NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020 AND 2019
(unaudited)
Note 1. Organization and Basis of Preparation
United Health Products, Inc. (“United” or the “Company”) is a product development and solutions company focusing its growth initiatives on the expanding wound-care industry and disposable medical supplies markets. The Company produces an innovative gauze product that absorbs exudate (fluids which have been discharged from blood vessels) by forming a gel-like substance upon contact.
The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on July 9, 2020.
In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of financial statements for the interim period, have been included.
Note 2. Significant Accounting Policies
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred recurring net losses, negative working capital and operations have not provided cash flows. Additionally, the Company does not currently have sufficient revenue producing operations to cover its operating expenses and meet its current obligations. In view of these matters, there is substantial doubt about the Company’s ability to continue as a going concern. The Company intends on financing its future development activities and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
The Chief Executive Officer has agreed to advance funds or make payments of the Company’s obligations at his discretion. There is no written agreement to continue this support.
On March 11, 2020, the World Health Organization declared the outbreak of a coronavirus (COVID-19) as a pandemic. As a result, economic uncertainties have arisen which have the potential to negatively impact the Company’s ability to raise funding from the markets. Other financial impact could occur though such potential impact is unknown at this time.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires the Company’s 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 income and expenses during the reported period. Changes in the economic environment, financial markets, as well as in the healthcare industry, and any other parameters used in determining these estimates, could cause actual results to differ.
Revenue Recognition
The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sale of its HemoStyp product by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
The Company receives orders for its HemoStyp products directly from its customers. Revenues are recognized based on the agreed upon sales or transaction price with the customer when control of the promised goods are transferred to the customer. The transfer of goods to the customer and satisfaction of the Company’s performance obligation will occur either at the time when products are shipped or when the products arrive and are received by the customer. No discounts were offered by the Company. The Company does not provide an estimate for returns as there is no anticipation for any returns in the normal course of business.
Trade Accounts Receivable and Concentration Risk
We record accounts receivable at the invoiced amount and we do not charge interest. We review the accounts receivable by amounts due from customers which are past due, to identify specific customers with known disputes or collectability issues. In determining the amount of the reserve, we make judgments about the creditworthiness of significant customers based on ongoing credit evaluations. We will also maintain a sales allowance to reserve for potential credits issued to customers. We will determine the amount of the reserve based on historical credits issued.
There was no provision for doubtful accounts recorded at September 30, 2020 and December 31, 2019. The Company recorded $0 and $0 in bad debt expense for the nine month periods ended September 30, 2020 and 2019, respectively.
Inventory
Inventory is valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. Inventory on the balance sheet consists of raw materials purchased by the Company and finished goods.
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Raw materials
|
|
$
|
54,774
|
|
|
$
|
54,774
|
|
Finished goods
|
|
|
21,880
|
|
|
|
22,074
|
|
|
|
$
|
76,654
|
|
|
$
|
76,848
|
|
During the nine months ended September 30, 2020 and 2019, the Company determined $0 and $0, respectively, of inventory should be impaired and written-off to cost of goods sold.
Stock Based Compensation
The Company accounts for share-based compensation under the provisions of ASC 718, Compensation-Stock Compensation. Under the fair value recognition provisions, stock-based compensation expense is measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measured. Share-based compensation for all stock-based awards to employees and directors is recognized as an expense over the requisite service period, which is generally the vesting period.
The Company accounts for stock compensation arrangements with non-employees in accordance with Accounting Standard Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which requires that such equity instruments are recorded at the value on the grant date.
Per Share Information
Basic earnings per share are calculated using the weighted average number of common shares outstanding for the period presented. Diluted earnings per share is computed using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. The dilutive effect of potential common shares is not reflected in diluted earnings per share because the Company incurred a net loss for the nine months ended September 30, 2020 and 2019 and the effect of including these potential common shares in the net loss per share calculations would be anti-dilutive.
The total potential common shares as of September 30, 2020 includes 47,755,000 of restricted stock units, 535,000 shares for convertible loans payable – related party and 880,000 shares for convertible loans payable. The total potential common shares as of September 30, 2019 included 50,350,000 of restricted stock units and 94,494 for convertible loans payable – related party.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed on the straight-line method. The depreciation and amortization methods are designed to amortize the cost of the assets over their estimated useful lives, in years, of the respective assets as follows:
Maintenance and repairs are charged to expense as incurred. Improvements of a major nature are capitalized. At the time of retirement or other disposition of property and equipment, the cost and accumulated depreciation are removed from the accounts and any gains or losses are reflected in income.
New Accounting Pronouncements
The Company considers all new pronouncements and management has determined that there have been no other recently adopted or issued accounting standards that had or will have a material impact on its financial statements.
Note 3. Related Party Transactions
Related party loans and related party convertible loans payables
As of September 30, 2020 and December 31, 2019, convertible loans payable – related party totaled $240,140 and $365,785, respectively. The amount of $365,785 as of December 31, 2019 was owed to Doug Beplate, our Chief Executive Officer and convertible at $0.65 per share, at the sole discretion of Mr. Beplate.
During the nine months ended September 30, 2020, Mr. Beplate loaned the Company $227,730 which were convertible at $0.65. These loans resulted in a beneficial conversion feature of $59,987 which was recorded to interest expense – related party upon issuance. The Company made repayments to Mr. Beplate totaling $505,762 during the nine months ended September 30, 2020, leaving a balance of $87,753 owed to Mr. Beplate as of September 30, 2020. These loans were for operating expenses of the Company, due on demand and have no interest rate.
During the nine months ended September 30, 2020, Louis Schiliro, the Chief Operating Officer loaned the Company $110,000. The loan is convertible at $0.50 per share at the discretion of Mr. Schiliro, has a maturity date of December 31, 2020 and has an interest rate of 3%.
During the nine months ended September 30, 2020, Mr. Schiliro, also converted $90,000 of accrued compensation into a convertible loan. The loan is convertible at $0.50 per share at the discretion of Mr. Schiliro, has a maturity date of March 31, 2021 and has an interest rate of 3%.
These loans resulted in a beneficial conversion feature totaling $88,385 which was recorded as a debt discount. The debt discount is being amortized through the maturity dates and $40,774 was amortized to interest expense – related party during the nine months ended September 30, 2020. The remaining unamortized debt discount is $47,611. As of September 30, 2020, Mr. Schiliro is owed $200,000 and the balance on the loan net of the debt discount is $152,389. Interest expense was $1,495 during the nine months ended September 30, 2020 and the entire amount has been accrued.
Accrued liabilities
As of September 30, 2020 and December 31, 2019, $68,395 and $77,130 was owed to Mr. Beplate, respectively, for accrued compensation. During the nine months ended September 30, 2020 $188,375 was paid to Mr. Beplate.
As of September 30, 2020 and December 31, 2019, $56,600 and $24,100 was owed to Nate Knight, the Chief Financial Officer, for accrued compensation, respectively. During the nine months ended September 30, 2020 $32,500 of compensation was accrued and $12,500 was paid. As of September 30, 2020 and December 31, 2019, Mr. Knight was owed $7,456 for reimbursable expenses.
As of September 30, 2020 and December 31, 2019, $15,000 and $0 was owed to Louis Schiliro, the Chief Operating Officer, for accrued compensation, respectively. During the nine months ended September 30, 2020 $15,000 of compensation was accrued, $30,000 was paid and $90,000 was converted into a convertible loan as mentioned above. As of September 30, 2020 and December 31, 2019, Mr. Schiliro was owed $18,243 and $0 for reimbursable expenses, respectively.
As of September 30, 2020 and December 31, 2019, $5,000 and $0 was owed to the office administrator, who is a person affiliated with the Company’s CEO, for accrued compensation, respectively. During the nine months ended September 30, 2020 $5,000 of compensation was accrued and $40,000 was paid. As of September 30, 2020 and December 31, 2019, $1,932 and $10,330 was also owed for reimbursable expenses, respectively.
Equity transactions
On July 21, 2020 the Board of Directors approved amendments to the previously granted restricted stock units (RSU) on March 25, 2019. The approved amendments increased the amount of RSU’s granted to Mr. Beplate from 33,000,000 to 33,800,000, increased the amount of RSU’s granted to Mr. Schiliro from 8,000,000 to 10,000,000, increased the amount of RSU’s granted to the office administrator, who is a person affiliated with the Company’s CEO from 250,000 to 500,000 and increased the amount of RSU’s granted to the Technical Product Supervisor, who is the son of the office administrator.
The amendment also changed the vesting conditions so now 15% of RSU units vested on July 15, 2020, an additional 15% of RSU units upon FDA approval of a PMA Class III awarded to the Company, an additional 20% of RSU units on January 1, 2021 and the balance of all unvested RSU units on the earliest date that (a) the Company achieves $20 million in gross cumulative sales commencing as of January 1, 2020, (b) a Covered Transaction is consummated or (c) a Trigger Event occurs. The Grantee has the option to delay the Vesting Date of all or part of his RSU Units until no later than an event described in (a), (b) or (c) above, by serving written notice to the Company prior to the Vesting Date. and delivered to such persons upon the earlier of (i) a change in control of the Company by a cash tender offer, merger, acquisition or otherwise or (ii) the Company achieving gross revenues of $20,000,000 in gross revenues on a go forward basis, or (iii) the commencement of an event by a third party without the Board’s approval to effect, or seek to effect, a change in control of the Company or the Company’s management.
The change in vesting terms resulted in a total of 6,720,000 of the RSU’s vesting on July 15, 2020 with 5,070,00 being issued to Mr. Beplate, 1,500,000 being issued to Mr. Schiliro, 75,000 being issued to the office administrator, who is a person affiliated with the Company’s CEO and 75,000 being issued to the Technical Product Supervisor, who is the son of the office administrator. The change in vesting terms also resulted in a total of 50,000 of the RSU’s vesting on July 20, 2020 with 50,000 being issued to the Marketing and Advertising Supervisor, who is the daughter of the office administrator. The vesting of the 6,770,000 RSU’s resulted in stock-based compensation expense of $4,806,700 which is the fair value of the stock on the vesting date.
Note 4. Convertible Loans
During the nine months ended September 30, 2020, a consultant loaned the Company $325,000. The loan is convertible at $0.50 per share at the discretion of the consultant, has a maturity date of March 31, 2021 and has an interest rate of 3%.
During the nine months ended September 30, 2020, a consultant and a medical advisor converted $115,000 of accrued compensation into convertible loans. The loans are convertible at $0.50 per share at the discretion of the note holders, have a maturity date of March 31, 2021 and have an interest rate of 3%.
These loans resulted in a beneficial conversion feature totaling $174,495 which was recorded as a debt discount. The debt discount is being amortized through the maturity dates and $57,350 was amortized to interest expense during the nine months ended September 30, 2020. The remaining unamortized debt discount is $117,145. As of September 30, 2020, the convertible loans have a principal balance of $440,000 and the balance on the loans net of the debt discount is $322,855. Interest expense was $3,144 during the nine months ended September 30, 2020 and the entire amount has been accrued.
Note 5. Prepaid and Other Current Assets
The Company had a balance of $10,000 and $0 as of September 30, 2020 and December 31, 2019, respectively. During the nine months ended September 30, 2020, the Company paid $10,000 as a security deposit on a lease for office and warehouse space.
Note 6. Property and Equipment
As of September 30, 2020 and December 31, 2019, the balance of property and equipment represented consisted of the followings:
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Equipment (not placed in service)
|
|
$
|
92,089
|
|
|
$
|
-
|
|
Accumulated depreciation
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
92,089
|
|
|
$
|
-
|
|
Depreciation expense for the nine months ended September 30, 2020 and 2019 was $0 and $0, respectively.
During the nine months ended September 30, 2020 and 2019, the Company acquired property and equipment of $92,089 and $0, respectively.
Note 7. Issuances of Securities
Share issuances 2019
During the nine months ended September 30, 2019, 1,435,769 shares of common stock were sold to non-affiliated investors in a private placement for total cash proceeds of $910,750, 400,000 shares of common stock were sold to securities counsel for total cash proceeds of $200,000, 200,000 shares of common stock were issued to securities counsel for services rendered with a fair value of $190,000, 100,000 shares of common stock were issued to each of two directors for services rendered with a fair value of $190,000 and 410,000 shares of common stock were issued to the Company’s CEO for conversion of notes payable and accrued liabilities totaling $205,000.
During the nine months ended September 30, 2019, 2,150,000 shares that were held in escrow originally were to vest upon a change of control of the Company were modified by the Board of Directors and deemed vested. The modification resulted in recording $2,021,000 of stock-based compensation expense which was the fair value of the shares on the date of the modification.
Share issuances 2020
During the nine months ended September 30, 2020, 1,975,500 shares of common stock were sold to non-affiliated investors in a private placement for total cash proceeds of $1,105,696, 50,000 shares of common stock were issued to a former medical advisor for services rendered with a fair value of $47,500, 425,000 shares of common stock were issued to consultants for services rendered with a fair value of $301,875 and 22,381 shares of common stock were cancelled.
Restricted stock units
As discussed in Note 3, the Board of Directors approved amendments to the previously granted restricted stock units (RSU) on March 25, 2019 for certain management and consultants to the Company. The amendments increased the total amount of RSU’s granted from 50,350,000 to 55,350,000. The amendments also changed the vesting conditions which resulted in 7,545,000 of the RSU’s vesting on July 15, 2020 and 50,000 of the RSU’s vesting on July 20, 2020. Per ASC 718-20-35, the change in vesting conditions resulted in a modification of the stock-based compensation awards. The modification is considered a Type III modification as described in ASC 718-20-55 and resulted in recording $5,392,450 of stock-based compensation expense which was the fair value of the shares on the date of the modification.
In addition, the amendment will result in 10,060,000 of the RSU’s vesting on January 1, 2021. The fair value of these RSU’s on the date of the amendment was $7,142,600. The compensation expense is being amortized on a straight-line basis from the date of the amendment through January 1, 2021 which is the vesting date. Stock-based compensation of $3,092,222 was recognized as expense during the nine months ended September 30, 2020 leaving total unrecognized compensation cost of $4,050,378.
Management is unable to determine when FDA approval of a PMA Class III will be awarded to the Company or when a change of control will occur, if at all, and as of September 30, 2020, there was $31,963,827 unrecognized compensation cost related to the restricted stock unit awards.
Activity related to our restricted stock units during the nine months ended September 30, 2020 was as follows:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
|
Grant
|
|
|
|
Number of
|
|
|
Date Fair
|
|
|
|
Units
|
|
|
Value
|
|
Total awards outstanding at December 31, 2019
|
|
|
50,350,000
|
|
|
$
|
0.94
|
|
Units granted
|
|
|
50,350,000
|
|
|
$
|
0.71
|
|
Units Exercised/Released
|
|
|
(7,595,000
|
)
|
|
$
|
0.71
|
|
Units Cancelled/Forfeited
|
|
|
(45,350,000
|
)
|
|
$
|
0.94
|
|
Total awards outstanding at September 30, 2020
|
|
|
47,755,000
|
|
|
$
|
0.73
|
|
Note 8. Litigation
A Complaint was filed with the United States District Court, Southern District of New York by Steven Safran as Plaintiff against the Company and Douglas Beplate, its CEO, as Defendant. This court case was transferred to the United States District Court in Las Vegas, Nevada. Mr. Safran is seeking damages and monies allegedly owed pursuant to an employment agreement of approximately $734,000 and allegedly unpaid loans of $245,824 provided to Defendants. The Company has denied Plaintiff’s allegations and intends to vigorously defend said lawsuit. The parties have held various depositions and the Company had a motion to dismiss which was denied. The Plaintiff filed a motion to amend his complaint and the Company has submitted opposition papers and are awaiting an order from the Court. A trial is scheduled for August 10, 2021.
In July 2015, the Company entered into a consulting agreement retaining the services of Maxim Group LLC. An amended agreement was executed in January 2018. A total of 4 million shares of common stock were issued to Maxim in exchange for its obligation to perform certain advisory and other services. In the fourth quarter of 2018, the Company notified Maxim of its intent to file for arbitration pursuant to the consulting agreement. Maxim, without providing a similar notice to the Company, immediately filed a complaint with FINRA seeking release of a restrictive legend from a Company stock certificate in the amount of 500,000 shares. The Company filed an affirmative defense that the required notice of arbitration was not provided to the Company prior to filing. The Company also filed a counterclaim for breach of contract seeking restitution of the original 4 million shares issued to Maxim. This case was settled on December 13, 2019, with Maxim agreeing to make certain payments to the Company post sale of their 500,000 Company shares, in an amount equal to one-half of their sales proceeds. To date, the Company has received no money.
Philip Forman, who served in positions as Chairman, a director, Chief Executive Officer and Chief Medical Advisor at various time between 2011 and October 2015, filed a lawsuit against the Company and our Chief Executive Officer, Douglas Beplate, in the United States District Court of the District of Nevada. The claimant is claiming, among other things, that: the June 25, 2015 Amendment to his November 10, 2014 Employment Agreement with the Company, which terminated the Employment Agreement on October 1, 2015, is not valid because of lack of consideration; that a July 22, 2015 Stock Purchase Agreement pursuant to which the claimant sold Company shares issued to him under the Amendment to a third a party is unenforceable (despite the fact that all payment for the shares under the Stock Purchase Agreement was made); that the plaintiff’s 2014 Employment Agreement is enforceable and that he is entitled to cash and stock compensation under that Employment Agreement (without giving regard to the Amendment); that if the Amendment is enforceable, he is entitled to the shares issued under the Amendment (without mention that those shares were sold to a third party under the Stock Purchase Agreement described above); and that the Company and Mr. Beplate defrauded the plaintiff relating to the foregoing. The plaintiff is seeking declaratory judgment regarding the parties’ relative rights under the Employment Agreement, the Amendment and the Stock Purchase Agreement; money damages of no less than $2,795,000; and punitive damages of $8,280,000. The Company believes that it has meritorious defenses to the matters claimed as well as counterclaims against the claimant. A motion to dismiss the plaintiff’s claims was filed and on March 19, 2020 the motion to dismiss was denied. Discovery is now taking place.
FSR Inc. commenced a lawsuit in 2018 against Korsair Holdings A.G. in the U.S. District Court for the Southern District of New York, seeking among other claims for relief, rescission of the transfer of 3,050,000 shares of United Health Products that FSR sold to Korsair in 2011. Third-Party Plaintiff, JEC Consulting Associates, LLC as Liquidator of LeadDog Capital L.P., Intervenor (“Intervenor”) in the above matter, filed a third-party complaint against United Health Products, and Douglas Beplate alleging among other things that the Company and Mr. Beplate refused to have the Rule 144 restrictive legend removed from the Korsair certificate held by JEC, and concomitantly fraudulently deprive JEC as Liquidator of LeadDog of the ability to sell the Shares in the open market, knowingly, intentionally and directly causing economic harm to LeadDog Capital L.P. Intervenor as Third Party Plaintiff further alleges that the Company and Mr. Beplate as Third-Party Defendants are not only monetarily liable to Third-Party Plaintiff for compensatory damages of $2,500,000 but should be made to pay exemplary damages in an amount determined by the Court, but not less than an equal amount - $2,500,000. Third-Party Plaintiff demands judgment for the above referenced amounts and for the Court to also declare that the 3,050,000 shares are free trading; that Third-Party Plaintiff’s rights to 2.5 million of the Shares are superior to the claims of Plaintiff FSR; that Plaintiff FSR has no claim to 2.5 million of the 3,050,000 Shares reflected by the Korsair certificate; that the Company and Mr. Beplate are to instruct its current transfer agent to remove the restrictive legend on the Korsair certificate for the Shares; and an order directing the Company and Mr. Beplate to instruct the Company’s transfer agent to exchange the Korsair certificate for new free-trading, unrestricted certificates. The Company believes that it had legal right to decline to instruct the transfer agent to remove the restrictive legend from the Korsair Shares where the ownership of the aforementioned shares have been in dispute and the Korsair shares have not been submitted for transfer to its transfer agent in proper form under the uniform commercial code. Recently, the Court granted the motion for a default by FSR, Inc against Korsair Holdings, AG., but denied any claim for relief against UHP, Inc. The Court ruled that the SEC must review the claim before the matter can proceed in Court. The SEC has yet to render a determination.
Due to uncertainties inherent in litigation, we cannot predict the outcome of the legal proceedings described herein.
In October 2019 the Company filed a defamation, trade libel and unlawful and deceptive practices lawsuit against White Diamond Research LLC, Adam Gefvert, Streetsweeper.org, Sonya Colberg and others in response to a stock manipulation scheme to injure UHP for illegitimate personal gain. The complaint alleged that in August 2019 the above defendants published false and defamatory statements about UHP in “short and distort” schemes to artificially drive down the market price of UHP’s common stock while at the same time having a short position in UHP’s stock, so they could obtain illicit profits on their short sale positions. This lawsuit was settled in April 2020 on terms mutually agreed to by the Company and the defendant parties, without the exchange of monetary payment or other economic consideration.
On February 7, 2020, the Company filed the Original Petition for Fraud and Breach of Contract in the 215th Judicial District of Harris County. The demand for trial by jury was made. Defendants Patterson Companies Inc., and Patterson Management, L.P., were served on February 24, 2020. Defendants Patterson Veterinary, Inc. and Patterson Logistics Services, Inc. were served on February 25, 2020. Defendant Animal Health was served on February 27, 2020. On March 5, 2020, the Defendants removed to federal court. The defendants filed their answer in federal court on March 12, 2020.
On June 26, 2020 Defendant’s Animal Health International, et al filed a Motion for Judgment on the Pleadings. On July 16, 2020 Plaintiff, United Health Products, Inc., filed an opposed Motion for Leave to Amend the state court petition to conform with federal rules. On July 22, 2010 Judge Andrew Hanen denied the Defendant’s Motion for Judgment on the Pleadings and granted the Plaintiff’s Motion for Leave to file an Amended Complaint, directing the Clerk of the Court to file the First Amended Complaint. The initial pretrial conference occurred on August 25, 2020. The defendant has filed for summary judgement.
In August 2020, United Health Products filed suit against its former auditors, Haynie & Company, in Utah State Court, asserting claims related to professional negligence and breach of fiduciary duty. Haynie & Company denies the allegations. The parties recently began conducting discovery.
Note 9. Subsequent Events
The Company has evaluated events from September 30, 2020, through the date whereupon the financial statements were issued and has determined that the following material events have occurred:
The Company received a total of $15,000 in loans from the Company’s Chief Executive Officer,
The Company’s Chief Operating Officer, Mr. Schiliro, converted $15,000 of accrued compensation into a convertible loan. The loan is convertible at $0.50 per share at the discretion of Mr. Schiliro, has a maturity date of March 31, 2021 and has an interest rate of 3%.
Various consultants, the Company's legal counsel and a medical advisor converted a total of $115,000 of accrued compensation into convertible loans. The loans are convertible at $0.50 per share at the discretion of the note holders, have a maturity date of March 31, 2021 and have an interest rate of 3%.