UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q~~10-Q/A

(Amendment No. 1)

☑

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

For the quarterly period ended ~~March 31, 2021~~June 30, 2020

☐

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

Commission file number: 000-31549

PCT LTD

(Exact name of registrant as specified in its charter)

Nevada	90-0578516
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4235 Commerce Street Little River, South Carolina	29566
(Address of principal executive offices)	(Zip Code)

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(843) 390-7900

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

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~~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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☑ No ☐ The registrant does not have a Web site.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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:

Large accelerated filer ☐

Non-accelerated filer ☑

Accelerated filer ☐

Smaller reporting company ☑

Emerging growth company ☐

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

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

The number of shares outstanding of the registrant’s common stock as of ~~June 21, 2021~~August 27, 2020 was ~~765,501,229~~598,982,574 which does not include 400,267,426 shares of common stock reserved against default on convertible ~~debt.~~debt and 750,000 shares for vesting of executive shares.

EXPLANATORY NOTE

Overview

Amendment No. 1 to Form 10-Q/A (this “Form 10-Q/A") amends and restates certain items noted below in the Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, as originally filed with the Securities and Exchange Commission on August 31, 2020 (the “Original Filing”). This Form 10-Q/A amends the Original Filing to reflect the correction of an error in the previously reported financial statements related to the accounting for the settlement of certain derivative warrants. See Note 13 to the Condensed Consolidated Financial Statements included in Item 1 for additional information and a reconciliation of the previously reported amounts to the restated amounts.

For the convenience of the reader, this Form 10-Q/A sets forth the Original Filing, as amended, in its entirety; however, this Form 10-Q/A amends and restates only the following financial statements and disclosures that were impacted from the correction of the error:

• Part I, Item 1 - Financial Statements

• Part I, Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

• Part I, Item 4 - Controls and Procedures

Except as described above, no other changes have been made to the Original Filing. This Form 10-Q/A speaks as of the date of the Original Filing and does not reflect events that may have occurred after the date of the Original Filing or modify or update any disclosures that may have been affected by subsequent events.

The Company is also filing an amended Annual Report for the fiscal year ended December 31, 2020 and an amended Quarterly Report for each of the quarterly periods ended September 30, 2020 and March 31, 2021 to restate the previously issued annual and interim financial statements due to the accounting error described above.

TABLE OF CONTENTS

Part I – Financial Information		Page

Explanatory Note		3

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	34

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2327

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2630

Item 4.	Controls and Procedures	2630

Part II – Other Information		31

Item 1.	Legal Proceedings	2731

Item 1A.	Risk Factors	2732

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2732

Item 3.	Defaults Upon Senior Securities	2833

Item 4.	Mine Safety Disclosures	2833

Item 5.	Other Information	2833

Item 6.	Exhibits	2934

	Signatures	3035

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The financial information set forth below with respect to our statements of operations, stockholders’ equity (deficit), and cash flows for the ~~three-month~~three and six-month periods ended ~~March 31, 2021,~~June 30, 2020 and ~~2020~~2019 is unaudited. This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the ~~three-month~~three and six-month periods ended ~~March 31, 2021~~June 30, 2020 and ~~2020~~2019 are not necessarily indicative of results to be expected for any subsequent period.

PCT LTD

~~Condensed~~ Consolidated Balance Sheets

~~(Unaudited)~~

March 31,
2021
December 31,
2020
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 53,853 $ 115,196
Accounts receivable, net 198,443 349,526
Inventory 7,029 6,188
Prepaid expenses 192,333 274,736
Other current assets —   2,110
Total current assets 451,658 747,756

PROPERTY AND EQUIPMENT
Property and equipment, net 346,716 358,719

OTHER ASSETS
Intangible assets, net 3,323,902 3,400,024
Operating lease, right of use asset 110,236 118,385
Deposits 15,226 9,726
Total other assets 3,449,364 3,528,135

TOTAL ASSETS $ 4,247,738 $ 4,634,610

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 231,439 $ 272,978
Accrued expenses – related parties 80,951 139,280
Accrued expenses 611,155 622,040
Deferred revenue 1,075 1,075
Operating lease liability 36,607 34,965
Notes payable – related parties, net 183,034 789,214
Notes payable, net 413,130 384,380
Convertible notes payable, net 1,935,017 1,554,503
Derivative liability 11,763,555 11,429,043
Total current liabilities 15,255,963 15,227,478

     Convertible notes payable, net of current portion and discount —   53,500
     Operating lease liability, net of current portion 77,499 83,420
TOTAL LIABILITIES 15,333,462 15,364,398

MEZZANINE EQUITY
Preferred series A stock, $0.001 par value; 1,000,000 authorized; 500,000 and 500,000 issued and outstanding at March 31, 2021 and December 31, 2020, respectively 60,398 60,398
Preferred series B stock, $0.001 par value; 1,000,000 authorized; 1,000,000 and 1,000,000 issued and outstanding at March 31, 2021 and December 31, 2020, respectively 158,247 158,247
Preferred series C stock, $0.001 par value; 5,500,000 authorized; nil and 490,000 issued and outstanding at March 31, 2021 and December 31, 2020, respectively —   40,000
TOTAL MEZZANINE EQUITY 218,645 258,645

STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value; 1,000,000,000 authorized; 758,454,354 and 722,487,846 issued and outstanding at March 31, 2021 and December 31, 2020, respectively 758,454 722,488
Additional paid-in-capital 23,962,053 23,202,933
Accumulated deficit (36,024,876 ) (34,913,854 )
TOTAL STOCKHOLDERS’ DEFICIT (11,304,369 ) (10,988,433 )

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 4,247,738 $ 4,634,610

	June 30, 2020			December 31, 2019
		(Unaudited)
		(Restated - See note 13)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	29,260		$	67,613
Accounts receivable, net		319,128			111,915
Prepaid expenses		51,395			43,100
Other current assets		17,110			2,110
Total current assets		416,893			224,738

PROPERTY AND EQUIPMENT
Property and equipment, net		401,233			440,109

OTHER ASSETS
Intangible assets, net		3,552,267			3,704,429
Deposits		2,526			5,499
Total other assets		3,554,793			3,709,928

TOTAL ASSETS	$	4,372,919		$	4,374,775

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable	$	447,805		$	315,228
Accrued expenses – related parties		98,311			84,538
Accrued expenses		912,393			890,104
Notes payable – related parties, net		826,214			826,957
Notes payable, net		408,617			468,153
Convertible notes payable, net		980,254			1,187,633
Derivative liability		11,393,973			10,517,873
Total current liabilities		15,067,567			14,290,486

TOTAL LIABILITIES		15,067,567			14,290,486

MEZZANINE EQUITY
Preferred series A stock, $0.001 par value; 1,000,000 authorized; 500,000 and 500,000 issued and outstanding at June 30, 2020 and December 31, 2019, respectively		60,398			60,398
Preferred series B stock, $0.001 par value; 1,000,000 authorized; 1,000,000 and 1,000,000 issued and outstanding at June 30, 2020 and December 31, 2019, respectively		158,247			158,247
Preferred series C stock, $0.001 par value; 5,500,000 authorized; 440,000 and nil issued and outstanding at June 30, 2020 and December 31, 2019, respectively		484,000			—
TOTAL MEZZANINE EQUITY		702,645			218,645

STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value; 1,000,000,000 authorized; 584,201,486 and 498,880,300 issued and outstanding at June 30, 2020 and December 31, 2019, respectively		584,202			498,881
Additional paid-in-capital		18,056,637			15,872,330
Accumulated deficit		(30,038,132	)		(26,505,567	)
TOTAL STOCKHOLDERS’ DEFICIT		(11,397,293	)		(10,134,356	)

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' DEFICIT	$	4,372,919		$	4,374,775

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

PCT LTD

Condensed Consolidated Statements of Operations

(Unaudited)

For the Three Months Ended
March 31,
2021 2020
REVENUES
Product $ 89,263 $ 162,648
Licensing 31,750 7,000
    Equipment leases 274,506 102,534
Total Revenues 395,519 272,182

OPERATING EXPENSES
General and administrative 893,451 548,786
Research and development 9,199 —
Costs of product, licensing and equipment leases 52,901 148,850
Depreciation and amortization 88,122 83,021
Total operating expenses 1,043,673 780,657

Loss from operations (648,154 ) (508,475 )

OTHER INCOME (EXPENSE)
Gain/(Loss) on change in fair value of derivative liability (650,913 ) (9,294,762 )
Gain/(Loss) on settlement of debt 316,401 (44,000 )
Interest expense (178,356 ) (434,411 )
Misc. income 50,000
Total other income (expense) (462,868 ) (9,773,173 )

Loss before income taxes (1,111,022 ) (10,281,648 )

Income taxes —   —

NET LOSS $ (1,111,022 ) $ (10,281,648 )
Preferred series C stock deemed dividends —   (270,000 )
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS’ $ (1,111,022 ) $ (10,551,648 )

Basic and diluted net loss per share $ (0.00 ) $ (0.02 )

Basic and diluted weighted average shares outstanding 751,832,583 545,843,212

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

~~PCT LTD~~

Consolidated Statements of Stockholders’ Equity (Deficit)
For the Three-Months Ended March 31, 2021 and 2020
(Unaudited)

Total
Common Stock Additional Paid-in Accumulated Stockholders’ Equity
Shares Amount Capital Deficit (Deficit)
Balance – December 31, 2019 498,880,300 $ 498,881 $ 15,872,330 $ (26,505,567 ) $ (10,134,356 )
Common stock issued for services 15,525,000 15,525 103,538 —   119,063
Common stock issued in settlement of debt 250,000 250 7,975 —   8,225
Common stock issued in conversion of convertible notes payable 36,050,000 36,050 360,660 —   396,710
Beneficial conversion feature on preferred series C stock —   —   270,000 (270,000 ) —
Net loss for the three-months ended March 31, 2020 —   —   —   (10,281,648 ) (10,281,648 )
Balance – March 31, 2020 550,705,300 $ 550,706 $ 16,614,503 $ (37,057,215 ) $ (19,892,006 )

Balance – December 31, 2020 722,487,846 $ 722,488 $ 23,202,933 $ (34,913,854 ) $ (10,988,433 )
Common stock issued for services 2,500,000 2,500 74,276 —   76,776
Common stock issued in settlement of debt, related parties 4,466,508 4,466 648,844 —   653,310
Common stock issued in conversion of convertible notes payable 25,000,000 25,000 —   —   25,000
Conversion of preferred series C stock 4,000,000 4,000 36,000 —   40,000
Net loss for the three-months ended March 31, 2021 —   —   —   (1,111,022 ) (1,111,022 )
Balance – March 31, 2021 758,454,354 $ 758,454 $ 23,962,053 $ (36,024,876 ) $ (11,304,369 )

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2020			2019			2020			2019
	(Restated - See note 13)						(Restated - See note 13)
REVENUES
Product	$	582,389		$	11,745		$	745,037		$	98,839
Licensing		77,000			34,000			84,000			78,500
Equipment leases		221,783			73,117			324,317			137,480
Total Revenues		881,172			118,862			1,153,354			314,819

OPERATING EXPENSES
General and administrative		592,042			415,339			1,140,828			1,082,303
Research and development		5,000			3,792			5,000			3,792
Cost of product, licensing and equipment leases		415,855			24,077			564,705			96,731
Depreciation and amortization		81,348			84,189			164,369			169,101
Total operating expenses		1,094,245			527,397			1,874,902			1,351,927

Loss from operations		(213,073	)		(408,535	)		(721,548	)		(1,037,108	)

OTHER INCOME (EXPENSE)
Loss on change in fair value of derivative liability		(6,015,835	)		(2,789,342	)		(15,310,597	)		(2,951,641	)
Gain (loss) on change in fair value of preferred series A stock liability		—			(3,004	)		—			72,473
Gain on sale of intangible assets		—			52,498			—			52,498
Gain (loss) on settlement of debt		13,707,921			—			13,663,921			(84,409	)
Interest expense		(459,930	)		(381,764	)		(894,341	)		(502,283	)
Total other income (expense)		7,232,156			(3,121,612	)		(2,541,017	)		(3,413,362	)

Income (loss) before income taxes		7,019,083			(3,530,147	)		(3,262,565	)		(4,450,470	)

Income taxes		—			—			—			—

NET INCOME (LOSS)	$	7,019,083		$	(3,530,147	)	$	(3,262,565	)	$	(4,450,470	)
Preferred series C stock deemed dividends		—			—			(270,000	)		—
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS’	$	7,019,083		$	(3,530,147	)	$	(3,532,565	)	$	(4,450,470	)

Basic net income (loss) per share	$	0.01		$	(0.07	)	$	(0.01	)	$	(0.09	)
Diluted net income (loss) per share	$	(0.00	)		(0.07	)		(0.01	)		(0.09	)

Basic weighted average shares outstanding		569,964,666			52,755,139			557,809,456			49,208,103
Diluted weighted average shares outstanding		774,463,424			52,755,139			557,809,456			49,208,103

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

PCT LTD

Condensed Consolidated Statements of ~~Cash Flows~~Stockholders’ Equity (deficit)

For the Three and Six Months Ended June 30, 2020 and 2019

(Unaudited)

For the Three-Months Ended
March 31,
2021 2020
Cash Flows from Operating Activities
Net loss $ (1,111,022 ) $ (10,281,648 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 88,122 83,021
Amortization of debt discount 78,804 73,588
Common stock issued for services 14,027 119,063
Loss on change in fair value of derivative liability 650,913 9,294,762
Amortization of right of use asset 8,149 —
Amortization of prepaid expense 146,465 —
Loss on settlement of debt (316,401 ) 44,000
Default penalties on convertible notes 15,172 13,762
Changes in operating assets and liabilities:
Accounts receivable 151,083 (15,745 )
Inventory (841 ) 26,669
Prepaid expenses —   33,024
Deposits (5,500 ) (12,027 )
Operating lease liability (4,279 ) —
Accrued expenses (10,885 ) 377,306
Accrued expenses – related party 13,900 5,430
Accounts payable (41,539 ) 44,573
Net cash used in operating activities (323,932 ) (194,222 )

Cash Flows from Financing Activities
Proceeds from notes payable 207,575 155,525
Proceeds from notes payable – related parties 3,500
Proceeds from convertible notes payable 555,000 76,000
Proceeds from preferred series C stock subscriptions 270,000
Repayment of convertible notes payable (218,500 ) (8,888 )
Repayment of notes payable (256,486 ) (102,414 )
Repayment of notes payable – related parties (25,000 ) (12,286 )
Net cash provided by financing activities 262,589 381,437

Net change in cash (61,343 ) 187,215
Cash and cash equivalents at beginning of period 115,196 67,613
Cash and cash equivalents at end of period $ 53,853 $ 254,828

Supplemental Cash Flow Information
Cash paid for interest $ 43,339 $ 147
Cash paid for income taxes $ —   $ —

Non-cash investing and financing activities:
Preferred series C stock deemed dividend $ —   $ 270,000
Original debt discount against convertible notes $ —   $ 41,888
Original debt discount against notes payable $ —   $ 25,068
Common stock issued in conversion of convertible notes payable $ 25,000 $ 396,710

Common stock issued in settlement of debt $ —   $ 8,225
Property and equipment transferred to inventory $ —   $ 26,669
Common stock issued for prepaid expenses $ 62,750 $ —
Preferred series C converted to common stock $ 40,000 $ —
Common stock issued in settlement of notes payable to related parties $ 653,309 $ —
Common stock issued in conversion of preferred series C stock $ 77,998 $ —

					Additional					Total Stockholders’
	Common Stock				Paid-in		Accumulated			Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance – December 31, 2018		44,559,238	$	44,560	$	11,588,030	$	(9,927,003	)	$	1,705,587
Common stock issued for services		575,000		575		98,352		—			98,927
Common stock issued in settlement of debt		5,383,810		5,383		800,012		—			805,395
Net loss for the three-months ended March 31, 2019		—		—		—		(920,323	)		(920,323	)
Balance – March 31, 2019		50,518,048	$	50,518	$	12,486,394	$	(10,847,326	)	$	1,689,586
Stock-based compensation		—		—		23,125		—			23,125
Common stock issued in conversion of convertible notes payable		26,341,913		26,342		261,034		—			287,376
Net loss for the three-months ended June 30, 2020		—		—		—		(3,530,147	)		(3,530,147	)
Balance – June 30, 2019		76,859,961	$	76,860	$	12,770,553	$	(14,377,473	)	$	(1,530,060	)

					Additional					Total Stockholders’
	Common Stock				Paid-in		Accumulated			Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance – December 31, 2019		498,880,300	$	498,881	$	15,872,330	$	(26,505,567	)	$	(10,134,356	)
Common stock issued for services		15,525,000		15,525		103,538		—			119,063
Common stock issued in settlement of debt		250,000		250		7,975		—			8,225
Common stock issued in conversion of convertible notes payable		36,050,000		36,050		360,660		—			396,710
Beneficial conversion feature on preferred series C stock		—		—		270,000		(270,000	)		—
Net loss for the three-months ended March 31, 2020		—		—		—		(10,281,648	)		(10,281,648	)
Balance – March 31, 2020		550,705,300	$	550,706	$	16,614,503	$	(37,057,215	)	$	(19,892,006	)
Common stock issued for cash		4,250,000		4,250		135,750		—			140,000
Stock-based compensation		—		—		14,182		—			14,182
Common stock issued in settlement of debt		15,000,000		15,000		826,500		—			841,500
Common stock issued in cashless exercise of warrants		9,246,186		9,246		420,702		—			429,948
Common stock issued in conversion of preferred series C stock		5,000,000		5,000		45,000		—			50,000
Net income for the three-months ended June 30, 2020		—		—		—		7,019,083			7,019,083
Balance – June 30, 2020 (restated See Note 13)		584,201,486	$	584,202	$	18,056,637	$	(30,038,132	)	$	(11,397,293	)

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

PCT LTD

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Six Months Ended June 30,
	2020			2019
	(Restated - See Note 13)
Cash Flows from Operating Activities
Net loss	$	(3,262,565	)	$	(4,450,470	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		164,369			169,101
Amortization of debt discounts		280,188			300,703
Amortization of operating lease right-of-use asset		—			23,635
Common stock issued for services		133,245			122,052
Loss on change in fair value of derivative liability		15,310,597			2,951,641
Gain on change in fair value of preferred series A stock liability		—			(72,473	)
(Gain) loss on settlement of debt		(13,663,921	)		84,409
Gain on sale of intangible assets		—			(52,498	)
Default penalties on convertible notes payable		13,762			87,500
Changes in operating assets and liabilities:
Accounts receivable		(207,213	)		(81,166	)
Inventory		26,669			644
Prepaid expenses		(8,295	)		177,475
Other assets		(12,027	)		—
Operating lease liability		—			(21,626	)
Accounts payable		132,577			59,265
Accrued expenses – related party		13,773			8,245
Accrued expenses		620,188			215,811
Contract liabilities		—			24,532
Net cash used in operating activities		(458,653	)		(453,220	)

Cash Flows from Investing Activities
Proceeds from sale of intangible assets		—			57,500
Purchases of property and equipment		—			(2,516	)
Purchase of intangible assets		—			(5,000	)
Net cash provided by investing activities		—			49,984

Cash Flows from Financing Activities
Proceeds from notes payable – related parties		3,500			2,544
Proceeds from notes payable		155,525			88,600
Proceeds from convertible notes payable		413,000			460,750
Proceeds from common stock subscriptions		140,000			—
Proceeds from preferred series C stock subscriptions		270,000			—
Repayments of notes payable – related parties		(4,286	)		(16,044	)
Repayments of notes payable		(245,551	)		(9,209	)
Repayments of convertible notes payable		(311,888	)		(91,000	)
Net cash provided by financing activities		420,300			435,641

Net change in cash		(38,353	)		32,405
Cash and cash equivalents at beginning of period		67,613			4,893
Cash and cash equivalents at end of period	$	29,260		$	37,298

Supplemental Cash Flow Information
Cash paid for interest	$	53,645		$	51,639
Cash paid for income taxes	$	—		$	—

Non-Cash Investing and Financing Activities:
Preferred series C stock deemed dividend	$	270,000		$	—
Original debt discounts against notes payable	$	23,917		$	10,204
Original debt discounts against convertible notes payable	$	197,888		$	395,125
Modification of notes payable	$	—		$	20,590
Common stock issued in conversion of convertible notes payable	$	396,710		$	287,376
Common stock issued in cashless exercise of warrants	$	429,948		$	—
Common stock issued in conversion of preferred series C stock	$	50,000		$	—
Accounts receivable netted against notes payable	$	—		$	18,000
Initial operating lease right-of-use asset and liability	$	—		$	43,330
Preferred series A stock reclassification from liability to mezzanine equity	$	—		$	60,398
Property plant and equipment transferred to inventory	$	26,669		$	—

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

PCT LTD

Notes to the Unaudited

Condensed Consolidated Financial Statements

~~March 31, 2021~~June 30, 2020

NOTE 1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited interim condensed consolidated financial statements of PCT LTD (the “Company”) have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of our balance ~~sheet,~~sheets, statements of operations, stockholders’ equity (deficit), and cash flows for the periods presented. All such adjustments are of a normal recurring nature. The results of operations for the interim period are not necessarily indicative of the results to be expected for a full year.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, ~~2020~~2019 audited financial statements as reported in its Form 10-K, filed on ~~April 13, 2021.~~August 3, 2020.

COVID-19

In December 2019 COVID-19 emerged in Wuhan, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to almost all other countries, including the United States, and infections have been reported globally. Because COVID-19 infections have been reported throughout the United States, certain federal, state and local governmental authorities have issued stay-at-home orders, proclamations and/or directives aimed at minimizing the spread of COVID-19. Additional, more restrictive proclamations and/or directives may be issued in the future.

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak. Any resulting financial impact cannot be reasonably estimated at this time but may have a material impact on our business, financial condition and results of operations. The significance of the impact of the COVID-19 outbreak on the Company’s businesses and the duration for which it may have an impact cannot be determined at this time. At a minimum, the COVID-19 pandemic caused the Company to restrict travel of its personnel and to initiate distributor installations of certain of the Company’s equipment, as possible. The Company adapted to the immediate need for its US EPA registered disinfectant at the end of March and beginning of April, 2020, ~~but~~by installing greater storage reserves and by assembling more of it higher-volume equipment to produce the hospital grade disinfectant known as Hydrolyte®. There were hard costs ~~associates~~associated with these adaptations to the Little River, SC facility, but the Company continues to benefit from its fluid production capacities over the longer term. As the Federal, state and other restrictions associated with the pandemic have lessened, the Company is able to act more effectively in obtaining new contracts for its healthcare equipment, the Annihilyzer®.

and other equipment.

Nature of Operations

PCT LTD (formerly Bingham Canyon Corporation, (the “Company,” “PCT Ltd,” or “Bingham”), a Delaware corporation, was formed on February 27, 1986. The Company changed its domicile to Nevada on August 26, 1998. The Company acquires, develops and provides sustainable, environmentally safe disinfecting, cleaning and tracking technologies. The Company specializes in providing cleaning, sanitizing, and disinfectant fluid solutions and fluid-generating equipment that creates environmentally safe solutions for global sustainability.

Paradigm is located in Little River, SC and was formed June 6, 2012 under the name of EUR-ECA, Ltd. On September 11, 2015, its Board of Directors authorized EUR-ECA Ltd to file with the Nevada Secretary of State to change its name to Paradigm Convergence Technologies Corp. Paradigm is a technology licensing company specializing in environmentally safe solutions for global sustainability. The company holds a patent, intellectual property and/or distribution rights to innovative products and technologies. Paradigm provides innovative products and technologies for eliminating biocidal contamination from water supplies, industrial fluids, hard surfaces, food processing equipment, and medical devices. Paradigm’s overall strategy is to market new products and technologies through the use of equipment leasing, joint ventures, licensing, distributor agreements and partnerships.

Effective on February 29, 2018, the Company changed its name from Bingham Canyon Corporation to PCT LTD to more accurately identify the Company’s direction and to develop the complimentary relationship and association with its wholly-owned operating company, Paradigm Convergence Technologies Corporation (“Paradigm” or “PCT Corp.”).

Significant Accounting Policies

There have been no changes to the significant accounting policies of the Company from the information provided in Note 1 of the Notes to the Consolidated Financial Statements in the Company's most recent Form 10-K.

Reclassification

Certain balances on the previously issued statements of operations and cash flows have been reclassified to be consistent with the current period presentation. The reclassification had no impact on total financial position, net loss, or stockholders’ equity (deficit).

Fair Value Measurements

The Company follows ASC 820, “Fair Value Measurements and Disclosures”, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. A fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last is considered unobservable, is used to measure fair value:

Level 1 - Valuations for assets and liabilities traded in active markets from readily available pricing sources such as quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The carrying values of our financial instruments, including, cash and cash equivalents, accounts receivable, inventory, prepaid expenses, accounts payable and accrued expenses approximate their fair value due to the short maturities of these financial instruments.

Derivative liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

Our financial assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2020, consisted of the following:

	Total fair value at June 30, 2020 $		Quoted prices in active markets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $
	(restated)						(restated)
Description:
Derivative liability (1)		11,393,973		—		—		11,393,973
Total		11,393,973		—		—		11,393,973

Our financial assets and liabilities carried at fair value measured on a recurring basis as of December 31, 2019, consisted of the following:

	Total fair value at December 31, 2019 $		Quoted prices in active markets (Level 1) $		Significant other observable inputs (Level 2) $		Significant unobservable inputs (Level 3) $

Description:
Derivative liability (1)		10,517,873		—		—		10,517,873
Total		10,517,873		—		—		10,517,873

(1) The Company has estimated the fair value of these liabilities using the Binomial Model.

810

Basic and Diluted ~~Loss~~Income (Loss) Per Share

Basic ~~loss~~income (loss) per share is computed by dividing net ~~loss~~income (loss) by the weighted-average number of common shares outstanding during the period. Diluted ~~loss~~income (loss) per share is computed by dividing net ~~loss~~income (loss) by the weighted-average number of common shares outstanding for the period and, if dilutive, potential common shares outstanding during the period. Potentially dilutive securities consist of the incremental common shares issuable upon exercise of common stock equivalents such as options, warrants, convertible notes payable, preferred series A stock and preferred series C stock. Potentially dilutive securities are excluded from the computation if their effect is anti-dilutive. As ~~March 31, 2021,~~a result, for the three months ended June 30, 2020, there were outstanding common share equivalents ~~(options, warrants, convertible debt, and preferred series A stock~~ which amounted to ~~556,953,901~~319,106,192 (restated) shares of common ~~stock. These~~stock that were not included in the calculation as their effect is anti-dilutive. For fiscal periods with net losses, these common share equivalents were not included in the computation of diluted loss per share as their effect would have been anti-dilutive.

	Three months ended June 30, 2020 $			Three months ended June 30, 2019 $			Six months ended June 30, 2020 $			Six months ended June 30, 2019 $

Numerator:
Net income (loss)		7,019,083			(3,530,147	)		(3,532,565	)		(4,450,470	)
Loss on change in fair value of derivative liability		4,463,852			—			—			—
Gain on settlement of debt		(13,794,438	)		—			—			—
Amortization of debt discount		176,381			—			—			—
Interest expense		52,146			—			—			—
Adjusted net income (loss)		(2,082,976	)		(3,530,147	)		(3,532,565	)		(4,450,470	)

Denominator: Weighted average shares outstanding used in computing net income (loss) per share
Basic		569,964,666			52,755,139			557,809,456			49,208,103
Effect of dilutive warrants		81,681,300			—			—			—
Effect of convertible note weighted shares		122,817,458			—			—			—
Diluted		774,463,424			52,755,139			557,809,456			49,208,103

Net income (loss) per share applicable to common shareholders:
Basic		0.01			(0.07	)		(0.01	)		(0.09	)
Diluted		(0.00	)		(0.07	)		(0.01	)		(0.09	)

Recent Accounting Pronouncements

ASU 2019-12 amends the requirements related to the accounting for “hybrid” tax regimes. Such regimes are tax jurisdictions that impose the greater of two taxes — one based on income, or one based on items other than income. Although ASC 740 does not apply to taxes based on items other than income, ASC 740-10-15-4(a) originally specified that if there is a tax based on income that is greater than a franchise tax based on capital, only that excess is subject to the guidance in ASC 740. In feedback to the FASB, stakeholders indicated that the guidance on hybrid tax regimes increased the cost and complexity of applying ASC 740, particularly when the tax amount deemed to be a non-income tax was insignificant. Further, such guidance made it more difficult for entities to determine the appropriate tax rate to use when recording deferred taxes.

Accordingly, the FASB amended ASC 740-10-15-4(a) to state that an entity should include the amount of tax based on income in the tax provision and should record any incremental amount recorded as a tax not based on income. This amendment effectively reverses the order in which an entity determines the type of tax under current U.S. GAAP. In addition, the ASU amends the illustrative examples referred to and included in ASC 740-10-55-26 and ASC 740-10-55-139 through 55-144. The FASB notes that such amendments are consistent with the accounting for other incremental taxes, such as the base erosion anti-abuse tax. Moreover, in paragraph BC12 of the ASU, the FASB concluded that subjecting these taxes to the disclosure requirements in ASC 740 will result in greater transparency of franchise tax amounts.

In August ~~2020,~~2018, the FASB issued ~~ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)”~~Accounting Standards Update No. 2018-13 (“ASU ~~2020-06”~~2018-13”)., Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements relating to fair value measurements as outlined in Topic 820, Fair Value Measurement. ASU ~~2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity.~~2018-13 is applicable to all entities that are required, under GAAP, to make disclosures about recurring or nonrecurring fair value measurements. The amendments outlined in ASU ~~is part of the FASB’s simplification initiative, which aims to reduce unnecessary complexity in U.S. GAAP. The ASU’s amendments~~2018-13 are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2023, and interim periods within those fiscal years.~~2019, with early adoption permitted for any removed or modified disclosures upon issuance of ASU 2018-13. The Company ~~is currently evaluating~~adopted ASU 2018-13 on January 1, 2020 and the ~~impact~~adoption of ASU ~~2020-06 will~~2018-13 did not have a material effect on ~~its~~the consolidated financial statements.

NOTE 2. GOING CONCERN

The accompanying consolidated condensed financial statements have been prepared assuming that the Company will continue as a going concern. The Company has ~~limited assets, has~~ an accumulated deficit of ~~$36,024,876~~$30,038,132 (restated) and has negative cash flows from operations. As of ~~March 31, 2021,~~June 30, 2020, the Company had a working capital deficit of ~~$14,804,305.~~$14,650,674 (restated). The Company has relied on raising debt and equity capital in order to fund its ongoing day-to-day operations and its corporate overhead. The Company will require additional working capital from either cash flow from operations, from debt or equity financing, or from a combination of these sources. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a period of one year from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

911

NOTE 3. PROPERTY AND EQUIPMENT

Property and equipment at ~~March 31, 2021~~June 30, 2020 and December 31, ~~2020~~2019 consisted of the following:

	March 31, 2021			December 31, 2020			June 30, 2020			December 31, 2019
Leasehold improvements		18,840			18,840
Machinery and leased equipment	$	365,483		$	365,483		$	151,719		$	151,719
Machinery and equipment not yet in service		32,580			32,580			294,896			321,565
Office equipment and furniture		39,356			39,357			20,064			20,064
Website		2,760			2,760			2,760			2,760

Total property and equipment	$	459,020		$	459,020		$	469,439		$	496,108
Less: Accumulated Depreciation		(112,304	)		(100,301	)		(68,206	)		(55,999	)

Property and equipment, net		346,716			358,719			401,233			440,109

Depreciation expense was ~~$12,000~~$12,207 and ~~$6,153~~$12,701 for the ~~three-months~~six-months ended ~~March 31, 2021~~June 30, 2020 and ~~2020,~~2019, respectively.

NOTE 4. INTANGIBLE ASSETS

Intangible assets at ~~March 31, 2021~~June 30, 2020 and December 31, ~~2020~~2019 consisted of the following:

	March 31, 2021			December 31, 2020			June 30, 2020			December 31, 2019
Patents	$	4,505,489		$	4,505,489		$	4,505,489		$	4,505,489
Technology rights		200,000			200,000			200,000			200,000
Intangible, at cost		4,705,489			4,705,489
Intangibles, at cost								4,705,489			4,705,489
Less: Accumulated amortization		(1,381,587	)		(1,305,465	)		(1,153,222	)		(1,001,060	)
Net Carrying Amount	$	3,323,902		$	3,400,024		$	3,552,267		$	3,704,429

Amortization expense was ~~$76,122~~$152,162 and ~~$76,868~~$156,400 for the ~~three-months~~six-months ended ~~March 31, 2021~~June 30, 2020 and ~~2020,~~2019, respectively.

Estimated Future Amortization Expense:

		$
For year ending December 31, 2020 - remaining			151,002
For year ending December 31, 2021				~~228,366~~302,003
	For year ending December 31, 2022				~~304,488~~302,003
	For year ending December 31, 2023				~~304,488~~302,003
	For year ending December 31, 2024				~~304,488~~302,003
	~~For year ending December 31, 2025~~				~~304,488~~
	Thereafter				~~1,877,584~~2,193,253
	Total				~~3,323,902~~3,552,267

1012

NOTE 5. ~~LEASES~~

On August 26, 2020, the Company signed a new one-year lease for the Company headquarters and operations located in Little River, South Carolina. The lease was effective retroactively from July 1, 2020, ending on June 30, 2021, for $7,500 per month. The Company re-negotiated an annual lease on the Little River, SC facility for $7,500 per month, retroactive to July 1, 2020, which is renewable for an additional four years (with a 2% increase annually). The Company renewed the lease for another year, effective July 1, 2021, at $7,650/month.

On October 19, 2020, the Company entered into a building lease with a three-year term and an effective date of November 1, 2020. The lease requires the Company to make payments of $4,500 per month. The Company recognized operating lease expense of $13,500 during the period ended March 31, 2021.

~~At March 31, 2021, the weighted average remaining operating lease term was 2.58 years and the weighted average discount rate associated with operating leases was 18.5%.~~

~~On March 15, 2021, the Company entered into a building lease with a two-year term and an effective date of April 1, 2021. The lease requires the Company to make payments of $2,750 per month.~~

~~The Components of lease expenses were as follows:~~

2021
$
2020
$

Total operating lease cost 13,500 —
~~The following table provides supplemental cashflow and other information related to leases for the period ended March 31, 2021 and 2020:~~
2021
$
2020
$

Lease payments 38,750 17,940
~~Supplemental balance sheet information related to leases as of March 31, 2021 and 2020 are as below:~~
2021
$
2020
$

Cost 123,614 —
Accumulated amortization (13,378 ) —
Net carrying value 110,236 —
~~Future minimum lease payments related to lease obligations are as follows as of March 31, 2021:~~
$
2021 40,500
2022 54,000
2023 45,000

Total minimum lease payments 139,500

Less: amount of lease payments representing effects of discounting (25,394 )

Present value of future minimum lease payments 114,106

Less: current obligations under leases (36,607 )

Lease liabilities, net of current portion 77,499
11
~~NOTE 6.~~ Notes Payable

The following ~~table summarizes~~tables summarize notes payable as of ~~March 31, 2021~~June 30, 2020 and December 31, ~~2020:~~2019:

Type Original Amount
Origination
Date

Maturity
Date

Effective Annual
Interest
Rate

Balance at
March 31,
2021

Balance at
December 31, 2020
Original Amount
Origination
Date
Maturity
Date
Annual
Interest
Rate
Balance at
June 30,
2020
Balance at
December 31, 2019
Note Payable ** $ 25,000 05/08/2017 06/30/2018 0 % $ 27,500 $ 27,500 $ 25,000 05/08/2017 06/30/2018 0 % $ 27,500 $ 27,500
Note Payable ** $ 8,700 11/15/2018 06/30/2019 10 % $ 8,700 $ 8,700 $ 130,000 06/20/2018 01/02/2020 8 % $ 112,500 $ 130,000
Note Payable $ 118,644 05/05/2020 05/05/2021 8 % $ 110,644 $ 110,644
Note Payable ** $ 8,700 11/15/2018 06/30/2019 10 % $ 8,700 $ 8,700
Note Payable (e) $ 90,596 09/15/2019 05/28/2020 8 % $ —   $ 90,596
Note Payable ~~(b)~~(k) $ 50,000 10/03/2019 04/03/2020 12 % $ —   $ 37,500
Note Payable (e) $ 17,500 11/12/2019 11/12/2020 8 % $ —   $ 17,500
Note Payable ** $ 83,400 12/20/2019 06/19/2020 150 % $ 38,491 $ 80,192
Note Payable ~~(e)~~ $ 148,362 12/20/2019 11/27/2020 80 % $ 68,496 $ 145,404
Note Payable (a) $ 199,500 10/01/2020 09/28/2021 66 % $ 95,805 $ 149,573 $ 25,782 01/08/2020 05/13/2020 313 % $ —   $ —
Note Payable ~~(b)~~(k) $ 126,000 11/03/2020 04/23/2021 168 % $ 21,000 $ 85,050
Note Payable (c) $ 113,980 11/04/2020 03/15/2021 210 % $ —   $ 65,988
Note Payable (b) $ 33,660 02/19/2020 04/30/2020 585 % $ —   $ —
Note Payable (c)(e) $ 20,000 02/28/2020 05/28/2020 8 % $ —   $ —
Note Payable (d) $ 177,800 01/02/2021 07/12/2021 116 % $ 115,957 $ —   $ 100,000 03/31/2020 08/01/2020 30 % $ 50,000 $ —
Note Payable ~~(e)~~ $ 111,920 03/03/2021 05/21/2021 220 % $ 90,935 $ —   $ 118,644 05/05/2020 05/05/2021 8 % $ 118,644 $ —
Subtotal $ 470,542 $ 447,455 $ 424,331 $ 537,392
Debt discount $ (57,412 ) $ (63,075 ) $ (15,714 ) $ (69,239 )
Balance, net $ 413,130 $ 384,380 $ 408,617 $ 468,153
Less current portion $ (413,130 ) $ (384,380 ) $ (408,617 ) $ (468,153 )
Total long-term $ —   $ —   $ —   $ —

** Currently in default

a) On ~~October 1,~~January 8, 2020, the Company sold future receivables with a non-related party for ~~$199,500,~~up to $87,540. During the period $25,782 was sold, of which ~~$53,250~~$10,207 was loan fees and original issue discount resulting in cash proceeds to the Company of ~~$146,250.~~$15,575. The advance ~~is to be~~was repaid through $1,450 weekly ~~payments of $3,841.~~payments. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and ~~all past, present and future assets of~~inventory. This note was repaid during the ~~Company. During the three months ended March 31, 2021, $14,625 of the discount was amortized to expense, leaving a net note balance of $79,789 (discount balance of $16,017).~~period.

b) On ~~November 3,~~February 19, 2020, the Company sold future receivables with a non-related party for ~~$126,000,~~$33,660, of which ~~$39,650~~$13,710 was loan fees and original issue discount resulting in cash proceeds to the Company of ~~$86,350.~~$19,950. The advance ~~is to be~~was repaid through ~~$1,050~~$660 daily payments. In connection with the advance, the Company granted the lender a security interest in all accounts, equipment, intangibles and ~~all past, present and future assets of~~inventory. This note was repaid during the ~~Company. During the three months ended March 31, 2021, $17,969 of the discount was amortized to expense, leaving a net note balance of $20,025 (discount balance of $975).~~period.

c) On ~~November 4,~~February 28, 2020, the Company ~~sold future receivables~~entered into a promissory note with a non-related party for ~~$113,980,~~$20,000. The note is due May 28, 2020, is unsecured and bears an interest rate of ~~which $34,440 was loan fees and original issue discount resulting in cash proceeds to~~8% per annum. On May 5, 2020, the Company ~~of $79,540. The advance is to be repaid through $5,999 weekly payments. In connection~~consolidated this note with the advance, the Company granted the lender a security interest and all past, present and future assets of the Company. During the three months ended March 31, 2021, $13,489 of the discount was amortized to expense, and the remaining $65,988 was repaid leaving a note balance of $0.two others as described in Note 6(e).

d) On ~~February 2, 2021,~~March 31, 2020, the Company ~~sold future receivables~~entered into a promissory note with a non-related party for ~~$177,800,~~$100,000. The note is due August 1, 2020, is unsecured and bears interest at $2,500 per month, repayable in four monthly payments of ~~which $39,795 was loan fees and original issue discount resulting, and $35,994 was paid to settle the loan described in Note (d) in cash proceeds to~~$27,500 commencing May 1, 2020. Additionally, the Company issued the lender 250,000 shares of ~~$102,011. The advance is to be repaid through $7,730 weekly payments. In connection~~the Company’s common stock with a fair market value of $8,225 as additional consideration for the ~~advance,~~loan. During the period, the Company ~~granted the lender a security interest and all past, present and future assets~~repaid $50,000 of the ~~Company. During the three months ended March 31, 2021, $21,522 of the discount was amortized to expense, leaving a net note balance of $97,684 (discount balance of $18,273).~~note.

e) On ~~March 9, 2021,~~May 5, 2020, the Company ~~sold future receivables~~consolidated three notes with principal amounts of $90,596, $17,500 and $20,000 as well as accrued interest into a new note with a ~~non-related party for $111,920,~~principal amount of ~~which $35,120 was loan fees~~$118,644 and ~~original issue discount resulting~~a maturity date of May 5, 2021. The note bears interest at 8% per annum and in ~~cash proceeds to the Company of $76,800. The advance is to be repaid through $1,399 weekly payments. In~~ connection with the advance, the Company granted the lender a security interest and all past, present and future assets of the Company. During the three months ended March 31, 2021, $12,975 of the discount was amortized to expense, leaving a net note balance of $68,790 (discount balance of $22,145).
f) On March 9, 2021, the Company sold future receivables with a non-related party for $29,686, of which $10,120 was loan fees and original issue discount resulting in cash proceeds to the Company of $19,566. During the three months ended March 31, 2021, $10,120 of the discount was amortized to expense and $29,686 was repaid, leaving a net note balance of $0.
12
~~The following table summarizes notes payable as of March 31, 2021 and December 31, 2020:~~
Type Original Amount
Origination
Date

Maturity
Date

Annual
Interest
Rate

Balance at
March 31,
2021

Balance at
December 31, 2020
Note Payable, RP ** $ 30,000 04/10/2018 01/15/2019 3 % $ 5,000 $ 30,000
Note Payable, RP **(g) $ 380,000 06/20/2018 01/02/2020 8 % $ —   $ 380,000
Note Payable, RP **(h) $ 350,000 06/20/2018 01/02/2020 5 % $ —   $ 285,214
Note Payable, RP ** $ 17,000 06/20/2018 01/02/2020 5 % $ 17,000 $ 17,000
Note Payable, RP ** $ 50,000 07/27/2018 11/30/2018 8 % $ 50,000 $ 50,000
Note Payable, RP $ 5,000 10/09/2018 Demand 0 % $ 5,000 $ 5,000
Note Payable, RP $ 5,000 10/19/2018 Demand 0 % $ 5,000 $ 5,000
Note Payable, RP ** $ 15,000 08/16/2019 02/16/2020 8 % $ 15,000 $ 15,000
Note Payable, RP $ 2,000 02/11/2020 Demand 0 % $ 2,000 $ 2,000
Note Payable, RP (h) $ 84,034 02/16/2021 Demand 5 % $ 84,034 $ —
Subtotal $ 183,034 $ 789,214
Debt discount $ —   $ —
Balance, net $ 183,034 $ 789,214
Less current portion $ (183,034 ) $ (789,214 )
Total long-term $ —   $ —

** Currently in default
g) ~~On February 16, 2021,~~consolidation the Company issued ~~2,663,299~~the lender 15,000,000 shares of the Company’s common stock ~~to settle~~with a ~~June 20, 2018 note payable of $380,000 and accrued interest of $26,153 owed to the current COO and Director of the Company. The Company recognized the~~ fair value of $841,500. As the ~~shares issued of $74,572 and due~~instruments were substantially different, the old notes were considered to ~~the related party nature of the transaction no gain was recognized for the difference between the fair value of the shares~~be extinguished and the ~~extinguished debt. The resulting difference was recorded as Additional Paid-in Capital in the amount of $328,919.~~
h) On February 16, 2021, the Company issued 1,803,279 shares of common stock to settle $247,156 from a $275,000 note payable dated June 20, 2018, which has a balance of $331,190, including interest, to the current Chairman and CEO of the Company. The Company also agreed to issue a new note for the remaining balance owed to the Chairman and CEO of $84,034, dated February 16, 2021. The note will bear interest at 5% per annum and is due on June 30, 2021. The Company recognized ~~the fair value~~a loss on settlement of ~~the shares issued~~debt of $50,492 and due to the related party nature of the transaction no gain was recognized for the difference between the fair value of the shares and the extinguished debt. The resulting difference was recorded as Additional Paid-in Capital in the amount of $194,861.$826,500.

13

The following table summarizes notes payable, related parties as of June 30, 2020 and December 31, 2019:
  Type Original Amount
Origination
Date
Maturity
Date
Annual
Interest
Rate
Balance at
June 30,
2020
Balance at
December 31, 2019
Note Payable, RP ** $ 30,000 04/10/2018 01/15/2019 3 % $ 30,000 $ 30,000
Note Payable, RP ** $ 380,000 06/20/2018 01/02/2020 8 % $ 380,000 $ 380,000
Note Payable, RP ** $ 350,000 06/20/2018 01/02/2020 5 % $ 322,214 $ 325,000
Note Payable, RP ** $ 17,000 06/20/2018 01/02/2020 5 % $ 17,000 $ 17,000
Note Payable, RP ** $ 50,000 07/27/2018 11/30/2018 8 % $ 50,000 $ 50,000
Note Payable, RP $ 5,000 10/09/2018 Demand 0 % $ 5,000 $ 5,000
Note Payable, RP $ 5,000 10/19/2018 Demand 0 % $ 5,000 $ 5,000
Note Payable, RP ** $ 15,000 08/16/2019 02/16/2020 8 % $ 15,000 $ 15,000
Note Payable, RP (f) $ 1,500 02/11/2020 Demand 0 % $ —   $ —
Note Payable, RP (g) $ 2,000 02/11/2020 Demand 0 % $ 2,000 $ —
Subtotal $ 826,214 $ 827,000
Debt discount $ —   $ (43 )
Balance, net $ 826,214 $ 826,957
Less current portion $ (826,214 ) $ (826,957 )
Total long-term $ —   $ —
** Currently in default
f) On February 11, 2020, the Company entered into a promissory note with the Chairman and CEO of the Company for $1,500. The note is due on demand, is unsecured and bears an interest rate of 0% per annum. The note was repaid during the period.
g) On February 11, 2020, the Company entered into a promissory note with the COO and Director of the Company for $2,000. The note is due on demand, is unsecured and bears an interest rate of 0% per annum.
14
The following table summarizes convertible notes payable as of ~~March 31, 2021~~June 30, 2020 and December 31, ~~2020:~~2019:

Type Original Amount
Origination
Date

Maturity
Date

Annual
Interest
Rate

Balance at
March 31,
2021

Balance at
December 31,
2020
Original Amount
Origination
Date
Maturity
Date
Annual
Interest
Rate
Balance at
June 30,
2020
Balance at
December 31, 2019
Convertible Note Payable (h) * ** $ 50,000 12/06/2018 12/06/2019 12 % $ 5,685 $ 22,777
Convertible Note Payable * ** $ 65,000 12/06/2018 12/06/2019 12 % $ 46 $ 46 $ 65,000 12/06/2018 12/06/2019 12 % $ 46 $ 46
Convertible Note Payable * **(i) $ 75,000 03/18/2019 12/13/2019 24 % $ 107,795 $ 177,795
Convertible Note Payable * ** (j) $ 30,000 03/06/2020 03/05/2021 12 % $ 36,834 $ 21,662
Convertible Note Payable (k) * ** $ 150,000 04/10/2020 04/09/2021 12 % $ 90,000 $ 165,000
Convertible Note Payable ** (l) $ 300,000 08/27/2020 07/31/2021 12 % $ 280,000 $ 300,000
Convertible Note Payable (m) $ 53,500 09/22/2020 03/21/2022 12 % $ —   $ 53,500
Convertible Note Payable (n) $ 87,500 09/24/2020 Demand 8 % $ 15,000 $ 40,000
Convertible Note Payable (i) * ** $ 100,000 01/18/2019 01/16/2020 24 % $ 105,041 $ 95,492
Convertible Note Payable (r) $ 60,000 01/29/2019 01/22/2020 18 % $ —   $ 266,050
Convertible Note Payable * ** $ 50,000 02/01/2019 10/22/2019 24 % $ 154,330 $ 154,330
Convertible Note Payable (o) $ 200,000 10/07/2020 10/06/2021 5 % $ 200,000 $ 200,000 $ 60,000 02/21/2019 02/14/2022 0 % $ —   $ 74,000
Convertible Note Payable (p) $ 200,000 10/16/2020 10/15/2021 5 % $ 200,000 $ 200,000
Convertible Note Payable (j) * ** $ 55,125 02/21/2019 02/20/2020 24 % $ 46,338 $ 42,125
Convertible Note Payable * ** $ 75,000 03/18/2019 12/13/2019 24 % $ 232,814 $ 232,814
Convertible Note Payable (o) $ 26,000 09/16/2019 09/11/2022 0 % $ —   $ 26,000
Convertible Note Payable ~~(q)~~(k) $ 300,000 11/11/2020 11/10/2021 5 % $ 300,000 $ 300,000 $ 175,814 09/27/2019 09/25/2020 8 % $ —   $ 175,814
Convertible Note Payable (r) $ 150,000 12/29/2020 12/28/2021 5 % $ 150,000 $ 150,000
Convertible Note Payable $ 53,000 10/08/2019 10/07/2020 12 % $ —   $ 53,000
Convertible Note Payable $ 50,000 10/31/2019 10/29/2020 12 % $ —   $ 50,000
Convertible Note Payable ~~(t)~~(l) $ 8,888 02/19/2020 02/18/2021 12 % $ —   $ —
Convertible Note Payable (m) * ** $ 30,000 03/06/2020 03/05/2021 12 % $ 30,000 $ —
Convertible Note Payable ~~(v)~~(n) $ 45,000 03/09/2020 03/02/2021 12 % $ 45,000 $ —
Convertible Note Payable (p) * ** $ 150,000 04/10/2020 04/09/2021 12 % $ 150,000 $ —
Convertible Note Payable (q) $ 128,000 04/16/2020 04/09/2021 12 % $ 128,000 $ —
Convertible Note Payable (s) $ 150,000 01/27/2021 01/27/2022 5 % $ 150,000 $ —   $ 83,000 05/12/2020 11/08/2021 12 % $ 83,000 $ —
Convertible Note Payable ~~(t)~~(l) $ 128,000 02/22/2021 02/22/2022 12 % $ 128,000 $ —
Convertible Note Payable (u) $ 200,000 03/18/2021 03/18/2022 5 % $ 200,000 $ —
Convertible Note Payable ~~(v)~~(n) $ 83,000 03/26/2021 03/26/2022 12 % $ 83,000 $ —
Subtotal $ 1,940,675 $ 1,608,003 $ 980,254 $ 1,192,448
Debt discount $ (5,658 ) $ —   $ —   $ (4,815 )
Balance, net $ 1,935,017 $ 1,608,003 $ 980,254 $ 1,187,633
Less current portion $ (1,935,017 ) $ (1,554,503 ) $ (980,254 ) $ (1,187,633 )
Total long-term $ —   $ 53,500 $ —   $ —
* Embedded conversion feature accounted for as a derivative liability at period end
** Currently in default * Embedded conversion feature accounted for as a derivative liability at period end
** Currently in default
h) During the period ended June 30, 2020, $17,092 of principal and $3,507 of interest of the convertible note payable was converted into 36,050,000 shares of the Company’s common stock.

i) During the ~~three months~~period ended ~~March 31, 2021~~June 30, 2020, the Company ~~repaid $70,000 of the~~was further assessed default penalties and interest on this convertible note ~~payable.~~as the note reached maturity. Additional default and penalties were assessed in the amount of $118,295 of which $9,549 was recorded as a principal addition and $108,746 was recorded in accrued interest. to the note.

j) During the ~~three months~~period ended ~~March 31, 2021~~June 30, 2020, the Company ~~incurred additional~~was further assessed default penalties and interest on this convertible note as the note reached maturity. Additional default and penalties were assessed in the amount of ~~$15,174 on the convertible note.~~$4,213 was recorded as a principal addition.

k)
On ~~April 10,~~February 7, 2020, the Company ~~entered into a~~extinguished both promissory note (totaling $39,000) and convertible ~~promissory~~ note (totaling $181,000), including accrued interest with a non-related party ~~for $150,000,~~through the issuance of ~~which $18,000 was~~220,000 shares of preferred series C stock. The Company recorded the difference between the fair value of the preferred series C stock of $264,000 and the debt outstanding of $220,000 as a loss on extinguishment of debt of $44,000.
l) On February 19, 2020, the Company received another tranche on a convertible note originally dated December 6, 2018. The new tranche had a principal amount of $8,888, with an original issue discount ~~resulting in cash proceeds to the Company~~ of ~~$132,000.~~$888. The convertible note is due ~~on April 9, 2021 and~~365 days from issuance, bears interest ~~on the unpaid principal balance~~ at ~~a rate of~~ 12% per ~~annum. The Note may be converted~~annum and is convertible into common shares of the Company at 65% multiplied by the ~~Lender at any time into shares of Company’s common stock at a conversion~~lowest traded price ~~equal to 65% of the~~or lowest ~~trading~~closing bid price during the ~~25-trading day period~~25 days the Company’s stock is tradable prior to the conversion date. Further, if at any time the stock price is less than $0.30 an additional 20% discount is applied and if at any time the conversion price is less than $0.01 anand additional 10% is applied. Further, an additional 15% is applied if the Company fails to comply with its reporting requirements. During the period, all these additional discounts were triggered.

The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15. The initial fair value of the conversion feature was ~~$507,847~~$70,719 and resulted in a discount to the note payable of ~~$132,000~~$8,000 and an initial derivative expense of ~~$375,847.~~ $62,719.

During the ~~year~~period ended ~~December 31,~~June 30, 2020, the entire amount was repaid.
15
m) On March 6, 2020, the Company ~~incurred $15,000 of penalties which increased the~~received another tranche on a convertible note originally dated December 6, 2018. The new tranche had a principal amount of $30,000, with an original issue discount of $4,000. The convertible note is due 365 days from issuance, bears interest at 12% per annum and is convertible into common shares of the Company at 65% multiplied by the lowest traded price or lowest closing bid price during the 25 days the Company’s stock is tradable prior to the conversion date. Further, if at any time the stock price is less than $0.30 an additional 20% discount is applied and if at any time the conversion price is less than $0.01 and additional 10% is applied. Further, an additional 15% is applied if the Company fails to comply with its reporting requirements. During the period, all these additional discounts were triggered.

The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15. The initial fair value of the conversion feature was $391,837 and resulted in a discount to the note ~~to $165,000. During the three months ended March 31, 2021, the Company repaid $75,000~~payable of ~~the note.~~
$26,000 and an initial derivative expense of $365,837.

l) ~~During the three months ended March 31, 2021, the Company repaid $20,000 of the note.~~
m)n) On ~~September 22,~~March 9, 2020, the Company entered into a convertible promissory ~~note~~ with a non-related party for $53,500, of which $3,500 was an original issue discount resulting in cash proceeds to the Company of $50,000. The note is due on March 21, 2022 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. During the three months ended March 31, 2021 the Company repaid the $53,500 note as well as $25,882 of interest and prepayment penalties. As the note was repaid prior to becoming convertible no derivative liability was recognized.
n) ~~During the three months ended March 31, 2021 the Company issued 25,000,000 common shares upon the conversion of $25,000 of the convertible note payable.~~
o) On October 7, 2020, the Company entered into a convertible promissory note with a non-related party for $200,000. The note is due on October 6, 2021 and bears interest on the unpaid principal balance at a rate of 5% per annum. The Note may be converted by the Lender at any time after 6-months of the date of issuance into shares of Company’s common stock at a conversion price of $0.20.
p) On October 16, 2020, the Company entered into a convertible promissory note with a non-related party for $200,000. The note is due on October 15, 2021 and bears interest on the unpaid principal balance at a rate of 5% per annum. The Note may be converted by the Lender at any time after 6-months of the date of issuance into shares of Company’s common stock at a conversion price of $0.20.
q) On November 11, 2020, the Company entered into a convertible promissory note with a non-related party for $300,000. The note is due on November 10, 2021 and bears interest on the unpaid principal balance at a rate of 5% per annum. The Note may be converted by the Lender at any time after 6-months of the date of issuance into shares of Company’s common stock at a conversion price of $0.15.
r) On December 29, 2020, the Company entered into a convertible promissory note with a non-related party for $150,000. The note is due on December 28, 2021 and bears interest on the unpaid principal balance at a rate of 5% per annum. The Note may be converted by the Lender at any time after 6-months of the date of issuance into shares of Company’s common stock at a conversion price of $0.10.
s) On January 27, 2021, the Company entered into a convertible promissory note with a non-related party for $150,000. The note is due on January 26, 2022 and bears interest on the unpaid principal balance at a rate of 5% per annum. The note may be converted by the lender at any time within 6-months of the date of issuance into shares of Company’s common stock at a conversion price equal to $0.10.
t) ~~On February 23, 2021, the Company entered into a convertible promissory note with a non-related party for $128,000,~~$45,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of ~~$125,000.~~$42,000. The note is due on ~~February 22, 2022~~March 2, 2021 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. As the note ~~is not~~isn’t convertible until 180 days following issuance, no derivative liability was recognized as of ~~March 31, 2021.~~June 30, 2020.

u)o) On ~~March 18, 2021,~~April 1, 2020, the Company entered into a settlement agreement to settle convertible notes with principal amounts of convertible notes. The Company agreed to pay $100,000 to settle the principal and accrued interest and penalties relating to the two convertible notes. The Company recorded a gain on settlement of debt of $312,269. As part of the settlement, the Company cancelled 197,190,272 warrants.
p) On April 10, 2020, the Company entered into a convertible promissory note with a non-related party for ~~$200,000.~~$150,000 of which $18,000 was an original issue discount resulting in cash proceeds to the Company of $132,000. The note is due on ~~March 17, 2022~~April 9, 2021 and bears interest on the unpaid principal balance at a rate of 5%12% per annum. The ~~note~~Note may be converted by the ~~lender~~Lender at any time ~~within 6-months of the date of issuance~~ into shares of Company’s common stock at a conversion price equal to ~~$0.10.~~65% of the lowest trading price during the 25-trading day period prior to the conversion date. Further, an additional 15% is applied if the Company fails to comply with its reporting requirements. During the period, this additional discount was triggered.

The embedded conversion option qualified for derivative accounting and bifurcation under ASC 815-15. The initial fair value of the conversion feature was $507,847 and resulted in a discount to the note payable of $132,000 and an initial derivative expense of $375,847.

v)q) On ~~March 26, 2021,~~April 16, 2020, the Company entered into a convertible promissory ~~note~~ with a non-related party for ~~$83,000,~~$128,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of ~~$80,000.~~$125,000. The note is due on ~~March 24, 2022~~April 9, 2021 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. As the note ~~is not~~isn’t convertible until 180 days following issuance, no derivative liability was recognized as of ~~March 31, 2021.~~June 30, 2020.
r) On May 11, 2020, the Company entered into a settlement agreement to settle the $60,000 convertible note. The Company agreed to pay $100,000 to settle the principal and accrued interest and penalties relating the convertible note. The Company recorded a gain on settlement of debt of $2,273,770.
s) On May 12, 2020, the Company entered into a convertible promissory with a non-related party for $83,000 of which $3,000 was an original issue discount resulting in cash proceeds to the Company of $80,000. The note is due on November 8, 2021 and bears interest on the unpaid principal balance at a rate of 12% per annum. Stringent pre-payment terms apply (from 15% to 40%, dependent upon the timeframe of repayment during the note’s term) and any part of the note which is not paid when due shall bear interest at the rate of 22% per annum from the due date until paid. The Note may be converted by the Lender at any time after 180 days of the date of issuance into shares of Company’s common stock at a conversion price equal to 61% of the lowest trading price during the 15-trading day period prior to the conversion date. As the note isn’t convertible until 180 days following issuance, no derivative liability was recognized as of June 30, 2020.

1416

NOTE ~~7 –~~6. DERIVATIVE LIABILITIES

The embedded conversion option of (1) the convertible ~~debentures~~notes payable described in Note ~~6 and~~5; (2) ~~warrants, containing~~warrants; contain conversion features that qualify for embedded derivative classification. The fair value of the liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments.

Upon the issuance of the convertible notes payable described in Note 6,5, the Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible notes, warrants and options. The Company elected to reclassify contracts from equity with the earliest inception date first. As a result, none of the Company’s previously outstanding convertible instruments qualified for derivative reclassification, however, any convertible securities issued after the election, including the warrants described in Note ~~10,~~9, qualified for derivative classification. The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities.

March 31,
2021
December 31,
2020
Balance at the beginning of period $ 11,429,043 $ 10,517,873
Original discount limited to proceeds of convertible notes —   166,000
Fair value of derivative liabilities in excess of notes proceeds received —   1,128,966
Settlement of derivative instruments (316,401 ) (4,876,287 )
Change in fair value of embedded conversion option 650,913 4,492,491
Balance at the end of the period $ 11,763,555 $ 11,429,043
June 30,
2020 December 31,
2019
(restated)

Balance at the beginning of period $ 10,517,873 $ 322,976
Original discount limited to proceeds of notes 166,000 540,750
Fair value of derivative liabilities in excess of notes proceeds received 804,403 1,653,887
Settlement of derivative instruments (14,600,497 ) (3,258,054 )
Change in fair value of embedded conversion option 14,506,194 11,258,314
Balance at the end of the period $ 11,393,973 $ 10,517,873

The Company uses Level 3 inputs for its valuation methodology for the embedded conversion ~~features~~option and warrant liabilities as their fair values were determined by using the Binomial Model based on various assumptions.

Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:

~~Expected Volatility~~ ~~Risk-free Interest Rate~~ ~~Expected Dividend Yield~~ ~~Expected Life (in years)~~
~~At March 31, 2021~~ ~~116 - 262~~ % ~~0.07-0.92~~ % 0 % ~~0.66-4.41~~
Expected Volatility Risk-free Interest Rate Expected Dividend Yield Expected Life (in years)

At issuance during the period 336-358% 0.25-1.47% 0 % 1.00
At June 30, 2020 236-320% 0.16-0.18% 0 % 0.68-3.70
The Company uses Level 3 inputs for its valuation methodology for the preferred series A stock liability as their fair values were determined by using the Binomial Model based on various assumptions.

1517

NOTE ~~8 -~~7. STOCKHOLDERS’ DEFICIT

Preferred Stock

~~Effective March 23, 2018,~~On February 7, 2020, the Company ~~amended~~extinguished a promissory note and convertible note, including accrued interest through the ~~articles~~issuance of ~~incorporation and authorized 10,000,000~~220,000 shares of preferred ~~stock with a par value of $0.001 per share. The preferred stock may be issued from time to time by the Board of Directors as shares of one or more classes or~~ series ~~as summarized below.~~
~~Series A Preferred Shares~~
Effective March 23, 2018, the Company amended the articles of incorporation and authorized 10,000,000 shares of preferred stock with a par value of $0.001 per share, of which 1,000,000 shares were designated as Series A Convertible Preferred Stock as of December 31, 2019. The preferred stock may be issued from time to time by the Board of Directors as shares of one or more classes or series.
On December 1, 2018, the Company’s Board of Directors authorized an offering for 1,000,000 Preferred Series “A” stock at $0.10 per share and with 100% regular or cashless exercise at $0.10 per share of common stock warrant coverage. At December 31, 2018, the Company received $60,000 of subscriptions for the issuance of 600,000 shares of Preferred Series “A” stock to three accredited investors who are related parties.C stock. The Company ~~was unable to issue~~recorded the ~~subscriber~~difference between the preferred shares until the Company filed a Certificate of Designation and the Preferred Series “A” stock has been duly validly authorized. Resulting in a preferred stock liability related to the Company’s commitment to issue shares of Series A stock upon the designation.
On April 12, 2019, the Company filed a Certificate of Designation with the Nevada Secretary of State designating 1,000,000 shares of its authorized preferred stock as Series A Convertible Preferred Stock. The principal terms of the Series A Preferred Shares are as follows:
~~Issue Price~~
~~The stated price for the Series A Preferred shall be $0.10 per share.~~
~~Redemption~~
This Company may at any time following the first anniversary date of issuance (the “Redemption Date”), at the option of the Board of Directors, redeem in whole or in part the Shares by paying in cash in exchange for the Shares to be redeemed a price equal to the Original Series A Issue Price ($0.10) (the “Redemption Price”). Any redemption affected pursuant to this provision shall be made on a pro rata basis among the holders of the Shares in proportion to the number of the shares then held by them.
~~Dividends~~
~~None.~~
~~Preference of Liquidation~~
In the event of any liquidation, dissolution or winding up of the Company, the holders of Shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of this Company, to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the sum of (i) $0.10 for each outstanding Share (the “Original Series A Issue Price”) and (ii) an amount equal to 6% of the Original Series A Issue Price for each 12 months that has passed since the date of issuance of any Shares (such amount being referred to herein as the “Premium”).
For purposes of this provision, a liquidation, dissolution or winding up of this Company shall be deemed to be occasioned by, or to include, (A) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation but, excluding any merger effected exclusively for the purpose of changing the domicile of the Company); or (B) a sale of all or substantially all of the assets of the Company; unless the Company’s stockholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise), hold at least 50% of the voting power of the surviving or acquiring entity.
If upon the occurrence of such liquidation, dissolution or winding up event, the assets and funds thus distributed among the holders of the Shares shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of series of preferred stock that may from time to time come into existence, the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the holders of the Shares in proportion to the preferential amount each such holder is otherwise entitled to receive.
In any of such liquidation, dissolution or winding up event, if the consideration received by the Company is other than cash, its value will be deemed its fair market value. Any securities shall be valued as follows:
~~Securities not subject to investment letter or other similar restrictions on free marketability (covered by (B) below):~~
1) If traded on a securities exchange (NASDAQ, AMEX, NYSE, etc.), the value shall be deemed to be the average of the closing prices of the securities on such exchange over the thirty-day period ending three (3) days prior to the closing;
2) If traded on a quotation system, such as the OTC:QX, OTC:QB or OTC Pink Sheets, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty-day period ending three (3) days prior to the closing; and
3) If there is no active public market, the value shall be the fair market value thereof, as mutually determined by the Company and the holders of at least a majority of the voting power of all then outstanding shares of Preferred Stock.
The method of valuation of securities subject to investment letter or other restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder’s status as an affiliate or former affiliate) shall be to make an appropriate discount from the market value determined as above in (A) (1), (2) or (3) to reflect the approximate fair market value thereof, as mutually determined by the Company and the holders of at least a majority of the voting power of all then outstanding shares of such Preferred Stock.
~~Voting~~
~~The holder of each Share shall not have any voting rights, except in the case of voting on a change in the preferences of Shares.~~
~~Conversion~~
Each Share shall be convertible into shares of the Company’s Common Stock at a price per share of $0.10 (1 Share converts into 1 share of Common Stock), at the option of the holder thereof, at any time following the date of issuance of such Share and on or prior to the fifth day prior to the Redemption Date, if any, as may have been fixed in any Redemption Notice with respect to the Shares, at the office of this Company or any transfer agent for such stock. Each Share shall automatically be converted into shares of Common Stock on the first day of the thirty-sixth (36th) month following the original issue date of the shares at the Conversion Price per share.
The Company was unable to issue the subscribers the preferred shares until the Company filed a Certificate of Designation and the Preferred Series “A” stock had been duly validly authorized. As the Company had not filed the Certificate of Designation and as the Company could not issue the preferred shares to settle the proceeds received, it was determined the subscriptions were settleable in cash. As a result, the Company classified the subscriptions received as a liability in accordance with ASC 480 Distinguishing Liabilities from Equity. The filing of the Certificate of Designation and issuance of the preferred shares resulted in the reclassification of the Series A Preferred Shares from a liability to temporary equity or “mezzanine” because the preferred shares include the liquidation preferences described above. The fair value of the preferred series AC stock of $264,000 and the debt outstanding of $220,000 as a loss on ~~April 12, 2019 was $60,398 and was valued by using~~extinguishment of debt of $44,000.
During the ~~Binomial Model based on various assumptions and was reclassified from a liability to mezzanine equity.~~
~~As of March 31, 2021, and December 31,~~period ended June 30, 2020, ~~there were 500,000~~the Company sold 270,000 shares of ~~Series A Convertible Preferred Stock issued and outstanding, respectively.~~
16
~~Series B Preferred Shares~~
~~Effective August 13, 2019, the Company filed a Certificate~~preferred series C stock for proceeds of Designation with the Nevada Secretary of State thereby designating 1,000,000 shares of its authorized preferred stock as Series B –Preferred Stock. The principal terms of the Series B Preferred Shares are as follows:
~~Voting Rights~~
Holders of the Series B Preferred Stock shall be entitled to cast five hundred (500) votes for each share held of the Series B Preferred Stock on all matters presented to the stockholders of the Corporation for stockholder vote which shall vote along with holders of the Corporation’s Common Stock on such matters.
~~Redemption Rights~~
The Series B Preferred Stock shall be redeemed by the Corporation upon the successful receipt by the Corporation of at least $1,000,000 in equity capital following the issuance of the Series B Preferred Stock. To date the Company has received $500,500 of equity capital, and upon the receipt of an additional $499,500 in equity capital the redemption right will be triggered.
~~Conversion Rights~~
~~The Series B Preferred Stock is not convertible into shares of Common Stock of the Corporation.~~
~~Protective Provisions~~
So long as any shares of Series B Preferred Stock are outstanding, this Corporation shall not without first obtaining the approval (by vote or written consent, as provided by law) of the Holders of the Series B Preferred Stock which is entitled, other than solely by law, to vote with respect to the matter, and which Preferred Stock represents at least a majority of the voting power of the then outstanding shares of such Series B Preferred Stock:
a) sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Corporation is disposed of;
b) ~~alter or change the rights, preferences or privileges of the shares of Series B Preferred Stock so as to affect adversely the shares;~~
c) ~~increase or decrease (other than by redemption or conversion) the total number of authorized shares of preferred stock;~~
d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Series B Preferred Stock with respect to dividends or upon liquidation, or (ii) having rights similar to any of the rights of the Series B Preferred Stock; or
e) ~~amend the Corporation’s Articles of Incorporation or bylaws.~~
~~Dividends~~
~~None.~~
~~Preference of Liquidation~~
~~None.~~
Upon designation, the Company issued 500,000 shares of the Series B preferred stock to each of its current CEO/Chairman and COO/Director (1,000,000 shares in total) pursuant to their employment agreements. As the Series B Preferred Shares represent share-based payments that are not classified as liabilities but that could require the employer to redeem the equity instruments for cash or other assets, the Company classified the initial redemption amount of the shares of $158,247 as temporary equity or “mezzanine”.
~~As of March 31, 2021, and December 31, 2020, there were 1,000,000 shares of Series B Preferred Stock issued and outstanding, respectively.~~
17
~~Series C Preferred Shares~~
Pursuant to the September 18, 2019 majority consent of stockholders in lieu of an annual meeting (including the consent of the Series A Convertible Preferred Stockholders), the Registrant filed a Certificate of Designation with the Nevada Secretary of State designating 5,500,000 shares of its authorized preferred stock as Series C Convertible Preferred Stock. The Registrant is awaiting the file stamped Certificate of Designation from the Nevada Secretary of State. The rights and preferences of such preferred stock are as follows:$270,000.

The ~~number of shares constituting~~preferred series C stock sold during the ~~Series C Convertible Preferred Stock shall be 5,500,000. Such number of shares may be increased or decreased by resolution of~~period contained a beneficial conversion feature as the ~~Board of Directors, provided that no decrease shall reduce the number of shares of Series C Convertible Preferred Stock to a number~~conversion price was less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Company convertible into Series C Convertible Preferred Stock.
~~Conversion Rights~~
~~Each Share shall be convertible into shares~~fair value of the ~~Company’s Common Stock at a price per share of $0.01 (1 Share converts into 100 shares of Common Stock) (the “Conversion Price”),~~common stock which the instrument is convertible at the ~~option~~commitment date. During the six-months ended June 30, 2020, the intrinsic value of the ~~holder thereof,~~270,000 shares sold was $270,000. As the preferred series C stock are have no stated maturity date and are convertible at any time, ~~following~~ the date of issuance of such Share and on or prior to the fifth (5th) day prior to the redemption Date, if any, as may have been fixed in any redemption notice with respect to the Shares, at the office of this Company or any transfer agent for such stock.
~~Voting Rights~~
~~The holder of each Share shall not have any voting rights, except~~discount created in the ~~case of voting on~~preferred series C stock is fully amortized at issuance as a ~~change in the preferences of Shares.~~deemed dividend.
~~Protective Provisions~~
So long as any Shares are outstanding, this Company shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of Shares which is entitled, other than solely by law, to vote with respect to the matter, and which Shares represents at least a majority of the voting power of the then outstanding Shares:
a) sell, convey, or otherwise dispose of or encumber all or substantially all of its property or business or merge into or consolidate with any other corporation (other than a wholly owned subsidiary corporation) or effect any transaction or series of related transactions in which more than fifty percent (50%) of the voting power of the Company is disposed of;
b) ~~alter or change the rights, preferences or privileges of the Shares so as to affect adversely the Shares;~~
c) ~~increase or decrease (other than by redemption or conversion) the total number of authorized shares of preferred stock;~~
d) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any equity security (i) having a preference over, or being on a parity with, the Shares with respect to liquidation, or (ii) having rights similar to any of the rights of the Preferred Stock; or
e) ~~amend the Company’s Articles of Incorporation or bylaws.~~
~~Other Rights~~
There are no other rights, privileges or preferences attendant or relating to in any way the Shares, including by way of illustration but not limitation, those concerning dividend, ranking, other conversion, other redemption, participation or anti-dilution rights or preferences.
As conversion of the Series C Preferred Shares is not within the control of the Company, and it is not certain that the Company could satisfy its obligation to deliver shares upon conversion, the Series C Preferred Shares were classified in temporary equity or “mezzanine”.
~~At December 31, 2020, there were 40,000 Series C Preferred Shares issued and outstanding, valued at $1 per share or $40,000.~~
On ~~February 15, 2021, 40,000~~June 24, 2020, 50,000 shares of preferred series C stock was converted into common stock (1 share converts into 100 shares of common stock), resulting in the issuance of ~~4,000,000~~5,000,000 shares of common stock. ~~At March 31, 2021, no Series C Preferred Shares were outstanding~~
18
Common Stock

~~Effective March 23, 2018,~~On January 1, 2019, the Company ~~amended~~entered into a four-year employment agreement with F. Jody Read in his role as Chief Executive Officer. The employment agreement awards the ~~Articles~~CEO 1,500,000 restricted shares of ~~Incorporation~~the Company’s restricted stock valued at $240,000, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020, 375,000 shares on March 1, 2021 and ~~increased~~ the ~~authorized~~final 375,000 shares on March 1, 2022. On October 4, 2019, F. Jody Read resigned from the position of CEO and moved back into the role of COO. The terms of his employment agreement remained unchanged. As of June 30, 2020, 750,000 shares were issued and the Company had recognized $145,093 of stock-based compensation.
During the period ended June 30, 2020, $17,092 of principal and $3,507 of interest of a convertible note payable was converted into 36,050,000 shares of the Company’s common stock as further described in Note 5(h).
During the period ended June 30, 2020, the Company issued 9,246,186 shares of common stock ~~with a par~~upon the cashless exercise of 9,280,742 warrants.
On January 1, 2020, the Company issued 15,000,000 fully vested shares of the Company’s common stock to Gary J. Grieco, its President and CEO, pursuant to an employment agreement. The Company recorded the fair value of ~~$0.001 per share from 100,000,000 to 300,000,000 shares. Effective October 4, 2019,~~the common shares of $99,000 as stock-based compensation.
On March 20, 2020, the Company ~~amended the Articles of Incorporation and increased the authorized~~issued 150,000 shares of common stock ~~with~~to a ~~par~~consultant. The Company recorded the fair value of ~~$0.001 per share from 300,000,000~~the common shares of $5,880 in consulting expense.
On March 31, 2020, the Company issued 250,000 shares of common stock pursuant to ~~1,000,000,000 shares.~~a loan agreement. The ~~number of shares outstanding~~Company recorded the fair value of the ~~registrant’s~~common shares of $8,225 in interest expense.
On April 27, 2020, the Company issued 1,000,000 shares of common stock to an employee of the Company for cash proceeds of $10,000.
On April 27, 2020, the Company issued 2,750,000 shares of common stock for cash proceeds of $110,000.
On May 5, 2020, the Company issued 15,000,000 shares of common stock as part of ~~March 31, 2021~~the note extinguishment and ~~December 31, 2020 was 758,454,354 and 722,487,846, respectively.~~consolidation agreement described in Note 5(e).

On ~~January 4, 2021,~~May 19, 2020, the Company issued ~~25,000,000~~500,000 shares of common ~~shares to settle a convertible note described in Note 6(o), with a remaining balance~~stock for cash proceeds of ~~$40,000.~~$20,000.

On ~~February 15, 2021, 40,000~~June 24, 2020, 50,000 shares of preferred series C stock was converted into common stock (1 share converts into 100 shares of common stock), resulting in the issuance of ~~4,000,000~~5,000,000 shares of common stock.
On February 16, 2021, the Company issued 1,803,279 shares of common stock to settle $247,270 from a $275,000 note payable dated June 20, 2018, which has a balance of $331,304, including interest, to the current Chairman and CEO of the Company.
18

On February 16, 2021, the Company issued 2,663,299 shares of common stock to settle a June 20, 2018 note payable of $380,000 and accrued interest of $26,153 owed to the current COO and Director of the Company.
On March 1, 2021, the Company entered into a consulting agreement. Pursuant to the agreement, the consultant will provide advisory services through May 31, 2021 in consideration of 2,500,000 shares of common stock. The fair value of the common stock was $62,750, of which $20,917 was recognized in consulting expenses for the period ended March 31, 2021 and $41,833 was recorded as prepaid expenses.
NOTE 9.8. STOCK OPTIONS

Below is a table summarizing the options issued and outstanding as of ~~March 31, 2021:~~June 30, 2020:

Number of options Weighted average exercise price
$
Balance, December 31, 2020 200,000 2.00
Granted —   —
Expired —   —
Settled —   —
Balance, March 31, 2021 200,000 2.00
Number of
options Weighted average exercise price
$
Balance, December 31, 2019 200,000 2.00
Granted —   —
Expired —   —
Settled —   —
Balance, June 30, 2020 200,000 2.00

As at ~~March 31, 2021,~~June 30, 2020, the following share stock options were outstanding:

Date Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if
Issued Issued Outstanding Exercisable Price $ Life (Years) Date Exercised Issued Outstanding Exercisable Price $ Life (Years) Date Exercised
01/26/2017 200,000 200,000 2.00 0.82 01/26/2022 400,000 01/26/2017 200,000 200,000 2.00 1.58 01/26/2022 400,000
200,000 200,000 $ 400,000 200,000 200,000 $ 400,000

The weighted average exercise prices are $2.00 for the options outstanding and exercisable, respectively. The intrinsic value of stock options outstanding at ~~March 31, 2021~~June 30, 2020 was $nil.

19
NOTE 9. WARRANTS

The Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible instruments. The initial fair value of the warrants issued during the period was calculated using the Binomial Model as described in Note 6.

The following table summarizes the continuity of share purchase warrants:

Number of
warrants Weighted average exercise price
$
Balance, December 31, 2020 457,690,272 0.000179
Adjustment to warrants outstanding —   —
Granted —   —
Settled —   —
Balance, March 31, 2021 457,690,272 0.000179
Number of
warrants Weighted average exercise price
$
(restated)

Balance, December 31, 2019 413,816,252 0.00053
Adjustment to warrants outstanding 43,154,762 0.00056
Granted —   —
Cancelled (197,190,272 ) 0.00041
Exercised (9,280,742 ) 0.00035
Balance, June 30, 2020 250,500,000 0.00049

As at ~~March 31, 2021,~~June 30, 2020, the following share purchase warrants were outstanding:

Date Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if Date Number Number Exercise Weighted Average Remaining Contractual Expiration Proceeds to Company if
Issued Issued Outstanding Exercisable Price $ Life (Years) Date Exercised Issued Outstanding Exercisable Price $ Life (Years) Date Exercised
11/28/2018 142,857,143 * 142,857,143 * 0.00035 * 0.66 11/28/2021 $ 50,000 (restated) (restated) (restated)
12/3/2018 500,000 500,000 0.10 2.68 12/3/2023 50,000
2/14/2019 152,899,585 * 152,899,585 * 0.00035 * 2.88 2/14/2024 50,267 11/28/2018 142,857,143 * 142,857,143 * 0.00035 * 1.41 11/28/2021 $ 50,000
3/13/2019 107,142,857 * 107,142,857 * 0.00035 * 2.95 3/13/2024 37,500 12/3/2018 500,000 500,000 0.10 3.43 12/3/2023 50,000
9/11/2019 53,571,429 * 53,571,429 * 0.00056 * 3.45 9/11/2024 30,000 3/13/2019 107,142,857 * 107,142,857 * 0.00035 * 3.70 3/13/2024 37,500
8/26/2020 10,000,000 10,000,000 0.06000 4.41 8/26/2025 600,000 250,500,000 250,500,000 $ 137,500
457,690,272 457,690,272 $ 817,767

*The number of warrants outstanding and exercisable is variable based on adjustments to the exercise price of the warrant due to dilutive issuances.

The Company cancelled 197,190,272 warrants as part of the settlement of a convertible note as described in Note 5(o).
The intrinsic value of warrants outstanding at ~~March 31, 2021~~June 30, 2020 was ~~$9,670,419.~~$8,825,000 (restated).
19
NOTE 10. RELATED PARTY TRANSACTIONS

The Company has agreements with related parties for consulting services, accrued rent, accrued interest, notes payable and stock options. See Notes to Financial Statements numbers 6,5, 7, 8 9 and 11 for more details.
20
NOTE 11. COMMITMENTS AND CONTINGENCIES

Consulting Agreements –

On ~~March~~October 1, ~~2021,~~2019, the Company entered into a consulting ~~agreement. Pursuant~~agreement for investor relations services through March 31, 2020. The agreement called for a cash payment of $25,000 and 12,000,000 restricted shares of common stock to be issued to the ~~agreement,~~consultant. As of December 31, 2019, the ~~consultant will provide~~Company recorded the fair value of the shares of $61,200 for the consulting expense related to the consulting services provided. The expense was recognized over the service period, ending on March 31, 2020.
In addition to contracts for service, the Company in various marketing and management matters for a period of three months. In consideration for the services performed by the consultant, the Company agreed to compensate the consultant $5,000 per month. Additionally, the Company agreed to sell to the consultant, and the consultant has the option to purchase from the Company, two and one-half million (2,500,000) shares of the Company’s Common Stock at the price of $0.0001. This option to purchase is valid for one year.
~~The Company~~ also regularly uses the professional services of securities attorneys, a US EPA specialist, professional accountants and other public-company specialists.

Employment Agreements –

~~No new agreements during~~On January 1, 2019, the ~~period ending~~Company entered into a four-year employment agreement with F. Jody Read in his role as Chief Executive Officer. The terms of the contract call for an annual salary of $90,000 for the first year, effective March ~~31, 2021.~~1, 2019 and increasing to $120,000 once the Company’s revenue exceeds monthly expenses, then incrementally over time and with certain operation results, up to $200,000/year. The salary may be paid, at the employee’s discretion, either in cash or in common stock. A $1,000 per month allowance will be granted to the executive for housing near the Company’s South Carolina facility. The employment agreement awards the CEO 1,500,000 restricted shares of the Company’s restricted stock, which shall vest in the following manner: 375,000 shares on March 1, 2019, 375,000 shares on March 1, 2020, 375,000 shares on March 1, 2021 and the final 375,000 shares on March 1, 2022. On August 12, 2019, the Company amended the Employment Contract with F. Jody Read, CEO, whereby 500,000 preferred series B stock were issued to Read. All other terms of the January 1, 2019 employment agreement remain in effect. On October 4, 2019, F. Jody Read resigned from the position of CEO and moved back into the role of COO.
On August 12, 2019, the Company entered into a four-year employment agreement with Gary J. Grieco, its President, whereby Mr. Grieco will continue to receive $24,000 per year for services to Company as its President and whereby 500,000 preferred series B stock were issued to Grieco. The employment agreement begins on August 12, 2019, is automatically renewable for two years unless terminated earlier as per the terms of the agreement. Gary Grieco entered the role of CEO of the Company upon F. Jody Read’s resignation on October 4, 2019 and entered into a four-year employment agreement with the Company on January 1, 2020. Pursuant to the agreement Mr. Grieco will receive $48,000 per year commencing April 1, 2020 and receive 15,000,000 shares of the Company’s common stock for services to the Company as its President and CEO. In addition, once monthly revenue exceeds monthly expenses the salary will be increased and Mr. Grieco will be issued an additional 10,000,000 shares of the Company’s common stock. The employment agreement begins on January 1, 2020 and is automatically renewable for two years unless terminated earlier as per the terms of the agreement.

Other Obligations and Commitments –

~~No new obligation or commitments during~~On March 20, 2020, the Company entered into a consulting agreement. Pursuant to the agreement the consultant will provide investor relations services for a period ~~ending March 31, 2021.~~of six months. The Company had issued the consultant 150,000 shares of common stock with a fair value of $5,880 for services received.
20
NOTE 12. SUBSEQUENT EVENTS

On ~~April 2, 2021 and April 16, 2021, the Company paid $35,000 and $19,000 respectively to a non-related party towards a $75,000 Convertible Note dated March 18, 2019.~~
~~On April 5, 2021,~~July 6, 2020, the Company entered into a ~~convertible~~consulting agreement. Pursuant to the agreement the consultant will provide investor relations services for a period of one year in consideration for $3,000 per month and the issuance of 1,000,000 common shares of the Company.
On July 7, 2020, the Company entered into a promissory note with a non-related party for ~~$43,000.~~$150,000. The ~~Note~~note is due ~~on April~~October 5, ~~2022~~2020, is unsecured and bears an interest ~~on the unpaid principal balance at the~~ rate of ~~12%~~10% per annum. ~~The Note may be converted by the lender at any time before 6-months of the date of issuance into shares of Company’s common stock at the conversion price equal to 61% multiplied by the Market Price.~~

On ~~April 14, 2021,~~July 8, 2020, the Company entered into a ~~convertible~~consulting agreement. Pursuant to the agreement the consultant will provide operational business development and introductory services for a period of five years in consideration for the issuance of 1,000,000 common shares of the Company and a 5% commission, paid in shares, for any investments brokered.
On July 15, 2020, the Company entered into a promissory note with a non-related party for ~~$200,000.~~$119,200. The ~~Note~~note is due on April 14, 2022 and bears interest on the unpaid principal balance at the rate of 5% per annum. The Note may not be converted by the lender before 6 months of the issuance date into shares of Company’s common stock at a conversion price equal to $0.10.repayable in $7,450 weekly payments.

On August 11, 2020, 75,000 shares of preferred series C stock was converted into common stock (1 share converts into 100 shares of common stock), resulting in the issuance of 7,500,000 shares of common stock.
On August 18, 2020, the Company settled the $100,000 note described in Note 5(i). Pursuant to the settlement agreement, the Company will issue the lender 5,281,088 shares of common stock and pay the lender $140,000 in four monthly installments of $35,000 commencing August 19, 2020 and ending November 19, 2020.
On August 21, 2020, the Company sold future receivables with a non-related party for $50,000. The advance is repayable through daily payments of $1,071 totaling $74,950.
NOTE 13. RESTATEMENT
As previously disclosed, the Company determined that previously issued warrants to a debt holder should have been accounted for as cancelled along with the settlement of all outstanding debt with such holder in May ~~3, 2021,~~2020. In May 2020, the Company entered into a ~~convertible promissory note~~debt settlement agreement with one of its debt holders which settled all debt and warrants held by such holder. However, due to a non-related party for $128,000. The Note is due on May 3, 2022 and bears interest on the unpaid principal balance at the rate of 12% per annum. The Note may be converted by the lender at any time before 6-monthsmisunderstanding of the ~~date of issuance into shares of Company’s common stock at~~facts and circumstances related to the ~~conversion price equal to 61% multiplied by the Market Price.~~
~~On May 5, 2021,~~settlement agreement, the Company ~~entered into an employment agreement with~~did not reflect the warrants as settled at that time. Due to the provisions of the warrants, these were accounted for as derivative liabilities. The Company concluded that the impact of recognizing the cancellation of the warrants was materially different from its previously reported results. As a ~~recently appointed officer, whereby it authorized the issuance of 1,000,000 shares of common stock to such officer (see 8-K issued May 21, 2021)~~
~~On May 6, 2021,~~result, the Company accepted the resignation of Gregory W. Albers from the position of Secretary/Treasurer of PCT LTD. Mr. Albers will continue to serve as a member of the Board as a Director (see 8-K issued May 21, 2021)
~~On May 7, 2021, the Company deemed in the best interest to settle any and all of the Company’s prior convertible debt with Crown Bridge Partners and allow~~is restating its unaudited condensed consolidated financial statements for the ~~cashless exercise to purchase 1,921,875 shares of PCT LTD’s common stock (par value $0.001/share) at~~periods impacted. The following financial tables reconcile the ~~rate of $0.032/share, thereby reducing PCT LTD’s prior debt to Crown Bridge Partners to $0.00. In addition, Crown Bridge Partners shall release 60,072,853 shares~~previously reported amounts to the ~~agreed upon payment terms of $36,994 cash.~~restated amounts for each unaudited condensed consolidated financial statement.

On May 19, 2021, the company received acknowledgement from a non-related, convertible note holder, with which the Company had previously settled its debt, that 4,623,093 warrants were extinguished at the time of the settlement (May 8, 2020); thereby returning 4,623,093 warrants to the Company’s treasury.
On June 2, 2021, the Company sold future receivables to a non-related party for $222,400, of which $8,000 was attributable to loan fees and $62,400 to original issue discount resulting in cash proceeds to the Company of $152,000. The advance is to be repaid through weekly payments of $8,554. In connection with the advance, the Company granted the lender a security interest in all past, present and future assets of the Company.
~~On June 2, 2021, the Company paid $25,000 to a non-related party toward a $150,000 Convertible Note dated April 9, 2020.~~
On June 2, 2021, the Company entered into a subscription and purchase agreement with a non-related party consisting of 3,750,000 restricted shares of common stock (aggregate) at a price per share of $0.02 for $75,000 cash.
~~On June 4, 2021, the Company paid $43,600 to a non-related party to extinguish any and all debt owed on a February 1, 2021 future receivables transaction~~.
~~On July 1, 2021, the Company renewed its annual lease on the Little River, SC facility for $7,650 per month, which is renewable for an additional three years (with a 2% increase annually).~~
21

The table below sets forth changes to the unaudited consolidated balance sheet:
June 30, 2020
As Previously Reported Adjustments As Restated

ASSETS
Total current assets $ 416,893 $ —   $ 416,893

Total property and equipment, net 401,233 —   401,233
Total other assets 3,554,793 —   3,554,793

TOTAL ASSETS 4,372,919 —   4,372,919

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable 447,805 —   447,805
Accrued expenses – related parties 98,311 —   98,311
Accrued expenses 912,393 —   912,393
Notes payable – related parties 826,214 —   826,214
Notes payable, net 408,617 —   408,617
Convertible notes payable, net 980,254 —   980,254
Derivative liability 18,419,365 (7,025,392 ) 11,393,973
Total current liabilities 22,092,959 (7,025,392 ) 15,067,567

TOTAL LIABILITIES 22,092,959 (7,025,392 ) 15,067,567

TOTAL MEZZANINE EQUITY 702,645 —   702,645

STOCKHOLDERS’ DEFICIT
Common stock 584,202 —   584,202
Additional paid-in capital 18,056,637 —   18,056,637
Accumulated deficit (37,063,524 ) 7,025,392 (30,038,132 )
(18,422,685 ) 7,025,392 (11,397,293 )

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY $ 4,372,919 $ —   $ 4,372,919
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The table below sets forth changes to the unaudited condensed consolidated statements of operations for the three months ended June 30, 2020:
For the three months ended June 30, 2020
As Previously Reported Adjustments As Restated

REVENUES
Total revenues $ 881,172 $ —   $ 881,172

OPERATING EXPENSES
Total operating expenses 1,094,245 —   1,094,245

LOSS FROM OPERATIONS (213,073 ) —   (213,073 )

OTHER INCOME (EXPENSE)
Loss on change in fair value of derivative liability (1,092,845 ) (4,922,990 ) (6,015,835 )
Gain (loss) on change in fair value of preferred series A stock liability —   —   —
Gain on sale of intangible assets —   —   —
Gain (loss) on settlement of debt 1,759,539 11,948,382 13,707,921
Interest expense (459,930 ) —   (459,930 )
Total other income (expense) 206,764 7,025,392 7,232,156

Income (loss) before income taxes (6,309 ) 7,025,392 7,019,083

Income taxes —   —   —

NET INCOME (LOSS) (6,309 ) 7,025,392 7,019,083
Preferred series C stock deemed dividends —   —   —

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS’ $ (6,309 ) $ 7,025,392 $ 7,019,083

Basic net income (loss) per share $ (0.00 ) $ 0.01 $ 0.01

Diluted net income (loss) per share $ (0.00 ) $ —   $ (0.00 )

Basic weighted average shares outstanding 569,964,666 569,964,666

Diluted weighted average shares outstanding 569,964,666 774,463,424
23
The table below sets forth changes to the unaudited condensed consolidated statements of operations for the six months ended June 30, 2020:
For the six months ended June 30, 2020
As Previously Reported Adjustments As Restated

REVENUES
Total revenues $ 1,153,354 $ —   $ 1,153,354

OPERATING EXPENSES
Total operating expenses 1,874,902 —   1,874,902

LOSS FROM OPERATIONS (721,548 ) —   (721,548 )

OTHER INCOME (EXPENSE)
Loss on change in fair value of derivative liability (10,387,607 ) (4,922,990 ) (15,310,597 )
Gain (loss) on change in fair value of preferred series A stock liability —   —   —
Gain on sale of intangible assets —   —   —
Gain (loss) on settlement of debt 1,715,539 11,948,382 13,663,921
Interest expense (894,341 ) —   (894,341 )
Total other income (expense) (9,566,409 ) 7,025,392 (2,541,017 )

Income (loss) before income taxes (10,287,957 ) 7,025,392 (3,262,565 )

Income taxes —   —   —

NET INCOME (LOSS) (10,287,957 ) 7,025,392 (3,262,565 )
Preferred series C stock deemed dividends (270,000 ) —   (270,000 )

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS’ $ (10,557,957 ) $ 7,025,392 $ (3,532,565 )

Basic and diluted net income (loss) per share $ (0.02 ) $ 0.01 $ (0.01 )

Basic and diluted weighted average shares outstanding 557,809,456 557,809,456
24
The table below sets forth changes to the unaudited condensed consolidated statements of cash flows for the six months ended June 30, 2020:
For the six months ended June 30, 2020
As Previously Reported Adjustments As Restated

Cash Flows from Operating Activities
Net loss $ (10,287,957 ) $ 7,025,392 $ (3,262,565 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 164,369 —   164,369
Amortization of debt discounts 280,188 —   280,188
Common stock issued for services 133,245 —   133,245
Loss on change in fair value of derivative liability 10,387,607 4,922,990 15,310,597
(Gain) loss on settlement of debt (1,715,539 ) (11,948,382 ) (13,663,921 )
Default penalties on convertible notes payable 13,762 13,762
Change in operating assets and liabilities
Accounts receivable (207,213 ) —   (207,213 )
Inventory 26,669 —   26,669
Prepaid expenses (8,295 ) —   (8,295 )
Other assets (12,027 ) —   (12,027 )
Accounts payable 132,577 —   132,577
Accrued expenses – related party 13,773 —   13,773
Accrued expenses 620,188 —   620,188
Net cash used in operating activities (458,653 ) —   (458,653 )

Net cash provided by investing activities —   —   —

Net cash provided by financing activities 420,300 —   420,300

Net change in cash (38,353 ) —   (38,353 )
Cash and cash equivalents at beginning of period 67,613 —   67,613
Cash and cash equivalents at end of period $ 29,260 $ —   $ 29,260
25
FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in this Quarterly Report on Form 10-Q, future Quarterly Reports on Form 10-Q, our Annual Report on Form 10-K and Current Reports on Form 8-K.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

• our ability to efficiently manage and repay our debt obligations;
• our inability to raise additional financing for working capital;
• our ability to generate sufficient revenue in our targeted markets to support operations;
• significant dilution resulting from our financing activities;
• actions and initiatives taken by both current and potential competitors;
• supply chain disruptions for components used in our products;
• manufacturers inability to deliver components or products on time;
• our ability to diversify our operations;
• the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;
• adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
• changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
• deterioration in general or global economic, market and political conditions;
• inability to efficiently manage our operations;
• inability to achieve future operating results;
• the unavailability of funds for capital expenditures;
• our ability to recruit, hire and retain key employees;
• the global impact of COVID-19 on the United States economy and out operations;
• the inability of management to effectively implement our strategies and business plans; and
• the other risks and uncertainties detailed in this report.

In this form 10-Q references to “PCT LTD”, “the Company”, “we,” “us,” “our” and similar terms refer to PCT LTD and its wholly owned operating subsidiary, Paradigm Convergence Technologies Corporation (“Paradigm”).

COVID-19

The current and potential effects of coronavirus may impact our business, results of operations and financial condition.

Actual or threatened epidemics, pandemics, outbreaks, or other public health crises could materially and adversely impact or disrupt our operations, adversely affect the local economies where we operate and negatively impact our customers’ spending in the impacted regions or depending upon the severity, globally, which could materially and adversely impact our business, results of operations and financial condition. For example, since December 2019, a strain of novel coronavirus (causing “COVD-19”) surfaced in China and has spread into the United States, Europe and most other countries of the world, resulting in certain supply chain disruptions, volatilities in the stock market, lower oil and other commodity prices due to diminished demand, massive unemployment, and lockdown on international travels, all of which has had an adverse impact on the global economy. There is significant uncertainty around the breadth and duration of the business disruptions related to COVID-19, as well as its impact on the U.S. economy. Moreover, an epidemic, pandemic, outbreak or other public health crisis, such as COVID-19, could adversely affect our ability to adequately staff and manage our business. The extent to which COVID-19 impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain, rapidly changing and cannot be predicted, including new information that may emerge concerning the severity of COVID-19 and the actions ~~taken~~take to contain it or treat its impact.

2226

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

On August 31, 2016, PCT LTD entered into a Securities Exchange Agreement (the “Exchange Agreement”) with Paradigm Convergence Technologies Corporation, a Nevada corporation (“Paradigm”). Pursuant to the terms of the Exchange Agreement, Paradigm became the wholly-owned subsidiary of PCT LTD after the exchange transaction. PCT LTD is a holding company, which through Paradigm is engaged in the business of marketing new products and technologies through licensing and joint ventures.

PCT LTD had not recorded revenues for the two fiscal years prior to its acquisition of Paradigm and was dependent upon financing to continue basic operations. Paradigm has recorded revenue since it initiated operations in 2012; however, those revenues have not been sufficient to finance operations. The Company recorded a net loss of ~~$1,111,022~~$3,262,565 (restated) for the ~~three-months~~six-months ended ~~March 31, 2021~~June 30, 2020 and accumulated losses of ~~$36,024,876~~$30,038,132 (restated) from inception through ~~March 31, 2021.~~June 30, 2020.

PCT LTD remains dependent upon additional financing to continue operations. The Company intends to raise additional financing through private placements of its common stock and note payable issuances. We expect that we would issue such stock pursuant to exemptions to the registration requirements provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs, as discussed below, and the available exemptions to the registration requirements of the Securities Act of 1933. We also note that if we issue more shares of our common stock, then our stockholders may experience dilution in the value per share of their common stock.

The expected costs for the next twelve months include:

continuation of commercial launch of non-toxic sanitizing, disinfecting and sterilizing products and technologies with a strong emphasis on health care facilities, including hospitals, nursing homes, assisted living facilities, clinics and medical, dental and veterinarian offices;

continued research and development on product generation units including those designed for on-site deployment at customers’ facilities;

accelerated research and development and initial commercialization on applications of the products in the agricultural sector, most specifically with respect to abatement of a specific crop disease crisis caused by a bacterium in the U.S. and elsewhere;

acquiring available complementary technology rights;

payment of short-term debt;

hiring of additional personnel in ~~2021;~~2020; and

general and administrative operating costs.

Management projects these costs to total approximately ~~$2,400,000.~~$2,700,000. To minimize these costs, the Company intends to maintain its practice of controlling operating overheads with efficient facilities commitments, generally below market salaries and consulting fees, and rigorous prioritization of expenditure requirements. Based on its understanding of the commercial readiness of its products and technologies, the capabilities of its personnel (current and being hired), established business relationships and the general market conditions, management believes that the Company expects to be covering its fixed operating expenses (“burn rate”)by the end of the ~~fourth~~third quarter of ~~2021.~~2020.

2327

Liquidity and Capital Resources

A critical component of our operating plan impacting our continued existence is the ability to obtain additional capital through additional equity and/or debt financing. We do not anticipate generating sufficient positive internal operating cash flow until such time as we can deliver our products to market and generate substantial revenues, which may take the next full year to fully realize, if ever. In the event we cannot obtain the necessary capital to pursue our strategic plan, we may have to significantly curtail our operations. This would materially impact our ability to continue operations.
SUMMARY OF BALANCE SHEET March 31,
2021 December 31,
2020
Cash and cash equivalents $ 53,853 $ 115,196
Total current assets 451,659 747,756
Total assets 4,247,738 4,34,610
Total liabilities 15,333,462 15,364,398
Accumulated deficit (36,024,876 ) (34,913,854 )
Total stockholders’ deficit $ (11,304,369 ) $ (10,988,433 )
SUMMARY OF BALANCE SHEET June 30,
2020 December 31,
2019
(restated)
Cash and cash equivalents $ 29,260 $ 67,613
Total current assets 416,893 224,738
Total assets 4,372,919 4,374,775
Total liabilities 15,067,567 14,290,486
Accumulated deficit (30,038,132 ) (26,505,567 )
Total stockholders’ deficit $ (11,397,293 ) $ (10,134,356 )

At ~~March 31, 2021,~~June 30, 2020, the Company recorded a net loss of ~~$1,111,022~~$3,262,565 (restated) and a working capital deficit of ~~$14,804,305.~~$14,650,674 (restated). While we have recently recorded an increase in the amount of revenues from operations, since inception and we had not established an ongoing source of revenue sufficient to cover our operating costs. During the ~~three-months~~six-months ended ~~March 31, 2021~~June 30, 2020 and ~~2020~~2019 we primarily relied upon advances and loans from stockholders and third parties to fund our operations. The Company has relied on raising debt and equity capital in order to fund its ongoing day-to-day operations and its corporate overhead. We had ~~$53,853~~$29,260 in cash at ~~March 31, 2021,~~June 30, 2020, compared to ~~$115,196~~$67,613 in cash at December 31, ~~2020.~~2019. We had total liabilities of ~~$15,333,462~~$15,067,567 (restated) at ~~March 31, 2021~~June 30, 2020 compared to ~~$15,364,398~~$14,290,486 at December 31, ~~2020.~~2019.

Our current cash flow is not sufficient to meet our monthly expenses of approximately ~~$200,000~~$250,000 and to fund future research and development adequately. We intend to rely on additional debt financing, loans from existing stockholders and private placements of common stock for additional funding in addition to the increasing our recognized revenue from the leasing and/or sale of products; however, there is no assurance that additional funding will be available. We do not have material commitments for future capital expenditures. However, we cannot assure you that we will be able to obtain short-term financing, or that sources of such financing, if any, will continue to be available, and if available, that they will be on favorable terms.

During the next 12 months we anticipate incurring additional costs related to the filing of Exchange Act reports. We believe we will be able to meet these costs through funds provided by management, significant stockholders and/or third parties. We may also rely on the issuance of our common stock in lieu of cash to convert debt or pay for expenses.

Commitments and Obligations

At ~~March 31, 2021~~June 30, 2020 the Company recorded notes payable totaling approximately ~~$2,531,181~~$2,215,085 (related, non-related and convertible, net of debt discount) compared to notes payable totaling ~~$2,781,597~~$2,482,743 (related, non-related and convertible, net of debt discount) at December 31, ~~2020.~~2019. These notes payable represent cash advances received and expenses paid from third parties and related parties. All of the notes payable carry effective interest from 0% to ~~220%~~585% and are due ranging from on demand to ~~March 26, 2022.~~November 8, 2021.

The Company headquarters and operations is located in Little River, South Carolina. The South Carolina lease payment was to $4,800 per month through November 30, 2019. The building was sold and the Company ~~re-negotiated an~~is on a month-to-month lease with the new Landlord, while negotiating a new annual lease, ~~on the Little River, SC facility for $7,500 per month, retroactive to July 1, 2020,~~ which ~~is renewable for an additional four years (with a 2% increase annually) and added a three-year~~will likely include monthly lease ~~for 9,600 sf.~~payments of ~~warehouse space in Fort Wayne, Indiana on November 1, 2020, for $4,500/month~~.~~The Company also began leasing additional office space in Little River, SC, for $2,750 a month, on an annual lease, effective March 15, 2021.~~$7,500/month.

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Results of Operations

SUMMARY OF OPERATIONS Three-month period ended
March 31,
(Unaudited)
2021 2020
Revenues $ 395,519 $ 272,182
Total operating expenses 1,043,673 780,657
Total other expenses 462,868 9,773,173
Net loss (1,111,022 ) (10,281,648 )
Preferred series C stock deemed dividends —   270,000
Net loss attributable to common stockholders’ (1,111,022 ) (10,551,648 )
Basic and diluted loss per share $ (0.00 ) $ (0.02 )
Three Months Ended June 30, 2020
SUMMARY OF OPERATIONS Three-month period ended
June 30,
(Unaudited)
2020 2019
(restated)
Revenues $ 881,172 $ 118,862
Total operating expenses 1,094,245 527,397
Total other income (expense) 7,232,156 (3,121,612 )
Net income (loss) 7,019,083 (3,530,147 )
Preferred series C stock deemed dividends —   —
Net income (loss) attributable to common stockholders’ 7,019,083 (3,530,147 )
Basic income (loss) per share $ 0.01 $ (0.07 )
Diluted income (loss) per share $ (0.00 ) $ (0.07 )

Revenues increased to ~~$395,519,~~$881,172, for the three-months ended ~~March 31, 2021~~June 30, 2020 (the ~~“2021 first~~“2020 second quarter”) compared to ~~$272,182~~$118,862 for the three-months ended ~~March 31, 2020~~June 30, 2019 (the ~~“2020 first~~“2019 second quarter”). The revenue increase for the period was due to the increased volume of fluids sold, as a result of the Company adapting to the COVID-19 pandemic and heightened need for an effective US EPA-registered disinfectant, as well as the additional revenue from recurring leased-equipment income.

Total operating expenses increased to ~~$1,043,673~~$1,094,245 during the ~~2021 first~~2020 second quarter compared to ~~$780,657~~$527,397 during the ~~2020 first~~2019 second quarter. The increase during the ~~first~~second quarter of ~~2021~~2020 was primarily due to an increase in ~~salaries~~general and ~~wages, legal, consulting fees~~administrative expenses and ~~rent.~~an increase in cost of product, licensing, and equipment leases associated with increased revenue.

General and administrative expenses increased to ~~$893,451~~$592,042 for the ~~2021 first~~2020 second quarter compared to ~~$548,786~~$415,339 during the ~~2020 first~~2019 second quarter. The increase during the ~~first~~second quarter of ~~2021~~2020 was primarily due to hiring new employees and expenses related to legal and accounting work.
Depreciation and amortization expenses decreased slightly to $81,348 during the 2020 second quarter compared to $84,189 during the 2019 second quarter. Depreciation and amortization was comparable between the two periods.
Total other income was $7,232,156 (restated) for the 2020 second quarter compared to other expense of $3,121,612 during the 2019 second quarter. The overall change was a result of a gain on settlement of debt and an increase in the gain on change in fair value of derivatives during the second quarter of 2020.
As a result of the changes described above, net income increased to $7,019,083 (restated) during the 2020 second quarter compared to a net loss of $3,530,147 during the 2019 second quarter.
Six Months Ended June 30, 2020
SUMMARY OF OPERATIONS Six months period ended
June 30,
(Unaudited)
2020 2019
(restated)
Revenues $ 1,153,354 $ 314,819

Total operating expense $ 1,874,902 $ 1,351,927
Total other expense $ 2,541,017 $ 3,413,362
Net loss $ (3,262,565 ) $ (4,450,470 )
Preferred series C stock deemed dividends (270,000 ) —
Net loss attributable to common stockholders’ (3,532,565 ) (4,450,470 )
Basic and diluted loss per share $ (0.01 ) $ (0.09 )
Revenues increased to $1,153,354 for the six months ended June 30, 2020 compared to $314,819 for the six months ended June 30, 2019. The revenue increase for the period was due to the increased volume of fluids sold as a result of the Company adapting to the COVID-19 pandemic and heightened need for an effective US EPA-registered disinfectant, as well as the additional revenue from recurring leased-equipment income.
Total operating expenses increased to $1,874,902 during the six months ended June 30, 2020 compared to $1,351,927 during the six months ended June 30, 2019. The increase during the period was primarily due to an increase in ~~salaries~~cost of product, licensing, and ~~wages, legal, consulting fees~~equipment leases associated with increased revenue.
General and ~~rent.~~administrative expenses increased slightly to $1,140,828 for the six months ended June 30, 2020 compared to $1,082,303 during the six months ended June 30, 2019. General and administrative was comparable between the two periods.

Depreciation and amortization expenses ~~increased~~decreased slightly to ~~$88,122~~$164,369 during the ~~2021 first quarter~~six months ended June 30, 2020 compared to ~~$83,021~~$169,101 during the ~~2020 first quarter.~~six months ended June 30, 2019. Depreciation and amortization was comparable between the two periods.

Total other expenses decreased to ~~$462,868~~$2,541,017 (restated) for ~~the 2021 first quarter~~six months ended June 30, 2020 compared to ~~$9,773,173~~$3,413,362 during the ~~2020 first quarter.~~six months ended June 30, 2019. The overall decrease ~~in other expenses~~ was ~~primarily due to the $9.2M loss in derivatives incurred during 2020 which did not occur in 2021. There was also~~a result of a gain ~~on the~~of settlement of debt ~~of $316,401~~during the six months ended June 30, 2020, offset by an increase in ~~2021 vs. a $44,000~~interest expense, and loss on ~~the settlement~~change in fair value of ~~debt in 2020.~~derivatives.

As a result of the changes described above, net loss ~~from operations after income taxes~~ decreased to ~~$1,111,022~~$3,262,565 (restated) during the ~~2021 first quarter~~six months ended June 30, 2020 compared to ~~$10,281,648~~$4,450,470 during the ~~2020 first quarter.~~six months ended June 30, 2019.

29
Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Critical Accounting Policies

Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
25
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized, and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow our management to make timely decisions regarding required disclosure. ~~Gary J. Grieco,~~F. Jody Read, our ~~President and~~Chief Executive Officer, who serves as our principal executive officer and ~~Arthur Abraham, our Chief Financial Officer and~~ principal financial officer, ,has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. The disclosure controls and procedures ensure that all information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized, and reported, within the time periods specified in the SEC’s rule and forms; and (ii) accumulated and communicated to our principal executive officer as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive officer ~~and principal financial officer~~ concluded that as of ~~March 31, 2021,~~June 30, 2020, our disclosure controls and procedures were not ~~effective for the reasons discussed in our 10-K filing.~~effective.

Our management is responsible to establish and maintain adequate internal control over financial reporting. Our principal executive officer is responsible to design or supervise a process that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The policies and procedures include:
~~maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,~~
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and
~~provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.~~
For the prior ended March 31, 2021, management has relied on the Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Internal Control - Integrated Framework (2013),” to evaluate the effectiveness of our internal control over financial reporting. Based upon that framework, our President has determined that our internal control over financial reporting for the period ended March 31, 2020, was not effective.
The material weaknesses relate to the limited number of persons responsible for the recording and reporting of financial information, the lack of separation of financial reporting duties, and the limited size of our management team in general. We are in the process of evaluating methods of improving our internal control over financial reporting, including the possible addition of financial reporting staff and the increased separation of financial reporting responsibility, and intend to implement such steps as are necessary and possible to correct these material weaknesses.
Our management determined that there were no changes made in our internal controls over financial reporting during the first quarter of 2021 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Notwithstanding this finding of ineffective disclosure controls and procedures, ~~our certifying officers~~we concluded that the consolidated financial statements included in this Form 10-Q present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States. Changes have been made to internal controls since the original 2nd Quarter 2020 10-Q. The new reporting process will help prevent future financial oversights.

Changes in Internal Control Over Financial Reporting

During the quarter ended ~~March 31,~~June 30, 2020, internal financial controls were not sufficient to detect material events, such as the settled debt and cancelled warrants which occurred in the 2nd Quarter 2020 which resulted in a $7 million liability reduction on the Balance Sheet, whereby creating the restatement of the 10-Q for Quarters 2 and 3 in 2020 and Quarter 1 in 2021, ~~there were no changes in our internal control over~~along with the 2020 10-K.
The Company has implemented controls around its financial reporting process that ~~materially affected, or are reasonably likely to materially affect, our internal control over~~will help prevent future financial ~~reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).~~oversights from occurring again.

2630

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We may become involved in various routine legal proceedings incidental to our business. To our knowledge as of the date of this report, other than described below, there are no material pending legal proceedings to which we are a party or to which any of our property is subject.

Annihilare Litigation

On August 8, 2019, we received notice from Annihilare Medical Systems, Inc (“Annihilare”) that certain intellectual properties developed jointly between us and Annihilare were to be discontinued from use by us and our customers. We dispute the claims from Annihilare that the intellectual properties are exclusively ~~Annihilare’s.~~Annihilare’s, and

In May of 2020, we filed a complaint in the United States District Court for the Western District of North Carolina (Charlotte Divisions – Civil Action No. 3:20-cv-00287), against Annihilare, Marion E. Paris, Jr. and Clay Parker ~~Sipes, seeking damages.~~Sipes. Seeking damages for:
1. Two counts of Patent infringement;
2. Trademark infringement;
3. Federal unfair competition, false designation of origin, and false and misleading description of representation;
4. Trademark dilution;
5. Federal cybersquatting;
6. Violation of Defend Trade Secrets Act;
7. Violation of North Carolina’ Trade Secrets Protection Act;
8. Violation of North Carolina and common law unfair competition
9. Breach of fiduciary duty;
10. Breach of duty of loyalty and faithless service;
11. Breach of consulting agreements;
12. Breach of employment agreements;
13. Tortious interference with prospective business relationships;
14. Unjust enrichment;
15. Conversion;
16. Civil conspiracy; and
17. Injunctive relief.

These claims ~~arose~~arise from several consulting agreements and an acquisition ~~agreement~~agreements between ~~the Company~~us and the Defendants surrounding the purchase of Annihilyzer® Intellectual property by ~~the Company~~us and subsequent infringement of the intellectual properties. The case ~~settled in the quarter ended March 31, 2021.~~is currently ongoing.
31
ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this Item. However, we detailed significant business risks in Item 1A to our Form 10-K for the year ended December 31, ~~2020.~~2019.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On ~~January 4, 2021,~~April 27, 2020, the Company issued ~~25,000,000 common shares to settle a convertible note described in Note 6(bb), with a remaining balance of $40,000.~~
~~On February 16, 2021, the Company issued 1,803,279~~1,000,000 shares of common stock to ~~settle $247,270 from a $275,000 note payable dated June 20, 2018, which has a balance of $331,304, including interest, to the current Chairman and CEO~~an employee of the ~~Company. The~~ Company ~~also agreed to issue a new note~~ for ~~the remaining balance owed to the Chairman and CEO~~cash proceeds of ~~$84,034, dated February 16, 2021. The note will bear interest at 5% per annum and is due on June 30, 2021.~~$10,000.

On ~~February 16, 2021,~~April 27, 2020, the Company issued ~~2,663,299~~2,750,000 shares of common stock ~~to settle a June 20, 2018 note payable~~for cash proceeds of ~~$380,000 and accrued interest of $26,153 owed to the current COO and Director of the Company.~~$110,000.

On ~~February 15, 2021, 40,000~~May 5, 2020, the Company issued 15,000,000 shares of common stock as part of the note extinguishment and consolidation agreement described in Note 5(e).
On May 19, 2020, the Company issued 500,000 shares of common stock for cash proceeds of $20,000.
On June 24, 2020, 50,000 shares of preferred series C stock was converted into common stock (1 share converts into 100 shares of common stock), resulting in the issuance of ~~4,000,000~~5,000,000 shares of common stock.
Subsequent Issuances After Quarter-End
On ~~March 1, 2021, the Company released an additional vested 375,000 shares of common stock to its current COO and Director, as per the Company employment agreement with the executive.~~
~~On March 1, 2021,~~July 6, 2020, the Company entered into a consulting agreement. Pursuant to the agreement the consultant will provide ~~advisory~~investor relations services for a period of ~~three months~~one year in consideration ~~of $5,000~~for $3,000 per month and ~~an option to purchase 2,500,000~~the issuance of 1,000,000 common shares of ~~common stock at $0.0001 for one year, exercisable on issuance.~~the Company.
27
~~Subsequent Issuances After Quarter-End~~
On ~~April 5, 2021,~~July 8, 2020, the Company entered into a ~~convertible promissory note with~~consulting agreement. Pursuant to the agreement the consultant will provide operational business development and introductory services for a ~~non-related party~~period of five years in consideration for $43,000. The Note is due on April 5, 2022 and bears interest on the unpaid principal balance at the rate of 12% per annum. The Note may be converted by the lender at any time before 6-months of the date of issuance into shares of Company’s common stock at the conversion price equal to 61% multiplied by the Market Price.
On April 14, 2021, the Company entered into a convertible promissory note with a non-related party for $200,000. The Note is due on April 14, 2022 and bears interest on the unpaid principal balance at the rate of 5% per annum. The Note may not be converted by the lender before 6 months of the issuance date into shares of Company’s common stock at a conversion price equal to $0.10.
On May 3, 2021, the Company entered into a convertible promissory note with a non-related party for $128,000. The Note is due on May 3, 2022 and bears interest on the unpaid principal balance at the rate of 12% per annum. The Note may be converted by the lender at any time before 6-months of the date of issuance into shares of Company’s common stock at the conversion price equal to 61% multiplied by the Market Price.
~~On May 5, 2021, the Company entered into an employment agreement with a recently appointed officer, whereby it authorized~~ the issuance of 1,000,000 common shares of the Company and a 5% commission, paid in shares, for any investments brokered.
On August 11, 2020, 75,000 shares of preferred series C stock was converted into common stock (1 share converts into 100 shares of common stock), resulting in the issuance of 7,500,000 shares of common stock.
On August 18, 2020, the Company settled the $100,000 note described in Note 5(i). Pursuant to the settlement agreement, the Company will issue the lender 5,281,088 shares of common stock ~~to such officer (see 8-K issued May 21, 2021)~~
~~On May 7, 2021,~~and pay the ~~Company deemed~~lender $140,000 in ~~the best interest to settle any~~four monthly installments of $35,000 commencing August 19, 2020 and all of the Company’s prior convertible debt with Crown Bridge Partners and allow for the cashless exercise to purchase 1,921,875 shares of PCT LTD’s common stock (par value $0.001/share) at the rate of $0.032/share, thereby reducing PCT LTD’s prior debt to Crown Bridge Partners to $0.00. In addition, Crown Bridge Partners shall release 60,072,853 shares to the agreed upon payment terms of $36,994 cash.
~~On June 2, 2021, the Company paid $25,000 to a non-related party toward a $150,000 Convertible Note dated April 9,~~ending November 19, 2020.
One June 2, 2021, the Company entered into a subscription and purchase agreement with a non-related party consisting of 3,750,000 restricted shares of common stock (aggregate) at a price per share of $0.02 for $75,000 cash.

All of the above-described issuances were exempt from registration pursuant to Section 4(a)(2) and/or Regulation D of the Securities Act as transactions not involving a public offering. With respect to each transaction listed above, no general solicitation was made by either the Company or any person acting on its behalf. All such securities issued pursuant to such exemptions are restricted securities as defined in Rule 144(a)(3) promulgated under the Securities Act, appropriate legends have been placed on the documents evidencing the securities and may not be offered or sold absent registration or pursuant to an exemption therefrom.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended ~~March 31, 2021.~~June 30, 2020.
32
ITEM 3. DEFAULTS UPON SENIOR SECURITIES

We have entered into a number of promissory notes, some of which are in default as of ~~March 31, 2021,~~June 30, 2020, or went into default before the filing of this Quarterly Report (See Note 65 to the financial statements).

A significant portion of our current debt is in default, which may subject us to litigation by the debt holders.

As of ~~March 31, 2021,~~June 30, 2020, we only had cash and cash equivalents of ~~$53,853.~~$29,260 and had a significant amount of short-term debt in default. The short-term debt agreements provide legal remedies for satisfaction of defaults, including increased interest rates, default fees and other financial penalties. As of the date of this Annual Report none of the lenders have pursued their legal remedies, although several lenders have sent us demand letters. Management’s plan is to raise additional funds in the form of debt or equity in order to continue to fund losses until such time as revenues are able to sustain the Company. To date, the main source of funding has been through the issuance of convertible notes with provisions that allow the holder to convert the debt and accrued and unpaid interest at substantial discounts to the trading price of our common stock. The effect of the conversions in the year ended December 31, 2019 and the period ended June 30, 2020 for the convertible notes has been to substantially dilute existing holders of common stock of our Company. However, there is no assurance that management will be successful in being able to continue to obtain additional funding or defend potential litigation by note holders.


ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

2833

ITEM 6. EXHIBITS

Exhibit No. Description
3(i) Amended and Restated Articles of Incorporation, as currently in effect (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed April 13, 2018)
3.1 Amended Articles of Incorporation increasing authorized shares (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed on October 25, 2019)
3(ii) Amended and Restated Bylaws, as currently in effect (Incorporated by reference to Exhibit 3.2 of Form 8-K, filed April 13, 2018)
4.1 Certificate of Designation of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 4.1 of Form 10-Q, filed on September 16, 2019)
4.2 Certificate of Designation of Series B – Super Voting Convertible Preferred Stock (Incorporated by reference to Exhibit 4.2 of Form 10-Q, filed on September 16, 2019)
4.3 Certificate of Designation of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed on October 25, 2019)
4.4 Power Up Note dated June 5, 2018 (Incorporated by reference to Exhibit 4.1 of Form 10-Q, filed August 20, 2018)
4.5 Second Power Up Note dated July 25, 2018 (Incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018)
4.6 Third Power Up Note dated August 27, 2018 (Incorporated by reference to Exhibit 4.3 of Form 10-Q, filed November 21, 2019)
4.7 Fourth Power Up Note dated December 5, 2018 (Incorporated by reference to Exhibit 4.6 of Form 10-Q, filed on September 16, 2019)
4.8 Fifth Power Up Note dated January 15, 2019 (Incorporated by reference to Exhibit 4.7 of Form 10-Q, filed on September 16, 2019)
4.9 Sixth Power Up Note dated February 22, 2019 (Incorporated by reference to Exhibit 4.8 of Form 10-Q, filed on September 16, 2019)
4.10 GS Capital Note dated January 16, 2019 (Incorporated by reference to Exhibit 4.9 of Form 10-Q, filed on September 16, 2019)
4.11 JSJ Note dated January 22, 2019 (Incorporated by reference to Exhibit 4.10 of Form 10-Q, filed on September 16, 2019)
4.12 EMA Note dated January 22, 2019 (Incorporated by reference to Exhibit 4.11 of Form 10-Q, filed on September 16, 2019)
4.13 Adar Note dated February 20, 2019 (Incorporated by reference to Exhibit 4.12 of Form 10-Q, filed on September 16, 2019)
4.14 Peak One Note dated February 21, 2019 (Incorporated by reference to Exhibit 4.13 of Form 10-Q, filed on September 16, 2019)
4.15 Auctus Note dated March 13, 2019 (Incorporated by reference to Exhibit 4.14 of Form 10-Q, filed on September 16, 2019)
4.16 Peak One Opportunity Fund Note dated September 16, 2019 (Incorporated by reference to Exhibit 4.16 of Form 10-Q, filed on August 14, 2020)
~~4.5~~4.17 Power-Up #8 Note dated October 8, 2019 (Incorporated by reference to Exhibit 4.17 of Form 10-Q, filed on August 14, 2020)
~~4.6~~4.18 Power-Up #9 Note dated October 31, 2019 (Incorporated by reference to Exhibit 4.18 of Form 10-Q, filed on August 14, 2020)
~~4.7~~4.19 Power-Up #10 Note dated March 2, 2020 (Incorporated by reference to Exhibit 4.19 of Form 10-Q, filed on August 14, 2020)
~~4.8~~4.20 TFK Investments Note dated April 10, 2020 (Incorporated by reference to Exhibit 4.20 of Form 10-Q, filed on August 14, 2020)
~~4.9~~4.21 Power-Up #11 Note dated April 16, 2020 (Incorporated by reference to Exhibit 4.21 of Form 10-Q, filed on August 14, 2020)
~~4.10~~4.22 Herschbach 2005 Trust Consolidated Note dated May 5, 2020 (Incorporated by reference to Exhibit 4.22 of Form 10-Q, filed on August 14, 2020)
~~4.11~~4.23 Power-Up #12 Note dated May 12, 2020 (Incorporated by reference to Exhibit 4.23 of Form 10-Q, filed on August 14, 2020)
~~4.12~~4.24 Digital Ally Note dated July 7, 2020 (Incorporated by reference to Exhibit 4.24 of Form 10-Q, filed on August 14, 2020)
~~4.13~~4.25 Reserve Capital Management Note dated July 15, 2020 (Incorporated by reference to Exhibit 4.25 of Form 10-Q, filed on ~~November 16, 2020)~~
~~4.14~~ ~~Digital Ally Note #2 dated July 28, 2020~~
~~4.15~~ ~~Signature Note dated October 1, 2020 (Incorporated by reference to Exhibit 4.27 of Form 10-Q, filed on November 16,~~August 14, 2020)
10.1 Agreement with Annihilyzer, Inc. dated November 29, 2016 (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed April 20, 2017)
10.2 Amendment to Agreement with Annihilyzer, Inc. dated April 6, 2017 (Incorporated by reference to Exhibit 10.2 of Form 8-K, filed April 20, 2017)
10.3 Read Consolidated Promissory Note dated September 27, 2017 (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed October 4, 2017)
10.4† Paris Employment Agreement (Incorporated by reference to Exhibit 10.5 of Form 10-Q, filed November 14, 2017)
10.5 Strategic Planning Services Agreement dated March 15, 2018
10.6 Power Up Agreement dated June 5, 2018 (Included in Exhibit 4.1, which is incorporated by reference to Exhibit 4.1 of Form 10-Q, filed August 20, 2018)
10.7 Second Power Up Agreement dated July 25, 2018 (Included in Exhibit 4.2, which is incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018
10.8 Third Power Up Agreement dated August 27, 2018 (Included in Exhibit 4.3, which is incorporated by reference to Exhibit 4.3 of Form 10-Q, filed November 21, 2019)
10.9 Fourth Power Up Agreement dated December 15, 2018 (Incorporated by reference to Exhibit 10.9 of Form 10-Q, filed on September 16, 2019)
10.10 Fifth Power Up Agreement dated January 15, 2019 (Incorporated by reference to Exhibit 10.10 of Form 10-Q, filed on September 16, 2019)
10.11 Sixth Power Up Agreement dated February 22, 2019 (Incorporated by reference to Exhibit 10.11 of Form 10-Q, filed on September 16, 2019)
10.12 GS Capital Agreement dated January 16, 2019 (Incorporated by reference to Exhibit 10.12 of Form 10-Q, filed on September 16, 2019)
10.13 JSJ Agreement dated January 22, 2019 (Incorporated by reference to Exhibit 10.13 of Form 10-Q, filed on September 16, 2019)
10.14 EMA Agreement dated January 22, 2019 (Incorporated by reference to Exhibit 10.14 of Form 10-Q, filed on September 16, 2019)
10.15 Adar Agreement dated February 20, 2019 (Incorporated by reference to Exhibit 10.15 of Form 10-Q, filed on September 16, 2019)
10.16 Peak One Agreement dated February 21, 2019 (Incorporated by reference to Exhibit 10.16 of Form 10-Q, filed on September 16, 2019)
10.17 Auctus Agreement dated March 13, 2019 (Incorporated by reference to Exhibit 10.17 of Form 10-Q, filed on September 16, 2019)
10.18† Read Employment Agreement (Incorporated by reference to Exhibit 10.18 of Form 10-Q, filed on September 16, 2019)
~~10.5†~~10.19† Read Addendum to Employment Agreement (Incorporated by reference to Exhibit 10.19 of Form 10-Q, filed on September 16, 2019)
~~10.6†~~10.20† Grieco 2019 Employment Agreement (Incorporated by reference to Exhibit 10.20 of Form 10-Q, filed on September 16, 2019)
~~10.7†~~10.21† Grieco 2020 Employment Agreement ~~(Incorporated~~Incorporated by reference to Exhibit 10.21 of Form 10-Q, filed on April 13, 2020)
~~10.8~~10.22 Peak One Opportunity Fund Agreement dated September 16, 2019 (Incorporated by reference to Exhibit 10.22 of Form 10-Q, filed on August 14, 2020)
~~10.9~~10.23 Power-Up #8 Agreement dated October 8, 2019 (Incorporated by reference to Exhibit 10.23 of Form 10-Q, filed on August 14, 2020)
~~10.10~~10.24 Power-Up #9 Agreement dated October 31, 2019 (Incorporated by reference to Exhibit 10.24 of Form 10-Q, filed on August 14, 2020)
~~10.11~~10.25 Power-Up #10 Agreement dated March 2, 2020 (Incorporated by reference to Exhibit 10.25 of Form 10-Q, filed on August 14, 2020)
~~10.12~~10.26 TFK Investments Agreement dated April 10, 2020 (Incorporated by reference to Exhibit 10.26 of Form 10-Q, filed on August 14, 2020)
~~10.13~~10.27 Power-Up #11 Agreement dated April 16, 2020 (Incorporated by reference to Exhibit 10.27 of Form 10-Q, filed on August 14, 2020)
~~10.14~~10.28 Herschbach 2005 Trust Agreement dated May 12, 2020 (Incorporated by reference to Exhibit 10.28 of Form 10-Q, filed on August 14, 2020)
~~10.15~~ ~~RB Capital $200,000 Note dated October 7, 2020 (Incorporated by reference to Exhibit 10.29 of Form 10-Q, filed on November 16, 2020)~~
~~10.16~~ ~~RB Capital $200,000 Note dated October 16, 2020 (Incorporated by reference to Exhibit 10.30 of Form 10-Q, filed on November 16, 2020)~~
~~10.17~~ ~~October 1, 2020 $199,500 Future Receivables Note (Incorporated by reference to Exhibit 10.17 of Form 10-K, filed on April 13, 2021)~~
~~10.18~~ ~~November 3, 2020 $126,000 Future Receivables Note(Incorporated by reference to Exhibit 10.18 of Form 10-K, filed on April 13, 2021)~~
~~10.19~~ ~~November 4, 2020 $113,980 Future Receivables Note (Incorporated by reference to Exhibit 10.19 of Form 10-K, filed on April 13, 2021)~~
~~10.20~~ ~~RB Capital $300,000 Note dated November 11, 2020 (Incorporated by reference to Exhibit 10.20 of Form 10-K, filed on April 13, 2021)~~
~~10.21~~ ~~RB Capital $150,000 Note dated December 29, 2020 (Incorporated by reference to Exhibit 10.21 of Form 10-K, filed on April 13, 2021)~~
~~10.22~~ ~~RB Capital $150,000 Note dated January 26, 2021 (Incorporated by reference to Exhibit 10.22 of Form 10-K, filed on April 13, 2021)~~
~~10.23~~ ~~February 2, 2021 $177,800 Future Receivables Note (Incorporated by reference to Exhibit 10.23 of Form 10-K, filed on April 13, 2021)~~
~~10.24~~ ~~February 22, 2021 $128,000 Convertible Promissory Note (Incorporated by reference to Exhibit 10.24 of Form 10-K, filed on April 13, 2021)~~
~~10.25~~ ~~March 5, 2021 $522,640 Future Receivables Note (Incorporated by reference to Exhibit 10.25 of Form 10-K, filed on April 13, 2021)~~
~~10.26~~ ~~March 9, 2021 $111,920 Future Receivables Note (Incorporated by reference to Exhibit 10.26 of Form 10-K, filed on April 13, 2021)~~
~~10.27~~ ~~March 18, 2021 $200,000 Convertible Promissory Note (Incorporated by reference to Exhibit 10.27 of Form 10-K, filed on April 13, 2021)~~
~~10.28~~ ~~March 23, 2021 Amended Convertible Note (Incorporated by reference to Exhibit 10.28 of Form 10-K, filed on April 13, 2021)~~
31.1 Principal Executive Officer Certification
31.2 Principal Financial Officer Certification
32.1 ~~PEO~~ Section 1350 Certification
~~32.2~~ ~~PFO Section 1350 Certification~~
~~99.15~~ ~~New Website and Investor Relations Press Release dated January 26, 2021 (Incorporated by reference to Exhibit 99.8 of Form 10-K, filed on April 13, 2021)~~
~~99.2~~ ~~UK Updated Press Release dated January 28, 2021 (Incorporated by reference to Exhibit 99.9 of Form 10-K, filed on April 13, 2021)~~
~~99.3~~ ~~Litigation Settlement Press Release dated March 4, 2021 (Incorporated by reference to Exhibit 99.10 of Form 10-K, filed on April 13, 2021)~~
~~99.4~~ ~~Fiscal 2020 Results Press Release dated April 15, 2021~~
~~99.5~~ ~~Oilfield Testing Press Release dated April 30, 2021~~
~~99.6~~ ~~Current Status of OTC QB Uplisting Press Release dated May 4, 2021~~
~~99.7~~ ~~New Financial Officer Press Release dated May 14, 2021~~
~~99.8~~ ~~ProtectX Joint Business Venture Press Release dated May 27, 2021~~
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Label Linkbase Document
101.PRE XBRL Taxonomy Presentation Linkbase Document

† Indicates management contract or compensatory plan or arrangement.

2934

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.

PCT LTD

Date: ~~June 25,~~September 3, 2021 By:   /s/ Gary Grieco
Gary Grieco, Chief Executive Officer and Chairman

/s/ Arthur Abraham
Arthur Abraham, Chief Financial Officer

  35
30

	March 31, 2021			December 31, 2020
		(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	53,853		$	115,196
Accounts receivable, net		198,443			349,526
Inventory		7,029			6,188
Prepaid expenses		192,333			274,736
Other current assets		—			2,110
Total current assets		451,658			747,756

PROPERTY AND EQUIPMENT
Property and equipment, net		346,716			358,719

OTHER ASSETS
Intangible assets, net		3,323,902			3,400,024
Operating lease, right of use asset		110,236			118,385
Deposits		15,226			9,726
Total other assets		3,449,364			3,528,135

TOTAL ASSETS	$	4,247,738		$	4,634,610

LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable	$	231,439		$	272,978
Accrued expenses – related parties		80,951			139,280
Accrued expenses		611,155			622,040
Deferred revenue		1,075			1,075
Operating lease liability		36,607			34,965
Notes payable – related parties, net		183,034			789,214
Notes payable, net		413,130			384,380
Convertible notes payable, net		1,935,017			1,554,503
Derivative liability		11,763,555			11,429,043
Total current liabilities		15,255,963			15,227,478

Convertible notes payable, net of current portion and discount		—			53,500
Operating lease liability, net of current portion		77,499			83,420
TOTAL LIABILITIES		15,333,462			15,364,398

MEZZANINE EQUITY
Preferred series A stock, $0.001 par value; 1,000,000 authorized; 500,000 and 500,000 issued and outstanding at March 31, 2021 and December 31, 2020, respectively		60,398			60,398
Preferred series B stock, $0.001 par value; 1,000,000 authorized; 1,000,000 and 1,000,000 issued and outstanding at March 31, 2021 and December 31, 2020, respectively		158,247			158,247
Preferred series C stock, $0.001 par value; 5,500,000 authorized; nil and 490,000 issued and outstanding at March 31, 2021 and December 31, 2020, respectively		—			40,000
TOTAL MEZZANINE EQUITY		218,645			258,645

STOCKHOLDERS’ DEFICIT
Common stock, $0.001 par value; 1,000,000,000 authorized; 758,454,354 and 722,487,846 issued and outstanding at March 31, 2021 and December 31, 2020, respectively		758,454			722,488
Additional paid-in-capital		23,962,053			23,202,933
Accumulated deficit		(36,024,876	)		(34,913,854	)
TOTAL STOCKHOLDERS’ DEFICIT		(11,304,369	)		(10,988,433	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	4,247,738		$	4,634,610

	For the Three Months Ended March 31,
	2021			2020
REVENUES
Product	$	89,263		$	162,648
Licensing		31,750			7,000
Equipment leases		274,506			102,534
Total Revenues		395,519			272,182

OPERATING EXPENSES
General and administrative		893,451			548,786
Research and development		9,199			—
Costs of product, licensing and equipment leases		52,901			148,850
Depreciation and amortization		88,122			83,021
Total operating expenses		1,043,673			780,657

Loss from operations		(648,154	)		(508,475	)

OTHER INCOME (EXPENSE)
Gain/(Loss) on change in fair value of derivative liability		(650,913	)		(9,294,762	)
Gain/(Loss) on settlement of debt		316,401			(44,000	)
Interest expense		(178,356	)		(434,411	)
Misc. income		50,000
Total other income (expense)		(462,868	)		(9,773,173	)

Loss before income taxes		(1,111,022	)		(10,281,648	)

Income taxes		—			—

NET LOSS	$	(1,111,022	)	$	(10,281,648	)
Preferred series C stock deemed dividends		—			(270,000	)
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS’	$	(1,111,022	)	$	(10,551,648	)

Basic and diluted net loss per share	$	(0.00	)	$	(0.02	)

Basic and diluted weighted average shares outstanding		751,832,583			545,843,212

Consolidated Statements of Stockholders’ Equity (Deficit)
For the Three-Months Ended March 31, 2021 and 2020 (Unaudited)

										Total
	Common Stock				Additional Paid-in		Accumulated			Stockholders’ Equity
	Shares		Amount		Capital		Deficit			(Deficit)
Balance – December 31, 2019		498,880,300	$	498,881	$	15,872,330	$	(26,505,567	)	$	(10,134,356	)
Common stock issued for services		15,525,000		15,525		103,538		—			119,063
Common stock issued in settlement of debt		250,000		250		7,975		—			8,225
Common stock issued in conversion of convertible notes payable		36,050,000		36,050		360,660		—			396,710
Beneficial conversion feature on preferred series C stock		—		—		270,000		(270,000	)		—
Net loss for the three-months ended March 31, 2020		—		—		—		(10,281,648	)		(10,281,648	)
Balance – March 31, 2020		550,705,300	$	550,706	$	16,614,503	$	(37,057,215	)	$	(19,892,006	)

Balance – December 31, 2020		722,487,846	$	722,488	$	23,202,933	$	(34,913,854	)	$	(10,988,433	)
Common stock issued for services		2,500,000		2,500		74,276		—			76,776
Common stock issued in settlement of debt, related parties		4,466,508		4,466		648,844		—			653,310
Common stock issued in conversion of convertible notes payable		25,000,000		25,000		—		—			25,000
Conversion of preferred series C stock		4,000,000		4,000		36,000		—			40,000
Net loss for the three-months ended March 31, 2021		—		—		—		(1,111,022	)		(1,111,022	)
Balance – March 31, 2021		758,454,354	$	758,454	$	23,962,053	$	(36,024,876	)	$	(11,304,369	)

	For the Three-Months Ended March 31,
	2021			2020
Cash Flows from Operating Activities
Net loss	$	(1,111,022	)	$	(10,281,648	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		88,122			83,021
Amortization of debt discount		78,804			73,588
Common stock issued for services		14,027			119,063
Loss on change in fair value of derivative liability		650,913			9,294,762
Amortization of right of use asset		8,149			—
Amortization of prepaid expense		146,465			—
Loss on settlement of debt		(316,401	)		44,000
Default penalties on convertible notes		15,172			13,762
Changes in operating assets and liabilities:
Accounts receivable		151,083			(15,745	)
Inventory		(841	)		26,669
Prepaid expenses		—			33,024
Deposits		(5,500	)		(12,027	)
Operating lease liability		(4,279	)		—
Accrued expenses		(10,885	)		377,306
Accrued expenses – related party		13,900			5,430
Accounts payable		(41,539	)		44,573
Net cash used in operating activities		(323,932	)		(194,222	)

Cash Flows from Financing Activities
Proceeds from notes payable		207,575			155,525
Proceeds from notes payable – related parties					3,500
Proceeds from convertible notes payable		555,000			76,000
Proceeds from preferred series C stock subscriptions					270,000
Repayment of convertible notes payable		(218,500	)		(8,888	)
Repayment of notes payable		(256,486	)		(102,414	)
Repayment of notes payable – related parties		(25,000	)		(12,286	)
Net cash provided by financing activities		262,589			381,437

Net change in cash		(61,343	)		187,215
Cash and cash equivalents at beginning of period		115,196			67,613
Cash and cash equivalents at end of period	$	53,853		$	254,828

Supplemental Cash Flow Information
Cash paid for interest	$	43,339		$	147
Cash paid for income taxes	$	—		$	—

Non-cash investing and financing activities:
Preferred series C stock deemed dividend	$	—		$	270,000
Original debt discount against convertible notes	$	—		$	41,888
Original debt discount against notes payable	$	—		$	25,068
Common stock issued in conversion of convertible notes payable	$	25,000		$	396,710

Common stock issued in settlement of debt	$	—		$	8,225
Property and equipment transferred to inventory	$	—		$	26,669
Common stock issued for prepaid expenses	$	62,750		$	—
Preferred series C converted to common stock	$	40,000		$	—
Common stock issued in settlement of notes payable to related parties	$	653,309		$	—
Common stock issued in conversion of preferred series C stock	$	77,998		$	—

	2021 $			2020 $

Cost		123,614			—
Accumulated amortization		(13,378	)		—
Net carrying value		110,236			—

	$
2021		40,500
2022		54,000
2023		45,000

Total minimum lease payments		139,500

Less: amount of lease payments representing effects of discounting		(25,394	)

Present value of future minimum lease payments		114,106

Less: current obligations under leases		(36,607	)

Lease liabilities, net of current portion		77,499

Type	Original Amount		Origination Date	Maturity Date	Effective Annual Interest Rate			Balance at March 31, 2021			Balance at December 31, 2020			Original Amount			Origination Date		Maturity Date		Annual Interest Rate			Balance at June 30, 2020				Balance at December 31, 2019
Note Payable **	$	25,000	05/08/2017	06/30/2018		0	%	$	27,500		$	27,500			$	25,000		05/08/2017		06/30/2018		0	%		$	27,500			$	27,500
Note Payable **	$	8,700	11/15/2018	06/30/2019		10	%	$	8,700		$	8,700			$	130,000		06/20/2018		01/02/2020		8	%		$	112,500			$	130,000
Note Payable	$	118,644	05/05/2020	05/05/2021		8	%	$	110,644		$	110,644
Note Payable **															$	8,700		11/15/2018		06/30/2019		10	%		$	8,700			$	8,700
Note Payable (e)															$	90,596		09/15/2019		05/28/2020		8	%		$	—			$	90,596
Note Payable ~~(b)~~(k)															$	50,000		10/03/2019		04/03/2020		12	%		$	—			$	37,500
Note Payable (e)															$	17,500		11/12/2019		11/12/2020		8	%		$	—			$	17,500
Note Payable **															$	83,400		12/20/2019		06/19/2020		150	%		$	38,491			$	80,192
Note Payable ~~(e)~~															$	148,362		12/20/2019		11/27/2020		80	%		$	68,496			$	145,404
Note Payable (a)	$	199,500	10/01/2020	09/28/2021		66	%	$	95,805		$	149,573			$	25,782		01/08/2020		05/13/2020		313	%		$	—			$	—
Note Payable ~~(b)~~(k)	$	126,000	11/03/2020	04/23/2021		168	%	$	21,000		$	85,050
Note Payable (c)	$	113,980	11/04/2020	03/15/2021		210	%	$	—		$	65,988
Note Payable (b)															$	33,660		02/19/2020		04/30/2020		585	%		$	—			$	—
Note Payable (c)(e)															$	20,000		02/28/2020		05/28/2020		8	%		$	—			$	—
Note Payable (d)	$	177,800	01/02/2021	07/12/2021		116	%	$	115,957		$	—			$	100,000		03/31/2020		08/01/2020		30	%		$	50,000			$	—
Note Payable ~~(e)~~	$	111,920	03/03/2021	05/21/2021		220	%	$	90,935		$	—			$	118,644		05/05/2020		05/05/2021		8	%		$	118,644			$	—
Subtotal								$	470,542		$	447,455													$	424,331			$	537,392
Debt discount								$	(57,412	)	$	(63,075	)												$	(15,714	)		$	(69,239	)
Balance, net								$	413,130		$	384,380													$	408,617			$	468,153
Less current portion								$	(413,130	)	$	(384,380	)												$	(408,617	)		$	(468,153	)
Total long-term								$	—		$	—													$	—			$	—

** Currently in default

	March 31, 2021			December 31, 2020
Balance at the beginning of period	$	11,429,043		$	10,517,873
Original discount limited to proceeds of convertible notes		—			166,000
Fair value of derivative liabilities in excess of notes proceeds received		—			1,128,966
Settlement of derivative instruments		(316,401	)		(4,876,287	)
Change in fair value of embedded conversion option		650,913			4,492,491
Balance at the end of the period	$	11,763,555		$	11,429,043

	Expected Volatility	Risk-free Interest Rate	Expected Dividend Yield			Expected Life (in years)

At issuance during the period	336-358%	0.25-1.47%		0	%		1.00
At June 30, 2020	236-320%	0.16-0.18%		0	%		0.68-3.70

	Number of options		Weighted average exercise price $
Balance, December 31, 2020		200,000		2.00
Granted		—		—
Expired		—		—
Settled		—		—
Balance, March 31, 2021		200,000		2.00

	Number of options		Weighted average exercise price $
Balance, December 31, 2019		200,000		2.00
Granted		—		—
Expired		—		—
Settled		—		—
Balance, June 30, 2020		200,000		2.00

	Number of warrants		Weighted average exercise price $
Balance, December 31, 2020		457,690,272		0.000179
Adjustment to warrants outstanding		—		—
Granted		—		—
Settled		—		—
Balance, March 31, 2021		457,690,272		0.000179

Date	Date	Number			Number			Exercise			Weighted Average Remaining Contractual		Expiration		Proceeds to Company if		Date	Number			Number			Exercise			Weighted Average Remaining Contractual		Expiration		Proceeds to Company if
Issued	Issued	Outstanding			Exercisable			Price $			Life (Years)		Date		Exercised		Issued	Outstanding			Exercisable			Price $			Life (Years)		Date		Exercised
	11/28/2018		142,857,143	*		142,857,143	*		0.00035	*		0.66		11/28/2021	$	50,000		(restated)			(restated)										(restated)
	12/3/2018		500,000			500,000			0.10			2.68		12/3/2023		50,000
	2/14/2019		152,899,585	*		152,899,585	*		0.00035	*		2.88		2/14/2024		50,267	11/28/2018		142,857,143	*		142,857,143	*		0.00035	*		1.41		11/28/2021	$	50,000
	3/13/2019		107,142,857	*		107,142,857	*		0.00035	*		2.95		3/13/2024		37,500	12/3/2018		500,000			500,000			0.10			3.43		12/3/2023		50,000
	9/11/2019		53,571,429	*		53,571,429	*		0.00056	*		3.45		9/11/2024		30,000	3/13/2019		107,142,857	*		107,142,857	*		0.00035	*		3.70		3/13/2024		37,500
	8/26/2020		10,000,000			10,000,000			0.06000			4.41		8/26/2025		600,000			250,500,000			250,500,000									$	137,500
			457,690,272			457,690,272									$	817,767

	June 30, 2020
	As Previously Reported			Adjustments			As Restated

ASSETS
Total current assets	$	416,893		$	—		$	416,893

Total property and equipment, net		401,233			—			401,233
Total other assets		3,554,793			—			3,554,793

TOTAL ASSETS		4,372,919			—			4,372,919

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		447,805			—			447,805
Accrued expenses – related parties		98,311			—			98,311
Accrued expenses		912,393			—			912,393
Notes payable – related parties		826,214			—			826,214
Notes payable, net		408,617			—			408,617
Convertible notes payable, net		980,254			—			980,254
Derivative liability		18,419,365			(7,025,392	)		11,393,973
Total current liabilities		22,092,959			(7,025,392	)		15,067,567

TOTAL LIABILITIES		22,092,959			(7,025,392	)		15,067,567

TOTAL MEZZANINE EQUITY		702,645			—			702,645

STOCKHOLDERS’ DEFICIT
Common stock		584,202			—			584,202
Additional paid-in capital		18,056,637			—			18,056,637
Accumulated deficit		(37,063,524	)		7,025,392			(30,038,132	)
		(18,422,685	)		7,025,392			(11,397,293	)

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY	$	4,372,919		$	—		$	4,372,919

	For the three months ended June 30, 2020
	As Previously Reported			Adjustments			As Restated

REVENUES
Total revenues	$	881,172		$	—		$	881,172

OPERATING EXPENSES
Total operating expenses		1,094,245			—			1,094,245

LOSS FROM OPERATIONS		(213,073	)		—			(213,073	)

OTHER INCOME (EXPENSE)
Loss on change in fair value of derivative liability		(1,092,845	)		(4,922,990	)		(6,015,835	)
Gain (loss) on change in fair value of preferred series A stock liability		—			—			—
Gain on sale of intangible assets		—			—			—
Gain (loss) on settlement of debt		1,759,539			11,948,382			13,707,921
Interest expense		(459,930	)		—			(459,930	)
Total other income (expense)		206,764			7,025,392			7,232,156

Income (loss) before income taxes		(6,309	)		7,025,392			7,019,083

Income taxes		—			—			—

NET INCOME (LOSS)		(6,309	)		7,025,392			7,019,083
Preferred series C stock deemed dividends		—			—			—

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS’	$	(6,309	)	$	7,025,392		$	7,019,083

Basic net income (loss) per share	$	(0.00	)	$	0.01		$	0.01

Diluted net income (loss) per share	$	(0.00	)	$	—		$	(0.00	)

Basic weighted average shares outstanding		569,964,666						569,964,666

Diluted weighted average shares outstanding		569,964,666						774,463,424

	For the six months ended June 30, 2020
	As Previously Reported			Adjustments			As Restated

REVENUES
Total revenues	$	1,153,354		$	—		$	1,153,354

OPERATING EXPENSES
Total operating expenses		1,874,902			—			1,874,902

LOSS FROM OPERATIONS		(721,548	)		—			(721,548	)

OTHER INCOME (EXPENSE)
Loss on change in fair value of derivative liability		(10,387,607	)		(4,922,990	)		(15,310,597	)
Gain (loss) on change in fair value of preferred series A stock liability		—			—			—
Gain on sale of intangible assets		—			—			—
Gain (loss) on settlement of debt		1,715,539			11,948,382			13,663,921
Interest expense		(894,341	)		—			(894,341	)
Total other income (expense)		(9,566,409	)		7,025,392			(2,541,017	)

Income (loss) before income taxes		(10,287,957	)		7,025,392			(3,262,565	)

Income taxes		—			—			—

NET INCOME (LOSS)		(10,287,957	)		7,025,392			(3,262,565	)
Preferred series C stock deemed dividends		(270,000	)		—			(270,000	)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS’	$	(10,557,957	)	$	7,025,392		$	(3,532,565	)

Basic and diluted net income (loss) per share	$	(0.02	)	$	0.01		$	(0.01	)

Basic and diluted weighted average shares outstanding		557,809,456						557,809,456

•	our ability to efficiently manage and repay our debt obligations;
•	our inability to raise additional financing for working capital;
•	our ability to generate sufficient revenue in our targeted markets to support operations;
•	significant dilution resulting from our financing activities;
•	actions and initiatives taken by both current and potential competitors;
•	supply chain disruptions for components used in our products;
•	manufacturers inability to deliver components or products on time;
•	our ability to diversify our operations;
•	the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;
•	adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
•	changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
•	deterioration in general or global economic, market and political conditions;
•	inability to efficiently manage our operations;
•	inability to achieve future operating results;
•	the unavailability of funds for capital expenditures;
•	our ability to recruit, hire and retain key employees;
•	the global impact of COVID-19 on the United States economy and out operations;
•	the inability of management to effectively implement our strategies and business plans; and
•	the other risks and uncertainties detailed in this report.

SUMMARY OF BALANCE SHEET	March 31, 2021			December 31, 2020
Cash and cash equivalents	$	53,853		$	115,196
Total current assets		451,659			747,756
Total assets		4,247,738			4,34,610
Total liabilities		15,333,462			15,364,398
Accumulated deficit		(36,024,876	)		(34,913,854	)
Total stockholders’ deficit	$	(11,304,369	)	$	(10,988,433	)

SUMMARY OF OPERATIONS	Three-month period ended March 31,
	(Unaudited)
	2021			2020
Revenues	$	395,519		$	272,182
Total operating expenses		1,043,673			780,657
Total other expenses		462,868			9,773,173
Net loss		(1,111,022	)		(10,281,648	)
Preferred series C stock deemed dividends		—			270,000
Net loss attributable to common stockholders’		(1,111,022	)		(10,551,648	)
Basic and diluted loss per share	$	(0.00	)	$	(0.02	)

SUMMARY OF OPERATIONS	Three-month period ended June 30,
	(Unaudited)
	2020			2019
	(restated)
Revenues	$	881,172		$	118,862
Total operating expenses		1,094,245			527,397
Total other income (expense)		7,232,156			(3,121,612	)
Net income (loss)		7,019,083			(3,530,147	)
Preferred series C stock deemed dividends		—			—
Net income (loss) attributable to common stockholders’		7,019,083			(3,530,147	)
Basic income (loss) per share	$	0.01		$	(0.07	)
Diluted income (loss) per share	$	(0.00	)	$	(0.07	)

SUMMARY OF OPERATIONS	Six months period ended June 30,
	(Unaudited)
	2020			2019
	(restated)
Revenues	$	1,153,354		$	314,819

Total operating expense	$	1,874,902		$	1,351,927
Total other expense	$	2,541,017		$	3,413,362
Net loss	$	(3,262,565	)	$	(4,450,470	)
Preferred series C stock deemed dividends		(270,000	)		—
Net loss attributable to common stockholders’		(3,532,565	)		(4,450,470	)
Basic and diluted loss per share	$	(0.01	)	$	(0.09	)

Exhibit No.	Description
3(i)	Amended and Restated Articles of Incorporation, as currently in effect (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed April 13, 2018)
3.1	Amended Articles of Incorporation increasing authorized shares (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed on October 25, 2019)
3(ii)	Amended and Restated Bylaws, as currently in effect (Incorporated by reference to Exhibit 3.2 of Form 8-K, filed April 13, 2018)
4.1	Certificate of Designation of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 4.1 of Form 10-Q, filed on September 16, 2019)
4.2	Certificate of Designation of Series B – Super Voting Convertible Preferred Stock (Incorporated by reference to Exhibit 4.2 of Form 10-Q, filed on September 16, 2019)
4.3	Certificate of Designation of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 of Form 8-K, filed on October 25, 2019)
4.4	Power Up Note dated June 5, 2018 (Incorporated by reference to Exhibit 4.1 of Form 10-Q, filed August 20, 2018)
4.5	Second Power Up Note dated July 25, 2018 (Incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018)
4.6	Third Power Up Note dated August 27, 2018 (Incorporated by reference to Exhibit 4.3 of Form 10-Q, filed November 21, 2019)
4.7	Fourth Power Up Note dated December 5, 2018 (Incorporated by reference to Exhibit 4.6 of Form 10-Q, filed on September 16, 2019)
4.8	Fifth Power Up Note dated January 15, 2019 (Incorporated by reference to Exhibit 4.7 of Form 10-Q, filed on September 16, 2019)
4.9	Sixth Power Up Note dated February 22, 2019 (Incorporated by reference to Exhibit 4.8 of Form 10-Q, filed on September 16, 2019)
4.10	GS Capital Note dated January 16, 2019 (Incorporated by reference to Exhibit 4.9 of Form 10-Q, filed on September 16, 2019)
4.11	JSJ Note dated January 22, 2019 (Incorporated by reference to Exhibit 4.10 of Form 10-Q, filed on September 16, 2019)
4.12	EMA Note dated January 22, 2019 (Incorporated by reference to Exhibit 4.11 of Form 10-Q, filed on September 16, 2019)
4.13	Adar Note dated February 20, 2019 (Incorporated by reference to Exhibit 4.12 of Form 10-Q, filed on September 16, 2019)
4.14	Peak One Note dated February 21, 2019 (Incorporated by reference to Exhibit 4.13 of Form 10-Q, filed on September 16, 2019)
4.15	Auctus Note dated March 13, 2019 (Incorporated by reference to Exhibit 4.14 of Form 10-Q, filed on September 16, 2019)
4.16	Peak One Opportunity Fund Note dated September 16, 2019 (Incorporated by reference to Exhibit 4.16 of Form 10-Q, filed on August 14, 2020)
~~4.5~~4.17	Power-Up #8 Note dated October 8, 2019 (Incorporated by reference to Exhibit 4.17 of Form 10-Q, filed on August 14, 2020)
~~4.6~~4.18	Power-Up #9 Note dated October 31, 2019 (Incorporated by reference to Exhibit 4.18 of Form 10-Q, filed on August 14, 2020)
~~4.7~~4.19	Power-Up #10 Note dated March 2, 2020 (Incorporated by reference to Exhibit 4.19 of Form 10-Q, filed on August 14, 2020)
~~4.8~~4.20	TFK Investments Note dated April 10, 2020 (Incorporated by reference to Exhibit 4.20 of Form 10-Q, filed on August 14, 2020)
~~4.9~~4.21	Power-Up #11 Note dated April 16, 2020 (Incorporated by reference to Exhibit 4.21 of Form 10-Q, filed on August 14, 2020)
~~4.10~~4.22	Herschbach 2005 Trust Consolidated Note dated May 5, 2020 (Incorporated by reference to Exhibit 4.22 of Form 10-Q, filed on August 14, 2020)
~~4.11~~4.23	Power-Up #12 Note dated May 12, 2020 (Incorporated by reference to Exhibit 4.23 of Form 10-Q, filed on August 14, 2020)
~~4.12~~4.24	Digital Ally Note dated July 7, 2020 (Incorporated by reference to Exhibit 4.24 of Form 10-Q, filed on August 14, 2020)
~~4.13~~4.25	Reserve Capital Management Note dated July 15, 2020 (Incorporated by reference to Exhibit 4.25 of Form 10-Q, filed on ~~November 16, 2020)~~
~~4.14~~	~~Digital Ally Note #2 dated July 28, 2020~~
~~4.15~~	~~Signature Note dated October 1, 2020 (Incorporated by reference to Exhibit 4.27 of Form 10-Q, filed on November 16,~~August 14, 2020)
10.1	Agreement with Annihilyzer, Inc. dated November 29, 2016 (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed April 20, 2017)
10.2	Amendment to Agreement with Annihilyzer, Inc. dated April 6, 2017 (Incorporated by reference to Exhibit 10.2 of Form 8-K, filed April 20, 2017)
10.3	Read Consolidated Promissory Note dated September 27, 2017 (Incorporated by reference to Exhibit 10.1 of Form 8-K, filed October 4, 2017)
10.4†	Paris Employment Agreement (Incorporated by reference to Exhibit 10.5 of Form 10-Q, filed November 14, 2017)
10.5	Strategic Planning Services Agreement dated March 15, 2018
10.6	Power Up Agreement dated June 5, 2018 (Included in Exhibit 4.1, which is incorporated by reference to Exhibit 4.1 of Form 10-Q, filed August 20, 2018)
10.7	Second Power Up Agreement dated July 25, 2018 (Included in Exhibit 4.2, which is incorporated by reference to Exhibit 4.2 of Form 10-Q, filed August 20, 2018
10.8	Third Power Up Agreement dated August 27, 2018 (Included in Exhibit 4.3, which is incorporated by reference to Exhibit 4.3 of Form 10-Q, filed November 21, 2019)
10.9	Fourth Power Up Agreement dated December 15, 2018 (Incorporated by reference to Exhibit 10.9 of Form 10-Q, filed on September 16, 2019)
10.10	Fifth Power Up Agreement dated January 15, 2019 (Incorporated by reference to Exhibit 10.10 of Form 10-Q, filed on September 16, 2019)
10.11	Sixth Power Up Agreement dated February 22, 2019 (Incorporated by reference to Exhibit 10.11 of Form 10-Q, filed on September 16, 2019)
10.12	GS Capital Agreement dated January 16, 2019 (Incorporated by reference to Exhibit 10.12 of Form 10-Q, filed on September 16, 2019)
10.13	JSJ Agreement dated January 22, 2019 (Incorporated by reference to Exhibit 10.13 of Form 10-Q, filed on September 16, 2019)
10.14	EMA Agreement dated January 22, 2019 (Incorporated by reference to Exhibit 10.14 of Form 10-Q, filed on September 16, 2019)
10.15	Adar Agreement dated February 20, 2019 (Incorporated by reference to Exhibit 10.15 of Form 10-Q, filed on September 16, 2019)
10.16	Peak One Agreement dated February 21, 2019 (Incorporated by reference to Exhibit 10.16 of Form 10-Q, filed on September 16, 2019)
10.17	Auctus Agreement dated March 13, 2019 (Incorporated by reference to Exhibit 10.17 of Form 10-Q, filed on September 16, 2019)
10.18†	Read Employment Agreement (Incorporated by reference to Exhibit 10.18 of Form 10-Q, filed on September 16, 2019)
~~10.5†~~10.19†	Read Addendum to Employment Agreement (Incorporated by reference to Exhibit 10.19 of Form 10-Q, filed on September 16, 2019)
~~10.6†~~10.20†	Grieco 2019 Employment Agreement (Incorporated by reference to Exhibit 10.20 of Form 10-Q, filed on September 16, 2019)
~~10.7†~~10.21†	Grieco 2020 Employment Agreement ~~(Incorporated~~Incorporated by reference to Exhibit 10.21 of Form 10-Q, filed on April 13, 2020)
~~10.8~~10.22	Peak One Opportunity Fund Agreement dated September 16, 2019 (Incorporated by reference to Exhibit 10.22 of Form 10-Q, filed on August 14, 2020)
~~10.9~~10.23	Power-Up #8 Agreement dated October 8, 2019 (Incorporated by reference to Exhibit 10.23 of Form 10-Q, filed on August 14, 2020)
~~10.10~~10.24	Power-Up #9 Agreement dated October 31, 2019 (Incorporated by reference to Exhibit 10.24 of Form 10-Q, filed on August 14, 2020)
~~10.11~~10.25	Power-Up #10 Agreement dated March 2, 2020 (Incorporated by reference to Exhibit 10.25 of Form 10-Q, filed on August 14, 2020)
~~10.12~~10.26	TFK Investments Agreement dated April 10, 2020 (Incorporated by reference to Exhibit 10.26 of Form 10-Q, filed on August 14, 2020)
~~10.13~~10.27	Power-Up #11 Agreement dated April 16, 2020 (Incorporated by reference to Exhibit 10.27 of Form 10-Q, filed on August 14, 2020)
~~10.14~~10.28	Herschbach 2005 Trust Agreement dated May 12, 2020 (Incorporated by reference to Exhibit 10.28 of Form 10-Q, filed on August 14, 2020)
~~10.15~~	~~RB Capital $200,000 Note dated October 7, 2020 (Incorporated by reference to Exhibit 10.29 of Form 10-Q, filed on November 16, 2020)~~
~~10.16~~	~~RB Capital $200,000 Note dated October 16, 2020 (Incorporated by reference to Exhibit 10.30 of Form 10-Q, filed on November 16, 2020)~~
~~10.17~~	~~October 1, 2020 $199,500 Future Receivables Note (Incorporated by reference to Exhibit 10.17 of Form 10-K, filed on April 13, 2021)~~
~~10.18~~	~~November 3, 2020 $126,000 Future Receivables Note(Incorporated by reference to Exhibit 10.18 of Form 10-K, filed on April 13, 2021)~~
~~10.19~~	~~November 4, 2020 $113,980 Future Receivables Note (Incorporated by reference to Exhibit 10.19 of Form 10-K, filed on April 13, 2021)~~
~~10.20~~	~~RB Capital $300,000 Note dated November 11, 2020 (Incorporated by reference to Exhibit 10.20 of Form 10-K, filed on April 13, 2021)~~
~~10.21~~	~~RB Capital $150,000 Note dated December 29, 2020 (Incorporated by reference to Exhibit 10.21 of Form 10-K, filed on April 13, 2021)~~
~~10.22~~	~~RB Capital $150,000 Note dated January 26, 2021 (Incorporated by reference to Exhibit 10.22 of Form 10-K, filed on April 13, 2021)~~
~~10.23~~	~~February 2, 2021 $177,800 Future Receivables Note (Incorporated by reference to Exhibit 10.23 of Form 10-K, filed on April 13, 2021)~~
~~10.24~~	~~February 22, 2021 $128,000 Convertible Promissory Note (Incorporated by reference to Exhibit 10.24 of Form 10-K, filed on April 13, 2021)~~
~~10.25~~	~~March 5, 2021 $522,640 Future Receivables Note (Incorporated by reference to Exhibit 10.25 of Form 10-K, filed on April 13, 2021)~~
~~10.26~~	~~March 9, 2021 $111,920 Future Receivables Note (Incorporated by reference to Exhibit 10.26 of Form 10-K, filed on April 13, 2021)~~
~~10.27~~	~~March 18, 2021 $200,000 Convertible Promissory Note (Incorporated by reference to Exhibit 10.27 of Form 10-K, filed on April 13, 2021)~~
~~10.28~~	~~March 23, 2021 Amended Convertible Note (Incorporated by reference to Exhibit 10.28 of Form 10-K, filed on April 13, 2021)~~
31.1	Principal Executive Officer Certification
31.2	Principal Financial Officer Certification
32.1	~~PEO~~ Section 1350 Certification
~~32.2~~	~~PFO Section 1350 Certification~~
~~99.15~~	~~New Website and Investor Relations Press Release dated January 26, 2021 (Incorporated by reference to Exhibit 99.8 of Form 10-K, filed on April 13, 2021)~~
~~99.2~~	~~UK Updated Press Release dated January 28, 2021 (Incorporated by reference to Exhibit 99.9 of Form 10-K, filed on April 13, 2021)~~
~~99.3~~	~~Litigation Settlement Press Release dated March 4, 2021 (Incorporated by reference to Exhibit 99.10 of Form 10-K, filed on April 13, 2021)~~
~~99.4~~	~~Fiscal 2020 Results Press Release dated April 15, 2021~~
~~99.5~~	~~Oilfield Testing Press Release dated April 30, 2021~~
~~99.6~~	~~Current Status of OTC QB Uplisting Press Release dated May 4, 2021~~
~~99.7~~	~~New Financial Officer Press Release dated May 14, 2021~~
~~99.8~~	~~ProtectX Joint Business Venture Press Release dated May 27, 2021~~
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Label Linkbase Document
101.PRE	XBRL Taxonomy Presentation Linkbase Document

		PCT LTD


Date: ~~June 25,~~September 3, 2021	By:	/s/ Gary Grieco
		Gary Grieco, Chief Executive Officer and Chairman
		/s/ Arthur Abraham Arthur Abraham, Chief Financial Officer