UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

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

For the Fiscal Year Ended December 31, 2019

 

Commission File Number: 000-56091

 

 

SYLIOS CORP

(Exact name of registrant as specified in its charter)

 

Florida		26-2317506
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

501 1st Ave N., Suite 901

St. Petersburg, FL 33701

(Address of principal executive offices, including Zip Code)

 

(727)-482-1505

(Issuer’s telephone number, including area code)

 

NOT APPLICABLE

(Former name or former address if changed since last report)

 

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [X] No [  ]

 

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 [X] 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 (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [  ] No [X]

 

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	[X]
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 7(a)(2)(B) of the Securities Act. [  ]

 

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

 

The aggregate market value on June 30, 2019 (the last business day of the Company’s completed second quarter of fiscal 2019) of the voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of the stock on that date, was approximately $108,875. The registrant does not have non-voting common stock outstanding.

 

As of March 16, 2021, there were 391,243,635 shares of the registrant’s common stock outstanding.

 

 

 

Cautionary Note Regarding Forward Looking Statements

 

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue, “and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by any forward-looking statements.

 

Important factors that may cause the actual results to differ from the forward-looking statements, projections or other expectations include, but are not limited to, the following:

 

	●	risk that we will not be able to remediate identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures;
	●	risk that we fail to meet the requirements of the agreements under which we acquired our business interests, including any cash payments to the business operations, which could result in the loss of our right to continue to operate or develop the specific businesses described in the agreements;
	●	risk that we will be unable to secure additional financing in the near future in order to commence and sustain our planned development and growth plans;
	●	risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations;
	●	risks and uncertainties relating to the various industries and operations we are currently engaged in;
	●	results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future growth, development or expansion will not be consistent with our expectations;
	●	risks related to the inherent uncertainty of business operations including profit, cost of goods, production costs and cost estimates and the potential for unexpected costs and expenses;
	●	risks related to commodity price fluctuations;
	●	the uncertainty of profitability based upon our history of losses;
	●	risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned development projects;
	●	risks related to environmental regulation and liability;
	●	risks related to tax assessments;
	●	other risks and uncertainties related to our prospects, properties and business strategy.

 

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not undertake to update or revise any of the forward-looking statements to conform these statements to actual results, whether as a result of new information, future events or otherwise.

 

As used in this annual report, “Sylios,” the “Company,” “we,” “us,” or “our” refer to Sylios Corp unless otherwise indicated.

 

 

TABLE OF CONTENTS

 

		PAGE
PART I
Item 1.	Business	4
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	22
Item 3.	Legal Proceedings	23
Item 4.	Mine Safety Disclosures	23
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	24
Item 6.	Selected Financial Data	27
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	35
Item 8.	Financial Statements and Supplementary Data	36
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosures	37
Item 9A.	Controls and Procedures	37
Item 9B.	Other Information	38
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	38
Item 11.	Executive Compensation	41
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	44
Item 13.	Certain Relationships and Related Transactions, and Director Independence	45
Item 14.	Principal Accounting Fees and Services	46
PART IV
Item 15.	Exhibits	47
Signatures		51

 

 

PART I

 

ITEM 1.

BUSINESS.

 

Overview

 

Sylios Corp (f/k/a US Natural Gas Corp) (“Sylios”, the “Company”, “we”, “us”, or “our”) was organized as a Florida Corporation on March 28, 2008 under the name of Adventure Energy, Inc.

 

Sylios Corp is a holding corporation, which through its subsidiaries, has operations engaged in the exploration and development of oil and natural gas properties, purchase of royalty and working interest units in producing properties (oil and natural gas) and alternative land development projects. The Company maintains equity investments in our two spin-offs (The Greater Cannabis Company, Inc. (“GCAN”) and AMDAQ Corp (“AMDAQ”)) that focus on the development and commercialization of cannabinoid delivery systems and blockchain technology, respectively. As of the date of this filing, the Company maintains a 1.81% ownership of the issued and outstanding common shares of GCAN and a 9.84% ownership of the issued and outstanding common shares of AMDAQ.

 

Our operations are currently divided amongst five wholly owned subsidiaries, US Natural Gas Corp KY (“KY”), US Natural Gas Corp WV (“WV”) (formerly Wilon Resources, Inc.), E 3 Petroleum Corp (“E3”), 1720 RCMG, LLC (“RCMG”) and 5496 NRMF, LLC (“NRMF”). During the fiscal year ended 2017, the Company spun-off its two formerly owned subsidiaries, The Greater Cannabis Company, Inc. and AMDAQ Corp. In addition, in June 2017 the Company sold its wholly owned subsidiary Bud Bank, Inc.

 

Subsidiaries

 

US Natural Gas Corp WV:

 

US Natural Gas Corp WV (“WV”) (formerly Wilon Resources, Inc.) is a wholly owned subsidiary that was formed in Tennessee and acquired in June 2010.

 

WV’s operations were based in Wayne County, West Virginia and primarily concentrated on the production of commercially viable natural gas. Through WV, the Company seeks to identify and acquire “non-operator” royalty or working interest participations in natural gas wells that are in production. As of the date of this filing, the Company does not own any real property, royalty or working interest participations in WV.

 

US Natural Gas Corp KY:

 

US Natural Gas Corp KY (“KY”) is a wholly owned subsidiary formed in the State of Florida on June 8, 2010. KY’s operations concentrate on oil producing activities mainly in South-Central Kentucky.

 

Our business strategy is to economically increase reserves, production, and the sale of natural gas and oil from existing and acquired properties in the Appalachian Basin and elsewhere, in order to maximize shareholders’ return over the long term. Our strategic location in Kentucky enables us to actively pursue the acquisition and development of producing properties in that area that will enhance our revenue base without proportional increases in overhead costs.

 

We expect to generate long-term reserve and production growth through drilling activities and further acquisitions. We believe that our management’s experience and expertise will enable us to identify, evaluate, and develop natural gas projects.

 

We have acquired and intend to acquire additional producing oil and gas property rights where we believe significant additional value can be created. Our Management is primarily interested in developmental properties where some combination of these factors exist: (1) opportunities for long production life with stable production levels; (2) geological formations with multiple producing horizons; (3) substantial exploitation potential; and (4) relatively low capital investment production costs.

 

 

The Company currently holds the following royalties in certain wells in the State of Kentucky and Tennessee. The Company is not required to cover the wells on its blanket bond nor is it required to expend any future capital on maintenance.

 

ROYALTIES HELD (as NON-OPERATOR)
WELL NAME		COUNTY (STATE)		% ROYALTY				STATUS (b)		PRODUCT (c)
GREEN 7-3-TW		FENTRESS (TN)			15			SI		O
JAMES PHARIS K-1		CUMBERLAND (KY)			5			SI		O
Wells sold in the Soligen Technologies, Inc. transaction dated May 10, 2018		Multiple within KY			30			SI		O

 

(b)

- Status

 

	i)	PR - In Production
	ii)	PL - Plugged
	iii)	SI - Shut-In

 

(c)

- Product

 

	i)	O - Oil production
	ii)	NG - Natural Gas production
	iii)	O/NG - Both Oil & Natural Gas production

 

The GREEN and JAMES PHARIS wells are covered under the bond of Keller Energy, LLC (“Keller”). Keller is currently re-entering each of the wells to replace downhole pumping parts, flowlines and certain tank batteries. The Company anticipates that each of the wells will be placed into production during the third quarter of 2019.

 

The wells sold to Soligen Technologies, Inc. (“Soligen”) are still under the bond of E 3 Petroleum Corp, a wholly owned subsidiary of the Company. Soligen’s plan is to re-enter each well to determine what downhole work is needed to place the wells back into production and to stimulate increased production. We anticipate that 3-4 of the wells will be re-entered, re-worked and placed into production by the end of the first calendar quarter of 2020. Please see NOTE E - OIL AND GAS ROYALTY INTERESTS and NOTE F – OIL AND GAS OPERATING BONDS for further information.

 

On May 10, 2018, the Company’s subsidiary, US Natural Gas Corp KY (“KY”), entered into an Asset Purchase Agreement with Soligen Technologies, Inc. (“SGTN”) for the sale of 13 previously producing crude and natural gas wells, approximately 1700 acres of leaseholds, tank batteries and gathering systems (collectively the “assets”) all located in multiple counties throughout the State of Kentucky. Under the terms of the Agreement, SGTN acquired the assets for consideration of One Hundred Forty Thousand and no/100 Dollars ($140,000). At Closing, SGTN assigned KY a royalty for payment out of production, whereby KY shall receive thirty percent (30%) of the gross proceeds of production from the acquired assets. In addition, KY shall receive ten percent (10%) of the monthly gross proceeds of production from any new drilled wells on the acquired leases. KY shall receive payments from production until such time that KY has received a total of One Hundred Forty Thousand and no/100 Dollars ($140,000). Please see NOTE E - OIL AND GAS ROYALTY INTERESTS for further information.

 

 

E 3 Petroleum Corp:

 

E 3 Petroleum Corp (“E3”) is a wholly owned subsidiary formed in the State of Florida on February 8, 2010. E3’s sole business activity is to act as the bonding entity for the Company’s oil and natural gas wells. As a bonding entity, E3 places funds with the Kentucky Department of Natural Resources to cover the reclamation costs in the event the wells under its bond are deemed abandoned by the State of Kentucky. Please see NOTE F – OIL AND GAS OPERATING BONDS for further information.

 

Land Development

 

5496 NRMF, LLC:

 

5496 NRMF, LLC (“NRMF”) is a wholly owned subsidiary formed in the State of Florida on October 12, 2019. NRMF’s future operations will be concentrated on the development of the 1.1 acre tract of commercial land purchased in Santa Rosa County, FL.

 

On October 9, 2019, the Company entered into a Commercial Sales Contract for the purchase of the 1.1 acre tract of land located in Santa Rosa County, FL. The purchase price for the land was $17,500. The transaction closed on November 4, 2019.

  

1720 RCMG, LLC:

 

1720 RCMG, LLC (“RCMG”) is a wholly owned subsidiary formed in the State of Florida on July 24, 2019. RCMG’s future operations are concentrated on the development of the .92 acres acre tract of commercial land purchased in Bibb County, GA.

 

On October 6, 2018, the Company entered into a Commercial Real Estate Purchase and Sale Agreement with the Company’s President for the purchase of a .92 acre of land located in Bibb County, GA. The purchase price for the land was $40,000. On this same date, the Company entered into an Asset Purchase Agreement with its President for the purchase of all architectural and engineering plans for the development of a storage facility to be constructed on the .92 acre of land. The purchase price for these assets was $35,000.

 

On October 6, 2018, the Company issued its President a Secured Note in the amount of $75,000. The Note has a term of one year and bears interest at 3%. The Company’s first payment in the amount of $15,000 was due within 90 days of an effective reverse stock split. As of the date of issuance of these Financial statements, except for a $5,000 payment made by the Company to the Company’s president on November 12, 2018, the Company has not made any payment against the Note.

 

The Company’s plans are to develop a 21,000 square foot self-storage facility containing 140-160 units plus retail units to lease. There are no guarantees that the Company will be able to secure financing to construct the facility.

 

 

Surplus Inventory

 

On September 12, 2019, the Company entered into an Inventory Purchase Agreement with Wanshan Engineering Services, LLC for the purchase of surplus inventory. The Company purchased 30,000 Squeezee Soap Filled Scrubbers for the purchase price of $100,000 via the issuance of 10,000,000 shares of restricted common stock. The Closing of the transaction occurred on September 15, 2019.

 

On September 21, 2019, the Company entered into an Inventory Purchase Agreement with Wanshan Engineering Services, LLC for the purchase of surplus inventory. The Company purchased 1,000 Ampt wireless earbuds for the purchase price of $60,000 via the issuance of 6,000,000 shares of restricted common stock. The Closing of the transaction occurred on September 25, 2019.

 

Squeezee Soap Filled Scrubbers:

 

The innovative Squeezee sponge has concentrated dishwashing liquid inside the sponge with grease cutting formula and Aloe for soft hands. The Squeezee scrubber makes dishwashing both more convenient and economical. No more need for purchasing separate detergents. The soft antibacterial non-scratch double-sided scrubber has a unique shape allowing to reach those hard to get to places for multi-purpose use.

 

Ampt Wireless Bluetooth Earbuds:

 

Pair the AMPT stereo Bluetooth earphones with each other for a stereo experience. In single earbud mode, each wireless headset can connect with two Bluetooth source devices like your iPhone or Android phone, iPad, tablet, or laptop simultaneously. If you are streaming music from your iPad, and receive an incoming call on your iPhone, the wireless earphones will recognize this and allow you to take the call seamlessly without the hassle of repairing. Pairing 2 cordless earbuds wirelessly like Apple AirPods, making it the smallest stereo Bluetooth headset on the market. Siri is just a touch away via the main button on either of the cordless earbuds. You never have to take your smartphone out of your pocket, giving you a genuine hands-free, wireless stereo experience.

 

Consulting Services

 

On December 16, 2019, the Company entered into a Consulting Agreement (the “Agreement”) with Deep Green Waste & Recycling, Inc. (hereinafter “Deep Green”), a publicly traded entity under the symbol “DGWR.” Under the terms of the Agreement, the Company is to assist Deep Green in the preparation of its Registration Statement on Form S-1, introduce the Company to a PCAOB audit firm and introduce potential funding sources. The term of the Agreement is for six months and the Company is to be paid compensation of $7,500.

 

On August 22, 2019, the Company entered into a Consulting Agreement (the “Agreement”) with Global Technologies, Ltd (hereinafter “Global”), a publicly traded entity under the symbol “GTLL.” Under the terms of the Agreement, the Company is to assist Global in the preparation of its Registration Statement on Form 10, introduce the Company to a PCAOB audit firm and identification of potential qualifying transaction candidates. The term of the Agreement is for six months and the Company is to be paid compensation of $50,000 through the issuance of ten (10) shares of the GTLL’s Series L Preferred Stock. Please see NOTE H – ACQUISITION OF GLOBAL TECHNOLOGIES, LTD (ENTITY CONTROLLED BY WAYNE ANDERSON) SERIES L CONVERTIBLE PREFERRED STOCK for further information.

 

 

Former Subsidiaries:

 

Bud Bank, LLC:

 

On April 21, 2017, the Company entered into a definitive Asset Acquisition Agreement (the “Agreement”) with The Greater Cannabis Company, Inc. (“GCC”), whereby GCC acquired the Company’s wholly owned subsidiary Bud Bank, Inc. (“Bud Bank”). Under the Agreement, GCC is obligated to pay the Company a royalty of 10% of net sales proceeds generated by Bud Bank through its operations up to a total of $50,000 and thereafter for perpetuity pay a royalty of 3% of net sales proceeds generated by Bud Bank through its operations. The transaction closed on June 21, 2017 concurrent with the Company’s filings with the State of Florida. The transaction closed on June 20, 2017.

 

SLMI Options, LLC:

 

SLMI Options, LLC (“SLMI”) was a wholly owned subsidiary that was acquired through a Lender acquisition Agreement with SLMI Holdings, LLC in September 2009. The sole purpose of the acquisition of SLMI was to hold three commercial notes issued by Wilon Resources, Inc., (formerly “Wilon Resources of Tennessee, Inc.”) in the years 2005 through 2007. There has been no additional operational activity of SLMI. SLMI was administratively dissolved in 2015.

 

Equity holdings in which we hold >5% ownership of the issued and outstanding common stock

 

AMDAQ Corp:

 

AMDAQ Corp (“AMDAQ”) (formerly E 2 Investments, LLC) was a wholly owned subsidiary of the Company until October 2, 2017, payment date for the spin-off. At December 31, 2018, the Company held 2,956,650 shares of common stock of AMDAQ. As of the date of this filing, the Company holds 2,956,650 (9.1% ownership of the issued and outstanding common shares) shares of common stock of AMDAQ.

 

The Company’s business model from inception through August 31, 2017 concentrated on alternative investments including but not limited to:

 

	●	Buying and selling of domestic equities
	●	Purchase of third-party debt issued by publicly traded entities
	●	Purchase of mineral rights
	●	Direct Stock Purchase participation with other publicly traded entities
	●	Consulting capacity
	●	Purchase of Royalty or Working Interests in Crude and Natural Gas Producing wells

 

On September 1, 2017, the Company acquired AMDAQ Ltd, a corporation formed under the Registrar of Companies for England and Wales, in order to diversify its business model to enter into the rapidly expanding sectors of blockchain technology.

 

AMDAQ’s multi-faceted business model will allow the company to take advantage of the significant emerging opportunities being developed utilizing blockchain technology. The opportunities we have identified to date cross many industries, which will help minimize our exposure to any single sector. We have associated ourselves with leading experts in the field of blockchain technologies, allowing for a broad overview of exciting applications being developed, which include direct investments in blockchain applications, the AMDAQ marketplace and our TIKR division.

 

The AMDAQ marketplace will provide the infrastructure for the administration of pre-existing and potential ownership of both tangible and intangible assets and its adaptable structural utility can be used in parallel to any equity fundraising mechanism.

 

AMDAQ will allow both the documented ownership and transfer of assets for which there is no established registration process and the sub-division of ownership interests in otherwise registered assets where transfer processes may be expensive/cumbersome and/or trigger taxes and other expenses.

 

Using the AMDAQ platform, assets can be titled in a Smart Contract with ownership interests evidenced by ownership of an associated Ethereum token. The Smart Contract will provide not only the rules as to transfer of ownership but also automated voting mechanisms for each specific situation that requires governance decisions.

 

For further information on the Company’s operations and filings with the Securities and Exchange Commission, please visit its corporate website at www.amdaq.com and the website of its subsidiary, AMDAQ, Ltd., at www.amdaq.market. Please see NOTE G - INVESTMENTS IN AND ADVANCES TO SPUN-OFF FORMER SUBSIDIARIES for further information.

 

Competition

 

We are in direct competition with numerous oil and natural gas companies, drilling and income programs and partnerships exploring various areas of the Appalachian Basin and elsewhere competing for customers. Several of our competitors are large, well-known oil and gas and/or energy companies, but no single entity dominates the industry. Many of our competitors possess greater financial and personnel resources, sometimes enabling them to identify and acquire more economically desirable energy producing properties and drilling prospects than us. We are more of a regional operator, and have the traditional competitive strengths of one, including recently established contacts and in-depth knowledge of the local geography. Additionally, there is increasing competition from other fuel choices to supply the energy needs of consumers and industry. Management believes that there exists a viable market-place for smaller producers of natural gas and oil and for operators of smaller natural gas transmission systems.

 

Patents and Trademarks

 

The success of our business depends on our continued ability to use our existing trade name in order to increase our brand awareness. In that regard, we believe that our trade name is valuable asset that is critical to our success. As of the date of this filing, we have not submitted a trademark application for our name, Sylios Corp or that of any of our subsidiaries. In the event the Company does file an application, there is no guarantee that the U.S. Patent and Trademark Office will grant us a trademark. The unauthorized use or other misappropriation of our trade name could diminish the value of our business concept and may cause a decline in our revenue.

 

 

Seasonality

 

The exploration for oil and natural gas reserves depends on access to areas where operations are to be conducted. Seasonal weather variations, including freeze-up and break-up affect access in certain circumstances. According to the American Petroleum Institute, more than 60 million U.S. households use natural gas for water heating, space heating, or cooking. In total, natural gas accounts for more than 50 percent of the fuel used to heat U.S. homes. Residential and commercial heating demand for natural gas is highly weather-sensitive, making weather the biggest driver of natural gas demand in the short term. As a result, natural gas demand is highly “seasonal” in nature, with significant “peaks” in the winter heating season.

 

Seasonality and the natural gas in storage also play a prominent role in natural gas prices. Because natural gas consumption is seasonal, but production is not, natural gas inventories are built during the summer for use in the winter. This seasonality leads to higher winter prices and lower summer prices. In addition, inventories above the seasonal average depress prices, and inventories below the seasonal average boost prices.

 

Government Regulations and Environmental Quality

 

Operations are or will be subject to various types of regulation at the federal, state and local levels. Such regulation includes requiring permits for the drilling of wells; maintaining bonding requirements in order to drill or operate wells; implementing spill prevention plans; submitting notification and receiving permits relating to the presence, use and release of certain materials incidental to oil and gas operations; and regulating the location of wells, the method of drilling and casing wells, the use, transportation, storage and disposal of fluids and materials used in connection with drilling and production activities, surface usage and the restoration of properties upon which wells have been drilled, the plugging and abandoning of wells and the transporting of production.

  

Operations are or will also be subject to various conservation matters, including the regulation of the size of drilling and spacing units or proration units, the number of wells which may be drilled in a unit, and the unitization or pooling of oil and gas properties.

 

In this regard, some states allow the forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases, which may make it more difficult to develop oil and gas properties. In addition, state conservation laws establish maximum rates of production from oil and gas wells, generally limit the venting or flaring of gas, and impose certain requirements regarding the ratable purchase of production. The effect of these regulations is to limit the amounts of oil and gas we may be able to produce from the wells and to limit the number of wells or the locations at which we may be able to drill.

 

Business is affected by numerous laws and regulations, including energy, environmental, conservation, tax and other laws and regulations relating to the oil and gas industry. We plan to develop internal procedures and policies to ensure that operations are conducted in full and substantial environmental regulatory compliance.

 

Failure to comply with any laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of injunctive relief or both. Moreover, changes in any of these laws and regulations could have a material adverse effect on business. In view of the many uncertainties with respect to current and future laws and regulations, including their applicability to us, we cannot predict the overall effect of such laws and regulations on future operations.

 

We believe that our operations comply in all material respects with applicable laws and regulations and that the existence and enforcement of such laws and regulations have no more restrictive an effect on operations than on other similar companies in the energy industry. We do not anticipate any material capital expenditures to comply with federal and state environmental requirements.

 

Furthermore, we are subject to various other federal, state, local and international laws and regulations applicable to its business. We believe that we are in substantial compliance with these laws and regulations.

 

Licenses

 

We held a Gathering Line Operators License in the state of Kentucky during the time we acted as the operator of our wells. As we no longer act in the capacity as the “Operator” of any shut-in/producing wells, the Company is no longer required to retain its operator license in the State of Kentucky. In the event that we would elect to act as the Operator of our wells, we would be required to submit an application to retain a license.

 

 

Compliance Expenses

 

Our company incurs annual expenses to comply with state and federal licensing requirements. We estimate these costs to be under $2,000 per year. In the event we elect to drill any new wells in Kentucky, we anticipate annual expenditures of approximately $25,000 per well related to environmental costs including water drainage and land development. It is difficult to estimate these environmental expenses while we are still a development stage company as they are largely dependent on many factors for each drilled well. See “Government Regulation” and “Environmental Regulation” below.

 

Principal Products or Services and Markets

 

The principal markets for the Company’s crude oil are local refining companies. The principal markets for the Company’s natural gas production are local utilities, private industry end-users, and gas marketing companies.

 

When the wells we maintain a royalty interest in are in production, the crude oil produced is sold at or near the wells to Sunoco, Inc. or Barrett Oil Purchasing, Inc. The Company may sell some or all of its production to one or more additional refineries in order to maximize revenues as purchases prices offered by the refineries fluctuate from time to time. At present, all of the wells we maintain an interest are shut-in as contract labor initiates the re-entry of each to place them back into production.

 

Drilling Equipment

 

The Company obtains drilling services as required from time to time from various companies as available and various drilling contractors in Kentucky. The Company does not own any of its own drilling equipment nor maintain a storage facility in Kentucky.

 

Distribution Methods of Products or Services

 

Crude oil is normally delivered to refineries in Kentucky by tank truck and natural gas is distributed and transported by pipeline.

 

Commodity Price Volatility

 

Oil and natural gas prices are volatile and subject to a number of external factors. Prices are cyclical and fluctuate as a result of shifts in the balance between supply and demand for oil and natural gas, world and North American market forces, conflicts in Middle Eastern countries, inventory and storage levels, OPEC policy, weather patterns and other factors. OPEC supply curtailment, tensions in the Middle East, increased demand in China and low North American crude stocks have kept crude oil prices high. Natural gas prices are greatly influenced by market forces in North America since the primary source of supply is contained within the continent.

 

Market forces include the industry’s ability to find new production and reserves to offset declining production, economic factors influencing industrial demand, weather patterns affecting heating demand and the price of oil for fuel switching.

 

Labor and Other Supplies

 

Oil and Natural Gas Operations: We contract all labor for the development of leasehold acreage in preparation for drilling, as well as the drilling and completion crews. Our contract labor monitors the wells on a daily basis, replaces the completion components as needed, makes repairs to the gathering system, and any other day-to-day maintenance when our wells are in production.

 

Other Operational Activities: We contract all labor for website development, accounting, legal and daily activities outside of management.

 

Employees

 

As of the date of this Report, we have one full time employee that serves in the role of President, Vice President, Treasurer and Director. Our sole officer and director also serve as the President and Chairman of the Board of Global Technologies, Ltd., a publicly traded company listed on the OTC Markets “PINK” under the symbol “GTLL” and serves as the sole officer and director of AMDAQ Corp. We plan to expand our management team within the next 12 months to include certain officers for our currently active subsidiaries and any new subsidiaries or operational activities management deems necessary. We consider our relations with our employees and consultants to be in good standing.

 

 

Report to Shareholders

 

On February 18, 2021, the Company received an Order of Suspension of Trading from the Securities and Exchange Commission because of questions regarding the accuracy and adequacy of information in the marketplace about the Company and its securities. The Order also cited the Company’s delinquencies in its periodic filings with the Commission.

 

On April 16, 2012, the Company filed a Form 15 with the Securities and Exchange Commission to immediately end the Company’s requirements as a fully reporting entity. The Company’s common stock continued to be quoted on the OTC Markets “PINK.”

 

Prior to filing the Form 15, the Company was subject to the informational requirements of the Securities Exchange Act of 1934. Accordingly, we filed annual, quarterly and other reports and information with the Securities and Exchange Commission. The public may read and copy these reports, statements, or other information we file at the SEC’s public reference room at 100 F Street, NE., Washington, DC 20549 on official business days during the hours of 10 a.m. to 3 p.m. State that the public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission at (http://www.sec.gov).

 

Company Information

 

We are a Florida for-profit corporation. Our corporate address is 501 1st Ave N., Suite 901, St Petersburg, FL 33701, our telephone number is (727) 482-1505 and our website address is www.sylios.com. The information on our website is not a part of this prospectus. The Company’s stock is quoted under the symbol “UNGS” on the OTC Markets. The Company’s transfer agent is Pacific Stock Transfer whose address is 6725 Via Austi Pkwy, Las Vegas, NV 89119 and phone number is (702) 361-3033.

 

ITEM 1A.

RISK FACTORS.

 

You should carefully consider the risks described below together with the other information set forth in this report, which could materially affect our business, financial condition and future results. The risks described below are not the only risks facing our company. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and operating results.

 

COVID-19 Related Risks

 

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to be spread throughout the United States and the world. The impact from the COVID-19 outbreak is uncertain and may impact our business and results of operations and could impact our financial condition in the future. We are unable to accurately predict the full impact that COVID-19 may have due to numerous uncertainties, including the severity, duration and spread of the outbreak, and actions that may be taken by governmental authorities.

 

The adverse impacts of the pandemic on our business and future financial performance could include, but are not limited to:

 

	●	our ability to raise additional capital,
	●	our ability to enter into licensing agreements,
	●	our technology development plans and timelines,
	●	significant declines in revenue due to supply chain disruptions,
	●	our operating effectiveness resulting from employees working remotely or being ill and unable to work,
	●	and our ability to complete a sale or merger of the Company.

  

Risks Relating to Our Financial Condition

 

Our independent registered accounting firm has expressed concerns about our ability to continue as a going concern.

 

The report of our independent registered accounting firm expresses concern about our ability to continue as a going concern based on the absence of significant revenues, our significant losses from operations and our need for additional financing to fund all of our operations. It is not possible at this time for us to predict with assurance the potential success of our business. The revenue and income potential of our proposed business and operations are unknown. If we cannot continue as a viable entity, we may be unable to continue our operations and you may lose some or all of your investment in our common stock.

 

We have limited operational history in an emerging industry, making it difficult to accurately predict and forecast business operation.

 

As we have approximately ten years of corporate operational history and have yet to generate substantial revenue, it is extremely difficult to make accurate predictions and forecasts on our finances. This is compounded by the fact that we operate in both the technology, retail and cannabis industries, which are three rapidly transforming industries. There is no guarantee that our products or services will remain attractive to potential and current users as these industries undergo rapid change or that potential customers will utilize our services.

 

As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.

 

We have not yet produced a net profit and may not in the near future, if at all. While we expect our revenue to grow, we have not achieved profitability and cannot be certain that we will be able to sustain our current growth rate or realize sufficient revenue to achieve profitability. Our ability to continue as a going concern may be dependent upon raising capital from financing transactions, increasing revenue throughout the year and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.

 

We may require additional capital to support business growth, and this capital might not be available on acceptable terms, if at all.

 

We intend to continue to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new features and products or enhance our existing products, improve our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we may need to engage in continued equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of our common stock. Any debt financing we secure in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be impaired, and our business may be harmed.

 

 

We expect our quarterly financial results to fluctuate.

 

We expect our revenue and operating results to vary significantly from quarter to quarter due to a number of factors, including changes in:

 

	●	General economic conditions, both domestically and in foreign markets;
	●	The performance of the two spin-offs of which we hold an equity investment;
	●	Production from the oil and natural gas wells in which we maintain ownership;
	●	Our ability to identify future acquisition targets;
	●	Our ability to raise capital to implement our business plan; and
	●	General acceptance and growth of the cannabis and blockchain technology industries.

 

As a result of the variability of these and other factors, our operating results in future quarters may be below the expectations of our stockholders.

 

General Business Risks

 

Conflicts of interest may arise from other business activities of our directors and officers.

 

Our sole officer and director, Wayne Anderson, currently serves in the role as President and Chairman of another publicly traded entity, Global Technologies, Ltd. (a non-reporting publicly traded company “GTLL” on the OTC Markets “PINK”). Mr. Anderson also serves as the President and Chairman of one of the Company’s former wholly owned subsidiaries, AMDAQ Corp. As such, Mr. Anderson may not be able to dedicate the required time to the Company.

 

We are highly dependent on the services of key executives, the loss of whom could materially harm our business and our strategic direction. If we lose key management or significant personnel, cannot recruit qualified employees, directors, officers, or other personnel or experience increases in our compensation costs, our business may materially suffer.

 

We are highly dependent on our management team, specifically Wayne Anderson. If we lose key employees, our business may suffer. Furthermore, our future success will also depend in part on the continued service of our management personnel and our ability to identify, hire, and retain additional key personnel. We do not carry “key-man” life insurance on the lives of any of our executives, employees or advisors. We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development of our business. Because of this competition, our compensation costs may increase significantly.

 

We will need to raise additional capital to continue operations over the coming year.

 

We anticipate the need to raise approximately $500,000 in capital to fund our operations through December 31, 2021. We expect to use these cash proceeds, primarily for the development of the Company’s proposed storage facility in Macon, GA, to assist AMDAQ Corp in the further development of its business plan including legal and accounting expenses aimed at its “going public” event, to find a suitable acquisition/joint venture target for our US Natural Gas Corp KY subsidiary, for the acquisition of additional royalty interests in oil and natural gas wells and to remain in full legal and accounting compliance with the SEC. We cannot guarantee that we will be able to raise these required funds or generate sufficient revenue to remain operational.

 

We may be unable to manage growth, which may impact our potential profitability.

 

Successful implementation of our business strategy requires us to manage our growth. Growth could place an increasing strain on our management and financial resources. To manage growth effectively, we will need to:

 

	●	Establish definitive business strategies, goals and objectives;
	●	Maintain a system of management controls; and
	●	Attract and retain qualified personnel, as well as, develop, train and manage management-level and other employees.

 

 

If we fail to manage our growth effectively, our business, financial condition or operating results could be materially harmed, and our stock price may decline.

 

Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.

 

We may in the future be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance. While neither Florida law nor our Articles of Incorporation or bylaws require us to indemnify or advance expenses to our officers and directors involved in such a legal action, we have entered into an indemnification agreement with our President and intend to enter into similar agreements with other officers and directors in the future. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.

 

If we are unable to maintain effective internal control over our financial reporting, the reputational effects could materially adversely affect our business.

 

Under the provisions of Section 404(a) of the Sarbanes-Oxley Act of 2002, as amended by the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010, the SEC adopted rules requiring public companies to perform an evaluation of Internal Control over Financial Reporting (Internal Controls) and to report on our evaluation in our Annual Report on Form 10-K. Our Internal Controls constitute a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. In the event we discover material weakness in our internal controls and our remediation of such reported material weakness is ineffective, or if in the future we are unable to maintain effective Internal Controls, additional resulting material restatements could occur, regulatory actions could be taken, and a resulting loss of investor confidence in the reliability of our financial statements could occur.

 

We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.

 

We estimate that it will cost approximately $50,000 annually to maintain the proper management and financial controls for our filings required as a public reporting company. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital.

 

We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease ongoing business operations.

 

We are in the “developmental” stage of business and have yet to commence any substantive commercial operations. We have limited history of revenues from operations. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. We have a limited operating history and must be considered in the developmental stage. Success is significantly dependent on a successful drilling, completion and production program. Operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to locate recoverable reserves or operate on a profitable basis. We are in the developmental stage and potential investors should be aware of the difficulties normally encountered by enterprises in this stage. If the business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in the Company.

 

 

Risks Inherit to Our Oil & Gas Operations

 

As properties are in the exploration stage, there can be no assurance that we will establish commercial discoveries on the properties.

 

Exploration for economic reserves of oil and gas is subject to a number of risk factors. Few properties that are explored are ultimately developed into producing oil and/or gas wells. The wells we maintain a royalty interest are located throughout Kentucky or Tennessee and considered in the exploration stage. Failure to make commercial discoveries on any of these properties would prevent our company from earning revenue and could lead to the failure of our business.

 

We are a new entrant into the oil and gas exploration and development industry without profitable operating history.

 

Since inception, activities have been limited to organizational efforts, obtaining working capital and acquiring and developing a very limited number of properties. As a result, there is limited information regarding property related production potential or revenue generation potential. As a result, future revenues may be limited or non-existent.

 

The business of oil and gas exploration and development is subject to many risks. The potential profitability of oil and natural gas properties if economic quantities are found is dependent upon many factors and risks beyond our control, including, but not limited to: (i) unanticipated ground conditions; (ii) geological problems; (iii) drilling and other processing problems; (iv) the occurrence of unusual weather or operating conditions and other force majeure events; (v) lower than expected reserve quantities; (vi) accidents; (vii) delays in the receipt of or failure to receive necessary government permits; (viii) delays in transportation; (ix) labor disputes; (x) government permit restrictions and regulation restrictions; (xi) unavailability of materials and equipment; and (xii) the failure of equipment or drilling to operate in accordance with specifications or expectations.

 

Drilling operations may not be successful which would harm our ability to operate.

 

There can be no assurance that future drilling activities will be successful, and we cannot be sure that overall drilling success rate or production operations within a particular area will ever come to fruition and, if it does, will not decline over time. We may not recover all or any portion of the capital investment in the wells or the underlying leaseholds. Unsuccessful drilling activities would have a material adverse effect upon results of operations and financial condition. The cost of drilling, completing, and operating wells is often uncertain, and a number of factors can delay or prevent drilling operations including: (i) unexpected drilling conditions; (ii) pressure or irregularities in geological formations; (iii) equipment failures or accidents; (iv) adverse weather conditions; and (iv) shortages or delays in availability of drilling rigs and delivery of equipment. If we are unable to successfully drill for oil and natural gas, we will not have revenue and in turn, the company could fail.

 

Production initiatives may not prove successful which could have a material adverse effect upon our operations.

 

The shales from which we intend to produce natural gas frequently contain water, which may hamper the ability to produce gas in commercial quantities. The amount of natural gas that can be commercially produced depends upon the rock and shale formation quality, the original free gas content of the shales, the thickness of the shales, the reservoir pressure, the rate at which gas is released from the shales, and the existence of any natural fractures through which the gas can flow to the well bore. However, shale rock formations frequently contain water that must be removed in order for the gas to detach from the shales and flow to the well bore. The ability to remove and dispose of sufficient quantities of water from the shales will determine whether or not we can produce gas in commercial quantities.

 

There is no guarantee that the potential drilling locations we have or acquire in the future will ever produce natural gas, which could have a material adverse effect upon the results of operations.

 

 

Prospects that we decide to drill may not yield oil or natural gas in commercially viable quantities which could have a material adverse effect upon our operations.

 

Prospects are in various stages of preliminary evaluation and assessment and we have not reached the point where we will decide to drill at all on the subject prospects. The use of seismic data, historical drilling logs, offsetting well information, and other technologies and the study of producing fields in the same area will not enable us to know conclusively prior to drilling and testing whether natural gas will be present or, if present, whether oil or natural gas will be present in sufficient quantities or quality to recover drilling or completion costs or to be economically viable. In sum, the cost of drilling, completing and operating any wells is often uncertain and new wells may not be productive.

 

If production results from operations, we are dependent upon transportation and storage services provided by third parties.

 

We will be dependent on the transportation and storage services offered by various interstate and intrastate pipeline companies for the delivery and sale of gas supplies. Both the performance of transportation and storage services by interstate pipelines and the rates charged for such services are subject to the jurisdiction of the Federal Energy Regulatory Commission or state regulatory agencies. An inability to obtain transportation and/or storage services at competitive rates could hinder processing and marketing operations and/or affect sales margins.

 

The potential profitability of oil and gas ventures depends upon factors beyond the control of our company.

 

The potential profitability of oil and gas properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil and gas are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls, or any combination of these and other factors, and respond to changes in domestic, international, political, social, and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect financial performance.

 

Adverse weather conditions can also hinder drilling operations. A productive well may become uneconomic in the event that water or other deleterious substances are encountered which impair or prevent the production of oil and/or gas from the well. The marketability of oil and gas which may be acquired or discovered will be affected by numerous factors beyond our control. These factors include the proximity and capacity of oil and gas pipelines and processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production and environmental regulations. These factors cannot be accurately predicted and the combination of these factors may result in our company not receiving an adequate return on invested capital.

 

The oil and gas industry is highly competitive and there is no assurance that we will be successful in acquiring new leases.

 

The oil and gas industry is intensely competitive. We compete with numerous individuals and companies, including many major oil and gas companies, which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for desirable oil and gas leases, suitable properties for drilling operations and necessary drilling equipment, as well as for access to funds. We cannot predict if the necessary funds can be raised or that any projected work will be completed. With the increased competition for mineral rights leases, we cannot say with certainty that we will be able to expand beyond the current 1,300 acres we currently hold. If we are unable to acquire further leaseholds, our drilling activities will be restricted to the acreage we currently maintain, which will in turn limit our growth and revenue.

 

Oil and gas operations are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.

 

Oil and gas operations are subject to federal, state, and local laws relating to the protection of the environment, including laws regulating removal of natural resources from the ground and the discharge of materials into the environment. Oil and gas operations are also subject to federal, state, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental standards imposed by federal, state or local authorities may be changed and any such changes may have material adverse effects on activities. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may elect not to insure against due to prohibitive premium costs and other reasons. To date we have not been required to spend any material amount on compliance with environmental regulations. However, we may be required to do so in future and this may affect our ability to expand or maintain operations.

 

 

Exploration activities are subject to certain environmental regulations which may prevent or delay the commencement or continuance of operations.

 

In general, exploration activities are subject to certain federal, state and local laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase the costs of these activities and may prevent or delay the commencement or continuance of a given operation. Compliance with these laws and regulations has not had a material effect on operations or financial condition to date. Specifically, we are subject to legislation regarding emissions into the environment, water discharges and storage and disposition of hazardous wastes. In addition, legislation has been enacted which requires well and facility sites to be abandoned and reclaimed to the satisfaction of state authorities. However, such laws and regulations are frequently changed and we are unable to predict the ultimate cost of compliance. Generally, environmental requirements do not appear to affect us any differently or to any greater or lesser extent than other companies in the industry.

 

We believe that our operations comply, in all material respects, with all applicable environmental regulations. Our operating partners maintain insurance coverage customary to the industry; however, we are not fully insured against all possible environmental risks.

 

Exploratory drilling involves many risks and we may become liable for pollution or other liabilities which may have an adverse effect on financial position.

 

Drilling operations generally involve a high degree of risk. Hazards such as unusual or unexpected geological formations, power outages, labor disruptions, blow-outs, sour gas leakage, fire, inability to obtain suitable or adequate machinery, equipment or labor, and other risks are involved. We may become subject to liability for pollution or hazards against which we cannot adequately insure or which we may elect not to insure. Incurring any such liability may have a material adverse effect on financial position and operations.

 

Any change to government regulation/administrative practices may have a negative impact on the ability to operate and profitability.

 

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business.

 

The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate profitably.

 

Risks Inherit to Our Equity Holding in AMDAQ Corp

 

Government actions or digital distribution platform restrictions could result in AMDAQ Corp’s products and services being unavailable in certain geographic regions, harming future growth.

 

Due to their connections to the blockchain industry, governments and government agencies could ban or cause their network or future apps to become unavailable in certain regions and jurisdictions. This could greatly impair or prevent them from registering new customers at their online portal in affected areas and prevent current customers from accessing the network. In addition, government action taken against their service providers, suppliers or partners could cause their network to become unavailable for extended periods of time.

 

Failure to identify and acquire technology and assets in the blockchain sector could greatly harm AMDAQ Corp’s business model.

 

Their business model is reliant on their ability to identify and acquire technology and assets within the blockchain sector. There is no guarantee that they will be successful in identifying viable companies or successful in acquiring any companies.

 

Competing blockchain platforms and technologies.

 

The development and acceptance of competing blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or an alternative to distributed ledgers altogether. This may adversely affect the Company and its exposure to various blockchain technologies. Such circumstances would have a material adverse effect on the ability of the Company to continue as a going concern or to pursue this segment at all, which would have a material adverse effect on the business, prospects or operations of the Company.

 

 

A network or data security incident may allow unauthorized access to AMDAQ Corp’s network or data, harm their reputation, create additional liability and adversely impact our financial results.

 

Increasingly, companies are subject to a wide variety of attacks on their networks on an ongoing basis. In addition to traditional computer “hackers,” malicious code (such as viruses and worms), phishing attempts, employee theft or misuse, and denial of service attacks, sophisticated nation-state and nation-state supported actors now engage in intrusions and attacks (including advanced persistent threat intrusions) and add to the risks to our internal networks and the information they store and process. Despite significant efforts to create security barriers to such threats, it is virtually impossible for them to entirely mitigate these risks. A breach in their data security could compromise their networks or networks secured by their products, creating system disruptions or slowdowns and exploiting security vulnerabilities of their products, and the information stored on their networks could be accessed, publicly disclosed, altered, lost, or stolen, which could subject them to liability and cause them financial harm. Although they have not yet experienced significant damages from unauthorized access by a third party of their internal network, any actual or perceived breach of network security in their internal systems could result in damage to their reputation, negative publicity, loss of channel partners, end-customers and sales, loss of competitive advantages over their competitors, increased costs to remedy any problems, and costly litigation. Any of these negative outcomes could adversely impact the market perception of their products and services and investor confidence in their company and could seriously harm their business or operating results.

 

Government regulation of the Blockchain industry and digital assets is evolving, and unfavorable changes could substantially harm AMDAQ Corp’s business and results of operations.

 

They are subject to general business regulations and laws as well as Federal and state regulations and laws specifically governing securities and digital assets. Existing and future laws and regulations may impede the growth of the Internet, e-commerce or other online services, and increase the cost of providing online services. These regulations and laws may cover taxation, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, broadband residential Internet access and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales, use and other taxes, libel and personal privacy apply to the Internet and e-commerce. Unfavorable resolution of these issues may harm their business and results of operations.

 

Due to AMDAQ Corp’s involvement in the blockchain industry, they may have a difficult time obtaining the various insurances that are desired to operate their business, which may expose them to additional risk and financial liabilities.

 

Insurance that is otherwise readily available, such as general liability, and directors and officer’s insurance, may become more difficult for them to find and more expensive, because they are a service provider to companies in the digital asset sector. There are no guarantees that they will be able to find such insurances in the future, or that the cost will be affordable to them. If they are forced to go without such insurances, it may prevent them from entering into certain business sectors, may inhibit our growth, and may expose them to additional risk and financial liabilities. AMDAQ Corp will carry general liability insurance. They do not currently hold any other forms of insurance, including directors’ and officers’ insurance. Because they do not have any other types of insurance, if they are made a party of a legal action, they may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against them that could cause them to cease operations.

 

Forms of Attack Against the Ethereum Network.

 

Exploitation of Flaws in the Ethereum Network’s Source Code

 

As with any other computer code, the Ethereum Network source code may contain certain flaws. Several errors and defects have been found and corrected, including those that disabled some functionality for users, exposed users’ information, or allowed users to create multiple views of the Ethereum Network. Such flaws have been discovered and quickly corrected by the Core Developers or the Ethereum community, thus demonstrating one of the advantages of opensource codes that are available to the public: opensource codes rely on transparency to promote community-sourced identification and solution of problems within the code.

 

Greater than Fifty Percent of Network Computational Power

 

Malicious actors can structure an attack whereby such actor gains control of more than half of the Ethereum Network’s processing power or “hashrate.” Computer scientists and cryptographers believe that the immense collective processing power of the Ethereum Network makes it impracticable for an actor to gain control of computers representing a majority of the processing power on the Ethereum Network.

 

If a malicious actor acquired sufficient computational power necessary to control the Ethereum Network (which amount would be well in excess of fifty percent), it would be able to engage in double-spending, or prevent some or all transactions from being confirmed, and prevent some or all other miners from mining any valid new blocks. The malicious actor or group of actors, however, would not be able to reverse other people’s transactions, change the fixed number of Ethers generated per new block, or transfer previously existing Ether that belong to other users.

 

Cancer Nodes

 

This form of attack involves a malicious actor propagating “cancer nodes” to isolate certain users from the legitimate Ethereum Network. A target user functionally surrounded by cancer nodes would be put on a separate “network,” allowing the malicious actor to relay only blocks created by the separate network and thus opening the target user to double-spending attacks. By using cancer nodes, a malicious actor also can disconnect the target user from the Ethereum economy entirely by refusing to relay any blocks or transactions. Ethereum software programs make these attacks more difficult by limiting the number of outbound connections through which users are connected to the Ethereum Network.

 

Manipulating Blockchain Formation

 

A malicious actor may attempt to double-spend Ether by manipulating the formation of the Blockchain rather than through control of the Ethereum Network. In this type of attack, a miner creates a valid new block containing a double-spend transaction and schedules the release of such attack block so that it is added to the Blockchain before a target user’s legitimate transaction can be included in a block. All double-spend attacks require that the miner sequence and execute the steps of its attack with sufficient speed and accuracy. Users and merchants can dramatically reduce the risk of a double-spend attack by waiting for multiple confirmations from the Ethereum Network before settling a transaction. The Ethereum Network still may be used to execute instantaneous, low-value transactions without confirmation to the extent the recipient of Ether determines that a malicious miner would be unwilling to carry out a double-spend attack for low-value transactions because the reward from mining would be higher than the small profit gained from double-spending. Users and merchants can take additional precautions by adjusting their Ethereum Network software programs to connect only to other well-connected nodes and to disable incoming connections. These precautions reduce the risk of double-spend attacks involving manipulation of a target’s connectivity to the Ethereum Network.

 

 

Rapid technological changes.

 

The industries in which AMDAQ Corp intends to compete with are subject to rapid technological changes. No assurances can be given that the technological advantages which may be enjoyed by the Company in respect of their technologies cannot or will not be overcome by technological advances in the respective industries rendering the Company’s technologies obsolete or non-competitive.

 

Protection of intellectual property.

 

The success of AMDAQ Corp will be dependent, in part, upon the protection of its various proprietary technologies from competitive use. Certain of its technologies are the subject of various patents in varying jurisdictions. In addition to the patent applications, the Company relies on a combination of trade secrets, nondisclosure agreements and other contractual provisions to protect its intellectual property rights. Nevertheless, these measures may be inadequate to safeguard the Company’s underlying technologies. If these measures do not protect the intellectual property rights, third parties could use the Company’s technologies, and its ability to compete in the market would be reduced significantly.

 

In the future, the Company may be required to protect or enforce its patents and patent rights through patent litigation against third parties, such as infringement suits or interference proceedings. These lawsuits could be expensive, take significant time, and could divert management’s attention from other business concerns. These actions could put the Company’s patents at risk of being invalidated or interpreted narrowly, and any patent applications at risk of not issuing. In defense of any such action, these third parties may assert claims against the Company. The Company cannot provide any assurance that it will have sufficient funds to vigorously prosecute any patent litigation, that it will prevail in any of these suits, or that the damages or other remedies awarded, if any, will be commercially valuable. During the course of these suits, there may be public announcements of the results of hearings, motions and other interim proceedings or developments in the litigation, which could result in the negative perception by investors, which could cause the price of the Company’s common stock to decline dramatically.

 

Risk to Our Common Stock and Offering

 

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities in the secondary market.

 

Companies trading on the Over the Counter Bulletin Board must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. In addition, we may be unable to get relisted on the OTC Bulletin Board, which may have an adverse material effect on the Company.

 

We do not expect to pay dividends in the future; any return on investment may be limited to the value of our common stock.

 

We do not currently anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting it at such time as the board of directors may consider relevant. Our current intention is to apply net earnings, if any, in the foreseeable future to increasing our capital base and development and marketing efforts. There can be no assurance that the Company will ever have sufficient earnings to declare and pay dividends to the holders of our common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if its stock price appreciates.

 

Authorization of preferred stock.

 

Our Certificate of Incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock with designations, rights and preferences determined from time to time by its Board of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of the common stock. In the event of issuance, the preferred stock could be utilized, under certain circumstances, as a method of discouraging, delaying or preventing a change in control of the Company. At present, we have authorized and issued 3,000,000 and 1,000,000 shares, respectively, of Series A Preferred stock and authorized and issued 500,000 and 100 shares, respectively, of Series D Preferred stock. Please see NOTE L - CAPITAL STOCK for further information.

 

 

The Company arbitrarily determined the offering price and terms of the Shares offered through this Prospectus.

 

The price of the Shares has been arbitrarily determined and bears no relationship to the assets or book value of the Company, or other customary investment criteria. No independent counsel or appraiser has been retained to value the Shares, and no assurance can be made that the offering price is in fact reflective of the underlying value of the Shares offered hereunder. Each prospective investor is therefore urged to consult with his or her own legal counsel and tax advisors as to the offering price and terms of the Shares offered hereunder.

 

The Shares are an illiquid investment and transferability of the Shares is subject to significant restriction.

 

There are substantial restrictions on the transfer of the Shares. Therefore, the purchase of the Shares must be considered a long-term investment acceptable only for prospective investors who are willing and can afford to accept and bear the substantial risk of the investment for an indefinite period of time. There is not a public market for the resale of the Shares. A prospective investor, therefore, may not be able to liquidate its investment, even in the event of an emergency, and Shares may not be acceptable as collateral for a loan.

 

The market price for our common stock may be particularly volatile given our status as a relatively unknown company, with a limited operating history and lack of profits which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price, which may result in substantial losses to you.

 

Our stock price may be particularly volatile when compared to the shares of larger, more established companies that trade on a national securities exchange and have large public floats. The volatility in our share price will be attributable to a number of factors. First, our common stock will be compared to the shares of such larger, more established companies, sporadically and thinly traded. As a consequence of this limited liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could decline precipitously in the event that a large number of shares of our common stock are sold on the market without commensurate demand. Second, we are a speculative or “risky” investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established company that trades on a national securities exchange and has a large public float. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time. Moreover, the OTC Bulletin Board is not a liquid market in contrast to the major stock exchanges. We cannot assure you as to the liquidity or the future market prices of our common stock if a market does develop. If an active market for our common stock does not develop, the fair market value of our common stock could be materially adversely affected.

 

Existing stockholders will experience significant dilution from our sale of shares under potential Securities Purchase Agreements.

 

The sale of shares pursuant to any Securities Purchase Agreements executed by the Company in the future will have a dilutive impact on our stockholders. As a result, the market price of our common stock could decline significantly, as we sell shares pursuant to the Securities Purchase Agreement. In addition, for any particular advance, we will need to issue a greater number of shares of common stock under the Securities Purchase Agreement as our stock price declines. If our stock price is lower, then our existing stockholders would experience greater dilution.

 

 

The Company May Issue Shares of Preferred Stock with Greater Rights than Common Stock.

 

The Company’s charter authorizes the Board of Directors to issue one or more series of preferred stock and set the terms of the preferred stock without seeking any further approval from holders of the Company’s common stock. Any preferred stock that is issued may rank ahead of the Company’s common stock in terms of dividends, priority and liquidation premiums and may have greater voting rights than the Company’s common stock.

 

Being a Public Company Significantly Increases the Company’s Administrative Costs.

 

The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and listing requirements subsequently adopted by the NYSE Amex in response to Sarbanes-Oxley, have required changes in corporate governance practices, internal control policies and audit committee practices of public companies. Although the Company is a relatively small public company, these rules, regulations, and requirements for the most part apply to the same extent as they apply to all major publicly traded companies. As a result, they have significantly increased the Company’s legal, financial, compliance and administrative costs, and have made certain other activities more time consuming and costly, as well as requiring substantial time and attention of our senior management. The Company expects its continued compliance with these and future rules and regulations to continue to require significant resources. These rules and regulations also may make it more difficult and more expensive for the Company to obtain director and officer liability insurance in the future and could make it more difficult for it to attract and retain qualified members for the Company’s Board of Directors, particularly to serve on its audit committee.

 

Our shares are subject to the U.S. “Penny Stock” Rules and investors who purchase our shares may have difficulty re-selling their shares as the liquidity of the market for our shares may be adversely affected by the impact of the “Penny Stock” Rules.

 

Our stock is subject to U.S. “Penny Stock” rules, which may make the stock more difficult to trade on the open market. Our common shares are not currently traded on the OTC Bulletin Board, but it is the Company’s plan that the common shares be quoted on the OTC Bulletin Board. A “penny stock” is generally defined by regulations of the U.S. Securities and Exchange Commission (“SEC”) as an equity security with a market price of less than US$5.00 per share. However, an equity security with a market price under US $5.00 will not be considered a penny stock if it fits within any of the following exceptions:

 

	(i)	the equity security is listed on NASDAQ or a national securities exchange;
	(ii)	the issuer of the equity security has been in continuous operation for less than three years, and either has (a) net tangible assets of at least US $5,000,000, or (b) average annual revenue of at least US $6,000,000; or
	(iii)	the issuer of the equity security has been in continuous operation for more than three years and has net tangible assets of at least US $2,000,000.

 

Our common stock does not currently fit into any of the above exceptions.

 

If an investor buys or sells a penny stock, SEC regulations require that the investor receive, prior to the transaction, a disclosure explaining the penny stock market and associated risks. Furthermore, trading in our common stock will be subject to Rule 15g-9 of the Exchange Act, which relates to non-NASDAQ and non-exchange listed securities. Under this rule, broker/dealers who recommend our securities to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale. Securities are exempt from this rule if their market price is at least $5.00 per share. Since our common stock is currently deemed penny stock regulations, it may tend to reduce market liquidity of our common stock, because they limit the broker/dealers’ ability to trade, and a purchaser’s ability to sell, the stock in the secondary market.

 

 

The low price of our common stock has a negative effect on the amount and percentage of transaction costs paid by individual shareholders. The low price of our common stock also limits our ability to raise additional capital by issuing additional shares. There are several reasons for these effects. First, the internal policies of certain institutional investors prohibit the purchase of low-priced stocks. Second, many brokerage houses do not permit low-priced stocks to be used as collateral for margin accounts or to be purchased on margin. Third, some brokerage house policies and practices tend to discourage individual brokers from dealing in low-priced stocks. Finally, broker’s commissions on low-priced stocks usually represent a higher percentage of the stock price than commissions on higher priced stocks. As a result, the Company’s shareholders may pay transaction costs that are a higher percentage of their total share value than if our share price were substantially higher.

 

Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and experience further dilution.

 

We are authorized to issue up to 750,000,000 shares of common stock, of which 391,243,635 shares of common stock are issued and outstanding as of March 16, 2021. Our Board of Directors has the authority to cause us to issue additional shares of common stock and to determine the rights, preferences and privileges of such shares, without consent of any of our stockholders. Consequently, the stockholders may experience more dilution in their ownership of our stock in the future.

 

You may be diluted by conversions of the Company’s Series A Preferred Stock, Series D Preferred Stock, convertible notes and exercises of outstanding options and warrants.

 

As of December 31, 2019, we had (i) outstanding options/warrants to purchase an aggregate of 8,324,617 shares of our common stock with exercise prices ranging from $0.024- $0.80 per share, and (ii) outstanding third-party notes in an aggregate principal amount of $1,533,519, which are convertible for up to 560,374,918 shares of our common stock, and (iii) 1,000,000 shares of Series A Preferred stock outstanding, which are convertible into 7,800,000 shares of our common stock; and (iv) 100 shares of Series D Preferred stock which is convertible into 416,666,667 shares of our common stock.

 

The exercise of such options and warrants, conversion of the third-party notes, conversion of our Series A Preferred Stock and Series D Preferred Stock will result in further dilution of your investment. In addition, you may experience additional dilution if we issue common stock in the future. As a result of this dilution, you may receive significantly less in net tangible book value than the full purchase price you paid for the shares in the event of liquidation.

 

Issuances of shares of common stock or securities convertible into or exercisable for shares of common stock following this offering, as well as the exercise of options and warrants outstanding, will dilute your ownership interests and may adversely affect the future market price of our common stock.

 

The issuance of additional shares of our common stock or securities convertible into or exchangeable for our common stock could be dilutive to stockholders if they do not invest in future offerings. We may seek additional capital through a combination of private and public offerings in the future.

 

The Company’s shares of common stock are quoted on the OTC Markets Pink Sheet, which limits the liquidity and price of the Company’s common stock.

 

The Company’s shares of Common Stock are traded on the OTC Markets Pink Sheet market under the symbol “UNGS.” Quotation of the Company’s securities on the OTC Pink Sheet market limits the liquidity and price of the Company’s Common Stock more than if the Company’s shares of Common Stock were listed on The Nasdaq Stock Market or a national exchange. There is currently no active trading market in the Company’s Common Stock. There can be no assurance that there will be an active trading market for the Company’s Common Stock following a business combination. In the event that an active trading market commences, there can be no assurance as to the market price of the Company’s shares of Common Stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained. Furthermore, because our shares of Common Stock are traded on the OTC Pink Sheet market, the shares of our Common Stock may only be offered and sold by Selling Shareholders at a fixed price of $0.044 per share until our Common Stock is quoted on the OTCQB tier of the OTC Markets, and thereafter at prevailing market prices or privately negotiated prices or in transactions that are not in the public market. We cannot assure you that our Common Stock will be quoted on the OTCQB tier notwithstanding our belief that we will satisfy the eligibility standards for admission to, and our intention to make application for quotation on the OTCQB.

 

FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.

 

The Financial Industry Regulatory Authority, Inc. (“FINRA”) has adopted rules requiring that, in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced securities will not be suitable for at least some customers. If these FINRA requirements are applicable to us or our securities, they may make it more difficult for broker-dealers to recommend that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our common stock and could have an adverse effect on the market for and price of our common stock.

 

 

We are classified as a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors.

 

We are a “smaller reporting company.” Specifically, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings.

 

Because directors and officers currently and for the foreseeable future will continue to control Sylios Corp, it is not likely that you will be able to elect directors or have any say in the policies of the Company.

 

Our shareholders are not entitled to cumulative voting rights. Consequently, the election of directors and all other matters requiring shareholder approval will be decided by majority vote. The directors, officers and affiliates of Sylios Corp beneficially own approximately 1.0% of our outstanding common stock through direct ownership plus an indeterminate number of shares of common stock through another class of capital stock that may be converted into common stock. Our President owns all issued and outstanding shares of the Company’s Series D Preferred Stock, which has voting rights equal to four times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of Series A, plus Series B, plus Series C Preferred Stocks which are issued and outstanding at the time of voting. As of the date of this filing, our President would have voting rights equal to 1,572,265,383 shares (1,568,974,540 voting shares through the Series D Preferred Stock and 3,290,843 shares of common stock held) or 80.04% of the shares available to vote for a matter brought before shareholders. In the event our President were to convert all 100 shares of Series D Preferred stock into shares of common stock and exercise an option for 25,000 shares, he would be issued.416,691,667 shares of common stock for a total ownership of 419,990,510 or 51.98% of the issued and outstanding common stock.

 

Since we intend to retain any earnings for development of our business for the foreseeable future, you will likely not receive any dividends for the foreseeable future.

 

We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

 

The Company is a holding company.

 

The Company is a holding company and essentially all of its assets are the capital stock of its material subsidiaries. As a result, investors in the Company are subject to the risks attributable to its subsidiaries. Consequently, our cash flows and ability to complete current or desirable future enhancement opportunities are dependent on the earnings of its subsidiaries and investments and the distribution of those earnings to the Company. The ability of these entities to pay dividends and other distributions will depend on their operating results and are subject to applicable laws and regulations which require that solvency and capital standards be maintained by such companies and contractual restrictions contained in the instruments governing their debt. In the event of a bankruptcy, liquidation or reorganization of any of our material subsidiaries, holders of indebtedness and trade creditors may be entitled to payment of their claims from the assets of those subsidiaries before the Company.

  

Cautionary Note

 

Because the risk factors referred to above, as well as other risks not mentioned above, could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us, you should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which ones will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. 

 

ITEM 1B.

UNRESOLVED STAFF COMMENTS.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 2.

PROPERTIES.

 

Our current office space is located at 501 1st Ave N., Suite 901, St. Petersburg, FL 33701. We are currently entered into a month to month lease and our monthly rent is $475.00. We believe we will be at our current office space for the foreseeable future.

 

We own a .92 acre tract of vacant commercial land in Bibb County, Georgia. With adequate financing, the Company’s current plans are to initiate the development of a storage facility on site during calendar 2021. Please see NOTE D – PROPERTY AND EQUIPMENT for further information.

 

We own a 1.1 acre tract of vacant commercial land in Santa Rosa County, Florida. With adequate financing, the Company’s current plans are to initiate the development of a storage facility on site during calendar 2021. Please see NOTE D – PROPERTY AND EQUIPMENT for further information.

 

We believe that our facilities are adequate for our current needs and that, if required, we will be able to expand our current space or locate suitable new office space and obtain a suitable replacement for our executive and administrative headquarters.

 

 

ITEM 3.

LEGAL PROCEEDINGS.

 

From time to time, we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities be incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, Management of the Company does not believe that there are any proceedings to which any director, officer, or affiliate of the Company, any owner of record of the beneficially or more than five percent of the common stock of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.

 

On May 1, 2018, Beaufort Capital Partners, LLC (‘Plaintiff”) filed a complaint against the Company (“Defendant”) with the Supreme Court of New, County of New York, alleging that the Defendant failed to pay principal, interest and other amounts due and owing pursuant to certain agreements between Plaintiff and Defendant, including but not limited to those certain Senior Secured Convertible Notes dated October 19, 2016 and other related instruments in the amount of $197,128.64. On October 5, 2018, the Company and the Plaintiff entered into a Debt Settlement Agreement (the “Agreement”) whereby the Company was to pay the Plaintiff the sum of Fifteen Thousand and NO/100 Dollars ($15,000)(the “Settlement Amount”) as a one-time lump sum payment to satisfy all financial obligations by the Company to the Plaintiff for all Convertible Notes issued to the Plaintiff. On October 10, 2018, the Company made full payment of the Settlement Amount.

 

On December 31, 2013, PR Newswire Assoc, LLC (“Plaintiff”) filed a complaint against the Company (“Defendant”) with the Circuit Court of Pinellas County, Florida, alleging that the Defendant failed to pay the Plaintiff for public relation services in the amount of $4,175. On February 18, 2014, the Court issued a Final Judgment against the Company in the amount of $4,175 principal, costs in the sum of $350 for a total of $4,525. Said total is to draw interest at the legal rate of 4.75% interest per annum. As of December 31, 2019, $4,525 principal plus all inherit interest remain due.

 

On December 5, 2013, Jack Rice Insurance, LLC (“Plaintiff”) filed a complaint against the Company (“Defendant”) with the Circuit Court of Pinellas County, Florida, alleging that the Defendant failed to pay the Plaintiff for insurance premiums in the amount of $1941.96 plus costs in the amount of $191.11 for a total of $2,133.07. On February 13, 2014, the Court issued a Final Judgment against the Company in the amount of $1,941.96 principal, costs in the sum of $191.11 for a total of $2,133.07. Said total is to draw interest at the legal rate of 4.75% interest per annum. As of December 31, 2019, $1,406.28 principal plus all inherit interest remain due.

 

On November 27, 2013, Wallace L. Scruggs and Renee Scruggs (Plaintiffs”) filed a complaint against the Company (“Defendant”) in the United States District Court, Southern District of West Virginia, Huntington Division alleging that the Defendant failed to make payments on the terms of a Subscription Agreement entered into by the Plaintiffs and a subsidiary of the Defendant in the amount of $350,000. On March 1, 2017, the case was dismissed with prejudice by the Court for failure to prosecute and stricken from the docket of the court.

 

On August 29, 2011, US Natural Gas Corp (“Plaintiff”) filed a complaint against Northwest Florida Operations, Inc. (“Defendant”) in the County Court of Pinellas County Florida, Small Claims Division alleging breach of contract against the Defendant with an amount due of $1,568 with costs of $268.92. On October 11, 2011, the Court issued a Final judgment in the amount of $1793.90 with interest at 4.75%. As of December 31, 2019, $1,793.90 plus all inherit interest remain due to the Company.

 

ITEM 4.

MINE SAFETY DISCLOSURES.

 

None.

 

 

PART II

 

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 

The Common Stock of the Company is currently trading on the OTC Markets under the symbol “UNGS.” The following information reflects the high and low closing prices of the Company’s common stock on the OTC Markets.

 

Quarterly period		High				Low
Fiscal year ended December 31, 2019:
First Quarter		$	0.59			$	0.0041
Second Quarter		$	0.06			$	0.0057
Third Quarter		$	0.0465			$	0.005
Fourth Quarter		$	0.05			$	0.0021
Fiscal year ended December 31, 2018:
First Quarter		$	0.80			$	0.40
Second Quarter		$	0.40			$	0.04
Third Quarter		$	0.40			$	0.042
Fourth Quarter		$	0.40			$	0.04

 

The closing stock prices reflect the Company’s 1:4000 reverse stock split effective as of December 28, 2018.

 

Holders

 

As of December 31, 2019, there were 290 shareholders of record of our common stock.

 

Dividend Policy

 

The Company has never declared or paid any cash dividends on its common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

 

The Company paid a stock dividend to its shareholders in the spin-off of its wholly owned subsidiary, The Greater Cannabis Company, Inc. (“GCAN”). GCAN is currently trading on the OTCQB under the symbol “GCAN.”

 

The Company paid a stock dividend to its shareholders in the spin-off of its wholly owned subsidiary, AMDAQ Corp (f/k/a E 2 Investments, LLC). AMDAQ Corp will file its Registration Statement on Form S-1 during the second quarter of 2019.

 

Penny Stock Regulations and Restrictions on Marketability

 

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws, (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price, (d) contains a toll-free telephone number for inquiries on disciplinary actions, (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks, and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock, (b) the compensation of the broker-dealer and its salesperson in the transaction, (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock, and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.

 

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

 

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling their shares of our common stock.

 

Securities authorized for issuance under equity compensation plans

 

We have no equity compensation plans and accordingly we have no shares authorized for issuance under an equity compensation plan.

 

Transfer Agent

 

Pacific Stock Transfer

6725 Via Austi Pkwy, Suite 300

Las Vegas, NV 89119

(800) 785-7782 voice

(702) 433-1979 fax

www.pacificstocktransfer.com

 

Recent Sales of Unregistered Securities

 

During the year ended December 31, 2019, we issued securities that were not registered under the Securities Act and were not previously disclosed in a Current Report on Form 8-K as listed below. Except where noted, all of the securities discussed in this Item 5 were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act.

 

Common Stock

 

On January 4, 2019, the Company issued 37,500 shares of its common stock (with a fair value of $14,959) in satisfaction of $15,000 in accounts payable due a consultant.

 

On January 7, 2019, the prior owner of AMDAQ, Ltd and the prior owners of the AMDAQ tokens agreed to a reduction in the number of common shares of AMDAQ Corp that they would retain. Of the 15,000,000 shares of AMDAQ Corp common stock issued to the prior owner of AMDAQ, Ltd, 7,500,000 were returned to AMDAQ Corp to be retired. Of the 3,000,000 shares of AMDAQ Corp common stock issued for the purchase of the AMDAQ tokens, 1,500,000 were returned to AMDAQ Corp to be retired.

 

On February 7, 2019, the Company issued 594,066 shares of its common stock to a convertible noteholder in satisfaction of $642 accrued interest. The $59,418 excess of the $60,060 fair value of the 594,066 shares over the $642 liability reduction was charged to loss on conversion of debt in the three months ended March 31, 2019.

 
On February 14, 2019, the Company issued 3,000,000 shares of its common stock to Valvasone Trust as payment for services rendered on behalf of the Company. The $300,000 fair value of the 3,000,000 shares was charged to professional fees in the three months ended March 31, 2019.

 

On February 14, 2019, the Company issued 1,500,000 shares of its common stock to a Valvasone Trust affiliate as payment for services rendered on behalf of the Company. The $150,000 fair value of the 1,500,000 shares was charged to professional fees in the three months ended March 31, 2019.

 

On February 20, 2019, the Company issued 536,585 shares of its common stock to a convertible noteholder in satisfaction of $1,100 notes payable. The $52,559 excess of the $53,659 fair value of the 536,585 shares over the $1,100 liability reduction was charged to loss on conversion of debt in the three months ended March 31, 2019.

 

On April 17, 2019, the Company issued 116,822 shares of its common stock to Wayne Anderson, the Company’s chief executive officer and sole officer and director of the Company, in satisfaction of $10,000 director’s stock-based compensation for the first quarter of calendar year 2019.

 

On August 22, 2019, the Company issued 583,523 shares of its common stock to a convertible noteholder in satisfaction of $345 principal and $851 interest against an outstanding note. The $7,557 excess of the $8,753 fair value of the 583,523 shares over the $1,196 liability reduction was charged to loss on conversion of debt in the three months ended September 30, 2019.

 

On September 9, 2019, the Company issued 1,226,583 shares of its common stock to a convertible noteholder in satisfaction of $1,300 interest against an outstanding note. The $10,966 excess of the $12,266 fair value of the 1,226,583 shares over the $1,300 liability reduction was charged to loss on conversion of debt in the three months ended September 30, 2019.

 

On September 15, 2019, the Company issued 10,000,000 shares of restricted common stock for the purchase of $100,000 in inventory. Please see NOTE C – INVENTORY for further information.

 

On September 25, 2019, the Company issued 6,000,000 shares of restricted common stock for the purchase of $60,000 in inventory. Please see NOTE C – INVENTORY for further information.

 

 

On October 28, 2019, the Company issued 1,248,390 shares of its common stock to a convertible noteholder as a partial cashless exercise of a warrant.

 

On October 28, 2019, the Company issued 1,000,000 shares of its common stock to a convertible noteholder in satisfaction of $3,700 principal and $500 in fees against an outstanding note. The $5,800 excess of the $10,000 fair value of the 1,000,000 shares over the $4,200 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On November 25, 2019, the Company issued 2,072,133 shares of its common stock to a convertible noteholder in satisfaction of $605 principal and $721 in accrued interest against an outstanding note. The $19,395 excess of the $20,721 fair value of the 2,072,133 shares over the $1,326 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 5, 2019, the Company issued 893,006 shares of its common stock to a convertible noteholder as a partial cashless exercise of a warrant.

 

On December 5, 2019, the Company issued 772,133 shares of its common stock to a convertible noteholder in satisfaction of $400 principal, $721 in accrued interest and $500 in fees against an outstanding note. The $2,240 excess of the $3,861 fair value of the 772,133 shares over the $1,621 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 10, 2019, the Company issued 3,545,487 shares of its common stock to a convertible noteholder in satisfaction of $1,875 principal and $39 in accrued interest against an outstanding note. The $9.077 excess of the $10,991 fair value of the 3,545,487 shares over the $1,914 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 12, 2019, the Company issued 1,940,268 shares of its common stock to a convertible noteholder in satisfaction of $3,150 principal, $17 in accrued interest and $500 in fees against an outstanding note. The $1,572 excess of the $5,239 fair value of the 1,940,268 shares over the $3,667 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 20, 2019, the Company issued 2,023,234 shares of its common stock to a convertible noteholder in satisfaction of $2,600 principal, $16 in accrued interest and $500 in fees against an outstanding note. The $3,156 excess of the $6,272 fair value of the 2,023,234 shares over the $3,116 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 26, 2019, the Company issued 4,093,514 shares of its common stock to a convertible noteholder in satisfaction of $1,773 principal and $28 in accrued interest against an outstanding note. The $8,023 excess of the $9,824 fair value of the 4,093,514 shares over the $1,801 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 30, 2019, the Company issued 2,116,895 shares of its common stock to a convertible noteholder in satisfaction of $2,600 principal, $12 in accrued interest and $500 in fees against an outstanding note. The $3,239 excess of the $6,351 fair value of the 2,116,895 shares over the $3,112 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

 

ITEM 6.

SELECTED FINANCIAL DATA.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 7.

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

 

The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this report.

 

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. Forward-looking statements are often identified by words like: “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions, or words that, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus.

 

Although the forward-looking statements in this annual report on Form 10-K reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in herein and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

Our financial statements are stated in United States Dollars (USD or US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common stock” refer to the common shares in our capital stock.

 

Overview

 

Sylios Corp (f/k/a US Natural Gas Corp) (“Sylios”, the “Company”, “we”, “us”, or “our”) was organized as a Florida Corporation on March 28, 2008 under the name of Adventure Energy, Inc. Sylios has five wholly owned subsidiaries: (i) US Natural Gas Corp KY (“USNG KY”), a corporation incorporated in Florida on February 1, 2010; (ii) US Natural Gas Corp WV (“USNG WV”) a corporation incorporated in Tennessee on August 25, 2009 and redomiciled in Florida on April 26, 2010; (iii) E 3 Petroleum Corp (“E 3”) a corporation incorporated in Florida on February 2, 2010; (iv) 1720 RCMG, LLC (“1720”) a limited liability company formed in the State of Florida on July 24, 2019; and (v) 5496 NRMF, LLC (“5496”) a limited liability company formed in the State of Florida on October 12, 2019.

 

Effective March 10, 2017, Sylios distributed approximately 80.01% of the common stock of The Greater Cannabis Company, Inc. (“GCAN”), a former wholly owned subsidiary of Sylios organized in Florida on March 13, 2014. Please see NOTE G - INVESTMENTS IN AND ADVANCES TO SPUN-OFF FORMER SUBSIDIARIES for further information.

 

Effective October 2, 2017, Sylios distributed approximately 41.05% of the common stock of AMDAQ Corp (formerly E 2 Investments, LLC) (“AMDAQ”), a former wholly owned subsidiary of Sylios organized in Florida on July 20, 2009. Please see NOTE G - INVESTMENTS IN AND ADVANCES TO SPUN-OFF FORMER SUBSIDIARIES and NOTE R- SUBSEQUENT EVENTS for further information.

 

Effective December 28, 2018, Sylios effected a 1 share for 4,000 shares reverse stock split of its common stock reducing the number of issued and outstanding shares of its common stock from 10,949,884,000 to 2,737,471 shares. The accompanying financial statements retroactively reflect the reverse stock split.

 

Sylios owns vacant land in Macon, GA and Milton, FL, which subject to receipt of adequate financing, it plans upon developing a storage facility for customer rentals on each tract of land. Please see NOTE D - PROPERTY AND EQUIPMENT for further information. USNG KY was granted royalty interests in 13 oil and gas wells in Kentucky (that had been shut-in since 2014) that it had acquired several years prior to the year ended December 31, 2017, which were sold to a third party in 2018. Please see NOTE E - OIL AND GAS ROYALTY INTERESTS for further information.

 

 

Results of Operations

 

Operating Revenues

 

During the year ended December 31, 2019, the Company recorded revenues of $2,500 compared to revenues of $3,000 for the year ended December 31, 2018. Revenues for the years ended December 31, 2019 and 2018 were from consulting services.

 

Operating Expenses and Net Loss

 

During the year ended December 31, 2019, the Company incurred operating expenses of $1,359,147 compared to operating expenses of $379,253 for the year ended December 31, 2018. The increase in operating expenses is attributed to an increase in officer and director compensation and professional fees during the year ended December 31, 2019.

 

For the year ended December 31, 2019, the Company recorded net income of $5,804,894 or $0.33 per share, compared with a net loss of $7,710,990 or $2.82 loss per share for the year ended December 31, 2018. The increase in net income for the year ended December 31, 2019 is attributed to the Company’s derivative liability income in the amount of $7,659,285 versus a derivative liability loss for the year ended December 31, 2018 in the amount of $7,722,369.

 

Liquidity and Capital Resources

 

Working Capital

 

		Year ended December 31, 2019				Year ended December 31, 2018
Current Assets			67				28,005
Current Liabilities			4,069,581				11,548,595
Working Capital (Deficit)			(4,069,514	)			(11,520,590	)

 

At December 31, 2019, the Company had cash of $67 and total current assets of $67 compared with cash of $28,005 and total current assets of $28,005 at December 31, 2018. The decrease in total current assets is attributable to a decrease in cash at December 31, 2019.

 

 

At December 31, 2019, the Company had total current liabilities of $4,069,581 compared to $11,548,595 at December 31, 2018. The decrease in total current liabilities was attributed to a decrease in the calculation of the Company’s derivative liability and a decrease in accrued officer and director compensation as compared to the year ended December 31, 2018.

 

The overall working capital deficit decreased from $11,520,590 at December 31, 2018 to $4,069,514 at December 31, 2019. The decrease in working capital deficit is mainly due to the calculation of the Company’s derivative liability expense.

 

Cash Flows

 

		Year ended December 31, 2019				Year ended December 31, 2018
Cash Flows from (used in) Operating Activities			(202,435	)			(29,252	)
Cash Flows from (used in) Investing Activities			(35,039	)			-
Cash Flows from (used in) Financing Activities			209,536				57,255
Net Increase Decrease in Cash During Period			(27,938	)			28,003

 

Cashflow from Operating Activities

 

During the year ended December 31, 2019, the Company used cash of $202,435 in operating activities compared to cash used of $29,252 from operating activities for the year ended December 31, 2018. The increase in cash used from operating activities was due to a loss on conversions of notes payable, an increase on amortization of debt discounts offset by derivative liability income of $7,659,285.

 

Cashflow from Investing Activities

 

During the year ended December 31, 2019, the Company used cash of $35,039 in investing activities compared to cash used of $- from investing activities for the year ended December 31, 2018.

 

Cashflow from Financing Activities

 

During the year ended December 31, 2019, cash provided by financing activities was $209,536 compared to $57,255 for the year ended December 31, 2018. During the year ended December 31, 2019, the Company received $206,450 of proceeds from the issuance of multiple convertible debentures payable to unrelated parties and repaid $13,000 on outstanding notes payable.

 

We currently have no external sources of liquidity, such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

 

We are dependent on our product sales to fund our operations and may require the sale of additional common stock to maintain operations. Our officers and directors have made no written commitments with respect to providing a source of liquidity in the form of cash advances, loans, and/or financial guarantees.

 

If we are unable to raise the funds required to fund our operations, we will seek alternative financing through other means, such as borrowings from institutions or private individuals. There can be no assurance that we will be able to raise the capital we need for our operations from the sale of our securities. We have not located any sources for these funds and may not be able to do so in the future. We expect that we will seek additional financing in the future. However, we may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, we may be forced to cease operations. If we fail to raise funds, we expect that we will be required to seek protection from creditors under applicable bankruptcy laws.

 

Convertible Debentures

 

a)

On December 13, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Armada Investment Fund, LLC (“Armada”) wherein the Company issued Armada a Convertible Promissory Note (the “Note”) in the amount of $16,500 ($1,500 OID). The Note has a term of one (1) year (due on December 13, 2020) and bears interest at 8% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 60% multiplied by the Market Price (as defined herein)(representing a discount rate of 40%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB. As part and parcel of the foregoing transaction, Armada was issued a warrant granting the holder the right to purchase up to 841,200 shares of the Company’s common stock at an exercise price of $0.024 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.

 

 

b)	On October 30, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Armada Investment Fund, LLC (the “Investor”) wherein the Company issued the Investor a Convertible Promissory Note (the “Note”) in the amount of $25,300. The Note has a term of one (1) year, is due on October 30, 2020 and bears interest at 8% annually. The Note is convertible, in whole or in part, at any time and from time to time before maturity (October 30, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 60% multiplied by the Market Price (as defined herein)(representing a discount rate of 40%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB. As part and parcel of the foregoing transaction, the Investor was issued a warrant granting the holder the right to purchase up to 1,402,000 shares of the Company’s common stock at an exercise price of $0.024 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
c)	On July 24, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Armada Investment Fund, LLC (“ARMADA”) in the principal amount of $15,400. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (July 24, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, ARMADA was also issued a warrant granting the holder the right to purchase up to 256,667 shares of the Company’s common stock at an exercise price of $.08 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
d)	On July 2, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Armada Investment Fund, LLC (“ARMADA”) in the principal amount of $16,500. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (June 5, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, ARMADA was also issued a warrant granting the holder the right to purchase up to 220,000 shares of the Company’s common stock at an exercise price of $.075 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
e)	On June 5, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Armada Investment Fund, LLC (“ARMADA”) in the principal amount of $16,500. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (June 5, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, ARMADA was also issued a warrant granting the holder the right to purchase up to 220,000 shares of the Company’s common stock at an exercise price of $.075 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
f)	On February 18, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Armada Investment Fund, LLC, (“ARMADA”) in the principal amount of $11,550 in exchange for $10,500 cash. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (February 18, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, ARMADA was also issued a warrant granting the holder the right to purchase up to 26,250 shares of the Company’s common stock at an exercise price of $.10 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
g)	On February 12, 2019, the Company issued an Amended and Restated Replacement Convertible Promissory Note in the amount of Twenty-One Thousand Five Hundred and NO/100 Dollars ($21,500) to Armada Investment Fund, LLC (“ARMADA) dated February 12, 2019. On this same date, ARMADA entered into an Assignment Agreement with Bullfly Trading Company, Inc. (“BULLFLY”) for the assignment of two convertible notes issued by the Company to BULLFLY the first dated June 1, 2016 with a principal amount of $4,000 and the second dated July 11, 2016 in the principal amount of $4,000 and with Mountain Properties, Inc. (“MOUNTAIN”) for the assignment of one convertible note issued by the Company to MOUNTAIN dated February 24, 2016 with a principal amount of $7,500. The Amended and Restated Replacement Convertible Promissory Note includes all principal and accrued interest on the three notes purchased by ARMADA. The Convertible Note is convertible, in whole or in part, at any time and from time to time at the option of the holder at the Variable Conversion Price The “Variable Conversion Price” shall equal the lesser of (i) 50% multiplied by the lowest Trading Price (as defined herein) during the previous twenty five (25) Trading Days (as defined herein) before the Issue Date of this Note (representing a discount rate of 50%) or (ii) 50% multiplied by the Market Price (as defined herein) (representing a discount rate of 50%).  “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The notes bears interest at 8% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
h)	On December 31, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Armada Investment Fund, LLC, (“ARMADA”) in the principal amount of $33,000. The Convertible Note was funded on December 31, 2018. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (December 31, 2019) at the option of the holder at the Variable Conversion Price, shall equal the lesser of (i) 50% multiplied by the lowest Trading Price during the previous twenty (20) Trading Days before the Issue Date of this Note (representing a discount rate of 50%) or (iii) 50% multiplied by the Market Price (as defined herein) (representing a discount rate of 50%). “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, ARMADA was also issued a warrant granting the holder the right to purchase 82,500 shares of the Company’s common stock at an exercise price of $0.50 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.

 

 

i)	On October 9, 2018, the Company executed a Convertible Note (the “Convertible Note”) payable to Armada Investment Fund, LLC, (“ARMADA”) in the principal amount of $30,000. The Convertible Note was funded on October 10, 2018. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (October 9, 2019) at the option of the holder at the Variable Conversion Price, shall equal the lesser of (i) 50% multiplied by the lowest Trading Price during the previous twenty (20) Trading Days before the Issue Date of this Note (representing a discount rate of 50%) or (iii) 50% multiplied by the Market Price (as defined herein) (representing a discount rate of 50%). “Market Price” means the lowest Trading Price (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, ARMADA was also issued a warrant granting the holder the right to purchase 62,500 shares of the Company’s common stock at an exercise price of $0.40 for a term of 5-years. As part of the Convertible Note, the Company executed a Registration Rights Agreement (the “RRA”) dated October 9, 2018. Among other things, the RRA provides for the Company to file a Registration Statement with the SEC covering the resale of shares underlying the Convertible Note and the warrant and to have declared effective such Registration Statement. In the event that the Company doesn’t meet the registration requirements provided for in the RRA, the Company is obligated to pay ARMADA certain payments for such failures. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
j)	On May 2, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Jefferson Street Capital, LLC in the principal amount of $11,000 in exchange for $9,000 cash. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (February 3, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 58% multiplied by the Market Price (as defined herein)(representing a discount rate of 42%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lesser of the (i) lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date or (ii) lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Original Issue Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB. The Convertible Note has a term of nine (9) months and bears interest at 8% annually. As part of the transaction, JEFFERSON was also issued a warrant granting the holder the right to purchase up to 50,000 shares of the Company’s common stock at an exercise price of $.10 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
k)	On February 18, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Jefferson Street Capital, LLC, (“JEFFERSON”) in the principal amount of $11,550 in exchange for $10,500 cash. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (February 18, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, JEFFERSON was also issued a warrant granting the holder the right to purchase up to 26,250 shares of the Company’s common stock at an exercise price of $.10 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
l)	On October 16, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to BHP Capital NY Inc. (“BHP”) in the principal amount of $13,750. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (October 16, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 60% multiplied by the Market Price (as defined herein)(representing a discount rate of 40%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, BHP was also issued a warrant granting the holder the right to purchase up to 761,598 shares of the Company’s common stock at an exercise price of $.024 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
m)	On July 24, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to BHP Capital NY Inc. (“BHP”) in the principal amount of $15,400. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (July 24, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, BHP was also issued a warrant granting the holder the right to purchase up to 256,667 shares of the Company’s common stock at an exercise price of $.08 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
n)	On May 2, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to BHP Capital NY Inc. in the principal amount of $11,000 in exchange for $9,000 cash. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (February 3, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 58% multiplied by the Market Price (as defined herein)(representing a discount rate of 42%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lesser of the (i) lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date or (ii) lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Original Issue Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB. The Convertible Note has a term of nine (9) months and bears interest at 8% annually. As part of the transaction, BHP was also issued a warrant granting the holder the right to purchase up to 50,000 shares of the Company’s common stock at an exercise price of $.10 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.

 

 

o)	On February 18, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to BHP Capital NY Inc., (“BHP”) in the principal amount of $11,550 in exchange for $10,500 cash. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (February 18, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, BHP was also issued a warrant granting the holder the right to purchase up to 26,250 shares of the Company’s common stock at an exercise price of $.10 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
p)	On October 16, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Fourth Man, LLC (“FOURTH”) in the principal amount of $13,750. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (October 16, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 60% multiplied by the Market Price (as defined herein)(representing a discount rate of 40%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, FOURTH was also issued a warrant granting the holder the right to purchase up to 761,598 shares of the Company’s common stock at an exercise price of $.024 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
q)	On July 24, 2019, the Company executed a Convertible Note (the “Convertible Note”) payable to Fourth Man, LLC (“FOURTH”) in the principal amount of $15,400. The Convertible Note is convertible, in whole or in part, at any time and from time to time before maturity (July 24, 2020) at the option of the holder. The conversion price for the principal and interest in connection with voluntary conversions by the Holder shall be 70% multiplied by the Market Price (as defined herein)(representing a discount rate of 30%), subject to adjustment as described herein (“Conversion Price”). Market Price” means the lowest one (1) Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Prices” means, for any security as of any date, the lowest traded price on the Over-the Counter Pink Marketplace, OTCQB, or applicable trading market (the “OTCQB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. www.Nasdaq.com) or, if the OTCQB is not the principal trading market for such security, on the principal securities exchange or trading market where such security is listed or traded or, if the lowest intraday trading price of such security is not available in any of the foregoing manners, the lowest intraday price of any market makers for such security that are quoted on the OTC Markets. The Convertible Note has a term of one (1) year and bears interest at 8% annually. As part of the transaction, FOURTH was also issued a warrant granting the holder the right to purchase up to 256,667 shares of the Company’s common stock at an exercise price of $.08 for a term of 5-years. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.

 

r)	On January 27, 2017, the Company executed a Convertible Note (the “Note”) payable to Tangiers Investment Group, LLC (“TANGIERS”), in the principal amount of $55,000. The Note is convertible, in whole or in part, at any time and from time to time before maturity (January 17, 2018) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 50% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of one (1) year and bears interest at 8% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
s)	On June 3, 2015, the Company executed a Convertible Note (the “Note”) payable to Tangiers Investment Group, LLC (“TANGIERS”), in the principal amount of $17,250. The Note is convertible, in whole or in part, at any time and from time to time before maturity (June 3, 2016) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 50% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of one (1) year and bears interest at 10% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
t)	On August 12, 2014, the Company executed a Convertible Note (the “Note”) payable to Tangiers Investment Group, LLC (“TANGIERS”), in the principal amount of $112,500. The Note is convertible, in whole or in part, at any time and from time to time before maturity (August 21, 2015) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 50% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of one (1) year and bears interest at 8% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.

 

 

u)	On July 3, 2014, the Company executed a Convertible Note (the “Note”) payable to Tangiers Investment Group, LLC (“TANGIERS”), in the principal amount of $50,000. The Note is convertible, in whole or in part, at any time and from time to time before maturity (July 3, 2015) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 50% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of one (1) year and bears interest at 10% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
v)	On June 2, 2014, the Company executed a Convertible Note (the “Note”) payable to Tangiers Investment Group, LLC (“TANGIERS”), in the principal amount of $28,500. The Note is convertible, in whole or in part, at any time and from time to time before maturity (June 2, 2015) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 50% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of one (1) year and bears interest at 10% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
w)	On April 2, 2014, the Company executed a Convertible Note (the “Note”) payable to Tangiers Investment Group, LLC (“TANGIERS”), in the principal amount of $5,500. The Note is convertible, in whole or in part, at any time and from time to time before maturity (April 2, 2015) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 50% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty (20) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of one (1) year and bears interest at 8% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
x)	On February 18, 2013, the Company executed a Debt Purchase and Conversion Agreement (the “Agreement”) with Tangiers Investment Group, LLC (“TANGIERS”), whereby TANGIERS purchased the balance of the principal on a Convertible Note (the “Note”) issued to a third party of December 14, 2010 with a maturity date of December 14, 2011. The remaining principal amount due under the Note was $10,750. The Agreement allows for the conversion of the acquired Note at the option of the holder at the Conversion Price, which shall equal forty percent (40%) of the closing bid price, as provided by NASDAQ, on the date the Notice of Conversion is submitted to the Company. The Note bears interest at 0% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
y)	On January 9, 2019, the Company executed a Convertible Note (the “Note”) payable to Darling Investments, LLC, (“DARLING”) in the principal amount of $12,500. The Note is convertible, in whole or in part, at any time and from time to time before maturity (January 9, 2020) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 40% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of one (1) year and bears interest at 12% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
z)	On March 7, 2017, the Company executed a Convertible Note (the “Note”) payable to Darling Investments, LLC, (“DARLING”) in the principal amount of $10,000. The Note is convertible, in whole or in part, at any time and from time to time before maturity (March 7, 2018) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 20% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of one (1) year and bears interest at 12% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.

 

 

(aa)	On February 13, 2017, the Company executed a Convertible Note (the “Note”) payable to Darling Capital, LLC, (“DARLING”) in the principal amount of $10,000. The Note is convertible, in whole or in part, at any time and from time to time before maturity (October 13, 2017) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 40% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of nine (9) months and bears interest at 12% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
(bb)	On February 2, 2017, the Company executed a Convertible Note (the “Note”) payable to Darling Capital, LLC, (“DARLING”) in the principal amount of $9,200. The Note is convertible, in whole or in part, at any time and from time to time before maturity (October 2, 2017) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 40% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of nine (9) months and bears interest at 12% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
(cc)	On January 28, 2017, the Company executed a Convertible Note (the “Note”) payable to Darling Capital, LLC, (“DARLING”) in the principal amount of $7,500. The Note is convertible, in whole or in part, at any time and from time to time before maturity (September 28, 2017) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 40% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of nine (9) months and bears interest at 12% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
(dd)	On January 10, 2017, the Company executed a Convertible Note (the “Note”) payable to Darling Capital, LLC, (“DARLING”) in the principal amount of $5,000. The Note is convertible, in whole or in part, at any time and from time to time before maturity (September 10, 2017) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 40% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of nine (9) months and bears interest at 12% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.
(ee)	On December 2, 2016, the Company executed a Convertible Note (the “Note”) payable to Darling Capital, LLC, (“DARLING”) in the principal amount of $15,000. The Note is convertible, in whole or in part, at any time and from time to time before maturity (August 2, 2017) at the option of the holder at the Variable Conversion Price, which shall mean the lesser of 40% multiplied by the Market Price (as defined). “Market Price” means the lowest Trading Prices (as defined below) for the Common Stock during the twenty-five (25) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. The Note has a term of nine (9) months and bears interest at 12% annually. Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information.

 

 

Notes in General

 

The Convertible Notes are convertible into shares of common stock of the Company based upon a discount to the market price. The conversion terms of these Convertible Notes are based upon a discount to the then-prevailing average of the lowest trading bid prices (as described above for each separate note) and, as a result, the lower the stock price at the time the holders convert the Convertible Notes, the more shares of our common stock the holders will receive. The number of shares of common stock issuable upon conversion of these Convertible Notes is indeterminate. If the trading price of our common stock is lower when the conversion price of these Convertible Notes is determined, we would be required to issue a higher number of shares of our common stock, which could cause substantial dilution to our stockholders. In addition, if the holders opt to convert these Convertible Notes into shares of our common stock and sell those shares it could result in an imbalance of supply and demand for our common stock and resulting in lower trading prices for our common stock as reported by the OTC Pink Sheets. The further our stock price declines, the further the adjustment of the conversion price will fall and the greater the number of shares we will have to issue upon conversion.

 

In addition, the number of shares issuable upon conversion of the Convertible Note is potentially limitless. While the overall ownership of each individual Holder at any one moment may be limited to 9.99% of the issued and outstanding shares of our common stock, each holder may be free to sell any shares into the market that have previously been issued to them, thereby enabling them to convert the remaining portion of these Convertible Notes.

 

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

 

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

 

INDEX TO FINANCIAL STATEMENTS

 

Financial Statements		Page
Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets at December 31, 2019 and 2018		F-2
Consolidated Statements of Operations for the years ended December 31, 2019 and 2018		F-3
Consolidated Statements of Stockholders’ (Deficiency) for the years ended December 31, 2019 and 2018		F-4
Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018		F-5
Notes to Consolidated Financial Statements		F-6 - F-30

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders of Sylios Corp

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Sylios Corp and its subsidiaries (the “Company”) as of December 31, 2019 and 2018 and the related consolidated statements of operations, stockholders’ deficiency, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Sylios Corp and its subsidiaries as of December 31, 2019 and 2018 and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Going Concern Uncertainty

 

The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note Q to the financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note Q. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

	/s/ Michael T. Studer CPA P.C.
	Michael T. Studer CPA P.C.

 

Freeport, New York

March 17, 2021

 

We have served as the Company’s auditor since 2019.

 

 

SYLIOS CORP

CONSOLIDATED BALANCE SHEETS

 

		December 31, 2019				December 31, 2018
ASSETS
CURRENT ASSETS
Cash		$	67			$	28,005
Inventory			-				-
Total current assets			67				28,005
PROPERTY AND EQUIPMENT, net			97,801				76,814
OTHER ASSETS
Global Technologies, Ltd (entity controlled by Jimmy Wayne Anderson)(“GTLL”) Series L Convertible Preferred Stock			-				-
Loans receivable from GTLL			13,326				-
Oil and gas royalty interests			-				-
Oil and gas operating bonds			24,500				24,500
-Investments in and advances to spun-off former subsidiaries:
The Greater Cannabis Company, Inc.			-				-
AMDAQ Corp			-				-
TOTAL ASSETS		$	135,694			$	129,319
LIABILITIES AND STOCKHOLDERS’ (DEFICIENCY)
CURRENT LIABILITIES
Accounts payable		$	60,134			$	29,585
Accrued officer and director compensation			539,464				804,335
Accrued interest on notes payable			526,694				439,414
Notes payable, third parties			1,533,519				1,440,242
Notes payable, related parties			138,000				148,000
Loans, related parties			19,848				3,762
Derivative liability			1,251,922				8,683,257
Total current liabilities			4,069,581				11,548,595
Asset Retirement Obligations (ARO’s)			64,500				64,500
TOTAL LIABILITIES			4,134,081				11,613,095
STOCKHOLDERS’ DEFICIENCY
Preferred stock: 5,000,000 shares authorized, par value $.001, as of December 31, 2019 and December 31, 2018, there are the following shares outstanding:
Series A: 1,000,000 and 1,000,000, respectively			1,000				1,000
Series B: 0 and 0, respectively			-				-
Series C: 0 and 0, respectively			-				-
Series D: 100 and 100, respectively			-				-
Common stock: 750,000,000 shares authorized, par value $.001, as of December 31, 2019 and December 31, 2018, there are 49,209,761 and 5,909,113 shares outstanding, respectively.			49,210				5,909
Additional paid in capital			10,619,106				8,981,912
Accumulated Deficit			(14,667,703	)			(20,472,597	)
Total stockholders’ (deficiency)			(3,998,387	)			(11,483,776	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY		$	135,694			$	129,319

 

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

 

 

SYLIOS CORP

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31, 2019 and 2018

 

		December 31, 2019				December 31, 2018
Revenue earned
Consulting fees		$	2,500			$	3,000
Total revenue earned			2,500				3,000
Operating Expenses
Officer and director compensation, including stock-based compensation of $326,000 and $306,000, respectively			646,000				337,942
Professional fees, including stock based compensation of $491,400 and $0, respectively			586,900				958
Other operating expenses			126,247				40,353
Total operating expenses			1,359,147				379,253
Loss from operations			(1,356,647	)			(376,253	)
Other income (expenses)
Income from modification of convertible and non-convertible notes payable			-				462,513
Loss on conversions of notes payable			(183,000	)			-
Gain from settlement of convertible notes payable			-				198,398
Loss on write-off of advances to spun-off former subsidiaries			-				(93,498	)
Derivative liability income (expense)			7,659,285				(7,722,369	)
Amortization of debt discounts			(190,762	)			(12,699	)
Gain from marketable securities			9,782				-
Interest expense			(133,764	)			(167,082	)
Total other income (expenses)			7,161,541				(7,334,737	)
Net income (loss) before provision for income taxes			5,804,894				(7,710,990	)
Provision for income taxes			-				-
Net income (loss)		$	5,804,894			$	(7,710,990	)
Income (loss) per common share:
Basic		$	0.33			$	(2.82	)
Diluted		$	0.01			$	(2.82	)
Weighted average common shares outstanding:
Basic			17,393,217				2,737,471
Diluted			455,877,245				2,737,471

 

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

 

 

SYLIOS CORP

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIENCY)

For the years ended December 31, 2019 and 2018

 

For the year ended December 31, 2019:

 

		Series A Preferred								Series D Preferred																Additional
		stock								stock								Common Stock								Paid in				Accumulated
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Total
Balances at December 31, 2018			1,000,000			$	1,000				100			$	-				5,909,113			$	5,909			$	8,981,912			$	(20,472,597	)		$	(11,483,776	)
Issuance of common stock in satisfaction of convertible debt and accrued interest			-				-				-				-				1,130,651				1,131				112,588				-				113,719
Issuance of common stock to consultant in satisfaction of account payable to consultant			-				-				-				-				37,500				37				14,963				-				15,000
Issuance of common stock chargeable as professional fees to Valvasone Trust and affiliate for services of independent financial advisor (7% stockholder of Company)			-				-				-				-				4,500,000				4,500				445,500				-				450,000
Transfer of 750,000 shares of The Greater Cannabis Company, Inc. common stock ($157,500 fair value) to Valvasone Trust in satisfaction of $107,000 notes payable and $9,100 accrued interest			-				-				-				-				-				-				157,500				-				157,500
Transfer of 4,000,000 shares of The Greater Cannabis Company, Inc. common stock ($840,000 fair value) in satisfaction of $544,000 accrued officer’s compensation			-				-				-				-				-				-				840,000				-				840,000
Round up shares after reverse split			-				-				-				-				509				1				(1	)			-				-
Net income for the three months ended March 31, 2019			-				-				-				-				-				-				-				6,473,414				6,473,414
Balances at March 31, 2019			1,000,000			$	1,000				100			$	-				11,577,773			$	11,578			$	10,552,462			$	(13,999,183	)		$	(3,434,143	)
Issuance of restricted common stock to Company chief executive officer for director compensation for 1st quarter 2019			-				-				-				-				116,822				117				9,883				-				10,000
Net loss for the three months ended June 30, 2019			-				-				-				-				-				-				-				(189,678	)			(189,678	)
Balances at June 30, 2019			1,000,000			$	1,000				100			$	-				11,694,595			$	11,695			$	10,562,345			$	(14,188,861	)		$	(3,613,821	)
Issuance of common stock in satisfaction of convertible debt and accrued interest			-				-				-				-				1,810,106				1,810				19,207				-				21,017
Issuance of common stock for purchase of inventory			-				-				-				-				16,000,000				16,000				(16,000	)			-				-
Net loss for the three months ended September 30, 2019			-				-				-				-				-				-				-				(252,018	)			(252,018	)
Balances at September 30, 2019			1,000,000			$	1,000				100			$	-				29,504,701			$	29,505				10,565,552			$	(14,440,879	)		$	(3,844,822	)
Issuance of common stock in satisfaction of convertible debt and accrued interest			-				-				-				-				17,563,664				17,564				55,695				-				73,259
Issuance of common stock in connection with cashless exercise of warrants			-				-				-				-				2,141,396				2,141				(2,141	)			-				-
Net loss for the three months ended December 31, 2019			-				-				-				-				-				-				-				(226,824	)			(226,824	)
Balances at December 31, 2019			1,000,000			$	1,000				100			$	-				49,209,761			$	49,210				10,619,016			$	(14,677,703	)		$	(3,998,387	)

 

For the year ended December 31, 2018:

 

		Series A Preferred								Series D Preferred																Additional
		stock								stock								Common Stock								Paid in				Accumulated
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Total
Balances at December 31, 2017			1,000,000			$	1,000				100			$	-				2,737,471			$	2,737			$	8,875,084			$	(12,761,607	)		$	(3,882,786	)
Net loss for the three months ended March 31, 2018			-				-				-				-				-				-				-				(243,480	)			(243,480	)
Balances at March 31, 2018			1,000,000			$	1,000				100			$	-				2,737,471			$	2,737			$	8,875,084			$	(13,005,087	)		$	(4,126,266	)
Net income for the three months ended June 30, 2018			-				-				-				-				-				-				-				204,550				204,550
Balances at June 30, 2018			1,000,000			$	1,000				100			$	-				2,737,471			$	2,737			$	8,875,084			$	(12,800,537	)		$	(3,921,716	)
Net loss for the three months ended September 30, 2018			-				-				-				-				-				-				-				(174,461	)			(174,461	)
Balances at September 30, 2018			1,000,000			$	1,000				100			$	-				2,737,471			$	2,737				8,875,084			$	(12,974,998	)		$	(4,096,177	)
Issuance of restricted common stock to Company chief executive officer in satisfaction of accrued director compensation			-				-				-				-				2,176,617				2,177				67,823				-				70,000
Issuance of restricted common stock to Company chief executive officer in satisfaction of accrued director compensation			-				-				-				-				995,025				995				39,005				-				40,000
Net loss for the three months ended December 31, 2018			-				-				-				-				-				-				-				(7,497,559	)			(7,497,599	)
Balances at December 31, 2018			1,000,000			$	1,000				100			$	-				5,909,113			$	5,909				8,981,912			$	(20,472,597	)		$	(11,483,776	)

 

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

 

 

SYLIOS CORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2019 and 2018

 

		December 31, 2019				December 31, 2018
OPERATING ACTIVITIES:
Net income (loss)		$	5,804,894			$	(7,710,990	)
Adjustments to reconcile net income (loss) to net cash used from operating activities:
Depreciation			726				967
Stock-based professional fees relating to Valvasone Trust and affiliate			450,000				-
Excess of fair value of The Greater Cannabis Company, Inc. common stock transferred to the Company CEO over accrued officer compensation settled charged to officer and director compensation			296,000				-
Excess of fair value of The Greater Cannabis Company, Inc. common stock transferred to Valvasone Trust over notes payable and accrued interest settled charged to professional fees			41,400				-
Issuance of notes payable to Valvasone Trust for professional fees			20,000				-
Writeoff of oil and gas royalty interests charged to other operating expenses			-				10,000
Income from modification of convertible and non-convertible notes payable			-				(462,513	)
Gain from settlement of debt			-				(198,398	)
Loss on writeoff of advances to spun-off subsidiaries			-				93,498
Loss on conversion of notes payable			183,000				-
Derivative liability expense (income)			(7,659,285	)			7,722,369
Amortization of debt discounts			190,762				12,699
Changes in operating assets and liabilities:
Inventory			-				-
Accounts payable			47,175				3,485
Accrued officer and director compensation			289,129				337,942
Accrued interest on notes payable			133,764				161,689
Net cash provided (used) from operating activities			(202,435	)			(29,252	)
INVESTING ACTIVITIES:
Computer software and hardware additions			(4,160	)			-
Advances to GTLL			(13,326	)			-
Acquisition of land in Santa Rosa County, Florida			(17,553	)			-
Advances to spun-off former subsidiary, The Greater Cannabis Company, Inc.			-				-
Net cash used by investing activities			(35,039	)			-
FINANCING ACTIVITIES:
Loans, related parties, net			16,086				2,255
Proceeds from notes payable			206,450				75,000
Payment to lender in connection with gain from settlement of convertible notes payable			-				(15,000	)
Repayment of note payable, related party			(10,000	)			(5,000	)
Repayment of note payable, third party			(3,000	)			-
Net cash provided from financing activities			209,536				57,255
NET INCREASE (DECREASE) IN CASH			(27,938	)			28,003
CASH, BEGINNING OF PERIOD			28,005				2
CASH, END OF PERIOD		$	67			$	28,005
Supplemental Disclosures of Cash Flow Information:
Taxes paid		$	-			$	-
Interest paid		$	-			$	-
Non-cash investing and financing activities:
Acquisition of land and storage facility development plans in exchange for secured promissory note payable to Company CEO		$	-			$	75,000
Initial derivative liability charged to debt discounts		$	176,450			$	71,326
Issuance of notes payable to Valvasone Trust for professional services		$	20,000			$	-
Transfer of 750,000 shares of The Greater Cannabis Company, Inc. common stock ($157,500 fair value) to Valvasone Trust in satisfaction of $107,000 notes payable and $9,100 accrued interest		$	157,500			$	-
Transfer of 4,000,000 shares of The Greater Cannabis Company, Inc. common stock ($840,000 fair value) in satisfaction of $544,000 accrued officer’s compensation		$	840,000			$	-
Issuance of common stock for the purchase of surplus inventory		$	-			$	-
Issuance of common stock (total fair value of $207,995 in 2019) to convertible noteholders in satisfaction of:
Principal on notes payable		$	18,148			$	-
Accrued interest			4,347				-
Fees			2,500				-
Subtotal			24,995				-
Loss on conversions of notes payable			183,000				-
Total fair value of common stock issued		$	207,995			$	-
Issuance of common stock to consultant in settlement of account payable to consultant		$	15,000			$	-
Issuance of common stock in satisfaction of accrued director’s compensation		$	10,000			$	110,000

 

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

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE A – ORGANIZATION

 

Sylios Corp (f/k/a US Natural Gas Corp) (“Sylios”, the “Company”, “we”, “us”, or “our”) was organized as a Florida Corporation on March 28, 2008 under the name of Adventure Energy, Inc. Sylios has five wholly owned subsidiaries: (i) US Natural Gas Corp KY (“USNG KY”), a corporation incorporated in Florida on February 1, 2010; (ii) US Natural Gas Corp WV (“USNG WV”), a corporation incorporated in Tennessee on August 25, 2009 and redomiciled in Florida on April 26, 2010; (iii) E 3 Petroleum Corp (“E 3”), a corporation incorporated in Florida on February 2, 2010; (iv) 1720 RCMG, LLC (“RCMG”), a limited liability company formed in the State of Florida on July 24, 2019; and (v) 5496 NRMF, LLC (“NRMF”), a limited liability company formed in the State of Florida on October 12, 2019.

 

Effective March 10, 2017, Sylios distributed approximately 80.01% of the common stock of The Greater Cannabis Company, Inc. (“GCAN”), a former wholly owned subsidiary of Sylios organized in Florida on March 13, 2014. Please see NOTE G - INVESTMENTS IN AND ADVANCES TO SPUN-OFF FORMER SUBSIDIARIES for further information.

 

Effective October 2, 2017, Sylios distributed approximately 41.05% of the common stock of AMDAQ Corp (formerly E 2 Investments, LLC) (“AMDAQ”), a former wholly owned subsidiary of Sylios organized in Florida on July 20, 2009. Please see NOTE G - INVESTMENTS IN AND ADVANCES TO SPUN-OFF FORMER SUBSIDIARIES and NOTE R- SUBSEQUENT EVENTS for further information.

 

Effective December 28, 2018, Sylios effected a 1 share for 4,000 shares reverse stock split of its common stock reducing the number of issued and outstanding shares of its common stock from 10,949,884,000 to 2,737,471 shares. The accompanying financial statements retroactively reflect the reverse stock split.

 

Sylios owns vacant land in Macon, GA and Milton, FL, which subject to receipt of adequate financing, it plans upon developing storage facilities for customer rentals. Please see NOTE D - PROPERTY AND EQUIPMENT for further information. USNG KY was granted royalty interests in 13 oil and gas wells in Kentucky (that had been shut-in since 2014) that it had acquired several years prior to the year ended December 31, 2017, which were sold to a third party in 2018. Please see NOTE E - OIL AND GAS ROYALTY INTERESTS for further information.

 

On September 5, 2019, the Company filed a Form 8-A12G with the Securities and Exchange Commission to become a mandatory filer under the Securities Exchange Act of 1934.

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

Summary of Significant Accounting Policies

 

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States and have been consistently applied in the preparation of the financial statements.

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of Sylios Corp and its wholly owned subsidiaries, US Natural Gas Corp KY, US Natural Gas Corp WV, E 3 Petroleum Corp, 5496 NRMF, LLC and 1720 RCMG, LLC. All inter-company balances and transactions have been eliminated in consolidation.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Cash Equivalents

 

Investments having an original maturity of 90 days or less that are readily convertible into cash are considered to be cash equivalents. For the periods presented, the Company had no cash equivalents.

 

Income Taxes

 

In accordance with Accounting Standards Codification (ASC) 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. The asset and liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is not more likely than not that a deferred tax asset will be realized.

 

We expect to recognize the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount to be recognized in the financial statements will be the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of December 31, 2019, we had no uncertain tax positions. We recognize interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. We currently have no federal or state tax examinations nor have we had any federal or state examinations since our inception. To date, we have not incurred any interest or tax penalties.

 

Financial Instruments and Fair Value of Financial Instruments

 

We adopted ASC Topic 820, Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC Topic 820 establishes a common definition for fair value to be applied to existing US GAAP that requires the use of fair value measurements that establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

 

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC Topic 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

 

Level 1:		Observable inputs such as quoted market prices in active markets for identical assets or liabilities
Level 2:		Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3:		Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

 

The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. Except for the derivative liability, we had no financial assets or liabilities carried and measured at fair value on a recurring or nonrecurring basis during the periods presented.

 

Oil and Gas Properties

 

The Company has adopted the successful efforts method of accounting for oil and gas producing activities. Under the successful efforts method, costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells that find proved reserves, and to drill and equip developmental wells are capitalized. Costs to drill exploratory wells that do not find proved reserves, costs of developmental wells on properties the Company has no further interest in, geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

When a property is determined to contain proved reserves, the capitalized costs of such properties are transferred from unproved properties to proved properties and are amortized by the unit-of-production method based upon estimated proved developed reserves. To the extent that capitalized costs of groups of proved properties having similar characteristics exceed the estimated future net cash flows, the excess, if any, of capitalized costs are written down to the present value of such amounts. Estimated future net cash flows are determined based primarily upon the estimated future proved reserves related to the Company’s current proved properties and, to a lesser extent, certain future net cash flows related to operating and related fees. The Company follows U.S. GAAP in Accounting for Impairments.

 

On sale or abandonment of an entire interest in a proved property, gain or loss is recognized, taking into consideration the amount of any recorded impairment. If a partial interest in a proved property is sold, the amount received is treated as a reduction of the cost of the interest retained. (Please see NOTE E - OIL AND GAS ROYALTY INTERESTS for further information.).

 

Derivative Liabilities

 

We evaluate convertible notes payable, stock options, stock warrants and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity.

 

The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date.

 

Long-lived Assets

 

Long-lived assets such as property and equipment and intangible assets are periodically reviewed for impairment. We test for impairment losses on long-lived assets used in operations whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial positions. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

 

Marketable Equity Securities

 

Marketable equity securities are stated at market value with unrealized gains and losses included in operations. The Company has classified its marketable equity securities as trading securities.

 

Deferred Financing Costs

 

Deferred financing costs represent costs incurred in connection with obtaining debt financing. These costs are amortized ratably and charged to financing expenses over the term of the related debt.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Equity Instruments Issued to Non-Employees for Acquiring Goods or Services

 

Issuances of our common stock or warrants for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete.

 

Although situations may arise in which counter performance may be required over a period of time, the equity award granted to the party performing the service is fully vested and non-forfeitable on the date of the agreement. As a result, in this situation in which vesting periods do not exist if the instruments are fully vested on the date of agreement, we determine such date to be the measurement date and will record the estimated fair market value of the instruments granted as a prepaid expense and amortize such amount to expense over the contract period. When it is appropriate for us to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values.

 

Stock-Based Compensation

 

We account for share-based awards to employees in accordance with ASC 718 “Stock Compensation”. Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the estimated service period (generally the vesting period) on the straight-line attribute method. Share-based awards to non-employees are accounted for in accordance with ASC 505-50 “Equity”, wherein such awards are expensed over the period in which the related services are rendered.

 

Related Parties

 

A party is considered to be related to us if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with us. Related parties also include our principal owners, our management, members of the immediate families of our principal owners and our management and other parties with which we may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties, or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests, is also a related party.

 

Revenue Recognition

 

Revenue is recognized when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) the price is fixed or determinable, (3) collectability is reasonably assured, and (4) delivery has occurred.

 

Advertising Costs

 

Advertising costs are expensed as incurred. For the periods presented, we had no advertising costs.

 

Income (loss) per share

 

We compute income (loss) per share in accordance with FASB ASC 260. The ASC specifies the computation, presentation and disclosure requirements for loss per share for entities with publicly held common stock.

 

Basic income (loss) per share amounts are computed by dividing the net income (loss) by the weighted average number of common shares outstanding. Diluted income (loss) per common share is computed on the basis of the weighted average number of common shares and dilutive securities (such as stock options, warrants and convertible securities) outstanding. Dilutive securities having an anti-dilutive effect on diluted income (loss) per share are excluded from the calculation. For the year ended December 31, 2018, the Company excluded 216,001,429 shares, relating to convertible notes payable to third parties (Please see NOTE J - NOTES PAYABLE, THIRD PARTIES for further information), 7,800,000 shares, relating to the Series A Preferred stock and 15,547,264 shares, relating to the Series D Preferred stock from the calculation of diluted shares outstanding as the effect of their inclusion would be anti-dilutive.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Recently Enacted Accounting Standards

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers, which will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. As amended by the FASB in July 2015, the standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). ASU 2014-09 has not had any significant effect on our Financial statements for the periods presented.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), to provide guidance on recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements, specifically differentiating between different types of leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from all leases. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed from previous GAAP. There continues to be a differentiation between finance leases and operating leases. However, the principal difference from previous guidance is that the lease assets and lease liabilities arising from operating leases should be recognized in the balance sheet. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. The amendments will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The modified retrospective approach includes a number of optional practical expedients that entities may elect to apply. These practical expedients relate to the identification and classification of leases that commenced before the effective date, initial direct costs for leases that commenced before the effective date, and the ability to use hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. An entity that elects to apply the practical expedients will, in effect, continue to account for leases that commence before the effective date in accordance with previous GAAP unless the lease is modified, except that lessees are required to recognize a right-of-use asset and a lease liability for all operating leases at each reporting date based on the present value of the remaining minimum rental payments that were tracked and disclosed under previous GAAP. ASU No. 2016-02 has not had any significant effect on our Financial statements for the periods presented.

 

On July 13, 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (“ASU”) 2017-11. Among other things, ASU 2017-11 provides guidance that eliminates the requirement to consider “down round” features when determining whether certain financial instruments or embedded features are indexed to an entity’s stock and need to be classified as liabilities. ASU 2017-11 provides for entities to recognize the effect of a down round feature only when it is triggered and then as a dividend and a reduction to income available to common stockholders in basic earnings per share. The guidance is effective for annual periods beginning after December 15, 2018; early adoption is permitted.

 

The Company has early adopted ASU 2017-11. As a result, we have not recognized the fair value of the warrants containing down round features as liabilities. Please see NOTE N - CAPITAL STOCK for further information.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Fair Value of Financial Instruments

 

The Company defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. Financial instruments included in the Company’s financial statements include cash, accounts payable and accrued expenses, accrued interest payable, loans payable to related parties, notes payable to third parties, notes payable to related parties and derivative liability. Unless otherwise disclosed in the notes to the financial statements, the carrying value of financial instruments is considered to approximate fair value due to the short maturity and characteristics of those instruments. The carrying value of debt approximates fair value as terms approximate those currently available for similar debt instruments.

 

NOTE C - INVENTORY

 

Inventory consists of the following at:

 

		December 31, 2019				December 31, 2018
Squeezee scrubbers			-				-
Ampt earbuds			-				-
Totals		$	-			$	-

 

On September 12, 2019, the Company entered into an Inventory Purchase Agreement with Wanshan Engineering Services, LLC for the purchase of surplus inventory. The Company purchased 30,000 Squeeze Soap Filled Scrubbers for the purchase price of $100,000 via the issuance of 10,000,000 shares of Sylios restricted common stock. The Closing of the transaction occurred on September 15, 2019.

 

On September 21, 2019, the Company entered into an Inventory Purchase Agreement with Wanshan Engineering Services, LLC for the purchase of surplus inventory. The Company purchased 1,000 Ampt wireless earbuds for the purchase price of $60,000 via the issuance of 6,000,000 shares of Sylios restricted common stock. The Closing of the transaction occurred on September 25, 2019.

 

Pending significant sales of the inventory purchased from Wanshan Engineering Services, LLC, the Company has not assigned any value to the inventory.

 

Squeezee Soap Filled Scrubbers:

 

The innovative Squeezee sponge has concentrated dishwashing liquid inside the sponge with grease cutting formula and Aloe for soft hands. The Squeezee scrubber makes dishwashing both more convenient and economical. No more need for purchasing separate detergents. The soft antibacterial non-scratch double-sided scrubber has a unique shape allowing to reach those hard to get to places for multi-purpose use.

 

The Company launched its ecommerce site for the Squeezee Scrubber on February 10, 2020. However, to the date of issuance of these financial statements, the Company has not yet made any sales of this product.

 

Ampt Wireless Bluetooth Earbuds:

 

Pair the AMPT stereo Bluetooth earphones with each other for a stereo experience. In single earbud mode, each wireless headset can connect with two Bluetooth source devices like your iPhone or Android phone, iPad, tablet, or laptop simultaneously. If you are streaming music from your iPad, and receive an incoming call on your iPhone, the wireless earphones will recognize this and allow you to take the call seamlessly without the hassle of repairing. Pairing 2 cordless earbuds wirelessly like Apple AirPods, making it the smallest stereo Bluetooth headset on the market. Siri is just a touch away via the main button on either of the cordless earbuds. You never have to take your smartphone out of your pocket, giving you a genuine hands-free, wireless stereo experience.

 

The Company launched its ecommerce site for the Ampt Wireless Bluetooth Earbuds on February 28, 2020. However, to the date of issuance of these financial statements, the Company has not yet made any sales of this product.

 

The products are currently stored in a warehouse in Largo, Florida.

 

NOTE D - PROPERTY AND EQUIPMENT

 

Property and equipment consist of the following at:

 

		December 31, 2019				December 31, 2018
Land in Macon, GA and storage facility costs development plans (pledged as security for promissory note of $75,000). Please see NOTE – K for further information)(i)			75,000				75,000
Land in Santa Rosa County, Florida (1.1 acre tract)(ii)			17,553				-
Computer Software and Hardware			24,160				20,000
Furniture, Fixtures and Equipment			10,828				10,828
Total			127,541				105,828
Accumulated depreciation and depletion			(29,740	)			(29,014	)
Net property and equipment		$	97,801			$	76,814

 

	(i)	On October 6, 2018, the Company entered into a Commercial Real Estate Purchase and Sale Agreement with the Company’s President for the purchase of a .92 acre of land located in Bibb County, GA. The purchase price for the land was $40,000.
		On this same date, the Company entered into an Asset Purchase Agreement with its President for the purchase of all architectural and engineering plans for the development of a storage facility to be constructed on the .92 acre of land. The purchase price for these assets was $35,000.
		The Company issued its President a Note in the amount of $75,000 on this same date. The Note has a term of one year and bears interest at 3%. The Company’s first payment in the amount of $15,000 was due within 90 days of an effective reverse stock split. As of the date of issuance of these Financial statements, except for a $5,000 payment made by the Company to the Company’s president on November 12, 2018, the Company has not made any payment against the Note.
	(ii)	On October 9, 2019, the Company entered into a Commercial Sales Contract for the purchase of a 1.1 acre tract of land located in Santa Rosa County, Florida. The purchase price for the land was $17,500. The transaction closed on November 4, 2019.

 

The Company uses the straight-line method of depreciation for computer software and furniture, fixtures and equipment over the estimated useful lives of the respective assets. For the years ended December 31, 2019 and 2018, depreciation expense relating to property and equipment was $726 and $967, respectively.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE E - OIL AND GAS ROYALTY INTERESTS

 

Oil and gas royalty interests consist of:

 

		December 31, 2019				December 31, 2018
Royalty interests in 13 wells located in Kentucky, acquired in 2009, shut-in since 2014, and sold to Soligen Technologies, Inc. on May 10, 2018 (1)		$	-			$	-
Royalty interest in oil well located in Fentress County, Tennessee, acquired in September 2015 and shut-in since September 2015. (2)			-				-
Royalty interest in oil well located in Cumberland County, Kentucky, acquired in September 2015 and shut-in since September 2015. (3)			-				-
Totals		$	-			$	-

 

(1)

Pursuant to an Asset Purchase Agreement dated May 10, 2018, USNG KY was granted a royalty interest resulting from the sale of these wells equal to 30% of the gross proceeds of production from the 13 wells and 10% of the gross proceeds of production from any new drilled wells on the sold leases up to a maximum of $140,000. From 2014 to the date of issuance of these financial statements, there has been no production from these wells.

 

No gain or loss has been recognized from the sale of these wells. No guaranteed royalty revenue was granted to the Company in the sale, only a royalty interest dependent on future production. There was no remaining carrying value for these wells at the time of the sale as the wells were fully impaired prior to the year ended December 31, 2017.

 

(2)

Represents a 79.5% royalty interest up to $11,500 and a 15% royalty interest thereafter. From September 2015 to the date of issuance of these financial statements, there has been no production from this well. Effective December 31, 2018, the Company recognized an impairment loss of $7,500 and reduced the carrying cost of this asset from $7,500 to $0.

 

(3)

Represents a 5% royalty interest. From September 2015 to the date of issuance of these financial statements, there has been no production from this well. Effective December 31, 2018, the Company recognized an impairment loss of $2,500 and reduced the carrying cost of this asset from $2,500 to $0.

 

NOTE F – OIL AND GAS OPERATING BONDS

 

The Company is required to put up for bond either cash or a Surety bond for each well it elects to act as operator. The amount of the bond is calculated based on the total depth of the well. In the event the Company were to abandon the wells, the Kentucky Department of Natural Resources would claim the cash bond and use the funds for reclamation.

 

The Company hopes to reclaim the cash bonds totaling $24,500 for the 13 wells sold in the Asset Purchase Agreement with Soligen Technologies, Inc. when Soligen replaces the Company’s cash bonds by funding with its own bond, which has not yet occurred at the date of issuance of these financial statements. Please see NOTE E - OIL AND GAS ROYALTY INTERESTS for further information.

 

NOTE G - INVESTMENTS IN AND ADVANCES TO SPUN-OFF FORMER SUBSIDIARIES

 

The Greater Cannabis Company, Inc.

 

Effective March 10, 2017, in connection with a partial spin-off of The Greater Cannabis Company, Inc. (“GCAN”) from the Company, the Company issued a total of 26,905,969 shares of GCAN common stock. 5,378,476 shares were issued to itself (representing 19.9% of the issued and outstanding shares of GCAN common stock after the spin-off) and 21,527,493 shares were issued to the stockholders of record of the Company on February 3, 2017 on the basis of one share of GCAN common stock for each 500 shares of the Company’s common stock held (representing 80.1% of the issued and outstanding shares of GCAN common stock after the spin-off). The related Registration Statement on Form S-1 was declared effective by the Securities and Exchange Commission on August 31, 2017. The Financial Industry Regulatory Authority (“FINRA”) cleared the quotation of GCAN common stock on July 10, 2018 under the symbol “GCAN.”

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE G - INVESTMENTS IN AND ADVANCES TO SPUN-OFF SUBSIDIARIES (continued)

 

Generally accepted accounting principles in the United States require that an entity’s distribution of shares of a wholly owned or consolidated subsidiary to be recorded based on the carrying value of the subsidiary. The partial spin-off was recorded at the carrying value of GCAN’s net assets which was a deficit of $113,922 as of March 10, 2017, as follows:

 

ASSETS		$	-
LIABILITIES
Notes payable to Sylios		$	104,557
Accrued interest on notes payable to Sylios			7,604
Loans payable to related parties:
Due to Chief Executive Officer of Sylios			1,477
Due to two subsidiaries of Sylios			284
Total liabilities			113,922
Net Assets		$	(113,922	)

 

Since GCAN had negative assets at the March 10, 2017 effective date of the spin-off, the Company recorded its 19.9% investment in GCAN at $0.

 

At December 31, 2019 and December 31, 2018, the Company held 628,476 (1.60% of the 39,301,323 issued and outstanding common shares) and 5,378,476 (16.87% of the 31,880,969 issued and outstanding common shares) shares of common stock of GCAN, respectively. On January 9, 2019, the Company transferred 4,000,000 shares of GCAN common stock (fair value of $840,000) to Wayne Anderson to satisfy liabilities of $544,000. Also, on January 9, 2019 the Company transferred 750,000 shares of GCAN common stock (fair value of $157,500) to Valvasone Trust to satisfy liabilities of $116,100.

 

AMDAQ Corp

 

On September 1, 2017, AMDAQ Corp (“AMDAQ”) acquired AMDAQ, Ltd. (“Limited”), a corporation formed under the Registrar of Companies for England and Wales in March 2016, in exchange for 15,000,000 shares of AMDAQ common stock (representing approximately 46% of the 32,552,818 issued and outstanding shares of AMDAQ common stock after the transaction). As of the September 1, 2017 acquisition date. Limited had no assets and no liabilities.

 

Effective October 2, 2017, in connection with a partial spin-off of AMDAQ from the Company, the Company issued a total of 17,552,626 shares of AMDAQ common stock. 2,956,650 shares were issued to itself (representing 9.1% of the 32,552,818 issued and outstanding shares of AMDAQ common stock after the spin-off) and 14,595,976 shares were issued to the stockholders of record of the Company on September 15, 2017 on the basis of one share of AMDAQ common stock for each 750 shares of the Company’s common stock held (representing 44.8% of the 32,552,818 issued and outstanding shares of AMDAQ common stock after the spin-off).

 

Generally accepted accounting principles in the United States require that an entity’s distribution of shares of a wholly owned or consolidated subsidiary to be recorded based on the carrying value of the subsidiary. The partial spin-off was recorded at the carrying value of AMDAQ’s net assets which was a deficit of $21,319 as of October 2, 2017, as follows:

 

ASSETS
Loans receivable from USNG KY		$	41,714
Total assets			41,714
LIABILITIES
Loans payable to Sylios:		$	63,033
Total liabilities			63,033
Net Assets		$	(21,319	)

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE G - INVESTMENTS IN AND ADVANCES TO SPUN-OFF FORMER SUBSIDIARIES (continued)

 

Since AMDAQ had negative net assets at the October 2, 2017 effective date of the spin-off, the Company recorded its 9.1% investment in AMDAQ at $0.

 

NOTE H – ACQUISITION OF GLOBAL TECHNOLOGIES, LTD (ENTITY CONTROLLED BY WAYNE ANDERSON) SERIES L CONVERTIBLE PREFERRED STOCK

 

Effective August 22, 2019, the Company entered into a Consulting Agreement with Global Technologies, Ltd. (“GTLL”) pursuant to which GTLL issued 10 shares of GTLL Series L Convertible Preferred Stock to the Company. Wayne Anderson, the Chief Executive Officer of the Company, has voting control of GTLL through his ownership of Series K Super Voting Preferred Stock which he acquired on August 2, 2019.

 

Each share of GTLL Series L Convertible Preferred Stock (the “Preferred Stock”) is entitled to receive dividends when, as, and if declared by the GTLL Board of Directors in its sole discretion. The Preferred Stock has voting rights equal to four times the sum of i) the total number of shares of GTLL common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all GTLL preferred stock which are issued and outstanding at the time of voting. Each share of GTLL Preferred Stock is convertible into the number of shares of GTLL common stock equal to 5,000 divided by .50 times the lowest closing price of GTLL’s common stock for the immediate five-day period prior to the receipt of the Notice of Conversion.

 

Generally accepted accounting principles in the United States require that an equity transaction involving entities under common control are to be recorded based on the carrying value of the assets acquired. The transaction was recorded at GTLL’s carrying value of $0.

 

Since GTLL had negative net assets at August 22, 2019, the effective date of the Consulting Agreement, the Company recorded its 10 shares of GTLL Series L Convertible Preferred Stock at $0.

 

At the date of issuance of these financial statements, the Company still holds the aforementioned 10 shares of GTLL Series L Convertible Preferred Stock.

 

NOTE I – ACCRUED OFFICER AND DIRECTOR COMPENSATION

 

Accrued officer and director compensation is due to Wayne Anderson, the sole officer and director of the Company, and consists of:

 

		December 31, 2019				December 31, 2018
Pursuant to April 1, 2015 Employment Agreement		$	6,964			$	561,835
Pursuant to April 1, 2018 Employment Agreement			472,500				202,500
Pursuant to January 2, 2018 Board of Directors Service Agreement			60,000				40,000
Total		$	539,464			$	804,335

 

For the years ended December 31, 2019 and 2018, the balance of accrued officer and director compensation changed as follows:

 

		Pursuant to Employment Agreements				Pursuant to Board of Directors Services Agreements				Total
Balance, December 31, 2017			506,393				70,000				576,393
Officer’s/director’s compensation for year ended December 31, 2018			257,942				80,000				337,942
Issuance of 2,176,617 restricted shares of common stock (with a fair value of $87,500 at a $70,000 agreed reduction of the liability) on December 31, 2018			-				(70,000	)			(70,000	)
Issuance of 995,025 restricted shares of common stock (with a fair value of $40,000) on December 31, 2018			-				(40,000	)			(40,000	)
Balance, December 31, 2018			764,335				40,000				804,335
Officer’s/director’s compensation for three months ended March 31, 2019			67,500				20,000				87,500
Transfer of 4,000,000 shares of The Greater Cannabis Company, Inc. (“GCAN”) common stock from the Company to the Company’s sole officer and director			(544,000	)			-				(544,000	)
Balance March 31, 2019 (unaudited)			287,835				60,000				347,835
Officer’s/director’s compensation for three months ended June 30, 2019			67,500				20,000				87,500
Cash payments to Officer/Director during the three months ended June 30, 2019			(10,871	)			(12,500	)			(23,371	)
Issuance of 116,822 restricted shares of common stock (with a fair value of $10,000) on April 10, 2019			-				(10,000	)			(10,000	)
Balance June 30, 2019 (unaudited)		$	344,464			$	57,500			$	401,964
Officer’s/director’s compensation for three months ended September 30, 2019			67,500				20,000				87,500
Cash payments to Officer/Director during the three months ended September 30, 2019			-				(8,000	)			(8,000	)
Balance September 30, 2019 (unaudited)		$	411,964			$	69,500			$	481,464
Officer’s/director’s compensation for three months ended December 31, 2019			67,500				20,000				87,500
Cash payments to Officer/Director during the three months ended December 31, 2019			-				(29,500	)			(29,500	)
Balance, December 31, 2019		$	479,464			$	60,000			$	539,464

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE J - NOTES PAYABLE, THIRD PARTIES

 

Notes payable to third parties consist of:

 

 

		December 31, 2019				December 31, 2018
Unsecured Convertible Promissory Note payable to Armada Investment Fund, LLC (“Armada”), with interest at 8% payable at maturity with principal (default interest rates ranging from 18% to 24%); convertible into shares of common stock at a variable conversion price equal to 50%-60% of the Market Price which is defined as the lowest Trading Price for the common stock during the 20-trading day period prior to the Conversion Date:
Issue date October 9, 2018, maturity date of October 9, 2019, in technical default- net of unamortized debt discount of $0 and $23,178 at December 31, 2019 and December 31, 2018, respectively			30,000				6,822
Issue date December 31, 2018, maturity date of December 31, 2019, in technical default - net of unamortized debt discount of $0 and $33,000 at December 31, 2019 and December 31, 2018, respectively			33,000				-
Amended and Restated Replacement Convertible Promissory Note, Issue date February 12, 2019, maturity date of February 12, 2019, in technical default - net of amounts converted into Sylios common stock and net of unamortized debt discount of $0 and $0 at December 31, 2019 and December 31, 2018, respectively			20,400				-
Issue date February 18, 2019, maturity date of February 18, 2020 - net of unamortized debt discount of $368 and $0 at December 31, 2019 and December 31, 2018 respectively			2,432				-
Issue date June 5, 2019, maturity date of June 5, 2020 - net of unamortized debt discount of $7,053 and $0 at December 31, 2019, December 31, 2018, respectively			9,447				-
Issue date July 2, 2019, maturity date of June 5, 2020 - net of unamortized debt discount of $7,053 and $0 at December 31, 2019, December 31, 2018, respectively			9,447				-
Issue date July 24, 2019, maturity date of July 24, 2020 - net of unamortized debt discount of $8,649 and $0 at December 31, 2019, December 31, 2018, respectively			6,751				-
Issue date October 30, 2019, maturity date of October 30, 2020 - net of unamortized debt discount of $21,004 and $0 at December 31, 2019, December 31, 2018, respectively			4,296				-
Issue date December 13, 2019, maturity date of December 13, 2020 - net of unamortized debt discount of $15,688 and $0 at December 31, 2019, December 31, 2018, respectively			812				-
Subtotal Armada			116,585				6,822
Unsecured Convertible Promissory Notes payable to Darling Capital, LLC and its affiliate Darling Investments, LLC (“Darling”), all in technical default (except the January 9, 2019 note), with interest at 12% payable at maturity with principal (default interest rates ranging from 18% to 22%); convertible into shares of common stock at a variable conversion price equal to 20-40% of the Market Price, which is defined as the lowest Trading Price for the common stock during the 25 trading day period prior to the Conversion Date.
Issue date December 2, 2016, maturity date August 2, 2017			15,000				-
Issue date January 10, 2017, maturity date September 10, 2017			5,000				-
Issue date January 28, 2017, maturity date September 28, 2017, net of amounts converted into Sylios common stock			2,397				3,984
Issue date February 2, 2017, maturity date November 30, 2017, net of amounts converted into Sylios common stock			4,742				4,742
Issue date February 13, 2017, maturity date November 30, 2017			10,000				10,000
Issue date March 7, 2017, maturity date March 7, 2018, - net of amounts converted into Sylios common stock			10,000				10,000
Issue date January 9, 2019, maturity date January 9, 2020, -net of unamortized debt discount of $308 and $0 at December 31, 2019 and December 31, 2018, respectively			12,192				-
Subtotal Darling			59,331				28,726
Unsecured Convertible Promissory Notes payable to Tangiers Investment Group, LLC (“Tangiers”), all in technical default, with interest ranging from 0% to 15% payable at maturity with principal (default interest rates ranging from 0% to 20%); except for the March 16, 2016 Promissory Note, convertible into shares of common stock at a variable conversion price equal to 50% of the Market Price (40% for the note due April 25, 2014), which is defined as the lowest Trading Price for the common stock during the 20 trading day period prior to the Conversion Date.
Issue date April 2, 2014, maturity date April 2, 2015, net of amounts converted into Sylios common stock			5,500				3,086
Issue date February 18, 2013 (original issue date December 14, 2010), maturity date December 14, 2011, net of amounts converted into Sylios common stock			521				521
Issue date June 2, 2014, maturity date June 2, 2015, net of amounts converted into Sylios common stock			26,086				26,086

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE J - NOTES PAYABLE, THIRD PARTIES (continued)

 

Issue date August 12, 2014, maturity date August 12, 2015			112,500				112,500
Issue date July 3, 2014, maturity date July 3, 2015			50,000				50,000
Issue date June 3, 2015, maturity date June 3, 2016			17,250				17,250
Issue date March 16, 2016, maturity date June 14, 2016			17,500				17,500
Issue date January 27, 2017, maturity date January 27, 2018			55,000				55,000
Subtotal Tangiers			284,357				281,943
Unsecured Convertible Promissory Notes payable to Bullfly Trading Company, Inc. (“Bullfly”), all in technical default until assigned to Armada on February 12, 2019, with interest at 15% payable at maturity with principal, convertible into shares of common stock at a conversion price equal to a 50% discount to the 5-day moving bid average:
Issue date June 1, 2016, maturity date December 1, 2016			-				4,000
Issue date July 11, 2016, maturity date January 11, 2017			-				4,000
Subtotal Bullfly			-				8,000
Unsecured Convertible Promissory Notes payable to Mountain Properties, Inc. (“Mountain”), all in technical default until assigned to Armada on February 12, 2019, with interest at 15% payable at maturity with principal, convertible into shares of common stock at a conversion price equal to a 50% discount to the 5-day moving bid average:
Issue date February 24, 2016, maturity date August 24, 2016			-				7,500
Subtotal Mountain			-				7,500
Secured Renewal Notes payable to SLMI Energy Holdings, LLC (“SLMI”), with interest at 3% payable on demand with principal, secured by substantially all assets of the Company per UCC filing dated June 30, 2015:
Issue date June 6, 2018 (renewing note dated September 4, 2009)			790,000				790,000
Issue date June 6, 2018 (renewing note dated November 12, 2009)			120,000				120,000
Subtotal SLMI			910,000				910,000
Secured Note payable to MTEL Investment and Management (“MTEL”) in technical default, with interest of $50,000 payable at maturity with principal:
Issue date January 11, 2010, maturity date July 10, 2010			100,000				100,000
Subtotal MTEL			100,000				100,000
Unsecured Notes payable to Valvasone Trust (“Valvasone”), all in technical default until satisfied on January 9, 2019, with interest at 3% payable at maturity with principal:
Issue date October 7, 2013, maturity date January 31, 2014			-				10,000
Issue date March 30, 2014, maturity date June 30, 2014			-				15,000
Issue date January 11, 2016, maturity date March 31, 2016			-				22,000
Issue date July 1, 2017, maturity date September 30, 2017			-				40,000
Subtotal Valvasone			-				87,000
Unsecured Note payable to Mt. Atlas Consulting (“Atlas”) in technical default, with interest at 20% payable at maturity with principal:
Issue date November 17, 2017, maturity date April 17, 2018			4,000				4,000
Subtotal Atlas			4,000				4,000
Unsecured Promissory Note payable to Jefferson Street Capital (“Jefferson”), with interest at 8% payable at maturity with principal:
Issue date February 18, 2019, maturity date February 18, 2020- net of unamortized debt discount of $1,032 and $0 at December 31, 2019 and December 31, 2018, respectively			6,818				-
Issue date May 2, 2019, maturity date February 3, 2020- net of unamortized debt discount of $1,025 and $0 at December 31, 2019 and December 31, 2018, respectively			9,975				-
Subtotal Jefferson			16,793
Unsecured Promissory Note payable to BHP Capital NY, Inc. (“BHP”), with interest at 8% payable at maturity with principal (default interest rates ranging from 18% to 24%); convertible into shares of common stock at a variable conversion price equal to 50%-60% of the Market Price which is defined as the lowest Trading Price for the common stock during the 20-trading day period prior to the Conversion Date:
Issue date February 18, 2019, maturity date February 18, 2020- net of unamortized debt discount of $1,550 and $0 at December 31, 2019 and December 31, 2018, respectively			10,000				-
Issue date May 2, 2019, maturity date February 3, 2020- net of unamortized debt discount of $1,025 and $0 at December 31, 2019 and December 31, 2018, respectively			9,975				-
Issue date July 24, 2019, maturity date of July 24, 2020- net of unamortized debt discount of $8,649 and $0 at December 31, 2019, December 31, 2018, respectively			6,751				-
Issue date October 16, 2019, maturity date of October 16, 2020- net of unamortized debt discount of $10,887 and $0 at December 31, 2019, December 31, 2018, respectively			2,863				-
Subtotal BHP			29,589				-
Unsecured Promissory Note payable to Fourth Man, LLC. (“FOURTH”), with interest at 8% payable at maturity with principal (default interest rate of 18%); convertible into shares of common stock at a variable conversion price equal to 60% of the Market Price which is defined as the lowest Trading Price for the common stock during the 20-trading day period prior to the Conversion Date:
Issue date July 24, 2019, maturity date of July 24, 2020- net of unamortized debt discount of $8,649 and $0 at December 31, 2019, December 31, 2018, respectively			6,751				-
Issue date October 16, 2019, maturity date of October 16, 2020- net of unamortized debt discount of $10,887 and $0 at December 31, 2019, December 31, 2018, respectively			2,863				-
Subtotal FOURTH			9,614				-
Unsecured Promissory Note payable to Pacific Stock Transfer Company (“Pacific”) in technical default, with interest at 5% payable at maturity with principal:
Issue date August 11, 2017, maturity date November 11, 2017			3,250				6,250
Subtotal Pacific			3,250				6,250
Total		$	1,533,519			$	1,440,242

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE J - NOTES PAYABLE, THIRD PARTIES (continued)

 

Concentration of Debt Due Lenders:

 

		SLMI				Tangiers				Other				Total
December 31, 2019
Promissory notes payable, net of discount		$	910,000			$	284,357			$	339,162			$	1,533,519
Accrued interest:
Stated interest			306,584				103,077				93,559				503,220
Additional default interest			-				-				23,474				23,474
Total accrued interest			306,584				103,077				117,033				526,694
Total debt		$	1,216,584			$	387,434			$	456,195			$	2,060,213
December 31, 2018
Promissory notes payable, net of discount		$	910,000			$	281,943			$	248,299			$	1,440,242
Accrued interest:
Stated interest			279,284				79,145				80,985				439,414
Additional default interest			-				-				-				-
Total accrued interest			279,284				79,145				80,985				439,414
Total debt		$	1,189,284			$	361,088			$	329,284			$	1,879,656

 

Interest expense consists of:

 

		Year Ended
		December 31, 2019				December 31, 2018
Stated interest		$	110,290			$	71,446
Additional default interest			23,474				95,636
Amortization of debt discounts			190,762				12,699
Totals		$	324,526			$	179,781

 

The stated interest and additional default interest expense relates to the following lenders:

 

		Year Ended
		December 31, 2019				December 31, 2018
SLMI		$				$
Stated Interest			27,300				27,042
Additional default interest			-				30,667
Total SLMI			27,300				57,709
Tangiers:
Stated Interest			23,932				23,600
Additional default interest			-				49,958
Total Tangiers			23,932				73,558
Other lenders
Stated Interest			59,058				20,804
Additional default interest			23,474				15,011
Total others			82,532				35,815
Totals
Stated Interest			110,290				71,446
Additional default interest			23,474				95,636
Total all Lenders		$	133,764			$	167,082

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE J - NOTES PAYABLE, THIRD PARTIES (continued)

 

Income from modification of convertible and non-convertible notes payable consists of:

 

		Year Ended
		December 31, 2019				December 31, 2018
Waiver of prior and future additional default interest pursuant to debt modifications with SLMI Energy Holdings, LLC on June 8, 2018 (1)		$	-			$	343,540
Waiver of prior and future additional default interest pursuant to debt modifications with Darling Capital, LLC on December 6, 2018 (2)			-				9,366
Waiver of prior and future additional default interest pursuant to debt modifications with Tangiers Investment Group, LLC on December 18, 2018 (2)			-				109,607
Total		$	-			$	462,513

 

(1) The debt modifications with SLMI Energy Holdings, LLC (“SLMI”) provide that in the event that the Company does not make a payment to SMLI within 30 days written notice of demand by SLMI, all unpaid interest accruing since September 4, 2009 (in the case of the original September 4, 2009 Note) and accruing since November 12, 2009 (in the case of the original November 12, 2009 Note) shall accrue at a 18% default interest rate rather than the 3% stated interest rate in the Renewal Notes. If that had occurred on December 31, 2019, the additional default interest accruable would have been approximately $1,365,000. As of the date of the issuance of these financial statements, SLMI has not provided the Company any notice of demand for payment and accordingly, the Company is not in default of these obligations.

 

(2) As of the date of the issuance of these financial statements, waivers of the additional default interest for both Darling and Tangiers obligations remain in effect. However, the Company is still in technical default for the principal and stated interest of these significantly past-due convertible promissory notes.

 

Gain on settlement of convertible notes payable consists of:

 

		Year Ended
		December 31, 2019				December 31, 2018
						(Unaudited)
Company payment of $15,000 on October 5, 2018 in full and final settlement of $130,298 debt and $83,100 accrued interest due Beaufort Capital Partners, LLC		$	-			$	198,398
Total		$	-			$	198,398

 

Convertible Note Conversions:

 

For the year ended December 31, 2019, the Company issued the following shares of common stock upon the conversions of portions of the Convertible Notes:

 

		Principal				Interest				Fees				Total				Conversion				Shares				Issued
Date		Conversion				Conversion				Conversion				Conversion				Price				Issued				to
2/7/2019		$	-			$	642			$	-			$	642			$	0.00106				594,066			Darling
2/20/2019			1,100				-				-				1,100				0.00205				536,585			Armada
8/26/2019			345				851				-				1196				0.002				583,523			Armada
9/9/2019			-				1,300				-				1,300				0.00106				1,226,583			Darling
10/28/2019			3,700				-				500				4,200				0.00402				1,000,000			Jefferson
11/25/2019			605				721				-				1,326				0.00064				2,072,133			Darling
12/5/2019			400				721				500				1,621				0.00210				772,133			Armada
12/10/2019			1,875				39				-				1,914				0.00054				3,545,487			Darling
12.12.2019			3,150				17				500				3,667				0.00189				1,940,268			Armada
12/20/2019			2,600				16				500				3116				0.00154				2,023,234			Armada
12/26/2019			1,773				28				-				1,801				0.00044				4,093,514			Darling
12/30/2019			2,600				12				500				3,112				0.00147				2,116,895			Armada
		$	18,148			$	4,347			$	2,500			$	24,995								22,645,817

 

Loss on conversions of notes payable consists of:

 

		Year ended
		December 31, 2019				December 31, 2018
Armada convertible notes		$	(70,322	)		$	-
Jefferson convertible notes			(5,800	)			-
Darling convertible notes			(106,878	)			-
Total		$	(183,000	)		$	-

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE K - NOTES PAYABLE, RELATED PARTIES

 

Notes payable to related parties consist of:

 

		December 31, 2019				December 31, 2018
Secured Promissory Note dated October 6, 2018 payable to Wayne Anderson, CEO of the Company, interest at 3%, due October 6, 2019		$	70,000			$	70,000
Unsecured Promissory Note dated September 15, 2017, payable to Around the Clock Partners, LP (entity controlled by Wayne Anderson), interest at 3%, due September 15, 2018			68,000				78,000
Total		$	138,000			$	148,000

 

The Secured Promissory Note dated October 6, 2018 payable to Wayne Anderson (originally in the amount of $75,000) is secured by a Deed to Secure Debt, Assignment of Rents and Security Agreement relating to the property located in Macon, Georgia (Please see NOTE D – PROPERTY AND EQUIPMENT for further information). The Note provides for the Company to make a first payment of $15,000 within 90 days of an effective reverse stock split, which occurred on December 28, 2018. As of the date of issuance of these Financial statements, except for a $5,000 payment made by the Company to Mr. Anderson on November 12, 2018, the Company has not made any payments against the Note.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE L - DERIVATIVE LIABILITY

 

The derivative liability at December 31, 2019 and December 31, 2018 consisted of:

 

		December 31, 2019				December 31, 2018
Convertible Promissory Notes payable to Armada Investment Fund, LLC. Please see NOTE J – NOTES PAYABLE, THIRD PARTIES for further information		$	297,868			$	1,076,786
Convertible Promissory Notes payable to Darling Capital, LLC and its affiliate Darling Investments, LLC. Please see NOTE J – NOTES PAYABLE, THIRD PARTIES for further information			207,837				2,248,272
Convertible Promissory Notes payable to Tangiers Investment Group, LLC. Please see NOTE J – NOTES PAYABLE, THIRD PARTIES for further information			584,473				5,354,400
Convertible Promissory Notes payable to Bullfly Trading Company, Inc. Please see NOTE J – NOTES PAYABLE, THIRD PARTIES for further information			-				1,960
Convertible Promissory Note dated February 24, 2016 payable to Mountain Properties, Inc. Please see NOTE J – NOTES PAYABLE, THIRD PARTIES for further information			-				1,838
Convertible Promissory Note payable to Jefferson Street Capital, LLC. Please see NOTE J – NOTES PAYABLE, THIRD PARTIES for further information			24,431				-
Convertible Promissory Note payable to BHP Capital NY, Inc. Please see NOTE J – NOTES PAYABLE, THIRD PARTIES for further information			83,012				-
Convertible Promissory Note dated July 24, 2019 payable to Fourth Man, LLC. Please see NOTE J – NOTES PAYABLE, THIRD PARTIES for further information			54,301				-
Total derivative liability		$	1,251,922			$	8,683,257

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE L - DERIVATIVE LIABILITY (continued)

 

The Convertible Promissory Notes (the “Notes”) contain a variable conversion feature based on the future trading price of the Company’s common stock. Therefore, the number of shares of common stock issuable upon conversion of the Notes is indeterminate. Accordingly, we have recorded the fair value of the embedded conversion features as a derivative liability at the respective issuance dates of the notes and charged the applicable amounts to debt discounts (limited to the face value of the respective notes) and the remainder to other expenses. The increase (decrease) in the fair value of the derivative liability from the respective issue dates of the notes to the measurement dates is charged (credited) to other expense (income).

 

The fair value of the derivative liability was measured at the respective issuance dates and at December 31, 2019 and December 31, 2018 using the Black Scholes option pricing model. Assumptions used for the calculation of the derivative liability of the Notes at December 31, 2019 were (1) stock price of $0.0028 per share, (2) conversion prices ranging from $0.00042 to $0.00147 per share, (3) terms ranging from 39 days to 347 days, (4) expected volatility of 284.00%, and (5) risk free interest rates ranging from 1.48% to 1.60%. Assumptions used for the calculation of the derivative liability of the Notes at December 31, 2018 were (1) stock price of $0.0402 per share, (2) conversion prices ranging from $0.0008 to $0.164 per share, (3) terms ranging from 6 months to 12 months, (4) expected volatility of 1080%, and (5) risk free interest rates ranging from 2.56% to 2.63%.

 

Derivative liability income (expense) consists of:

 

		Year ended
		December 31, 2019				December 31, 2018
Beaufort convertible notes		$	-			$	220,382
Armada convertible notes			902,168				(1,103,786	)
Darling convertible notes			2,052,935				(2,041,937	)
Tangiers convertible notes			4,769,927				(4,914,831	)
Other convertible notes			(65,745	)			27,803
Total		$	7,659,285			$	(7,722,369	)

 

NOTE M – ASSET RETIREMENT OBLIGATIONS

 

The Company’s asset retirement obligations relate to future plugging and abandonment costs relating to the 13 oil and gas wells located in Kentucky, which were sold to Soligen Technologies, Inc. (“Soligen”) on May 10, 2018 (Please see NOTE E -OIL AND GAS ROYALTY INTERESTS for further information). The $64,500 liability was estimated by management at December 31, 2016 based upon a number of factors including the depth of the wells and the regional reclamation, plugging and abandonment costs. No change in the estimate of $64,500 has been recognized from December 31, 2016 to December 31, 2019.

 

If and when Soligen replaces our operating bond on deposit with the Kentucky Department of Natural Resources, Soligen will then become responsible for the asset retirement obligations relating to the 13 wells and we will write-off the then balance of the asset retirement obligations liability.

 

NOTE N - CAPITAL STOCK

 

Preferred Stock

 

On September 2, 2009, the Board of Directors unanimously approved the designation of a series of preferred stock to be known as “Series A Preferred Stock”. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in respect of the Series A Preferred Stock shall be as hereinafter described. The holders of Series A Preferred Stock shall not be entitled to receive dividends nor shall dividends be paid on common stock or any other Series of Preferred Stock while Series A Preferred shares are outstanding.

 

The holders of Series A Preferred Stock shall be entitled to vote on all matters submitted to a vote of the Shareholders of the Company and shall have such number of votes equal to the number of shares of Series A Preferred Stock held on a one per one share basis. Upon the availability of a sufficient number of authorized but unissued and unreserved shares of common stock, the holders of any Series A Preferred Stock shall be entitled to convert such shares in to fully paid and non-assessable shares of common stock at the rate of 7.8 shares of common stock for each share of Series A Preferred Stock only if the Company has failed to satisfy all financial obligations by the designated time inclusive of the cure period. The Board of Directors of the Company, pursuant to authority granted in the Articles of Incorporation, created a series of preferred stock designated as Series A Preferred Stock (the “Series A Preferred Stock”) with a stated value of $0.001 per share. The number of authorized shares constituting the Series A Preferred Stock was Three Million (3,000,000) shares. At December 31, 2019 and December 31, 2018, there are 1,000,000 and 1,000,000 shares issued and outstanding, respectively.

 

On September 2, 2009, the Board of Directors unanimously approved the designation of a series of preferred stock to be known as “Series B Preferred Stock”. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in respect of the Series B Preferred Stock shall be as hereinafter described. The holders of Series B Preferred Stock shall not be entitled to receive dividends. The holders of Series B Preferred Stock shall not be entitled to vote on any matters submitted to a vote of the Shareholders of the Company. Upon the availability of a sufficient number of authorized but unissued and unreserved shares of common stock, the holders of Series B Preferred Stock may at their election convert such shares in to fully paid and non-assessable shares of common stock at the rate of ten shares of common stock for each share of series B Preferred Stock. The Board of Directors of the Company, pursuant to authority granted in the Articles of Incorporation, created a series of preferred stock designated as Series B Preferred Stock (the “Series B Preferred Stock”) with a stated value of $0.001 per share. The number of authorized shares constituting the Series B Preferred Stock was Three Hundred Thousand (300,000) shares. At December 31, 2019 and December 31, 2018 there are 0 and 0 shares issued and outstanding, respectively.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE N - CAPITAL STOCK (continued)

 

On April 14, 2011, the Board of Directors unanimously approved the designation of a series of preferred stock to be known as “Series C Preferred Stock”. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in respect of the Series C Preferred Stock shall be as hereinafter described. The holders of Series C Preferred Stock shall not be entitled to receive dividends nor shall dividends be paid on common stock or any other Series Preferred Stock while Series C Preferred shares are outstanding. The holders of Series C Preferred Stock shall be entitled to vote on all matters submitted to a vote of the Shareholders of the Company and shall have such number of votes equal to the number of shares of Series C Preferred Stock held on a forty votes per one share basis. Upon the availability of a sufficient number of authorized but unissued and unreserved shares of common stock, the holders of Series C Preferred Stock may at their election convert such shares in to fully paid and non-assessable shares of common stock at the rate of forty shares of common stock for each share of series C Preferred Stock. The Board of directors of the Company, pursuant to authority granted in the Articles of Incorporation, created a series of preferred stock designated as Series C Preferred Stock (the “Series C Preferred Stock”) with a stated value of $0.001 per share. The number of authorized shares constituting the Series C Preferred Stock was One Million (1,000,000) shares. At December 31, 2019 and December 31, 2018, there are 0 and 0 shares issued and outstanding, respectively

 

On November 14, 2017, the Company’s Board of Directors unanimously approved the designation of a series of preferred stock to be known as “Series D Preferred Stock” with a stated value of $0.001 per share. The designations, powers, preferences and rights, and the qualifications, limitations or restrictions hereof, in respect of the Series D Preferred Stock shall be as hereinafter described. The holders of Series D Preferred Stock shall not be entitled to receive dividends.

 

If at least one share of Series D Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series D Preferred Stock at any given time, regardless of their number, shall have voting rights equal to four times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of Series A, plus Series B, plus Series C Preferred Stocks which are issued and outstanding at the time of voting. Upon the availability of a sufficient number of authorized but unissued and unreserved shares of common stock, the holders of Series D Preferred Stock may at their election convert such shares in to fully paid and non-assessable shares of common stock upon the following formula:

 

Calculation- Each individual share of Series D Preferred Stock shall be convertible into the number of shares of Common Stock equal to:

 

[5000]

 

divided by:

 

[.80 times the lowest closing price of the Company’s common stock for the immediate five-day period prior to the receipt of the Notice of Conversion remitted to the Company by the Series D Preferred stockholder]

 

The number of authorized shares constituting the Series D Preferred Stock was Five Hundred Thousand (500,000) shares. At December 31, 2019 and December 31, 2018, there are 100 and 100 shares issued and outstanding, respectively.

 

Common Stock

 

Holders of the Company’s common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. A vote by the holders of a majority of the Company’s outstanding voting shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to the Company’s articles of incorporation.

 

Holders of the Company’s common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. The Company’s common stock has no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to the Company’s common stock.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE N - CAPITAL STOCK (continued)

 

In April 2018, the Board of Directors approved a 1:4000 reverse stock split. On December 7, 2018, the Company filed a new Issuer Company-Related Action Notification Form with the Financial Industry Regulatory Authority (“FINRA”) for the Company’s approved 1:4000 reverse stock split. On December 27, 2018, the Company was notified by FINRA that it had sufficient information to pass on the corporate action. The Company’s common stock began trading on a post-split basis beginning on December 28, 2018 (the “Effective date”). The trading symbol for the Company’s common stock was changed to “UNGSD” for the first twenty business days including the effective date, thereafter the trading symbol reverted back to “UNGS.”

 

Common Stock and Preferred Stock Issuances

 

For the years ended December 31, 2019 and 2018, the Company issued and/or sold the following unregistered securities:

 

Common Stock

 

2019

 

On January 4, 2019, the Company issued 37,500 shares of its common stock (with a fair value of $14,959) in satisfaction of $15,000 in accounts payable due a consultant.

 

On January 7, 2019, the prior owner of AMDAQ, Ltd and the prior owners of the AMDAQ tokens agreed to a reduction in the number of common shares of AMDAQ Corp that they would retain. Of the 15,000,000 shares of AMDAQ Corp common stock issued to the prior owner of AMDAQ, Ltd, 7,500,000 were returned to AMDAQ Corp to be retired. Of the 3,000,000 shares of AMDAQ Corp common stock issued for the purchase of the AMDAQ tokens, 1,500,000 were returned to AMDAQ Corp to be retired.

 

On February 7, 2019, the Company issued 594,066 shares of its common stock to a convertible noteholder in satisfaction of $642 accrued interest. The $59,418 excess of the $60,060 fair value of the 594,066 shares over the $642 liability reduction was charged to loss on conversion of debt in the three months ended March 31, 2019.

 
On February 14, 2019, the Company issued 3,000,000 shares of its common stock to Valvasone Trust as payment for services rendered on behalf of the Company. The $300,000 fair value of the 3,000,000 shares was charged to professional fees in the three months ended March 31, 2019.

 

On February 14, 2019, the Company issued 1,500,000 shares of its common stock to a Valvasone Trust affiliate as payment for services rendered on behalf of the Company. The $150,000 fair value of the 1,500,000 shares was charged to professional fees in the three months ended March 31, 2019.

 

On February 20, 2019, the Company issued 536,585 shares of its common stock to a convertible noteholder in satisfaction of $1,100 notes payable. The $52,559 excess of the $53,659 fair value of the 536,585 shares over the $1,100 liability reduction was charged to loss on conversion of debt in the three months ended March 31, 2019.

 

On April 17, 2019, the Company issued 116,822 shares of its common stock to Wayne Anderson, the Company’s chief executive officer and sole officer and director of the Company, in satisfaction of $10,000 director’s stock-based compensation for the first quarter of calendar year 2019.

 

On August 22, 2019, the Company issued 583,523 shares of its common stock to a convertible noteholder in satisfaction of $345 principal and $851 interest against an outstanding note. The $7,557 excess of the $8,753 fair value of the 583,523 shares over the $1,196 liability reduction was charged to loss on conversion of debt in the three months ended September 30, 2019.

 

On September 9, 2019, the Company issued 1,226,583 shares of its common stock to a convertible noteholder in satisfaction of $1,300 interest against an outstanding note. The $10,966 excess of the $12,266 fair value of the 1,226,583 shares over the $1,300 liability reduction was charged to loss on conversion of debt in the three months ended September 30, 2019.

 

On September 15, 2019, the Company issued 10,000,000 shares of restricted common stock for the purchase of $100,000 in inventory. Please see NOTE C – INVENTORY for further information.

 

On September 25, 2019, the Company issued 6,000,000 shares of restricted common stock for the purchase of $60,000 in inventory. Please see NOTE C – INVENTORY for further information.

 

On October 28, 2019, the Company issued 1,248,390 shares of its common stock to a convertible noteholder as a partial cashless exercise of a warrant.

 

On October 28, 2019, the Company issued 1,000,000 shares of its common stock to a convertible noteholder in satisfaction of $3,700 principal and $500 in fees against an outstanding note. The $5,800 excess of the $10,000 fair value of the 1,000,000 shares over the $4,200 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On November 25, 2019, the Company issued 2,072,133 shares of its common stock to a convertible noteholder in satisfaction of $605 principal and $721 in accrued interest against an outstanding note. The $19,395 excess of the $20,721 fair value of the 2,072,133 shares over the $1,326 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 5, 2019, the Company issued 893,006 shares of its common stock to a convertible noteholder as a partial cashless exercise of a warrant.

 

On December 5, 2019, the Company issued 772,133 shares of its common stock to a convertible noteholder in satisfaction of $400 principal, $721 in accrued interest and $500 in fees against an outstanding note. The $2,240 excess of the $3,861 fair value of the 772,133 shares over the $1,621 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 10, 2019, the Company issued 3,545,487 shares of its common stock to a convertible noteholder in satisfaction of $1,875 principal and $39 in accrued interest against an outstanding note. The $9.077 excess of the $10,991 fair value of the 3,545,487 shares over the $1,914 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 12, 2019, the Company issued 1,940,268 shares of its common stock to a convertible noteholder in satisfaction of $3,150 principal, $17 in accrued interest and $500 in fees against an outstanding note. The $1,572 excess of the $5,239 fair value of the 1,940,268 shares over the $3,667 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 20, 2019, the Company issued 2,023,234 shares of its common stock to a convertible noteholder in satisfaction of $2,600 principal, $16 in accrued interest and $500 in fees against an outstanding note. The $3,156 excess of the $6,272 fair value of the 2,023,234 shares over the $3,116 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 26, 2019, the Company issued 4,093,514 shares of its common stock to a convertible noteholder in satisfaction of $1,773 principal and $28 in accrued interest against an outstanding note. The $8,023 excess of the $9,824 fair value of the 4,093,514 shares over the $1,801 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

On December 30, 2019, the Company issued 2,116,895 shares of its common stock to a convertible noteholder in satisfaction of $2,600 principal, $12 in accrued interest and $500 in fees against an outstanding note. The $3,239 excess of the $6,351 fair value of the 2,116,895 shares over the $3,112 liability reduction was charged to loss on conversion of debt in the three months ended December 31, 2019.

 

2018

 

In December 2018, the Company issued 995,025 shares of its common stock (with a fair value of $40,000) to Wayne Anderson, the Company’s chief executive officer and sole officer and director of the Company, in satisfaction of $40,000 accrued director’s compensation for the calendar year 2018.

 

In December 2018, the Company issued 2,176,617 shares of its common stock (with a fair value of $70,000) to Wayne Anderson in satisfaction of $70,000 accrued director’s compensation for the calendar years 2011-2017.

 

The number of common shares authorized with a par value of $0.001 per share at December 31, 2019 and December 31, 2018 is 750,000,000 and 750,000,000, respectively. At December 31, 2019 and December 31, 2018, there are 49,209,761 and 5,909,113 shares of common stock issued and outstanding, respectively.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE N - CAPITAL STOCK (continued)

 

Preferred Stock

 

None

 

Warrants and Options

 

A summary of warrants and options activity follows:

 

		Shares Equivalent
		Options				Warrants				Total
Balance, January 1, 2017			25,000				-				25,000
Granted in year ended December 31, 2017			-				-				-
Balance December 31, 2017			25,000				-				25,000
Options (exercisable at $0.40 per share) granted to Wayne Anderson in connection with April 1, 2018 Employment Agreement			25,000				-				25,000
Warrants (exercisable at $0.40 per share) issued to Armada Investment Fund, LLC in connection with sale of $30,000 Promissory Note on October 9, 2018			-				62,500				62,500
Warrants (exercisable at $0.40 per share) issued to Armada Investment Fund, LLC in connection with sale of $33,000 Promissory Note on December 31, 2018			-				82,500				82,500
Balance, December 31, 2018			50,000				145,000				195,000
Warrants (exercisable at $0.025 per share) issued to Darling Capital, LLC in connection with sale of $12,500 Promissory Note dated January 9, 2019			-				3,000,000				3,000,000
Warrants (exercisable at $.10 per share) issued to Armada Investment Fund, LLC in connection with sale of $11,550 Promissory Note dated February 20, 2019			-				26,250				26,250
Warrants (exercisable at $.10 per share) issued to Jefferson Street Capital, LLC in connection with sale of $11,550 Promissory Note dated February 20, 2019			-				26,250				26,250
Warrants (exercisable at $.10 per share) issued to BHP Capital NY Inc. in connection with sale of $11,550 Promissory Note dated February 20, 2019			-				26,250				26,250
Balance March 31, 2019			50,000				3,223,750				3,273,350
Warrants (exercisable at $.10 per share) issued to BHP Capital NY Inc. in connection with sale of $11,000 Promissory Note dated May 2, 2019			-				50,000				50,000
Warrants (exercisable at $.10 per share) issued to Jefferson Street Capital, LLC in connection with sale of $11,000 Promissory Note dated May 2, 2019			-				50,000				50,000
Warrants (exercisable at $.075 per share) issued to Armada Investment Fund, LLC in connection with sale of $16,500 Promissory Note dated June 5, 2019			-				220,000				220,000
Balance, June 30, 2019			50,000				3,543,750				3,593,750
Warrants (exercisable at $.075 per share) issued to Armada Investment Fund, LLC in connection with sale of $16,500 Promissory Note dated July 2, 2019			-				220,000				220,000
Warrants (exercisable at $.08 per share) issued to Armada Investment Fund, LLC in connection with sale of $15,400 Promissory Note dated July 24, 2019			-				256,667				256,667
Warrants (exercisable at $.08 per share) issued to BHP Capital NY Inc in connection with sale of $15,400 Promissory Note dated July 24, 2019			-				256,667				256,667
Warrants (exercisable at $.08 per share) issued to Fourth Man, LLC in connection with sale of $15,400 Promissory Note dated July 24, 2019			-				256,667				256,667
Balance, September 30, 2019			50,000				4,533,751				4,583,751
Warrants (exercisable at $.024 per share) issued to BHP Capital NY Inc in connection with sale of $13,750 Promissory Note dated October 16, 2019			-				761,958				761,958
Warrants (exercisable at $.024 per share) issued to Fourth Man, LLC in connection with sale of $13,750 Promissory Note dated October 16, 2019			-				761,958				761,958
Warrants (exercisable at $.024 per share) issued to Armada Investment Fund, LLC in connection with sale of $25,300 Promissory Note dated October 30, 2019			-				1,402,000				1,402,000
Warrants (exercisable at $.024 per share) issued to Armada Investment Fund, LLC in connection with sale of $16,500 Promissory Note dated December 13, 2019			-				841,200				841,200
Exercise of warrants (exercisable at $.10 per share) issued to Armada Investment Fund, LLC in connection with sale of $11,550 Promissory Note dated February 20, 2019			-				(26,250	)			(26,250	)
Balance, December 31, 2019			50,000				8,274,617				8,324,617

 

As of December 31, 2019, the Company has nineteen warrants and options issued and outstanding granting the holders the right to purchase up to a total of 8,324,617 shares of its common stock.

 

The following table summarizes information about warrants outstanding as of December 31, 2019:

 

Number Outstanding
At December 31, 2019				Exercise Price				Expiration Date
	25,000			$	0.80			April 1, 2020
	25,000			$	0.40			April 1, 2023
	62,500			$	0.40			October 9, 2023
	82,500			$	0.40			December 31, 2023
	3,000,000			$	0.025			January 9, 2024
	52,500			$	0.10			February 20, 2024
	100,000			$	0.10			May 2, 2024
	440,000			$	0.075			June 5, 2024
	770,001			$	0.08			July 24, 2024
	1,523,916			$	0.024			October 16, 2024
	1,402,000			$	0.024			October 30, 2024
	841,200			$	0.024			December 13, 2024
	8,324,617

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE O - INCOME TAXES

 

The provision for (benefit from) income taxes differs from the amount computed by applying the statutory United States federal income tax rate for the periods presented to income (loss) before income taxes. The income tax rate was 21% for the years ended December 31, 2019 and 2018. The sources of the difference are as follows:

 

		Year Ended
		December 31, 2019				December 31, 2018
Expected tax		$	1,219,028			$	(1,619,308	)
Non-deductible stock-based compensation			171,654				-
Non-deductible loss on conversion of notes payable and accrued interest			38,430				-
Non-deductible loss (nontaxable income) from derivative liability			(1,608,450	)			1,621,697
Non-deductible amortization of debt discounts			40,060				2,667
Increase (decrease) in Valuation allowance			139,278				(5,056	)
Provision for (benefit from) income taxes		$	-			$	-

 

All tax years remain subject to examination by the Internal Revenue Service.

 

Significant components of the Company’s deferred income tax are as follows:

 

		December 31, 2019				December 31, 2018
Unpaid accrued officer and director compensation		$	113,287			$	168,910
Net operating loss carry-forwards			2,257,245				2,062,344
Valuation allowance			(2,370,532	)			(2,231,254	)
Net non-current deferred tax asset		$	-			$	-

 

Based on management’s present assessment, the Company has not yet determined it to be more likely than not that a deferred tax asset of $2,370,532 attributable to the future utilization of the $539,464 timing difference relating to unpaid officer and director compensation and the $10,748,786 net operating loss carryforward as of December 31, 2019 will be realized. Accordingly, the Company has provided a 100% allowance against the deferred tax asset in the financial statements at December 31, 2019. The Company will continue to review this valuation allowance and make adjustments as appropriate. $10,072,705 of the net operating loss carryforward expires in varying amounts from year 2026 to year 2037.

 

Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE P - COMMITMENTS AND CONTINGENCIES

 

Occupancy

 

On August 28, 2019, the Company entered into a lease to rent office space located at 501 1st Ave N, Suite 901, St. Petersburg, FL 33701. The lease is for a term of one year and has a monthly rental rate of $480. The Company’s future rental obligation at December 31, 2019 is $3,840.

 

Employment and Director Agreements

 

On April 1, 2018, the Company executed an employment agreement with Wayne Anderson to serve in the role as President, Treasurer, and Secretary of the Company upon the terms and provisions and, subject to the conditions set forth in the Agreement, for a term of three (3) years, commencing on April 1, 2018 and terminating on March 31, 2021, unless earlier terminated as provided in the Agreement. The Agreement included options to Mr. Anderson to purchase 25,000 shares of common stock at a price of $0.40 per share. The agreement provides for Mr. Anderson to receive an annual compensation of $270,000 for each of the three years of the Agreement. Please see NOTE I – ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE P - COMMITMENTS AND CONTINGENCIES (continued)

 

On January 2, 2018, the Company executed a new Board of Directors Service Agreement with Wayne Anderson. Under the terms of the Agreement, commencing January 2, 2018 the Company is to pay Mr. Anderson $10,000 per quarter for which Mr. Anderson serves on the Board of Directors. In addition to cash compensation, the Company is to issue Mr. Anderson the equivalent of $10,000 of the Company’s common stock on the last calendar day of each quarter. The calculation for the number of shares to be issued to Mr. Anderson shall be as follows: $10,000/(Closing stock price on the last trading day of each quarter x .80). Please see NOTE I – ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information.

 

On April 1, 2015, the Company executed an employment agreement with Wayne Anderson to serve in the role as President, Treasurer, and Secretary of the Company upon the terms and provisions and, subject to the conditions set forth in the Agreement, for a term of three (3) years, commencing on April 1, 2015, and terminating on March 31, 2018, unless earlier terminated as provided in the Agreement. The Agreement included options to Mr. Anderson to purchase 25,000 shares of common stock at a price of $0.40 per share. Mr. Anderson was accrued an annual compensation of $221,767 for each of the three years of the Agreement.

 

On January 5, 2011, the Company executed a Board of Directors Service Agreement with Wayne Anderson. Under the terms of the Agreement, commencing January 5, 2011 the Company was to pay Mr. Anderson the equivalent of $2,500 per quarter in common stock for which Mr. Anderson served on the Board of Directors. For the years ended December 31, 2011 to December 31, 2017, the Company expensed $10,000 per year, which was satisfied through the issuance of the Company’s common stock on December 31, 2018. Please see NOTE I – ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information.

 

Legal

 

From time to time, the Company is subject to litigation from service providers and others. As of December 31, 2019 and December 31, 2018, there are two outstanding judgments against the Company totaling $6,658 and $6,658, respectively (which is included in accounts payable). As of December 31, 2019 and December 31, 2018 and at the date of issuance of these financial statements, there is no outstanding litigation against the Company.

 

Key Man life insurance

 

On July 17, 2019, the Company applied for a 10-year term Key Man life insurance policy for its sole officer and director, Jimmy Wayne Anderson, in the amount of $500,000. The policy was approved in August 2019 with an effective start date of September 1, 2019. The monthly cost to the company is $59.38.

 

 

SYLIOS CORP

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2019 and 2018

 

NOTE Q - GOING CONCERN UNCERTAINITY

 

Under ASC 205-40, we have the responsibility to evaluate whether conditions and/or events raise substantial doubt about our ability to meet our future financial obligations as they become due within one year after the date that the financial statements are issued. As required by this standard, our evaluation shall initially not take into consideration the potential mitigating effects of our plans that have not been fully implemented as of the date the financial statements are issued.

 

In performing the first step of this assessment, we concluded that the following conditions raise substantial doubt about our ability to meet our financial obligations as they become due. We have a history of net losses: As of December 31, 2019, we had an accumulated deficit of $14,667,703. For the year ended December 31, 2019, we used cash from operating activities of $202,435. We expect to continue to incur negative cash flows until such time as our operating segments generate sufficient cash inflows to finance our operations and debt service requirements.

 

In performing the second step of this assessment, we are required to evaluate whether our plans to mitigate the conditions above alleviate the substantial doubt about our ability to meet our obligations as they become due within one year after the date that the financial statements are issued. Our future plans include securing additional funding sources that may include establishing corporate partnerships, establishing licensing revenue agreements, issuing additional convertible debentures and issuing public or private equity securities, including selling common stock through an at-the-market facility (ATM).

 

There is no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available through external sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force the Company to substantially curtail or cease operations and would, therefore, have a material effect on the business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or they will not have a significant dilutive effect on the Company’s existing shareholders. We have therefore concluded there is substantial doubt about our ability to continue as a going concern through March 2022.

 

The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying 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 classification of liabilities that may result from our failure to continue as a going concern.

 

NOTE R - SUBSEQUENT EVENTS

 

On January 10, 2020, the Company entered into a separate Securities Purchase Agreement (the “Agreement”) with each of Armada Investment Fund, LLC (“Armada”) and Fourth Man, LLC (“FM”) wherein the Company issued each of Armada and FM a Convertible Promissory Note (the “Note”) in the amount of $18,425 ($1,675 OID). Each Note has a term of one (1) year (due on January 10, 2021) and bears interest at 8% annually. As part and parcel of the foregoing transaction, Armada and FM were each issued a warrant granting the holder the right to purchase up to 921,250 shares of the Company’s common stock at an exercise price of $0.024 for a term of 5-years. The transactions closed on January 13, 2020. In addition, 32,000,000 shares of the Company’s common stock have been reserved at Pacific Stock Transfer Corporation, our transfer agent, for each of Armada and FM for possible issuance upon the conversion of each Note into shares of our common stock. The transactions closed on January 13, 2020.

 

On January 13, 2020, the Company entered into a Securities Purchase Agreement (the “Agreement”) with Deep Green Waste & Recycling, Inc. (hereinafter “Deep Green”) wherein Deep Green issued the Company a Convertible Promissory Note (the “Note”) in the amount of $35,000 ($5,000 OID). The Note has a term of one (1) year (due on January 13, 2021) and bears interest at 8% annually. As part and parcel of the foregoing transaction, the Company was issued a warrant granting the holder the right to purchase up to 262,500 shares of Deep Green’s common stock at an exercise price of $0.04 for a term of 5-years. As part of the Note, the Company executed a Registration Rights Agreement (the “RRA”) dated January 13, 2020. Among other things, the RRA provides for Deep Green to file a Registration Statement with the SEC covering the resale of shares underlying the Note and the warrant and to have declared effective such Registration Statement. In the event that Deep Green doesn’t meet the registration requirements provided for in the RRA, Deep Green is obligated to pay the Company certain payments for such failures. In addition, 6,000,000 shares of Deep Green’s common stock have been reserved at Transfer Online, Deep Green’s transfer agent, for the Company for possible issuance upon the conversion of the Note into shares of Deep Green’s common stock. The transaction closed on January 16, 2020.

 

 

On March 6, 2020, the Company entered into an Assignment Agreement (the “Agreement”) with Armada Investment Fund, LLC (“Assignee”). Under the terms of the Agreement, the Company sold, assigned, conveyed and transferred its interest into the Securities Purchase Agreement, Convertible Promissory Note (principal amount of $23,000), Stock Purchase Warrant Agreement (262,500 shares of common stock) and Registration Rights Agreement entered into by the Company and Deep Green Waste & Recycling, Inc. all dated January 13, 2020 in exchange for Ten Thousand Five Hundred and No/100 Dollars ($10,500) cash compensation and the forgiveness of all principal and interest remaining on the Amended and Restated Replacement Convertible Promissory Note issued by the Company to the Assignee dated February 12, 2019. The transaction closed on March 12, 2020.

 

On April 14, 2020, the Company issued 2,448,979 shares of its common stock to a convertible noteholder in satisfaction of $1,900 of principal and $500 of fees against an outstanding note. The $3,733 excess of the $5,633 fair value of the 2,448,979 shares over the $1,900 liability reduction will be charged to loss on conversion of debt.

 

On May 4, 2020, the Company issued 2,551,020 shares of its common stock to a convertible noteholder in satisfaction of $2,000 of principal and $500 of fees against an outstanding note. The $6,673 excess of the $8,673 fair value of the 2,551,020 shares over the $2,000 liability reduction will be charged to loss on conversion of debt.

 

On May 6, 2020, the Company issued 4,093,514 shares of its common stock to a convertible noteholder in satisfaction of $1,773 of principal and $28 of interest against an outstanding note. The $12,526 excess of the $14,327 fair value of the 4,093,514 shares over the $1,801 liability reduction will be charged to loss on conversion of debt.

 

On May 21, 2020, the Company issued 5,685,666 shares of its common stock to a convertible noteholder in satisfaction of $625 of principal, $160 of interest and $921 of fees against an outstanding note. The $19,115 excess of the $19,900 fair value of the 5,685,666 shares over the $785 liability reduction will be charged to loss on conversion of debt.

 

On June 5, 2020, the Company issued 5,699,000 shares of its common stock to a convertible noteholder in satisfaction of $9 of interest and $1,701 of fees against an outstanding note. The $14,239 excess of the $14,248 fair value of the 5,699,000 shares over the $9 liability reduction will be charged to loss on conversion of debt.

 

On June 10, 2020, the Company issued 6,823,020 shares of its common stock to a convertible noteholder in satisfaction of $2,047 of interest against an outstanding note. The $16,375 excess of the $18,422 fair value of the 6,823,020 shares over the $2,047 liability reduction will be charged to loss on conversion of debt.

 

On June 24, 2020, the Company issued 7,504,633 shares of its common stock to a convertible noteholder in satisfaction of $212 of principal and $2,039 of interest against an outstanding note. The $13,509 excess of the $15,760 fair value of the 7,504,633 shares over the $2,251 liability reduction will be charged to loss on conversion of debt.

 

On June 25, 2020, the Company issued 8,254,333 shares of its common stock to a convertible noteholder in satisfaction of $2,476 of principal against an outstanding note. The $18,985 excess of the $21,461 fair value of the 8,254,333 shares over the $2,476 liability reduction will be charged to loss on conversion of debt.

 

On July 13, 2020, the Company issued 9,078,933 shares of its common stock to a convertible noteholder in satisfaction of $2,683 of principal and $41 of interest against an outstanding note. The $15,434 excess of the $18,158 fair value of the 9,078,933 shares over the $2,724 liability reduction will be charged to loss on conversion of debt.

 

 

On July 27, 2020, the Company issued 9,985,933 shares of its common stock to a convertible noteholder in satisfaction of $2,996 of principal against an outstanding note. The $21,969 excess of the $24,965 fair value of the 9,985,933 shares over the $2,996 liability reduction will be charged to loss on conversion of debt.

 

On August 4, 2020, the Company issued 5,442,933 shares of its common stock to a convertible noteholder in satisfaction of $1,633 of principal against an outstanding note. The $16,329 excess of the $17,962 fair value of the 5,442,933 shares over the $1,633 liability reduction will be charged to loss on conversion of debt.

 

On August 4, 2020, the Company issued 5,540,600 shares of its common stock to a convertible noteholder in satisfaction of $1,158 of principal and $2,167 of interest against an outstanding note. The $14,959 excess of the $18,284 fair value of the 5,540,600 shares over the $3,325 liability reduction will be charged to loss on conversion of debt.

 

On August 4, 2020, the Company issued 4,225,000 shares of its common stock to a convertible noteholder in satisfaction of $2,180 of interest and $1,200 of fees against an outstanding note. The $11,763 excess of the $13,943 fair value of the 4,225,000 shares over the $2,180 liability reduction will be charged to loss on conversion of debt.

 

On August 11, 2020, the Company issued 6,403,850 shares of its common stock to a convertible noteholder in satisfaction of $3,842 of principal against an outstanding note. The $25,616 excess of the $29,458 fair value of the 6,403,850 shares over the $3,842 liability reduction will be charged to loss on conversion of debt.

 

On August 14, 2020, the Company issued 10,778,000 shares of its common stock to a convertible noteholder in satisfaction of $3,449 of interest against an outstanding note. The $49,363 excess of the $52,812 fair value of the 10,778,000 shares over the $3,449 liability reduction will be charged to loss on conversion of debt.

 

On August 21, 2020, the Company issued 15,530,500 shares of its common stock to a convertible noteholder in satisfaction of $4,235 of principal and $734 of interest against an outstanding note. The $44,729 excess of the $49,698 fair value of the 15,530,500 shares over the $4,969 liability reduction will be charged to loss on conversion of debt.

 

On October 10, 2020, the Company issued 25,862,069 shares of its common stock to a convertible noteholder in satisfaction of $8,850 of principal and $6,150 of interest against an outstanding note. The $34,178 excess of the $49,178 fair value of the 25,862,069 shares over the $15,000 liability reduction will be charged to loss on conversion of debt.

 

On October 21, 2020, the Company issued 28,533,866 shares of its common stock to a convertible noteholder in satisfaction of $9,883 of principal and $2,958 of interest against an outstanding note. The $41,373 excess of the $54,214 fair value of the 28,533,866 shares over the $12,841 liability reduction will be charged to loss on conversion of debt.

 

On November 5, 2020, the Company issued 13,121,179 shares of its common stock to a convertible noteholder in satisfaction of $5,117 of principal against an outstanding note. The $13,253 excess of the $18,370 fair value of the 13,121,179 shares over the $5,117 liability reduction will be charged to loss on conversion of debt.

 

On January 9, 2021, the Company issued 34,368,854 shares of its common stock to a convertible noteholder in satisfaction of $12,500 of principal and $3,997 of interest against an outstanding note. The $86,610 excess of the $103,107 fair value of the 34,368,854 shares over the $16,497 liability reduction will be charged to loss on conversion of debt.

 

On February 9, 2021, the Company issued 12,842,105 shares of its common stock to a convertible noteholder in satisfaction of $11,000 of interest against an outstanding note. The $84,032 excess of the $95,032 fair value of the 12,842,105 shares over the $11,000 liability reduction will be charged to loss on conversion of debt.

 

On February 12, 2021, the Company entered into a Consulting Agreement (the “Agreement”) with Deep Green Waste & Recycling, Inc. (hereinafter “Deep Green”), a publicly traded entity under the symbol “DGWR.” Under the terms of the Agreement, the Company is to assist Deep Green in the preparation of its Registration Statement on Form S-1 and preparation of its Annual Report on Form 10-K. The term of the Agreement is for three months or until Deep Green’s Form S-1 is filed with the SEC and the Company is to be compensated 750,000 shares of Deep Green’s common stock.

 

 

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

There have been no disagreements on accounting and financial disclosures from the inception of our Company through the date of this Form 10-K. Michael T. Studer CPA P.C has audited our financial statements for the years ended December 31, 2019 and 2018.

 

ITEM 9A.

CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO has concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in 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 due to material weaknesses in our internal controls described below.

 

Limitations on the Effectiveness of Controls

 

Our management, including our CEO and CFO, does not expect that our disclosure controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within us have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

 

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

 

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment, we believe that, as of December 31, 2019, our internal control over financial reporting was not effective based on those criteria.

 

 

Management’s assessment identified several material weaknesses in our internal control over financial reporting. These material weaknesses include the following:

 

-	Insufficient number of qualified accounting personnel governing the financial close and reporting process
-	Lack of independent directors
-	Lack of proper segregation of duties

 

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

 

Changes in Internal Controls

 

There were no changes in our internal control over financial reporting during the year ended December 31, 2019, which have affected, or are reasonably likely to affect, our internal control over financial reporting.

 

ITEM 9B.

OTHER INFORMATION.

 

None.

 

PART III

 

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

 

Officers and Directors

 

Our officers are elected by the board of directors to a term of one (1) year and serves until their successor is duly elected and qualified, or until they are removed from office. The board of directors has no nominating, auditing or compensation committees.

 

The names, ages and positions of our present officers and director are set forth below:

 

Name		Age		Position and Term
Jimmy Wayne Anderson		54		President, Principal Financial Officer and Chairman of the Board (Since 2008)

 

Jimmy Wayne Anderson, President, Director and Chairman of the Board – Mr. Anderson is the co-founder and acting President and Chairman of the Board of Sylios Corp and has served in this capacity since the Company’s inception in 2008. Mr. Anderson has been instrumental in the establishment and development of each of the Company’s operational subsidiaries. Mr. Anderson leverages nearly 15 years of business experience in the financial and medical sectors prior to founding the Company. Mr. Anderson completed his undergraduate education at the University of Georgia and received his Doctorate degree from Temple University.

 

Mr. Anderson also serves as the sole officer and director of Global Technologies, Ltd., a publicly traded company listed on the OTC Markets “PINK” under the symbol “GTLL” and as the sole officer and director of AMDAQ Corp. Mr. Anderson served as the principal executive officer, principal financial officer and chairman of The Greater Cannabis Company, Inc., a publicly traded company listed on the OTC Markets “QB” under the symbol “GCAN,” from inception through July 31, 2018.

 

The Company anticipates that it will need to retain additional management and key personnel in the near future.

 

 

Family Relationships

 

There are no family relationships among the directors and executive officers.

 

Conflicts of Interest

 

We believe that our current officer and director will not be subject to conflicts of interest. No policy has been implemented or will be implemented to address conflicts of interest.

 

Involvement in Certain Legal Proceedings

 

During the past ten years, Mr. Anderson has not been the subject of the following events:

 

A.	A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
B.	Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
C.	The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities;
	1.	Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
	2.	Engaging in any type of business practice; or
	3.	Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
D.	The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
E.	Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
F.	Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

 

 

G.	Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
	1.	Any Federal or State securities or commodities law or regulation; or
	2.	Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
	3.	Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
H.	Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

 

Audit Committee and Audit Committee Financial Expert

 

We do not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on its board of directors. All current members of the board of directors lack sufficient financial expertise for overseeing financial reporting responsibilities.

 

We do not have an audit committee financial expert because we believe the costs related to retaining a financial expert at this time is prohibitive. Further, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.

 

We intend to establish an audit committee of the Board of Directors, which will consist of independent directors. The audit committee’s duties will be to recommend to our board of directors the engagement of an independent registered public accounting firm to audit our financial statements and to review our accounting and auditing principles. The audit committee will review the scope, timing and fees for the annual audit and the results of audit examinations performed by the internal auditors and independent registered public accounting firm, including their recommendations to improve the system of accounting and internal controls. The audit committee will at all times be composed exclusively of directors who are, in our opinion, free from any relationship which would interfere with the exercise of independent judgment as a committee member and who possess an understanding of financial statements and generally accepted accounting principles.

 

Code of Ethics

 

We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics was filed as Exhibit 14.1 on our Form S-1 Registration Statement as filed with the Securities and Exchange Commission on April 11, 2019.

 

Disclosure Committee and Charter

 

We do not have a disclosure committee and disclosure committee charter. We plan to establish a Disclosure Committee and will operate under a charter. The purpose of a disclosure committee would be to provide assistance to the Principal Executive Officer and the Principal Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports.

 

Section 16(a) Beneficial Ownership Compliance

 

Section 16(a) of the Exchange Act requires our officers and directors, and persons who own more than 10% of our common stock, to file reports of ownership and changes in ownership with the SEC. These persons are required by SEC regulations to furnish to us copies of all Section 16(a) forms they file. SEC regulations require us to identify in this Annual Report anyone who filed a required report late or failed to file a required report. Based on our review of forms we received, we believe that during 2019 all Section 16(a) filing requirements were satisfied on a timely basis.

 

 

ITEM 11.

EXECUTIVE COMPENSATION.

 

Summary Compensation Table

 

The following table sets forth the compensation paid by us to our officers during the last two fiscal years ended December 31, 2019 and 2018. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named executive officers.

 

Name and Principal Position		Year		Salary- Paid or accrued ($)				Bonus ($)				Stock Awards ($)(2)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Change in Pension Value & Non-Qualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
				(a)				(b)				(c)				(d)(5)												(e)
Wayne Anderson, President, Treasurer, Secretary, Chairman (1)		2019			270,000				0				296,000				0				0				0				80,000				646,000
		2018			257,942				0				0				0				0				0				80,000				337,942

 

(1)	Effective upon the execution of the employment agreement dated April 1, 2018, Mr. Wayne Anderson served in the capacity as President, Treasurer, and Secretary. In consideration of Mr. Anderson’s execution and delivery of the agreement, the Company issued to Mr. Anderson a warrant granting the holder the right to purchase 100,000,000 shares of the Company’s common stock at a fixed strike price of $.0001. Pursuant to the agreement, Mr. Anderson receives annual compensation of $270,000 for each of the three years of the employment agreement.
(2)	On January 9, 2019, the Company transferred 4,000,000 shares of GCAN common stock (fair value of $840,000) to Wayne Anderson to satisfy liabilities of $544,000.
(3)	The values shown in this column represent the aggregate grant date fair value of equity-based awards granted during the fiscal year, in accordance with ASC 718, “Share Based-Payment”. The fair value of the stock options at the date of grant was estimated using the Black-Scholes option-pricing model, based on the assumptions described in the Notes to Financial Statements included in this Annual Report.

 

	(a)	Accrued salary and salary paid. Please see NOTE I - ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information.
	(b)	Accrued bonus to employee for execution of employment agreement.
	(c)	Stock awards.
	(d)	Options issued to employee for execution of employment agreement. More details on Options noted under Employment Agreements section below.
	(e)	Equity compensation received as a Director of the Company.

 

 

We have no plans in place and have never maintained any plans that provide for the payment of retirement benefits or benefits that will be paid primarily following retirement including, but not limited to, tax qualified deferred benefit plans, supplemental executive retirement plans, tax-qualified deferred contribution plans and nonqualified deferred contribution plans.

 

Except as indicated below, we have no contracts, agreements, plans or arrangements, whether written or unwritten, that provide for payments to the named executive officers listed above.

 

Equity Compensation, Pension or Retirement Plans

 

No retirement, pension, profit sharing, stock option or insurance programs or other similar programs have been adopted by the Company for the benefit of its employees.

 

Outstanding Equity Awards at Fiscal Year-End 2019

 

		Option Awards
		Number of Securities Underlying Unexercised Options (#)(3)												Option Exercise Price (3)				Option Expiration
Name		Exercisable				Unexercisable								($)				Date
Wayne Anderson			25,000	(1)			-				-				0.80			04/01/2020
President, Secretary, Treasurer and Chairman			25,000	(2)			-								0.40			04/01/2023

 

	(1)	These options vest immediately upon execution of employment agreement dated April 1, 2015.
	(2)	These options vest immediately upon execution of employment agreement dated April 1, 2018.
	(3)	The number of shares the warrants/options are exercisable into as well as the exercise price have been adjusted for the Company’s 1:4000 reverse stock split effective on December 28, 2018.

 

Audit Committee

 

Presently, our Board of Directors is performing the duties that would normally be performed by an audit committee. We intend to form a separate audit committee, and plan to seek potential independent directors. In connection with our search, we plan to appoint an individual qualified as an audit committee financial expert.

 

Options/SARS Grants During Last Fiscal Year

 

None.

 

Directors’ Compensation

 

On January 2, 2018, the Company executed a new Board of Directors Service Agreement with Wayne Anderson. Under the terms of the Agreement, commencing January 2, 2018 the Company is to pay Mr. Anderson $10,000 per quarter for which Mr. Anderson serves on the Board of Directors. In addition to cash compensation, the Company is to issue Mr. Anderson the equivalent of $10,000 of the Company’s common stock on the last calendar day of each quarter. The calculation for the number of shares to be issued to Mr. Anderson shall be as follows: $10,000/(Closing stock price on the last trading day of each quarter x .80).

 

 

Please see NOTE P- COMMITMENTS AND CONTINGENCIES and NOTE I - ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information.

 

The following table sets forth with respect to the named director, compensation information inclusive of equity awards and payments made in the years ended December 31, 2019 and 2018.

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards ($)				Option Awards ($)				Non-Equity Incentive Plan Compensation ($)				Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
		(b)				(c)				(d)				(e)				(f)				(g)				(h)
Wayne Anderson (2019)(1)		$	40,000			$	40,000				-				-				-				-			$	80,000
Wayne Anderson (2018)(2)		$	40,000			$	40,000				-				-				-				-			$	80,000

 

(1)	The Company’s sole director, Wayne Anderson, was not paid any stock compensation as per the terms of the Board of Directors Service Agreement dated January 5, 2011 for serving on the Board of Directors. As of December 31, 2017, Mr. Anderson was due $70,000 in stock for serving on the Board for the years 2011, 2012, 2013, 2014, 2015, 2016 and 2017. On December 31, 2018, Mr. Anderson was issued 2,176,617 shares of the Company’s common stock as part of his compensation for serving on the Board for the years ended 2011, 2012, 2013, 2014, 2015, 2016 and 2017. Please see NOTE I - ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information.
(2)	The Company’s sole director, Wayne Anderson, was not paid any cash compensation as per the terms of the Board of Directors Service Agreement dated January 3, 2018 for serving on the Board of Directors. At December 31, 2018, Mr. Anderson accrued $40,000 in cash compensation for the fiscal year 2018. On December 31, 2018, Mr. Anderson was issued 995,025 shares of the Company’s common stock as part of his compensation for serving on the Board for the year ended 2018. Please see NOTE I - ACCRUED OFFICER AND DIRECTOR COMPENSATION for further information.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

On October 6, 2018, the Company entered into a Commercial Real Estate Purchase and Sale Agreement with the Company’s President for the purchase of a .92 acre of land located in Bibb County, GA. The purchase price for the land was $40,000. On this same date, the Company entered into an Asset Purchase Agreement with its President for the purchase of all architectural and engineering plans for the development of a storage facility to be constructed on the .92 acre of land. The purchase price for these assets was $35,000.

 

On October 6, 2018, the Company issued its President a Secured Note in the amount of $75,000. The Note has a term of one year and bears interest at 3%. The Company’s first payment in the amount of $15,000 was due within 90 days of an effective reverse stock split. As of the date of issuance of these Financial statements, except for a $5,000 payment made by the Company to the Company’s president on November 12, 2018, the Company has not made any payment against the Note.

 

On December 31, 2017, the Company issued 100 shares of its Series D Preferred Stock to its President. As of the date of this filing, all issued and outstanding shares of the Company’s Series D Preferred Stock are held by its President.

 

On September 15, 2017, the Company issued an unsecured Promissory Note in the amount $70,000 to Around the Clock Partners, LP for funds advanced to the Company. Around the Clock Partners, LP is an entity controlled by Wayne Anderson, the Company’s President.

 

There are no stock option, retirement, or pension plans for the benefit of our officers and directors.

 

Director Independence

 

Our Board of Directors will periodically review relationships that directors have with the Company to determine whether the directors are independent. Directors are considered “independent” as long as they do not accept any consulting, advisory or other compensatory fee (other than director fees) from the Company, are not an affiliated person of the Company or its subsidiaries (e.g., an officer or a greater-than-ten-percent stockholder) and are independent within the meaning of applicable laws, regulations and the Nasdaq listing rules. In this latter regard, the Board of Directors will use the Nasdaq listing rules (specifically, Section 5605(a)(2) of such rules) as a benchmark for determining which, if any, of its directors are independent, solely in order to comply with applicable SEC disclosure rules. However, this is for disclosure purposes only. It should be understood that, as a corporation whose shares are not listed for trading on any securities exchange, our Company is not required to have any independent directors at all on its Board of Directors, or any independent directors serving on any particular committees of the Board of Directors.

 

As of the date of this Form 10-K, the Board of Directors has determined that the Company does not have any independent directors within the meaning of the Nasdaq listing rule cited above.

 

Long-Term Incentive Plan Awards

 

We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance at this time.

 

Indemnification

 

Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.

 

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against policy, as expressed in the Act and is, therefore, unenforceable.

 

 

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

 

We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally provide that a person is the beneficial owner of securities if such person has or shares the power to vote or direct the voting of securities, or to dispose or direct the disposition of securities. A security holder is also deemed to be, as of any date, the beneficial owner of all securities that such security holder has the right to acquire within 60 days after such date through (i) the exercise of any option or warrant, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement, or (iv) the automatic termination of a trust, discretionary account or similar arrangement. Except as disclosed in the footnotes to this table and subject to applicable community property laws, we believe that each person identified in the table has sole voting and investment power over all of the shares shown opposite such person’s name.

 

The percentage of beneficial ownership is based on 407,393,252 shares of our Common Stock outstanding as of March 16, 2021, which includes 391,243,635 shares of common stock outstanding, 7,800,000 shares of common stock issuable upon conversion of the Company’s Series A Preferred Stock, 25,000 shares issuable under an option granted to our President and 8,324,617 shares of our common stock issuable upon the exercise of warrants issued in multiple financing transactions, which are all outstanding as of March 16, 2021 and excludes:

 

●

An indeterminate number of shares of common stock issuable upon conversion of the Company’s Series D Preferred Stock

 

		Common Stock
		Beneficially				Percentage of
Name of Beneficial Owner (1)		Owned				Common Stock (2)
Jimmy Wayne Anderson (3)(4)			3,315,843				0.81	%
Officers and Directors as a Group			3,315,843				0.81	%

 

	(1)	Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options, warrants, or convertible debt currently exercisable or convertible, or exercisable or convertible within 60 days of March 16, 2021 are deemed outstanding for computing percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any person. Percentages are based on a total of shares of common stock outstanding on March 16, 2021, and the shares issuable upon exercise of options, warrants exercisable, and debt convertible on or within 60 days of March 16, 2021.
	(2)	The number of common shares outstanding used in computing the percentages is 391,243,635.
	(3)	Included within Wayne Anderson’s beneficial ownership includes 2,379 shares of common stock issued to Mr. Anderson for past accrued wages, 25,000 shares issuable to Mr. Anderson under the option issued to Mr. Anderson under the terms of his 2018 Employment Agreement with the Company, 2,176,617 shares issued to Mr. Anderson for compensation due as a Board member for the years 2011-2017, 995,025 shares issued to Mr. Anderson for compensation due as a Board member for the year 2018, 116,822 shares issued to Mr. Anderson for director’s compensation for the first quarter of 2019.
	(4)	The address for Mr. Anderson is 501 1st Ave N., Suite 9, St. Petersburg, FL 33701.

 

		Series A Preferred Stock				Percentage of
		Beneficially				Series A
Name of Beneficial Owner		Owned (1)				Preferred Stock (2)
SLMI Energy Holdings, LLC (3)			1,000,000				100.00	%
Total			1,000,000				100.00	%

 

	(1)	The holders of Series A Preferred Stock shall be entitled to vote on all matters submitted to a vote of the Shareholders of the Company and shall have such number of votes equal to the number of shares of Series A Preferred Stock held on a one per one share basis. Upon the availability of a sufficient number of authorized but unissued and unreserved shares of common stock, the holders of any Series A Preferred Stock shall be entitled to convert such shares in to fully paid and non-assessable shares of common stock at the rate of 7.8 shares of common stock for each share of Series A Preferred Stock only if the Company has failed to satisfy all financial obligations by the designated time inclusive of the cure period.
	(2)	The number of Series A Preferred shares outstanding used in computing the percentage is 1,000,000.
	(3)	The address for SLMI Energy Holdings, LLC is 1377 Old Riverside Rd, Roswell, GA 30076.

 

		Series D Preferred Stock				Percentage of
		Beneficially				Series D
Name of Beneficial Owner		Owned (1)				Preferred Stock (2)
Jimmy Wayne Anderson (3)			100				100.00	%
Total			100				100.00	%

 

	(1)	The holders of Series D Preferred Stock shall not be entitled to vote on any matters submitted to a vote of the Shareholders of the Company. If at least one share of Series D Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series D Preferred Stock at any given time, regardless of their number, shall have voting rights equal to four times the sum of: i) the total number of shares of Common Stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of Series A, plus Series B, plus Series C Preferred Stocks which are issued and outstanding at the time of voting. Each share of the Company’s Series D Preferred stock can be converted into shares of the Company’s Class A Common stock based on the following formula: $5,000 divided by .80 times the lowest closing price of the Company’s Common Stock for the immediate five-day period prior to the receipt of the Notice of Conversion.
	(2)	The number of Series D Preferred shares outstanding used in computing the percentage is 100.
	(3)	The address for Mr. Anderson is 501 1st Ave N., Suite 901, St. Petersburg, FL 33701.

 

 

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

 

On October 6, 2018, the Company entered into a Commercial Real Estate Purchase and Sale Agreement with the Company’s President for the purchase of a .92 acre of land located in Bibb County, GA. The purchase price for the land was $40,000. On this same date, the Company entered into an Asset Purchase Agreement with its President for the purchase of all architectural and engineering plans for the development of a storage facility to be constructed on the .92 acre of land. The purchase price for these assets was $35,000.

 

On October 6, 2018, the Company issued its President a Secured Note in the amount of $75,000. The Note has a term of one year and bears interest at 3%. The Company’s first payment in the amount of $15,000 was due within 90 days of an effective reverse stock split. As of the date of issuance of these Financial statements, except for a $5,000 payment made by the Company to the Company’s president on November 12, 2018, the Company has not made any payment against the Note.

 

On December 31, 2017, the Company issued 100 shares of its Series D Preferred Stock to its President. As of the date of this filing, all issued and outstanding shares of the Company’s Series D Preferred Stock are held by its President.

 

On September 15, 2017, the Company issued an unsecured Promissory Note in the amount $70,000 to Around the Clock Partners, LP for funds advanced to the Company. Around the Clock Partners, LP is an entity controlled by Wayne Anderson, the Company’s President.

 

 

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

 

Michael T. Studer CPA P.C has audited our financial statements for the years ended December 31, 2019 and 2018.

 

1) Audit Fees

 

The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Quarterly Reports on Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:

 

2019		$	24,000			Michael T. Studer CPA, P.C.
2019		$	25,000			Michael T. Studer CPA, P.C.

 

2) Audit-Related Fees

 

The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:

 

2019		$	0			Michael T. Studer CPA, P.C.
2018		$	0			Michael T. Studer CPA, P.C.

 

3) Tax Fees

 

The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:

 

2019		$	0			Michael T. Studer CPA, P.C.
2018		$	0			Michael T. Studer CPA, P.C.

 

4) All Other Fees

 

The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:

 

2019		$	0			Michael T. Studer CPA, P.C.
2018		$	0			Michael T. Studer CPA, P.C.

 

5) During the fiscal year ending December 31, 2019 and as of the date of this report, the Company does not maintain an audit committee and therefore does not have an audit committee pre-approval policy in place.

 

 

PART IV

 

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

 

No.		Description
2.1		Articles of Merger US Natural Gas Corp and Wilon Resources, Inc. dated March 22, 2010 (previously filed with Form S-1 on April 11, 2019)
2.2		Agreement and Plan of Share Exchange between US Natural Gas Corp KY, Sylios Corp and TerraTech, Inc. dated September 22, 2017 (previously filed with Form S-1 on April 11, 2019)
3.1		Articles of Incorporation Adventure Energy, Inc. dated March 28, 2008 (previously filed with Form S-1 on April 11, 2019)
3.2		Amendment to Articles of Incorporation of Adventure Energy, Inc. dated April 18, 2008 (previously filed with Form S-1 on April 11, 2019)
3.3		Bylaws of Adventure Energy, Inc. (previously filed with Form S-1 on April 11, 2019)
3.4		Amended and Restated Articles of Incorporation of Adventure Energy, Inc. dated October 6, 2009 (previously filed with Form S-1 on April 11, 2019)
3.5		Amendment to Articles of Incorporation of Adventure Energy, Inc. (name change) dated March 19, 2010 (previously filed with Form S-1 on April 11, 2019)
3.6		Amendment to Articles of Incorporation of US Natural Gas Corp dated April 18, 2011 (previously filed with Form S-1 on April 11, 2019)
3.7		Amendment to Articles of Incorporation of US Natural Gas Corp dated August 2, 2011 (previously filed with Form S-1 on April 11, 2019)
3.8		Amendment to Articles of Incorporation of US Natural Gas Corp dated December 1, 2011 (previously filed with Form S-1 on April 11, 2019)
3.9		Amendment to Articles of Incorporation of US Natural Gas Corp dated May 8, 2012 (previously filed with Form S-1 on April 11, 2019)
3.10		Amendment to Articles of Incorporation of US Natural Gas Corp dated November 26, 2012 (previously filed with Form S-1 on April 11, 2019)
3.11		Amendment to Articles of Incorporation of US Natural Gas Corp dated July 19, 2013 (previously filed with Form S-1 on April 11, 2019)
3.12		Amendment to Articles of Incorporation of US Natural Gas Corp (name change) dated April 14, 2014 (previously filed with Form S-1 on April 11, 2019)
3.13		Amendment to Articles of Incorporation of Sylios Corp dated August 21, 2014 (previously filed with Form S-1 on April 11, 2019)
3.14		Amendment to Articles of Incorporation of Sylios Corp dated December 3, 2014 (previously filed with Form S-1 on April 11, 2019)
3.15		Amendment to Articles of Incorporation of Sylios Corp dated October 2, 2015 (previously filed with Form S-1 on April 11, 2019)
3.16		Amendment to Articles of Incorporation of Sylios Corp dated November 4, 2015 (previously filed with Form S-1 on April 11, 2019)
3.17		Amendment to Articles of Incorporation of Sylios Corp dated January 5, 2017 (previously filed with Form S-1 on April 11, 2019)
3.18		Amendment to Articles of Incorporation of Sylios Corp dated December 28, 2017 (previously filed with Form S-1 on April 11, 2019)
3.19		Amendment to Articles of Incorporation of Sylios Corp dated April 20, 2018 (previously filed with Form S-1 on April 11, 2019)
4.1		Specimen certificate of common stock (previously filed with Form S-1 on April 11, 2019)
10.1		Wayne Anderson Employment Agreement dated April 1, 2009 (previously filed with Form S-1 on April 11, 2019)
10.2		Lender Acquisition Agreement between Adventure Energy, Inc. and SLMI Holdings, LLC dated September 4, 2009 (previously filed with Form S-1 on April 11, 2019)
10.3		Asset Purchase Agreement between Adventure Energy, Inc. and KYTX Oil & Gas, LLC dated November 6, 2009 (previously filed with Form S-1 on April 11, 2019)
10.4		Securities Purchase Agreement between E 2 Investments, LLC and Harlis Trust dated November 10, 2009 (previously filed with Form S-1 on April 11, 2019)
10.5		Amendment to Securities Purchase Agreement between E 2 Investments, LLC and Harlis Trust dated December 20, 2010 (previously filed with Form S-1 on April 11, 2019)
10.6		Wayne Anderson Employment Agreement dated April 1, 2015 (previously filed with Form S-1 on April 11, 2019)
10.7		Wayne Anderson Employment Agreement dated April 1, 2018 (previously filed with Form S-1 on April 11, 2019)
10.8		Board of Directors Services Agreement with Jimmy Wayne Anderson dated as of January 5, 2011 (previously filed with Form S-1 on April 11, 2019)
10.9		Board of Directors Services Agreement with Jimmy Wayne Anderson dated as of January 2, 2018 (previously filed with Form S-1 on April 11, 2019)
10.10		Indemnification Agreement between Sylios Corp and Wayne Anderson dated April 1, 2018 (previously filed with Form S-1 on April 11, 2019)

 

 

10.11		Asset Acquisition Agreement between Sylios Corp and The Greater Cannabis Company, Inc. dated April 21, 2017 (previously filed with Form S-1 on April 11, 2019)
10.12		Registration Rights Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of October 9, 2018 (previously filed with Form S-1 on April 11, 2019)
10.13		Securities Purchase Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of October 9, 2018 (previously filed with Form S-1 on April 11, 2019)
10.14		Convertible Note between Sylios Corp and Armada Investment Fund, LLC dated as of October 9, 2018 (previously filed with Form S-1 on April 11, 2019)
10.15		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of October 9, 2018 (previously filed with Form S-1 on April 11, 2019)
10.16		Assignment of Secured Note and Security Agreement dated April 22, 2014 (previously filed with Form S-1 on April 11, 2019)
10.17		Renewal Note between Sylios Corp and SLMI Energy Holdings, LLC dated June 6, 2018 (original date September 4, 2009) (previously filed with Form S-1 on April 11, 2019)
10.18		Renewal Note between Sylios Corp and SLMI Energy Holdings, LLC dated June 6, 2018 (original date November 12, 2009) (previously filed with Form S-1 on April 11, 2019)
10.19		Securities Purchase Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of December 31, 2018, 2018 (previously filed with Form S-1 on April 11, 2019)
10.20		Convertible Note between Sylios Corp and Armada Investment Fund, LLC dated as of December 31, 2018 (previously filed with Form S-1 on April 11, 2019)
10.21		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of December 31, 2018 (previously filed with Form S-1 on April 11, 2019)
10.22		Securities Purchase Agreement between Sylios Corp and Darling Capital, LLC dated as of January 9, 2019 (previously filed with Form S-1 on April 11, 2019)
10.23		Convertible Note between Sylios Corp and Darling Capital, LLC dated as of January 9, 2019 (previously filed with Form S-1 on April 11, 2019)
10.24		Common Stock Purchase Warrant Agreement between Sylios Corp and Darling Capital, LLC dated as of January 9, 2019 (previously filed with Form S-1 on April 11, 2019)
10.25		Securities Purchase Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.26		Convertible Note between Sylios Corp and Armada Investment Fund, LLC dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.27		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.28		Securities Purchase Agreement between Sylios Corp and BHP Capital NY Inc. dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.29		Convertible Note between Sylios Corp and BHP Capital NY Inc. dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.30		Common Stock Purchase Warrant Agreement between Sylios Corp and BHP Capital NY Inc. dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.31		Securities Purchase Agreement between Sylios Corp and Jefferson Street Capital, LLC dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.32		Convertible Note between Sylios Corp and Jefferson Street Capital, LLC dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.33		Common Stock Purchase Warrant Agreement between Sylios Corp and Jefferson Street Capital, LLC dated as of February 18, 2019 (previously filed with Form S-1 on April 11, 2019)
10.34		Amended and Restated Replacement Convertible Promissory Note between Sylios Corp and Armada Investment Fund, LLC dated as of February 12, 2019 (previously filed with Form S-1 on April 11, 2019)
10.35		Convertible Note between Sylios Corp and Jefferson Street Capital, LLC dated as of May 2, 2019 (previously filed with Form S-1/A on May 15, 2019)
10.36		Securities Purchase Agreement between Sylios Corp and Jefferson Street Capital, LLC dated as of May 2, 2019  (previously filed with Form S-1/A on May 15, 2019)

 

 

10.37		Common Stock Purchase Warrant Agreement between Sylios Corp and Jefferson Street Capital, LLC dated as of May 2, 2019 (previously filed with Form S-1/A on May 15, 2019)
10.38		Convertible Note between Sylios Corp and BHP Capital NY Inc. dated as of May 2, 2019 (previously filed with Form S-1/A on May 15, 2019)
10.39		Securities Purchase Agreement between Sylios Corp and BHP Capital NY Inc. dated as of May 2, 2019 (previously filed with Form S-1/A on May 15, 2019)
10.40		Common Stock Purchase Warrant Agreement between Sylios Corp and BHP Capital NY Inc. dated as of May 2, 2019 (previously filed with Form S-1/A on May 15, 2019)
10.41		Secured Note between US Natural Gas Corp WV (f/k/a Wilon Resources, Inc. and MTEL Investment and Management dated January 5, 2010 (previously filed on Form S-1/A on June 17, 2019)
10.42		Loan Agreement between US Natural Gas Corp KY and Mt. Atlas Consulting, LLC dated November 17, 2017 (previously filed on Form S-1/A on June 17, 2019)
10.43		Promissory Note between Sylios Corp and Pacific Stock Transfer Company dated August 11, 2017 (previously filed on Form S-1/A on June 17, 2019)
10.44		Convertible Note between US Natural Gas Corp and Tangiers Investment Group, LLC dated April 2, 2014 (previously filed on Form S-1/A on June 17, 2019)
10.45		Convertible Note between US Natural Gas Corp and Tangiers Investment Group, LLC dated April 28, 2014 (previously filed on Form S-1/A on June 17, 2019)
10.46		Convertible Note between US Natural Gas Corp and Tangiers Investment Group, LLC dated June 2, 2014 (previously filed on Form S-1/A on June 17, 2019)
10.47		Convertible Note between Sylios Corp and Tangiers Investment Group, LLC dated August 12, 2014 (previously filed on Form S-1/A on June 17, 2019)
10.48		Convertible Note between Sylios Corp and Tangiers Investment Group, LLC dated July 3, 2014 (previously filed on Form S-1/A on June 17, 2019)
10.49		Convertible Note between Sylios Corp and Tangiers Investment Group, LLC dated June 3, 2015 (previously filed on Form S-1/A on June 17, 2019)
10.50		Convertible Note between Sylios Corp and Tangiers Investment Group, LLC dated March 16, 2016 (previously filed on Form S-1/A on June 17, 2019)
10.51		Convertible Note between Sylios Corp and Tangiers Investment Group, LLC dated January 27, 2017 (previously filed on Form S-1/A on June 17, 2019)
10.52		Convertible Promissory Note between Sylios Corp and Darling Capital, LLC dated January 28, 2017 (previously filed on Form S-1/A on June 17, 2019)
10.53		Convertible Promissory Note between Sylios Corp and Darling Capital, LLC dated February 2, 2017 (previously filed on Form S-1/A on June 17, 2019)
10.54		Convertible Promissory Note between Sylios Corp and Darling Capital, LLC dated February 13, 2017 (previously filed on Form S-1/A on June 17, 2019)
10.55		Convertible Promissory Note between Sylios Corp and Darling Capital, LLC dated March 7, 2017 (previously filed on Form S-1/A on June 17, 2019)
10.56		Promissory Note between US Natural Gas Corp and Valvasone Trust dated October 7, 2013 (previously filed on Form S-1/A on June 17, 2019)
10.57		Promissory Note between US Natural Gas Corp and Valvasone Trust dated March 30, 2014 (previously filed on Form S-1/A on June 17, 2019)
10.58		Promissory Note between Sylios Corp and Valvasone Trust dated January 11, 2016 (previously filed on Form S-1/A on June 17, 2019)
10.59		Promissory Note between Sylios Corp and Valvasone Trust dated July 1, 2017 (previously filed on Form S-1/A on June 17, 2019)
10.60		Convertible Note between Sylios Corp and Armada Investment Fund, LLC dated as of June 5, 2019 (previously filed on Form S-1/A on June 17, 2019)
10.61		Securities Purchase Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of June 5, 2019 (previously filed on Form S-1/A on June 17, 2019)
10.62		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of June 5, 2019 (previously filed on Form S-1/A on June 17, 2019)
10.63		Convertible Note between Sylios Corp and Armada Investment Fund, LLC dated as of July 2, 2019 (previously filed on Form 8-K on July 9, 2019)
10.64		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of July 2, 2019 (previously filed on Form 8-K on July 9, 2019)

 

 

10.65		Securities Purchase Agreement between Sylios Corp and Armada Investment Fund, LLC, BHP Capital NY Inc and Fourth Man, LLC dated July 25, 2019 (previously filed on Form 8-K on July 31, 2019)
10.66		Convertible Promissory Note between Sylios Corp and Armada Investment Fund, LLC dated July 29, 2019 (previously filed on Form 8-K on July 31, 2019)
10.67		Convertible Promissory Note between Sylios Corp and BHP Capital NY Inc. dated July 29, 2019 (previously filed on Form 8-K on July 31, 2019)
10.68		Convertible Promissory Note between Sylios Corp and Fourth Man, LLC dated July 29, 2019 (previously filed on Form 8-K on July 31, 2019)
10.69		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated July 29, 2019 (previously filed on Form 8-K on July 31, 2019)
10.70		Common Stock Purchase Warrant Agreement between Sylios Corp and BHP Capital NY Inc dated July 29, 2019 (previously filed on Form 8-K on July 31, 2019)
10.71		Common Stock Purchase Warrant Agreement between Sylios Corp and Fourth Man, LLC dated July 29, 2019 (previously filed on Form 8-K on July 31, 2019)
10.72		Consulting Agreement between the Company and Global Technologies, Ltd dated August 22, 2019 (previously filed on Form 10-Q on November 19, 2019)
10.73		Securities Purchase Agreement between Sylios Corp and BHP Capital NY Inc. and Fourth Man, LLC dated October 16, 2019 (previously filed on Form 8-K on October 18, 2019)
10.74		Convertible Promissory Note between Sylios Corp and BHP Capital NY Inc. dated October 16, 2019 (previously filed on Form 8-K on October 18, 2019)
10.75		Convertible Promissory Note between Sylios Corp and Fourth Man, LLC dated October 16, 2019 (previously filed on Form 8-K on October 18, 2019)
10.76		Common Stock Purchase Warrant Agreement between Sylios Corp and BHP Capital NY Inc. dated October 16, 2019 (previously filed on Form 8-K on October 18, 2019)
10.77		Common Stock Purchase Warrant Agreement between Sylios Corp and Fourth Man, LLC dated October 16, 2019 (previously filed on Form 8-K on October 18, 2019)
10.78		Inventory Purchase Agreement between Sylios Corp and Wanshan Engineering Services, LLC dated September 12, 2019 (previously filed on Form 8-K on October 30, 2019)
10.79		Inventory Purchase Agreement between Sylios Corp and Wanshan Engineering Services, LLC dated September 21, 2019 (previously filed on Form 8-K on October 30, 2019)
10.80		Securities Purchase Agreement between Sylios Corp and Armada Investment Fund, LLC dated October 30, 2019 (previously filed on Form 8-K on November 4, 2019)
10.81		Convertible Promissory Note between Sylios Corp and Armada Investment Fund, LLC dated October 30, 2019 (previously filed on Form 8-K on November 4, 2019)
10.82		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated October 30, 2019 (previously filed on Form 8-K on November 4, 2019)
10.83		Consulting Agreement between Sylios Corp and Deep Green Waste & Recycling, Inc. dated as of December 16, 2019 (previously filed on Form 8-K on January 17, 2020)
10.84		Securities Purchase Agreement between Sylios Corp and Armada Investment Fund, LLC dated December 13, 2019 (previously filed on Form 8-K on December 17, 2019)
10.85		Convertible Promissory Note between Sylios Corp and Armada Investment Fund, LLC dated December 13, 2019 (previously filed on Form 8-K on December 17, 2019)
10.86		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated December 13, 2019 (previously filed on Form 8-K on December 17, 2019)
10.87		Securities Purchase Agreement between Sylios Corp and Armada Investment Fund, LLC dated January 10, 2020 (previously filed on Form 8-K on January 16, 2020)
10.88		Convertible Promissory Note between Sylios Corp and Armada Investment Fund, LLC dated January 10, 2020 (previously filed on Form 8-K on January 16, 2020)
10.89		Common Stock Purchase Warrant Agreement between Sylios Corp and Armada Investment Fund, LLC dated January 10, 2020 (previously filed on Form 8-K on January 16, 2020)
10.90		Securities Purchase Agreement between Sylios Corp and Fourth Man, LLC dated January 10, 2020 (previously filed on Form 8-K on January 16, 2020)
10.91		Convertible Promissory Note between Sylios Corp and Fourth Man, LLC dated January 10, 2020 (previously filed on Form 8-K on January 16, 2020)
10.92		Common Stock Purchase Warrant Agreement between Sylios Corp and Fourth Man, LLC dated January 10, 2020 (previously filed on Form 8-K on January 16, 2020)
10.93		Securities Purchase Agreement between Sylios Corp and Deep Green Waste & Recycling, Inc. dated as of January 13, 2020 (previously filed with Form 8-K on January 17, 2020)
10.94		Convertible Promissory Note between Sylios Corp and Deep Green Waste & Recycling, Inc. dated as of January 13, 2020 (previously filed with Form 8-K on January 17, 2020)
10.95		Common Stock Purchase Warrant Agreement between Sylios Corp and Deep Green Waste & Recycling, Inc. dated as of January 13, 2020 (previously filed with Form 8-K on January 17, 2020)
10.96		Registration Rights Agreement between Sylios Corp and Deep Green Waste & Recycling, Inc. dated as of January 13, 2020 (previously filed with Form 8-K on January 17, 2020)
10.97		Assignment Agreement between Sylios Corp and Armada Investment Fund, LLC dated as of March 6, 2020 (previously filed with Form 8-K on March 17, 2020)
10.98*		Consulting Agreement between Sylios Corp and Deep Green Waste & Recycling, Inc. dated as of February 12, 2021
14.1		Code of Business Conduct and Ethics (previously filed with Form S-1 on April 11, 2019)
21.1		Articles of Incorporation US Natural Gas Corp KY dated February 8, 2010 (previously filed with Form S-1 on April 11, 2019)
21.2		Amendment to Articles of Incorporation to US Natural Gas Corp KY dated March 22, 2010 (previously filed with Form S-1 on April 11, 2019)
21.3		Articles of Organization for E 2 Investments, LLC dated July 22, 2009 (previously filed with Form S-1 on April 11, 2019)
21.4		Certificate for Conversion and Articles of Incorporation for AMDAQ Corp dated August 29, 2017 (previously filed with Form S-1 on April 11, 2019)
21.5		Articles of Organization for The Greater Cannabis Company, LLC dated March 20, 2014 (previously filed with Form S-1 on April 11, 2019)
21.6		Certificate of Conversion and Articles of Incorporation for The Greater Cannabis Company, Inc. dated January 13, 2017 (previously filed with Form S-1 on April 11, 2019)
21.7		Articles of Incorporation E 3 Petroleum Corp dated February 8, 2010 (previously filed with Form S-1 on April 11, 2019)
21.8		Articles of Incorporation US Natural Gas Corp WV dated July 6, 2010 (previously filed with Form S-1 on April 11, 2019)
21.9		Articles of Organization SLMI Options, LLC dated June 17, 2008 (previously filed with Form S-1 on April 11, 2019)
21.10		Articles of Organization 1720 RCMG, LLC dated July 22, 2019 (previously filed with Form 10-Q dated August 19, 2019)
21.11		Articles of Organization 5496 NRMF, LLC dated October 16, 2019 (previously filed with Form 8-K dated November 1, 2019)
21.12		Subsidiaries of the Registrant
Graphic		Corporate logo- Sylios Corp
31.1		Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith).
31.2		Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended (filed herewith).
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 17th day of March 2021.

 

	SYLIOS CORP
	(the “Registrant”)
	BY:	/s/ Jimmy Wayne Anderson
		Jimmy Wayne Anderson
		President, Chief Executive Officer and Director (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer)

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Name		Position		Date
/s/ Jimmy Wayne Anderson
Jimmy Wayne Anderson		President, Chief Executive Officer and Director (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer)		March 17, 2021