BIOXYTRAN INC

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 –BACKGROUND AND ORGANIZATION

Business Operations

Bioxytran, Inc. (the “Company”) is a clinical stage pharmaceutical company focused on the development, manufacture and commercialization of therapeutic drugs designed to address hypoxia in humans, which is a lack of oxygen to tissues, in a safe and efficient manner.

Our Subsidiary, Pharmalectin, Inc. (the “Subsidiary”) is a clinical stage pharmaceutical company focused on the development, manufacture and commercialization of therapeutic drugs designed to address conditions related to viral diseases.

Our Foreign Subsidiary, Pharmalectin (BVI), Inc. (the “Foreign Subsidiary”) is the owner and custodian of the Company’s Copyrights, Trademarks and Patents.

Our subsidiary, Pharmalectin India Pvt Ltd. (“Pharmalectin India”) is managing the Company’s local clinical research and trials, and holds the local rights to commercialization.

Organization

Bioxytran, Inc. was organized on October 5, 2017 as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000 authorized shares of Common Stock with a par value of $0.0001, and 5,000,000 shares of Preferred Stock with a par value of $0.0001. On September 21, 2018, the Company underwent a reorganization in the form of a reverse merger and is currently registered as a Nevada corporation with a taxing structure for U.S. federal and state income tax as a C-Corporation with 300,000,000 authorized Common shares with a par value of $0.001, and 50,000,000 Preferred shares with a par value of $0.001. As at March 31, 2024 there are 173,032,028 shares of Common Stock issued and outstanding;94,083,520 shares (54.4%) are beneficially held by insiders, or their affiliates; a non-affiliated shareholder beneficially owns 14,027,606 shares (8.1%)

Pharmalectin was organized on October 5, 2017, as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000 authorized shares of Common Stock with a par value of $0.0001, and 5,000,000 shares of Preferred Stock, none outstanding, with a par value of $0.0001. The Subsidiary was founded under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2020, the name was changed to Pharmalectin, Inc. As at March 31, 2024, there are 29,410,000 shares of Common Stock issued and outstanding;15,000,000 (51%) shares are held by Bioxytran and 14,410,000 shares (49%) are held by an affiliate where the beneficial ownership includes Mike Sheikh, Ola Soderquist and David Platt.

Pharmalectin BVI was organized on March 17, 2021, as a British Virgin Islands (BVI) Business Corporation with a BVI corporate taxing structure with 50,000 authorized and outstanding shares with a par value of $1.00. The Company holds 100% of the shares in the Subsidiary.

Pharmalectin India Pvt Ltd. (“Pharmalectin India”) was organized on August 30, 2022, as an Indian Business Corporation with its principal place of business in Hyderabad, Telangana, India, with 50,000 authorized shares with a par value of $0.12 (₹10). There are currently 41,020 outstanding shares whereof 41,000 (99.95%) are held by the Company.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with US GAAP, have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited consolidated financial statements.

While the information presented in the accompanying financial statements is unaudited, it includes all adjustments which are, in the opinion of the management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are statements prepared in accordance with US GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company’s December 31, 2022, audited financial statements and notes.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of Bioxytran, Inc. a Nevada Corporation, its majority owned subsidiary, Pharmalectin, Inc. of Delaware, as well as its wholly owned subsidiaries, Pharmalectin (BVI), Inc. of British Virgin Islands and Pharmalectin India Pvt Ltd. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.

Cash

For purposes of the Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with an original maturity date of three months or less to be cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation, valuation of warrants, valuations in connection with convertible notes and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

Net Loss per Common Share, basic and diluted

The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into Common Stock using the “treasury stock” and/or “if converted” methods as applicable.

At March 31, 2024, we would, based on the market price of $0.1058/share, be obligated to issue approximately 9,253,173 shares of Common Stock upon conversion of the currently outstanding convertible notes (the “2021 Notes”),2,422,144 shares upon exercise of the warrants, and 290,000 shares upon exercise of outstanding options, or a total of 11,965,317 shares of Common Stock. For the Notes, the shares total is based on $948,071 of currently outstanding principal, and unpaid interest.

The notes issued in 2021 (the “2021 Note”), have an interest rate of 10% and are convertible at the lower of (i) a fixed price of $0.13, or (ii) if the market price at the date of conversion is below $0.13, the conversion price will be reduced with 120% of the difference between conversion and market price. The notes issued in 2024 (the “2024 Note”), have an interest rate of 8% and are convertible at a fixed price of $0.13

The 14,410,000 (49%) shares of Common Stock in the Subsidiary, owned by an affiliate, come with an option to convert into a 16.8% ownership in the Company on a fully diluted basis, currently 42,892,010 shares of Common Stock.

Stock Based Compensation

The Company measures the cost of services received from employees and non-employees in exchange for an award of equity instruments based on the fair value of the award on the grant date pursuant ASC 718. Stock-based compensation expense is recorded by the Company over the requisite service period, or vesting period, in the same expense classifications in the statements of operations, as if such amounts were paid in cash.

Accounting for subsidiary stock transactions

The Company accounts for subsidiary stock transactions in accordance with Opinions of the Accounting Principles Board 09 (APBO No. 9). In paragraph 28, this pronouncement excluded all adjustments from transactions in a company’s own stock “…from the determination of net income or the results of operations under all circumstances.”

Research and Development

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. In the three months ended March 31, 2024, the Company incurred $27,000 in research and development expenses, while during the three months ended March 31, 2023, the Company incurred $139,004.

Intangibles – Goodwill and Other

Valuation of intangibles are in accordance with ASC 350. Costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at award date, which varies depending on the pendency period of the application, generally approximating seventeen years. Capitalized patent costs, also referred to as patent prosecution costs, include internal legal labor, professional legal fees, government filing fees and translation fees related to expanding the Company’s patent portfolio. Costs associated with the maintenance and annuity fees of patents are accounted for as prepaid assets at the time of payment and amortized over the shorter of the maintenance period or remaining life of the related patent.

Accrued Expenses

As part of the process of preparing our condensed consolidated financial statements, we are required to estimate accrued expenses. This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the associated cost incurred on these services as at each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers. In the event that we do not identify certain costs that have been incurred or we under, or over, -estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated. The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance with accounting principles generally accepted in the U.S.

Warrants

The Company has issued Common Stock warrants in connection with the execution of certain equity and debt financings. The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price, remaining life of the warrant, and risk-free interest rates at each period end.

Fair Value

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed interim financial statements.

NOTE 3 –GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

As at March 31, 2024, the Company had cash of $10,024 and a negative working capital of $1,105,877. The Company has not yet generated any revenues, and has incurred cumulative net losses of $16,297,931. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

During the three months ended March 31, 2024, the Company raised a net of $4,000 in cash proceeds from equity and $61,500 in cash proceeds from the issuance of convertible notes. During the same period in 2022, the Company raised a net of $50,000 in cash proceeds from subsidiary stock transactions. The Company is aware that its current cash on hand will not be sufficient to fund its projected operating requirements through the month of June, 2024 and is pursuing alternative opportunities to funding.

The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

The Company’s management does not know the full extent or foresee the impact COVID-19 has had on our business or our operations or its ability to carry out our plans. We will continue to monitor and follow this situation closely.

Accordingly, the accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

NOTE 4 -AFFILIATE TRANSACTIONS

The Company holds License Agreements (the “License(s)” or “Agreement(s)”) for a medical device (license obtained in 2019) and a compound (license obtained in 2021), with two affiliated companies where the beneficial ownership includes Mike Sheikh, Ola Soderquist and David Platt. The products were developed prior to the establishment of Bioxytran. The maintenance fees for each license amount to $5,000 per year. During the three months ended March 31, 2024, there was $10,000 in transactions with affiliates. During the same period in 2023, there was $10,000 in transactions with affiliates for license maintenance.

The Company had at March 31, 2024 loan agreements calling for an 8% interest with two of its affiliates, one loan is for $35,070 with an accrued interest of $1,064, while the other is for $38,037 with an accrued interest of $33. As at December 31, 2023 there was a loan for $25,000 with an accrued interest of $542.

NOTE 5 -INTANGIBLES

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment charges were recorded in the 3 months ended March 31, 2024, and the year ended December 31, 2023.

Amortization of capitalized patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, generally approximating twenty years.

NOTE 6 –ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

On March 31, 2024, there was $1,097 in interest due and $73,107 in loans from affiliates, and $30,000 in un-issued shares liability affiliate. On December 31, 2023, there was $2,000 in accounts payable and $25,000 in loans from affiliates, and $515,904 in un-issued shares liability affiliate.

The following table represents the major components of accounts payables and accrued expenses and other current liabilities at March 31, 2024, and at December 31, 2023:

NOTE 7 –CONVERTIBLE NOTES PAYABLE

Private Placement, 2021 Notes currently outstanding

Around May 3, 2021, we entered into four (4) Securities Purchase Agreements (the “2021 SPA’s”), under which we agreed to sell convertible promissory notes (the “2021 Notes”), in an aggregate principal amount of $2,165,000 with 6% interest.

At any time after the issue date of the Notes, the Holders of the Notes, (the “2021 Holders”), have the option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the 2021 Notes into shares of our Common Stock at the Conversion Price. The “Conversion Price” will be the lesser of (i) $.13 per share or (ii) 85% of the closing price of Any Qualified Financing, which consists of any fundraising whereby the Company receives gross proceeds of not less than $500,000.

If the 2021 Notes are converted prior to us paying off such note, it would lead to substantial dilution to our shareholders as a result of the conversion discounted applicable to the 2021 Notes. There can be no assurance that there will be any funds available to pay of the 2021 Notes. If we fail to obtain such additional financing on a timely basis, the 2021 Holders may convert the 2021 Notes and sell the underlying shares, which may result in significant dilution to shareholders due to the conversion discount, as well as a significant decrease in our stock price.

On May 5, 2023, three (3) of the Notes were renegotiated; the interest was set to 10%, a prepayment at 120% was included and the Notes extended until April 30, 2024. The conversion price was adjusted to the lower of (i) a fixed price of $0.13, or (ii) if the market price at the date of conversion is below $0.13, the conversion price will be reduced with 120% of the difference between conversion and market price.

At March 31, 2024 and December 31, 2023, the outstanding convertible notes were as follows:

Private Placement, 2024

On March 15, 2024, we entered into a Security Purchase Agreements (the “2024 SPA’s”), with an accredited investor, under which we agreed to sell a Note, in a principal amount of $61,500 with 8% interest (the “2024 Note”) to the holders of the 2024 Note (the “2024 Holder”).

At any time after the issue date of the 2024 Note, the 2024 Holder has the option to convert any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the Note into shares of our Common Stock at the Conversion Price. The “Conversion Price” is set to $0.13 per share.

The Common Stock underlying the 2024 Note, when issued, bear a restrictive legend and are currently eligible for resale under Rule 144.

NOTE 8 –STOCKHOLDERS’ EQUITY

The Company is authorized to issue 300,000,000 shares of Common Stock, and 50,000,000 shares of Preferred Stock.

Preferred Stock

As at March 31, 2024, no Preferred shares have been designated nor issued.

Common Stock

As at January 1, 2023, there were 123,252,235 shares of Common Stock issued and outstanding.

Issuances in the period January 1 and March 31, 2023

On January 4, 2023 the Company issued 93,750 shares of Common Stock against $30,000 included in Stockholders Equity as Stock Subscription at December 31, 2022, or 0.32/share.

On February 10, 2023 the Company issued 156,250 shares of Common Stock against $50,000, or 0.32/share.

Issuances in the period January 1 and March 31, 2024

On January 17, 2024, the Company issued 333,333 shares of Common Stock in a private placement against $45,000, or 0.135/share.

On January 18, 2024, the Company issued 3,703,704 shares of Common Stock in exchange for invoices of $500,000, or 0.135/share.

On January 18, 2024, the Company issued 3,599,289 shares of Common Stock to offset an affiliate against invoices paid on behalf of the Company and accrued salaries to our Officers, for a total value of $485,904, or 0.135/share.

On January 19, 2024, the Company returned 1,000,000 shares of Common Stock into treasury. The shares outstanding at year end were included in the value of Common Stock and reversed in Additional Paid in Capital (“APIC”) at par, $1,000.

On March 20, 2024, the Company issued 906,618 shares of Common Stock against a principal of $100,000 from the remaining 2021 Note, or 0.11/share.

On January 22, 2024, the Company issued 4,356,778 shares of Common Stock in a cash-less exercise in exchange for 5,066,264 shares in Pharmalectin at a fixed conversion rate of 1.18864/share. The Subsidiary cancelled 1,358,466 option shares with provisions for dilutive issuance and cash-less exercise.

On January 22, 2024, the Company issued 8,950,474 shares of Common Stock in conversion of a note of $1,000,000 and $163,562 in interest, or 0.13/share.

On March 27, 2024, the Company issued 3,705,808 in exchange for invoices in the amount of $385,404, or 0.104/share.

2021 Stock Plan issuances in the period January 1 and March 31, 2024

In the first three months of 2024, the Company issued 1,190,460 shares of Common Stock to its Board members and Management for their contribution throughout the year 2023. The shares had a fair value of $131,836, or an average of 0.111/share.

In the first three months of 2024, the Company issued 1,643,231 shares of Common Stock to twelve consultants for their contribution throughout the year 2023. The shares had a fair value of $168,448, or an average of 0.103/share.

As at March 31, 2024, the Company has 173,032,028 shares of Common Stock issued and outstanding.

Common Stock Warrants

In the 3 months ended March 31, 2024 and 2023 the Company did not issue any Warrants.

The following table summarizes the Company’s Common Stock warrant activity in the 3 months ended March 31, 2024 and 2023:

The following table summarizes information about stock warrants that are vested or expected to vest at March 31, 2024, with a market price of $0.1058 at March 31, 2024:

The weighted-average remaining contractual life for warrants exercisable at December 31, 2023, is 3.5 years. The aggregate intrinsic value for fully vested, exercisable warrants was $0 at March 31, 2024.

NOTE 9 –STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

On January 15, 2021, the Company adopted a stock option plan entitled “The 2021 Stock Plan” (2021 Plan) under which the Company may grant Options to Purchase Stock, Stock Awards or Stock Appreciation Rights up to 15% of the then fully diluted number of shares of the Company’s Common Stock, automatically adjusted on January 1 each year. On January 1, 2024, the 2021 Employee, Director and Consultant Stock Plan (the “2021 Plan”) was reset in accordance with its stipulations. After the reset there were 30,028,314 shares of Common Stock awards available for grant.

As at January 1, 2024, there were 335,000 outstanding stock options valued at historic fair market value of $155,505 and a cumulative 5,288,687 shares issued valued at a fair historic market value of $99,910 at the time of award. As at March 31, 2023, there existed “The 2010 Stock Plan” and under this plan there were 524,000 outstanding stock options with a fair historic market value of $173,362 and a cumulative 4,290,709 shares issued with a negative (historically awarded “expensive” stock was returned to treasury in 2021) fair historic market value of $97,272 at the time of award.

Under the terms of the stock plans, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically immediate and the options typically expire in five years. Stock Awards may be directly issued under the Plan (without any intervening options). Stock Awards may be issued which are fully and immediately vested upon issuance.

In the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense of $300,245 and $13,600, respectively, in connection with share-based payment awards. There were no awards from the 2021 Plan in the three months ended March 31, 2023.

Issuances in the period January 1 and March 31, 2024

On March 27, 2024 the Company issued 211,269 shares of Common Stock to three Board members for their contribution during the fourth quarter of 2023. The shares had a fair value of $30,000 and were included in Stockholders Equity as Stock Subscription at December 31, 2023, or $0.142/share.

On March 27, 2024 the Company issued 72,423 shares of Common Stock to three Consultants for their contribution during the fourth quarter of 2023. The shares had a fair value of $10,284 and were included in Stockholders Equity as Stock Subscription at December 31, 2023, or $0.142/share.

On March 27, 2024 the Company issued 979,191 shares of Common Stock, as an equity bonus for the year 2023, to its Board and Management. The shares had a fair value of $100,855, or $0.104/share.

On March 27, 2024 the Company issued 1,520,808 shares of Common Stock, as an equity bonus to thirteen Consultants that had contributed to the Company’s R&D during 2023. The shares had a fair value of $158,643, or $0.104/share.

On March 27, 2024 the Company mistakenly issued 50,000 shares of Common Stock, $50 was accounted in Common Stock against APIC.

Stock options granted and vested 2021 Plan:

There wereno stock options granted the three months ended March 31, 2024, while,45,000 were forfeited. There wereno stock options granted the three months ended March 31, 2024, while,48,000 were forfeited.

The following table summarizes the Company’s stock option activity in the three months ended March 31, 2024, and 2023:

The following table summarizes information about stock options that are vested or expected to vest at March 31, 2024:

There were no granted options granted, nor any options issued in the period ended March 31, 2024 and 2023:

The weighted-average remaining estimated life for options exercisable at March 31, 2024 is 0.38 years.

The aggregate intrinsic value for fully vested, exercisable options was $4,635 at March 31, 2024 and at December 31, 2023 was $6,750. The actual tax benefit realized from stock option exercises in the three months ended at March 31, 2024 and 2023 was $0 asno options were exercised.

As at March 31, 2024 the Company has 27,242,623 options or stock awards available for grant under the 2021 Plan.

NOTE 10 –NON-CONTROLLING INTEREST

As at March 31, 2024, there are 29,410,000 issued and outstanding shares in Pharmalectin;15,000,000 (51%) shares of Common Stock are held by Bioxytran and 14,410,000 shares (49%) are held by an affiliate where the beneficial ownership includes Mike Sheikh, Ola Soderquist and David Platt. As per the exchange terms in the Joint Venture Agreement dated November 15, 2020, the affiliate has the option to convert 15,000,000 shares in the Subsidiary into a 17.5%, or a pro-rated quantity thereof, ownership in Company. If the option is exercised, it would result in significant dilution to shareholders which could lead to a significant decrease in our stock price, based on how the market perceive the value of fully control the Subsidiary.

NOTE 11 –COMMITMENTS AND CONTINGENCIES

Employment contracts

Our Executive Officers have entered into employment contracts and confidentiality, non-disclosure and assignment of invention agreements. The most substantial provisions include;

There are no other arrangements or plans in which we provide pension, retirement or similar benefits for any of Executive Officers or Directors.

Litigation

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters are expensed as incurred and we accrue for adverse outcomes as they become probable and estimable.

NOTE 12 –SUBSEQUENT EVENTS

The Company has evaluated events from March 31, 2024 through the date the financial statements were issued. The events requiring disclosure for this period are as follows;

Remuneration Adjustment by Management Team

The management team will reduce their compensation with 67% for the remainder of 2024, or until the Company is listed on a major national stock exchange, whichever comes first.

Common stock

Stock Subscription

On May 15, 2024, the Company issued 173,077 shares of Common Stock for a cash investment of $18,000, or $0.104/share. $4,000 of these funds were included as unissued shares in the financial statements at March 31, 2024.

Conversion of Note

On May 15, 2024, the Company issued 479,192 shares of Common Stock in conversion of a note of $61,500 and $795 in interest, or $0.13/share.

Shares Awarded under the 2021 Stock Plan

On April 4, 2024, the Company issued 1,000,000 shares of Common Stock to a consultant as payment for a 12-month investor relations agreement. The shares fair value was $104,000, or $0.104/share.

On April 5, 2024 the Company corrected an issuance of 50,000 made on March 27, 2023. $50 was transferred from Common Stock to APIC.

On May 19, 2024, the Company issued 241,938 shares of Common Stock to affiliates for their service in the Board of Directors during the first quarter of 2024. The fair value of these shares was $30,000, or $0.124/share. The issuance was included as unissued shares related party in the financial statements at March 31, 2024.

On May 19, 2024, the Company issued 86,246 shares of Common Stock to non-affiliates for their services during the first quarter of 2024. The fair value of these shares was $10,246, or $0.124/share. The issuance was included as unissued shares related party in the financial statements at March 31, 2024.

Management sees no further subsequent events requiring disclosure.