UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DCD.C. 20549

FORM 10-Q/A

(Amendment No. 1)10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2013June 30, 2018

OR

For the Transition period from ________ to ______.

Commission File NumberNumber: 1-9927

COMPREHENSIVE CARE CORPORATION

(Exact name of registrantRegistrant as specified in its charter)

3405 W. Dr. Martin Luther King Jr. Blvd, Suite 101, Tampa, FL 33607

(Address of principal executive offices and zip code)813-517-8484

(813) 288-4808

(Registrant’s telephone number including area code)

(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrantRegistrant 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 (Section(§ 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¨Nox    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.filer, a smaller reporting company or an emerging growth company. See definitionthe definitions of “large accelerated filer,” “accelerated filer”filer," “smaller reporting company” and large accelerated filer”"emerging growth company" in Rule 12b-2 of the Exchange Act.Act (Check one):.

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¨Nox

As of May 16, 2013, there were 61,247,424April 12, 2019, the Registrant had outstanding 67,361,656 shares of the registrant’s common stock,its $0.01 par value outstanding.Common Stock.

ADVANZEON SOLUTIONS, INC.

TABLE OF CONTENTS

ADVANZEON SOLUTIONS, INC.

EXPLANATORY NOTECONSOLIDATED BALANCE SHEETS

June 30, 2018 (unaudited) and December 31, 2017

ASSETS

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

ADVANZEON SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

June 30, 2018 (unaudited) and December 31, 2017

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

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

ADVANZEON SOLUTIONS, INC.

CONSOLIDATED STATEMENT OF OPERATIONS

For the Three and Six Month Periods Ended June 30, 2018 and 2017 (unaudited)

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

ADVANZEON SOLUTIONS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIENCY

June 30, 2018 (unaudited) and December 31, 2017

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

ADVANZEON SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Month Periods Ended June 30, 2018 and 2017 (unaudited)

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

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements include the accounts of Advanzeon Solutions, Inc and its wholly owned subsidiary, and its respective subsidiaries (collectively referred to herein as, the “Company,” “Advanzeon,” “we”, “us,” or “our”).

In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the Company's financial position as of June 30, 2018, the changes therein for the three and six month periods then ended and the results of operations for the three and six month periods ended June 30, 2018 and 2017.

The financial statements included in the Form 10-Q are presented in accordance with the requirements of the Form and do not include all of the disclosures required by accounting principles general accepted in the United States of America. For additional information, reference is made to the Company's annual report on Form 10-K for the years ended December 31, 2017, 2016 and 2015, filed January 29, 2019. The results of operations for the six-month period ended June 30, 2018 and 2017 are not necessarily indicative of operating results for the full year.

Established in 1969, Advanzeon Solutions, Inc., (formerly Comprehensive Care Corp.) (“Advanzeon”, “we”, “Parent”, or the “Company”), through its wholly-owned subsidiary Pharmacy Value Management Solutions, Inc., and its wholly-owned subsidiaries during 2015, and partly in 2016, provided managed care services by acting as the administrator for certain administrative service agreements in the behavioral health and substance abuse fields. We primarily offered these services to commercial, Medicare, Medicaid, Children’s Health Insurance Program (“CHIP”) health plans, as well as self-insured companies. Our managed care operations consisted solely of servicing administrative service agreements. Starting in July of 2015, we implemented our comprehensive sleep apnea program, called “SleepMaster Solutions” ™. SleepMaster Solutions (“SMS”) utilizes an administrative system for the convenient identification/testing and therapy of Obstructive Sleep Apnea (“OSA”). We partnered with a national health care provider by initiating a sleep apnea wellness program whereby we screened, tested and when needed, offered treatment programs for treating this disorder. We also contracted with a union to treat its driver members. Beginning in 2017, our only business was our SMS sleep apnea program.

The Company has elected to not adopt the option available under United States generally accepted accounting principles (“GAAP”) to measure any eligible financial instruments or other items at fair market value at this time. Accordingly, the Company measures all of its assets and liabilities on the historical cost basis of accounting, except as otherwise required by GAAP.

Inter-company accounts and transactions have been eliminated in consolidation. Certain minor reclassifications of prior period amounts have been made to conform to the current period presentation.

Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts. Actual results could differ from these estimates. Estimates involved in the determination of an allowance for doubtful accounts receivable and accrued claims payable, including incurred but not reported, are considered by management as particularly susceptible to material change in the next year. Other significant estimates relate to stock-based compensation, warrants and beneficial conversion features.

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable - Accounts receivable is carried at its estimated collectible value. Since customer credit is generally extended on a short-term basis, accounts receivable does not bear interest and are uncollateralized. We manage credit risk and determine necessary allowances by evaluating customers’ credit worthiness before extending credit and periodically for collectability, based primarily on customers’ past credit history and current financial conditions and general economic conditions, results of prior collection efforts, the relative strength of our relationship therewith and, in the event of a dispute, its legal position and the estimated cost of proposed collection proceedings. Management has not established a policy for when to charge off uncollectible accounts receivable or to use external collection agencies and makes such decisions on a case-by-case basis. The maximum losses that the Company would incur if a customer failed to pay would be limited to the carrying value of the receivable.

Revenue Recognition - Revenue is recognized when billed, which is approximately when the testing service is performed or CPAP machine is shipped.

Property and Equipment - Property and equipment (Note 4) is stated at cost less accumulated depreciation. Depreciation and amortization are computed using the straight-line method over the estimated useful lives ranging from 2 to 12 years. Leasehold improvements are amortized over the shorter of the lease term or the asset’s useful life.

Fair Value Measurements - The carrying amounts of cash, accounts receivable and accounts payable approximate their estimated fair value due to the short-term nature of these instruments. Since our other financial liabilities are not traded in an open market, we generally use a present value technique, which is a level 3 input, as defined in GAAP, to measure the estimated fair value of these financial instruments, except for valuing stock options and warrants (see below). The rate used for discounting expected cash flows is a risk-free rate adjusted for systematic and unsystematic risk.

The carrying amounts and estimated fair values of long-term debt at June 30, 2018 and December 31, 2017 are as follows:

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the six months ended June 30, 2018, there have been 15 additional convertible-promissory notes totaling $516,923 and $913,503 was reclassified from accounts payable to related party loans payable. One previous $50,000 convertible-promissory note was converted into stock.

Cost of Revenues - Costs of revenues consist of sleep testing expenses, supplies, service fees and product shipping.

Income Taxes - We are filing this Amendment No. 1 (this “Amendment”)subject to the income tax jurisdictions of the U.S. and multiple state tax jurisdictions. However, our Quarterly Reportprovisions for income taxes for 2017 and 2018 include only state income taxes/fees.

Management has evaluated our tax positions taken or to be taken on Form 10-Q for the Fiscal Quarter Ended March 31,income tax returns that remain subject to examination (i.e., tax years 2013 originally filed with the Securities and Exchange Commission on May 20, 2013 (the “Original Form 10-Q”)thereafter federally), to correct theand has concluded that there have been no uncertain tax positions (as defined in GAAP) taken that require recognition or disclosure in the Original Form 10-Qconsolidated financial statements. In the event of any income tax-related interest or penalties are incurred, they would be included in general and administrative expense.

Stock Options and Warrants - We grant stock options and warrants to reflect that the rightour non-employee directors, note holders and certain consultants allowing them to purchase our common stock pursuant to approved terms. The estimated value of the lenderwarrants issued with debt instruments is recorded as a discount on notes payable and amortized as interest expense over the term of the notes using the effective interest method.

Other current assets consists of the following at June 30, 2018 and December 31, 2017:

In 2018, $24,616 of prepaid expenses was reclassified to convertmiscellaneous receivable. The remaining $309,893 in miscellaneous receivable is legal settlement income.

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and equipment, net, consists of the Revolving Convertible Promissory Note (the “Note”) issued pursuantfollowing at June 30, 2018 and December 31, 2017:

Depreciation expense for the six month periods ended June 30, 2018 and 2017 is $300 and $0, respectively.

The Company has received financing from Management of the Company as well as from members of our Board of Directors. These individuals are deemed to be related parties to the Senior Secured Revolving Credit Facility applies onlyCompany and their indebtedness must be disclosed separately.

As of June 30, 2018 and December 31, 2017, there are the following related party notes payable:

During the occurrencefirst quarter of an Event2018, $910,010 was reclassified from accounts payable to loans payable related party. During the quarter ended June 30, 2018 the Company wrote off the due to shareholder balance and accrued interest totaling $7,771,140 as further discussed in Note 10.

As of Default or otherwise withJune 30, 2018, and December 31, 2017, the consentbalance was as follows:

During the six months ended June 30, 2018, there have been 15 additional convertible-promissory notes totaling $516,923. One previous $50,000 convertible-promissory note was converted into stock.

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Break-out of debt between the parent company and our subsidiary PVMS is as follows:

At PVMS, the total of notes issued year-to-date and their dollar values were as follows:

All notes are short-term in nature, one-year maturity date. All debt issued has a stated interest rate of 12% per year.

At PVMS, the total of notes converted to stock for the sixth month period ended June 30, 2018 and their dollar values were as follows:

Contingent Liability consisted of 3 items:

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2018 and December 31, 2017, the balance of this indebtedness is as follows:

In 2018, we have reclassified the Legal Settlement Payable of $39,995 to Accounts Payable.

As of June 30, 2018 and December 31, 2017, the balance of accrued interest on this indebtedness is as follows:

During the second quarter of 2018, a total of $4,771,140 was written off to Extinguishment of loan due to shareholder. The remaining balance of $246,568 was reclassified as Accrued Interest Payable (non-related party).

As of June 30, 2018 and December 31, 2017, the balance of other accrued liabilities is as follows:

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In 2018 other accrued liabilities of $1,053,270 has been reclassified to its proper category, $696,989 has been reclassified to accrued interest-non-related party, $196,260 to loan payable related party, $150,000 to accrued board of directors fees, and $10,021 was a reversal of the borrower. A copyDecember 31, 2017 year-end accrual of wages, subcontractor fees, and commissions.

An expired promissory note and the accrued interest was written off to extinguishment of loan due to shareholders in accordance with Florida Law 95.11 (2)(b) on the expiration of debt. The principal amount of $3,000,000 and accrued interest of $4,771,140 was written off.

We lease certain office space under an operating lease that expires on June 30, 2019. The Tampa office lease contains an annual escalation clause and a provision for payment of real estate taxes, insurance, and maintenance and repair expenses. Total rental expense for the lease for the sixth month periods ended June 30, 2018 and June 30, 2017 is $49,607 and $62,015, respectively.

During the six month period ended June 30, 2018, the Company issued 2,000,000 shares of common stock for a legal settlement. The shares were issued at a value of $0.12 per share or for a total value of $240,000. In addition, the Company issued 1,597,971 shares for the conversion of a promissory note of $50,000 and accrued interest of $1,231. The stock was issued at a value of $0.03 per share. The Company relied on Section 4(a)(1) of the correctedSecurities Act of 1933, as amended, as the exemption from registration under the Act. The Company authorized the increase in the number of common shares available to one billion common shares as described within Note 14.

During the six month period ended June 30, 2017, no stock was sold or issued.

Except as set forth in Item 1, all of the legal proceedings for the six month periods ended June 30, 2018 is attacheddisclosed in our annual report on Form10-K filed on January 29, 2019.

On May 15, 2018, the Company was awarded $269,750 during the final settlement of litigation in connection with overpaid fees owed to the Company. In addition the Company was awarded $70,000 related to use of a trademark in a mediation settlement. As referred to in Note 3, $309,893 of these awarded settlements are still outstanding as Exhibit 4.27 hereto and incorporated herein by reference.of June 30, 2018.

ADVANZEON SOLUTIONS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In accordance with Rule 12b-15 underASC Topic 855, “Subsequent Events”, the Company evaluated subsequent events through April 22, 2019, the date these financial statements were available to be issued. During their evaluation, the following subsequent event was identified.

The Company entered into various convertible debt agreements totaling $1,185,000. Additionally, on September 28, 2018 the Company adjusted the par value of the Series C Convertible Preferred Stock from $50 per share to $.001 per share.

On March 21, 2019, the Company issued 200,000 shares of its common stock to its Securities Exchange ActCommission counsel, who elected to take common stock in the Company as partial payment of 1934, as amended, this Amendment is accompanied by currently dated certificationshis legal fees.

Additionally on Exhibits 31.1, 31.2, 32.1March 29, 2019, the Company issued 500,000 shares of its common stock to an existing shareholder and 32.2 by our Chief Executive Officer and Chief Financial Officer.

Except as expressly set forth in this Amendment, we are not amending any other partwarrant holder, who elected to exercise his warrants to purchase 500,000 shares of the Original Form 10-Q. This Amendment does not reflect events occurring after the filingCompany's common stock for $15,000.  The warrants were issued during May of the Original Form 10-Q or modify or update any related or other disclosures, including the forward-looking statements, unless expressly noted otherwise. Accordingly, this Amendment2017.

ADVANZEON SOLUTIONS, INC.

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

General

The following information should be read in conjunction with the Originalfinancial statements and notes thereto and in conjunction with Managements’ Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-Q.

This report includes forward-looking statements, the realization of which may be affected by certain important factors.

Overview

The Company through its wholly-owned subsidiary Pharmacy Value Management Solutions, Inc. administers and operates a medically-driven sleep apnea program branded SleepMaster Solutions™ (“SMS”). Management believes that SMS is the largest provider of these combined services in the nation. We are in all 50 states and provide a turnkey solution designed to effectively keep drivers on the road with no down time, compliant with DOT regulations, improve their health, and significantly decrease legal liability risk for the employer. We are vertically integrated, and we provide a “Program” of services that addresses all the needs of a corporate transportation system, union or other driver-related organizations. We believe we are the only company capable of providing the full range of needed services in a timely manner.

Our services start with the identification of the target population and the potential risk the client currently has. We can do this through our SMS Program, which includes the ability to screen every driver to identify if signs and symptoms of sleep apnea are present. We can then take this data and provide the employer with a list of those drivers that should be tested and the statistical likelihood of the percentage of those drivers who will test positive for obstructive sleep apnea (OSA). Together with the employer/union, SMS provides a realistic time frame, actual total cost, and process for testing all drivers who need to be tested. For those drivers testing positive for OSA, we then provide the appropriate treatment such that the driver will meet the DOT requirements and remain on the road. We monitor 365 days per year driver’s usage of the treatment device according to DOT standards and we report that usage to all stakeholders as required/permitted. We utilize mathematical algorithms to determine if the driver is predicatively meeting the annual DOT requirements for usage. Using those predictive algorithms, we reach out to those drivers and provide case management, encouragement designed to solve problems such that the driver increases usage, if necessary, and remains compliant.

SMS constructed its model based upon the foregoing principles. The SMS Program includes all processes attended in sleep apnea screening, testing, treatment, monitoring and overall management of commercial drivers’ as well as their employers’ needs. We have successfully established relationships with national health care clinic providers, all with certified medical examiner (“CME”) status. These clinics total almost 1,000 throughout the U.S. We also have both formal and informal relationships with employers; municipalities; a significant veteran’s group; union and non-union driving organizations; suppliers of home sleep testing equipment and a variety of OSA treatment devices; and, a national network of telemedicine sleep specialists covering all 50 states. We have an internal medical team for governance and protocol purposes and a customer service department that interfaces directly with our drivers. We also have a marketing team that regularly interfaces with our existing accounts and markets our services to potential new accounts. Our services are performed utilizing a best medical practices model and an efficient, cost-effective delivery system. We obtain the required equipment on a per order basis from a durable medical equipment distributor.

ADVANZEON SOLUTIONS, INC.

Revenue is recognized when billed, which is approximately when the testing service is performed or CPAP machine is shipped.

During the period, the Company worked diligently to develop its marketing platform with respect to agreements previously entered into. In addition, it entered into two new agreements designed to not only generate revenue for the Company but increase its visibility on a national stage. At the end of the previous quarter, the Company entered into an agreement with T.A. Baxter, LLC (“Baxter”), a specialty pharmaceutical company specializing in CDC-compliant opioid pain medication, commercially known as LoMed. The agreement provides for the automatic sleep apnea testing of all LoMed patients as a pre-condition to being prescribed the LoMed product. During this period, the Company worked closely with Baxter in connection with promoting the LoMed product to pain clinics and physicians in various geographic locations. The Company believes that its sleep apnea program is an integral part of good medicine in connection with the prescribing of pain medication to patients and that its relationship with Baxter provides the Company with an excellent opportunity for the Company to market its product in the pain/behavioral health space, in general.

In April, the Company entered into an agreement with Interstate Specialty Marketing, Inc. (“ISM”), a specialty marketing company that offers a wide array of products and services to affinity groups with whom it contracts. The agreement provides for the Company to be included automatically in ISM’s promotion to its association clients on a going-forward basis. ISM currently has two material association accounts. The agreement is effective immediately. However, the Company anticipates a ramp-up time of three to five months before ISM will have designed appropriate marketing material for execution of its obligations to the Company. During the next two quarters, the Company will work closely with ISM so that when launched, the Company’s product will be embedded as an automatic benefit being provided to all of the members of ISM’s clients, nationwide.

Also in this quarter, we entered into an agreement with a large national healthcare services provider that provides a number of healthcare services, nationwide, to former employees of the U.S. Government. These services include testing for sleep apnea, when suspected. This is a third-party payer arrangement, whereby, when our contract partner examines a member of this group and suspects that the patients may suffer from sleep apnea, the patient is referred to us for sleep apnea testing. This is not an exclusive arrangement, but we do not know of any other resource being used by our contract partner for this purpose. Our fees for testing our contract partner’s patients are billed to and paid by our contract partner.

In this quarter, we entered into an agreement with one of the nation’s largest healthcare providers, which agreement designates us as a national vendor for this healthcare provider. The agreement specifically designates us as the obstructive sleep apnea (OSA) healthcare provider for a large municipality with whom our contract partner also contracted. Under the terms of this agreement, the Company provides sleep apnea testing to all municipal employees visiting our contract partner’s clinics who exhibit signs of OSA. Our services are billed to and paid by our contract partner. This agreement is exclusive with respect to the subject municipality.

ADVANZEON SOLUTIONS, INC.

Sources of Revenue

Three month periods ended June 30, 2018 and 2017

A quantitative summary of our revenues by source category for the three month periods ended June 30, 2018 and 2017:

ITEM 6. EXHIBITS

ADVANZEON SOLUTIONS, INC.

Financial Condition

Liquidity and Capital Resources

During the six month periods ended June 30, 2018, we funded our operations from revenues and $525,043 in private borrowings. We will continue to fund our operations from these sources until we are able to produce operating revenue sufficient to cover our cost structure. In the event we are not able to secure such funding, our operations will be adversely affected.

Short Term: We funded our operations with revenues from sales and private borrowings.

Item 3. Quantitative and Qualitative Disclosures about Market Risk: As a smaller reporting company we are not required to make any disclosure.

Item 4. Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions may occur or the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2018. This evaluation was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, Internal Control-Integrated Framework. Based upon such assessment, our CFO concluded that, as of June 30, 2018, our internal controls over financial reporting were not optimally effective in the specific areas described in the paragraphs below.

As of June 30, 2018, our CFO identified the following specific material weaknesses in the Company’s internal controls over its financial reporting processes:

ADVANZEON SOLUTIONS, INC.

As a result of our retaining the services of an Outside Accountant in January 2018 and appointing an internal Company employee to interface with the Outside Accountant, we have instituted the following policies and procedures designed to address the material weaknesses cited above.

The Company plans to further augment its addressing of material weaknesses, on an as-needed basis, by hiring additional accounting personnel once its initial corrective steps have been fully implemented, tested and found to be effective.

ADVANZEON SOLUTIONS, INC.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

With the exception of the matter set forth below, all of the legal proceedings for the six month period ended June 30, 2018 is disclosed in our annual report on Form 10-K filed on January 29, 2019.

In a related matter to the Katzman litigation, On January 10, 2017, the Company brought an action against Melanie Damian et al. Case number 17-CA-00252, Thirteenth Judicial Circuit Court. Hillsborough County, FL. The Company alleges abuse of process based on wrongful collection practices including wrongful garnishment of bank accounts. The matter has been dismissed by mutual consent.

In an action entitled Pharmacy Value Management Services Inc. v. Hartman et al,
Case No. 8:17-cv-132-T-35TBM (M.D. Fla.) – a settlement pursuant to the mediation in the matter was reached and executed on March 18, 2018. Pursuant to the settlement Defendants paid the sum of $70,000.

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

With the exception of the matter set forth below the sale of unregistered securities for the period were disclosed in our annual report on Form 10-K filed on January 29, 2019.

During the six month period ended June 30, 2018, the Company issued 2,000,000 shares of common stock for a legal settlement. The shares were issued at a value of $0.12 per share or for a total value of $240,000. In addition, the Company issued 1,597,971 shares for the conversion of a promissory note of $50,000 and accrued interest of $1,231. The stock was issued at a value of $0.03 per share. We relied on Section 4(a)(1) of the Securities Act of 1933, as amended, as the exemption from registration under the Act.

Item 3. Exhibits

Documents filed as part of this Report.

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.