UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended March 31, 2021

 

or

 

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

 

For the transition period from _____________ to __________

 

Commission File Number: 000-53450

 

REMSLEEP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		47-5386867
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

 

2202 N. West Shore Blvd, Suite 200, Tampa. FL 33607

(Address of principal executive offices) (Zip Code)

 

813-367-3855

(Registrant’s telephone number, including area code)

 

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

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 ☒
Emerging growth company ☐

 

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

 

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

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of as of May 13, 2021, there were 501,218,704 shares of common stock outstanding.

 

 

 

TABLE OF CONTENTS

 

		Page No.
PART I. - FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Plan of Operations.	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	14
Item 4	Controls and Procedures.	14
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	15
Item 1A.	Risk Factors.	15
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	15
Item 3.	Defaults Upon Senior Securities.	15
Item 4.	Mine Safety Disclosures	15
Item 5.	Other Information.	15
Item 6.	Exhibits.	15
Signatures		16

 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

REMSLEEP HOLDINGS, INC.

 

Condensed Balance Sheets as of March 31, 2021 (unaudited) and December 31, 2020		2
Condensed Statements of Operations for the Three Months Ended March 31, 2021 and 2020 (unaudited)		3
Condensed Statements of Stockholders’ Deficit for the Three Months Ended March 31, 2021 and 2020 (unaudited)		4
Condensed Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020 (unaudited)		5
Notes to the Condensed Financial Statements (unaudited)		6

 

 

REMSLEEP HOLDINGS, INC.

CONDENSED BALANCE SHEETS

 

		March 31, 2021				December 31, 2020
ASSETS		(Unaudited)				(Audited)
Current assets:
Cash		$	158,873			$	114,227
Inventory			11,064				11,064
Total current assets			169,937				125,291
Other asset			10,000				10,000
Property and equipment, net			100,186				95,371
Total Assets		$	280,123			$	230,662
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable		$	33,542			$	20,235
Accrued compensation			40,000				35,000
Accrued interest			42,901				23,013
Accrued interest – related party			50,567				44,921
Convertible Notes, net of discount of $279,159 and $157,233, respectively			152,277				44,867
Derivative Liability			453,216				700,719
Loan payable – related party			179,191				179,191
Loans payable			52,345				53,212
Total Liabilities			1,004,039				1,101,158
Commitments and Contingencies			-				-
STOCKHOLDERS’ DEFICIT:
Series A preferred stock, $0.001 par value, 5,000,000 shares authorized, 4,000,000 and issued and outstanding			126,000				126,000
Series B preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued			500				500
Series C preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued			-				-
Common stock, $0.001 par value, 1,000,000,000 shares authorized, 443,049,571 and 368,063,606 shares issued and outstanding, respectively			443,047				368,061
Common stock to be issued			-
Additional paid in capital			5,743,945				5,200,885
Accumulated Deficit			(7,037,408	)			(6,565,942	)
TOTAL STOCKHOLDERS’ DEFICIT			(723,916	)			(870,496	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT		$	280,123			$	230,662

 

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

 

 

REMSLEEP HOLDINGS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

		For the Three Months Ended  March 31,
		2021				2020
Operating Expenses:
Professional fees		$	24,598			$	9,725
Compensation expense – related party			21,000				21,000
General and administrative			48,666				48,667
Total operating expenses			94,264				79,392
Loss from operations			(94,264	)			(79,392	)
Other expenses:
Interest expense			(166,573	)			(160,640	)
Default penalty of convertible note			(162,798	)			-
Loss on issuance of convertible debt			(442,979	)			(186,365	)
Change in fair value of derivative			395,148				152,875
Total other expense			(377,202	)			(194,130	)
Loss before income taxes			(471,466	)			(273,522	)
Provision for income taxes			-				-
Net Loss		$	(471,466	)		$	(273,522	)
Net loss per share, basic and diluted		$	(0.00	)		$	(0.00	)
Weighted average common shares outstanding, basic and diluted			406,969,823				149,584,188

 

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

 

 

REMSLEEP HOLDINGS, INC.

CONDENSED STATEMENT OF STOCKHOLDERS’ DEFICIT

FOR THE THREE MONTHS ENDED MARCH 31, 2020 and 2021

(UNAUDITED)

 

		Series A Preferred Shares				Series A Preferred Stock Amount				Common Shares				Common Stock Amount				Additional Paid-in Capital				Accumulated Deficit				Total
Balance, December 31, 2019			4,000,000			$	125,000				116,269,466			$	116,268			$	4,139,395			$	(5,390,490	)		$	(1,009,827	)
Common stock issued for conversion of debt			-				-				19,741,098				19,741				278,991				-				298,732
Warrants converted to common stock			-				-				36,769,439				36,769				(36,769	)			-				-
Warrant down round protection			-				-				-				-				3,349				(3,349	)			-
Net loss			-				-				-				-				-				(273,522	)			(273,522	)
Balance, March 31, 2020			4,000,000			$	125,000				172,780,003			$	172,778			$	4,384,966			$	(5,667,361	)		$	(984,617	)

 

		Series A Preferred Stock								Series B Preferred Stock								Common Stock								Additional Paid-in				Accumulated
		Shares				Amount				Shares				Amount				Shares				Amount				Capital				Deficit				Total
Balance, December 31, 2020			5,000,000			$	126,000				500,000			$	500				368,063,606			$	368,061			$	5,200,885			$	(6,565,942	)		$	(870,496	)
Common stock issued for conversion of debt			-				-				-				-				74,985,965				74,986				467,990				-				542,976
Warrants issued with convertible debt			-				-				-				-				-				-				75,070				-				75,070
Net Loss			-				-				-				-				-				-				-				(471,466	)			(471,466	)
Balance, March 31, 2021			5,000,000			$	126,000				500,000			$	500				443,049,571			$	443,047			$	5,743,945			$	(7,037,408	)		$	(723,916	)

 

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

 

 

REMSLEEP HOLDINGS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

		For the Three Months Ended March 31,
		2021				2020
Cash Flows from Operating Activities:
Net loss		$	(471,466	)		$	(273,522	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation expense			12,890				11,117
Change in fair value of derivative			(395,148	)			(152,875	)
Discount amortization			138,622				145,740
Loss on issuance of convertible debt			442,979				186,385
Default penalty of convertible note			162,798				-
Changes in Operating Assets and Liabilities
Prepaid expenses			-				7,909
Inventory			-				(1,039	)
Accounts payable			13,306				(16,520	)
Accrued officer compensation			5,000				(1,000	)
Accrued interest			22,191				10,570
Accrued interest – related party			5,646				5,646
Net cash used in operating activities			(63,182	)			(77,589	)
Cash Flows from Investing Activities:
Purchase of equipment			(17,705	)			(7,500	)
Net Cash used in investing activities			(17,705	)			(7,500	)
Cash Flows from Financing Activities:
Repayment of loans			(867	)			(818	)
Proceeds from convertible notes payable			126,400				220,000
Net cash provided by financing activities			125,533				219,182
Net change in cash			44,646				134,093
Cash at beginning of the period			114,227				119,574
Cash at end of the period		$	158,873			$	253,667
Supplemental cash flow information:
Interest paid in cash		$	114			$	-
Taxes paid		$	-			$	-
Supplemental non-cash disclosure:
Common stock issued for conversion of debt		$	86,915			$	82,233

 

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

 

 

REMSLEEP HOLDINGS, INC.

 

NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 2021
(Unaudited)

 

NOTE 1 - BACKGROUND

 

Business Activity

 

REMSleep Holdings, Inc., (the “Company”) was incorporated in the State of Nevada on June 6, 2007. On January 5, 2015 the name of the Company was changed to REMSleep Holdings, Inc. and the business model was changed to reflect the new direction of the Company; to develop and distribute products to help people affected by sleep apnea. On May 30, 2015 REMSleep LLC was formally merged into REMSleep Holdings, Inc.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

These unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). These financial statements and the notes attached hereto should be read in conjunction with the financial statements and notes included in the Company’s 10-K for its fiscal year ended December 31, 2020. In the opinion of the Company, all adjustments, including normal recurring adjustments necessary to present fairly the financial position of the Company, as of March 31, 2021 and the results of its operations and cash flows for the three months then ended have been included. The results of operations for the interim period are not necessarily indicative of the results for the full year ending December 31, 2021.

 

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 at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

Fair Value of Financial Instruments

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.  The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1:	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2:	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3:	Pricing inputs that are generally unobservable inputs and not corroborated by market data.

 

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.

 

 

The following table classifies the Company’s liabilities measured at fair value on a recurring basis into the fair value hierarchy as of March 31, 2021 and December 31, 2020:

 

March 31, 2021:

 

Description		Level 1				Level 2			Level 3				Total Gains
Derivative		$	-			$	-		$	453,216			$	395,148
Total		$	-			$	-		$	453,216			$	395,148

 

December 31, 2020:

 

Description		Level 1				Level 2			Level 3				Total Gains
Derivative		$	-			$	-		$	700,719			$	79,677
Total		$	-			$	-		$	700,719			$	79,677

 

Basic and Diluted Earnings Per Share

 

Net income (loss) per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification.  Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock and potentially outstanding shares of common stock during the period. The weighted average number of common shares outstanding and potentially outstanding common shares assumes that the Company incorporated as of the beginning of the first period presented. 

 

As of March 31, 2021, the Company had approximately 73,121,000 of potentially dilutive shares of common stock from convertible debt and 170,974,026 potentially dilutive shares of common stock warrants.

 

As of March 31, 2020, the Company had approximately 114,812,000 of potentially dilutive shares of common stock from convertible debt and 19,561,039 potentially dilutive shares of common stock warrants.

 

The Company’s diluted loss per share is the same as the basic loss per share for all periods, as the inclusion of any potential shares would have had an anti-dilutive effect due to the Company generating a loss in those periods.

 

Recently Adopted Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect.  These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

NOTE 3 - GOING CONCERN

 

The accompanying unaudited 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 Company has an accumulated deficit of $7,037,408 at March 31, 2021, had a net loss of $471,466 and net cash used in operating activities of $63,182 for the three months ended March 31, 2021. The Company’s ability to raise additional capital through the future issuances of common stock and/or debt financing is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. These conditions and the ability to successfully resolve these factors over the next twelve months raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

The Company is in the final stages of product development and plans to begin selling its product in 2021. The Company will continue to finance its operations through debt and/or equity financing as needed.

 

The industry in which we operate depends heavily upon our ability to obtain raw material and manufacture our product as well as the overall level of consumer and business spending. A sustained deterioration in general economic conditions (including distress in financial markets, turmoil in specific economies around the world, public health crises, and additional government intervention), particularly in the United States, may have a negative financial impact to our Company. Adverse conditions as a result of the global COVID-19 outbreak, will and may continue to impact our manufacturing processes and ultimately our ability to sell our product.

 

 

NOTE 4 - PROPERTY & EQUIPMENT

 

Long lived assets, including property and equipment and certain intangible assets to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Impairment losses are recognized if expected future cash flows of the related assets are less than their carrying values. Measurement of an impairment loss is based on the fair value of the asset. Long-lived assets and certain identifiable intangibles to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

 

Property and Equipment and intangible assets are first recorded at cost. Depreciation and/or amortization is computed using the straight-line method over the estimated useful lives of the various classes of assets as follows between three and five years.

 

Maintenance and repair expenses, as incurred, are charged to expense. Betterments and renewals are capitalized in plant and equipment accounts. Cost and accumulated depreciation applicable to items replaced or retired are eliminated from the related accounts with any gain or loss on the disposition included as income.

 

Assets stated at cost, less accumulated depreciation consisted of the following:

 

		March 31, 2021				December 31, 2020
Furniture/fixtures		$	14,904			$	14,904
Office equipment			7,136				7,136
Automobile			17,189				17,189
Tooling/Molds			159,490				141,785
Less: accumulated depreciation			(98,533	)			(85,643	)
Fixed assets, net		$	100,186			$	95,371

 

Depreciation expense

 

Depreciation expense for the three months ended March 31, 2021 and 2020 was $12,890 and $11,117, respectively.

 

NOTE 5 - LOANS PAYABLE

 

On October 24, 2017, the Company was notified that a petition had been filed in the Iowa District Court for Polk County by a Mr. John M. Wesson for failure to repay a loan. Mr. Wesson had loaned the Company $30,000 and $20,000 on October 24, 2012 and June 12, 2013, respectively. The loans were to accrue interest at 5%. On April 26, 2018, the Company agreed to repay the loan in full including accrued interest and $5,000 for legal fees. As of March 31, 2021, there is $45,000 and $19,896 of principal and interest due on this loan. As of December 31, 2020, there is $45,000 and $19,355 of principal and interest due on this loan.

 

On March 23, 2018, the Company purchased an automobile. The purchase price was $16,963.46. The interest rate on the loan is 5.8% and matures on April 7, 2023. Payments on the loan, consisting of principal and interest, are $327 per month. As of March 31, 2021 and December 31, 2020 there is $7,345 and $8,212, respectively, due on this loan.

 

 

NOTE 6 - CONVERTIBLE NOTES

 

The following table summarizes the convertible notes and related activity as of March 31, 2021:

 

Note Holder		Date		Maturity Date		Interest				Balance December 31, 2020				Additions				Conversions/ Repayments				Balance March 31, 2021
Diamond Investments II LLC		8/28/2020		8/28/2021			8	%			110,250				-				(55,125	)			55,125
Power Up Lending Group LTD		12/18/2020		12/18/2021			10	%			91,850				-				-				91,850
Granite Global Investments Ltd		10/26/2020		11/6/2021			24.5	%			-				162,798				(29,487	)			133,311
Granite Global Investments Ltd		1/6/2021		6/6/2021			12	%			-				31,000				-				31,000
Granite Global Investments Ltd		1/30/2021		6/6/2021			12	%			-				36,000				-				36,000
Power Up Lending Group LTD		2/22/2021		2/22/2022			10	%			-				84,150				-				84,150
							Total			$	202,100			$	313,948			$	(84,612	)		$	431,436
				Less debt discount							(157,233	)											(279,159	)
										$	44,867											$	152,277

 

A summary of the activity of the derivative liability for the notes above is as follows:

 

Balance at December 31, 2019		$	626,831
Increase to derivative due to new issuances			808,643
Decrease to derivative due to conversion/repayments			(897,519	)
Derivative loss due to mark to market adjustment			162,764
Balance at December 31, 2020			700,719
Increase to derivative due to new issuances			603,737
Decrease to derivative due to conversion/repayments			(456,092	)
Derivative loss due to mark to market adjustment			(395,148	)
Balance at March 31, 2021		$	453,216

 

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy as of March 31, 2021 is as follows:

 

Inputs		March 31, 2021				Initial Valuation
Stock price		$	.009			$	.0018 - .003
Conversion price		$	.0036 - .0057			$	.002 - .0057
Volatility (annual)			169.93 – 233.34	%			203.69% - 233.34	%
Risk-free rate			.05% - .06	%			.07% - .09	%
Dividend rate			-				-
Years to maturity			.41 – .90				.83 - 1

 

A summary of quantitative information about significant unobservable inputs (Level 3 inputs) used in measuring the Company’s derivative liability that are categorized within Level 3 of the fair value hierarchy at the time of conversion is as follows:

 

Inputs
Stock price		$	.0036 - .0059
Conversion price		$	.0026 - .0031
Volatility (annual)			206.91% – 256.65	%
Risk-free rate			.11% - .12	%
Dividend rate			-
Years to maturity			.47 - .96

 

The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s management. 

 

 

NOTE 7 - RELATED PARTY TRANSACTIONS

 

The Company has received support from parties related through common ownership and directorship. These loans are unsecured, and due on demand. As of March 31, 2021 and December 31, 2020, the balance due on these loans is $179,191 and $179,191, respectively. Beginning on January 1, 2019, the balance due accrues interest at 12.5%. As of March 31, 2021, total accrued interest is $44,921.

 

The Company executed a new employment agreement with Mr. Wood on April 1, 2019. Per the terms of the agreement Mr. Wood is to be compensated $4,000 per month. The agreement expired on April 1, 2020 and has been renewed for two more years. As of March 31, 2021 and December 31, 2020, there is $0 and $2,000 of accrued compensation, respectively, due to Mr. Wood.

 

The Company executed an employment agreement with its Chairman, Russell Bird, on January 1, 2019. Per the terms of the agreement, which is effective for one year, Mr. Bird is to be compensated $3,000 per month. As of March 31, 2021 and December 31, 2020, there is $40,000 and $33,000 of accrued compensation, respectively, due to Mr. Bird. Mr. Bird’s employment agreement has been renewed in 2020 for two more years.

 

NOTE 8 - COMMON STOCK

 

During the three months ended March 31, 2021, Diamond Investments converted $55,125 of principal and $2,303 of interest, into 17,091,667 shares of common stock.

 

During the three months ended March 31, 2021, Granite Global Value converted $29,487 of principal into 57,894,298 shares of common stock.

 

NOTE 9 - PREFERRED STOCK

 

The Company is currently authorized to issue 5,000,000 shares of Series A Preferred Stock, par value $0.001 per share value with 1:25 voting rights. The Series A Preferred Stock ranks equal to the common stock on liquidation, pays no dividend and is convertible to common stock for one share of common for one share of Series A Preferred Stock.

 

The Company is currently authorized to issue 5,000,000 shares of Series B Preferred Stock, par value $0.001 per share. Each share of Series B Preferred Stock has a 1:100 voting right and is convertible into 100 shares of common stock. No dividends will be paid and in the event of liquidation all shares of Series B will automatically convert into common stock. There are no shares of Series B Preferred Stock issued and outstanding.

 

The Company is currently authorized to issue 5,000,000 shares of Series C Preferred Stock, par value $0.001 per share value. Each share of Series C Preferred Stock has a 1:50 voting right and is convertible into 50 shares of common stock. No dividends will be paid and in the event of liquidation all shares of Series C will automatically convert into common stock. There are no shares of Series C Preferred Stock issued and outstanding.

 

NOTE 10 - WARRANTS

 

On January 6, 2021, the Company issued 35,000,000 warrants to Granite Global Investments Ltd in conjunction with convertible debt. The warrants are exercisable for 5 years at $.006 per share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would require a liability classification and are therefore considered equity. The Black Scholes pricing model was used to estimate the fair value of the Warrants issued with the following inputs:

 

Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $24,440, accounted for in additional paid in capital.

 

Warrants			35,000,000
Share price		$	0.0033
Exercise Price		$	0.006
Term			5 years
Volatility			353	%
Risk Free Interest Rate			.43	%
Dividend rate			-

 

 

On January 30, 2021, the Company issued 120,000,000 warrants to Granite Global Investments Ltd in conjunction with convertible debt. The warrants are exercisable for 5 years at $.0003 per share. The warrants were evaluated for purposes of classification between liability and equity. The warrants do not contain features that would require a liability classification and are therefore considered equity. The Black Scholes pricing model was used to estimate the fair value of the Warrants issued with the following inputs:

 

Using the fair value calculation, the relative fair value between the debt issued and the warrants was calculated to determine the warrants recorded equity amount of $33,652, accounted for in additional paid in capital.

 

The Black Scholes pricing model was used to estimate the fair value of the Warrants issued with the following inputs:

 

Warrants			120,000,000
Share price		$	0.0043
Exercise Price		$	0.0003
Term			5 years
Volatility			352	%
Risk Free Interest Rate			0.45	%
Dividend rate			-

 

A summary of the status of the Company’s outstanding stock warrants and changes during the year is presented below:

 

		Number of Warrants				Weighted Average Exercise Price				Weighted Average Remaining Contract Term				Aggregate Intrinsic Value
Outstanding at December 31, 2019			3,000,000			$	0.07				2.59			$	-
Granted			63,236,369			$	0.00385				2.56			$	-
Expired			-			$	-				-			$	-
Exercised			(50,262,343	)		$	0.00385				-			$	-
Exercisable at December 31, 2020			15,974,026			$	0.00385				2.06			$	-
Granted			155,000,000			$	0.002				4.82			$	-
Expired			-			$	-				-			$	-
Exercised			-			$	-				-			$	-
Exercisable at March 31, 2021			170,974,026			$	0.002				4.54			$	-

 

Range of Exercise Prices		Number Outstanding 3/31/2021		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price
$0.0003 - $0.07		170,974,026		4.54 years		$0.01

 

The aggregate intrinsic value represents the total pretax intrinsic value, based on warrants with an exercise price less than the Company’s stock price as of March 31, 2021, which would have been received by the warrant holder had the warrant holder exercised their warrants as of that date.

 

NOTE 11 - SUBSEQUENT EVENTS

 

In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements other than the following.

 

Subsequent to March 31, 2021, Granite Global Value converted $12,068 of principal, into 22,108,173 shares of common stock.

 

Subsequent to March 31, 2021, Diamond Investments converted $55,125 of principal and $2,756 of interest into 12,862,500 shares of common stock.

 

Subsequent to March 31, 2021, Jefferson Street Capital LLC converted warrants into 20,529,196 shares of common stock.

 

Subsequent to March 31, 2021, BHP Capital NY Inc. converted warrants into 2,669,264 shares of common stock.

 

Subsequent to March 31, 2021, the Company received $125,000 from PowerUp Lending from a newly issued convertible note.

 

Subsequent to March 31, 2021, the Company received $85,500 from Granite Global Value from a newly issued convertible note.

 

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

 

Forward-looking Statements

 

There are “forward-looking statements” contained in this quarterly report. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “may,” “should,” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this quarterly report to conform forward-looking statements to actual results. Important factors on which such statements are based are assumptions concerning uncertainties, including but not limited to, uncertainties associated with the following:

 

	●	Inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement our business plans;
	●	Our failure to earn revenues or profits;
	●	Inadequate capital to continue business;
	●	Volatility or decline of our stock price;
	●	Potential fluctuation in quarterly results;
	●	Rapid and significant changes in markets;
	●	Litigation with or legal claims and allegations by outside parties; and
	●	Insufficient revenues to cover operating costs.

 

The following discussion should be read in conjunction with the financial statements and the notes thereto which are included in this quarterly report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially from those anticipated in any forward-looking statements included in this discussion as a result of various factors.

 

Overview

 

We were incorporated in the State of Nevada on June 6, 2007. On August 26, 2010, we changed our name from Bella Viaggio, Inc. to Kat Gold Holdings Corp. Effective January 1, 2015, we completed an exchange agreement to purchase 100% of the outstanding interests of RemSleep LLC in exchange for 50,000,000 shares of common stock of RemSleep Holdings, Inc. at which time RemSleep LLC became our wholly-owned subsidiary and we adopted their business of developing and distributing sleep apnea products. On January 5, 2015, we changed our name to REMSleep Holdings, Inc. to reflect our new business model.

 

Our officers have 35 years of sleep-industry experience, including having been employed at sleep industry companies. Our officers invented our DeltaWave CPAP interface (the “DeltaWave”) as an innovative new device to treat patients with sleep apnea. The patent-pending DeltaWave product is a nasal-pillows type interface that will result in better comfort and, therefore, better compliance since it was specifically designed with unique airflow characteristics to enable patients with sleep apnea to breathe normally. A survey that appeared in DME Business found that 89% of patients stated that mask-interface comfort was their primary concern. The primary issue that we have addressed with the DeltaWave is the “work of breathing” component. We believe that our DeltaWave is designed to effectively address the stubborn issues that continue to affect a patient’s ability to comply with treatment, as follows:

 

	●	Does not disrupt normal breathing mechanics;
	●	Is not claustrophobic;
	●	Causes zero work of breathing (WOB);
	●	Minimizes or eliminates drying of the sinuses;
	●	Uses less driving pressure; and
	●	Allows users to feel safe and secure while sleeping.

 

Pending adequate financing, we plan to conduct clinical trials to test product effectiveness.

 

On June 28, 2016, we applied for a patent for a new, innovative sleep apnea product that serves as an interface for the delivery of CPAP therapy and other respiratory needs. Our goal is to develop sleep products that achieve optimum compliance and comfort for CPAP patients.

 

 

Our website is located at: http://www.remsleeptech.com. The contents of our website are not incorporated by reference into this report.

 

On January 30, 2020, the World Health Organization declared the COVID-19 (coronavirus) outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. The virus and actions taken to mitigate its spread have had and are expected to continue to have a broad adverse impact on the economies and financial markets of many countries, including the geographical areas in which the Company operates. The Company continues to execute its business plan. At the present time, the Company can not predict the full impact of the COVID-19 virus on its business. Our projections on spending, product development and milestone achievements are likely to be further revised as new information is obtained.

 

Results of Operations

 

The three months ended March 31, 2021 compared to the three months ended March 31, 2021

 

We have not generated any revenue to date.

 

Professional fees were $24,598 compared to $9,725 for the three months ended March 31, 2021 and 2020, respectively, an increase of $14,873, or 152.9%. Professional fees consist mostly of accounting, audit and legal fees. The increase is attributed to an increase in both audit and legal fees during the period.

 

Compensation expense was $21,000 and $21,000 for the three months ended March 31, 2021 and 2020, respectively.

 

General and administrative expense (“G&A”) was $48,666 and $48,667 for the three months ended March 31, 2021 and 2020, respectively.

 

Total other expense for the three months ended March 31, 2021, was $377,202. Other expense includes a gain in the change of fair value of $395,148, a loss on the issuance of convertible debt of $442,979, a penalty for default on convertible debt of $162,798 and interest expense of $166,573 (includes $138,622 amortization of debt discount). In the prior period we had total other expense of $194,130 which included a gain in the change of fair value of $152,875, a loss on the issuance of convertible debt of $186,365 and $160,640 of interest expense (includes $145,740 amortization of debt discount).

 

Net Loss

 

For the three months ended March 31, 2021, we had a net loss of $471,466 as compared to a net loss of $273,522 for the three months ended March 31, 2020. The increase in net loss can be attributed to our increase in other expense.

 

Liquidity and Capital Resources

 

Cash flow from operations

 

Cash used in operating activities for the three months ended March 31, 2021 was $63,182 as compared to $77,589 of cash used in operating activities for the three months ended March 31, 2020.

 

Cash Flows from Investing

 

Cash used in investing activities for the purchase of equipment and tooling for the three months ended March 31, 2021 was $17,705 as compared to $7,500 of cash used in investing activities for the three months ended March 31, 2020.

 

Cash Flows from Financing

 

For the three months ended March 31, 2021, we received $126,400 from the issuance of convertible debt. We also repaid $867 on our auto loan. For the three months ended March 31, 2020, we received $220,000 from convertible debt loans and repaid $818 on our auto loan.

 

As of March 31, 2021, we owe $431,436 to our convertible note holders.

 

Going Concern

 

As of March 31, 2021, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our proposed business.

 

We have suffered recurring losses from operations since our inception. In addition, we have yet to generate an internal cash flow from our business operations or successfully raised the financing required to develop our proposed business. As a result of these and other factors, our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Our future success and viability, therefore, are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital may have a material and adverse effect upon us and our shareholders.

 

 

Management’s plans with regard to these matters encompass the following actions: (i) obtaining funding from new investors to alleviate our working capital deficiency, and (ii) implementing a plan to generate sales. Our continued existence is dependent upon our ability to resolve our liquidity problems and increase profitability in our current business operations. However, the outcome of management’s plans cannot be ascertained with any degree of certainty. Our financial statements do not include any adjustments that might result from the outcome of these risks and uncertainties.

 

The industry in which we operate depends heavily upon our ability to obtain raw material and manufacture our product as well as the overall level of consumer and business spending. A sustained deterioration in general economic conditions (including distress in financial markets, turmoil in specific economies around the world, public health crises, and additional government intervention), particularly in the United States, may have a negative financial impact to our Company. Adverse conditions as a result of the global COVID-19 outbreak, will and may continue to impact our manufacturing processes and ultimately our ability to sell our product.

 

Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

 

Critical Accounting Policies

 

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 the disclosure of contingent assets and liabilities of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Note 2 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial Statements. Estimates are used for, but not limited to, contingencies and taxes.  Actual results could differ materially from those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates used in the preparation of the Financial Statements.

 

We are subject to various loss contingencies arising in the ordinary course of business.  We consider the likelihood of loss or impairment of an asset or the incurrence of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies.  An estimated loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been incurred and the amount of the loss can be reasonably estimated.  We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

 

We recognize deferred tax assets (future tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.  The deferred tax assets and liabilities represent the expected future tax return consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered or settled.  Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine that it is more likely than not that this deferred tax asset will be realized.

 

Recent Accounting Pronouncements

 

We have reviewed other recently issued accounting pronouncements and plan to adopt those that are applicable to us. We do not expect the adoption of any other pronouncements to have an impact on our results of operations or financial position.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

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

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Each of our principal executive and principal financial officer has evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a - 15(e) and 15d - 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on their evaluation, each such person concluded that our disclosure controls and procedures were not effective as of March 31, 2021 due to a lack of segregation of duties.

 

In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, 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.

 

Changes in Internal Control over Financial Reporting.

 

Our management has evaluated whether any change in our internal control over financial reporting occurred during the last fiscal quarter. Based on that evaluation, management concluded that there has been no change in our internal control over financial reporting during the relevant period that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None

 

ITEM 1A. RISK FACTORS

 

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

 

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

 

During the three months ended March 31, 2021, Diamond Investments converted $55,125 of principal and $2,303 of interest, into 17,091,667 shares of common stock.

 

During the three months ended March 31, 2021, Granite Global Value converted $29,487 of principal into 57,894,298 shares of common stock.

 

For each of the above-referenced issuances, the Company relied upon the exemption from the registration requirements of the Securities Act of 1933, as amended, provided by Section 4(a)(2) promulgated thereunder due to the fact that each was an isolated issuance to an accredited investor and did not involve a public offering of securities.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable

 

ITEM 5. OTHER INFORMATION

 

None

 

ITEM 6. EXHIBITS

 

(a) Documents furnished as exhibits hereto:

 

Exhibit No.		Description
31.1		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Label Linkbase Document
101.PRE		XBRL Taxonomy Presentation Linkbase Document

 

 

SIGNATURES

 

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

 

	REMSLEEP HOLDINGS, INC.
Date: May 17, 2021	By:	/s/ Thomas J. Wood
		Thomas J. Wood
		Chief Executive Officer and Director (Principal Executive Officer) (Principal Financial and Accounting Officer)

 

 

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