UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedended: September 30, 2022March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

For the transition period from ________ to _________

Commission File Number: 000-55889

Global Diversified Marketing Group Inc.NETBRANDS CORP.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: 800-550-5996

Securities registered pursuant to Section 12(b) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 10, 2022,May 12, 2023, the registrant had 15,535,75616,110,756 shares of its common stock issued and outstanding.

GLOBAL DIVERSIFIED MARKETING GROUP INC.NETBRANDS CORP.

QUARTERLY REPORT ON FORM 10-Q

September 30, 2022March 31, 2023

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS.

The following unaudited interim condensed financial statements of Global Diversified Marketing Group Inc.NetBrands Corp. (referred to herein as the “Company,” “we,” “us” or “our”) are included in this Quarterly Report on Form 10-Q (the “Quarterly Report”).

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (the “SEC”), and should be read in conjunction with the audited condensed financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 20212022 which we filed with the SEC on March 14, 202223, 2023 (the “Annual Report”), as updated in subsequent filings we have made with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

NetBrands Corp.

(formerly known as Global Diversified Marketing Group Inc.)

Condensed Financial Statements for the NineThree Months Ended September 30, 2022March 31, 2023

Index to the Unaudited Consolidated Condensed Financial Statements

NetBrands Corp.

Formerly Known as Global Diversified Marketing Group Inc.

Consolidated Balance Sheets

(Unaudited)

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

NetBrands Corp.

Formerly Known as Global Diversified Marketing Group Inc.

Consolidated Statements of Operations

(Unaudited)

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

NetBrands Corp.

Formerly Known as Global Diversified Marketing Group Inc.

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

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

NetBrands Corp.

Formerly Known as Global Diversified Marketing Group Inc.

Consolidated Statements of Cash Flows

(Unaudited)

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

NetBrands Corp.

(Formerly known as Global Diversified Marketing Group Inc.)

GLOBAL DIVERSIFIED MARKETING GROUP INC.Notes To Unaudited Condensed Financial Statements For The Periods

NOTES TO THE (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTSEnded March 31, 2023 And 2022

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

NetBrands Corp., formerly known as Global Diversified Marketing Group Inc. (the( “NetBrands” or the “Company”), formerly knownwas incorporated as Dense Forest Acquisition Corporation, was incorporated in Delaware on December 1, 2017, and changed its name on June 13, 2018, as part of a change in control. As part of the change in control, its then officers and directors resigned and contributed back to the Company 19,500,000 shares of the 20,000,000 outstanding shares of its common stock, $0.0001 par value per share (the “Common Stock”), and appointed new officers and directors. On June 14, 2018, the new management of the Company issued 12,500,000 shares of its Common Stockcommon stock to Paul Adler, the then president of the Company.

On November 26, 2018, the Company effected the acquisition of Global Diversified Holdings, Inc. (“GDHI”), a private New York company owned by the Company’s president, with the issuance of 200 shares of the Company’s Common Stockcommon stock in exchange for all of the outstanding shares of GDHI. GDHI became a wholly-owned subsidiary of the Company, and its activity for the nine months ended September 30,years 2022 and 2021 is reflected in these condensed financial statements along with the expenses of the Company.

Prior to the acquisition of GDHI, the Company had no business and no operations. Pursuant to the acquisition, the Company acquired the operations and business plan of GDHI, which imports and sells snack food products. For accounting purposes, GDHI is considered to be the acquirer, and the equity is presented as if the business combination had occurred on January 1, 2017.

On August 31, 2022, the Company entered into an Asset Purchase Agreement with InPlay Capital Inc., a Delaware corporation (“InPlay”), pursuant to which, on the same date, the Company purchased from InPlay all of the assets used in the operation and conduct of its business relating to the online home fitness store known as “The Hula Fit”, including the Shopify Store and the TikTok, Facebook and Google ad accounts, for a purchase price of $50,000. Paul Adler, the sole executive officer and a director of the Company, and the Company’s majority stockholder, is also the sole officer, director, and 100% stockholder of InPlay.

On March 29, 2023, the Company filed an Amendment to its Certificate of Incorporation (the “Amendment”) effecting the change of the Company’s name to “NetBrands Corp.”, a name that reflects the planned expansion of the Company’s digital business. In connection with the name change, the Company submitted to the Financial Industry Regulatory Authority, Inc. (“FINRA”) a voluntary request for the change of its OTC trading symbol. In the meantime, the Company’s common stock will remain listed for quotation under the current symbol “GDMK.”

Basis of Presentation

The condensed financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. Certain prior year amounts have been reclassified to conform to the presentation in the current year. The Company has adopted a December 31 year-end.

Management’s Representation of Interim Condensed Financial Statements

The accompanying unaudited consolidated condensed consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company uses the same accounting policies in preparing quarterly and annual condensed financial statements. Certain information and footnote disclosures normally included in condensed financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated condensed financial statements include all of the adjustments, which in the opinion of management are necessary tofor a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year.

Principles of Consolidation

The accompanying consolidated condensed financial statements include the accounts of the Company and its wholly-owned subsidiary.subsidiary, Global Diversified Holdings, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, accounts receivable from customers, accounts payable, and loans payable. The carrying amounts of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these condensed financial statements.

Use of Estimates

The preparation of condensed 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 balance sheet. Actual results could differ from those estimates.

Stock-Based Compensation

The Company accounts for stock-based compensation using the fair value method following the guidance outlined in Section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This Section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. During the ninethree months ended September 30,March 31, 2023 and March 31, 2022 and September 30, 2021 stock-based compensation was $$-212,2600- and $784,2594,515, respectively.

Cash and Cash Equivalents

The Company considers all highly liquid investments with the original maturities of three months or less to be cash equivalents. On September 30, 2022,March 31, 2023, and December 31, 2021,2022, the Company had $177,6798,221 and $312,57454,185, respectively of cash.cash and cash equivalents, respectively.

Factoring

The Company accounts for the transfer of our accounts receivable to a third party under a factoring agreement in accordance with ASC 860-10-40-5 “Transfers and Servicing”. ASC 860-10 requires that several conditions be met in order to present the transfer of accounts receivable as a sale. Even though we have isolated the transferred (sold) assets and we have the legal right to transfer our assets (accounts receivable) we do not meet the third test of effective control since our accounts receivable sales agreement with the factor requires us to be liable in the event of default by one of our customers. Because we do not meet all three conditions, we do not qualify for sale treatment and our debt incurred with respect to the sale of our accounts receivable is presented as a loan payable in on our consolidated balance sheet. As of September 30, 2022 and December 31, 2021, the amounts due to factors in both periods was $-0-.

Accounts Receivable

Accounts receivable are generated from sales of snack food products to retail outlets throughout the United States. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based on customer payment and current creditworthiness, as determined by review of their current credit information. The Company continuously monitors credit limits for its customers and maintains a provision for estimated credit losses based on its historical experience and any specific customer issues that have been identified. An allowance for doubtful; accounts are provided against accounts receivable for amounts management believes may be uncollectible. The Company historically has not had issues collecting on its accounts receivable from its customers. The Company factors certain of its receivables to improve its cash flow.

Bad debt expense for the ninethree months ended September 30,March 31, 2023, and 2022 and 2021 was $-0- and $-0-, respectively; the allowance for doubtful accounts on September 30, 2022, and 2021 wasthe same dates were $-0- and-and $-0-, respectively.

Inventory

Inventory, consistswhich is comprised of snack food products and packaging supplies and areis charged to inventory when purchased, is stated at the lower of cost or market.net realizable value with cost determined under the first-in, first-out (“FIFO”) method. The Company does not carry any raw materials.

The Company evaluates inventory levels quarterly value based upon assumptions about future demand and market conditions. Any inventory that has a cost basis in excess of its expected net realizable value, inventory that becomes obsolete, inventory in excess of expected sales requirements, inventory that fails to meet commercial sale specifications or is otherwise impaired are written down with a corresponding charge to the statement of operations in the period that the impairment is first identified. The Company performed its evaluation on March 31, 2023 and December 30, 2022, and determined that no write-down was required.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful life of the assets. Maintenance, repairs, and renewals that do not materially add to the value of the equipment nor appreciably prolong its useful life are charged to expense as incurred.

Revenue Recognition

Beginning January 1, 2018, the Company implemented ASC 606, Revenue from Contracts with Customers. Although the new revenue standard is expected to have an immaterial impact, if any, on our ongoing net income, we did implement changes to our processes related to revenue recognition and the control activities within them. These included the development of new policies based on the five-step model provided in the new revenue standard, ongoing contract review requirements, and gathering of information provided for disclosures.

The Company recognizes revenue from product sales or services rendered when control of the promised goods are transferred to our clients in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods and services. To achieve this core principle, we apply the following five steps: identify the contract with the client, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to performance obligations in the contract and recognize revenues when or as the Company satisfies a performance obligation. Typically, the Company receives a detailed purchase order from large retailers that specify the goods ordered, their price, payment terms and the required delivery date. Once the delivery of items on the purchase order is made to the client and title passes, the Company has met its performance obligation and recognizes revenue.

Advertising and Marketing Costs

The Company’s policy regarding advertising and marketing is to record the expense when incurred. The Company incurred advertising and marketing expenses of $34,43031,288 and $160,89314,884 during the ninethree months ended September 30,March 31, 2023, and 2022, and 2021, respectively.

Impairment of Long-Lived Assets

The Company continually monitors events and changes in circumstances that could indicate the carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.

Goodwill and Intangible Assets

Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from our acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter.

Goodwill and indefinite-lived assets are not amortized but are subject to annual impairment testing unless circumstances dictate more frequent assessments. We perform an annual impairment assessment for goodwill and indefinite-livedintangible assets during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, we determine fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, we rely on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, our risk relative to the overall market, our size and industry and other Company-specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.

Indefinite-lived intangible assets are evaluated for impairment at the individual asset level by assessing whether it is more likely than not that the asset is impaired (for example, that the fair value of the asset is below its carrying amount). If it is more likely than not that the asset is impaired, its carrying amount is written down to its fair value.

Determining the fair value of a reporting unitintangible assets is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans, and future market conditions, among others. There can be no assurance that our estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause us to perform an impairment test prior to scheduled annual impairment tests.assumptions.

On September 30, 2022, we conducted an impairment analysis and determined that our purchase of Hula fitFit was fully impaired. As a result, we recordrecorded an impairment loss of $50,000 for the periodyear ended September 30, 2022December 31, 2022.

Income Taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

The Company’s income tax returns are open for examination for up to the past three years under the statute of limitations. There are no tax returns currently under examination.

Leases

The majority of our lease obligations are real estate operating leases from which we conduct our business. For any lease with an initial term in excess of 12 months, the related lease assets and liabilities are recognized on the Consolidated Balance Sheets as either operating or finance leases at the inception of an agreement where it is determined that a lease exists. Leases with an initial term of 12 months or less are not recorded on our Consolidated Balance Sheets; we recognize lease expense for these leases on a straight-line basis over the lease term.

Leases with an initial term of 12 months or less, or that are on a month-to-month basis are not recorded on our Consolidated Balance Sheets; we recognize lease expense for these leases on a straight-line basis over the lease term.

Operating lease assets represent the right to use an underlying asset for the lease term, and operating lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are recognized based on the present value of future payments over the lease term at commencement date. We use a collateralized incremental borrowing rate based on the information available at commencement date, including lease term, in determining the present value of future payments. Our lease terms generally do not include options to extend or terminate the lease unless it is reasonably certain that the option will be exercised. Fixed payments may contain predetermined fixed rent escalations. We recognize the related rent expense on a straight-line basis from the commencement date to the end of the lease term.

As of March 31, 2023, we had $546,267 in right of use assets, $112,666 in short term operating lease payables and $436,674 in long term lease liabilities with an average remaining life of approximately 3.75 years.

Comprehensive Income

The Company has established standards for reporting and display ofdisplaying comprehensive income, its components, and accumulated balances. When applicable, the Company would disclose this information on its Statement of Stockholders’ Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. During the nine monthsperiods ended September 30,March 31, 2023 and December 31, 2022, the Company had a balance of $1,895 in accumulated other comprehensive income on its balance sheet which arose from an unrealized gain due to foreign currency fluctuations.fluctuations in prior years.

Basic Income (Loss) Per Share

Basic income (loss) per share has been calculated based on the weighted average number of shares of Common Stockcommon stock outstanding during the period. As of March 31, 2023 the Company had no dilutive instruments that could increase the number of shares if exercised or converted.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position, or cash flow.

NOTE 2 – GOING CONCERN

As of September 30, 2022,March 31, 2023, the Company had cash and cash equivalents of $177,6798,221 a, negative working capital deficit of $520,0161,114,166 and had an accumulated deficit of $28,403,81828,922,341. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financials have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. If the Company is, in fact, unable to continue as a going concern, the shareholders may lose some or all of their investment in the Company.

NOTE 3 – CAPITAL STOCK

The Company has 100,000,000 shares of $0.0001 par value common stock (the “Common Stock”) authorized. The Company had 15,535,75615,635,756 and 14,473,25615,635,756 shares of Common Stockcommon stock issued and outstanding as of September 30, 2022,March 31, 2023, and December 31, 2021,2022, respectively. There were no stock issuances in the first fiscal quarter of 2023.

2022 Common Stock Issuances for Services

During the three months ended March 31, 2022, the Company issued 15,000 shares of its common stock for services, which were valued at $4,515. All issuances made by the Company are valued based upon the closing trading price of the Company’s Common Stockcommon stock on the date when the Boardboard of Directorsdirectors authorizes and approves the issuance of such shares.

During the three months ended June 30, 2022, the Company issued an aggregate of (a) 250,000 shares of common stock to the members of the Company’s board of directors, valued at $0.18 per share, and (b) 350,000 shares of common stock to the members of its Boardboard of Directorsdirectors in lieu of cash payments. These shares were valuepayments, valued at $0.21 per shares.share. The Company also issued 20,000 shares of common stock to a service provider, valued at $0.106 per share.

During the three months ended September 30, 2022, the Company issued an aggregate of 427,500 shares to consultants and to an investor relations firm valued at an average of approximately $0.20 per share.

During the yearthree months ended December 31, 2021,2022, the Company issued a total of 1,340,738100,000 shares of Common Stock as follows:

800,110 shares were issued for servicescommon stock to consultants and one employee. These shares werea member of the Company’s board of directors valued at $871,3410.151 per share.

125,000 shares were awarded to four independent directors and were valued at $250,250.

These charges amounting to $1,121,591 were recorded as $932,591 in “professional fees” and $189,000 in payroll on the Company’s Consolidated Statements of Operations during the year ended December 31, 2021.

Preferred Stock

The Company has 20,000,000 shares of $0.0001.0001 par value preferred stock authorized. On February 24, 2020, the Company filed a Certificate of Designation for a class of preferred stock designated Class A Super Voting Preferred Stock (“A Stock”). There are 1,000,000 shares of A Stock designated. Each share of such stock shall vote with the Common Stockcommon stock and have 100,000 votesvotes.. The A Stock has no conversion, dividend, or liquidation rights. Accordingly, the holders of A Stock will, by reason of their voting power, be able to control the affairs of the Company. The Company has issued 1,000 shares of A Stock to Paul Adler, the company’sCompany’s Chief Executive Officer, and majority shareholder giving him effective voting control over the Registrant’sCompany’s affairs for the foreseeable future.

As a result of the issuance of the A Stock with super-voting rights giving him an aggregate of 100,000,000 votes, combined with the shares of common stock he holds, Mr. Adler has effective voting control of approximately 97% of the Company.

NOTE 4 – RELATED PARTY TRANSACTIONS

During the nine months ended September 30,On August 31, 2022, and September 30, 2021, the Company incurred salary expenseentered into an Asset Purchase Agreement with InPlay Capital Inc., a Delaware corporation (“InPlay”), pursuant to which the Company purchased from InPlay all of the assets used in the operation its business relating to the online home fitness store known as “The Hula Fit”, including the Shopify Store and the TikTok, Facebook and Google ad accounts, for a purchase price of $295,50050,000. Paul Adler, the sole executive officer and a director of the Company, and the Company’s majority stockholder, is also the sole officer, director, and 100% stockholder of InPlay. The assets were recorded as intangible assets on the Company’s balance sheet then impaired for the full amount of $221,25050,000 respectively, related to services provided to it by its CEO..

NOTE 5 – COMMITMENTS AND CONTINGENCIES

The Company renewed a 60-month lease agreement on October 1, 2021, to renthas two primary leases. The Company leases approximately 1,0001,500 square feet of office space inat 4042 Austin Boulevard, Suite B, Island Park, New York.York 11558. On October 1, 2021, Thethe Company entered into a 60-month lease requires monthly payments offor $1,74820,976 per year for the first 24 months and after that increases by approximatelytwo years, with 3% each year, andannual escalation clauses for the last three years of the lease. The lease contains one five yearfive-year renewal optionoption.. Management believes that its present office facilities are adequate for its corporate needs.

In March 2022, the Company transitioned from the use of a public warehouse and entered a lease for 8,500 square feet of warehouse space for 60 months at 78 Henry Street Secaucus, NJ 07094, at the rate of $132,896 per year, with annual 3% escalation clauses.

Future minimum lease payments due under thisthese operating lease,leases, including renewal periods, are as follows:

SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS OF OPERATING LEASE LIABILITY