GREENWAY TECHNOLOGIES, INC. & SUBSIDIARIES 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our results of operations and financial condition for the fiscal years ended December 31, 2023 and 2022 should be read in conjunction with our Financial Statements and the notes to those Consolidated Financial Statements that are included elsewhere in this Form 10-K and were prepared assuming that we will continue as a going concern. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the “Risk Factors,” “Cautionary Notice Regarding Forward-Looking Statements” and “Description of Business” sections and elsewhere in this Form 10-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” “predict,” and similar expressions to identify forward-looking statements. Although we believe the expectations expressed in these forward-looking statements are based on reasonable assumptions within the bounds of our knowledge of our business, our actual results could differ materially from those discussed in these statements. We undertake no obligation to update publicly any forward-looking statements for any reason even if new information becomes available or other events occur in the future. In the below discussion, “we,” “our,” “us,” the “Company” and similar terms in this report, as well as references to “UMED” and “Greenway” all refer to Greenway Technologies, Inc., and our wholly-owned subsidiary, Greenway Innovative Energy, Inc., unless the context requires otherwise. Greenway Technologies, Inc. is engaged in the research and development of proprietary gas-to-liquids syngas conversion systems and micro-plants that can be scaled to meet specific gas field production requirements. The company’s patented and proprietary technologies have been realized in its first commercial G-Reformer unit, a unique component used to convert natural gas into synthesis gas, which when combined with a Fischer-Tropsch reactor and catalyst, produces fuels including gasoline, diesel, jet fuel and methanol. G-Reformer units can be deployed to process a variety of natural gas streams including pipeline gas, associated gas, flared gas, vented gas, coal-bed methane and/or biomass gas. When derived from any of these natural gas sources, the liquid fuels created are incrementally cleaner than conventionally produced oil-based fuels. Greenway’s objective is to become a material direct and licensed producer of renewable GTL synthesized diesel and jet fuels, with a near term focus on U.S. market opportunities. The Company believes that its proprietary G-Reformer is a major innovation in gas reforming and GTL technology in general. Initial tests have demonstrated that the Company’s solution appears to be superior to legacy technologies which are more costly, have a larger footprint and cannot be easily deployed at field sites to process associated gas, stranded gas, coal-bed methane, vented gas, or flared gas - all markets the Company seeks to service. On April 28, 2020, the Company was issued a new U.S. Patent 10,633,594 B1 for syngas generation for gas-to-liquid fuel conversion. The Company has several other pending patent applications, both domestic and international, related to various components and processes involving our proprietary GTL methods, which when granted, will further complement our existing portfolio of issued patents and pending patent applications. On December 8, 2020, the Company announced an exclusive worldwide patent licensing agreement with the University of Texas at Arlington (UTA) for all patent applications currently filed with the Patent and Trademark Office relating to GWTI’s natural gas reforming technologies developed under its sponsored research agreement with UTA. - 15 - On December 15, 2020, the Company announced additional information regarding valuable outputs produced by the company’s proprietary G-Reformer™ catalyst reactor and Fischer-Tropsch (FT) technology which combine to form the “Greer-Wright” GTL solution. Originally developed to convert natural gas into ultra-clean synthetic fuel, recent research and development activity has shown that the technology can also allow the extraction of high-value chemicals and alcohols. The chemical outputs include n-Hexane, n-Heptane, n-Octane, n-Decane, n-Dodecane, and n-Tridecane. Alcohols produced include ethanol and methanol. The company has identified worldwide industrial demand for these outputs which will significantly improve the economic return on investment (ROI) of GTL plants that are based on GWTI’s technology. GWTI is a development-stage company with plans to continue its unique and patented technology. In February 2021, the Company was issued Patent 10,907,104, the fourth patent relating to the company’s proprietary G-Reformer™ technology which allows for the conversion of natural gas into synthesis gas. The newly issued patent extends the methods and details of generating syngas using the apparatus described in a previously issued patent No. 10,633,594, the company’s third patent. As described in the patent, methane, oxygen, and steam are continuously injected into the combustion section of the apparatus to generate carbon monoxide along with unreacted methane and steam. The carbon monoxide, unreacted methane, and steam then enter the catalyst chamber where these components react to generate syngas. The pressure inside the reaction vessel is controlled at no higher than 5 psig. Further, the Company believes its technologies and processes will allow for multiple small-scale GTL plants to be built with substantially lower up-front and ongoing costs resulting in more profitable results for O&G operators. In addition, the proprietary technology based around the G-Reformer is unique in that it also allows for transportable (mobile) GTL plants with a much smaller footprint as compared to legacy large-scale technologies. Greenway is in discussions with a number of oil and gas operators and other interested parties to license and obtain joint venture or other forms of capital funding to build its first third-party customer gas-to-liquid plant. Mining Interest In December 2010, UMED acquired the rights to approximately 1,440 acres of placer mining claims located on Bureau of Land Management (“BLM”) land in Mohave County, Arizona for 5,066,000 shares of restricted Common A stock. Early indications, from samples taken and processed, provided reason to believe that the potential recovery value of the metals located on the 1,440 acres is significant, but only actual mining and processing will determine the ultimate value which may be realized from this property holding. The Company is currently exploring strategic options to partner or sell its interest in this acreage, while it focuses on its emerging GTL technology sales and marketing efforts. Going Concern We remain dependent on outside sources of funding (debt and/or equity) for continuation of our operations. Our independent registered public accounting firm issued a going concern qualification in their report dated July16, 2024, which is included with our consolidated Financial Statements and raises substantial doubt about our ability to continue as a going concern. $ December 31, December 31, Increase 2023 2022 (Decrease) % Change Net loss $ 1,580,735 $ 1,512,692 $ 68,043 4.50 % 1 Net cash used in operations $ 302,663 $ 496,654 $ (193,991 ) -39.06 % 2 Working capital deficit $ 12,029,311 $ 10,737,576 $ 1,291,735 12.03 % 3 Stockholders’ deficit $ 12,029,311 $ 10,737,576 $ 1,291,735 12.03 % 4 1 – Our net loss decreased primarily due to the net effect of reductions in officers and directors liability insurance of $48,876, research and development by $54,275, amortization of debt discount by $48,232 and transfer agent expenses by $2,406 and increase in legal expenses of $82,552, mining leases of $48,493 and recognition of gain on debt settlements of $70,377 in 2022 compared to zero gain on debt settlements in 2023. 2 – Our net cash used in operations in 2023 was less than 2022. The change was primarily due to increases of accounts payable and accrued expenses by $178,453 and accounts payable and accrued expenses – related parties by $62,098. 3 – The increase in working capital deficit from 2022 to 2023 primarily relates to less cash in 2023 of $23,463, higher accounts payable and accrued expenses of $505,113, higher accounts payable and accrued expenses – related party of $750,013, reduction of notes payable of $20,000, and increase in advances relates parties and others of $30,200. 4 – The increase in working capital deficit from 2022 to 2023 results from the net effect of 2023 net loss of $1,580,735 and issuances of common stock of $289,000, which decreased the stockholders’ deficit. These factors raise substantial doubt about our ability to continue as a going concern. The Consolidated Financial Statements included in our Form 10-K do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue in existence. Our ability to continue as a going concern is dependent upon our ability to generate sufficient new cash flows to meet our obligations on a timely basis, to obtain additional financing as may be required, and/or ultimately to attain profitable operations. However, there is no assurance that profitable operations, financing, or sufficient new cash flows will occur in the future. - 16 - Our ability to achieve profitability will depend upon our ability to finance, manufacture, and market/operate GTL units. Our growth is dependent on attaining profit from our operations and our raising additional capital either through the sale of our Common Stock or borrowing. There is no assurance that we will be able to raise any equity financing or sell any of our products at a profit. We will be unable to pay our obligations in the normal course of business or service our debt in a timely manner throughout 2024 without raising additional debt or equity capital. There can be no assurance that we will raise additional debt or equity capital. We are currently evaluating strategic alternatives that include (i) raising new equity capital and/or (ii) issuing additional debt instruments. The process is ongoing, lengthy and has inherent costs. There can be no assurance that the exploration of these strategic alternatives will result in any specific action to alleviate our 12-month working capital needs or result in any other transaction. While we are attempting to commence operations and generate revenues, our cash position may not be significant enough to support our daily operations. Management intends to raise additional funds by way of an offering of our securities. Management believes that the actions presently being taken to further implement our business plan and generate revenues provide the opportunity for us to continue as a going concern. While we believe in the viability of our strategy to generate revenues and in our ability to raise additional funds, we may not be successful. Our ability to continue as a going concern is dependent upon our capability to further implement our business plan and generate revenues. Results of Operations For Year Ended December 31, 2023 as Compared to Year Ended December 31, 2022: We had no revenues for consolidated operations for the years ended December 31, 2023 and 2022. We reported consolidated net losses during the years ended December 31, 2023 and 2022 of $1,580,735 and $1,512,692, respectively. The following table summarizes consolidated operating expenses and other income and expenses for the years ended December 31, 2023 and December 31, 2022: December 31, December 31, $ Increase 2023 2022 (Decrease) % Change Revenues $ - $ - $ - 0.00 % General and administrative expenses $ 960,692 $ 888,599 $ 17,818 8.11 % 1 Research and development $ - $ 54,275 $ (54,275 ) 100.00 % 2 Interest expense $ 620,043 $ 591,963 $ 28,080 4.74 % 3 Amortization of debt discount $ - $ 48,232 $ (48,232 ) 100.00 % 4 Gain on debt settlement $ - $ (70,377 ) $ 70,377 100.00 % 5 Total operating expenses increased by $17,818 from $942,874 in 2022 to $960,692 in 2023. 1 – The increase was due to reductions in officers and directors liability insurance of $48,876, research and development of $54,275, amortization of debt discount of $48,233 and transfer agent expenses of $2,406 and increases in legal expense of $82,552, and mining leases of $48,493. 2 – The decrease was related to less activity in 2023 due to lack of sufficient resources and inability to pursue additional R&D related activities. 3 – The increase is based on higher interest rates. 4 – There was no amortization of debt discount in 2023. 5 – The Company settled a legal matter in 2022 resulting in a gain on debt settlement and had no comparable gain in 2023. Net Loss and Net Loss per Share Our consolidated net loss increased by $68,043 to $1,580,735 ($0.00) - basic and diluted earnings share for the year ended December 31, 2023, as compared to a net loss of $1,512,692 ($0.00), for the same period ended in 2022. The weighted-average number of shares of Common Stock used in the earnings per share for the basic and dilutive computation was 397,741,921 for the year ended December 31, 2023, and 371,601,679 for the year ended December 31, 2022. - 17 - Liquidity and Capital Resources We do not currently have sufficient working capital to fund our expected future operations. We cannot assure investors that we will be able to continue our operations without securing additional adequate funding. We had $1,132 in cash, total assets of $1,132, and total liabilities of $12,030,443 as of December 31, 2023. Total accumulated deficit at December 31, 2023, was ($37,859,604). Liquidity is the ability of a company to generate adequate amounts of cash to meet all of its financial obligations. The following table provides certain selected balance sheet comparisons between December 31, 2023, and December 31, 2022: December 31, December 31, $ Increase 2023 2022 (Decrease) % Change Cash $ 1,132 $ 24,595 $ (23,463 ) -95.40 % 1 Prepaids and other $ - $ 2,947 $ (2,947) -100.00 % 2 Total current assets $ 1,132 $ 27,542 $ (26,410 ) -95.89 % 3 Total assets $ 1,132 $ 27,542 $ (26,410 ) -95.89 % 3 Accounts payable and accrued expenses $ 3,822,338 $ 3,317,225 $ 505,113 15.23 % 4 Accounts payable and accrued expenses - related party $ 4,549,465 $ 3,799,452 $ 750,012 16.49 % 4 Note payable $ 652,500 $ 672,500 $ (20,000) -2.97 % 5 Notes payable - related parties - net $ 2,805,774 $ 2,805,774 $ - - % Convertible note payable - net $ 166,667 $ 166,667 $ - - % Advances - related parties $ 31,200 $ 3,500 $ 27,700 791.43 % 6 Advances - others 2,500 - 2,500 100.00 % 6 Total current liabilities $ 12,030,443 $ 10,765,118 $ 1,265,325 11.75 % 7 Total liabilities $ 12,030,443 $ 10,765,118 $ 1,265,325 11.75 % 7 1 - Cash decreased in 2023 due to payments of accounts payable. 2 – The prepaid of $2,947 at December 31, 2022 represented prepaid legal fees. The amount was applied in 2023 against legal fee billings. 3 - See discussion regarding cash resources in #1 above. 4 – Lack of cash resources resulted in an increase in these liabilities. 5 – In 2023, note payments in the amount of $20,000 were made resulting in a decrease of $20,000 in the note payable. 6 - In 2023, related parties and an unrelated party made advances in the amounts of $31,200 and $2,500, respectively. 7 – See discussions in 4, 5 and 6. - 18 - Cash Flows December 31, December 31, $ Increase 2023 2022 (Decrease) % Change Net cash used in operating activities $ 302,663 $ 496,654 $ (193,991 ) -39.06 % Net cash used in investing activities $ - $ - $ - - % Net cash provided by financing activities $ 279,200 $ 460,700 $ (181,500 ) -39.40 % Operating Activities Our net cash used in operations in 2023 was less than 2022. The change was primarily due to the recognition of a gain on debt settlement in 2022 of $70,377 but no such gain recognition in 2023, amortization of debt discount of $48,232 in 2022 but no amortization of debt discount in 2023, stock issued for services in 2022 but no stock issued for services in 2023, an increase of $178,453 of accounts payable and accrued expenses and an increase of $62,098 in accounts payable and accrued expenses – related parties during 2023. Investing activities Net cash used in investing activities for the year ending December 31, 2023 and 2022 was $0. F inancing Activities In 2023, the Company had net cash provided by financing activities of $279,200, consisting of the following: Proceeds from advances – related parties - $31,700 Repayment of advances – related parties - $500 Proceeds of advances – others – $2,500 Repayments on notes payable - $20,000 Proceeds from stock issued for cash - $265,500 Repayments of advances – related parties - $500 Our accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. Our general business strategy is to first develop our GTL technology to maintain our basic viability, while seeking significant development capital for full commercialization. As shown in the accompanying consolidated financial statements, we have incurred an accumulated deficit of $37,859,604 and $36,278,869 as of December 31, 2023 and 2022, respectively. Our ability to continue as a going concern is in doubt and dependent upon achieving a profitable level of operations and on our ability to obtain necessary financing to fund ongoing operations. - 19 - Commitments Capital Expenditures - none Operational Expenditures Employment Agreements In August 2012, we entered into an employment agreement with Raymond Wright, for the position of president of GIE, for a term of five years with compensation of $90,000 per year. In September 2014, Mr. Wright’s employment agreement was amended to increase his annual pay to $180,000. By its terms, Mr. Wright’s employment agreement automatically renewed on August 12, 2020, 2021, 2022 and 2023, for a successive one-year periods. During the twelve-months ended December 31, 2023, we paid and/or accrued a total of $180,000 for this calendar year under the terms of the agreement. Mr. Wright is also the chairman of our Board of Directors. Effective May 10, 2018, we entered into an employment agreement with Ransom Jones, Chief Financial Officer, Secretary and a member of the board of directors. Mr. Jones earns a base salary of $120,000 per year. During each year that Mr. Jones’ agreement is in effect, he is entitled to receive a bonus (“Bonus”) equal to at least Thirty-Five Thousand Dollars ($35,000) per year, such amount having been accrued for the period ended December 31, 2023. Mr. Jones received a grant of common stock (the “Stock Grant”) at the start of his employment equal to 250,000 shares each of the Company’s Common Stock, par value $.0001 per share (the “Common Stock”), such shares vesting immediately. Mr. Jones is also entitled to participate in the Company’s benefit plans when such plans exist. The foregoing summary of Mr. Jones’s employment agreement is qualified in its entirety by reference to the actual true and correct Employment Agreement by and between Mr. Jones and our Company, dated May 10, 2018, a copies of which are filed as Exhibit 10.40 to this Form 10-K and incorporated by reference herein. Consulting Agreements On September 7, 2018, Wildcat, a company controlled by Shareholder Marshall Gleason, filed suit against us alleging claims arising from the Gleason Agreement, seeking to recover monetary damages, interest, court costs, and attorney’s fees. In a separate lawsuit, Wildcat filed suit claiming that the Company breached that certain Promissory Note dated on or about November 13, 2017, entered into between Wildcat, as lender and Greenway as borrower, and as a result Wildcat initiated an action in County Court at Law No. 2 of Tarrant County, Texas, Cause No. 2018-006416-2. On March 6, 2019, we entered into a Rule 11 Agreement with Gleason settling both disputes, a copy of which is filed as Exhibit 10.52 to this Form 10-K and incorporated by reference. Pursuant to the Rule 11 Agreement, the parties agreed to abate both cases until the earlier of a default of the performance of the Rule 11 Agreement or October 30, 2019, whichever be sooner. The Rule 11 Agreement provided that if we timely performed through October 15, 2019, the parties would file a joint motion for dismissal and present agreed orders of dismissal with prejudice for both lawsuits. The Company performed in all regards under the Rule 11 Agreement, however Gleason refused to sign the Wildcat Settlement Agreement at the point of the Company’s having performed its obligations. The parties’ respective counsels then mutually agreed to extend the original October 30, 2019 settlement date until at least the end of the year while the parties waited for Gleason’s signature. Gleason signed the Compromise Settlement and Release Agreement on February 4, 2020, and all litigation was dismissed by the Court on February 25, 2020. A copy of the Dismissal is incorporated by reference as Exhibit 10.59. - 20 - Paul Alfano, a director and greater than five percent (5%) shareholder entered into a consulting agreement with us on April 19, 2018 via Alfano Consulting Services (the “Alfano Agreement”), to provide board and senior management advice, including but not limited to corporate strategy, SEC regulatory adherence, sales and marketing strategies, document and presentation preparation and fund-raising support. Terms included payment of billable time at $40.00 per hour, plus approved expenses, retroactive to January 1, 2017. A copy is available by Exhibit 10.44 incorporated by reference herein. The Alfano Agreement was terminated when Mr. Alfano became a director on June 26, 2019. The Company has accrued Consulting Fees and Expenses of $120,988 for all prior periods through the year ending December 31, 2021. During 2022, Mr. Alfano and the Company mutually agreed to issues Company shares to Mr. Alfano in full satisfaction of the $120,988 Consulting Fees and Expenses that were accrued as of December 31, 2021. On October 19, 2020, the Company entered into a management consulting services agreement with Dean Goekel (the “Goekel Agreement” via “Analytical Professionals”), to manage engineering and vendor relationships, assist in defining the design and cost of certain capital equipment and to manage the direction of research, development and other related engineering activities. Mr. Goekel will also support the Company’s ongoing business operations, including assistance in commercialization and market implementation, strategic planning and other services. The agreed upon start date under the agreement is July 1, 2020 and the minimum engagement term was for six (6) months. After the initial term the agreement automatically renews for subsequent six (6) month terms unless the Company or Mr. Goekel terminates the agreement. Under the agreement, in exchange for Mr. Goekel’s services he will receive a minimum monthly fee of $10,000 per month in deferred compensation until such time that adequate funds are available for payment. As of December 31, 2023, we have accrued $420,000 in compensation expense related to this agreement. Additionally, under the agreement Mr. Goekel was issued stock warrants for 3,000,000 shares at a strike price of $0.03 per share effective July 1, 2020 and expiring on June 30, 2022. The Company recognized valued and recognized compensation expense related to these warrants of $25,137 for the year ended December 31, 2020. Mr. Goekel did not exercise any of the stock warrant prior to June 30, 2022 and the warrants expired unexercised. After meeting certain deliverables set forth in the agreement, Mr. Goekel will be issued stock warrants for 1,000,000 shares at a strike price that is an average of the stock price for the 90 days that the deliverables have been met. No such deliverables have been met to date, and currently management does not believe these 1,000,000 warrants will be earned by the service provider. Other Pursuant to the GIE Acquisition Agreement in August 2012, we agreed to: (i) issue an additional 7,500,000 shares of Common Stock when the first portable GTL unit is built and becomes operational, and is capable of producing 2,000 barrels of diesel or jet fuel per day, and (ii) pay a 2% royalty on all gross production sales on each unit placed in production, or one percent (1%) each to the founders and previous owners of GIE. On February 6, 2018, and in connection with a settlement agreement dated April 5, 2018, by and between the Greer Family Trust and us, which is the successor in interest one of the founders and prior owners of GIE, F. Conrad Greer (“ Greer ”), (the “ Trust ”, and such settlement agreement the “ Trust Settlement Agreement ”), we issued 3,000,000 shares of Common Stock and a convertible promissory note for $150,000 to the Trust in exchange for: (i) a termination of the Trust’s right to receive 3,750,000 shares of Common Stock in the future and 1% of the royalties owed to the Trust under the GIE Acquisition Agreement; (ii) the termination of Greer’s then current employment agreement with GIE; and (iii) the Trust’s waiver of any future claims against us for any reason. A copy of the Trust Settlement Agreement and related promissory note dated April 5, 2018, by us in favor of the Trust is filed as Exhibit 10.36 to this Form 10-K and incorporated by reference herein. As a result of the transactions consummated by the Trust Settlement Agreement, we are committed to issue a reduced number of 3,750,000 shares of Common Stock and 1% of the royalties due on production of our GTL operational units to Ray Wright, the other founder and prior owner of GIE, pursuant to the GIE Acquisition Agreement. Mining Leases For 2023, our annual lease maintenance fees due to Bureau of Land Management (“ BLM ”) for the Arizona, were $20,400. There is no actual lease agreement with the BLM, but we file an annual maintenance fee form and pay fees to the BLM to hold our claims. The next payment will be due on August 31, 2024. - 21 - Financing Related parties Financing to date has been provided by loans, advances from Shareholders and Directors and issuances of our Common Stock in various private placements to accredited investors, related parties and institutions. For the year ended December 31, 2023 there was $31,200 of related- party financing, reflected as a liability – Advances – related parties. For the year ended December 31, 2023, we did not receive any proceeds from related-party loans. Third-party financing On various dates throughout the year ended December 31, 2023, the Company issued 18,633,333 shares of Rule 144 restricted Common Stock, par value $0.0001 per share pursuant to private placement sales to various accredited investors, for $265,500 ($.01 - $.02/share). On various dates throughout the year ended December 31, 2022, the Company issued 20,667,999 shares of Rule 144 restricted Common Stock, par value $0.0001 per share pursuant to private placement sales to various accredited investors, for $482,200 ($0.02 - $0.03/share). Seasonality We do not anticipate that our business will be affected by seasonal factors. Impact of Inflation While we are subject to general inflationary trends, including for basic manufacturing production materials, our management believes that inflation in and of itself does not have a material effect on our operating results. However, inflation may become a factor in the future. The economics of GTL conversion rely in part on the arbitrage between oil and natural gas prices, with economic models for many producers, including our own models, using a range of $30-60/bbl (for WTI or Brent Crude as listed daily on the Nymex and ICE commodities exchanges) to determine relative profitability of their GTL operations. Off-Balance Sheet Arrangements The Company does not have any off balance sheet arrangements. Critical Accounting Policies and Estimates Our Consolidated Financial Statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States (“ GAAP ”). Preparing our Financial Statements requires management to make estimates and assumptions that impact the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Critical accounting policies include revenue recognition and impairment of long-lived assets. - 22 - We evaluate our long-lived assets for financial impairment on a regular basis in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets , ” which evaluates the recoverability of long-lived assets not held for sale by measuring the carrying amount of the assets against the estimated discounted future cash flows associated with them. At the time such evaluations indicate that the future discounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair values. We believe that the critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our financial statements. Use of Estimates Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates, and those estimates may be material. Changes in estimates are recorded in the period in which they become known. The Company bases its estimates on historical experience and other assumptions, which include both quantitative and qualitative assessments that it believes to be reasonable under the circumstances. Significant estimates during the years ended December 31, 2023 and 2022, respectively, include uncertain tax positions, and the valuation allowance on deferred tax assets. - 23 - Cash and Cash Equivalents and Concentration of Credit Risk For purposes of the statements of cash flows, the Company considers all highly liquid instruments with a maturity of three months or less at the purchase date and money market accounts to be cash equivalents. At December 31, 2023 and 2022, respectively, the Company did not have any cash equivalents. The Company is exposed to credit risk on its cash and cash equivalents in the event of default by the financial institutions to the extent account balances exceed the amount insured by the FDIC, which is $250,000. At December 31, 2023 and 2022, respectively, the Company did not have any cash in excess of the insured FDIC limit. Use of Estimates The preparation of our Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our Financial Statements and the reported amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates. Income Taxes The Company accounts for income tax using the asset and liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. Based on the uncertainty of future taxable income, the Company does not reflect deferred tax assets in its financial statements. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date. The Company follows the accounting guidance for uncertainty in income taxes using the provisions of ASC 740 “Income Taxes”. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. As of December 31, 2023 and December 31, 2022, respectively, the Company had no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. The Company recognizes interest and penalties related to uncertain income tax positions in other expense. No interest and penalties related to uncertain income tax positions were recorded during the years ended December 31, 2023 and 2022, respectively. Research and Development The Company accounts for research and development costs in accordance with ASC subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. - 24 - The Company incurred research and development expenses of $-0- and $54,275 for the years ended December 31, 2023 and 2022, respectively. Stock-Based Compensation The Company accounts for our stock-based compensation under ASC 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company uses the fair value method for equity instruments granted to non-employees and uses the Black-Scholes or an alternative option pricing model for measuring the fair value of options. The fair value of stock-based compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods. When determining fair value, the Company considers the following assumptions in the Black-Scholes model: ● Exercise price, ● Expected dividends, ● Expected volatility, ● Risk-free interest rate; and ● Expected life of option - 25 - Basic and Diluted Earnings (Loss) per Share Pursuant to ASC 260-10-45, basic loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding for the periods presented. Diluted loss per share is computed by dividing net loss by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. Potentially dilutive common shares may consist of common stock issuable for stock options and warrants (using the treasury stock method), convertible notes and common stock issuable. These common stock equivalents may be dilutive in the future. At December 31, 2023 and 2022, respectively, the Company had the following common stock equivalents outstanding, which are potentially dilutive equity securities: December 31, 2023 December 31, 2022 Convertible debt 4,064,400 3,689,400 Warrants - - 4,064,400 3,689,400 Recent Accounting Standards Changes to accounting principles are established by the Financial Accounting Standards Board in the form of Accounting Standards Updates (“ASU’s”) to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof. Management has evaluated all recent accounting pronouncements as issued by the FASB in the form of Accounting Standards Updates (“ASU”) through the date these financial statements were available to be issued and found no recent accounting pronouncements issued, but not yet effective accounting pronouncements, when adopted, will have a material impact on the financial statements of the Company. Subsequent Events From January 1, 2024 through July 16, 2024, the Company issued 12,445,334 shares of Rule 144 restricted Common Stock in private placements to seven accredited investors at $0.01 - $0.02 per share. - 26 - Item 7A. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, as defined by Rule12b-2 of the Securities Exchange Act of 1934 and Item 10(f)(1) of Regulation S-K, we are not required to provide information requested by this item.