IIOT-OXYS, Inc. 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and, as such, is accumulated and communicated to our Chief Executive Officer and Interim Chief Financial Officer, Clifford Emmons, who serves as our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Mr. Emmons, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of December 31, 2021. Based on his evaluation, Mr. Emmons concluded that, due to a material weakness in our internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of December 31, 2021. In light of the material weakness in internal control over financial reporting, we completed substantive procedures, including validating the completeness and accuracy of the underlying data used for accounting prior to filing this Annual Report. These additional procedures have allowed us to conclude that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America. Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2021 based upon Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“ COSO ”). During its evaluation, management noted certain matters involving internal control and its operation that we consider to be significant deficiencies or material weaknesses under standards of the Public Company Accounting Oversight Board (“ PCAOB ”). A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. 26 A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. We noted deficiencies involving lack of segregation of duties, lack of governance/oversight, and lack of internal control documentation that we believe to be material weaknesses. Because of this material weaknesses, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2021, based on criteria described in Internal Control – Integrated Framework (2013) issued by COSO. Remediation of the Material Weakness We are evaluating the material weaknesses and developing a plan of remediation to strengthen our overall internal control over financial reporting. The remediation plan will include the following actions: · Separation of corporate responsibilities, e.g. CEO, CFO, Secretary, etc. to different key management individuals; and · Creation and adoption of a formal policy manual specifically dealing with financial controls. Due to a material weakness as disclosed in the 2020 Annual Report on Form 10-K, we committed to the same remediation plan, as disclosed above; however, due to lack of resources, we were unable to execute the contemplated remediation plan. If we are unable to increase our workforce, we may never be able to implement the remediation plan proposed above. We are committed to maintaining a strong internal control environment and we believe that these remediation efforts will represent significant improvements in our controls. We have started to implement these steps, as disclosed above; however, some of these steps will take time to be fully integrated and confirmed to be effective and sustainable. Additional controls may also be required over time. Until the remediation steps set forth above are fully implemented and tested, the material weakness described above will continue to exist. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during our most recent fiscal quarter ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. 27 PART III Item 10. Directors, Executive Officers and Corporate Governance Current Management The following table sets forth information concerning our directors and executive officers: Name Position Age Executive Officers : Clifford L. Emmons Chief Executive Officer, President, and Interim Chief Financial Officer 60 Karen McNemar Chief Operating Officer 52 Directors : Clifford L. Emmons Director 60 Vidhyadhar Mitta Director 50 Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Directors are elected by a plurality of the votes cast at the annual meeting of stockholders and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified. A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent in writing to the action. Business Experience of Executive Officers and Directors The principal occupation and business experience during the past five years for our executive officers and directors is as follows: Clifford L. Emmons: Mr. Emmons has served as our Chief Executive Officer, President, Interim Chief Financial Officer, and director since June 4, 2018. From 1995 to 2017, Mr. Emmons worked for Medtronic, a global leader in medical technology, services, and solutions, where he served in various capacities including several Vice President and Director positions. Mr. Emmons is also the founder of AHI, LLC, a consultancy firm. Mr. Emmons received an Executive Certificate in Strategy & Innovation from MIT, a Master’s of Science in Management Engineering from the University of Bridgeport, a Bachelor of Science in Electrical Engineering from the University of New Haven, and a Bachelor of Science in Mechanical Engineering from the University of Connecticut. Karen McNemar: Ms. McNemar has served as our Chief Operating Officer since September 20, 2018. From 1998 until August 2017, Ms. McNemar served in many capacities for Medtronic which included as a Senior Director of R&D Operations. Ms. McNemar is a collaborative strategic global business leader with extensive experience in New Product Development and Operations, building strong and effective diverse teams across organizations at all levels. Ms. McNemar is also a trusted advisor, recognized for successful process and program management, with a focus on leading complex initiatives and analyzing data and processes to identify solutions to increase organizational productivity and performance. Ms. McNemar received her Bachelor of Science in Industrial Engineering and Operations Research. Vidhyadhar Mitta: Mr. Mitta has served as a director of the Company since the closing of the reverse acquisition on July 28, 2017. Mr. Mitta has also served as a director of OXYS since its inception on August 4, 2016. Since 2000, he has been the founder and President of Synergic Solutions Inc., a software development company that designs custom software for a variety of industries including radio-medicine and associate allied health fields. In his position as President, Mr. Mitta has responsibility for all aspects of Synergic Solutions including technical program guidance, employee supervision, business development, and profit and loss responsibility. Mr. Mitta received a BS in Information Science & Technology from BMS College of Engineering in 1995. 28 Legal Proceedings During the past ten years there have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any of our directors or executive officers, and none of these persons has been involved in any judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business entity, any judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws or regulations, or any disciplinary sanctions or orders imposed by a stock, commodities or derivatives exchange or other self-regulatory organization. Family Relationships There are no family relationships between any of our directors and executive officers. Director Independence We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” We currently have not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, other than as described above, no security holders have made any such recommendations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly. Delinquent Section 16(a) Reports Under U.S. securities laws, directors, certain officers and persons holding more than 10% of our common stock must report their initial ownership of our common stock and any changes in their ownership to the SEC. The SEC has designated specific due dates for these reports and we must identify in this Proxy Statement those persons who did not file these reports when due. Based solely on our review of copies of the reports filed with the SEC and the written representations of our directors and executive officers, we believe that all reporting requirements for fiscal year 2021 were complied with by each person who at any time during the 2021 fiscal year was a director or an executive officer or held more than 10% of our common stock, except for the following: Ms. McNemar filed a Form 4 late. Ms. McNemar failed to timely file the vesting of an award of restricted shares. Code of Ethics On March 9, 2018, the Board of Directors adopted a Code of Ethics (the “ Code ”). The purpose of the Code of Ethics is to deter wrongdoing and to promote: · honest and ethical conduct; · full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by the Company; · avoidance and ethical handling of actual or apparent conflicts of interest, including disclosure to an appropriate person of any material transaction or relationship that reasonably could be expected to give rise to such a conflict; · confidentiality of corporate information; 29 · protection and proper use of corporate assets and opportunities; · compliance with applicable governmental laws, rules, and regulations; · prompt internal reporting of any violations of this Code to an appropriate person; and · accountability for adherence to the Code. The Code of Ethics applies to all directors, officers, and employees of the Company and its subsidiaries, including, but not limited to, the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics is available at www.oxyscorp.com and is included as an exhibit to this Annual Report. The Company will provide any person, without charge and upon request through our website, a copy of the Code of Ethics. Item 11. Executive Compensation The following table sets forth information concerning the annual compensation awarded to, earned by, or paid to the following named executive officers for all services rendered in all capacities to our company and its subsidiaries for the years ended December 31, 2021 and 2020. Summary Compensation Table Name and principal position Year Salary ($) Stock Awards ($) Total ($) Clifford Emmons (1) 2021 38,366 (2) 450,000 (3) 488,366 2020 21,677 (4) 14,300 (5) 35,977 Karen McNemar (6) 2021 124,813 (7) 360,000 (8) 484,813 2020 52,547 (9) 8,560 (10) 61,107 (1) Mr. Emmons was appointed as our CEO, President, and interim CFO on June 4, 2018. (2) As of December 31, 2021, Mr. Emmons was owed $145,844 in accrued and unpaid consulting fees and $0 in reimbursable expenses. (3) On June 4, 2021, 1,500,000 shares of Common Stock previously granted to Mr. Emmons vested. (4) As of December 31, 2020, Mr. Emmons was owed $115,907 in accrued and unpaid consulting fees and $17,001 in reimbursable expenses. (5) On June 4, 2020, 1,000,000 shares of Common Stock previously granted to Mr. Emmons vested. (6) Ms. McNemar was appointed as our COO effective as of September 20, 2018. (7) As of December 31, 2021, Ms. McNemar was owed $118,767 in accrued and unpaid consulting fees and $9,314 in reimbursable expenses. (8) On October 1, 2021, 1,200,000 shares of Common Stock previously granted to Ms. McNemar vested. (9) As of December 31, 2020, Ms. McNemar was owed $120,814 in accrued and unpaid consulting fees and $18,000 in reimbursable expenses. (10) On October 1, 2020, 800,000 shares of Common Stock previously granted to Ms. McNemar vested. Emmons Consulting Agreement On March 11, 2019, the Company’s Board of Directors (with Mr. Emmons abstaining) approved the Consulting Agreement dated effective June 4, 2018 with Clifford Emmons, the Company’s Chief Executive Officer, Interim Chief Financial Officer, and director (the “ Emmons Agreement ”). The term of the Emmons Agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by Mr. Emmons pursuant to the Emmons Agreement are those customary for the positions in which he is serving. Mr. Emmons shall receive a monthly fee of $15,000 which accrues unless converted into shares of Common Stock of the Company at a conversion rate specified in the Emmons Agreement. Until the Company closes a minimum $500,000 capital raise, the monthly fee accrues and, upon the closing of such a capital raise, $5,000 of the monthly fee will be paid to Mr. Emmons in cash and the remainder will continue to accrue. Upon the closing of a capital raise of at least $2,000,000, the entire monthly fee will be paid to Mr. Emmons in cash and all accrued and unpaid monthly fees will be paid by the Company within one year of the closing of such a capital raise. 30 As of the effective date, the Company shall issue to Mr. Emmons an aggregate of 3,060,000 shares of the Company’s Common Stock which vest as follows: 1. 560,000 shares on the first-year anniversary of the effective date; 2. 1,000,000 shares on the second-year anniversary of the effective date; and 3. 1,500,000 shares on the third-year anniversary of the effective date. The shares are granted under the 2019 Plan. Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the Emmons Agreement) or the listing of the Company’s Common Stock on a senior exchange. On June 12, 2020, the Company entered into an amendment effective January 1, 2020 (the “ Emmons Amendment ”) to the Emmons Agreement, pursuant to which, Sections 7(a) and 7(b) of the Emmons Agreement were amended to read as follows: Fees . From January 1, 2020 until April 23, 2020, the Consultant shall be paid an hourly wage of $12.75 per hour for Services performed. From April 24, 2020 onward, the Consultant shall be paid an hourly wage of $48.08 an hour for Services performed (the “ Fees ”). Fees may accrue at the discretion of management. Conversion of Accrued and Unpaid Fees . At any time, the Consultant shall have the right to convert any accrued and unpaid Fees into shares of Common Stock of the Company (the “ Conversion Shares ”). The conversion price shall equal 90% multiplied by the Market Price (as defined herein) (representing a discount rate of 10%) (the “ Conversion Price ”). “Market Price” means the average of the Trading Prices (as defined below) for the shares of Common Stock of the Company during the thirty (30) day period ending on the latest complete trading day prior to the Conversion Date. “Trading Price” and “Trading Prices” means, for any security as of any date, the closing trade price of the Company’s Common Stock on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“ Reporting Service ”) designated by the Consultant or, if the OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. “Conversion Date” shall mean the date of receipt by the Company of the completed and executed Notice of Conversion, the form of which is attached hereto as Exhibit A . Pursuant to the Emmons Amendment, Section 11 was also eliminated from the Emmons Agreement. McNemar Consulting Agreement On March 11, 2019, the Company’s Board of Directors approved the Consulting Agreement dated effective October 1, 2018 with Karen McNemar, the Company’s Chief Operating Officer (the “ McNemar Agreement ”). The term of the McNemar Agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by Ms. McNemar pursuant to the McNemar Agreement are those customary for the position in which she is serving. Ms. McNemar shall receive a monthly fee of $12,750 which accrues unless converted into shares of Common Stock of the Company at a conversion rate specified in the McNemar Agreement. Until the Company closes a minimum $500,000 capital raise, the monthly fee accrues and, upon the closing of such a capital raise, $4,250 of the monthly fee will be paid to Ms. McNemar in cash and the remainder will continue to accrue. Upon the closing of a capital raise of at least $2,000,000, the entire monthly fee will be paid to Ms. McNemar in cash and all accrued and unpaid monthly fees will be paid by the Company within one year of the closing of such a capital raise. As of the effective date, the Company shall issue to Ms. McNemar an aggregate of 2,409,000 shares of the Company’s Common Stock which vest as follows: 1. 409,000 shares on the first-year anniversary of the effective date; 2. 800,000 shares on the second-year anniversary of the effective date; and 3. 1,200,000 shares on the third-year anniversary of the effective date. 31 The shares are granted under the 2017 Stock Incentive Plan. Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the McNemar Agreement) or the listing of the Company’s Common Stock on a senior exchange. On June 12, 2020, the Company entered into an amendment effective January 1, 2020 (the “ McNemar Amendment ”) to the McNemar Agreement, pursuant to which, Sections 7(a) and 7(b) of the McNemar Agreement were amended to read as follows: Fees . From January 1, 2020 until April 23, 2020, the Consultant shall be paid an hourly wage of $12.75 per hour for Services performed. From April 24, 2020 onward, the Consultant shall be paid an hourly wage of $48.08 an hour for Services performed (the “ Fees ”). Fees may accrue at the discretion of management. Conversion of Accrued and Unpaid Fees . At any time, the Consultant shall have the right to convert any accrued and unpaid Fees into shares of Common Stock of the Company (the “ Conversion Shares ”). The conversion price shall equal 90% multiplied by the Market Price (as defined herein) (representing a discount rate of 10%) (the “ Conversion Price ”). “Market Price” means the average of the Trading Prices (as defined below) for the shares of Common Stock of the Company during the thirty (30) day period ending on the latest complete trading day prior to the Conversion Date. “Trading Price” and “Trading Prices” means, for any security as of any date, the closing trade price of the Company’s Common Stock on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“ Reporting Service ”) designated by the Consultant or, if the OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. “Conversion Date” shall mean the date of receipt by the Company of the completed and executed Notice of Conversion, the form of which is attached hereto as Exhibit A . Pursuant to the McNemar Amendment, Section 11 was also eliminated from the McNemar Agreement. Debt Forgiveness Agreements On June 11, 2020, the Company entered into Debt Forgiveness Agreements with Mr. Emmons and Ms. McNemar, pursuant to which: · Mr. Emmons forgave $185,000 of accrued and unpaid consulting fees owed to him pursuant to his consulting agreement with the Company; and · Ms. McNemar forgave $103,250 of accrued and unpaid consulting fees owed to her pursuant to her current and previous consulting agreement with the Company. Share Exchange Agreements As of November 9, 2020, we entered into a Share Exchange Agreements (the “ Exchange Agreements ”) with Mr. Emmons, Vidhyadhar Mitta, our director, and Ms. McNemar pursuant to which: · we agreed to sell Mr. Emmons 7,800 shares of Series A Preferred Stock (as defined below) in exchange for 780,000 unissued, vested shares of our Common Stock; · we agreed to sell Mr. Mitta 12,000 shares of Series A Preferred in exchange for 1,000,000 unissued, awarded shares of our Common Stock and $168 in accrued and unpaid interest pursuant to a note issued to Mr. Mitta; and · we agreed to sell Ms. McNemar 6,045 shares of Series A Preferred Stock in exchange for 604,500 unissued, vested shares of our Common Stock. Equity Awards As of December 31, 2021, there were no unvested equity awards to our named executive officers. 32 Compensation of Directors Besides Mr. Emmons’ compensation (whose compensation is disclosed above), no compensation was awarded to, earned by, or paid to any remaining directors for services rendered in all capacities to our company and its subsidiaries for the year ended December 31, 2021. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table and footnotes thereto sets forth information regarding the number of shares of common stock beneficially owned by (i) each director and named executive officer of our company, (ii) each person known by us to be the beneficial owner of 5% or more of its issued and outstanding shares of common stock, and (iii) named executive officers, executive officers, and directors of the Company as a group as of April 7, 2022. In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table assumes 237,205,464 shares of common stock outstanding. Unless otherwise further indicated in the following table, the footnotes thereto and/or elsewhere in this report, the persons and entities named in the following table have sole voting and sole investment power with respect to the shares set forth opposite the shareholder’s name, subject to community property laws, where applicable. Unless as otherwise indicated in the following table and/or the footnotes thereto, the address of our named executive officers and directors in the following tables is: 705 Cambridge Street, Cambridge, MA 02141. Name and Address of Beneficial Owner Amount and Nature of Beneficial Ownership (1) Percent of Class (1) Named Executive Officers and Directors Clifford Emmons 44,178,048 (2) 15.87% Karen McNemar 12,344,999 (3) 4.98% Vidhyadhar Mitta 548,925,593 (4) 69.99% Executive Officers, Named Executive Officers, and Directors as a Group (3 Persons) 605,448,640 68.27% 5% Beneficial Holders (Not Named Above) Cambridge MedSpace LLC 705 Cambridge Street Cambridge, MA 02141 79,824,167 (5) 25.18% *Less than 1% (1) Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the above table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on the April 7, 2022. 33 (2) Includes 13,333 shares issuable upon the exercise of warrants issued to Cambridge MedSpace LLC, an entity of which Mr. Emmons is a 36.36% owner. Also includes 29,010,735 shares issuable upon the conversion of a note issued to Cambridge MedSpace LLC. Includes 11,313,980 shares of Common Stock issuable upon the conversion of $145,844 in accrued and unpaid consulting fees. Lastly, includes 780,000 shares issuable upon the conversion of shares of Series A Preferred Stock owned by Mr. Emmons. (3) Includes 9,935,999 shares of Common Stock issuable upon the conversion of $128,081 in accrued and unpaid salary. Also includes 604,500 shares issuable upon the conversion of shares of Series A Preferred Stock owned by Ms. McNemar. (4) Includes 1,562,500 shares issuable upon the exercise of warrants. Also includes 544,426,250 shares issuable upon the conversion of a note issued to Mr. Mitta. Lastly, includes 1,200,000 shares issuable upon the conversion of shares of Series A Preferred Stock owned by Mr. Mitta. (5) Includes 36,667 shares issuable upon the exercise of warrants issued to Cambridge MedSpace LLC, an entity of which Mr. Emmons is an owner. Also includes 79,787,500 shares issuable upon the conversion of a note issued to Cambridge MedSpace LLC. The following table sets forth information known to us regarding the beneficial ownership of our Series A Supervoting Preferred Stock as of April 8, 2022. Title of Class Name and address of beneficial owner Amount and nature of beneficial ownership Percent of Class Series A Supervoting Preferred Stock Vidhyadhar Mitta 12,000 46.43% Clifford L. Emmons 7,800 30.18% Karen McNemar 6,045 23.39% The following table sets forth information known to us regarding the beneficial ownership of our Series B Convertible Preferred Stock as of April 8, 2022. Title of Class Name and address of beneficial owner (1) Amount and nature of beneficial ownership Percent of Class Series B Convertible Preferred Stock GHS Investments, LLC 393 100% Item 13. Certain Relationships and Related Transactions, and Director Independence Certain Relationships and Related Transactions For transactions with our executive officers, please see the disclosure under “ Item 11. Executive Compensation. ” above. Coufal Amended and Restated Consulting Agreement On March 11, 2019, the Company’s Board of Directors approved the Amended and Restated Consulting Agreement dated effective April 23, 2018 with Antony Coufal, the Company’s Chief Technology Officer (the “ Coufal Agreement ”). The term of the Coufal Agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by Mr. Coufal pursuant to the Coufal Agreement are those customary for the position in which he is serving. Mr. Coufal shall receive a monthly fee of $9,375 which accrues unless converted into shares of Common Stock of the Company at a conversion rate specified in the Coufal Agreement. Until the Company closes a minimum $500,000 capital raise, the monthly fee accrues and, upon the closing of such a capital raise, $3,125 of the monthly fee will be paid to Mr. Coufal in cash and the remainder will continue to accrue. Upon the closing of a capital raise of at least $2,000,000, the entire monthly fee will be paid to Mr. Coufal in cash and all accrued and unpaid monthly fees will be paid by the Company within one year of the closing of such a capital raise. 34 As of the effective date, the Company shall issue to Mr. Coufal an aggregate of 1,800,000 shares of the Company’s Common Stock which vest as follows: 1. 300,000 shares on the first-year anniversary of the effective date; 2. 600,000 shares on the second-year anniversary of the effective date; and 3. 900,000 shares on the third-year anniversary of the effective date. The shares are granted under the 2017 Stock Incentive Plan. Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the Coufal Agreement) or the listing of the Company’s Common Stock on a senior exchange. On June 12, 2020, the Company entered into an amendment effective January 1, 2020 (the “ Coufal Amendment ”) to the Coufal Agreement, pursuant to which, Sections 7(a) and 7(b) of the Coufal Agreement were amended to read as follows: Fees . From January 1, 2020 until April 23, 2020, the Consultant shall be paid an hourly wage of $12.75 per hour for Services performed. From April 24, 2020 onward, the Consultant shall be paid an hourly wage of $48.08 an hour for Services performed (the “ Fees ”). Fees may accrue at the discretion of management. Conversion of Accrued and Unpaid Fees . At any time, the Consultant shall have the right to convert any accrued and unpaid Fees into shares of Common Stock of the Company (the “ Conversion Shares ”). The conversion price shall equal 90% multiplied by the Market Price (as defined herein) (representing a discount rate of 10%) (the “ Conversion Price ”). “Market Price” means the average of the Trading Prices (as defined below) for the shares of Common Stock of the Company during the thirty (30) day period ending on the latest complete trading day prior to the Conversion Date. “Trading Price” and “Trading Prices” means, for any security as of any date, the closing trade price of the Company’s Common Stock on the OTC Pink, OTCQB or applicable trading market as reported by a reliable reporting service (“ Reporting Service ”) designated by the Consultant or, if the OTC Pink is not the principal trading market for such security, the trading price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no trading price of such security is available in any of the foregoing manners, the average of the trading prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. “Conversion Date” shall mean the date of receipt by the Company of the completed and executed Notice of Conversion, the form of which is attached hereto as Exhibit A . Pursuant to the Coufal Amendment, Section 11 was also eliminated from the Coufal Agreement. Coufal Debt Forgiveness Agreement On June 11, 2020, the Company entered into Debt Forgiveness Agreements with Mr. Coufal pursuant to which Mr. Coufal forgave $82,475 of accrued and unpaid consulting fees owed to him pursuant to his consulting agreement with the Company. Coufal Termination Agreement Effective March 31, 2021, the Company entered into a Termination Agreement (the “ Termination Agreement ”) with Mr. Coufal, pursuant to which Mr. Coufal resigned and from all positions within the Company and any of its subsidiaries. In addition, the Termination Agreement provided for the payment of $11,144.42 in reimbursable expenses and $130,451 in accrued and unpaid consulting fees to Mr. Coufal within five business days of the effective date. The Termination Agreement also provided for the issuance to Mr. Coufal 843,288 shares of the Company’s Common Stock within five business days of the effective date. Cambridge MedSpace Note On January 22, 2019, we entered into a Securities Purchase Agreement with Cambridge MedSpace, LLC, a Massachusetts limited liability company for the purchase of a 5% Secured Convertible Note in the principal amount of $55,000. The note was convertible, in whole or in part, into shares of our Common Stock, at any time at a rate of $0.65 per share with fractions rounded up to the nearest whole share, unless paid in cash at our election. The note bears interest at a rate of 5% per annum and interest payments will be made on an annual basis. The original maturity date of the note was January 22, 2020. The note is governed by the SPA and is secured by all our assets (but is not a senior secured note) pursuant to the Security Agreement. In addition to the issuance of the note, we issued to Cambridge MedSpace warrants to purchase one share of our Common Stock for 50% of the number of shares of Common Stock issuable upon conversion of the note. Each warrant was originally immediately exercisable at $0.75 per share and expires on January 22, 2024. The lender is owned by shareholders of the Company, or their affiliates, including Clifford L. Emmons, our Chief Executive Officer, Interim Chief Financial Officer, and director. 35 On June 12, 2020, the Company entered into Amendment No. 1 to the note with Cambridge MedSpace pursuant to which the note was amended to extend the maturity date to March 1, 2021. On April 6, 2022, the Company entered into Amendment No. 2 to the note with Cambridge MedSpace pursuant to which the maturity date as extended to March 1, 2024. Due to adjustments to the conversion price of the note, the conversion price is currently $0.0008. Vidhyadhar Note On August 2, 2019, we entered into a Securities Purchase Agreement with Vidhyadhar Mitta, a director of the Company, for the purchase of a 12% Secured Convertible Note in the principal amount of up to $125,000. The note was originally convertible, in whole or in part, into shares of our Common Stock, at any time at a rate of $0.08 per share with fractions rounded up to the nearest whole share, unless paid in cash at our election. The note bears interest at a rate of 12% per annum and interest payments were originally to be made on a quarterly basis. The note originally matured August 2, 2021. On August 2, 2019, the first closing of the note occurred pursuant to which we received $75,000. On September 6, 2019, the second closing occurred pursuant to which the Company received $25,000. On October 16, 2019, the third closing occurred pursuant to which the Company received $25,000. The note is governed by the SPA and is secured by all the assets of the Company (but is not a senior secured note) pursuant to the Security Agreement. In addition to the issuance of the note, we issued to the Mr. Mitta warrants to purchase one share our Common Stock for 50% of the number of shares of Common Stock issuable upon conversion of the funds received. Each warrant was originally immediately exercisable at $0.12 per share and expires on August 2, 2024. Due to adjustments to the conversion price of the note, the conversion price is currently $0.0008. Director Independence We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” Although we have not have adopted the independence standards any national securities exchange to determine the independence of directors, the NYSE MKT LLC provides that a person will be considered an independent director if he or she is not an officer of the company and is, in the view of our board of directors, free of any relationship that would interfere with the exercise of independent judgment. Under this standard, our board of directors has determined that Mr. Mitta would meet this standard, and therefore, would be considered to be independent. Item 14. Principal Accountant Fees and Services Fees Paid Audit Fees The aggregate fees billed for professional services rendered by our principal accountants for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the year ended December 31, 2021 were $49,000 and $32,500 for the period ended December 31, 2020. Audit-Related Fees There were no fees billed for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the financial statements, other than those reported above, for the years ended December 31, 2021 and 2020. Tax Fees The aggregate fees billed for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning in the years ended December 31, 2021 were $2,000 and there were no fees in 2020. 36 All Other Fees There were no other fees billed for products or services provided by the principal accountants, other than those previously reported above, for the years ended December 31, 2021 and 2020. Audit Committee We do not have an Audit Committee; therefore, the Board of Directors has considered whether the non-audit services provided by our auditors to us are compatible with maintaining the independence of our auditors and concluded that the independence of our auditors is not compromised by the provision of such services. Our Board of Directors pre-approves all auditing services and permitted non-audit services, including the fees and terms of those services, to be performed for us by our independent auditor prior to engagement. 37 PART IV Item 15. Exhibits, Financial Statement Schedules Financial Statements The following financial statements are filed with this Annual Report: Report of Independent Registered Public Accounting Firm Balance Sheets at December 31, 2021 and 2020 Statements of Operations for the years ended December 31, 2021 and 2020 Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2021 and 2020 Statements of Cash Flows for the years ended December 31, 2021 and 2020 Notes to Financial Statements Exhibits The following exhibits are included with this Annual Report: Incorporated by Reference Filed Exhibit Filing Here- Number Exhibit Description Form File No. Exhibit Date with 2.1 & 10.1 Securities Exchange Agreement dated March 16, 2017, by and among Gotham Capital Holdings, Inc., OXYS Corp. and the Shareholders of OXYS Corp. 8-K 000-50773 2.1 8/3/2017 2.2 & 10.2 Agreement and Plan of Merger dated July 10, 2017 8-K 000-50773 2.1 11/1/2017 2.3 & 10.3 Securities Exchange Agreement dated December 14, 2017, with HereLab, Inc. 8-K 000-50773 2.1 12/19/2017 3.1 Nevada Articles of Incorporation for IIOT-OXYS, Inc. 8-K 000-50773 3.1 11/1/2017 3.2 Bylaws for IIOT-OXYS, Inc. 8-K 000-50773 3.2 11/1/2017 3.3 Nevada Articles of Merger dated July 14, 2017 8-K 000-50773 3.3 11/1/2017 3.4 New Jersey Certificate of Merger dated October 26, 2017 8-K 000-50773 3.4 11/1/2017 3.5 Articles of Exchange 8-K 000-50773 2.1 1/12/2018 3.6 Certificate of Amendment to Articles of Incorporation filed with the Nevada Secretary of State effective January 18, 2021 8-K 000-50773 3.1 1/19/2021 3.7 Certificate of Designation for Series B Convertible Preferred Stock 8-K 000-50773 3.1 11/24/2020 3.8 Certificate of Designation filed with the Nevada Secretary of State on July 2, 2020 8-K 000-50773 3.1 11/13/2020 3.9 Certificate of Designation filed with the Nevada Secretary of State on November 9, 2020 8-K 000-50773 3.2 11/13/2020 4.1 & 10.4* 2017 Stock Incentive Plan 8-K 000-50773 4.1 12/19/2017 4.2 & 10.5* 2019 Stock Incentive Plan 8-K 000-50773 4.1 3/12/2019 10.6 Non-Exclusive Patent License Agreement with MIT dated February 5, 2018 10-K 000-50773 10.7 4/17/2018 38 10.7 Form of 12% Senior Secured Convertible Note 8-K 000-50773 99.1 2/13/2018 10.8 Amendment No. 1 to the 12% Senior Secured Convertible Promissory Note Issued to Sergey Gogin on January 22, 2018 8-K 000-50773 99.3 3/12/2019 10.9 Amendment dated January 28, 2021 to Senior Secured Convertible Promissory Note with Sergey Gogin 10-Q 000-50773 10.1 5/17/2021 10.10 Amendment dated December 14, 2021 to Senior Secured Convertible Promissory Note with Sergey Gogin X 10.11 Form of Securities Purchase Agreement 8-K 000-50773 99.2 2/13/2018 10.12 Form of Security and Pledge Agreement 8-K 000-50773 99.3 2/13/2018 10.13 Form of Warrant 8-K 000-50773 99.4 2/13/2018 10.14 Amendment No. 1 to the Warrant Agreement Issued to Sergey Gogin on January 22, 2018 8-K 000-50773 99.4 3/12/2019 10.15 Form of 12% Senior Secured Convertible Note 8-K 000-50773 99.5 3/12/2019 10.16 Amendment No. 1 to Senior Secured Convertible Promissory Note with Catalytic Capital LLC 10-Q 000-50773 10.2 11/16/2020 10.17 Amendment dated January 28, 2021 to Senior Secured Convertible Promissory Note with Catalytic Capital, LLC 10-Q 000-50773 10.2 5/17/2021 10.18 Amendment No. 1 to Senior Secured Convertible Promissory Note with YVSGRAMORAH LLC 10-Q 000-50773 10.3 11/16/2020 10.19 Amendment dated January 28, 2021 to Senior Secured Convertible Promissory Note with YVSGRAMORAH LLC 10-Q 000-50773 10.3 5/17/2021 10.20 Amendment dated December 14, 2021 to Senior Secured Convertible Promissory Note with YVSGRAMORAH LLC X 10.21 Form of Securities Purchase Agreement 8-K 000-50773 99.6 3/12/2019 10.22 Form of Security and Pledge Agreement 8-K 000-50773 99.7 3/12/2019 10.23 Form of Warrant 8-K 000-50773 99.8 3/12/2019 10.24* Consulting Agreement with Clifford Emmons dated effective June 4, 2018 8-K 000-50773 99.9 3/12/2019 10.25* Consulting Agreement with Karen McNemar dated effective October 1, 2018 8-K 000-50773 99.1 3/12/2019 10.26 Securities Purchase Agreement with Cambridge MedSpace, LLC dated January 22, 2019 8-K 000-50773 99.1 1/23/2019 10.27 5% Convertible Secured Note with Cambridge MedSpace, LLC dated January 22, 2019 8-K 000-50773 99.2 1/23/2019 10.28 Security Agreement with Cambridge MedSpace, LLC dated January 22, 2019 8-K 000-50773 99.3 1/23/2019 10.29 Warrant Agreement with Cambridge MedSpace, LLC dated January 22, 2019 8-K 000-50773 99.4 1/23/2019 10.30 Securities Purchase Agreement with Vidhyadhar Mitta dated August 2, 2019 8-K 000-50773 99.1 8/8/2019 10.31 12% Convertible Secured Note with Vidhyadhar Mitta dated August 2, 2019 8-K 000-50773 99.2 8/8/2019 10.32 Amendment No. 1 to the 12% Secured Convertible Promissory Note dated effective August 2, 2021 with Vidhyadhar Mitta 10-Q 000-50773 10.1 11/15/2021 10.33 Security Agreement with Vidhyadhar Mitta dated August 2, 2019 8-K 000-50773 99.3 8/8/2019 10.34 Warrant Agreement with Vidhyadhar Mitta dated August 2, 2019 8-K 000-50773 99.4 8/8/2019 10.35 Warrant Agreement with Vidhyadhar Mitta dated September 6, 2019 10-K 000-50773 10.31 6/23/2020 10.36 Warrant Agreement with Vidhyadhar Mitta dated October 16, 2019 10-K 000-50773 10.32 6/23/2020 10.37 Equity Financing Agreement dated November 1, 2021 with GHS Investments, LLC S-1 333-261484 10.35 12/3/2021 39 10.38 Registration Rights Agreement dated November 1, 2021 with GHS Investments, LLC S-1 333-261484 10.36 12/3/2021 10.39 $100,000 Convertible Promissory Note dated July 29, 2020 issued to GHS Investments LLC 8-K 000-50773 99.3 8/3/2020 10.40 $75,000 Convertible Promissory Note dated July 29, 2020 issued to GHS Investments LLC 8-K 000-50773 99.4 8/3/2020 10.41 Extension No. 1 to Convertible Promissory Note dated April 29, 2021 ($75,000) with GHS Investments LLC 10-Q 000-50773 10.2 8/13/2021 10.42 Extension No. 1 to Convertible Promissory Note dated April 29, 2021 ($100,000) with GHS Investments LLC 10-Q 000-50773 10.3 8/13/2021 10.43 Amendment No. 2 dated November 4, 2021 to $100,000 Convertible Promissory Note issued to GHS Investments LLC S-1 333-261484 10.41 12/3/2021 10.44 Amendment No. 2 dated November 4, 2021 to $75,000 Convertible Promissory Note issued to GHS Investments LLC S-1 333-261484 10.42 12/3/2021 10.45 Collaboration Agreement effective March 18, 2020 with Aingura IIoT, S.L. 10-Q 000-50773 10.1 8/19/2020 10.46 Finder’s Fee Agreement dated November 10, 2021 with J.H. Darbie & Co., Inc. S-1 333-261484 10.44 12/3/2021 10.47* Debt Forgiveness Agreement with Clifford L. Emmons effective as of December 31, 2019 10-Q 000-50773 10.3 9/14/2020 10.48* Debt Forgiveness Agreement with Karen McNemar effective as of December 31, 2019 10-Q 000-50773 10.4 9/14/2020 10.49* Amendment to Consulting Agreement with Clifford L. Emmons dated June 12, 2020 10-Q 000-50773 10.6 9/14/2020 10.50* Amendment to Consulting Agreement with Karen McNemar dated June 12, 2020 10-Q 000-50773 10.7 9/14/2020 10.51 Securities Purchase Agreement dated November 16, 2020 with GHS Investments, LLC S-1 333-252887 10.52 2/9/2021 10.52 Settlement and Mutual Release Agreement dated July 29, 2020 10-Q 000-50773 10.1 11/16/2020 10.53* Exchange Agreement Dated November 9, 2020 with Clifford L. Emmons S-1 333-252887 10.55 2/9/2021 10.54* Exchange Agreement Dated November 9, 2020 with Vidhyadhar Mitta S-1 333-252887 10.56 2/9/2021 10.55* Exchange Agreement Dated November 9, 2020 with Karen McNemar S-1 333-252887 10.57 2/9/2021 10.56* Employment Contract dated April 1, 2021 with Chandran Seshagiri 10-Q 000-50773 10.1 8/13/2021 10.57 Common Stock Purchase Agreement dated February 24, 2021 with GHS Investments, LLC 10-Q 000-50773 10.4 5/17/2021 10.58 Termination Agreement with Antony Coufal dated effective March 31, 2021 10-Q 000-50773 10.5 5/17/2021 14.1 Code of Ethics 10-K 000-50773 14.1 4/17/2018 21.1 List of Subsidiaries 10-K 000-50773 21.1 4/17/2018 23.1 Consent of Haynie & Company, independent registered public accounting firm S-1 333-261484 23.1 12/3/2021 23.2 Consent of Attorney S-1 333-261484 5.1 12/9/2021 31.1 Rule 13a-14(a) Certification by Principal Executive Officer X 32.1 Section 1350 Certification of Principal Executive Officer X 101.INS Inline XBRL Instance Document. X 101.SCH Inline XBRL Taxonomy Extension Schema Document. X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). _________________ *Management contract or compensatory plan or arrangement. Item 16. Form 10-K Summary None. SIGNATURE PAGE FOLLOWS 40 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IIOT-OXYS, INC. Date: April 14, 2022 By: /s/ Clifford L. Emmons Clifford L. Emmons, Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated. NAME TITLE DATE /s/ Clifford L. Emmons Director April 14, 2022 Clifford L. Emmons /s/ Vidhyadhar Mitta Director April 14, 2022 Vidhyadhar Mitta 41 INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 457 ) F-2 Balance Sheets at December 31, 2021 and 2020 F-3 Statements of Operations for the years ended December 31, 2021 and 2020 F-4 Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2021 and 2020 F-5 Statements of Cash Flows for the years ended December 31, 2021 and 2020 F-6 Notes to Financial Statements F-7 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of IIOT-OXYS, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of IIOT-OXYS, Inc. (the Company) as of December 31, 2021 and 2020, and the related statements of operations, stockholders’ equity (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). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for 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. Consideration of the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 to the financial statements, the Company has incurred net losses since inception and has negative cash flows from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the 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 audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Haynie & Company Haynie & Company Salt Lake City, Utah Firm ID: 457 April 14, 2022 We have served as the Company’s auditor since 2018. F- 2 IIOT-OXYS, Inc. and Subsidiaries Consolidated Balance Sheets December 31, 2021 December 31, 2020 ASSETS Current Assets Cash and Cash Equivalents $ 46,821 $ 103,074 Accounts Receivable, Net 11,280 – Prepaid Expenses 7,773 2,427 Total Current Assets 65,874 105,501 Intangible Assets, Net 298,085 347,856 Total Assets $ 363,959 $ 453,357 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts Payable $ 161,171 $ 169,914 Accrued Liabilities 247,155 147,490 Deferred Revenue 46,425 46,425 Notes Payable, net of discounts of $ 57,148 and $ 111,781 at December 31, 2021 and 2020, respectively 233,167 953,219 Shares Payable to Related Parties – 730,836 Salaries Payable to Related Parties 273,926 407,271 Derivative Liability 212,816 315,782 Total Current Liabilities 1,174,660 2,770,937 PPP Liability – 36,700 Notes Payable 267,152 – Due to Stockholders 1,000 1,000 Total Liabilities 1,442,812 2,808,637 Commitments and Contingencies (Note 4) – – Series B Convertible Preferred Stock, 600 Shares Designated, $ 0.001 Par Value, $ 1,200 Stated Value; 155 Shares Issued and Outstanding at December 31, 2021 and 2020, Respectively. Liquidation Preference $ 186,000 as of December 31, 2021 and 2020, respectively 186,000 186,000 Stockholders' Equity (Deficit) Preferred Stock Series A, $ 0.001 Par Value, 10,000,000 Shares authorized; 25,896 shares and 25,845 Shares Issued and Outstanding at December 31, 2021 and 2020, Respectively 26 26 Common Stock $ 0.001 Par Value, 1,000,000,000 shares Authorized; 220,254,395 Shares and 145,110,129 Shares Issued and Outstanding at December 31, 2021 and 2020, Respectively 220,255 145,111 Additional Paid in Capital 7,059,098 4,794,261 Accumulated Deficit ( 8,544,232 ) ( 7,480,678 ) Total Stockholders' Equity (Deficit) ( 1,264,853 ) ( 2,541,280 ) Total Liabilities and Stockholders' Equity (Deficit) $ 363,959 $ 453,357 The accompanying notes are an integral part of these consolidated financial statements. F- 3 IIOT-OXYS, Inc. and Subsidiaries Consolidated Statements of Operations For The Years Ended December 31, 2021 2020 Revenues $ 11,280 $ 36,771 Cost of Sales 2,040 15,044 Gross Profit 9,240 21,727 Operating Expenses Bank Service Charges 229 5,478 Office Expenses 29,281 12,940 Organization Costs – 36,030 Payroll Expense 301,707 137,220 Professional 508,153 802,135 Patent License Fee – 4,932 Amortization of Intangible Assets 49,771 49,636 Total Operating Expenses 889,141 1,048,371 Other Income (Expense) Gain (Loss) on Change in FMV of Derivative Liability 102,966 ( 220,325 ) Loss on Derivative – ( 239,396 ) Gain (Loss) on Extinguishment of Debt 120,000 ( 16,205 ) Interest Expense ( 430,999 ) ( 737,541 ) Other Income 46,700 5,000 Total Other Income (Expense) ( 161,333 ) ( 1,208,467 ) Net Loss Before Income Taxes ( 1,041,234 ) ( 2,235,111 ) Provision for Income Tax – – Net Loss $ ( 1,041,234 ) $ ( 2,235,111 ) Convertible Preferred Stock Dividend ( 22,320 ) ( 1,663 ) Net Loss Attributable to Common Stockholders $ ( 1,063,554 ) $ ( 2,236,774 ) Net Loss Per Share Attributable to Common Stockholders - Basic and Diluted $ ( 0.01 ) $ ( 0.02 ) Weighted Average Shares Outstanding Attributable to Common Stockholders - Basic and Diluted 195,264,873 110,119,684 The accompanying notes are an integral part of these consolidated financial statements. F- 4 IIOT-OXYS, Inc. and Subsidiaries Consolidated Statements of Stockholders' Equity (Deficit) For the Years Ended December 31, 2021 and 2020 Preferred Stock Common Stock Additional Shares Amount Shares Amount Paid-In Capital Accumulated Deficit Total Stockholders' Equity (Deficit) Balance - December 31, 2019 – $ – 43,313,547 $ 43,314 $ 3,077,972 $ ( 5,040,307 ) $ ( 1,919,021 ) Preferred Stock Issued in Exchange of Shares Exchange 25,845 26 – – 424,092 – 424,118 Common Stock Issued for Conversion of Convertible Note Payable – – 51,950,000 51,950 10,686 – 62,636 Common Stock issued for Conversion of Detachable Warrants – – 40,802,082 40,802 ( 40,802 ) – – Relief of Derivative Liabilities – – – – 235,393 – 235,393 Warrants Issued for Default of Convertible Note Payables – – – – 163,433 – 163,433 Changes in FMV of Warrants Related to Convertible Note Payables – – – – 203,597 ( 203,597 ) – Beneficial Conversion Feature Discount on Note Payable – – – – 26,833 – 26,833 Common Stock Issued for Extinguishment of Debt – – 6,760,000 6,760 9,991 – 16,751 Common Stock Issued to Officers for Services – – 2,284,500 2,285 683,066 – 685,351 Net Loss – – – – – ( 2,236,774 ) ( 2,236,774 ) Balance - December 31, 2020 25,845 26 145,110,129 145,111 4,794,261 ( 7,480,678 ) ( 2,541,280 ) Common Stock Issued for Conversion of Convertible Note Payable – – 32,350,978 32,351 291,169 – 323,520 Common Stock Sold for Cash – – 35,500,000 35,500 497,000 – 532,500 Common Stock Issued for Extension of Notes Payable – – 1,250,000 1,250 9,875 – 11,125 Common Stock Issued for Financing Commitment – – 1,800,000 1,800 ( 1,800 ) – – Preferred Stock Sold for Cash 51 – – – 51,000 – 51,000 Beneficial Conversion Feature Discount on Notes Payable – – – – 360,000 – 360,000 Commission Paid for Raising Capital – – – – ( 11,650 ) – ( 11,650 ) Common Stock Issued for Accrued Compensation – – 3,693,288 3,693 1,061,093 – 1,064,786 Common Stock Issued for Services – – 550,000 550 8,150 – 8,700 Net Loss – – – – – ( 1,063,554 ) ( 1,063,554 ) Balance - December 31, 2021 25,896 $ 26 220,254,395 $ 220,255 $ 7,059,098 $ ( 8,544,232 ) $ ( 1,264,853 ) The accompanying notes are an integral part of these consolidated financial statements. F- 5 IIOT-OXYS, Inc. and Subsidiaries Consolidated Statements of Cash Flows For The Years Ended December 31, 2021 2020 Cash Flows From Operating Activities Net Loss $ ( 1,063,554 ) $ ( 2,236,774 ) Adjustments to Reconcile Net Loss to Net Cash (Used) By Operating Activities Loss on Extinguishment of Debt – 16,205 Loss on Issuance of Default Warrants – 163,433 Loss due to Change in Fair Market Value of Derivative Liability – 220,325 Loss on Derivative Liability – 239,396 Preferred Stock Issued for Services – 8,794 Penalty and Fees Incurred due to Default Increase in Notes Payable – 162,976 Forgiveness of PPP Loan ( 36,700 ) – Debt discount on notes payable ( 129,380 ) – Beneficial conversion feature 360,000 106,388 Amortization of Intangible Assets 49,771 49,636 Amortization of Series B Preferred Stock to redemption – 186,000 Changes in Operating Assets and Liabilities (Increase) Decrease in: Accounts Receivable ( 11,280 ) 28,004 Prepaid Expense ( 5,346 ) 1,283 Increase (Decrease) in: Accounts Payable ( 8,743 ) 5,352 Accrued Liabilities 110,789 92,483 Derivative liability ( 102,966 ) – Deferred Revenue – 46,425 Shares Payable to Related Parties 342,650 728,892 Salaries Payable to Related Parties ( 133,345 ) 64,044 Net Cash Used by Operating Activities ( 628,103 ) ( 117,138 ) Cash Flows From Financing Activities Cash Received from Convertible Note Payable 521,850 129,300 Cash Payments of Notes Payable – ( 100,000 ) Proceeds from sale of Series B Preferred Stock 50,000 130,000 Proceeds from PPP Loan – 36,700 Net Cash Provided By Financing Activities 571,850 196,000 Net Decrease in Cash and Cash Equivalents ( 56,253 ) 78,862 Cash and Cash Equivalents - Beginning of Period 103,074 24,212 Cash and Cash Equivalents - End of Period $ 46,821 $ 103,074 Supplement Disclosures of Cash Flow Information Interest Paid During the Period $ – $ – Income Taxes Paid During the Period $ – $ – Supplemental Disclosures of Non-Cash Investing and Financing Activities Discount on Notes Payable $ 26,833 $ 26,833 Conversion of Convertible Notes Payable and Derivative Liabilities $ 288,029 $ 288,029 Warrant Anti-Dilution Issuance $ 203,597 $ 203,597 Discount on Series B Preferred Stock $ 186,000 $ 186,000 The accompanying notes are an integral part of these consolidated financial statements. F- 6 IIOT-OXYS, Inc. and Subsidiaries Notes to Consolidated Financial Statements December 31, 2021 and 2020 NOTE 1 - NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN Unless otherwise indicated, any reference to “the Company”, “our company”, “we”, “us”, or “our” refers to IIOT-OXYS, Inc., a Nevada corporation, and as applicable to its wholly-owned subsidiaries, OXYS Corporation, a Nevada corporation, and HereLab, Inc., a Delaware corporation. IIOT-OXYS, Inc., a Nevada corporation (the “Company”) was originally established for the purpose of designing, building, testing, and selling Edge Computing Systems for the Industrial Internet. The Company is currently devoting substantially all its efforts in identifying, developing and marketing engineered products, software and services for applications in the Industrial Internet which involves collecting and processing data collected from a wide variety of industrial systems and machines. We were incorporated in the state of New Jersey on October 1, 2003 under the name of Creative Beauty Supply Corporation and commenced operations as of January 1, 2004. On November 30, 2007, our Board of Directors approved a plan to dispose of our wholesale and retail beauty supply business. On May 18, 2015, we changed our name to Gotham Capital Holdings. From January 1, 2009 until July 28, 2017, we had no operations. On March 16, 2017, our Board of Directors approved to change our name to “IIOT-OXYS, Inc.” and authorized a change of domicile from New Jersey to Nevada. Impact of COVID-19 During the year ended December 31, 2021, the effects of a new coronavirus (“COVID-19”) and related actions to attempt to control its spread began to impact our business. The impact of COVID-19 on our operating results for the year ended December 31, 2021 was limited, in all material respects, due to the government mandated numerous measures, including closures of businesses, limitations on movements of individuals and goods, and the imposition of other restrictive measures, in its efforts to mitigate the spread of COVID-19 within the country. On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Governments around the world have mandated, and continue to introduce, orders to slow the transmission of the virus, including but not limited to shelter-in-place orders, quarantines, significant restrictions on travel, as well as work restrictions that prohibit many employees from going to work. Uncertainty with respect to the economic effects of the pandemic has introduced significant volatility in the financial markets. Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company. The financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. In the opinion of the Company’s management, the financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. Principles of Consolidation The consolidated financial statements for the years ended December 31, 2021 and 2020, respectively, include the accounts of Company, and its wholly-owned subsidiaries OXYS Corporation and HereLab, Inc. All significant intercompany balances and transactions have been eliminated. F- 7 Reclassifications Certain amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These reclassifications have no effect on previously reported net income. Use of Estimates The preparation of 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 the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of accounts payable, accrued liabilities and payable to related party. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has suffered continuing operating losses, used cash flows in operating activities of $ 628,103 and has an accumulated deficit of $ 8,544,232 as of December 31, 2021. These factors, among others, raise a substantial doubt about the Company’s ability to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management believes that the Company will be able to achieve a satisfactory level of liquidity to meet the Company’s obligations for the next 12 months by generating cash through additional borrowings and/or sale of equity securities, as needed. However, there can be no assurance that the Company will be able to generate sufficient liquidity to maintain its operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following summary of significant accounting policies of the Company is presented to assist in the understanding of the Company’s financial statements. These accounting policies conform to GAAP in all material respects and have been consistently applied in preparing the accompanying financial statements. Cash and Cash Equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. The Company reported a cash balance of $ 46,821 and $ 103,074 as of December 31, 2021 and 2020, respectively. Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are carried at original invoice amount less an estimate made for doubtful accounts. The Company determines the allowance for doubtful accounts by identifying potential troubled accounts and by using historical experience and future expectations applied to an aging of accounts. Trade accounts receivable are written off when deemed uncollectible. Recoveries of trade accounts receivable previously written off are recorded as income when received. There was no allowance for doubtful accounts as of December 31, 2021 and December 31, 2020, respectively. F- 8 Long-Lived Assets The Company regularly reviews the carrying value and estimated lives of its long-lived assets to determine whether indicators of impairment may exist that warrant adjustments to the carrying value or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objectives. Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited and are reviewed when appropriate for possible impairment. Basic and Diluted Earnings (Loss) Per Common Share The Company computes earnings (loss) per share in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”), ASC 260, “ Earnings per Share” . ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible note and preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Revenue Recognition The Company’s revenue is derived primarily from providing services under contractual agreements. The Company recognizes revenue in accordance with ASC Topic No. 606, Revenue from Contracts with Customers (“ASC 606”) which was adopted on January 1, 2018. According to ASC 606, the Company recognizes revenue based on the following criteria: · Identification of a contract or contracts, with a customer. · Identification of performance obligations in the contract. · Determination of contract price. · Allocation of transaction price to the performance obligation. · Recognition of revenue when, or as, performance obligation is satisfied. The Company used a practical expedient available under ASC 606-10-65-1(f)4 that permits it to consider the aggregate effect of all contract modifications that occurred before the beginning of the earliest period presented when identifying satisfied and unsatisfied performance obligations, transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations. The Company has elected to treat shipping and handling activities as cost of sales. Additionally, the Company has elected to record revenue net of sales and other similar taxes. Concentration of Credit Risk Financial instruments that potentially expose the Company to concentrations of risk consist primarily of cash and cash equivalents which are generally not collateralized. The Company’s policy is to place its cash and cash equivalents with high quality financial institutions, in order to limit the amount of credit exposure. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC), up to $ 250,000 . At December 31, 2021 and December 31, 2020, the Company had no amounts in excess of the FDIC insurance limit. F- 9 Fair Value of Financial Instruments and Fair Value Measurements ASC 820, “ Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. 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. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. 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. The Company’s consolidated financial instruments consist principally of cash, prepaid expenses, accounts payable, accrued liabilities, notes payable and related parties payable. The Company believes that the recorded values of all the financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. Income Taxes The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “ Income Taxes” . The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized. The Company follows the provisions of ASC 740-10, “ Accounting for Uncertain Income Tax Positions .” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Convertible Debt and Convertible Preferred Stock When the Company issues convertible debt or convertible preferred stock, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities from Equity , and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives and Hedging . Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations. F- 10 If a conversion feature does not meet the conditions to be separated and accounted for as an embedded derivative liability, the Company then determines whether the conversion feature is “beneficial”. A conversion feature would be considered beneficial if the conversion feature is “in the money” when the host instrument is issued or, under certain circumstances, later. If convertible debt contains a beneficial conversion feature (“BCF”), the amount of the amount of the proceeds allocated to the BCF reduces the balance of the convertible debt, creating a discount which is amortized over the debt’s term to interest expense in the consolidated statements of operations. When a convertible preferred stock contains a BCF, after allocating the proceeds to the BCF, the resulting discount is either amortized over the period beginning when the convertible preferred stock is issued up to the earliest date the conversion feature may be exercised, or if the convertible preferred stock is immediately exercisable, the discount is fully amortized at the date of issuance. The amortization is recorded similar to a dividend. Convertible debt is accounted for under the ASC 470-20, Debt – Debt with Conversion and Other Options. Recent Accounting Pronouncements In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) ASU No. 2019-12, Income Taxes (Topic 740) , Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of this guidance on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements. Other accounting standards that have been issued or proposed by FASB and do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. NOTE 3 - INTANGIBLE ASSETS The Company’s intangible assets comprise of intellectual property revolving around their field tests, sensor integrations, and board designs. Intangible assets, net of amortization at December 31, 2021 and 2020 amounted to $ 298,085 and $ 347,856 , respectively. Schedule of intangible assets December 31,2021 December 31,2020 Intangible Assets $ 495,000 $ 495,000 Accumulated amortization ( 196,915 ) ( 147,144 ) Intangible Assets, net $ 298,085 $ 347,856 At December 31, 2021 and 2020, respectively, the Company determined that none of its intangible assets were impaired. Amortizable intangible assets are amortized using the straight-line method over their estimated useful lives of ten years. Amortization expense of finite-lived intangibles was $ 49,771 and $ 49,636 for the years ended December 31, 2021 and 2020, respectively. F- 11 The following table summarizes the Company’s estimated future amortization expense of intangible assets with finite lives as of December 31, 2021: Schedule of future amortization Amortization expense 2022 $ 49,500 2023 49,500 2024 49,500 2025 49,500 Thereafter 100,085 Total $ 298,085 NOTE 4 - COMMITMENTS AND CONTINGENCIES In prior years, the Company entered into consulting agreements with one director, three executive officers, and one engineer of the Company, which include commitments to issue shares of the Company’s common stock from the Company’s Stock Incentive Plans. All the agreements have been terminated and shares have been issued in conjunction with the related separation agreements. According to the terms of the three agreements, 1,319,000 shares vested in 2019, 2,400,000 shares vested in 2020, and 3,600,000 shares of common stock vested in 2021. In the event that the agreement is terminated by either party pursuant to the terms of the agreement, all unvested shares which have been earned shall vest on a pro-rata basis as of the effective date of the termination of the agreement and all unearned, unvested shares shall be terminated. The value of the shares was assigned at fair market value on the effective date of the agreement and the pro-rata number of shares earned was calculated and amortized at the end of each reporting period. The Company has accrued $ 0 and $ 730,836 in shares payable in conjunction with these agreements as of December 31, 2021 and 2020, respectively. A summary of these agreements is as follows. On March 11, 2019, the Company’s Board of Directors approved the Consulting Agreement dated effective June 4, 2018 with its CEO. The term of the agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by the CEO pursuant to the agreement are those customary for the position in which the CEO is serving. As of the effective date, the Company shall issue to the CEO an aggregate of 3,060,000 shares of the Company’s common stock which vest as follows: 1. 560,000 shares on the first-year anniversary of the effective date; 2. 1,000,000 shares on the second-year anniversary of the effective date; and 3. 1,500,000 shares on the third-year anniversary of the effective date. The shares are issued under the 2019 Stock Incentive Plan. Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the agreement) or the listing of the Company’s common stock on a senior exchange. As of December 31, 2021 and 2020, 3,060,000 shares and 1,560,000 shares had vested and issued, respectively. On June 11, 2020, the Company entered into a Debt Forgiveness Agreement with the CEO, pursuant to which the CEO forgave $ 185,000 of accrued and unpaid consulting fees owed to him pursuant to his consulting agreement with the Company. On June 12, 2020, the Company entered into an amendment effective January 1, 2020 to the Consulting Agreement with the CEO. The amendment stated that from January 1, 2020 until April 23, 2020, the Consultant shall be paid an hourly wage of $12.75 per hour for services performed. From April 24, 2020 onward, the Consultant shall be paid an hourly wage of $48.08 an hour for services performed. Fees may accrue at the discretion of management. At any time, the Consultant shall have the right to convert any accrued and unpaid fees into shares of Common Stock of the Company. The conversion price shall equal 90% multiplied by the market price (representing a discount rate of 10%). As of December 31, 2021 and 2020, the Company recorded $ 145,844 and $ 138,602 is in salaries payable to related parties due and payable to the CEO, respectively. F- 12 On March 11, 2019, the Company’s Board of Directors approved the Consulting Agreement dated effective October 1, 2018 with its COO. The term of the agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by the COO pursuant to the agreement are those customary for the position in which the COO is serving. As of the effective date, the Company shall issue to the COO an aggregate of 2,409,000 shares of the Company’s common stock which vest as follows: 1. 409,000 shares on the first-year anniversary of the effective date; 2. 800,000 shares on the second-year anniversary of the effective date; and 3. 1,200,000 shares on the third-year anniversary of the effective date. The shares are issued under the 2017 Stock Incentive Plan. Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the agreement) or the listing of the Company’s common stock on a senior exchange. As of December 31, 2021 and 2020, 24,090,000 shares and 1,209,000 shares, respectively, had vested and issued, respectively. On June 11, 2020, the Company entered into a Debt Forgiveness Agreement with the COO, pursuant to which the COO forgave $ 103,250 of accrued and unpaid consulting fees owed to her pursuant to her consulting agreement with the Company. On June 12, 2020, the Company entered into an amendment effective January 1, 2020 to the Consulting Agreement with the COO. The amendment stated that from January 1, 2020 until April 23, 2020, the Consultant shall be paid an hourly wage of $12.75 per hour for services performed. From April 24, 2020 onward, the Consultant shall be paid an hourly wage of $48.08 an hour for services performed. Fees may accrue at the discretion of management. At any time, the Consultant shall have the right to convert any accrued and unpaid fees into shares of Common Stock of the Company. The conversion price shall equal 90% multiplied by the market price (representing a discount rate of 10%). As of December 31, 2021 and 2020, the Company recorded $ 128,081 and $ 139,078 in salaries payable to related parties due and payable to the COO, respectively. On March 11, 2019, the Company’s Board of Directors approved the Amended and Restated Consulting Agreement dated effective April 23, 2018 with its CTO. The term of the agreement is for three years beginning as of the effective date, unless terminated earlier pursuant to the agreement and is automatically renewable for one-year terms upon the consent of the parties. The services to be provided by the CTO pursuant to the agreement are those customary for the position in which the CTO is serving. As of the effective date, the Company shall issue to the CTO an aggregate of 1,800,000 shares of the Company’s common stock which vest as follows: 1. 300,000 shares on the first-year anniversary of the effective date; 2. 600,000 shares on the second-year anniversary of the effective date; and 3. 900,000 shares on the third-year anniversary of the effective date. As part of the Amended and Restated Consulting Agreement dated effective April 23, 2018 the CTO shall receive a monthly fee of $9,375 which accrues unless converted into shares of common stock of the Company at a conversion rate specified in the agreement. Until the Company closes a minimum $500,000 capital raise, the monthly fee accrues and, upon the closing of such a capital raise, $3,125 of the monthly fee will be paid to the CTO in cash and the remainder will continue to accrue. Upon the closing of a capital raise of at least $2,000,000, the entire monthly fee will be paid to the CTO in cash and all accrued and unpaid monthly fees will be paid by the Company within one year of the closing of such a capital raise. On April 1, 2021, the Company and CTO mutually agreed to terminate the Amended and Restated Consulting Agreement. The Company and CTO agreed to settle for 843,288 shares of common stock for past services which were valued at the fair value of $270,493. The Company issued 843,288 shares of common stock to the CTO on April 12, 2021. As of December 31, 2021 and 2020, 0 shares and 900,000 shares had vested and issued, respectively. On June 11, 2020, the Company entered into a Debt Forgiveness Agreement with the CTO pursuant to which the CTO forgave $ 82,475 of accrued and unpaid consulting fees owed to him pursuant to his consulting agreement with the Company. On June 12, 2020, the Company entered into an amendment effective January 1, 2020 to the Consulting Agreement with the CTO. The amendment stated that from January 1, 2020 until April 23, 2020, the Consultant shall be paid an hourly wage of $12.75 per hour for services performed. From April 24, 2020 onward, the Consultant shall be paid an hourly wage of $48.08 an hour for services performed. Fees may accrue at the discretion of management. At any time, the Consultant shall have the right to convert any accrued and unpaid fees into shares of Common Stock of the Company. The conversion price shall equal 90% multiplied by the market price (representing a discount rate of 10%). F- 13 Effective March 31, 2021, the Company entered into a Termination Agreement (the “ Termination Agreement ”) with the CTO, pursuant to which the CTO resigned and from all positions within the Company and any of its subsidiaries. In addition, the Termination Agreement provided for the payment of $ 11,144 in reimbursable expenses and $ 130,451 in accrued and unpaid consulting fees to the CTO within five business days of the effective date. The Termination Agreement also provided for the issuance to the CTO 843,288 shares of the Company’s Common Stock within five business days of the effective date. As of December 31, 2021 and 2020, the Company recorded $ 0 and $ 129,590 in salaries payable to related parties due and payable to the CTO, respectively. NOTE 5 - CONVERTIBLE NOTES PAYABLE The following table summarizes the outstanding balance of convertible notes payable, interest and conversion rates as of December 31, 2021 and December 31, 2020, respectively. Schedule of convertible notes payable December 31, 2021 December 31, 2020 A. Convertible note payable to an investor with interest at 12% per annum, convertible at any time into shares of common stock at $0.10 per share. Interest is payable quarterly with the balance of principal and interest due on maturity on March 1, 2023. The note is secured by substantially all the assets of the Company. $ 295,000 $ 600,000 B. Convertible note payable to an investor with interest at 5% per annum, convertible at any time into shares of common stock at $0.00084 per share. Interest is payable annually with the balance of principal and interest due on maturity on March 1, 2024. The note is secured by substantially all the assets of the Company. 55,000 55,000 C. Convertible note payable to an investor with interest at 12% per annum. On February 3, 2021, the investor settled the note and accrued interest, in exchange for common stock of the Company. – 50,000 D. Convertible note payable to an investor with interest at 12% per annum. $10,000 of the principal is currently convertible into shares of common stock at $0.01 per share, with remaining principal and interest convertible into shares of common stock at $0.10 per share. Interest is payable quarterly with the balance of principal and interest due on maturity on March 1, 2023. The note is secured by substantially all the assets of the Company. 50,000 60,000 E. Convertible note payable to a related party with interest at 12% per annum, convertible at any time into shares of common stock at $0.00084 per share. Interest is payable quarterly with the balance of principal and interest due on maturity on August 2, 2022. The note is secured by substantially all the assets of the Company. 125,000 125,000 F. Convertible note payable to an investor with interest at 10% per annum, convertible at any time into shares of common stock at $0.01 per share. Principal and interest due on maturity on April 29, 2022. 33,167 100,000 G. Convertible note payable to an investor with interest at 10% per annum, convertible at any time into shares of common stock at $0.0099 per share. Note was issued as payment for future fees to be incurred under the related Equity Financing Agreement. Principal and interest due on maturity on April 29, 2022. 75,000 75,000 633,167 1,065,000 Less unamortized discount ( 57,148 ) ( 111,781 ) Net balance 576,019 953,219 Less current portion ( 233,167 ) ( 953,219 ) $ 267,152 $ – F- 14 A. January 18, 2018 Convertible Note and Warrants (“Note A”) On January 18, 2018, the Board of Directors of the Company approved a non-public offering of up to $1,000,000 aggregate principal amount of its 12% Senior Secured Convertible Notes. The notes are convertible, in whole or in part, into shares of the Company’s common stock, at any time at a rate of $0.65 per share with fractions rounded up to the nearest whole share, unless paid in cash at the Company’s election. The notes bear interest at a rate of 12% per annum and interest payments will be made on a quarterly basis. The notes matured on January 15, 2020. The notes are governed by a Securities Purchase Agreement and are secured by all the assets of the Company pursuant to a Security and Pledge Agreement. In addition to the issuance of the notes in the offering, the Company’s Board of Directors approved, as part of the offering, the issuance of warrants to purchase one share of the Company’s common stock for 50% of the number of shares of common stock issuable upon conversion of each note. Each warrant is immediately exercisable at $0.75 per share, contains certain anti-dilution down-round features and expires on January 15, 2023. If the Company ever defaults on the loan, the warrants to be issued will increase from 50% of the number of shares of common stock issuable upon conversion to 100%. On March 7, 2019, the Board of Directors of the Company approved Amendment No. 1 to the 12% Senior Secured Convertible Promissory Note and the Warrant Agreement, each issued January 22, 2018, respectively, to the note holder. The amendments (i) extend the maturity date of the note to March 1, 2021 and extend the term of the warrants to March 6, 2024, (ii) lower the conversion price of the note and the exercise price of the warrants to $0.20 and $0.30, respectively, and (iii) add an adjustment to the conversion and exercise price of the note and warrants, respectively, in the event the Company does not achieve certain milestones during calendar 2019. The fair value of the warrants is $ 25,162 determined using the Black-Scholes valuation model with the following assumptions: expected term of 2.5 years; risk free interest rate of 2.6%; and volatility of 127%. The effective conversion rate resulted in a discount of $ 23,956 and is amortized to interest expense using the effective interest method over the term of the note. The Company recognized a loss on extinguishment of debt of $ 221,232 related to the decrease in conversion price. On January 1, 2020, the Company failed to achieve certain milestones during calendar 2019 and, as such, the conversion/exercise prices of the note and warrants were adjusted to $0.10 and $0.15, respectively. This resulted in an adjustment to retained earnings of $ 201 based on the change in fair value. Effective January 15, 2020, the Company went into technical default of the note agreement as a result of not making the December 31, 2019 interest payment within the required period. As a result, the principal was increased by 20%, or $100,000, and the Company was required to issue an additional 384,615 warrants at the then effective exercise price of $0.15 per share. The fair value of the warrants was $ 44,297 , determined using the Black-Scholes valuation model with the following assumptions: expected term of 4.14 years; risk free interest rate of 1.6%; and volatility of 243%. Due to the default, this value was immediately expensed. As of March 31, 2020, the exercise price of the warrants was further adjusted to $0.00084 as a result of the down-round features being triggered. This resulted in an adjustment to retained earnings of $ 71 based on the change in fair value. On January 28, 2021, the noteholder of Note A agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to March 1, 2022, in exchange for the reduction of the conversion price to $0.01 per share, and all prior Events of Default (as defined in the Note A) including penalties of $100,000 were waived, and all future Events of Default (as defined in the Note A) pertaining to the future payment of interest were waived through maturity. O n December 14, 2021, the Company entered into amendment to the Note A which limits the respective holder to conversions resulting in beneficial ownership by the holder and its affiliates of no more than 4.99% of the outstanding shares of common stock of the Company. The Company recorded $100,000 as extinguishment of debt in its statements of operations for the year ended December 31, 2021. The Company recorded $ 300,000 as the beneficial conversion feature discount on note payable of $ 500,000 on January 28, 2021. On March 14, 2022, the noteholder of Note A, effective March 1, 2022, agreed to extend the maturity date of the Senior Secured Convertible Note to March 1, 2023 in exchange for the reduction of the conversion price to $0.008 per share and one-year extensions as long as the Note A is not in default. F- 15 On February 4, 2021, the noteholder A converted the principal balance of $ 50,000 of its convertible promissory note into 5,000,000 shares of common stock of the Company (Note 9). On April 15, 2021, the noteholder A converted the principal balance of $ 75,000 of its convertible promissory note into 7,500,000 shares of common stock of the Company (Note 9). On July 28, 2021, the noteholder A converted the principal balance of $ 80,000 of its convertible promissory note into 8,000,000 shares of common stock of the Company (Note 9). The conversion shares totaled 42,603,642 and 6,858,244 shares of common stock, upon conversion of the total principal and accrued interest of $ 426,036 and $ 685,824 , as of December 31, 2021 and 2020, respectively. The Company amortized the beneficial conversion feature discount to interest expense of $ 254,660 and $ 12,060 for the years ended December 31, 20221 and 2020, respectively. The unamortized discount totaled $ 45,340 and $ 1,978 at December 31, 2021 and 2020, respectively. In addition, the Company recorded interest expense of $ 45,212 and $ 70,701 for the year ended December 31, 2021 and 2020, respectively. Accrued interest payable on Note A was $ 131,036 and $ 85,824 as of December 31, 2021 and 2020, respectively. The principal balance payable on Note A amounted to $ 295,000 and $ 600,000 on December 31, 2021 and 2020, respectively. B. January 2019 Convertible Note and Warrants (“Note B”) On January 22, 2019, the Company entered into a Securities Purchase Agreement and Security and Pledge Agreement with a single investor and issued a Secured Convertible Promissory Note to the investor in the principal amount of $ 55,000 . In addition to the note, the Company issued to the investor 36,667 warrants. Each warrant is immediately exercisable at $ 0.75 per share, contains certain anti-dilution down-round features and expires on January 22, 2024 . If the Company ever defaults on the loan, the warrants to be issued will increase from 50% of the number of shares of common stock issuable upon conversion to 100%. The warrants are considered equity instruments based on the Company’s adoption of ASU 2017-11. As of March 31, 2020, the exercise price of the warrants was adjusted to $ 0.00084 as a result of the down-round features being triggered. This resulted in an adjustment to retained earnings of $ 7 based on the change in fair value. The unpaid principal balance of the note and accrued interest is $ 55,000 and $ 8,092 at December 31, 2021 and $ 55,000 and $ 5,342 as of December 31, 2020, respectively. The Company recorded interest expense of $ 2,750 and $ 2,758 for the years ended December 31, 2021 and 2020, respectively. The Company amortized the discount to interest expense $ 0 and $ 194 for the years ended December 31, 2021 and 2020, respectively. The unamortized discount on the Note B was $0 at December 31, 2021 and 2020, respectively. This note and accrued interest is due to a related party. On June 12, 2020, this note was amended to extend the maturity date to March 1, 2022, and all events of default were waived. The conversion shares totaled 78,864,418 and 75,426,918 shares of common stock upon the conversion of the total principal and accrued interest of $ 63,092 and $ 60,342 as of December 31, 2021 and 2020, respectively. On April 6, the Noteholder of Note B agreed to extend the maturity date of the Note B to March 1, 2024. C and D. March 2019 Convertible Note and Warrants (“Note C”) and (“Note D”) On March 7, 2019, the Board of Directors of the Company approved a non-public offering of up to $500,000 aggregate principal amount of its 12% Senior Secured Convertible Notes (Note C and Noted D), collectively called “Notes” unless specifically specified otherwise. The Notes are convertible, in whole or in part, into shares of the Company’s common stock, at any time at a rate of $0.20 per share with fractions rounded up to the nearest whole share, unless paid in cash at the Company’s election. The Notes bear interest at a rate of 12% per annum and interest payments will be made on a quarterly basis. The Notes matured on March 1, 2021. The conversion price of the Notes is also subject to adjustments if the Company does not achieve certain milestones during the calendar year 2019. The Notes are governed by a Securities Purchase Agreement and are secured by all the assets of the Company pursuant to a Security and Pledge Agreement. Funding is subject to the occurrence of certain milestones, as stated in the SPA. In addition to the issuance of the Notes in the offering, the Company’s Board of Directors approved, as part of the offering, the issuance of warrants to purchase one share of the Company’s common stock for 50% of the number of shares of common stock issuable upon conversion of each Note. Each warrant is immediately exercisable at $ 0.30 per share and expires five years from the issuance date. The exercise price of the warrants is also subject to adjustments if the Company does not achieve certain milestones during the calendar year 2019. F- 16 On March 6, 2019, the Company entered into SPAs and Security and Pledge Agreements with its first two investors (Note C and Note D) in the offering and issued Notes to the investors in the principal amount of $ 50,000 each totaling in the aggregate if $ 100,000 . Subscription funds were received by the Company from the investors on March 6, 2019. In addition to the Notes, the Company issued to the investors an aggregate of 250,000 warrants. Each warrant is immediately exercisable at $0.30 per share, contains certain anti-dilution down-round features and expires on March 6, 2024. If the Company ever defaults on the loan the warrants to be issued will increase from 50% of the number of shares of common stock issuable upon conversion to 100%. The warrants are considered equity instruments based on the Company’s adoption of ASU 2017-11. The proceeds received upon issuing the Notes and warrants were allocated to each instrument on a relative fair value basis. The initial fair value of the warrants was $ 12,646 determined using the Black-Scholes valuation model with the following assumptions: expected term of 2.5 years; risk free interest rate of 2.5%; and volatility of 127%. The effective conversion rate resulted in a discount of $ 11,226 and is amortized to interest expense using the effective interest method over the term of the Notes. On January 1, 2020, the Company failed to achieve certain milestones during calendar 2019 and, as such, the conversion/exercise prices of the Notes and warrants were adjusted to $0.10 and $0.15, respectively. This resulted in an adjustment to retained earnings of $ 131 based on the change in fair value. Effective January 15, 2020, the Company went into technical default of the Note agreement as a result of not making the December 31, 2019 interest payment within the required period. As a result, the principal was increased by 20%, or $20,000, in aggregate, and the Company was required to issue an additional 250,000 warrants at the then effective exercise price of $0.15 per share. The fair value of the warrants was $ 28,793 , determined using the Black-Scholes valuation model with the following assumptions: expected term of 4.14 years; risk free interest rate of 1.6%; and volatility of 243%. Due to the default, this value was immediately expensed. As of March 31, 2020, the exercise price of the warrants was further adjusted to $0.00084 as a result of the down-round features being triggered. This resulted in an adjustment to retained earnings of $ 46 based on the change in fair value. On September 21, 2020, these Notes were amended to reduce the conversion price of an aggregate of $20,000 of the total outstanding principal value of $ 120,000 from $0.10 to $0.01 per share. The remaining aggregate principal of $100,000 remains convertible at $0.10 per share. This modification to the Notes was considered substantial (i. e. the change in fair value of the conversion feature was greater than 10% of the carrying value of the debt). As a result, the modification was accounted for as an extinguishment of debt, resulting in the recognition of an extinguishment loss of $ 18,360 for the year ended December 31, 2020. On October 15, 2020, the holder of Note C converted $ 10,000 of the principal note amount into 1,000,000 shares of common stock. On January 28, 2021, the noteholder of Note C agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to March 1, 2022 in exchange for the reduction of the conversion price to $0.01 per share, and all prior Events of Default (as defined in the Note C) including penalties of $10,000 were waived, and all future Events of Default (as defined in the Note C) pertaining to the future payment of interest were waived through maturity. The Company recorded $ 10,000 as extinguishment of debt in its statements of operations for the year ended December 31, 2021. The Company recorded $ 30,000 as debt discount on note payable and amortized it to interest expense since the Note C was converted into common stock of the Company immediately. The Company amortized the discount to interest expense of $ 30,000 and $ 2,037 for the year ended December 31, 2021 and 2020, respectively. The unamortized discount was $ 0 and $ 0 at December 31, 2021 and 2020, respectively. In addition, the Company recorded interest expense on Note C of $ 460 and $ 6,686 for the years ended December 31, 2021 and 2020, respectively. Accrued interest payable on Note C was $ 0 and $ 6,050 at December 31, 2021 and December 31, 2020, respectively. On January 28, 2021, the noteholder of Note C converted the principal balance of $ 40,000 of its convertible promissory note and $ 6,510 of accrued interest, into 4,650,978 shares of common stock of the Company (Note 9). The principal balance payable on Note C amounted to $ 0 and $ 50,000 on December 31, 2021 and 2020. F- 17 On January 28, 2021, the noteholder of Note D agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to March 1, 2022 in exchange for the reduction of the conversion price to $ 0.01 per share, and all prior Events of Default (as defined in the Note D) including penalties of $10,000 were waived, and all future Events of Default (as defined in the Note D) pertaining to the future payment of interest were waived through maturity. O n December 14, 2021, the Company entered into amendment to the Note D which limits the respective holder to conversions resulting in beneficial ownership by the holder and its affiliates of no more than 4.99% of the outstanding shares of common stock of the Company. The Company recorded $ 10,000 as extinguishment of debt in its statements of operations for the year ended December 31, 2021. The Company recorded $ 30,000 as the beneficial conversion feature discount on note payable of $50,000 on January 28, 2021. The Company amortized the beneficial conversion feature discount to interest expense of $ 25,466 and $ 1,019 for the years ended December 31, 2021 and 2020, respectively. The unamortized discount was $ 4,534 and $ 0 at December 31, 2021 and 2020, respectively. In addition, the Company recorded interest expense of $ 6,115 and $ 7,070 for the years ended December 31, 2021 and 2020, respectively. Accrued interest payable on Note D was $ 14,698 and $ 6,768 as of December 31, 2021 and 2020, respectively. The principal balance payable on Note D amounted to $ 50,000 and $ 60,000 on December 31, 2021 and 2020, respectively. On March 14, 2022, the noteholder of Note D, effective march 1, 2022, agreed to extend the maturity date of the Senior Secured Convertible Note to March 1, 2023 in exchange for the reduction of the conversion price to $0.008 per share and one-year extensions as long as the Note D is not in default. The conversion shares of Note D totaled 6,469,754 and 1,588,520 shares of common stock upon the conversion of the total principal and accrued interest of $ 64,698 and $ 68,582 as of December 31, 2021 and 2020, respectively. E. August 2019 Convertible Note and Warrants (“Note E”) On August 2, 2019, the Company entered into a Securities Purchase Agreement with an investor for the purchase of a 12 % Secured Convertible Note in the principal amount of up to $ 125,000 . The note is convertible, in whole or in part, into shares of the Company’s common stock, at any time at a rate of $0.08 per share with fractions rounded up to the nearest whole share, unless paid in cash at the Company’s election. The note bears interest at a rate of 12% per annum and interest payments will be made on a quarterly basis. The note matured on August 2, 2021 . $ 75,000 , $ 25,000 , and $ 25,000 subscription funds were received by the Company from the investor on August 2, 2019, September 6, 2019, and October 16, 2019, respectively. In addition to the note, the Company issued to the investor an aggregate of 781,250 warrants. The warrants were considered equity instruments based on the Company’s adoption of ASU 2017-11. The proceeds received upon issuing the note and warrants were allocated to each instrument on a relative fair value basis. The initial fair value of the warrants was $ 71,035 determined using the Black-Scholes valuation model with the following assumptions: expected term of 2.5 years; risk free interest rate of 1.6 %; and volatility of 132 %. The effective conversion rate resulted in a discount of $ 104,941 and is amortized to interest expense using the effective interest method over the term of the note. Effective January 30, 2020, the Company went into technical default of the note agreement as a result of not making the December 31, 2019 interest payment within the required period. As a result, the Company was required to issue an additional 781,250 warrants at the then effective exercise price of $0.12 per share. The fair value of the warrants was $ 90,342 , determined by using the Black-Scholes valuation model with the following assumptions: expected term of 4.76 years; risk free interest rate of 1.6 %; and volatility of 233 %. Due to the default, this value was immediately expensed. As of March 31, 2020, the exercise price of the warrants was adjusted to $ 0.00084 as a result of the down-round features being triggered. This resulted in an adjustment to retained earnings of $ 70 based on the change in fair value. On August 2, 2021, the noteholder of Note E agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to August 2, 2022 . All other terms and conditions of the Note E remain the same. The Company amortized the debt discount on Note E to interest expense of $ 34,104 and $ 52,539 for the years ended December 31, 2021 and 2020, respectively. The unamortized discount was $ 0 and $ 34,104 at December 31, 2021 and 2020, respectively. The Company recorded interest expense of $ 15,000 and $ 15,051 on Note E for the years ended December 31, 2021 and 2020, respectively. Accrued interest payable on Note E was $ 33,690 and $ 18,690 as of December 31, 2021 and 2020, respectively. The principal balance payable on Note E amounted to $ 125,000 and $ 125,000 on December 31, 2021 and 2020, respectively. The maturity date of the Note E is August 2, 2022. This note is payable to a related party. The conversion shares totaled 188,916,781 shares of common stock upon conversion of the total principal and accrued interest of $ 158,690 as of December 31, 2021. F- 18 F. August 29, 2019 Convertible Note and Warrants (“Note F”) On August 29, 2019, the Company entered into a Securities Purchase Agreement with an investor for the purchase of a Convertible Promissory Note in the principal amount of up to $ 105,000 . The Note is not convertible within 180 days of receipt of funds for the first closing and is then convertible, in whole or in part, into shares of the Company’s Common Stock at a rate of $ 0.20 per share. Upon an “Event of Default,” as defined in the note, the conversion price becomes the “Variable Conversion Price” which is defined in the note as “60% multiplied by the Marked Price.” “Market Price” is defined in the note as “the lowest one (1) Trading Price (as defined in the note) for the common stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date.” The note bears interest at a rate of 10 % per annum with principal and accrued and unpaid interest payable six months from the receipt of funds for each tranche under the note. Subscription funds of $ 30,000 were received by the Company from the investor on September 6, 2019 for which the Company paid a purchase price of $35,000. In addition to the notes, the Company issued to the investor an aggregate of 175,000 warrants. The warrants are considered equity instruments based on the Company’s adoption of ASU 2017-11. The proceeds received upon issuing the notes and warrants were allocated to each instrument on a relative fair value basis. The initial fair value of the warrants was $ 15,868 determined using the Black-Scholes valuation model with the following assumptions: expected term of 2.5 years; risk free interest rate of 1.4 %; and volatility of 132 %. The effective conversion rate resulted in a discount of $ 10,378 and is amortized to interest expense using the effective interest method over the term of the notes. As of March 31, 2020, the exercise price of the warrants was adjusted to $ 0.00084 and the number of warrants was increased to 41,666,667 as a result of the down-round features being triggered. This resulted in an adjustment to retained earnings of $ 203,002 based on the change in fair value. During the three months ended March 31, 2020, the note went into default upon passing its maturity date. As a result, a default penalty of $ 26,250 was recorded and added to the principal balance. In addition, the conversion price became the “Variable Conversion Price” as defined above. This note became convertible into a variable number of shares of common stock for which there is no floor to the number of shares that might be required to be issued. Based on the requirements of ASC 815, Derivatives and Hedging, the conversion feature represents an embedded derivative that is required to be bifurcated and accounted for as a separate derivative liability. The derivative liability is originally recorded at its estimated fair value and is required to be revalued at each conversion event and reporting period. Changes in the derivative liability fair value are reported in operating results each reporting period. The Company valued the conversion feature on the date of default resulting in initial liability of $ 159,888 , which was immediately expensed as loss on derivative. At each conversion date, the Company recalculated the value of the derivative liability associated with the convertible note recording a gain (loss) in connection with the change in fair market value. In addition, the pro-rata portion of the derivative liability as compared to the portion of the convertible note converted was reclassed to additional paid-in capital. For the year ended December 31, 2020, the Company recorded a loss of $ 114,051 related to the change of fair value of the derivative liability to additional paid-in capital. Upon issuance and at each conversion, reporting period date, and extinguishment date, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion prices ranging from $ 0.0008 to $ 0.0073 , the closing stock price of the Company's common stock on the date of valuation ranging from $0.0022 to $0.021, an expected dividend yield of 0 %, expected volatility ranging from 459 % to 574 %, risk-free interest rates ranging from 0.11 % to 0.39 %, and an expected term of 0.25 years. On May 20, 2020, the second closing of the Convertible Promissory Note occurred pursuant to which the Company paid a purchase price of $ 35,000 and received gross proceeds of $ 29,300 . In addition to the issuance of the note, the Company issued to the holder warrants to purchase one share of the Company’s Common Stock for 100% of the number of shares of Common Stock issuable upon conversion of the funds received in the second closing. Each warrant is immediately exercisable at $ 0.20 per share, unless adjusted, and expires on May 20, 2025 . F- 19 On July 29, 2020, the Company entered into a Settlement and Mutual Release Agreement with the lender pursuant to which the Company paid $ 100,000 to the lender in exchange for the full extinguishment of the remaining principal amount and all accrued and unpaid interest and penalties associated with the Convertible Promissory Note dated August 29, 2019 issued to the lender (approximately $62,000). All remaining unexercised warrants to purchase the Company’s Common Stock issued to the lender were also extinguished pursuant to the Settlement Agreement. Upon receipt of the Settlement Amount by the lender, the lender agreed to release all reserved shares of the Company’s Common Stock. The Settlement Agreement also provides for a full mutual release of the parties. The settlement payment was allocated to the extinguished debt and warrants based on their relative fair values. The difference in the settlement amount allocated to the debt components, including the related derivative liability, and the actual value of the debt components of $ 2,155 was recorded as a gain on extinguishment for the year ended December 31, 2020. The settlement amount allocated to the warrants of $ 1,609 was recorded as a reduction to additional paid-in capital. In addition, the remaining unamortized discount was fully amortized to interest expense upon the settlement. On February 1, 2021, the noteholder of Note F converted the principal balance of $ 66,833 of its convertible promissory note and $ 5,177 of accrued interest into 7,200,000 shares of common stock of the Company (Note 9). The Company recorded amortization of debt to interest expense of $ 1,925 and $ 25,484 for the years ended December 31, 2021 and 2020, leaving an unamortized debt balance of $ 3,637 and $ 0 at December 31, 2021 and 2020, respectively. The Company recorded interest expense of $ 3,903 and $ 742 for the years ended December 31, 2021 and 2020, respectively. Accrued interest payable on Note F was $ 1,712 and $ 2,986 as of December 31, 2021 and 2020, respectively. The principal balance payable on Note F amounted to $ 33,167 and $ 100,000 on December 31, 2021 and 2020, respectively. The noteholder of Note F agreed to extend the maturity date of the note from April 29, 2021 to April 29, 2022 (Note 11). The conversion shares totaled 3,487,893 shares of common stock upon conversion of the total principal and accrued interest of $ 34,879 as of December 31, 2021. F- 20 G . July 2020 Equity Financing Arrangement (“Note G”) On July 29, 2020, the Company entered an Equity Financing Agreement and Registration Rights Agreement with an investor, pursuant to which the investor agreed to purchase up to $5,000,000 in shares of the Company’s Common Stock, from time to time over the course of 36 months after effectiveness of a registration statement on Form S-1 of the underlying shares of Common Stock. In connection with entering into the Equity Financing Agreement, on July 29, 2020, the Company issued to the investor a Convertible Promissory Note in the principal amount of $ 100,000 (the “$100k Note”). The $100k Note matured on April 29, 2021 upon which time all accrued and unpaid interest was due and payable. Interest accrued on the $100k Note at 10% per annum based on a 360-day year. The $100k Note was convertible at any time, upon the election of the investor, into shares of the Company’s Common Stock at $0.01 per share. The $100k Note was subject to various “Events of Default,” which were disclosed in the $100k Note. Upon the occurrence of an uncured “Event of Default,” the $100k Note will become immediately due and payable and will be subject to penalties and adjustments to the conversion price (the lesser of: (a) $0.01 or (b) 70% multiplied by the Market Price (as defined in the $100k Note) (representing a discount rate of 30%). Upon the issuance of the $100k Note, the Company has agreed to reserve one times the number of shares of Common Stock into which the $100k Note is convertible and, 101 days from the issuance of the $100k Note, the Company will reserve two-and-a-half times the number of shares of Common Stock into which the $100k Note is convertible. Within three Trading Days (as defined in the $100k Note) of the sale by the investor of all of the Common Stock issued upon the conversion of the $100k Note, the Company is required to issue to investor a number of shares of Common Stock priced at the lowest traded price for the relevant Trading Day, which represents the difference between $130,000 and the net proceeds to the investor from the sale of aggregate Common Stock issued upon the conversion of the $100k Note. Also, in connection with entering into the Equity Financing Agreement, on July 29, 2020, the Company issued to the investor a Convertible Promissory Note in the principal amount of $75,000 (the “$75k Note”). No proceeds were received for this note as it was issued to offset future transaction costs related to any future issuances of equity under the agreement. As a result, the amount has been capitalized as deferred offering costs in the accompanying balance sheet and will be offset against any future proceeds received under the agreement. The $75k Note matures on April 29, 2022 upon which time all accrued and unpaid interest will be due and payable. Interest accrues on the $75k Note at 10% per annum based on a 360-day year. The $75k Note is convertible at any time, upon the election of the investor, into shares of the Company’s Common Stock at $0.01 per share. The $75k Note is subject to various “Events of Default,” which are disclosed in the $75k Note. Upon the occurrence of an uncured “Event of Default,” the $75k Note will become immediately due and payable (multiplied by 130% of the unpaid principal and accrued and unpaid interest) and will be subject to penalties and adjustments to the conversion price (the lesser of: (a) $0.01 or (b) 70% multiplied by the Market Price (as defined in the $75k Note) (representing a discount rate of 30%). Upon the issuance of the $75k Note, the Company has agreed to reserve one time the number of shares of Common Stock into which the $75k Note is convertible and, 101 days from the issuance of the $75k Note, the Company will reserve two-and-a-half times the number of shares of Common Stock into which the $75k Note is convertible. As of December 31, 2021 and 2020, the unpaid principal balance of Note G was $ 75,000 , and the accrued interest was $ 9,740 and $ 2,240 . The Company recorded interest expense of $ 7,500 and $ 5,226 for the years ended December 31, 2021 and 2020, respectively. The Company recorded amortization of debt to interest expense of $ 1,925 and $ 25,484 for the years ended December 31, 2021 and 2020, leaving an unamortized debt balance of $ 3,637 and $ 0 at December 31, 2021 and 2020, respectively. The conversion shares totaled 8,473,973 shares of common stock upon conversion of the total principal and accrued interest of $ 84,740 as of December 31, 2021. F- 21 NOTE 6 - EARNINGS (LOSS) PER SHARE The following table sets forth the computation of basic and diluted net loss per share of common stock for the three and nine months ended December 31, 2021 and 2020: Schedule of earnings per share Year ended December 31, 2021 2020 Net loss attributable to common stockholders (basic) $ ( 1,063,554 ) $ ( 2,236,774 ) Shares used to compute net loss per common share, basic and diluted 195,264,873 110,119,684 Net loss per share attributable to common stockholders, basic and diluted $ ( 0.01 ) $ ( 0.02 ) Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. The Company’s potentially dilutive securities which include stock options, convertible debt, convertible preferred stock and common stock warrants have been excluded from the computation of diluted net loss per share as they would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares outstanding due to the Company’s net loss position. The following outstanding common stock equivalents have been excluded from diluted net loss per common share for the years ended December 31, 2021 and 2020, respectively, because their inclusion would be anti-dilutive: Schedule of antidilutive shares As of December 31, 2021 2020 Warrants to purchase common stock 2,868,397 2,868,397 Potentially issuable shares related to convertible notes payable 328,816,461 273,594,437 Potentially issuable vested shares to directors and officers – 2,400,000 Potentially issuable unvested shares to officers – 3,600,000 Total anti-dilutive common stock equivalents 331,684,858 282,462,834 NOTE 7 - PAYCHECK PROTECTION PROGRAM LOAN The Company applied for and received funding from the Payroll Protection Program (the “ PPP Loan ”) in the amount of $ 36,700 under the Coronavirus Aid, Relief and Economic Security Act (the “ CARES Act ”). The PPP Loan matures on April 23, 2022 and bears interest at a rate of 1.0 % per annum. Monthly amortized principal and interest payments are deferred for six months after the date of disbursement (subject to further deferral pursuant to the terms of the Paycheck Protection Flexibility Act of 2020). The Promissory Note contains events of default and other provisions customary for a loan of this type. The Paycheck Protection Program provides that the use of PPP Loan amount shall be limited to certain qualifying expenses and may be partially or wholly forgiven in accordance with the requirements set forth in the CARES Act. On August 31, 2021, the Company received a notification from the Small Business Administration approving the forgiveness of the PPP Loan in the amount of $ 36,700 . The Company recorded the PPP Loan of $ 0 and $ 36,700 as a liability on its Balance Sheet at December 31, 2021 and 2020, respectively. F- 22 Supplemental Target Advance On July 7, 2021 and July 8, 2021, a commercial bank granted to the Company two payments of $5,000 each, under the authority and regulations of the U. S. Small Business Administration Supplemental Target Advance of the Coronavirus Aid, Relief, and Economic Security Act (The “CARES Act”). Such advances amounted to $10,000 and does not need to be repaid. The Company recorded $ 10,000 as other income in its statements of operations for the year ended December 31, 2021. NOTE 8 - RELATED PARTIES At December 31, 2021 and 2020, the amount due to two stockholders was $ 1,000 relating to depositing funds for opening bank accounts for the Company. The Company leases its current office facility on a month-to-month basis at a monthly rent of $250 starting January 1, 2020. For the year ended December 31, 2021 and 2020, rent expense earned by the stockholder amounted to $ 3,000 and $ 3,000 , respectively. The Company has recorded $ 750 and $ 16,500 of rent payable to the stockholder in accounts payable as of December 31, 2021 and 2020, respectively. The Company recorded professional fees paid to officers and a director amounting to $ 7,182 and $ 0 for the year ended December 31, 2020 and 2019, respectively. The Company awarded shares payable to officers and a director valued at $ 349,657 and $ 728,892 for the years ended December 31, 2021 and 2020, respectively, pursuant to the terms of an exchange agreement (Note 4). Shares payable to officers and a director were $ 0 and $ 730,836 at December 31, 2021 and 2020, respectively. The officers and a director converted shares payable valued at $ 1,062,986 into 3,543,288 shares of common stock for the year ended December 31, 2021, and shares payable valued at $ 415,350 into 15,845 shares of Series A Supervoting Convertible Preferred Stock during the year ended December 31, 2020. No convertible preferred stock was issued to related parties in 2021. NOTE 9 - STOCKHOLDERS' EQUITY Common Stock The Company has an authorized capital of 1,000,000,000 shares of $ 0.001 par value common stock and 10,000,000 shares of $ 0.001 par value preferred stock at December 31, 2021. The Company had 220,254,395 shares and 145,110,129 shares of common stock, and 25,896 shares and 25,845 shares of preferred stock, issued and outstanding as of December 31, 2021 and 2020, respectively. On January 4, 2021, pursuant to the authorization and approval previously provided by the stockholders, the Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of Nevada to increase its authorized shares of common stock, $0.001 par value per share, from 190,000,000 shares to 1,000,000,000 shares, which filing became effective on January 18, 2021. Common Stock Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available, therefore. In the event of liquidation, dissolution, or winding up of the Company, the holders of common stock are entitled to share pro rata in all assets remaining after payment in full of all liabilities. All of the outstanding shares of common stock are fully paid and non-assessable. Holders of common stock have no preemptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock. F- 23 On January 28, 2021, the noteholder of Note C converted the principal balance of $ 40,000 of its convertible promissory note and $ 6,510 of accrued interest, into 4,650,978 shares of common stock of the Company (Note 5). On February 1, 2021, the noteholder of Note F converted the principal balance of $ 66,833 of its convertible promissory note and $ 5,177 of accrued interest into 7,200,000 shares of common stock of the Company (Note 5). On February 4, 2021, the noteholder of Note A converted the principal balance of $ 50,000 of its convertible promissory note into 5,000,000 shares of common stock of the Company (Note 5). On February 24, 2021, the Company entered into a Common Stock Purchase Agreement with an investor pursuant to which the investor agreed to purchase up to $5,000,000 of the Company’s registered common stock at $0.015 per share. Pursuant to the Agreement, purchases may be made by the Company during the Commitment Period (as defined in the Agreement) through the submission of a purchase notice to the investor no sooner than ten business days after the preceding closing. No purchase notice can be made in an amount less than $10,000 or greater than $500,000 or greater than two times the average of the daily trading dollar volume for the Company’s common stock during the ten business days preceding the purchase date. Each purchase notice is limited to the investor beneficially owning no more than 4.99% of the total outstanding common stock of the Company at any given time. There are certain conditions precedent to each purchase including, among others, an effective registration statement in place and the VWAP of the closing price of the Company’s common stock greater than $0.0175 for the Company's common stock during the five business days prior to the closing. On February 26, 2021, March 16, 2021, April 14, 2021 and August 3, 2021, the investor purchased 8,000,000 shares, 8,400,000 shares, 8,900,000 shares and 10,200,000 shares of common stock for a cash consideration of $ 120,000 , $ 126,000 , $ 133,500 , and $ 153,000 , respectively. On April 1, 2021, the Company’s Chief Technology Officer resigned from his employment with the Company. In settlement of the Company’s total obligations with the officer upon separation, the Company issued 843,288 shares of its common stock valued at $ 252,986 as award shares payable pursuant to the Stock Incentive Plan for services performed (Note 8). On April 15, 2021, the noteholder of Note A converted the principal balance of $ 75,000 of its convertible promissory note into 7,500,000 shares of common stock of the Company (Note 5). On May 20, 2021, the Company issued to a consultant for services rendered, pursuant to a consulting agreement, 500,000 shares of common stock valued at the fair market price on the date of issuance of $ 7,800 . On May 20, 2021, the Company issued to a consultant for services, pursuant to a consulting agreement, 50,000 shares of common stock valued at the fair market price on the date of issuance of $ 900 . On June 15, 2021, the Company issued 1,500,000 shares of common stock valued at $ 450,000 to Company’s Chief Executive Officer in satisfaction of accrued shares payable compensation (Note 8). On July 28, 2021, the noteholder of Note A converted the principal balance of $ 80,000 of its convertible promissory note into 8,000,000 shares of common stock (Note 5). On November 23, 2021, the noteholders of Notes F and G agreed to extend the maturity date of their Convertible Promissory Notes in exchange of receiving 1,250,000 shares of common stock valued at the fair market price of $ 11,125 on the date of issuance (Note 6). On December 21, 2021, the Company issued 1,800,000 shares of common stock to the noteholder of Note F as commitment fee for making equity financing available to the Company. The Company recorded the fair value of such common stock issued at the fair market price of $ 15,300 on the date of issuance of common stock. F- 24 On December 21, 2021, the Company issued 1,200,000 shares of common stock to its Chief Operating Officer valued at $ 360,000 , and issued 150,000 shares of common stock to a consultant valued at $ 1,800 in satisfaction of accrued shares payable compensation (Note 8). As a result of all common stock issuances, the Company recorded 220,254,396 shares and 145,110,130 shares of common stock issued and outstanding at December 31, 2021 and December 31, 2020, respectively. Stock Incentive Plans On December 14, 2017 (the “Effective Date”), the Board of Directors of the Company approved the 2017 Stock Inventive Plan (the “2017 Plan”). Awards may be made under the 2017 Plan for up to 4,500,000 shares of common stock of the Company. All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company are eligible to be granted awards under the 2017 Plan. No awards can be granted under the 2017 Plan after the expiration of 10 years from the Effective Date but awards previously granted may extend beyond that date. Awards may consist of both incentive and non-statutory options, restricted stock units, stock appreciation rights, and restricted stock awards. On March 11, 2019 (the “Effective Date”) the Board of Directors of the Company approved the 2019 Stock Incentive Plan (the “2019 Plan”). Awards may be made under the Plan for up to 5,000,000 shares of common stock of the Company. All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company are eligible to be granted awards under the 2019 Plan. No awards can be granted under the Plan after the expiration of 10 years from the Effective Date but awards previously granted may extend beyond that date. Awards may consist of both incentive and non-statutory options, restricted stock units, stock appreciation rights, and restricted stock awards. Shares earned and issued related to the consulting agreements are issued under the 2017 Plan and the 2019 Plan (Note 4). Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the agreement) or the listing of the Company’s common stock on a senior exchange. A summary of the status of the Company’s non-vested shares as December 31, 2021 and 2020 and changes during the year then ended, is presented below: Summary of non-vested shares Non-vested Shares of Common Stock Weighted Average Fair Value Balance at December 31, 2019 6,000,000 $ 0.30 Awarded – – Vested ( 2,400,000 ) 0.30 Forfeited – – Balance at December 31, 2020 3,600,000 0.30 Awarded – – Vested ( 3,600,000 ) 0.30 Forfeited – – Balance at December 31, 2021 – $ 0.30 Preferred Stock Series A Supervoting Convertible Preferred Stock On July 2, 2020, the Board of Directors of the Corporation had authorized issuance of 15,600 shares of preferred stock, $ 0.001 par value per share, designated as Series A Supervoting Preferred Stock. Dividends: Initially, there will be no dividends due or payable on the Series A Supervoting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Corporation’s Articles of Incorporation. F- 25 Liquidation and Redemption Rights : Upon the occurrence of a Liquidation Event (as defined below), the holders of Series A Supervoting Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series A Supervoting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends. Liquidation Event means (i) the liquidation, dissolution or winding-up, whether voluntary or involuntary, of the corporation, (ii) the purchase or redemption by the corporation of the shares of any class of stock or the merger or consolidation of the corporation with or into any other corporation or corporations, or (iii) the sale, license or lease of all or substantially all, or any material part of, the Corporation’s assets. Conversion : Each holder of Series A Supervoting Preferred Stock may voluntarily convert its shares into shares of common stock of the Corporation at a rate of 1:100 (as may be adjusted for any combinations or splits with respect to such shares). Rank : All shares of the Series A Supervoting Preferred Stock shall rank senior to the Corporation’s (A) common stock, par value $0.001 per share, and any other class or series of capital stock of the Corporation hereafter created. Voting Rights : A. If at least one share of Series A Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series A Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. B. Each individual share of Series A Super Voting Preferred Stock shall have the voting rights equal to: [twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of Series A and any newly designated Preferred stock issued and outstanding at the time of voting}] Divided by: [the number of shares of Series A Super Voting Preferred Stock issued and outstanding at the time of voting] With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent , the holders of the outstanding shares of Series A Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Articles of Incorporation or Bylaws. On November 9, 2020, the Company awarded a director for services rendered, 1,000,000 shares of common stock valued at its fair value on the date of issuance of $8,600 and concurrently, exchanged the common stock for Series A Supervoting Convertible Preferred Stock, and accrued interest of $168 relating to the outstanding convertible note which was convertible into common stock, was converted into Series A Supervoting Convertible Preferred Stock. The Company issued 12,000 shares of Series A Supervoting Convertible Preferred Stock in exchange of $8,768 of services rendered and accrued interest for the year ended December 31, 2020. On December 31, 2020, the officers and a director converted $685,350 of their vested shares payable compensation costs into 2,284,500 shares of the Company’s common stock and $415,350 of their unrecognized compensation costs into 13,845 shares of the Company’s Series A Convertible Preferred Stock. As a result, total unrecognized compensation costs related to the non-vested share-based compensation arrangements awarded to employees were $730,836 and $1,102,645 as of December 31, 2020 and 2019, respectively. That cost is expected to be recognized over a weighted-average period of 0.5 years and 1.4 years as of December 31, 2020 and December 31, 2019, respectively. The total fair value of shares compensation recognized during the year ended December 31, 2020 and 2019, was $728,892 and $685,416, respectively. The Company did not issue any Series A Supervoting Convertible Preferred Stock during the year ended December 31, 2021. The Company had 25,845 shares of Series A Supervoting Convertible Preferred Stock issued and outstanding at December 31, 2021 and December 31, 2020, respectively. F- 26 Series B Convertible Preferred Stock Equity Financing On November 16, 2020, the Board of Directors of the Corporation had authorized issuance of up to 600 shares of preferred stock, $ 0.001 par value per share, designated as Series B Convertible Preferred Stock. Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value of $ 1,200 , subject to increase set forth in the Certificate of Designation. Dividends: Each share of Series B Convertible Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends of 12% per annum, payable quarterly, beginning on the Original Issuance Date and ending on the date that such share of Series B Convertible Preferred Share has been converted or redeemed (the “Dividend End Date”). Dividends may be paid in cash or in shares of Series B Convertible Preferred Stock. From and after the initial Closing Date, in addition to the payment of dividends pursuant to Section 2(a), each Holder shall be entitled to receive, and the Corporation shall pay, dividends on shares of Series B Convertible Preferred Stock equal to (on an as-if-converted-to-Common-Stock basis) and in the same form as dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of the common stock. The Corporation shall pay no dividends on shares of the common stock unless it simultaneously complies with the previous sentence. Voting Rights : The Series B Convertible Preferred Stock will vote together with the common stock on an as converted basis subject to the Beneficial Ownership Limitations (not in excess of 4.99% conversion limitation). However, as long as any shares of Series B Convertible Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series B Convertible Preferred Stock directly and/or indirectly (a) alter or change adversely the powers, preferences or rights given to the Series b Convertible Preferred Stock or alter or amend this Certificate of Designation, (b) authorize or create any class of stock ranking as to redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu with, the Series b Convertible Preferred Stock or, authorize or create any class of stock ranking as to dividends senior to, or otherwise pari passu with, the Series b Convertible Preferred Stock, (c) amend its Articles of Incorporation or other charter documents in any manner that adversely affects any rights of the Holders, (d) increase the number of authorized shares of Series B Convertible Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing. Liquidation : Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for each share of Series B Convertible Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. Conversion : Each share of Series B Convertible Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of common stock (subject to the limitations) determined by dividing the Stated Value of such share of Series B Convertible Preferred Stock by the Conversion Price. The Conversion Price for the Series b Convertible Preferred Stock shall be the amount equal to the lowest traded price for the Company’s common stock for the fifteen (15) Trading Days immediately preceding the date of such conversion. All such foregoing determinations will be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such measuring period. Following an event of default, the Conversion price shall equal the lower of : (a) the then applicable Conversion Price; or (b) a price per share equaling 80% of the lowest traded price for the Company’s common stock during the ten (10) trading days preceding the relevant Conversion. Redemption: The Series B Convertible Preferred Stock may be redeemed by payment of the stated value thereof, with the following premiums based on the time of the redemption. · 115% of the stated value if the redemption takes place within 90 days of issuance; · 120% of the stated value if the redemption takes place after 90 days and within 120 days of issuance · 125% of the stated value if the redemption takes place after 120 days and within 180 days of issuance; and · each share of Preferred Stock is redeemed one year from the day of issuance F- 27 On November 19, 2020, pursuant to the terms of a Securities Purchase Agreement dated November 16, 2020 (the “SPA”), the Company entered into a new preferred equity financing agreement with GHS Investments, LLC (“GHS”) in the amount of up to $600,000. The SPA provides for GHS’s purchase, from time to time, of up to 600 shares of the newly-designated Series B Convertible Preferred Stock. The initial closing under the SPA consisted of 45 shares of Series B Convertible Preferred Stock, stated value $1,200 per share, issued to GHS for an initial purchase price of $45,000, or $1,000 per share. At the Company’s option, and subject to the terms of the SPA and the Certificate of Designation for the Series B Convertible Preferred Stock (the “COD”), additional closings in the amount of 40 shares of Series B Convertible Preferred Stock for a total purchase price of $40,000 may take place at a rate of up to once every 30 days. In connection with the initial closing in the amount of 45 shares of Series B Convertible Preferred Stock, the Company issued an additional 25 shares of Series B Convertible Preferred Stock to GHS as a commitment fee. The Company’s ability to conduct additional closings under the SPA is subject to certain conditions, including the following: · The Company’s continued compliance with all covenants and agreements under the SPA and the COD, with no uncured defaults under the Company’s agreements with GHS; · The continued quotation of the Company’s common stock on the over-the-counter market or another trading market or exchange; · The average daily dollar trading volume for the Company’s common stock for the 30 trading days preceding each additional closing must be at least $10,000 per day; and · The closing market price for the Company’s common stock must be at least $0.01 for each of the 30 trading days preceding each additional closing. No additional closings may take place after the two-year anniversary of the SPA, or once the entire $600,000 amount has been funded. If the average daily dollar trading volume for the Company’s common stock for the 30 trading days preceding a particular additional closing is at least $50,000 per day, the Company may, at its option, increase the amount of that additional closing to 75 shares of Series B Convertible Preferred Stock ($75,000). The Series B Convertible Preferred Stock is classified as temporary equity, as it is convertible upon issuance at an amount equal to the lowest traded price for the Company’s common stock for the fifteen trading days immediately preceding the date of conversion. Based on the requirements of ASC 815, Derivatives and Hedging , the conversion feature represents an embedded derivative that is required to be bifurcated and accounted for as a separate derivative liability. The derivative liability is originally recorded at its estimated fair value and is required to be revalued at each conversion event and reporting period. Changes in the derivative liability fair value are reported in operating results each reporting period. On November 19, 2020 (the date of receipt of cash proceeds of $45,000 issuance), the Company valued the conversion feature of the derivative and recorded an initial derivative liability of $ 103,267 , $ 58,267 as day one loss on the derivative, $ 39,000 as interest expense, and $ 84,000 as Series B Convertible Preferred Stock mezzanine liability and $ 84,000 as amortization. At December 31, 2020, the Company recalculated the value of the derivative liability associated with the convertible note and recorded a loss of $ 39,266 in connection with the change in fair market value of the derivative liability. In addition, the Company recorded $900 as sales commission to complete this financing as of December 31, 2020. The Company recalculated the value of derivative liability associated with the convertible note in connection with the change in the fair market value of the derivative liability and recorded a gain of $ 48,683 for the year ended December 31, 2021. In addition, the Company recorded $ 10,080 and $ 1,160 as preferred dividend payable to GHS for the years ended December 31, 2021 and 2020, respectively. On November 19, 2020, December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.004 to $0.0141, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0070 to $0.0184, an expected dividend yield of 0%, expected volatility ranging from 200.53% to 440.99%, risk-free interest rates ranging from 0.07% to 0.38%, and an expected term of 1.50 to 0.38 years. F- 28 On December 16, 2020, pursuant to the terms of the SPA, GHS purchased an additional 85 shares of Series B Convertible Preferred Stock for gross proceeds of $ 85,000 . The Company paid $1,700 in selling commissions to complete this financing. On December 16, 2020 (the date of receipt of cash proceeds of $85,000 issuance), the Company valued the conversion feature of the derivative and recorded an initial derivative liability of $ 106,241 , $ 1,700 as interest expense, $ 102,000 as Series B Convertible Preferred Stock a mezzanine liability and $ 102,000 as amortization. At December 31, 2020, the Company recalculated the value of the derivative liability associated with the convertible note recording a loss of $ 67,008 in connection with the change in fair market value of the derivative liability. In addition, the Company recorded $ 503 as preferred stock dividend payable to GHS as of December 31, 2020. At December 31, 2021, the Company recalculated the value of derivative liability and recorded a gain of $ 54,223 in connection with the change in fair market value of the derivative liability. The Company recorded $ 12,240 as preferred stock dividend expense for the year ended December 31, 2021 and $ 12,743 as preferred stock dividend payable as of December 31, 2021. On December 16, 2020, December 31, 2020, March 31, 2021, June 30, 2021, September 30, 2021 and December 31, 2021, the Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $ 0.004 to $ 0.0141 , the closing stock price of the Company's common stock on the date of valuation ranging from $ 0.0063 to $ 0.0184 , an expected dividend yield of 0 %, expected volatility ranging from 431.65 % to 200.59 %, risk-free interest rates ranging from 0.39 % to 0.07 %, and an expected term of 1.50 to 0.46 years. As a result of receipt of cash proceeds relating to Series B Convertible Preferred Stock, the Company recorded derivative liability of $ 212,816 and $ 315,782 and Series B Convertible Preferred Stock liability of $ 186,000 and $ 186,000 at December 31, 2021 and 2020, respectively. Warrants A summary of the status of the Company’s warrants as of December 31, 2021 and 2020 and changes during the years then ended, is presented below: Summary of warrant activity Shares Under Warrants Weighted Average Exercise Price Weighted Average Remaining Contractual Life Outstanding at December 31, 2019 1,627,532 $ 0.21 4.5 Years Issued 43,082,532 $ 0.01 4.4 Years Exercised – – Expired/Forfeited ( 41,666,667 ) – Outstanding at December 31, 2020 3,043,397 $ 0.01229 4.0 Years Issued – – Exercised – – Expired/Forfeited ( 175,000 ) $ 0.20 Outstanding at December 31, 2021 2,868,397 $ 0.00084 3.4 Years NOTE 10 - INCOME TAXES Income tax expense for the year ended December 31, 2021 and 2020 is summarized as follows: Schedule of components of income tax expense (benefit) December 31, 2021 December 31, 2020 Deferred: Federal $ ( 223,346 ) $ ( 469,723 ) State ( 51,582 ) ( 108,484 ) Change in valuation allowance 274,929 578,206 Income tax expense (benefit) $ – $ – F- 29 The following is a reconciliation of the provision for income taxes at the U.S. federal income tax rate to the income taxes reflected in the Statement of Operations: Schedule of effective income tax rate reconciliation December 31, 2021 December 31, 2020 Tax at statutory tax rate 21.00 % 21.00 % State taxes 4.85 % 4.85 % Other permanent items – – Valuation allowance - 25.85 % - 25.85 % Income tax expense – – The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31, 2021 and 2020 are as follows: Schedule of deferred tax assets and liabilities December 31, 2021 December 31, 2020 Deferred tax assets: Net operating loss carry forward $ 1,465,996 $ 1,287,319 Total gross deferred tax assets 1,465,996 1,287,319 Less: valuation allowance ( 1,465,996 ) ( 1,287,319 ) Net deferred tax assets $ – $ – Deferred income taxes are provided for the tax effects of transactions reported in the financial statements and consist of deferred taxes related primarily to differences between the bases of certain assets and liabilities for financial and tax reporting. The deferred taxes represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled. On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Reform Act”) was enacted into law and the new legislation contains several key tax provisions that impact the Company, including a reduction of the corporate income tax rate to 21% effective for tax years beginning after December 31, 2017 and the Transition Tax, among others. The staff of the US Securities and Exchange Commission (SEC) has recognized the complexity of reflecting the impacts of the Tax Reform Act, and issued guidance in Staff Accounting Bulletin 118 (“SAB 118”) in December 2017, which clarifies accounting for income taxes under ASC 740 if information is not yet available or complete and provides for up to a one-year period in which to complete the required analyses and accounting (the measurement period). Adjustments to incomplete and unknown amounts will be recorded and disclosed prospectively during the measurement period. The Company has completed the required analysis and accounting for substantially all the effects. Except for the reduction of the income tax rate from 34% to 21%, there were no material impact on the Company’s financial statements. At December 31, 2021 and 2020, the Company had accumulated net operating losses of approximately $ 8,340,000 and $ 7,481,000 , respectively, for U.S. federal and Massachusetts income tax purposes available to offset future taxable incomes. The net operating losses generated in tax years prior to December 31, 2017, can be carry forward for twenty years, whereas the net operating losses generated after December 31, 2017 can be carry forward indefinitely. Management determined that it was unlikely that the Company’s deferred tax assets would be realized and have provided for a full valuation allowance associated with the net deferred tax assets. At December 31, 2021 and 2020, the Company’s deferred income tax assets and valuation allowance were $ 1,465,996 and $ 1,287,319 , respectively. In the ordinary course of business, the Company’s income tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessment by these taxing authorities. Accordingly, the Company believes that it is more likely than not that it will realize the benefits of tax positions it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with FASB ASC 740. Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. As of December 31, 2021, tax years 2020, 2019, and 2018 remain open for examination by the Internal Revenue Service and the Massachusetts Division of Revenue. The Company has received no notice of audit from the Internal Revenue Service or the Massachusetts Division of Revenue for any of the open tax years. F- 30 NOTE 11 - SUBSEQUENT EVENTS Management has evaluated subsequent events through the date of this Report, the date the financial statements were available to be issued, noting the following items that would impact the accounting for events or transactions in the current period or require additional disclosure. On February 7, 2022, the Company sold 51 shares of Series B preferred stock to GHS Investments, LLC for a cash consideration of $51,000. The Company paid a sales commission of $1,000. On March 14, 2022, the Company entered into amendments to each of the Notes A and D effective March 1, 2022 which extend the maturity dates to March 1, 2023, reduce the conversion price to $0.008 per share, add an additional Event of Default (as defined in the Notes) that the closing price of the shares of Common Stock on the Trading Market (as defined in the Notes) is less than $0.008 per share for ten (10) consecutive Trading Days (as defined in the Notes), and adding automatic one-year extensions as long at either Note is not in default. On March 18, 2022, the Board of Directors of the Company approved the 2022 Stock Incentive Plan (the “ Plan ”). Awards may be made under the Plan for up to 20,000,000 shares of common stock of the Company. All of the Company’s employees, officers and directors, as well as consultants and advisors to the Company are eligible to be granted awards under the Plan. No awards can be granted under the Plan after the expiration of 10 years from the Effective Date but awards previously granted may extend beyond that date. Awards may consist of both incentive and non-statutory options, restricted stock units, stock appreciation rights, and restricted stock awards. On March 24, 2022, the Company issued 136 shares of Series B Preferred stock to GHS Investments, LLC at the purchase price of $1,000 per share for cash proceeds of $136,000. On April 4, 2022 (the “Issuance Date”), the Company was issued a 10% Unsecured Convertible Promissory Note (the “Note”) in the principal amount of $200,000 by Aretas Sensor Networks Inc., a company incorporated under the laws of the Province of British Columbia (“ Aretas ”). The purchase price of the Note was $192,500 with a discount of $7,500. The Note matures on April 4, 2024 at which time the Company has the option to either receive the principal amount or shares of Aretas representing 3.23% of the fully-diluted share capital of Aretas. Within 30 days of the Issuance Date of the Note, an interest payment of $20,000 is due and, within six months of the Issuance Date, a final interest payment of $20,000 is due. The Note may be prepaid at any time by Aretas upon 10 days’ written notice to the Company. Upon an Event of Default, as defined in the Note, interest will accrue at 20% and, if conversion shares are not issued to the Company by Aretas, Aretas will pay to the Company $1,000 per day until the shares are issued. On April 6, 2022, the Company and noteholder of Note B agreed to extend the maturity date of the promissory note to March 1, 2024. On April 8, 2022, the Company sold 7,828,223 shares of common stock to GHS Investments LLC for $98,635.60. The Company paid selling commissions to the broker of $1,972.71. F- 31