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.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
Cybersecurity Risk
Management and Strategy
We have developed and maintain a cybersecurity
risk management methodology intended to protect the confidentiality, integrity, and availability of our critical systems and information.
Our cybersecurity risk management methodology is integrated into our overall enterprise risk management, and shares common methodologies,
reporting channels and governance processes that apply across the Company to other legal, compliance, strategic, operational, and financial
risk areas. As part of our overall risk management processes and procedures, we have instituted a cybersecurity awareness designed to
identify, assess and manage material risks from cybersecurity threats. The cyber risk management methodology involves risk assessments,
implementation of security measures and ongoing monitoring of systems and networks, including networks on which we rely. Through our cybersecurity
awareness, the current threat landscape is actively monitored in an effort to identify material risks arising from new and evolving cybersecurity
threats. We may engage external experts, including cybersecurity assessors, consultants and auditors to evaluate cybersecurity measures
and risk management processes as needed. We also depend on and engage various third parties, including suppliers, vendors and service
providers in connection with our operations. Our risk management, legal, and compliance personnel oversee and identify, including through
a third-party cybersecurity service provider, material risks from cybersecurity threats associated with our use of such entities.
Our cybersecurity risk management methodology
includes:
We have not identified risks from known cybersecurity
threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business
strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized, are reasonably likely
to materially affect us, including our operations, business strategy, results of operations, or financial condition.
7
Cybersecurity Governance
Our Board of Directors
oversees our risk management, including our information technology and cybersecurity policies, procedures, and risk assessments. Management
reports to our Board of Directors on information security matters as necessary, regarding any significant cybersecurity incidents, as
well as any incidents with lesser impact potential.
One of the key functions of our Board of Directors
is informed oversight of our various processes for managing risk. An overall review of risk is inherent in our Board of Directors ongoing
consideration of our long-term strategies, transactions and other matters presented to and discussed by the Board of Directors. This includes
a discussion of the likelihood and potential magnitude of various risk.
ITEM 2. PROPERTIES
We do not own any real estate property.
ITEM 3. LEGAL PROCEEDINGS
There are no material claims, actions, suits,
proceedings, or investigations that are currently pending or, to the Company’s knowledge, threatened by or against the Company or
respecting its operations or assets, or by or against any of the Company’s officers, directors, or affiliates.
ITEM 4. MINE SAFETY DISCLOSURES
None.
8
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 $0.001 per share,
is currently listed to trade on the OTC Markets Group, OTCPINK tier under the symbol “RMSL”. The range of reported high and
reported low sales prices per share for our common stock for each fiscal quarter during 2024 and 2023, as reported by NASDAQ and the OTC
Markets Group, is set forth below.
Quarterly common stock Price Ranges
Fiscal Year 2024, Quarter Ended: High Low
Fiscal Year 2023, Quarter Ended: High Low
At March 14, 2025 there were approximately 156
holders of record of our common stock, although we believe that there are other persons who are beneficial owners of our common stock
held in street name. The transfer agent and registrar for our common stock is Securities Stock Transfer,
2901 N Dallas Parkway, Suite 380, Plano, TX 75093.
Recent Issuances of Unregistered Securities
On July 16, 2024, 1800 Diagonal converted $50,000 of principal into
5,000,000 shares of common stock (Note 5).
During the year ended December
31, 2024, the Company sold 57,003,525 shares of common stock to Quick Capital LLC for total proceeds of $420,000.
ITEM 6. [RESERVED]
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 Clearwater, FL. We have been engaged in our current business model since January 1, 2015.
9
We are a medical technology company focused on
the development and commercialization of innovative and minimally invasive solutions for patients with obstructive sleep apnea. Our officers
have 35 years of sleep-industry experience, including having been employed at sleep industry companies. Our goal is to develop sleep products
that achieve optimum compliance and comfort for CPAP patients.
In May 2017, we applied for a patent with the
US Patent and Trademark Office for our proprietary DeltaWave CPAP interface (“DeltaWave”), a new, innovative sleep apnea product
to act as an interface for the delivery of CPAP therapy and other respiratory needs. DeltaWave is a nasal-pillow type interface designed
to offer better comfort and, therefore, better compliance since it was specifically designed with unique airflow characteristics to enable
patients with sleep apnea to breathe normally.
Our officers have 35 years of sleep-industry experience,
including having been employed at sleep industry companies. Our officers invented the DeltaWave as an innovative new device to treat patients
with sleep apnea. The patent-pending DeltaWave device 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.
Results of Operations
Year Ended December 31, 2024 Compared to
the Year Ended December 31, 2023
Revenues
We began to sell our ResPlus
CPAP system in the second quarter of 2022.
We recognized revenue and cost of goods of $117,185 and $99,147, respectively
for the year ended December 31, 2024. We saw a decrease in sales in the current period due to both the number of sales but also due to
fewer sales for multiple units.
We recognized revenue and cost of goods of $203,718
and $960,457, respectively for the year ended December 31, 2023. Our cost of goods sold includes impairment expense of $738,113 for the
write down of inventory on hand.
Operating Expenses
Professional fees were $114,865 and $116,362 for
the years ended December 31, 2024 and 2023, respectively, a decrease of $1,497, or 1.3%. Professional fees consist mostly of accounting,
audit and legal fees.
Compensation expense was $143,000 and $172,000
for the years ended December 31, 2024 and 2023, respectively, a decrease of $29,000, or 16.9%. On June 1, 2023, Mr. Bird resigned from
all positions with the Company, this resulted in a $40,000 decrease to compensation expense. Our COO also increased his work hours for
an additional $11,000 of compensation expense.
Development expenses related to our DeltaWave CPAP system was $187,445
and $294,819 for the years ended December 31, 2024 and 2023, respectively, a decrease of $107,374 or 36.4%. Our development expenses has
decreased in the current period as we got closer to completing the development, testing and final FDA approval of our DeltaWave product.
Lease expense was $96,905 and $136,320 for the
years ended December 31, 2024 and 2023, respectively, a decrease of $39,415, or 28.9%. In the prior year the Company rented an apartment
used by Company personnel. The apartment was a monthly, short-term rental.
General and administrative expense (“G&A”)
were $269,371 and $295,402 for the years ended December 31, 2024 and 2023, respectively, a decrease of $26,031 or 8.8%.
10
Total other expense for the year ended December
31, 2024, was $284,449, which includes interest expense of $143,146 (includes $135,315 amortization of debt discount), a loss on disposal
of fixed assets of $159,593, an early payment penalty of $16,574 and a loss on the issuance of convertible debt of $6,473. These expenses
were offset by a $14,270 gain on conversion of debt and a change in the fair value of derivatives of $27,067.
Total other expense for the year ended December
31, 2023, was $6,196. Other expenses include interest expense of $7,090 and a gain on disposal of an asset of $894.
Net Loss
For the year ended December 31, 2024, we had a net loss of $1,077,997
as compared to a net loss of $1,777,838 for the year ended December 31, 2023.
Liquidity and Capital Resources
Cash flow from operations
Cash used in operating activities for the year
ended December 31, 2024 was $683,057 as compared to $791,329 of cash used in operating activities for the year ended December 31, 2023.
Cash Flows from Investing
Cash used in investing activities for the purchase of equipment and
tooling for the year ended December 31, 2024 was $124,700 as compared to $147,628 of cash used in investing activities for the year ended
December 31, 2023.
Cash Flows from Financing
For the year ended December 31, 2024, we received
$225,000 from convertible notes payable and repaid $93,000. We also received $420,000 from the sale of common stock. For the year ended
December 31, 2023, we repaid $183,931 of a related party loan.
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 $15,270,756 at December 31, 2024, had a net loss of $1,077,997 and net cash used in operating activities
of $683,057 for the year ended December 31, 2024. 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.
Critical Accounting Policies
The Company considers its accounting for the fair
value of financial instruments, revenue recognition, accounts receivable, allowance for doubtful accounts and inventory among its critical
accounting policies. The Company maintains an allowance for doubtful accounts to reflect management’s estimate of the amount of
receivables that will not be collected. This estimate is considered a critical accounting estimate due to the subjectivity involved in
evaluating the collectability of accounts receivable. The fair value measurement of derivative instruments is also one of our critical
accounting estimates due to the complexity and subjectivity involved. These estimates often require the use of valuation models that rely
on unobservable inputs. Refer to Note 2 of our financial statements contained elsewhere in this Form 10-K for a more detail description
of each, and a summary of all our critical accounting policies and recently adopted and issued accounting standards.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
We are a smaller reporting company as defined
by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REMSLEEP HOLDINGS, INC.
Report of Independent Registered Public Accounting Firm (Firm ID # 05525) F-2
Statements of Operations for the Years ended December 31, 2024 and 2023 F-4
Statements of Cash Flows for the Years ended December 31, 2024 and 2023 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, 2024 and 2023, 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, 2024, 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, 2024 and 2023 and the results of its operations and its cash flows for each of the years in
the two-year period ended December 31, 2024, 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 3 to the financial statements, the Company has
an accumulated deficit, net loss, and net cash used in operating activities. These factors, among others, raise substantial doubt about
the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in
Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there were no critical audit matters.
Fruci & Associates II, PLLC – PCAOB ID #05525
We have served as the Company’s auditor since 2018.
Spokane, Washington
April 14, 2025
F-2
REMSLEEP HOLDINGS, INC.
BALANCE SHEETS
ASSETS
Current assets:
Prepaid – related party 7,500 —
Deposit on inventory 9,050 —
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Convertible note payable, net of $100,162 debt discount 16,438 —
Accrued interest 1,406 —
Operating lease liability – current portion 9,136 134,438
Long Term Liabilities
Operating lease liability – net of current portion — 43,676
Commitments and Contingencies — —
STOCKHOLDERS’ EQUITY (DEFICIT):
Total Liabilities and Stockholders’ Equity (Deficit) $ 591,697 $ 1,206,314
The accompanying notes are an integral part
of these financial statements.
F-3
REMSLEEP
HOLDINGS, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
Operating Expenses:
Other income (expense):
Gain (loss) on disposal of fixed assets (159,593 ) 894
Gain on conversion 14,270 —
Early payment penalty (16,574 ) —
Loss on issuance of convertible debt (6,473 ) —
Change in fair value of derivative 27,067 —
Provision for income taxes — —
Net loss per share, basic and diluted $ (0.00 ) $ (0.00 )
The accompanying notes are an integral part
of these financial statements.
F-4
REMSLEEP
HOLDINGS, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
The accompanying notes are an integral part
of these financial statements.
F-5
REMSLEEP HOLDINGS, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
Cash Flows from Operating Activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of derivative (27,067 ) —
Loss on issuance of convertible debt 6,473 —
Discount amortization 135,316 —
Bad debt expense 1,410
Gain on conversion (14,270 ) —
Changes in Operating Assets and Liabilities:
Prepaid compensation - – related party (7,500 ) —
Prepaids and other assets (390 ) (8,710 )
Deposit on inventory (9,050 ) —
Accrued compensation – related party (14,500 ) 8,500
Cash Flows from Investing Activities:
Cash Flows from Financing Activities:
Proceeds from convertible note payable 225,000 —
Repayment of convertible note payable (93,000 ) —
Proceeds from the sale of common stock 420,000 —
Repayment of loans – related party — (183,931 )
Net cash provided (used) by financing activities 552,000 (183,931 )
Supplemental cash flow information:
Interest paid in cash $ 6,426 $ —
Taxes paid $ — $ —
Supplemental disclosure of non-cash activity:
Debt discount to be amortized $ 100,162 $ —
Series C preferred stock issued for intangibles – related party $ — $ 2,000
The accompanying notes are an integral part
of these financial statements.
F-6
REMSLEEP HOLDINGS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2024
NOTE 1 – BACKGROUND
Business Activity
REMSleep Holdings, Inc., (the “Company”)
was incorporated in the State of Nevada on June 6, 2007. On January 5, 2015 the name of the Company was changed to REMSleep Holdings,
Inc. and the business model was changed to reflect the new direction of the Company; to develop and distribute products to help people
affected by sleep apnea. On May 30, 2015 REMSleep LLC was formally merged into REMSleep Holdings, Inc.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of Estimates
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 at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those estimates.
Concentrations of Credit Risk
We maintain our cash in bank deposit accounts,
the balances of which at times may exceed federally insured limits. We continually monitor our banking relationships and consequently
have not experienced any losses in our accounts. At times, such deposits may be in excess of the Federal Deposit Insurance Corporation
insurable amount (“FDIC”). As of December 31, 2024 and 2023, the Company had $213,343 and $469,100 above the FDIC’s
$250,000 coverage limit, respectively.
Cash Equivalents
The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents for the years ended December
31, 2024 and 2023.
Property and Equipment
Fixed assets are carried at the lower of cost
or net realizable value. All fixed assets with a cost of $2,000 or greater are capitalized. Depreciation of property and equipment is
calculated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold
improvements are amortized over the lesser of the remaining term of the lease or the estimated useful life of the asset. Major betterments
that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets
are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss
is recognized in operations.
Basic and Diluted Earnings Per Share
Net income (loss) per common share is computed
pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss) per common share is computed
by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net
income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially
outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. Diluted amounts are
not presented when the effect of the computations are anti-dilutive due to the losses incurred. Accordingly, there is no difference in
the amounts presented for basic and diluted loss per share.
F-7
As of December 31, 2024, the Company had approximately 5,000,000 potentially
dilutive shares from Series A preferred stock, 50,000,000 from Series B preferred stock, 600,000,000 from Series C preferred stock and
30,257,949 potentially dilutive shares from convertible debt.
As of December 31, 2023, the Company had potentially
dilutive shares of common stock of 5,000,000 shares from Series A preferred stock, 50,000,000 from Series B preferred stock and 600,000,000
from Series C preferred stock.
Stock-Based Compensation
In June 2018, the FASB issued ASU 2018-07, Compensation
– Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 allows companies to
account for nonemployee awards in the same manner as employee awards. The guidance is effective for fiscal years beginning after December
15, 2018, and interim periods within those annual periods.
Fair Value of Financial Instruments
The Company follows paragraph 825-10-50-10 of
the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of
the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States
of America (U.S. GAAP) and expands disclosures about fair value measurements. To increase consistency and comparability in fair value
measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of
fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
The carrying amount of the Company’s financial
assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity
of those instruments. The Company’s notes payable approximate the fair value of such instruments as the notes bear interest
rates that are consistent with current market rates.
Revenue Recognition
The Company recognizes revenue under ASC 606,
“Revenue from Contracts with Customers” (“ASC 606”). The Company determines revenue recognition through the following
steps:
● Identification of a contract with a customer;
● Identification of the performance obligations in the contract;
● Determination of the transaction price;
● Recognition of revenue when or as the performance obligations are satisfied.
When the product ships control of the promised goods is transferred to the customers and the revenue is recognized.
Warranties
The Company is currently selling its ResPlus Auto
CPAP Machine (“ResPlus”). The ResPlus is imported by the Company and sold primarily to Durable Medical Equipment companies
to patients with sleep apnea. The manufacturer warranties the unit for 2 years parts and labor. During the last twelve months the Company
has received back eight units for warranty repair, out of approximately 1,000 units sold. As of December 31, 2024, there is no accrual
for warranty expense due to the low cost of replacement to date. If returns are to increase, management will determine if it needs to
account for the cost of returns and establish a warranty accrual.
F-8
Accounts Receivable
Revenues that have been recognized but not yet received are
recorded as accounts receivable. The Company estimates credit losses based on the Current Expected Credit Losses (CECL) model as required
by ASC 326. The allowance for credit losses is based on a variety of factors, including historical loss experience, current conditions,
and reasonable and supportable forecasts of future economic conditions. An allowance for estimated uncollectible amounts will be recognized
to reduce the amount of receivables to its net realizable value when needed. Based on collection experience and periodic reviews of outstanding
receivables, the Company determines if it needs to adjust its allowance. As of December 31, 2024, all the accounts receivable balance
is due from one customer. As of December 31, 2024 and 2023, management has determined that an allowance for doubtful account is
required of $7,000 and $5,590, respectively, for amounts that may not be collectible.
Inventories
Inventories are stated at the lower of cost or
net realizable value. Inventory on hand consists of finished goods purchased from third parties. When there is evidence that the inventory’s
value is less than original cost, the inventory is reduced to market value. We determine market value on current resale amounts and whether
technological obsolescence exists. As of December 31, 2023, the Company determined that the value of its inventory had fallen below cost
and required impairment down to market value. As a result we recognized impairment expense of $738,113 for the year ended December 31,
2023. No impairment expense was recognized for the year ended December 31, 2024.
Recently Adopted Accounting Pronouncements
In November 2023, the FASB issued ASU 2023-07,
Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information
on an annual and interim basis, primarily disclosure of significant segment expense categories and amounts for each reportable segment.
The new standard is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning
after December 15, 2024. The Company adopted ASU 2023-07 in the annual financial statements for the year ended December 31, 2024, and
for interim periods beginning in 2025. The adoption of ASU 2023-07 did not have a significant impact on the Company’s financial
statements.
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.
NOTE 3 – 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 $15,270,756 at December 31, 2024, had a net loss of $1,077,997 and net cash used in operating activities
of $683,057 for the period ended December 31 2024. 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.
The Company received its FDA 510k approval for
its DeltaWave product on July 2, 2024. We expect to have product inventory ready for the market in the second quarter of 2025. The Company
will continue to finance its operations through debt and/or equity financing as needed.
NOTE 4 – PROPERTY & EQUIPMENT
Long lived assets, including property and equipment
and certain intangible assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows
of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset.
Long-lived assets and certain identifiable intangibles to be disposed of are reported at the lower of carrying amount or fair value less
cost to sell.
Property and Equipment and intangible assets are
first recorded at cost. Depreciation and/or amortization is computed using the straight-line method over the estimated useful lives of
the various classes of assets as follows between three and five years.
Maintenance and repair expenses, as incurred,
are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable
to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.
F-9
Assets stated at cost, less accumulated depreciation consisted of the
following:
During the year ended December 31, 2024, the Company
wrote off certain molds that were no longer in use, resulting in a loss on disposal of fixed assets of $159,593.
Depreciation expense
Depreciation expense for the years ended December
31, 2024 and 2023 was $73,834 and $102,198, respectively.
NOTE 5 – CONVERTIBLE NOTE PAYABLE
On January 10, 2024, the Company issued a 10% Convertible Promissory
Note (the “Note”) for $143,000 to 1800 Diagonal Lending LLC (“1800 Diagonal”). The Note includes an OID of $18,000
and matures on January 10, 2025. The OID includes $5,000 withheld for legal fees. The Note is convertible into shares of common stock,
beginning 180 days after the issue date, at a 25% discount to the average of the three lowest trades during the ten days prior to the
date of conversion. The Company recorded an original debt discount of $118,887 ($18,000 OID, $100,877 from derivative) to be amortized
over the one-year term of the loan. On July 16, 2024, 1800 Diagonal converted $50,000 of principal into 5,000,000 shares of common stock.
On July 24, 2024, the remaining principal and interest of $93,000 and $6,246, respectively, was repaid, along with an additional $16,574
early payment penalty fee.
During the year ended December 31, 2024, $118,877
was amortized to interest expense. The debt discount balance as of December 31, 2024, is $0.
On November 18, 2024, the Company issued a 10%
Convertible Promissory Note for $116,600 to 1800 Diagonal. The Note includes an OID of $16,600 and matures on August 30, 2025. The OID
includes $6,000 withheld for legal fees. The Note is convertible into shares of common stock, beginning 180 days after the issue date,
at a 25% discount to the average of the three lowest trades during the ten days prior to the date of conversion. The Company recorded
an original debt discount of $116,600 ($16,600 OID, $100,000 from derivative) to be amortized over the one-year term of the loan. As of
December 31, 2024, there is $116,600 and $1,406 of principal and interest, respectively, due on the loan.
During the year ended December 31, 2024, $16,438
was amortized to interest expense. The debt discount balance as of December 31, 2024, is $100,162.
A summary of the activity of the derivative liability
for the notes above is as follows:
Increase to derivative due to new issuances 207,350
Decrease to derivative due to conversion/repayments (28,269 )
Derivative gain due to mark to market adjustment (27,067 )
F-10
A summary of quantitative information about significant
unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of
the fair value hierarchy as of December 31, 2024 is as follows:
Inputs December 31 2024 Initial Valuation
Dividend rate — —
Years to maturity 0.66 1
NOTE 6 – RELATED PARTY TRANSACTIONS
The Company executed a new employment agreement with Mr. Wood on April 1, 2022. Per the terms of the agreement Mr. Wood is to be compensated
$8,000 per month. As of December 31, 2024 and 2023, there is $0 and $14,500 of accrued compensation, respectively, due to Mr. Wood. During
the years ended December 31, 2024 and 2023, cash payments of $95,000 and $83,500, respectively, were paid to Mr. Wood. As of December
31, 2024, there is $7,500 of prepaid compensation expense for Mr. Wood.
As of December 31, 2024 and December 31, 2023,
there is $46,000 and $46,000 of accrued compensation, respectively, due to Russell Bird, the former Chairman. Effective June 1, 2023,
Mr. Bird resigned from all positions with the Company.
The Company has entered into an at-will consulting
agreement with Jonathan Lane to serve as Chief Technology Officer. During the years ended December 31, 2024 and 2023, the Company made
cash payments to Mr. Lane of $47,000 and $36,000, respectively.
During the years ended December 31, 2024 and 2023, the Company paid
$31,100 and $19,000, respectively, to the brother of the CEO for services related to development of the Company’s product. The payments
are accounted for in development expense.
On September 6, 2023, the Company entered into
an intellectual property assignment agreement (the “IP Purchase Agreement”) with Mr. Wood, pursuant to which the Company has
agreed to issue to Mr. Wood a total of 2,000,000 shares of Series C Preferred Stock.
NOTE 7 – OPERATING LEASES
The Company entered into a Lease Agreement (the
“Lease”) with 14175 Icot Blvd, LLC (the “Lessor”), effective May 1, 2022, relating to approximately 9,677 square
feet of property located at 14175 Icot Blvd, Clearwater, FL 33760. The term of the Lease is for thirty-six (36) months commencing May 1,
2022. The monthly base rent, including tax is $8,686.71 for the first twelve (12) months increasing thereafter to $9,034.17 for the next
12 months and to $12,287.63 for the last 12 months. The Company paid $69,494 of advanced rent. The advance rent is to be allocated
equally over the first two years of the lease.
During the year ended December 31, 2024, it was
agreed that the monthly lease expense would remain at the original $8,686.71.
In February 2016, the FASB issued Accounting Standard
Update (“ASU”) 2016-02, Leases (Topic 842), which superseded guidance in ASC 840, Leases. We account for short-term
leases, those lasting fewer than 12 months, using the practical expedient as outlined in the guidance, which does not include recording
such leases on the balance sheet.
Adoption of Accounting Standard Update (“ASU”)
2016-02, Leases (Topic 842), resulted in recording an initial right-of-use (“ROU”) assets and operating lease liabilities
of $328,803 on May 1, 2022.
Asset Balance Sheet Classification December 31, 2024 December 31, 2023
Operating lease asset Right of use asset $ 16,154 $ 177,796
Liability
F-11
The operating lease expense for the above agreement
for the year ended December 31, 2024, was $96,905 which consisted of amortization expense of $88,653 and interest expense of $8,252.
The operating
lease expense for the above agreement for the year ended December 31, 2023, was
$136,320 which consisted of amortization expense of $103,613, $18,928 of prepaid rent and interest expense of $13,779.
During the year ended December
31, 2023, the Company also incurred $8,675 of rent expense for an apartment used by Company personnel. The apartment is a monthly,
short-term rental.
NOTE 8 – COMMON STOCK TRANSACTIONS
On July 16, 2024, 1800 Diagonal converted $50,000 of principal into
5,000,000 shares of common stock (Note 5).
During the year ended December
31, 2024, the Company sold 57,003,525 shares of common stock to Quick Capital LLC for total proceeds of $420,000.
NOTE 9 – PREFERRED STOCK
The Company is currently authorized to issue 5,000,000
shares of Series A Preferred Stock, par value $0.001 per share with 1:25 voting rights. The Series A Preferred Stock ranks equal to the
common stock on liquidation, pays no dividend and is convertible to common stock for one share of common for one share of Series A Preferred
Stock.
The Company is currently authorized to issue 5,000,000
shares of Series B Preferred Stock, par value $0.001 per share. Each share of Series B Preferred Stock has a 1:100 voting right and is
convertible into 100 shares of common stock. No dividends will be paid and in the event of liquidation all shares of Series B will automatically
convert into common stock. There are 500,000 shares of Series B Preferred Stock issued and outstanding.
The Company is currently authorized to issue 5,000,000
shares of Series C Preferred Stock, par value $0.001 per share. On July 24, 2023, the Company filed an Amended and Restated Certificate
of Designations of the Series C Preferred Shares. The Series C Preferred may vote on any action upon which holders of the Company’s
common stock may vote, and they shall vote together as one class with voting rights equal to eighty one percent (81%) of all the issued
and outstanding shares of common stock of the Company. Each share of Series C Preferred can be converted into 300 shares of the Company’s
common stock.
On September 6, 2023, the Company entered into
an intellectual property assignment agreement (the “IP Purchase Agreement”) with Mr. Wood, pursuant to which the Company has
agreed to issue to Mr. Wood a total of 2,000,000 shares of Series C Preferred Stock.
F-12
NOTE 10 – INCOME TAX
Deferred taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred
tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has evaluated Staff Accounting
Bulletin No. 118 regarding the impact of the decreased tax rates of the Tax Cuts & Jobs Act. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used.
The provision for Federal income tax consists of the following December
31:
Federal income tax benefit attributable to:
Net provision for Federal income taxes $ - $ -
The cumulative tax effect at the expected rate of 21% of significant
items comprising our net deferred tax amount is as follows:
Deferred tax asset attributable to:
Net deferred tax asset $ - $ -
At December 31, 2024, the Company had net operating loss carry forwards
of approximately $3,207,000 that may be offset against future taxable income. NOLs from tax years up to 2017 can be carried forward twenty
years. Under the CARES Act, the Company carry forward NOLs indefinitely for NOLs generated in a
tax year beginning after 2017, that remain after they are carried back to tax years in the five-year carryback period. No tax benefit
has been reported in the December 31, 2024 financial statements since the potential tax benefit is offset by a valuation allowance of
the same amount.
Due to the change in ownership provisions of the
Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations.
Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years. With few exceptions, the
Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2016.
NOTE 11 – SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) management
has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined
that it has the following material subsequent event to disclose in these financial statements.
On February 7, 2025, the Company issued a 10%
Convertible Promissory Note (the “Note”) for $66,000 to 1800 Diagonal Lending LLC. The Note includes an OID of $6,000 and
matures on November 15, 2025. The Note is convertible into shares of common stock, beginning 180 days after the issue date, at a 25% discount
to the average of the three lowest trades during the ten days prior to the date of conversion.
F-13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Management’s Report Disclosure Controls
and Procedures
During the fourth quarter of the year ended December
31, 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive
officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that,
as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information
required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the required time periods specified in the Commission’s rules and forms and is accumulated and communicated to our
management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding
required disclosure.
Our principal executive officer and principal
financial officer, do not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud.
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives
of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the
benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
To address the material weaknesses, we performed
additional analysis and other post-closing procedures in an effort to ensure our financial statements included in this annual report have
been prepared in accordance with generally accepted accounting principles. In addition, we engaged accounting consultants to assist
in the preparation of our financial statements. Accordingly, management believes that the financial statements included in this report
fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented.