MEDTAINER, INC. (Form: 10-K, Received: 05/28/2020 17:22:31)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2019

[ ] 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: 000-29381

MEDTAINER, INC.

(Exact name of registrant as specified in its charter)

Florida		65-0207200
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

1620 Commerce St., Corona, CA		92880
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (844) 226-5649

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

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

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in 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 Section 15(d) of the Act.

Yes [ ] No [X]

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer [ ] Accelerated filer [ ]

Non-accelerated filer (Do not check if a smaller reporting company) [ ] Smaller reporting company [X]

Emerging Growth Company [X]

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 [X]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $10.8 million.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

The number of shares outstanding of the registrant’s common stock as of May 28, 2020, was 77,085,272.

(DOCUMENTS INCORPORATED BY REFERENCE)

List hereunder the following documents if incorporated by reference and the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933.

None.

NOTE

On March 30, 2020, pursuant to Securities Exchange Act Release No. 34-88465, dated March 25, 2020 (the “Order”), the Company filed a Current Report on Form 8-K with the Commission stating that “[The Company’s] operations and business have experienced disruption due to these conditions and in particular, the state of emergency that has been declared in the State of California and the related executive order by California’s governor mandating that all individuals living in the state, with certain exceptions that are not applicable to the Company’s employees, stay at home or at their places of residence. These disruptions include limited access to the Company’s facilities, support staff, and professional advisors, and, as a result, management is unable timely to prepare and file [its Annual Report on Form 10-K]” and that it would file the Annual Report as quickly as practicable, but not later than May 14, 2020.

On March 31, 2020, the Commission’s Corporate Finance Division updated its Compliance and Disclosure Interpretations (the “C&DIs”) comprising its interpretations of the rules promulgated under the registration and reporting provisions of Sections 12, 13 and 15 of the Exchange Act. In its answer to Question 135.13 of the C&DIs, the Division stated that a report to be filed by a registrant that relied on the Order for a report will be considered to have a due date 45 days after its original filing deadline and that as such, the registrant would be permitted to subsequently rely on Rule 12b-25 if it were unable to file the report on or before the extended due date.

Because the disruptions described above have persisted, the Registrant was unable to file this Annual Report by the extended due date and, on May 14, 2020, filed Form 12b-25 stating that it was unable to file this Annual Report and setting forth the reasons for its inability.

This Annual Report is filed timely in reliance on the Order and said Form 12b-25.

MEDTAINER, INC.

ANNUAL REPORT ON FORM 10-K FOR YEAR ENDED DECEMBER 31, 2019

TABLE OF CONTENTS

		Page
PART I
Item 1	Business	1
Item 1A	Risk Factors	5
Item 1B	Unresolved Staff Comments	6
Item 2	Properties	6
Item 3	Legal Proceedings	6
Item 4	Mine Safety Disclosures	6
PART II
Item 5	Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	7
Item 6	Selected Financial Data	8
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8
Item 7A	Quantitative and Qualitative Disclosures About Market Risk	14
Item 8	Financial Statements and Supplementary Data	15
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	31
Item 9A	Controls and Procedures	31
Item 9B	Other Information	31

PART III

Item 10	Directors, Executive Officers and Corporate Governance	32
Item 11	Executive Compensation	34
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	35
Item 13	Certain Relationships and Related Transactions, and Director Independence	35
Item 14	Principal Accounting Fees and Services	35

PART IV

Item 15	Exhibits, Financial Statement Schedules	36
Item 16	Form 10-K Summary	37

Signatures		38

This Annual Report on Form 10-K contains forward-looking statements that are based on current expectations, estimates, forecasts and projections about the Company, its future performance, its beliefs and its management’s assumptions. In addition, other written or oral statements that constitute forward-looking statements may be made by the Company or on its behalf. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates” and variations of these words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict or assess, including those relating to the Covid-19 pandemic. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Except as required under the federal securities laws and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), the Company does not have any intention or obligation to update publicly any forward-looking statements after the filing of this Annual Report on Form 10-K, whether as a result of new information, future events, changes in assumptions or otherwise.

This Annual Report on Form 10-K identifies contracts and instruments to which the Company or its officers and directors are parties or by which it is affected. Where such contracts or instruments are exhibits to this report, either because they are filed herewith or incorporated herein by reference, readers of this report are referred thereto and the descriptions herein are qualified by such reference. These contracts and instruments are identified in Item 15 – “Exhibits, Financial Statement Schedules.”

PART I

Item 1. Business.

General Information

Medtainer, Inc. (the “Company”) was incorporated under the laws of the state of Florida on September 5, 1997. It changed its corporate name to Acology, Inc. on January 9, 2014, and on August 28, 2018, to Medtainer, Inc. Prior to January 1, 2018, the Company sold its products through its wholly owned subsidiary, D&C Distributors LLC, a California limited liability company, which commenced operations on January 29, 2013, and which the Company acquired by merger on March 28, 2014, and performed its printing services through its wholly owned subsidiary, D&C Printing LLC, a California limited liability company, which was established by the Company and commenced operations on April 14, 2015. Commencing on January 1, 2018, the Company has itself conducted all of its business.

The Company has authorized capital of 100,000,000 shares of common stock, par value $0.00001 per share (“Common Stock”), and 10,000,000 shares of preferred stock, without par value. On March 22, 2019, the Company implemented a reverse split of its Common Stock on the basis of one share for each 100 shares then outstanding. Also, on that date, the Company reduced the number of authorized shares of Common Stock from 6,000,000,000 to 100,000,000, while the number of authorized shares of preferred stock remained 10,000,000. The effects of the reverse split have been retroactively applied to all periods covered by this report.

The Company’s principal place of business, which is its only facility, is located at 1620 Commerce St., Corona, CA 92880. The Company’s telephone number is (844) 226-5649. The Company’s corporate website address is http://www.medtainer.com. The Common Stock is quoted on the OTC Pink tier of OTC Link, a quotation system operated by OTC Markets Group Inc. (“OTC Link”) under the trading symbol MDTR.

Products and Services

The Company’s principal product is the Medtainer^®, which is used to store pharmaceuticals, herbs, teas and other solids or liquids and can grind solids and shred herbs. The Medtainer^® is described under the caption “Item 1. Business – Products and Services – The Medtainer^®.”

The Company has expanded its product base into other areas to capture opportunities made available to it through its core base of its Medtainer^®products. The most significant components of revenues from other products were humidity pack inserts, lighters, plastic container holders, smell-proof bags and other goods. The Company is developing markets for these products. These products are described under the caption “Item 1. Business – Products and Services – Other Products.” The Company provides private labeling and branding services for purchasers of containers and other products. For further details, see “Item 1. Business – Printing.”

Revenues from the Company’s products and services for the years ended December 31, 2019, and December 31, 2018, were as follows:

	Year Ended December 31,
	2019				2018
	Revenues		%		Revenues		%
Medtainers^®	$	1,391,296		65	$	1,374,403		62
Humidity pack inserts		357,218		17		397,875		18
Lighters		140,662		6		134,470		6
Printing		83,442		4		82,617		4
Plastic lighter holders		74,547		3		85,367		4
Shipping charges		65,542		3		86,429		4
Jars		23,370		1		21,498		1
Others		12,389		1		47,671		1
Total Revenues	$	2,148,466		100	$	2,230,330		100

The Company markets directly to businesses through its phone room, to the retail public through internet sales, and directly to wholesalers and other businesses who resell its products to other businesses and end users. See “Item 1. Business – Sales and Distribution.”

Because the Company’s printing business is a service that relates principally to its Medtainer^® products and lighters and because it accounts for an immaterial portion of the Company’s revenue, the Company regards itself as having a single segment.

The Medtainer^®

Medtainers^®are manufactured from medical-grade polypropylene resin. They can store pharmaceuticals, herbs, teas and other solids or liquids and can grind solids and shred herbs and are air- and water-tight. The Company sells the original 20-dram version, a 20-dram version that has received child safety certification, and a 40-dram version. The Company is focusing its marketing of Medtainers^®on the Cannabis/CBD markets, as well as drug stores and drug store chains, veterinarians and veterinary distributors and other distributors and end users.

Medtainers^®have three components. The top component is a cap, the middle component is a storage cup with grinding/shredding teeth projecting downward from its bottom and the bottom component is a grinding/shredding cup with teeth projecting upward from its bottom. Material is transferred from the storage cup into the grinding/shredding cup, the storage cup is inserted into the grinding/shredding cup, forming a space in which the two sets of teeth intermesh, and the two cups are then rotated manually such that the material passes between the two sets of teeth and is ground or shredded. The ground or shredded material may then be returned to the storage cup for storage or used or dispensed in another manner. The cap attaches to the grinding/shredding cup such that the storage cup is held between them, forming a compact unit which is air- and water-tight between the cap and the storage cup, as well as between the storage cup and the bottom cup. The pictures below show exploded views of the non-childproof and childproof configurations of the Medtainer^®.

Until June 8, 2018, the Company purchased Medtainers^®from Polymation, LLC (“Polymation”), located in Newbury Park, California, under an agreement that it entered into with Polymation on August 13, 2013. Under this agreement, the Company had the exclusive worldwide right to purchase, promote, advertise, market, distribute and resell Medtainers^®, with on which the owner of Polymation held patents and Polymation held the trademark. On June 8, 2018, the Company acquired these patents, the trademark and a domain name, agreed with Polymation to terminate the agreement, licensed Polymation to manufacture Medtainers^® solely for purchase by the Company under the patents and entered into a production contract, dated June 8, 2018, which was amended on March 27, 2019, under which Polymation manufactures and the Company purchases Medtainers^® (as so amended, the “Production Contract”). The Production Contract requires the Company to purchase at least 30,000 units per month, with that requirement increasing by 1% on each anniversary of its effective date, and sets prices for the products purchased thereunder, subject to periodic increase for changes in the local consumer-price index. Its term expires on April 30, 2031, unless the Company exercises a termination option, under which the Company may terminate the Production Contract upon payment to Polymation of $400,000, less any amount that its owner agrees that he owes to the Company or that he owes to it under a final and unappealable judgment, provided that the shares of Common Stock issued to him in the transaction in which the Company acquired the patent and trademark (see “Item 1. Business – Patents, Trademarks and Other Intellectual Property”) may be publicly sold under the exemption from registration under the Securities Act of 1933 (the “Securities Act”) afforded by Rule 144 promulgated thereunder or another exemption from such registration.

Because the Company owns the patent for the Medtainer^®, to the extent that it can sell more Medtainers^® than it is required to purchase under the Production Contract, it will be able to manufacture them in-house or acquire them from a third party, possibly at prices lower than under the Production Contract, but unless the number of Medtainers^® that the Company is not required to purchase under the Production Contract is substantial, doing so may not be cost-effective. The Company intends to continue its efforts to sell Medtainers^® globally, which, if successful, would increase demand for Medtainers^®and could cause increase sales volume with the result that the Company might produce them at its facilities or seek out a third party to manufacture them, instead of purchasing them from Polymation, if doing either were cost-effective. The Company presently has no suppliers other than Polymation for Medtainers^®.

The Company believes that the raw materials used by Polymation in manufacturing Medtainers^® are readily available.

Other Products

In addition to Medtainers^®, the Company sells and is actively developing markets for the following products, all of which it purchases from their manufacturers and resells:

● Humidity Control Inserts. These inserts are placed into air- and water-tight containers, such as humidors and Medtainers^®, to maintain humidity by adding or removing moisture. These inserts are of varying sizes and capable of maintaining various ranges of relative humidity, depending on the specifications of each particular insert. The Company purchases inserts from Boveda Inc. and Desiccare, Inc. and markets them under the Boveda or Desiccare label. The Company also has an agreement with Desiccare for it to private label inserts under the name “MED X 2 Way Humidity Control Pack” and markets some of the inserts it purchases from Desiccare under its own private label. The Company believes that marketing inserts under its own brand label is significant in that many of its Medtainer^® products are now being sold with humidity packs inserted into the containers and that this “value added” factor has increased demand for its product.

●

Smell-Proof Bags. These airtight bags are made of flexible polyester, Mylar^®, plastic and other substances, with such means of closure as Velcro^®, Ziploc^®and zippers. Some use activated carbon to enhance odor removal. They are of varying size and can be used to store and prevent dissipation of odors from fish, herbs and dirty clothes, among others.

●

Lighters. These are butane lighters that are sold with and without logos and other markings. The Company adds logos and markings based on customers' specifications.

There are numerous manufacturers of these products.

Printing

The Company began providing printing services in 2015. In 2019, it had revenue of $83,442 from printing, compared with $82,617 in 2018. The Company entered this business because some of its customers desired to have custom labels imprinted on the products that they purchased from the Company and the Company found that the cost of doing so through third parties raised the price that it charged to customers for imprinted products to levels that it believed would impede sales. Labelling is performed using two specialized printers, one of which is capable of printing on nonporous plastic. Currently, about 2,000 square feet is devoted to printing. The Company is seeking additional printing business from companies that require labelling on their own products.

Sales and Distribution

The Company sells approximately 96% of its products to wholesalers and distributors, who resell them to businesses and consumers, with and without custom labeling; the remainder are sold directly to retail consumers through internet sales and at trade shows.

The Company entered into a Product License and Distribution Agreement, dated April 1, 2014, with IGreen Planet Store, Ltd. (“IGreen”), a Canadian distribution company located in Vancouver, British Columbia, Canada. Under this agreement, the Company has granted to IGreen an exclusive license to market, sell and distribute Medtainers^® in Canada. The agreement had a 5-year term, which has expired. The Company is negotiating a new agreement with IGreen and is conducting business with IGreen as if the expired agreement were still in effect. Under the agreement, the Company is required to maintain product liability insurance covering the products sold thereunder; the Company is in the process of doing so. IGreen is not required to purchase a minimum quantity of products. For the years 2019 and 2018, the Company’s sales to IGreen were $207,123 and $254,860, respectively, representing 10% and 11%, respectively, of total sales.

As of May 27, 2020, the Company’s backlog of orders that it believed to be firm was $82,377, which the Company expects to fill during the current fiscal year. As of May 27, 2019, its backlog was $84,491, of which $42,457 was filled during 2019.

Prior to the Covid-19 pandemic, nine of the Company’s personnel worked in its phone room, making sales by telephone and over its website; the number as of May 28, 2020, was three.

The Company believes that social media are important to marketing its products and it maintains a presence on Instagram, Facebook, Twitter and other social media.

The Company believes that it is important to maintain strong relationships with its direct customers and its distributors, and, where possible, their customers and takes measures to do so.

Patents, Trademarks and Other Intellectual Property

The Company entered into an Asset Purchase Agreement, dated as of April 16, 2018, by and between the Company and the owner of Polymation, which was amended on June 8, 2018 (as so amended, the “APA”). Under the APA, the Company acquired from him and from certain entities that he controlled (including Polymation), patents and patent applications relating to the Medtainer^®, a trademark of the name Medtainer^® and an internet domain in consideration of its issuance to him of 2,631,252 shares of Common Stock.

As a consequence of the acquisition of these patents and the trademark, the Company is able to defend the Medtainer^® against infringement and counterfeiting more effectively than before the acquisition. The Company believes that such acquisition has enabled it to invite larger companies to explore the possibility of strategic partnerships, expand into other container markets and diversify into associated and/or new markets.

While the Medtainer^®is patented, similar products are being manufactured and sold. The Company has not determined whether all of these products conflict with the Medtainer^® patents, but when it determines that a conflict exists, it takes measures to enforce its patents. The Company does not know to what extent these products have affected its business.

The Company may license the Medtainer^® patents and trademark to, and future, patents, trademarks, trade secrets and similar proprietary rights to and from, third parties.

The Company employs various methods, including confidentiality and non-disclosure agreements with third parties, employees and consultants, to protect its trade secrets and know-how. As it develops new products, the Company will rely on a combination of patents, trade secrets, unpatented know-how, trademarks, copyrights and other intellectual property rights, nondisclosure agreements and other protective measures to protect its proprietary rights. The Company cannot presently ascertain the extent to which other intellectual property that it may develop or license will be important to it.

Competition

The Company faces competition of varying intensity in the sale of its products and competes with and seeks to distinguish itself from its competitors principally on the basis of the uniqueness and quality of its products, price, service, quality, product characteristics and timely delivery. In particular, the Medtainer^® competes with metal, glass, paper and other packaging materials as well as plastic and resin packaging materials made through various manufacturing processes. Most of the Company’s existing and potential competitors have greater brand name recognition and their products may enjoy greater market acceptance among its potential customers. In addition, many of these competitors have significantly greater financial, technical, sales, marketing, distribution, service and other resources than does the Company and may be more able to adapt quickly to customers’ changing demands and changes in technology, to enhance existing products, to develop and introduce new products and new production technologies and to respond timely changing market conditions and customer demands. If the Company is not able to compete successfully in the face of its competitors’ advantages, its ability to gain market share or market acceptance for its products could be limited, its revenues and profit margins could suffer, and it might never become profitable.

Except for the market for containers such as the Medtainer^®, in which the Company believes it is a significant competitor, it is an insignificant factor in the highly fragmented markets for its other products and, although it intends to improve its position in these markets, it is unlikely that it will become significant for the foreseeable future.

Regulation

The Food and Drug Administration (the “FDA”) regulates the material content of Medtainers^®, including the medical-grade polypropylene resin used in their manufacture, pursuant to the Federal Food, Drug and Cosmetic Act, and the Consumer Product Safety Commission (the “CPSC”) regulates certain aspects of these products pursuant to various federal laws, including the Consumer Product Safety Act and the Poison Prevention Packaging Act. The FDA and the CPSC can require the manufacturer of defective products to repurchase or recall these products and may also impose fines or penalties on the manufacturer. Similar laws exist in some states, cities and other countries in which the Company sells or intends to sell its products. In addition, certain state laws restrict the sale of packaging with certain levels of heavy metals and impose fines and penalties for noncompliance. Although FDA-approved resins and pigments are used in its products that directly contact food and drugs and the Company believes that Medtainer^®products are in material compliance with all applicable regulatory requirements (although the Company is not required to submit these or any other products to the FDA or the CPSC for review), the Company is subject to the risk that these products could be found not to be in compliance with these and/or other requirements. A recall of any of these products or any fines and penalties imposed in connection with noncompliance could have a materially adverse effect on the Company.

Employees

As of December 31, 2019, the Company had, in addition to its 2 executive officers, 9 sales personnel, 3 administrative personnel and 4 print technicians and warehouse personnel. Due to the Covid-19 pandemic, the Company now has, in addition to its 2 executive officers, 1 administrator, 1 print technician and 3 persons working in the Company’s phone room.

Information About Executive Officers

The names and ages of the Company’s executive officers and their positions with the Company are as follows:

Name (Age)	Present Position (Effective Date)	Positions Held During Past
Name (Age)	Present Position (Effective Date)	Five Years (Effective Date)
Curtis Fairbrother (58)	Chairman of the Board; CEO; CFO; Director (2014)	Chairman of the Board; CEO; CFO; Director (2014)
Douglas Heldoorn (52)	President; COO; Director (2014)	President; COO; Director (2014)

There are no family relationships between any of the officers named above and there is no arrangement or understanding between any of the officers named above and any other person pursuant to which he was selected as an officer. Each of the officers named above was elected by the board of directors to hold office until his successor is elected and qualified or until his earlier resignation or removal.

Further information about the Company’s officers and directors appears in Part III of this report.

Item 1A. Risk Factors.

While the Company is a smaller reporting company as defined by Rule 12b-2 promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”) and is not required to provide information under this item, it calls attention to the following risks, which it believes are especially significant:

If the Company cannot raise capital, it may have to curtail it operations or could fail.

As described in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources,” the Company requires substantial additional capital. In the event that it cannot raise such capital, it may have to curtail its operations or could fail.

The Company’s business, financial condition, results of operations and liquidity could be substantially and adversely affected by the Covid-19 pandemic.

In December 2019, an outbreak of a novel strain of coronavirus known as COVID-19 originated in Wuhan, China, and has spread to other countries, including the United States. On March 11, 2020, the World Health Organization declared the outbreak to be a pandemic. A number of jurisdictions in the United States, including the State of California, have declared a state of emergency. Further, the governor of the State of California, where the Company’s headquarters, all of its employees and the manufacturer of its Medtainer^®products are located, has issued an executive order pursuant to that declaration mandating that all individuals living in the state stay at home or at their places of residence, except as needed to maintain the continuity of operations in certain sectors, in none of which the Company operates. As a result, for an unknown but possibly extended period, the following, among others, may be substantially and adversely affected to an extent that the Company cannot presently predict: the Company’s ability to conduct its operations, including its financial reporting systems, internal control over financial reporting and disclosure controls and procedures; its financial condition and results of operations; its capital and financial resources, including its liquidity; its balance sheet and its ability to account timely for those assets; demand for its products and services; the ability of its suppliers to manufacture and deliver the products that it sells; its ability to deliver its products; the valuation of its goodwill, intangible assets and long-lived assets; its ability to display and sell its products at trade shows and similar events; its ability to conduct meetings with existing and prospective customers and suppliers; the ability of the Company and its customers to meet their financial obligations to one another and to others; travel restrictions and border closures; and, if its employees were to contract coronavirus, their ability to work. To the extent that the Company will be able to continue operating, it may incur additional costs in order to do so.

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation – Impact of the Covid-19 Pandemic” for further information.

The Company sells products that may be used for cannabis-related purposes.

The Company does not market or sell cannabis, but many of its products can be used for cannabis-related purposes. In light of the fact that the possession and use of cannabis has been legalized, subject to varying restrictions, in many states and that several other states are considering such legalization, the Company believes that its products may be of interest to a large number of users of cannabis. The Company does advertise its products on the Company’s website and elsewhere as suitable for that purpose. The Company believes that marketing these products subjects the Company to certain risks, including:

●

The use of cannabis for medical and recreational use is lawful in many states, but under United States federal law and the laws of the other states, the possession, use, cultivation, storage, processing and/or transfer of cannabis is illegal. Federal and state law enforcement authorities have prosecuted persons engaged in these activities. While the Company does not believe that it engages in these activities, any of these law enforcement authorities might bring an action against the Company including, but not limited to, a claim of aiding and abetting criminal activities. Such an action would have a material and adverse effect on the Company’s business and operations.

●

Under United States federal law, it is unlawful to sell or offer for sale, to use the mails or any other facility of interstate commerce to transport or to import or export drug paraphernalia. The term “drug paraphernalia” includes any equipment, product or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance. One of the factors that these authorities may consider in determining whether the Company’s products are drug paraphernalia is its national and local advertising concerning its use. The Company has advertised its products as usable for cannabis-related purposes. However, the Company does not believe that its products were designed or are intended for illegal purposes, or that its products are drug paraphernalia, as defined in federal law. The Company is promoting its products primarily to be used for other purposes. During the administration of President Barack H. Obama, enforcement of such federal law was relaxed, and the administration of President Donald J. Trump has indicated that it will not enforce federal cannabis laws against companies that comply with state law. If in the future federal authorities were to take a different view, they might bring a criminal action against the Company. Such an action would have a material and adverse effect on the Company’s business and operations.

Item 1B. Unresolved Staff Comments.

The Company is not an accelerated filer or a large accelerated filer, as defined in Rule 12b-2 promulgated under the Exchange Act, or a well-known seasoned issuer, as defined in Rule 405 promulgated under the Securities Act and is not required to provide information under this item. However, there are no unresolved staff comments.

Item 2. Properties.

The Company’s headquarters are located and all of its operations are conducted at 1620 Commerce St., Corona, California. Until August 31, 2018, it leased this property, comprising approximately 8,000 square feet, from an unrelated party for $7,500 per month plus 100% of operating expenses, as defined in the lease. This lease expired on June 30, 2018, and until August 31, 2018, the Company continued to occupy this property on the same terms. On September 1, 2018, it entered into a sublease of the property from DPH Supplements Inc. (“DPH”), a corporation owned by one of the Company’s officers and directors, who had leased the property from its owner under a master lease dated August 27, 2018. Under the sublease, the Company agreed to pay monthly rentals of $8,640 and to assume and all of the obligations of DPH under the master lease, including the payment in full of certain capital expenses and the sharing of others; the payment of “common area operating expenses,” as defined, which includes real property taxes paid by master lessor, the maintenance of the property and payment of insurance premium increases. The term of this sublease was to end on August 31, 2019, but on September 1, 2019, it was amended to extend its term until August 31, 2020, and to increase the rent to $8,967. For further information regarding this sublease and the amendment, see “Item 10. Directors, Executive Officers and Corporate Governance – Real Property Lease.” The Company believes this property is suitable and adequate for its purposes. The Company believes that this property is suitable and adequate for its purposes.

Item 3. Legal Proceedings.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities.

The Common Stock is quoted on the OTC Pink tier OTC Link under the trading symbol MDTR.

The following table reflects the high and low closing bid information for the Common Stock for each fiscal quarter during the fiscal years ended December 31, 2019, and 2018, and during the current year to date. The bid information was obtained from OTC Markets Group Inc. and reflects prices between dealers, without retail markup, markdown or commission, and may not represent actual transactions.

Quarter Ended		Closing Bid High		Closing Bid Low
Fiscal Year 2020
June 30, 2020 (through May 26, 2020)	$	0.081	$	0.06
March 31, 2020	$	0.21	$	0.04
Fiscal Year 2019
December 31, 2019	$	0.24	$	0.10
September 30, 2019	$	0.52	$	0.24
June 30, 2019	$	0.84	$	0.24
March 31, 2019	$	1.34	$	0.77
Fiscal Year 2018
December 31, 2018	$	2.51	$	0.77
September 30, 2018	$	1.11	$	0.76
June 30, 2018	$	1.47	$	0.72
March 31, 2018	$	2.27	$	0.91

Prices in the above table for dates prior to March 22, 2019, have been adjusted to reflect the 1-for-100 reverse stock split that occurred on that date.

As of May 27, 2020, there were 428 holders of record of Common Stock.

The Company has never declared or paid cash dividends on Common Stock. The Company intends to retain all available funds and any future earnings for use in the operation and expansion of its business and does not anticipate paying cash dividends in the foreseeable future.

Equity Compensation Plan Information

The Company adopted its 2018 Incentive Award Plan (the “2018 Plan”) on December 1, 2018, under which the Company may issue up to 2,000,000 shares of Common Stock as incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other forms of compensation to employees, directors and consultants. In addition, the 2018 Plan provides for the grant of performance cash awards to employees, directors and consultants. All these shares were reserved on that date.

On December 1, 2019, 1,350,000 shares of Common Stock were awarded to employees in the form of restricted shares and 335,000 shares of Common Stock were awarded to consultants as compensation. The fair value of these shares on the grant date was $0.01 per share. During the year ended December 31, 2019, all shares awarded to consultants and 1,050,000 of the 1,350,000 shares awarded to employees were vested for financial reporting purposes under U.S. generally accepted accounting principles (“GAAP”).

The Company made no awards in any other form during the year ended December 31, 2019, and December 10, 2018. The Company expensed $871,032 and $767,592 for share-based compensation in the years ended December 31, 2019, and December 31, 2018, respectively, for its employees and nonemployees in the accompanying consolidated statements of operations.

The following table summarizes vesting for financial reporting purposes under GAAP of the Common Stock shares issued under the 2018 Plan:


	Shares of Common Stock
Vesting Dates	Employees		Consultants
December 31, 2018		—		185,000
January 1, 2019		750,000		—
March 31, 2019		—		150,000
June 30, 2019		300,000		—
Total vested at December 31, 2019		1,050,000		335,000

Sales of Unregistered Securities

On February 17, 2018, the Company issued 120,000 shares of Common Stock to an unrelated investor in consideration of $120,000, without registration under the Securities Act, in reliance upon the exemptions from registration afforded by Section 4(a)(2) thereof and Rule 506 promulgated thereunder.

Item 6. Selected Financial Data.

The Company is a smaller reporting company as defined by Rule 12b-2 promulgated under the Exchange Act and is not required to provide information under this item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The financial data discussed below are derived from the audited consolidated financial statements of the Company as at December 31, 2019, which were prepared and presented in accordance with U.S. generally accepted accounting principles. These financial data are only a summary and should be read in conjunction with the financial statements and related notes contained herein, which more fully present the Company’s financial condition and operations as at that date. The results set forth in these consolidated financial statements are necessarily indicative of the Company’s future performance. This section and other parts of this report contain forward-looking statements that involve risks and uncertainties. Actual results may differ significantly from the results discussed in forward-looking statements.

Overview

As indicated in Note 3 of the Notes to Consolidated Financial Statements set forth in Item 8. Financial Statements and Supplementary Data, there is substantial doubt as to the ability of the Company to continue as a going concern. The Company has generated material operating losses since inception and its ability to continue as a going concern is dependent on the successful execution of its operating plan, which includes increasing sales of existing products while introducing additional products and services, controlling cost of goods sold and operation expenses, negotiating extensions of existing loans, and raising either debt or equity financing.

The Company needs a substantial amount of additional capital to fund its business, including expansion of its operations, and for payment of its debts. No assurance can be given that any additional capital can be obtained or, if obtained, will be adequate to meet its needs and the Company may need to take certain measures to remain a going concern. If adequate capital cannot be obtained on a timely basis and on satisfactory terms, the Company’s operations could be materially negatively impacted, or it could be forced to terminate operating.

Impact of the Covid-19 Pandemic

The Covid-19 pandemic, its disruption of the Company’s business and its effect on the economy generally have adversely impacted and constitute a material risk to the Company. See “Item 1A – Risk Factors. The Company’s business, financial condition, results of operations and liquidity have been and will continue for an indefinite period to be substantially and adversely affected by this pandemic.”

In particular, the Company’s sales in the first quarter of 2020 were approximately $84,000 lower than for the like period of 2019; the Company believes that this decrease was substantially due to the Covid-19 pandemic. The Company expects that its sales in the second quarter of 2020 will be substantially lower than for the like period of 2019 and for the first quarter of 2020.

As of May 26, 2020, sales have been approximately $144,000, cost of sales $180,000 and operating expenses $133,000. While the Company has reduced its expenses substantially, as described below, it expects to record substantial operating and net losses for the 3- and 6-month periods ended June 30, 2020, for the remainder of 2020 and possibly beyond. On May 26, 2020, the Company had a cash balance of approximately $287,000 and receivables of $137,000 which is insufficient for it to meet its current obligations. These receivables may be collected more slowly than prescribed by their payment terms and some may prove to be uncollectible.

To mitigate losses during the Covid-19 pandemic and the ensuing recovery period, the Company has furloughed or terminated most of its 18 employees, such that it now has 6 employees, including officers, which are the minimum necessary to maintain limited operations. Its executive officers have waived their salaries from April 15, 2020, through May 4, 2020, and have agreed to a reduced salary for an undetermined time. In addition, the Company is deferring employer payroll taxes, as permitted by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Company is also purchasing from Polymation fewer Medtainers^® than required under the Production Contract; while doing so enables the Company to preserve cash, it also subjects it to claims for breach of that agreement.

On May 4, 2020, the Company made a Note in favor of Customers Bank in the principal amount of $137,690 pursuant to the terms of the Paycheck Protection Program authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and pursuant to all regulations and guidance promulgated or provided by the SBA and other Federal agencies that are now, or may become, applicable to the loan. The loan bears interest at the rate of 1% per annum. No interest or principal will be required during the first six months after the loan amount was disbursed, although interest will continue to accrue over this deferral period. After the deferral period and after taking into account any loan forgiveness applicable to the loan pursuant to the program, as approved by SBA, any remaining principal and accrued interest will be payable in substantially equal monthly installments over the remaining 18-month term of the loan, in the amount and according to the payment schedule provided by lender.

The loan will be forgiven if its proceeds are used for payroll, mortgage interest, rent, and utilities during the 8-week period beginning on May 4, 2020. However, the amount of loan forgiveness will be reduced if less than 75% of the funds is expended for payroll over that period. Because the Company may not require a number of employees such that it would expend these funds for payroll to that extent, a substantial portion of the loan may not be forgiven. In addition, the amount of the loan to be forgiven and other terms of the loan may be affected by regulations and interpretations that have not yet been adopted or, if presently adopted, are changed.

The reduced price of the Company’s common stock, combined with matters associated with the Covid-19 pandemic, such as decreases in sales and increased losses, the general business climate and market conditions, indicate that its intellectual property and related goodwill may be materially and adversely impaired. Accordingly, the Company plans to test intellectual property and goodwill for impairment during the quarter ending June 30, 2020, and will reflect any adjustment in its consolidated financial statements.

Results of Operations

Comparison of the Years Ended December 31, 2019, and December 31, 2018

The following table sets forth information from the consolidated statements of operations for the years ended December 31, 2019, and December 31, 2018.

	Year Ended December 31,
	2019		2018
Revenues	$	2,148,466	$	2,230,330
Cost of goods sold		1,020,747		1,032,601
Gross profit		1,127,719		1,197,730

Operating expenses		2,497,678		2,318,647
Loss from operations		(1,369,959)		(1,120,917)

Non-operating income (expense):
Interest expense		(38,491)		(159,386)
Loss on extinguishment of debt		—		5,012
Gain on change in fair value of derivative		—		1,031
Net loss	$	(1,408,450)	$	(1,274,260)

Revenues and Cost of Goods Sold

Revenues for the year ended December 31, 2019, were $2,148,466, from which the Company earned a gross profit of $1,127,719, or 52.5% of sales. Revenues for the year ended December 31, 2018, were $2,230,330, from which the Company earned a gross profit of $1,197,730, or 53.7% of sales. The decrease in gross profit was due to reduction in revenues without a corresponding decrease in cost of goods sold. This reduction was due primarily to a reduction in revenues from humidity pack inserts, printing, and shipping. The decrease in cost of goods sold was due primarily to a decrease in the cost of goods sold for humidity pack inserts, and a decrease in the cost of printing. The decrease in cost of goods sold was partially offset by an increase in the cost of goods sold for containers, shipping, and payment processing fees.

Operating Expenses

Operating expenses for the years ended December 31, 2019, and December 31, 2018, were as follows:

	Year Ended December 31.
	2019		2018
Advertising and marketing expense	$	84,440	$	45,463
Bad debt expense		7,150		—
Depreciation and amortization		109,127		71,546
Professional fees		112,829		98,598
Share-based compensation		871,032		767,592
Payroll expenses		1,170,829		1,183,973
General and administrative expenses		142,271		151,475
Total operating expenses	$	2,497,678	$	2,318,647

Operating expenses for the years ended December 31, 2019, and December 31, 2018 were $2,497,678 and $2,318,647, respectively, a difference of $179,031. The increase in operating expenses was attributable to a $38,977 increase in advertising and marketing expense primarily due to increased attendance at trade shows and conferences; a $7,150 increase in bad debt expense; a $37,581 increase in depreciation and amortization ($2,288 for increased depreciation and $35,294 for increased amortization) for the period from June 8, 2018, through December 31, 2018, for the year ended December 31, 2018 and was for the twelve months for the year ended December 31, 2019; a $14,231 increase in professional fees due to increased auditing costs and professional valuation services for goodwill and intangible assets incurred in 2019; and a $103,440 increase in share-based compensation due to a amortization of share-based compensation awards from the 2018 Plan which commenced in 20198. The increase in operating expenses was partially offset by a $13,144 decrease in payroll expense and a $9,204 decrease in general and administrative expense. The decrease in general and administrative expenses was primarily due to a $7,747 decrease in auto expenses ($5,055 for the year ended December 31, 2019, compared with $12,801 for the year ended December 31, 2018), a $2,644 decrease in telephone expense ($38,730 for the year ended December 31, 2019, compared with $41,375 for the year ended December 31, 2018), and a $14,380 decrease in expenses associated with the APA ($0 for the year ended December 31, 2019, compared with $14,380 for the year ended December 31, 2018) due to the fact expenses associated with the APA were a one-time expense incurred in 2018. The decrease in general and administrative expenses was partially offset by a $7,620 increase in rent expense ($105,319 for the year ended December 31, 2019, compared with $97,698 for the year ended December 31, 2018) due to an increase in the monthly rent effective September 1, 2019, a $3,828 increase in stock-related expenses ($26,726 for the year ended December 31, 2019, compared with $22,898 for the year ended December 31, 2018) and a $4,092 increase in computer and internet expenses ($32,070 for the year ended December 31, 2019, compared with $27,977 for the year ended December 31, 2018) due to an increase in software purchases.

Loss from Operations

Loss from operations increased from $1,120,917 for the year ended December 31, 2018, to $1,369,959 for the year ended December 31, 2019. This increase was due to a decrease in revenues without a corresponding decrease in cost of goods sold, resulting in a decrease in the gross profit percentage from 53.7% for the year ended December 31, 2018, to 52.5% for the year ended December 31, 2019, as well as from the $179,031 increase in operating expenses from the year ended December 31, 2018, to the year ended December 31, 2019, which is discussed above.

Interest Expense

Interest expense incurred in the years ended December 31, 2019, and December 31, 2018, was $38,491 and $159,386, respectively. The decrease in interest expense was due to the agreements reached in 2018 with a noteholder to adjust accrued interest payable in exchange for waiving the default of the note. For further information, see Note 5 to the Notes to Consolidated Financial Statements set forth in Item 8. Financial Statements and Supplementary Data.

Gain on Extinguishment of Debt

For the year ended December 31, 2018, the Company recorded a gain on extinguishment of debt of $5,012 as the result of the conversion of convertible debt with a bifurcated conversion feature, offset by a gain on settlement of a convertible note. This debt was fully paid as of December 31, 2018.

Gain on Change of Fair Value of Derivative

For the year ended December 31, 2018, the Company recorded a gain on change in fair value of derivative of $1,031 as the result of the lower fair value of the derivative liability, which is adjusted to fair value each reporting period, substantially due to a decrease in the underlying stock price. This derivative liability no longer existed as of December 31, 2018, and therefore, the Company recorded no gain or loss from derivative liability for the year ended December 31, 2019.

Net Loss

Net loss increased from $1,274,260 for the year ended December 31, 2018, to $1,408,450 for the year ended December 31, 2019, due principally to the decrease in revenues resulting in a decrease in gross profit, and the increase in operating expenses.

Liquidity and Capital Resources

As of December 31, 2019, the Company had $17,982 in cash and $108,836 in accounts receivables. During the year ended December 31, 2019, the Company borrowed $610,393 from and repaid $368,891 to its officers and directors. For further information, see Note 11 of the Notes to Consolidated Financial Statements set forth in Item 8. Financial Statements and Supplementary Data.

During the year ended December 31, 2018, $49,658 of indebtedness and accrued interest was converted into 57,741 shares of common stock.

The number of items of the Company’s products sold for 2019, 2018 and 2017 is as follows:

	Year Ended December 31,
	2019		2018		2017
Medtainers^®		339,000		346,000		381,700
Humidity control packs		443,000		518,000		568,000
Other products		134,815		17,000		63,000

As of December 31, 2019, the Company had inventory of approximately 90,500 Medtainers^® products and approximately 46,500 units of other products.

In addition to the loan of $137,690 described above, the Company received, $200,000 from the sale of 20,000,000 shares of Common Stock to a private investor. The Company believes that most of the proceeds of the loan will not be expended to reduce its existing obligations. The Company believes that it will require approximately $1,300,000 in additional funding for the next 12 months, including approximately $600,000 to repay loans and interest that are past due, assuming that the Company’s operating loss remains at the same level. The Company plans to seek extensions of these loans, in which case, the amount of such funding will be reduced, but cannot give assurances as to the extent that it will be successful. The Company plans to fund its activities through loans from banks and other financial institutions and the sale of debt or equity securities to private investors. There is no assurance that such the funding will be available on acceptable terms, or available at all. If the Company is unable to raise sufficient funds when required or on acceptable terms, it may have to reduce significantly, or discontinue, its operations. To the extent that funds are raised by issuing equity securities or securities that are convertible into the Company’s equity securities, its stockholders may experience significant dilution.

The Company had no material commitments for capital expenditures as of December 31, 2019.

Revenues were $2,148,466 for the year ended December 31, 2019, and $2,230,330 for the year ended December 31, 2018. Revenues decreased for the later year due primarily to a decrease in revenues from humidity insert packs and the shipping costs charged to customers. The Company’s gross profit decreased from $1,197,730 for the year ended December 31, 2018, to $1,127,719 for the year ended December 31, 2019, primarily due to an increase in the cost of goods of containers, which is the Company’s primary source of revenue (65% and 62% of total revenues for the year ended December 31, 2019, and December 31, 2018, respectively). The Company intends to devote its manpower and capital resources to increasing revenues, while working to reduce the cost of goods sold and operating expenses. Doing so depends on the successful execution of its operating plan, which includes increasing sales of existing products, introducing additional products and services, controlling cost of goods sold and operation expenses, negotiating extensions of existing loans and raising either debt or equity financing.

Off-Balance-Sheet Arrangements

The Company has no off-balance sheet arrangements.

Risks and Uncertainties

See “Item 1A – Risk Factors” for information as to certain significant risks.

Critical Accounting Policies and Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain estimates could be affected by external conditions, including those unique to its industry, and general economic conditions. These external conditions could affect the Company’s estimates so as to cause actual results to differ materially from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly, based on these conditions and records adjustments when necessary.

Significant estimates relied upon in preparing the consolidated financial statements contained in this report include revenue recognition, accounts receivable reserves, inventory and related reserves, valuations and purchase price allocations related to business combinations,expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to intangible assets and goodwill, amortization periods, accrued expenses, share-based compensation, and recoverability of the Company’s net deferred tax assets and any related valuation allowance.

Fair Value Measurement

The Company has adopted the provisions of ASC Topic 820, Fair Value Measurements, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, is carried at historical cost basis, which approximates their fair value because of the short-term nature of these instruments. The carrying amounts of the Company’s short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

ASC Topic 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC Topic 820 also establishes a fair-value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 describes three levels of inputs that may be used to measure fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – Inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

During the year ended December 31, 2018, the Company accounted for a derivative liability in connection with the conversion feature of convertible debt, classified as a Level 3 liability, as the only financial liability measured at fair value on a recurring basis. As of December 31, 2019, and December 31, 2018, the Company had no derivative liability.

Goodwill and Intangible Asset Impairment

Goodwill and intangible assets that have indefinite useful lives are not amortized, but are evaluated for impairment annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The Company records intangible assets at fair value, estimated using a discounted cash flow approach. The Company amortizes its intangible assets that have finite lives using either the straight-line method or based upon estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized. Amortization is recorded over estimated useful lives ranging from 14 to 20 years.

The Company reviews intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that would indicate impairment and trigger a more frequent impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, or an adverse action or assessment by a regulator. If the carrying value of an intangible asset exceeds its undiscounted cash flows, the Company will write down its carrying value to its fair value in the period identified. The Company generally calculates fair value as the present value of estimated future cash flows to be generated by the asset using a risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, the Company will amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life. The Company also evaluates intangible assets and long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. These changes include but are not limited to significant adverse changes in business climate, market conditions, or other events that indicate an asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test of recoverability are less than the carrying amount of these assets, the carrying amount of such assets is reduced to fair value.

In January 2017, FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (“ASU No. 2017-04”), which simplifies accounting for goodwill impairment. This ASU requires a hypothetical purchase price allocation, which is mandatory for fiscal years beginning after December 14, 2019. As permitted, the Company adopted No. ASU No. 2017-04 for fiscal periods beginning January 1, 2018. Pursuant to ASU No. 2017-04, the Company evaluates and tests the recoverability of its goodwill for impairment at least annually during the fourth quarter of each fiscal year or more often if circumstances indicate that goodwill may not be recoverable. The Company has conducted annual impairment test of goodwill during the fourth quarter of each year, commencing in the year ended December 31, 2018, in which year it first acquired intangible assets. The annual impairment testing process is subjective and requires judgment at many points. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets not previously recorded. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based upon an evaluation of the fair value of the Company as a whole. The estimation of fair value requires significant judgment. The goodwill recorded in the consolidated balance sheets at each of December 31, 2019 and December 31, 2018, was $1,020,314. Goodwill was due entirely to the Company’s acquisition of intangible property relating to Medtainers^®in 2018. Various future events, including changes in demand for Medtainers^®, could result in an impairment of goodwill. Any adjustments resulting from an impairment test will be reflected in the Company’s consolidated financial statements.

The fair value of acquired technology and patents, as well as acquired technology that the Company may develop, is determined at acquisition date primarily using the income approach, which discounts expected future cash flows to present value. The discount rates used in the present value calculations are typically derived from a weighted-average cost of capital analysis and then adjusted to reflect risks inherent in the development lifecycle as appropriate. Any loss resulting from an impairment test will be reflected in operating income in the Company’s consolidated statements of income. The annual impairment testing process is subjective and requires judgment at many points. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets not previously recorded.

There was no impairment of intangible assets, long-lived assets or goodwill during the years ended December 31, 2019 and December 31, 2018.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 20 l4-09, Revenue from Contracts with Customers (Topic 606), which superseded all existing revenue recognition requirements, including most industry specific guidance. This standard requires a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration that it expects to receive for those goods or services. FASB subsequently issued the following amendments to ASU No. 2014-09 concerning its adoption and clarification that have the same effective date and transition date: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU No. 20l6-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The Company adopted these amendments (collectively, the “new revenue standards”) with ASU No. 2014-09.

The new revenue standards became effective for the Company on January 1, 2018, and were adopted using the modified retrospective method. The adoption of the new revenue standards did not change the Company’s revenue recognition as the majority of its revenues continue to be recognized when the customer takes control of its product. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained earnings was required upon adoption of the new revenue standards.

Under the new revenue standards, the Company recognizes revenues when its customer obtains control of promised goods or services, or when they are shipped to that customer, in an amount that reflects the consideration which it expects to receive in exchange for them. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (a) identify contract(s) with a customer; (b) identify the performance obligations in the contract; (c) determine the transaction price; (d) allocate the transaction price to the performance obligations in the contract; and (e) recognize revenues when (or as) the Company satisfies its performance obligation.

Revenues from product sales are recognized when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment or delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.

Income Taxes

The Company accounts for income taxes under FASB ASC Topic 740, Accounting for Income Taxes, under which the Company is required to recognize a current tax liability or asset for current taxes payable or refundable and a deferred tax liability or asset for the estimated future tax effects of temporary differences and carry forwards to the extent they are realizable.

The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. While the Company has considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event it were to determine that it would be able to realize deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period in which such determination was made. Likewise, should the Company determine that it would not be able to realize all or part of a net deferred tax asset in the future, an adjustment to that asset would be charged to income in the period in which such determination was made. In the year ended December 31, 2019, the Company recorded a deferred tax liability related to intangible assets that are amortized under GAAP but are not deductible for tax purposes. The remaining change in valuation allowance is attributable to the decrease in valuation allowance on other tax assets generated through the year ended December 31, 2019. The Company believes that it is more likely than not that these tax assets will be realized. Based on annual evaluations of tax positions, the Company believes that it has appropriately filed its tax returns and accrued for possible exposures. As part of the process of preparing the Company’s consolidated financial statements, it is required to estimate its income tax provision or benefit in each of the jurisdictions in which it operates. This process involves estimating current income tax provision or benefit together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences have resulted in deferred tax assets and liabilities, which are included in the consolidated balance sheets.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions.

JOBS Act

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) provides that, as an emerging growth company, the Company (a) need not present more than 2 years of audited financial statements in order for a registration statement with respect to an initial public offering of common equity securities to be effective, and in any other registration statement that it files with the SEC, it need not present selected financial data prescribed by the SEC in its regulations for any period prior to the earliest audited period presented in connection with the Company’s initial public offering; and (b) may not be required to comply with any new or revised financial accounting standard until such date that a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002) is required to comply with such new or revised accounting standard, if such standard applies to companies that are not issuers. The term “issuer” generally means any person who issues or proposes to issue any security, the securities of which are registered under section 12 of the Exchange Act or that is required to file reports under section 15(d) of the Exchange Act, or that files or has filed a registration statement that has not yet become effective under the Securities Act and that it has not withdrawn.

While the Company is permitted to opt out of these provisions of the JOBS Act, it has not done so and does not intend to do so. As a result, the Company’s financial statements may not be comparable to companies that that elect to opt out of or do not have the benefit of these provisions.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

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

Item 8. Financial Statements and Supplementary Data.

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	16
Consolidated Balance Sheets	17
Consolidated Statements of Operations	18
Consolidated Statements of Cash Flows	19
Consolidated Statements of Stockholders’ Equity (Deficit)	20
Notes to Consolidated Financial Statements	21

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Medtainer, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Medtainer, Inc. (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2019 and 2018, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has a working capital deficit, continued operating losses since inception, and has notes payable that are currently in default. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. 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 audits 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 consolidated 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 audits, 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 audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ HASKELL & WHITE LLP

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

Irvine, California

May 28, 2020

MEDTAINER, INC.

(formerly named Acology, Inc.)

CONSOLIDATED BALANCE SHEETS

	December 31,
		2019		2018
ASSETS
CURRENT ASSETS
Cash	$	17,982		$	17,374
Accounts receivable		108,836			67,874
Inventories		85,215			172,884
Prepaid expenses		8,967			—
TOTAL CURRENT ASSETS		221,000			258,132
Property and equipment, net of accumulated depreciation of $118,459 and $90,140, respectively		35,280			62,434
Intangible assets, net of accumulated amortization of $126,322 and $45,514, respectively		1,405,678			1,486,486
Goodwill		1,020,314			1,020,314
Security deposits		7,699			7,699
TOTAL ASSETS	$	2,689,971		$	2,835,065

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	234,635		$	189,217
Accrued interest payable		142,464			124,633
Payroll liabilities payable		162,409			111,128
Customer deposits payable		97,310			51,496
Convertible notes payable		81,172			81,172
Notes payable		373,959			373,959
Loans payable – stockholders		627,162			385,660
Capital lease payable		—			9,522
TOTAL CURRENT LIABILITIES		1,719,111			1,326,787

STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock, without par value, issuable in series, 10,000,000 shares authorized: none issued		—			—
Common stock, par value $0.00001 per share, 100,000,000 shares
authorized: 56,700,979 shares issued and outstanding at
December 31, 2019, and 55,499,106 shares issued and
outstanding at December 31, 2018		567			555
Additional paid-in capital		5,905,656			5,034,636
Accumulated deficit		(4,935,363	)		(3,526,913	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		970,860			1,508,278
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	2,689,971		$	2,835,065

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

MEDTAINER, INC.

(formerly named Acology, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2019			2018
Revenues	$	2,148,466		$	2,230,330

Cost of goods sold		1,020,747			1,032,601

Gross profit		1,127,719			1,197,730

Operating expenses:

Advertising and marketing		84,440			45,463
Bad debt expense		7,150			—
Depreciation and amortization		109,127			71,546
Professional fees		112,829			98,598
Share-based compensation		871,032			767,592
Payroll expenses		1,170,829			1,183,973
General and administrative expenses		142,271			151,475

Total operating expenses		2,497,678			2,318,647

Loss from operations		(1,369,959	)		(1,120,917	)

Non-operating income (expense)

Interest expense		(38,491	)		(159,386	)
Gain on extinguishment of debt		—			(5,012	)
Gain on change in fair value of derivative		—			1,031

Non-operating income (expense)		(38,491	)		(153,343	)

Loss before income taxes		(1,408,450	)		(1,274,260	)

Income tax provision		—			—

Net loss	$	(1,408,450	)	$	(1,274,260	)

Basic loss per common share	$	(0.02	)	$	(0.02	)

Diluted loss per common share	$	(0.02	)	$	(0.02	)

Basic weighted average common shares outstanding		56,516,046			54,182,109
Diluted weighted average common shares outstanding		57,000,567			54,330,467

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

MEDTAINER, INC.

(formerly named Acology, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2019			2018
OPERATING ACTIVITIES:
Net loss	$	(1,408,450	)	$	(1,274,260	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation expense		28,319			26,031
Amortization expense		80,808			45,514
Stock expense for sales agreement		—			9,100
Share-based compensation		871,032			767,592
Gain on extinguishment of debt		—			(5,012	)
Gain on change in fair value of derivative		—			(1,031	)
Non-cash interest expense		—			105,507
Decrease (increase) in operating assets
Accounts receivable		(40,962	)		20,088
Inventories		87,669			38,768
Prepaid expenses		(8,967	)		—
Increase (decrease) in operating liabilities
Accounts payable and accrued expenses		45,418			(91,508	)
Accrued interest		17,831			110,046
Payroll liabilities		51,281			—
Customer deposits		45,814			—
Payment of security deposits		—			(210	)
NET CASH USED IN OPERATING ACTIVITIES		(230,207	)		(249,825	)

NET CASH USED IN INVESTING ACTIVITIES:
Acquisition of property and equipment		(1,165	)		(12,416	)
NET CASH USED IN INVESTING ACTIVITIES		(1,165	)		(12,416	)

FINANCING ACTIVITIES:
Proceeds from issuance of common stock		—			120,000
Repayment of note payable		—			(100,000	)
Principal payments on capital lease obligations		(9,522	)		(25,707	)
Proceeds from stockholder loan		610,393			348,666
Repayment of stockholder loan		(368,891	)		(86,000	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		231,980			256,959

INCREASE (DECREASE) IN CASH		608			(5,282	)

CASH - BEGINNING OF YEAR		17,374			22,656

CASH - END OF YEAR	$	17,982		$	17,374

Non-cash financing activities
Conversion of convertible debt into common stock	$	—		$	49,658
Common stock issued for the acquisition of intangible assets and goodwill	$	—		$	2,552,314

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

MEDTAINER, INC.

(formerly named Acology, Inc.)

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

					Additional
	Common Stock				Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total

BALANCES – January 1, 2018		52,495,113		525		1,536,002	$	(2,252,653	)	$	(716,126	)

Issuance of common stock in private placement		120,000		1		119,999		—			120,000

Share-based compensation		185,000		2		767,590		—			767,592

Common stock issued under sales agreement		10,000		—		9,100		—			9,100

Common stock issued upon conversion of convertible debt		57,741		1		49,657		—			49,658

Common stock issued upon acquisition of intangible assets		2,631,252		26		2,552,288		—			2,552,314

Net loss		—		—		—		(1,274,260	)		(1,274,260	)

BALANCES – December 31, 2018		55,499,106		555		5,034,636		(3,526,913	)		1,508,278

Common stock issued in reverse split		1,873		—		—		—			—

Share-based compensation		1,200,000		12		871,020		—			871,032

Net loss		—		—		—		(1,408,450	)		(1,408,450	)

BALANCES – December 31, 2019		56,700,979		567	$	5,905,656	$	(4,935,363	)	$	970,860

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

MEDTAINER, INC.

(formerly named Acology, Inc.)

Notes to Consolidated Financial Statements

December 31, 2019

Note 1 – Description of Business and Organization

Medtainer, Inc. (the “Company”) designs, brands and sells proprietary plastic medical grade containers called Medtainers^®that can store pharmaceuticals, herbs, teas and other solids or liquids and can grind solids and shred herbs. The Company also sells humidity control inserts, smell-proof bags, lighters, plastic lighter holders and other products, and provides private labeling and branding for purchasers of the Company’s containers and the other products.

The Company was incorporated under the laws of the state of Florida on September 5, 1997. It changed its corporate name to Acology, Inc. on January 9, 2014, and on August 28, 2018, to Medtainer, Inc. Prior to January 1, 2018, the Company sold its products through its wholly owned subsidiary, D&C Distributors LLC, a California limited liability company, which commenced operations on January 29, 2013, and which the Company acquired by merger on March 28, 2014, and performed its printing services through its wholly owned subsidiary, D&C Printing LLC, a California limited liability company, which was established by the Company and commenced operations on April 14, 2015. Commencing on January 1, 2018, the Company has itself conducted all of its business.

Note 2 – Summary of Significant Accounting Policies

Accounting Principles

The accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-K and Article 10 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”).

Principles of Consolidation

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

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. Certain of these estimates could be affected by external conditions, including those unique to the Company’s industry, and general economic conditions. It is possible that these external conditions could have an effect on the Company’s estimates that could cause actual results to differ materially from its estimates. The Company re-evaluates all of its accounting estimates at least quarterly based on these conditions and records adjustments when necessary.

Significant estimates relied upon in preparing these consolidated financial statements include revenue recognition, accounts receivable reserves, inventory and related reserves, valuations and purchase price allocations related to business combinations, expected future cash flows used to evaluate the recoverability of long-lived assets, estimated fair values of long-lived assets used to record impairment charges related to intangible assets and goodwill, amortization periods, accrued expenses, share-based compensation, and recoverability of the Company’s net deferred tax assets and any related valuation allowance.

Financial Statement Reclassification

The Company has recast certain prior period current liabilities on its consolidated balance sheets, consisting of accounts payable and accrued liabilities and expenses, to conform to the current period presentation. The Company also recast for the year ended December 31, 2018, $27,557 of operating expenses to cost of goods sold. This recast of operating expenses to cost of goods sold were made to more accurately reflect the absorption calculations used in the current periods. These items had no impact in the Company’s consolidated statements of operations or net cash from or used in operating, financing, or investing in its consolidated cash flow statements.

Remaining Performance Obligations

As of December 31, 2019, the Company’s backlog of orders that it believed to be firm was $97,310, all which the Company expects to fill during 2020. As of December 31, 2018, its backlog was $51,495, only $9,433 of which was filled during 2019, because three customers, whose orders totaled $42,062, deferred delivery; these orders remain open and those customers have not withdrawn their deposits.

Cash

The Company considers all short-term highly liquid investments with an original maturity at the date of purchase of 3 months or less to be cash equivalents.

Accounts Receivable

Included in “Accounts receivable” on the consolidated balance sheets are amounts primarily related to customers. The Company estimates losses on receivables based on known troubled accounts and historical experience of losses incurred. Receivables are considered impaired and written off when it is probable that all contractual payments due will not be collected in accordance with the terms of the related agreement. Based on experience and the judgment of management, the allowance for doubtful accounts was $0 as of December 31, 2019, and December 31, 2018.

Inventories

Inventories, which consist of products held for resale, are stated at the lower of cost, determined using the first-in first-out method, and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to complete and dispose of the product. If the Company identifies excess, obsolete or unsalable items, its inventories are written down to their realizable value in the period in which the impairment is first identified. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of sales in the Company’s consolidated statements of operations.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided for on a straight-line basis over the useful lives of the assets. For furniture and fixtures the useful life is 7 years. Machinery, equipment, and computers are depreciated over the useful life of 3 to7 years. Leasehold improvements are depreciated over 2 years and were fully depreciated as of December 31, 2019. Expenditures for additions and improvements are capitalized and repairs and maintenance are expensed as incurred.

Goodwill and Intangible Assets

Goodwill and intangible assets that have indefinite useful lives are not amortized but are evaluated for impairment annually or whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The Company records intangible assets at fair value, estimated using a discounted cash flow approach. The Company amortizes intangible assets that have finite lives using either the straight-line method or based upon estimated future cash flows to approximate the pattern in which the economic benefit of the assets will be utilized. Amortization is recorded over estimated useful lives ranging from 14 to 20 years.

The Company reviews intangible assets subject to amortization at least quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. Conditions that would indicate impairment and trigger a more frequent than quarterly impairment assessment include, but are not limited to, a significant adverse change in legal factors or business climate that could affect the value of an asset, or an adverse action or assessment by a regulator. If the carrying value of an intangible asset exceeds its undiscounted cash flows, the Company will write down the carrying value to its fair value in the period identified. The Company generally calculates fair value as the present value of estimated future cash flows to be generated by the asset using a risk-adjusted discount rate. If the estimate of an intangible asset’s remaining useful life is changed, the Company will amortize its remaining carrying value prospectively over its revised remaining useful life. The Company has conducted annual impairment test of goodwill during the fourth quarter of each year, commencing in the year ended December 31, 2018, in which year it first acquired intangible assets. The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based upon an evaluation of the fair value of the Company as a whole. The estimation of fair value requires significant judgment.

Loss resulting from an impairment test will be reflected in operating income in the Company’s consolidated statements of operations. The annual impairment testing process is subjective and requires judgment at many points. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges for these assets not previously recorded.

In January 2017, FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment (“ASU No. 2017-04”), which simplifies accounting for goodwill impairment. This ASU requires a hypothetical purchase price allocation, which is mandatory for fiscal years beginning after December 14, 2019. The Company adopted ASU No. 2017-04 for fiscal periods beginning January 1, 2018. The Company evaluates intangible assets and long-lived assets for possible impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. These changes include but are not limited to significant adverse changes in business climate, market conditions, or other events that indicate that an asset’s carrying amount may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test of recoverability are less than the carrying value of these assets, their carrying value will be reduced to fair value. The Company evaluates and tests the recoverability of its goodwill for impairment at least annually during the fourth quarter of each fiscal year or more often if circumstances indicate that goodwill may not be recoverable. There was no impairment of intangible assets, long-lived assets or goodwill during the year ended December 31, 2019.

Intangible assets, domain names, trademarks and non-compete agreements that are deemed to have a definite life are amortized over their estimate useful lives and intangible assets with an indefinite life are assessed for impairment at least annually. Beginning in 2018, the Company has evaluated quarterly the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815, Derivatives and Hedging Activities.

GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free-standing derivative financial instruments according to certain criteria. These criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not remeasured at fair value under otherwise applicable GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments when it has been determined that the embedded conversion options should not be bifurcated from their host instruments as follows: the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt.

The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. Debt- and equity-linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (ASU) No. 20l4-09, Revenue from Contracts with Customers (Topic 606), which superseded all existing revenue recognition requirements, including most industry specific guidance. This standard requires a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration that it expects to receive for them. FASB subsequently issued the following amendments to ASU No. 2014-09 concerning its adoption and clarification that have the same effective date and transition date: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net); ASU No. 20l6-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU No. 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers. The Company adopted these amendments (collectively, the “new revenue standards”) when it adopted ASU No. 2014-09.

The became effective for the Company on January 1, 2018, and were adopted using the modified retrospective method. Adoption of the new revenue standards did not change the Company’s revenue recognition, as the majority of its revenues continue to be recognized when the customer takes control of its product. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect to its product revenues, no adjustment to retained earnings was required upon adoption of the new revenue standards.

Under the new revenue standards, the Company recognizes revenues when a customer obtains control of promised goods or services, or when they are shipped to a customer, in an amount that reflects the consideration that it expects to receive in exchange for them. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (a) identify contract(s) with a customer; (b) identify the performance obligations in the contract; (c) determine the transaction price; (d) allocate the transaction price to the performance obligations in the contract; and (e) recognize revenues when (or as) the Company satisfies its performance obligation.

Revenues from product sales are recognized when a customer obtains control of the Company’s product, which occurs at a point in time, typically upon shipment or delivery to the customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less or the amount is immaterial.

Revenues for the years ended December 31, 2019, and December 31, 2018, were as follows:

	Year Ended December 31,
	2019				2018
	Revenues		%		Revenues		%
Medtainers^®	$	1,391,296		65	$	1,374,403		62
Humidity pack inserts		357,218		17		397,875		18
Lighters		140,662		6		134,470		6
Printing		83,442		4		82,617		4
Plastic lighter holders		74,547		3		85,367		4
Shipping charges		65,542		3		86,429		4
Jars		23,370		1		21,498		1
Others		12,389		1		47,671		1
Total Revenues	$	2,148,466		100	$	2,230,330		100

Share-Based Payments

In June 2018, FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions. This update supersedes previous guidance for share-based payments to nonemployees under Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. This guidance became effective for the Company as of January 1, 2019. Based on the completed analysis, the Company has determined that the adoption of this guidance will not have a material impact on its financial statements. The Company treats share-based payments to employees and non-employees in accordance with GAAP.

Fair Value Measurements

The Company has adopted ASC Topic 820, Fair Value Measurements, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.

The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses, is carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of the Company’s short- and long-term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.

Level 1 – Quoted prices in active markets for identical assets or liabilities

Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – Inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

As of December 31, 2018, and during the year ended December 31, 2019, the Company had no derivative liability. During the year ended December 31, 2018, the Company accounted for a derivative liability in connection with the conversion feature of convertible debt, classified as a Level 3 liability, as the only financial liability measured at fair value on a recurring basis.

Advertising

Advertising and marketing expenses are charged to operations as incurred.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. Under this method, income tax expense is recognized for (a) taxes payable or refundable for the current year and (b) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the consolidated statements of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of the available positive and negative evidence, it is more likely than not some portion or all the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company has no material uncertain tax positions.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in financial institutions, which at times, may exceed the federal deposit insurance coverage of $250,000. The Company has not experienced losses on these accounts and that it is not exposed to significant risks on such accounts. The Company has not experienced losses on accounts receivable and the Company believe that it is not exposed to significant risks with respect to them.

Recent accounting pronouncements

In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), which requires recognition of lease liabilities, representing future minimum lease payments, on a discounted basis, and a corresponding right-of-use assets on a balance sheet for most leases, along with requirements for enhanced disclosures to enable the assessment of the amount, timing and uncertainty of cash flows arising from leasing arrangements. This ASU became effective for the Company on January 1, 2019, and the Company has determined that the impact of this ASU is immaterial. The Company had entered into a 24-month equipment lease in May 2017, which had five remaining payments of $2,000 each as of December 31, 2018; therefore, the Company determined that the impact of this ASU is immaterial. The Company also had entered into a building lease September 1, 2018, which expired August 31, 2019. It was renewed on September 1, 2019 and expires on August 31, 2020. Because the building lease has an initial term of 12 months or less and there is no assurance the Company will remain in the building location after the lease has expired, the Company has concluded that this ASU does not apply to this building lease.

The Company does not believe there are any other recently issued, but not yet effective, accounting standards that would have a significant impact on the Company’s financial position or results of operations.

Note 3 – Going Concern

The 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. At December 31, 2019, the Company had a working capital deficit of $1,498,111 and an accumulated deficit of $4,935,363. In addition, the Company has generated operating losses since its inception and has notes payable that are currently in default. These factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the successful execution of its operating plan, which includes increasing sales of existing products and services, introducing additional products and services, controlling operating expenses, negotiating extensions of overdue notes payable and raising either debt or equity financing. There is no assurance that the Company will be able to any of the measures set forth in the previous sentence.

Note 4 – Intangible Assets

The Company has intangible assets described in the next paragraph that are subject to amortization. Intangible Assets not subject to amortization are tested for impairment at least annually. The Company periodically reviews these and other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company will recognize an impairment loss when the sum of expected undiscounted future cash flows is less that the carrying amount of the asset, to be measured as the difference between the asset’s estimated fair value and its book value. The costs of intangible assets were included in intangible assets on the consolidated balance sheets and amortized as indicated in the next paragraph.

On June 8, 2018, the Company acquired patents and patent applications, a trademark and an internet domain related to Medtainer^®pursuant to an Asset Purchase Agreement, dated as of April 16, 2018, and amended on June 8, 2018, by and between the Company and an unrelated party, in consideration of the issuance of 2,631,252 shares of common stock. These assets and the associated goodwill have been apportioned as follows, based upon a report that the Company obtained from an independent valuation firm, as of December 31, 2019, and December 31, 2018:.

Estimated Asset Valuation at December 31, 2019:
Description	Weighted Average Estimated Useful Life	Gross Carrying Value		Accumulated Amortization		Net Amount
U.S. patents	15 years	$	435,000	$	(44,571)	$	390,429
U.S. patents	15 years		435,000		(42,895)		392,105
Canadian patents	20 years		260,000		(20,224)		239,776
European patents	14 years		30,000		(3,262)		26,738
Molds	15 years		150,000		(15,370)		134,630
Trademark	Indefinite life		220,000		—		220,000
Domain name	Indefinite life		2,000		—		2,000
Intangible Totals		$	1,532,000	$	(126,322)	$	1,405,678
Goodwill		$	1,020,314	$	—	$	1,020,314

Estimated Asset Valuation at December 31, 2018:
Description	Weighted Average Estimated Useful Life	Gross Carrying Value		Accumulated Amortization		Net Amount
U.S. patents	15 years	$	435,000	$	(16,060)	$	418,940
U.S. patents	15 years		435,000		(15,455)		419,545
Canadian patents	20 years		260,000		(7,286)		252,714
European patents	14 years		30,000		(1,1705)		28,825
Molds	15 years		150,000		(5,538)		144,462
Trademark	Indefinite life		220,000		—		220,000
Domain name	Indefinite life		2,000		—		2,000
Intangible Totals		$	1,532,000	$	(45,514)	$	1,486,486
Goodwill		$	1,020,314	$	—	$	1,020,314

Note 5 – Property and Equipment

Property and equipment consisted of:

	December 31,
	2019		2018
Furniture and fixtures	$	600	$	600
Machinery and equipment		109,346		108,181
Leasehold improvements		43,793		43,793
		153,739		152,574
Accumulated depreciation		(118,459)		(90,140)
	$	35,280	$	62,434

Note 6 – Convertible Notes Payable and Promissory Notes Payable

As of December 31, 2019, and December 31, 2018, the Company had the following convertible notes and promissory notes outstanding:

		December 31, 2019				December 31, 2018
				Accrued				Accrued
		Principal		Interest		Principal		Interest
Convertible Notes Payable
July 2014 $75,000 note, convertible into common stock	$	66,172	$	23,712	$	66,172	$	17,095
at $5.00 per share, 10% interest, currently in default (a)
July 2014 $15,000 note, convertible into common stock		15,000		9,125		15,000		7,625
at $5.00 per share, 10% interest, currently in default (a)
	$	81,172	$	32,837	$	81,172	$	24,720

Notes Payable
November 2014 $300,000 note, due February 2019,	$	298,959	$	34,627	$	298,959	$	24,913
10% interest, currently in default (b)
August 2015 $75,000 note, with one-time interest		75,000		75,000		75,000		75,000
charge of $75,000, currently in default (c)
		373,959		109,627		373,959		99,913
Total	$	446,131	$	142,464	$	455,131	$	124,633

The Company entered into promissory note conversion agreements in the aggregate amount of $90,000 and made $8,828 payment on them as of December 31, 2019. These notes are convertible into shares of the Company’s common stock at a conversion price of $5.00 per share. The loans under these agreements are non-interest-bearing and have no stated maturity date; however, the Company is accruing interest at a 10% annual rate.

On November 3, 2014, the Company made a promissory note in the principal amount of $300,000 in favor of an unrelated person (the “Old Note”). On February 22, 2018, the Company repaid $100,000 of the principal of the Old Note and made a new promissory note, dated February 22, 2018, in the principal amount of $298,959 in favor of said party (the “New Note”) in satisfaction of the Old Note, which principal amount comprised the unpaid principal amount of $200,000 due on the Old Note after the repayment, and $98,959 of accrued interest on the Old Note. At December 31, 2019, accrued interest on this note was $34,627. The outstanding balance of this note was $298,959 at December 31, 2019, and December 31, 2018. The New Note was due on February 22, 2019. The Company is negotiating an extension.

On August 15, 2015, the Company made a promissory note in the principal amount of $150,000 in favor of an unrelated party. The note bears interest at 0.48% per annum, provided that the note is paid on or before maturity date, or 2 percentage points over the Wall Street Journal Prime Rate, if it was not repaid on or before the maturity date. Upon an event of default, as defined in the note, interest will be compounded daily. This note matured on August 11, 2016. During the year ended December 31, 2017, the holder of this note agreed to exchange $75,000 of principal and $663 of interest accrued on this note for 500,000 shares of common stock. This exchange was accounted for as an extinguishment of debt resulting in a loss of $683,337. In connection with this exchange, the Company agreed to pay the holder a fee of $75,000 in consideration of his waiving the default under the promissory note, as additional consideration for his agreeing to the exchange and as compensation for his foregoing the interest that would have accrued on the promissory note at the default rate but for the waiver. At December 31, 2019, and December 31, 2018, the note had a balance of $75,000, in addition to the $75,000 fee included in accrued interest. The Company is currently negotiating an extension of the maturity date of this note.

Note 7 – Stockholders’ Equity

On February 12, 2018, the Company issued 120,000 shares of common stock to an unrelated party in consideration of $120,000.

On June 8, 2018, the Company issued 2,631,252 shares of common stock, valued at $2,552,314, for the purchase of certain patents and patent applications, a trademark and an internet domain. For information regarding the valuation of these assets and the associated goodwill, see Note 4.

On September 25, 2018 the Company issued 57,741 shares of common stock upon conversion of the three convertible promissory notes described in subparagraph (2) of Note 6.

On March 22, 2019, the Company implemented a reverse split of its common stock on the basis of one share of common stock for each 100 shares of common stock then outstanding. Also, on that date, the Company reduced the number of shares of its authorized common stock from 6,000,000,000 to 100,000,000. The number of authorized shares of preferred stock remained 10,000,000. The effects of the reverse split have been retroactively applied to all periods presented in the consolidated financial statements.

Note 8 – Share-Based Compensation

The Company’s 2018 Incentive Award Plan (the “2018 Plan”) became effective on December 1, 2018, under which the Company may issue up to 2,000,000 shares of common stock as incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other forms of compensation to employees, directors and consultants. In addition, the 2018 Plan provides for the grant of performance cash awards to employees, directors and consultants. All these shares were reserved on that date.

On December 1, 2018, 1,350,000 shares of common stock were awarded to employees in the form of restricted shares and 335,000 shares of common stock were awarded to consultants as compensation. The fair value of these shares on the grant date was $0.01 per share. As of December 31, 2018, 185,000 shares awarded to consultants were vested and none of the shares awarded to employees were vested. The following table shows vesting for financial reporting purposes under GAAP of the shares issued under the 2018 Plan:

	Shares of Common Stock
Vesting Dates	Employees		Consultants
December 31, 2018		—		185,000
January 1, 2019		750,000		—
March 31, 2019		—		150,000
June 30, 2019		300,000		—
Total vested at December 31, 2019		1,050,000		335,000

The Company made no awards in any other form during the years ended December 31, 2019, and December 31, 2018. The Company expensed $871,032 and $767,592 for share-based compensation in the years ended December 31, 2019, and December 31, 2018, respectively, for its employees and nonemployees in the accompanying consolidated statements of operations.

Note 9 – Income Taxes

As of December 31, 2019, the Company had approximately $3,248,000 of net operating loss carryforwards (“NOLs”) available to reduce future taxable income which will begin to expire in 2035. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the assessment, management has established a full valuation allowance against all the deferred tax assets for every period because it is more likely than not that all of the deferred tax assets will be realized.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) was signed into law, making significant changes to the Internal Revenue Code. Changes include a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. The Company has estimated its provision for income taxes in accordance with the 2017 Tax Act and the guidance available and, based thereon, has determined that the 2017 Tax Act does not change the determination that it is more likely than not that all of the deferred tax assets will be realized. Accordingly, the Company has kept the full valuation allowance. As a result, the Company recorded no income tax expense during the year ended December 31, 2019.

The reconciliation of the effective tax rate to the federal statutory rate is as follows:

	December 31,
	2019			2018
U.S. federal statutory rate		(21%	)		(21%	)
State income tax, net of federal benefit		(7%	)		(7%	)
Change in valuation allowance		28%			28%
		0%			0%

The components of deferred tax assets were:

	December 31,
	2019			2018
Net operating loss	$	682,000		$	563,000
Valuation allowance		(682,000	)		(563,000)
	$	—		$	—

Note 10 – Capital Leases

During each of the years ended at December 31, 2017, and December 31, 2016, the Company entered a capitalized equipment lease. Each of these leases was payable in 24 monthly installments of $2,000, including interest at the rate of 19.87% per annum. The lessor under these leases was a related party. The Company made its final payments for these leases during June 2018 and May 2019, respectively.

Note 11 – Related-Party Transactions

Loans

The Company has received loans from its officers and directors from time to time since its inception. During the year ended December 31, 2019, the Company received loans of $610,393 from its officers and directors and the Company repaid $368,891 of these loans. During the year ended December 31, 2018, the Company received loans of $348,666 from its officers and directors, and the Company repaid $86,000 of these loans. The balance of these loans at December 31, 2019, and December 31, 2018, was $627,162 and $385,660, respectively. All of these loans are non-interest-bearing and have no set maturity date. The Company expects to repay these loans when cash flows become available.

Contracts

The Company makes capital lease payments for equipment, building lease payments, and products for resale to an entity owned by a related party, who is also one of its executive officers.

Payments made to related parties for the years ended December 31, 2019, and December 31, 2018, were as follows:

	Year Ended December 31,
	2019		2018
Capital lease payments	$	10,000	$	30,498
Building lease payments		105,319		97,698
Purchase of products for resale		74,416		72,898
Total	$	189,735	$	201,094

Note 12 – Concentrations

For the year ended December 31, 2019, and December 31, 2018, one of the Company’s customers accounted for approximately 10% and 11%, respectively, of total sales.

For the year ended December 31, 2019, the Company purchased approximately 36%, of its products for cost of goods sold from one distributor. For the year ended December 31, 2018, the Company purchased approximately 42% and 39%, respectively, of its products for cost of goods sold from two distributors.

For the year ended December 31, 2019, three of the Company’s customers accounted for 34%, 21% and 18% of its accounts receivable. As of December 31, 2018, three of the Company’s customers accounted for 35%, 20% and 11% of its accounts receivable.

Note 13 – Commitments

The Company was committed under an operating lease for its premises, under which it made monthly payments of $7,500, plus 100% of operating expenses, until the lease expired June 30, 2018. On September 1, 2018, the Company entered a new operating lease with an entity owned by a related party calling for monthly payments of $8,641, plus 100% of operating expenses, for a term expiring on August 31, 2019. On September 1, 2019, this was amended such that it will expire on August 31, 2020, and the rent thereunder was increased to $8,967 per month.

In conjunction with the Asset Purchase Agreement described in Note 4, the Company agreed to purchase a minimum of 30,000 units of product per month. The minimum purchase quantity will increase by 1% on every anniversary of the agreement’s effective date. The purchase price for units is subject to periodic adjustment for changes in the consumer price index. The agreement will expire on April 30, 2031; however, it can be terminated upon payment of $400,000.

Note 14 – Subsequent Events

On May 4, 2020, the Company made a note in favor of Customers Bank in the principal amount of $137,690 pursuant to the terms of the Paycheck Protection Program authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and pursuant to all regulations and guidance promulgated or provided by the SBA and other Federal agencies that are now, or may become, applicable to the loan. The loan bears interest at the rate of 1% per annum. No interest or principal will be required during the first six months after the loan amount was disbursed, although interest will continue to accrue over this deferral period. After the deferral period and after taking into account any loan forgiveness applicable to the loan pursuant to the program, as approved by SBA, any remaining principal and accrued interest will be payable in substantially equal monthly installments over the remaining 18-month term of the loan, in the amount and according to the payment schedule provided by lender. The loan will be forgiven if its proceeds are used for payroll, mortgage interest, rent, and utilities during the 8-week period beginning on May 4, 2020. However, the amount of loan forgiveness will be reduced if less than 75% of the funds is expended for payroll over that period. Because the Company may not require a number of employees such that it would expend these funds for payroll to that extent, a substantial portion of the loan may not be forgiven. In addition, the amount of the loan to be forgiven and other terms of the loan may be affected by regulations and interpretations that have not yet been adopted or, if presently adopted, are changed.

On May 21, 2020, the Company issued 20,000,000 Shares of Common Stock to an unrelated party in consideration of $200,000.

Management evaluated all other subsequent events when these financial statements were issued and determined that none of them requires this disclosure herein.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

On October 25, 2018, Paritz & Company, P.A., the Company’s independent registered public accounting firm, which audited the Company’s financial statements for the year ended December 31, 2017, gave notice of its resignation as such, effective on that date. The Board of Directors engaged Prager Metis CPAs, LLC (“Prager”) to serve as the Company’s independent registered public accounting firm, effective on October 26, 2018.

Prager acted in that capacity until, on June 5, 2019, it gave notice of its resignation as such, effective on that date. At that time, Prager had not completed its audit of the Company’s financial statements for the year ended December 31, 2018. On June 24, 2019, the Company’s Board of Directors engaged Haskell & White LLP to serve as its independent registered public accounting firm.

There was no disagreement of the type described in Item 304(a)(1)(iv) of Regulation S-K and no reportable event described in Item 304(a)(1)(v) of Regulation S-K in connection with either of the changes described above.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of the principal executive officer and principal accounting officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as the term is defined in Rule 13a-15(e) promulgated under the Exchange Act, as of December 31, 2019. Based on this evaluation, the principal executive officer and principal accounting officer concluded that these disclosure controls and procedures were not effective as of that date, at a reasonable level of assurance, in ensuring that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (a) accumulated and communicated to the Company’s management, including its the principal executive officer and principal accounting officer, in a timely manner to allow timely decisions regarding required disclosure, and (b) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that (a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on its financial statements.

Under the supervision and with the participation of management, including the principal executive officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the criteria in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)(“COSO”). Based on this evaluation, management concluded that internal control over financial reporting was not effective as of December 31, 2019. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. As defined in Rule 12b-2 promulgated under the Exchange Act, a material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement in the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The Company’s evaluation of its internal control over financial reporting identified the following material weaknesses in internal control over financial reporting as of December 31, 2019:

●

The Company has difficulty in accounting for complex transactions.

●

Documented processes do not exist for several key processes.

●

The Company lacks board oversight because it has no directors who are independent of management and no audit committee.

Because of the material weaknesses noted above, the Company has concluded, based on COSO, that it did not maintain effective internal control over financial reporting as of December 31, 2019.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2019, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

Attestation Report of the Independent Registered Public Accounting Firm

This report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting because the Company is an emerging growth company, as that term is defined in Rule 12b-2 promulgated under the Exchange Act.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The following individuals serve as executive officers and directors in the following positions on December 31, 2019:

Name	Age	Position
Curtis Fairbrother	58	Chairman of the Board; Chief Executive Officer; Chief Financial Officer; Director
Douglas Heldoorn	52	President; Chief Operating Officer; Director

Curtis Fairbrother and Douglas Heldoorn cofounded the Company in 2014. Each of them is a control person with respect to the Company by reason of his holdings of Common Stock.

Curtis Fairbrother is the Company’s Chief Executive Officer and Chairman of the Board, serving in those capacities since 2014. Mr. Fairbrother has over 20 years of experience in business startups and consolidation. He performed successfully in the automotive retail and wholesale parts industries, managing multimillion-dollar budgets and the distribution and sale of large inventories. Working as an executive at AutoNation’s corporate offices, he oversaw national parts distribution and management, research and development, brand recognition and product development. He specializes in new product development and marketing strategy and has been successful in corporate product placement and branding throughout North America with other successful companies, including I Green Planet Group LLC, a premier Canadian cannabis packaging company.

Mr. Heldoorn has served as a member of the Company’s board of directors and its President and Chief Operating Officer since 2014. He has over 20 years of management and executive experience. From 2009 to 2012, he served as the Executive General Manager at Nissan Motor Corporation, overseeing management training as well as specializing in turning distressed dealerships into profitable businesses. Overseeing multimillion-dollar advertising budgets, he ran dealerships that consistently netted $20 million per month in income. He became one of the top Executive Managers for automotive retail in North America. Mr. Heldoorn is a master motivational speaker and sales trainer and specializes in business acquisition and turn-arounds. He is recognized for his advertising, branding and communications acumen. His franchises have consistently landed in the top 5% in the nation.

Messrs. Fairbrother and Heldoorn will serve as directors until their successors are elected and qualified or until their earlier resignation or removal. Officers hold their positions at the pleasure of the board of directors, absent any employment agreement. There was and is no arrangement or understanding between any director or officer of the Company and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and, to the Company’s knowledge, there is no arrangement, agreement, plan or understanding (a) as to whether non-management stockholders will exercise their voting rights to continue to elect the current directors to the Company’s board and or (b) between non-management stockholders and management under which non-management stockholders may directly or indirectly participate in or influence the management of its affairs.

The prior experience of each of Mr. Fairbrother and Mr. Heldoorn in management, together with his willingness to spend substantially all of his time as an officer of the Company and his willingness to provide capital to the Company, led to the conclusion that he was a desirable person to serve as a director.

Family Relationships

There are no family relationships between any of the directors and officers named above and there is no arrangement or understanding between any of them and any other person pursuant to which he was selected as a director or officer.

Loans

The Company has received loans from Messrs. Fairbrother and Heldoorn from time to time since 2014. All of these loans are non-interest-bearing and have no set maturity date. The Company expects to repay these loans when funds become available. During the years ended December 31, 2019, and December 31, 2018, respectively, the Company received and repaid loans from and to them as follows:

	Curtis Fairbrother			Douglas Heldoorn		Total
Balance at December 31, 2017	$	—		$	122,994	$	122,994
Year ended December 31, 2018:
Amounts loaned		141,500			207,166		348,666
Amounts repaid		(86,000)			—		(86,000	)
Balance at December 31, 2018		55,500			330,160		385,660
Year ended December 31, 2019:
Amounts loaned		240,100			370,293		610,393
Amounts repaid		(90,716	)		(278,175)		(368,891	)
Balance at December 31, 2019	$	204,884			422,278	$	627,162

Real Property Lease

Until August 31, 2018, the Company subleased the 8,000-square-foot property at which its headquarters and all of its operations are located from an independent sublessor, who leased the 10,000-square-foot building in which this property is located from its owner under a lease that expired on August 31, 2018. When the lease expired, the sublessor did not extend it or enter into a new lease. The Company desired to continue to occupy these premises, but the owner was unwilling to enter into a lease with it; the owner, however, was willing to enter into a lease with DPH, which is owned by Mr. Heldoorn, who is one of the Company’s officers and directors. Accordingly, DPH leased the building from its owner under a lease, dated August 27, 2018, which has a term of two years, expiring on August 31, 2020, at a rental of $11,108 per month. DPH then subleased 8,000 square feet to the Company under a one-year sublease at a monthly rent of $8,640 per month and on the other terms set forth in Item 2 and subleased the remaining 2,000 square feet to a third party at a rent of $2,467 per month. Thus, (a) the Company subleased 80% of the area of the building and paid 77.8% of the total rent paid by DPH for the building, (b) the amounts that DPH received as rent under the two subleases was equal to the rent that it paid to the owner of the building and (c) DPH netted no income from the sublease after it paid rent to the owner. On September 1, 2019, the Company and DPH amended this sublease to extend its term for one year, expiring on August 31, 2020, and to increase the monthly rent to $8,967, leaving the other provisions of the lease unaffected. The Company now leases 80% the total area of the building, and pays 72.5% of the total rent paid by DPH for the building. The Company believes that it is paying rent at the market rate for space in the area in which its premises are located and that its sublease with DPH is fair to the Company and in its best interest.

Certain Other Transactions

Mr. Douglas Heldoorn, an officer and director of the Company, has provided support to the Company when its credit has been insufficient to obtain its own credit and when it has had insufficient funds to purchase equipment and products. In 2017 and 2016, DPH, doing business as Honestas Holdings, acquired the two printers that the Company uses for its printing services for $20,000 each and leased them to the Company under capital leases, each of which was payable in 24 monthly installments of $2,000 that included interest at the rate of 19.87% per annum. In 2019 and 2018, it paid $10,000 and $30,000, respectively, to DPH under these leases. The Company believes that the terms on which it could have leased these printers from a third party under capital leases are substantially the same as those on which it leased them from DPH and that there leases were fair to the Company and in its best interest.

In 2019 and 2018, the Company purchased $74,416 and $72,898, respectively, of products for resale from Mr. Heldoorn or one of the entities that he controls.

Employment Arrangements

There are no employment agreements between the Company and its officers and directors. For information regarding the compensation paid to Messrs. Fairbrother and Heldoorn, see “Item 11. Executive Compensation.”

Involvement in Certain Legal Proceedings

Neither of the Company’s directors and executive officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree, or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

Director Compensation

The Company is not paying any cash or other compensation to its directors for their services as such. In the future, the Company may consider appropriate forms of compensation, including cash compensation and the issuance of Common Stock and share-based compensation.

Director Independence

The Company has no directors who are independent within the definition of “independent director” set forth in NASDAQ Stock Market Listing Rule 5605(a)(2), as amended. This rule provides that an “independent director” is a person other than an officer or employee of the Company or any other individual having a relationship which, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. This rule further provides that a director cannot be considered independent if:

●

he is, or at any time during the past three years was, an employee of the company;

●

he or his family member accepted any compensation from the company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions);

●

his family member is, or at any time during the past three years was, an executive officer of the company;

●

he or his family member is a partner in, controlling stockholder of, or an executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);

●

he or his family member is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the company served on the compensation committee of such other entity; or

●

he or his family member is a current partner of the company’s outside auditor, or at any time during the past three years was a partner or employee of the company’s outside auditor, and who worked on the company’s audit.

Committees

The Board of Directors has not designated any committees, including a compensation committee, nominating committee or an audit committee, although it is permitted to do so under the Florida Business Corporation Act and its by-laws. With respect to the absence of a nominating committee, the board has determined that it is appropriate not to have one in light of the fact that its two directors have voting control of the Company and can together nominate and elect directors without the vote of the other stockholders. The Company does not have a compensation committee. Although it has adopted the 2018 Plan, in which its officers and directors are eligible to participate, no awards have been made to any of them, and the Company believes that a compensation committee will not be necessary until one or more of them is selected for such participation. The Company has no audit committee.

Code of Ethics

The Company has a code of business ethics that applies to all employees, including its chief executive officer and chief financial officer. These standards are designed to deter wrongdoing and to promote the highest ethical, moral and legal conduct of all employees. The code of ethics may be found on the Company’s website, www.medtainerinc.com and as Exhibit 14 to this report.

Item 11. Executive Compensation.

Compensation

The following table sets forth compensation awarded to, earned by or paid to the Chief Executive Officer and the four other most highly compensated executive officers with compensation in excess of $100,000 for the years ended December 31, 2019, 2018 and 2017.

SUMMARY COMPENSATION TABLE


							Non-Equity
					Stock	Option	Incentive Plan	All Other
Name	Year		Salary	Bonus	Awards	Awards	Compensation	Compensation		Total
Curtis Fairbrother	2019	$	132,065	—	—	—	—	—	$	132,065
Chief Executive Officer	2018	$	142,858	—	—	—	—	—	$	142,858
	2017	$	130,123	—	—	—	—	—	$	130,123
Douglas Heldoorn	2019	$	132,065	—	—	—	—	—	$	132,430
Chief Operating Officer	2018	$	141,558	—	—	—	—	—	$	141,558
	2017	$	130,123	—	—	—	—	—	$	130,123

Mr. Fairbrother is the Company’s principal executive officer and principal accounting officer.

Employment Contracts

The Company has no employment contracts with its executive officers and has made no long-term compensation payouts to them.

Equity Awards, Grant Based Awards, Stock Options, Pension Benefits and Deferred Compensation

On December 31, 2018, the Company adopted, and on December 31, 2018, it amended, the 2018 Plan, which is the only plan under which it can make equity- or grant-based awards or stock options. The stockholders approved the plan and the amendment by consent on those dates. Under this plan, participants, who may include officers and directors of the Company, may receive awards of qualified and/or nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, other share- or cash-based awards or dividend equivalents. The Company has not made any awards to it officers and directors under this plan and has not granted pension benefits or entered into any deferred compensation plan or arrangement. For information regarding securities authorized for issuance and awards made under the 2018 Plan, see “Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities – Equity Compensation Plan Information.”

Compensation Analysis

The Company is paying compensation to its officers on an inadequate basis. It believes that adequate compensation will eventually be required to retain their services. In particular, it believes that adequate compensation for persons with Messrs. Fairbrother’s and Heldoorn’s credentials and experience at a like stage of its development would involve a salary of approximately $180,000 per year, a cash bonus, noncash incentive compensation based on performance and share-based compensation. The Company believes that the 2018 Plan can provide share- and performance-based incentives to officers and employees and attract and retain qualified officers and key employees. Thus far, awards of restricted stock have been granted to employees who are not officers to compensate them for past service for which the Company believes it paid less than market rates and, in some cases, to retain their services. The Company has not yet determined how best to utilize the other elements of the plan, particularly performance-based compensation tailored to executives and key employees in terms of determining how to design awards; the various ways in which awards might be combined; the bases for selecting each of these ways; how decisions regarding each element fit into the Company’s overall compensation objectives and affect decisions regarding other elements; and whether there are other compensation plans that should be considered.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters.

Security Ownership of Persons Other than Management

The Company knows of no person, other than its directors and executive officers, who owns beneficially 5 percent or more of the outstanding shares of Common Stock.

Security Ownership of Management

The following table sets forth certain information regarding the beneficial ownership of Common Stock as of December 31, 2019, for the following: (a) each of the Company’s directors and executive officers and (b) its directors and executive officers as a group.

Name of Beneficial Owner	Shares Beneficially Owned		Percentage of class
Curtis Fairbrother		15,491,673		27.3
Douglas Heldoorn		19,230,000		33.9
All directors and executive officers as a group (2 persons)		34,721,673		61.2

No beneficial owner has any right, direct or indirect, to acquire Common Stock by conversion. The address for each beneficial owner is in care of the Company at 1620 Commerce St., Corona, CA 92880.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

No directors or executive officers or their respective immediate family members or affiliates are indebted to the Company. As of the date of this report, there is no material proceeding to which any of them is a party or has a material interest adverse to the Company.

Item 14. Principal Accountant Fees and Services.

Audit Fees

The Company was billed $38,000 by Haskell & White LLP (“H&W”) for the year ended December 31, 2019, and $49,345 ($34,345 by Haskell & White LLP and $15,000 by Prager Metis CPAs), for the year ended December 31, 2018, for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements, the review of the financial statements included in its quarterly reports on Form 10-Q or and other services normally provided in connection with its statutory and regulatory filings or engagements for those years.

Audit Related Fees

The Company was billed $0 for audit-related fees for the years ended December 31, 2019, and December 31, 2018. Audit-related fees include fees for assurance and related services rendered by the principal accountant and which were reasonably related to the performance of the audit or review of the Company’s financial statements.

Tax Fees

The Company was billed $0 for tax fees by H&W for the years ended December 31, 2019, and December 31, 2018. These were fees are for professional services for tax compliance, tax advice and tax planning.

All Other Fees

There were no other fees for professional services rendered by the principal accountant during the last two fiscal years that were not included in the above paragraphs.

Preapproval Policy

None of the above services was approved by the audit committee, because the board of directors has no audit committee. The board of directors pre-approves all audit and permissible non-audit services provided by its principal accountant.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

Financial Statements and Schedules. The following financial statements and schedules for the Company as of December 31, 2019, are filed as part of this report.

(a)

Consolidated Financial Statements of the Company.

See “Item 8. Financial Statements and Supplementary Data – Index to Consolidated Financial Statements.”

Financial Statement Schedules have been omitted because they are not applicable or because the required information is shown in the financial statements or the notes thereto.

(b)

Exhibits. The following exhibits are incorporated herein by reference or are filed with this report as indicated below.

Exhibit	Description
3.1		Articles of incorporation of the Registrant, filed September 5, 1997. Filed as Exhibit 3.1 to Registration Statement on Form S-11 (File No. 333-195866) and incorporated herein by reference.
3.2		Amendment to Articles of Incorporation of the Registrant, filed February 15, 1999. Filed as Exhibit 3.2 to Registration Statement on Form S-1 (File No. 333-195866) and incorporated herein by reference.
3.3		Amendment to Articles of Incorporation of the Registrant, filed January 26, 2000. Filed as Exhibit 3.3 to Registration Statement on Form S-1 (File No. 333-195866) and incorporated herein by reference.
3.4		Amendment to Articles of Incorporation of the Registrant, filed July 5, 2012. Filed as Exhibit 3.4 to Registration Statement on Form S-1 (File No. 333-195866) and incorporated herein by reference.
3.5		Amendment to Articles of Incorporation of the Registrant, filed January 9, 2014. Filed as Exhibit 3.5 to Registration Statement on Form S-1 (File No. 333-195866) and incorporated herein by reference.
3.6		Amendment to Articles of Incorporation of the Registrant, filed August 28, 2018. Filed as Exhibit 3 to Current Report of Registrant on Form 8-K filed on September 21, 2018, and incorporated herein by reference.
3.7		Amendment to Articles of Incorporation of the Registrant, filed August 28, 2018. Filed as Exhibit 3.1 to Current Report of Registrant on Form 8-K filed on February 20, 2019, and incorporated herein by reference.
3.8		By-laws of the Registrant. Filed as Exhibit 3.6 to Registration Statement on Form S-1 (File No. 333-195866) and incorporated herein by reference.
10.1		Product License and Distribution Agreement, dated April 28, 2014, by and between D&C Distributors LLC and IGreen Planet Store Ltd. Filed as Exhibit 10.8 to Registration Statement on Form S-1 (File No. 333-195866) and incorporated herein by reference.
10.2		Lease, dated July 29, 2014, by and between Arthur E. Gordon and Doug Heldoorn, an individual DBA D&C Distributors LLC. Filed as Exhibit 10.10 to the Annual Report of Registrant on Form 10-K for the year ended December 31, 2014, and incorporated herein by reference.
10.3		Lease, dated August 27, 2019, by and between KST Family Trust, as Lessor, and DPH Supplements Inc. Filed as Exhibit 10.6 to Annual Report of Registrant on Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
10.4		Sublease, entered into on September 1, 2019, by and between DPH Supplements Inc., as Sublessor, and the Registrant, as Subtenant. Filed as Exhibit 10.7 to Annual Report of Registrant on Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
10.5		Asset Purchase Agreement, dated as of April 26, 2018, by and between the Registrant and Mark Hainbach. Filed as Exhibit 10.1 to Current Report of Registrant on Form 8-K filed on May 3, 2018, and incorporated herein by reference.
10.6		Amendment of Asset Purchase Agreement, dated as of June 8, 2018, by and between the Registrant and Mark Hainbach. Filed as Exhibit 10.1 to Current Report of Registrant on Form 8-K filed on June 15, 2018, and incorporated herein by reference.
10.7		Production Contract, dated June 8, 2018, by and between the Registrant and Polymation, LLC. Filed as Exhibit 10.3 to Current Report of Registrant on Form 8-K filed on June 15, 2018, and incorporated herein by reference.
10.8		Amendment to Production Contract, dated March 27, 2019, by and between the Registrant and Polymation, LLC. Filed as Exhibit 10.12 to Annual Report of Registrant on Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
10.9		2018 Incentive Award Plan of Registrant, as adopted on December 1, 2018, and amended on December 31, 2018. Filed as Exhibit 10.1 to Post-Effective Amendment No. 1 to Registration Statement on Form S-8 (File No. 333-228820) and incorporated herein by reference

10.10				Equipment Lease Purchase Agreement, dated June 15, 2017, between Honestas Holdings and D&C Distributors, LLC. Filed as Exhibit 10.14 to Annual Report of Registrant on Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
10.11				Equipment Lease Purchase Agreement, dated April 30, 2016, between Honestas Holdings and D&C Distributors, LLC. Filed as Exhibit 10.15 to Annual Report of Registrant on Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
10.12				Lease, dated August 27, 2018, by and between KST Family Trust, as Lessor, and Douglas Heldoorn and DPH Supplements Inc., as Lessees. Filed as Exhibit 10.6 to Annual Report of Registrant on Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
10.13				Lease, dated as of September 1, 2018, by and between DPH Supplements, Inc. and the Registrant. Filed herewith.
10.14				Lease Amendment, dated as of September 1, 2019, by and between DPH Supplements, Inc. and the Registrant. Filed as Exhibit 10.16 to Annual Report of Registrant on Form 10-K for the year ended December 31, 2018, and incorporated herein by reference.
10.15				Note, dated May 4, 2020, made by the Registrant in favor of Customers Bank, in the principal amount of $137,690. Filed herewith.
10.16				Stock Purchase Agreement, dated May 19, 2020, by and between the Registrant and Ardelli Holdings LLC. Filed herewith.
14				Code of Ethics. Filed herewith.
21				Subsidiaries of the Registrant. Filed herewith.
23				Consent of Independent Registered Public Accounting Firm. Filed herewith.
31				Rule 13a-14(a)/15d-14(a) Certification. Filed herewith.
32				Section 1350 Certification. Filed herewith.

(c)

Excluded Financial Statements

None.

Item 16. Form 10-K Summary.

None.

SIGNATURES

In accordance with Section 13 or 15(d) 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.

MEDTAINER, INC.

By: /s/ Curtis Fairbrother

Name: Curtis Fairbrother

Title: Chief Executive Officer

Date: May 28, 2020

In accordance with the Exchange Act, 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	Title	Date
/s/ Curtis Fairbrother	Chairman of the Board; Chief Executive Officer; principal executive officer; principal financial officer and principal accounting officer Director	May 28, 2020
Curtis Fairbrother
/s/ Douglas Heldoorn	President; Chief Operating Officer; director	May 28, 2020
Douglas Heldoorn

Exhibit 10.13

SUBLEASE AGREEMENT

This is an agreement to sublet real property according to the terms specified below.

The sublessor agrees to sublet and the subtenant agrees to take the premises described below. Both parties agree to keep, perform and fulfill the promises, conditions and agreements below:

1. The sublessor is: DPH Supplements Inc.

The subtenant is: Medtainer, Inc.

The location of the premises is: 1620 Commerce St, #A, Corona. CA 92880.

The term of this sublease is I2 Months, beginning September 1, 2018. The rent is $8,640.50 per month, payable in advance on the 1st day of each month. The rent is payable to DPH Supplements at 1620 Commerce St., #B. Corona. CA 92880.

The sublease agreement will terminate on (date) 8/31/2019. There shall be no holding over under the terms of this sublease agreement under any circumstances.

All charges for utilities connected with premises which arc to be paid by the sublessor under the master lease shall be paid by the subtenant for the term of this sublease.

Subtenant agrees to surrender and deliver to the sublessor the premises and all furniture and decorations within the premises in as good a condition as they were at the beginning of the term, reasonable wear and tear excepted. The subtenant will be liable to the sublessor for any damages occurring to the premises or the contents thereof or to the building which are done by the subtenant or his guests.

Subtenant agrees to pay to sublessor a deposit of S6.000.00 to cover damages and cleaning. Sublessor agrees that if the premises and contents thereof arc returned to him/her in the same condition as when received: by the subtenant, reasonable wear and tear thereof excepted, (s)he will refund to the subtenant $6,000 at the end of the term, or within 30 days thereafter. Any reason for retaining a portion of the deposit shall be explained in writing within 30 days to the subtenant.

At the time of taking possession of the premises by the subtenant, the sublessor will provide the subtenant with an inventory form within three (3) days of taking possession.

10.

This sublease agreement incorporates and is subject to the original lease agreement between the sublessor and his lessor, a copy of which is attached hereto, and which is hereby referred to and incorporated herein as if it were set out here at length. The: subtenant agrees to assume all of the obligation and responsibilities of the sublessor under the original lease for the duration of the sublease agreement.

11.

In the event of any legal action concerning this sublease, the losing party shall pay to the losing party reasonable attorney’s fees and court costs to be fixed by the court in which such judgment shall be entered.

12.

Other: [None]

13.

This lease constitutes the sole agreement between the parties, and no additions, deletions or modifications may be accomplished without the written consent of both parties. (ANY ORAL REPRESENTATIONS EXECUTED AT THE TIME OF SIGNING THIS LEASE ARE NOT LEGALLY VALID AND THEREFORE ARE NOT BINDING UPON EITHER PARTY,)

14.

The words “sublessor” and “subtenant” as used herein include The plural as well as the singular; no regard to gender is intended by the language in this sublease.

15.

If the subtenant is under 18 years or age, then his/her legal guardian or parent guarantees and agrees to perform all of the terms, covenants and conditions of this sublease by affixing his signature below.

16.

Each signatory to this sublease acknowledges receipt of an executed copy hereof.

17.

This sublease is not binding upon either party unless approved by the landlord as provided below.

The parties hereby bind themselves to this agreement by their signatures affixed below on this 1st day of September 2018.

SUBLESSOR			SUBTENANT

DPH SUPPLEMENTS INC,			MEDTAINER, INC.
/s/ Douglas P. Heldoorn			/s/ Jeff Carlson
			Controller
			9/1/2018
___________________
(Parent/guardian if subtenant
Is under 18 years of age)
ORIGINAL LEASE ATTACHED: ___ Yes XX No
INVENTORY ATTACHED: ___ Yes XX No

Exhibit 10.14

U.S. Small Business Administration

NOTE

SBA Loan #	1072367404
SBA Loan #

SBA Loan Name	Medtainer Inc
SBA Loan Name

Date	5/4/2020
Date

Loan Amount	$ 137690.00

Interest Rate	1.0%

Borrower	Medtainer Inc
Borrower

Operating Company	Medtainer Inc
Operating Company

Lender	Customers Bank

PROMISE TO PAY:

This Loan is being made by Lender to Borrower pursuant to the terms of the Paycheck Protection Program authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and pursuant to all regulations and guidance promulgated or provided by the SBA and other Federal agencies that are now, or may become, applicable to the Loan (the

“Program”). In return for the Loan, Borrower promises to pay to the order of Lender the Loan Amount listed above, interest on the unpaid principal balance, and all other amounts required by this Note.

DEFINITIONS:

“Loan” means the loan evidenced by this Note.

“Loan Documents” means the documents related to this loan signed by Borrower.

“SBA” means the Small Business Administration, an Agency of the United States of America.

PAYMENT TERMS:

Borrower must make all payments in accordance with the Lender’s payment instructions. The payment terms for this Note are:

(1)

The unpaid principal amount of this Note shall bear interest at a rate per annum equal to 1.00%, calculated on the basis of a 365 day year and the actual number of days elapsed and payable in cash on the Maturity Date (as defined below).

(2)

No interest or principal will be required during the first six months after the Loan amount is disbursed, although interest will continue to accrue over this six-month deferral period.

(3)

After such six-month deferral period and after taking into account any loan forgiveness applicable to the Loan pursuant to the Program, as approved by SBA, any remaining principal and accrued interest will be payable in substantially equal monthly installments over the remaining 18-month term of the Loan, in the amount and according to the payment schedule provided by Lender.

(4)

Lender will apply each installment payment first to accrued interest and then to principal.

(5)

This Note will mature two (2) years from the date of this Note (“Maturity Date”), at which time all unpaid or unforgiven principal, accrued interest and any other amounts outstanding pursuant to this Note will be due and payable.

(6)

The Borrower may prepay this Note in whole or in part at any time without penalty.

(7)

If a payment is made consistent with Lender’s payment instructions but received after 3:00 PM EST on a business day, Lender will credit the Borrower’s payment on the next business day.

(8)

Automatic Payment Authorization. Borrower authorizes Lender to initiate, on each business day, ACH debit and credit entries to the deposit account designated by Borrower for Loan disbursements (“Designated Account”) for all payments due under this Note, and to debit the Designated Account for such payments on the date each payment is due and to initiate, if necessary, additional entries for any entries credited or debited in error. Borrower acknowledges and agrees that, to the extent there are insufficient funds in the Designated Account to pay the required amounts when due, Borrower shall immediately pay to Lender all sums remaining unpaid. This authorization supplements, and does not limit, Lender’s rights under this Note. Borrower understands that this authorization will remain in full force and effect until the Borrower notifies Lender in writing of the Borrower’s wish to revoke this authorization, in which case Borrower is still responsible for making all further payments in a timely manner. The Borrower understands that Lender needs at least five (5) days prior notice to cancel this authorization. The Borrower signing below is authorized to make this request, and Lender is entitled to rely conclusively on this authorization until this authorization is terminated by Lender or the Borrower. Borrower agrees that ACH transactions must comply with the provisions of U.S. law and agrees to be bound by the National Automated Clearing House Association Operating Rules, as in effect from time to time and to the extent applicable, in connection with all such transactions.

(9)

If a debit is rejected or if Borrower otherwise fails to pay the amount due, Borrower agrees that Lender may (A) terminate further automatic debits, in which case Borrower will be responsible for making all further payments directly and in a timely manner, (B) debit the Designated Account at any time and from time to time, for any amounts due until paid in full, (C) subject to any right to notice of default and right to cure required by state law (which you agree to waive to the greatest extent possible), declare the outstanding Loan immediately due and payable and (D) pursue any and all other remedies available to Lender.

DEFAULT:

Borrower is in default under this Note if Borrower does not make a payment when due under this Note, or if Borrower or Operating Company:

(1)

Fails to do anything required by this Note and other Loan Documents;

(2)

Defaults on any other loan with Lender;

(3)

Does not disclose, or anyone acting on their behalf does not disclose, any material fact to Lender or SBA;

(4)

Makes, or anyone acting on their behalf makes, a materially false or misleading representation to Lender or SBA;

(5)

Defaults on any loan or agreement with another creditor, if Lender believes the default may materially affect Borrower’s ability to pay this Note;

(6)

Fails to pay any taxes when due;

(7)

Becomes the subject of a proceeding under any bankruptcy or insolvency law;

(8)

Has a receiver or liquidator appointed for any part of their business or property;

(9)

Makes an assignment for the benefit of creditors;

(10)

Has any adverse change in financial condition or business operation that Lender believes may materially affect Borrower’s ability to pay this Note;

(11)

Reorganizes, merges, consolidates, or otherwise changes ownership or business structure without Lender’s prior written consent;

(12)

Becomes the subject of a civil or criminal action that Lender believes may materially affect Borrower’s ability to pay this Note; or

(13)

For any reason it is determined that the Borrower is not eligible to obtain this Loan under the Program or otherwise violates any term or requirement of the Program.

LENDER’S RIGHTS IF THERE IS A DEFAULT:

Without notice or demand and without giving up any of its rights, Lender may:

(1)

Require immediate payment of all amounts owing under this Note;

(2)

Collect all amounts owing from any Borrower; or

(3)

File suit and obtain judgment.

LENDER’S GENERAL POWERS:

Without notice and without Borrower’s consent, Lender may:

(1)

Incur expenses to collect amounts due under this Note and enforce the terms of this Note or any other Loan Document. Among other things, the expenses may include payments for reasonable attorney’s fees and costs. If Lender incurs such expenses, it may demand immediate repayment from Borrower or add the expenses to the principal balance;

(2)

Release anyone obligated to pay this Note; and

(3)

Take any action necessary to collect amounts owing on this Note.

WHEN FEDERAL LAW APPLIES:

When SBA is the holder, this Note will be interpreted and enforced under federal law, including SBA regulations. Lender or SBA may use state or local procedures for filing papers, recording documents, giving notice, foreclosing liens, and other purposes. By using such procedures, SBA does not waive any federal immunity from state or local control, penalty, tax, or liability. As to this Note, Borrower may not claim or assert against SBA any local or state law to deny any obligation, defeat any claim of SBA, or preempt federal law.

SUCCESSORS AND ASSIGNS:

Under this Note, Borrower includes its successors, and Lender includes its successors and assigns.

GENERAL PROVISIONS:

(1)

Borrower waives all suretyship defenses.

(2)

Borrower must sign all documents necessary at any time to comply with the Loan Documents and the Program.

(3)

Lender may exercise any of its rights separately or together, as many times and in any order it chooses. Lender may delay or forgo enforcing any of its rights without giving up any of them.

(4)

Borrower may not use an oral statement of Lender or SBA to contradict or alter the written terms of this Note.

(5)

If any part of this Note is unenforceable, all other parts remain in effect.

(6)

To the extent allowed by law, Borrower waives all demands and notices in connection with this Note, including presentment, demand, protest, and notice of dishonor. Borrower also waives any defenses based upon any claim that Lender did not obtain any guarantee or collateral; did not obtain, perfect, or maintain a lien upon any collateral; or did not obtain the fair market value of any collateral at a sale.

(7)

Borrower agrees to modify this Note and any other Loan Document if requested by Lender in order to comply with the Program requirements and as necessary to ensure this Note is guaranteed by the SBA under the Program. Further, Borrower agrees that if the SBA or the U.S. Department of Treasury issues a form note or other related loan documentation or otherwise specifies documentation requirements with respect to loans made pursuant to the Program, Borrower will immediately execute such note and related loan documentation in such form as required to comply with all Program requirements as requested by Lender. Borrower hereby appoints Lender as its attorney-in-fact to sign such documentation on its behalf in the event Borrower is unavailable or unwilling to sign any such documentation for any reason, and such documentation will be enforceable as if signed directly by Borrower.

(8)

If Borrower is an entity, Borrower is currently existing, in good standing and duly organized under the laws of the state of its organization, and has the power to own its property and to carry on its business in each jurisdiction in which it operates.

(9)

Borrower has full power and authority to enter into this Note and the Loan Documents, to execute and deliver this Note and the Loan Documents, and to incur the obligations provided for in this Note, including the Loan, and the Loan Documents. No consent or approval of members or of any public authority is required as a condition to the validity of this Note or any Loan Documents. This Note has been duly executed and delivered by the Borrower.

(10)

Agreement to Conduct Electronic Transactions: The parties expressly agree that the transactions and interactions they have with one another in relation to this document may be conducted by electronic means. Without limiting the generality of the foregoing, the parties expressly agree that this Note, the Loan Documents and any other instruments, agreements, documents, and communications related to this Note, the Loan Documents or the matters addressed in this Note (each, inclusive of this document, a “Covered Document”), may be created, generated, sent, communicated, executed, signed, delivered, transmitted, received, retained, stored, authenticated, or otherwise processed, handled, or used by electronic means or in electronic form. In the event that any party hereto signs a Covered Document (including, without limitation, this Note) electronically, such party: (a) expressly states that such party has signed such Covered Document in electronic form using an electronic signature, and that such party intends for such party’s electronic signature to be such party’s signature to such Covered Document, and that by making such electronic signature, such party intends to sign such Covered Document; (b) agrees to the terms of such Covered Document in all respects, as if such party had signed a paper or other written or tangible version of such Covered Documents using a pen or other tangible writing instrument; and (c) agrees that any such Covered Document will be valid for all legal purposes under all applicable law, including, without limitation and as applicable, under the Electronic Signatures in Global and National Commerce Act and the Uniform Electronic Transactions Act as enacted in the state whose governing law governs such Covered Document.

(11)

Arbitration and Class Action Waiver. Any dispute, claim, or controversy relating in any way to this Note or your receipt or use of the Loan shall be, at the election of either party, resolved by binding arbitration under applicable Pennsylvania law. Claims regarding the validity, enforceability or scope of this section or this Note including but not limited to whether a given claim or dispute is subject to arbitration will be determined by the arbitrator. The

Federal Arbitration Act and federal arbitration law apply to this Note. The arbitration shall be administered by JAMS (www.jamsadr.com) and the arbitration shall be conducted in accordance with the Expedited Procedures of the JAMS. A single arbitrator shall be chosen in accordance with the procedures of JAMS. Any arbitration hearing will occur in Wyomissing, Pennsylvania. The arbitrator will apply the substantive law of the State of Pennsylvania, exclusive of its conflict or choice of law rules. Either party may commence arbitration by providing to JAMS and the other party to the dispute a written demand for arbitration, setting forth the subject of the dispute and the relief requested. The arbitrator’s award will be binding on the parties and may be entered as a judgment in any court of competent jurisdiction. The arbitrator may not consolidate more than one person’s or entity’s claims.

To the maximum extent permitted by law, the parties agree that any dispute, claim, or controversy in connection with this Note, whether in arbitration or in court, will be conducted only on an individual (non-class or non-representative) basis. Borrower waives any right to have any dispute, claim, or controversy in connection with this Note decided by a jury, and Borrower also waives any right to participate in a class action against Lender or its affiliates.

10. STATE-SPECIFIC PROVISIONS:

Except as set forth in Section 7, this Note will be governed by the laws of the state of Pennsylvania. State-specific disclosures pertaining to the Borrower are set forth in Addendum A.

IN WITNESS WHEREOF, Borrower has executed this Note as of the date first above written.

	BORROWER:	Medtainer, Inc.

	By:
	Name:	Douglas Heldoorn
	Title	COO

Addendum A to SBA Note

N/A

EXHIBIT 10.16

STOCK PURCHASE AGREEMENT
Dated as of May 19, 2020
by and between
MEDTAINER, INC.
and

ARDELLI HOLDINGS LLC

TABLE OF CONTENTS

	Page
ARTICLE I DEFINITIONS	1
ARTICLE II PURCHASE AND SALE OF COMMON STOCK	3
Section 2.1. Purchase and Sale of the Shares	3
Section 2.2. Closing	3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE INVESTOR	4
Section 3.1. Organization and Good Standing	4
Section 3.2. Authorization and Enforceability
Section 3.3. No Conflicts	4
Section 3.4. Investment Purpose	5
Section 3.5. Accredited Investor Status	5
Section 3.6. Reliance on Exemptions	5
Section 3.7. Information	5
Section 3.8. No Governmental Review	5
Section 3.9. No General Solicitation	6
Section 3.10. Resales of Shares	6
Section 3.11. Concerning Rule 144	6
Section 3.12 Acknowledgment	6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY	6
Section 4.1. Organization, Good Standing and Power	6
Section 4.2. Authorization and Enforceability	6
Section 4.3. Capitalization	7
Section 4.4. Concerning the Shares	7
Section 4.5. No Conflicts	7
Section 4.6 Commission Document; Financial Statements	8
Section 4.7. No Material Adverse Effect	8
Section 4.8. No Undisclosed Liabilities	9
Section 4.9. No Undisclosed Events or Circumstances	9
Section 4.10. Indebtedness	9
Section 4.11. Title to Assets	10
Section 4.12. No Actions Pending	10
Section 4.13. Compliance with Law	10
Section 4.14 Operation of Business	10
Section 4.15. Material Agreements	11
Section 4.16. Taxes	11
Section 4.17. No General Solicitation or Advertising	12
Section 4.18. Acknowledgement	12

	Page
ARTICLE V ADDITIONAL COVENANTS	12
Section 5.1. Securities Compliance	12
Section 5.2. Compliance with Laws	12
Section 5.3. Corporate Existence	12
Section 5.4. Option	12
ARTICLE VI CONDITIONS TO CLOSING	13
ARTICLE VII TERMINATION	14
Section 7.1. Termination	14
Section 7.2. Effect of Termination	14
ARTICLE VIII INDEMNIFICATION	14
Section 8.1. Indemnification of Investor	14
Section 8.2. Indemnification Procedures	15
ARTICLE IX MISCELLANEOUS	15
Section 9.1. Fees and Expenses	15
Section 9.2. Legends	15
Section 9.3. Remedies	16
Section 9.4. Entire Agreement; Amendment	16
Section 9.5. Notices	16
Section 9.6. Waivers	17
Section 9.7. Headings	17
Section 9.8. Construction	17
Section 9.9. Successors and Assigns	17
Section 9.10. No Third-Party Beneficiaries	17
Section 9.11. Governing Law	17
Section 9.12. Survival	17
Section 9.13. Counterparts	17
Section 9.14. Severability	18
Section 9.15. Further Assurances	18
Section 9.16. Signatory	18

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT is made and entered into as of May 19, 2020 (this “Agreement”), by and between MEDTAINER, INC., a corporation organized and existing under the laws of the State of Florida, and ARDELLI HOLDINGS LLC, a limited liability company established and existing under the laws of the State of California (the “Investor”).

RECITALS

WHEREAS, the parties desire that, upon the terms and subject to the terms and conditions set forth herein, at the times provided herein, the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, a total of 20,000,000 newly issued shares of the Company’s common stock, par value $0.000001 per share (“Common Stock”) for the purchase price of $200,000.00 (the “Purchase Price”); and

WHEREAS, such issuance and sale will be made in reliance upon the provisions of Section 4(a)(2) of the Securities Act and Rule 506(c) of Regulation D promulgated by the Commission under the Securities Act (“Regulation D”), and upon such other exemption or exemptions from the registration requirements of the Securities Act as may be available with respect to such issuance and sale,

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I
DEFINITIONS

In addition to terms defined elsewhere in this Agreement, the following terms used herein have the meanings ascribed thereto:

“2018 Form 10-K” means the Annual Report on Form 10-K filed with the Commission by the Company for its fiscal year ended December 31, 2018.

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with a Person, as such terms are used in and construed under Rule 144.

“Agreement” has the meaning assigned to such term in the preamble hereof.

“Bylaws” has the meaning assigned to such term in Section 3.6.

“Charter” has the meaning assigned to such term in Section 3.6.

“Closing” has the meaning assigned to such term in Section 2.2.

“Closing Date” has the meaning assigned to such term in Section 2.2.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commission” means the United States Securities and Exchange Commission.

“Commission Documents” means all reports, schedules, registrations, forms, statements, information and other documents filed with or furnished to the Commission by the Company pursuant to the reporting requirements of the Exchange Act, including (i) the 2018 Form 10-K, (ii) all material filed or furnished pursuant to Section 13(a), Section 13(c), Section 14 or Section 15(d) of the Exchange Act, since January 1, 2017, and (iii) all certifications and statements required by (i) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (ii) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002 with respect to the foregoing documents.

“Common Stock” has the meaning assigned to such term in the Recitals.

“Company” has the meaning assigned to such term in the preamble hereto.

“Damages” has the meaning assigned to such term in Section 9.1.

“EDGAR” means the Commission’s Electronic Data Gathering, Analysis and Retrieval System.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.

“GAAP” means generally accepted accounting principles in the United States of America as applied by the Company.

“Governmental Licenses” has the meaning assigned to such term in Section 4.14(a).

“Indebtedness” means (a) any liabilities for borrowed money or amounts (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements, indemnities and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments due under leases required to be capitalized in accordance with GAAP.

“Intellectual Property” has the meaning assigned to such term in Section 4.14(b).

“Investor” has the meaning assigned to such term in the preamble.

“Knowledge” means the actual knowledge of the Company’s Chief Executive Officer or Chief Financial Officer, after reasonable inquiry of the officers, directors and employees of the Company who could reasonably be expected to have knowledge or information with respect to the matter in question.

“Material Adverse Effect” means any event, circumstance, development, change, occurrence or effect that, individually or in the aggregate, is or is reasonably likely to result in, a material adverse effect on the condition (financial or otherwise), assets, liabilities, business or results of operations of the Company and its Subsidiaries, taken as a whole, including, without limitation (i) any changes in general United States or global economic conditions, including changes in United States or global securities, credit, financial, debt or other capital markets, (ii) any changes in conditions generally affecting the industries in which the Company or any of its Subsidiaries materially engages, (iii) any decline in the market price or trading volume of the Common Stock, (iv) any changes in credit ratings and any changes in any analysts’ recommendations or ratings with respect to the Company or any of its Subsidiaries, (v) any effect resulting from the announcement of, or the consummation of the transactions contemplated by, this Agreement on the Company’s relationships, contractual or otherwise, with customers, suppliers, vendors, bank lenders, strategic venture partners or employees; (vi) any failure by the Company or any of its Subsidiaries to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period, (vii) the execution and delivery of this Agreement, the public announcement or the pendency of this Agreement, (viii) any changes after the date hereof in any law or GAAP (or authoritative interpretations thereof), (ix) any act of God, natural disaster, terrorism, armed hostilities, sabotage, war or any escalation or worsening of acts of war, epidemic, pandemic or disease outbreak (including, without limitation, the COVID-19 virus) and (x) the receipt of any notice that the Common Stock may be ineligible to continue listing or quotation on the Trading Market, other than a final and non-appealable notice that the listing or quotation of the Common Stock on the Trading Market shall be terminated on a date certain (unless, prior to such date certain, the Common Stock is listed or quoted on any other Trading Market).

“Material Agreements” has the meaning assigned to such term in Section 4.15.

“Person” means any person or entity, whether a natural person, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture, governmental agency or authority.

“Purchase Price” has the meaning assigned to such term in the Recitals.

“Regulation D” has the meaning assigned to such term in the Recitals.

“Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Shares” shall mean the shares of Common Stock that are to be purchased by the Investor under this Agreement.

“Subsidiary” shall mean any corporation or other entity of which at least a majority of the securities or other ownership interest having ordinary voting power for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by the Company and/or any of its other Subsidiaries.

“Trading Market” means the OTC Pink tier of the quotation system operated by OTC Markets Group Inc.; provided, however, that in the event that the Common Stock shall be listed or quoted on the NASDAQ Global Market, the NASDAQ Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange, NYSE Area, the NYSE MKT, or the OTCQX or OTCQB tier operated by OTC Markets Group Inc., than the “Trading Market” shall mean such other market or exchange or any successor to the foregoing on which the Common Stock is then listed or quoted.

ARTICLE II

PURCHASE AND SALE OF COMMON STOCK

Section 2.1. Purchase and Sale of the Shares. Upon the terms and subject to the conditions of this Agreement, the Company shall issue and sell to the Investor, and the Investor shall purchase the Shares from the Company, which Shares shall be newly issued, duly authorized, validly issued, fully paid and nonassessable shares of Common Stock for the Purchase Price.

Section 2.2. Closing. The closing of said issue and sale shall take place at the offices of the Company, at its address for notice set forth in Section 9.5, at 2:00 p.m., Los Angeles, California, time, as quickly as practicable, but in any event within 3 business days after the signing of this Agreement by both parties. Such closing is referred to herein as the “Closing.” At the Closing, (a) the Company shall deliver to the Investor (i) the Company’s irrevocable instructions to its Transfer Agent to issue a certificate representing the Shares to the Investor and (ii) a copy of resolutions of the Company’s board of directors authorizing the execution and delivery of this Agreement and the issuance of the Shares and (b) the Investor shall deliver to the Company by wire transfer or by certified or bank cashier’s check, payable to the order of the Company, for the Purchase Price. The Closing shall be complete upon transmission to said transfer agent by email of said irrevocable instructions. The date on which the Closing occurs is the “Closing Date.”

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor hereby makes the following representations and warranties to the Company:

Section 3.1. Organization and Good Standing. The Investor is a limited liability company established and in good standing under the laws of the State of California.

Section 3.2. Authorization and Enforceability. The Investor has all requisite power and authority to enter into and perform its obligations under this Agreement and to purchase the Shares in accordance with the provisions hereof. The execution, delivery and performance by the Investor of this Agreement and the consummation by it of the transactions contemplated hereby have been duly and validly authorized by all necessary company action, and no further consent or authorization of the Investor, its managers or its members is required. This Agreement has been duly executed and delivered by the Investor and constitutes a valid and binding obligation of the Investor, enforceable against the Investor in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application (including any limitation of equitable remedies).

Section 3.3. No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the consummation by the Investor of the transactions contemplated hereby do not and will not (i) conflict with, constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Investor is a party or is bound, (ii) create or impose any lien, charge or encumbrance on any property of the Investor under any agreement or any commitment to which the Investor is party or under which the Investor is bound or under which any of its properties or assets are bound, or (iii) result in a violation of any federal, state, local or foreign statute, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to the Investor or by which any of its properties or assets are bound or affected, except, for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, prohibit or otherwise interfere with, in any material respect, the ability of the Investor to enter into and perform its obligations under this Agreement. The Investor is not required under any applicable federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or to purchase the Shares in accordance with the provisions hereof; provided, however, that for purposes of the representation made in this sentence, the Investor is assuming and relying upon the accuracy of the relevant representations and warranties and the compliance with the relevant covenants and agreements of the Company herein.

Section 3.4. Investment Purpose. The Investor is acquiring the Shares for its own account, for investment purposes and not with a view to, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the registration requirements of the Securities Act. The Investor does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Shares.

Section 3.5. Accredited Investor Status. The Investor is an “accredited investor,” as that term is defined in Rule 501(a) of Regulation D.

Section 3.6. Reliance on Exemptions. The Investor understands that the Shares are being offered and sold to it in reliance on specific exemptions from the registration requirements of federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Investor’s compliance with, the representations, warranties, covenants, agreements, acknowledgments and understandings of the Investor set forth herein in order to determine the availability of such exemptions and the eligibility of the Investor to acquire the Shares.

Section 3.7. Information. All materials relating to the business, financial condition, management and operations of the Company and materials relating to the offer and sale of the Securities that have been requested by the Investor have been furnished or otherwise made available to the Investor, including the Commission Documents and the exhibits filed therewith, and the Investor has reviewed them to its satisfaction. The Investor understands that its investment in the Shares involves a high degree of risk. The Investor is able to bear the economic risk of an investment in the Shares and has such knowledge and experience in financial and business matters that it is capable, without the assistance of any representative or advisor, of evaluating the merits and risks of an investment in the Shares. The Investor has been afforded the opportunity to ask questions of and receive answers from representatives of the Company concerning the financial condition and business of the Company and other matters relating to an investment in the Shares. Neither such inquiries nor any other due diligence investigations conducted by the Investor shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement or the Investor’s right to rely on any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby The Investor has sought such accounting, legal and tax advice as it has deemed necessary to make an informed investment decision with respect to its acquisition of the Shares. The Investor understands that it and not the Company shall be responsible for its tax liabilities that may arise as a result of this investment or the transactions contemplated by this Agreement. The Investor has reviewed via EDGAR true and correct copies of the Company’s Articles of Incorporation as in effect on the date hereof (the “Charter”), and the Company’s Bylaws as in effect on the date hereof (the “Bylaws”).

Section 3.8. No Governmental Review. The Investor understands that no federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Shares or the fairness or suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares.

Section 3.9. No General Solicitation. The Investor is not purchasing the Shares as a result of any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale thereof.

Section 3.10. Resales of Shares. The Investor represents, warrants and covenants that it will resell the Shares in a manner in compliance with all applicable federal and state securities laws, rules and regulations.

Section 3.11. Concerning Rule 144. The Investor understands that (i) the exemption from registration under the Securities Act afforded by Rule 144 is subject to a number of conditions, one of which is that the Investor shall have held the Shares for at least 6 months after it pays for them, (ii) notwithstanding the satisfaction of such conditions, said exemption will be available for such resale only if, at the time thereof, the Company is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act and has filed all reports and other materials required to be filed by Section 13 or Section 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the Company was required to file such reports and materials), other than Current Reports on Form 8-K and (iii) the number of shares of Common Stock that the Investor may sell pursuant to such exemption within any period of 3 months will be limited.

Section 3.12. Acknowledgement. The Investor acknowledges and agrees that the Company has not made and does not make any representations or warranties with respect to the transactions contemplated by this Agreement other than those specifically set forth in Article IV.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby makes the following representations, warranties and covenants to the Investor:

Section 4.1. Organization, Good Standing and Power. The Company and each of its Subsidiaries is a corporation or other juridical entity validly existing and in good standing under the laws of the State of California and has the requisite corporate power and authority to own, lease and operate its properties and assets and to conduct its business as it is now being conducted and as presently proposed to be conducted. The Company and each Subsidiary is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except for any jurisdiction in which the failure to be so qualified would not have a Material Adverse Effect.

Section 4.2. Authorization and Enforceability. The Company has all requisite corporate power and authority to enter into and perform its obligations under this Agreement and to issue the Shares in accordance with the provisions hereof. The execution, delivery and performance by the Company of this Agreement and the consummation by it of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Company, its Board of Directors or its shareholders is required. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, , liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application (including any limitation of equitable remedies).

Section 4.3. Capitalization. The authorized capital stock of the Company is as set forth in the Commission Documents. On the date hereof there are 56,700,979 shares of Common Stock and no shares of the Company’s preferred stock issued and outstanding. All of the outstanding shares of Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. No shares of Common Stock are entitled to preemptive rights and, except as set forth in the Commission Documents, there are no outstanding debt securities and no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into or exchangeable for, any shares of capital stock of the Company.

Section 4.4. Concerning the Shares. The Shares have been duly authorized by all necessary corporate action on the part of the Company and, when issued upon payment therefor in accordance with the provisions of this Agreement, will be validly issued and outstanding, fully paid and nonassessable and free from all liens, charges, taxes, security interests, encumbrances, rights of first refusal, preemptive or similar rights and other encumbrances with respect to the issue thereof.

Section 4.5. No Conflicts. The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby do not and will not (i) result in a violation of any provision of the Company’s Charter or Bylaws, (ii) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give rise to any rights of termination, amendment, acceleration or cancellation of, any material agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company or any of its Subsidiaries is a party or by which it is bound, (iii) create or impose a lien, charge or encumbrance on any property or assets of the Company or any of its Subsidiaries under any agreement or any commitment to which the Company or any of them is a party or by which the Company or any of them is bound or to which any of their respective properties or assets is subject, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of them are bound or affected (including federal and state securities laws and regulations and the rules and regulations of the Trading Market), except, for such conflicts, defaults, terminations, amendments, acceleration, cancellations, liens, charges, encumbrances and violations as would not, individually or in the aggregate, have a Material Adverse Effect. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities laws, the Company is not required under any federal, state, local or foreign law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency (including, without limitation, the Trading Market) in order for it to execute, deliver or perform any of its obligations under this Agreement or to issue the Shares to the Investor in accordance with the terms hereof; provided, however, that, for purposes of the representation made in this sentence, the Company is assuming and relying upon the accuracy of the representations and warranties of the Investor in this Agreement and the compliance by it with its covenants and agreements contained in this Agreement.

Section 4.6. Commission Documents, Financial Statements.

The Company has timely filed all Commission Documents (giving effect to all permissible extensions of the due date therefor, including those provided by Rule 12b-25 under the Exchange Act and Securities Exchange Act Release No. 34-88465). The Company has delivered or made available to the Investor via EDGAR or otherwise true and complete copies of the Commission Documents filed with or furnished to the Commission prior to the Closing Date (including, without limitation, the 2018 Form 10-K). No Subsidiary of the Company is required to file or furnish any report, schedule, registration, form, statement, information or other document with the Commission. As of its filing date, each Commission Document filed with or furnished to the Commission prior to the Closing Date (including, without limitation, the 2018 Form 10-K) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and other federal, state and local laws, rules and regulations applicable to it, and, as of its filing date, such Commission Document did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company has delivered or made available to the Investor via EDGAR or otherwise true and complete copies of all comment letters and substantive correspondence received by the Company from the Commission relating to the Commission Documents filed with or furnished to the Commission as of the Closing Date, together with all written responses of the Company thereto in the form such responses were filed via EDGAR. There are no outstanding or unresolved comments or undertakings in such comment letters received by the Company from the Commission. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Securities Act or the Exchange Act.

The financial statements, together with the related notes and schedules, of the Company included in the Commission Documents complied when they were filed as to form in all material respects with all applicable accounting requirements and the published rules and regulations of the Commission and all other applicable rules and regulations with respect thereto. Such financial statements, together with the related notes and schedules, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be otherwise indicated in such financial statements or the notes thereto), and fairly present in all material respects the financial condition of the Company and its consolidated Subsidiaries as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

The Investor acknowledges that (i) the notes to the financial statements contained in the Commission Documents state that there is substantial doubt about the ability of the Company to continue as a going concern and (ii). the Company has advised the Investor that the Company requires substantial additional capital, in addition to the Purchase Price and that, in the event that the Company cannot raise such capital, it may have to curtail its operations or could fail. The Investor further acknowledges that it has consider these factors, together with others that it has deemed relevant, and after so considering, has determined to enter into this Agreement.

Section 4.7. No Material Adverse Effect. Except as disclosed in any Commission Documents and except for the effects of the current so-called “Covid-19 Pandemic,” on the Company and its business, the Company has not experienced or suffered any Material Adverse Effect, and there exists no current state of facts, condition or event which would have a Material Adverse Effect.

The Investor acknowledges that the Company has advised the Investor that the effects of the Covid-19 Pandemic have been and are expected to continue to be material and adverse. In particular, for an unknown but possibly extended period, the following, among others, may be substantially and adversely affected to an extent that the Company cannot presently predict: the Company’s ability to conduct its operations, including its financial reporting systems, internal control over financial reporting and disclosure controls and procedures; its financial condition and results of operations; its capital and financial resources, including its liquidity; its balance sheet and its ability to account timely for those assets; demand for its products and services; the ability of its suppliers to manufacture and deliver the products that it sells; its ability to deliver its products; the valuation of its goodwill, intangible assets and long-lived assets; its ability to display and sell its products at trade shows and similar events; its ability to conduct meetings with existing and prospective customers and suppliers; the ability of the Company and its customers to meet their financial obligations to one another and to others; travel restrictions and border closures; and, if its employees were to contract Covid-19, their ability to work; and to the extent that the Company will be able to continue operating, it may incur additional costs in order to do so. The Investor further acknowledges that it has consider the factors set forth above relating to the Covid-19 Pandemic, together with others that it has deemed relevant, and after so considering, has determined to enter into this Agreement.

Section 4.8. No Undisclosed Liabilities. Neither the Company nor any of its Subsidiaries has any liabilities, obligations, claims or losses (whether liquidated or unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise) that would be required to be disclosed on a balance sheet of the Company or any Subsidiary (including the notes thereto) in conformity with GAAP and are not disclosed in the Commission Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries respective businesses since September 30, 2019, and which, individually or in the aggregate, do not or would not have a Material Adverse Effect.

Section 4.9. No Undisclosed Events or Circumstances. Except as set forth in Section 4.7, no event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company at or before the Closing but which has not been so publicly announced or disclosed, except for events or circumstances which, individually or in the aggregate, do not or would not have a Material Adverse Effect.

Section 4.10. Indebtedness. The Company’s Quarterly Report on Form 10-Q for its fiscal quarter ended September 30, 2019, sets forth, as of that date, all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments through such date. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to Title 11 of the United States Code or any similar federal or state bankruptcy law or law for the relief of debtors, nor does the Company have any Knowledge that its creditors intend to initiate involuntary bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under Title 11 of the United States Code or any other federal or state bankruptcy law or any law for the relief of debtors. There is no existing or continuing default or event of default in respect of any Indebtedness of the Company or any of its Subsidiaries.

Section 4.11. Title to Assets. Each of the Company and its Subsidiaries has good and valid title to, or has valid rights to lease or otherwise use, all of their respective real and personal property reflected in the Commission Documents, free of mortgages, pledges, charges, liens, security interests or other encumbrances, except for those indicated in the Commission Documents and those that would not have a Material Adverse Effect. All real property and facilities held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company or any of its Subsidiaries.

Section 4.12. No Actions Pending. To the Knowledge of the Company, there is no action, suit, claim, investigation or proceeding pending or threatened against the Company or any Subsidiary which questions the validity of this Agreement or the transactions contemplated hereby or any action taken or to be taken pursuant hereto. Except as set forth in the Commission Documents, to the Knowledge of the Company, there is no action, suit, claim, investigation or proceeding pending or threatened against or involving the Company, any Subsidiary or any of their respective properties or assets, or involving any officers or directors of the Company or any of its Subsidiaries, in each case which, if determined adversely to the Company, its Subsidiary or any officer or director of the Company or its Subsidiaries, would have a Material Adverse Effect. Except as set forth in the Commission Documents, no judgment, order, writ, injunction or decree or award has been issued by or, to the Knowledge of the Company, requested of any court, arbitrator or governmental agency which would be reasonably expected to result in a Material Adverse Effect.

Section 4.13. Compliance with Law. The business of the Company and the Subsidiaries has been and is presently being conducted in compliance with all applicable federal, state, local and foreign governmental laws, rules, regulations and ordinances, except as set forth in the Commission Documents and except for such non-compliance which, individually or in the aggregate, would not have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possible violations which could not, individually or in the aggregate, have a Material Adverse Effect.

Section 4.14. Operation of Business.

(a) The Company or one or more of its Subsidiaries possesses such permits, licenses, approvals, consents and other authorizations (including licenses, accreditation and other similar documentation or approvals of any local health departments) issued by the appropriate federal, state, local or foreign regulatory agencies or bodies as are necessary to conduct the business now operated by it (collectively, “Governmental Licenses”), except where the failure to possess such Governmental Licenses, individually or in the aggregate, would not have a Material Adverse Effect. The Company and its Subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure to so comply, individually or in the aggregate, would not have a Material Adverse Effect or except as otherwise disclosed in the Commission Documents. All of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect, individually or in the aggregate, would not have a Material Adverse Effect or except as otherwise disclosed in the Commission Documents. Except as set forth in the Commission Documents, neither the Company nor any of its Subsidiaries has received any written notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, if the subject of any unfavorable decision, ruling or finding, individually or in the aggregate, would have a Material Adverse Effect.

(b) The Company or one or more of its Subsidiaries owns or possesses adequate patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, trade dress, logos, copyrights and other intellectual property, including, without limitation, all of the intellectual property described in the Commission Documents as being owned or licensed by the Company (collectively, “Intellectual Property”), necessary to carry on the business now operated by it. Except as set forth in the Commission Documents, there are no actions, suits or judicial proceedings pending, or to the Company’s Knowledge threatened, relating to patents or proprietary information to which the Company or any of its Subsidiaries is a party or of which any property of the Company or any of its Subsidiaries is subject, and neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which could render any Intellectual Property invalid or inadequate to protect the interest of the Company and its Subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would have a Material Adverse Effect.

Section 4.15. Material Agreements. Except as set forth in the Commission Documents, neither the Company nor any Subsidiary of the Company is a party to any written or oral contract, instrument, agreement commitment, obligation, plan or arrangement, a copy of which would be required to be filed with the Commission as an exhibit to an annual report on Form 10-K (collectively, “Material Agreements”). Except as set forth in the Commission Documents, the Company and each of its Subsidiaries have performed in all material respects all the obligations then required to be performed by them under the Material Agreements, have received no notice of default or an event of default by the Company or any of its Subsidiaries thereunder and are not aware of any basis for the assertion thereof, and neither the Company or any of its Subsidiaries nor, to the Knowledge of the Company, any other contracting party thereto are in default under any Material Agreement now in effect, the result of which would have a Material Adverse Effect. Except as set forth in the Commission Documents, each of the Material Agreements is in full force and effect, and constitutes a legal, valid and binding obligation enforceable in accordance with its terms against the Company and/or any of its Subsidiaries and, to the Knowledge of the Company, each other contracting party thereto, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

Section 4.16. Taxes. Except in relation to taxes not exceeding $250,000 in the aggregate, excluding interest and penalties, the Company and each of its Subsidiaries (i) has filed all necessary federal, state and foreign income and franchise tax returns or has duly requested extensions thereof, except for those the failure of which to file would not have a Material Adverse Effect, (ii) has paid all federal, state, local and foreign taxes due and payable for which it is liable, except to the extent that any such taxes are being contested in good faith and by appropriate proceedings, except for such taxes the failure of which to pay would not have a Material Adverse Effect, and (iii) does not have any tax deficiency or claims outstanding or assessed or, to the Company’s Knowledge, proposed against it which would have a Material Adverse Effect. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim.

Section 4.17. No General Solicitation or Advertising. Neither the Company, nor any of its Subsidiaries or Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Shares.

Section 4.18. Acknowledgement. The Company acknowledges and agrees that the Investor has not made and does not make any representations or warranties with respect to the transactions contemplated by this Agreement other than those specifically set forth in Article III of this Agreement.

ARTICLE V

ADDITIONAL COVENANTS

The Company covenants with the Investor, and the Investor covenants with the Company, as follows:

Section 5.1. Securities Compliance. The Company shall notify the Commission and the Trading Market, if and as applicable, in accordance with their respective rules and regulations, of the transactions contemplated by this Agreement, and shall take all necessary action, undertake all proceedings and obtain all registrations, permits, consents and approvals for the legal and valid issuance of the Shares to the Investor in accordance with the terms of this Agreement.

Section 5.2. Compliance with Laws. The Investor shall comply with all laws, rules, regulations and orders applicable to the performance by it of its obligations under this Agreement and its investment in the Shares.

Section 5.3 Corporate Existence. The Company shall take all steps necessary to preserve and continue the corporate existence of the Company; provided, however, that, nothing in this Agreement shall be deemed to prohibit the Company from (a) consolidating or merging with or into another Person (whether or not the Company is the surviving entity), (b) selling, leasing, licensing, assigning, transferring, conveying or otherwise disposing of all or substantially all of the properties or assets of the Company to another Person, (c) taking action to facilitate a purchase, tender or exchange offer by another Person that is accepted by the holders of more than 50% of the outstanding shares of Common Stock, (d) consummating a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or (e) reorganizing, recapitalizing or reclassifying its Common Stock.

Section 5.4 Option. The Investor grants to the Company the right and option to repurchase the Shares for the purchase price of $0.015 per share, but shall not be obligated to sell the Shares to the Company upon exercise of said option if it determines in its discretion, that so doing is not in its best interest.

ARTICLE VI

CONDITIONS TO CLOSING

The obligation of the parties to consummate the Closing is subject to the satisfaction of the following conditions:

(a) Accuracy of the Investor’s Representations and Warranties. It shall be a condition precedent to the obligation of the Company that the representations and warranties of the Investor contained in this Agreement (i) that are not qualified by “materiality” shall be true and correct in all material respects as of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct in all material respects as of such other date and (ii) that are qualified by “materiality” shall be true and correct as of the date of such Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date. By virtue of its consummation of a Closing, the Investor shall be deemed to have delivered to the Investor its certificate stating that its representations and warranties contained in this Agreement are true and correct on such Closing Date as specified in the previous sentence.

(b) Accuracy of the Company’s Representations and Warranties. It shall be a condition precedent to the obligation of the Investor that the representations and warranties of the Company contained in this Agreement (i) that are not qualified by “materiality” or “Material Adverse Effect” shall be true and correct in all material respects as of the date of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct in all material respects as of such other date and (ii) that are qualified by “materiality” or “Material Adverse Effect” shall be true and correct as of the Closing Date, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date. By virtue of its consummation of the Closing, the Company shall be deemed to have delivered to the Investor its certificate stating that its representations and warranties contained in this Agreement are true and correct on the Closing Date as specified in the previous sentence.

(c) No Injunction. It shall be a condition precedent to the obligation of the Company and the Investor that no statute, regulation, order, decree, writ, ruling or injunction shall have been enacted, entered, promulgated, threatened or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of or which would materially modify or delay any of the transactions contemplated by this Agreement.

(d) No Proceedings or Litigation. It shall be a condition precedent to the obligation of the Company and the Investor that no action, suit or proceeding before any arbitrator or any court or governmental authority shall have been commenced or threatened, and no inquiry or investigation by any governmental authority shall have been commenced or threatened, against the Company or any Subsidiary, or any of the officers, directors or affiliates of the Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by this Agreement.

(e) No Material Adverse Effect. It shall be a condition precedent to the obligation of the Investor that no condition, occurrence, state of facts or event constituting a Material Adverse Effect shall have occurred and be continuing.

(f) Verification of Status as Accredited Investor. It shall be a condition precedent to the obligation of the Company to consummate the Closing that the Investor shall have delivered to the Issuer a written confirmation meeting the requirements of Section (c)(2)(ii)(C) of Rule 506 of Regulation D from a registered broker-dealer, an investment adviser registered with the Commission, a licensed attorney who is in good standing under the laws of the jurisdictions in which he or she is admitted to practice law or a certified public accountant who is duly registered and in good standing under the laws of the place of his or her residence or principal office verifying the Investor’s status as an Accredited Investor.

ARTICLE VII

TERMINATION

Section 7.1. Termination. This Agreement may be terminated at any time prior to the Closing (i) by the mutual consent of the parties, effective as of the date of such mutual written consent unless otherwise provided therein or (ii) upon notice by a party upon the breach by the other party of such other party’s representations and warranties or a covenant to be complied with by such other party.

Section 7.2. Effect of Termination. In the event of termination by the Company or the Investor pursuant to Section 7.1, this Agreement shall become void and of no further force and effect, except that (i) the provisions of Article VIII (Indemnification), Article IX (Miscellaneous) and this Article VII (Termination) shall remain in full force and effect indefinitely notwithstanding such termination, and, (ii) as long as the Investor owns any Shares, the covenants and agreements of the Company contained in Article V (Additional Covenants) shall remain in full force, notwithstanding such termination, for a period of 12 months following such termination.

ARTICLE VIII

INDEMNIFICATION

Section 8.1. Indemnification of Investor. In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Shares hereunder and in addition to all of the Company’s other obligations hereunder, subject to the provisions of this Section 8.1, the Company shall indemnify and hold harmless the Investor from and against all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses (including all judgments, amounts paid in settlement, court costs, reasonable attorneys’ fees and costs of defense and investigation)(collectively, “Damages”) that the Investor may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or (b) any action, suit, claim or proceeding instituted against the Investor arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement; provided, however, that (i) the foregoing indemnity shall not apply to any Damages to the extent, but only to the extent, that such Damages resulted directly and primarily from a breach of any of the Investor’s representations, warranties, covenants or agreements contained in this Agreement, and (y) the Company shall not be liable under subsection (b) of this Section 8.1 to the extent, but only to the extent, that a court of competent jurisdiction shall have determined by a final judgment (from which no further appeals are available) that such Damages resulted directly and primarily from any acts or failures to act, undertaken or omitted to be taken by the Investor through its fraud, bad faith, gross negligence, or willful or reckless misconduct. Damages shall be limited to the amount that the Investor paid for the Shares less any profit that it shall have recognized from its disposition of any of them.

Section 8.2. Indemnification Procedures. Promptly after an Investor Party receives notice of a claim or the commencement of an action for which the Investor intends to seek indemnification under Section 8.1, the Investor will notify the Company in writing of the claim or commencement of the action, suit or proceeding. The Company will be entitled to participate in the defense of any claim, action, suit or proceeding as to which indemnification is being sought, and the Company may (but will not be required to) assume the defense against the claim, action, suit or proceeding with counsel satisfactory to it. After the Company notifies the Investor that the Company wishes to assume the defense of a claim, action, suit or proceeding, the Company will not be liable for any further legal or other expenses incurred by the Investor in connection with the defense against the claim, action, suit or proceeding. The Investor, as a condition to receiving indemnification as provided in Section 8.1, will cooperate in all reasonable respects with the Company in the defense of any action or claim as to which indemnification is sought. The Company will not be liable for any settlement of any action effected without its prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned. The Company will not, without the prior written consent of the Investor, effect any settlement of a pending or threatened action with respect to which the Investor is, or is informed that it may be, made a party and for which it would be entitled to indemnification, unless the settlement includes an unconditional release of the Investor from all liability and claims which are the subject matter of the pending or threatened action.

The remedies provided for in this Article XIII are exclusive with respect to indemnification.

ARTICLE X

MISCELLANEOUS

Section 9.1. Fees and Expenses. Each party shall bear its own fees and expenses related to the transactions contemplated by this Agreement; The Company shall pay all federal, state and local stamp and other similar transfer and other taxes and duties levied in connection with issuance of the Shares.

Section 9.2. Legends. The certificates representing the Shares shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates:

THE OFFER AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

Section 9.3. Remedies.

(a) Arbitration. Except as provided in Section 9.3(b), any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled exclusively by arbitration administered by the American Arbitration Association (the “AAA”) under its Commercial Arbitration Rules in Riverside County, California, by a single arbitrator, and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Prior to instituting arbitration, the Parties agree first to attempt in good faith to settle the dispute by mediation administered by the AAA under its Commercial Mediation Procedures. The prevailing Party in such arbitration shall pay all of the expenses thereof and such expenses shall be included in the award. A demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter has arisen, but not after the time when legal proceedings with respect thereto would be barred by a statute of limitations or otherwise.

(b) Limitation on Damages. NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL, OR EXEMPLARY DAMAGES.

Section 9.4. Entire Agreement; Amendment. This Agreement sets forth the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, negotiations and understandings between the parties, both oral and written, with respect to such matters. There are no promises, undertakings, representations or warranties by either party relative to subject matter hereof not expressly set forth herein. No provision of this Agreement may be amended other than by a written instrument signed by both parties hereto.

Section 9.5. Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery or facsimile (with facsimile machine confirmation of delivery received) at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The address for such communications shall be:

If to the Company:

Medtainer, Inc.

1620 Commerce St.

Corona, CA 92880

Attention: Chief Executive Officer

If to the Investor:

Ardelli Holdings LLC

36625 Kevin Rd., Suite 150

Wildomar, CA 92525

Either party hereto may from time to time change its address for notices by giving at least 10 days advance written notice of such changed address to the other party hereto.

Section 9.6. Waivers. No provision of this Agreement may be waived other than in a written instrument signed by the party against whom enforcement of such waiver is sought. No failure or delay in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercises thereof or of any other right, power or privilege.

Section 9.7. Headings. The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in which they are found.

Section 9.8. Construction. Each of the parties acknowledges that it and its counsel has reviewed and had an opportunity to revise this Agreement and therefore agrees that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Any reference in this Agreement to “Dollars” or “$” shall mean the lawful currency of the United States of America.

Section 9.9. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. The Investor may not assign its rights or obligations under this Agreement.

Section 9.10. No Third-Party Beneficiaries. Except as expressly provided in Article IX, this Agreement is intended only for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

Section 9.11. Governing Law. This Agreement shall be governed by and construed in accordance with the internal procedural and substantive laws of the State of California, without giving effect to the choice of law provisions of such state that would cause the application of the laws of any other jurisdiction.

Section 9.12. Survival. The representations, warranties, covenants and agreements of the Company and the Investor contained in this Agreement shall survive the execution and delivery hereof until the termination of this Agreement; provided, however, that (i) Article VII (Termination), Article VIII (Indemnification) and this Article IX (Miscellaneous) shall remain in full force and effect indefinitely notwithstanding such termination, and, (ii) so long as the Investor owns any Shares, the covenants and agreements of the Company contained in Article V (Additional Covenants), shall remain in full force and effect notwithstanding such termination for a period of 12 months following such termination.

Section 9.13. Counterparts. This Agreement may be executed in counterparts, all of which taken together shall constitute one and the same original and binding instrument and shall become effective when all counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties hereto need not sign the same counterpart. In the event any signature is delivered by facsimile, digital or electronic transmission, such transmission shall constitute delivery of the manually executed original.

Section 9.14. Severability. The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement, and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

Section 9.15. Further Assurances. From and after the date of the Closing, upon the request of the Investor or the Company, each of the Company and the Investor shall execute and deliver such instrument, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.

Section 9.16. Signatory. The person who executes and delivers this Agreement on behalf of the Investor by signing this Agreement individually represents and warrants to the Company that he is authorized and empowered by the Investor to execute this Agreement in the name and on behalf of the Investor.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.

MEDTAINER, INC.

By: /s/ Curtis Fairbrother

Curtis Fairbrother

Chief Executive Officer

ARDELLI HOLDINGS LLC

By: /s/ Russell Ward

Russell Ward

Member

Exhibit 14

MEDTAINER, INC

Code of Ethics

Our Board of Directors adopted the following Code of Ethics applicable to its Board of Directors, its Chief Executive Officer (CEO) and its senior financial officers performing similar functions who have been identified by the CEO (collectively, the “Senior Financial Officers”) are subject to the following additional specific policies (collectively referred to as the “Code of Ethics”):

Code of Ethics for Senior Financial Officers and All Medtainer Inc. Personnel, Including Non-Financial Executives of Medtainer Inc. Corporation

The CEO and all Senior Financial Officers are responsible for full, fair, accurate and timely disclosure in the reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and in other public communications made by the Company. Accordingly, it is the responsibility of the CEO and each Senior Financial Officer to promptly bring to the attention of Company’s General Counsel or the CEO any material information of which he or she may become aware that affects such disclosures.
The CEO and each Senior Financial Officer shall promptly bring to the attention of the General Counsel or the CEO any information he or she may have concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data; or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s financial reporting, disclosures or internal controls.
The CEO and each Senior Financial Officer shall act with honesty and integrity in the performance of his or her duties at the Company, shall comply with laws, rules and regulations of federal, state and local governments and other private and public regulatory agencies that affect the conduct of the Company’s business and the Company’s financial reporting.
The CEO and each Senior Financial Officer shall promptly bring to the attention of the General Counsel or the CEO any information he or she may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to the Company and the operation of its business, by the Company or any agent thereof, or any violation of this Code of Ethics.
The CEO, each Senior Financial Officer and the Board of Directors shall avoid actual or apparent conflicts of interest between personal and business relationships; such as holding a substantial equity, debt or other financial interest in any competitor, supplier or customer of the Company; or having a personal financial interest in any transaction involving the purchase or sale by the Company of any products, materials, equipment, services or property, other than through Company-sponsored programs, or other than transactions on terms and conditions substantially similar to those given to independent third parties. Any such actual or apparent conflicts of interest shall be brought to the attention of the General Counsel, the CEO and the Board of Directors.
The CEO and each Senior Financial Officer shall act in good faith, responsibly, with due care, competence and diligence.
The CEO and each Senior Financial Officer shall respect the confidentiality of information acquired in the course of his work, except when authorized or otherwise legally obligated to disclose it. Such confidential information acquired in the course of one’s work shall not be used for personal advantage.
The CEO and each Senior Financial Officer shall promote responsible use of, and control over, all Medtainer, Inc. assets and resources.
The Board of Directors shall determine, or designate appropriate persons to determine appropriate actions to be taken in the event of violations of this Code of Ethics by the CEO and the Company’s Senior Financial Officers. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code of Ethics, and may include written notices, censure by the Board, demotion or re-assignment of the individual involved, suspension with or without pay or benefits and termination of the individual’s employment.

Code of Ethics for All Personnel

Every employee shall act with honesty and integrity in the performance of his or her duties with the Company and shall comply with laws, rules and regulations of federal, state and local governments and other private and public regulatory agencies that affect the conduct of the Company’s business.
Every employee shall keep confidential, unless required by law or regulation, confidential information of the Company. Confidential information includes all non-public information that might be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that customers and suppliers have entrusted to the Company in confidence. This obligation not to disclose confidential information continues even after employment ends.

All employees shall protect the Company’s assets and ensure their efficient use. Company assets may be used only for its legitimate business purposes.
The Company seeks to outperform its competition in a fair and honest manner. The Company seeks competitive advantages through superior performance, never through unethical or illegal business practices. Obtaining proprietary information, possessing trade secret information that was obtained without the owner’s consent or inducing such disclosures by past or present employees of other companies is prohibited. Each employee shall respect the rights of and deal fairly with the Company’s customers, suppliers, competitors and employees. No employee shall take unfair advantage through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other intentional unfair-dealing practice.
All employees are expected to comply with all of the laws, rules and regulations, including without limitation insider trading laws, that apply to them in their employment and when appropriate, seek advice from supervisors, managers or other appropriate personnel.

Exhibit 21

Name	Subsidiaries of the Registrant Jurisdiction of Organization	Percentage Owned
D&C Distributors, LLC*	California	100%
D&C Printing, LLC*	California	100%
D&C Global Distribution, LLC*	California	100%

*Non-Operating beginning January 1, 2019.

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement of Medtainer, Inc. on Form S-8 (File No. 333-228820) of our report dated May 28, 2020, appearing in the Annual Report on Form 10-K of Medtainer, Inc. for the year ended December 31, 2019.

Our report, dated May 28, 2020, contains an explanatory paragraph that states the Company has a working capital deficit, continued operating losses since inception, and has notes payable that are currently in default. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ HASKELL & WHITE LLP

Irvine, California

May 28, 2020

Exhibit 31

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a) AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Curtis Fairbrother, certify that:

I have reviewed this Form 10-K of Medtainer, Inc. for the year ended December 31, 2019;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;

The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: May 28, 2020

/s/ Curtis Fairbrother

Curtis Fairbrother

Principal Executive Officer and

Principal Accounting Officer

Exhibit 32

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL ACCOUNTING OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Curtis Fairbrother, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

The Quarterly Report on Form 10-K of the Company for the year ended December 31, 2019, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 28, 2020

/s/ Curtis Fairbrother

Curtis Fairbrother

Principal Executive Officer and

Principal Accounting Officer

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer (Do not check if a smaller reporting company)	[ ]	Smaller reporting company	[X]
		Emerging Growth Company	[X]