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Item 1A. Risk Factors

2021-08-10 compared with 2021-05-14 · 27 added, 14 removed, 92 unchanged (31% of the section changed)

7 unchanged sentences

The COVID-19 pandemic may also have the effect of heightening many of the other risks identified elsewhere in this section.

Investing in our common stock involves a high degree of risk You should consider carefully the following risks, together with all the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and notes thereto.

If any of the following risks actually materializes, our operating results, financial condition and liquidity could be materially adversely affected.

As a result, the trading price of our common stock could decline and you could lose part or all of your investment.

Investing in our common stock involves a high degree of risk You should carefully consider the following risks, together with all the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and notes thereto.

If any of the following risks materializes, our operating results, financial condition and liquidity could be materially adversely affected.

As a result, the trading price of our common stock could decline, and you could lose part or all your investment.

The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item1A, “ Risk Factors, ” contained in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 25, 2021 .

Except as disclosed below, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on March 25, 2021.

If any of the following risks materializes, our operating results, financial condition and liquidity could be materially adversely

There is substantial doubt about our ability to continue as a going concern as a result of our limited operating history, history of losses and financial resources, and if we are unable to generate significant revenue or secure financing, we may be required to cease or curtail our operations.

We have a long history of losses and incurred net losses of approximately $2.9 million and $3.9 million for the years ended December 31, 2020 and 2019, respectively and net losses of approximately $2.4 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively.

We have a long history of losses and incurred net losses of approximately $2.9 million and $3.9 million for the years ended December 31, 2020, and 2019, respectively and net losses of approximately $3.9 million and $0.9 million for the six months ended June 30, 2021, and 2020, respectively.

We have nominal revenues from our operations.

6 unchanged sentences

Such additional funding may not be available on commercially reasonable terms, or at all.

As of the six months ended June 30, 2021, we have only generated revenues of $11,200.

The issuance of additional shares of our common stock, convertible notes, convertible Preferred Stock, and other convertible securities may dilute the percentage ownership of the then-existing stockholders and may make it more difficult to raise additional equity capital.

As of March 22, 2021, there are outstanding options, warrants to purchase 23,567,879 and 0 shares of common stock, respectively.

In addition, we have outstanding Series C Preferred Stock that converts into 12,600,000 shares of common stock, notes that convert into 54,127 shares of common stock, and dividends on the Preferred X stock is convertible into an additional 32,477 shares of common stock.

As of June 30, 2021, there are outstanding options and warrants to purchase 11,696,211and 12,600,000 shares of common stock, respectively.

In addition, we have outstanding Series C Preferred Stock that converts into 8,150,705 shares of common stock, and dividends on Preferred Stock is convertible into an additional 376,803 shares of common stock.

The exercise of such options and warrants and conversion of convertible securities would dilute the then-existing stockholders’ percentage ownership of our stock, and any sales in the public market of common stock underlying such securities could adversely affect prevailing market prices for the common stock.

Moreover, the terms upon which we would be able to obtain additional equity capital could be adversely affected because the holders of our options and warrants can be expected to exercise them at a time when we would, in all likelihood, be able to obtain any needed capital on terms more favorable to us than those provided by such securities.

Moreover, the terms upon which we would be able to obtain additional equity capital could be adversely affected because the holders of our options and warrants can be expected to exercise them at a time when we would, likely, be able to obtain any needed capital on terms more favorable to us than those provided by such securities.

We may become involved in legal proceedings that could have a material adverse impact on our business, results of operations and financial condition.

2 unchanged sentences

however, we do not have liability insurance coverage to protect us from such claims.

A successful personally liability claim, or series of claims brought against us, in excess of our insurance coverage, would negatively impact our financial condition.

A successful personally liability claim, or series of claims brought against us, more than our insurance coverage, would negatively impact our financial condition.

From time to time and in the ordinary course of our business, we and certain of our subsidiaries may become involved in various legal proceedings and claims, including for example, employment disputes and litigation;

3 unchanged sentences

Small Business Administration.

On April 18, 2020, the Company’s former President and COO completed and submitted an application on behalf of the Company to Bank of America, NA (“Bank of America”) for a PPP loan, which was subsequently approved.

On April 25, 2020 the Company entered into an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of $460,000, and the Company received the full amount of the loan proceeds on May 4, 2020.

On April 18, 2020, the Company’s former President and COO completed and applied on behalf of the Company to Bank of America, NA (“Bank of America”) for a PPP loan, which was subsequently approved.

On April 25, 2020, the Company entered an unsecured Promissory Note (the “Note”) with Bank of America for a loan in the original principal amount of $460,000, and the Company received the full amount of the loan proceeds on May 4, 2020.

On July 21, 2020, Bank of America notified the Company in writing that it should not have received $440,000 of the loan proceeds disbursed under the Note.

15 unchanged sentences

Smith requested a “Right-to-Sue” letter, which she received, giving her a right to sue in District Court for 90 days from the date of the dismissed action.

On May 4, 2021, we were served with a Statement of Nature of Dispute, Claims and Issues to be Arbitrated in which Claimant TerraNova makes claims related to alleged breach of an agreement between the Parties dated August 17, 2020.

TerraNova claims damages in the amount of $385,000.

Terra Nova Matter

On May 4, 2021, we were served with a Statement of Nature of Dispute, Claims and Issues to be Arbitrated in which Claimant Terra Nova makes claims related to alleged breach of an agreement between the Parties dated August 17, 2020.

Terra Nova claims damages in the amount of $385,000.

Although we intend to vigorously defend against the claims, there can be no assurance that we will be successful.

4 unchanged sentences

In some cases, substantial non-economic remedies or punitive damages may be sought.

Although we maintain liability insurance coverage, there can be no assurance that such coverage will cover any particular verdict, judgment or settlement that may be entered against us, that such coverage will prove to be adequate or that such coverage will continue to remain available on acceptable terms, if at all.

Although we maintain liability insurance coverage, there can be no assurance that such coverage will cover any verdict, judgment or settlement that may be entered against us, that such coverage will prove to be adequate or that such coverage will continue to remain available on acceptable terms, if at all.

If we incur liability that exceeds our insurance coverage or that is not within the scope of the coverage in legal proceedings brought against us, it could have a material adverse effect on our business, results of operations and financial condition.

5 unchanged sentences

SALE OF UNREGISTERED SECURITIES

During the quarter ended March 31, 2021, we offered and sold securities below.

During the six months ended June 30, 2021, we offered and sold securities below.

On January 4, 2021, we issued 4,123,750 shares of common stock at a price of $0.012 per share pursuant to the conversion of $45,000 of principal and $4,485 of accrued interest in Eagle Equities Note 4.

20 unchanged sentences

The transaction was executed directly with us, and no brokers, dealers or representatives were involved.

On April 19, 2021, the Company issued 1,962 shares of common stock for professional fees which had been performed in a prior period.

The Company recorded these shares at the par value of $0.01 per share.

On May 4 through May 26, 2021, the Company issued 4,237,424 shares of common stock for the conversion of 1,059,356 shares of Series C Preferred Stock at a price of $0.25 per share.

On May 12, 2021, the Company issued 2,500,000 shares of common stock at a price of $0.03 per share for the exercise of stock options by a consultant.

Between June 10, 2021, and June 29, 2021, the Company issued 5,116,668 shares of common stock at a price of $0.03 per share for the exercise of stock options by officers and directors.

On June 23, 2021, the Company cancelled 2,000,000 shares of common stock held by an ex-officer in connection with a settlement agreement.

The cancellation of these shares was recorded at the par value of $0.01 per share.

Also, in connection with the settlement agreement, the Company issued 637,953 shares to the ex-officer at the market price of $.20 per share.

Also, during the six months ended June 30, 2021, the Company charged the amount of $7,897 to operations in connection with the vesting of stock granted to its officers and board members;

the Company also charged the amount of $201,292 to operations in connection with the vesting of options granted to its officers and board members.

Except for the issuances of common stock upon conversion of notes or the exchange of Common Stock for Series A Preferred Stock or notes which were effected relying on Section 3(a)(9) of the Securities Act as the common stock was exchanged by us with our existing security holders exclusively and no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange, the securities issued in each of the transactions described above were issued relying on Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder.

9 unchanged sentences

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

What changed 10-Q

Item 1A. Risk Factors