10-K
1
f10k2020_remsleepholdings.htm
ANNUAL REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
☐ TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 000-53450
REMSLEEP HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
2202
N. West Shore Blvd, Suite 200, Tampa, FL 33607
(Address of principal executive offices) (Zip Code)
813-367-3855
(Registrant’s telephone number)
Securities registered pursuant to Section 12(b)
of the Exchange Act: None.
Securities registered pursuant to Section 12(g)
of the Exchange Act:
Common Stock, $0.001 par value OTCQB
(Title of class) (Name of exchange on which registered)
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Check whether the issuer is not required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒
Check whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
☐ No ☒
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to
submit and post such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge,
in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K.
☐ Yes ☒ No
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the 135,711,957
shares of voting and non-voting common equity held by non-affiliates computed by reference to the closing price of $0.0045 on June 30,
2020, at which the common equity was last sold in its most recently completed second fiscal quarter was approximately $610,700.
As of April 12, 2021, there were 405,712,834 shares of common stock
outstanding.
TABLE OF CONTENTS
Page
PART I 1
ITEM 1 Description of Business 1
ITEM 1A. Risk Factors 6
ITEM 2. Properties 6
ITEM 3. Legal Proceedings 6
ITEM 4. Mine Safety Disclosures 6
PART II 7
ITEM 6. Selected Financial Data 7
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk 9
ITEM 8. Financial Statements and Supplementary Data F-1
ITEM 9A. Controls and Procedures 10
ITEM 9B. Other Information 10
PART III 11
ITEM 10. Directors, Executive Officers, and Corporate Governance 11
ITEM 11. Executive Compensation 13
ITEM 14. Principal Accountant Fees and Services 15
ITEM 15. Exhibits and Financial Statement Schedules 16
Signatures 17
i
Forward Looking Statements
Except for statements of historical fact, the
information presented herein constitutes forward-looking statements. These forward-looking statements generally can be identified by phrases
such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “foresees,”
“intends,” “plans,” or other words of similar import. Similarly, statements herein that describe our business
strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such
factors include, but are not limited to, our ability to: successfully commercialize our technology; generate revenues and achieve profitability
in an intensely competitive industry; compete in products and prices with substantially larger and better capitalized competitors;
secure, maintain and enforce a strong intellectual property portfolio; attract additional capital sufficient to finance our working capital
requirements, as well as any investment of plant, property and equipment; develop a sales and marketing infrastructure; identify and maintain
relationships with third party suppliers who can provide us a reliable source of raw materials; acquire, develop, or identify for our
own use, a manufacturing capability; attract and retain talented individuals; continue operations during periods of uncertain general
economic or market conditions, and; other events, factors and risks previously and from time to time disclosed in our filings with the
Securities and Exchange Commission, including, specifically, the “Risk Factors” enumerated herein. Although we believe the
expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. You should not place undue reliance on our forward-looking statements, which speak only as of the date of
this report. Except as required by law, we do not undertake to update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise.
ii
PART I
ITEM 1. DESCRIPTION OF BUSINESS
We were incorporated in the State of Nevada on
June 6, 2007. On August 2, 2010, we changed our name from Bella Viaggio, Inc. to Kat Gold Holdings Corp. Effective January 1, 2015,
we completed an exchange agreement to purchase 100% of the outstanding interests of REMSleep LLC in exchange for 50,000,000 common shares
of REMSleep Holdings, Inc.’s stock, at which time REMSleep LLC became our wholly-owned subsidiary and adopted their business of
developing and distributing our sleep apnea products. On January 5, 2015, we changed our name to REMSleep Holdings, Inc. to reflect our
new business model.
Our officers have 35 years of sleep-industry experience,
including having been employed at sleep industry companies. Our officers invented our DeltaWave CPAP interface (the “DeltaWave”)
as an innovative new device to treat patients with sleep apnea. The patent-pending DeltaWave product is a nasal-pillows type interface
that will result in better comfort and, therefore, better compliance since it was specifically designed with unique airflow characteristics
to enable patients with sleep apnea to breathe normally. A survey that appeared in DME Business found that 89% of patients stated that
mask-interface comfort was their primary concern. The primary issue that we have addressed with the DeltaWave is the “work of breathing”
component. We believe that our DeltaWave is designed to effectively address the stubborn issues that continue to affect a patient’s
ability to comply with treatment, as follows:
● Does not disrupt normal breathing mechanics;
● Is not claustrophobic;
● Causes zero work of breathing (WOB);
● Minimizes or eliminates drying of the sinuses;
● Uses less driving pressure; and
● Allows users to feel safe and secure while sleeping.
Pending adequate financing, we plan to conduct
clinical trials to test product effectiveness.
On June 28, 2016, we applied for a patent for
a new, innovative sleep apnea product that serves as an interface for the delivery of CPAP therapy and other respiratory needs. Our goal
is to develop sleep products that achieve optimum compliance and comfort for CPAP patients.
Our website is located at: http://www.remsleeptech.com.
Industry Background
The market for sleep treatment and equipment was
$7.96 billion in 2011 and continues to increase, with North America accounting for a majority of the market. More than 8 million CPAP
interfaces are sold annually in the U.S., with another 2.5 million globally. There are also an estimated 80 million people with undiagnosed
sleep apnea. Sleep apnea is a condition that affects millions of people in the United States alone. An increasingly sedentary lifestyle
and bad working habits has led to obesity and otherwise poor cardiac and aerobic health. This has led to a fast-growing epidemic of obstructive
sleep apnea (OSA), which greatly reduces the quality of sleep one gets and can ultimately result in hypertension, heart failure, stroke,
and at the least, reduced performance in everyday life. Sleep apnea results in numerous afflictions that affect people’s day-to-day
lives and can eventually contribute to serious health conditions. While people’s knowledge of this affliction has grown strongly
in recent years, and the market is expanding fast nationwide, up to 80% of people with sleep apnea may be undiagnosed 1 –
a market of millions of new potential users. Even those who are tested and prescribed a sleep apnea machine often give up after a short
time due to discomfort or what is called the “work of breathing” with traditional machines. In fact, over 50% of patients
give up on using CPAP therapy after 6 months. This is a major waste of resources and a very telling statistic.
A major challenge in the current market is not
only to get more patients diagnosed but to also increase CPAP compliance. According to market analyst Frost & Sullivan, “The
development of finer and ergonomic CPAP devices will help increase patient ability to adhere to sleep therapy. The market is also seeing
a rise in newer technologies that replace elaborate practices, target patient comfort to improve compliance, and help drive acceptance
of sleep monitoring devices.”
1
A growing knowledge of sleep apnea and its treatment
has helped to increase awareness with the public. In addition to making the use of a CPAP or related device less intimidating, a move
toward affordable and prescription-based technology can greatly expand the market “Evolving technologies will also influence patient
preferences for products, treatment modalities, and diagnostic locations,” states Frost & Sullivan 2. “As such,
the global sleep apnea treatment market is expected to shift to home-based diagnostics for early identification and treatment of patients
as well as portable devices that can reduce sleep apnea with minimal inconvenience.”
Sleep apnea causes breathing interruptions of
between 10 to 20 seconds that can occur hundreds of times during a night, disrupting the natural sleep rhythm and depriving people of
the restorative sleep they need to be energetic, mentally sharp, and productive the next day. CPAP can be a very effective method used
to treat sleep apnea, but as noted, noncompliance remains a stubborn issue for both physicians and patients. CPAP technology therefore
is constantly being updated and improved, and the new CPAP devices are lighter, quieter, and more comfortable.
Health care spending continues to grow rapidly
on an annual basis in the United States. Spending was $2.7 trillion in 2011 and, in 2013, it reached over $3.6 trillion. By 2022, spending
is projected to reach $5 trillion, or around 20% of GDP, according to the Centers for Medicare and Medicaid Services 3. Growing
alongside this market is the U.S. life science industry, which will grow an estimated 2.2% in 2014 to $93 billion. This includes R&D
spending, with growth primarily from smaller biopharmaceutical innovators and medical device manufacturers.
Within this market, sleep apnea products have
experienced rapid growth. In the past couple of decades there has been a rapid increase in the technological developments in the field
of sleep apnea diagnosis and treatment. The result has been strong growth for sleep apnea devices globally. Demand for new and innovative
treatment methodologies is driving growth, helping to provide patients with a healthy lifestyle. “Obstructive sleep apnea is destroying
the health of millions of Americans, and the problem has only gotten worse over the last two decades,” according to American Academy
of Sleep Medicine President Dr. Timothy Morgenthaler 4. “The effective treatment of sleep apnea is one of the keys to
success as our nation attempts to reduce health care spending and improve chronic disease management.”
Sleep problems are considered a “global
epidemic,” with sleep apnea as a major contributor to the disorder. An estimated 100 million people worldwide have sleep apnea,
though more than 80% of these people are undiagnosed. The market for sleep apnea diagnostic and therapeutic devices on a global level
was $7.96 billion in 2011 and will reach a projected $19.72 billion by 2017, according to a study from Markets & Markets1
Nationwide in the U.S., there are more than 1,600 businesses in the Sleep Disorder Clinics market, according to research firm IBISWorld.
These businesses have combined annual revenue of $7 billion and have maintained a combined annual growth rate (CAGR) of 9.8% from 2008
to 2013. “Sleep clinics have gained exposure during the period due to the rising number of sleep disorders,” states IBISWorld.
“Moreover, health insurance policies are increasingly covering all or at least part of the costs of tests and, as more patients
have been able to gain greater access to specialized sleep clinics, industry revenue grows.”
There are also more than 972,000 physicians and
365,000 doctors’ offices, as well as nearly 5,800 hospitals. In addition, the market for U.S. home healthcare is served by about
30,000 businesses with combined annual revenue of $59 billion. The market includes medical and skilled nursing services; medical equipment,
supplies, and medication services; personal care; and therapeutic services (like physical and respiratory therapy).
Sources:
1. Markets & Markets. “Global Sleep Apnea Diagnostics &
Therapeutic Devices Market.” http://www.marketsandmarkets.com/PressReleases/sleep-apnea-devices.asp
2. Frost & Sullivan. “Sleep apnea market is in need of finer,
ergonomic treatments.” June 4, 2014. http://www.frost.com/prod/servlet/press-release.pag?docid=290951848
3. Forbes. “Annual U.S. Healthcare Spending Hits $3.8 Trillion.”
Feb. 2, 2014. http://www.forbes.com/sites/danmunro/2014/02/02/annual-u-s-healthcare-spending-hits-3-8-trillion/
4. American Academy of Sleep Medicine. “Rising prevalence of
sleep apnea in U.S. threatens public health.” Sept. 2014. http://www.aasmnet.org/articles.aspx?id=5043
2
Marketing
We plan to market the DeltaWave product in the
U.S., as follows:
● Submit manufacture orders to our manufacturer according to market demand
● Negotiate and secure agreements with industry distributor partners
● Secure agreements with Internet retailers for online sales
● Market DeltaWave at respiratory trade shows, social media, press releases
● Attend sleep and healthcare, respiratory industry trade shows
All of the foregoing is contingent upon adequate
financing.
Target Market
Our target market includes:
● Sleep product distributors that will distribute our product
● Home care dealers
● Private sleep labs
● Product end users
● Physicians, particularly sleep physicians
● Medical groups
● Hospitals
We expect that most of our revenues will be in
the home care dealers and hospital target market.
Manufacturing
Our product will be manufactured by mold makers.
We presently have molds made in China; however, we are considering relocating the manufacturing of our molds to the United States.
Operations Contingent Upon Adequate Financing
Our entire business plan, including our ability
to conduct manufacturing, marketing, generate sales and further develop products, are entirely dependent upon adequate financing. Should
we fail to obtain adequate financing: (a) our financial condition will be negatively affected; (b) we will be unable to conduct the essential
aspects of our business plan, including marketing as reflected above; (c) investments in our common stock will be negatively impacted;
(d) we will be forced to liquidate our business and file for bankruptcy protection.
3
Competition
The sleep apnea devices market is highly consolidated,
with primary competitors being:
● ResMed
● Philips Respironics
● Naus Medical
● Fisher & Paykel Healthcare
● DeVilbiss Healthcare
● CareFusion
● InnoMed
● TAP
ResMed is the market leader (45% of market share),
followed by Philips (30%), and Fisher/Paykel (12%). Our competitors offer a full range of sleep products.
Our competitors have greater financial, operational
and personnel resources than we do. We will attempt to overcome our competitors’ competitive advantages by emphasizing the advantages
of our Delta Wave product.
Government Regulations
FDA
Our products are subject to extensive regulation
particularly as to safety, efficacy and adherence to FDA Quality System Regulation, and related manufacturing standards. Medical device
products are subject to rigorous FDA and other governmental agency regulations in the United States and similar regulations of foreign
agencies abroad. The FDA regulates the design, development, research, preclinical and clinical testing, introduction, manufacture, advertising,
labeling, packaging, marketing, distribution, import and export, and record keeping for such products, to ensure that medical products
distributed in the United States are safe and effective for their intended use. In addition, the FDA is authorized to establish special
controls to provide reasonable assurance of the safety and effectiveness of most devices. Non-compliance with applicable requirements
can result in import detentions, fines, civil and administrative penalties, injunctions, suspensions or losses of regulatory approvals,
recall or seizure of products, operating restrictions, refusal of the government to approve product export applications or allow us to
enter supply contracts, and criminal prosecution.
Unless an exemption applies, the FDA requires
that a manufacturer introducing a new medical device or a new indication for use of an existing medical device obtain either a Section
510(k) premarket notification clearance or a premarket approval, or PMA, before introducing it into the U.S. market. The type of marketing
authorization is generally linked to the classification of the device. The FDA classifies medical devices into one of three classes (Class
I, II or III) based on the degree of risk the FDA determines to be associated with a device and the level of regulatory control deemed
necessary to ensure the device’s safety and effectiveness.
Our products currently marketed in the United
States are marketed in reliance on 510(k) pre-marketing clearances as either Class I or Class II devices. The process of obtaining a Section
510(k) clearance generally requires the submission of performance data and often clinical data, which in some cases can be extensive,
to demonstrate that the device is “substantially equivalent” to a device that was on the market before 1976 or to a device
that has been found by the FDA to be “substantially equivalent” to such a pre-1976 device, a predecessor device is referred
to as “predicate device.” As a result, FDA clearance requirements may extend the development process for a considerable length
of time. In addition, in some cases, the FDA may require additional review by an advisory panel, which can further lengthen the process.
The PMA process, which is reserved for new devices that are not substantially equivalent to any predicate device and for high-risk devices
or those that are used to support or sustain human life, may take several years and requires the submission of extensive performance and
clinical information.
Medical devices can be marketed only for the indications
for which they are cleared or approved. After a device has received 510(k) clearance for a specific intended use, any change or modification
that significantly affects its safety or effectiveness, such as a significant change in the design, materials, method of manufacture or
intended use, may require a new 510(k) clearance or PMA approval and payment of an FDA user fee. The determination as to whether a modification
could significantly affect the device’s safety or effectiveness is initially left to the manufacturer using available FDA guidance;
however, the FDA may review this determination to evaluate the regulatory status of the modified product at any time and may require the
manufacturer to cease marketing and recall the modified device until 510(k) clearance or PMA approval is obtained. The manufacturer may
also be subject to significant regulatory fines or penalties. The FDA is currently reviewing its guidance describing when it believes
a manufacturer is obligated to submit a new 510(k) for modifications or changes to a previously cleared device. The FDA is expected to
issue revised guidance to assist device manufacturers in making this determination. It is unclear whether the FDA’s approach in
this new guidance will result in substantive changes to existing policy and practice regarding the assessment of whether a new 510(k)
is required for changes or modifications to existing devices.
4
Any devices we manufacture and distribute pursuant
to clearance or approval by the FDA are subject to pervasive and continuing regulation by the FDA and certain state agencies. These include
product listing and establishment registration requirements, which help facilitate FDA inspections and other regulatory actions. As a
medical device manufacturer, our manufacturing facilities are subject to inspection on a routine basis by the FDA. We are required to
adhere to applicable regulations setting forth detailed cGMP requirements, as set forth in the QSR, which require, manufacturers, including
third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all
phases of the design and manufacturing process. Noncompliance with these standards can result in, among other things, fines, injunctions,
civil penalties, recalls or seizures of products, total or partial suspension of production, refusal of the government to grant 510(k)
clearance or PMA approval of devices, withdrawal of marketing approvals and criminal prosecutions. We believe that our design, manufacturing
and quality control procedures are in compliance with the FDA’s regulatory requirements.
We must also comply with post-market surveillance
regulations, including medical device reporting, or MDR, requirements which require that we review and report to the FDA any incident
in which our products may have caused or contributed to a death or serious injury. We must also report any incident in which our product
has malfunctioned if that malfunction would likely cause or contribute to a death or serious injury if it were to recur.
Labeling and promotional activities are subject
to scrutiny by the FDA and, in certain circumstances, by the Federal Trade Commission. Medical devices approved or cleared by the FDA
may not be promoted for unapproved or un-cleared uses, otherwise known as “off-label” promotion. The FDA and other agencies
actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly
promoted off-label uses may be subject to significant liability, including substantial monetary penalties and criminal prosecution.
Other Healthcare Laws
Even though we do not submit claims or bill governmental
programs and other third-party payers directly for reimbursement for our products sold in the United States, we are still subject to laws
and regulations that may restrict our business practices, including, without limitation, anti-kickback, false claims, physician payment
transparency and data privacy and security laws. The government has interpreted these laws broadly to apply to the marketing and sales
activities of manufacturers and distributors like us.
The federal Anti-Kickback Statute prohibits, among
other things, persons or entities from knowingly and willfully soliciting, receiving, offering or providing remuneration, directly or
indirectly, in cash or in kind, in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or
recommendation of, any good, facility, item or service for which payment may be made, in whole or in part, under federal healthcare programs
such as Medicare and Medicaid. In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback
Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act.
The federal civil False Claims Act prohibits,
among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment
or approval to the federal government or knowingly making, using or causing to be made or used a false record or statement material to
a false or fraudulent claim to the federal government. A claim includes “any request or demand” for money or property presented
to the U.S. government. The civil False Claims Act also applies to false submissions that cause the government to be paid less than the
amount to which it is entitled, such as a rebate. Intent to deceive is not required to establish liability under the civil False Claims
Act.
The Federal Health Insurance Portability and Accountability
Act of 1996, or HIPAA, created federal criminal statutes that prohibit among other actions, knowingly and willfully executing, or attempting
to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, knowingly and willfully embezzling
or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense, and knowingly and
willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in
connection with the delivery of or payment for healthcare benefits, items or services. Like the Anti-Kickback Statute, a person or entity
does not need to have actual knowledge of these statutes or specific intent to violate them to have committed a violation.
Also, many states and countries outside the U.S.
have similar fraud and abuse statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items
and services reimbursed under Medicaid and other state programs.
Under HIPAA, the Department of Health and Human
Services, or HHS, has issued regulations to protect the privacy and security of protected health information used or disclosed by covered
entities including health care providers, such as us. HIPAA also regulates standardization of data content, codes and formats used in
health care transactions and standardization of identifiers for health plans and providers. Penalties for violations of HIPAA regulations
include civil and criminal penalties. In addition to federal privacy and security regulations, there are state laws governing confidentiality
and security of health information that are applicable to our business. New laws governing privacy may be adopted in the future as well.
Failure to comply with privacy requirements could result in civil or criminal penalties, which could have a materially adverse effect
on our business.
5
Additionally, there has been a recent trend of
increased federal and state regulation of payments and transfers of value provided to healthcare professionals or entities. The Physician
Payment Sunshine Act was enacted in law as part of PPACA, which imposed new annual reporting requirements on device manufacturers for
payments and other transfers of value provided by them, directly or indirectly, to physicians and teaching hospitals, as well as ownership
and investment interests held by physicians and their family members. A manufacturer’s failure to submit timely, accurately and
completely the required information for all payments, transfers of value or ownership or investment interests may result in civil monetary
penalties. Certain states also mandate implementation of commercial compliance programs, impose restrictions on device manufacturer marketing
practices and/or require the tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities.
The shifting commercial compliance environment
and the need to build and maintain robust systems to comply with different compliance or reporting requirements in multiple jurisdictions
increase the possibility that a healthcare company may fail to comply fully with one or more of these requirements. If our operations
are found to be in violation of any of the health regulatory laws described above or any other laws that apply to us, we may be subject
to penalties, including potentially significant criminal and civil and administrative penalties, damages, fines, disgorgement, imprisonment,
exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens, diminished
profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to
operate our business and our results of operations.
Environmental Regulation
Our operations are not subject to environmental
regulation.
Employees
We have the following employees:
● Tom Wood, Chief Executive Officer
● Jonathan B. Lane, Vice President and Chief Technology Officer
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item; however,
due to the current circumstance we have chosen to include the following risk factor.
Global economic, political
and other conditions may adversely affect trends in consumer and business spending, which may adversely impact our manufacturing and the
demand for our products and our revenue and profitability.
On January 30, 2020, the World
Health Organization declared the COVID-19 (coronavirus) outbreak a "Public Health Emergency of International Concern" and on
March 10, 2020, declared it to be a pandemic. The virus and actions taken to mitigate its spread have had and are expected to continue
to have a broad adverse impact on the economies and financial markets of many countries, including the geographical areas in which the
Company operates. The Company continues to execute its business plan. At the present time, the Company can not predict the full impact
of the COVID-19 virus on its business. Our projections on spending, product development and milestone achievements are likely to be further
revised as new information is obtained.
The industry in which we operate
depends heavily upon our ability to obtain raw material and manufacture our product as well as the overall level of consumer and business
spending. A sustained deterioration in general economic conditions (including distress in financial markets, turmoil in specific economies
around the world, public health crises, and additional government intervention), particularly in the United States, may have a negative
financial impact to our Company. Adverse conditions as a result of the global COVID-19 outbreak, will and may continue to impact our manufacturing
processes and ultimately our ability to sell our product.
ITEM 2. PROPERTIES
We do not own any real estate property.
ITEM 3. LEGAL PROCEEDINGS
None
ITEM 4. MINE SAFETY DISCLOSURES
None.
6
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON
EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock, par value $.001 per share (the
“Common Stock”), is currently listed to trade on the OTC Markets Group OTCQB tier under the symbol “RMSL”. The
high/low market prices of our common stock were as follows for the periods below, as reported on www.OTCQB.com. The quotations
below reflect inter-dealer bid prices without retail markup, markdown, or commission and may not represent actual transactions.
As of April 6, 2020, we had approximately 154 shareholders of record
of our common stock.
Recent Issuances of Unregistered Securities
On November 23, 2020, the Company granted 500,000
shares of Series A preferred stock to Mr. Bird for services rendered to the Company. The shares were valued at $0.0025, the closing stock
price of the Company’s common shares on the date of grant, for total non-cash compensation expense of $1,250. The closing price
for common stock was deemed an acceptable method for valuation as one share of Series A preferred stock is convertible into one share
of common stock.
On November 23, 2020, the Company granted 500,000
shares of Series A preferred stock to Mr. Wood for services rendered to the Company. The shares were valued at $0.0025, the closing stock
price of the Company’s common shares on the date of grant, for total non-cash compensation expense of $1,250. The closing price
for common stock was deemed an acceptable method for valuation as one share of Series A preferred stock is convertible into one share
of common stock.
On November 23, 2020, the Company granted 250,000
shares of Series B preferred stock to Mr. Bird for services rendered to the Company. The shares were valued at $0.0025, the closing stock
price of the Company’s common shares on the date of grant, multiplied by 100, for total non-cash compensation expense of $62,500.
The closing price for common stock multiplied by 100 was deemed an acceptable method for valuation as one share of Series B preferred
stock is convertible into 100 shares of common stock.
On November 23, 2020, the Company granted 250,000
shares of Series B preferred stock to Mr. Wood for services rendered to the Company. The shares were valued at $0.0025, the closing stock
price of the Company’s common shares on the date of grant, multiplied by 100, for total non-cash compensation expense of $62,500.
The closing price for common stock multiplied by 100 was deemed an acceptable method for valuation as one share of Series B preferred
stock is convertible into 100 shares of common stock.
During the year
ended December 31, 2020, Armada Capital Partners LLC converted $20,850 and $110 of
principal and interest, respectively, into 5,202,346 shares of common stock.
During the year
ended December 31, 2020, BHP Capital NY Inc converted $7,394 and $35 of principal and interest, respectively, into 1,919,620 shares
of common stock.
During the year
ended December 31, 2020, Jefferson Street Capital LLC converted $13,750 of principal and $2,205 of interest, respectively, into
3,989,090 shares of common stock.
During the year
ended December 31, 2020, Odyssey Capital Funding LLC converted $35,000 of principal and $2,890 of interest, respectively, into
8,630,042 shares of common stock.
During the year
ended December 31, 2020, 37,890,381 shares of common stock were issued in conversion of 50,262,343 warrants.
During the year
ended December 31, 2020, Power Up Lending Group LTD converted $188,300 of principal and $7,650 of interest, respectively, into
62,639,262 shares of common stock.
During the year
ended December 31, 2020, Granite Global Value converted $174,265 of principal into 116,523,399 shares of common stock.
During the year
ended December 31, 2020, the Company sold 15,000,000 shares of common stock pursuant to the terms of its Form 1-A, Regulation A Offering
Statement, for total cash proceeds of $75,000. The proceeds were used to pay for general operating expenses.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable since we are a smaller reporting
company as defined under the applicable SEC rules.
7
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a Nevada corporation formed on June 6,
2007. Our headquarters are in Tampa, FL. We have been engaged in our current business model since January 1, 2015.
We have experienced recurring losses and negative
cash flows from operations since inception, including in our current business model. We anticipate that our expenses will increase as
we ramp up our expansion, which likely will lead to additional losses, until such time that we approach profitability, or which there
are no assurances. We have relied on equity financing to fund operations. There can be no guarantee that we will ever become profitable,
or that adequate additional financing will be realized in the future or otherwise may be available to us on acceptable terms, or at all.
If we are unable to raise capital when needed, we would be forced to delay, reduce or eliminate our expansion efforts. We will need to
generate significant revenues to achieve profitability, of which there are no assurances.
Going Concern
The accompanying financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company has an accumulated deficit of $6,565,942 at December 31, 2020, had a net loss of $1,175,452 (including $127,500 of non-cash
stock compensation and $832,885 in losses related to convertible debt, interest and discount amortization) and net cash used in operating
activities of $335,293 for the year ended December 31, 2020. The Company’s ability to raise additional capital through the future
issuances of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful development of the
Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary
for the Company to continue operations. These conditions and the ability to successfully resolve these factors over the next twelve months
raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not
include any adjustments that may result from the outcome of these aforementioned uncertainties.
Results of Operations for the year ended December
31, 2020 compared to the year ended December 31, 2019
The following information should be read in conjunction
with our financial statements and related notes thereto included elsewhere in this Form 10-K.
Revenues
We generated no revenues during our fiscal years
ending December 31, 2020 and 2019.
Operating Expenses
For the year ended December 31, 2020, professional
fees decreased $18,535 or 30.9% to $41,525 compared to $60,060 for the year ended December 31, 2019. Professional fees consist mostly
of accounting, audit and legal fees. The decrease of $18,535 in the current year is mainly attributed to a decrease in legal fees. In
the prior year we incurred additional legal fees related to the preparation and filing of our Form 1-A.
Consulting expense was $5,000 compared to $54,720
for the years ended December 31, 2020 and 2019, respectively, a decrease of $49,720 or 90.9%. The decrease is due to the decrease in issuing
common stock for services. In the prior year we granted common stock for total non-cash expense of $54,320. In addition, in the prior
year we had a hired a consultant for investor relation and related services. We are no longer using those services in the current period.
We issued no stock for services in the current year.
Compensation expense was $211,500 and $2,107,000
for the years ended December 31, 2020 and 2019, respectively. In the prior year we issued 25,000,000 common shares each to both our Chairman
and CEO for services for total non-cash expense of $2,000,000. We also issued our Chairman 500,000 shares of series A preferred stock
for total non-cash compensation expense of $20,000.
General and administrative expense was $211,819
and $119,504 for the years ended December 31, 2020 and 2019, respectively, an increase of $92,315 or 79.9%. The
increase in the current period can be largely attributed to an increase in depreciation of $31,657, development expense of $22,922, web
design expense of $10,450 and investor relation expense of $20,390, all related to increased efforts to fully develop our product and
bring it to market. We also had an increase in investor relation expense of $20,390, for assistance with our Offering Statement.
Total other expense for the year ended December 31,
2020, was $705,608. Other income/expense includes $561,576 of debt discount amortization, a $350,986 loss on the issuance of convertible
debt, an early payment penalty of $49,162 and a gain in the change of fair value of derivatives of $79,677. These are all expenses related
to our convertible debt. We also incurred $49,958 of interest expense.
Total other expense for the year ended December
31, 2019, was $1,546,484. Other expense includes $341,011 of debt discount amortization, a $1,575,107 loss on the issuance of convertible
debt and a gain in the change of fair value of derivatives of $445,318. These are all expenses related to our convertible debt. We also
incurred $55,693 of interest expense.
Net Loss
For the year ended December 31, 2020, we had a
net loss of $1,175,452 as compared to a net loss of $3,888,468 for the year ended December 31, 2019. Our net loss was lower in the current
period primarily due to the expense associated with the other non-cash expense from the issuance of convertible debt and common stock
issued for services.
8
Liquidity and Capital Resources
Net cash used in operating activities was $335,293
for year ended December 31, 2020. During the year ended December 31, 2019 we used cash of $236,036 in operating activities.
We used $36,710 and $96,874 on the purchase of
property and equipment for years ended December 31, 2020 and 2019, respectively.
We received a net total of $366,656 from financing
activities for the year ended December 31, 2020. This consisted of $460,000 from proceeds from convertible debt and $75,000 from the sale
of common stock. We repaid $165,000 of our convertible debt and $3,344 against other loans. We received a net total of $435,844 from financing
activities for the year ended December 31, 2019, including $439,000 from a convertible promissory note offset by repayment of related
party loans of $3,156.
As of December 31, 2020, we have the following
amounts due on our convertible debt.
Note Holder Date Maturity Date Principal
Critical Accounting Estimates and Policies
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities of the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. Note 1 to the Financial Statements describes
the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited
to, contingencies and taxes. Actual results could differ materially from those estimates. The following critical accounting policies
are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.
We are subject to various loss contingencies arising
in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence of a liability,
as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency
is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount
of the loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals
should be adjusted.
We recognize deferred tax assets (future tax benefits)
and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis
of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return consequences of those
differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled. Future
tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not
that this deferred tax asset will be realized.
Off-Balance Sheet Arrangements
We have not entered into any off-balance sheet
arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to
investors.
Recent Accounting Pronouncements
On June 20, 2018, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements
to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting
for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard,
companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value
all equity classified awards at their grant-date under ASC718 and forgo revaluing the award after this date. The Company has chosen to
early adopt this standard. There has been no material impact on our financial statements as a result of adopting this standard.
The Company has implemented all new accounting
pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise
disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have
a material impact on its financial position or results of operations.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
Not applicable to smaller reporting companies.
9
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REMSLEEP HOLDINGS, INC.
Report of Independent Registered Public Accounting Firm F-2
Statements of Operations for the Years ended December 31, 2020 and 2019 F-4
Statements of Cash Flows for the Years ended December 31, 2020 and 2019 F-6
Notes to Financial Statements F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Shareholders of REMSleep
Holdings, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets
of REMSleep Holdings, Inc. (“the Company”) as of December 31, 2020 and 2019, and the related statements of operations, stockholders’
equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively
referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in
the two-year period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has
an accumulated deficit and negative cash flows from operations. These factors raise substantial doubt about the Company’s ability
to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond