NTRU Natur International Corporation (CE)

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS

Natur International Corp. was formerly named Future Healthcare of America. In November 2018, Natur Holding B.V. was acquired to continue the company as a provider of cold pressed juice beverages and healthy snacks. The original business of Future Healthcare of America, founded in 2012, was as a provider of home healthcare services, which had declined and is expected to be fully closed and liquidated in the fourth quarter of 2019.

The current name of the company is Natur International Corp., which was effected on January 7, 2019. The trading symbol for our common stock became NTRU as of that date and trades on The OTC Market.

Natur International Corp., is a Wyoming corporation, and operates its beverage business through a number of direct and indirect subsidiaries, of which the current principal one is Natur BPS B.V. (known by the trade name Natur Functionals), and is the successor to the business of Natur Holding B.V. (“we”, “our”, “the Company” or “Natur”). Our beverage business commenced in late 2015, with product distribution in Northern Europe. Currently, our operational headquarters is in Amsterdam, the Netherlands.

At the onset of 2019, our product line up centered on a range of cold pressed juices and healthy snacks. These products were sold either directly or through distribution partners in the Netherlands and the United Kingdom. Beginning in the fourth quarter of 2018, and throughout the first half of 2019, the Company focus shifted from dependence on the legacy fruit and vegetable juices and snacks toward innovating a new line of hemp-derived natural food and beverage products. The Company product value proposition is to provide affordable, culturally relevant, authentic, fresh fruit, vegetable and hemp-derived supplemented consumer products to democratize clean, healthy, eating and drinking, with plans to address the growing needs for products that address other personal needs in health, wellness and beauty care.

Through third party contract manufacturers, we apply patented technology to proprietary nutrient dense blends of fruit and vegetables, adding hemp-derived supplements. These are bottled or packed with technically advanced food and product safety measures and in some cases cold high-pressure processing to bring fresh tasting fruit, vegetable and hemp-derived supplemented blends to market through more than fifteen product types. These newly innovated products are brought to market, in Europe, through Natur’s distribution channels of direct-to-business, direct-to-consumer and through select distributors.

Natur operated as a private enterprise in the Netherlands from its founding in 2015 through November 13, 2018, when it was acquired as a wholly owned subsidiary in a share exchange transaction by Future Healthcare of America, pursuant to that certain Share Exchange Agreement, among the Company and the former shareholders of Natur Holding, B.V. (the “Share Exchange Transaction”). In connection with the Share Exchange Transaction, the former shareholders of Natur received the equivalent of 215,759,999 shares of the Common Stock (the “Common Stock”), which was issued in part as 115,760,000 shares of Common Stock and in part as 100,000 shares of voting, convertible Series B Preferred Stock (the “Series B Preferred Stock”) representing 100,000,000 shares of Common Stock upon conversion. The Share Exchange Transaction was accounted for as a reverse capitalization with Natur Holding B.V. being treated as the accounting acquirer. As such, the historical information for all periods presented prior to the merger date relate to Natur Holding B.V. Subsequent to the Share Exchange Transaction consummation date, the information in this report relates to the consolidated entities of Natur, including Natur Holding B.V. and successor subsidiary and the former subsidiaries of Future Healthcare of America, the latter of which are currently in the process of being wound down and presented as discontinued operations.

In connection with the Share Exchange Transaction, net cash received was $2,000,000 and costs incurred were $399,381 including professional fees for legal, accounting services and finance commission. Immediately after the Share Exchange Transaction, the former Natur shareholders collectively owned the controlling position among the shareholders of the Company.

On May 1, 2019, Natur Holding B.V. filed a Petition in the Netherlands Court for the District of Amsterdam (“Petition”) for the liquidation of the company and the transfer of certain assets and retained liabilities to Natur BPS B.V., a wholly owned subsidiary of Natur International Corp., which operates under the trade name Natur Functionals. This court process allowed the historical business of the Company’s beverage business to be continued and eliminates a substantial amount of the liabilities of the Company. The Petition permits the Company to focus on activities that will drive growth and future profits. As a result of the Petition the control of Natur International Corp. over Natur Holding B.V. is compromised for financial reporting purposes, and its investment in it will be deconsolidated as of May 1, 2019.

The Series B Preferred Stock was automatically converted upon the Company increasing the number of shares of Common Stock of its authorized capital, which happened on June 26, 2019. At the same time the Series C Preferred Stock was automatically converted to 78,832,399 shares of Common Stock. As of September 30, 2019, the total number of outstanding shares amounted to 322,230,038 shares of Common Stock with an authorized share capital of 750,000,000 shares of common Stock.

NATUR INTERNATIONAL CORP.

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NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS - continued

On June 30, 2019, the Company expressed its interest in pursuing a transaction with Share International Holding B.V. on a binding basis. The contemplated transaction is the acquisition of Share International Holding B.V. (“SIH”) and related assets for the operation of its business by the issuance of shares of Natur. The terms of this acquisition were negotiated and an agreement signed on October 26, 2019, with an anticipated closing date prior to fiscal year end.. At the same time as the Company entered into the letter of intent, it lent to SIH the sum $250,000 under a promissory note, due January 4, 2020. The note bears interest at the rate of 10%. The repayment obligation under the Note will be cancelled if no business arrangement is concluded due to a breach by the Company of any agreement for the business arrangement that is concluded in the future, either party to the note experiences a material adverse change, or the business arrangement is not approved by the shareholders or owners of the respective parties to the extent that approval is required. The note also has other standard default provisions under which the Company may declare a default. Also, at the same time as the foregoing letter of intent and loan were concluded, the board of directors of the Company appointed Mr. Paul Bartley as the Chief Executive Officer of the Company; Mr. Bartley is a principal of SIH

On July 25, 2019, the Company acquired a controlling position in Temple Turmeric, Inc., a Delaware corporation (“Temple”). Founded in 2009, Brooklyn, New York based Temple’s mission is to bring the highest quality turmeric to the world by pioneering the first Turmeric-based ready to drink beverage line. Temple has driven consumer understanding and demand for Turmeric as it has become more and more widely consumed through this decade. Temple now adds adaptogenic herbs and ancient super food formulations to beverages with a turmeric foundation.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation. The Company prepares its financial statements using the accrual basis of accounting in accordance with United States generally accepted accounting principles (“US GAAP”).

Consolidation - The financial statements presented reflect the accounts of Natur International Corp. and its direct and indirect subsidiaries. All inter-company transactions have been eliminated in consolidation. The company currently consolidates the following subsidiaries:

Use of Estimates in Financial Statement Preparation. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the 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.

Cash and Cash Equivalents. Cash equivalents include all highly liquid investments with original maturities of three months or less.

Accounts Receivable. Accounts receivable are comprised of unsecured amounts due from customers. The Company carries its accounts receivable at their face amounts less an allowance for bad debts. The allowance for bad debts is recognized based on management’s estimate of likely losses per year, based on past experience and review of customer profiles and the aging of receivable balances.

Accounts Receivable Related Party. Accounts receivables from related parties are comprised of unsecured amounts due from related parties. The Company carries this receivable at its face amounts less an allowance for bad debts. The allowance for bad debts is recognized based on management’s estimate.

The company sold proceed from future sale receivables for 3.5% of the outstanding trade receivable due. The accounts receivables associated with the sale has been removed from the books of the company at the date of factoring the balance. The company has no continue involvement with the collection of the associated accounts receivable balance after handing over the balance to the factoring company.

NATUR INTERNATIONAL CORP.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Inventory. Inventory, consisting of raw materials, work in progress and finished goods, is valued at the lower of the inventory’s costs or net realizable value, using the first in, first out method to determine the cost. Management compares the cost of inventory with its net realizable value and an allowance is made to write down inventory to net realizable value, if lower.

Property and Equipment. Property and equipment are valued at cost. Additions are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected in operations. Depreciation is provided using the straight-line method over the estimated useful lives of the assets as follows:

Intangible Assets and Long-Lived Assets. The Company recognizes an acquired intangible asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or when it can be separated or divided from the acquired entity and sold, transferred, licensed, rented or exchanged, either individually or in combination with a related contract, asset or liability. Such intangibles are amortized over their useful lives. Impairment losses are recognized if the carrying amount of an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its fair value.

The Company’s long-lived assets, including intangibles, are reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result from the asset to its carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the long-lived asset. Long lived assets are evaluated on a yearly basis and no impairment losses were incurred during the nine months ended September 30, 2019.

Related Party Transactions. The Board of Directors has adopted a Related Party Transaction Policy for the review of related person transactions. Under these policies and procedures, the management reviews related person transactions in which we are or will be a participant to determine if they are fair and beneficial to the Company. Financial transactions, arrangements, relationships or any series of similar transactions, arrangements or relationships in which a related person has or will have a material interest and that exceeds the lesser of: (i) $10,000, and (ii) one percent of the average of the Company’s total assets at year-end for the last two completed fiscal years, in the aggregate per year are subject to the boards review. Any member of the board who is a related person with respect to a transaction under review may not participate in the deliberation or vote requesting approval or ratification of the transaction. Transactions that are subject to the policy include any transaction, arrangement or relationship (including indebtedness or guarantees of indebtedness) in which the Company is a participant with a related person. The related person may have a direct or indirect material interest in the transaction. It is Company policy that the board shall approve any related party transaction before the commencement of the transaction. However, if the transaction is not identified before commencement, it must still be presented to the board for their review and ratification.

NATUR INTERNATIONAL CORP.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Revenue Recognition. Beginning on January 1, 2018, the Company recognizes revenue under ASC 606, Revenue from Contracts with Customers. The core principle of the revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle:

Step 1: Identify the contract with the customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when the company satisfies a performance obligation

The Company’s performance obligations are satisfied at the point in time when products are received by the customer, which is when the customer has title and the significant risks and rewards of ownership. Therefore, the Company’s contracts have a single performance obligation (shipment of product). The Company primarily receives fixed consideration for sales of product.

The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time. Shipping and handling activities are performed before the customer obtains control of the goods and therefore represent a fulfillment activity rather than a promised service to the customer. Revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon delivery to the customer. The Company’s performance obligations are satisfied at that time.

Share-Based Payment Arrangements. The Company measures the cost of employee services received in exchange for an award of equity instruments (share-based payments, or SBP) based on the grant-date fair value of the award. That cost is recognized over the period during which an employee is required to provide service in exchange for the SBP award—the requisite service period (vesting period). For SBP awards subject to conditions, compensation is not recognized until the performance condition is probable of occurrence. The grant-date fair value of share options is estimated using the Black-Scholes-Merton option-pricing model. The Company adopted ASU 2018-07 in the first quarter of 2019 which aligns the accounting for share-based payment awards issued to employees and non-employees.

The fair value of each option granted during the period ended September 30, 2019 was estimated on the date of grant using the Black-Scholes-Merton option-pricing model with the weighted average assumptions in the following table:

The expected term of options granted represents the period of time that options granted are expected to be outstanding. The expected volatility was based on the volatility in the trading of the Company’s common stock. The assumed discount rate was the default risk-free six-year interest rate in the Netherlands.

NATUR INTERNATIONAL CORP.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Revenues do not include sales or other taxes collected from customers.

The Company’s products are sold and distributed through various channels, which include selling directly to retail stores and other outlets such as food markets, institutional accounts and independent outlets. The Company typically collects payment from customers within 30 days from the date of sale. The following table presents our continued revenues disaggregated by geographical region for the nine-month period ended September 30, 2019:

The Company sells its products and extends credit, generally without requiring collateral, based on an ongoing evaluation of the customer’s business prospects and financial condition. The Company evaluates the collectability of its trade accounts receivable based on a number of factors, including the Company’s historic collections pattern and changes to a specific customer’s ability to meet its financial obligations. The Company has established an allowance for doubtful accounts to adjust the recorded receivable to the estimated amount the Company believes will ultimately be collected.

The nature of the Company’s contracts does not give rise to variable consideration, such as prospective and retrospective rebates.

The Company experiences customer returns primarily as a result of damaged or out-of-date product. At any given time, the Company estimates less than 1% of sales could be at risk for return by customers. As the company do not deem this amount to be material no provision was recorded for the period ended 30 September, 2019. Returned product is recognized as a reduction of net sales.

Recent Accounting Pronouncements

Compensation—Stock Compensation: On June 20, 2018, the FASB issued ASU No. 2018-07, Compensation—Stock Compensation (Topic 718) - Improvements to Nonemployee Share-Based Payment Accounting, which aligns the accounting for share-based payment awards issued to employees and nonemployees. Under ASU No. 2018-07, the existing employee guidance will apply to nonemployee share-based transactions (as long as the transaction is not effectively a form of financing), with the exception of specific guidance related to the attribution of compensation cost. The cost of nonemployee awards will continue to be recorded as if the grantor had paid cash for the goods or services. In addition, the contractual term will be able to be used in lieu of an expected term in the option-pricing model for nonemployee awards. The adoption had no impact on the Company’s historic financial statements.

Leases: In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This update requires the recognition of lease assets and lease liabilities on the balance sheet for leases classified as operating leases under previous guidance. The accounting for finance leases (capital leases) was substantially unchanged. The original guidance required application on a modified retrospective basis with adjustments to the earliest comparative period presented. In August 2018, the FASB issued ASU No. 2018-11, “Targeted Improvements to ASC 842,” which included an option to not restate comparative periods in transition and elect to use the effective date of ASU No. 2016-02 as the date of initial application, which the Company elected. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, and continues to be reported under previous guidance that did not require the recognition of operating lease liabilities and corresponding lease assets on the consolidated balance sheet. As a result of the adoption of ASU No. 2016-02 on January 1, 2019, the Company recorded operating lease right-of-use assets of $580,310 and operating lease liabilities of $578,007.

Foreign Currency Translation. The Company follows Section 830-10-45 of the FASB Accounting Standards Codification (“Section 830-10-45”) for foreign currency translation to translate the financial statements from the functional currency, generally the local currency, into U.S. Dollars. Section 830-10-45 sets out the guidance relating to how a reporting entity determines the functional currency of a foreign entity (including of a foreign entity in a highly inflationary economy), re-measures the books of record (if necessary), and characterizes transaction gains and losses. Pursuant to Section 830-10-45, the assets, liabilities, and operations of a foreign entity shall be measured using the functional currency of that entity. An entity’s functional currency is the currency of the primary economic environment in which the entity operates; normally, that is the currency of the environment, or local currency, in which an entity primarily generates and expends cash.

The financial records of the Company are maintained in its local currency, the euro (“EUR”), which is the functional currency. Assets and liabilities are translated from the local currency into the reporting currency, U.S. dollars, at the exchange rate prevailing at the balance sheet date. Revenues and expenses are translated at weighted average exchange rates for the period to approximate translation at the exchange rates prevailing at the dates those elements are recognized in the consolidated financial statements. Foreign currency translation gain (loss) resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining accumulated other comprehensive income in the consolidated statement of stockholders’ equity.

NATUR INTERNATIONAL CORP.

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Unless otherwise noted, the rate presented below per U.S. $1.00 was the midpoint of the interbank rate as quoted by OANDA Corporation (www.oanda.com) contained in its consolidated financial statements. Translation of amounts from EUR into U.S. dollars has been made at the following exchange rates for the respective periods:

Cost of Revenues. Cost of revenue includes all direct expenses incurred to produce the revenue for the period. This includes, but is not limited to, costs for finished products, pick packing costs, storage costs and transportation costs. Cost of revenues are recorded in the same period as the resulting revenue.

Employee Benefits. Wages, salaries, bonuses and social security contributions are recognized as an expense in the year in which the associated services are rendered by employees. For any unused portion of vacation leave, an accrual is recorded for carry over to the following year.

Income Taxes. The Company is subject to US corporation tax. The US combined federal and state corporate tax rate is 23%. The company’s United States net operating losses totaled $3,483,928 as of December 31, 2017 and begin to expire in tax years 2032 and following. Net losses from US operating totaled $157,386 for 2018 and may be carried forward indefinitely. The company is subject to US Internal Revenue Code rules limiting the use of US net operating losses after the merger with Future Health Care of America during 2018 (described in Note 17). This limitation has no effect on the Company’s financial statements because the Company has recognized no deferred tax asset with respect to its net operating loss carryforwards. The NOLs are the cumulative NOL’s per the Company’s 2017 federal income tax return. The 382 limit will not be factored in until the company has income and the limit is therefore applicable.

Natur BPS B.V., the Dutch subsidiary of Natur International Corp is structured as a Dutch limited liability company. Tax on the result is calculated based on the result before tax in the profit and loss account, considering losses available for set-off from previous years (to the extent that they have not already been included in the deferred tax assets) and exempt profit components and after the addition of non-deductible costs. Due account is also taken of changes which occur in the deferred tax assets and deferred tax liabilities in respect of changes in the applicable tax rate.

The corporate tax rate for profits above $238,812 (or €200,000) amounts to 25%. Below that amount the rate is 20%. Future profits can be carried back to prior year losses for a maximum of 9 years for the full amount of losses incurred.

In the financial statements of group companies, a tax charge is calculated on the basis of the accounting result. The corporate income tax that is due by these group companies is charged into the current accounts of the company.

Because of the compensable losses no deferred taxes are included in the financial statements. From incorporation of the company only the Corporation Tax return of 2015/2016 has been filed. All years are still subject to examination.

Fair Value of Financial Instruments. The carrying value of short-term instruments, including cash, accounts payable and accrued expenses, and short-term notes approximate fair value due to the relatively short period to maturity for these instruments. The long-term debt approximate fair value since the related rates of interest approximate current market rates.

Fair value is defined 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. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company does not have any assets or liabilities that are required to be measured and recorded at fair value on a recurring basis.

Income /(Loss) Per Share - The Company computes income (loss) per share in accordance with Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260 Earnings Per Share, which requires the Company to present basic earnings per share and diluted earnings per share when the effect is dilutive (see Note 12).

NATUR INTERNATIONAL CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – GOING CONCERN

The Company considered its going concern disclosure requirements in accordance with ASC 240-40-50. We have had material operating losses, working capital deficit and have not yet created positive cash flows. These factors raise substantial doubt as to our ability to continue as a going concern. The Company concluded, in spite of the decreased cash flow from operations, both the elimination of certain debt and the successful raising of new capital and obtaining new capital commitments during the second and third quarter of 2019, that it has materially improved its capital so as to continue as going concern. The Company implemented a plan in the second quarter of 2019 to further structurally improve the conditions for its continuing as a going concern; (i) the Company implemented certain cost savings, primarily to its overhead requirements, (ii) the Company will continue to generate additional revenue (and positive cash flows from operations) partly related to the Company’s expansion into new product lines during 2019 and partly related to the Company sales initiatives already implemented; and (iii) undertook a reorganization and restructuring program to reduce its debt that has now been completed. The corporate restructuring through the Petition in May 2019 is further disclosed in Note 13 to these financial statements. These actions have had an overall positive impact on the cost-basis of the organization. Notwithstanding the foregoing, the Company will continue to need additional capital from investors to fund its larger business plan and maintain the continuity and growth of its current operations. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

The depreciation expense for the nine-months ended September 30 2019 and the year- ended December 31, 2018 was $3,579 and $179,600 respectively. 

Prepaid expenses as at 30 September 2019 includes a payment to a law firm working for the company in the Netherlands totaling $33,042. A prepayment was also made to a key supplier for the purchase of raw materials totaling $22,940. 

For the outstanding amount relating to AMC this transaction relates to the purchase of bottled juices for resale. Total purchases relating to goods sold for the nine-month period ended September 30, 2019, and the nine-month period ended September 30, 2018, was $60,542, and $1,069,888, respectively.

For the related party balance liability held from NL Life Sciences, STB Family Offices SARL and TriDutch Holding B.V there is no repayment schedule in place. No interest is being charged. For the related party liability held with Flare Media B.V., STB Family Office B.V. in May 2019 the debt was fully transferred to NL Life Sciences B.V. as part of a debt restructuring. Following approval by the SEC in the third quarter of 2019 to increase the authorized share capital the company plans to fully convert this balance into equity, in the form of common stock, in the fourth quarter of 2019.

The other loans consist of the procurement of goods and consulting fees for the management team that have accrued from previous periods. No interest is being charged.

For the loan from TriDutch Holding B.V., in May 2019 the debt was fully transferred to NL Life Sciences B.V. as part of a debt restructuring. The debt is now shown consolidated under a single line under NL Life Sciences B.V. under note 7. There is a translation difference of $271 when compared to the cashflow due to foreign exchange translation differences.

Convertible Loan 1

Party for loan 1 had granted a loan facility in the principle amount of $581,058 or €500,000 with the right, but not the obligation to convert the outstanding loan amounts into shares in the capital of Natur at a company valuation of $17.4 million or €15 million for a term from December 19, 2017, till the maturity date of December 31, 2018, at an interest rate of 10% per annum. In July 2019 the amount of $629,750 was fully converted to common stock of the company.

Convertible Loan 2

On October 20, 2017, an amount of $929,692 or €800,000 was advanced to the Company for a loan agreement that was drafted but never signed. An interest rate of 5% per annum is calculated and the loan has a maturity date of February 28, 2018. Repeated attempts at correspondence was made between the Company and the lender’s attorney in April and May 2019 to discuss converting the balance to common stock of the Company on the bankruptcy of Natur Holding B.V. As no response was received the amount remains in Natur Holding B.V. who’s estate is being managed independently by a court issued Curator. Neither Natur International Corp or any subsidiaries have any further obligation for this note.

Convertible Loan 3

Natur Holding B.V., the principle subsidiary of Natur International Corp, entered into a loan agreement with Dam! Holding B.V., under which Natur Holding could borrow up to US$560,915 or €500,000. The final terms of the agreement were concluded on February 18, 2019.The full drawdown of $560,915 was made in three tranches throughout January and February 2019. Repayment is due after six months from the date of receipt of the initial funds. The loan may be pre-paid in full or in part at any time. Interest, at the rate of 5% per annum, is due and payable quarterly. The loan carries a default interest rate of 11% per annum. There is a currently a translation difference of $20,320 due to foreign exchange rate differences. Following approval by the SEC in the third quarter of 2019 to increase the authorized share capital the company plans to fully convert this balance into equity, in the form of common stock, in the fourth quarter of 2019.

As at June 26, 2019, $8,830,140  of the balance was converted into Series C Preferred Stock, this stock then converted to shares of common stock after the increase in authorized share capital of the Company.

The Holder 6^th Wave Efficiency Life Fund agrees that if it sells any of the shares of Common Stock it was directly or beneficially issued by the Parent Company on November 13, 2018, either as shares of Common Stock or the Common Stock underlying the Class B Preferred Stock, in exchange for its equity interest in the Company and any of the Conversion Shares (together the Common Stock, the Common Stock underlying the Class B Preferred Stock and the Conversion Shares are referred to as the “Value Calculation Shares”) at any time prior to December 31, 2022, and the gross proceeds to the Holder or its affiliates from the sale (or deemed sale as provided herein) of any or all of the Value Calculation Shares exceeds USD $15,000,000, then the balance of the Debt, equal to USD $3,000,000 as of the date hereof and any interest, expenses, penalties, and other charges of any nature due thereon under the terms of the Debt Agreement (the “Debt Balance”), will be deemed fully paid, discharged and extinguished and the Debt Agreement in all respects will be terminated and of no further effect. There is a currently a translation difference of $15,7823 due to foreign exchange rate differences.

Following approval by the SEC in the third quarter of 2019 to increase the authorized share capital the company plans to fully convert this balance into equity, in the form of common stock, in the fourth quarter of 2019.

NOTE 11 – OPTIONS & WARRANTS

On November 13, 2018, the Company closed a subscription agreement and debt conversion agreement with Alpha Capital Anstalt wherein the Company granted the following warrants to purchase:

On August 30, 2019 the Company and Alpha agree that the currently issued and outstanding warrant held by Alpha for the purchase of up to 33,000,000 will be reissued so that 16,500,000 of the shares thereunder may be purchased at the per share exercise price of $0.0304 and 16,500,000 of the shares may be purchased at the per share exercise price of $.06 (the original exercise price).

A summary of the status of the warrants granted is presented below for the nine months ended: