Global Warming Solutions (GWSO) 10-Q2022 Q3 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended September 30, 2022

For the transition period from ___________ to __________

Commission file number 000-53170

28751 Rancho California Road, Suite 100 Temecula, California 92590

 (Address of Principal Executive Offices & Zip Code)

(951) 528-2102

(Registrant’s Telephone Number)

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

None.

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

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

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

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

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

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

As of November 21, 2022, the registrant had 16,025,050 shares of common stock issued and outstanding.

GLOBAL WARMING SOLUTIONS, INC.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

Global Warming Solutions, Inc.

and Subsidiaries

Consolidated Balance Sheets

See accompanying notes to these unaudited consolidated financial statements.

Global Warming Solutions, Inc.

and Subsidiaries

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

See accompanying notes to these unaudited consolidated financial statements.

Global Warming Solutions, Inc.

and Subsidiaries

Consolidated Statement of Stockholders’ Equity

See accompanying notes to these unaudited consolidated financial statements.

Global Warming Solutions, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

See accompanying notes to these unaudited consolidated financial statements.

Global Warming Solutions, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1.  Nature of Operations and Basis of Presentation

Global Warming Solutions, Inc. (“Company”) is an Oklahoma corporation headquartered in California that develops technologies that help mitigate global warming while maintaining a retail operation in CBD products. The Company was formerly known as Southern Investments, Inc., and was domiciled in Oklahoma. On April 15, 2007, the company changed its name to Global Warming Solutions, Inc., and moved its headquarters to the commonwealth of Canada. In February 2021 we relocated to Temecula, California.

The Company was incorporated on March 30, 1999, as Southern Investments, Inc. and has not been in bankruptcy, receivership or any similar proceeding. The Company has never been classified as a shell company.

On April 15, 2007, Southern Investments, Inc. acquired all of the issued and outstanding stock of Global Warming Technologies, Inc., an Oklahoma corporation, in exchange for 55,000,000 shares of Southern Investments, Inc. common stock. Following the acquisition, Southern Investments, Inc. changed its name to Global Warming Solutions, Inc and the Company implemented a 1 for 10 reverse stock split of the Company’s outstanding common stock that took effect on July 6, 2007.

From 2007-2017 the Company was conducting testing of its fertilizer product made with Humate Coated Urea (HCU) with various farmers in Canada. Recently the Company has begun a pilot program in New Zealand with Carbon Company, LTD.  Originally, the Company obtained 11.8% of Carbon Company, LTD which was transferred to the Company’s CEO as compensation for work performed on behalf of the Company prior to 2018.

On October 23, 2019, the Company acquired the domain name, “www.cbd.biz” and other intangible assets from Paul Rosenberg and Overwatch Partners, Inc., for $100,000.

On May 8, 2021, the company ceased all operations relating to CBD sales. The website “www.cbd.biz” has since been shut down. All operations pertaining to CBD sales have been divested and discontinued. The domain and all other assets associated with CBD sales was transferred to Green Holistic Solutions, Inc., in exchange for 18 million shares of Green Holistic Solutions, Inc.  Green Holistic Solutions, Inc., is controlled by Paul Rosenberg and Michael Hawkins, both of whom are a significant shareholder of the Company.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X promulgated by the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on April 4, 2022.

In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of our consolidated financial statements as of December 31, 2021, and for the three and nine months ended September 30, 2022, and 2021. The results of operations for the three and nine months ended September 30, 2022, are not necessarily indicative of the operating results for the full year ending December 31, 2022.

NOTE 2.  Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The most significant estimates include revenue recognition; sales returns and other allowances; allowance for doubtful accounts; valuation of inventory; valuation and recoverability of long-lived assets; property and equipment; contingencies; and income taxes.

On a regular basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

Revenue Recognition Policies

We earn revenue from the sale of products. During the nine months ended September 30, 2022, the Company had no revenue.

Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:

Concentration of Credit Risk and Significant Customers

Financial instruments which potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable. The Company places its temporary cash investments with financial institutions insured by the FDIC. The Company has one primary customer that has accounted for 92% of its sales for the year ended December 31, 2020.

Concentrations of credit risk with respect to trade receivables and commodities are limited due to the diverse group of customers to whom the Company provides services to. The Company establishes an allowance for doubtful accounts when events and circumstances regarding the collectability of its receivables or the selling of its commodities warrant based upon factors such as the credit risk of specific customers, historical trends, other information and past bad debt history. The outstanding balances are stated net of an allowance for doubtful accounts.

Our cash balances are maintained in accounts held by major banks and financial institutions located in the United States. The Company may occasionally maintain amounts on deposit with a financial institution that are in excess of the federally insured limit of $250,000. The risk is managed by maintaining all deposits in high-quality financial institutions.

The Company had $0 in excess of federally insured limits on September 30, 2022, and December 31, 2021.

Cost of Goods Sold

The Company recognizes the direct cost of purchasing product for sale, including freight-in and packaging, as cost of goods sold in the accompanying statement of operations.

Accounts Receivable

The Company’s accounts receivable are trade accounts receivable. The Company recognized $0 as an uncollectable reserve for the years ending September 30, 2022, and 2021.

Income Taxes

Income taxes are accounted for under the assets and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

Basic and Diluted Net Loss Per Share

The Company follows ASC Topic 260 – Earnings Per Share, and FASB 2015-06, Earnings Per Share to account for earnings per share. Basic earnings per share (“EPS”) calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

Basic net earnings (loss) per common share are computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Dilutive common stock equivalent shares consist convertible debentures.

Commitments and Contingencies

The Company reports and accounts for its commitments and contingencies in accordance with ASC 440 – Commitments and ASC 450 – Contingencies. We recognize a loss on a contingency when it is probable a loss will incur and that the amount of the loss can be reasonably estimated. As of September 30, 2022, and December 31, 2021, the Company recognized a loss on contingencies of $0 and $0, respectively.

Recent Accounting Pronouncements

There have been no recent accounting pronouncements issued which are expected to have a material effect on the Company’s financial statements. Management continues to monitor and review recently issued accounting guidance upon issuance.

In June 2014, the FASB issued ASU No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as “Development Stage Entities” (Topic 915). The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted this standard and will not report inception-to-date information.

On May 28, 2014, the FASB issued ASU No. 2015-08 a standard on recognition of revenue from contracts with customers (Topic 606). An issue discussed relates to when another party, along with the entity, is involved in providing a good or a service to a customer. In those circumstances, Topic 606 requires the entity to determine whether the nature of its promise is to provide that good or service to the customer (that is, the entity is a principal) or to arrange for the good or service to be provided to the customer by the other party (that is, the entity is an agent). This determination is based upon whether the entity controls the good or the service before it is transferred to the customer. Topic 606 includes indicators to assist in this evaluation. The Company evaluated all its contracts to determine if the Company was a principal or agent. The Company has determined it was the principal in all its contracts.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments. This ASU provides clarification regarding how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The issues addressed in this ASU that will affect us is classifying debt prepayments or debt extinguishment costs and contingent consideration payments made after a business combination. This update is effective for annual and interim periods beginning after December 15, 2017, and interim periods within that reporting period and is to be applied using a retrospective transition method to each period presented. Early adoption is permitted. The adoption of this ASU did not have a material impact on our financial position, results of operations and related disclosures for the years ended December 31, 2021, and 2020.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. Current U.S. GAAP requires an entity to separate deferred income tax liabilities and assets into current and noncurrent amounts in a classified statement of financial position. To simplify the presentation of deferred income taxes, the amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this update apply to all entities that present a classified statement of financial position. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this update. The amendments in this update will align the presentation of deferred income tax assets and liabilities with International Financial Reporting Standards (IFRS) and are effective for fiscal years after December 15, 2016, including interim periods within those annual periods. The adoption of this ASU as of January 1, 2017, did not have a material impact on our consolidated financial statements and related disclosures.

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. The new standard further requires new disclosures about contracts with customers, including the significant judgments the company has made when applying the guidance.

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, “Presentation of Financial Statements—Going Concern: Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” ASU 2014-15, which is effective for annual reporting periods ending after December 15, 2015, extends the responsibility for performing the going-concern assessment to management and contains guidance on how to perform a going-concern assessment and when going-concern disclosures would be required under GAAP. Management’s evaluations regarding the events and conditions that raise substantial doubt regarding our ability to continue as a going concern as discussed in the notes to our consolidated financial statements included elsewhere.

We have implemented all other new accounting pronouncements that are in effect and that may impact our financial statements and we do not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our consolidated financial position or results of operations.

NOTE 3. Going Concern

The Company’s financial statements are prepared using generally accepted accounting principles, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. Because the business is new and has a limited history, no certainty of continuation can be stated. The accompanying financial statements for the three and nine months ended September 30, 2022, and 2021 have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company suffered losses from operations in all years since inception, and has a nominal working capital surplus, which raise substantial doubt about its ability to continue as a going concern.

Management is taking steps to raise additional funds to address its operating and financial cash requirements to continue operations in the next twelve months. Management has devoted a significant amount of time in the raising of capital from additional debt and equity financing. However, the Company’s ability to continue as a going concern is dependent upon raising additional funds through debt and equity financing and generating revenue. There are no assurances the Company will receive the necessary funding or generate revenue necessary to fund operations. The financial statements contain no adjustments for the outcome of this uncertainty.

NOTE 4. BALANCE SHEET DETAILS

Intangible Assets

On October 23, 2019, the Company acquired the URL “www.cbd.biz” and certain other intangible assets consisting of trade secrets, brand recognition, and work product for $100,000. 

On May 8, 2021, the company ceased all operations relating to CBD sales. The website “www.cbd.biz” has since been shut down. All operations pertaining to CBD sales have been divested and discontinued. The domain and all other assets associated with CBD sales was transferred to Green Holistic Solutions, Inc., in exchange for 18 million shares of Green Holistic Solutions, Inc. Green Holistic Solutions, Inc., is controlled by Paul Rosenberg and Michael Hawkins, both of whom are a significant shareholder of the Company.

As of September 30, 2022, the Company’s intangible assets consist of domain names and other intellectual property valued at $9,896.

Accounts Payable

The Company’s accounts payable is to a single vendor, Securities Transfer Corporation, the Company’s stock transfer agent.

Legal Settlements

In June 2020, the Company entered into a settlement agreement with Securities Transfer Corporation. As part of the agreement, the Company was to be forgiven a portion of its outstanding balanced owed ($16,042) should it become current in its payments with the transfer company. The Company has a balance of $10,000 payment to become current and have the additional amount of $16,042 forgiven.

Debt

As of September 30, 2022, and December 31, 2021, the Company has no non-current debt.

NOTE 5. Stockholders’ Equity

In February 2021, the Company commenced a private placement of its common shares at an offering price of $1.25 per share. As of March 31, 2021, the Company had sold 788,000 shares of its common stock for gross proceeds of $1,145,000. In addition, each investor was issued a warrant to purchase an additional share at $1.75 for every 10 shares they purchased. In April 2021, the Company sold an additional 128,000 shares of its common stock for gross proceeds of $160,000. The private capital raise was exempt from registration under Regulation D Rule 506(c). This funding will be utilized for day-to-day operations as well as to finance the development of our ECO APP (see comments below) and the mobile system for the production of hydrogen and electric energy during the movement of automobile, along with other unforeseen projects that the Company will elect to develop and participate in.

On April 29, 2021, the Company paid Vladimir Valisenko, the former CEO of the Company, $50,000 in exchange for services and the cancellation of 5,000,000 of the Company’s common stock.

In August 2021, the Company cancelled 400,000 shares of common stock in exchange for $60,000.

On September 27, 2021, the Company cancelled 2,355,885 shares of common stock in exchange for $20,000.

In September 2021, the Company issued 1,200 shares of common stock related to the exercise of warrants for $2,100.

In October 2021, the Company sold 56,000 shares of common stock for $280,000.

On February 2, 2022, a former related party retired 1,616,455 shares of common stock.

On March 30, 2022, the Company issued 30,000 shares of common stock related to a consulting agreement valued at $156,000.

On May 26, 2022, the company retired 1,200 shares of common stock valued at $2,100 and issued 8,000 shares of common stock related to the exercise of warrants.

NOTE 6. Warrants to Purchase Common Stock

Warrants Issued to Investors

As of September 30, 2022, we have warrants to purchase 70,800 shares of common stock at $1.75 per share. All of these warrants expire in March 2026.

On May 26, 2022, warrants to purchase 8,000 shares of common stock were exercised at $1.75 per share.

NOTE 7. Research and Development

On May 18, 2022, the Company signed a research and development agreement with AQST USA, LLC valued at $1.3 million. The agreement is for sixty percent of the agreement to be paid based on certain milestone deliverables and the balance is to be paid in Company common stock. As of September 30, 2022, the Company has paid approximately $295 thousand based on the milestones achieved and is recorded as a research and development expense.

NOTE 8. Commitments and Contingencies

The Company has no commitments or contingencies for the three months ended September 30, 2022, and 2021.

NOTE 9. Subsequent Events

None.

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

This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, in connection with the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially and adversely from those expressed or implied by such forward-looking statements Such forward-looking statements include statements about our expectations, beliefs or intentions regarding our potential product offerings, business, financial condition, results of operations, strategies or prospects. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made and are often identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” or “will,” and similar expressions or variations. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those risks disclosed under the caption “Risk Factors” included in our 2020 annual report on Form 10-K filed with the Securities and Exchange Commission, or the SEC, on April 4, 2022, and in our subsequent filings with the SEC. Furthermore, such forward-looking statements speak only as of the date of this report. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

Development of Business

Global Warming Solutions, Inc. (“Company”) is an Oklahoma corporation headquartered in California that develops technologies that help mitigate global warming while maintaining a retail operation in CBD products. The Company was formerly known as Southern Investments, Inc., and was domiciled in Oklahoma.  On April 15, 2007, the company changed its name to Global Warming Solutions, Inc., and moved its headquarters to the commonwealth of Canada. In February 2021 we relocated to Temecula, California.

The Company was incorporated on March 30, 1999, as Southern Investments, Inc. and has not been in bankruptcy, receivership or any similar proceeding. The Company has never been classified as a shell company. 

On April 15, 2007, Southern Investments, Inc. acquired all of the issued and outstanding stock of Global Warming Technologies, Inc., an Oklahoma corporation, in exchange for 55,000,000 shares of Southern Investments, Inc. common stock. Following the acquisition, Southern Investments, Inc. changed its name to Global Warming Solutions, Inc and the Company implemented a 1 for 10 reverse stock split of the Company’s outstanding common stock that took effect on July 6, 2007.

From 2007-2017 the Company was conducting testing of its fertilizer product made with Humate Coated Urea (HCU) with various farmers in Canada. Recently the Company has begun a pilot program in New Zealand with Carbon Company, LTD.  Originally, the Company obtained 11.8% of Carbon Company, LTD which was transferred to the Company’s CEO as compensation for work performed on behalf of the Company prior to 2018.

On October 23, 2019, the Company acquired the domain name “www.cbd.biz” and certain other intangible assets in exchange for a convertible promissory note for $100,000 and began offering hemp-based cannabinoid (“CBD”) products through this website. 

On May 8, 2021, the company ceased all operations relating to CBD sales. The website “www.cbd.biz” has since been shut down. All operations pertaining to CBD sales have been divested and discontinued. The domain and all other assets associated with CBD sales was transferred to Green Holistic Solutions, Inc., in exchange for 18 million shares of Green Holistic Solutions, Inc.  Green Holistic Solutions, Inc., is controlled by Paul Rosenberg and Michael Hawkins, both of whom are a significant shareholder of the Company.

BUSINESS STRATEGY

Industry Overview

Global Warming Industry

Typically, executives manage environmental risk as a threefold problem of i) regulatory compliance, ii) potential liability for industrial accidents, and iii) pollutant release mitigation.  But climate change presents business risks that are different in kind because the impact is global, the problem is long-term, and the harm is essentially irreversible. 

The market for global warming solutions is highly competitive and rapidly evolving, resulting in a dynamic competitive environment with several dominant national and multi-national leaders. The Company will have to compete with established corporations that have substantially greater financial, marketing, technical and human resource capabilities. Such competition may be able to undertake more extensive marketing campaigns, adopt more aggressive distribution policies and make more attractive offers to potential clients. The Company expects competition to persist and intensify in the future.

Management believes that there is an increasing demand for money-making ideas created by the warming of our planet and that products and services that slow the flow of greenhouse gases by using less energy or by substituting clean energy for fossil fuels are in great demand.

Description of Business

Our current business strategy is to generate revenue through three basic options: i) consulting fees, ii) royalty fees, and iii) retail sales. 

Principal Products

Currently the company has initiated research and development on Hydrogen Fuel Cell Batteries which they expect to compete directly with the current Lithium-Ion market.

Patents, Trademarks, Trade Secrets, and Other Intellectual Property

In order to generate revenue from royalties and consulting, we have been developing technologies for future use and development.  There are no assurances any of these items currently identified as research and development will materialize or generate revenue for the Company.

We intend to file a provisional patent with the U.S. Patent Office in the first quarter of 2021 titled Hydrogen Supply Way and Device. This patent will cover intellectual property developed by us in expanding our business opportunities as discussed under Recent Events.

We have created various formulas and processes we intend to patent and/or copyright for future use and licensing.  The following list comprise our intellectual property:

Pick-Up-Oil – is a proprietary carbon sorbent for oil collection.  Under the process, the airborne sorbent is discharged in the oil slick and after absorbing the oil is collected.  The product is then extracted from the oil and available for secondary use. 

Hybrid Electrochemical Energy System – is a patented battery system employing advanced manufacturing techniques for solid state electrolytes. With large capacity anode due to special design creating higher specific energy due to air oxygen acting as a depolarizer we expect much quicker charging times and far cheaper manufacturing costs.

Exclusive Rights License Technology

Turbine Energy Project – is a patented turbine technology invented and owned by Dr. Yuri Abramov “Licensor”, that increases the efficiency of electrical power production triggered by wind. Lift force is generated with relatively low wind force and utilizes changes in temperature and density to generate equivocal force throughout thus creating perpetual flow.  The Company has the right of the use of the patented technology on a perpetual basis. The Company will pay a 6% licensing fee until such time as $10 million has been paid to the Licensor at which time the patent shall be transferred to the Company and the Licensor shall receive an option for up to 2% of the total issued and outstanding stock.

Growth Strategy

We anticipate growth in our operations through normal acceptance of our products, through the licensing of our technologies and intellectual properties, and through acquisitions when deemed in the best interest of our shareholders.

Competition

The Company competes with other industry participants, including those in global warming and CBD products and services.   Market and financial conditions, and other conditions beyond the Company’s control may make it more attractive for prospective customers to transact business with other entities.

Our potential competitors may have greater resources, longer histories, more developed intellectual property, and lower costs of operations. Other companies also may enter into business combinations or alliances that strengthen their competitive positions.

Recent Events

On May 18, 2022, the Company signed a research and development agreement with AQST USA, LLC valued at $1.3 million. The agreement is for sixty percent of the agreement to be paid based on certain milestone deliverables and the balance is to be paid in Company common stock. As of September 30, 2022, the Company has paid approximately $295 thousand based on the milestones achieved and is recorded as a research and development expense.

On April 8, 2021, Mr. Michael Pollastro, 37, was appointed to the Board of Directors and President of the Company. Also, effective April 8, 2021, Mr. Vladimir Vasilenko resigned from his position on the Board of Directors and as Chief Executive Officer of the Company and appointed Chief Scientific Officer. Mr. Vaslienko’s resignation was not based on any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

In 2021 the Company has engaged MSP Corporate, a Ukrainian patent agency to file a patent on behalf of the Company for their mobile system for the production of hydrogen and electric energy during the movement of automobiles.  We believe our system is more suitable for vehicular applications as it recovers metal sodium produced by means of circulating electrical current. The Company has no projections when this project will be complete, when or if the project will be offered on the market, or if the project will be successful.

In 2020, the Company entered into the initial phase of testing its theory for a sodium-based battery. The study is in conjunction with a Scientific School in Kazakhstan.  The study’s focus is of electrochemical processes in biological objects. The Company believes that the transfer rate of sodium ions in our solid electrolyte is sufficient to provide power to the vehicle. The Company has divided the project into three phases. The end result will be the testing of a sodium-based battery on a light chassis. The Company has no projections when this project will be complete, when or if the project will be offered on the market, or if the project will be successful. The cost associated with this project has been minimal to date; however, we expect the initial investment to develop this will be greater than we can self-fund. We are actively seeking to raise capital through private placement exempt from registration under Rule 506(c).

In December 2020, the Company began developing and designing an ECO APP for calculating, assessing, monitoring CO2 emissions and reforestation of affected areas. The application will use satellite imaging and other remote-sensing technologies to measure real time atmospheric CO2 being absorbed and stored by trees and other plants across the USA and Europe. The Company is still evaluating revenue potential opportunities associated with this initiative. The Company has no projections when this project will be complete, when or if the project will be offered on the market, or if the project will be successful.

On December 11, 2020, the Company announced it was relocating its headquarters to Temecula, California in January 2021.  In February 2021 we relocated to Temecula, California.

On December 5, 2020, the Company converted all its outstanding debt into common stock. Total debt converted was $531,203 at the conversion price of $2.13 per share. An additional two million shares were issued to three debt holders as settlement for converting at $2.13 per share instead of $0.01 as outlined in their various debt instruments. Under the conversions, Paul Rosenberg was issued 1,155,585 shares of common stock, Epic Industry Corp was issued 550,606 shares of common stock and Overwatch Partners, Inc., was issued 523,899 shares of common stock.

On December 3, 2020, the Company incorporated Alterna Motors, LLC, a Wyoming limited liability company, a wholly owned subsidiary of the Company. Subsequently, Alterna Motors entered into a letter of intent with Classic Electro, LLC, based in Grodno, Belorussia.  It is in the intent of the parties for Alterna Motors to be the American and Canadian distributor of Classic Electro’s retrofitting engine concept and universal electric mobility installation kit.  The Company has no assurances at this time that this project will be implemented, that an actual agreement will be entered into, or if this project will be successful.  In addition, Alterna Motors is developing a line of three-wheeled, all electric local delivery vehicles for use in the USA and Europe.  The Company has no assurances at this time that this project will be implemented, that an actual agreement will be entered into, or if this project will be successful. The cost associated with this project has been minimal to date; however, we expect the initial investment to develop this will be greater than we can self-fund. We are actively seeking to raise capital through private placement exempt from registration under Rule 506(c).

On November 17, 2020, the Company’s CEO cancelled 12 million shares he owned in the Company.  The CEO received no compensation for such cancellation.

On October 26, 2020, the Company established an advisory committee. The advisory committee consists of seven members with expertise in the global warming communities. Each member has agreed to serve on the advisory committee for 2 years. The goal of the advisory committee is to make recommendations to the company and its scientist in matters within the areas of their experience and expertise, based upon the members’ reasonable research, study, and analysis. Compensation for serving on the advisory committee is determined by the board of directors on an individual-by-individual basis based upon the experience, knowledge and negotiated value. The advisory committee will meet three times per year.

Results of Operations

Revenue

Our revenue from operations for the three months ended September 30, 2022, and 2021 was $0. 

For the nine months ended September 30, 2022, revenue was $0 compared to $101,724 for the nine months ended September 30, 2021. The difference was primarily due to decrease in retail sales operations in 2022 as compared to 2021. 

Cost of Goods Sold

Our cost of goods sold for the three months ended September 30, 2022, and 2021 was $0.

For the nine months ended September 30, 2022, the cost of goods sold was $0 as compared to $72,839 for the nine months ended September 30, 2021. The difference was primarily due to decrease in retail sales operations in 2022 as compared to 2021.

Gross Profit

Our gross profit for the three months ended September 30, 2022, and 2021 was $0.

For the nine months ended September 30, 2022, gross profit was $0 as compared to $28,886 for the nine months ended September 30, 2021. The difference was primarily due to decrease in retail sales operations in 2022 as compared to 2021.

Operating Expenses

Our operating expenses for the three months ended September 30, 2022, was $339,515 compared to $152,804 for the three months ended September 30, 2021.  Our total operating expenses for the three months ended September 30, 2022, consisted of $146,498 of selling, general and administrative expenses, professional fees of $12,657, research and development of $176,365, and amortization expense of $3,995. Our total operating expenses for the three months ended September 30, 2021, consisted of $16,697 of selling, general and administrative expenses, professional fees of $104,741, research and development of $27,416, and amortization expense of $3,951. Our general and administrative expenses consist of bank charges and other expenses.

For the nine months ended September 30, 2022, operating expenses were $873,427 compared to $357,710 for the nine months ended September 30, 2021. Our total operating expenses for the nine months ended September 30, 2022, consisted of $319,476 of selling, general and administrative expenses, professional fees of $218,049, research and development of $324,047, and amortization expense of $11,855. Our total operating expenses for the nine months ended September 30, 2021, consisted of $181,611 of selling, general and administrative expenses, professional fees of $132,907, research and development of $27,416, and amortization expense of $15,776. Our general and administrative expenses consist of payroll, professional services, bank charges and other expenses.

Net Operating Income/Loss

Our net operating loss for the three months ended September 30, 2022, was $263,164 as compared to a net operating loss of $152,804 for the three months ended September 30, 2021. 

Our net loss for the nine months ended September 30, 2022, was $843,405 as compared to a net loss of $475,627 for the nine months ended September 30, 2021. 

Liquidity and Capital Resources

As of September 30, 2022, we had current assets of $177,487, including $47,511 in cash, and current liabilities of $5,654, resulting in a working capital of $171,833. 

In February 2021, we commenced a private placement of 1,000,000 units of our securities, at a price of $1.25 per unit. Each unit consists of one share of our common stock and a common stock purchase warrant to purchase one-tenth share of our common stock, over a five-year period, at an exercise price of $1.75 per share. As of the date of this report, gross proceeds of $1,145,00 have been received.  

We believe as of the date of this report, we have the working capital on hand, along with our expected cash flow from operations, to fund our current level of operations at least through the end of the next twelve months. However, there can be no assurance that we will not require additional capital. If we require additional capital, we will seek to obtain additional working capital through the sale of our securities and, if available, bank lines of credit. However, there can be no assurance we will be able to obtain access to capital as and when needed and, if so, the terms of any available financing may not be subject to commercially reasonable terms.

Cash Flows

Operating Activities

We used cash from operating activities totaling $958,520 during the nine months ended September 30, 2022 and used cash from operating activities totaling $479,370 during the nine months ended September 30, 2021. The increase in cash used in operations was primarily due to an increase in research and development expenses of $324,047.

Investing Activities

Investing activities during the nine months ended September 30, 2022, consisted of $359 of equipment purchases, and $2,149 in intangible assets. 

Investing activities during the nine months ended September 30, 2021, consisted of $68,607 of equipment purchases, $16,199 in intangible assets, and $11,800 of deposits on lease

Financing Activities

Financing activities during the nine months ended September 30, 2022, consisted of $167,900 of proceeds from the issuance of stock.

Financing activities during the nine months ended September 30, 2021, consisted of $1,373,630 of proceeds from the issuance of stock and $130,000 of payments on the repurchase of stock.

Critical Accounting Policies and Estimates

Refer to Note 2, “Summary of Significant Accounting Polices,” in the accompanying notes to the consolidated financial statements for a discussion of recent accounting pronouncements.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by section 10(f)(1) of Regulation S-K. As such, we are not required to provide the information set forth in this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that as of September 30, 2022, our disclosure controls and procedures were not effective.

Changes in Internal Control

There were no changes in our internal control over financial reporting during the three months ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 5. Other Information

None

Item 6. Exhibits

* Filed electronically herewith

SIGNATURES

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