Kisses From Italy Inc. 10-K

Table of Contents U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________ FORM 10-K __________________ ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31 , 2022 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________________ TO ________________________. Commission File Number 000-52898 Kisses From Italy, Inc. (Exact name of registrant as specified in its charter) Florida 46-2388377 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 80 SW 8th St. Suite 2000 Miami , Florida 33130 (Address of principal executive offices) 305 423-7129 (Issuer’s Telephone Number) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered N/A N/A Securities registered pursuant to Section 12(g) of the Act: (Title of each class) Common Stock, par value $0.001 per share Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☑ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☑ Smaller reporting company ☑ Emerging growth company ☑ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑ State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter on June 30, 2022, was $ 1,256,937 . As of March 31, 2023, the Registrant had 210,220,534 shares of Common Stock issued and outstanding. TABLE OF CONTENTS Page No. PART I Item 1. Business 1 Item 1A. Risk Factors 9 Item 1B. Unresolved Staff Comments 9 Item 2 Properties 9 Item 3. Legal Proceedings 10 Item 4. Mine Safety Disclosures 10 PART II Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities 11 Item 6. Selected Financial Data 11 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 15 Item 8. Financial Statements and Supplementary Data 15 Item 9. Changes in and Disagreements on Accounting and Financial Disclosure 16 Item 9A. Controls and Procedures 16 Item 9B. Other Information 17 Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections 17 PART III Item 10. Directors, Executive Officers, and Corporate Governance 18 Item 11. Executive Compensation 20 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 21 Item 13. Certain Relationships and Related Transactions, and Director Independence 22 Item 14. Principal Accounting Fees and Services 22 PART IV Item 15. Exhibits, Financial Statement Schedules 24 Item 16. Form 10-K Summary 26 Signatures 27 i FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. The statements regarding Kisses from Italy, Inc. contained in this Report that are not historical in nature, particularly those that utilize terminology such as “may,” “will,” “should,” “likely,” “expects,” “anticipates,” “estimates,” “believes” or “plans,” or comparable terminology, are forward-looking statements based on current expectations and assumptions, and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. All forward-looking statements speak only as of the date of this Report. Except to the extent required by law, we undertake no obligation to update any forward-looking statements or other information contained herein. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions, and expectations reflected in or suggested by the forward-looking statements in this Report are reasonable, we cannot assure you that these plans, intentions, or expectations will be achieved. ii PART I ITEM 1. BUSINESS Overview Overview Kisses From Italy Inc. (together with its subsidiaries, hereinafter referred to as “us,” “our,” “we,” or the “Company”) was incorporated in the State of Florida on March 7, 2013, with a focus on developing a fast, casual food dining chain restaurant business. The Company operates through its wholly-owned subsidiaries, Kisses From Italy 9 th LLC, Kisses From Italy-Franchising LLC, Kisses From Italy, Inc. (Canada) (a company incorporated under the laws of Canada and registered in Quebec on December 23, 2020), and Kisses From Italy Italia SRLS (a limited liability company incorporated in Italy), and its 70% owned subsidiary, Kisses-Palm Sea Royal LLC. We commenced operations by opening our initial corporate-owned restaurant in Fort Lauderdale, Florida in May 2015. By April 2016, we opened three additional restaurants located in various Wyndham Hotel properties in the Pompano Beach, Florida area. In September 2017, Hurricane Irma caused significant damage to the area, which resulted in Wyndham halting operations at its hotel properties for repairs and renovations and the closure of our Wyndham hotel locations. In December 2017, we vacated one of our restaurants in the Wyndham Hotel properties due to damage from the hurricane and have not re-opened such restaurant. During the first half of 2021, we consolidated the remaining two Wyndham stores into one location. While our Fort Lauderdale location was reopened in early November 2017, we were only able to reopen two of the hotel locations in Pompano Beach in late January 2018. We also elected not to reopen our fourth location, as the damages were too excessive. If we can raise additional capital, of which there is no assurance, we intend to own and operate up to 10 restaurants and utilize them as a showcase in the marketing of our proposed franchise operations. In May 2017, we completed our National Franchise License which permits us to sell franchises in all of the states in the United States except for New York, Virginia, and Maryland, which licenses we hope to obtain if sufficient demand exists in the future. We opened our first European location in Ceglie del Campo, Bari, Italy, in October 2019. The Bari location closed in April 2020 due to the Covid-19 pandemic, briefly re-opened and has not re-opened as of the date of this Report. Such location was intended to serve as the distribution center for products for European locations, as well as to be used as a training facility for European franchises. However, this initiative has been severely curtailed due to the onset and lingering impact of Covid -19 in Europe. Our two corporate-owned restaurants, one located in Fort Lauderdale, Florida, and one within the Wyndham location in Pompano Beach, Florida, have fully re-opened without limitation or any social distancing requirement. In September 2019, the Company's common stock was approved for trading by FINRA and in October 2019 was approved for uplisting by the OTC Markets Group to the OTCQB under the symbol “KITL”. 1 In June of 2020, the Company entered into a multi-unit development agreement (the “Development Agreement”) pursuant to which it granted development rights to Demasar Management, Inc. (“Demasar”) to open and operate up to 100 restaurants in Canada. Under this Development Agreement, the developer is obligated to open a minimum of 20 restaurants by June 17, 2025. On November 20, 2021, we opened a franchise location under the Development Agreement in Montreal, Quebec, Canada. The Company expects to generate franchise fees from its franchise locations once the franchises become established. In September of 2020, we entered retail food and grocery stores with Kisses From Italy branded products in Canada. The product launch began in November of 2020 and Kisses From Italy branded products were in nine retail stores by the end of 2020. Currently, Kisses From Italy branded products are in 40 stores across Ontario and Quebec, Canada. In April of 2021, we entered into a Consulting Agreement (the “Consulting Agreement”) with Fransmart, LLC, a Delaware limited liability company (“Fransmart”), pursuant to which we engaged Fransmart as our exclusive global franchise developer and representative for a period of ten years. In June of 2021, the Company’s first franchise location opened in Chino, California. In November of 2021, the Company opened its second franchise location in Montreal, Canada. The Company has not generated any franchise fees during the years ended December 31 2022 and 2021 respectively. On March 9, 2022, the Company filed Articles of Amendment to its Articles of Incorporation to increase the number of its authorized common stock from 200,000,000 shares to 300,000,000 shares. Such action was approved by the Board of Directors on January 25, 2022 and a majority of the Company’s shareholders on January 27, 2022. The purpose of the share increase was to make available additional shares of common stock to meet the current obligations of the Company to issue common stock, including under outstanding convertible securities. RECENT DEVELOPMENT On April 11, 2022, the Company entered into a securities purchase agreement, dated as of April 6, 2022, (the “Talos Purchase Agreement”) with Talos Victory Fund, LLC, a Delaware limited liability company (“Talos”), pursuant to which the Company issued to Talos a promissory note in the principal amount of $165,000 (the “Talos Note”). The Company received $148,500 gross proceeds from Talos due to the original issue discount on the Talos Note. In connection with the execution and delivery of the Talos Purchase Agreement and the issuance of the Talos Note, the Company issued to Talos 500,000 commitment shares and a warrant to purchase an additional 1,650,000 shares of common stock of the Company. On April 13, 2022, the Company entered into a securities purchase agreement, dated as of April 11, 2022, (the “Blue Lake Purchase Agreement”) with Blue Lake Partners, LLC, a Delaware limited liability company (“Blue Lake”), pursuant to which the Company issued to Blue Lake a promissory note in the principal amount of $165,000.00 (the “Blue Lake Note”). The Company received $148,500 gross proceeds from Blue Lake due to the original issue discount on the Blue Lake Note. In connection with the execution and delivery of the Blue Lake Purchase Agreement and the issuance of the Blue Lake Note, the Company issued to Blue Lake 500,000 commitment shares and a warrant to purchase an additional 1,650,000 shares of common stock of the Company. On May 13, 2022, the Company entered into a securities purchase agreement, dated as of May 11, 2022, (the “Fourth Man Purchase Agreement”) with Fourth Man, LLC (“Fourth Man”), pursuant to which the Company issued to Fourth Man a promissory note in the principal amount of $150,000 (the “Fourth Man Note”). The Company received $135,000 gross proceeds from Fourth Man due to the original issue discount on the Fourth Man Note. In connection with the execution and delivery of the Fourth Man Purchase Agreement and the issuance of the Fourth Man Note, the Company issued to Fourth Man, 607,000 commitment shares and a warrant to purchase an additional 1,500,000 shares of common stock of the Company. Each of the notes bears interest at 12% and has a fixed price conversion to common stock at $0.025 per share. 2 On July 26, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with 1800 Diagonal Lending LLC, a Virginia limited liability company (the “Lender”), pursuant to which the Company issued the Lender a promissory note in the principal amount $70,000 (the “Note”). The Note bears interest at a rate of 9% per annum and is due and payable on July 26, 2023. Upon an event of default under the Note, the interest increases to 22%. The Company has the right to prepay the Note in full at any time upon three trading days’ prior written notice, subject to a prepayment penalty if the Note is prepaid on or before January 22, 2023. The prepayment penalty is equal to 20% of the outstanding principal and interest under the Note for prepayment made on or before September 24, 2022, 25% of the outstanding principal and interest under the Note for prepayment made between September 25, 2022 and November 23, 2022 and 29% of the outstanding principal and interest under the Note for prepayment made between September 26, 2022 and January 22, 2023. The Note is convertible at the option of the Lender at any time after January 22, 2023 at a conversion price equal to 65% of the lowest closing bid price of the Company’s common stock on the OTCQB market or other applicable exchange during the ten trading days preceding the conversion date, provided that no such conversion may result in the Lender and its affiliates beneficially owning more than 4.99% of the then outstanding shares of the common stock of the Company. For as long as the Note is outstanding, the Company must have authorized and reserved, free of preemptive rights, six times the number of shares issuable upon full conversion of the Note (initially 25,846,153 shares), subject to the 4.99% beneficial ownership limitation. The Company entered into a Strategic Alliance Agreement, effective as of March 1, 2023 (the “SAA”), with SC Culinary LLC, a New York limited liability company (“SC Culinary”). SC Culinary is currently the creator and owner of, and in possession of, a quick-service food concept (the “Concept”) and is developing and will develop all intellectual property rights related to the Concept (the “Intellectual Property Rights”), all of which were or will be developed or acquired by SC Culinary, independently, or assigned to it by Scott Conant. Scott Conant, who owns all rights in and to his name, voice, image, and likeness (the “NIL Rights”), has granted SC Culinary the exclusive right to license the NIL Rights to third parties. Pursuant to the SAA, SC Culinary will license its interest in the Concept, the Intellectual Property Rights, and the NIL Rights (collectively, the “License”) to a wholly-owned subsidiary of the Company to be established (the “Subsidiary”) for the purpose of developing the Concept into the business of the Subsidiary (the “Brand”). In consideration for the use of the License under the SAA, SC Culinary is entitled to receive certain minimum cash payments and restricted shares of common stock of the Company (the “Shares”) upon the achievement of certain milestones. Notwithstanding the foregoing, the issuance of the Shares to SC Culinary is subject to anti-dilution protection, wherein the Company shall issue SC Culinary additional shares of common stock in order to maintain the percentage owned by SC Culinary in the Company at the time of the issuance. The SAA terminates on the tenth (10th) anniversary of the effective date but may automatically renew for successive five (5) year periods unless either party provides ninety (90) days’ notice of termination. SC Culinary is entitled to terminate the SAA in the event of default by the Company and the Subsidiary. In the event of termination, SC Culinary shall have the absolute right to cause the Subsidiary and the Company to cease to operate the Brand except for the limited purposes of honoring existing franchise agreements. In such an event, SC Culinary will grant the Subsidiary a limited license to use the Brand and SC Culinary’s rights in the Intellectual Property solely in connection with and for the term of the existing franchise agreements (with no further rights of expansion). In the event that SC Culinary terminates the SAA for any reason, SC Culinary shall have the sole and absolute right to use, exploit and operate the Brand and all Intellectual Property separate and apart from the Company without the payment of any amounts or other consideration to the Company, the Subsidiary or relevant third parties or the need for the approval of any kind from the Company or relevant third parties. 3 OUR STRATEGY We strive to provide the highest level of service, high-quality ingredients, and products. Enveloped in our mission is our philosophy to support and partner with local producers and suppliers within the regions in order to provide a truly authentic experience to our customers. Our vision is to leverage the success of our flagship store and our initial hotel locations in the South Florida market and to expand into other regions on a local, state, national, and global level. The main focus is doing so through our continued corporate-owned store expansion, along with the development and sales of additional locations through the advancement of our franchise and territorial rights program. Our Menu Our menu includes grilled paninis including an Italian style Panini, sausage, beef, sliced pork, or chicken topped with quality natural “sott'olio” (grilled and marinated vegetable) products at prices ranging from $5.95 to $7.95. We also offer deli paninis including fresh cheese Panini, prosciutto, salami, capocollo, bresaola, and turkey panini’s ranging in price from $5.95 to $7.95. All our panini’s include lettuce, tomato, and one choice of cheese and three choices of marinated vegetables, or three choices of grilled vegetables. We also offer desserts including a Nutella sandwich, a variety of fresh Danish, cannoli, Italian biscotti, sfogliatelle or a corneti, ranging in price from $1.50 to $2.50. Our breakfast menu is served all day We also have a full coffee and tea favorites, including espresso, cappuccino, and other coffee drinks, soft drinks, bottled water, and juices, as well as various flavors of granite (ices). Our vision is to transport true authentic and rustic taste from the provinces of Italy through our menu items. We intend to offer products that will cater to all diets, including gluten-free diets and emphasize fresh products with no preservatives. All our sott'olio and coffee products are made in Italy. Our management is in constant communication with our product manufacturers and search for high quality and authentic products from different regions from Southern Italy including Sicily, Calabria, Puglia, Napoli, Potenza, and Toscana. Ensuring freshness and quality, our representatives work closely with local farmers and ranchers for all meats and fresh vegetables. All our products are D.O.P. (Protected Designation of Origin) certified and defined in the European Commission Regulations. Quick Service Restaurants Our initial restaurant is located at 3146 NE 9 th Street in Fort Lauderdale, Florida. This location is across the street from an Atlantic Ocean public beach and consists of approximately 1,000 square feet of a retail restaurant with seating for up to 25 guests. Subsequently, we opened three additional similar restaurants, all in Southern Florida. Except for the Fort Lauderdale location, all of our restaurant locations arose out of a relationship we established with Wyndham Vacation Ownership, Inc., which operates timeshare apartment complexes. Of our three restaurants, two are located in Wyndham timeshare resort properties where they are the only restaurants on site. Our lease agreements provide for our restaurants to provide room service that can be charged to the customer’s room, as well as an opportunity to provide food and beverage service to various sales, orientations, marketing, and owner events held by Wyndham regularly on these properties. Wyndham remits payments for these services bi-weekly and charges us with a 5% administrative fee for processing costs. Each location is managed by one senior employee/manager and individually assessed based on foot traffic, seasonality, and other demographic factors. Our U.S. locations abide by the standards and rules set forth by the State of Florida Department of Health, and our Italian location abides by the standards and rules set forth by Italy’s Ministry of Health and the Puglia (Apulia) region’s legislative/administrative authority. Michele Di Turi, our CEO, possesses the Certified Food Manager accreditation and has the proper authority to provide necessary food safety courses. 4 Restaurant Franchising In addition to opening our company-owned restaurants, we are engaged in franchising our restaurant concept so that we can build market share and brand awareness. In May 2017, we completed our National Franchise License which permits us to sell franchises in all of the states in the United States except for New York, Virginia, and Maryland which we intend to add at later dates if sufficient demand exists. On June 23, 2017, we completed the sale of our initial two Florida franchises at a price of $15,000 per location. These locations are set to be developed at a later date. In June 2021 and November 2021 the Company opened its first two franchise locations in Chino, California and Montreal, Canada, respectively. Due to the onset of Covid-19 the Company has temporarily waived any franchise fees at both locations so that the franchisees could establish operations at each of those locations. In June 2020, the Company entered into the Development Agreement pursuant to which it granted development rights to Demasar to open and operate up to 100 restaurants in Canada. Demasar will be taking the lead for franchise expansion and assisting in the Canadian brand building for the Kisses From Italy brand. Each of our franchise restaurants are required to conform to a standard of interior design, featuring a distinctive and comfortable Italian décor. Our prior approval is required for each specific location of a proposed franchise restaurant, which includes a requirement that the same be in a clearly identifiable commercial location built out in accordance with our standards. Franchisees are also required to satisfactorily complete training and purchase certain equipment and supplies from us and other approved suppliers. We also require the purchase of a point-of-sale system and data polling services from a specified supplier and a computer system that meets established system standards. Franchisees will be required to purchase approximately 90% to 95% of their supplies and food inventory either directly from us, or from approved suppliers. We attempt to negotiate system-wide volume discounts and/or rebates for our franchisees from approved suppliers and if successful, pass such discounts and/or rebates on to franchisees based on the volume of their purchases from the suppliers providing the discounts. Our franchise agreement with franchisees also requires our franchisee to pay royalties of 9% of gross sales, which are defined to be total actual charges for all products (food and non-food) and services, such as catering and delivery, sold to customers, exclusive of taxes, every week. We retain 6% of this royalty and the remaining 3% goes towards a marketing fund. The marketing fund is broken down in two parts, 2% for local marketing and 1% for national marketing. We anticipate that until national coverage is warranted, local and/or regional marketing campaigns will be implemented. We also require that our franchisee enter into a collateral assignment and assumption of lease through which we are granted a security interest in all of the furniture, removable trade fixtures, inventory, licenses, and supplies located in the restaurant as collateral for (1) the payment of any obligation owed to us, (2) any default or breach under the terms of the lease, and (3) any default or breach of any of the terms and provisions of the franchise agreement. In the event of a breach of or default under the lease or payment by a franchisee as a result of a breach or default, we may be entitled to possession of the restaurant and all of our rights, title, and interest in and to the lease. We also enter into a conditional assignment of telephone numbers and listings that assigns us telephone numbers and directory listings upon termination or expiration of a franchise relationship. The initial term of a franchise agreement is ten years, with a renewal provision of between 2-5 years on the terms and conditions of the franchise agreement so long as there has been substantial compliance with the franchise agreement and pay a to-be-determined fee for each renewal. 5 Franchisees are also required to replace any franchise that terminates or expires or any restaurant that closes within the territory if necessary, to maintain the number of our named restaurants required in the development schedule. If a franchisee fails to meet the development schedule, we have the right to terminate the franchise agreement or adjust that territory to eliminate any state in the territory where they have not achieved the minimum number of restaurants required for that state. We are required to perform the following services: · Solicitation of new franchise owners - Actively and continuously market and promote through advertising and solicit prospective franchise owners in their territory according to an annual plan and budget that a franchisee develops and submits for our approval. · Site selection, leasing, and build-out - Consult and advise franchise owners with site selection and lease negotiation of the restaurants. Develop and maintain relationships with landlords for purposes of obtaining sites for restaurants and coordinating efforts with franchise owners to lease such sites. Develop relationships with landlords, contractors, equipment suppliers, and service providers in the territory and assist in the supervision of the build-out for the restaurants in our territory. · Training - Provide all initial training to the franchise owners, as well as supplemental and refresher training at our training restaurant. Schedule and coordinate all training of all franchise owners with our required mode of operations. · Opening assistance - Provide grand opening support, including coordinating marketing with local television, radio, newspapers, and trade publications. Provide franchise owners with supervisory assistance and guidance in connection with the opening and initial operations of their restaurants. Provide pre-opening and post-opening assistance for each new restaurant. · Monitoring, audit, and inspection - Be responsible for at least monthly monitoring of the operation of their restaurants, including monitoring and reporting of the sales volume and other data as determined from time to time. Monitor and communicate to our franchisee the marketing efforts of our restaurants. Conduct or assist franchisees with inspecting or auditing restaurants and their owners, with visits no less than monthly and in-depth reports at least quarterly. · Vendors and suppliers - Notify vendors and, if necessary, locate new vendors for the franchises and coordinate distribution and purchasing programs. Assist franchisees in developing programs for suppliers and distributors of approved products. Maintain positive relationships and evaluate additional incentive programs and marketing programs from approved and preferred suppliers, vendors, and other designated parties. · Continuing assistance to franchise owners - Provide continuing operating assistance and assist in facilitating transfers and renewals of franchises. Assist franchise owners during transfers of their franchises or restaurants. We also require our franchisees to maintain certain staffing levels. For the first development year, we require each location to have 2 corporate employees, increasing to 3 in the fifth development year. If a franchisee fails to perform services and we need to assume such tasks, we require that they pay us an amount equal to 125% of the expenditures incurred by us. and we have the right to terminate the agreement after notice of a 30-day cure period. Each franchisee must refer all inquiries for franchises in their territory to us. Under the terms of an Area Representative Agreement, we have the sole right to grant franchises in all our unsold territories, terminate a franchise agreement, and approve site selections, leases, and other franchise real estate transactions. Franchise Marketing Our marketing strategy for establishing multi-unit franchises is to contact individuals or entities that have previously developed franchises in other concepts. This strategy allows us to find people with the proper knowledge, experience, and financial resources to develop a successful franchise operation in a timely fashion. 6 We seek individuals or groups with the skills and financial strength to operate multi-unit franchise organizations within specific geographic territories. We anticipate that a franchise territory will consist of areas that are either cities or counties depending on population. We seek to identify people with considerable experience in the management of food service venues who also have sufficient start-up capital to open several of our restaurants. We have entered into discussions with several possible franchise owners, however. we currently have no franchise agreements. We will consider the skills and investment capital that each potential multiple franchise owner presents to determine the size and nature of the territory and the minimum number of our restaurants that the franchise owner will be required to maintain in the territory in order keep the exclusive rights to that territory. We will review the demographics of each proposed location to consider the appropriate number of restaurants in each area based upon population and other factors including per capita income and then set the minimum number of restaurants at half the amount. Franchisees will not be restricted from opening additional restaurants beyond the minimum for their territory. We have not yet generated revenue from the sourcing of franchises and there are no assurances we will ever generate revenues from this business concept. Commissary System We plan to develop centralized commissary facilities that will serve all of the restaurants that we own in a given region. We believe that a commissary that serves a region of restaurants will improve efficiency and consistency for the restaurant concept. We also believe that a commissary system will allow our restaurants to be approximately 500 square feet smaller than they would otherwise be. We plan to build commissaries in areas with lower rent. In this manner, we plan to save the difference between the 500 fewer square feet that retail rental space would cost and the commissary’s costs located in a lower-rent area. Our commissary will have storage space for paper products as well as walk-in coolers to store food. Food preparation for sauces, salad dressings, and other base ingredients will be done in the commissary “clean room” and then delivered to local restaurants daily. We believe central food preparation of sauces and base ingredients will maintain the consistency of our restaurants’ products and possibly reduce labor costs. Restaurant Advertising Our advertising has and will consist primarily of newspaper print ads, direct mailing efforts and also through social media, including Facebook, Twitter, and other social media outlets. We also participated in other forms of advertising. For example, we intend to use an airplane to advertise our Kisses banner to the Fort Lauderdale beach crowd, offering promotional free coffee and T-shirts. Our ads will contain a coupon for a free coffee with the purchase of any meal item. As we open restaurants in new markets we plan to duplicate the advertising effort we employed in Fort Lauderdale and to spend initially approximately 2% to 3% of monthly revenue for local advertising on a per company-owned restaurant basis. Since we plan to build multiple restaurants simultaneously within a specific geographic region, we believe our advertising cost as a percentage of revenue will decrease as we increase the number of restaurants within a region. There are no assurances we will successfully open multiple restaurants in the future. Employees We currently employ 8 full-time persons, plus our officers. We do not have any part-time employees. Our employees work at will and are not represented by a collective bargaining unit. We believe our relationship with our employees is excellent in most cases. We require all our employees and consultants to sign a confidentiality and non-disclosure agreement. Our success relies on our ability to hire additional employees, particularly on the local sales side. We believe there are numerous quality people to choose from throughout our area of targeted expansion. As we grow we anticipate we will require a franchise director and a Chief Financial Officer/Controller, as well as various administrative support personnel. 7 Competition The fast-food segment of the restaurant industry is highly competitive and fragmented. In addition, fast food restaurants compete against other segments of the restaurant industry, including fast-casual restaurants and casual dining restaurants. The number, size, and strength of our competitors vary by region. Our competitors also compete based on a number of factors, including taste, the speed of service, value, name recognition, restaurant location, and customer service. The restaurant industry is often affected by changes in consumer tastes; national, regional, or local economic conditions; currency fluctuations; demographic trends; traffic patterns; the type, number, and location of competing food retailers and products; and disposable purchasing power. Our restaurant concept is expected to compete with international, national, and regional restaurant chains as well as locally-owned restaurants. We will compete not only for customers, but also for management and hourly personnel, suitable real estate sites, and qualified franchisees. We believe that each of the following restaurants may provide competition to our proposed restaurants because they all are franchise operations that sell sandwiches and coffee: · Jimmy John’s · Subway · Chipotle Mexican Grill · Miami Subs Grill · Starbucks Of the above-listed restaurants, all are larger and have significantly greater financial resources than we currently have available. Government Regulations We are subject to various federal, state, and local laws affecting our business. Our restaurants must comply with licensing and regulation by a number of governmental authorities, which include health, sanitation, safety, and fire agencies in the state or municipality in which the restaurant is located. In addition, we must comply with various state laws that regulate the franchisor/franchisee relationship. We are also subject to federal and state laws governing employment and pay practices, overtime, tip credits, and working conditions. The bulk of our employees are paid on an hourly basis at rates related to the federal and state minimum wages. We are also subject to federal and state child labor laws which, among other things, prohibit the use of certain “hazardous equipment” by employees 18 years of age or younger. Under the Americans with Disabilities Act, we could be required to expend funds to modify our restaurants to better provide service to, or make reasonable accommodation for the employment of disabled persons. We continue to monitor our facilities for compliance with the Americans with Disabilities Act in order to conform to its requirements. We believe future expenditures for such compliance would not have a material adverse effect on our operations. As a potential franchisor, we will be soliciting prospects for franchises and are subject to federal and state laws pertaining to franchising. These laws require that certain information be provided to franchise prospects at certain times and regulate what can be said and done during the offering process. Some states require the franchise offering circular to be registered and renewed on an annual basis. 8 Trademarks and Patents We have applied for and received a registered trademark of our logo in Italy, No. 0001 528191. This trademark expires in September 2029. We have also obtained the registered trademark of our logo in the United States (the United States Patent and Trademark Office) Serial No. 87138230. This trademark expires in August 2026. Both trademarks are subject to automatic renewal if the Company pays the renewal fees. ITEM 1A. RISK FACTORS We are a smaller reporting company and not required to include this disclosure in this Report. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES As of December 31, 2021 the Company had three operating restaurants. The Company leases these spaces based upon the following schedules: · Kisses From Italy 9 th LLC based in Fort Lauderdale, Florida leases approximately 990 square feet and has paid $3,273 per month since 2018, pending completion of the required renovations to the exterior and interior of the property necessitated due to hurricane damage that occurred to the location in 2018. The landlord has been very slow in making these changes. It was agreed upon that when work was completed, and approved by the City of Fort Lauderdale, the rent would be increased to the market rate at that time. Beginning on May 1, 2021, the rent increased to $5,857.50 per month and was renewed by the Company for an additional five-year term with standard annual escalator costs. · Kisses-Palm Sea Royal LLC based in Pompano Beach, Florida leases approximately 2,300 square feet for $3,933 per month. The Company has a one-year automatic renewal provision for this lease on May 1 st of each year under the same terms. · Kisses From Italy Italia SRLS based in Bari, Italy, leases approximately 2,200 square feet of space for 1,400 euros per month under the terms of a nine-year lease which ends on May 5, 2024 and has an optional automatic renewal provision for nine years. The Company is in the process of negotiating new terms for the lease. Both parties have agreed no rent payments will be submitted, until new terms are agreed upon. 9 During the three months ended March 31, 2022, the Company adopted ASC 842, and based on the present value of the lease payments for the remaining average lease term of the Company’s existing leases noted above, the Company recognized $562,030 in noncurrent ROU assets, $88,469 in current lease liabilities and $473,561 in noncurrent lease liabilities from operating leases. For the year ended December 31, 2022 and 2021, the Company recorded rent expenses related to lease obligations of $133,526 and $130,198 respectively. Rent expenses related to lease obligations in operating expenses in the Company’s statement of operations. ITEM 3. LEGAL PROCEEDINGS There are no pending legal proceedings to which we are a party or in which any director, officer or affiliate of ours, any owner of record or beneficially of more than 5% of any class of our voting securities, or security holder is a party adverse to us or has a material interest adverse to us. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 10 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is quoted on the OTCQB over-the-counter market under the symbol “KITL.” Over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions. The last reported sales price of our common stock on the OTCQB on March 30, 2023 was $0.031. Holders As of March 30, 2023 we had approximately 120 holders of record of our common stock. Dividend Policy We have not paid any dividends since our incorporation and do not anticipate the payment of dividends in the foreseeable future. At present, our policy is to retain earnings, if any, to develop and market our products. The payment of dividends in the future will depend upon, among other factors, our earnings, capital requirements, and operating financial conditions. ITEM 6. SELECTED FINANCIAL DATA. Not applicable. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Annual Report. Actual future results may be materially different from what we expect. We undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made, except as required by federal securities and any other applicable law. Results of Operations Comparison of Results of Operations for the years ended December 31, 2022, and 2021 11 Revenue and Cost of Sales Total revenues for the year ended December 31, 2022, were $391,447 compared to $400,662 during the year ended December 31, 2021. Revenues for the year ended December 31, 2022 was comprised of $365,970 in food sales and $25,477 in sales of branded products to retail locations in Canada; compared to food sales of $364,662 and franchise sales of $36,116 during the year ended December 31, 2021. The revenues in 2022 were comparable to 2021 due to no change in the retail environment for our products. We are working on new concepts and menu changes but there can be no assurances that these changes will be successful. Cost of goods sold during the year ended December 31, 2022 was $213,106 compared to $203,121 during the year ended December 31, 2021. This slight increase in cost of sales in 2022 over 2021 levels is attributable to higher food costs in 2022, offset by improved operating efficiencies. Operating expenses Operating expenses were $675,579 for the year ended December 31, 2022, compared to $4,337,390 during the year ended December 31, 2021. Non-cash stock-based compensation was $5,170 and $3,765,5911 for the years ended December 31, 2022 and December 31, 2021, respectively. Excluding the stock-based compensation in both periods, operating expenses were $675,579 for the year ended December 31, 2022 compared to $571,999 for the year ended December 31, 2021. This is primarily attributable to increased general and administrative expenses due to inflationary factors as well increased corporate activity. Other income and expense Other expenses comprising interest expense and change in the fair value of the derivative liability was $362,467 for the year ended December 31, 2022 compared to $798,877 during the year December 31, 2021. The decrease in other expenses is attributable to fewer conversions of equity instruments with beneficial conversion issues in which interest expense was recognized in 2021 compared to 2022, a gain of $34,373 from the extinguishment of debt, partially offset by an increase of $73,398 due to the recognition of a derivative liability in 2022 compared to zero in the 2021 period. Net Loss As a result of the forgoing, the net loss attributable to Kisses From Italy Inc. for the year ended December 31, 2022 was $847,385 compared to a net loss attributable to Kisses of Italy, Inc of $4,942,113 for same period ended December 31, 2021. The decrease in the net loss in the 2022 period is primarily attributable to a decrease of $3,760,421 of non-cash stock based compensation, decreased other expense in 2022 partially offset by increased general and administrative expenses . Liquidity and Capital Resources On December 31, 2022, we had $324,493 in cash and cash equivalents. Net cash used in operating activities was $579,140 during the year ended December 31, 2022, compared to net cash used of $451,591 during the year ended December 31, 2021. The increase in net cash used in operating activities of $127,459 is primarily attributable to increased operating losses net of non-cash items compared to the year ended December 31, 2021. Net cash used in investing activities was $40,852 due to the purchase of fixed assets during the year ended December 31, 2022, compared to $1,910 during the period ended December 30, 2021. 12 Net cash provided by financing activities was $805,000 for the year ended December 31, 2022, compared to $555,650 during the year ended December 31, 2021. The difference in the 2022 period compared to 2021 is attributable to proceeds of $550,000 from convertible notes, $250,000 from proceeds in notes payable, compared to $435,650 in proceeds from the sale of common stock and $120,000 in proceeds from the sale of preferred stock. During the next year, we estimate that we will need approximately $1,000,000 to fully effectuate our business development plans, including opening additional company-owned restaurants and continuing to develop and enhance the marketing of our franchise concept. Subject to the continued impact of Covid-19, we currently believe that we can open at least two additional restaurants for approximately $300,000. We believe that continuing to open company-owned restaurants will assist us to market other locations. There can be no assurances that additional financing, either through equity or debt, will be available on a timely basis, on favorable terms, or at all. While we have had discussions with potential investors and investment bankers, we have no agreement with any third party to provide additional financing. Our inability to obtain additional financing may have a significant negative impact on our continued development and the results of our operations. Covid-19 has also caused significant disruptions to the global financial markets, which impacts our ability to raise additional capital. If the Company is unable to obtain adequate capital due to the continued spread of Covid-19, the Company may be required to reduce the scope, delay, or eliminate some or all of its planned operations. Going Concern Our consolidated financial statements were prepared to assume that we will continue as a going concern and do not include adjustments for the recoverability and the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve months following the date of the financial statements that may be necessary should we be unable to continue in operation. In addition, the Company continues to experience negative cash flows from operations. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. OFF-BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements. Critical Accounting Policies and Estimates Critical accounting estimates – The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. 13 Stock-based Compensation – We account for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Leases – We follow the guidance in ASC 840 “Leases,” which requires us to evaluate the lease agreements we enter into to determine whether they represent operating or capital leases at the inception of the lease. On November 15, 2019, the FASB has issued ASU 2019-10, which amends the effective dates for three major accounting standards. The ASU defers the effective dates for the credit losses, derivatives, and leases standards (ASC 842) for certain companies. Since we are classified as a “emerging growth company” and we have a calendar-year end we are eligible for deferring the adoption of ASC 842 to December 15, 2021. ASC 842 will be effective for us beginning on December 15, 2021. While we continue to evaluate the impact of the new standard, we expect the adoption of this guidance will have not have any impact on our financial statements. Recent Accounting Pronouncements Under the Jumpstart Our Business Startups Act, or the JOBS Act, we meet the definition of an “emerging growth company.” We have irrevocably elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. As a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non- emerging growth companies. On January 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. As of and for the year ended December 31, 2018, our consolidated financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard. On November 15, 2019, the FASB issued ASU 2019-10, which amends the effective dates for three major accounting standards. The ASU defers the effective dates for the credit losses, derivatives, and leases standards (ASC 842) for certain companies. Since we are classified as a “emerging growth company” and we have a calendar-year end we are eligible for deferring the adoption of ASC 842 to December 15, 2021. While we continue to evaluate the impact of the new standard, we expect the adoption of this guidance will have not have any impact on our financial statements. 14 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are a smaller reporting company and are not required to provide the information under this item pursuant to Regulation S-K. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Reference is made to the Financial Statements, the notes thereto, and the Report of Independent Public Accountants thereon commencing at page F-1 of this Report, which Financial Statements, notes and report are incorporated herein by reference. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 5041 ) F-1 Consolidated Balance Sheets as of December 31, 2022 and 2021 F-2 Consolidated Statements of Operations for the Years Ended December 31, 2022 and 2021 F-3 Consolidated Statement of Shareholders’ Equity for the Two Years Ended December 31, 2021 F-4 Consolidated Statements of Cash Flows for the Years Ended December 31, 2022 and 2021 F-6 Notes to Consolidated Financial Statements F-7 15 Report of Independent Registered Public Accounting Firm To the shareholders and the board of directors of Kisses From Italy, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Kisses From Italy, Inc. as of December 31, 2022 and 2021, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States. Substantial Doubt about 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 discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience 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 3. 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 audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our 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 audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /S/ BF Borgers CPA PC (PCAOB ID 5041) We have served as the Company's auditor since 2018 Lakewood, CO March 30, 2023 F- 1 Kisses From Italy Inc. Consolidated Balance Sheets December 31, December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 324,493 $ 139,485 Accounts receivable 13,470 12,900 Other receivables 49,190 48,443 Inventory 14,359 5,270 Total current assets 401,511 206,098 Property and equipment, net 3,687 5,793 Equipment not in service 40,852 – Right of use assets 473,561 – Other Assets 2,745 2,745 Total assets $ 922,355 $ 214,635 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable 86,393 $ 52,665 Accrued liabilities 149,393 134,505 Lease liability - short term 45,577 – Notes payable 262,171 – Convertible notes 488,400 – Derivative liability 73,398 – Total current liabilities 1,105,333 187,170 Lease liability- long term 427,984 – Notes payable-long term – 12,171 Convertible notes -long term – 10,000 Total liabilities 1,533,317 209,340 Commitments and contingencies – – Stockholders' Equity (Deficit): Preferred stock, Series A $ 0.001 par value. 1,500,000 shares authorized; zero 0 shares shares issued and outstanding – – Preferred stock, Series B $ 0.001 par value. 5,000,000 shares authorized; zero 0 shares shares issued and outstanding – – Preferred stock, Series C, $ 0.001 par value 1,000,000 shares authorized; 145,080 shares and 240,080 shares issued and outstanding as of December 31, 2022 and December 31 2021, respectively 145 240 Common stock, $ 0.001 par value, 300,000,000 shares authorized; 189,216,582 and 180,913,582 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively 189,216 180,913 Additional paid-in capital 13,939,053 13,702,813 Accumulated deficit ( 14,706,391 ) ( 13,859,006 ) Total Kisses From Italy Stockholders' Deficit ( 577,976 ) 24,960 Non-controlling interest ( 32,985 ) ( 19,665 ) Total stockholders' (deficit) equity ( 610,961 ) 5,295 Total liabilities and (deficit) equity $ 922,355 $ 214,635 The accompanying notes are an integral part of the consolidated financial statements. F- 2 Kisses From Italy Inc. Consolidated Statements of Operations Year Year Ended Ended December 31, December 31, 2022 2021 Revenue $ 391,447 $ 400,662 Cost of goods sold 213,106 203,121 Gross margin 178,341 197,541 Operating expenses: Depreciation and amortization 2,106 4,597 Executive and stock based compensation-related party – 2,008,527 Stock based compensation 5,170 1,778,390 Payroll and other expenses 122,837 86,532 Rent 133,526 130,198 Consulting and professional fees 178,155 171,865 General and administrative 234,784 157,280 Total operating expenses 676,579 4,337,389 Income (loss) from operations ( 498,238 ) ( 4,139,849 ) Other income (expense) Interest income (expense), net ( 323,441 ) ( 798,877 ) Gain on the extinguishment of debt 34,373 – Change in the fair value of the derivative liability ( 73,398 ) – Total other income (expense) ( 362,467 ) ( 798,877 ) Income (loss) before income taxes ( 860,705 ) ( 4,938,726 ) Provision for income taxes (benefit) – – Net loss ( 860,705 ) ( 4,938,726 ) Less: net income (loss) attributable to non-controlling interests ( 13,320 ) 3,387 Net loss attributable to Kisses From Italy, Inc. $ ( 847,385 ) $ ( 4,942,113 ) Basic earnings (loss) per common share $ ( 0.00 ) $ ( 0.03 ) Diluted earnings (loss) per common share $ ( 0.00 ) $ ( 0.03 ) Weighted -weighted average number of shares outstanding: Basic and diluted 184,929,538 168,615,951 The accompanying notes are an integral part of the consolidated financial statements. F- 3 Kisses from Italy Consolidated Statements of Changes in Stockholders' Equity (Deficit) Preferred Stock Preferred Stock Preferred Stock Additional Non- Total Stockholders’ Series A Series B Series C Common Stock Paid-in controlling Accumulated Equity' Shares Value Shares Value Shares Value Shares Value Capital Interest Deficit (Deficit) Balance, December 31, 2020 – $ – – $ – 79,610 $ 80.00 154,832,335 $ 154,832 $ 8,612,683 $ ( 23,052 ) $ ( 8,916,893 ) $ ( 172,350 ) Issuance of common stock in private placement – – – – – – 1,750,000 1,750 173,250 – – 175,000 Issuance of Series C Preferred Stock – – – – 380,650 381 – – 1,175,400 – – 1,175,781 Conversion of Series C Preferred to Common stock – – – – ( 220,180 ) ( 220 ) 5,922,913 5,923 ( 5,702 ) – – – Issuance of common stock for services – – – – – – 18,408,334 18,408 2,507,359 – – 2,525,767 Issuance of stock options for services – – – – – – – – 1,239,823 – – 1,239,823 Non-controlling interest, net income (loss) – – – – – – – – – 3,387 – 3,387 Net income (loss) – – – – – – – – – – ( 4,942,113 ) ( 4,942,113 ) Balance, December 31, 2021 – $ – - $ – 240,080 $ 240 180,913,582 $ 180,913 $ 13,702,813 $ ( 19,665 ) $ ( 13,859,006 ) $ 5,295 The accompanying notes are an integral part of the consolidated financial statements. F- 4 Kisses from Italy Inc, Consolidated Statements of Changes in Stockholders' Equity (Deficit) (continued) Preferred Stock Preferred Stock Preferred Stock Additional Non- Total Stockholders’ Series A Series B Series C Common Stock Paid-in controlling Accumulated Equity Shares Value Shares Value Shares Value Shares Value Capital Interest Deficit (Deficit) Balance, December 31, 2021 – $ – – $ – 240,080 $ 240 180,913,582 $ 180,913 $ 13,702,813 $ ( 19,665 ) $ ( 13,859,006 ) $ 5,295 Net loss – – – – – – – – – – ( 847,385 ) ( 847,385 ) Non-controlling interest, net income (loss) – – – – – – – – – ( 13,320 ) – ( 13,320 ) Stock based compensation – – – – – – – – 5,170 – – 5,170 Issuance of Series C Preferred Stock – – – – 5,000 5 – – 4,995 – – 5,000 Conversion of Series C Preferred to common stock – – – – ( 100,000 ) ( 100 ) 3,000,000 3,000 ( 2,900 ) – – – Issuance of common stock as financing commitment shares – – – – – – 1,607,000 1,607 73,977 – – 75,584 Conversion of convertible notes and accrued interest into common stock – – – – – – 3,696,000 3,696 54,331 – – 58,027 Issuance of warrants in connection with debt – – – – – – – – 100,667 – – 100,667 Balance, December 31, 2022 – $ – – $ – 145,080 $ 145 189,216,582 $ 189,216 $ 13,939,053 $ ( 32,985 ) $ ( 14,706,391 ) $ ( 610,961 ) The accompanying notes are an integral part of the consolidated financial statements. F- 5 Kisses From Italy Inc. Consolidated Statements of Cash Flows Year Year Ended Ended December 31, December 31, 2022 2021 Cash flows from operating activities of continuing operations: Net (loss) $ ( 847,385 ) $ ( 4,942,113 ) Net income (loss) attributable to non-controlling interest ( 13,320 ) 3,387 Adjustments to reconcile net loss to cash used in operating activities: Depreciation and amortization 2,106 4,597 Gain on the extinguishment of debt ( 34,373 ) – Stock-based compensation 5,170 3,765,591 Change in the fair market value of derivative liability 73,398 – Issuance of financing commitment shares 75,584 – Issuance of financing commitment warrants 100,667 – Beneficial conversion feature of Preferred C Stock – 795,131 Changes in operating assets and liabilities: Other assets – ( 110 ) Accounts receivable ( 570 ) ( 7,139 ) Account receivable-other ( 747 ) ( 43,603 ) Inventory ( 9,089 ) ( 1,219 ) Accounts payable 33,731 ( 12,099 ) Accrued liabilities 35,688 ( 14,014 ) Net cash used in operating activities ( 579,140 ) ( 451,591 ) Cash flows used in investing activities: Purchase of fixed assets ( 40,852 ) ( 1,910 ) Net cash used in financing activities ( 40,852 ) ( 1,910 ) Cash flows from financing activities: Proceeds from convertible notes - net of conversions 550,000 – Proceeds from notes payable 250,000 – Proceeds from the sale of common stock – 435,650 Proceeds from the sale of preferred stock 5,000 120,000 Net cash provided by financing activities 805,000 555,650 Net increase in cash and cash equivalents 185,008 102,149 Cash and cash equivalents at beginning of period 139,485 37,336 Cash and cash equivalents at end of period $ 324,493 $ 139,485 Supplemental disclosure of cash flow information: Cash paid for interest $ – $ – Cash paid for income taxes $ – $ – Supplemental disclosure of non-cash investing and financing activities Conversion of convertible notes and accrued interest into common stock $ 58,027 $ – The accompanying notes are an integral part of the consolidated financial statements. F- 6 KISSES FROM ITALY INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Kisses From Italy Inc. (the “Company”) was incorporated in Florida on March 7, 2013. The Company’s main focus is to develop a fast, casual food dining chain restaurant business of corporate-owned restaurants and expanding through a nationwide/international franchise and territory sales program. The Company commenced operations in May 2015 by opening its first location in Fort Lauderdale, Florida. Three additional restaurants, located in various Wyndham Hotel properties in the Pompano Beach, Florida area, were then opened within the following ten months. All locations, which are in leased facilities, were fully operational by April 2016. In December 2017, the Company vacated one of its restaurants due to a hurricane and has not re-opened that location. In June 2021, the Company consolidated its two Wyndham stores into one location to become more efficient. The Company opened its inaugural European location in Ceglie del Campo, Bari, Italy, in October 2019. The Bari location closed in April 2020 due to the Covid-19 pandemic, briefly re-opened and has not re-opened as of the date of this Report. Such location was intended to serve as the distribution center for products for European locations, as well as to be used as a training facility for European franchises. However, this initiative has been severely curtailed due to the onset and lingering impact of Covid-19 in Europe. In June 2021 and November 2021, the Company opened its first two franchise locations in Chino, California and Montreal, Canada, respectively. Due to the onset of Covid-19 the Company has temporarily waived any franchise fees at both locations so that the franchisees could establish operations at each of those locations. The Company’s accounting year-end is December 31. COVID-19 On March 11, 2020, the World Health Organization declared the Covid-19 outbreak to be a global pandemic. In addition to the devastating effects on human life, the pandemic has had a negative ripple effect on the global economy, leading to disruptions and volatility in the global financial markets. Most US states and many countries have issued policies intended to stop or slow the further spread of the disease. Covid-19 and we believe, the US’s response to the pandemic has significantly affected the economy. There are no comparable events that provide guidance as to the effect the Covid-19 pandemic may have, and, as a result, the ultimate effect of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the effects on the economy, the markets we serve, our business, or our operations. Except for our Bari location which remains closed, our US locations are now open and are operating at near pre-Covid revenue levels. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses or recognized when incurred. The consolidated financials include the accounts of the Company and its wholly-owned subsidiaries; Kisses From Italy 9 th LLC, Kisses From Italy-Franchising LLC, Kisses From Italy, Inc. (Canada) (a company incorporated under the laws of Canada and registered in Quebec on December 23, 2020), and Kisses From Italy Italia SRLS (a limited liability company incorporated in Italy), and its 70% owned subsidiary, Kisses-Palm Sea Royal LLC. All intercompany accounts and transactions are eliminated in consolidation. F- 7 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 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 most significant estimates relate to revenue recognition, valuation of accounts receivable and the allowance for doubtful accounts, inventories, purchase price allocation of acquired businesses, impairment of long-lived assets and goodwill, valuation of financial instruments, income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivables are recorded at the net value of face amount less any allowance for doubtful accounts. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company reviews the allowance for doubtful accounts on a regular basis, and all past due balances are reviewed individually for collectability. Account balances are charged against the allowance when placed for collection. Recoveries of receivables previously written off are recorded when received. Interest is not charged on past due accounts. These receivables are related to the sale of our private label branded products sold in retail and grocery stores in Canada. As of December 31, 2022, and December 31, 2021, our trade receivables amounted to $ 13,470 and $ 12,900 respectively, with an allowance for doubtful accounts of $- 0 - for both periods. Other Receivables Other receivables are comprised of three components, a receivable from a franchisee, and a receivable from the government for Employee Retention Credits (“ERC”) and Value Added Tax at the Company’s Bari location in Italy. ERC Credits The purpose of the ERC is to encourage employers to keep employees on the payroll, even if they are not working during the covered period due to the effects of the coronavirus outbreak. The updated ERC provides a refundable credit of up to $5,000 for each full-time equivalent employee a company retained from March 13, 2020, to December 31, 2020, and up to $14,000 for each retained employee from January 1, 2021, to June 30, 2021. The Company qualifies as an employer if it was ordered to fully or partially shut down or if the Company’s gross receipts fell below 50% for the same quarter in 2019 (for 2020) and below 80% (for 2021). As of December 31, 2022 and December 31, 2021 the Company had ERC credits receivable of $ 27,190 and $ 41,717 credits receivable, respectively. F- 8 Valued Added Tax (“VAT”) The Valued Added Tax (“VAT”) VAT is a broadly-based consumption tax which is assessed to the value that is added to goods and services. The Value Added Tax (“VAT”), applies to nearly all goods and services that are bought and sold within the European Union. In Italy where the Company operates, the VAT tax ranges between 4% and 10% for food products and alcohol. As of December 31, 2022 and December 31, 2021, respectively, the Company had a VAT net receivable from its Bari location amounting to $- 0 - and $ 4,839 , respectively. Franchisee Receivable In order to assist the Company’s franchisee in California, the Company extended a $22,000 demand loan at a 1% interest rate to the franchisee. As of December 31, 2022 and December 31, 2021 the balance on the franchisee receivable was $ 22,000 and $- 0 -, respectively. Foreign Currency Translation The functional and reporting currency of the Company’s Bari location in Italy is the Euro. Management has adopted ASC 830 “Foreign Currency Matters” for transactions that occur in foreign currencies. Monetary assets denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Average monthly rates are used to translate revenues and expenses. To date, this difference has been immaterial for the Bari location. Transactions denominated in currencies other than the functional currency, such as the Company’s current retails sales in Canada for Kisses From Italy branded products, are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods. Assets and liabilities of the Company’s operations are translated into the reporting currency, United States dollars, at the exchange rate in effect at the balance sheet dates. Revenue and expenses are translated at average rates in effect during the reporting periods. Equity transactions are recorded at the historical rate when the transaction occurred. Revenue Recognition The Company recognizes revenue under the guidelines of ASC 606. Sales, as presented in the Company’s consolidated statement of earnings, represent franchise revenue; and food and beverage product sold which is presented net of discounts, coupons, employee meals and complimentary meals. Revenue is recognized using the five step approach required under the guidelines of ASC 606: 1. Identify the contract with the client, 2. Identify the performance obligations in the contract, 3. Determine the transaction price, 4. Allocate the transaction price to performance obligations in the contract 5. Recognize revenues when or as the Company satisfies a performance obligation At the corporate owned restaurants all five steps of revenue recognition occur almost simultaneously. The customer orders food from a menu, it is prepared, delivered to the customer who then pays for the food order at the cash register. Our restaurant business represented approximately 90% of our revenue for the years ended December 31, 2022 and 2021 For our branded retail products goods sold in Cana the Company receives a detailed purchase order from grocery store retailers that specifies the goods ordered, their price, payment terms and the required delivery date. Once the delivery of items on the purchase order is made to the client and title passes to the retailer, the Company has met its performance obligation and recognizes revenue. Non-controlling interest Non-controlling interest represents third-party ownership in the net assets of one of our consolidated subsidiaries. For financial reporting purposes, the assets and liabilities of our majority-owned subsidiary consolidated with those of the Company’s wholly-owned subsidiaries, with any third-party investor’s interest shown as non-controlling interest. F- 9 Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. On December 31, 2022 and December 31, 2021, the Company cash equivalents totaled $ 324,493 and $ 139,485 , respectively. Property and equipment Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in results of operations. The estimated useful lives of property and equipment are as follows: Estimated useful lives of property Computers, software, and office equipment 1 – 6 years Machinery and equipment 3 – 5 years Leasehold improvements Lesser of lease term or estimated useful life Income taxes The Company accounts for income taxes under the Financial Accounting Standards Board (“FASB”) ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05,“Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit. On December 18, 2019, FASB released Accounting Standards Update (“ASU”) 2019-12, which affects general principles within Topic 740, Income Taxes. The amendments of ASU 2019-12 are meant to simplify and reduce the cost of accounting for income taxes. The FASB has stated that the ASU is being issued as part of its Simplification Initiative, which is meant to reduce complexity in accounting standards by improving certain areas of GAAP without compromising information provided to users of financial statements. The Company adopted this guidance on January 1, 2021 which had no impact on the Company’s financial statements. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not the net-cash settlement of the derivative instrument could be required within twelve months of the balance sheet date. As of December 31, 2022 and December 31, 2021 the balance of the derivative liability was $ 73,398 and $- 0 -, respectively. F- 10 Stock-based Compensation The Company accounts for stock-based compensation using the fair method following the guidance set forth in Section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. Leases In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which establishes a new lease accounting model for lessees. The updated guidance requires an entity to recognize assets and liabilities arising from financing and operating leases, along with additional qualitative and quantitative disclosures. The amended guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, with early adoption permitted. In March 2019, the FASB issued ASU 2019-01, Codification Improvements, which clarifies certain aspects of the new lease standard. The FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases in July 2018. Also in 2018, the FASB issued ASU 2018-11, Leases (Topic 842) Targeted Improvements, which provides an optional transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard. On November 15, 2019, the FASB issued ASU 2019-10, which amends the effective dates for three major accounting standards. The ASU defers the effective dates for the credit losses, derivatives, and lease standards for certain companies. Since the Company is classified as a small reporting company and emerging growth company and has a calendar-year end, the Company was eligible for deferring the adoption of ASC 842 to January 1, 2022. In the first quarter of fiscal 2022, we adopted ASU 2016-02 related solely to operating leases at our store locations. The most significant impact of adoption was the recognition of right of use operating lease assets and right of use operating lease liabilities of approximately $ 562,000 each, respectively. Inventory Inventory is comprised of wholesale food inventory at our retail operations The value of the food at our US locations is very minimal at any one time and is charged to cost of sales as soon as it arrives at the store. Our US locations do not have liquor licenses. During the three months ended March 31, 2022 we wrote off $1,951 alcoholic beverage inventory since the Bari location had been closed since the onset of Covid in March 2020. The balance of inventory at December 31, 2022 and December 31, 2021 was $ 14,359 and $ 5,270 , respectively. Net Loss per Share Net loss per common share is computed by dividing net loss by the weighted average shares of common stock outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, “Earnings per Share.” Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of shares of common stock and dilutive common share equivalents outstanding. Due to the Company’s net losses for the years ended June 30, 2022, and June 30, 2021, all of its outstanding stock options, warrants, and shares issuable if convertible notes or Preferred C shares was converted to common stock; are all considered anti-dilutive. The number of these anti-dilutive equivalents was not calucated and are excluded from the calculation of net loss per share. F- 11 Recent Accounting Pronouncements In August 2020, FASB issued ASU 2020-06 Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The Company adopted this guidance on January 1, 2022. In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and also issued subsequent amendments to the initial guidance: ASU 2018-19, ASU 2019-04, and ASU 2019-05 (collectively, “Topic 326”). Topic 326 requires measurement and recognition of expected credit losses for financial assets held. The Company will be required to adopt this ASU for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of Topic 326 is not expected to have a material effect on the Company’s financial statements and financial statement disclosures. NOTE 3 – GOING CONCERN AND LIQUIDITY As of December 31, 2022 the Company had cash on hand of $ 324,493 and an accumulated deficit of $ 14,706,391 . Management has concluded that these financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. It is the Company’s current intention to raise debt and/or equity financing to fund ongoing operating expenses. There is no assurance that financing, whether debt or equity, will be available to the Company, satisfactorily completed or on terms favorable to the Company. Any issuance of equity securities, if accomplished, could cause substantial dilution to existing stockholders and any debt financing may contain covenants limiting certain corporate actions. Any failure by the Company to successfully raise additional financing would have a material adverse effect on its business, including the possible inability to continue operations. NOTE 4 – PROPERTY AND EQUIPMENT As of December 31, 2022 and December 31, 2021, the Company had $ 3,687 and $ 5,793 in property and equipment, all located at its Bari location in Italy. As of December 31, 2022 all property and equipment and leaseholds at its US locations had been fully depreciated. F- 12 NOTE 5 – ACCRUED LIABILITIES The following table sets forth the components of the Company’s accrued liabilities on December 31, 2022 and December 31, 2021. Schedule of accrued and other liabilities December 31, 2022 December 31, 2021 Sales tax payable $ 3,957 $ 4,666 Accrued interest payable 50,330 4,363 Payroll tax liabilities 95,106 125,476 Total accrued liabilities $ 149,393 $ 134,505 The Company is in arrears on its payroll tax payments as of December 31, 2022. As of December 31, 2022 and December 31, 2021 “payroll tax liabilities” was approximately $ 38,557 and $ 56,549 in interest and penalties, respectively. NOTE 6 – PROMISSORY NOTES PAYABLE As of December 31, 2022 and December 31, 2021, the balance of notes payable was $ 262,171 and $- 0 -, respectively. The December 31, 2022 balance is comprised of two unsecured 8 % notes payable amounting to $ 12,171 that mature in September 2023, and an 8%, $ 250,000 unsecured loan that matures on July 13, 2022. NOTE 7 – CONVERTIBLE NOTES AND DERIVATIVE LIABILITY As of December 31, 2022 and December 31, 2021, the outstanding principal balance of convertible notes was $ 488,400 and $ 10,000 , respectively. The balance of the derivative liability was $ 73,398 and $- 0 -, respectively. On April 11, 2022, the Company entered into a securities purchase agreement, dated as of April 6, 2022, (the “Talos Purchase Agreement”) with Talos Victory Fund, LLC, a Delaware limited liability company (“Talos”), pursuant to which the Company issued to Talos a promissory note in the principal amount of $ 165,000 (the “Talos Note”). The Company received $ 148,500 gross proceeds from Talos due to the original issue discount on the Talos Note. In connection with the execution and delivery of the Talos Purchase Agreement and the issuance of the Talos Note, the Company issued to Talos 500,000 commitment shares and a warrant to purchase an additional 1,650,000 shares of common stock of the Company at an exercise price of $0.10. On April 13, 2022, the Company entered into a securities purchase agreement, dated as of April 11, 2022, (the “Blue Lake Purchase Agreement”) with Blue Lake Partners, LLC, a Delaware limited liability company (“Blue Lake”), pursuant to which the Company issued to Blue Lake a promissory note in the principal amount of $ 165,000 (the “Blue Lake Note”). The Company received $ 148,500 gross proceeds from Blue Lake due to the original issue discount on the Blue Lake Note. In connection with the execution and delivery of the Blue Lake Purchase Agreement and the issuance of the Blue Lake Note, the Company issued to Blue Lake 500,000 commitment shares and a warrant to purchase an additional 1,650,000 shares of common stock of the Company at an exercise price of $0.10. On May 13, 2022, the Company entered into a securities purchase agreement, dated as of May 11, 2022, (the “Fourth Man Purchase Agreement”) with Fourth Man, LLC (“Fourth Man”), pursuant to which the Company issued to Fourth Man a promissory note in the principal amount of $ 150,000 (the “Fourth Man Note”). The Company received $ 135,000 gross proceeds from Fourth Man due to the original issue discount on the Fourth Man Note. In connection with the execution and delivery of the Fourth Man Purchase Agreement and the issuance of the Fourth Man Note, the Company issued to Fourth Man, 607,000 commitment shares and a warrant to purchase an additional 1,500,000 shares of common stock of the Company. Each of the notes bear interest at 12% and has a fixed price conversion to common stock at $0.025 per share. Using the Black Scholes model, the Company recording a financing expense of $ 97,453 for the total of 4,800,000 warrants issued on the Talos Note, Blue Lake Note and the Fourth Man Note. During the three months ended September 30, 2022, the Company granted an underwriter 162,000 warrants exercisable for five years at an exercise price of $ 0.11 , and 56,250 warrants exercisable for five 5 years at $ 0.12 per share. Using the Black Scholes model, the Company recording a financing expense of $ 3,214 for these warrants. As a result of the above transactions, the Company has recorded $ 100,167 in total financing fees in 2022 on these warrants issued to the noteholders and the underwriter. F- 13 On July 26, 2022 the Company entered into a $ 70,000 convertible note agreement with a maturity date of July 26, 2023 with Diagonal Lending. Under the terms of the note agreement Diagonal had the right to convert its note at a discount of 35% to the Company’s lowest trading price in the 10 days prior to conversion. The Company considered the current FASB guidance of “Contracts in Entity’s Own Stock” which indicates that any adjustment to the fixed amount (either conversion price or number of shares) of the instrument regardless of the probability of whether or not within the issuers’ control means the instrument is not indexed to the issuer’s own stock. Accordingly, the Company determined that the conversion prices of the Notes were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or the conversion price was variable. As a result, the Company determined that the conversion features of the Notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The fair value of the Company’s derivative liability of $ 73,398 as of December 31, 2022 was estimated using the Black-Scholes-Merton Option Pricing model with a volatility of 208.3%, exercise price of $0.0084, using a one-year T-bill rate of $4.73%. During the three months ended December 31, 2022, Talos victory fund converted $ 71,600 in principal and $ 19,800 in accrued interest into 3,696,000 shares at a conversion price of $ 0.025 . Since the Company stock price was $0.0157 at the time of the conversion, the Company recorded a gain on the extinguishment of debt of $ 34,373 . NOTE 8 – STOCKHOLDERS EQUITY Common Stock The Company has authorized 300,000,000 shares of common stock. On December 31, 2022 and December 31, 2021, there were 189,216,582 and 180,913,582 shares of common stock issued and outstanding, respectively, with a $ 0.001 par value per share. During the year ended December 31, 2022, the Company issued the following shares of stock: · 3,000,000 shares upon the conversion of Series C Stock · 1,607,000 shares for financing commitments valued at $ 97,453 · 3,696,000 shares upon the conversion of convertible notes valued at $ 58,027 During the year ended December 31, 2021, the Company issued the following shares of common stock: · 14,000,000 shares to its executive officers valued at $ 1,987,200 · 4,408,334 shares to service providers valued at $ 538,568 · 1,750,000 shares to accredited investors for gross proceeds of $ 175,000 · 5,922,903 shares upon the conversion of Series C Stock These shares were valued based on the trading price of the Company’s stock on the date of approval of the respective share issuances by the Company’s Board of Directors times the number of shares issued. F- 14 Preferred Stock On December 19, 2019, the Company filed a Certificate of Designation with the State of Florida to designate 1,500,000 shares of the Company’s authorized preferred stock as Series A Preferred Stock (“Series A Stock”), 5,000,000 shares as Series B Preferred Stock (“Series B Stock”) and 1,000,000 shares as Series C Preferred Stock (“Series C Stock”). A summary of the material provisions of the Certificate of Designation governing the Series A Stock, the Series B Stock and the Series C Stock is as follows: Series A Stock The Series A Stock is not convertible. Each share of Series A Stock shall entitle the holder to three hundred votes for each share of Series A Stock. Any amendment to the Certificate of Designation requires the consent of the holders of at least two-thirds of the shares of Series A Stock then outstanding. The holders of Series A Stock are not entitled to dividends until and unless determined by the Board of Directors of the Company. Liquidation Preference No distribution shall be made to holders of shares of capital stock ranking junior to the Series A Preferred Stock upon liquidation, dissolution or winding-up of the Company. The Series A Stock ranks pari passu with the Series C Stock. There were no shares of Series A Stock outstanding as of December 31, 2022 and December 31, 2021. Series B Stock The Series B Stock is convertible at any time by the holder into the number of shares of common stock of the Company based on two times the price paid by the holder for the shares. The Board has the authorization to establish a minimum price for the conversion price of the Series B Stock (so that if the market price of the common stock of the Company drops below the issuance price, the conversion rate will then be based on the minimum price established by the Board and not the price paid for the shares). The holders of the Series B Stock shall not be entitled to voting rights except as otherwise provided by applicable law. The holders of Series B Stock are not entitled to dividends until and unless determined by the Board. Liquidation Preference The holders of Series B Stock shall not be entitled to any distributions upon a liquidation of the Company. Restrictions of Transferability The shares of the Series B Stock shall not, directly, or indirectly, be sold, hypothecated, transferred, assigned, or disposed of in any manner without the prior written consent of the Board and applicable securities laws. There were no shares of Series B Stock outstanding as of December 31, 2022. Series C Stock The Series C Stock is convertible at any time by the holder into the number of shares of common stock of the Company on the basis of three times the price paid for the shares divided by the floor price of $0.10 established by the Board of Directors. The holders of the Series C Stock shall not be entitled to voting rights except as otherwise provided for by applicable law. The holders of Series C Stock are not entitled to dividends until and unless determined by the Board. F- 15 Liquidation Preference Upon any liquidation of the Company, the holders of Series C Stock shall be entitled to the amount paid for the shares of Series C Stock prior to the holders of shares ranking junior to the Series C Stock. Upon the holders of the Series C Stock and any series of stock ranking pari passu with the Series C Stock having received distributions to which they are entitled, the remaining assets of the Company shall be distributed to the other holders pro rata in proportion to the shares held by each holder. Restrictions of Transferability The Series C Stock shall not, directly, or indirectly, be sold, hypothecated, transferred, assigned, or disposed of in any manner without the prior written consent of the Board and applicable securities laws. As of December 31, 2022 and December 31, 2021 there were 145,080 and 240,080 shares of Series C Stock outstanding, respectively, which were purchased at a price of $ 1.00 per share. Stock Purchase Warrants Stock purchase warrants are accounted for as equity in accordance with ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity . The following table reflects all outstanding and exercisable warrants at December 31, 2022 and December 31, 2021. All warrants are exercisable for a period of three to five years from the date of issuance: Schedule of warrant activity Number of Warrants Outstanding Weighted Average Exercise Price Weighted Average Remaining Contractual Life (Yrs.) Balance January 1, 2021 – – – Warrants issued – – – Warrants exercised – – – Warrants forfeited – – – December 31, 2021 – – – Warrants issued 5,018,000 $ 0.10055 4.25 Warrants exercised – – – Warrants forfeited – – – Balance December 31, 2022 5,018,000 $ 0.10055 4.25 As of December 31, 2022 the outstanding stock purchase warrants had an aggregate intrinsic value of $0. F- 16 Stock Options As of December 31, 2022 there were 16,000,000 vested 10 year stock options outstanding. 5,333,334 options had a strike price of $0.07, 5,333,333 had a strike price of $0.25 and 5,333,333 had a strike price of $0.50. These options have a remaining life of 8.5 years All options were immediately expensed during the second quarter of 2022 and the Company recorded an expense of $ 1,239,823 related to these options. There have been no stock option issuances since June 30, 2021. NOTE 9 – LEASES As of December 31, 2021 the Company had three operating restaurants. The Company leases these spaces based upon the following schedules: · Kisses From Italy 9 th LLC based in Fort Lauderdale, Florida leases approximately 990 square feet and has paid $3,273 per month since 2018, pending completion of the required renovations to the exterior and interior of the property necessitated due to hurricane damage that occurred to the location in 2018. The landlord has been very slow in making these changes. It was agreed upon that when work was completed, and approved by the City of Fort Lauderdale, the rent would be increased to the market rate at that time. Beginning on May 1, 2021, the rent increased to $ 5,857 .50 per month and was renewed by the Company for an additional five-year term with standard annual escalator costs. · Kisses-Palm Sea Royal LLC based in Pompano Beach, Florida leases approximately 2,300 square feet for $ 3,933 per month. The Company has a one-year automatic renewal provision for this lease on May 1 st of each year under the same terms. · Kisses From Italy Italia SRLS based in Bari, Italy, leases approximately 2,200 square feet of space for 1,400 euros per month under the terms of a nine-year lease which ends on May 5, 2024 and has an optional automatic renewal provision for nine years. The Company is in the process of negotiating new terms for the lease. Both parties have agreed no rent payments will be submitted, until new terms are agreed upon. During the three months ended March 31, 2022, the Company adopted ASC 842, and based on the present value of the lease payments for the remaining average lease term of the Company’s existing leases noted above, the Company recognized $ 562,030 in noncurrent ROU assets, $ 88,469 in current lease liabilities and $ 473,561 in noncurrent lease liabilities from operating leases. For the year ended December 31, 2022 and 2021, the Company recorded rent expenses related to lease obligations of $ 133,526 and $ 130,198 respectively. Rent expenses related to lease obligations in operating expenses in the Company’s statement of operations. F- 17 NOTE 10 – SUBSEQUENT EVENTS The Company entered into a Strategic Alliance Agreement, effective as of March 1, 2023 (the “SAA”), with SC Culinary LLC, a New York limited liability company (“SC Culinary”). SC Culinary is currently the creator and owner of, and in possession of, a quick-service food concept (the “Concept”) and is developing and will develop all intellectual property rights related to the Concept (the “Intellectual Property Rights”), all of which were or will be developed or acquired by SC Culinary, independently, or assigned to it by Scott Conant. Scott Conant, who owns all rights in and to his name, voice, image, and likeness (the “NIL Rights”), has granted SC Culinary the exclusive right to license the NIL Rights to third parties. Pursuant to the SAA, SC Culinary will license its interest in the Concept, the Intellectual Property Rights, and the NIL Rights (collectively, the “License”) to a wholly-owned subsidiary of the Company to be established (the “Subsidiary”) for the purpose of developing the Concept into the business of the Subsidiary (the “Brand”). In consideration for the use of the License under the SAA, SC Culinary is entitled to receive certain minimum cash payments and restricted shares of common stock of the Company (the “Shares”) upon the achievement of certain milestones. Notwithstanding the foregoing, the issuance of the Shares to SC Culinary is subject to anti-dilution protection, wherein the Company shall issue SC Culinary additional shares of common stock in order to maintain the percentage owned by SC Culinary in the Company at the time of the issuance. The SAA terminates on the tenth (10 th ) anniversary of the effective date but may automatically renew for successive five (5) year periods unless either party provides ninety (90) days’ notice of termination. SC Culinary is entitled to terminate the SAA in the event of default by the Company and the Subsidiary. In the event of termination, SC Culinary shall have the absolute right to cause the Subsidiary and the Company to cease to operate the Brand except for the limited purposes of honoring existing franchise agreements. In such an event, SC Culinary will grant the Subsidiary a limited license to use the Brand and SC Culinary’s rights in the Intellectual Property solely in connection with and for the term of the existing franchise agreements (with no further rights of expansion). In the event that SC Culinary terminates the SAA for any reason, SC Culinary shall have the sole and absolute right to use, exploit and operate the Brand and all Intellectual Property separate and apart from the Company without the payment of any amounts or other consideration to the Company, the Subsidiary or relevant third parties or the need for the approval of any kind from the Company or relevant third parties. During March 2023, three convertible noteholders converted $259,800 of debt and accrued interest into 10,552,000 shares of the Company’s common stock. Additionally, subsequent to December 31, 2022 the Company issued 6,451,952 common shares to service providers and 4,000,000 shares pursuant to financing arrangements. F- 18 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the end of the period covered by this Report. These controls are designed to ensure that information required to be disclosed in the reports we file or submit pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Based on this evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of December 31, 2022. Inherent Limitations Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdown can occur because of simple error or mistake. In particular, many of our current processes rely upon manual reviews and processes to ensure that neither human error nor system weakness has resulted in erroneous reporting of financial data. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during our fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the exemption provided to issuers that are not “large accelerated filers” or “accelerated filers” under the Dodd-Frank Wall Street Reform and Consumer Protection Act. 16 Management Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act. Those rules define internal control over financial reporting as 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 and includes those policies and procedures that: · Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; · Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and the receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the Company; and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013. Based on its assessment, management has concluded that as of December 31, 2022, our disclosure controls and procedures and internal control over financial reporting were effective. This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report. ITEM 9B. OTHER INFORMATION None ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 17 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The following table sets forth information regarding our executive officers and directors: Name Age Position Michele Di Turi 47 Co-Chief Executive Officer, President, and Chairman of the Board Claudio Ferri 47 Co-Chief Executive Officer, Chief Investment Officer, and a director Leonardo Fraccalvieri 40 Chief Operating Officer and Director Our directors are elected for a term of one year and serve until such director’s successor is elected and qualified. Each executive officer serves at the pleasure of the Board of Directors Background Michele Di Turi has been our Co-Chief Executive Officer, President and a director since our inception in March 2013. In addition, Mr. Di Turi has been Chief Operating Officer and a Director of Sunshine Biopharma, Inc., a publicly held biotech company since October 15, 2009. Since November 2008, Mr. Di Turi has also been President of Sunshine Bio Investments, Inc., a privately held Canadian corporation engaged in the sale of non-regulated biotechnology and medical products. Prior thereto, from February 2003 through November 2008, Mr. Di Turie was employed by Mazda President, Inc., Montreal, Canada, as a sales representative and director of customer service. This experience led to Mr. Di Turi’s appointment to the Board. Claudio Ferri has been our Co-Chief Executive Officer, Chief Investment Officer and a director since our inception in March 2013. From May 2001 through September 2013, Mr. Ferri was employed by State Street Global Advisors, Montreal, Canada as Vice President, Senior Portfolio Manager and Trader where his responsibilities included the management of Canadian government bonds and provincial/agency investment strategies and trading for active and enhanced fixed income portfolios. Mr. Ferri received a Bachelor of Commerce degree from Concordia University in 2001 with a major in finance. This experience led to Mr. Ferri’s appointment to the Board. Leonardo Fraccalvieri has been our Chief Operating Officer and a director since our inception in March 2013. Previously, from April 2013 through January 2014, he was Business Development Manager at Italy America Chamber of Commerce, West LA, CA, where he was responsible for management of project development and evaluation of Italian companies looking to expand in the US. From June 2012 through December 2013, Mr. Fraccalvieri was a business analyst at 10EQS Management Consulting where he was responsible for market strategy definition. From May 2009 through June 2011, he was a Business Development specialist at BusinessviaItaly, where he worked with companies looking to expand their business internationally to find new commercial partners abroad, as well as providing new business opportunities for foreign nationals. Mr. Fraccalvieri attended Universita’ Commerciale Luigi Bocconi Milano and received an undergraduate degree in Economics of International Market and New Technologies in Milan and a graduate degree from 2 Universita’ Commerciale Luigi Bocconi Milano in Milan where he received a Masters’ degree in International Management and Business Administration, majoring in Management Consulting and Strategy. This experience led to Mr. Fraccalvieri’s appointment to the Board. Board Committees The Company has no nominating, audit, or compensation committees. The entire Board participates in the nomination and audit oversight processes and considers executive and director compensation. Given the size of the Company and its stage of development, the entire Board is involved in such decision-making processes. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executive officers or directors. 18 Family Relationships There are no family relationships between any of our officers and directors. I nvolvement in Certain Legal Proceedings Our directors and executive officers have not been involved in any of the following events during the past ten years: · Any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; · Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); · Being subject to any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities, or banking activities or to be associated with any person practicing in banking or securities activities; · Being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; · Being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended, or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or · Being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity, or organization that has disciplinary authority over its members or persons associated with a member. Director Independence Our Board is currently composed of three members. Our Common Stock is not currently listed for trading on a national securities exchange and, as such, we are not subject to any director independence standards. No member of our Board of Directors is considered an independent director. We evaluated independence in accordance with the rules of The New York Stock Exchange, Inc., which generally provides that a director is not independent if: (i) the director is, or in the past three years has been, an employee of ours; (ii) a member of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (iii) the director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other than for service as a director (or for a family member, as a non-executive employee); (iv) the director or a member of the director’s immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants, or has worked for such firm in any capacity on our audit; (v) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves on the compensation committee; or (vi) the director or a member of the director’s immediate family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past three years, exceeds the greater of $1,000,000 or 2% of that other company’s consolidated gross revenues. Once we achieve trading status, of which there can be no assurance, we will insure that our committees, as well as our Board of Directors, complies with all the requirements of a public company under the auspices of the OTC Marketplace. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors and persons beneficially owning more than 10% percent of our equity securities ("Reporting Persons") to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Based solely on our review of copies of such reports and representations from the Reporting Persons, we believe that during the year ended December 31, 2022, the Reporting Persons timely filed all such reports. 19 Code of Ethics Our board of directors has not adopted a code of ethics but plans to do so in the near future. ITEM 11. EXECUTIVE COMPENSATION The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by, or paid to our Chief Executive Officer and the other executive officer with compensation exceeding $100,000 during fiscal year ended 2022 and 2021 (each "Named Executive Officer"). SUMMARY COMPENSATION TABLE Name and principal position Year Salary ($) Bonus($) Stock Awards ($) (1) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All Other Compensation ($) Total ($) Michele Di Turi, 2022 -0- -0- -0- -0- -0- -0- -0- -0- Co-CEO and President, and Chairman 2021 21,327 -0- 993,600 -0- -0- -0- -0- 1,014,927 Claudio Ferri, 2022 -0- -0- -0- -0- -0- -0- -0- -0- Co-CEO and CIO 2021 -0- -0- 993,600 -0- -0- -0- -0- 993,600 (1) Represents a stock award of 7,000,000 shares for services performed valued at $993,600. Compensation of Directors During the year ended December 31, 2022, no compensation has been paid to our directors in consideration for their services rendered in their capacities as directors. 20 Stock Plan We have not adopted a stock plan but may do so in the future. Employment Agreements None of our executive officers are party to any employment agreement with us. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table lists, as of March 30, 2023, the number of shares of common stock beneficially owned by (i) each person, entity or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each of our Named Executive Officers and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal stockholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose or direct the disposition of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest. Except as noted below, each person has sole voting and investment power with respect to the shares beneficially owned and each stockholder’s address is c/o Kisses From Italy Inc., 80 SW 8 th Street, Suite 2000, Miami, Florida 33130. As of March 30, 2023, there were 210,220,534 shares outstanding. Class of Shares Name and Address # of Shares % of Class Common Michele Di Turi (1) 80 SW 8 th St. Suite 2000 Miami, Florida 33130 65,600,000 31.2 % Common Claudio Ferri (1)(2) 80 SW 8 th St. Suite 2000 Miami, Florida 33130 43,010,000 20.3 % Common Leonardo Fraccalvieri (1) 80 SW 8 th St. Suite 2000 Miami, Florida 33130 1,000,000 * Common All Officers and Directors as a Group (3 persons) 109,209,000 54.7% 5% Holders Common Denis Senecal Holdings 23,761,153 11.3 % * Less than 1% (1) Officer and director of our Company. (2) Includes 410,000 shares held by Mr. Ferri’s wife. Excludes 15,100 shares of Series C Stock held by Mr. Ferri and 5,000 shares of Series C Stock held by Mr. Ferri’s spouse. The Series C Stock does not have voting rights. (3) Denis Senecal has voting and dispositive authority over these shares. 21 Change-in-Control Agreements The Company does not have any change-in-control agreements with any of its executive officers. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Related Party Transactions During 2020, the Company issued 3,600,000 shares to each of its co-executive officers, which were valued at $360,000 each. On April 19, 2021, we issued 5,000,000 shares of common stock to Mr. Di Turi, our Co-Chief Executive Officer, President, and director, as bonus compensation. On April 19, 2021, we issued 5,000,000 shares of common stock to Mr. Ferri, our Co-Chief Executive Officer, Chief Investment Officer, and director, as bonus compensation. On September 27, 2021, and October 1, 2021, we issued 692,841 and 4,102,097 shares to Senecal, a 10% shareholder, upon the conversion of 30,000 and 150,000 shares, respectively of Series C Stock On December 15, 2021, we issued 2,000,000 shares of common stock to Mr. Di Turi, our Co-Chief Executive Officer, President, and director, as bonus compensation. On December 15, 2021, we issued 2,000,000 shares of common stock to Mr. Ferri, our Co-Chief Executive Officer, Chief Investment Officer, and director, as bonus compensation. Director Independence None of our current directors are deemed “independent” pursuant to SEC rules. We anticipate appointing independent directors in the foreseeable future. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Fees Paid to Independent Registered Public Accounting Firms The following table presents fees for professional audit services rendered by B F Borgers CPA PC, our independent auditors, during our fiscal years ended December 31, 2022, and 2021: December 31, 2022 December 31, 2021 Audit Fees $ 58,500 $ 43,200 Total $ 58,500 $ 43,200 Audit Fees consist of fees for professional services rendered for the audit of our financial statements included in our Annual Report on Forms 10-K and for the review of our interim financial statements included in our Quarterly Reports on Form 10-Q. Administration of the Engagement; Pre-Approval of Audit and Permissible Non-Audit Services We have not yet established an audit committee. Until then, there are no formal pre-approval policies and procedures. Nonetheless, the auditors engaged for these services are required to provide and uphold estimates for the cost of services to be rendered. The percentage of hours expended on BF Borgers CPA PC’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was 0%. 22 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES The following exhibits are included herewith: Exhibit No. Description 3.1 Articles of Incorporation filed with the Florida Department of State on March 7, 2013 (incorporated by reference to Form S-1 Registration Statement filed on May 15, 2018) 3.2 Articles of Amendment to Articles of Incorporation filed with the Florida Department of State on May 11, 2018 (incorporated by reference to Form S-1 Registration Statement filed on May 15, 2018) 3.3 Bylaws of Registrant (incorporated by reference to Form S-1 Registration Statement filed on May 15, 2018) 3.4 Articles of Amendment to Articles of Incorporation Certificate of Designation of Preferences, Rights and Limitations of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock (incorporated by reference to Current Report on Form 8-K filed on December 26, 2019) 3.5 Articles of Amendment to Articles of Incorporation filed with the Florida Department of State on March 7, 2022 (incorporated by reference to Form 8-K filed on March 21, 2022) 4.1 Warrant dated as of November 22, 2021, issued by Kisses from Italy Inc. to MacRab LLC (incorporated by reference to Form 8-K filed on November 30, 2021) 4.2 Promissory Note, dated April 6, 2022, issued by Kisses from Italy, Inc. to Talos Victory Fund, LLC (incorporated by reference to Form 8-K filed on April 15, 2022) 4.3 Common Stock Purchase Warrant, dated April 6, 2022, issued by Kisses from Italy, Inc. to Talos Victory Fund, LLC (incorporated by reference to Form 8-K filed on April 15, 2022) 4.4 Promissory Note, dated April 11, 2022, issued by Kisses from Italy, Inc. to Blue Lake Partners, LLC (incorporated by reference to Form 8-K filed on April 15, 2022) 4.5 Common Stock Purchase Warrant, dated April 11, 2022, issued by Kisses from Italy, Inc. to Blue Lake Partners, LLC (incorporated by reference to Form 8-K filed on April 15, 2022) 4.6 Promissory Note, dated May 11, 2022, issued by Kisses from Italy, Inc. to Fourth Man, LLC (incorporated by reference from Form 8-K filed on May 17, 2022) 4.7 Common Stock Purchase Warrant, dated May 11, 2022, issued by Kisses from Italy, Inc. to Fourth Man, LLC (incorporated by reference to Form 8-K filed on May 17, 2022) 4.8 Convertible Promissory Note, dated July 26, 202, issued by Kisses from Italy, Inc. to 1800 Diagonal Lending LLC (incorporated by reference to Form 8-K filed on August 1, 2022) 23 10.1 Assignment of Lease Agreement between Registrant and Paradigm Shift Holdings, Inc. and Palm Vacation Group for Palm Aire Location (incorporated by reference to Form S-1 Registration Statement filed on May 15, 2018) 10.2 Assignment of Lease Agreement between Registrant and Paradigm Holdings, Inc. and Sea Garden Beach and Tennis Resort, Inc. for Sea Garden Location (incorporated by reference to Form S-1 Registration Statement filed on May 15, 2018) 10.3 Online Virtual Office Arrangement between Registrant and Regis Management Group, LLC commencing July 1, 2018 (incorporated by reference to Form S-1 Registration Statement filed on May 15, 2018) 10.4 Form of 8% Convertible Debenture (incorporated by reference to Amendment to Form S-1/A Registration Statement filed on July 11, 2018) 10.5 Form of Convertible Debenture, 2018-9 Offering (incorporated by reference to Form 10-K filed April 16, 2019) 10.7 Development Agreement (incorporated by reference to Form 8-K filed June 23, 2020) 10.8 Distribution Financing -Lead Generation Agreement (incorporated by reference to Form 8-K filed June 23, 2020) 10.9 Registration Rights Agreement (incorporated by reference to Form 8-K filed June 23, 2020) 10.10 Investor Relations Consulting Agreement with HIR Holdings, LLC (incorporated by reference to Form 10-Q filed November 13, 2020) 10.11 Corporate Communication Consulting Agreement with Impact IR (incorporated by reference to Form 10-Q filed November 13, 2020) 10.12 Consulting Agreement, dated April 22, 2021, effective as of April 16, 2021, by and between Fransmart, LLC, a Delaware limited liability company, and Kisses from Italy-Franchising, LLC (Information has been excluded from Exhibit 10.12 because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.) (incorporated by reference to Form 8-K filed April 28, 2021) 10.13 Standby Equity Commitment Agreement, dated as of November 22, 2021, between Kisses from Italy Inc. and MacRab LLC (incorporated by reference to Form 8-K filed on November 30, 2021) 10.14 Registration Rights Agreement, dated as of November 22, 2021, between Kisses from Italy Inc. and MacRab LLC (incorporated by reference to Form 8-K filed on November 30, 2021) 10.15 Securities Purchase Agreement, dated April 6, 2022, by and between Kisses from Italy, Inc. and Talos Victory Fund, LLC (incorporated by reference to Form 8-K filed on April 15, 2022) 10.16 Registration Rights Agreement, dated April 6, 2022, by and between the Kisses from Italy, Inc. and Talos Victory Fund, LLC (incorporated by reference to Form 8-K filed on April 15, 2022) 10.17 Securities Purchase Agreement, dated April 11, 2022, by and between Kisses from Italy, Inc. and Blue Lake Partners, LLC (incorporated by reference to Form 8-K filed on April 15, 2022) 10.18 Registration Rights Agreement, dated April 11, 2022, by and between the Kisses from Italy, Inc. and Blue Lake Partners, LLC (incorporated by reference to Form 8-K filed on April 15, 2022) 24 10.19 Securities Purchase Agreement, dated May 11, 2022, by and between Kisses from Italy, Inc. and Fourth Man, LLC (incorporated by reference to Form 8-K filed on May 17, 2022) 10.20 Registration Rights Agreement, dated May 11, 2022, by and between the Kisses from Italy, Inc. and Fourth Man, LLC (incorporated by reference to Form 8-K filed on May 17, 2022) 10.21 Securities Purchase Agreement, dated July 26, 2022, by and between Kisses from Italy, Inc. and 1800 Diagonal Lending LLC (incorporated by reference to Form 8-K filed on |August 1, 2022) 10.21 Strategic Alliance Agreement, effective as of March 1, 2023, by and between SC Culinary LLC, a New York limited liability company, and Kisses From Italy Inc. (Information has been excluded from Exhibit 10.14 because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.) (incorporated by reference to Form 8-K filed on |March 2, 2023) 21.1 List of Subsidiaries * 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 31.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 * 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 * 101.INS XBRL Instances Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed. * Filed herewith. ITEM 16. FORM 10-K SUMMARY None. 25 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report to be signed on its behalf by the undersigned thereunder duly authorized. KISSES FROM ITALY, INC. Dated: March 31, 2023 By: /s/ Michel Di Turi Michel Di Turi Co-Chief Executive Officer and President (Principal Executive Officer) By: / s/ Claudio Ferri Claudio Ferri Co-Chief Executive Officer and Chief Investment Officer Principal Financial and Accounting Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 31, 2023 By: s/ Michel Di Turi Michel Di Turi, Director March 31, 2023 By: s/ Claudio Ferri Claudio Ferri, Director March 31, 2023 By: / s/ Leonardo Fraccalvieri Leonardo Fraccalvieri, Director 26