UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2021
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________ to _____________
Commission File Number: 000-51935
Sun Pacific Holding Corp
(Exact Name of Registrant as Specified in Its Charter)
| Nevada | 90-1119774 | |
|
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
| 345 Highway 9 South Suite 388, Manalapan, NJ | 07726 | |
| (Address of Principal Executive Office) | (Zip Code) |
(732) 845-0906
(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: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Non-accelerated filer ☐ | Smaller reporting company ☒ | |
| (Do not check if a 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 ☒
As of August 16, 2021 there were 974,728,678 shares of the registrant’s common stock, $0.0001 par value, outstanding.
SUN PACIFIC HOLDING CORP AND SUBSIDIARIES
INDEX
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 26 |
| Item 4. | Controls and Procedures | 26 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 27 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 28 |
| Item 3. | Defaults Upon Senior Securities | 31 |
| Item 5. | Other Information | 31 |
| Item 6. | Exhibits | 31 |
| Signatures | 32 | |
| 2 |
FORWARD-LOOKING STATEMENTS
Except for any historical information contained herein, the matters discussed in this quarterly report on Form 10-Q contain certain “forward-looking statements’’ within the meaning of the federal securities laws. This includes statements regarding our future financial position, economic performance, results of operations, business strategy, budgets, projected costs, plans and objectives of management for future operations, and the information referred to under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
These forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,’’ “will,’’ “expect,’’ “intend,’’ “estimate,’’ “anticipate,’’ “believe,’’ “continue’’ or similar terminology, although not all forward-looking statements contain these words. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, you are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Important factors that may cause actual results to differ from projections include, for example:
| ● | the success or failure of management’s efforts to implement our business plan; | |
| ● | our ability to fund our operating expenses; | |
| ● | our ability to compete with other companies that have a similar business plan; | |
| ● | the effect of changing economic conditions impacting our plan of operation; and | |
| ● | our ability to meet the other risks as may be described in future filings with the Securities and Exchange Commission (the “SEC”). |
Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this quarterly report on Form 10-Q.
When considering these forward-looking statements, you should keep in mind the cautionary statements in this quarterly report on Form 10-Q and in our other filings with the SEC. We cannot assure you that the forward-looking statements in this quarterly report on Form 10-Q will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may prove to be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified timeframe, or at all.
| 3 |
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
| 4 |
SUN PACIFIC HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 2021 AND DECEMBER 31, 2020
(unaudited)
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 74,776 | $ | 55,817 | ||||
| Accounts receivable, net of allowance for uncollectable accounts of $0 and $22,835, respectively | 35,563 | 34,995 | ||||||
| Current assets held for disposal | - | 178,521 | ||||||
| Total current assets | 110,339 | 269,333 | ||||||
| Property and Equipment, Net | 91,751 | 99,289 | ||||||
| Deposits and Other Assets | 22,531 | 22,531 | ||||||
| Non-current assets held for disposal | - | 8,702,974 | ||||||
| Total assets | $ | 224,621 | $ | 9,094,127 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 67,812 | $ | 93,182 | ||||
| Accounts payable, related party | 106,512 | 106,512 | ||||||
| Accrued compensation to officer | 1,010,714 | 929,797 | ||||||
| Accrued expenses | 130,457 | 172,567 | ||||||
| Accrued expenses, related party | 110,347 | 95,591 | ||||||
| Dividends payable, related party | 22,038 | 22,038 | ||||||
| Advances from related parties | 615,432 | 615,432 | ||||||
| Project financing obligation | 260,000 | 260,000 | ||||||
| Convertible notes payable | 98,425 | 196,850 | ||||||
| Convertible notes payable, related party | 408,196 | 408,196 | ||||||
| Notes Payable, net of discounts | 200,000 | 200,000 | ||||||
| Current liabilities held for disposal | - | 1,160,809 | ||||||
| Total current liabilities | 3,029,933 | 4,260,974 | ||||||
| Long Term Liabilities: | ||||||||
| Convertible note | - | |||||||
| Notes payable, net of discounts | 66,397 | 30,492 | ||||||
| Lease liability, net of current portion | - | - | ||||||
| Long -term liabilites held for disposal | - | 10,810,243 | ||||||
| Total liabilities | 3,096,330 | 15,101,709 | ||||||
| Commitments and contingencies (see Note 7) | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock $0.0001 par value, 20,000,000 million shares authorized: Series A preferred stock: 12,000,000 shares designated; 12,000,000 shares issued and outstanding | 1,200 | 1,200 | ||||||
| Series B preferred stock: 1,000,000 shares designated; -0- shares issued and outstanding, respectively | - | - | ||||||
| Series C preferred stock: 500,000 shares designated; -0- and 275,000 shares issued and outstanding, respectively | - | - | ||||||
| Preferred Stock Value | ||||||||
| Common stock $0.0001 par value, 1,000,000,000 shares authorized; 966,726,357 and 725,982,137 shares issued and outstanding, respectively | 97,495 | 96,672 | ||||||
| Additional paid in capital | 4,847,775 | 4,693,389 | ||||||
| Accumulated deficit | (7,818,179 | ) | (9,417,865 | ) | ||||
| Total deficit | (2,871,709 | ) | (4,626,604 | ) | ||||
| Non-controlling interst in subsidiary | - | (1,380,978 | ) | |||||
| Total stockholders’ deficit | (2,871,709 | ) | (6,007,582 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 224,621 | $ | 9,094,127 | ||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 5 |
SUN PACIFIC HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2019
(unaudited)
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenues | $ | 72,861 | $ | 96,091 | $ | 101,971 | $ | 166,781 | ||||||||
| Cost of Revenues | 7,351 | 4,860 | 10,613 | 23,140 | ||||||||||||
| Gross profit | 65,510 | 91,231 | 91,358 | 143,641 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Wages and compensation | 40,459 | 55,504 | 80,917 | 111,872 | ||||||||||||
| Professional fees | 9,529 | 22,834 | 16,048 | 32,466 | ||||||||||||
| Rent | - | - | - | - | ||||||||||||
| General and administrative | 38,511 | 10,582 | 73,857 | 127,316 | ||||||||||||
| Total operating expenses | 88,499 | 88,920 | 170,822 | 271,654 | ||||||||||||
| Loss from continung operations operations | (22,989 | ) | 2,311 | (79,464 | ) | (128,013 | ) | |||||||||
| Other Expenses: | ||||||||||||||||
| Interest expense | (15,454 | ) | (91,270 | ) | (33,430 | ) | (37,031 | ) | ||||||||
| Total other expense | (15,454 | ) | (91,270 | ) | (33,430 | ) | (37,031 | ) | ||||||||
| Net loss from continuing operations before income tax benefit | (38,443 | ) | (88,959 | ) | (112,894 | ) | (165,044 | ) | ||||||||
| Income tax benefit - continuing operations | 956,913 | - | 820,721 | - | ||||||||||||
| Net income (loss) from continuing operations | 918,470 | (88,959 | ) | 707,827 | (165,044 | ) | ||||||||||
| Income (loss) from discontinued operations before income taxes | 3,606,909 | (467,222 | ) | 3,093,558 | (767,907 | ) | ||||||||||
| Income tax expense - discontinued operations | (956,913 | ) | - | (820,721 | ) | - | ||||||||||
| Income (loss) from discontinued operations | 2,649,996 | (467,222 | ) | 2,272,837 | (767,907 | ) | ||||||||||
| Net income (loss) | $ | 3,568,466 | $ | (556,181 | ) | $ | 2,980,664 | $ | (932,951 | ) | ||||||
| Net loss (income) attributable to non-controlling interst | (1,632,520 | ) | 228,938 | (1,380,978 | ) | 376,274 | ||||||||||
| Net income (loss) attributable to common stockholders | $ | 1,935,946 | $ | (327,243 | ) | $ | 1,599,686 | $ | (556,677 | ) | ||||||
| Net Loss Per Common Share - Basic | $ | 0.00 | $ | (0.00 | ) | $ | 0.00 | $ | (0.00 | ) | ||||||
| Weighted Average Shares Outstanding - Basic | 974,953,335 | 966,726,357 | 973,418,836 | 920,877,262 | ||||||||||||
| Net Loss Per Common Share - Diluted | $ | 0.00 | $ | 1.00 | $ | 0.00 | $ | 1.00 | ||||||||
| Weighted Average Shares Outstanding - Diluted | 1,065,158,373 | 966,726,357 | 1,063,623,874 | 920,877,262 | ||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 6 |
SUN PACIFIC HOLDING CORP .
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(unaudited)
| - | Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Deficit | ||||||||||||||||||||||||
| Series A | Additional | Non- | ||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid In | Accumulated | Controlling | Total | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Interest | Deficit | |||||||||||||||||||||||||
| Six Months Ended June 30, 2020 | ||||||||||||||||||||||||||||||||
| Balances at December 31, 2019 | 12,000,000 | $ | 1,200 | 725,982,137 | $ | 72,598 | $ | 4,717,462 | $ | (8,342,437 | ) | $ | (590,986 | ) | $ | (4,142,163 | ) | |||||||||||||||
| Issuance of common stock upon cashless exercise of warrants | - | - | 240,744,220 | 24,074 | (24,074 | ) | - | - | - | |||||||||||||||||||||||
| Issuance of Previously subscribed common stock | ||||||||||||||||||||||||||||||||
| Conversion of convertible debt | ||||||||||||||||||||||||||||||||
| Cashless exercise of common stock warrants | ||||||||||||||||||||||||||||||||
| Issuance of Previously subscribed common stock, shares | ||||||||||||||||||||||||||||||||
| Conversion of convertible debt, shares | ||||||||||||||||||||||||||||||||
| Cashless Exercise Of Common Stock Warrants Shares | ||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | (229,434 | ) | (147,336 | ) | (376,770 | ) | |||||||||||||||||||||
| Balances at March 31, 2020 | 12,000,000 | 1,200 | 966,726,357 | 96,672 | 4,693,388 | (8,571,871 | ) | (738,322 | ) | (4,518,933 | ) | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (327,343 | ) | (228,938 | ) | (556,181 | ) | |||||||||||||||||||||
| Balances at June 30, 2020 | $ | 12,000,000 | $ | 1,200 | $ | 966,726,357 | $ | 96,672 | $ | 4,693,388 | $ | (8,899,214 | ) | $ | (967,260 | ) | $ | (5,075,214 | ) | |||||||||||||
| Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||
| Balances at December 31, 2020 | 12,000,000 | $ | 1,200 | 966,726,357 | $ | 96,672 | $ | 4,693,389 | $ | (9,417,865 | ) | $ | (1,380,978 | ) | $ | (6,007,582 | ) | |||||||||||||||
| Issuance of Previously subscribed common stock | - | - | 300,000 | 30 | (30 | ) | - | - | - | |||||||||||||||||||||||
| Conversion of convertible debt | - | - | 7,626,978 | 763 | 154,446 | - | - | 155,209 | ||||||||||||||||||||||||
| Cashless exercise of common stock warrants | - | - | 300,000 | 30 | (30 | ) | - | - | - | |||||||||||||||||||||||
| Net loss | - | - | - | - | - | (336,260 | ) | (251,542 | ) | (587,802 | ) | |||||||||||||||||||||
| Balances at March 31, 2021 | 12,000,000 | 1,200 | 974,953,335 | 97,495 | 4,847,775 | (9,754,125 | ) | (1,632,520 | ) | (6,440,175 | ) | |||||||||||||||||||||
| Net income | - | - | - | - | - | 1,935,946 | 1,632,520 | 3,568,466 | ||||||||||||||||||||||||
| Balances at June 30, 2021 | 12,000,000 | $ | 1,200 | 974,953,335 | $ | 97,495 | $ | 4,847,775 | $ | (7,818,179 | ) | $ | - | $ | (2,871,709 | ) | ||||||||||||||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 7 |
SUN PACIFIC HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(unaudited)
| 2021 | 2020 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net income (loss) | $ | 2,980,664 | $ | (932,951 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | 7,538 | 17,315 | ||||||
| Amortization of debt discount - interest expense | - | 234,919 | ||||||
| Gain on deconsolidation | (3,861,861 | ) | - | |||||
| Effect of discontinued operations on cash from operations | 272,304 | 9,835 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (568 | ) | 7,527 | |||||
| Prepaid expenses and deposits | - | - | ||||||
| Accounts payable | (25,370 | ) | (34,026 | ) | ||||
| Accounts payable, related party | - | 14,972 | ||||||
| Accrued compensation to officer | 80,917 | 80,917 | ||||||
| Accrued expenses | 14,674 | 115,376 | ||||||
| Accrued expenses, related party | 14,756 | 15,959 | ||||||
| Net cash used in operating activities | (516,946 | ) | (470,157 | ) | ||||
| Cash flows from Investing Activities (Discontinued Operations): | ||||||||
| Purchase of property and equipment | - | (500,792 | ) | |||||
| Payment of deposits on equipment | - | (488,461 | ) | |||||
| Cash released from escrow | - | 450,909 | ||||||
| Net cash used in investing activities | - | (538,344 | ) | |||||
| Cash flows from Financing Activities: | ||||||||
| Proceeds from payroll protection loan | 35,905 | - | ||||||
| Proceeds from the issuance of convertible debt | 500,000 | - | ||||||
| Net cash provided by financing activities | 535,905 | - | ||||||
| Net decrease in cash and restricted cash | 18,959 | (1,008,501 | ) | |||||
| Cash and restricted cash at beginning of period | 55,817 | 1,270,949 | ||||||
| Cash and restricted cash at end of period | $ | 74,776 | $ | 262,448 | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Interest paid | $ | - | $ | 450,909 | ||||
| Taxes paid | $ | - | $ | - | ||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Note payable extension fee added to principal | $ | 458,063 | $ | 436,250 | ||||
| Issuance of common stock upon conversion of convertible debt and accrued interest | $ | 155,209 | $ | - | ||||
| Right-of-use asset and operating lease liability | $ | - | $ | - | ||||
The accompanying footnotes are an integral part of these condensed consolidated financial statements.
| 8 |
SUN PACIFIC HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2021 AND 2020
NOTE 1 - DESCRIPTION OF THE BUSINESS
The Company was incorporated under the laws of the State of New Jersey on July 28, 2009, as Sun Pacific Power Corporation and together with its subsidiaries, are referred to as the “Company”. On August 24, 2017, the Company entered into an Acquisition Agreement with EXOlifestyle, Inc. whereby the Company became a wholly owned subsidiary of EXOlifestyle, Inc. The acquisition was accounted for as a reverse merger, resulting in the Company being considered the accounting acquirer. Accordingly, the accompanying condensed consolidated financial statements included the accounts of EXOlifestyle, Inc. since August 24, 2017.
Utilizing managements history in general contracting, coupled with our subject matter expertise and intellectual property (“IP”) knowledge of solar panels and other leading-edge technologies, Sun Pacific Holding (“the Company”) is focused on building a “Next Generation” green energy company. The Company offers competitively priced “Next Generation” solar panel and lighting products by working closely with design, engineering, integration and installation firms in order to deliver turnkey solar and other energy efficient solutions. We provide solar bus stops, solar trashcans and “street kiosks” that utilize our unique advertising offerings that provide State and local municipalities with costs efficient solutions, and we have started, through a partnership, with ownership terms to be defined upon securing financing, the opportunity to develop and build a solar farm in Durango Mexico.
Our green energy solutions can be customized to meet most enterprise and/or government mandated regulations and advanced system requirements. Our portfolio of products and services allow our clients to select a solution that enables them to establish a viable standard product offering that focuses on the goals of the client’s entire organization.
Currently, the Company has five (5) subsidiary holdings. Sun Pacific Power Corp., which was the initial company that specialized in solar, electrical and general construction. Bella Electric, LLC that in conjunction with the Company operates our electrical contracting work. Bella Electric, LLC is a Pennsylvania limited liability company. The Company also formed Sun Pacific Security Corp., a New Jersey corporation. Bella Electric, LLC and Sun Pacific Security Corp. have generally ceased operations, but we maintain the subsidiaries in case we find opportunities to relaunch our operations. The Company also formed National Mechanical Group Corp, a New Jersey corporation focused on plumbing operations in the New Jersey and Pennsylvania areas. Currently the Company is exploring migrating National Mechanical Group Corp from plumbing operations to partnering on a Solar Farm project in Durango Mexico in which it will partner with Soluciones De Energia Diversificada Internacional, S.A.P.I. (“SEDI”), a subsidiary of Blissful Holdings, LLC. The Company also formed Street Smart Outdoor Corp, a Wyoming corporation that acts as a holding company for the Company’s state specific operations in unique advertising through solar bus stops, solar trashcans and “street kiosks.” MedRecycler, LLC, is a wholly owned subsidiary duly formed in the state of Nevada. MedRecycler, LLC was created in 2018 to act as a holding company for potential waste to energy projects. On May 28, 2021, MedRecycler, LLC, exchanged its 51% interest in MedRecycler RI, Inc. a Rhode Island Corporation for a profit participation agreement with MedRecycler RI, Inc. MedRecycler RI, Inc. was created for the Medical Waste to Energy facility that the Company was attempting to finance and operate in West Warrick, Rhode Island. The Company no longer consolidates MedRecycler RI, Inc. as of May 28, 2021.
As of today, the Company’s principal source of revenues is derived from Street Smart Outdoor Corp. operations in the outdoor advertising business with contracts in place in Rhode Island and Tallahassee, Florida, along with some other minor contracting work that we are currently reviewing to determine if we shall continue pursuing in the future.
The Company has been unable to produce positive cashflows since inception resulting in the Company relying heavily upon convertible promissory notes and equity financing. As a result, the Company’s shareholders have suffered from highly dilutive financings. The Company will need to continue to rely upon debt, equity, partnership arrangements, and other sharing or rights participation agreements to fund its ability to undertake new and ongoing business opportunities to remain viable in the future.
| 9 |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles of the United States of America (“GAAP”) and the interim reporting rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
Use of estimates in the preparation of financial statements
Preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Significant estimates include the allowance for doubtful accounts and impairment assessments related to long-lived assets.
Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned, and less-than-wholly owned subsidiaries of which the Company holds a controlling interest. All significant intercompany balances and transactions have been eliminated. Amounts attributable to minority interests in the Company’s less-than-wholly owned subsidiary are presented as non-controlling interest on the accompanying condensed consolidated balance sheets and statements of operations.
Discontinued Operations
In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when the components of an entity meets the criteria in paragraph 205-20-45-10. In the period in which the component meets held-for-sale or discontinued operations criteria the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations. At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations.
The Company disposed of a component of its business pursuant to a Net Profit Participation Agreement dated May 28, 2021, resulting in the Company no longer controlling the subsidiary, which met the definition of a discontinued operation. Accordingly, the operating results of the business disposed are reported as income (loss) from discontinued operations in the accompanying condensed consolidated statements of operations for the three and six months ended June 30, 2021, and 2020, and its assets and liabilities are categorized as held for disposal on the condensed consolidated balance sheet as of December31, 2021. The following summarize assets and liabilities held for disposal on the accompanying condensed consolidated balance sheets and statements of operations:
| 10 |
SCHEDULE OF DISPOSAL OF DISCONTINUED OPERATIONS
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Carrying amounts of current assets held or disposal: | ||||||||
| Cash | $ | - | $ | 101,313 | ||||
| Cash held in escrow | - | 77,208 | ||||||
| Total current assets held for disposal | $ | - | $ | 178,521 | ||||
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Carrying non-current assets held or disposal: | ||||||||
| Property and Equipment, Net | $ | - | $ | 1,194,031 | ||||
| Right-of-Use Asset | - | 1,094,314 | ||||||
| Deposits and Other Assets | - | 6,414,629 | ||||||
| Total non-current assets held for disposal | $ | - | $ | 8,702,974 | ||||
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Carrying amounts of current liabiities held or disposal: | ||||||||
| Accounts payable amd accrued expenses | $ | - | $ | 1,160,809 | ||||
| Total current liabilities held for disposal | $ | - | $ | 1,160,809 | ||||
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Carrying non-current liabilities held or disposal: | ||||||||
| Notes payable | $ | - | $ | 9,627,784 | ||||
| Right-of-Use Obligation | - | 1,182,459 | ||||||
| Total non-current liabilities held for disposal | $ | - | $ | 10,810,243 | ||||
| 2021 | 2020 | |||||||
| Three Months Ended June 30, | ||||||||
| Operating Expenses | $ | (125,749 | ) | $ | (305,373 | ) | ||
| Interest expenses | (129,203 | ) | (161,849 | ) | ||||
| Gain on deconsolidation | 3,861,861 | - | ||||||
| Net Income (loss) from discontinued operations | $ | 3,606,909 | $ | (467,222 | ) | |||
| June 30, | June 30, | |||||||
| 2021 | 2020 | |||||||
| Six Months Ended June 30, | ||||||||
| Operating Expenses | $ | (483,213 | ) | $ | (516,964 | ) | ||
| Interest expenses | (285,090 | ) | (250,943 | ) | ||||
| Gain on deconsolidation | 3,861,861 | - | ||||||
| Net Income (loss) from discontinued operations | $ | 3,093,558 | $ | (767,907 | ) | |||
Cash, and Cash Equivalents and Cash Held in Escrow
For purposes of the consolidated statements of cash flows, cash includes demand deposits and short-term liquid investments with original maturities of three months or less when purchased. As of June 30, 2021, the Federal Deposit Insurance Corporation (FDIC) provided insurance coverage of up to $250,000, per depositor, per institution. At June 30, 2020, none of the Company’s cash balances were in excess of federally insured limits.
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Accounts Receivable
In the normal course of business, we decide to extend credit to certain customers without requiring collateral or other security interests. Management reviews its accounts receivable at each reporting period to provide for an allowance against accounts receivable for an amount that could become uncollectible. This review process may involve the identification of payment problems with specific customers. Periodically we estimate this allowance based on the aging of the accounts receivable, historical collection experience, and other relevant factors, such as changes in the economy and the imposition of regulatory requirements that can have an impact on the industry. These factors continuously change and can have an impact on collections and our estimation process. The Company’s allowance for doubtful accounts was $0 as of June 30, 2021 and December 31, 2020.
Contingencies
Certain conditions may exist as of the date financial statements are issued, which may result in a loss, but which will only be resolved when one or more future events occur or do not occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to pending legal proceedings that are pending against us or unasserted claims that may result in such proceedings, we evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein. If the assessment of a contingency indicates that it is probable that a liability has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in our consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable would be disclosed.
Fair value of financial instruments
The carrying amounts of the Company’s accounts payable, accrued expenses, and shareholder advances approximate fair value due to their short-term nature.
Property and equipment
Property and equipment are stated at cost. Additions and improvements that significantly add to the productive capacity or extend the life of an asset are capitalized. Maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over three to five years for vehicles and five to ten years for equipment. Leasehold improvements are amortized over the lesser of the estimated remaining useful life of the asset or the remaining lease term.
Impairment of long-lived assets
The Company periodically reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be realizable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. During the six months ended June 30, 202, the Company did not identify any such impairment losses.
Income taxes
Under ASC Topic 740, “Income Taxes”, the Company is required to account for its income taxes through the establishment of a deferred tax asset or liability for the recognition of future deductible or taxable amounts and operating loss and tax credit carry forwards. Deferred tax expense or benefit is recognized as a result of timing differences between the recognition of assets and liabilities for book and tax purposes during the year.
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Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are recognized for deductible temporary differences and operating losses, and tax credit carry forwards. A valuation allowance is established to reduce that deferred tax asset if it is “more likely than not” that the related tax benefits will not be realized.
The incremental tax effects of income from discontinued operations, loss from continued operations, are recognized in the period in which the pretax amounts are recognized. In accordance with ASC 740-20-45, the tax benefit of pretax loss from continuing operations considers income from discontinued operations in determining the amount of tax benefit that results from a loss from continuing operations and that shall be allocated to continuing operations.
Revenue recognition
100% of the Company’s revenue for the six months ended June 30, 2021 and 2020, is recognized based on the Company’s satisfaction of distinct performance obligations identified generally at a point in time as defined by Topic 606, as amended. The Company’s advertising revenues are recognized in the period in which advertising space to customers is provided, which is generally on a monthly basis. Construction revenues generally are recognized upon completion of each contract.
SCHEDULE OF DISAGGREGATION OF REVENUES
| 2021 | 2020 | |||||||
| Outdoor Advertising Shelter Revenues | $ | 101,971 | $ | 130,253 | ||||
| Contracting Service Revenues | - | 36,528 | ||||||
| Revenues | $ | 101,971 | $ | 166,781 | ||||
Advertising Costs
Advertising costs are expensed in the period incurred and totaled $7,362 and $48,447 for the six months ended June 30, 2021 and 2020, respectively.
Earnings Per Share
Under ASC 260, “Earnings Per Share” (“EPS”), the Company provides for the calculation of basic and diluted earnings per share. Basic EPS includes no dilution and is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of securities that could share in the earnings or losses of the entity. For the three and six months ended June 30, 2020, basic and diluted loss per share is the same as the calculation of diluted per share amounts would result in an anti-dilutive calculation. For the six months ended June 30, 2021 and 2020, the following potential shares have been excluded from the calculation of diluted loss per share because their impact was anti-dilutive:
SCHEDULE OF ANTI-DILUTIVE EARNINGS PER SHARE
| 2021 | 2020 | |||||||
| Convertible Debt | - | 258,586,584 | ||||||
| Convertible Debt Subject to Forbearance | - | 545,640,919 | ||||||
| Warrants | 1,000,000 | 1,620,030 | ||||||
| Anti-dilutive securities | 1,000,000 | 805,847,532 | ||||||
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The following summarizes the calculation of diluted income and weighted average shares outstanding for the three and six months ended June 30, 2021:
SUMMARY OF DILUTED INCOME AND WEIGHTED AVERAGE SHARES OUTSTANDING
| Net Income | Weighted Average Shares Outstanding | |||||||
| Three months ended June 30, 2021 | ||||||||
| Basic | $ | 1,935,946 | 974,953,335 | |||||
| Convertible Debt | 10,454 | 90,205,038 | ||||||
| Warrants | 27,962 | - | ||||||
| Diluted | $ | 1,946,400 | 1,065,158,373 | |||||
| Net Income | Weighted Average Shares Outstanding | |||||||
| Six months ended June 30, 2021 | ||||||||
| Basic | $ | 1,599,686 | 973,418,836 | |||||
| Convertible Debt | 32,907 | 90,205,038 | ||||||
| Warrants | 27,962 | - | ||||||
| Diluted | $ | 1,632,593 | 1,063,623,874 | |||||
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred losses from continuing operations and had a working capital deficit of $2,919,594 as of June 30, 2021. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent on its ability to raise the additional capital to meet short and long-term operating requirements. Management is continuing to pursue external financing alternatives to improve the Company’s working capital position however additional financing may not be available upon acceptable terms, or at all. If the Company is unable to obtain the necessary capital, the Company may have to cease operations.
NOTE 4 – PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following as of June 30, 2021 and December 31, 2020:
SCHEDULE OF PROPERTY AND EQUIPMENT, NET
| 2021 | 2020 | |||||||
| Furniture and equipment | $ | 265,999 | $ | 265,999 | ||||
| Vehicles | 67,240 | 67,240 | ||||||
| Leasehold Improvements | 66,077 | 66,077 | ||||||
| Less: Accumulated Depreciation | (307,565 | ) | (300,027 | ) | ||||
| Property and equipment, net | $ | 91,751 | $ | 99,289 | ||||
Depreciation expenses totaled $7,538 and 17,315 for the six months ended June 30, 2021 and 2020, respectively.
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NOTE 5 - BORROWINGS
Convertible notes payable
On August 24, 2016, the Company issued two two-year unsecured convertible notes payable totaling $200,000 pursuant to a private placement memorandum. The notes matured on August 24, 2018 and have an annual interest rate of 12.5%. At the election of the holder, upon the occurrence of certain events, the notes can be converted into common stock of the Company at a conversion price per share equal to 50% of the average bid price for the 30 consecutive business days prior to conversion. The conversion feature is contingent upon i) the successful filing of a registration statement to become publicly traded, and ii) the company stock has become publicly quoted on the OTC Markets and iii) the conversion price is above $0.10. In August 2018, the holders of the notes agreed to extend the maturity date of the notes to December 31, 2018, in exchange for warrants to acquire 600,000 shares of common stock for an exercise price of $0.31 per share, exercisable over three years. The Company estimated the fair value of the warrants, totaling $16,401, using the Black Scholes Method and recorded an additional discount against the note to be amortized over the extended term of the notes. $100,000 of the notes were exchanged in March of 2021. The remaining notes are carried at $98,425 with no remaining unamortized discount as of June 30, 2021 and December 31, 2020. The notes are currently in default and have not been converted.
Convertible notes payable, related party
On October 23, 2015, a total of $332,474 in advances from a related party was converted into two one-year unsecured convertible notes payable to Nicholas Campanella, Chief Executive Officer of the Company. The notes have an annual interest rate of 6% and are currently in default. At the election of the holder, the notes can be converted into common stock of the Company at a conversion price per share equal to 20% of the average bid price for the three consecutive business days prior to conversion. As of June 30, 2021 and December 31, 2020, the balances of the notes totaled $332,474.
On August 24, 2016, a total of $75,000 in advances from a related party was converted into a two-year unsecured convertible note payable to Nicholas Campanella, Chief Executive Officer of the Company, pursuant to a private placement memorandum. The note matures on August 24, 2018, has an annual interest rate of 12.5% and is due at maturity. At the election of the holder, upon the occurrence of certain events, the note can be converted into common stock of the Company at a conversion price per share equal to 50% of the average bid price for the 30 consecutive business days prior to conversion. The conversion feature is contingent upon i) the successful filing of a registration statement to become publicly traded, and ii) the company stock has become publicly quoted on the OTC Markets and iii) the conversion price is above $0.10. In connection with this note, the Company issued 75,000 shares of Series B preferred stock, as further described in Note 6. As of June 30, 2021 and December 31, 2020, the balance of the notes was $75,000. The notes are carried at $76,500 as of June 30, 2021 and December 31, 2020, with no remaining unamortized discounts.
Accrued interest on the convertible notes, related party totaled $105,522 and $90,670 as of June 30, 2021 and December 31, 2020, respectively.
Project Financing Obligation
In June 2018, the Company received proceeds of $260,000 pursuant to a partnership agreement and related partnership contribution agreements with third party investors, pursuant which investors have agreed to provide financing for no less than (10) ten new bus shelters being installed annually. Each investment in the partnership grants the investor the right to preferential distributions of profits related to the Company’s contract with Rhode Island. The investors receive 100% of the profits from the Rhode Island contract to install 20 bus shelters until 100% of the initial investments are returned. Thereafter, the investors receive 20% of the remaining profits from Rhode Island contract. As of June 30, 2021 and December 31, 2020, no profits have been earned on the Rhode Island contract, no repayments have occurred, and the total amount of investments received totaling $260,00 is reflected on the accompanying consolidated balance sheet as a Project Financing Obligation.
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Line of credit, related party
On October 23, 2015, the Company entered into a line of credit agreement with Nicholas Campanella, Chief Executive Office of the Company, for a total value of $250,000. The line of credit does not bear an interest rate and is payable on demand. As of June 30, 2021 and December 31, 2020, the balance of the debt to related party was $164,261.
Note Payable
On June 21, 2019, the Company issued a six-month ten percent interest promissory note in the amount of $200,000. The note was funded July 8, 2019. Per the terms of the note, the Company agreed to issue to the lender was issued 2,000,000 shares of restricted common stock, with a fair value of $2,600 as an inducement. The balance of the note is $200,000 as of June 30, 2021 and December 31, 2020.
Payroll Protection Plan Loans
During the three months ended June 30, 2021, the Company received $35,907 under the Paycheck Protection Program, in addition to $30,492 received in 2020. The Company expects all amounts received under the Paycheck Protection Program to be forgiven in accordance with their terms and therefore has accrued no interest thereon. The balance of the loans totaled $66,397 and $30,492 as of March 31, 2021 and December 31, 2020, respectively. In July 2021, $30,492 was forgiven.
NOTE 6 – STOCKHOLDERS’ DEFICIT
Preferred stock
The Company is authorized to issue 20,000,000 shares of $0.0001 par value preferred stock. As of June 30, 2021, the Company has designated 12,000,000 shares of Series A Preferred Stock, 1,000,000 shares of Series B Convertible Preferred Stock, and 500,000 shares of Series C Convertible Stock.
Series A Preferred Stock - Each share of Series A Preferred Stock is entitled to 125 votes on all matters submitted to a vote to the stockholders of the Company, and does not have conversion, dividend or distribution upon liquidation rights.
Series B Preferred Stock - In connection with the reverse merger, the Company issued 2,000,000 shares of Series B Preferred Stock. Each share of Series B Preferred Stock automatically converted into 30.8565 shares of common stock after giving effect to the reverse stock split that occurred on October 3, 2017. Holders of Series B Preferred Stock are entitled to vote and receive distributions upon liquidation with common stockholders on an as-if converted basis.
Series C Preferred Stock - In connection with the reverse merger, the Company issued 275,000 shares of Series C Preferred Stock. Holders of Series C Preferred Stock are not entitled to voting rights or preferential rights upon liquidation. Each share of Series C Preferred Stock shall pay an annual dividend in the amount of $0.125 per year, for a total of $0.25, over an eighteen (18) month term, from the date of issuance (the “Commencement Date”). Dividend payments shall be payable as follows: (i) dividend in the amount of $0.0625 per share of Series C Preferred Stock at the end of each of the third quarter and fourth quarter of the first twelve (12) months of the twenty-four (24) month period after the Commencement Date; and (ii) dividend in the amount of $0.03125 per share of Series C Preferred Stock at the end of each of the four quarters of the second twelve (12) months of the twenty-four (24) month period after the Commencement Date. The source of payment of the dividends will be derived from up to thirty-five percent (35%) of net revenues (“Net Revenues”) from the Street Furniture Division of the Corporation following the seventh (7th) month after the Commencement Date. To the extent the amount derived from the Net Revenues of the Street Furniture Division is insufficient to pay dividends of Series C Preferred Stock, if a sufficient amount is available, the next quarterly payment date the funds will first pay dividends of Series C Preferred Stock past due. At the conclusion of twenty-four months after the Commencement Date, and upon the payment of all dividends due and owing on said Series C Preferred Stock, the Series C Preferred Stock shall automatically be redeemed by the Corporation and returned to the Corporation for cancellation, as unissued, non-designated, preferred shares. The series C preferred stock were redeemed during the year ended December 31, 2018. As of June 30, 2021 and December 31, 2020, dividends payable of $22,038, are reflected as dividends payable on the accompanying consolidated balance sheets.
Warrants
There were 300,000 warrants exercised during the six months ended June 30, 2021 at an exercise price of $0.031 per share.
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The following summarizes warrant information as of June 30, 2021:
SUMMARY OF WARRANT INFORMATION
| Exercise Price | Number of Shares | Expiration Date | ||||||
| $ | 0.031 | 320,030 | August 24, 2021 | |||||
| $ | 10.00 | 100,000 | October 27,2027 | |||||
| $ | 45.00 | 900,000 | October 27,2027 | |||||
| 1,320,030 | ||||||||
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Employment agreement
On December 20, 2014, the Company entered into a five-year employment agreement with Nicholas Campanella, Chief Executive Officer. Under the terms of the agreement, the Company is required to pay a base compensation of $180,000 annually, subject to increases in cost of living and performance bonuses as awarded by the Board of Directors. After 5 years, the agreement is automatically renewed for an additional two years unless terminated by either party. As part of the agreement Mr. Campanella opted to defer, with no interest, the receipt of compensation under the agreement until the Company has the funds to pay its obligation. In October 2017, the Company issued 12,000,000 shares of series A preferred stock and 1,250,000 shares of common stock to its chief executive officer in settlement of $107,307 of accrued salary. At June 30, 2021 and December 31, 2020, the Company had accrued compensation of $1,010,714 and $929,797, respectively, and recorded the related expenses in wages and compensation expense on the accompanying condensed consolidated statements of operations.
Profit Participation Agreement - HCL
On October 21, 2019, MedRecycler–RI, Inc., a subsidiary of the Company (“MedRecycler”), entered into a profit participation partnership agreement with its medical waste to energy equipment manufacturer. The manufacturer will contribute approximately $3.1 million in Hydrochloric acid (“HCL”) refining equipment that will allow elements of the MedRcycler medical waste residuals to be processed into HCL for sale. The partnership agreement provides for the contribution of the processing equipment in return for a twenty percent (“20%”) gross profit participation right from the processing and sale of the HCL. MedRecycler will contribute and utilize elements of the residual that is produced from the processing of medical waste, along with housing and operating the equipment as part of the agreement. The asset contribution and profit participation partnership agreement are contingent upon the closing of MedRecycler’s permanent financing to fund the MedRecycler facility in West Warrick, RI.
Legal Matters
On May 28, 2019, a former President Director of the Company, filed suit against the Company and its wholly owned subsidiary, Street Smart Outdoor Corp., in Superior Court of New Jersey, Monmouth County, Law Division alleging breach of contract and has demanded $450,000 in lost wages. The matter is currently pending in the New Jersey Superior Court.
On August 3, 2021, MedRecycler-RI, Inc. received a demand letter related to moneys owed for the property leased in West Warwick, Rhode Island. The Company is a guarantor to the lease. Although no formal action has yet been lodged with the courts, the Company has potential liability exposure as the guarantor of the lease obligation. The Company believes that the lease agreement should be cancelled as a result the legislation rendering the continuation of the Rhode Island Project inoperable.
From time to time the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe that the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company.
Currently, the Company besides the legal the legal matter discussed above is not involved in any other pending or threatened material litigation or other material legal proceedings, nor have we been made aware of any pending or threatened regulatory audits.
NOTE 8 - RELATED PARTY TRANSACTIONS
Certain affiliates have made non-interest-bearing advances. The balances of these advances, which are due on demand and include the Advances from Related Parties noted in Note 5, totaled $615,432 as of June 30, 2021 and December 31, 2020. Included in accounts payable related parties as of June 30, 2021 and December 31, 2020, are expenses incurred with these affiliates totaling $76,512 and $76,512, respectively.
In January 11, 2019, the Company entered into that certain Forbearance Agreement between the Company and Nicholas Campanella. Mr. Campanella is owed approximately $648,400 in principal and interest on loans and lines of credit issued by the Company. Those debt obligations are currently in default. As consideration for the forbearance of those debts, the Company has agreed to provide a pledge of 100% membership interest in MedRecycler, LLC, and wholly owned subsidiary of the Company organized in the state of Nevada which holds 51,000 shares of MedRecycler-RI, Inc. as security against the moneys owed. The amounts owed to Mr. Campanella date back nearly five years and represent cash payments made by Mr. Campanella to Sun Pacific Power Corp. On April 3, 2019, Mr. Campanella agreed to extend the forbearance until December 31, 2022.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The discussion and analysis of our financial condition and results of operations are based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States of America. This discussion should be read in conjunction with the other sections of this Form 10-K, including “Risk Factors,” and the Financial Statements. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Annual Report on Form 10-K. See “Forward-Looking Statements.” Our actual results may differ materially. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
As used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” except where the context otherwise requires, the term “we,” “us,” “our,” or “the Company,” refers to the business of Sun Power Holdings Corp.
Organizational Overview
Utilizing managements history in general contracting, coupled with our subject matter expertise and intellectual property (“IP”) knowledge of solar panels and other leading-edge technologies, Sun Pacific Holding (“the Company”) is focused on building a “Next Generation” green energy company. The Company offers competitively priced “Next Generation” solar panel and lighting products by working closely with design, engineering, integration and installation firms in order to deliver turnkey solar and other energy efficient solutions. We provide solar bus stops, solar trashcans and “street kiosks” that utilize our unique advertising offerings that provide State and local municipalities with costs efficient solutions, and we have started, through a partnership, with ownership terms to be defined upon securing financing, the opportunity to develop and build a solar farm in Durango Mexico.
Our green energy solutions can be customized to meet most enterprise and/or government mandated regulations and advanced system requirements. Our portfolio of products and services allow our clients to select a solution that enables them to establish a viable standard product offering that focuses on the goals of the client’s entire organization.
Currently, the Company has five (5) subsidiary holdings. Sun Pacific Power Corp., which was the initial company that specialized in solar, electrical and general construction. Bella Electric, LLC that in conjunction with the Company operates our electrical contracting work. Bella Electric, LLC is a Pennsylvania limited liability company. The Company also formed Sun Pacific Security Corp., a New Jersey corporation. Bella Electric, LLC and Sun Pacific Security Corp. have generally ceased operations, but we maintain the subsidiaries in case we find opportunities to relaunch our operations. The Company also formed National Mechanical Group Corp, a New Jersey corporation focused on plumbing operations in the New Jersey and Pennsylvania areas. Currently the Company is exploring migrating National Mechanical Group Corp from plumbing operations to partnering on a Solar Farm project in Durango Mexico in which it will partner with Soluciones De Energia Diversificada Internacional, S.A.P.I. (“SEDI”), a subsidiary of Blissful Holdings, LLC. The Company also formed Street Smart Outdoor Corp, a Wyoming corporation that acts as a holding company for the Company’s state specific operations in unique advertising through solar bus stops, solar trashcans and “street kiosks.” MedRecycler, LLC, is a wholly owned subsidiary duly formed in the state of Nevada. MedRecycler, LLC was created in 2018 to act as a holding company for potential waste to energy projects. On May 28, 2021, MedRecycler, LLC, exchanged its 51% interest in MedRecycler RI, Inc. a Rhode Island Corporation for a profit participation agreement with MedRecycler RI, Inc. MedRecycler RI, Inc. was created for the Medical Waste to Energy facility that the Company was attempting to finance and operate in West Warrick, Rhode Island. The Company no longer consolidates MedRecycler RI, Inc. as of May 28, 2021.
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As of today, our principal source of revenues is derived from Street Smart Outdoor Corp. operations in the outdoor advertising business with contracts in place in Rhode Island and Tallahassee, Florida, along with some other minor contracting work that we are currently reviewing to determine if we shall continue pursuing in the future. We are currently in discussions with a nationally known outdoor advertising firm to manage and expand our operations, either through a joint venture, partnership, and or a management arrangement as a result of the company’s insufficient working capital and as an option to allow for the expansion of our technologies and or contracts by working with other parties that can bring management expertise and or other resources that may allow us to further optimize our growth strategies.
Sun Pacific Power Corp. is in the process of providing limited general contracting services and are reviewing continuing general contracting in the region as we shift our focus to other green energy opportunities.
Bella Electric, LLC and Sun Pacific Security Corp. have generally ceased operations, but we maintain the subsidiaries in case we find opportunities to relaunch our operations.
MedRecycler, LLC, a wholly owned subsidiary of Sun Pacific Holding Company currently holds fifty one percent (51%) of MedRecycler-RI, Inc., a corporation formed in the state of Rhode Island for the development of waste to energy projects in the state of Rhode Island. Currently, MedRecycler-RI, Inc. has entered into an Indenture of Trust in the amount of $6,025,000.00 as bridge financing for a project in West Warwick, Rhode Island (the “Rhode Island Project”). This was extended and amended to include an additional $2,700,000.00 as the approval process of permanent bond financing has been delay in the state of Rhode Island and again amended and extended with the addition of $500,000 in additional convertible debt being added by a new senior secured lender with such $500,000 in debt converting into equity in the project upon the completion of permanent financing that is further being augmented with the ability of the $500,000 in senior convertible debt expanding up to $2,000,000 with the conversion of up to 40% equity in MedRecycler RI, Inc. The original plan was for a facility in Johnston, Rhode Island, but through our negotiations, determined that the West Warwick location was more suitable. The Indenture of Trust has been secured by all equity holdings in MedRecycler-RI, Inc., all personal holdings of equity in the Company held by Nick Campanella, our CEO and member of the Board of Directors. Mr. Campanella has further pledged personal property located in Manapalan in excess of $1,000,000. Payment for the Indenture of Trust is further guaranteed by the Company and Street Smart Outdoor Corp. Currently, MedRecycler-RI, Inc. has entered into a lease agreement in West Warwick, Rhode Island, has taken preliminary steps to order the equipment, and is beginning to engage specialists and staff for building out the Rhode Island Project. In order to secure actual operations of the Rhode Island Project, we estimate that MedRecycler-RI, Inc. must still secure enough long term financing that will extinguish is short-term debt and fund the permanent financing of its operations.
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Currently, the legislative bill High-Heat Medical Waste Facility Act has been signed into law by the signature the Governor of Rhode Island. The effect of the bill would be essentially ban the specific operation of the Rhode Island Project. The Company has engaged counsel to challenge the bill, generally, however, even a successful action against the state of Rhode Island would be timely and expensive and still does not ensure that MedRecycler-RI, Inc. can even get permitting. If the Rhode Island Project fails, the note holders will likely foreclose on the project, including all security and guarantees.
Currently the Company is also exploring migrating its subsidiary, National Mechanical Group Corp from plumbing operations to partnering on a Solar Farm project in Mexico in which it will partner with other subject matter experts and seek project financing. If successful, National Mechanical Group Corp would own equity in the partnership that would own a portion of the project and also receive compensation for its work in project management and other professional services.
On September 19, 2019, the United States Patent and Trademark Office published patent US 2019 288 139 A1 for the Frame-Less Encapsulated Photo-Voltaic (PV) Solar Power Panel Supporting Solar Cell Modules Encapsulated Within Optically-Transparent Epoxy-Resin Material Coating a Phenolic Resin Support Sheet issued to National Mechanical Group Corp. Originally designed for application in the solar bus shelters operated by Street Smart Outdoor Corp, as a glassless solar panel, the Company has developed a patent protected product and process for creating solar panels that can be integrated directly into the design of products as a molded, weather resistant plastic. The Company will begin work developing a business plan for expanding on either manufacturing or licensing of the technology in the future.
Currently, the Company has been and is insolvent if you factor in the Company’s debt obligations. Over its history and to augment the Company’s strategy, it has sought out partnerships and other arrangements with professionals and companies at the operating subsidiary level to counter its insolvent state, coupled with the Company’s use of debt and equity financings. The Company continues to look for opportunities that will allow it to partner with others in the form of debt and or equity and other contributions at the subsidiary level, and where possible attempt to keep control of at least fifty one percent (51%) of those subsidiaries. While it will also look for the means to correct its insolvent state at the holding company level, given its current negative economic condition, many parties continue to prefer to work with the Company at an operational subsidiary level. The Company is currently exploring other equity and or debt opportunities to correct its overall insolvent state. Although we continue operations through our subsidiary holdings, revenues generated do not fully produce cash flows sufficient to meet our basic capital requirements. In order to meet our reporting requirements, we may have to seek additional capital through debt or equity financing and/or request deferred payment or other in-kind payments for services. Street Smart Outdoor is undercapitalized making expansion of our advertising products highly unlikely or difficult to expand without the use of potential partnerships and or commission only sales representatives. Neither the Company nor Street Smart Outdoor have secured additional financing to support operations. We are attempting to partner or otherwise develop a capital strategy to allow us to grow the outdoor advertising business that includes financing outdoor structures with other parties, in which we arrange financing arrangements, and we continue to look for other professional organizations that we can partner with in expanding our contracts.
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On January 29, 2021, MedRecycler-RI, Inc., a subsidiary of Sun Pacific Holding Corp., (the “Company”) entered into an amendment to the Indenture of Trust with UMB Bank, extending the term of the two (2) bond’s representing bridge financing for the Rhode Island medical waste to energy project for a period of up to one year from the date of signing. The extension of the bonds shall accrue interest, including a capitalized extension fee of five (5%) percent, at twelve (12%) per annum. In addition, the Company has been issued an extension for the term of a secured convertible loan to Pyro SS, LLC, as reported in the Company’s Form 10Q for the quarter ended September 30, 2020, until July 28, 2021 and that were subsequently further extended through January 29, 2022. The bonds are intended to be paid and extinguished from proceeds from permanent financing. Currently, the legislative bill High-Heat Medical Waste Facility Act has been signed into law by the signature the Governor of Rhode Island. The effect of the bill would be essentially ban the specific operation of the Rhode Island Project. The Company has engaged counsel to challenge the bill, generally, however, even a successful action against the state of Rhode Island would be timely and expensive and still does not ensure that MedRecycler-RI, Inc. can even get permitting. If the Rhode Island Project fails, the note holders will likely foreclose on the project, including all security and guarantees.
Strategic Vision
Our objective is to grow our business profitably as a premier green energy-based provider of both product and services to the public and private sectors. We are working to deploy our strategy in building upon our general and other contracting expertise in conjunction with our intellectual property and subject matter expertise in green energy that may allow us to grow a group of profitable business lines in solar, waste to energy, efficient lighting, and other unique energy related areas.
Recent advances in a multitude of different yet converging technologies have significantly improved the ability to integrate energy efficient products and solutions into infrastructure related projects. These technological advances decrease the requirements needed to jointly operate a multitude of differing assets, devices, and tools that create new ways to integrate evolving new technologies. This technological change and convergence in energy efficient devices, integrated communications among devices, and societal needs to more effectively and environmentally friendly we believe presents a significant opportunity for us in providing and supporting simple to complex integrated solutions.
Our challenges continue to be reaching critical mass in our solar shelter business, expanding into other green energy related projects, completion of the Rhode Island Project and securing operational capital. Except for the bridge financing for the Rhode Island Project, we do not have any material existing financing arrangements in place. While the Company has never been adequately funded from inception, the Company has attempted to use debt, equity, and other opportunistic in-kind compensation to further the Company’s strategic vision.
Going Concern
The Company has an accumulated deficit of $7,818,179 and a working capital deficit of $2,919,594 as of June 30, 2021. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, which it has not been able to accomplish to date, and/or obtain additional financing from its stockholders and/or other third parties.
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In order to further implement its business plan and satisfy its working capital requirements, the Company will need to raise additional capital. There is no guarantee that the Company will be able to raise additional equity or debt financing at acceptable terms, if at all.
There is no assurance that the Company will ever be profitable. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
There is no assurance that the Company will ever be profitable. These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.
RISK FACTORS
Generally, as a smaller reporting company, we are permitted to omit risk factors. However, we believe the following Risk Factors are material to our business. These do not encompass all risks related to our operations.
You should carefully consider the risks described below together with all of the other information included in this annual report before making an investment decision with regard to our securities. The statements contained in or incorporated herein that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, you may lose all or part of your investment. In addition to the other information provided in this prospectus, you should carefully consider the following risk factors in evaluating our business before purchasing any of our common stock.
Risks Related to Our Financial Condition
Since our inception, we have been insolvent and have required debt and equity financing to maintain operations.
Since our inception, we have failed to create cashflows from revenues sufficient to cover basic costs. As a result, we have relied heavily on debt and equity financing. Equity financing, in particular, has created a dilutive effect on our common stock, which has hampered our ability to attract reasonable financing terms. For the foreseeable future, we will continue to rely upon debt and equity financing to maintain operation of the Company and its subsidiaries.
We have generated minimal revenues from operations, which makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.
As of December 31, 2020, we had generated insufficient revenues. As a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Our projections are based upon our best estimates on future growth. Because of the related uncertainties, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, revenues, or expenses. If we make poor budgetary decisions as a result of unreliable data, we may never become profitable or incur losses, which may result in a decline in our stock price.
There is substantial doubt about our ability to continue as a going concern and if we are unable to generate significant revenue or secure additional financing, we may be unable to implement our business plan and grow our business.
We are just graduating as an emerging growth company and are in the process of selling and developing our products. Consequently, we have not generated enough revenues as of the date of this prospectus. We have an accumulated deficit and have incurred operating losses since our inception and expect losses to continue during the remainder of fiscal 2021. Our independent registered public accounting firm has indicated in their report that these conditions raise substantial doubt about our ability to continue as a going concern for a period of 12 months from the issuance date of this report. The continuation of our business as a going concern is dependent upon the continued financial support from our stockholders.
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There is uncertainty regarding our ability to grow our business to a greater extent than we can with our existing financial resources, also described above, without additional financing. We have no agreements, commitments, or understandings to secure additional financing at this time. Our long-term future growth and success is dependent upon our ability to continue selling our products and services, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to continue selling our products and services, generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our ability to grow our business to a greater extent than we can with our existing financial resources, also described above.
Expenses required to operate as a public company will reduce funds available to implement our business plan and could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.
Operating as a public company is more expensive than operating as a private company, including additional funds required to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be costlier than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements. We anticipate that the cost of SEC reporting will be approximately $100,000 annually. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition. If we fail to meet these requirements, we will be unable to secure a qualification for quotation of our securities on the OTCQB, or if we have secured a qualification, we may lose the qualification and our securities would no longer trade on the OTCQB. Further, if we fail to meet these obligations and consequently fail to satisfy our SEC reporting obligations, investors will then own stock in a company that does not provide the disclosure available in quarterly, annual reports and other required SEC reports that would be otherwise publicly available leading to increased difficulty in selling their stock due to our becoming a non-reporting issuer.
Risks Related to Our Business
We rely on our Chief Executive Officer to operate our business. The loss of our Chief Executive Officer could have a material adverse effect on our business.
Our operations are highly dependent upon the efforts of our Chief Executive Officer, Nicholas Campanella. The success of our Company is heavily reliant upon the efforts and resources of Nicholas Campanella. The loss of our Chief Executive Officer would have a material adverse effect on our business, financial condition, and results of operations, particularly if we are unable to hire or relocate and integrate suitable replacements on a timely basis or at all. Further, in order to continue to grow our business, we will need to expand our senior management team. We may be unable to attract or retain these persons. This could hinder our ability to grow our business and could disrupt our operations or otherwise have a material adverse effect on our business.
We are unable to attract additional management personnel and members to our Board of Directors.
Due to our insolvency, we are unable to dedicate any amount of cashflows to executive salaries and/or directors’ and officers’ insurance, therefore we are unable to attract additional executive personnel or Board Members. Until we can secure, at a minimum directors’ and officers’ insurance, the executive duties shall remain with our Chief Executive Officer.
Legal action by disgruntled shareholders and former employees may endanger our ability to raise capital for our ongoing projects through our subsidiary interests and may create additional financial risks.
Recently, disgruntled shareholders have filed a derivative suit which has been dismissed against the Company but such actions could complicate our ability to secure financing. Specifically, our Rhode Island waste to energy project is being operated through our subsidiary holding, MedRecycler-RI, Inc. and this action could potentially harm our negotiating position with certain authorities that are required to approve the permanent financing for the project. In addition, a former executive of the Company contacted authorities approving the project, availing their potential legal actions to the negotiation process. He has since filed suit. These threated and ongoing legal actions could require the Company to provide additional security or to seek alternative means of financing the project altogether that could necessitate a change in the capital structure of the Subsidiary to allow for the placement of permanent financing. Although the Company has sought alternative means of securing permanent financing, due to the financial condition of the Company, we were unable to overcome the lack of creditworthiness as a major factor contributing to the failure to secure permanent financing. The consequences of these threats and ongoing suits could negatively affect the outcome of the project, including, but not limited to, potential foreclosure by the bridge financier, which could result in the total loss of the project for the Company and a change in control of the Company. As the financier is not likely willing to operate and maintain an insolvent public company, such foreclosure could result in a bankruptcy and/or total restructuring of the Company. In addition, defending any legal action could add additional financial risk to the Company that could result if its bankruptcy and/or total restructuring.
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Due to the current debt load of the Company, our credit worthiness may endanger our ability to secure financing.
Given the financial condition of the Company, securing financing for a project such as our waste to energy project has been a very difficult task, as has been the case for most fund-raising efforts for the Company. The current debt load and financial performance of the Company could raise creditworthiness issues in the eyes of potential lenders. The current state of the Company’s credit could require the Company to evaluate new corporate and capital structures of our subsidiaries in order to shield our subsidiary interests from the liabilities of the Company. If we fail to present lenders with a credit profile that will meet their standards, large projects, such as our subsidiary project in MedRecycler-RI, Inc. could fail or require new corporate and or capital restructuring. Given that the Company is already heavily in debt, such failure to secure financing and complete the project could require the Company to file for bankruptcy and encumber all of the assets of the Company.
The current ownership has the effect of concentrating voting control with our Chief Executive Officer and his family; this limits our other stockholders’ and your ability to influence corporate matters.
Nicholas Campanella currently holds 12,000,000 shares of Series A Preferred Stock. Each share of Series A Preferred Stock is entitled to 125 votes per share. As a result, Nicholas Campanella has 1,500,000,000 voting rights. As a result of this concentration of voting power, Nicholas Campanella will have significant influence over the management and affairs of the Company and control over matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as mergers or other sales of the Company or our assets, for the foreseeable future. This concentration of voting control will limit your ability to influence corporate matters and could adversely affect the market price of our Common Stock once a market is established.
Our director and officer, Nicholas Campanella will control and make corporate decisions that may differ from those that might be made by the other shareholders.
Due to the controlling amount of their share ownership in our Company, Nicholas Campanella will have a significant influence in determining the outcome of all corporate transactions, including the power to prevent or cause a change in control. His interests may differ from the interests of other stockholders and thus result in corporate decisions that are disadvantageous to other shareholders.
Our director and officer, Nicholas Campanella, holds substantial debt that is convertible into common stock, resulting in even greater control over the Company.
Nicholas Campanella holds convertible promissory notes in excess of $800,000, making Nicholas Campanella the largest creditor of the Company outside of the MedRecycler project. The convertible promissory notes are convertible into common stock at rate of a 50% discount to market. If Nicholas Campanella were to foreclose upon the limited assets of the Company, we would likely have to file for bankruptcy. Alternatively, Nicholas Campanella could convert the promissory note into common stock increasing his control over the Company.
The Rhode Island legislature has targeted our Rhode Island Project which we likely leave it inoperable.
The legislature of Rhode Island has currently passed the High-Heat Medical Waste Facility Act which if signed into law by the Governor would result in the Rhode Island Project being illegal in the state of Rhode Island. Although MedRecycler-RI, Inc. has engaged counsel to challenge to bill, it is not likely that Rhode Island Project will continue to operate in the near future. If the Rhode Island Project is deemed inoperable, note holders will likely foreclose upon the project, the underlying assets, and all security, collateral, and guarantees.
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Results of Operations
Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020
Revenues: Revenues decreased by $23,230 from $96,091 for the three months ended June 30, 2020 to $72,861 for the three months ended June 30, 2021 as a result of lesser advertising revenues and reduce General Contracting services as the Company migrates away from General Contracting services and towards the development of Green Energy Projects including the sale of Solar powered shelters and other energy related projects that derive income from advertising sources. Advertising revenue declined as a result of a transition to commissioned advertising sales personnel during the quarter. The Company has entered into revenue sharing agreements with the City of Tallahassee, the State of Rhode Island Transportation Authority, and the State of New Jersey, along with others to provide and manage up to approximately 1,700 Solar powered shelters and other related products for a period of up to Ten (10) years that may include providing WiFi Signal Boosters and Advertising in conjunction with the shelters and other related other outdoor related products. Depending upon the timing of installation and advertising revenue generated per shelter and or other advertising-based product, the Company’s Revenue may increase materially from this green energy offering. The Company has recently raised capital to build and deploy up to 20 bus shelters in Rhode Island as part of an income sharing arrangement with an investment group. The Company has recently had 20 bus shelters delivered and is in the process of deploying the bus shelters into the marketplace. The Company is currently in discussion with the State of Rhode Island on the specific details related to those bus shelters. The Company is also presently in the process of adding up to 60 bus benches in the City of Tallahassee and has engaged two new commissioned sales individuals to assist the company in increasing its advertising revenues in the City of Tallahassee marketplace, along with adding improved sales advertising capabilities in an effort to improve advertising utilization. The Company’s current Waste to Energy and Durango Solar Farm Project may or may not impact future revenues depending upon the capital structure and other conditions that will be required of the Company by its financing partners and or other regulatory authorities upon closing of its permanent financing for those projects. These items along with other revenue generating opportunities that is under review by the Company may cause dramatic shifts in the Company’s comparative revenue profile of the products and services that the Company provides in the future.
Cost of revenues: Cost of revenues increased by $2,491 from $4,860 for the three months ended June 30, 2020 to $7,351 for the three months ended June 30, 2021.
Operating Expenses: Operating expenses decreased by $421 from $88,499 for the three months ended June 30, 2020 to $88,920 for the three months ended June 30, 2021.
Other Expenses: Other Expenses, consisting of interest, decreased by $75,816 from $91,270 for the three months ended June 30, 2020 to $15,454 for the three months ended June 30, 2021 as a result of the amortization of debt discounts in 2020.
Net Loss from Continuing Operations: As a result of the above, the Company incurred a Net Loss from Continuing Operations of $22,989 for the three months ended June 30, 2021 compared to net income from continuing operations of $2,311 for the three months ended June 30, 2020.
Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020
Revenues: Revenues decreased by $64,810 from $166,781 for the six months ended June 30, 2020 to $101,97 for the six months ended June 30, 2021 as a result of lesser advertising revenues and reduce General Contracting services as the Company migrates away from General Contracting services and towards the development of Green Energy Projects including the sale of Solar powered shelters and other energy related projects that derive income from advertising sources. Advertising revenue declined as a result of a transition to commissioned advertising sales personnel during the quarter. The Company has entered into revenue sharing agreements with the City of Tallahassee, the State of Rhode Island Transportation Authority, and the State of New Jersey, along with others to provide and manage up to approximately 1,700 Solar powered shelters and other related products for a period of up to Ten (10) years that may include providing WiFi Signal Boosters and Advertising in conjunction with the shelters and other related other outdoor related products. Depending upon the timing of installation and advertising revenue generated per shelter and or other advertising-based product, the Company’s Revenue may increase materially from this green energy offering. The Company has recently raised capital to build and deploy up to 20 bus shelters in Rhode Island as part of an income sharing arrangement with an investment group. The Company has recently had 20 bus shelters delivered and is in the process of deploying the bus shelters into the marketplace. The Company is currently in discussion with the State of Rhode Island on the specific details related to those bus shelters. The Company is also presently in the process of adding up to 60 bus benches in the City of Tallahassee and has engaged two new commissioned sales individuals to assist the company in increasing its advertising revenues in the City of Tallahassee marketplace, along with adding improved sales advertising capabilities in an effort to improve advertising utilization. The Company’s current Waste to Energy and Durango Solar Farm Project may or may not impact future revenues depending upon the capital structure and other conditions that will be required of the Company by its financing partners and or other regulatory authorities upon closing of its permanent financing for those projects. These items along with other revenue generating opportunities that is under review by the Company may cause dramatic shifts in the Company’s comparative revenue profile of the products and services that the Company provides in the future.
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Cost of revenues: Cost of revenues decreased by $12,527 from $23,140 for the six months ended June 30, 2020 to $10,613 for the six months ended June 30, 2021.
Operating Expenses: Operating expenses decreased by $100,832 from $271,654 for the six months ended June 30, 2020 to $170,822 for the six months ended June 30, 2021.
Other Expenses: Other Expenses, consisting of interest, decreased by $3,601 from $37,031 for the six months ended June 30, 2020 to $33,430 for the six months ended June 30, 2021.
Net Loss from Continuing Operations: As a result of the above, the Company incurred a Net Loss from Continuing Operations of $112,894 for the six months ended June 30, 2021 compared to $165,044 for the six months ended June 30, 2020.
Continuing Operations, Liquidity and Capital Resources
As of June 30, 2020, we had a working capital deficit of approximately $2,920,000. We intend to seek additional financing for our working capital, in the form of equity or debt, to provide us with the necessary capital to accomplish our plan of operation. There can be no assurance that we will be successful in our efforts to raise additional capital.
During the six months ended June 30, 2021, we received $35,905 from the a Payroll Protection Program.
Off-Balance Sheet Arrangements
As of June 30, 2020, we did not have 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 that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2021. Based on such review and evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2021, the disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure and (c) that the Company’s disclosure controls and procedures were not effective as a result of continuing weaknesses in its internal control over financial reporting principally due to the following:
| ● | The Company has not established adequate financial reporting monitoring activities to mitigate the risk of management override, specifically because there are few employees and only two officers with management functions and therefore there is lack of segregation of duties. | |
| ● | An outside consultant assists in the preparation of the annual and quarterly financial statements and partners with the Company to ensure compliance with US GAAP and SEC disclosure requirements. | |
| ● | Outside counsel assists the Company and external attorneys to review and editing of the annual and quarterly filings and to ensure compliance with SEC disclosure requirements. |
At such time as the Company raises additional working capital it plans to add staff, initiate training, add additional subject matter expertise in its finance area so that it may improve it processes, policies, procedures, and documentation of its internal control processes.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or 15d-15 of the Exchange Act that occurred during the fiscal quarter ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On May 28, 2019, William Singer, our former President and a former Director, filed suit against the Company and our wholly owned subsidiary, Street Smart Outdoor Corp., in Superior Court of New Jersey, Monmouth County, Law Division. Mr. Singer alleges breach of contract and has demanded $450,000.00 in lost wages. The matter is currently pending in Superior Court.
On November 14, 2019 suit was filed against the Company by shareholders James J. Loures, Jr. and Justin Derkack requesting that the Company reverse the underlying transactions related to the MedRecycler-RI, Inc. project such that 100% of the revenues and profits generated from the project remain with the Company. The matter has been settled.
On August 3, 2021, MedRecycler-RI, Inc. received a demand letter related to moneys owed for the property leased in West Warwick, Rhode Island. The Company is a guarantor to the lease. Although no formal action has yet been lodged with the courts, the Company has potential liability exposure as the guarantor of the lease obligation. The Company believes that the lease agreement should be cancelled as a result the legislation rendering the continuation of the Rhode Island Project inoperable.
From time to time the Company is a party to various legal or administrative proceedings arising in the ordinary course of our business. While any litigation contains an element of uncertainty, we have no reason to believe that the outcome of such proceedings will have a material adverse effect on the financial condition or results of operations of the Company.
There is no material bankruptcy, receivership, or similar proceeding with respect to the Company or any of its significant subsidiaries. However, given the Company’s insolvency, there is a high risk that the Company may be forced to file for bankruptcy if the Company is unable to meet its capital requirements in 2021.
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There are no administrative or judicial proceedings arising from any federal, state, or local provisions that have been enacted or adopted regulating the discharge of materials into the environment or primary for the purpose of protecting the environment.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On or about January 9, 2019, we issued 1,500,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00292 per share of common stock.
On or about January 15, 2019, we issued 2,000,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.003285 per share of common stock.
On or about January 25, 2019, we issued 2,000,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0016 per share of common stock.
On or about January 29, 2019, we issued 3,500,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0018 per share of common stock.
On or about February 6, 2019, we issued 3,750,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0018 per share of common stock.
On or about February 8, 2019, we issued 3,776,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0016 per share of common stock.
On or about February 12, 2019, we issued 3,900,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0018 per share of common stock.
On or about February 22, 2019, we issued 3,776,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0016 per share of common stock.
On or about February 26, 2019, we issued 4,300,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0018 per share of common stock.
On or about March 7, 2019, we issued 4,000,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00168 per share of common stock.
On or about March 11, 2019 we issued 4,700,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00189 per share of common stock.
On or about March 19, 2019, we issued 5,100,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00168 per share of common stock.
On or about March 27, 2019, we issued 5,438,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0014 per share of common stock.
On or about March 26, 2019, we issued 5,400,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.004720741 per share of common stock.
On or about April 9, 2019, we issued 5,900,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00144 per share of common stock.
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On or about April 16, 2019, we issued 6,000,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00144 per share of common stock.
On or about April 26, 2019, we issued 5,978,800 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.001280023 per share of common stock.
On or about May 1, 2019, we issued 5,978,800 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00132 per share of common stock.
On or about May 1, 2019, we issued 6,700,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.001485075 per share of common stock.
On or about May 6, 2019, we issued 6,871,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.001 per share of common stock.
On or about May 8, 2019, we issued 7,700,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.001035065 per share of common stock.
On or about May 9, 2019, we issued 7,846,500 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000920028 per share of common stock.
On or about May 21, 2019, we issued 8,622,300 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.001239924 per share of common stock.
On or about May 21, 2019, we issued 8,400,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0009 per share of common stock.
On or about May 30, 2019, we issued 9,300,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0009 per share of common stock.
On or about May 31, 2019, we issued 9,471,700 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000800068 per share of common stock.
On or about June 5, 2019, we issued 10,000,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000855 per share of common stock.
On or about June 5, 2019, we issued 10,408,400 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000759963 per share of common stock.
On or about June 12, 2019, we issued 5,618,833 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.0007199 per share of common stock.
On or about June 13, 2019, we issued 11,200,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00072 per share of common stock.
On or about June 14, 2019, we issued 11,985,594 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000640018 per share of common stock.
On or about June 20, 2019, we issued 12,600,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000495 per share of common stock.
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On or about June 25, 2019, we issued 13,200,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000495 per share of common stock.
On or about July 1, 2019, we issued 13,800,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000495 per share of common stock.
On or about July 9, 2019, we issued 14,500,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000495034 per share of common stock.
On or about July 11, 2019, we issued 15,200,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000495 per share of common stock.
On or about July 17, 2019, we issued 16,000,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00045 per share of common stock.
On or about July 22, 2019, we issued 16,800,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00045 per share of common stock.
On or about July 30, 2019, we issued 17,600,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00045 per share of common stock.
On or about August 7, 2019, we issued 18,400,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00045 per share of common stock.
On or about August 13, 2019, we issued 19,300,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00045 per share of common stock.
On or about August 28, 2019, we issued 20,000,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00018 per share of common stock.
On or about September 6, 2019, we issued 21,300,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000135 per share of common stock.
On or about September 11, 2019, we issued 22,300,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000135 per share of common stock.
On or about September 19, 2019, we issued 15,190,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.000135 per share of common stock.
On or about October 2, 2019, we issued 24,200,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00009 per share of common stock.
On or about October 7, 2019, we issued 25,300,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00018 per share of common stock.
On or about October 8, 2019, we issued 26,500,000 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00018 per share of common stock.
On or about October 15, 2019, we issued 27,321,556 shares of common stock to one entity pursuant to the conversion of a certain convertible debenture at a conversion price of $0.00018 per share of common stock.
| 30 |
On or about November 19, 2019, we issued 29,805,700 shares of common stock to one entity pursuant to a cashless exercise of a warrant, with an exercise price of $0.00009 per share of common stock.
On or about December 12, 2019, we issued 31,293,000 shares of common stock to one entity pursuant to a cashless exercise of a warrant, with an exercise price of $0.00009 per share of common stock.
On or about December 19, 2019, we issued 32,854,600 shares of common stock to one entity pursuant to a cashless exercise of a warrant, with an exercise price of $0.00009 per share of common stock.
On or about December 26, 2019, we issued 34,494,000 shares of common stock to one entity pursuant to a cashless exercise of a warrant, with an exercise price of $0.00009 per share of common stock.
On or about January 29, 2021 we issued 50,000 shares of common stock to one entity pursuant to a subscription agreement for $0.20 per share.
On or about February 8, 2021 we issued 250,000 shares of common stock to one entity pursuant to a subscription agreement for $0.10 per share.
On or about March 11, 2021, we issued 300,000 shares of common stock to one entity pursuant to a cashless exercise of a warrant, with an exercise price of $0.031 per share of common stock.
On or about March 11, 2021, we issued 7,626,978shares of common stock to one entity pursuant to a conversion of a convertible note, with a conversion price of $0.02035 per share of common stock.
All the offers and sales of securities listed above were made to accredited investors. The issuance of the above securities is exempt from the registration requirements under Rule 4(2) of the Securities Act of 1933, as amended, and/or Rule 506 as promulgated under Regulation D.
Item 3. Defaults Upon Senior Securities
None.
Item 5. Other Information
(a) Not applicable.
(b) During the quarter ended June 30, 2021, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.
Item 6. Exhibits
| Exhibit Number | Description of Exhibit | |
| 31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1 | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2 | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition | |
| 101.LAB | Inline XBRL Taxonomy Extension Labels | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| 31 |
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.
| Sun Pacific Holding Corp. | ||
| Date: August 23, 2021 | By: | /s/ Nicholas Campanella |
| Nicholas Campanella | ||
| Chief Executive Officer and Chief Financial Officer (principal executive officer, principal accounting officer and principal financial officer) | ||
| 32 |
Exhibit 31.1
CERTIFICATIONS
I, Nicholas Campanella, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2021 of Sun Pacific Holding Corp.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| Date: August 23, 2021 | |
| /s/ Nicholas Campanella | |
| Nicholas Campanella | |
| Chief Executive Officer | |
| (principal executive officer) |
Exhibit 31.2
CERTIFICATIONS
I, Nicholas Campanella, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended June 30, 2021 of Sun Pacific Holding Corp.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| Date: August 23, 2021 | |
| /s/ Nicholas Campanella | |
| Nicholas Campanella | |
| Chief Financial Officer and Principal Officer) |
Exhibit 32.1
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Sun Pacific Holding Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nicholas Campanella, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| August 23, 2021 | /s/ Nicholas Campanella |
| Nicholas Campanella | |
| Chief Executive Officer | |
| (principal executive officer) |
Exhibit 32.2
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Sun Pacific Holding Corp. (the “Company”) on Form 10-Q for the period ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Nicholas Campanella, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| August 23, 2021 | /s/ Nicholas Campanella |
| Nicholas Campanella | |
| Chief Financial Officer | |
| (principal financial officer) |