans in regard to these matters

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 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 audit.

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

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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.

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

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

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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,

As part of our audits,

we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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.

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 audit also included evaluating the accounting principles used and significant

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 audit provides

a reasonable basis for our opinion.

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

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

of Investments

Recognition – Refer to Note 2 to the financial statements

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.

discussed in Note 2, the Company recognizes 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.

judgment is exercised by the Company in determining revenue recognition for products and services, and includes the following:

● Identification

and treatment of contract terms that may impact the timing and amount of revenue recognized.

● Determination

of stand-alone selling prices for each distinct performance obligation.

management’s revenue recognition was highly judgmental due to the significant estimation required for the recognition of revenue.

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

principal audit procedures related to the Company's revenue recognition for these customer agreements included the following, among others:

evaluated management's significant accounting policies related to revenue recognition and

reviewed underlying customer invoices for reasonableness of the application of ASC 606.

obtained and read contract source documents for selected revenue transactions and tested

management’s treatment of those terms.

tested the accuracy and completeness of selected revenue transactions during the year ended

December 31, 2021.

& Associates II, PLLC

have served as the Company’s auditor since 2020.

BALANCE SHEETS

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Deposits on inventory

Deposits on inventory - related party

Deposits on inventory -

related party

Accounts receivable

Other current assets

current assets

Total current assets

Investment in securities at cost

Investment in securities

Right-of-use asset

Property and equipment, net of accumulated depreciation

LIABILITIES AND STOCKHOLDERS’

and equipment, net of accumulated depreciation

LIABILITIES AND STOCKHOLDERS’

Current liabilities:

Bank overdraft

Accounts payable

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Short-term advances payable

Short-term advances payable - related parties

Short-term advances payable

- related parties

Accrued liabilities

Accrued payroll and compensation expense

Accrued interest, current portion

Convertible debenture, current portion, net of discounts

Accrued payroll and compensation

Accrued interest, current

Convertible debenture,

current portion, net of discounts

Note payable, current portion

Note payable to stockholders and members

Note payable to stockholders

Derivative liability

Liabilities from discontinued operations

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

Accrued interest, net of

current portion

Note payable, net of current

debenture, net of current portion, net of discount

Total liabilities

Commitments and contingencies

Stockholders’

Stockholders’ deficit:

Common stock, par value

2 unchanged sentences

Additional paid-in capital

Accumulated deficit

Total stockholders’

Total liabilities and stockholders’

( 77,803,460 )

( 77,929,672 )

Total stockholders’

( 40,564,954 )

( 40,698,101 )

Total liabilities and

stockholders’ deficit

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

STATEMENTS OF OPERATIONS

Year Ended December 31,

the Years Ended

Cost of sales

1 unchanged sentence

Employee costs

Selling, general and administrative expenses

general and administrative expenses

Total operating expenses

Income (loss) from operations

(Loss) income

from operations

Other income (expense)

1 unchanged sentence

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

Gain on forgiveness of

Gain on write off of accounts

Gain (loss) on derivative

Total other (expense)

Net (loss) income

from continuing operations

from discontinued operations

Net (loss) income

from continuing operations per common share, basic

Net income from continuing

operations per common share, diluted

Net income from

discontinued operations per common share, basic

Net income from

discontinued operations per common share, diluted

Net income per share, basic

Net income per share, diluted

Basic and diluted weighted

average common shares outstanding

Diluted weighted average common shares

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

STATEMENTS OF STOCKHOLDERS’

STATEMENTS OF STOCKHOLDERS’ DEFICIT

THE YEARS ENDED DECEMBER 31, 2021 AND 2020

Additional Paid-in

Balance, December 31, 2019

1 unchanged sentence

$ ( 41,234,691 )

Net loss, year ended December 31, 2019

Stock option expense

Common stock issued for conversion of accrued

Balance, December 31, 2020

2 unchanged sentences

Stock option expense

Common stock issued for conversion of accrued interest

Net loss, year ended December 31, 2020

Common stock issued for conversion of accrued

Balance, December 31, 2021

1 unchanged sentence

$ ( 40,564,954 )

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

STATEMENTS OF CASH FLOWS

Year Ended December 31,

the Years Ended December 31,

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

Adjustments to reconcile

net income to net cash (used) provided by operating activities:

from discontinued operations

Depreciation expense

3 unchanged sentences

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:

Gain on forgiveness of

Gain on write off of accounts

( 1,023,471 )

Amortization of right-of-use

asset to rent expense

Expenses paid on our behalf

by a related party

Changes in operating assets

and liabilities:

Deposits on inventory

Deposits on inventory - related party

Deposits on inventory -

related party

Accounts receivable

4 unchanged sentences

Accrued payroll and compensation

Accrued interest

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

Net cash provided by continuing

operating activities

cash provided by (used in) discontinued operations

Net cash provided by operating

Cash flows from investing activities:

Purchase of equipment

Net cash used in investing activities

Net cash used in investing

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

Proceeds from convertible

loans payable

Proceeds from related-party

Repayments of related-party

Proceeds from loan payable

of loans payable

Net Cash used in financing activities

Net change in cash

Cash, beginning of period

Cash, end of period

beginning of year

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.

CORPORATION AND SUBSIDIARIES

paid for interest

paid for income taxes

Supplemental disclosure of noncash investing

measurement of derivative liability

stock issued for conversion of accrued interest

accompanying notes are an integral part of these financial statements.

TO CONSOLIDATED FINANCIAL STATEMENTS

31, 2020 AND 2019

1 — ORGANIZATION AND NATURE OF OPERATIONS

offer diversified expertise in manufacturing, marketing, distribution, and technology services in a wide variety of consumer products,

including tobacco products, medical devices, and beverages.

We have an innovative and consumer-focused approach to brand portfolio

management, resting on a strong understanding of consumers domestically, and we have established a footprint in more than 50 key,

international markets.

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.

1987, CirTran Corporation was incorporated in Nevada under the name Vermillion Ventures, Inc., for the purpose of acquiring other operating

corporate entities.

We were largely inactive until July 1, 2000, when our wholly owned subsidiary, CirTran Corporation (Utah), acquired

substantially all the assets and certain liabilities of Circuit Technology, Inc., founded by our president, Iehab Hawatmeh.

together with our majority-owned subsidiaries, manufacture, distribute, and sell condoms, electronic tobacco products, cigars, energy

drinks, water beverages, and related merchandise, all using the HUSTLER® brand name.

Since entering our 2019 five-year manufacturing

and distribution agreement with an unrelated party, our efforts have been devoted to phase one of our development of all HUSTLER®-branded

products, which led us to generating revenue during 2020 for the first time in several years.

2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

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

of America (“U.S.

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

and our wholly owned subsidiaries:

CirTran Products Corp., LBC Products, Inc., and CirTran - Asia, Inc.

All intercompany balances

and transactions have been eliminated.

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

and our wholly owned subsidiaries:

CirTran Products Corp., CirTran Corporation (Utah), CirTran Beverage Corp., CirTran Online

Corp., CirTran Media Corp., Racore Network, and CirTran - Asia, Inc.

All intercompany balances and transactions have been eliminated.

preparing the financial statements in accordance with accounting principles generally accepted in the United States of America,

management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure

of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses

during the reported periods.

consolidated financial statements include the accounts of the company and our wholly owned subsidiaries:

CirTran Products Corp., LBC

Products, Inc., and CirTran Asia, Inc.

Intercompany accounts and transactions have been eliminated in consolidation

preparing the financial statements in accordance with US GAAP, management is required to make estimates and assumptions that affect the

reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements,

and the reported amounts of revenues and expenses during the reported periods.

Actual results could differ from those estimates.

follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue

Concentrations

of Credit Risk

maintain our cash in bank deposit accounts, the balances of which at times may exceed federally insured limits.

We continually monitor

our banking relationships and consequently have not experienced any losses in our accounts.

At times, such deposits may exceed the Federal

Deposit Insurance Corporation insurable limit.

consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

There were no cash

equivalents for the years ended December 31, 2021 or 2020.

and Equipment

and equipment are stated at cost less accumulated depreciation and amortization.

Depreciation of property and equipment is calculated

using the straight-line method over the estimated useful lives of the assets, which ranges from three to ten years.

Leasehold improvements

are amortized over the lesser of the remaining term of the lease or the estimated useful life of the asset.

Expenditures for repairs

and maintenance are expensed as incurred.

Gains or losses on dispositions of property and equipment are included in operating results.

follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue

from Contracts with Customers , for revenue recognition.

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

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

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.

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 the unique contract with

the customer, which is 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 years ended December 31, 2021 and 2020, we recognized revenue of $ 60,500 and $ 515,000 , respectively, 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 acceptance 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 therefore, no asset has been recorded for

customer acquisition costs.

We have not recognized impairment losses related to the receivables from these contracts during the years

ended December 31, 2021 and 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.

we recognized revenues of $ 2,862,769 and $ 1,217,625 during the years ended December 31, 2021 and 2020, respectively, related to the delivery

of product to our customers.

Each delivery is based on the unique contract with the customer, which is 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

consider all highly liquid, short-term investments with an original maturity of three months or less to be cash equivalents.

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.

We recognize revenue under the unique contract upon fulfillment of our performance obligations therein, typically limited

to the delivery of product.

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.

adoption of the standard resulted in recording right-of-use (“ROU”) assets and operating lease liabilities of $22,291 as

of December 31, 2021.

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.

The 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.

Although considered, we

determined it was 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.

3 unchanged sentences

31, 2021, is as follows:

SUMMARY OF FUTURE MINIMUM LEASE PAYMENTS DUE

Total future payments

2 unchanged sentences

in Securities

cost-method investment consists of an investment in a private digital multi-media technology company that totaled $300,000 at

December 31, 2020 and 2019.

As we owned less than 20% of that company’s stock as of each date, and no significant influence

or control exists, the investment is accounted for using the cost method.

We evaluated the investment for impairment and determined

there was none during the periods presented.

and Equipment

incur certain costs associated with the design and development of molds and dies for our contract-manufacturing segment.

costs are held as deposits on the balance sheet until the molds or dies are finished and ready for use.

At that point, the costs

are included as part of production equipment in property and equipment and are amortized over their useful lives.

We hold title

to all molds and dies used in the manufacture of products.

The capitalized cost, net of accumulated depreciation, associated with

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.

Leasehold improvements

are amortized over the shorter of the life of the lease or the service life of the improvements.

The straight-line method of depreciation

and amortization is followed for financial reporting purposes.

Maintenance, repairs, and renewals that neither materially add

to the value of the property nor appreciably prolong its life are charged to expense as incurred.

Gains or losses on dispositions

of property and equipment are included in operating results.

cost-method investment consists of an investment in a private digital multi-media technology company that totaled $ 300,000 at December

31, 2021 and 2020.

Because we owned less than 20 % of that company’s stock as of each date, and no significant influence or control

exists, the investment is accounted for using the cost method.

We evaluated the investment for impairment and determined there was none

during the periods presented.

of Long-Lived Assets

review our long-lived assets, including intangibles, for impairment when events or changes in circumstances indicate that the

carrying value of an asset may not be recoverable.

At each balance sheet date, we evaluate whether events and circumstances have

occurred that indicate possible impairment.

We use an estimate of future undiscounted net cash flows from the related asset or

group of assets over their remaining life in measuring whether the assets are recoverable.

We did not record expenses for the

impairment of long-lived assets during the year ended December 31, 2020 or 2019.

Instruments with Derivative Features

do not hold or issue derivative instruments for trading purposes.

However, we have financial instruments that are considered derivatives

or contain embedded features subject to derivative accounting.

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 using a Monte Carlo simulation.

The fair values of the derivative instruments are measured

each reporting period.

review our long-lived assets, including intangibles, for impairment when events or changes in circumstances indicate that the carrying

value of an asset may not be recoverable.

At each balance sheet date, we evaluate whether events and circumstances have occurred that

indicate possible impairment.

We use an estimate of future undiscounted net cash flows from the related asset or group of assets over

their remaining life in measuring whether the assets are recoverable.

We did no t record expenses for the impairment of long-lived assets

during the years ended December 31, 2021 or 2020.

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

Cost on manufactured inventories includes labor, material, and

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

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

Indirect overhead costs have been charged to cost of sales or capitalized as inventory, based on management’s estimate of

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.

overhead costs have been charged to cost of sales or capitalized as inventory, based on management’s estimate of the benefit of

indirect manufacturing costs to the manufacturing process.

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

market value on current resale amounts and whether technological obsolescence exists.

We will seek agreements with manufacturing

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

We will seek agreements with manufacturing 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.

These deposits are carried as a separate balance sheet

component and totaled $ 11,639 (non-related-party) and $ 87,042 (related-party) as of December 31, 2021, and $ 53,900 (non-related-party)

and $ 319,333 (related-party) as of December 31, 2020.

most of tobacco related products, the Company pays in advance for Federal Excise Taxes and State Excise Taxes prior to receiving product.

The Company accrues those taxes on its balance sheet and expenses them per-unit basis as sold.

balances consisted of the following:

December 31, 2020

December 31, 2019

SCHEDULE OF INVENTORY

Finished goods

Raw materials

Reserves for obsolescence

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

Options and Warrants .

We account for our stock options in accordance with ASC 718-10, Accounting for Stock Issued to Employees ,

which requires the recognition of the cost of employee services received in exchanged for an award of equity instruments in the

financial statements and is measured based on the grant date fair value of the award.

ASC 718-10 also requires the stock option

compensation expense to be recognized over the period during which an employee is required to provide service in exchange for

the award (typically the vesting period).

employee compensation was $56 and $800 for the years ended December 31, 2020 and 2019, respectively.

use the liability method of accounting for income taxes.

Under the liability method, deferred tax assets and liabilities are determined

based on differences between financial reporting and the tax basis of assets, liabilities, the carryforward of operating losses

and tax credits, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected

An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not

Research tax credits are recognized as used.

Reserve for obsolescence

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

We account for our stock options in accordance with ASC 718-10, Accounting for Stock Issued to Employees , and ASU 2018-07, Improvements

to Nonemployee Share-Based Payment Accounting , as updated, which requires the recognition of the cost of employee services received

in exchanged for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the

ASC 718-10 also requires the stock option compensation expense to be recognized over the period during which an employee is required

to provide service in exchange for the award (typically the vesting period).

There was no impact to our methodology for accounting for

equity-based compensation as a result of adopting ASC 718-10 and ASU 2018-07.

Value of Financial Instruments

carrying amounts reported in the accompanying consolidated financial statements for cash, notes payable, and accounts payable

approximate fair value because of the immediate or short-term maturities of these financial instruments.

The carrying amounts

of our debt obligations approximate fair value.

820-10-15, Fair Value Measurement-Overall-Scope and Scope Exceptions , defines fair value, thereby eliminating inconsistencies

in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations.

ASC 820-10-15

establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations.

The three levels of inputs are defined as follows:

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.

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

three levels of inputs are defined as follows:

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 data.

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 instruments.

Derivative liabilities are measured using level 3 inputs.

active markets

inputs (Level 2)

inputs (Level 3)

SCHEDULE OF FINANCIAL ASSETS AND LIABILITIES CARRIED AT FAIR VALUED MEASURED ON RECURRING BASIS

Fair Value at December 31, 2021

prices in active markets (Level 1)

other observable inputs (Level 2)

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)

Fair Value at December 31, 2020

prices in active markets (Level 1)

other observable inputs (Level 2)

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

shares outstanding during each period.

Diluted EPS is similarly calculated, except that the weighted-average number of common

shares outstanding would include common shares that may be issued subject to existing rights with dilutive potential when applicable.

We had 569,029,796 potentially issuable common shares at December 31, 2019.

However, the impacts of the potentially issuable common

shares were excluded from the diluted loss per common shares outstanding given the anti-dilutive effect such shares have on net

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.

These advances are due upon demand, carry no interest, and are not collateralized.

These advances are classified as short-term liabilities.

loss per share is calculated by dividing net loss available to common shareholders by the weighted-average number of common s hares

outstanding during each period.

Diluted loss per share is similarly calculated, except that

the weighted-average number of common shares outstanding would include common shares that may be issued subject to existing rights with

dilutive potential when applicable.

There were 144,264,247 potentially issuable shares from the conversions of convertible debentures

outstanding that were excluded in dilutive outstanding shares for the year ended December 31, 2021, due to the anti-dilutive effect these

would have on net loss per share.

There were 167,761,552 such shares issuable as of December 31,

We do not currently have adequate authorized but unissued shares to satisfy our obligations should all instruments eli gible

to convert to common stock be exercised.

We are not currently contemplating an increase in our authorized shares but may do so in the

taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus

deferred taxes related primarily to tax net operating loss carryforwards.

The deferred tax assets and liabilities represent the future

tax return consequences of these differences, which will either be taxable or deductible when assets and liabilities are recovered or

settled, as well as operating loss carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to

apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred

tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

allowance is established against deferred tax assets when in the judgment of management, it is more likely than not that such deferred

tax assets will not become available.

Because the judgment about the level of future taxable income is dependent to a great extent on

matters that may, at least in part, be beyond our control, it is at least reasonably possible that management’s judgment about

the need for a valuation allowance for deferred taxes could change in the near term.

benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.

amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon settlement.

for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition

and measurement standards.

As of December 31, 2021 and 2020, no liability for unrecognized tax benefits was required to be reported.

Issued Accounting Pronouncements

issued accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that require adoption

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

October 2016, we lost our ability to continue energy drink distribution, our principal source of revenue, after receiving an unfavorable

ruling in our suit against Playboy Enterprises, Inc.

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

the following paragraphs and eventually attain profitable operations.

The accompanying financial statements do not include any

adjustments that may be necessary if we are unable to continue as a going concern.

have implemented all new accounting pronouncements that are in effect.

These pronouncements did not have any material impact on our financial

statements unless otherwise disclosed, and we do not believe that there are any other new accounting pronouncements that have been issued

that might have a material impact on our financial position or results of operations.

3 — GOING CONCERN

accompanying consolidated financial statements have been prepared in conformity with US GAAP, which contemplate our continuation as a

going concern.

We had a working capital deficiency of $ 38,373,523

as of December 31, 2021, and net income

from continuing operations of $ 838,473

for the year ended December 31, 2021.

of December 31, 2021, we had an accumulated deficit of $ 77,803,460 .

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 and eventually attain

profitable operations.

The accompanying financial statements do not include any adjustments that may be necessary if we are unable to

continue as a going concern.

the coming year, our foreseeable cash requirements will relate to development of business operations and associated expenses.

We may experience a cash shortfall and be required to raise additional capital.

experience a cash shortfall and be required to raise additional capital.

Historically,

we have mostly relied upon shareholder loans and advances to finance operations and growth.

Management may raise additional capital

by retaining net earnings, if any, or through future public or private offerings of our stock or loans from private investors,

although we cannot assure that we will be able to obtain such financing.

Our failure to do so could have a material and adverse

effect upon us and our shareholders.

we have mainly relied upon shareholder loans and advances to finance operations and growth.

Management may raise additional capital by

retaining net earnings, if any, or through future public or private offerings of our stock or loans from private investors, although

we cannot assure that we will be able to obtain such financing.

Our failure to do so could have a material and adverse effect upon our

shareholders and us.

4 — PROPERTY AND EQUIPMENT

incur certain costs associated with the design and development of molds and dies for our contract-manufacturing segment.

are held as deposits on the balance sheet until the molds or dies are finished and ready for use.

At that point, the costs are included

as part of production equipment in property and equipment and are amortized over their useful lives.

We hold title to all molds and dies

used in the manufacture of products.

and equipment and estimated service lives consist of the following:

December 31, 2020

December 31, 2019

Useful Life (years)

SCHEDULE OF PROPERTY AND EQUIPMENT AND ESTIMATED SERVICE LIVES

Furniture and office equipment

Leasehold improvements

Production equipment

accumulated depreciation

Property and equipment, net

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.

Property and equipment,

recorded $ 3,198 and $ 373 of depreciation expense during the years ended December 31, 2021 and 2020.

5 — RELATED-PARTY TRANSACTIONS

involving Officers, Directors, and Stockholders

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, 2020 and 2019, the principal amount

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

At December 31, 2021 and 2020, the principal amount owing on the

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

No demand for payment has been made.

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, 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 –

The principal balance owing on the notes as of December

31, 2021 and 2020, was $ 72,466 and $ 72,466 , respectively.

No demand for payment has been made.

the year ended December 31, 2021, we made repayments to related parties of $ 396,797

and had other noncash reductions of $ 82,018 .

During the year ended December 31, 2020, we made repayments to related parties of $ 467,409

and received $ 11,500 .

There were $ 21,882 and

short-term advances due to related parties as of December 31, 2021 and 2020, respectively.

The advances are due on demand and included

in current liabilities.

No demand for payment has been made.

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

The terms of his employment agreement require us to grant options to purchase 6,000 shares of our stock each year, with an exercise $ 0.10 .

We issued options to purchase 6,000 and 6,000 shares of common stock during the years ended December 31, 2021 and 2020, respectively.

There were options to purchase 6,000 shares of common stock that expired during each year ended December 31, 2021 and 2020.

held outstanding options to purchase 30,000 and 30,000 shares of common stock as of December 31, 2021 and 2020, respectively.

13–Stock Options and Warrants.

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.

of December 31, 2021 and 2020, we owed our president a total of $ 433,379 and $ 868,528 , respectively, in unsecured 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

of December 31, 2021 and 2020, we owed a total of $ 13,740 and $ 13,740 , respectively, to a related party through trade payables incurred

in the normal course of business.

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

the year ended December 31, 2021, we had a net decrease in deposits with a related-party inventory supplier totaling $ 232,291 .

party is an entity controlled by our chief executive officer.

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 $ 1,186,645 and $ 643,772

during the years ended December 31, 2021 and 2020, respectively.

6 — OTHER ACCRUED LIABILITIES

tax liabilities consist of delinquent payroll taxes, interest, and penalties owed by us to the Internal Revenue Service (“IRS”)

and other tax entities.

liabilities consist of the following:

SCHEDULE OF ACCRUED LIABILITIES

Tax liabilities

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

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.

accrued liabilities as of December 31, 2021 and 2020, include a non-interest-bearing payable totaling $ 45,000 and $ 45,000 , respectively,

that is due on demand and customer deposits totaling $ 718,535 and $ 751,645 , respectively.

payroll and compensation liabilities consist of the following:

December 31, 2020

December 31, 2019

Stock option expenses

SCHEDULE OF ACCRUED PAYROLL AND COMPENSATION LIABILITIES

Director fees

1 unchanged sentence

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

to GloBrands, LLC

December 2019 Exclusive Manufacturing and Distribution Agreement with GloBrands grants to us the exclusive right to manufacture, distribute,

and sell specified products, including the authority to deal directly with distribution chain participants and to collect all product

We are authorized to retain from the collected sales proceeds an amount equal to 120% of our cost of goods sold, plus 10% of

gross sales of the covered products.

GloBrands reimburses us 105% of certain of our media placement expenses.

Our GloBrands’ agreement

term extends through November 30, 2024, subject to earlier termination by either party following 60 days’ notice of uncured material

time to time, GloBrands, LLC agrees to advance funds to the Company to assist in precuring inventory due to long lead times and to avoid

last minute high cost of shipping.

These advances are booked under Accrued Liabilities.

In addition, the Company bills GloBrands under

its agreement monthly, those amounts get netted out of the advances made.

agreement with GloBrands is subject in all respects to its rights as licensee under its licensing agreements with the Flynt/HUSTLER®

organization to use the HUSTLER® brand name.

The Flynt/HUSTLER® organization has approved our manufacturing and distribution

GloBrands is obligated to fully and timely perform and observe all terms, covenants, and conditions of the three underlying

licenses between it and the Flynt/Hustler organization, including the payment of required minimum and actual royalties to the Flynt/HUSTLER®

organization.

Further, GloBrands cannot amend the license agreements or waive or release any material right under the underlying Flynt/HUSTLER®

Under the Exclusive Manufacturing and Distribution Agreement, we transmit royalty payments on GloBrands’ behalf directly

to the Flynt/HUSTLER® organization.

have a limited license to use the HUSTLER® brand name for the exclusive purposes of fulfilling our obligations under the Exclusive

Manufacturing and Distribution Agreement

vendors, service providers, and others have asserted legal claims in previous years.

These creditors generally are not actively

seeking collection of amounts due them, and we have determined that the probability of realizing any loss on these claims is remote

and will seek to compromise and settle at a deep discount any of such claims that are asserted for collection.

These amounts are

included in our current liabilities.

We have not accrued any liability for claims or judgments that we have determined to be barred

by the applicable statute of limitations, which generally is eight years for judgments in Utah.

These creditors generally are not actively seeking

collection of amounts due to them, and we have determined that the probability of realizing any loss on these claims is remote and will

seek to compromise and settle at a deep discount any of such claims that are asserted for collection.

These amounts are included in our

current liabilities, except where we believe collection or enforcement of the judgments is barred by the applicable statute of limitations,

in which case the liabilities have been eliminated.

We have not accrued any liability for claims or judgments that we have determined

to be barred by the applicable statute of limitations, which generally is eight years for judgments in Utah.

Enterprises, Inc.

1 unchanged sentence

asserting numerous claims, including breach of contract and tortious interference.

Playboy responded with a counterclaim

of breach of contract and trademark infringement.

After proceedings in October 2016, the court awarded a judgment to Playboy of

$6.6 million against Play Beverages and CirTran Beverage Corp., our subsidiary.

The court denied our motion for a new trial and

awarded Playboy treble patent infringement damages and attorney’s fees.

We filed a notice of appeal in July 2017 and again

in March 2018.

Playboy has initiated collection efforts but has recovered no funds.

In September 2018, the appellate court affirmed

the judgment of the circuit court.

We have accrued $17,205,599 as of December 31, 2020 and 2019, related to this judgment, which

is included in liabilities in discontinued operations.

Playboy responded with a counterclaim of breach of

contract and trademark infringement.

After proceedings in October 2016, the court awarded a judgment of $ 6.6 million to Playboy against

Play Beverages and CirTran Beverage Corp., our subsidiary.

The court denied our motion for a new trial and awarded Playboy treble patent

infringement damages and attorney’s fees.

We filed a notice of appeal in July 2017 and again in March 2018.

Playboy has initiated

collection efforts but has recovered no funds.

In September 2018, the appellate court affirmed the judgment of the circuit court.

have accrued $ 17,205,599 as of December 31, 2021 and 2020, related to this judgment, which is included in liabilities in discontinued

Payroll Taxes, Interest, and Penalties

November 2004, the IRS accepted our amended offer in compromise (the “Offer”) to settle delinquent payroll taxes,

interest, and penalties, which requires us to pay $500,000, remain current in our payment of taxes for five years, and forego

claiming any net operating losses for the years 2001 through 2015 or until we pay taxes on future profits in an amount equal to

the taxes of $1,455,767 waived by the Offer.

In June 2013, we entered into a partial installment agreement to pay $768,526 in

unpaid 2009 payroll taxes, which requires us to pay the IRS 5% of cash deposits.

The monthly payments are to continue until the

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.

November 2004, the IRS accepted our amended offer in compromise (the “Offer”) to settle delinquent payroll taxes, interest,

and penalties, which required us to pay $ 500,000 , remain current in our payment of taxes for five years , and forego claiming any net

operating losses for the years 2001 through 2015 or until we paid taxes on future profits in an amount equal to the taxes of $ 1,455,767

waived by the Offer.

In June 2013, we entered into a partial installment agreement to pay $ 768,526 in unpaid 2009 payroll taxes, which

required us to pay the IRS 5 % of cash deposits.

The monthly payments were to continue until the account balances were 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.

Amounts of $ 525,238 and $ 673,645 were due as December 31, 2021 and 2020,

respectively.

engage Iehab Hawatmeh, our president and chief executive officer, through an employment agreement entered in August 2009 and amended

1 unchanged sentence

In July 2017, Mr.

Hawatmeh had resigned all positions with us to pursue other business activities, thereby

effectively terminating the agreement.

Hawatmeh had resigned all positions with us to pursue other business activities, thereby effectively

terminating the agreement.

However, the amendment to his employment agreement in September 2017 reinstated Mr.

to his previous positions, with a salary in an amount to be determined.

Hawatmeh to his previous

positions, with a salary in an amount to be determined.

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;

and (c) includes additional incentive compensation as follows:

(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.

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,

(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;

and (c) includes

additional incentive compensation as follows:

(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.

On January 1, 2020, we resumed accruing wages for our chief executive officer.

$ 296,500 was accrued during the year ended December 31, 2021.

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

the years ended December 31, 2021 and 2020, we granted options to purchase 8,000

shares of common stock, respectively, to Mr.

Hawatmeh and Ms.

We recorded expenses totaling $ 185

during the years ended December 31, 2021 and

2020, 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.

We have no other agreements requiring the grant of options.

have entered into agreements requiring us to pay certain royalties for the manufacture and distribution of licensed products.

based on a percentage of sales and remitted quarterly and are included in cost of sales for financial reporting purposes.

8 — NOTES PAYABLE

payable consisted of the following:

December 31, 2020

December 31, 2019

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

SCHEDULE OF NOTES PAYABLE

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.

Small Business Administration

was $ 252,665 and $ 205,165 of accrued interest due on these notes as of December 31, 2021 and 2020, respectively.

9 — CONVERTIBLE DEBENTURES

have entered into various convertible debentures that encumber all of our assets.

Convertible debentures consisted of the following:

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

debentures consisted of the following:

SCHEDULE OF CONVERTIBLE DEBENTURES

Convertible debenture, 5 % stated

interest rate, secured by all our assets, due on May 30, 2022

Convertible debenture, 5 % stated interest rate,

secured by all our assets, due on February 8, 2022

Convertible debenture, 5 % stated interest rate,

secured by all our assets, due on May 30, 2022

Convertible debenture, 5 % stated interest rate,

secured by all our assets, due on December 8, 2022

Convertible debenture,

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

current portion

Long-term portion

convertible debentures and accrued interest are convertible into shares of our common stock at the lower of $100 or the lowest

bid price for the 20 trading days prior to conversion.

of December 31, 2020 and 2019, we had accrued interest on the convertible debentures totaling $1,528,511 and $1,399,295, respectively,

of which $41,960 and $28,199 was current and $1,486,551 and $1,371,098 was long term, respectively.

As of December 31, 2020 and

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

convertible debentures and accrued interest are convertible into shares of our common stock at the lower of $ 100 or the lowest bid price

for the 20 trading days prior to conversion.

During the year ended December 31, 2021, the convertible debenture holder converted $ 6,750

of accrued but unpaid interest into 225,000 shares of our common stock.

During the year ended December 31, 2020, the convertible debenture

holder converted $ 4,400 of accrued but unpaid interest into 220,000 shares of our common stock.

of December 31, 2021 and 2020, we had accrued interest on the convertible debentures totaling $ 1,655,037 and

$ 1,528,511 , respectively, of which $ 55,710 and $ 41,960 was current and $ 1,599,328 and $ 1,486,551 was long term, respectively.

As of December

31 , 2021 and 2020, the debentures, including accrued but unpaid interest, were convertible into

144,264,247 and 167,761,552 shares of our common stock, respectively.

10 — DERIVATIVE LIABILITIES

discussed in Note 9 - Convertible Debentures , we have entered into five separate agreements to borrow a total of $2,665,528

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 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:

discussed in Note 9—Convertible Debentures, we have entered into five separate agreements to borrow a total of $ 2,665,528 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 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 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 as of December 31, 2021, using the following assumptions:

SCHEDULE OF DERIVATIVE LIABILITIES AT FAIR VALUE

36.5 % - 103 %

Risk-free rates

0.06% - 0.51 %

Remaining life

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’

fair values of the derivative instruments are measured each quarter, which resulted in a loss of $ 16,143 and $ 22,822 during the years

ended December 31, 2021 and 2020, respectively.

As of December 31, 2021 and 2020, the fair market value of the derivatives aggregated

$ 938,794 and $ 922,654 , respectively.

11 – COMMON STOCK TRANSACTIONS

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.

the year ended December 31, 2021, we issued a total of 225,000 shares of common stock for the conversion of $ 6,750 of accrued interest.

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.

12 — INCOME TAXES

did not provide any current or deferred U.S.

federal income tax provision or benefit for any of the periods presented because

we have experienced operating losses since inception.

When it is more likely than not that a tax asset cannot be realized through

future income, the company must allow for this future tax benefit.

We provided a full valuation allowance on the net deferred

tax asset, consisting of net operating loss carryforwards, because management has determined that it is more likely than not that

we will not earn income sufficient to realize the deferred tax assets during the carryforward period.

have not taken a tax position that, if challenged, would have a material effect on the financial statements for the years ended

December 31, 2020 and 2019, applicable under FASB ASC 740, Income Taxes .

We did not recognize any adjustment to the liability

for an uncertain tax position and, therefore, did not record any adjustment to the beginning balance of accumulated deficit on

the balance sheet.

All of our tax returns remain open.

federal income tax provision or benefit for any of the periods presented because we have

experienced operating losses since inception.

When it is more likely than not that a tax asset cannot be realized through future income,

the company must allow for this future tax benefit.

We provided a full valuation allowance on the net deferred tax asset, consisting

of net operating loss carryforwards, because management has determined that it is more likely than not that we will not earn income sufficient

to realize the deferred tax assets during the carryforward period.

federal income tax rate of 21 % is being used.

have not taken a tax position that, if challenged, would have a material effect on the financial statements for the years ended December

31, 2021 and 2020, applicable under FASB ASC 740, Income Taxes .

We did not recognize any adjustment to the liability for an uncertain

tax position and, therefore, did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet.

our tax returns remain open.

of December 31, 2021 and 2020, we had net operating loss carryforwards for tax reporting purposes of approximately $ 20.2 million

3 unchanged sentences

$ 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 .

provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before

provision for income taxes.

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

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

Valuation allowance

Net deferred tax asset

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

December 31, 2020

December 31, 2019

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

Depreciation and amortization

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.

SCHEDULE OF NET DEFERRED TAX ASSETS

Deferred Tax Assets:

NOL Carryover

Less valuation allowance

( 3,791,763 )

Net deferred tax assets

income tax provision differs from the amount of income tax determined by applying the U.S.

federal income tax rate to pretax income from

continuing operations for the years ended December 31, 2021 and 2020 due to the following:

SCHEDULE OF RECONCILIATION OF INCOME TAXES COMPUTED AT STATUTORY RATE

Book income (loss)

Change in payroll accruals

2 unchanged sentences

Change in derivative liability

Change in valuation allowance

Valuation allowance

Income tax expense

1 unchanged sentence

Incentive Plans

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.

the years ended December 31, 2021 and 2020, we granted to employees 8,000 and 8,000 options to purchase shares of common stock.

8,000 options granted during the year ended December 31, 2021, 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.

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

estimated five -year term,

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

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

estimated five -year term,

estimated volatility of 103 %, and a risk-free rate of 0.10 %.

of December 31, 2021 and 2020, we had no unrecognized compensation related to outstanding options that have not yet vested at year-end

that would be recognized in subsequent periods.

of December 31, 2021, there were 40,000 options issued and vested with a weighted average exercise price of $ 0.08 and a weighted average

remaining life of 2.92 years.

Outstanding options as of December 31, 2021, consisted of:

SCHEDULE OF STOCK OPTIONS OUTSTANDING

14— DISCONTINUED OPERATIONS

October 21, 2016, we exited the beverage licensing and distribution business.

The assets and liabilities associated with this

business are displayed as assets and liabilities from discontinued operations as of December 31, 2020 and 2019, as a result.

Additionally,

the revenues and costs associated with this business are displayed as losses from discontinued operations for the years ended

December 31, 2020 and 2019.

The assets and liabilities associated with this business

are displayed as assets and liabilities from discontinued operations as of December 31, 2021 and 2020, as a result.

Additionally, the

revenues and costs associated with this business are displayed as losses from discontinued operations for the years ended December 31,

2021 and 2020.

assets and liabilities included in discontinued operations were as follows:

SCHEDULE OF DISCONTINUED OPERATIONS

Assets from Discontinued Operations:

Total assets from discontinued operations

assets from discontinued operations

Liabilities from Discontinued Operations:

2 unchanged sentences

Accrued interest

Accrued payroll and compensation expense

Current maturities of long-term debt

Accrued payroll and compensation

Current maturities of long-term

Related-party payable

Short-term advances payable

Total liabilities from discontinued operations

losses from discontinued operations were comprised of the following components:

Year Ended December 31,

Cost of sales

Operating expenses

Selling, general and administrative expenses

Total operating expenses

advances payable

liabilities from discontinued operations

(loss) income from discontinued operations for the years ended December 31, 2021 and 2020, were comprised of the following components:

ended December 31,

Other income (expense):

Interest expense

Gain on write of off accounts payable

Total other income (expense)

Net income (loss) from discontinued operations

on write off of accounts payable

Total other income

Net income from

discontinued operations

15 — SUBSEQUENT EVENTS

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

impact of the pandemic on our supply chain as compared to product demand.

In addition, we actively monitor COVID-19-related developments

and may take further actions that alter our business operations as may be required by federal, state, or local authorities or

that we determine are in the best interests of our employees, customers, vendors, and stockholders.

The effects of these operational

modifications will be reflected in current and future reporting periods.

accordance with SFAS 165 (ASC 855-10), management has performed an evaluation of subsequent events through the date that the financial

statements were issued and has determined that it does not have any material subsequent events to disclose in these consolidated financial

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