The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

Hash LabsCoro Global Inc.

Condensed Consolidated Statements of Cash FlowsChanges in Stockholders’ Equity / (Deficit)

For the Three Ended June 30, 2020 and 2019

(Unaudited)

The accompanying notes are an integral part of these condensed consolidated unaudited financial statements.

Coro Global Inc.

Hash LabsCondensed Consolidated Statements of Changes in Stockholders’ Equity / (Deficit)

For the Six Months Ended June 30, 2020 and 2019

(Unaudited)

Coro Global Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

For The Three and NineSix Months Ended SeptemberJune 30, 20192020

(Unaudited)

NOTE 1 — BUSINESS, GOING CONCERN AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Hash LabsCoro Global Inc., a Nevada corporation (the “Company”), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete condensed consolidated financial statements. These unaudited condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Form 10-K for the fiscal year ended December 31, 20182019 filed with the SEC on April 11, 2019.13, 2020. In the opinion of management, these unaudited condensed consolidated financial statements reflect all adjustments that are of a normal recurring nature and which are necessary to present fairly the financial position of the Company as of SeptemberJune 30, 2019,2020, and the results of operations and cash flows for the ninethree and six months ended SeptemberJune 30, 20192020 and 2018.2019. The results of operations for the ninesix months ended SeptemberJune 30, 20192020 are not necessarily indicative of the results that may be expected for the entire fiscal year.

Principle of Consolidation

The accompanying financial statements present on a consolidated basis the accounts of the Company and its wholly owned subsidiary, Coro Corp., which was organized in the State of Nevada on September 14, 2018.

All significant intercompany accounts and transactions have been eliminated in consolidation.

Nature of Business Operations

Hash LabsCoro Global Inc. is a Nevada corporation that was originally formed on November 1, 2005 when Bio-Solutions International, Inc. (“Bio-Solutions”) entered into an Agreement and Plan of Merger with OmniMed Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of Bio-Solutions, OmniMed International, Inc. (“OmniMed”) and the shareholders of OmniMed. On January 17, 2006, OmniMed changed its name to MedeFile International, Inc.2005. On September 14, 2018 the Company formed a wholly owned subsidiary, Coro Corp. The Company is focused on dynamic global growth opportunities in the financial technology, or Fintech industry. The Company is developing products and technology solutions for global payments and the financial industry. Effective January 9, 2020, the Company changed its name to Coro Global Inc.

Covid-19 Pandemic

The Company’s operations have been materially and adversely impacted by the Covid-19 pandemic. The Company is located in Dade County, Florida which was subject to a “stay at home” order effective March 26, 2020, and which was lifted effective May 20, 2020. The effect of Covid-19 on the business, has since been limited to experiencing delays in obtaining registrations and/or licenses from various state governmental agencies due to staff being temporarily suspended or working remotely.

Going Concern

The accompanying financial statements have been prepared contemplating a continuation of the Company as a going concern. The Company reported a net loss of $4,067,097 for the nine months ended September 30, 2019.

The accompanyingcondensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company reported a net loss of $2,717,361 for the six months ended June 30, 2020 and has an accumulated deficit of $41,843,172 as of June 30, 2020. The operating losses raise substantial doubt about the Company’s ability to continue as a going concern.

We will need to raise additional capital in order to continue operations. The Company’s ability to obtain additional financing may be affected by the success of its growth strategy and its future performance, each of which is subject to general economic, financial, competitive, legislative, regulatory and other factors beyond the Company’s control. Additional capital may not be available on acceptable terms, or at all. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms.

Further, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. If additional financing is not available or is not available on acceptable terms, we will have to curtail or cease our operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. These financial statements do not include any adjustments that might arise from this uncertainty.

Cash and Cash Equivalents

For purposes of these financial statements, cash and cash equivalents includes highly liquid debt instruments with maturity of less than three months.

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. Currently our operating account is notaccounts are approximately $579,000 above the FDIC limit.

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. The Company incurred no$125,381, $125,381, $0 and $0, respectively for advertising costs for the three and ninesix months ended SeptemberJune 30, 20192020 and 2018.2019.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. 

Property and Equipment

Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred. Major additions and renewals are capitalized and depreciated over their estimated useful lives being 3 years up to 5 years.

Computer and equipment costs consisted of the following:

Depreciation expense was $499, $1,486, $0$498, and $0, respectively$499 for the three and nine months ended SeptemberJune 30, 2020 and 2019, respectively. Depreciation expense was $996, and 2018,$997 for the six months ended June 30, 2020 and 2019, respectively.

Revenue Recognition

TheEffective January 1, 2018, the Company accounts forrecognizes revenue in accordance with Accounting Standards Codification 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 606605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout the Industry Topics of the Accounting Standards Codification. The updated guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also provides for additional disclosures with respect to revenues and cash flows arising from contracts with customers. The standard was effective for the first interim period within annual reporting periods beginning after December 15, 2017, and the Company adopted at the beginning of fiscal year 2018standard using the modified retrospective method.approach effective January 1, 2018. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Companyadoption of this guidance did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the effect was immaterial. have a material impact on our financial statements.

Fair Value of Financial Instruments

Cash and Equivalents, Deposits In-Transit, Receivables, Prepaid and Other Current Assets, Accounts Payable, Accrued Salaries and Wages and Other Current LiabilitiesLiabilities.

The carrying amounts of these items approximated fair value.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, Financial Accounting Standards Board (“FASB”) ASC Topic 820-10-35 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements).

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

Impairment of Long Lived Assets

In accordance with Accounting Standards Codification (“ASC”) 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. ASC 360-10 relates to assets that can be amortized and the life can be determinable. The Company reviews property and equipment and other long-lived assets for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparison of the asset’s carrying amount to future undiscounted net cash flows the assets are expected to generate. Cash flow forecasts are based on trends of historical performance and management’s estimate of future performance, giving consideration to existing and anticipated competitive and economic conditions. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future cash flows arising from the assets or their fair values, whichever is more determinable.

Leases

In February 2016, the FASB issued ASU 2016-02,Leases, which amended current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this ASU did not have a material impact on our balance sheet.

Net Loss per Share

Basic and diluted loss per share amounts are computed based on net loss divided by the weighted average number of common shares outstanding. Convertible shares, if converted, totaling 0 and 299,815 common shares, respectively were not included in the computation of diluted loss per share because the assumed conversion and exercise would be anti-dilutive for the ninethree and six months ended SeptemberJune 30, 20192020 and 2018.2019.

Management Estimates

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

Stock Based Compensation

The Company accounts for employee compensation related to stock, options or warrants using a fair value-based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company accounts for nonemployee compensation related to stock, options or warrants using a fair value-based method whereby compensation cost is measured at the earlier of a commitment date or completion of services based on the value of the award and is recognized over the service period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the measurement date.

Reclassifications

Certain 20182020 balances have been reclassified in the 2019 financial statement presentation. The reclassification of accrued interest and cash overdrafts did not have any effect on the financial statements.

Recent Accounting Pronouncements

All other newly issued accounting pronouncements not yet effective have been deemed either immaterial or not applicable.

2. DEFERRED STOCK-BASED COMPENSATION - RELATED PARTY

Effective May 18, 2018, the Company appointed J. Mark Goode as the new President and Chief Executive Officer of the Company. He was also appointed a member and Chairman of the Board of Directors of the Company.

The Company entered into an employment agreement on May 18, 2018 with Mr. Goode, which provides for an annual salary and certain other benefits. Pursuant to the employment agreement, Mr. Goode’s annual base salary is $96,000, which may increase to up to $216,000 upon Mr. Goode meeting certain milestones set forth in the employment agreement related to the Company’s performance and is subject to increases as set from time to time by the Board. Upon the execution of the employment agreement, Mr. Goode received 500,000 shares of common stock of the Company valued at $1,250,000 ($2.50 per share). Pursuant to the initial terms of the employment agreement, after one year of employment by the Company as the Chief Executive Officer, the Company agreed to issue to Mr. Goode additional shares of common stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance; after two years of employment by the Company as the Chief Executive Officer, the Company agreed to issue to Mr. Goode additional shares of common stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance; and after three years of employment by the Company as the Chief Executive Officer, the Company agreed to issue to Mr. Goode additional shares of common stock of the Company equal to 1% of the outstanding shares of the Company at the time of such issuance. As of December 31, 2018 the Company accrued $300,995 in accordance with ASC 718-10-55-65 for the portion earned as the terms of such an award do not establish an ownership relationship because the extent to which (or whether) the employee benefits from the award depends on something other than changes in the entity’s share price. Therefore, the awards should be accounted for as a liability award. ASC 718 requires that public companies measure share-based awards classified as liabilities at fair value at each reporting date. In accordance with 718-30-35-3, a public entity shall measure a liability award under a share-based payment arrangement based on the award’s fair value re-measured at each reporting date until the date of settlement. Compensation cost for each period until settlement shall be based on the change (or a portion of the change, depending on the percentage of the requisite service that has been rendered at the reporting date) in the fair value of the instrument for each reporting period.

On May 31, 2019, the Company entered into amendment no. 1 to the Company’s employment agreement with Mr. Goode. Pursuant to the amendment, the Company’s obligation to issue additional shares of common stock as compensation to Mr. Goode was amended, such that, the Company issued to Mr. Goode and his designee 750,000 shares of common stock upon execution of the amendment, and the Company will have no further obligation to issue to Mr. Goode shares under the employment agreement. Mr. Goode would have been or will be required to return such 750,000 shares to the Company as follows:

On May 31, 2019 the Company recorded the reclassification of the derivative liability of $2,162,408 for the issuance of these share to additional paid in capital and common stock. The Company recorded $294,452 and $391,552, respectively$514,908 for the additional value of the common stock for the vesting of the award during the three and nine months ended September 30, 2019.award. As of SeptemberJune 30, 20192020 the unvested amount of the awards was $633,250.$385,681.

During the six months ended June 30, 2020, 500,000 shares of Mr. Goode common stock vested.

3. NOTES PAYABLE – RELATED PARTY

On July 15, 2016, the Company issued a 7% promissory note to a significant shareholder in the principal amount of $100,000. The note had an initial one-year term. On April 9, 2019, the maturity date of the note was extended to June 30, 2019. On April 12, 2019, the Company entered into an exchange agreement with The Vantage Group Ltd. (“Vantage”), which held the note, pursuant to which Vantage exchanged a portion of this note, in the amount of $50,000, for 10,000 newly issued shares of common stock of the Company. The Company repaid the remaining balance of $50,000. Vantage is owned by Lyle Hauser, an adviser to the Company’s largestCompany and its then-largest stockholder.

The changes in this note payable to related party are reflected in the following at SeptemberJune 30, 20192020 and December 31, 2018:2019:

On January 14, 2019, the Company entered into an exchange agreement with Lyle Hauser. Pursuant to the exchange agreement, Mr. Hauser exchanged an outstanding convertible promissory note of the Company in the aggregate amount of $70,382 (including accrued interest) held by Mr. Hauser for a new non-convertible promissory note of the Company in the principal amount of $70,382. The new note had an originalOn April 7, 2020, the maturity date of March 31,outstanding notes held by Lyle Hauser, consisting of (i) a promissory note, dated on or about January 14, 2019, in the original principal amount of $70,384,as amended by amendment No. 1 thereto, dated April 9, 2019, amendment No. 2 thereto, dated July 3, 2019, amendment No. 3 thereto, dated October 1, 2019, and amendment no. 4 thereto, dated January 17, 2020; and (ii) an original issue discount promissory note, dated on or about February 28, 2019, in the original principal amount of $110,000 (of which has$100,000 had been repaid, leaving an outstanding balance of $10,000), as amended by amendment No. 1 thereto, dated April 9, 2019, amendment No. 2 thereto, dated July 3, 2019, amendment No. 3 thereto, dated October 1, 2019, and amendment No. 4 thereto, dated January 17, 2020, was extended to June 30, 2020. In consideration for the extension of the maturity date of the notes, the Company issued to the designee of Lyle Hauser 33,000 shares of common stock. Between April 1, 2020 to June 30, 2020, the Company repaid $15,000 of the notes due to Lyle Hauser. As of June 30, 2020 and December 31, 2019, (see Note 8), and bears interest at the rate of 7% per year, due upon maturity. Mr. Hauser is the Company’s largest stockholder. Accrued interest at September 30, 2019 amounted to $6,557.

Onnote dated January 14, 2019 the Company entered into an exchange agreement with Vantage. Pursuant to the exchange agreement, Vantage exchanged the remaining amount due onhad a convertible promissory notebalance of the Company, equal to $17,780 (including$55,382 and accrued interest) held by Vantage for a new non-convertible promissory noteinterest of $5,438. On July 27, 2020 the Company in the principal amount of $17,780. The new note had an original maturity date of March 31,the note dated January 14, 2019 which has beenwas extended to December 31, 2019 (see Note 8), and bears interest at the rate of 7% per year, due upon maturity. Accrued interest at September 30, 2019 amounted to $326.

2020. See note 8.

On February 28, 2019, the Company issued a promissory note in the principal amount of $110,000 to Lyle Hauser with an original issue discount of $10,000, for a purchase price of $100,000. The note has a 0% interest rate until maturity and had an original maturity date of March 31, 2019, which has beenwas extended to December 31, 2019 (see Note 8).June 30, 2020. Following the maturity date, the note bearswould bear a 9% annual interest rate until paid in full. During the six months ended June 30, 2020 the Company repaid a total of $110,000. As of June 30, 2020 and December 31, 2019, the note had a balance of $0 and $110,000, respectively.

The Company evaluated the modification under ASC 470-50 and concluded the deletion of the conversion qualifies for debt modification which triggered debt extinguishment; however, there was no impact to the income statement as there was no unamortized discounts or other fees paid on the under the prior debt terms.

4. INTELLECTUAL PROPERTY

In September 2017, the Company entered into and closed an asset purchase agreement with Vantage. Pursuant to the asset purchase agreement, the Company purchased from Vantage a software application referred to as Dino Might and related intellectual property. As consideration for the purchase, the Company issued to Vantage 7,000 shares of newly created Series C Preferred Stock, valued at $820,451, and granted to Vantage a revenue sharing interest in the Dino Might asset pursuant to which the Company agreed to pay to Vantage, for the Company’s 2017 fiscal year and the following nine years, 30% of the revenue generated by the Dino Might asset. In 2017 the Company recognized an impairment loss of $818,472, on the transaction based on the future discounted cash flows over the next three years. As of SeptemberJune 30, 2020 and December 31, 2019, the Dino Might asset balance was $1,979.

Intellectual property is stated at cost. When retired or otherwise disposed, the related carrying value and accumulated amortization are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. Minor additions and renewals are expensed in the year incurred.

5. EQUITY

On September 29, 2017, the Company filed a Certificate of Designation of Series C Preferred Stock with the Secretary of State of Nevada (the “Series C Certificate of Designation”). The Company authorized 7,000 shares of preferred stock as Series C Preferred Stock. The Company issued 7,000 shares of Series C Preferred Stock on September 29, 2017. All outstanding shares of Series C Preferred Stock were converted to common stock in April 2018. No shares of Series C Preferred Stock are outstanding as of September 30, 2019March 31, 2020 and December 31, 2018,2019, and no such shares may be re-issued.

On April 12, 2019,May 18, 2018, the Company appointed J. Mark Goode as the new President and Chief Executive Officer of the Company, effective May 18. 2018. He was also appointed a member and Chairman of the Board of Directors of the Company. The Company entered into an exchangeemployment agreement on May 18, 2018 with Vantage pursuantMr. Goode, which provides for an annual salary and certain other benefits. Pursuant to the employment agreement, Mr. Goode’s annual base salary is $96,000, which Vantage exchanged a portion of an outstanding promissory notemay increase to up to $216,000 upon Mr. Goode meeting certain milestones set forth in the employment agreement related to the Company’s performance and is subject to increases as set from time to time by the Board. Upon the execution of the Company held by Vantage, in the amount of $50,000, for 10,000 newlyemployment agreement, Mr. Goode was issued 500,000 shares of common stock of the Company.

During the nine months ended September 30, 2019 the Company sold a total of 320,000 shares of common stock in private placements for $1,600,000valued at $1,250,000 ($5.002.50 per share).

On May 3, 2019, the Company issued 20,000 shares of common stock valued at $100,000 ($5.00 per share) fair market value, pursuant to an investor relations agreement, and agreed to pay $2,500 per months for a variety of services, including investor and public relations assessment, marketing surveys, investor support, and strategic business planning. The agreement had an initial term of six months, and renewed automatically for one additional six month term. In August 2019 the agreement was amended such that no additional compensation will be owed for the renewal term.

On May 31, 2019, the Company entered into amendment no. 1 to the Company’s employment agreement with J. Mark Goode, the Company’s chief executive officer and director. Pursuant to the amendment, the Company’s obligation to issue additional shares of common stock as compensation to Mr. Goode was amended, such that, the Company issued to Mr. Goode and his designee 750,000 shares of common stock upon execution of the amendment, and the Company will have no further obligation to issue to Mr. Goode shares under the employment agreement. Mr. Goode would have been or will be required to return such 750,000 shares to the Company as follows:

On May 31, 2019 the Company recorded the reclassification of the derivative liability of $2,162,408 for the issuance of these share to additional paid in capital and common stock. The Company recorded $294,452 and $391,552$687,003 for the additional value of the common stock for the vesting of the award during the three and nineyear ended December 31, 2019. The Company recorded $514,908 for the additional value of the common stock for the vesting of the award during the six months ended SeptemberJune 30, 2019.2020. As of SeptemberJune 30, 2020 and December 31, 2019 the unvested amount of the awards was $633,250.$385,681 and $900,589, respectively.

During the six months ended June 30, 2020, 500,000 shares of Mr. Goode common stock vested.

From January 1, 2020 to June 30, 2020, the Company entered into and closed securities purchase agreements with accredited investors pursuant to which the Company issued and sold an aggregate of 437,000 shares of common stock for an aggregate purchase price of $2,185,000.  

On April 7, 2020, the maturity date of outstanding notes held by Lyle Hauser was extended to June 30, 2020. See Note 3. In consideration for the extension of the maturity date of the notes, the Company issued to the designee of Lyle Hauser 33,000 shares of common stock. Between April 1, 2020 to May 14, 2020, the Company repaid $25,000 of notes due to Lyle Hauser.

During the six months ended June 30, 2020 the Company issued a total of 68,500 shares of common stock valued at $342,500 ($5.00 per share) to various consultant for consulting and business development.

On June 22, 2020, the Company issued, to a consultant for services, six-month warrants to purchase 30,000 shares of common stock with an exercise price of $0.01. The warrant was exercised prior to June 30, 2020. The Company recognized an expense of $149,700 ($5.00 per share) the current fair value for common stock.

On June 22, 2020, the Company issued to Niquana Noel, the Company’s chief operating officer, for services provided, six-month warrants to purchase 50,000 shares of common stock, with an exercise price of $0.01. The warrant was exercised prior to June 30, 2020. The Company recognized an expense of $249,500 ($5.00 per share) the current fair value for common stock.

6. COMMITMENTS AND CONTINGENCIES

From June 29, 2018 to September 11, 2018, the Company entered into a series of statement of work agreements with Best Innovation Group, Inc. (“BIG”) to provide consulting services to the Company. The statement of work agreements were entered into in connection with a professional services agreement the Company entered into with BIG dated May 1, 2018, under which all services performed by BIG are to be documented in a statement of work agreement. The Company agreed to reimburse BIG at a rate of $200 per hour. Under a statement of work agreement executed on July 26, 2018, the total cost to the Company was $716,272 of which $238,757 was due on the date of the agreement, $238,757 was due on November 15, 2018 and the remaining amount was paid in July 2019. On September 11, 2018, the Company entered into a statement of work agreement with BIG, under which BIG was engaged to provide SOC 2 gap remediation and audit services. Under this statement of work agreement, $70,000 was due and paid upon execution of the agreement, and $90,000 was due and paid from December 1, 2018 through March 1, 2019.

On August 3, 2018 the Company entered into a master services agreement with REQ a Washington, DC-based creative and digital marketing agency, pursuant to which the Company engaged REQ to develop a branding and digital marketing strategy. As of September 30, 2019, REQ has completed its engagement with the Company and the Company owes $17,000 to REQ.

In December 2018, we entered into a software license agreement with Swirlds to license Hashgraph for the Coro platform, and on June 23, 2020, the agreement was amended and restated software license agreement (as amended, the “Swirlds Agreement”). Pursuant to the Swirlds Agreement, the Company extended its license from Swirlds of Hashgraph technology for use in the Company’s Coro payment platform. The term and fees of such license will be as set forth in any applicable order form. In connection with the Swirlds Agreement, the Company is obligated to payand Swirlds executed an order form (the “Order Form”), which amends, restates and supersedes the order form between the Company and Swirlds dated December 13, 2018, whereby the Company will license 15 nodes from Swirlds, at a first year licensinglicense fee of $225,000 which will be due$15,000 per node, for a term of one (1) year, for a license fee of $225,000. Pursuant to prior to launchthe Order Form, the license of the Coro product and a feenodes will automatically renew for additional one (1) year terms unless and until either party terminates the Swirlds Agreement or provides notice of non-renewal of the license then in effect. Should the license for any of the foregoing 15 nodes atrenew for any additional year, the license fee per node will drop to $3,000 per node. In additionnode per year.

Additionally, pursuant to the Order Form, the Company is required towill pay a 10% transaction fee for account holdersSwirlds quarterly fees based on the aggregate value of all transaction fees the Company collects in that quarter from customers whose transactions were processed on the Coro payment platform using Swirld’s Hashgraph algorithm. The Company will also pay quarterly network transaction fees on all transactions (other than transactions for fiat), that are conducted by a Coro network user. If such quarterly network transaction fees equal less than $5,000, the Company will pay Swirlds Customer Network. The agreement automatically renews$5,000 for an additional one year and the fees may not increase more than 1%.that quarter.

On September 20, 2019March 9, 2020, the Company entered into an engagement agreement with MP Partners, LTD.Aegis Capital Corp. (“MP Partners”Aegis”) under, pursuant to which the Companywe engaged MP PartnersAegis to act as lead underwriter in connection with a finder outsideproposed public offering of common stock by the United States. As considerationCompany. In the Company agreedevent the contemplated offering is completed, the agreement contemplates, that (subject to execution of an underwriting agreement for the following:

The Company also agreed to issue to MP Partners a number of shares of common stock equal to 2%sold in the offering. The agreement has a term that ends six months from the date thereof or upon completion of the numberproposed offering. As of shares purchased by investors for whichJune 30, 2020, the Company oweshas recorded $119,025 of deferred offering costs consisting of $85,000 of legal fees, exchange listing fees of $9,025 and $25,000 of underwrite due diligence fees. Upon the completion of the offering the Company will reclassify to MP Partnersadditional paid in capital.

On June 24, 2020, the board of directors of the Company adopted a successcompensation program for independent directors. Under the program, independent directors will be entitled to a quarterly cash fee underof $7,500 and 7,500 shares of common stock on a quarterly basis (each due and payable quarterly in arrears). As of June 30, 2020, the agreement.Company had appointed three independent directors.

7. RELATED PARTY

On July 15, 2016, the Company issued an unsecured 7% promissory note to a significant shareholder in the amount of $100,000. The note had an initial one-year term. On April 9, 2019, the maturity date of the note was extended to June 30, 2019. On April 12, 2019, the Company entered into an exchange agreement with Vantage, which held the note, pursuant to which Vantage exchanged a portion of this note, in the amount of $50,000, for 10,000 newly issued shares of common stock of the Company. The Company repaid the remaining balance of $50,000.

On January 14, 2019, the Company entered into an exchange agreement with Lyle Hauser. Pursuant to the exchange agreement, Mr. Hauser exchanged an outstanding convertible promissory note of the Company in the aggregate amount of $70,382 (including accrued interest) held by Mr. Hauser for a new non-convertible promissory note of the Company in the principal amount of $70,382. The new note had an original maturity date of March 31, 2019, which has been extended to December 31, 2019,September 30, 2020 (see Note 8), and bears interest at the rate of 7% per year, due upon maturity. AccruedDuring the six months ended June 30, 2020 the Company repaid an additional $15,000. As of June 30, 2020, and December 31, 2019, the note had a balance of $55,382 and accrued interest at September 30, 2019 amounted to $6,557. of $5,438.

On January 14, 2019 the Company entered into an exchange agreement with Vantage. Pursuant to the exchange agreement, Vantage exchanged the remaining amount due on a convertible promissory note of the Company, equal to $17,780 (including accrued interest) held by Vantage for a new non-convertible promissory note of the Company in the principal amount of $17,780. The new note had an original maturity date of March 31, 2019, which has beenwas extended to December 31, 2019, and bore interest at the rate of 7% per year, due upon maturity. Accrued interest at September30,June 30, 2020 and December 31, 2019 amounted to $326.

$1,245. The Company repaid note in full on November 19, 2019.

On February 28, 2019, the Company issued a promissory note in the principal amount of $110,000 to Lyle Hauser with an original issue discount of $10,000, for a purchase price of $100,000. The note has a 0% interest rate until maturity and had an original maturity date of March 31, 2019, which has beenwas extended to December 31, 2019.June 30, 2020. In consideration for the extension of the maturity date of the notes, the Company issued to the designee of Lyle Hauser 33,000 shares of common stock. Following the maturity date, the note bearswould bear a 9% annual interest rate until paid in full. During the six months ended June 30, 2020 the Company repaid a total of $110,000. As of June 30, 2020, and December 31, 2019, the note had a balance of $0 and $110,000, respectively.

During the three and six months ended June 30, 2020 and 2019 the Company paid Dorr Asset Management consulting fees and expenses of $75,000, $143,367, $0, and $0, respectively. Dorr Asset Management is controlled by Brian and David Dorr, related parties to the Company.

8. SUBSEQUENT EVENTS

On OctoberFrom July 1, 2019, the Company entered into an amendment2020 to promissory notes held by Lyle Hauser, consisting of (i) a promissory note, dated on or about January 14, 2019, in the original principal amount of $70,384, as amended by amendment No. 1 thereto, dated April 9, 2019, and amendment No. 2 thereto, dated July 3, 2019, and (ii) an original issue discount promissory note, dated on or about February 28, 2019, in the original principal amount of $110,000, as amended by amendment No. 1 thereto, dated April 9, 2019, and amendment No. 2 thereto, dated July 3, 2019. The amendment extended the maturity dates of the notes from September 30, 2019 to December 31, 2019.

On October 1, 2019, the Company entered into an amendment to promissory notes held by Vantage consisting of (i) a promissory note, dated on or about January 14, 2019, in the original principal amount of $17,780, as amended by amendment No. 1 thereto, dated April 9, 2019, and amendment No. 2 thereto, dated July 3, 2019, and (ii) a promissory note, issued on or about JulyAugust 15, 2016, in the original principal amount of $100,000, as amended by amendment No. 1 thereto, dated April 9, 2019, and amendment No. 2 thereto, dated July 3, 2019. The amendment extended the maturity dates of the notes from September 30, 2019 to December 31, 2019.

On October 13, 2019, the Company entered into a letter agreement with Spartan Capital Securities, LLC (“Spartan Capital”), pursuant to which the Company engaged Spartan Capital as its exclusive placement agent, on a best efforts basis, for a period of one year, provided that, following an initial period of 180 days, either party may terminate the engagement upon 30 days’ prior written notice. Pursuant to the agreement, the Company agreed to pay Spartan Capital a cash fee of 7% of the gross proceeds from any investor in any equity or equity-linked financing, or 3.5% from any non-convertible debt facility or committed line of credit during the term, subject to certain exceptions for investors sourced from the Company’s existing relationships. The Company also agreed to issue to Spartan Capital, for any transaction for which Spartan Capital will be owed a cash fee, a number of warrants equal to 3.5% of the gross proceeds paid for any equity or equity-linked securities issued by the Company, divided by the price per share of common stock in the offering (or conversion price in the event of the sale of securities convertible into common stock), or 3.5% of the face value of any nonconvertible debt facility or committed line of credit, including any undrawn amounts, divided by an amount equal to 110% of the volume weighted average price of the common stock for the 10-day period immediately preceding the closing of the transaction.

On October 23, 2019, the Company entered into and closed a securities purchase agreement with an accredited investor pursuant to which the Company issued and sold to the investor 50,000 shares of common stock for a purchase price of $250,000.

On October 23, 2019, the Company issued to a consultant 12,500 shares of common stock pursuant to a consulting agreement.

From November 13, 2019 to November 14, 2019, the Company2020, we entered into and closed securities purchase agreements with accredited investors pursuant to which the Company issued and sold an aggregate of 92,000147,000 shares of common stock for an aggregate purchase price of $460,000. 

$735,000.

From July 15, 2020 to August 4, 2020, the Company repaid $60,000 of a promissory note, dated January 14, 2019 in the original principal amount of $70,384.32, held by Lyle Hauser. See Note 4.

On July 22, 2020, the Company issued 30,000 shares of common stock to a consultant upon exercise of warrants with an exercise price of $0.01 per share.

On July 27, 2020, the maturity date of an outstanding note held by Lyle Hauser dated on or about January 14, 2019, in the original principal amount of $70,384.32, was extended to September 30, 2020. See Note 4.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

Certain statements contained in this report are not statements of historical fact and are forward-looking statements. Forward-looking statements give current expectations or forecasts of future events or our future financial or operating performance. We may, in some cases, use words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements.

These forward-looking statements reflect our management’s beliefs and views with respect to future events, are based on estimates and assumptions as of the date of this report and are subject to risks and uncertainties, many of which are beyond our control, that could cause our actual results to differ materially from those in these forward-looking statements. We discuss many of these risks in greater detail under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2018,2019, filed with the SEC on April 11, 2019.13, 2020. Moreover, new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by applicable laws or regulations.law.

Overview

Hash Labs Inc., a Nevada corporation, is a

We have developed financial technology company that is developing products and solutions for the banking and financial services sector, as well as a global money transmitter business. The Company’s planned products and solutions will operate on the world’s most advancedthat use distributed ledger technology (or DLT).technologies for improved security, speed, and reliability. We recently commenced commercializing our CORO product, as further described below.

We have developed or are developing the following planned products:products and solutions: 

1.  Hash Labs DLT Cloud -CORO is a global money transmitter that allows customers to send, receive, and exchange currencies faster, cheaper and more securely, initially including the ability to send, receive and exchange U.S. dollars and gold. Our private permissioned DLT network provides an ultra-fastmission through CORO is to democratize access to gold as sound money. The CORO mobile app was completed and highly secure solution for commercial clients.released in select U.S. markets in August 2020 and we expect to expand the launch of the app throughout 2020, and subsequently to pursue money transmission licenses in foreign countries such as Mexico and Canada. We believe CORO is the world’s first global payment application that includes gold, the oldest and most trusted money. CORO’s technology facilitates money transmission and exchange with faster speeds, better security, and lower costs than existing options in the marketplace.

2. Financial Crime Risk Management (FCRM) platform –We– We believe there are developingcurrently two problems with anti-money laundering/know your customer (or AML/KYC) solutions. The first problem is that the laws and compliance regulations have increased faster than compliance officers have been able to respond. The result is a bottle-neck, slowing global financial transactions. Onboarding new clients of financial institutions is both complex and difficult. Once onboarded the ongoing monitoring of transactions for suspicious activity has become an even greater challenge. The technology industry has been rushing to provide solutions to meet compliance requirements. Unfortunately, most of the compliance solutions offered are fragmented and inefficient. Even the best solutions only excel at one element of the AML/KYC process. With this need in mind, we have developed our FCRM platform, an integrated AML/KYC onboarding and transaction monitoring solution. This platform will providesolution that provides an affordable and fully integrated compliance solution for compliance departments that meet the rigorous demands of government regulators, while supporting customers. Our FCRM technology has been completed and is incorporated within the Coro mobile app. We anticipate launching our FCRM platform as a stand-alone product in 2020.

3. Identity Management System (IMS) is a self-sovereign identity (SSI) management solution for businesses, institutions and governments. Our IMS will be the first tool to manage self-sovereign identities built on Hash Labs DLT Cloud. By using our IMS, our institutional customers will be able to provide their customers with a “portable” identity, by managing consent to access with other trusted parties.

4. Coro - Coro is a global money transmitter, facilitating money transmission and money exchange. Coro is powered by the private Hash Labs DLT network, allowing customers to send, receive, and exchange currencies, including gold. Coro’s DLT technology facilitates money transmission and exchange with faster speeds, better security, and lower costs than existing options in the marketplace. At launch Coro will provide the ability to send, receive and exchange between U.S. dollars and gold. The exchange rate between U.S. dollars and gold is transparent and set by the London Bullion Market Association and the global banks that are market makers in foreign currency exchange. The gold will be owned directly by Coro users and held by an independent, insured and audited vaulting custodian, on a segregated and allocated basis. Coro is not a market maker and will not market or sell investments in gold. We anticipate completing development and testing of Coro’s technology by the end of 2019.

Hash Labs DLT Cloud,2020, we will determine whether to commercialize FCRM platform, and IMS are all elements of the core technology used within Coro. We anticipate that each part will beas a valuable stand-alone solution with a robust prospective customer base in the financial institutions market. Coro will be marketed to consumers while the stand-alone software solutions will be marketed to both emerging fintech companies and more traditional financial institutions.

We have completed development of Hash Labs Cloud but we have not yet generated any revenues from this product or our other products, which are still in development. We anticipate launching Coro in the first quarter of 2020, subject to our determination, in consultation with legal counsel, that such launch will be in compliance with applicable securities laws. We anticipate launching FCRM and IMS as stand-alone products during the second half of 2020.

We have already completed our first cyber security audit and received our SOC 2 certification. The SOC 2 certification will give our cloud hosting customers the added level of trust and security they require as regulated financial institutions or as regulated entities in other financial service industries.product.

References in this report to “we,” “us,” the “Company” and “our” refer to Hash LabsCoro Global Inc. together with its wholly-owned subsidiaries.

Results of Operations for the three months ended SeptemberJune 30, 20192020 and 20182019

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the three months ended SeptemberJune 30, 2019 totaled $629,154, a decrease2020 were $1,429,007, an increase of $216,308$717,857 or approximately 26%101% compared to selling, general and administrative expenses of $845,462$711,150 for the three months ended SeptemberJune 30, 2018.2019. Stock compensation due to consulting fees increased by $469,068 to $561,163 for the three months ended June 30, 2020 from stock compensation expense of $96,100 for the three months ended June 30, 2019, in connection with the expansion of our operations. During the three months ended SeptemberJune 30, 2019 legal expense and compensation to our Chief Executive Officer decreased significantly. During the three months ended September 30, 20192020 the Company incurred stock compensation expenseadvertising costs of $295,452$125,381 compared to $588,317$0 for the three monthsmonth ended SeptemberJune 30, 2018 which was included in selling general and administrative expenses.

2019, due to the Company preparing to launch its CORO product. The remaining operating costs remained constant. 

Development Expense

Development expenses for the three months ended SeptemberJune 30, 2019 totaled $184,0212020 were $273,466 compared to $423,317$200,005 for the three months ended SeptemberJune 30, 2018. The Company completed the greater part of2019. We incurred significantly higher development of itsexpenses, including fees paid to vendors, for our planned CoroCORO product during the 2018 period.three months ended June 30, 2020 compared to the three months ended June 30, 2019 as we prepared to launch our CORO product.

Interest Expense

Interest expense on debentures for the three months ended SeptemberJune 30, 2020 and 2019, was $165,000 and 2018, was $2,236 and $97,110,$3,750, respectively. Interest expense during the three months ended SeptemberJune 30, 20182020 included the amortizationexpense for issuing 33,000 shares of $77,615common stock valued at $165,000 for the extension of beneficial conversion on convertible loans.a loan to a related party.

Net LossOther Expense

Net Loss

For the reasons stated above, our net loss for the three months ended SeptemberJune 30, 20192020 was ($815,411)1,867,473) or ($0.04)0.08) per share, a decreasean increase of $550,464$(952,748) or 40%104%, compared to net loss of ($1,365,875)914,725), or ($0.06)0.04) per share, during the three months ended SeptemberJune 30, 2018.

2019.

Results of Operations for the ninesix months ended SeptemberJune 30, 20192020 and 2018

Revenues2019

Revenues for the nine months ended September 30, 2019 totaled $0 compared to revenues of $12,981 during the nine months ended September 30, 2018. The decrease of $12,981 is related to the Company’s shift in business. We previously generated revenues from professional service specializing in HIPAA compliant retrieval, reproduction and release of information.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for the ninesix months ended SeptemberJune 30, 2019 totaled $3,159,191, an increase2020 were $2,063,855, a decrease of $671,732$466,182 or approximately 27%18% compared to selling, general and administrative expenses of $2,487,459$2,530,037 for the ninesix months ended SeptemberJune 30, 2018. During the nine months ended September 30, 20192019. Stock compensation due to consulting fees increased significantly.by $761,308 to $857,408 for the six months ended June 30, 2020 from stock compensation expense of $96,100 for the six months ended June 30, 2019, in connection with the expansion of our operations. During the ninesix months ended SeptemberJune 30, 20192020 the Company incurred stock compensation expense and settlementadvertising costs of derivative liability of $391,522 and $0$125,381 compared to $1,996,137 and $6,088, respectively$0 for the nine monthssix month ended SeptemberJune 30, 2018 which was included2019, as the Company prepared to launch its CORO product. The decrease in selling generalexpense were mainly attributable to modifications of stock based compensation expenses of $1,957,313 as well as reduced legal, and administrative expenses.consulting expenses paid to contractors.

Development Expense

Development expenses for the ninesix months ended SeptemberJune 30, 2019 totaled $890,6952020 were $488,506 compared to $423,317$706,674 for the ninesix months ended SeptemberJune 30, 2018. The Company completed the greater part of2019. We incurred significantly higher development of itsexpenses, including fees paid to vendors, for our planned CoroCORO product during the 2018 period.six months ended June 30, 2019 compared to the six months ended June 30, 2020. The reduction in expense was due to the Company using in-house developers rather than a third party contractor.

Interest Expense

Interest expense on debentures for the ninesix months ended SeptemberJune 30, 2020 and 2019, was $165,000 and 2018, was $17,211 and $619,262,$14,975, respectively. Interest expense during the ninesix months ended SeptemberJune 30, 20182020 included the amortizationexpense for issuing 33,000 shares of $586,166common stock valued at $165,000 for the extension of beneficial conversion of convertible loans.a loan to a related party.

Other Expense

Loss on change in fair value of derivative liabilities for the nine months ended September 30, 2019 and 2018 was $0 and $6,088 respectively.

Net Loss

For the reasons stated above, our net loss for the ninesix months ended SeptemberJune 30, 20192020 was ($4,067,097)2,717,361) or ($0.18)0.11) per share, an increasedecrease of $543,952$(534,325) or 15%16%, compared to net loss of ($3,523,145)3,251,686), or ($0.26)0.14) per share, during the ninesix months ended SeptemberJune 30, 2018.2019.

Liquidity and Capital Resources

As of SeptemberJune 30, 2019,2020, we had cash of $153,544, which$1,078,933, compared to cash of $223,576$470,800 as of December 31, 2018.2019. Net cash used in operating activities for the ninesix months ended SeptemberJune 30, 20192020 was $1,719,434.$1,452,367. Our current liabilities as of SeptemberJune 30, 20192020 of $418,765$214,569 consisted of: $220,603$159,187 for accounts payable and accrued liabilities, and note payable – related party of $198,162. $55,382.

During the ninesix months ended SeptemberJune 30, 2020 we entered into and closed subscription agreements with accredited investors pursuant to which the Company sold to the investors an aggregate of 437,000 shares of common stock, for a purchase price of $5.00 per share, and aggregate gross proceeds of $2,185,000. We repaid $15,000 of the $70,382 outstanding principal of a note payable from a then-related party. The balance at June 30, 2020 was $55,382. A total of $125,000 was repaid during the six months ended June 30, 2020.

Net cash used in operating activities for the six months ended June 30, 2019 was $1,161,196.

During the six months ended June 30, 2019 the Company entered into and closed subscription agreements with accredited investors pursuant to which the Company sold to the investors an aggregate of 320,000270,000 shares of common stock, for a purchase price of $5.00 per share, and aggregate gross proceeds of $1,600,000. A related party advanced the Company $3,000 and was repaid $3,000. In February 2019, the$1,350,000. The Company issued a $110,000 promissory note to Lyle Hauser (the Company’s largest stockholder) in the principal amount of $110,000a then-related party with an original issue discount of $10,000. The note has a 0% interest rate and had an original maturity date of March 31, 2019, which was extended to June 30, 2020 and has been extended to December 31, 2019. Following the maturity date, the note bears a 9% annual interest rate until paid in full. In April 2019, therepaid. The Company repaid $50,000 of a convertible loan to a relatedthen-related party and exchanged the remaining $50,000 into 10,000 shares of common stock valued at $50,000.

On October 23, 2019, the Company entered into and closed a securities purchase agreement with an accredited investor pursuant to which the Company issued and sold to the investor 50,000 shares of common stock for a purchase price of $250,000.

From November 13, 2019 to November 14, 2019, the Company entered into and closed securities purchase agreements with accredited investors pursuant to which the Company issued and sold an aggregate of 92,000 shares of common stock for an aggregate purchase price of $460,000. 

We anticipate that we will need to raise additional capital to execute our business plan, which may not be available on acceptable terms, or at all. If we raise funds through the sale of common stock or securities convertible into common stock, it may result in substantial dilution to our then-existing stockholders.

Off Balance Sheet Arrangements

We currently have no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

Revenue Recognition

Effective January 1, 2018, we recognize revenue in accordance with Accounting Standards Codification 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific revenue recognition guidance throughout the Industry Topics of the Accounting Standards Codification. The Company had historically generatedupdated guidance states that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also provides for additional disclosures with respect to revenues and cash flows arising from licensing the right to utilize its proprietary softwarecontracts with customers. The standard was effective for the storagefirst interim period within annual reporting periods beginning after December 15, 2017, and distributionwe adopted the standard using the modified retrospective approach effective January 1, 2018. The adoption of healthcare information to individuals and affinity groups. For revenue from product sales, the Company recognized revenue basedthis guidance did not have a material impact on four basic criteria which must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.our financial statements.

Stock-Based Compensation

The Company accountsWe account for all compensation related to stock, options or warrants using a fair value-based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company usesWe use the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement.

Impairment of long-lived assets

The Company reviewsWe review long-lived assets for impairment whenever events or changes in circumstances indicate that the asset’s carrying amount may not be recoverable. The Company conducts itsWe conduct our long-lived asset impairment analyses in accordance with ASC 360-10-15, “Impairment or Disposal of Long-Lived Assets.” ASC 360-10-15 requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows. If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals.

Recently Issued Accounting Pronouncements

There were various updatedupdates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’sour financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02,Leases,, which amended current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard was effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this ASUdid nothave a material impact on our balance sheet.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not required for a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer (principal executive and financial officer) of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer (principal executive and financial officer) concluded that the Company’s disclosure controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and also are not effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s chief executive officer (principal executive and financial officer), to allow timely decisions regarding required disclosure.

Management concluded that the design and operation of our disclosure controls and procedures are not effective because the following material weaknesses exist:

To the extent reasonably possible given our limited resources, we intend to take measures to cure the aforementioned weaknesses, including, but not limited to, increasing the capacity of our qualified financial personnel to ensure that accounting policies and procedures are consistent across the organization and that we have adequate control over financial statement disclosures.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended SeptemberJune 30, 2019,2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are no legal proceedings the Company is party to or any of its property is subject to.

Item 1A. Risk Factors.

Not required for a smaller reporting company.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

AsOn April 8, 2020, we issued 33,000 shares of August 13, 2019,common stock to the designee of a noteholder as consideration for extension of the maturity date on a promissory note.

During the three months ended June 30, 2020, the Company issued and sold to an accredited investor 30,000aggregate of 237,000 shares of common stock for(including previously reported sales) to accredited investors at a purchase price of $150,000.$5.00 per share for aggregate gross proceeds of $1,185,000.

During the three months ended June 30, 2020, we issued 29,500 shares of common stock to consultants for services.

In connection with the foregoing, the Companywe relied upon the exemption fromfor registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, for transactions not involving a public offering.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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