Sun Pacific Holding Corp. 10-K

Item 9A. Controls and Procedures As of the end of the period covered by this Annual Report, our Chief Executive Officer and Chief Financial Officer performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based on the evaluation and the identification of the material weaknesses in internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2019, the Company’s disclosure controls and procedures were not effective. Management’s Report on Internal Control over Financial Reporting Evaluation of Disclosure Controls and Procedures Pursuant to Rules 13a-15(b) and 15-d-15(b) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. The term “disclosure controls and procedures”, as defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based upon the evaluation of the disclosure controls and procedures at the end of the period covered by this report, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were not effective as a result of continuing weaknesses in its internal control over financial reporting principally due to the following: - The Company has not established adequate financial reporting monitoring activities to mitigate the risk of management override, specifically because there are few employees and only one officers with management functions and therefore there is lack of segregation of duties. - An outside consultant assists in the preparation of the annual and quarterly financial statements and partners with the Company to ensure compliance with US GAAP and SEC disclosure requirements. - Outside counsel assists the Company in the external attorneys to review and editing of the annual and quarterly filings and to ensure compliance with SEC disclosure requirements. At such time as the Company raises additional working capital it plans to add staff, initiate training, add additional subject matter expertise in its finance area so that it may improve it processes, policies, procedures, and documentation of its internal control processes. Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. 26 PART III Item 10. Directors, Executive Officers, and Corporate Governance; The current Directors and Officers of the Company are as follows: Executive Age Position Nicholas Campanella 55 Chairman of the Board, Chief Executive Officer and Director Vincent Randazzo 58 Director Sumair Mitroo** 53 (Former) Director ** Sumair Mitroo was removed from the Board on January 31, 2019 pursuant to the Bylaws of the Company as evidenced by Form 8-K filed on February 6, 2019. Nicholas Campanella, Director, CEO, and President is the founder of Sun Pacific Power Corp. and has been its President and a director since its inception in 2009. Mr. Campanella has been a serial entrepreneur. He has managed, owned, and led a number of companies in the development, contracting, insurance and manufacturing industries. From 1996 until 2015 he was the President of CGA Associates, an insurance brokerage company. From 2005 until 2009 he was the President of Northwoods Manufacturing and from 2004 to the present he is the President of Triplet Square, a real estate development company. Prior to 2004 he held positions of Vice President and Account Executive in the insurance industry. He has also served in many roles in community service including as an environmental commissioner and as the chairman of the economic development committee, along with serving as the Grand Knight for the Knights of Columbus. Mr. Campanella attended New York Institute of Technology in 1984, where he majored in Business Management. Vincent Randazzo, Director was appointed to the Board of Directors of Sun Pacific Holding Corp. because of his management experience with manufacturing operations and financial reporting. Mr. Randazzo received his Bachelor of Science in Business Administration from Saint Francis College. Mr. Randazzo started his career as an accounting clerk for Agip, USA. Thereafter, he quickly became a Manager of General Accounting for Time Warner Corporation rising to Plant Manager within 10 years with the company. In 1998, Mr. Randazzo joined I.L Walker, Inc., a folding carton manufacturing operation, as Vice President/General Manager. I.L. Walker, Inc. at the time had annual sales of $23,000,000. Mr. Randazzo was responsible for 155 employees, initiated new manufacturing and quality standards. Based on his experience with I.L. Walker, Inc., in 2001, Mr. Randazzo started his own firm, Zapp Packaging, Inc. driving sales from $1,500,000 the first year of operations to $15,000,000 in 2005 when he sold the company. In 2006, Mr. Randazzo joined MyPrint a division of e-Tools Corporation as V.P. of Operations until he was appointed C.E.O. in 2007, where he remains today. Mr. Randazzo’s experience brings expertise in building and growing businesses. Sumair Mitroo, (Former) Director was appointed to the Board of Directors in April 2017. Mr. Mitroo brings an impressive range of education, research, and proven business experience to the Company. He graduated with a degree in Chemistry from Case Western Reserve University (CWRU). From 1993 to 1995, Mr. Mitroo started in sales in the medical supplies industry with International Medical Supply, Inc. and rose to the rank of V.P. Between 1993 and 1997, Mr. Mitroo spearheaded several joint venture and international license technology collaborations between companies in USA and India as V.P. of Macro International, Inc. From 1998 to 2002, he worked for Geac Computer Corporation (NASDAQ: GEAC; TSE: GAC), and WorldCom/MCI. In 2003, Mr. Mitroo started Mitroo Networks and Communications, Inc., a telecom sales agency involved in providing voice and data solutions for companies worldwide, and in 2004, he started Ashoretree Services, Inc., to help organizations with outsourcing, subcontracting, or in-sourcing their marketing and BPO (Business Process Outsourcing). After starting as in investor in Larasan Pharmaceutical Corp. in 2003, Mr. Mitroo became CEO of Larasan in 2012. He is still currently involved in this role. Mr. Mitroo has been a consultant for business development for several firms. The term of the sitting Board of Directors was effective August 24, 2019 and expires on August 23, 2020. The shareholders shall be duly notified in accordance with the Bylaws of the Company and the laws of the state of Nevada for the appropriate shareholder meeting and request for shareholder voting per a formal proxy statement. 27 Committees As of the date of this Annual Report, the Company’s board of directors does not have any committees. The Board of Directors does not currently have a formal nominating committee as we are deemed a “controlled company” in that our CEO and Chairman, Nicholas Campanella holds greater than 50% voting control. As such, nominations of additional board members or nominees for shareholder election are set forth by Mr. Campanella. Mr. Campanella will consider shareholder nomination. However, there are currently no formal standards for accepting or rejecting such nominations. The Board of Directors does not currently have a formal auditing committee nor a member of the board that is a “audit committee financial expert” as defined by Item 507(d)(5). Family Relationships Nicholas Campanella and Vincent Randazzo are brothers in law. There are no other family relationships among the directors and executive officers of the Company. There is no arrangement or understanding between or among the directors or executive officers of the Company to which a director or executive officer of the Company was or is to be selected as a director. Involvement in Certain Legal Proceedings To our knowledge, during the last ten years, none of our directors and executive officers has: ● Had a bankruptcy petition filed by or against 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. ● Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses. ● Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities. ● Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. ● Been the subject to, or a party to, any sanction or order, not subsequently reverse, 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. Code of Ethics We do not currently have a code of ethic that applies to any member of the Board of Directors or our executive officers. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers and persons who own more than 10% of the issued and outstanding shares of our common stock to file reports of initial ownership of common stock and other equity securities and subsequent changes in that ownership with the SEC. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2019 all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with. Item 11. Executive Compensation Name and Principal Position Title Year Salary ($) Bonus ($) Stock Awards ($) Option Awards ($) Non-Equity Incentive Plan Compensation ($) Nonqualified Deferred Compensation Earnings ($) All other Compensation ($) Total ($) Nicholas Campanella (1) CEO 2017 -0- -0- -0- -0- -0- -0- -0- -0- 2018 -0- -0- -0- -0- -0- -0- -0- -0- 2019 -0- -0- -0- -0- -0- -0- 165,000 (2) 165,000 (1) Mr. Campenella received $165,000 for consulting services provided to to MedRecycler-RI, Inc., a subsidiary of the Company in the year ended December 31, 2019. (2) On December 20, 2017, the Company entered into a five-year employment agreement with Nicholas Campanella, Chief Executive Officer. Under the terms of the agreement, the Company is required to pay a base compensation of $165,000 annually, subject to increases in cost of living and performance bonuses as awarded by the Board of Directors. After 5 years, the agreement is automatically renewed for an additional two years unless terminated by either party. As part of the agreement Mr. Campanella opted to defer, with no interest, the receipt of compensation under the agreement until the Company has the funds to pay its obligation. 28 Compensation of Directors Our Directors do not receive compensation for sitting on the Board of Directors. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth, as of May 12, 2020, each person known by the Company to be the officer or director of the Company or a beneficial owner of five percent or more of the Company’s common stock. Except as noted, the holder thereof has sole voting and investment power with respect to the shares shown. Except as otherwise indicated, the address of each beneficial owner is c/o Sun Pacific Power Corporation, 215 Gordons Corner Road, Manalapan, New Jersey 07726. Name Position Number of Shares of Common Stock Percentage of Common Stock (1) Officers & Directors Nicholas Campanella Chairman of the Board. CEO, & Director 33,897,166 (2) 3.5 % Vincent Randanzzo Director 44,150 * Total Owned by all Officers and Directors 33,941,316 3.5 % (1) Applicable percentage ownership is based on 966,501,700 shares of common stock outstanding as of May 12, 2020. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock that are currently exercisable or exercisable within 60 days of are deemed to be beneficially owned by the person holding such securities for computing the percentage of ownership of such person but are not treated as outstanding for computing the percentage ownership of any other person. Nicholas Campanella, our Chairman and Chief Executive Officer holds 12,000,000 shares of Series A Preferred Stock as of May 19, 2020. The Series A Preferred Stock has voting rights equal to 1 25 votes on all matters submitted to a vote to the stockholders of the Company, does not have conversion, dividend or distribution upon liquidation rights. As a result, Mr. Campanella has the equivalent to 1,500,000,000 votes. Therefore, although the officers, directors and beneficial holders of shares greater than 5% of the common stock have voting rights equal to 3.5% of the voting rights of the common stock, this amounts to only 3.67% of the total voting rights available. Mr. Campanella thus has just over 50% of the total voting rights. Item 13. Certain Relationships and Related Transactions and Director Independence On August 24, 2017, the Company closed a share exchange agreement with the shareholder of Sun Pacific Power Corporation, a New Jersey corporation whereby the shareholders of Sun Pacific Power Corporation received 284,248,605 shares of common stock (pre-reverse stock split of 50:1) on a pro rata basis. Pursuant to the share exchange agreement, Nicholas Campanella was issued 976,351 shares of Series B Preferred Shares, which automatically converted into 30,126,775 shares of post reverse stock split common shares. Vincent Randazzo, our Director, is the brother-in-law of Nicholas Campanella, our Chairman and Chief Executive Office. 29 On February 7, 2019, MedRecycler-RI, Inc., of which the wholly owned subsidiary of the Company, MedRecycler, LLC, holds fifty one percent (51%), entered into an Indenture of Trust for a Promissory Note in the amount of $6,025,000, which has been subsequently amended adding an additional $2,700,000 in principal to the Promissory Note. Pursuant to the Indenture of Trust, Nicholas Campanella, our CEO and Chairman, provided pledged of personal assets to the note holder, including, real property and all equity ownership in the Company. Mr. Campanella received thirty nine percent (39%) or thirty-nine thousand shares of MedRecycler-RI, Inc. as consideration for his efforts and services in 2019 as well as his agreement to pledge substantial personal assets. Please refer to Note 7 of the financial statements for details related to related party transactions. Item 14. Principal Accounting Fees and Services. The aggregate fees incurred for each of the last two years for professional services rendered by Turner, Stone & Company, LLC, the independent registered public accounting firm for the audit of the Company’s annual financial statements included in the Company’s Form 10-K and review of financial statements for its quarterly report (Form 10-QT) are reported below. The total fees charged by Turner, Stone & Company, LLC in 2019 and 2018 aggregated $33,280 and $29,230, respectively, which includes fees for the 2018 and 2019 audited financial statements and review of the quarterly financial statements. Audit Taxes Filings Oher Total 2019 $ 32,280 $ - $ - $ - $ 33,280 2018 $ 29,230 $ - $ - $ - $ 29,230 30 PART IV Item 15. Exhibits, Financial Statement Schedules Exhibit Number Description of Exhibit Filed 3.1 Amended and Restated Articles of Incorporation filed May 29, 2015 Form 10 October 13, 2015 3.2 Bylaws dated April 5, 2005 Form 10 October 13, 2015 3.3 Designation of Series B and Series C Preferred Stock filed with the state of Nevada on August 11, 2017 Form 8-K August 18, 2017 3.4 Certificate of Amendment filed with the state of Nevada on October 3, 2017 Form 8-K October 13, 2017 3.5 Certificate of Change (Reverse Stock Split) filed with the state of Nevada on October 3, 2017 Form 8-K October 13, 2017 10.1 The Acquisition Agreement between the Company and Sun Pacific Power Corp., dated August 16, 2017 Form 8-K August 29, 2017 10.2 The Spinoff Agreement with the Company, Randy Romano, and Vaughan Dugan, dated August 24, 2017 Form 8-K August 18, 2017 10.3 The Forbearance Agreement between the Company and Nicholas Campanella, dated January 11, 2019. Form 8-K January 14, 2019 10.4 Guarantee of Payment and Performance between the Company and UMB Bank, N.A., date February 7, 2019 Form 8-K February 11, 2019 10.5 Extension of Forbearance Agreement between the Company and Nicholas Campanella, dated April 3, 2019 Form 10-K April 4, 2019 31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Herein 31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Herein 32.1 Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 . Herein 32.2 Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Herein 101.INS XBRL Instance 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation 101.DEF XBRL Taxonomy Extension Definition 101.LAB XBRL Taxonomy Extension Labels 101.PRE XBRL Taxonomy Extension Presentation 31 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Sun Pacific Power Corp. Date: 5/20/2020 By: /s/ Nicholas Campanella Name: Nicholas Campanella Title: Chairman of the Board of Directors, & Chief Executive Officer (Principal Executive Officer) Date: 5/20/2020 By: /s/ Nicholas Campanella Name: Nicholas Campanella Title: Chief Financial Officer (Principal Financial and Accounting Officer) In accordance with the Exchange Act, this report has been signed below by the following persons on May 20, 2020 on behalf of the registrant and in the capacities indicated. Signature Title /s/ Nicholas Campanella Chairman of the Board of Directors, Chief Nicholas Campanella Executive Officer, & Chief Financial Officer (Principal Executive Officer) (Principal Financial and Accounting Officer) /s/ Vincent Randazzo Director Vincent Randazzo 32 FINANCIAL STATEMENTS Report of Independent Registered Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2019 and 2018 F-3 Consolidated Statements of Operations for the Years Ended December 31, 2019 and 2018 F-4 Consolidated Statement of Stockholders’ Deficit for the Years Ended December 31, 2019 and 2018 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2019 and 2018 F-6 Notes to Consolidated Financial Statements F-7 F- 1 R eport of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders Sun Pacific Holding Corp. and Subsidiaries Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Sun Pacific Holding Corp. and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2019 and 2018, and the results of its consolidated operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has suffered recurring losses from operations since inception and has a significant working capital deficiency, both of which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Turner, Stone & Company, L.L.P. Dallas, Texas May 20, 2020 We have served as the Company’s auditor since 2017. F- 2 SUN PACIFIC HOLDING CORP. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2019 and 2018 December 31, 2019 December 31, 2018 ASSETS Current Assets: Cash and cash equivalents $ 109,561 $ 4,851 Cash held in escrow 1,161,388 - Prepaid interest held in escrow 450,909 - Accounts receivable, net of allowance for uncollectable accounts of $22,835 and $145,155, respectively 33,458 77,137 Other current assets - 7,234 Total current assets 1,755,316 89,222 Property and Equipment, Net 647,507 204,951 Right-of-use Asset 1,256,405 - Deposits and Other Assets 5,682,329 - Total assets $ 9,341,557 $ 294,173 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current Liabilities: Accounts payable $ 281,126 $ 245,125 Accounts payable, related party 91,540 91,512 Accrued compensation to officer 767,963 631,166 Accrued expenses 546,995 203,670 Accrued expenses, related party 65,188 31,745 Dividends payable, related party 22,038 18,913 Advances from related parties 614,654 612,023 Project financing obligation 260,000 260,000 Vehicle installment notes payable, current portion - 28,943 Convertible notes payable, net of discounts 196,850 423,454 Convertible notes payable, related party, net of discounts 408,974 408,974 Note Payable, net of discounts 200,000 - Lease liability, current portion 88,356 - Total current liabilities 3,543,684 2,955,525 Long Term Liabilities: Notes payable, net of discounts 8,703,438 - Lease liability, net of current portion 1,236,597 - Vehicle installment notes payable, net of current portion - 31,724 Total liabilities 13,483,719 2,987,249 Commitments and contingencies (see Note 7) Stockholders’ Deficit: Preferred stock $0.0001 par value, 20,000,000 million shares authorized: Series A preferred stock: 12,000,000 shares designated; 12,000,000 shares issued and outstanding 1,200 1,200 Series B preferred stock: 1,000,000 shares designated; -0- shares issued and outstanding, respectively - - Series C preferred stock: 500,000 shares designated; -0- and 275,000 shares issued and outstanding, respectively - - Common stock $0.0001 par value, 1,000,000,000 shares authorized; 725,982,137 and 69,901,354 shares issued and outstanding, respectively 72,598 6,690 Additional paid in capital 4,717,462 3,948,051 Accumulated deficit (8,342,437 ) (6,649,017 ) Total deficit (3,551,177 ) (2,693,076 ) Non-controlling interst in subsidiary (590,986 ) - Total stockholders’ deficit (4,142,162 ) (2,693,076 ) Total liabilities and stockholders’ deficit $ 9,341,557 $ 294,173 The accompanying footnotes are an integral part of these consolidated financial statements. F- 3 SUN PACIFIC HOLDING CORP CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 2019 2018 Revenues $ 300,733 $ 584,650 Cost of Revenues 214,896 311,492 Gross profit 85,837 273,158 Operating expenses: Wages and compensation 243,343 517,627 Professional fees 435,741 530,634 Insurance 12,979 2,658 Rent 40,580 39,297 General and administrative 568,626 479,580 Total operating expenses 1,301,269 1,569,796 Loss from operations (1,215,432 ) (1,296,638 ) Other Expenses: Dividend expense - preferred stock - (22,917 ) Other income, net 1,966 - Interest expense (566,700 ) (455,926 ) Total other expense. net (564,734 ) (478,843 ) Net loss $ (1,780,166 ) $ (1,775,481 ) Deemed dividend from warrant adjustments (504,240 ) - Net loss attributable to non-controlling interst 590,986 - Net loss attributable to common stockholders $ (1,693,420 ) $ (1,775,481 ) Net Loss Per Common Share - Basic and Diluted $ (0.01 ) $ (0.03 ) Weighted Average Shares Outstanding - Basic and Diluted 324,690,784 62,471,599 The accompanying footnotes are an integral part of these consolidated financial statements. F- 4 SUN PACIFIC HOLDING CORP CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT FOR THE YEAR ENDED DECEMBER 31, 2019 and 2018 Series A Preferred Series B Preferred Series C Preferred Additional Non- Stock Stock Stock Common Stock Paid In Accumulated Controlling Total Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Interest Deficit Balances at December 31, 2017 12,000,000 $ 1,200 - $ - 275,000 $ 28 $ 60,833,030 $ 6,083 $ 3,168,626 $ (4,873,536 ) - $ (1,697,599 ) Issuance of common stock for cash - - - - - - 1,230,000 123 172,877 - - 173,000 Issuance of common stock for services - - - - - - 668,324 67 84,142 - - 84,209 Issuance of common stock warrants for services - - - - - - - - 130,641 - - 130,641 Issuance of common stock warrants with convertible debt - - - - - - - - 350,000 - - 350,000 Issuance of common stock warrants for extension of maturity of debt - - - - - - - - 16,401 - - 16,401 Issuance of common stock upon conversion of convertible debt - - - - - - 4,170,000 417 25,335 - - 25,752 Redemption of preferred stock - - - - (275,000 ) (28 ) - - 28 - - - Net loss - - - - - - - - - (1,775,481 ) - (1,775,481 ) Balances at December 31, 2018 12,000,000 1,200 - - - - 66,901,354 6,690 3,948,051 (6,649,017 ) - (2,693,077 ) Issuance of common stock upon conversion of convertible debt - - - - - - 530,633,483 53,063 278,017 - - 331,080 Cashless exercise of common stock warrants - - - - - - 128,447,300 12,845 (12,845 ) - - - Deemed dividend - adjustments to warrants - - - - - - - - 504,240 (504,240 ) - - Net loss - - - - - - - - - (1,189,180 ) (590,986 ) (1,780,166 ) Balances at December 31, 2019 12,000,000 $ 1,200 - $ - - $ - 725,982,137 $ 72,598 $ 4,717,462 $ (8,342,437 ) $ (590,986 ) $ (4,142,163 ) The accompanying footnotes are an integral part of these consolidated financial statements. F- 5 SUN PACIFIC HOLDING CORP CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 2019 2018 Cash flows from Operating Activities: Net loss $ (1,780,166 ) $ (1,775,481 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 56,262 88,779 Amortization of debt discount - interest expense 406,275 348,446 Allowance for uncollectable accounts (122,320 ) 26,934 Loss on settlement of convertible debt 31,220 - Gain on sale of property and equipment (2,576 ) - Stock issued for services - 84,209 Warrants issued for services - 130,641 Changes in operating assets and liabilities: Accounts receivable 165,999 (27,342 ) Deposits 7,234 (122 ) Accounts payable 36,001 56,659 Accounts payable, related party 28 6,500 Accrued compensation to officer 136,797 180,000 Accrued expenses 410,120 111,875 Accrued expenses, related party 33,443 4,583 Right-to-use asset and obligation 68,548 - Dividends payable, related party 3,125 6,250 Net cash used in operating activities (550,010 ) (758,069 ) Cash flows from Investing Activities: Purchase of property and equipment (538,242 ) - Payment of deposits on equipment (5,682,329 ) - Proceeds from sale of property and equipment 42,000 - Net cash provided by (used in) investing activities (6,178,571 ) - Cash flows from Financing Activities: Proceeds from advances from related parties 2,631 23,506 Proceeds from notes payable released from escrow 8,453,624 - Proceeds from issuance of common stock - 173,000 Proceeds from the issuance of convertible debt 200,000 281,660 Repayment of convertible debt (150,000 ) (5,000 ) Proceeds from project financing obligation - 260,000 Repayment of vehicle installment notes payable (60,667 ) (25,985 ) Net cash provided by financing activities 8,445,588 707,181 Net decrease in cash and restricted cash 1,717,007 (50,888 ) Cash at beginning of year 4,851 55,740 Cash and restricted cash at end of year $ 1,721,858 $ 4,852 Supplemental Disclosure of Cash Flow Information: Interest paid $ 368,474 $ 24,928 Taxes paid $ - $ - Supplemental Disclosure of Non-Cash Investing and Financing Activities: Original issue discount on convertible notes $ - $ 68,340 Increase in convertible notes and discounts from extension $ - $ 50,000 Issuance of common stock upon conversion of convertible debt $ 331,080 $ 25,752 Debt discounts on convertible notes payable $ - $ 366,401 Right of use asset and operating lease liability $ 1,338,686 $ - Automatic redemption of preferred shares $ - $ 28 The accompanying footnotes are an integral part of these consolidated financial statements. F- 6 SUN PACIFIC HOLDING CORP NOTES TO CONSOLIDATED FINACNIAL STATEMENTS YEARS ENDED DECEMBER 31, 2019 and 2018 NOTE 1 - DESCRIPTION OF THE BUSINESS The Company was incorporated under the laws of the State of New Jersey on July 28, 2009, as Sun Pacific Power Corporation and together with its subsidiaries, are referred to as the “Company”. On August 24, 2017, the Company entered into an Acquisition Agreement with EXOlifestyle, Inc. whereby the Company became a wholly owned subsidiary of EXOlifestyle, Inc. The acquisition was accounted for as a reverse merger, resulting in the Company being considered the accounting acquirer. Accordingly, the accompanying condensed consolidated financial statements included the accounts of EXOlifestyle, Inc. since August 24, 2017. Currently, the Company has six (6) subsidiary holdings. Sun Pacific Power Corp which was the initial company that specialized in solar, electrical and general construction, Bella Electric, LLC that in conjunction with the Company operates our electrical contracting work. Bella Electric, LLC is a Pennsylvania limited liability company. The Company also formed Sun Pacific Security Corp., a New Jersey corporation. Currently the Company has not begun operations in the security sector but is reviewing plans to provide residential and commercial security solutions, including installation and monitoring. The Company also formed National Mechanical Group Corp, a New Jersey corporation focused on plumbing operations in the New Jersey and Pennsylvania areas. Currently the Company is exploring migrating National Mechanical Group Corp from plumbing operations to partnering on a Solar Farm project in Durango Mexico in which it will partner with Soluciones De Energia Diversificada Internacional, S.A.P.I. (“SEDI”), a subsidiary of Blissful Holdings, LLC. The partnership has identified, received preliminary terms, and is proceeding with due diligence including a site visit in December with a project funding source/partner in support of its partnership with SEDI to build and develop the Durango Mexico Solar Farm Project. The proposed project funding would be for up to $80 million in capital to build a 40 plus megawatt solar farm in which NMG and SEDI would own a thirty percent equity interest in the completed project. The Company also formed Street Smart Outdoor Corp, a Wyoming corporation that acts as a holding company for the Company’s state specific operations in unique advertising through solar bus stops, solar trashcans and “street kiosks.” MedRecycler, LLC, is a wholly owned subsidiary duly formed in the state of Nevada. MedRecycler, LLC was created in 2018 to act as a holding company for potential waste to energy projects. MedRecycler, LLC, currently owns 51% of MedRecycler RI, Inc. a Rhode Island corporation. MedRecycler RI, Inc. was created for the Medical Waste to Energy facility that the Company is attempting to finance and operate in West Warrick, Rhode Island. MedRecycler RI, Inc. is currently exploring permanent financing options to fund its operations that meet the underwriting requirements of various bond/debt investors and issuing authorities, which if put into place would require changes to MedRecycler RI, Inc.’s and or the Company’s organizational structure. The Company is exploring creative solutions that would meet the requirements of the various financing parties and still provide equivalent profit sharing arrangements between the parties that allow Sun Pacific to also undertake other projects as it focuses on the best organizational structure to allow it to fund and grow its green energy objectives. Description of business Utilizing managements history and contacts in general contracting, coupled with our subject matter expertise and intellectual property (“IP”) knowledge of solar panels and other environmentally friendly technologies, Sun Pacific Holding (“the Company”) is focused on building a “Next Generation” green energy company. The Company offers competitively priced “Next Generation” solar panel and lighting products by working closely with design, engineering, integration and installation firms in order to deliver turnkey solar and other energy efficient solutions. The Company provides solar bus stops, solar trashcans and “street kiosks” that utilize our unique advertising offerings that provide State and local municipalities with costs efficient solutions. The Company provides general, electrical, and plumbing contracting services to a range of both public and commercials customers in support of our goals of expanding our green energy market reach. In conjunction with these general contracting services and as part of our effort to expand our green energy marketplace, we are in the process of developing and building, with partners, a Waste to Energy plant in the state of Rhode Island. Given the Company’s financial development stage position we are exploring partnerships that allow the Company to develop additional green energy projects such as solar farms and or other green projects that can utilize the Company’s expertise by partnering with others and using creative financing arrangements and other participation rights agreements to augment the Company’s negative working capital. F- 7 The Company has been unable to produce positive cashflows since inception resulting in the Company relying heavily upon convertible promissory notes and equity financing. As a result, the Company’s shareholders have suffered from highly dilutive financings. The Company will need to continue to rely upon debt, equity, partnership arrangements, and other sharing or rights participation agreements to fund its ability to undertake new and ongoing business opportunities to remain viable in the future. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of estimates in the preparation of financial statements Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates include the allowance for doubtful accounts and impairment assessments related to long-lived assets. Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned, and less-than-wholly owned subsidiaries of which the Company holds a controlling interest. All significant intercompany balances and transactions have been eliminated. Amounts attributable to minority interests in the Company’s less-than-wholly owned subsidiary are presented as non-controlling interest on the accompanying condensed consolidated balance sheets and statements of operations. Cash, Cash Equivalents and Cash Held in Escrow For purposes of the consolidated statements of cash flows, cash includes demand deposits and short-term liquid investments with original maturities of three months or less when purchased. As of December 31, 2018, the Federal Deposit Insurance Corporation (FDIC) provided insurance coverage of up to $250,000, per depositor, per institution. At December 31, 2019, none of the Company’s cash balances were in excess of federally insured limits with the exception of $1,161,388 of cash balances held in escrow at UMB Bank, NA under a project fund that the Company’s subsidiary, MedRecycler-RI, Inc. is drawing balances against for the development of its Medical Waste to Energy project in Rhode Island. Any and all withdrawals are strictly controlled by the lending institution and use of proceeds must be approved prior to release of funds. As of December 31, 2019, th Company also has $450,909 of cash balacnes held in escrow for the prepayment of interest on the project finaning. Accounts Receivable In the normal course of business, we decide to extend credit to certain customers without requiring collateral or other security interests. Management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific customers. Periodically we estimate this allowance based on the aging of the accounts receivable, historical collection experience, and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change and can have an impact on collections and our estimation process. The Company’s allowance for doubtful accounts totaled $22,835 and $145,155 as of December 31, 2019 and 2018, respectively. Contingencies Certain conditions may exist as of the date financial statements are issued, which may result in a loss, but which will only be resolved when one or more future events occur or do not occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to pending legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed. F- 8 Fair value of financial instruments The carrying amounts of the Company’s accounts payable, accrued expenses, and shareholder advances approximate fair value due to their short-term nature. The Company’s long-term debt approximates fair value based on prevailing market rates. Property and equipment Property and equipment are stated at cost. Additions and improvements that significantly add to the productive capacity or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over three to five years for vehicles and five to ten years for equipment. Leasehold improvements are amortized over the lesser of the estimated remaining useful life of the asset or the remaining lease term. Interest costs incurred that are directly related to the construction of long term assets are capitalized during the construction period. As of December 31, 2019 and 2018, $651,828 and $0, respectively, is included in property plant and equipment. Capitalized Interest During the year ended December 31, 2019, the Company incurred total interest costs of $1,025,926, of which, $651,828 was capitalized and included in property and equipment as of December 31, 2019. Impairment of long-lived assets The Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. At December 31, 2019 and 2018, the Company has not identified any such impairment losses. Income taxes Under ASC Topic 740, “Income Taxes”, the Company is required to account for its income taxes through the establishment of a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit carry forwards. Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets and liabilities for book and tax purposes during the year. 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. Deferred tax assets are recognized for deductible temporary differences and operating losses, and tax credit carry forwards. A valuation allowance is established to reduce that deferred tax asset if it is “more likely than not” that the related tax benefits will not be realized. Leases In February 2016, the FASB issued ASU No. 2016-02 (Topic 842). Topic 842 amends several aspects of lease accounting, including requiring lessees to recognize leases with a term greater than one year as a right-of-use asset and corresponding liability, measured at the present value of the lease payments. In July 2018, the FASB issued supplemental adoption guidance and clarification to Topic 842 within ASU 2018-10 “Codification Improvements to Topic 842, Leases” and ASU 2018-11 “Leases (Topic 842): Targeted Improvements.” The new guidance aims to increase transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and requiring disclosure of key information about leasing arrangements. A modified retrospective application is required with an option to not restate comparative periods in the period of adoption. The Company, effective January 1, 2019 has adopted the provisions of the new standard. The Company has operating leases for warehouses and offices. Management evaluates each lease independently to determine the purpose, necessity to its future operations in addition to other appropriate facts and circumstances. F- 9 We adopted Topic 842 using a modified retrospective approach for all existing leases at January 1, 2019. The adoption of Topic 842 impacted our balance sheet by the recognition of the operating lease right-of-use assets and the liability for operating leases. Accordingly, upon adoption, leases that were classified as operating leases under the previous guidance were classified as operating leases under Topic 842. The lease liability is based on the present value of the remaining lease payments, discounted using a market based incremental borrowing rate as the effective date of January 1, 2019 using current estimates as to lease term including estimated renewals for each operating lease. As of January 1, 2019, the Company recorded an adjustment of approximately $1,339,000 to operating lease right-of-use assets (“ROU”) and the related lease liability (Note 7). Deposits During the year ended December 31, 2019, the Company made deposits of approximately $5,000,000 pursuant to a purchase of equipment costing approximately $7,200,000. We are currently expected to commence operations in late summer to early fall of 2020 at MedRecycler-RI, Inc.’s West Warwick, Rhode Island facility. Revenue recognition 100% of the Company’s revenue for the years ended December 31, 2019 and 2018, is recognized based on the Company’s satisfaction of distinct performance obligations identified in each agreement, generally at a point in time as defined by Topic 606, as amended. In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers. This standard replaced most existing revenue recognition guidance and is codified in FASB ASC Topic 606. Effective January 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective method. Under the new guidance, the Company recognizes revenue from contracts based on the Company’s satisfaction of distinct performance obligations identified in each agreement. The adoption of the guidance under ASU No. 2014-09 did not result in a material impact on the Company’s consolidated revenues, results of operations, or financial position. As part of the implementation of ASC 606 the Company must present disaggregation of revenues from contracts with customers into categories that depict how the nature, timing, and uncertainty of revenue and cash flows are affected by economic factors. Quantitative disclosures on the disaggregation of revenue are as follows: 2019 2018 Outdoor Advertising Shelter Revenues $ 150,636 $ 276,591 Contracting Service Revenues 150,097 308,059 $ 300,733 $ 584,650 Advertising Costs Advertising costs are expensed in the period incurred and totaled $21,939 and $27,727 for the years ended December 31, 2019 and 2018, respectively. Earnings Per Share Under ASC 260, “Earnings Per Share” (“EPS”), the Company provides for the calculation of basic and diluted earnings per share. Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings or losses of the entity. For the years ended December 31, 2019 and 2018, basic and diluted loss per share are the same as the calculation of diluted per share amounts would result in an anti-dilutive calculation. For the years ended December 31, 2019 and 2018, the following potential shares have been excluded from the calculation of diluted loss per share because their impact was anti-dilutive: 2019 2018 Convertible Debt 142,600,652 201,542,064 Convertible Debt Subject to Forebearance 654,557,961 - Warrants 365,590,508 8,324,757 1,162,749,121 209,866,791 Recent Accounting Pronouncements Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements. F- 10 NOTE 3 - GOING CONCERN The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the years ended December 31, 2019 and 2018, the Company incurred losses from operations of $1,215,432 and $1,296,638, respectively. The Company had a working capital deficit of $10,491,807 as of December 31, 2019. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise the additional capital to meet short and long-term operating requirements. Management is continuing to pursue external financing alternatives to improve the Company’s working capital position however additional financing may not be available upon acceptable terms, or at all. If the Company is unable to obtain the necessary capital, the Company may have to cease operations. NOTE 4 – PROPERTY AND EQUIPMENT, NET Property and equipment consisted of the following as of December 31, 2019 and 2018: 2019 2018 Furniture and equipment $ 289,479 $ 271,817 Vehicles 67,240 189,012 Leasehold Improvements 563,165 66,077 Less: Accumulated Depreciation (272,377 ) (321,955 ) Property and equipment, net $ 647,507 $ 204,951 Depreciation expenses totaled $56,262 and $88,779 for the years ended December 31, 2019 and 2018, respectively. NOTE 5 - BORROWINGS Vehicle installment notes payable The Company’s vehicle installment notes payable consist of several installment notes for various vehicles used in the Company’s operations. The notes have annual interest rates between 3.49% and 4.07% and require monthly minimum payments of principal and interest ranging from $370 to $434. The Company’s installment notes are collateralized by the vehicles purchased with the respective installment notes. The notes mature from November 2020 to August 2021. During the years ended December 31, 2018 and 2019, the Company sold several vehicles securing the notes, which was settled as a result of the sales. As of December 31, 2019 and 2018, the balance of the notes totaled $0 and $60,667, respectively. Convertible notes payable On August 24, 2016, the Company issued two two-year unsecured convertible notes payable totaling $200,000 pursuant to a private placement memorandum. The notes matured on August 24, 2018 and have an annual interest rate of 12.5%. At the election of the holder, upon the occurrence of certain events, the notes can be converted into common stock of the Company at a conversion price per share equal to 50% of the average bid price for the 30 consecutive business days prior to conversion. The conversion feature is contingent upon i) the successful filing of a registration statement to become publicly traded, and ii) the company stock has become publicly quoted on the OTC Markets and iii) the conversion price is above $0.10. In August 2018, the holders of the notes agreed to extend the maturity date of the notes to December 31, 2018, in exchange for warrants to acquire 600,000 shares of common stock for an exercise price of $0.31 per share, exercisable over three years. The Company estimated the fair value of the warrants, totaling $16,401, using the Black Scholes Method and recorded an additional discount against the note to be amortized over the extended term of the notes. The notes are carried at $196,850, with no remaining unamortized discount as of December 31, 2019 and 2018. The notes are currently in default and have not been converted. F- 11 In April 2018, the Company issued convertible notes with an aggregate principal balance of $350,000, for net proceeds after issuance costs which were recorded as a discount against the debt to be amortized into interest expense through the maturity of the notes, of $281,660. The notes mature in April 2019, accrue interest at an annual rate of 10% and are convertible into common stock at a conversion rate equal to the lesser of $0.05 and 60% times the lowest trading price of the Company’s common stock during the 18 trading days prior to conversion. Because the conversion feature is indexed to the Company’s stock, and there is an explicit cap to the total number of shares issuable upon conversion, the Company determine that the embedded conversion option did not require bifurcation and liability presentation. The investors in the notes also received warrants to acquire an aggregate of 6,349,457 shares of common stock for an exercise price of $0.11 per share, exercisable for 2 years. The Company estimated the fair value of the warrants using the Black Scholes model and the following assumptions: volatility – 261.8% to 268.7%; expected term – 2.0 years; dividend rate – 0.0%; risk free rate – 2.49%, and allocated $173,355 of the proceeds to the warrants, which was recorded as a discount against the debt to be amortized into interest expense through the maturity of the notes. Based on the allocation of proceeds to the debt, the Company determined there was a beneficial conversion feature totaling $176,645, which was recorded as a discount against the debt to be amortized into interest expense through the maturity of the notes. On November 13, 2018, the Company entered into agreements with the holders of the notes to extend the “Prepayment Termination Date” to December 23, 2018, as defined in the respective Promissory Notes in exchange for the addition of $25,000 to the principal of the principal of each note, which was recorded as an additional discount against the note and amortized into interest expense through the extended “Prepayment Termination Date”. During the years ended December 31, 2019 and 2018, the Company amortized $156,461 and $311,879, respectively, of the discounts. As of December 31, 2018, the notes are carried at $226,604, net of unamortized discounts of $156,461. On July 8, 2019, the Company entered into a settlement agreement with Auctus Fund, LLC, settling all amounts owed pursuant to that convertible promissory note entered into on April 30, 2018 for $150,000. During the year ended December 31, 2019, the holders of the notes elected to converted all remaining principal and accrued interest outstanding under the notes into 659,080,783 shares of common stock. Convertible notes payable, related party On October 23, 2015, a total of $332,474 in advances from a related party was converted into two one-year unsecured convertible notes payable to Nicholas Campanella, Chief Executive Officer of the Company. The notes have an annual interest rate of 6% and are currently in default. At the election of the holder, the notes can be converted into common stock of the Company at a conversion price per share equal to 20% of the average bid price for the three consecutive business days prior to conversion. As of December 31, 2019 and 2018, the balances of the notes totaled $332,474. On August 24, 2016, a total of $75,000 in advances from a related party was converted into a two-year unsecured convertible note payable to Nicholas Campanella, Chief Executive Officer of the Company, pursuant to a private placement memorandum. The note matures on August 24, 2018, has an annual interest rate of 12.5% and is due at maturity. At the election of the holder, upon the occurrence of certain events, the note can be converted into common stock of the Company at a conversion price per share equal to 50% of the average bid price for the 30 consecutive business days prior to conversion. The conversion feature is contingent upon i) the successful filing of a registration statement to become publicly traded, and ii) the company stock has become publicly quoted on the OTC Markets and iii) the conversion price is above $0.10. In connection with this note, the Company issued 75,000 shares of Series B preferred stock, as further described in Note 6. As of December 31, 2019 and 2018, the balance of the notes was $75,000. The notes are carried at $76,500 as of December 31, 2019 and 2018, with no remaining unamortized discounts. Accrued interest on the convertible notes, related party totaled $61,256 and $31,745 as of December 31, 2019 and 2018, respectively. Project Financing Obligation In June 2018, the Company received proceeds of $260,000 pursuant to a partnership agreement and related partnership contribution agreements with third party investors, pursuant which investors have agreed to provide financing for no less than (10) ten new bus shelters being installed annually. Each investment in the partnership grants the investor the right to preferential distributions of profits related to the Company’s contract with Rhode Island. The investors receive 100% of the profits from the Rhode Island contract to install 20 bus shelters until 100% of the initial investments are returned. Thereafter, the investors receive 20% of the remaining profits from Rhode Island contract. As of December 31, 2019 and 2018, no profits have been earned on the Rhode Island contract, no repayments have occurred and the total amount of investments received totaling $260,00 is reflected on the accompanying consolidated balance sheet as a Project Financing Obligation. F- 12 Line of credit, related party On October 23, 2015, the Company entered into a line of credit agreement with Nicholas Campanella, Chief Executive Office of the Company, for a total value of $250,000. The line of credit does not bear an interest rate and is payable on demand. As of December 31, 2019 and 2018, the balance of the debt to related party was $164,261 and $161,630, respectively. Indenture of Trust In January 2019, MedRecycler, LLC, a 51%-owned subsidiary of Sun Pacific Holding organized in the state of Rhode Island for the development of waste to energy projects in the state of Rhode Island. Currently, MedRecycler-RI, Inc. has entered into an Indenture of Trust in the amount of $6,025,000.00 as bridge financing for a project in West Warwick, Rhode Island. The proceeds from the indenture are held in escrow to be used to (i) to provide for the financing of certain waste to energy facility and related improvements (the “Improvements”); (ii) to provide for the financing or refinancing of certain equipment to be used in connection with the Improvements (the “Equipment” and together with the Improvements, the “Project”); (iii) to provide for the financing of capitalized interest; and (iv) to pay certain costs incurred in connection with the Project. The principal balance of the indenture accrues interest at an annual rate of 12%, payable semi-annually, and matures on January 29, 2020. The Company incurred debt issuance costs of $271,375, which were recorded as a discount against the indenture to be amortized into interest expense through the maturity of the indenture. On October 9, 2019, the Company entered into the First Amended Indenture of Trust (the “Amended Indenture”), with UMB Bank, N.A., a national banking association (“UMB”) increasing the principal under the original Indenture of Trust by two million seven hundred thousand dollars ($2,700,00.00). As a result, MedRecycler-RI, Inc. owes an aggregate of eight million seven hundred twenty-five thousand dollars ($8,725,000). As a condition to entry into the Amended Indenture all parties providing security interest, pledges, and guarantees pursuant to the Original Indenture of Trust signed on February 7, 2019, including the Company, agreed to extend such security interest, pledges, and guarantees pursuant to the terms of the Omnibus Amendment Agreement between the securing parties and UMB, as Trustee on October 9, 2019. In addition, the Trustee required that MedRecycler-RI, Inc. further agree to assign any and all contractual rights related to the equipment. For the year ended December 31, 2019, the Company amortized $249,814 of the discount, and as of December 31, 2019, the indenture is carried at $8,703,439, net of unamortized discount of $21,561. In 2020, the maturity dates of the notes were extended to January 2021 (see Note 11). Accordingly. These notes are presented as long-term on the accompanying consolidated balance sheet as of December 31, 2019. Note Payable On June 21, 2019, the Company issued a six month ten percent interest promissory note in the amount of $200,000. The note was funded July 8, 2019. Per the terms of the note, the Company agreed to issue to the lender was issued 2,000,000 shares of restricted common stock, with a fair value of $2,600 as an inducement. The balance of the note is $200,000 as of December 31, 2019. Future maturites of the Company’s debt are as follows: Years Ending December 31, 2020 $ 805,824 2021 8,725,000 Total future maturities 9,530,824 Less: discount (21,561 ) Carrying Value at December 31,2019 $ 9,509,263 NOTE 6 – STOCKHOLDERS’ DEFICIT Preferred stock The Company is authorized to issue 20,000,000 shares of $0.0001 par value preferred stock. As of December 31, 2019 and 2018, the Company has designated 12,000,000 shares of Series A Preferred Stock, 1,000,000 shares of Series B Convertible Preferred Stock, and 500,000 shares of Series C Convertible Stock. Series A Preferred Stock - Each share of Series A Preferred Stock is entitled to 125 votes on all matters submitted to a vote to the stockholders of the Company, and does not have conversion, dividend or distribution upon liquidation rights. F- 13 Series B Preferred Stock - In connection with the reverse merger, the Company issued 2,000,000 shares of Series B Preferred Stock. Each share of Series B Preferred Stock automatically converted into 30.8565 shares of common stock after giving effect to the reverse stock split that occurred on October 3, 2017. Holders of Series B Preferred Stock is entitled to vote and receive distributions upon liquidation with common stockholders on an as-if converted basis. Series C Preferred Stock - In connection with the reverse merger, the Company issued 275,000 shares of Series C Preferred Stock. Holders of Series C Preferred Stock are not entitled to voting rights or preferential rights upon liquidation. Each share of Series C Preferred Stock shall pay an annual dividend in the amount of $0.125 per year, for a total of $0.25, over an eighteen (18) month term, from the date of issuance (the “Commencement Date”). Dividend payments shall be payable as follows: (i) dividend in the amount of $0.0625 per share of Series C Preferred Stock at the end of each of the third quarter and fourth quarter of the first twelve (12) months of the twenty-four (24) month period after the Commencement Date; and (ii) dividend in the amount of $0.03125 per share of Series C Preferred Stock at the end of each of the four quarters of the second twelve (12) months of the twenty-four (24) month period after the Commencement Date. The source of payment of the dividends will be derived from up to thirty-five percent (35%) of net revenues (“Net Revenues”) from the Street Furniture Division of the Corporation following the seventh (7th) month after the Commencement Date. To the extent the amount derived from the Net Revenues of the Street Furniture Division is insufficient to pay dividends of Series C Preferred Stock, if a sufficient amount is available, the next quarterly payment date the funds will first pay dividends of Series C Preferred Stock past due. At the conclusion of twenty-four months after the Commencement Date, and upon the payment of all dividends due and owing on said Series C Preferred Stock, the Series C Preferred Stock shall automatically be redeemed by the Corporation and returned to the Corporation for cancellation, as unissued, non-designated, preferred shares. The series C preferred stock were redeemed during the year ended December 31, 2018. As of December 31, 2019 and 2018, divdends payable of $22,038 and $18,913, respectively, are reflected as dividends payable on the accompanying consolidated balance sheets. Common stock During the year end December 31, 2018, the Company sold 1,230,00 shares of common stock for cash of $173,000. During the year end December 31, 2018, the Company issued 668,324 shares of common stock for services rendered with a fair value of $84,184, based on the trading price of the common stock on the date of grant. During the year end December 31, 2018, the Company issued 4,170,000 shares of common stock, upon the conversion of principal and interest on convertible notes totaling $16,935, pursuant to the terms of the convertible note. During the year ended December 31, 2019, the Company issued 530,633,483 shares of common stock upon the conversion of convertible debt principal, interest and conversion fees totaling $331,080. During the year ended December 31, 2019, holders of warrants to acquire 129,909,530 shares of common stock elected to exercise the warrants on a cashless basis, at an exercise price of $0.0009 per share, resulting in the issuance of 128,447,300 shares of common stock. Warrants In September 2017, the Company agreed to issue a warrant to purchase 20,000 shares of common stock for an aggregate exercise price of $10.00 as consideration for consulting services to be provided from October 2017 through March 2018. The Company estimated the fair value of the warrants, $7,000 and recognized $1,167 of expense during the year ended December 31, 2017 based on the portion of the contract period that had expired and the remaining $5,833 during the year end December 31, 2018. In October 2017, the Company issued warrants to acquire 100,000 shares of common stock at an exercise price of $0.10 per share and 900,000 shares of common stock at an exercise price of $45.00 per share, exercisable over 10 years, for services to be rendered over a six-month period. The Company re-measured the warrants as of December 31, 2017, and estimated the fair value of $261,282, of which $130,641 was expensed during the year ended December 31, 2018. During the year ended December 31, 2019, the exercise prices of warrants to acquire 397,727 shares were adjusted as a result of the conversion of debt at conversion rates that were lower than the initial warrant exercise prices. Pursuant to the terms of the warrants, the number of shares are also increased so that the aggregate exercise price of the warrants remained constant at $43,750. On the date of each adjustment, the Company estimated the incremental fair value of the warrants resulting from these adjustments using a Black-Scholes option pricing model and recorded a deemed dividend of $504,240 for the year ended December 31, 2019. The significant assumptions used in the Black Scholes calculations were as follows: risk free rate – 2.4%, volatility – 230% to 265%, expected term – 0.58 years to 1.06 years. During the year ended December 31, 2019, holders of warrants to acquire 129,909,530 shares of common stock elected to exercise the warrants on a cashless basis, at an exercise price of $0.0009 per share, resulting in the issuance of 128,447,300 shares of common stock. The following summarizes warrant activity for the years ended December 31, 2019 and 2018: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life Outstanding at January 1, 2018 1,000,000 $ 41.50 7.8 years Granted 7,324,757 0.10 5.0 Years Outstanding at December 31, 2018 8,324,737 $ 5.08 0.38 years Ratchet adjustments 485,713,051 $ 0.00009 - Exercises (128,447,300 ) $ 0.00009 - Outstanding at December 31, 2019 365,590,508 $ 0.11 0.35 Years The following summarizes warrant information as of December 31, 2019: Exercise Price Number of Shares Expiration Date $ 0.00009 620,030 August 2021 $ 0.00009 363,970,478 April 2020 $ 10.00 100,000 October 27,2027 $ 45.00 900,000 October 27,2027 365,590,508 F- 14 NOTE 7 - COMMITMENTS AND CONTINGENCIES Employment agreement On December 20, 2014, the Company entered into a five-year employment agreement with Nicholas Campanella, Chief Executive Officer. Under the terms of the agreement, the Company is required to pay a base compensation of $180,000 annually, subject to increases in cost of living and performance bonuses as awarded by the Board of Directors. After 5 years, the agreement is automatically renewed for an additional two years unless terminated by either party. As part of the agreement Mr. Campanella opted to defer, with no interest, the receipt of compensation under the agreement until the Company has the funds to pay its obligation. In October 2017, the Company issued 12,000,000 shares of series A preferred stock and 1,250,000 shares of common stock to its chief executive officer in settlement of $107,307 of accrued salary. At December 31, 2019 and December 31, 2018, the Company had accrued compensation of $767,963 and $631,166, respectively, and recorded the related expenses in ‘general and administrative’ on the accompanying condensed consolidated statements of operations. Lease agreement During March 2017, the Company entered into a five-year lease agreement. Under the terms of the agreement, the Company is obligated to pay monthly rent payments starting at $3,556 and escalating over the life of the lease. The Company entered into a lease in February 2019 for the rental of a 48,167 square foot space in Rhode Island to be used for the Company’s MedRecycler operations. The lease has a term of 123 months commencing on March 1, 2019, requiring annual rental payments totaling $144,501 for the first year, increasing annually to $258,930 in the final year. The lease also requires the Company to pay a portion of the building’s common area maintenance. The Company recorded a right-to-use asset and corresponding obligation equal to the present value of the required lease payments using a discount rate of 12% based on the Company’s incremental borrowing rate. The following is a schedule showing the future minimum lease payments under leases for the next five years and the present value of the minimum lease payments as of December 31, 2019. Years Ending December 31, 2020 $ 243,249 2021 250,317 2022 217,361 2023 215,797 2024 167,516 Thereafter 1,064,425 Total minimum lease payments 2,158,666 Less: Amount representing interest (833,713 ) Present value of minimum lease payments $ 1,324,953 For the years ended December 31, 2019 and 2018, lease expense was $307,561 and $39,297, respectively inclusive of short-term leases. The related lease balance included in the condensed consolidated balance sheet as of December 31, 2019 were as follows: Assets: Operating lease right-of use asset $ 1,256,405 Liabilities: Lease liability – current portion $ 88,356 Lease liability – long-term portion 1,236,597 Total operating lease liabilities $ 1,324,953 F- 15 Significant customers For the year ended December 31, 2019, two customers accounted for 35% and 14%, respectively, of the Company’s revenues. As of December 31, 2019, accounts receivable due from these customers totaled $0 and $10,509 respectively. For the year ended December 31, 2018, one customer accounted for 42% of the Company’s revenues. Profit Participation Agreement On October 21, 2019, MedRecycler–RI, Inc., a subsidiary of the Company (“MedRecycler”), entered into a profit participation partnership agreement with its medical waste to energy equipment manufacturer. The manufacturer will contribute approximately $3.1 million in Hydrochloric acid (“HCL”) refining equipment that will allow elements of the MedRcycler medical waste residuals to be processed into HCL for sale. The partnership agreement provides for the contribution of the processing equipment in return for a twenty percent (“20%”) gross profit participation right from the processing and sale of the HCL. MedRecycler will contribute and utilize elements of the residual that is produced from the processing of medical waste, along with housing and operating the equipment as part of the agreement. The asset contribution and profit participation partnership agreement are contingent upon the closing of MedRecycler’s permanent financing to fund the MedRecycler facility in West Warrick, RI. Legal Matters On May 28, 2019, a former President Director of the Company, filed suit against the Company and its wholly owned subsidiary, Street Smart Outdoor Corp., in Superior Court of New Jersey, Monmouth County, Law Division alleging breach of contract and has demanded $450,000.00 in lost wages. The matter is currently pending in Superior Court. The Company has been served by shareholders James J. Loures, Jr. and Justin Derkack requesting that the Company reverse the underlying transactions related to the MedRecycler-RI, Inc. project such that 100% of the revenues and profits generated from the project remain with the Company. The Company does not believe that there are merits to the claim given the explicit determination by those authorities approving permanent financing for the project that they will not approve financing so long as the Company has direct ownership in MedRecycler-RI, Inc. From time to time the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe that the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company. Currently, the Company is not involved in any other pending or threatened material litigation or other material legal proceedings, nor have we been made aware of any pending or threatened regulatory audits. NOTE 8 - RELATED PARTY TRANSACTIONS Certain affiliates have made non-interest-bearing advances. The balances of these advances, which are due on demand and include the Advances from Related Parties noted in Note 5, totaled $614,654 and $612,023 as of December 31, 2019 and 2018, respectively. Included in accounts payable related parties as of December 31, 2019 and 2018, are expenses incurred with these affiliates totaling $91,540 and $91,512, respectively. F- 16 In January 11, 2019, the Company entered into that certain Forbearance Agreement between the Company and Nicholas Campanella. Mr. Campanella is owed approximately $648,400 in principal and interest on loans and lines of credit issued by the Company. Those debt obligations are currently in default. As consideration for the forbearance of those debts, the Company has agreed to provide a pledge of 100% membership interest in MedRecycler, LLC, and wholly owned subsidiary of the Company organized in the state of Nevada which holds 51,000 shares of MedRecycler-RI, Inc. as security against the moneys owed. The amounts owed to Mr. Campanella date back nearly five years and represent cash payments made by Mr. Campanella to Sun Pacific Power Corp. On April 3, 2019, Mr. Campanella agreed to extend the forbearance until December 31, 2020. In order to secure financing for the MedRecycler-RI, Inc. West Warrick, Rhode Island waste to energy facility, Mr. Campanella agreed that upon initial financing of the project, he shall pledge substantially all of his holdings in the Company, assign his pledges in MedRecycler, LLC, and certain properties held by Mr. Campanella, personally, in order to collateralize the debt obligations. As consideration for his inducement, the Board of Directors has deemed it fair consideration to issue Mr. Campanella 39,000 shares of MedRecycler-RI, Inc. In addition, MedRecycler-RI, Inc. had engaged the services of Marmac Corporate Advisors, LLC and Eilers Law Group, P.A. to oversee, negotiate and to facilitate the initial financing and capital structure of MedRecycler-RI, Inc. As neither party has received compensation for their services for the Company or MedRecycler-RI, Inc. since August of 2018 thru January of 2019, the Board of Directors, in January 2019, deemed it fair consideration to issue Marmac Corporate Advisors, LLC and Eilers Law Group, P.A. 8,000 and 2,000 shares of MedRecycler-RI, Inc., respectively. As a result, the Company shall maintain 51% of the ownership of MedRecycler-RI, Inc. through its MedRecycler, LLC holdings. During the year ended December 31, 2019, the Company paid Mr. Campanella $165,000 of fees for overseeing the project. The Company also agreed to pay consulting fees to Marmac Corporate Advisors, LLC in the amount of $15,000 a month effective February 1, 2019 for one year totaling $165,000. On February 7, 2019, pursuant to an Indenture of Trust entered into by our subsidiary, MedRecycler-RI, Inc., a Rhode Island corporation and UMB Bank, N.A., a national banking association (“UMB”) (the “Indenture”), Sun Pacific Holding Corp. (the “Company”) entered into that certain Guarantee of Payment and Performance with UMB acting as Trustee, whereby the Company agreed to guarantee any and all payments and/or other obligations owed by MedRecycler-RI, Inc. pursuant to the Indenture. In order to secure the financing described herein, Mr. Campanella, Marmac Corporate Advisors, LLC and Eilers Law Group, P.A. have further agreed to pledge, upon funding, 100% of their ownership in MedRecycler-RI, Inc. as well as Mr. Campanella’s assignment of his pledge from the Company of 100% of the membership interests of MedRecycler, LLC. As a result, 100% of MedRecycler-RI, Inc. will be pledged, upon funding, to the lending party as security for the note and/or bond. On May 20, 2019, Nicholas Campanella agreed to forbear any of his rights to convert any portion of his related party debt into common stock until such time that the Company had sufficient authorized shares to honor full conversion of all principal and accrued interest into common stock of the Company. NOTE 9 – INCOME TAXES The Company accounts for income taxes in accordance with ASC 740 which prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim period, disclosure and transition. There were no unrecognized tax benefits as of December 31, 2019 and 2018. The following table summarizes the significant differences between the U.S. Federal statutory tax rate and the Company’s effective tax rate for financial statement purposes for the years ended December 31, 2019 and 2018: 2019 2018 U.S. Federal Statutory Tax Rate 21.00 % 21.00 % State taxes 5.53 % 5.53 % Permanent items - % - % Chane in future tax rates - % - % Change in valuation allowance (26.53 )% (26.53 )% Totals 0.00 % 0.00 % F- 17 The tax effects of temporary differences that give rise to deferred tax assets and liabilities as of December 31, 2019 and 2018 are summarized as follows: 2019 2018 Deferred Tax Assets: Net operating loss carry-forwards $ 1,811,000 $ 1,368,000 Accrued expenses 204,000 168,000 Total deferred tax assets 2,015,000 1,536,000 Less: Valuation allowance (2,015,000 ) (1,536,000 ) Total deferred tax assets and liabilities, net $ — $ — As of December 31, 2019, the Company has available net operating loss carry forwards of approximately $6.8 million which begin to expire in 2036. The Company assesses the recoverability of its net operating loss carry forwards and other deferred tax assets and records a valuation allowance to the extent recoverability does not satisfy the “more likely than not” recognition criteria. The Company continues to maintain the valuation allowance until sufficient positive evidence exists to support full or partial reversal. As of December 31, 2019 the Company had a valuation allowance totaling $2,015,000 against its deferred tax assets due to insufficient positive evidence, primarily consisting of losses within the taxing jurisdictions that have tax attributes and deferred tax assets. NOTE 10 – SEGMENT INFORMATION Beginning in 2019, the Company operates in three segments: outdoor advertising, contruction managemnt services, and industrial waste management. Summary information by segment is as follows: Summary balance sheet information by segment as of December 31, 2019 is as follows: Contstruction Services Outdoor Advertising Industrial Waste Total Cash $ 4,142 $ 42,749 $ 62,670 $ 109,561 Escrowed Cash - - 1,161,388 1,161,388 Prepaid Interest - - 450,909 450,909 Accounts receivable 12,790 20,668 - 33,458 Current Assets 16,932 63,417 1,674,967 1,755,316 Property Plant and Equipment 126,939 - 520,568 Righ of Use Asset - - 1,256,405 1,256,405 Deposits and Other 21,653 - 5,660,676 5,682,329 Total assets $ 165,524 $ 63,417 $ 9,112,616 $ 9,341,557 Accounts Payable and Accrued Expenses 1,222,091 279,205 533,554 2,034,850 Related Party Advances 614,654 - - 614,654 Notes Payable 200,000 - 8,703,438 8,903,438 Convertible Debt 605,824 - - 605,824 Right of Use Obligation - - 1,324,953 1,324,953 Total Liabilities 2,642,569 279,205 10,561,945 13,483,719 Net Stockholders’ Deficit $ (2,477,045 ) $ (215,788 ) $ (1,449,329 ) $ (4,142,162 ) Summary Statement of Operations Information by segment for the year ended December 31, 2019 is as follows: Contstruction Services Outdoor Advertising Industrial Waste Total Net Revenues $ 150,097 $ 150,636 $ - $ 300,733 Cost of Sales 161,268 53,628 - 214,896 Operating Expenses 472,274 - 828,995 1,301,269 Operating Loss (483,445 ) 97,008 (828,995 ) (1,215,432 ) Other Expense 187,636 - 377,098 564,734 Net Loss $ (671,081 ) $ 97,008 $ (1,206,093 ) $ (1,780,166 ) NOTE 11 – SUBSEQUENT EVENTS From January 2020 to March 2020, holders of warrants to acquire 246,862,272 shares of common stock elected to exercise the warrants on a cashless basis, at an exercise price of $0.0009 per share, resulting in the issuance of 240,744,220 shares of common stock. On January 29, 2020, MedRecycler-RI, Inc., a subsidiary of the Company entered into a second amendment to the Indenture of Trust with UMB Bank, extending the term of the two (2) bond’s representing bridge financing for the Rhode Island medical waste to energy project for a period of up to one year. The extension of the bonds shall accrue interest, including a capitalized extension fee of five (5%) percent, at twelve (12%) per annum. The bonds are intended to be paid and extinguished from proceeds from permanent financing. F- 18