What changed in this filing

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Item 1. Financial Statements

2023-11-20 compared with 2023-08-21 · 122 added, 117 removed, 434 unchanged (36% of the section changed)

1 unchanged sentence

BALANCE SHEETS

June 30, 2023

September 30, 2023

December 31, 2022

46 unchanged sentences

STATEMENTS OF OPERATIONS

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of sales

3 unchanged sentences

Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense)

10 unchanged sentences

Net loss from continuing operations per common share, basic and diluted

Net loss from continuing operations per common share, basic

Net loss from discontinued operations per common share, basic and diluted

Net loss from discontinued operations per common share, basic

Net loss per common share, basic and diluted

2 unchanged sentences

STATEMENTS OF STOCKHOLDERS’ DEFICIT

THE THREE AND SIX MONTHS ENDED JUNE 30, 2023 AND 2022

Additional Paid-in

Total stockholders’

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

stockholders’

Balance, December 31, 2022

7 unchanged sentences

( 42,790,377 )

Additional Paid-in

Total Stockholders’

Balance, September 30, 2023

$ ( 80,234,638 )

$ ( 42,996,132 )

Stockholders’

Balance, December 31, 2021

7 unchanged sentences

( 41,176,372 )

( 78,414,878 )

( 41,176,372 )

Balance, September 30, 2022

$ ( 78,760,790 )

$ ( 41,522,284 )

$ ( 78,760,790 )

$ ( 41,522,284 )

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

STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended

September 30,

Cash flows from operating activities

19 unchanged sentences

Accrued interest

Net cash (used) provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities:

5 unchanged sentences

Repayments of related-party loans

Net Cash provided by (used in) financing activities

Net Cash used in financing activities

Net change in cash

24 unchanged sentences

In the opinion of our management, all adjustments, including

normal recurring adjustments necessary to present fairly our financial position, as of June 30, 2023, and the results of our operations

and cash flows for the six months then ended have been included.

normal recurring adjustments necessary to present fairly our financial position, as of September 30, 2023, and the results of our operations

and cash flows for the nine months then ended have been included.

The results of operations for the interim period are not necessarily

24 unchanged sentences

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

There were no cash equivalents

as of June 30, 2023 and December 31, 2022.

There were no cash

equivalents as of September 30, 2023 and December 31, 2022.

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

9 unchanged sentences

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

the six months ended June 30, 2023 and 2022, we recognized revenue of $ 23,228 and $ 227,404 , 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 six months

ended June 30, 2023 and 2022.

the nine months ended September 30, 2023 and 2022, we recognized revenue of $ 538,228 and $ 402,723 , 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 nine months ended September 30, 2023 and 2022.

Additionally,

we recognized revenues of $ 648,692 and $ 991,285 during the six months ended June 30, 2023 and 2022, 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 recognized revenues of $ 900,204 and $ 1,292,984 during the nine months ended September 30, 2023 and 2022, respectively, related to

the delivery of products 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, and price.

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

to the delivery of product.

The Company also recognizes revenue from advanced

royalty payments per the terms in its Manufacturing and Distribution Agreement with one if its distributors.

The royalty to be received

is calculated based on 8 % of gross sales, with an annual minimum royalty paid upfront per calendar year for the term of the contract.

There is a non-refundable $ 350,000 Minimum Royalty for FY2023 and a $ 150,000 annual operational fee (marketing and support).

recognizes the minimum royalty at the time of receipt.

The annual $ 150,000 fee is recognized over one year.

that have been recognized but not yet received are recorded as accounts receivable.

3 unchanged sentences

to reduce the amount receivable to its net realizable value when needed.

As of June 30, 2023, the Company has recorded an allowance for

doubtful accounts of $ 39,438 .

As of September 30, 2023, the Company has recorded an allowance

for doubtful accounts of $ 39,438 .

in Securities

cost-method investment consists of an investment in a private digital multi-media technology company that totaled $ 300,000 at June 30,

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

30, 2023 and December 31, 2022.

14 unchanged sentences

These deposits are carried as a separate balance sheet

component and total $ 50,440 (non-related-party) and $ 0 (related-party) as of June 30, 2023 and $ 40,440 (non-related-party) and $ 417,633

(related-party) as of December 31, 2022.

component and total $ 65,440 (non-related-party) and $ 92,175 (related-party) as of September 30, 2023 and $ 40,440 (non-related-party)

and $ 417,633 (related-party) as of December 31, 2022.

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

2 unchanged sentences

SCHEDULE OF INVENTORY

June 30, 2023

December 31, 2022

Finished goods

Raw materials

Value of Financial Instruments

16 unchanged sentences

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

Total Fair Value at

June 30, 2023

Quoted prices in active

markets (Level 1)

Significant other observable

September 30,

Quoted prices

inputs (Level 2)

Significant unobservable

inputs (Level 3)

Derivative liabilities

Total Fair Value at

December 31, 2022

Quoted prices in active

markets (Level 1)

Significant other observable

Quoted prices

inputs (Level 2)

Significant unobservable

inputs (Level 3)

4 unchanged sentences

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

There were 151,982,800

and 79,146,472 potentially issuable shares from the conversions of convertible debentures outstanding that were excluded in dilutive

outstanding shares for the six months ended June 30, 2023 and 2022, respectively, due to the anti-dilutive effect these would have on

net loss per share.

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

eligible to convert to common stock be exercised.

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

so in the future.

There were approximately

216,834,000 and 106,038,000 potentially issuable shares from the conversions of convertible debentures outstanding that were excluded

in dilutive outstanding shares for the nine months ended September 30, 2023 and 2022, respectively, due to the anti-dilutive effect these

would have on net loss per share.

We do not currently have adequate authorized but unissued shares to satisfy our obligations should

all instruments eligible to convert to common stock be exercised.

We are not currently contemplating an increase in our authorized shares

but may do so in the future.

Issued Accounting Pronouncements

6 unchanged sentences

as a going concern.

We had a working capital deficiency of $ 40,406,753 as of June 30, 2023, and a net loss from continuing operations

of $ 647,230 for the six months ended June 30, 2023.

As of June 30, 2023, we had an accumulated deficit of $ 80,028,883 .

These conditions

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

We had a working capital deficiency of $ 40,588,828 as of September 30, 2023, and a net loss from continuing operations

of $ 814,303 for the nine months ended September 30, 2023.

As of September 30, 2023, we had an accumulated deficit of $ 80,234,638 .

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

20 unchanged sentences

SCHEDULE OF PROPERTY AND EQUIPMENT AND ESTIMATED SERVICE LIVES

June 30, 2023

September 30, 2023

December 31, 2022

3 unchanged sentences

Property and equipment, net

recorded $ 1,893 and

of depreciation expense during the six months ended June 30, 2023 and 2022.

recorded $ 3,260 and $ 2,857 of depreciation expense during the nine months ended September 30, 2023 and 2022.

5 — RELATED-PARTY TRANSACTIONS

2 unchanged sentences

There were no repayments made during the periods presented.

At June 30, 2023 and December 31, 2022, the principal amount owing

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

At September 30, 2023 and December 31, 2022, the principal amount

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

No demand for payment has been made.

4 unchanged sentences

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

The principal balance owing on the notes as of June 30,

The principal balance owing on the notes as of September

30, 2023 and December 31, 2022, was $ 72,466 and $ 72,466 , respectively.

No demand for payment has been made.

were $ 58,366 and $ 21,882 of short-term advances due to related parties as of June 30, 2023 and December 31, 2022, respectively.

were $ 21,882 and $ 21,882 of short-term advances due to related parties as of September 30, 2023 and December 31, 2022, respectively.

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 price

Hawatmeh held outstanding options to purchase 30,000 shares of common stock as of June 30, 2023 and December 31, 2022.

Hawatmeh held outstanding options to purchase 30,000 shares of common stock as of September 30, 2023 and December 31, 2022.

See Note 13–Stock Options and Warrants.

of June 30, 2023 and December 31, 2022, we owed our president a total of $ 433,379 and $ 433,379 , respectively, in unsecured advances.

of September 30, 2023 and December 31, 2022, we owed our president a total of $ 433,379 and $ 433,379 , respectively, in unsecured advances.

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

2 unchanged sentences

These amounts are included in our liabilities from discontinued operations.

of June 30, 2023 and December 31, 2022, we owed a total of $ 0 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 six months ended June 30, 2023, we had a net decrease in deposits with a related-party inventory supplier totaling $ 417,633 .

related party is an entity controlled by our chief executive officer.

of September 30, 2023 and December 31, 2022, we owed a total of $ 0 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 date.

the nine months ended September 30, 2023, we had a net decrease in deposits with a related-party inventory supplier totaling $ 325,458 .

The related party is an entity controlled by our chief executive officer.

All transactions were at a 2 % markup over the related-party’s

1 unchanged sentence

Total inventory purchases from the related party were $ 672,614 and $ 744,709

during the periods ended June 30, 2023 and December 31, 2022, respectively.

during the periods ended September 30, 2023 and December 31, 2022, respectively.

6 — OTHER ACCRUED LIABILITIES

3 unchanged sentences

OF ACCRUED LIABILITIES

June 30, 2023

December 31, 2022

September 30,

Tax liabilities

accrued liabilities as of June 30, 2023 and December 31, 2022, include a non-interest-bearing payable totaling $ 45,000 and $ 45,000 , respectively,

that is due on demand and customer deposits totaling $ 1,626,861 and $ 1,437,361 , respectively.

accrued liabilities as of September 30, 2023 and December 31, 2022, include a non-interest-bearing payable totaling $ 45,000 and $ 45,000 ,

respectively, that is due on demand and customer deposits totaling $ 1,653,116 and $ 1,437,361 , respectively.

payroll and compensation liabilities consist of the following:

OF ACCRUED PAYROLL AND COMPENSATION LIABILITIES

June 30, 2023

December 31, 2022

September 30,

Director fees

24 unchanged sentences

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

have accrued $ 17,205,599 as of June 30, 2023 and December 31, 2022, related to this judgment, which is included in liabilities in discontinued

have accrued $ 17,205,599 as of September 30, 2023 and December 31, 2022, related to this judgment, which is included in liabilities in

discontinued operations.

Payroll Taxes, Interest, and Penalties

9 unchanged sentences

of limitations on this settlement and appropriate next steps.

The amounts of $ 517,684 and $ 517,684 were due as June 30, 2023 and December

31, 2022, respectively.

The amounts of $ 517,684 and $ 517,684 were due as September 30, 2023 and

December 31, 2022, respectively.

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

21 unchanged sentences

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

$ 172,500 and $ 345,000 was accrued during the period ended June 30, 2023 and December 31, 2022, respectively.

$ 258,750 and $ 345,000 was accrued during the period ended September 30, 2023 and December 31, 2022, respectively.

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

4 unchanged sentences

OF NOTES PAYABLE

June 30, 2023

September 30, 2023

December 31, 2022

2 unchanged sentences

Small Business Administration loan

is $ 339,978 and $ 300,165 of accrued interest due on these notes as of June 30, 2023 and December 31, 2022, respectively.

is $ 353,302 and $ 300,165 of accrued interest due on these notes as of September 30, 2023 and December 31, 2022, respectively.

9 — CONVERTIBLE DEBENTURES

1 unchanged sentence

OF CONVERTIBLE DEBENTURES

June 30, 2023

September 30, 2023

December 31, 2022

8 unchanged sentences

for the 20 trading days prior to conversion.

of June 30, 2023 and December 31, 2022, we had accrued interest on the convertible debentures totaling $ 1,854,405 and $ 1,788,318 , respectively.

of September 30, 2023 and December 31, 2022, we had accrued interest on the convertible debentures totaling $ 1,887,997 and $ 1,788,318 ,

respectively.

10 — DERIVATIVE LIABILITIES

7 unchanged sentences

We have estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a Monte Carlo

simulation as of June 30, 2023, using the following assumptions:

simulation as of September 30, 2023, using the following assumptions:

OF DERIVATIVE LIABILITIES AT FAIR VALUE

4 unchanged sentences

0.25 - 3.58 years

fair values of the derivative instruments are measured each quarter, which resulted in a loss of $ 44,503 and $ 33,949 during the six months

ended June 30, 2023 and 2022, respectively.

As of June 30, 2023 and December 31, 2022, the fair market value of the derivatives aggregated

$ 1,049,340 and $ 1,004,837 , respectively.

fair values of the derivative instruments are measured each quarter, which resulted in a loss of $ 19,238 and $ 35,105 during the nine

months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023 and December 31, 2022, the fair market value of the

derivatives aggregated $ 1,024,075 and $ 1,004,837 , respectively.

11 — STOCK OPTIONS AND WARRANTS

Incentive Plans

the six months ended June 30, 2023, 8,000 options previously granted to employees expired.

During the same period we granted those same

employees 8,000 new options to purchase shares of common stock.

the nine months ended September 30, 2023, 8,000 options previously granted to employees expired.

During the same period we granted those

same employees 8,000 new options to purchase shares of common stock.

The value of the options is nominal;

therefore there is no current impact

to the financial statements.

of June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, there were 40,000 options issued and vested with a weighted average exercise price of $ 0.03 and

a weighted average remaining life of 2.18 years.

Outstanding options as of June 30, 2023, consisted of:

therefore there is no current

impact to the financial statements.

of September 30, 2023 and December 31, 2022, 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 September 30, 2023 and December 31, 2022, there were 40,000 options issued and vested with a weighted average exercise price of $ 0.03

and a weighted average remaining life of 1.68 years.

Outstanding options as of September 30, 2023, consisted of:

OF STOCK OPTIONS OUTSTANDING

5 unchanged sentences

The assets and liabilities associated with this business

are displayed as assets and liabilities from discontinued operations as of June 30, 2023 and December 31, 2022.

Additionally, the revenues

and costs associated with this business are displayed as losses from discontinued operations.

are displayed as assets and liabilities from discontinued operations as of September 30, 2023 and December 31, 2022.

Additionally, the

revenues and costs associated with this business are displayed as losses from discontinued operations.

assets and liabilities included in discontinued operations were as follows:

OF DISCONTINUED OPERATIONS

June 30, 2023

September 30, 2023

December 31, 2022

10 unchanged sentences

Total liabilities from discontinued operations

loss from discontinued operations for the six months ended June 30, 2023 and 2022, were comprised of the following components:

Six Months ended June 30,

loss from discontinued operations for the nine months ended September 30, 2023 and 2022, were comprised of the following components:

Nine Months ended September 30,

Other expense:

1 unchanged sentence

Net loss from discontinued operations

$ ( 114,784 )

13 — SUBSEQUENT EVENTS

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements