NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2022 AND 2021

NOTE 1 – Organization and Going Concern

Organization

Global WholeHealth Partners Corporation was incorporated on March 7, 2013 in the State of Nevada under the name Texas Jack Oil and Gas Corp. On May 9, 2019, the Company amended its Articles of Incorporation to effect a change of name to Global WholeHealth Partners Corporation. The Company’s ticker symbol changed to GWHP.

The Company develops and markets in-vitro diagnostic tests. The Company has developed over 125 Diagnostic Tests with the criteria that they be “low cost”, OTC or “self-administered”, “absolutely accurate”, and provide “immediate results”. The Company has 45 FDA approved tests for distribution in the US which include tests for Troponin, Colorectal, and Drug testing among others. The remainder tests carry an FDA Certificate of Exportability for distribution in foreign countries and include tests such as Ebola, ZIKA, Dengue Fever, Malaria, Influenza, Tuberculosis, Yellow Fever, Corona Viruses, and other epidemic and vector borne diseases.

Going Concern

The Company’s consolidated financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs to allow it to continue as a going concern. As shown in the accompanying financial statements, the Company incurred negative operating cash flows of $1,968,2071,968,000 for the year ended June 30, 2022 and has an accumulated deficit of $18,937,68518,943,000 from inception through June 30, 2022. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.

In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. Historically, the Company has relied upon internally generated funds, and funds from the sale of stock, issuance of promissory notes and loans from its shareholders and private investors to finance its operations and growth. Management is planning to raise necessary additional funds for working capital through loans and/or additional sales of its common stock. However, there is no assurance that the Company will be successful in raising additional capital or that such additional funds will be available on acceptable terms, if at all. Should the Company be unable to raise this amount of capital its operating plans will be limited to the amount of capital that it can access. These consolidated financial statements do not give effect to any adjustments which will be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

NOTE 2 – Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates made by management primarily relate to accounts receivable, inventories, deferred income tax valuation allowances, and identifiable intangible assets.

Cash and cash equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less and money market accounts to be cash equivalents.

Inventory

Inventory is comprised of finished goods and stated at the lower of cost or net realizable value. Inventory cost is determined on a weighted average basis in accordance with ASC 330-10-30-9. Provisions are made to reduce slow-moving, obsolete, or unusable inventories to their estimated useful or scrap values. When necessary, the Company establishes reserves for this purpose. During the year ended June 30, 2022 and 2021, the Company recognized $115,681 and $171,811, respectively, of adjustments to reduce the value of inventory due primarily to the reduction in selling prices and expiration of test kits.

Equipment

Fixed assets are carried at cost, less accumulated depreciation. Major improvements are capitalized, while repair and maintenance are expensed when incurred. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in that period.

Depreciation is computed on a straight-line basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:

Intangible assets

Other definite-lived intangible assets are amortized over their useful lives. The Company reviews the recoverability of long-lived assets whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable.

Revenue Recognition

The Company recognizes revenue from operations through the sale of products. Product revenue is comprised of the sale of consumables. To date, all products sold have been fully paid for in advance of shipment.

Revenue is recognized when control of products and services is transferred to the customer in an amount that reflects the consideration that the Company expects to receive from the customer in exchange for those products and services. This process involves identifying the contract with the customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, if applicable, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The Company recognizes revenue for satisfied performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control.

Revenue from product sales is generally recognized upon shipment to the end customer, which is when control of the product is deemed to be transferred. Invoicing typically occurs prior to shipment and the term between invoicing and when payment is due is not significant.

Revenue is recorded net of discounts, and sales taxes collected on behalf of governmental authorities. Sales commissions are recorded as selling and marketing expenses when incurred.

The Company records any payments received from customers prior to the Company fulfilling its performance obligation(s) as deferred revenue.

The Company had one customer that represented 57.2% of revenue for the year ended June 30, 2021. The Company had three customers that represented 87.6% of revenue (59.6%, 17.4% and 10.6%) for the year ended June 30, 2020. No other customers represented greater than 10% of sales.

Concentration of Credit Risk and Off-Balance Sheet Risk

The Company has no significant off-balance-sheet risk such as foreign exchange contracts, option contracts, or other foreign hedging arrangements. Financial instruments that potentially subject the Company to concentrations of credit risk are principally cash. The Company’s policy is to place its cash in high quality financial institutions. The Company does not believe significant credit risk exists with respect to these institutions.

Leases

The Company recognizes leases with a term of greater than a year on the balance sheet by recording right-of-use assets and lease liabilities. Leases can be classified as either operating leases or finance leases. Operating leases will result in straight-line lease expense, while finance leases will result in front-loaded expense. The Company’s lease consists of an operating lease for office space. The Company does not recognize a lease liability or right-of-use asset on the balance sheet for short-term leases. Instead, the Company recognizes short-term lease payments as an expense on a straight-line basis over the lease term. A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company utilizes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

During the periods covered by this report, the Company did not have any assets or liabilities that were required to be measured at fair value on a recurring basis or on a non-recurring basis.

Fair Value of Financial Instruments

The Company’s financial instruments consist of accounts payable and accrued expenses. The carrying amounts of the Company’s financial instruments approximate fair value because of the short-term maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect those estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credits and loss carry-forwards. 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 and carry-forwards are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to amounts expected to be realized. The Company reports a liability for unrecognized tax benefits resulting from uncertain income tax positions, if any, taken or expected to be taken in an income tax return. Estimated interest and penalties are recorded as a component of interest expense or other expense, respectively.

Transactions with Related Parties

Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal stockholders of the Company, its management, members of the immediate families of principal stockholders of the Company and its management and other parties with which the Company may deal where one-party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all material related-party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as compensation or distribution to related parties depending on the transaction.

Net Income (Loss) Per Share

Basic net loss per common share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per common share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Dilutive common stock equivalents are comprised of convertible notes and warrants to purchase common stock. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

The potentially dilutive securities that would be anti-dilutive due to the Company’s net loss are not included in the calculation of diluted net loss per share attributable to common stockholders. The anti-dilutive securities are as follows (in common stock equivalent shares):

Research and Development

Research and development costs primarily consist of research contracts for the advancement of product development. The Company expenses all research and development costs in the period incurred.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with Accounting Standards Codification (“ASC”) 718, Stock Based Compensation. ASC 718 requires all stock-based payments to directors, employees and consultants, including grants of stock options, to be recognized in the consolidated statements of operations based on their fair values. If a stock-based award contains performance-based conditions, at the point that it becomes probable that the performance conditions will be met, the Company records a cumulative catch-up of the expense from the grant date to the current date, and then amortizes the remainder of the expense over the remaining service period. Management evaluates when the achievement of a performance-based condition is probable based on the expected satisfaction of the performance conditions as of the reporting date.

Accounting Pronouncements

We evaluate all Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) for consideration of their applicability. ASUs not included in our disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on our Consolidated Financial Statements.

New Accounting Pronouncements Not Yet Adopted

None.

Accounting Pronouncements Recently Adopted

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for the Company for fiscal years beginning after December 31, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020 and adoption must be as of the beginning of the Company’s annual fiscal year. The Company adopted ASU 2020-06 beginning with our fiscal year starting on July 1, 2021 with no impact on its Financial Statements.

In January 2020, the FASB issued ASU 2020-01 - Investments - Equity securities (Topic 321), Investments - Equity method and joint ventures (Topic 323), and Derivatives and hedging (Topic 815) - Clarifying the interactions between Topic 321, Topic 323, and Topic 815. The amendments in this Update improve the accounting for certain equity securities upon the application or discontinuation of the equity method of accounting and clarify the scope considerations for forward contracts and purchased options on certain securities. The amendments are effective for public entities in fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2020-01 beginning with our fiscal year starting on July 1, 2021 with no impact on its Financial Statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes – Simplifying the Accounting for Income Taxes. The guidance removes certain exceptions for recognizing deferred taxes for equity method investments, performing intra period allocation, and calculating income taxes in interim periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for goodwill and allocating taxes to members of a consolidated group, among others. This guidance is effective for interim and annual reporting periods beginning after December 15, 2020. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. The Company adopted ASU 2019-12 effective July 1, 2021 with no impact on its Financial Statements.

During the year ended June 30, 2021, the Company purchased $3,505 of computer equipment. During fiscal 2022 and 2021, the Company recognized depreciation expense of $1,163 and $1,067, respectively.

NOTE 4 – Stockholder’s Equity

Preferred Stock

The Company has Preferred stock: $0.001 par value; 10,000,000 shares authorized with no shares issued and outstanding.

Common Stock

The Company has 400,000,000 shares of Common Stock authorized of which 115,287,079 and 78,713,899 shares were issued and outstanding as of June 30, 2022 and June 30, 2021, respectively.

During fiscal 2022, the Company issued 16,000,000 shares in exchange for services valued at $1,733,100, which includes the issuance of 9,000,000 shares, in total, to the Board of Directors, valued at $387,000.

During fiscal 2022, Firstfire 1) converted $164,000 or principal of Firstfire Note No. 1 at a per share price of $0.03, and received 5,466,666 shares; and 2) converted $31,500 or principal of Firstfire Note No. 2 at a per share price of $0.0063, and received 5,000,000 shares.

On July 10, 2021, the Company and LionsGate Funding Management LLC (“LGFM”) entered into a Media and Marketing Services Agreement (the “MMSA”). Pursuant to the MMSA, 1) LGFM will provide services designed to increase the awareness and visibility in the investment community and market product to distributors throughout the world for a period of 12 months; and 2) the Company will pay LGFM $100,000 and issue 300,000 shares of restricted common stock valued at $129,000. The shares were issued on October 11, 2021. Lionsgate was issued 2,500,000 shares on January 13, 2022 in exchange for services valued at $215,000.

On April 20, 2021, the Company and Empire Associates, Inc. entered into a Stock Purchase Agreement whereby the Company agreed to issue 250,000 to Empire Associates, Inc. in full satisfaction of the $77,060 paid to Geneva by Empire Associates on behalf of the Company. The shares were issued on September 2, 2021.

On April 12, 2021, the Company and Nunzia Pharmaceutical, Inc. entered into a Mutual Sales and Marketing Agreement (the “MSMA”). Pursuant to the terms of the MSMA, each company has mutual abilities to share their products for sale under nonexclusive but favorable conditions and prices. The duration of the agreement is for an initial period of five years commencing on April 12, 2021. As consideration for the MSMA, the Company agreed to issue 5,000,000 shares of its restricted common stock to Nunzia and Nunzia agreed to issue 5,000,000 shares of its restricted common stock to the Company. Due to the related party nature of the MSMA, the Company recorded the issuance of its shares at par value and the receipt of shares from Global at par value or $5,000 and reflected the balance as a non-current asset under the account “Investment in related party.”

On March 30, 2021, the Company entered into a License Agreement (the “IP License Agreement”) with Charles Strongo. Under the terms of the IP License Agreement, the Company has the exclusive license to use the intellectual property, “A Rapid, Micro-Welt or Later flow text for Parkinson’s, Dementia, or Alzheimer or ASD.” The Company agreed to issue 5,000,000 shares of common stock and pay a 2% fee of gross sales from use of the intellectual property. The duration of the IP License Agreement is for an initial period of five years. The IP License Agreement was initially valued at $0.62 per share or $3,100,000. Due to the related party nature of the transfer and the absence of historical cost records, the full $3,100,000 was expensed within “Loss on related party transfer of intangible assets.”

On March 15, 2021, the Company issued 146,486 shares to Geneva Roth Remark Holdings, Inc. For additional information see “NOTE 6 – Convertible Promissory Notes” below.

On February 21, 2021, the Company agreed to issue and on February 25, issued 1,750,000 shares to LionsGate. The Company recorded compensation expense of $1,680,000.

On January 12, 2021, the Company entered into a License Agreement (the “Patent License Agreement”) with Charles Strongo. Under the terms of the Patent License Agreement, the Company has the exclusive license to manufacture, sell and license to be manufactured the only Biodegradable plastic for medical devices. The devices include cassettes, midstream, small buffer bottles, urine cups, and any other plastic type of medical device used in testing or for medical services under provisional patent number 63/054,139. The Company agreed to issue 3,000,000 shares of restricted common stock and pay a 2% fee of gross sales from use of the patent. The duration of the Patent License Agreement is for an initial period of five years. The Patent License Agreement was valued at $0.46 per share or $1,380,000. Due to the related party nature of the transfer and the absence of historical cost records, the full $1,380,000 was expensed within “Loss on related party transfer of intangible assets.”

On January 5, 2021, the Board appointed a new member, Dr. Miriam Lisbeth Paez De La Cerda and issued 200,000 shares of restricted common stock to each of the six Directors for a total issuance of 1,200,000 shares valued at $0.72 per share, the closing price of our common stock on January 5, 2020.

On December 15, 2020, the Company sold 250,000 shares of restricted common stock for $0.36 per share and received $90,000. These shares were issued on February 5, 2021.

On September 24, 2020, the Company and Dr. Scott Ford, Director, entered into a subscription agreement for the purchase 219,298 shares of restricted common stock at a price of $1.14 per share ($250,000 total) which represents a 50% discount to the share price due to the lack of marketability and the thinly traded nature of our common stock on the OTC. These shares were issued on February 5, 2021.

On July 9, 2020, the Company and Dr. Scott Ford, Director, entered into a subscription agreement for the purchase 45,000 shares of restricted common stock at a price of $2.00 per share which represents a 50% discount to the share price due to the lack of marketability and the thinly traded nature of our common stock on the OTC. These shares were issued on February 5, 2021.

EMC2 Capital

On July 22, 2020, the Company entered into a Common Stock Purchase Agreement (the “EMC2 SPA”) and a Registration Rights Agreement with EMC2 Capital, LLC (“EMC2 Capital”) pursuant to which EMC2 Capital agreed to invest up to One Hundred Million Dollars ($100,000,000) to purchase the Company’s common stock at a purchase price as defined in the Common Stock Purchase Agreement (the “Purchase Shares”). As consideration for entry into the EMC2 SPA, the Company agreed to issue 1,415,094 shares of common stock (the “Commitment Shares”) and a warrant to purchase up to two million (2,000,000) shares of common stock (the “Commitment Warrant”). The Commitment Warrant vested upon issuance, expires on its fifth anniversary and had an initial exercise price of $1.59 per share subject to adjustment whereby in the event that the bid price drops below the exercise price, at any time, the exercise price will decease by a prescribed amonut. Since the bid price dropped below $0.59 per share, the exercise price has been adjusted to par value, or $0.001 per share. Additionally, the Company agreed to issue a Registration Rights Agreement as an inducement to EMC2 Capital to execute and deliver the EMC2 SPA, whereby the Company agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, and applicable state securities laws, with respect to the shares of common stock issuable for EMC2 Capital’s investment pursuant to the Common Stock Purchase Agreement. The obligation to issue the Commitment Shares and Commitment Warrant and the right of the Company to sell Purchase Shares to EMC2 Capital was dependent on the Company satisfying certain conditions, including notice of effectivness of the shelf registration statement registering the Purchase Shares and the issuance of the Commitment Shares and Commitment Warrant. Our Form S-1 registering 11,993,271 shares of common stock related to the EMC2 SPA was filed on January 28, 2021 and declared effective on March 3, 2021, the measurement date.

The value of the Commitment Shares on the measurement date was $0.89 per share or $1,259,000. The value of the Commitment Warrant on the Measurement Date was $1,780,000 as calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) Stock price of $0.89 per share; (2) exercise price of $0.001 per share; (3) discount rate 0.73% (4) expected life of 4.33 years, (5) expected volatility of 227%, and (6) 0zero expected dividends.

As a result of the Securities and Exchange Commission declaring our Registration on Form S-1 effective, the pre conditions necessary for the Company to begin selling Purchase Shares to EMC2 Capital were removed. As a result, the Company determined the relative fair value of the Commitment Warrants and Commitment Shares to be $737,569 and $521,865, respectively and recorded a deferred financing asset of $521,865 and interest expense of $737,569. Subsequent cash receipts from the sale of Purchase Shares were first be allocated to the deferred financing cost asset.

During fiscal 2021, from March 3, 2021 through June 30, 2021, the Company sold 721,663 purchase shares to EMC2 Capital at prices ranging from $0.32 - $0.37 and received total proceeds of $250,051.

During fiscal 2022, the Company sold 7,856,514 Purchase Shares to EMC2 Capital at prices ranging from $0.02 - $0.34 and received total proceeds of $1,476,872. No Purchase Shares were sold during our fourth quarter ended June 30, 2022.

EMC2 also exercised their warrant to purchase 2,000,000 shares in exchange for the exercise price resulting in $2,000 of proceeds.

Warrants

Each of the Company’s warrants outstanding entitles the holder to purchase one share of the Company’s common stock for each warrant share held. A summary of the Company’s warrants outstanding and exercisable as of June 30, 2022 and 2021 is as follows:

NOTE 5 – Transactions with Related Persons

On March 30, 2022, the Board issued a total of 9,000,000 shares of restricted common stock valued at $0.043 per share to its six Directors.

On March 30, 2022, Michael Mitsunaga made a $10,000 payment to the Company’s counsel. Mr. Mitsunaga is the President Nunzia Pharmaceutical Company and was appointed its CEO in February 2022. Mr. Charles Strongo, the Company’s former Chairman and CEO resigned his position as Chairman and CEO of Nunzia Pharmaceutical Company on February 22, 2022. Due to the related party nature of the payment, as of June 30, 2022, the $10,000 is reflected on the balance sheet under the account “related party payables”.

On July 10, 2021, the Company and LionsGate Funding Management LLC (“LGFM”) entered into a Media and Marketing Services Agreement (the “MMSA”). LGFM is a shareholder, has provided significant funding to the Company and former officers of the Company are affiliates of LGFM. Pursuant to the MMSA, 1) LGFM provided services designed to increase the awareness and visibility in the investment community and market product to distributors throughout the world for a period of 12 months; and 2) the Company will pay LGFM $100,000 and issue 300,000 shares of restricted common stock valued at $129,000. The shares were issued on October 11, 2021. Lionsgate was also issued 2,500,000 shares on January 13, 2022 in exchange for services valued at $215,000.

Lionsgate was issued 2,500,000 shares on January 13, 2022 in exchange for services valued at $215,000.

On April 12, 2021, the Company and Nunzia Pharmaceutical, Inc. entered into a Mutual Sales and Marketing Agreement pursuant to which Nunzia and the Company exchanged 5,000,000 shares of common stock. For additional information, see “NOTE 4 – Stockholder’s Equity.”

On March 30, 2021, the Company entered into a five-year License Agreement with Charles Strongo and issued 5,000,000 shares of restricted common stock. For additional information, see “NOTE 4 – Stockholder’s Equity.”

On February 21, 2021 the Company agreed to issue and on February 25, issued 1,750,000 shares to LionsGate. The Company recorded compensation expense of $1,680,000.

On January 12, 2021, the Company entered into a five-year License Agreement with Charles Strongo and issued 3,000,000 shares of restricted common stock. For additional information, see “NOTE 4 – Stockholder’s Equity.”

On January 5, 2021, the Board appointed a new member, Dr. Miriam Lisbeth Paez De La Cerda and issued 200,000 shares of restricted common stock to each of the six Directors for a total issuance of 1,200,000 shares valued at $0.72 per share.

On July 9, 2020 and September 24, 2020, the Company and Dr. Scott Ford entered into a subscription agreement for the purchase of restricted common stock resulting in the payment of $340,000 to the Company, see “Note 4 – Stockholders’ Equity” above for additional information.

Beginning in January 2020, the Company utilizes the R&D capabilities of Pan Probe Biotech to perform studies and work towards the development of the Company’s COVID-19 tests. Dr. Shujie Cui is the Company’s former Chief Science Officer and 100% owner of Pan Probe. During the year ended June 30, 2022, the Company incurred R&D costs of $1,369,097 and paid Pan Probe $1,015,000 for R&D work. As of June 30, 2022 and 2021 the balance due to Pan Probe was $582,577 and $228,480, respectively.

The Company paid rent to Pan Probe on a temporary basis, from April 21, 2020 through October 21, 2020, at a rate of $2,551 per month or $15,306 which was prepaid in full in April 2020. During the year ended June 30, 2021, the Company recognized $10,204 of rent expense related to this arrangement.

Related Party Note

From time-to-time the Company receives shareholder advances from LionsGate to cover operating costs. On March 29, 2020, the Company issued a Promissory Note (the “Note”), and on June 30, 2020, amended the Note (the “Note Amendment”). Pursuant to the Note and Note Amendment, the terms provided for total funding of up to $585,000, interest at the rate of 5% per annum with the principal and interest due in-full on June 30, 2021. On January 27, 2021, the Company and LionsGate entered into a Loan Agreement (the “Loan Agreement”) and Promissory note (the “Promissory Note”) pursuant to which the Company may borrow up to $250,000 at an annual interest rate of 5% and default interest rate of 15%. The Loan Agreement supersedes the Note and Note Amendment and included a beginning balance of $29,951 which was the balance of advances and accrued interest owing under the Note as of January 27, 2021. The Promissory Note matured on December 31, 2021. During fiscal 2022 and 2021, LionsGate provided advances under the Note, Note Amendment and Promissory Note totaling $0 and $144,577, respectively. During fiscal 2022 and 2021, the Company repaid amounts owing under the Note, Note Amendment and Promissory Note totaling $24,000 and $267,750, respectively. The $24,000 fiscal 2022 payment exceeded the balance due of $2,785 by $21,215, resulting in a receivable to the Company which Lionsgate has partially repaid through fiscal 2022 payments totaling $950, leaving a receivable balance due from Lionsgate of $20,266 as of June 30, 2022.

During fiscal 2022 and 2021, the Company recognized $0 and $2,178, respectively, of interest expense related to the Note, Note Amendment and Promissory Note.

NOTE 6 – Convertible Promissory Notes

On April 18, 2020, the Company issued five separate unsecured convertible promissory notes in exchange for $95,000 (the “Convertible Notes”). Each Convertible Note contains the same terms and conditions. The Convertible Notes bear interest of 8%, matured in six months on October 17, 2020 and are convertible at any time into shares of restricted common stock at a conversion price of $9.00 per share. The notes are currently in default. The debt discount attributable to the fair value of the beneficial conversion feature amounted to $42,224 for the Convertible Notes and was accreted over the term of the Convertible Notes. In December of 2020, the Company repaid, in-full, two of the Convertible Notes with principal a balance totaling $10,000 and $500 in interest payable. In November of 2021, the Company repaid, in-full, one of the Convertible Notes with a principal balance totaling $50,000 and $6,425 of interest payable. During the years ended June 30, 2022 and 2021, the Company recognized $4,345 and $7,143, respectively, of interest expense; and $0 and $25,149, respectively, of accretion. As of June 30, 2022, the Convertible Notes principal balance is $35,000 and accrued interest balance is $6,102.

Firstfire Global Opportunities Fund LLC

Firstfire Note No. 1

On June 18, 2021, the Company entered into a Securities Purchase Agreement with Firstfire Global Opportunities Fund LLC (“Firstfire”), for the sale of a secured, 12% senior secured convertible promissory note in the principle amount of $275,000 and 165,000 stock purchase warrants. On July 8, 2021, the Company received $224,500 net of a $25,000 original issue discount, and $25,500 of placement agent and legal fees, and issued a senior secured convertible promissory note (the “Firstfire Note No. 1”) in the amount of $275,000. The terms of the Firstfire Note No. 1 provide for all principal and interest due in twelve (12) months on June 18, 2022, with $33,000 of interest (i.e., $275,000 x 12%) earned as of June 18, 2021, interest due upon default of 20% annually, a prepayment penalty of 5% of all outstanding amounts due, and if the Company triggers and event of default which is not cured, then the total of all amounts owing will be increased by 25%, to be paid at the discretion of Firstfire, in the form of cash or conversion into common stock. The Firstfire Note No. 1 is convertible any time after June 18, 2021 into shares of common stock at a conversion price that is the lesser of $0.35 per share or seventy percent (70%) of the lowest traded price of our common stock during the ten (10) trading day period prior to conversion. Conversion of the Firstfire Note No. 1 and/or the Firstfire Warrant No. 1 is limited to Firstfire beneficially owning no more than 4.99% of the outstanding common stock of the Company.

Additionally, the Company entered into a Registration Rights Agreement with Firstfire whereby the Company agreed to file within 90 days and have declared effective within 120 days from June 18, 2021, a registration statement to cover the shares issuable under the Firstfire Note No. 1 and Firstfire Warrant No. 1. Failure to file within 90 days and have the registration declared effective before 120 days will result in liquidated damages of 1% principal amount.

Due to the Company not filing a registration statement to cover the shares underlying a Firstfire Note No. 1 conversion by the dates specified in the Registration Rights Agreement, the Firstfire Note No. 1 fell into default resulting in the Firstfire Note No. 1 becoming immediately due and the Company recognizing liquidated damages of $2,750 and $77,000 increase in the amount due.

As additional consideration, the Company granted Firstfire a warrant to purchase 165,000 shares of our common stock (the “Firstfire Warrant No. 1”) at an exercise price of $0.50 for a period of three (3) years. The Firstfire Warrant No. 1 contains provision for an anti-dilution adjustment and cashless exercise rights if a registration statement covering the resale of the Firstfire Warrant No. 1 shares is not available for the resale of such Firstfire Warrant No. 1 shares. The fair value of the Firstfire Warrant No. 1 was $0.36 per share and was calculated using the Black-Scholes option pricing model with the following assumptions: (1) Stock price of $0.41 per share; (2) exercise price of $0.50 per share; (3) discount rate 0.47% (4) expected life of 3 years, (5) expected volatility of 194.5%, and (6) 0zero expected dividends. This resulted in allocating $48,849 to the Firstfire Warrant No. 1 and $226,151 to the Firstfire Note No. 1. The debt discount attributable to the beneficial conversion feature was $264,372. As a result of the original issue discount, fees, warrant and beneficial conversion feature of the Firstfire Note No. 1, the Company recorded a debt discount of $275,000.

During the year ended June 30, 2022, Firstfire converted $164,000 of principal of the Firstfire Note No. 1 at an average per share price of $0.03, and received 5,466,666 shares of common stock.

During the year ended June 30, 2022, the Company recognized $34,471 of interest expense.

As of June 30, 2022, the total amount due, including interest and penalties, under the Firstfire Note 1 is $225,221 and is convertible into approximately 40,218,100 shares of common stock.

Firstfire Note No. 2

On August 27, 2021, the Company entered into a Securities Purchase Agreement with Firstfire, for the sale of a secured, 12% senior secured convertible promissory note in the principle amount of $385,000 and 330,000 stock purchase warrants. The Company received $313,700 net of a $35,000 original issue discount and $36,300 of placement agent and legal fees, and issued a senior secured convertible promissory note (the “Firstfire Note No. 2”) in the amount of $385,000. The terms of the Firstfire Note No. 2 provide for all principal and interest due in twelve (12) months on August 27, 2022, with $46,200 of interest (i.e., $385,000 x 12%) earned as of August 27, 2021, interest due upon default of 20% annually, a prepayment penalty of 5% of all outstanding amounts due, and if the Company triggers and event of default which is not cured, then the total of all amounts owing will be increased by 25%, to be paid at the discretion of Firstfire, in the form of cash or conversion into common stock. The Firstfire Note No. 2 is convertible any time after August 27, 2021 if the underlying shares have an effective registration statement, otherwise, the right of conversion commences after 180 days from August 31, 2021 into shares of common stock at a conversion price that is the lesser of $0.35 per share or seventy percent (70%) of the lowest traded price of our common stock during the ten (10) trading day period prior to conversion. Conversion of the Firstfire Note No. 2 and/or the Firstfire Warrant No. 2 is limited to Firstfire beneficially owning no more than 4.99% of the outstanding common stock of the Company.

Additionally, the Company entered into a Registration Rights Agreement with Firstfire whereby the Company agreed to file within 90 days and have declared effective within 120 days from August 27, 2021, a registration statement to cover the shares issuable under the Firstfire Note No. 2 and Firstfire Warrant No. 2. Failure to file within 90 days and have the registration declared effective before 120 days will result in liquidated damages of 1% of the principal amount.

Due to the Company not filing a registration statement to cover the shares underlying a Firstfire Note No. 2 conversion by the dates specified in the Registration Rights Agreement, the Firstfire Note No. 2 fell into default resulting in the Firstfire Note No. 2 becoming immediately due and the Company recognizing liquidated damages of $3,850 and $107,800 increase in the amount due.

As additional consideration, the Company granted Firstfire a warrant to purchase 330,000 shares of our common stock (the “Firstfire Warrant No. 2”) at an exercise price of $0.50 for a period of three (3) years. The Firstfire Warrant No. 2 contains provision for an anti-dilution adjustment and cashless exercise rights if a registration statement covering the resale of the Firstfire Warrant No. 2 shares is not available for the resale of such Firstfire Warrant No. 2 shares. The fair value of the Firstfire Warrant No. 2 was $0.32 per share and was calculated using the Black-Scholes option pricing model with the following assumptions: (1) Stock price of $0.37 per share; (2) exercise price of $0.50 per share; (3) discount rate 0.41% (4) expected life of 3 years, (5) expected volatility of 184.0%, and (6) 0zero expected dividends. This resulted in allocating $82,870 to the Firstfire Warrant No. 2 and $302,130 to the Firstfire Note No. 2. The debt discount attributable to the beneficial conversion feature was $248,111. As a result of the original issue discount, fees, warrant and beneficial conversion feature of the Firstfire Note No. 2, the Company recorded a debt discount of $385,000.

During the year ended June 30, 2022, Firstfire converted $31,500 of principal of the Firstfire Note No. 2 at a per share price of $0.0063, and received 5,000,000 shares of common stock.

During the year ended June 30, 2022, the Company recognized $46,200 of interest expense.

As of June 30, 2022, the total amount due, including interest and penalties, under the Firstfire Note 2 is $511,350 and is convertible into approximately 93,112,500 shares of common stock.

Geneva Promissory Note dated April 26, 2021

On April 26, 2021, the Company and Geneva Roth Remark Holdings, Inc. (“Geneva”) entered into a Securities Purchase Agreement (the “SPA”). Pursuant to the SPA, The Company sold to Geneva a Promissory Note for the principal amount of $86,625 (the “Geneva Promissory Note”) and issued a warrant to purchase up to 51,975 shares of common stock (the “Geneva Warrant”). Under the Geneva Promissory Note the Company received net proceeds of $75,000 which included deductions for a 10% original issue discount, $3,000 for legal fees and $750 as a due diligence fee. The Geneva Promissory Note matured in one (1) year, required ten (10) monthly payments of $9,529 beginning June 1, 2021, and was unsecured. On August 9, 2021, the Company repaid, in whole, the remaining balance due under the Geneva Promissory Note, or $57,173.

During the year ended June 30, 2022 and 2021, the Company made payments totaling $76,230 and $19,058, respectively, recognized interest expense of $3,213 and $5,550, respectively and recognized accretion of the debt discount of $5,951 and $27,460, respectively.

Geneva Convertible Promissory Notes dated July 13, 2020, August 3, 2020 and September 8, 2020

On July 13, 2020, August 3, 2020 and September 8, 2020 (the “Issue Dates”), the Company and Geneva entered into separate and identical Securities Purchase Agreements (the “Geneva SPAs”). Pursuant to the Geneva SPAs, Geneva and the Company entered into separate and identical Convertible Promissory Notes also dated as of July 13, 2020, August 3, 2020 and September 8, 2020 for principal amounts of $63,000, $55,000 and $53,000, respectively (the “Geneva CPNs”). Pursuant to the terms of the Geneva CPNs, the Company received net proceeds of $60,000, $52,000 and $50,000 (the proceeds from each note were funded net of $3,000 in legal fees). The Geneva CPNs matured in one year, accrued interest of 10% and, after 180 days, were convertible into shares of common stock any time at a conversion price equal to 58% of the lowest trading price during the twenty-trading day period ending on the latest complete trading day prior to the conversion date. The Geneva CPN’s may be prepaid anytime up to 180 days from issuance with the following prepayment penalties: 1) The period beginning on the Issue Date and ending on the date which is ninety (90) days following the Issue Date, 125%; 2) The period beginning on the date that is ninety-one (91) day from the Issue Date and ending one hundred fifty (150) days following the Issue Date, 135%; and 3) The period beginning on the date that is one hundred fifty-one (151) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date, 139%.

On December 21, 2020, the Company paid $90,487 as full payment of the Geneva CPN dated July 13, 2020. The payment included $63,000 of principal, $2,917 of interest related to the coupon and $24,570 as a prepayment penalty recorded as interest expense.

On February 16, 2021, Empire Associates, Inc., an unaffiliated company, paid off the balance, in-full, on the note dated August 3, 2020. The payment totaled $77,061 and included $55,000 of principal, $3,256 of interest related to the coupon and $18,805 as a prepayment penalty recorded as interest expense. At the time of payoff, the Company and Empire Associates, Inc. had not entered into any agreements related to the payment of the Geneva CPN dated August 3, 2020. On April 20 the Company and Empire Associates, Inc. entered into a Stock Purchase Agreement whereby the Company agreed to issue 250,000 to Empire Associates, Inc. in full satisfaction of the $77,061 paid to Geneva on behalf of the Company.

On March 15, 2021, the Company issued 146,486 shares of common stock to Geneva upon their conversion, in-full, of $53,000 of Principal and $2,650 of unpaid interest owing under the Geneva CPN dated September 8, 2020.

The debt discount attributable to the legal fees paid and fair value of the beneficial conversion feature contained in the Geneva CPNs amounted to $132,831 and was accreted over the term of the Geneva CPNs. In the event a Geneva CPN was paid in advance of its maturity date, the future accretion was recorded in the period the related Geneva CPN was repaid.

The Geneva CPNs were repaid in full in fiscal 2021. During the year ended June 30, 2021, the Company recognized $9,380 of interest expense, $43,374 of in penalties and $132,831 of accretion related to the debt discount.

NOTE 7 – Leases

On September 14, 2021, in anticipation of increased business, the Company leased 6,900 square feet of office and light industrial space located at 1130 Calle Cordillera, San Clemente, California and entered into a Standard Multi-Tenant Office Lease (the “Lease”). Pursuant to the Lease the term is five years beginning on October 15, 2021, the Company paid a security deposit of $32,621, and monthly base rent is $9,696 subject to an annual increase of 3% each year.

On July 13, 2022, the Company received a notice to pay rent or surrender the premises located at 1130 Calle Cordillera, San Clemente, California due to non payment of rent for the months of April 2022 – July 2022 and totaling $35,391. In mid August 2022, the Company surrendered the premises and the deposit of $32,621 towards payment of the balance owed leaving a liability of $2,770.

As of June 30, 2022, the Company has not entered into any leases other than the lease described above which have not yet commenced and would entitle the Company to significant rights or create additional obligations.

NOTE 8 – Income Taxes

Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all, or some portion, of such assets will more than likely not be realized.

There is no current or deferred tax expense for 2022 and 2021, due to the Company’s loss position. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes and has recorded a full valuation allowance against the deferred tax asset.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets at June 30, 2022 and 2021 are as follows:

A reconciliation between the amount of income tax benefit determined by applying the applicable U.S. statutory income tax rate to pre-tax loss for the years ended June 30, 2022 and 2021 is as follows:

The net increase in the valuation allowance for deferred tax assets was $571,002 and $232,811 for the years ended June 30, 2022 and 2021, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not 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. Due to the uncertainty of realizing the deferred tax asset, management has recorded a valuation allowance against the entire deferred tax asset.

For federal income tax purposes, the Company has net U.S. operating loss carry forwards at June 30, 2022 available to offset future federal taxable income, if any, of approximately $3,994,223. The utilization of the tax net operating loss carry forwards may be limited due to ownership changes that have occurred as a result of sales of common stock.

The fiscal years 2019 through 2021 remain open to examination by federal authorities and other jurisdictions in which the Company operates.

NOTE 9 – Commitments and Contingencies

On September 14, 2021, the Company leased 6,900 square feet of office and light industrial space located at 1130 Calle Cordillera, San Clemente, California. See “Note 6 - Leases” and “Note 10 – Subsequent Events” for additional information.

On February 17, 2022, the Securities and Exchange Commission filed a lawsuit in the federal district court for the Southern District of California, charging the Company, former CEO Charles Strongo, and four stock promoters with violations of section 10(b) of the Securities Exchange Act of 1934 and section 17(a) of the Securities Act of 1933. The SEC’s complaint seeks injunctive relief, disgorgement of funds allegedly received from illegal conduct plus pre-judgment interest, and the civil penalties. On the same day, the US Attorney’s Office for the Southern District of California announced the unsealing of an indictment charging Mr. Strongo and the promoters with conspiring to manipulate the market for the Company’s stock in an alleged “pump-and-dump” scheme through allegedly false and misleading statements in press releases and SEC filings concerning the Company’s emergency use authorization submissions to the Food and Drug Administration for COVID-19 tests. The matter is presently stayed pending the conclusion of the criminal case, United States of America v. Brian Volmer et. al., United States District Court, Southern District Case No. 21-cr-1310-WQH, in which Mr. Strongo is also named as a defendant. Mr. Strongo adamantly denies the allegations and has entered a plea of not guilty to the charges. Total legal costs recognized through fiscal 2022 were $72,949. Due to the nature and early stage of the SEC Action, the Company is unable to estimate the total costs to defend itself or the potential costs to the Company in the event that it is not successful in its defense.