UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark one)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, ~~2019~~2020

[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number: 000-53635

GENERATION ALPHA, INC.

(Exact name of registrant as specified in its charter)

Nevada		20-8609439
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

1689-A Arrow Route, Upland, California		91786
(Address of principal executive offices)		(Zip Code)

(888) 998-8881

(Registrant’s telephone number, including area code)

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[X]	Smaller reporting company	[X]
		Emerging growth company	[ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

The aggregate market value of the voting common equity held by non-affiliates as of June 30, ~~2019~~2020, based on the closing sales price of the common stock as quoted on the OTCQB was approximately $2309,~~354,938~~541. For purposes of this computation, all officers, directors, and 5 percent beneficial owners of the registrant are deemed to be affiliates. Such determination should not be deemed an admission that such directors, officers, or 5 percent beneficial owners are, in fact, affiliates of the registrant.

As of ~~April~~March 631, ~~2020~~2021, there were 4959,~~274~~557,~~297~~830 shares of registrant’s common stock outstanding.

TABLE OF CONTENTS

			PAGE
FORWARD-LOOKING STATEMENTS			3ii
PART I
	ITEM 1.	DESCRIPTION OF BUSINESS	41
	ITEM 1A.	RISK FACTORS	107
	ITEM 2.	DESCRIPTION OF PROPERTY	2018
	ITEM 3.	LEGAL PROCEEDINGS	2018
	ITEM 4.	~~SUBMISSION~~MINE OFSAFETY ~~MATTERS TO A VOTE OF SECURITY HOLDERS~~DISCLOSURE	2019
PART II
	ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES	2120
	ITEM 6.	SELECTED FINANCIAL DATA	21
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	2221
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	26
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA	27
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	28
	ITEM 9A.	CONTROLS AND PROCEDURES	28
	ITEM 9B.	OTHER INFORMATION	29
PART III
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT	30
	ITEM 11.	EXECUTIVE COMPENSATION	32
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	35
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	3637
	ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	37
	ITEM 15.	EXHIBITS	38
PART IV
	ITEM 16.	FORM 10-K SUMMARY	41
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	38
SIGNATURES			42
	ITEM 16.	FORM 10-K SUMMARY	42
SIGNATURES			43

FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements, including, without limitation, in the sections captioned “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere. Any and all statements contained in this Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to exploration programs, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the SEC, and (iv) the assumptions underlying or relating to any statement described in points (i), (ii) or (iii) above.

The forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which we have no control over. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, our inability to obtain adequate financing, insufficient cash flows and resulting illiquidity, our inability to expand our business, the COVID-19 pandemic and measures intended to reduce its spread, government regulations, lack of diversification, ~~volatility in the price of gold,~~ increased competition, results of arbitration and litigation, stock volatility and illiquidity, and our failure to implement our business plans or strategies. A description of some of the risks and uncertainties that could cause our actual results to differ materially from those described by the forward-looking statements in this Report appears in the section captioned “Risk Factors” and elsewhere in this Report.

Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them. We disclaim any obligation to update the forward-looking statements contained in this Report to reflect any new information or future events or circumstances or otherwise.

Readers should read this Report in conjunction with the discussion under the caption “Risk Factors,” our financial statements and the related notes thereto in this Report, and other documents which we may file from time to time with the SEC.

3ii

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

This Report contains summaries of the material terms of various agreements executed in connection with the transactions described herein. The summaries of these agreements are subject to, and are qualified in their entirety by reference to, these agreements, all of which are incorporated herein by reference.

Overview of Business

We are focused on the research, design, development and manufacturing of advanced, energy efficient indoor horticulture lighting, plant nutrient products, and ancillary equipment. Our vision is to apply the latest advances in high efficiency lighting and controls technology as well as effective manufacturing techniques to deliver highly differentiated lighting and nutrient products with clear benefits at competitive prices to the greenhouse and indoor horticulture markets.

Our subsidiary, Solis Tek, Inc., a California corporation, was formed in June of 2010. Its operations consist of designing, developing and sourcing of a line of Solis Tek Digital Ballasts intended for use in high intensity lighting systems used for horticulture. An electrical ballast is a device intended to limit the amount of current in an electric circuit. A familiar and widely used example is the inductive ballast used in fluorescent lamps, which limits the current through the tube, which would otherwise rise to destructive levels due to the tube’s negative resistance characteristic. Since the commencement of operations, our product line has evolved from digital ballasts to a line of lighting products including a line of specialty ballasts ranging from 400 watts to 1,000 watts with various features, our Lamp Products, a line of reflectors, high intensity lighting accessories and a new line of LED lighting technologies.

Previously, we attempted to expand our operations in cannabis cultivation and processing management services. In 2018, we acquired YLK Partners AZ, LLC, or YLK Partners, an Arizona-based company to provide turn-key services for the management, administration, and operation of a medical marijuana cultivation and processing facility. YLK had a cultivation management services agreement with an Arizona licensee. In 2019, we purchased real property in Phoenix, Arizona for $3,500,000, which property held the approval and authorization for a Conditional Use Permit, which allows the property to be used for the operation of a cultivation and infusion facility, allowing for the cultivation, harvesting, preparation, packaging and storing of medical cannabis, as well as extraction, refinement, infusion, production, preparation, packaging, and storage of manufactured and derivative oils, waxes, concentrates, edible and non-edible products that contain cannabis. Later in 2019, we conveyed the property to our lender in full settlement of the outstanding amounts we borrowed to acquire the property. For various reasons, we decided to abandon the expanded business lines and to re-focus on our core business of lights and nutrients.

Indoor Lighting Industry

Light and plant growth

Light is essential for plant growth. Natural sunlight is the cheapest source available, but for horticulture it is not always attainable in sufficient quantities due to weather and other climate challenges. Therefore, the uses of artificial or alternative light sources have become very common in order to increase production and quality predominantly in indoor or greenhouse environments. Plants have a completely different sensitivity to light spectrum than humans. Every plant has their own sensitivity and receptivity for colors and intensity of light. Using these alternate light sources for plants, effective light recipes are essential to obtain the optimal results in plant production.

Grow lights

A grow light or plant light is an artificial light source, generally an electric light, designed to stimulate plant growth by emitting an electromagnetic spectrum appropriate for photosynthesis. Grow lights are used in applications where there is either no naturally occurring light, or where supplemental light is required. For example, in the winter months when the available hours of daylight may be insufficient for the desired plant growth, lights are used to extend the time the plants receive light.

Grow lights either attempt to provide a light spectrum similar to that of the sun, or to provide a spectrum that is more tailored to the needs of the plants being cultivated. Outdoor conditions are mimicked with varying color, temperatures and spectral outputs from the grow light, as well as varying the lumen output (intensity) and PAR output of the lamps. Depending on the type of plant being cultivated, the stage of cultivation (e.g., the germination/vegetative phase or the flowering/fruiting phase), and the photoperiod required by the plants, specific ranges of spectrum, luminous efficacy and color temperature are desirable for use with specific plants and time periods.

Specially designed artificial light sources can improve diverse growth parameters. These all depends on several factors, like crop, environmental circumstances, light recipe and many more. The following is a list of benefits that can be achieved with specially designed artificial lighting:

● Increased production and yield ~~● Increased aromatic flavor and higher potency ● Shortening of the total growth cycle ● Better plant uniformity ● Better space utility ● Improved plant quality~~

~~● Energy savings ● Better germination rate ● Higher multiplication factor ● Higher survival rate in rooting ● Improved/controlled stretching process ● Accelerated hardening phase~~1

	●	Increased aromatic flavor and higher potency

	●	Shortening of the total growth cycle

	●	Better plant uniformity

	●	Better space utility

	●	Improved plant quality

	●	Energy savings

	●	Better germination rate

	●	Higher multiplication factor

	●	Higher survival rate in rooting

	●	Improved/controlled stretching process

	●	Accelerated hardening phase

Hydroponics

The great majority of our customers are retailers that specialize in ~~Hydroponics~~hydroponics and sell our products to ~~Hydroponic~~hydroponic enclosed farm and grower operators. Hydroponics is a method of growing plants in mineral nutrient solutions, in water, without soil. Terrestrial plants may be grown with their roots in the mineral nutrient solution only or in an inert medium, such as polite, gravel, expanded clay pebbles or coconut husks.

Some of the reasons why hydroponics is being adapted around the world for plant production are the following:

	●	No soil is needed for hydroponics.

	●	The water stays in the system and can be reused - thus, a lower water requirement.

	●	It is possible to control the nutrition levels in their entirety; thus, lower nutrition requirements.

	●	No nutrition pollution is released into the environment because of the controlled system.

	●	Stable and high yields.

	●	Pests and diseases are easier to get rid of than in soil because of the container’s mobility.

	●	Ease of harvesting.

	●	No pesticide damage.

Our Business Strategy

Due to the expected increase in the number of States where the use of cannabis, both for medical and recreational use is being legalized, we intend to take advantage of what we believe is our premium brand image within the cannabis farming and growing community. We believe that as participation in the cannabis farming industry grows, in order to supply increasing demand caused by legalization, our Solis Tek brand equipment will be sought out by existing and new cannabis farms and commercial businesses. Our strategy is to maintain and increase our market share by expanding our marketing efforts and by introducing new and improved lighting technology to help the industry become more efficient. In addition, we market and sell a line of plant nutrients and fertilizers to help expand our market reach and maximize our revenue potential.

Products

We sell our products primarily to retailers in the United States and international markets who specialize in hydroponic horticulture. Currently, we have approximately 500 retail stores in the United States as well as various ecommerce websites that sell our products. We have four full time sales employees and three wholesale distributors who cover U.S., Canada, Spain and the United Kingdom for both retail customers as well as commercial growers in cannabis legal states and countries.

We believe that almost all of the end users that use our products are using the equipment for the growing of cannabis. However, our products can be, and are used for, the hydroponic and indoor growing of other horticultural products, such as hothouse vegetables, decorative plant nurseries, indoor aquariums, and industrial painting facilities. We intend to continue to expand and improve our products for use in as many applications as possible and to market our products to the entire indoor horticultural industry as well as other industrial applications that require artificial lighting.

Plant Nutrients and Fertilizers

We have developed “Terpenez™” which is a proprietary product formulated from all organic botanical extracts and is designed to assist plants with processes associated with oil and resin production. Terpenez is all natural and has organic inputs aimed at enhancing the aromatics of cannabis cultivation.

The formula provides essential oil-bearing plants with both precursors (i.e., metabolic building blocks, trace elements, etc.) and readily available bio-identical plant compounds aiming to increase overall essential oil production and intensity. It is the first product of its kind to deliver plant nutrients to cannabis cultivating customers with a fully plant derived 0-0-0 (Nitrogen, Phosphate, and Potassium free) product. Independent bioanalytical testing laboratory analysis was conducted and determined the level of heavy metals to be below the EPA’s detection limit.

Terpenez is used to increase the value of cannabis crops through the intensification of oil production, which has results in a significant improvement in flavor and aroma. Terpenez is unique to our family of products in that it is intended for daily use as a nutrient additive to the cannabis grow. Terpenez is currently available in four profiles Terpenez “Original”, Terpenez “Berry”, Terpenez “Citrus” and Terpenez “Pine/Earth”, and is offered to our retail hydroponic stores and online retailers throughout the USA and Europe.

LED Technology

In 2018, Solis Tek Digital Lighting launched its propriety LED (light emitting diode) lighting solution called the B9. LED lighting supports sustainable design in several ways. It uses less energy than most other types of lamps, produces less heat, lasts longer (which means less frequent replacement and therefore reduced waste), is mercury-free, and is housed in special semi-conductor “chips” designed for easier configuration, disassembly, and recycling.

In our ongoing research and development program, we have designed and are developing our next generation of high intensity lighting. Our LED technology, unlike other LED lighting sources, uses an advanced UV (Ultra Violet) diode phosphor combination to make our high intensity LED based lighting systems. Our LED systems should be available in the same light spectrums as our current HID lamps. Our design will emit lighting equivalent to the high-pressure sodium spectrum and ultra-violet spectrums and eliminate the inadequacies of current LED offerings to the horticultural industry i.e.: a) low intensity; b) lack of proper spectrum for particular plants; and c) longevity. Our LED “chips” will provide, from one LED, a full spectrum of light that mimics sunlight, as compared to other LED manufacturers of LEDs who provide arrays of several color specific LEDs in an attempt to cover the full light spectrum.

LED lighting produces significantly less heat than conventional HID and HPS lamps, so growers can control their greenhouse climate more accurately. Less heat also means more effective use of light, for example by increasing light levels, extending lighting periods, or by using LED light in greenhouses on warmer days without having to ventilate. Less heat also means you can place the light source closer to plants, reducing light loss.

Digital Lighting Controller

The Solis Tek Digital Lighting Controller is a temperature monitoring control system which was specifically designed for commercial cultivation. A single controller can run up to 300 lights with 150 lights per zone and contains such features integrated temperature sensors, custom sunrise and sunset modes, data log tracking, and cloud cover simulation. The controller has been rigorously tested in multiple garden environments and has been specifically designed for both commercial grows and large gardens. The data log tracks garden activity and events with options to run up to two independent light zones, each with their own customized sunrise, sunset, and cloud modes. The controller includes high temperature auto-dim and shut off prevention systems to prevent systems overheating.

Ballasts

Ballasts provide the proper starting voltage, operating voltage and current to the lamp to initiate and sustain its arc. High Intensity Discharge (HID) lamps have negative resistance, which causes them to draw an increasing amount of current; hence, they require a current-limiting device. The ballast provides the following functions:

It provides starting voltage and, in some cases, ignition pulses. All ballasts must provide some specific minimum voltage to ignite the lamp. In the case of pulse start lamps, an additional high voltage pulse is needed to ionize the gases within the lamp. These pulses are superimposed near the peak starting voltage waveform; it regulates the lamp’s current and power. The ballast limits the current through the lamp once it has started. The ballast’s current is set to a level that delivers the proper power to the lamp. In addition, the ballast regulates the lamp’s current through the range of typical line voltage variations, thereby keeping the lamp’s power fairly stable to maximize the lamp’s life and performance and; it provides appropriate sustaining voltage and current wave shape to achieve the lamp’s rated life. The ballast provides sufficient voltage to sustain the lamp as it ages. Solis Tek ballasts come in a variety of voltage settings to conform to the consumer needs.

Solis Tek Digital Ballasts were designed to work with our exclusive “Ignition Control” sequential lamp ignition, and “SenseSmart”, self- diagnostic safety systems. Solis Tek Digital Ballasts are software based, that makes our ballasts more versatile and enables us to incorporate special features such as sequential ballast ignition technology and SenseSmart technologies that ignites metal halide lamps one at a time based on load stability. Ignition Control is a main feature of our ballasts that comes as a standard feature in all of our ballasts. The exclusive Ignition Control assures that no matter how many lamps are contained in a lighting array attached to one power source, only one lamp will turn on at a predetermined time. This technology (not a randomized ignition startup) detects the voltage and amperage frequencies of the electrical circuit and ignites an array of metal halide or sodium lamps when the load for each lamp is most stable. The use of our technology prevents surges and spikes in electrical environment in which an array of ballasts operates and also prevents the overloading of circuit breakers.

Our SenseSmart self-diagnosing system feature enables our ballasts to internally safety check for over/under voltage, overheating, open circuits, short circuits and more. SenseSmart will recognize an unsafe condition and take pre-determined actions to alleviate the safety issue.

We offer a line of remote ballasts that include: 1000W 120/240V with remote control and timer, 1000W 240V only, and 1000W 277V.

Digital Lamps

Metal halide lamps are a type of HID (High Intensity Discharge) lamp; mercury vapor and high-pressure sodium lamps are also HID lamps. Light is generated by creating an arc between the two electrodes located inside the inner arc tube. The inner arc tube is typically made of quartz, and this is a very harsh environment, with high temperatures approaching 1000°C and pressures of 3 or 4 atmospheres. To start a metal halide lamp, a high starting voltage is applied to the lamp’s electrodes to ionize the gas before current can flow and start the lamp.

Solis Tek Digital Lamps are designed to be specifically tuned and matched with Solis Tek Digital Ballasts. Our lamps feature color enhanced full balanced spectrums, prolonged lamp life, less depreciation of lumen output over time, and precise gas combinations for increased blues, reds, and ultra violet output. Our Lamps emit a full spectrum of light tuned specifically for particular types of plants. As well, our lamps provide ample Ultra Violet light that plants thrive upon. We have designed our lamps using special low iron glass envelopes so as to prevent the blockage of the full spectrum of light that our lamps are designed to provide. Using Solis Tek lamps, growers can expect superior photo-chemical reactions, proper UV balance, advanced HID lamp designed especially for plant growth, plant quality, and plant yield.

We offer a select variety of light color spectrums in High Pressure Sodium (HPS).

LED Technology

Plant Nutrients and Fertilizers

Terpenez, the first product in our launch into the approximately $32 billion nutrient/additive sector of the greenhouse and growing business, leads a new class of horticultural products aimed at enhancing the cannabis aromatic experience and intensity. It does not contain cannabis derived terpenes within, instead it is made from the finest natural components available and is specifically formulated to assist the cannabis plant with processes associated with oil and resin production and naturally enhances the cannabis plant’s terpene profile. The formula provides essential oil-bearing plants with both precursors (i.e. metabolic building blocks, trace elements, etc.) and readily available bio-identical plant compounds aiming to increase overall essential oil production and intensity. It is the first product of its kind to deliver plant nutrients to cannabis cultivating customers with a fully plant derived 0-0-0 (Nitrogen, Phosphate, and Potassium free) product. Independent bioanalytical testing laboratory analysis was conducted and determined the level of heavy metals to be below the EPA’s detection limit. Terpenez is used to increase the value of cannabis crops through the intensification of oil production, which has results in a significant improvement in flavor and aroma. Terpenez is unique to our family of products in that it is intended for daily use as a nutrient additive to the cannabis grow, and is available through the over 500+ retail hydroponic stores and online retailers throughout the USA and Europe.

Marketing

We currently market our products directly and through distributors, to hydroponic retailers through direct contacts, on-line email advertising, social media, trade magazine advertising, trade show promotions, and cross-promotional offerings. Approximately less than 2% of our revenues were derived from non-U.S. sources in each of ~~2019~~2020 and ~~2018~~2019.

Manufacturing and Supply

All of our current lighting products are manufactured to our specifications in China. We have ~~three~~four independent lighting manufacturer and suppliers of our ballast, lamp and LED products. We continue to evaluate and upgrade our China manufacturing specifications and relationships and believe that the prices charged by these suppliers are industry-wide competitive.

Our reliance upon manufacturers and suppliers located in China, subjects us to various political, economic, and other risks and uncertainties inherent in importing products from this country, including among other risks, export/import duties, quotas and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations. There can be no assurance that if there were an interruption of our supply lines from China, that we would be able to quickly find replacement suppliers of our products domestically, or from other countries, and even if we found replacement suppliers, that we would be able to obtain the products at the quality and prices we currently pay which is why our founders continue to develop alternate relationships in China light and ballast manufacturing.

Our Terpenez nutrient products are formulated in our facility in Upland, CA under the strictest of manufacturing protocols. We intend to develop additional nutrient lines using local state-of-the-art processing labs in southern California under our proprietary formulations. Given the regulatory environment and intense scrutiny and testing required by both State and Federal agencies, we believe staying the course with natural, organic, and heavy-metal free ingredients will allow Zelda to provide substantial growth and opportunity within the industry.

Intellectual Property

We own a number of trademarks and rely on a combination of copyright and trade secrets as well as confidentiality procedures and contractual provisions to protect our proprietary technology and our brand. We rely on copyright laws to protect copy on our web site, www.solis-tek.com, and all marketing materials.

We own the trademark for our proprietary product “Terpenez”.

From time to time, we may encounter disputes over rights and obligations concerning intellectual property. Also, the efforts we have taken to protect our proprietary rights may not be sufficient or effective. Any significant impairment of our intellectual property rights could harm our business, our brand and reputation, or our ability to compete. Also, protecting our intellectual property rights could be costly and time consuming.

Government and Industry Regulation

Cannabis is currently a Schedule I controlled substance and is therefore illegal under federal law. Even in those states in which the use of cannabis has been legalized, its use, possession, or cultivation remains a violation of federal laws. A Schedule I controlled substance is defined as one that has no currently accepted medical use in the United States, a lack of safety for use under medical supervision and a high potential for abuse. The U.S. Department of Justice (the “DOJ”) defines Schedule I controlled substances as “the most dangerous drugs of all the drug schedules with potentially severe psychological or physical dependence.” If the federal government decides to enforce the Controlled Substances Act with respect to cannabis, persons that are charged with distributing, possessing with intent to distribute, or growing cannabis could be subject to fines and terms of imprisonment, the maximum being life imprisonment and a $50 million fine.

As of the date of this report, 33 states and the District of Columbia allow their residents to use medical cannabis. The state laws are in conflict with the federal Controlled Substances Act (the “CSA”), which makes cannabis use and possession illegal on a national level. The Obama administration stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical cannabis. However, recent statements by the Trump administration, in particular by then Attorney General Jeff Sessions, indicate that this policy may be under review. In March 2015, legislation was introduced in the U.S. Senate proposing to change federal law such that states could regulate medical use of cannabis without risk of prosecution. A key component of the proposed Compassionate Access, Research Expansion, and Respect States Act (the “CARERS Act”) is to reclassify cannabis under the Controlled Substances Act to Schedule II, thereby changing the plant from a federally-criminalized substance to one that has recognized medical uses. There is no guarantee that the administration will not change its stated policy regarding the low-priority enforcement of federal laws. Additionally, any new administration could change this policy and decide to enforce the federal laws strongly. Any such change in the federal government’s enforcement of current federal laws could cause significant financial damage to us. We intend to harvest, distribute and sell cannabis, and we may be irreparably harmed by a change in enforcement by the federal government.

Section 537 of the Consolidated Appropriations Act for the fiscal year ended September 30, 2017 prohibits the expenditure by the Department of Justice of any funds to prevent the implementation of medical marijuana laws by any state or the District of Columbia or Puerto Rico. In United States v McIntosh, the 9th Circuit Court of Appeals held that the operators and growers had standing to challenge federal indictments for violations of the Controlled Substances Act. It is unknown whether future appropriations acts will include similar provisions or whether other circuits will follow the lead of the 9th Circuit.

DOJ Deputy Attorney General James M. Cole issued a memorandum (the “Cole Memo”) to all United States Attorneys providing updated guidance to federal prosecutors concerning cannabis enforcement under the CSA. The Cole Memo guidance applies to all of DOJ’s federal enforcement activity, including civil enforcement and criminal investigations and prosecutions, concerning cannabis in all states. In January 2018, former Attorney General, Jeff Sessions rescinded the Cole Memo. However, the federal government, to date, has not determined to devote federal government resources to companies operating in states which have passed laws legalizing medical and recreational marijuana use whose businesses are operating in conformity with the provisions of the Cole Memo.

We intend to remain within the guidelines outlined in the Cole Memo (see “The Cole Memo”), however, we cannot provide assurance that the Company is in full compliance with the laws since the repeal of the Cole Memo or with the Cole Memo itself or any other federal laws or regulations. The Cole Memo reiterates Congress’s determination that cannabis is a dangerous drug and that the illegal distribution and sale of cannabis is a serious crime that provides a significant source of revenue to large-scale criminal enterprises, gangs, and cartels. The Cole Memo notes that DOJ is committed to enforcement of the CSA consistent with those determinations. It also notes that DOJ is committed to using its investigative and prosecutorial resources to address the most significant threats in the most effective, consistent, and rational way. In furtherance of those objectives, the Cole Memo provides guidance to DOJ attorneys and law enforcement to focus their enforcement resources on persons or organizations whose conduct interferes with any one or more of the following important priorities (the “Enforcement Priorities”): (a) preventing distribution of cannabis to minors; (b) preventing revenue from cannabis from going to gangs, cartels and other illegal participants; (c) preventing the diversion of cannabis from states where it is legal to states where it is illegal; (d) preventing state-authorized cannabis activity from being a cover or pretext for the trafficking of other illegal drugs; (e) preventing violence and the use of firearms in the cultivation and distribution of cannabis; (f) preventing drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; and (g) preventing the growing of cannabis on public lands and its use or possession on Federal property.

The DOJ may issue in the future supplemental guidance directing that prosecutors also consider the Enforcement Priorities with respect to federal money laundering, unlicensed money transmitter, and BSA offenses predicated on cannabis-related violations of the CSA.

Competition

Our Lighting Products currently face competition from traditional lighting fixture companies, lamp manufacturers and from non-traditional companies focused on LED lighting systems including fixtures and lamps. Lighting companies such as Acuity Brands, Inc., the Cooper Lighting division of Eaton Corporation plc, General Electric Company, Hubbell Incorporated, Philips, OSRAM, Gavita, Nanolux, Sunlight Supply and Hydrofarm are the main competitors in this market. Increasingly, however, other companies (i.e., start-ups) are beginning to emerge in the LED lighting markets in which we compete. We compete on the basis of product features, quality, product availability and price.

Our LED lighting products compete against traditional lighting products using incandescent, fluorescent, halogen, ceramic metal halide or other lighting technology. Our LED lighting products compete against traditional lighting products based upon superior energy savings, extended life, improved lighting quality and lower total cost of ownership. Also, our LED lighting products have a reduced impact on the environment as compared to fluorescent and compact fluorescent technologies that contain mercury.

We will also compete with LED-based products from traditional and non-traditional lamp and fixture companies, some of which are customers for our LED chips and LED components. Our products compete on the basis of color quality and consistency, superior light output, reduced energy consumption, brand and lower total cost of ownership. Within the Zelda nutrient product line, the Terpenez product is unique in its product class. The formula provides essential oil-bearing plants with both precursors (i.e. metabolic building blocks, trace elements, etc.) and readily available bio-identical plant compounds aiming to increase overall essential oil production and intensity. It is the first product of its kind to deliver plant nutrients to cannabis cultivating customers with a fully plant derived 0-0-0 (Nitrogen, Phosphate, and Potassium free) product. Independent bioanalytical testing laboratory analysis was conducted and determined the level of heavy metals to be below the EPA’s detection limit (BDL). Terpenez is used to increase the value of cannabis crops through the intensification of oil production, which has results in a significant improvement in flavor and aroma. With other nutrient lines, products that provide plant growth, and insect and pest protection, are marketed through a plethora of local and regional brands with literally scores of names and claims of value and productivity- none of which compete head on with Terpenez whose lab tested and grower proven track record is beyond compare.

Employees

As of ~~March~~December 31, 2020, we had five full-time employees, employed by us in various capacities, including one executive officer, ~~two~~ two sales representatives, one administrative personnel, and one warehouse/nutrient production associate. In addition, from time to to time, we employ temporary personnel to meet the business needs. None of our employees are represented by a collective bargaining agreement, and we believe that our relations with our employees are good.

Corporate Information

We were incorporated on March 2, 2007 under the laws of the State of Nevada as Cinjet Inc. On September 1, 2015, we changed our name to Solis Tek Inc. Effective September 25, 2018, we changed our name to Generation Alpha, Inc. Our website address is www.genalphainc.com. The information on our website is not part of this annual report. We have included our website address as a factual reference and do not intend for it to be an active link to our website.

~~Item 1A - RISK FACTORS.~~6

~~RISKS~~ITEM ~~RELATED~~1A. TORISK ~~OUR BUSINESS~~FACTORS.

You should carefully consider the following risk factors, as well as the other information in this report, before deciding whether to purchase, hold or sell shares of our common stock. The occurrence of any of the following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. You should consider all of the factors described as well as the other information in our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” when evaluating our business. If any of the following risks actually occurs, our business, financial condition, results of operations and future growth prospects would likely be materially and adversely affected. In these circumstances, the market price of our common stock would likely decline and you may lose all or part of your investments. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.

RISKS RELATED TO OUR FINANCIAL POSITION AND NEED FOR ADDITIONAL CAPITAL

We have incurred significant net losses and cannot assure you that we will achieve or maintain profitable operations, and our auditors have issued a “going concern” audit opinion.

Our net losses were $7571,~~893,656~~000 and $177,~~074~~894,~~005~~000 for the years ended December 31, ~~2019~~2020 and ~~2018~~2019, respectively. As of December 31, ~~2019~~2020, we had stockholders’ deficit of $8,~~624~~736,~~232~~000. We will need to raise additional working capital to continue our normal and planned operations. We will need to generate and sustain significant revenue levels in future periods in order to become profitable, and, even if we do, we may not be able to maintain or increase our level of profitability. We anticipate that our operating expenses will increase in the foreseeable future as we undertake increased technology and production efforts to support our business and increase our marketing and sales efforts to drive an increase in the number of customers and clients utilizing our services. In addition, as a public company, we will incur significant accounting, legal and other expenses that we did not incur as a private company. These expenditures will make it necessary for us to continue to raise additional working capital and make it harder for us to achieve and maintain profitability. Our efforts to grow our business may be costlier than we expect, and we may not be able to generate sufficient revenue to offset our higher operating expenses. If we are forced to reduce our expenses, our growth strategy could be compromised. We may incur significant losses in the future for a number of reasons, including unforeseen expenses, difficulties, complications and delays and other unknown events. Accordingly, substantial doubt exists about our ability to continue as a going concern and we cannot assure you that we will achieve sustainable operating profits as we continue to expand our infrastructure, restructure our balance sheet, further develop our marketing efforts, and otherwise implement our growth initiatives.

Our independent auditors have indicated in their report on our December 31, ~~2019~~2020 consolidated financial statements that there is substantial doubt about our ability to continue as a going concern. A “going concern” opinion indicates that the financial statements have been prepared assuming we will continue as a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result if we do not continue as a going concern. Therefore, you should not rely on our consolidated balance sheet as an indication of the amount of proceeds that would be available to satisfy claims of creditors, and potentially be available for distribution to stockholders, in the event of liquidation.

We must raise additional working capital.

At the present time, our ability to continue as a going concern is dependent upon raising capital from financing transactions. To stay in business, we will need to raise additional working capital through public or private sales of our equity securities, debt financing or short-term loans, or a combination of the foregoing. In the event that such financing is not procured, we may be forced to curtail our growth plans. There can be no assurance that we will be able to raise sufficient additional working capital financing from the sale of additional securities when needed to sustain our operations on acceptable terms, or at all. If such financing is not available on satisfactory terms or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and our financial condition may be materially adversely affected. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt and could increase our expenses and require that our assets be provided as a security for such debt. Debt financing would also be required to be repaid regardless of our operating results. Equity financing, if obtained, could result in dilution to our then existing stockholders.

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~~The~~RISKS ~~novel~~RELATED ~~coronavirus~~TO ~~(COVID-19)~~OUR ~~pandemic,~~COMPANY ~~efforts~~AND toOUR mitigate or disrupt the pandemic and the related weak, or weakening of, economic or other negative conditions, have impacted our business, and could result in a material adverse effect on our operations, liquidity, financial condition and financial results.BUSINESS

During March 2020, the World Health Organization declared the rapidly growing coronavirus outbreak to be a global pandemic. The COVID-19 pandemic has significantly impacted health and economic conditions throughout the United States. As the pandemic continues to grow, consumer fear about becoming ill with the virus and recommendations and/or mandates from federal, state and local authorities to avoid large gatherings of people or self-quarantine have increased. We currently believe we are an “essential” business under relevant federal, state and local mandates. If the classification of what is an “essential” business changes or other government regulations are adopted, we may be required to severely curtail operations, which would significantly and adversely impact our sales and revenue. Also, if we do not respond appropriately to the pandemic, or if customers do not perceive our response to be adequate, we could suffer damage to our reputation and our brand, which could adversely affect our business in the future.

COVID-19 has also impacted our supply chain for products we sell, particularly those products that are sourced from China, which primarily relate to our lighting units. The manufacturers we utilize for production of our products closed down their facilities during the pandemic, and we have been advised that they anticipate resuming operations in the near future. However, we are unable to determine at this time when such manufacturers will be able to produce the backlog of our products. This has directly impacted our ability to sell product directly, although we continue to have product available through third-party sellers, such as Amazon, although sales through such third-party sellers result in smaller profit margins than direct sales.

The extent to which the COVID-19 outbreak impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to the duration, spread, severity and impact of the COVID-19 outbreak, the effects of the outbreak on our customers and vendors and the remedial actions and stimulus measures adopted by local and federal governments, and to what extent normal economic and operating conditions can resume. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future. Furthermore, the financial condition of our customers and vendors may be adversely impacted, which may result in a decrease in spending by our customers, and an increase in bankruptcies or insolvencies, or a delay in payments, with respect to our vendors. Either of these events may, in turn, have a material adverse impact our business, results of operations and financial condition.

We depend on the development of the cannabis industry.

Over the past several years, the cannabis industry has grown significantly as a result of an increase of deregulation at a state level. Our revenues depend greatly on the expenditures made by companies within the cannabis industry. In some instances, companies in these industries are reliant on their ability to raise capital in order to fund their operations. Accordingly, economic factors and industry trends that affect our clients in these industries also affect our business. If companies in these industries were to reduce the number of research and development projects they conduct or outsource, our business could be materially adversely affected.

Our business is dependent on state laws pertaining to the cannabis industry.

The Federal Controlled Substances Act, or CSA, classifies cannabis as a Schedule I controlled substance and makes cannabis use and possession illegal on a national level. The United States Supreme Court has ruled that it is the Federal Government that has the right to regulate and criminalize cannabis, even for medical purposes, and thus federal law criminalizing the use of cannabis preempts state laws that legalize its use. As of the date of this Annual Report, thirty-three (33) states and the District of Columbia allow their residents to use medical cannabis, of which eleven (11) states and the District of Columbia have legalized the recreational use of cannabis. While some states have either approved ballot measures or approved legislation to legalize cannabis for adult recreational use, continued expansion of such ‘recreational use’ is not well defined at this time and any continued development of the cannabis industry will be dependent upon continued new legislative authorization of cannabis at the state, and perhaps the federal level. Any number of events or occurrences could slow or halt progress all together in this space. While progress within the cannabis industry channel is currently encouraging, growth is not assured. While there appears to be ample public support for favorable legislative action, numerous factors may impact or negatively affect the legislative process(s) within the various states we have business interests in. Any one of these factors could slow or halt use of cannabis, which would negatively impact our business up to possibly causing us to discontinue operations as a whole.

The cannabis industry faces significant opposition, and any negative trends will adversely affect our business operations.

We are substantially dependent on the continued market acceptance, and the proliferation of consumers, of medical and recreational cannabis. We believe that with further legalization, cannabis will become more accepted, resulting in a growth in consumer demand. However, we cannot predict the future growth rate or future market potential, and any negative outlook on the cannabis industry may adversely affect our business operations.

Large, well-funded business sectors may have strong economic reasons to oppose the development of the cannabis industry. For example, medical cannabis may adversely impact the existing market for the current “cannabis pill” sold by mainstream pharmaceutical companies. Should cannabis displace other drugs or products, the medical cannabis industry could face a material threat from the pharmaceutical industry, which is well-funded and possesses a strong and experienced lobby. Any inroads the pharmaceutical or any other potentially displaced, industry or sector could make in halting or impeding the cannabis industry could have a detrimental impact on our business.

Competition in our industry is intense.

There are many competitors in the cannabis industry, including many who offer similar products and services as those offered by us. There can be no guarantee that in the future other companies won’t enter this arena by developing services that are in direct competition with us or any acquired subsidiary. We anticipate the presence as well as entry of other companies in this market space and acknowledge that we may not be able to establish or if established, maintain a competitive advantage. Some of these companies may have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales and marketing resources. This may allow them to respond more quickly than us to market opportunities. It may also allow them to devote greater resources to the marketing, promotion and sale of their products and or services. These competitors may also adopt more aggressive pricing policies and make more attractive offers to existing and potential customers, employees, strategic partners, distribution channels and advertisers. Increased competition is likely to result in price reductions, reduced gross margins and a potential loss of market share.

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Our manufacturing is concentrated with two key manufacturers, and if our relationship with either or both of them terminates or is otherwise impaired, we would likely experience increased costs, disruptions in the manufacture and shipment of our products and a material loss of net sales.

We have no long-term contracts with our manufacturers and as a result, our manufacturers could cease to provide products to us with no notice. Two of our manufacturers, Shenzhen Jayo Technologies Co., Ltd. and Zhuhai Relite Co., Ltd, together accounted for approximately 96% of our cost of goods sold in 2019 and 2018. Each of these manufacturers is the sole source supplier for the products that it produces. We purchase from these two manufacturers on a purchase order basis with orders generally filled between 45 and 60 days after our purchase order is placed. A loss of either or both of these manufacturers or other key manufacturers would result in delayed deliveries to our retailers and distributors, would adversely impact our net sales and may require the establishment of new manufacturing relationships. As mentioned earlier, both manufacturers closed down their facilities during the COVID-19 pandemic and are expected to resume operations in the near future. Additionally, we cannot be certain that we will not experience operational difficulties with our manufacturers, including reductions in the availability of production capacity, errors in complying with product specifications, insufficient quality control, failures to meet production deadlines, increases in manufacturing costs and increased lead times.

Risk of reliance on suppliers and manufacturers in China for production of our lighting related products.

All of our products are imported from and manufactured in China. For this reason, a major change in the political, economic and/or legal environment, or a natural disaster or health outbreak (such as COVID-19) in China or another center of production, could have an impact on our ability to supply products.

We face business, political, operational, financial and economic risks because a portion of our net sales are generated internationally and substantially all of our products are manufactured outside of the United States.

We face business, political, operational, financial and economic risks inherent in international business, many of which are beyond our control, including: difficulties obtaining domestic and foreign export, import and other governmental approvals, permits and licenses, and compliance with foreign laws, which could halt, interrupt or delay our operations if we cannot obtain such approvals, permits and licenses, and that could have a material adverse effect on our results of operations; difficulties encountered by our international distributors or us in staffing and managing foreign operations or international sales, including higher labor costs, which could increase our expenses and decrease our net sales and profitability; transportation delays and difficulties of managing international distribution channels, which could halt, interrupt or delay our operations; longer payment cycles for, and greater difficulty collecting, accounts receivable, which could reduce our net sales and harm our financial results; trade restrictions, higher tariffs, currency fluctuations or the imposition of additional regulations relating to import or export of our products, especially in China, where substantially all of our products are manufactured, which could force us to seek alternate manufacturing sources or increase our expenses, either of which could have a material adverse effect on our results of operations; political and economic instability, including wars, terrorism, political unrest, boycotts, curtailment of trade and other business restrictions, any of which could materially and adversely affect our net sales and results of operations; and natural disasters, which could have a material adverse effect on our results of operations.

In addition, the outbreak of communicable diseases, such as a new virus known as the Coronavirus (COVID-19), could result in a widespread health crisis that could adversely affect general commercial activity and our business. An outbreak of communicable diseases in the region that we operate or regions from which our customers travel from or through, or the perception that such an outbreak could occur, and the measures taken by the governments of countries affected, including restricting air travel and other means of transportation, imposing quarantines and curfews and requiring the closure of our offices or other businesses, including office buildings, theatres, retail stores and other commercial venues, could adversely affect our business, financial condition or results of operations.

Any of these factors could reduce our net sales, decrease our gross margin or increase our expenses. Should we establish our own operations in international territories where we currently utilize a distributor, we will become subject to greater risks associated with operating outside of the United States.

Any shortage of raw materials or components could impair our ability to ship orders of our products in a cost-efficient manner or could cause us to miss the delivery requirements of our retailers or distributors, which could harm our business.

The ability of our manufacturers to supply our products is dependent, in part, upon the availability of raw materials and certain components. Our manufacturers may experience shortages in the availability of raw materials or components, which could result in delayed delivery of products to us or in increased costs to us. Any shortage of raw materials or components or inability to control costs associated with manufacturing could increase the costs for our products or impair our ability to ship orders in a timely cost-efficient manner. As a result, we could experience cancellation of orders, refusal to accept deliveries or a reduction in our prices and margins, any of which could harm our financial performance and results of operations.

Our business could suffer if any of our manufacturers fail to use acceptable labor practices.

We do not control our manufacturers or their labor practices. The violation of labor or other laws by a manufacturer utilized by us, or the divergence of an independent manufacturer’s labor practices from those generally accepted as ethical or legal in the United States, could damage our reputation or disrupt the shipment of finished products to us if such manufacturer is ordered to cease its manufacturing operations due to violations of laws or if such manufacturer’s operations are adversely affected by such failure to use acceptable labor practices. If this were to occur, it could have a material adverse effect on our financial condition and results of operations.

Exchange rate fluctuation between the U.S. dollar and Non-U.S. currencies may negatively affect our earnings.

Although most of our products imported for our core business are denominated in U.S. dollars, our operating results and cash flows may be subject to fluctuations due to changes in the relative values of the U.S. dollar and other foreign currencies. These fluctuations could negatively affect our operating results and could cause our revenues and net income or loss to vary from quarter to quarter. Furthermore, to the extent that we increase our revenues in regions, where our sales are denominated in U.S. dollars, a strengthening of the dollar versus other currencies could make our products less competitive in those foreign markets and collection of receivables more difficult.

We may elect from time to time to make changes to our pricing, service, hiring and marketing decisions that could increase our expenses, affect our revenues and impact our financial results.

Because our expense levels in any given quarter are based, in part, on management’s expectations regarding future revenues, if revenues are below expectations, the effect on our operating results may be magnified by our inability to adjust spending in a timely manner to compensate for a shortfall in revenues. The extent to which expenses are not subsequently followed by increased revenues would harm our operating results and could seriously impair our business.

If we are unable to generate sufficient cash flow from operations or are unable to obtain additional equity or debt financing, to meet our working capital requirements, we may have to curtail our business operations sharply or cease business altogether.

Defects or disruptions in the delivery of our service could diminish demand, decrease market acceptance or decrease customer satisfaction of our service and subject us to substantial liability.

We may, from time to time, find defects in our products service may be detected in the future. Any defects with our products could hurt our reputation and may damage our customers’ businesses. If that occurs, customers could elect not to renew, or delay or withhold payment to us, we could lose future sales, or, customers may make warranty or other claims against us, which could result in an increase in our provision for doubtful accounts, an increase in collection cycles for accounts receivable or the expense and risk of litigation.

Our inability to effectively manage our growth could harm our business and materially and adversely affect our operating results and financial condition.

Our strategy envisions growing our business. We plan to expand our product, sales, administrative and marketing organizations. Any growth in or expansion of our business is likely to continue to place a strain on our management and administrative resources, infrastructure and systems. As with other growing businesses, we expect that we will need to further refine and expand our business development capabilities, our systems and processes and our access to financing sources. We also will need to hire, train, supervise and manage new employees. These processes are time consuming and expensive, will increase management responsibilities and will divert management attention. We cannot assure you that we will be able to:

● expand our products offerings effectively or efficiently or in a timely manner; ● allocate our human resources optimally; ● meet our capital needs; ● identify and hire qualified employees or retain valued employees; or ● incorporate effectively the components of any business or product line that we may acquire in our effort to achieve growth.

Our inability or failure to manage our growth and expansion effectively could harm our business and materially and adversely affect our operating results and financial condition.

Our operating results may fluctuate significantly based on customer acceptance of our products. As a result, period-to-period comparisons of our results of operations are unlikely to provide a good indication of our future performance.

Management expects that we will experience substantial variations in our net sales and operating results from quarter to quarter due to customer acceptance of our products. If customers do not accept our products, our sales and revenues will decline, resulting in a reduction in our operating income.

Customer interest for our products could also be impacted by the timing of our introduction of new products. If our competitors introduce new products around the same time that we issue new products, and if such competing products are superior to our own, customers’ desire for our products could decrease, resulting in a decrease in our sales and revenues. To the extent that we introduce new products and customers decide not to migrate to our new products from our older products, our revenues could be negatively impacted due to the loss of revenue from those customers. In the event that our newer products do not sell as well as our older products, we could also experience a reduction in our revenues and operating income.

As a result of fluctuations in our revenue and operating expenses that may occur, management believes that period-to-period comparisons of our results of operations are unlikely to provide a good indication of our future performance.

If we do not successfully generate additional products and services, or if such products and services are developed but not successfully commercialized, we could lose revenue opportunities.

Our future success depends, in part, on our ability to expand our product offerings. To that end we have engaged in the process of identifying new product opportunities to provide additional products to our customers. The process of identifying and commercializing new products is complex and uncertain, and if we fail to accurately predict customers’ changing needs and emerging technological trends our business could be harmed. We may have to commit significant resources to commercializing new products before knowing whether our investments will result in products the market will accept. Furthermore, we may not execute successfully on commercializing those products because of errors in product planning or timing, technical hurdles that we fail to overcome in a timely fashion, or a lack of appropriate resources. This could result in competitors providing those solutions before we do and a reduction in net sales and earnings.

The success of new products depends on several factors, including proper new product definition, timely completion and introduction of these products, differentiation of new products from those of our competitors, and market acceptance of these products. There can be no assurance that we will successfully identify new product opportunities, develop and bring new products to market in a timely manner, or achieve market acceptance of our products or that products and technologies developed by others will not render our products or technologies obsolete or non-competitive.

Our inability to effectively protect our intellectual property would adversely affect our ability to compete effectively, our revenue, our financial condition and our results of operations.

We may be unable to obtain intellectual property rights to effectively protect our technology. Our ability to compete effectively may be affected by the nature and breadth of our intellectual property rights. While we intend to defend against any threats to our intellectual property rights, there can be no assurance that any such actions will adequately protect our interests. If we are unable to secure intellectual property rights to effectively protect our technology, our revenue and earnings, financial condition, or results of operations would be adversely affected.

We may be adversely affected by the financial condition of our retailers and distributors.

Some of our retailers and distributors have experienced financial difficulties in the past. A retailer or distributor experiencing such difficulties will generally not purchase and sell as many of our products as it would under normal circumstances and may cancel orders. In addition, a retailer or distributor experiencing financial difficulties generally increases our exposure to uncollectible receivables. We extend credit to our retailers and distributors based on our assessment of their financial condition, generally without requiring collateral. While such credit losses have historically been within our reserves, we cannot assure you that this will continue to be the case. Financial difficulties on the part of our retailers or distributors could have a material adverse effect on our results of operations and financial condition.

We will be required to attract and retain top quality talent to compete in the marketplace.

We believe our future growth and success will depend in part on our ability to attract and retain highly skilled managerial, product development, sales and marketing, and finance personnel. There can be no assurance of success in attracting and retaining such personnel. Shortages in qualified personnel could limit our ability to increase sales of existing products and launch new product and service offerings.

Our future success depends on our ability to grow and expand our customer base. Our failure to achieve such growth or expansion could materially harm our business.

To date, our revenue growth has been derived primarily from the sale of our products. Our success and the planned growth and expansion of our business depend on us achieving greater and broader acceptance of our products, expanding our customer base and successfully moving into providing management services. There can be no assurance that customers will purchase our products, that we will continue to expand our customer base or that we will successfully be able to provide management services to other companies in the cannabis space. If we are unable to effectively market or expand our product offerings, we will be unable to grow and expand our business or implement our business strategy. This could materially impair our ability to increase sales and revenue and materially and adversely affect our margins.

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IfRISKS weRELATED ~~experience~~TO ~~significant~~MANUFACTURING ~~fluctuations~~AND inOUR ~~our~~RELIANCE ~~rate~~ON ofTHIRD ~~anticipated growth and fail to balance our expenses with our revenue forecasts, our results could be harmed.~~PARTIES

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We have no long-term contracts with our manufacturers and as a result, our manufacturers could cease to provide products to us with no notice. Four of our manufacturers, which are all located in China, together accounted for approximately 96% of our cost of goods sold in 2020 and 2019 for our lighting products. Each of these manufacturers is the sole source supplier for the products that it produces. We purchase from these two manufacturers on a purchase order basis with orders generally filled between 90 and 120 days after our purchase order is placed. A loss of either or both of these manufacturers or other key manufacturers would result in delayed deliveries to our retailers and distributors, would adversely impact our net sales and may require the establishment of new manufacturing relationships. Our manufacturers had closed down their facilities earlier during the COVID-19 pandemic, but have resumed operations, although the lead time from product order increased from approximately 45-60 days to 90-120 days. Additionally, we cannot be certain that we will not experience operational difficulties with our manufacturers, including reductions in the availability of production capacity, errors in complying with product specifications, insufficient quality control, failures to meet production deadlines, increases in manufacturing costs and increased lead times.

Risk of reliance on suppliers and manufacturers in China for production of our lighting related products.

We may be adversely affected by the financial condition of our retailers and distributors.

RISKS RELATED TO INTELLECTUAL PROPERTY

Our inability to effectively protect our intellectual property would adversely affect our ability to compete effectively, our revenue, our financial condition and our results of operations.

We may in the future be sued by third parties for alleged infringement of their proprietary rights.

The lighting industry are characterized by the existence of a large number of patents, trademarks and copyrights and by frequent litigation based on allegations of infringement or other violations of intellectual property rights. We may receive in the future communications from third parties claiming that we have infringed the intellectual property rights of others. We may in the future be, sued by third parties for alleged infringement of their proprietary rights. Our technologies may not be able to withstand any third-party claims against their use. The outcome of any litigation is inherently uncertain. Any intellectual property claims, whether with or without merit, could be time-consuming and expensive to resolve, could divert management attention from executing our business plan and could require us to change our technology, change our business practices and/or pay monetary damages or enter into short- or long-term royalty or licensing agreements which may not be available in the future at the same terms or at all. In addition, many of our subscription agreements require us to indemnify our customers for third-party intellectual property infringement claims, which would increase the cost to us of an adverse ruling on such a claim. Any adverse determination related to intellectual property claims or litigation could prevent us from offering our service to others or could otherwise adversely affect our operating results or cash flows or both in a particular quarter.

Supporting a growing customer base could strain our personnel and corporate infrastructure, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.11

~~Our~~RISKS ~~current~~RELATED ~~management~~TO ~~and human resources infrastructure is comprised of only one executive officer and one administrative person. Our success will depend~~EMPLOYEES, inMANAGING ~~part,~~OUR ~~upon~~GROWTH ~~the~~AND ~~ability~~OTHER ofLEGAL our Management to manage our proposed business effectively. To do so, we will need to hire, train and manage new employees as needed. To manage the expected domestic growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. If we fail to successfully scale our operations and increase productivity, we will be unable to execute our business plan.MATTERS

We are dependent on our CEO, and her loss could harm our business and prevent us from implementing our business plan in a timely manner.

Our success depends substantially upon the continued services of our sole executive officer, Tiffany Davis, our Chief Executive Officer. We do not maintain a key person life insurance policy on our Chief Executive Officer. The loss of the services of Ms. Davis would have a material adverse effect on our growth, revenues, and prospective business. The loss of any of our personnel, or the inability to attract and retain qualified personnel, may significantly delay or prevent the achievement of our research, development or business objectives and could materially adversely affect our business, financial condition and results of operations.

Any employment agreement we enter into will not ensure the retention of the employee who is a party to the agreement. In addition, we have only limited ability to prevent former employees from competing with us. Furthermore, our future success will also depend in part on the continued service of our key management personnel and our ability to identify, hire, and retain additional personnel. We experience intense competition for qualified personnel and may be unable to attract and retain the personnel necessary for the development of our business. Moreover, competition for personnel with the technical skills that we seek is extremely high and is likely to remain high. Because of this competition, our compensation costs may increase significantly.

~~Failure~~We will be required to ~~manage~~attract ~~growth~~and ~~properly~~retain ~~could~~top ~~seriously~~quality ~~harm~~talent ~~our~~to ~~business~~compete in the marketplace.

We ~~have~~believe ~~experienced, and may continue to experience, significant growth in~~ our ~~business.~~future ~~If we do not effectively manage our~~ growth~~, the~~ ~~quality of our business may suffer, which could negatively affect our reputation~~ and demand for our offerings. Our growth has placed, and is expected to continue to place, a significant strain on our managerial, administrative, operational, and financial resources and our infrastructure. Our future success will depend, in part, ~~upon~~on ~~the~~our ability ~~of our senior management~~ to ~~manage growth~~attract ~~effectively.~~and ~~Among~~retain ~~other~~highly ~~things~~skilled managerial, ~~this will require us to: implement additional management information systems; further~~product ~~develop our operating~~development, ~~administrative,~~sales ~~legal,~~and ~~financial~~marketing, and ~~accounting~~finance ~~systems~~personnel. ~~and~~There ~~controls;~~can ~~hire~~be ~~additional~~no ~~personnel;~~assurance ~~develop additional levels~~ of ~~management~~success ~~within~~in ~~our~~attracting ~~company;~~and ~~locate~~retaining ~~additional~~such personnel. ~~office~~Shortages ~~space;~~in ~~maintain~~qualified ~~and~~personnel ~~improve~~could ~~coordination~~limit ~~among~~ our ~~engineering,~~ ~~product,~~ability ~~operations,~~to ~~legal,~~increase ~~finance,~~ sales, ~~marketing,~~of ~~and~~existing ~~customer~~products ~~service~~ and ~~support~~launch ~~organizations;~~new product and ~~manage our~~service ~~expanding international operations~~offerings.

~~Moreover,~~Our asinability ~~our~~to ~~sales~~effectively ~~increase,~~manage weour ~~may~~growth becould ~~required~~harm ~~to concurrently deploy~~ our business ~~infrastructure~~and atmaterially ~~multiple additional locations~~ and~~/or~~ ~~provide~~adversely ~~increased~~affect ~~levels of customization. As a result, we may lack the resources to deploy~~ our ~~products~~operating onresults ~~a timely~~ and ~~cost-effective~~financial ~~basis~~condition. ~~Failure to accomplish any of these requirements could impair our ability to deliver our products in a timely fashion, fulfill existing customer commitments or attract and retain new customers.~~

Our ~~ability~~strategy envisions growing our business. We plan to ~~grow~~expand our product, sales, administrative and marketing organizations. Any growth in or expansion of our business ~~may~~is ~~depend~~likely onto ~~developing~~continue to place a ~~positive~~strain ~~brand~~on ~~reputation~~our management and ~~member~~administrative ~~loyalty~~resources, infrastructure and systems. As with other growing businesses, we expect that we will need to further refine and expand our business development capabilities, our systems and processes and our access to financing sources. We also will need to hire, train, supervise and manage new employees. These processes are time consuming and expensive, will increase management responsibilities and will divert management attention. We cannot assure you that we will be able to:

~~Establishing and~~● ~~maintaining~~expand aour ~~positive~~products ~~brand~~offerings ~~reputation~~effectively ~~and~~or ~~nurturing~~efficiently ~~customer~~or ~~loyalty~~in isa ~~critical~~timely tomanner; ~~attracting~~● ~~new~~allocate ~~customers.~~our Wehuman ~~expect to~~resources ~~expend~~optimally; ~~reasonable~~● ~~but~~meet ~~limited~~our ~~resources~~capital toneeds; ~~develop,~~● ~~maintain~~identify and ~~enhance~~hire ~~our~~qualified ~~brand~~employees inor ~~the~~retain ~~near~~valued ~~future.~~employees; Inor ~~addition,~~● ~~nurturing customer~~incorporate ~~loyalty~~effectively ~~will~~the ~~depend~~components onof ~~our~~any ~~ability~~business toor ~~provide~~product ~~high-quality~~line ~~products~~that ~~which~~ we may ~~not~~acquire doin ~~successfully. If we are unable to maintain and enhance~~ our ~~brand~~effort ~~reputation and customer loyalty, our ability~~ to ~~attract~~achieve ~~new marketplace participants will be harmed~~growth.

Our inability or failure to manage our growth and expansion effectively could harm our business isand ~~dependent~~materially onand ~~state~~adversely ~~laws~~affect our ~~pertaining~~operating toresults ~~the~~and ~~cannabis~~financial ~~industry~~condition.

16Supporting a growing customer base could strain our personnel and corporate infrastructure, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.

~~The~~Our ~~cannabis~~current ~~industry~~management ~~faces~~and ~~significant~~human ~~opposition,~~resources infrastructure is comprised of only one executive officer and ~~any~~one ~~negative~~administrative ~~trends~~person. Our success will ~~adversely~~depend, ~~affect~~in part, upon the ability of our Management to manage our proposed business effectively. To do so, we will need to hire, train and manage new employees as needed. To manage the expected domestic growth of our operations and personnel, we will need to continue to improve our operational, financial and management controls and our reporting systems and procedures. If we fail to successfully scale our operations and increase productivity, we will be unable to execute our business plan.

WeOur ~~are~~ability ~~substantially~~to ~~dependent~~use onour ~~the~~net ~~continued~~operating ~~market~~loss ~~acceptance,~~carryforwards and ~~the~~certain ~~proliferation~~other oftax ~~consumers,~~attributes of medical and recreational cannabis. We believe that with further legalization, cannabis will become more accepted, resulting in a growth in consumer demand. However, we cannot predict the future growth rate or future market potential, and any negative outlook on the cannabis industry may ~~adversely~~be ~~affect our business operations~~limited.

~~Large,~~As ~~well-funded~~of ~~business~~December ~~sectors~~31, ~~may~~2020, ~~have~~we ~~strong~~had ~~economic~~aggregate ~~reasons~~U.S. tofederal ~~oppose~~net ~~the~~operating ~~development~~loss, or NOL, carryforwards of ~~the~~approximately ~~cannabis~~$14.1 ~~industry~~million. Our ~~For~~U.S. ~~example, medical~~federal ~~cannabis~~NOLs ~~may~~generated ~~adversely~~in ~~impact~~taxable ~~the~~years ~~existing~~ending ~~market~~prior ~~for~~to 2018 could expire unused. Under the ~~current~~Tax ~~“cannabis~~Cuts ~~pill”~~and ~~sold~~Jobs Act, as modified by ~~mainstream~~the ~~pharmaceutical companies.~~CARES ~~Should~~Act, ~~cannabis~~U.S. ~~displace~~federal ~~other~~NOLs ~~drugs~~incurred orin ~~products,~~taxable ~~the~~years ~~medical~~beginning ~~cannabis~~after ~~industry~~December ~~could~~31, ~~face~~2017 amay ~~material~~be ~~threat~~carried ~~from~~forward indefinitely, but the ~~pharmaceutical~~ ~~industry,~~deductibility ~~which~~of issuch ~~well-funded~~U.S. ~~and~~federal ~~possesses~~NOLs ain ~~strong~~tax ~~and~~years ~~experienced~~beginning ~~lobby.~~after ~~Any~~December ~~inroads~~31, ~~the~~2017 ~~pharmaceutical~~is orgenerally limited ~~any~~to ~~other~~80% ~~potentially~~of ~~displaced,~~taxable ~~industry~~income. orIt ~~sector~~is ~~could~~uncertain ~~make~~if inand ~~halting~~to orwhat ~~impeding~~extent ~~the~~various ~~cannabis~~states ~~industry~~will ~~could~~conform ~~have~~to athe ~~detrimental impact~~Tax onCuts ~~our~~and ~~business~~Jobs Act or the CARES Act.

In addition, under Sections 382 and 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. It is possible that we have experienced one or more ownership changes in the past. In addition, we may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership some of which may be outside of our control. As a result, if we earn net taxable income, our ability to use our pre-ownership change NOL carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

Our officers, directors and principal shareholders will own a controlling interest in our voting stock and investors will not have any voice in our management.

As of ~~April~~March 631, ~~2020~~2021, our officers, directors and principal shareholders, in the aggregate, beneficially own or control the votes of approximately 6473.45% of our outstanding common stock. As a result, these stockholders, acting together, will have the ability to control substantially all matters submitted to our stockholders for approval, including:

	●	election of our board of directors;

	●	removal of any of our directors;

	●	amendment of our articles of incorporation or bylaws; and

	●	adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.

As a result of their ownership and positions, our directors, executive officers and principal shareholders collectively are able to influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, sales of significant amounts of shares held by our directors, executive officers or principal shareholders, or the prospect of these sales, could adversely affect the market price of our common stock. Management’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

We may raise capital through the sale of our securities in either private placements or a public offering, which offerings would dilute the ownership of existing shareholders.

If our operations require additional capital in the future, we may sell additional share of our common stock and/or securities convertible into or exchangeable or exercisable for shares of our common stock. Such offerings may be in private placements or a public offering. If we conduct such additional offerings, existing stockholders would experience dilution of their ownership of the Company.

You may experience dilution of your ownership interests because of the future issuance of additional shares of our common or preferred stock or other securities that are convertible into or exercisable for our common or preferred stock.

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are authorized to issue an aggregate of 100,000,000 shares of common stock and 20,000,000 shares of “blank check” preferred stock. We may issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock may create downward pressure on the trading price of the common stock. We will likely need to raise additional capital in the near future to meet our working capital needs, and there can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with these capital raising efforts, including at a price (or exercise or conversion prices) that could be below the price an investor paid for stock.

You may have difficulty trading and obtaining quotations for our common stock.

Our common stock is not actively traded, and the bid and asked prices for our common stock on the OTCQB Market may fluctuate widely. It is anticipated that there will remain a limited trading market for the common stock on the OTCQB. The lack of an active market may impair your ability to obtain accurate quotations of the price of our common stock, or sell your shares at the time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair market value of your shares. An inactive market may also impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies by using common stock as consideration.

There is minimal active liquid trading market for our common stock.

Our common stock is quoted on the OTCQB. However, there is relatively small active trading market in our common stock, and we cannot give an assurance that a more active trading market will develop. If a more active market for our common stock develops, there is a significant risk that our stock price may fluctuate dramatically in the future in response to any of the following factors, some of which are beyond our control, such as:

● Actual or anticipated variations in our operating results (including whether we have achieved our key business targets, and/or earnings estimates) and prospects; ● Announcements of technological innovations by us or our competitors; ● Announcements by us or our competitors of significant acquisitions, business achievements, strategic partnerships, joint ventures, or capital commitments; ● Additions or departures of key personnel; ● Introduction of new services by us or our competitors; ● Sales of our common stock or other securities in the open market (particularly if overall trading volume is not high); ● General market conditions and broader political and economic conditions; ● Actual or anticipated monetization’s of our patents; and ● Other events or factors, many of which are beyond our control.

1714

~~Our board~~● ofGeneral ~~directors~~market ~~has~~conditions ~~the~~and ~~authority~~broader topolitical ~~issue~~and upeconomic toconditions; 20● ~~million~~Actual ~~shares~~or ofanticipated ~~“blank~~monetization’s ~~check”~~of ~~preferred~~our ~~stock.~~patents; ~~The~~and ~~issuance of~~● ~~any~~Other ~~preferred~~events ~~stock~~or ~~may~~factors, ~~adversely~~many ~~affect~~of ~~the~~which ~~holders~~are ofbeyond ~~common~~our ~~stock~~control.

~~Our~~The ~~Amended and Restated Articles of Incorporation authorizes the issuance of up to 20,000,000 shares of preferred stock with designations,~~ rights ~~and preferences determined from time to time by its Board~~ of Directors. Accordingly, our Board of Directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the ~~voting power or other rights of the~~ holders of ~~the~~ common stock. Inmay ~~the~~be ~~event~~impaired ofby ~~issuance,~~ the ~~preferred stock~~potential ~~could~~issuance ~~be utilized, under certain circumstances, as a method~~ of ~~discouraging, delaying or preventing a change in control of our company. Although we have no present intention to issue any shares of our authorized~~ preferred stock~~, there can be no assurance that we will not do so in the future~~.

~~Future~~Our ~~issuance~~articles of incorporation give our ~~Common~~board ~~Stock~~of directors the right to create new series of preferred stock. As a result, the board of directors may, without stockholder approval, issue preferred stock with voting, dividend, conversion, liquidation or other rights which could ~~dilute~~adversely affect the ~~interests~~voting power and equity interest of ~~existing~~the ~~shareholders~~holders of common stock. Preferred stock, which could be issued with the right to more than one vote per share, could be utilized as a method of discouraging, delaying or preventing a change of control. The possible impact on takeover attempts could adversely affect the price of our common stock. Although we have no present intention to issue any shares of preferred stock or to create a series of preferred stock, we may issue such shares in the future.

We may issue additional shares of our Common Stock in the future. The issuance of a substantial amount of Common Stock could have the effect of substantially diluting the interests of our shareholders. In addition, the sale of a substantial amount of Common Stock in the public market, either in the initial issuance or in a subsequent resale by the target company in an acquisition which received such Common Stock as consideration or by investors who acquired such Common Stock in a private placement could have an adverse effect on the market price of our Common Stock.

We do not anticipate paying dividends in the foreseeable future.

We anticipate that we will retain all future earnings and other cash resources for the future operation and development of our business and we do not intend to declare or pay any cash dividends in the foreseeable future. Future payment of cash dividends will be at the discretion of our board of directors after taking into account many factors, including our operating results, financial condition and capital requirements. Corporations that pay dividends may be viewed as a better investment than corporations that do not.

If we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to accounting controls and procedures, or if we discover material weaknesses and deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.

If we fail to comply with the rules under the Sarbanes-Oxley Act of 2002 related to disclosure controls and procedures, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult. Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting. If material weaknesses or significant deficiencies are discovered or if we otherwise fail to achieve and maintain the adequacy of our internal control, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly.

Management has identified material weaknesses in the design and effectiveness of our internal controls, which, if not remediated could affect the accuracy and timeliness of our financial reporting and result in misstatements in our financial statements.

In connection with the preparation of our Report on Form 10-K, an evaluation was carried out by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of December 31, 2019. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

During evaluation of disclosure controls and procedures as of December 31, 2019 conducted as part of our annual audit and preparation of our annual financial statements, management conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective. Management determined that at December 31, 2019, we had material weaknesses that relate to: (i) the lack of an independent audit committee; (ii) failure to have the Board of Directors review and approve significant transactions; (iii) an insufficient number of personnel appropriately qualified to perform control design, execution and monitoring activities; (iv) an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with our financial reporting requirements; (v) inadequate segregation of duties consistent with control objectives; and (vi) lack of written documentation of our key internal control policies and procedures over financial reporting.

These material weaknesses could result in a misstatement to the accounts and disclosures that would result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected. If we do not remediate the material weaknesses or if other material weaknesses are identified in the future, we may be unable to report our financial results accurately or to report them on a timely basis, which could result in the loss of investor confidence and have a material adverse effect on our stock price as well as our ability to access capital and lending markets.

Our common stock is subject to the “Penny Stock” rules of the SEC and the trading market in our securities will be limited, which makes transactions in our common stock cumbersome and may reduce the value of an investment in our common stock.

Rule 15g-9 under the Exchange Act establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

1915

GENERAL RISK FACTORS

The novel coronavirus (COVID-19) pandemic, efforts to mitigate or disrupt the pandemic and the related weak, or weakening of, economic or other negative conditions, have impacted our business, and could result in a material adverse effect on our operations, liquidity, financial condition and financial results.

COVID-19 has also impacted our supply chain for products we sell, particularly those products that are sourced from China, which primarily relate to our lighting units. Our manufacturers had closed down their facilities earlier during the COVID-19 pandemic, but have resumed operations, although the lead time from product order increased from approximately 45-60 days to 90-120 days. In addition, as a result of a backlog of products being produced in China, the amount of time it takes to have the finished products shipped from China to our facilities has increased. This has directly impacted our ability to sell product directly, and it has increased the amount of inventory we purchase, although we continue to have product available through third-party sellers, such as Amazon, although sales through such third-party sellers result in smaller profit margins than direct sales.

Our business could suffer if any of our manufacturers fail to use acceptable labor practices.

Exchange rate fluctuation between the U.S. dollar and Non-U.S. currencies may negatively affect our earnings.

Weakened global economic conditions may adversely affect our industry, business and results of operations.

Our overall performance will depend, in part, on worldwide economic conditions. The United States and other key international economies have been impacted by falling demand for a variety of goods and services, restricted credit, going concern threats to major multinational companies and medium and small businesses, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets and bankruptcies. These conditions affect the rate of information technology spending and could adversely affect our customers’ ability or willingness to purchase our proposed enterprise cloud computing application service, delay prospective customers’ purchasing decisions, reduce the value or duration of their subscription contracts, or affect renewal rates, all of which could adversely affect our operating results.

If we experience significant fluctuations in our rate of anticipated growth and fail to balance our expenses with our revenue forecasts, our results could be harmed.

Due to our evolving business model, the unpredictability of new markets that we intend to enter and the unpredictability of future general economic and financial market conditions, we may not be able to accurately forecast our rate of growth. We plan our expense levels and investment on estimates of future revenue and future anticipated rate of growth. As a result, we expect that our revenues, operating results and cash flows may fluctuate significantly on a quarterly basis.

We do not anticipate paying dividends in the foreseeable future.

During evaluation of disclosure controls and procedures as of December 31, 2020 conducted as part of our annual audit and preparation of our annual financial statements, management conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective. Management determined that at December 31, 2020, we had material weaknesses that relate to: (i) the lack of an independent audit committee; (ii) failure to have the Board of Directors review and approve significant transactions; (iii) an insufficient number of personnel appropriately qualified to perform control design, execution and monitoring activities; (iv) an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with our financial reporting requirements; (v) inadequate segregation of duties consistent with control objectives; and (vi) lack of written documentation of our key internal control policies and procedures over financial reporting.

ITEM 2. DESCRIPTION OF PROPERTY.

~~Effective~~Our ~~January 1, 2020, our~~ principal executive offices and warehouse are located at 1689-A Arrow Rt., Upland, CA 91786. We occupy a 2,974 square foot facility pursuant to a four-year lease with an independent party ending on January 31, 2023, pursuant to which we pay $2,825 per month in rental charges.

Prior to January 1, 2020, our principal executive offices and warehouse was located at 853 Sandhill Avenue, Carson, California, 90746. On December 31, 2019, we abandoned our operating lease in Carson, California. The Carson lease is for a 17,640 square foot facility pursuant to a five-year lease ending on June 30, 2023, pursuant to which we pay $15,000 per month in rental charges. We remain obligated under our Carson, California lease, until such time the landlord releases us from our lease agreement. As of the date of this report, we have not been released from the lease agreement.

ITEM 3. LEGAL PROCEEDINGS.

Other than disclosed below, we know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

Employment Matters

On September 27, 2019, Dennis Forchic (the “Plaintiff”) filed a breach of contract case against the Company in the Los Angeles Superior Court of Los Angeles, California, under case number 19STCV34592, alleging that the Company wrongfully terminated the Plaintiff’s employment agreement on February 5, 2018. The Plaintiff claims damages of $646,000 for unpaid severance, unpaid reimbursed expenses, and unpaid health benefits. In addition, the Plaintiff claims damages for failing to compensate Plaintiff for 3,000,000 stock options which vested on termination. On March 3, 2020, the Plaintiff was awarded a default judgment against the Company in the amount of $646,000, plus post judgment interest, as well as the vesting of options to purchase 1,000,000 shares of the Company’s common stock. On September 25, 2020, the Company negotiated a settlement for a total cash consideration of $165,000.

On or about June 25, 2018, a former employee filed a lawsuit in the San Diego Super Court, State of California against us. The case is Matthew Geschke v. Solis Tek, Inc., Case No. 37-2018-00031350-CU-OE-NC. In this action, the plaintiff seeks to enjoin the proposed transaction in which Multiband would acquire all of the outstanding shares of the Company. The plaintiff alleges we breached his employment agreement by terminating him, as well as making claims of breaching the covenant of good faith and fair dealing, intentional infliction of emotional distress, and failure to pay wages upon termination. We deny the material allegations of this complaint and intend to vigorously defend this action.18

On or about June 25, 2018, Matthew Geschke (the “Plaintiff”) filed a breach of contract case against the Company in the San Diego Superior Court of San Diego, California. The Plaintiff claimed damages for breach of an employment contract when the Company terminated the Plaintiff’s employment agreement on February 22, 2018. On June 26, 2020, the Plaintiff was awarded a default judgment against the Company in the amount of $448,000. No payments were made during the year ended December 31, 2020.

Lease Abandonment

On February 15, 2019, MSCP, L.L.C (“MSCP”), filed suit in the Superior Court of Arizona, County of Maricopa, Case No. CV2019-001613 against the Company and YLK. The case arises from YLK’s alleged breach of a certain lease agreement dated May 19, 2018 (the “Lease”), for the lease of certain real property located at 4301 W. Buckeye Road, Phoenix, Arizona 85043 (the “Premises”), between MSCP and YLK, which the Company guaranteed. MSCP filed the lawsuit after YLK provided a notice of termination for, amongst other reasons, MSCP’s failure to disclose various material information regarding code, safety, structural and other issues in the Premises that rendered the Premises unsuitable for use, unless the Company undertook significant and extraneous costs that were not contemplated under the Lease to remedy said issues in and outside of the Premises. MSCP’s complaint alleged counts for breach of lease and waste and breach of guaranty. MSCP is seeking compensatory damages, rents and other charges due under the lease, and attorney’s fees and costs. The Company just recently filed its answer denying the allegations as well as having filed counterclaims for fraud in the inducement, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, rescission of contract, unjust enrichment and punitive damages. On December 12, 2019, MSCP was awarded a default ~~judgement~~judgment against the Company in the amount of $1,487,000, which is recorded as a charge to operating expenses in the consolidated statements of operations for the ~~twelve~~year ~~months~~ ended December 31, 2019. NoOn September ~~payments~~11, 2020, the Company negotiated a settlement for a total consideration of $193,000, which were ~~made~~comprised ~~during~~of $150,000 in cash, and the issuance ~~twelve~~of ~~months~~3,333,333 ~~ended~~shares ~~December~~of 31the Company’s common stock valued at $43,000, ~~2019~~and recorded a gain on settlement of legal obligations of $1,441,000.

~~Breach~~ITEM of4. ~~Contract~~ MINE SAFETY DISCLOSURE.

On June 12, 2019, DPA, Inc., or DPA, filed suit in the Superior Court of Arizona, County of Maricopa, Case No. CV2019-008265 against the Company. The plaintiff alleges the Company breached an agreement to pay DPA for architectural design services related to a facility in Arizona and has requested a judgment for $251,923 plus interest, which is included in accounts payable and accrued expenses on the accompanying balance sheet. On September 18, 2019, DPA was awarded judgment against the Company for $251,923 plus interest at 18% per annum from June 6, 2019 until paid.

On August 7, 2019, Rose Law Group PC (“RLG”) filed a breach of contract case against the Company in the Superior Court of the State of Arizona, County of Maricopa, Case No. CV2019-008484 against the Company. RLG alleges breach of a contract to pay RLG for legal representation, and requested a judgment for $143,836, which is included in accounts payable and accrued expenses on the accompanying balance sheet. On October 17, 2019, RLG was awarded judgment against the Company for $150,256 plus interest at 12% per annum until paid.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

2019

PART II

ITEM 5. MARKET FOR COMMON EQUITY, ~~AND~~ RELATED STOCKHOLDER MATTERS AND ~~SMALL BUSINESS~~ ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is available for quotation on the OTCQB under the symbol “GNAL”. The OTCQB is a quotation service that displays real-time quotes, last-sale prices, and volume information in over-the-counter (“OTC”) equity securities. An OTCQB equity security generally is any equity that is not listed or traded on a national securities exchange. Our stock is thinly traded, and a robust, active trading market may never develop. The market for the Company’s common stock has been limited, volatile, and sporadic.

Price Range of Common Stock

~~Our~~The ~~common~~following ~~stock~~table isshows, ~~quoted~~for on the ~~OTCQB~~periods ~~Market~~indicated, ~~under~~ the ~~trading~~high ~~symbol~~and ~~“GNAL”.~~low ~~Prior~~closing toprices ~~September~~per ~~26,~~share ~~2018,~~of our common stock ~~was~~as ~~quoted~~reported on by the OTCQB ~~Market~~quotation ~~under the trading symbol “SLTK”~~service. Trading in stocks quoted on the OTC Markets is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects.

~~The~~Fiscal ~~following~~Year ~~quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.~~2020

	High		Low
First Quarter	$	0.05	$	0.01
Second Quarter	$	0.02	$	0.01
Third Quarter	$	0.02	$	0.01
Fourth Quarter	$	0.02	$	0.01

Fiscal Year 2019

	High		Low
First Quarter	$	0.72	$	0.26
Second Quarter	$	0.47	$	0.10
Third Quarter	$	0.12	$	0.02
Fourth Quarter	$	0.04	$	0.01

Fiscal Year 2018

	High		Low
First Quarter	$	2.64	$	1.08
Second Quarter	$	1.55	$	0.57
Third Quarter	$	1.05	$	0.40
Fourth Quarter	$	0.95	$	0.29

Holders of Common Stock

As of ~~April~~March 631, ~~2020~~2021, there were approximately 5154 shareholders of record ~~holding a total~~ of ~~49,274,297 shares of Common Stock. Because many of~~ our ~~shares of~~ common stock. ~~are~~The ~~held~~actual bynumber ~~brokers and other institutions on behalf~~ of stockholders, ~~we are unable to estimate~~is ~~the~~greater ~~total~~than this number of ~~stockholders represented by these~~ record holders. ~~The~~and ~~holders~~includes ofstockholders ~~the~~who ~~Common Stock~~ are ~~entitled~~beneficial toowners ~~one~~but ~~vote for~~whose ~~each~~shares ~~share~~are held ofin ~~record~~street name onby ~~all~~brokers ~~matters~~and ~~submitted~~other tonominees. aThis ~~vote~~number of ~~shareholders.~~holders ~~Holders~~ of ~~the~~record ~~Common~~also ~~Stock~~does ~~have~~not noinclude ~~preemptive rights~~stockholders ~~and~~whose noshares ~~right~~may tobe ~~convert~~held in ~~their~~trust ~~Common~~or ~~Stock~~by ~~into any~~ other ~~securities~~entities. ~~There are no redemption or sinking fund provisions applicable to the Common Stock.~~

Dividend Policy

We have never paid any cash dividends on our capital stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of the Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.

Recent Sales of Unregistered Securities

None.

Repurchases of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our registered securities during the period covered by this Annual Report.

~~ITEM 6 – SELECTED FINANCIAL DATA~~20

ITEM 6. SELECTED FINANCIAL DATA.

Not required under Regulation S-K for “smaller reporting companies.”

21ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

The following discussion and analysis of financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Note Regarding Forward-Looking Statements.” Our actual results could differ materially from those anticipated in the forward-looking statements as a result of certain factors discussed in “Risk Factors” and elsewhere in this report.

The following discussion and analysis of the Company’s financial condition and results of operations is based on the preparation of our financial statements in accordance with U.S. generally accepted accounting principles. You should read this discussion and analysis together with such financial statements and the related notes thereto.

Business Overview

~~Previously,~~Results we attempted to expand our operations in cannabis cultivation and processing management services. In 2018, we acquired YLK Partners AZ, LLC, or YLK Partners, an Arizona-based company to provide turn-key services for the management, administration, and operation of aOperations ~~medical marijuana cultivation and processing facility. YLK had a cultivation management services agreement with an Arizona licensee. In 2019, we purchased real property in Phoenix, Arizona~~ for ~~$3,500,000, which property held~~ the ~~approval and~~year ~~authorization~~ended ~~for~~December ~~a Conditional Use Permit~~31, ~~which~~2020 ~~allows~~compared ~~the property~~ to ~~be used for~~ the ~~operation~~year ofended aDecember ~~cultivation and infusion facility~~31, allowing for the cultivation, harvesting, preparation, packaging and storing of medical cannabis, as well as extraction, refinement, infusion, production, preparation, packaging, and storage of manufactured and derivative oils, waxes, concentrates, edible and non-edible products that contain cannabis. Later in 2019, we conveyed the property to our lender in full settlement of the outstanding amounts we borrowed to acquire the property. For various reasons, we decided to abandon the expanded business lines and to re-focus on our core business of lights and nutrients.

Results of Operations for the year ended December 31, 2019 compared to the year ended December 31, 2018

Revenue and Cost of Goods Sold

Revenue for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 was $1,~~965~~282,~~163~~000 and $31,~~348~~965,~~288~~000, respectively, a decrease of $1683,~~383~~000,~~125,~~ or 4135%. ~~The~~ The decrease was due to two significant factors during the year ended December 31, ~~2019~~2020, as compared to the prior year period. ~~Those~~ Those factors were: 1) a failed expansion of operations into cannabis cultivation and processing management services, which diverted resources and management attention; and 2) stagnation of the cannabis industry in terms of new markets and granting of new cultivation licenses, which resulted in few new companies obtaining licenses to legally grow cannabis, which ultimately resulted in a lack of orders for our lights.

Specific reasons to beset our revenue included a change of message and direction. We had previously been a retail driven company servicing our 500+ hydro-stores targeting the home and hobbyist growers. While we continue to service those valued retail customers, we have repositioned a segment of our sales force to nationwide commercial cultivation account managers and have re-programed the sales team, changed pricing and changed marketing strategies. Our recent shift to convert to a commercial mindset, also altered our inventory strategy to longer fulfillment and lead times. For the first time, our product engineers and sales team are also offering specific consulting services into every aspect of a new cultivation, including environmental requirements as well as full build-out and growing ancillary services, up to and including production requirements and specifications.

Cost of sales for the years ended December 31, ~~2019~~2020 and ~~2018,~~2019 was $1687,~~066,211~~000 and $21,~~826~~066,~~558~~000, respectively. Gross profit for the years ended December 31, ~~2019~~2020 and ~~2018,~~2019 was $~~898~~595,~~952~~000 and $~~521~~899,~~730~~000, respectively. As a percentage of revenue, gross profit ~~for the year ended December 31, 2019~~ was 46%, ~~compared to 16%~~ for the ~~year~~years ended December 31, ~~2018~~2020 and 2019. The ~~increase~~decrease in ~~gross profit and~~ our gross ~~margin~~ ~~percentage~~profit was ~~primarily~~ due to our decrease in ~~reserves for inventory obsolescence and change in product mix sold~~revenue.

2221

Selling, General and Administrative (SG&A) Expenses

SG&A expenses for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 were $31,~~580~~105,~~199~~000 and $113,~~975~~580,~~974~~000, respectively, a decrease of $82,~~395~~475,~~776~~000, or 7069%. ~~For~~We ~~the~~implemented ~~year~~a ~~ended~~number ~~December~~of ~~31,~~cost ~~2019,~~reduction ~~stock-based~~initiatives ~~compensation~~leading ~~expense~~to decreased wages and benefits of $6998,~~155~~000,~~174~~ todecreased legal and professional fees of $~~255~~374,~~850~~000, ~~compared~~decreased torent expense of $6296,~~411~~000,~~024 for~~ ~~the~~decreased ~~prior~~delivery ~~year~~costs ~~period.~~of ~~Excluding~~$155,000, decreased bad debt of $152,000, and decreased stock-based compensation expense, ~~our~~of ~~SG&A decreased~~ $295,~~240~~000,~~602~~ ~~due~~as ~~primarily~~compared to ~~reductions in~~ the ~~number~~prior year period. The remaining decrease of ~~employees~~$405,000 ~~benefits,~~was ~~and~~across ~~professional~~our ~~fees~~numerous remaining expense accounts.

Research and Development (R&D) Expenses

R&D expenses for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 were $~~154~~100,~~964~~000 and $~~167~~155,~~765~~000, respectively, a decrease of $1255,~~801~~000, or 835%. The decrease in R&D expenses was primarily due to ~~reductions~~decreased R&D investments in the ~~number~~current ofyear ~~employees~~period.

Legal ~~Settlement on Abandonment of Lease~~Judgments

On ~~February~~or ~~15,~~about ~~2019,~~June ~~MSCP~~25, ~~L.L.C~~2018, orMatthew ~~MSCP,~~Geschke ~~filed suit in~~ (the ~~Superior~~“Plaintiff”) ~~Court~~filed ofa ~~Arizona,~~breach ~~County~~ of ~~Maricopa,~~contract ~~Case~~case ~~No. CV2019-001613~~ against usthe ~~and~~Company ~~YLK~~in ~~Partners.~~the San ~~The~~Diego ~~case~~Superior ~~arises~~Court ~~from YLK Partner’s alleged breach~~ of aSan ~~certain~~Diego, ~~lease~~California. ~~agreement~~The ~~dated~~Plaintiff ~~May~~claimed ~~19, 2018,~~damages ~~or the Lease,~~ for ~~the~~breach ~~lease~~ of ~~certain~~an ~~real~~employment ~~property~~contract ~~located~~when ~~at 4301 W. Buckeye Road, Phoenix, Arizona 85043, or~~ the ~~Premises,~~ ~~between~~Company ~~MSCP~~terminated ~~and YLK Partners, which we guaranteed. MSCP filed~~ the ~~lawsuit after YLK Partners provided a notice of termination. MSCP~~Plaintiff’s ~~complaint~~employment ~~alleged~~agreement ~~counts~~on ~~for~~February ~~breach~~22, ~~of lease and waste and breach of guaranty~~2018. On ~~December~~June 1226, ~~2019~~2020, ~~MSCP~~the Plaintiff was awarded a default ~~judgement~~judgment against the Company in the amount of $1448,~~487,~~000.

~~Loss~~On onFebruary ~~Abandonment~~15, 2019, MSCP, L.L.C, or MSCP, filed suit in the Superior Court of ~~Leasehold~~Arizona, ~~Improvements~~County of Maricopa, Case No. CV2019-001613 against us and YLK Partners. The case arises from YLK Partner’s alleged breach of a certain lease agreement dated May 19, 2018, or the Lease, for the lease of certain real property located at 4301 W. Buckeye Road, Phoenix, Arizona 85043, or the Premises, between MSCP and YLK Partners, which we guaranteed. MSCP filed the lawsuit after YLK Partners provided a notice of termination. MSCP’s complaint alleged counts for breach of lease and waste and breach of guaranty. On December 12, 2019, MSCP was awarded a default judgment against the Company in the amount of $1,487,000.

In February 2019, we terminated our Arizona facility lease, thereby abandoning $856,760 of leasehold improvements. We recorded the abandonment of leasehold improvements of $217,062 and $639,198 during the twelve months ended December 31, 2019 and 2018, respectively (See Note 3 to the accompanying consolidated financial statements).

Impairment of Right of Use Asset

Impairment of right of use asset for the ~~year~~years ended December 31, 2020 and 2019 was $427,000 and $100,000, respectively. InDuring ~~December~~the years ended 2020 and 2019, we determined that our right of use asset was impaired and recorded an impairment charge accordingly. (See Note 65 to the accompanying consolidated financial statements). ~~No similar activity occurred during the prior year period.~~

Loss on Abandonment of Leasehold Improvements

In February 2019, we terminated our Arizona facility lease, thereby abandoning $217,000 of leasehold improvements. We recorded the abandonment of leasehold improvements of $217,000 during the year ended December 31, 2019. No similar activity occurred during the current year period.

Impairment of Intangible Assets

Impairment of intangible assets for the year ended December 31, 2019 was $1,~~138~~139,~~892~~000. In June 2019, we determined that our intangible assets were impaired and recorded an impairment charge accordingly. (See Note 43 to the accompanying consolidated financial statements). No similar activity occurred during the ~~prior~~current year period.

Excess Cost of Acquisition to Related Party over Historical Basis

Excess cost of acquisition to related party over historical basis for the year ended December 31, 2018 was $4,450,000, representing a non-cash charge related to our acquisition on YLK Partners NV from related parties on May 10, 2018 (See Note 4 to the accompanying consolidated financial statements). No similar activity occurred during the current year period.

Other Income and Expenses

Other ~~expense~~income for the year ended December 31, ~~2019~~2020 was $1914,~~951~~000,~~733,~~ as compared to other ~~income~~expense of $~~455~~1,~~369~~952,000 for the year ended December 31, ~~2018~~2019. The change in balance was due to the ~~change~~aggregate ingain ~~the~~on ~~fair~~settlements ~~value~~ of ~~derivative~~legal ~~liability~~judgments ofand a trade account payable of $82,~~946~~417,~~170~~000, offset by the ~~change~~loss inon ~~financing and~~conversion ~~debt~~of ~~extinguishment~~accrued ~~costs~~interest of $685,~~161537~~000, ~~and~~both ~~the change in interest expense~~ of ~~$1,211,342,~~which asdid ~~compared~~not toexist during the ~~prior~~current year period. ~~During~~ ~~the year ended December 31~~Additionally, ~~2018,~~ we ~~recorded~~realized athe ~~gain~~change onin ~~the~~financing ~~extinguishment~~and ofdebt ~~derivatives~~extinguishment costs of $21,~~389~~090,~~427~~000, ~~and~~the achange ~~loss~~in on the ~~extinguishment~~fair value of ~~debt~~derivative liability of $1195,~~555~~000,~~556,~~ ~~both~~and ofthe ~~which~~change ~~did~~in ~~not~~interest ~~exist~~expense ~~during~~of $361,000, as compared to the ~~current~~prior year period.

2322

Net Loss

Net loss for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 was $7571,~~893,656~~000 and $177,~~074~~894,~~005~~000, respectively. The decrease in net loss was ~~due~~ due to the increase in gross profit, the decrease in operating expenses, and the change in other income and expenses as discussed above.

Liquidity and Capital Resources

Cash and Liquidity

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

Cash Flows Used in Operating Activities

During the year ended December 31, ~~2019~~2020, we used $1499,~~009,931~~000 in operating activities, comprised primarily of our net loss of $7571,~~893~~000,~~656,~~ a gain ~~$1,544,531~~on insettlement of legal ~~settlements~~judgments and trade accounts payable, aof $12,~~138~~417,~~892~~000, an impairment of ~~intangible~~right of use asset, aof $~~962~~427,000 ~~in debt extinguishment cost~~, a ~~$870,278~~change ~~increase~~ in ~~accounts~~the ~~payable,~~fair avalue ~~$785,516~~of ~~decrease~~derivative inliabilities ~~provision~~of ~~for inventory reserves,~~ $~~336~~398,~~267 of amortization on debt discount~~000, ~~$255,850~~a ofchange ~~fair~~in ~~value~~inventory of ~~common stock for services~~$352,000, a $~~232~~328,~~178~~000 ~~decrease~~legal ~~in prepaid expenses and other current~~settlement ~~assets~~payable, a $~~226~~209,~~400~~000 increase in interest due to related parties, a $~~224~~185,~~068~~000 ~~loss on abandonment~~ of ~~leasehold~~stock-based ~~improvements~~related ~~and other fixed assets~~compensation, a $~~203~~134,000 ~~change~~ increase in ~~the~~accounts ~~fair~~payable ~~value of derivative liability, $193,869 in financing costs related to change in terms of warrants~~ and ~~convertible~~accrued ~~notes~~expenses, ~~a $123,956 decrease in accounts receivable,~~ and a $2485,~~233~~000 ofloss ~~fair~~on ~~value~~conversion of ~~vested~~accrued ~~stock options~~interest.

During the year ended December 31, ~~2018~~2019, we used $31,~~680~~010,~~331~~000 in operating activities, comprised primarily of our net loss of $177,~~074~~894,~~005~~000, a $81,~~743~~545,~~170~~000 ~~negative~~in ~~change~~legal insettlements ~~the~~payable, ~~fair~~a ~~value~~$1,139,000 impairment of ~~derivative~~intangible ~~liability~~asset, ~~and~~ a $2962,~~389,427~~000 ~~loss~~in ondebt extinguishment ~~of derivative liability~~cost, ~~offset~~a by $7870,~~317,406~~000 ofincrease ~~fair~~in ~~value~~accounts ofpayable, ~~warrants~~a ~~issued~~$786,000 decrease in provision for ~~financing~~inventory ~~costs~~reserves, $4336,~~660,467~~000 of ~~fair~~amortization ~~value~~on debt ~~of vested stock options~~discount, $4256,~~450,~~000 of fair value of ~~warrants~~common ~~issued~~stock tofor ~~related~~services, ~~party~~a in$232,000 ~~excess~~decrease ofin ~~basis~~prepaid ofexpenses ~~acquired~~and ~~licensing~~other ~~rights~~current assets, a $1226,~~676,557~~000 ofincrease ~~fair~~in ~~value~~interest ~~of common~~due ~~stock~~to ~~for~~related ~~services~~parties, a $1224,~~555,556~~000 loss on ~~extinguishment~~abandonment of ~~debt,~~leasehold ~~$1,291,050~~improvements ofand ~~amortization~~other fixed ~~on debt discount~~assets, a $~~798~~203,~~439 provision~~000 ~~for~~change ~~inventory~~in ~~reserves~~the fair value of derivative liability, $~~639~~194,~~198~~000 ~~loss~~in onfinancing ~~abandonment~~costs related to change in terms of ~~leasehold~~warrants ~~improvements~~and convertible notes, a $~~623~~124,~~516~~000 decrease in accounts receivable , and a $~~597~~24,~~535~~000 ~~loss~~of onfair avalue ~~vendor~~of ~~advance~~vested tostock ~~a former related party~~options.

Cash Flows Used in Investing Activities

During the year ended December 31, 2019, we used $222,~~451~~000 of cash to purchase property and equipment. ~~During~~No ~~the~~similar ~~year~~activity ~~ended~~occurred ~~December~~during ~~31, 2018, we used $377,841 of cash in investment activities, representing~~ the ~~collection~~current ofyear ~~an acquired receivable of $250,000 and cash received on the sale of property and equipment of $28,500, offset by $656,341 used to purchase property and equipment~~period.

Cash Flows Provided by Financing Activities

During the ~~year~~years ended December 31, 2020 and 2019, we ~~generated~~had cash provided from financing activities of $~~449~~767,~~327,~~000 ~~compared~~and ~~to cash provided by financing activities of~~ $3449,~~976~~000,~~922~~ ~~for the year ended December 31, 2018~~respectively. During the year ended December 31, ~~2019~~2020, we received proceeds of $~~275~~465,000, net of fees of $3735,~~500~~000, from a secured convertible note payable, ~~$150,000 from a loan payable~~ and $~~150~~355,000 from aloans ~~note~~ payable ~~to related parties~~, offset by $8853,~~173~~000 of payments on our ~~notes~~loan payable ~~to related parties~~.

During the year ended December 31, ~~2018~~2019, we generated cash from financing activities of $3449,~~976~~000,~~922,~~ compared to cash provided by financing activities of $23,~~755~~977,~~936~~000 for the year ended December 31, ~~2017~~2018. During the year ended December 31, ~~2018~~2019, we ~~raised~~received proceeds of $1275,~~568,~~000, ~~from the~~net ~~sale~~ of ~~common~~fees ~~stock, received proceeds~~ of $138,~~500,~~000, from a secured convertible note payable, ~~received~~ $1150,~~446,996~~000 from ~~the~~a ~~exercise~~loan ~~of warrants,~~payable ~~offset~~and by $~~505~~150,000 offrom ~~payments~~a ~~on our notes~~ note payable to related parties, ~~and~~offset ~~made~~by $88,000 of payments on ~~loans~~our notes payable ~~and~~to ~~capital lease~~related ~~obligations totaling $33,074~~parties.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the year ended December 31, 2019, we incurred a net loss of $8,381,171 and used cash in operations of $1,009,931 and had a shareholders’ deficit of $8,624,232 as of December 31, 2019. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date of the financial statements being issued. Our ability to continue as a going concern is dependent upon our ability to raise additional funds and implement our business plan. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.23

24The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the year ended December 31, 2020, we incurred a net loss of $571,000 and used cash in operations of $499,000 and had a shareholders’ deficit of $8,736,000 as of December 31, 2020. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date of the financial statements being issued. Our ability to continue as a going concern is dependent upon our ability to raise additional funds and implement our business plan. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

At December 31, ~~2019~~2020, we had cash on hand in the amount of $~~103~~372,~~637. On February 21, 2020, we received proceeds of $150,~~000 ~~on the issuance of a secured convertible note payable (See Note 15 to the accompanying consolidated financial statements)~~. Management estimates that the current funds on hand will be sufficient to continue operations through ~~June~~September 30, ~~2020~~2021. The continuation of our company as a going concern is dependent upon our ability to obtain necessary debt or equity financing to continue operations until we begin generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stock holders, in case or equity financing.

Historically, we have financed our operations primarily through private sales of common stock, a line of credit, loans from a third party financial institutions, related parties, and operations. We anticipate that our primary capital source will be from the issuance of notes payable or the proceeds from the sale of our common stock. If our sales goals do not materialize as planned, we believe that we can reduce our operating costs and achieve positive cash flow from operations. However, we may not generate sufficient revenues from product sales in the future to achieve profitable operations. If we are not able to achieve profitable operations at some point in the future, we may have insufficient working capital to maintain our operations as we presently intend to conduct them or to fund our expansion, marketing, and product development plans. There can be no assurance that we will be able to obtain such financing on acceptable terms, or at all.

Notes Payable to Related Parties

On May 9, 2016, we entered into note payable agreements with Alan Lien and Alvin Hao, former officers and directors, to borrow $300,000 under each individual note. Pursuant to the terms of each of these agreements, we borrowed $300,000 from each of Alan Lien and Alvin Hao. The notes accrue interest at a rate of 8% per annum, are unsecured and were due on or before May 31, 2018. The notes are currently past due. A total of $600,000 was due on the combined notes at December 31, ~~2019~~2020 and ~~December 31, 2018~~2019.

On May 8, 2019, we entered into a note agreement with the sister of Alvin Hao, a former officer and director, to borrow $150,000. The loan accrues interest at 8% per annum, are unsecured and due on November 8, 2019. The note is currently past due. A total of $150,000 was due on the note at December 31, 2020 and 2019.

We entered into note agreements with the parents of Alan Lien, a former officer and director. The loans accrue interest at 10% per annum, are unsecured and were due on or before December 31, 2016. ~~A total of $40,000 was due on the loans at each of December 31, 2019 and December 31, 2018.~~ The ~~loans~~notes are currently past due.

A total of $40,000 was due on the loans at each of December 31, 2020 and 2019.

Secured Convertible Notes Payable

On May 10, 2018, we issued a secured debenture (the “2018 Note”) to YA II PN in the principal amount of $1,500,000 with interest at 8% per annum (18% on default) and due on February 9, 2019. The 2018 Note was amended effective February 9, 2019 for which the maturity date was extended to August 9, 2019 and could be converted into our common stock at a conversion price of $0.50 a share. On October 29, 2019, the 2018 Note was further amended to include an extended maturity date of June 30, 2020, and provide a conversion right, in which the principal amount of the 2018 Note, together with any accrued but unpaid interest, could be converted into our common stock at a conversion price at 75% of the lowest volume weighted average price (VWAP) of our common stock during the 10 trading days immediately preceding the conversion date.

On October 29, 2019, we issued a convertible secured debenture (the “2019 Note”) to YA II PN in the principal amount of $275,000 with interest at 10% per annum (15% on default) and due on April 29, 2020. We received net proceeds of $237,500, net of closing costs of $37,500. The 2019 Note provides a conversion right, in which the principal amount of the Note, together with any accrued but unpaid interest, could be converted into our common stock at a conversion price at 75% of the lowest volume weighted average price (VWAP) of our common stock during the 10 trading days immediately preceding the conversion date.

On February 13, 2020, we issued a secured convertible debenture (the “2020 Note”) in the amount of $150,000. The Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of August 10, 2021. The 2020 Note is secured by all our and our subsidiaries assets. The 2020 Note provides a conversion right, in which any portion of the principal amount of the 2020 Note, together with any accrued but unpaid interest, may be converted into our common stock at a conversion price equal to 75% of the lowest VWAP of our common stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment.24

25On February 13, 2020, we issued a secured convertible debenture (the “2020 Note”) in the amount of $150,000. The 2020 Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of August 10, 2021. The 2020 Note is secured by all our and our subsidiaries assets. The 2020 Note provides a conversion right, in which any portion of the principal amount of the 2020 Note, together with any accrued but unpaid interest, may be converted into our common stock at a conversion price equal to 75% of the lowest VWAP of our common stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment.

On September 23, 2020, we issued a secured convertible debenture (the “September 2020 Note”) in the amount of $150,000. The September 2020 Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of August 10, 2021. The September 2020 Note is secured by all our and our subsidiaries assets. The 2020 September Note provides a conversion right, in which any portion of the principal amount of the 2020 September Note, together with any accrued but unpaid interest, may be converted into our common stock at a conversion price equal to 75% of the lowest VWAP of our common stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment.

Term Loan

On May 21, 2019, we entered into a loan agreement with Celtic Bank in the principal amount of $150,000 with interest at 40.44% per annum and due on May 21, 2020. The loan was guaranteed by Alvin Hao, one of our former officers. We have made principal payment of $4353,~~273~~000, leaving a total of $~~106~~11,~~277~~000 due on the term loan as of December 31, ~~2019~~2020. In February 2021, the loan was paid in full.

On May 7, 2020, the Company was granted a loan (the “PPP loan”) from Wells Fargo Bank in the aggregate amount of $205,000, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP loan agreement is dated May 8, 2020, matures on May 7, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, and is unsecured and guaranteed by the U.S. Small Business Administration (“SBA”). The loan term may be extended to May 7, 2025, if mutually agreed to by the Company and lender. A total of $205,000 was due on the loan as of December 31, 2020.

On June 7, 2020, the Company obtained an Economic Injury Disaster Loan from the SBA in the amount of $150,000. Interest on the loan is at the rate of 3.75% per year, and all loan payments are deferred for twelve months, at which time the balance is payable in monthly installments of $731 over a 30-year term. The loan is secured by all the Company’s assets. A total of $150,000 was due on the loan as of December 31, 2020.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates its estimates, including those related to impairment of long-lived assets, including finite lived intangible assets, accrued liabilities, fair value of warrant derivatives and certain expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions.

Our significant accounting policies are more fully described in Note 1 to our financial statements. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, and the related disclosures of contingent assets and liabilities. Actual results could differ from those estimates under different assumptions or conditions. We believe that the following critical accounting policies are subject to estimates and judgments used in the preparation of our consolidated financial statements:

~~Allowance for~~Revenue ~~Doubtful Accounts~~Recognition

The Company recognizes revenue in accordance ~~allowance~~with ~~for~~Financial ~~doubtful~~Accounting ~~accounts~~Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is ~~based~~recognized onwhen control of promised goods or services is transferred to the Company’s ~~assessment~~customers, ofin ~~the~~an ~~collectability~~amount ofthat ~~customer~~reflects ~~accounts.~~the ~~The~~consideration the Company expects to be entitled ~~regularly~~to ~~reviews~~in ~~the~~exchange ~~allowance~~for bythose ~~considering~~goods ~~factors~~or ~~such~~services. asThe ~~historical~~Company ~~experience,~~reviews ~~the~~its ~~age~~sales oftransactions ~~the~~to ~~accounts~~identify ~~receivable~~contractual ~~balances~~rights, ~~credit~~ ~~quality~~performance obligations, ~~economic~~and ~~conditions~~transaction ~~that~~prices, ~~may~~including ~~affect~~the aallocation ~~customer’s~~of ~~ability~~prices to ~~pay~~separate ~~and~~performance ~~expected~~obligations, ~~default~~if ~~frequency rates~~applicable. ~~Trade~~Revenue ~~receivables~~and cost of sales are ~~written~~recognized ~~off~~once atproducts are delivered to the ~~point~~customer’s ~~when~~control ~~they~~and ~~are~~performance ~~considered~~obligations ~~uncollectible~~are satisfied.

Accounts Receivable

Accounts receivable are recorded net of an allowance for expected losses. The allowance for doubtful accounts is based on the Company’s assessment of the collectability of customer accounts. The Company regularly reviews the allowance by considering factors such as historical experience, the age of the accounts receivable balances, credit quality, economic conditions that may affect a customer’s ability to pay and expected default frequency rates. Trade receivables are written off at the point when they are considered uncollectible.

Inventories

~~The~~Inventories are stated at the lower of cost or net realizable value. The Company provides inventory reserves based on excess and obsolete inventories determined primarily by historical sales and future demand forecasts. The write down amount is measured as the difference between the cost of the inventory and market based upon assumptions about future demand and charged to the provision for inventory, which is a component of cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

New Accounting Standards

See Note 21 of the financial statements for a discussion of recent accounting pronouncements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required under Regulation S-K for “smaller reporting companies.”

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.

	Page
PART I - FINANCIAL INFORMATION
Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets as of December 31, 2019 and 2018	F-2
Consolidated Balance Sheets as of December 31, 2020 and 2019	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2019 and 2018	F-3
Consolidated Statements of Operations for the Years Ended December 31, 2020 and 2019	F-4
Consolidated Statements of Shareholders’ Deficit for the Years Ended December 31, 2019 and 2018	F-4
Consolidated Statements of Shareholders’ Deficit for the Years Ended December 31, 2020 and 2019	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2019 and 2018	F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2020 and 2019	F-6
Notes to Consolidated Financial Statements	F-67 to F-2426

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholder’s and Board of Directors

Generation Alpha, Inc.

~~Carson~~Upland, California

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Generation Alpha, Inc. (the “Company”) as of December 31, ~~2019~~ 2020 and ~~2018~~2019, the related consolidated statements of operations, shareholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, ~~2019~~2020 and ~~2018~~2019, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company experienced a net loss and utilized cash from operations during the year ended December 31, ~~2019~~2020, and has a stockholders’ deficit at December 31, ~~2019~~2020. These matters raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 to the financial statements. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, and audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

F-1

Issuance of convertible notes with adjustable conversion features

As discussed in Note 8 to the consolidated financial statements, in February 2020 and September 2020, the Company issued $500,000 in convertible notes that are convertible into shares of the common stock of the Company at adjustable conversion prices. The accounting for the transactions was complex, as it required management to assess whether the conversion feature required bifurcation and separate valuation. As a result, the Company determined that the conversion feature of the convertible notes were not considered indexed to the Company’s own stock, and should be bifurcated, with the fair value of the bifurcated conversion features characterized as derivative liabilities. At December 31, 2020, the derivative liabilities totaled $2,161,000. The Company utilized a Monte Carlo Simulation Model prepared by a third-party valuation firm to determine the fair value of the embedded derivatives, which uses certain assumptions related to expected life of the conversion features, expected volatility, risk-free interest rates, and future dividends.

We identified the accounting for the issuance of convertible notes and accounting for the assessment of the fair values of the derivative liabilities as a critical audit matter, because of the significance of the account balances, and due to the complexity in assessing the features of the convertible notes for separate accounting, and the significant judgments used by the third party valuation firm in determining the fair value of the bifurcated conversion feature. Auditing the accounting for the issuance of the convertible notes and the valuation of the derivative liabilities involved increased extent of effort and a high degree of auditor judgment.

The primary audit procedures we performed to address this critical audit matter included the following, among others:

	●	We inspected the convertible note agreements and relevant documentation.
	●	We evaluated the Company’s conclusions regarding the application of relevant accounting guidance to the convertible notes, including conclusions reached with respect to identification and bifurcation of embedded conversion features.
	●	We assessed the professional competence, experience, and objectivity of the Company’s third-party valuation specialist.
	●	We tested the accuracy and completeness of data used by the third-party valuation specialist, including expected life, expected volatility, the risk free interest rate, and the dividend rate, and tested the mathematical accuracy of calculations.
	●	We developed independent estimates for the fair value of certain of the derivative liabilities based on the assumptions and data used by the third-party valuation specialist.

We have served as the Company’s auditor since 2015.

~~Weinberg~~/s/ Weinberg & Company, P.A.

Los Angeles, California

April 13, ~~2020~~2021

F-12

GENERATION ALPHA INC.

CONSOLIDATED BALANCE SHEETS

	December 31, 2019			December 31, 2018
	December 31, 2020			December 31, 2019
ASSETS
Current Assets
Cash	$	~~103~~372,~~637~~000		$	~~886~~104,~~693~~000
Accounts receivable, net of allowance for doubtful accounts and returns of $111,920 and $144,668, respectively		-			91,208
Accounts receivable, net of allowance for doubtful accounts and returns of $12,000 and $112,000, respectively		54,000			-
Inventories, net		389,922			570,187
Inventories, net of reserves of $30,000 and $125,000, respectively		133,000			390,000
Prepaid expenses and other current assets		2354,~~806~~000			~~255~~24,~~985~~000
Total Current Assets		~~517~~613,~~365~~000			1518,~~804,073~~000
Property and equipment, net		2215,~~039~~000			5622,~~761~~000
Right of use asset, net		~~427~~63,~~407~~000			-427,000
Intangible assets acquired from related party, net		-			1,301,591
Other assets		11,000			10,000
Other assets		10,169			83,887
Total Assets	$	702,000		$	977,000
Total Assets	$	976,980		$	3,246,312
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities
Accounts payable and accrued expenses	$	1,~~584~~649,~~643~~000		$	1,~~263~~562,~~364~~000
Legal settlements payable, including amounts due to former officer and shareholder		2,527,923			448,718
Legal obligations payable, including $0 and $646,000 due to former officer and shareholder, respectively		448,000			2,550,000
Lease payable, current portion		~~133~~440,~~188~~000			-133,000
Contract obligations – past due		~~798~~816,~~589~~000			~~372~~799,~~727~~000
Notes payable - related parties – past due		790,000			~~640~~790,000
Convertible note payable to related party, net of discount of $178,470 and $247,032, respectively		1,596,530			1,252,968
Convertible notes payable to related party (including $1,775,000 and $0 that are past due, respectively), net of discount of $220,000 and $178,000, respectively		2,055,000			1,597,000
Accrued interest to related parties		~~351~~531,~~439~~000			~~125~~351,~~039~~000
Loans payable		6411,~~375~~000			264,~~548~~000
Total Current Liabilities		76,~~846~~740,~~687~~000			47,~~105~~846,~~364~~000
Lease payable, net of current portion		~~422~~182,~~525~~000			-423,000
Contract obligations, net of current portion, past due		-			408,681
Loans payable		355,000			-
Derivative liabilities		12,~~332~~161,000			21,~~160~~332,~~806~~000
Total Liabilities		9,~~601~~438,~~212~~000			69,~~674~~601,~~851~~000
Commitments and Contingencies
Shareholders’ Deficit
Preferred stock, no par value, 20,000,000 shares authorized; no shares issued and outstanding at December 31, 2019 and December 31, 2018		-			-
Preferred stock, no par value, 20,000,000 shares authorized; no shares issued and outstanding at December 31, 2020 and December 31, 2019		-			-
Common stock, $0.001 par value, 100,000,000 shares authorized; 46,820,564 and 45,794,564 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively		46,821			45,795
Common stock, $0.001 par value, 100,000,000 shares authorized; 59,557,830 and 46,820,564 shares issued and outstanding at December 31, 2020 and December 31, 2019, respectively		59,000			47,000
Additional paid-in-capital		3132,~~739~~186,~~009~~000			2931,~~042~~739,~~072~~000
Accumulated deficit		(40,~~410~~981,~~062~~000	)		(3240,~~516~~410,~~406~~000	)
Total Shareholders’ Deficit		(8,~~624~~736,~~232~~000	)		(38,~~428~~624,~~539~~000	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	~~976~~702,~~980~~000		$	3977,~~246,312~~000

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

F-23

GENERATION ALPHA INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years ended December 31,
	2019			2018
	2020			2019
Sales	$	1,~~965~~282,~~163~~000		$	31,~~348~~965,~~288~~000
Cost of goods sold		1687,~~066,211~~000			21,~~826~~066,~~558~~000
Gross profit		~~898~~595,~~952~~000			~~521~~899,~~730~~000
Operating expenses
Selling, general and administrative expenses		31,~~580~~105,~~198~~000			113,~~975~~580,~~974~~000
Research and development		~~154~~100,~~964~~000			~~167~~155,~~765~~000
Legal settlement on abandonment of lease		1,487,000			-
Legal judgments		448,000			1,487,000
Loss on abandonment of leasehold improvements		217,062			639,198
Impairment of right of use asset		427,000			100,000
Impairment of right of use asset		100,000			-
Loss on abandonment of leasehold improvements		-			217,000
Impairment of intangible assets acquired from related party		~~1,138,892~~-			-1,139,000
Amortization of license agreement		~~162,699~~-			~~216~~163,~~932~~000
Excess cost of acquisition from a related party over historical basis		-			4,450,000
Total operating expenses		2,080,000			6,841,000
Write off of vendor advance from former related party		-			597,535
Loss from operations		(1,485,000	)		(5,942,000	)
Total operating expenses		6,840,815			18,047,404
Loss from operations		(5,941,863	)		(17,525,674	)
Other income (expenses)
Financing and debt extinguishment costs (1)		(1,155,869	)		(7,317,406	)
Gain on settlement of legal judgments		2,370,000			-
Change in fair value of derivative liability		(203,000	)		8,743,170
Gain on settlement of trade accounts payable		47,000			-
Gain on extinguishment of derivative liability		-			2,389,427
Loss on conversion of accrued interest on convertible notes related party		(85,000	)
Loss on the extinguishment of debt		-			(1,555,556	)
Financing and debt extinguishment costs (1)		(66,000	)		(1,156,000	)
Interest expense (2)		(592,924	)		(1,804,266	)
Change in fair value of derivative liability		(398,000	)		(203,000
Total other income (expenses)		(1,951,793	)		455,369
Interest expense (2)		(954,000	)		(593,000	)
Loss before income taxes		(7,893,656	)		(17,070,305	)
Total other income (expenses)		914,000			(1,952,000	)
Provision for income taxes		-			(3,700	)
Net loss	$	(571,000	)	$	(7,894,000	)
Net Loss	$	(7,893,656	)	$	(17,074,005	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.01	)	$	(0.17	)
BASIC AND DILUTED LOSS PER SHARE	$	(0.17	)	$	(0.39	)
WEIGHTED - AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED		53,419,000			46,343,600
WEIGHTED - AVERAGE COMMON SHARES OUTSTANDING BASIC AND DILUTED		46,343,600			43,564,550
(1) Included in financing costs are these amounts from a related party	$	66,000		$	1,156,000
(1) Included in financing costs are these amounts from a related party	$	1,155,869		$	6,177,406
(2) Included in interest expense are these amounts from related parties	$	699,000		$	523,000
(2) Included in interest expense are these amounts from related parties	$	522,753		$	65,996

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

F-34

GENERATION ALPHA INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

					Additional
	Common Stock				Paid-in		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance, December 31, 2017		38,522,034	$	38,522	$	9,077,690	$	(15,442,401	)	$	(6,326,189	)
Balance, December 31, 2018		45,794,564	$	46,000	$	29,042,000	$	(32,516,000	)	$	(3,428,000	)
Net proceeds from sale of common stock		1,321,538		1,322		1,566,678					1,568,000
Reclassification of warrant liability to equity due to adoption of ASU 2017-11						2,161,000					2,161,000
Fair value of common stock issued for services		1,388,000		1,388		1,675,169					1,676,557
Modification of warrants recorded as financing costs						194,000					194,000
Fair value of common stock issued to directors and employees		100,000		100		73,900					74,000
Fair value of common stock issued for services		426,000		-		178,000					178,000
Shares issued on exercise of warrants		2,306,360		2,306		1,444,690					1,446,996
Fair value of common stock issued to directors and employees		600,000		1,000		77,000					78,000
Shares issued on conversion of convertible note payable		1,788,082		1,788		1,786,294					1,788,082
Fair value of warrants recorded as a valuation discount						63,000					63,000
Shares issued on conversion of Series-A convertible preferred shares		368,550		369		368,181					368,550
Fair value of vested stock options						24,000					24,000
Extinguishment of derivative liabilities						1,799,003					1,799,003
Net loss								(7,894,000	)		(7,894,000	)
Fair value of warrants issued for financing costs						1,140,000					1,140,000
Balance, December 31, 2019		46,820,564		47,000		31,739,000		(40,410,000	)		(8,624,000	)
Fair value of warrants issued for acquisition of intangible assets from related party						5,450,000					5,450,000
Common stock issued for conversion of accrued interest on convertible notes related party		2,287,066		2,000		112,000					114,000
Fair value of vested stock options						4,660,467					4,660,467
Fair value of common stock issued to directors		6,116,867		6,000		86,000					92,000
Net loss								(17,074,005	)		(17,074,005	)
Fair value of common stock issued in settlement of legal judgments		4,333,333		4,000		56,000					60,000
Balance, December 31, 2018		45,794,564		45,795		29,042,072		(32,516,406	)		(3,428,539	)
Fair value of warrants issued with convertible notes related party						100,000					100,000
Reclassification of warrant liability to equity due to adoption of ASU 2017-11						2,160,806					2,160,806
Fair value of vested stock options						93,000					93,000
Modification of warrants recorded as financing costs						193,869					193,869
Net loss								(571,000	)		(571,000	)
Fair value of common stock issued for services		426,000		426		177,424					177,850
Balance, December 31, 2020		59,557,830	$	59,000	$	32,186,000	$	(40,981,000	)	$	(8,736,000	)
Fair value of common stock issued to directors and employees		600,000		600		77,400					78,000
Fair value of warrants recorded as a valuation discount						63,205					63,205
Fair value of vested stock options						24,233					24,233
Net loss								(7,893,656	)		(7,893,656	)
Balance, December 31, 2019		46,820,564	$	46,821	$	31,739,009	$	(40,410,062	)	$	(8,624,232	)

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

F-45

GENERATION ALPHA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended December 31
	2019			2018
	2020			2019
Cash Flows from Operating Activities
Net Loss	$	(7571,~~893,656~~000	)	$	(177,~~074~~894,~~005~~000	)
Adjustments to reconcile net loss to net cash used in operating activities
Provision for allowance for doubtful accounts and sales returns		(32100,~~748~~000	)		(~~297~~33,~~241~~000	)
Loss on vendor advance to former related party		-			597,535
Amortization of right of use asset		26,000			118,000
Amortization of right of use asset		117,618			-
Impairment of right of use asset		427,000			100,000
Impairment of right of use asset		100,000			-
Change in lease liability		(23,000	)		(104,000	)
Change in lease liability		(103,634	)		-
Provision for inventory reserves		(95,000	)		-
Provision for inventory reserves		-			798,439
Depreciation and amortization		7,000			196,000
Depreciation and amortization		195,805			271,013
Imputed interest on contractual obligation		17,000			17,000
Imputed interest on contractual obligation		17,181			12,885
Impairment of intangible asset		-			1,139,000
Loss on sale of property and equipment		-			16,043
Loss on conversion of accrued interest		85,000
Impairment of intangible asset		1,138,892
Loss on abandonment and disposal of fixed assets		-			224,000
Loss on abandonment and disposal of fixed assets		224,068			639,198
Fair value of vested stock options		93,000			24,000
Fair value of warrants issued to related party in excess of basis of acquired licensing rights		-			4,450,000
Fair value of common stock issued for services		-			178,000
Fair value of vested stock options		24,233			4,660,467
Fair value of common stock issued to directors and employees		92,000			78,000
Fair value of common stock issued for services		177,850			1,676,557
Amortization of debt discount		458,000			336,000
Fair value of common stock issued to directors and employees		78,000			74,000
Debt extinguishment cost		-			962,000
Fair value of warrants issued for financing costs		-			7,317,406
Warrants or modification of warrants recorded as financing costs		66,000			194,000
Loss on extinguishment of debt		-			1,555,556
Gain on settlement of legal judgments		(2,370,000	)		-
Amortization of debt discount		336,267			1,291,050
Gain on settlement of trade accounts payable		(47,000	)		-
Amortization of Series-A preferred shares discount		-			368,550
Change in the fair value of derivative liability		398,000			203,000
Debt extinguishment cost		962,000			-
Changes in operating assets and liabilities
Modification of warrants recorded as financing costs		193,869			-
Accounts receivable		46,000			124,000
Change in the fair value of derivative liability		203,000			(8,743,170	)
Inventories		352,000			180,000
Gain on extinguishment of derivative liability		-			(2,389,427	)
Prepaid expenses and other		(30,000	)		232,000
Changes in Assets and Liabilities
Other assets		(1,000	)		74,000
(Increase) Decrease in:
Accounts payable and accrued expenses		134,000			871,000
Accounts receivable		123,956			623,516
Legal settlement payable		328,000			1,545,000
Inventories		180,265			315,837
Accrued interest to related parties		209,000			226,000
Advances to former related party supplier		-			138,195
Net cash used in operating activities		(499,000	)		(1,010,000	)
Prepaid expenses and other		232,179			(121,610	)
Other assets		73,718			(45,907	)
(Decrease) Increase in:
Accounts payable and accrued expenses		870,275			139,016
Legal settlement payable		1,544,531			-
Due to former officer and shareholder		-			448,718
Due to former related party vendor		-			(381,457	)
Accrued interest to related parties		226,400			(21,495	)
Net cash used in operating activities		(1,009,931	)		(3,680,331	)
Cash Flows from Investing Activities
Collection of receivable acquired as part of acquisition		-			250,000
Purchase of property and equipment		-			(222,000	)
Cash received on sale of property and equipment		-			28,500
Net cash used in investing activities		-			(222,000	)
Purchase of property and equipment		(222,452	)		(656,341	)
Net cash used in investing activities		(222,452	)		(377,841	)
Cash Flows from Financing Activities
Proceeds from sale of common stock		-			1,568,000
Proceeds from secured convertible note payable from related party, net of fees		465,000			237,000
Proceeds from exercise of warrants		-			1,446,996
Proceeds from notes payable related parties		-			150,000
Proceeds from secured convertible note payable from related party, net of fees		237,500			1,500,000
Proceeds from loans payable		355,000			150,000
Proceeds from notes payable related parties		150,000			-
Payment of loans payable		(53,000	)		(88,000	)
Proceeds from loans payable		150,000
Net cash provided by financing activities		767,000			449,000
Payment of loans payable		(88,173	)		(23,409	)
Net increase (decrease) in cash		268,000			(783,000	)
Payments on notes payable related party		-			(505,000	)
Cash beginning of period		104,000			887,000
Payments on capital lease obligations		-			(9,665	)
Cash end of period	$	372,000		$	104,000
Net cash provided by financing activities		449,327			3,976,922
Interest paid	$	46,000		$	64,000
Net decrease in cash		(783,056	)		(81,250	)
Taxes paid	$	-		$	-
Cash beginning of period		886,693			967,943
Cash end of period	$	103,637		$	886,693
Interest paid	$	63,597		$	87,490
Taxes paid	$	-		$	3,200
Non-Cash Financing Activities
Recording of right of use asset and lease liability upon adoption of new lease accounting rule on January 1, 2019	$	645,025		$	-
Recording of right of use asset and lease liability	$	89,000		$	645,000
Reclassification of Accounts payable and accrued expenses to Legal settlement payable	$	534,674		$	-
Common stock issued for conversion of accrued interest on convertible notes related party	$	29,000			$
Reclassification of derivative liability to equity due to adoption of ASU 2017-11	$	2,106,806		$	-
Fair value of derivative liability created upon issuance of convertible notes and warrants from related party	$	431,000		$	167,000
Extinguishment of derivative liability	$	-		$	1,799,003
Fair value of common stock issued on settlement of legal judgments	$	60,000		$	-
Fair value of derivative liability created upon issuance of convertible notes and warrants from related party	$	167,000		$	7,677,406
Fair value of warrants issued with convertible notes related party	$	100,000		$	63,000
Fair value of warrants recorded to debt discount	$	63,205		$	-
Reclassification of accounts payable and accrued expenses to legal settlement payable	$	-		$	535,000
Common shares issued upon conversion of convertible note payable and accrued interest	$	-		$	1,788,082
Reclassification of derivative liability to equity due to adoption of ASU 2017-11	$	-		$	2,107,000
Common shares issued upon conversion of Series-A convertible preferred shares	$	-		$	368,550
Contract obligations incurred on acquisition of license agreement	$	-		$	768,523
Fair value of warrants issued for acquisition of intangible assets from related party	$	-		$	5,450,000

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

F-56

GENERATION ALPHA INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2019~~2020 AND ~~2018~~2019

NOTE 1 – ~~BASIS~~ORGANIZATION AND SUMMARY OF ~~PRESENTATION~~SIGNIFICANT ACCOUNTING POLICIES

History and Organization

Generation Alpha, Inc. (the “Company”) was originally incorporated under the laws of the State of Nevada on March 2, 2007 as Cinjet, Inc. (“Cinjet”). Effective September 1, 2015, Cinjet changed its corporate name to Solis Tek Inc. (“Solis Tek”). Effective September 25, 2018, Solis Tek changed its corporate name to Generation Alpha, Inc. Effective September 25, 2018, Generation Alpha, Inc. (f/k/a Solis Tek Inc.) (the “Company”) entered into an agreement and plan of merger (the “Merger Agreement”), whereby a wholly-owned subsidiary of the Company (the “Merger Sub”) was merged into the Company (the “Merger”). Upon consummation of the Merger, the separate existence of Merger Sub ceased. On June 23, 2015, the Company entered into an Agreement of Merger and Plan of Reorganization (the “Agreement”) with Solis Tek Inc., a California corporation (“STI”), and CJA Acquisition Corp., a California corporation and a wholly owned subsidiary of the Company (“Merger Sub”), providing for the merger of Merger Sub with and into STI (the “Merger”), with STI surviving the Merger as a wholly-owned subsidiary of the Company. The Merger was accounted for as a recapitalization of the Company with STI being deemed the accounting acquirer.

Overview of Business

The Company is a vertically integrated technology innovator, developer, manufacturer and distributor focused on bringing products and solutions to commercial and retail cannabis growers in both the medical and adult use recreational space in legal markets across the U.S. The Company’s lighting and nutrient customers include retail stores, distributors and commercial growers in the United States and abroad.

COVID-19 Considerations

During the year ended December 31, 2020, the COVID-19 pandemic did not have a material net impact on our operating results. Although there were delays in product manufacturing and delivery from China during parts of 2020 as a result of COVID-19, manufacturing and shipping did resume later in 2020, resulting in little overall impact on operating results. We do continue to see longer lead times from product ordering to delivery. In the future, the pandemic may cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment which negatively effects the consumers who purchase our products. The Company has not observed any material impairments of its assets or a significant change in the fair value of its assets due to the COVID-19 pandemic.

Our ability to operate without significant negative operational impact from the COVID-19 pandemic will in part depend on our ability to protect our employees and our supply chain. The Company has endeavored to follow the recommended actions of government and health authorities to protect our employees. Since the onset of the COVID-19 pandemic, we maintained the consistency of our operations. However, the uncertainty resulting from the pandemic could result in an unforeseen disruption to our workforce and supply chain (for example an inability of a key supplier or transportation supplier to source and transport materials) that could negatively impact our operations.

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the year ended December 31, ~~2019~~2020, the Company incurred a net loss of $7571,~~893,656~~000 and ~~used~~ used cash in operations of $1499,~~009,931~~000 and had a shareholders’ deficit of $8,~~624~~736,~~232~~000 as of December 31, ~~2019~~2020. In addition, $~~790~~2,565,000 of notes payable to related parties, $~~351~~531,~~439~~000 of accrued interest to related parties, and $~~798~~816,~~589~~000 of contract obligations ~~are~~ are past due. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one ~~year~~ year after the date of the financial statements being issued. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to raise additional funds and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

At December 31, 2019, the Company had cash on hand in the amount of $103,637. On February 21, 2020, the Company received proceeds of $150,000 on the issuance of a secured convertible note payable (see Note 15). Management estimates that the current funds on hand will be sufficient to continue operations through June 30, 2020. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing.F-7

~~NOTE~~At 2December -31, ~~SUMMARY~~2020, OFthe ~~SIGNIFICANT~~Company ~~ACCOUNTING~~had ~~POLICIES~~cash on hand in the amount of $372,000. Management estimates that the current funds on hand will be sufficient to continue operations through September 30, 2021. The continuation of the Company as a going concern is dependent upon its ability to obtain necessary debt or equity financing to continue operations until it begins generating positive cash flow. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing.

Basis of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: STI; Solis Tek East, Corporation (“STE”), an entity incorporated under the laws of the State of New Jersey, Zelda Horticulture, Inc. (“Zelda”), an entity incorporated under the laws of the State of California, and YLK Partners NV, LLC (“YLK”), Generation Alpha Brands, Inc., Trilogy Dispensaries, Inc., Extracting Point, LLC (“Extracting Point”), and GrowPro Solutions, Inc., all entities formed under the laws of Nevada. Intercompany transactions and balances have been eliminated in consolidation.

F-6

Leases

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases (“ASC 842”), which requires an entity to recognize a ROU asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease ROU assets and lease liabilities for operating leases of $645,025. There was no cumulative-effect adjustment to accumulated deficit.

Loss per Share Calculations

Basic earnings per share are computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares available. Diluted earnings per share is computed by dividing the net income applicable to common shareholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued using the treasury stock method. Potential common shares are excluded from the computation when their effect is antidilutive. The dilutive effect of potentially dilutive securities is reflected in diluted net income per share if the exercise prices were lower than the average fair market value of common shares during the reporting period.

Options to acquire 1,948,300 shares of common stock, warrants to acquire 18,283,140 shares of common stock, and 37,994,931 shares of common stock issuable under convertible note agreements, have been excluded from the calculation of weighted average common shares outstanding at December 31, 2019, as their effect would have been anti-dilutive. Options to acquire 8,394,391 shares of common stock and warrants to acquire 12,783,140 shares of common stock have been excluded from the calculation of weighted average common shares outstanding at December 31, 2018, as their effect would have been anti-dilutive.

Use of Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the U.S requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the financial statement date, and reported amounts of revenue and expenses during the reporting period. Significant estimates are used in valuing our allowances for doubtful accounts, reserves for inventory obsolescence, valuing derivative liabilities, valuing equity instruments issued for services, and valuation allowance for deferred tax assets, among others. Actual results could differ from these estimates.

Segment Reporting

The Company operates in one segment for the manufacture and distribution of our products. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements.

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting ~~Standard~~Standards ~~Update~~Board (“~~ASU~~FASB”) ~~No.~~Accounting ~~2014-09~~Standard Codification (“ASC”) 606, Revenue from Contracts with Customers (“ASC 606”). This standard provides ~~authoritative~~ authoritative guidance clarifying the principles for recognizing revenue and developing a common revenue standard for U.S. generally ~~accepted~~ accepted accounting principles. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in the exchange for those goods or services.

~~Under~~Revenue ~~this guidance, revenue~~ is recognized when control of promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company reviews its sales transactions to identify contractual rights, performance obligations, and transaction prices, including the allocation of prices to separate performance obligations, if applicable. Revenue and ~~costs~~cost of sales are recognized once products are delivered to the customer’s control and performance obligations are satisfied.

In the following table, revenue is disaggregated by major product line for the year ended 2019:

Sales Channels	Lighting		Plant Nutrients and Fertilizers		Total
Hydroponic resellers/retail	$	1,411,086	$	495,772	$	1,906,858
Direct to consumer/online		58,305		-		58,305
Total	$	1,469,391	$	495,772	$	1,965,163

In the following table, revenue is disaggregated by major product line for the year ended 2018:

Sales Channels	Lighting		Plant Nutrients and Fertilizers		Total
Hydroponic resellers/retail	$	2,654,520	$	654,067	$	3,308,587
Direct to consumer/online		39,701		-		39,701
Total	$	2,694,221	$	654,067	$	3,348,288

F-7

All products sold by the Company are distinct individual products and consist of advanced energy efficient indoor horticulture lighting, plant nutrient products, and ancillary equipment. The products are offered for sale as finished goods only, and there are no performance obligations required post-shipment for customers to derive the expected value from them. Contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time.

The Company does not offer a general right of return on any of its sales and considers all sales as final. The Company generally provides a three-year warranty on its ballasts. However, the Company does not maintain a warranty reserve as the Company is able to chargeback its vendors for all warranty claims. As of December 31, ~~2019~~2020, and ~~2018~~2019, the Company recorded reserves for returned product in the amounts of $~~59,804~~0 and $~~143~~60,~~947~~000, respectively, which reduced the accounts receivable balances as of those periods .

F-8

In the following table, revenue is disaggregated by major product line for the year ended 2020:

Sales Channels	Lighting		Plant Nutrients and Fertilizers		Total

Hydroponic resellers/retail	$	433,000	$	827,000	$	1,260,000
Direct to consumer/online		22,000		-		22,000
Total	$	455,000	$	827,000	$	1,282,000

In the following table, revenue is disaggregated by major product line for the year ended 2019:

Sales Channels	Lighting		Plant Nutrients and Fertilizers		Total

Hydroponic resellers/retail	$	1,411,000	$	496,000	$	1,907,000
Direct to consumer/online		58,000		-		58,000
Total	$	1,469,000	$	496,000	$	1,965,000

Accounts Receivable

~~The~~Accounts receivable are recorded net of an allowance for expected losses. The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s historical losses and an overall assessment of past due trade accounts receivable outstanding.

The allowance for doubtful accounts and returns is established through a provision reducing the carrying value of receivables. At December 31, ~~2019,~~2020 and ~~December 31~~2019, ~~2018,~~ the allowance for doubtful accounts was $5212,~~115~~000 and $~~720~~52,000, respectively.

Inventories

Inventories are stated at the lower of cost or net realizable value. Cost is computed on a first-in, first-out basis. The Company’s inventories consist almost entirely of finished goods as of December 31, ~~2019~~2020 and ~~2018~~2019.

The Company provides inventory reserves based on excess and obsolete inventories determined primarily by future demand forecasts. The write down amount is measured as the difference between the cost of the inventory and ~~market~~net realizable value based on upon assumptions ~~about~~ about future demand and charged to the provision for inventory write down, which is a component of cost of sales. At the point of the loss recognition, a new, lower cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. At December 31, ~~2019~~2020 and ~~December 31~~2019, ~~2018,~~ the reserve ~~for~~ for excess and obsolete inventory was $~~125~~30,~~262~~000 and $~~910~~125,~~778~~000, respectively. ~~During the year ended December 31, 2019, the Company disposed of approximately $827,000 of inventory that was previously reserved in prior years.~~

Property and Equipment

Property and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The Company has determined the estimated useful lives of its property and equipment, as follows:

Leasehold improvements	5 years
Machinery and equipment	5 years
Machinery and equipment	5 years
Computer equipment	3 years
Computer equipment	3 years
Furniture and fixtures	7 years
Furniture and fixtures	7 years

F-9

Maintenance and repairs are charged to expense as incurred. The cost and accumulated depreciation of assets sold or otherwise disposed of are removed from the related accounts and the resulting gain or loss is reflected in the statements of operations.

Management assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is an indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The Company did not record an impairment loss for the years ended December 31, ~~2019~~2020 and ~~2018~~2019.

Intangible Assets

The Company accounts for intangible assets in accordance with the authoritative guidance issued by the FASB. Intangibles are valued at their fair market value and are amortized taking into account the character of the acquired intangible asset and the expected period of benefit. The Company evaluates intangible assets for impairment, at a minimum, on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated undiscounted future cash flows. Recoverability of intangible assets is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors, including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss.

At December 31, 2018, the Company had intangible assets of $1,302,000 that consisted of a license right. In June 2019, and based on management’s assessment, it was determined that the intangible asset was impaired, and an impairment charge was recorded for $1,139,000 during the year ended December 31, 2019.

Leases

Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases (“ASC 842”), which requires an entity to recognize a right of use (“ROU”) asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease ROU assets and lease liabilities for operating leases of $645,000. There was no cumulative-effect adjustment to accumulated deficit.

Income Taxes

Income tax expense is based on pretax financial accounting income. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Valuation allowances are recorded to reduce deferred tax assets to the amount that will more likely than not be realized. The Company has recorded a valuation allowance against its deferred tax assets as of December 31, 2020 and 2019.

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50 percent likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for income taxes.

F-10

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

Research and Development

Research and development costs are expensed in the period incurred. The costs primarily consist of personnel and supplies.

F-8

Shipping and Handling Costs

The Company’s shipping and handling costs relating to inbound freight are reported as cost of goods sold in the consolidated Statements of Operations, while shipping and handling costs relating to outbound freight are reported as selling, general and administrative expenses in the consolidated Statements of Operations. The Company classifies amounts billed to customers for shipping fees as revenues.

~~Income~~Fair ~~Taxes~~Value Measurements

Concentration Risks

The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. During the years ended December 31, 2019 and 2018, the Company had cash deposits that exceeded the federally insured limit of $250,000. The Company believes that no significant concentration of credit risk exists with respect to these cash balances because of its assessment of the creditworthiness and financial viability of the financial institution.

The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities, and other factors could negatively impact the Company’s operating results. State and federal government laws could have a material adverse impact on the Company’s future revenues and results of operations.

The Company’s products require specific components that currently are available from a limited number of sources. The Company purchases some of its key products and components from single vendors. During the years ended December 31, 2019 and 2018, its ballasts, lamps and reflectors, which comprised the clear majority of the Company’s purchases during those periods, were each only purchased from one separate vendor.

The Company performs a regular review of customer activity and associated credit risks and does not require collateral or other arrangements. There were no customers that accounted for more than 10% of the Company’s revenue for the years ended December 31, 2019 and 2018. Shipments to customers outside the United States comprised less than 5.0% of our sales for the years ended December 31, 2019 and 2018, respectively.

As of December 31, 2019, two customers accounted for 23.6% and 10.1% of the Company’s trade accounts receivable balance, and as of December 31, 2018, four customers accounted for 37.4%, 14.4%, 12.9% and 12.1% of the Company’s trade accounts receivable balance.

Fair Value measurements

The Company determines the fair value of its assets and liabilities based on the exchange price in U.S. dollars 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 uses a fair value hierarchy with three levels of inputs, of which the first two are considered observable and the last unobservable, to measure fair value:

● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

	●	Level 2 — Inputs, other than Level 1, that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
	●	Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

F-9

The carrying amounts of financial instruments such as cash, accounts receivable, inventories, and accounts payable and accrued liabilities, approximate the related fair values due to the short-term maturities of these instruments. The carrying values of notes payable approximate their fair values due to the fact that the interest rates on these obligations are based on prevailing market interest rates.

The fair value of the derivative liabilities of $12,~~332~~161,000 and $21,~~160~~332,~~806~~000 at December 31, ~~2019~~2020 and ~~2018~~2019, respectively, was valued using Level 2 inputs.

~~Derivative~~Loss ~~Financial~~per ~~Instruments~~Share Calculations

~~The~~Basic ~~Company~~earnings ~~evaluates~~per ~~its~~share ~~financial~~are ~~instruments~~computed toby ~~determine~~dividing ifnet ~~such~~income ~~instruments~~(loss) ~~are~~available ~~derivatives~~to orcommon ~~contain~~shareholders ~~features~~by ~~that~~the ~~qualify~~weighted-average number asof ~~embedded~~common ~~derivatives~~shares available. ~~For~~Diluted ~~derivative~~earnings ~~financial~~per ~~instruments~~share ~~that~~is ~~are~~computed ~~accounted~~by ~~for~~dividing asthe ~~liabilities,~~net ~~the~~income ~~derivative~~applicable ~~instrument is~~to ~~initially~~common ~~recorded~~shareholders by atthe ~~its~~weighted ~~fair~~average ~~value~~number ~~and~~of iscommon ~~then~~shares ~~re-valued~~outstanding atplus ~~each~~the ~~reporting~~number ~~date,~~of ~~with~~additional ~~changes~~common inshares ~~the~~that ~~fair~~would ~~value~~have ~~reported~~been outstanding inif ~~the~~all ~~consolidated~~dilutive ~~statements~~potential ofcommon ~~operations.~~shares ~~The~~had ~~classification~~been ofissued ~~derivative~~using ~~instruments,~~the ~~including~~treasury ~~whether~~stock ~~such~~method. ~~instruments should~~Potential becommon ~~recorded~~shares asare ~~liabilities~~excluded from orthe ascomputation ~~equity,~~when their effect is ~~evaluated~~antidilutive. atThe ~~the~~dilutive ~~end~~effect of ~~each~~potentially ~~reporting~~dilutive ~~period.~~securities ~~Derivative~~is ~~instrument~~reflected ~~liabilities~~in ~~are~~diluted ~~classified~~net inincome ~~the~~per ~~balance~~share ~~sheet~~if asthe ~~current~~exercise orprices ~~non-current~~were ~~based~~lower onthan ~~whether~~the oraverage ~~not~~fair ~~net-cash~~market ~~settlement~~value of ~~the~~common ~~derivative~~shares ~~instrument could~~during ~~be required within 12 months of~~ the reporting ~~balance sheet date~~period.

Intangible Assets

At December 31, 2018, the Company had intangible assets of $1,301,591 that consisted of a license right. In June 2019, and based on management’s assessment, it was determined that the intangible asset was impaired, and an impairment charge was recorded for $1,138,892 during the twelve month period ended December 31, 2019 (see Note 4).

Recently Issued Accounting Pronouncements

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480): Accounting for Certain Financial Instruments with Down Round Features. This ASU addresses the complexity and reporting burden associated with the accounting for freestanding and embedded instruments with down round features as liabilities subject to fair value measurement. The Company has elected to apply ASU 2017-11 using a modified-retrospective approach by means of a cumulative-effect adjustment to its financial statements as allowed under ASU 2017-11. Upon adoption on January 1, 2019, the Company recorded an increase paid in capital and decreased the derivative liability by $2,160,806.

In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. As small business filer, the standard will be effective for us for interim and annual reporting periods beginning after December 15, 2022. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures.

Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

F-10

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31, 2019 and 2018:

	2019			2018
Leasehold improvements	$	-		$	7,000
Machinery and equipment		81,045			178,455
Computer equipment		10,908			10,908
Furniture and fixtures		39,560			39,560
		131,513			235,923
Less: accumulated depreciation and amortization		(109,474	)		(179,162	)
Property and equipment, net	$	22,039		$	56,761

Depreciation expense for the years ended December 31, 2019 and 2018 was $33,106 and $54,081, respectively.

During the year ended December 31, 2019, the Company disposed of property and equipment with a book value of $6,506, resulting in a loss on the disposal of property and equipment of $6,506. During the year ended December 31, 2018, the Company sold certain of its property and equipment for $28,500. The book value of the property and equipment was $44,543, resulting in a loss on the sale of property and equipment of $16,043.

In February 2019, the Company terminated its Arizona facility lease thereby abandoning $856,760 of leasehold improvements. The Company recorded the abandonment of leasehold improvements of $217,562 and $639,198 during the year ended December 31, 2019 and 2018, respectively, as a component of operating expense in the consolidated statement of operations (see Note 7).

NOTE 4 – LICENSE AGREEMENT ACQUIRED FROM RELATED PARTIES

License agreement acquired from related parties as of December 31, 2019 and December 31, 2018, consisted of the following:

	As of
	December 31, 2019			December 31, 2018
License agreement	$	1,518,523		$	1,518,523
Accumulated amortization		(379,631	)		(216,932	)
Impairment charge		(1,138,892	)		-
Intangible assets, net	$	-		$	1,301,591

On May 10, 2018, the Company entered into an acquisition agreement (the “Acquisition Agreement”) with the members (the “Sellers”), which in the aggregate, owned 100% of the membership interests in YLK. Pursuant to the Acquisition Agreement, in consideration of the Company acquiring all of the outstanding membership interests of YLK, the Company issued to the Sellers, a total of 5,000,000 warrants (the “Warrants”) to purchase 5,000,000 common shares, at an exercise price of $0.01 per share. The Warrants are exercisable until May 9, 2023. The aggregate fair value of the Warrants issued as consideration for the acquisition was determined to be $5,450,000.

The Sellers were the following, who were determined to be related parties:

	(a)	LK Ventures, LLC a Nevada limited liability company. One-half of the membership interests of LK Ventures, LLC is owned by Alan Lien, Chief Executive Officer, President and a director of the Company, and the remaining one-half is owned by a non-affiliated party. LK Ventures, LLC received 2,250,000 Warrants under the Acquisition Agreement for the 45% membership interests held in YLK.
	(b)	MDM Cultivation LLC, a Delaware limited liability company. The members of MDM Cultivation are affiliates of YA II PN, Ltd. (“YA II PN”) and D-Beta One EQ, Ltd., which presently hold (i) 2,258,382 shares of the Company’s common stock, (ii) warrants to purchase 11,200,000 shares of the Company’s common stock and (iii) a secured promissory note issued by the Company with an outstanding principal amount of $1.5 million. In addition, YA II PN and the Company are parties to that SEDA, pursuant to which YA II PN has agreed to purchase up to $25.0 million of the Company’s common stock, subject to the terms and conditions thereof. MDM Cultivation owned 45% of the outstanding membership interests of YLK. MDM Cultivation was issued 2,250,000 Warrants under the Acquisition Agreement. As affiliates of MDM Cultivation, YA II PN and D-Beta One EQ, Ltd. will be deemed to be the beneficial owners of the 2,250,000 Warrants in addition to the other shares and warrants presently held by them.

F-11

~~(c)~~Options to ~~Future~~acquire ~~Farm~~10,002,210 ~~Technologies~~shares ~~Inc.~~of common stock, warrants to acquire 28,283,140 shares of ~~Vancouver~~common ~~British~~stock, ~~Columbia~~and 173,780,295 ~~Canada.~~shares ~~Future~~of common ~~Farm~~stock ~~Technologies~~issuable under convertible note agreements, ~~Inc~~have been excluded from the calculation of weighted average common shares outstanding at December 31, 2020, as their effect would have been anti-dilutive. ~~was~~Options ~~issued~~to ~~500~~acquire 1,~~000~~948,300 ~~Warrants~~shares of common stock, warrants to acquire 18,283,140 shares of common stock, and 37,994,931 shares of common stock issuable under ~~the~~convertible note ~~Acquisition~~agreements, ~~Agreement~~have ~~for~~been excluded from the ~~10%~~calculation ~~membership~~of ~~interests~~weighted ~~held~~average incommon ~~YLK~~shares outstanding at December 31, 2019, as their effect would have been anti-dilutive.

~~The~~Concentration major asset of YLK is a Cultivation Management Services Agreement (the “Management Agreement”) with an Arizona licensee (the “Arizona Licensee”) that was entered into on January 5, 2018. No operating activity existed prior to the acquisition. The Arizona Licensee is authorized to operate a medical marijuana dispensary, one (1) onsite facility and one (1) offsite facility, to produce, sell and dispense medical marijuana and manufactured and derivative products that contain marijuana pursuant to Title 9; Chapter 17 of the Arizona Department of Health Services (“AZDHS”) Medical Marijuana Program and Arizona Revised Statute § 36-2801 et seq., as amended from time to time. Pursuant to the Management Agreement, YLK will provide the management services for the offsite facility, on behalf of the Arizona Licensee. The assets acquired also included a $250,000 receivable from Future Farm Technologies.Risks

AsCash ~~consideration~~includes ~~for~~cash ~~the~~on ~~exclusive~~hand ~~right~~and ofcash ~~YLK~~in tobanks ~~manage~~and ~~the~~are ~~Arizona~~reported ~~Licensee’s~~as ~~facility~~“Cash” ~~pursuant~~in to the ~~Management~~consolidated ~~Agreement; (i)~~balance ~~YLK~~sheets. ~~paid~~At ~~$750~~December 31,~~000~~ to2020 ~~the~~and ~~Arizona~~December ~~Licensee;~~31, ~~(ii)~~2019, ~~YLK~~cash ~~agreed~~includes tocash ~~pay~~on anhand ~~additional~~of $~~250~~289,000 ~~within~~and 10$12,000, ~~days~~respectively, ~~after receipt of the AZDHS approval to operate the facility;~~ and ~~(iii)~~cash ~~YLK~~in ~~agreed~~banks ~~to pay a total~~ of $~~600~~83,000~~, payable in 44 equal monthly installments~~ ~~commencing~~and ~~on April 1~~$92,000, ~~2019 (the “Installment Payments”)~~respectively. The ~~term~~balance of ~~the~~cash ~~Management~~on ~~Agreement~~hand is ~~five~~not ~~years.~~insured ~~YLK has~~by the ~~option~~Federal toDeposit ~~extend~~Insurance ~~the~~Corporation. ~~term~~The ~~for an additional five years with the payment of $1,000,000 at the commencement of the additional~~balance ~~term and a total~~ of ~~$1,000,000~~cash ~~payable~~ in ~~equal~~banks ~~monthly~~is ~~installments~~insured ~~over~~by the ~~extended~~Federal ~~term~~Deposit ofInsurance ~~the~~Corporation ~~Management~~for ~~Agreement.~~up ~~Before the~~to ~~acquisition, the Sellers paid~~ $~~750~~250,000 ~~per the terms of the Management Agreement~~.

~~Through~~The ~~the acquisition, the Sellers’ rights and obligations under the CMSA transferred to the~~ Company, ~~including~~operates ~~the~~in ~~payment~~markets ~~of an~~that ~~additional~~are ~~$250,000~~highly ~~within~~competitive ~~10 days after receipt of the AZDHS approval to operate the facility;~~ and ~~the~~rapidly ~~Installment Payments~~changing. As ~~the~~Significant ~~Installment~~technological ~~Payments totaling $600~~changes,~~000~~ ~~are~~shifting ~~noninterest bearing~~customer needs, the ~~Company~~emergence ~~calculated the net present value~~ of ~~the~~competitive ~~Installment Payments~~products ~~to be $518,523 (~~or aservices ~~discount~~with ofnew ~~$81~~capabilities,~~477)~~ ~~based~~and onother anfactors 8%could ~~cost~~negatively ofimpact ~~capital (which is consistent with borrowing rate of~~ the Company’s ~~other~~operating ~~notes)~~results. ~~The~~State ~~Company~~and ~~recorded~~federal ~~the~~government ~~aggregate~~laws ~~present~~could ~~value~~have ofa ~~these~~material ~~payments~~adverse ofimpact ~~$518,523~~on ~~as part of~~ the ~~acquisition~~ ~~cost of the Management Agreement, which will be amortized over five years, the length of the Management Agreement.~~Company’s ~~Amortization~~future ~~expense~~revenues ~~for twelve months ended December 31, 2019~~ and ~~2018,~~results ~~was~~of ~~$379,631 and $216,932, respectively~~operations.

~~Since~~The ~~the~~Company’s ~~assets,~~products ~~including~~require aspecific ~~$250,000~~components ~~balance~~that ~~due~~currently ~~from~~are ~~Future~~available ~~Farm Technologies, was acquired~~ from ~~related~~a ~~parties,~~limited ~~the~~number ~~assets were recorded at their historical acquisition cost~~ of ~~$1,000,000~~sources. The Company purchases ~~issued~~some ~~5,000,000~~of ~~Warrants~~its tokey ~~the~~products ~~Sellers with an exercise price of $0.01~~ and ancomponents ~~expiration~~from ~~date~~single ~~of May 9, 2023~~vendors. ~~Based~~During ~~on a Black-Sholes Merton model,~~ the ~~Warrants~~years ~~were~~ended ~~valued~~December ~~at $5~~31,~~450,000. Since~~ ~~the~~2020 ~~assets~~and ~~acquired were acquired from related parties~~2019, ~~the difference of $4~~its ballasts,~~450,000~~ ~~between the fair value of the Warrants granted of $5~~lamps,~~450,000~~ and ~~the historical acquisition cost of $1~~reflectors,~~000,000~~ ~~was~~which ~~recorded~~comprised asthe ~~related~~clear ~~party~~majority ~~compensation~~of ~~cost in~~ the ~~accompanying~~ ~~consolidated~~Company’s ~~statements~~purchases ofduring ~~operations.~~those ~~The $250~~periods,~~000~~ ~~receivable~~were each ~~was~~only ~~received~~purchased byfrom ~~the~~one ~~Company~~separate ~~during the year ended December 31, 2018~~vendor.

InThe ~~the~~Company ~~first~~performs ~~quarter~~a ofregular ~~2019,~~review ~~the~~of ~~Company~~customer ~~recorded~~activity ~~$162,699~~and ofassociated ~~amortization~~credit ~~expense.~~risks Inand ~~June~~does ~~2019,~~not ~~the~~require ~~Company~~collateral ~~determined~~or ~~that~~other ~~its~~arrangements. ~~intangible~~There ~~assets~~ were ~~impaired~~no ~~after~~customers ~~assessing~~that ~~the~~accounted ~~impact~~for more than 10% of the Company’s ~~current~~revenue ~~lack~~for ~~of liquidity,~~ the ~~recent~~years ~~lease abandonment~~ended ofDecember ~~its planned Arizona cultivation facility (Note 7)~~31, 2020 and ~~the~~2019. ~~recent~~Shipments ~~Deed~~to incustomers ~~Lieu~~outside ofthe ~~Foreclosure~~United ~~Release~~States ~~and~~comprised ~~Settlement Agreement~~less ~~with~~than ~~its~~5% ~~Lender~~ of aour ~~facility~~sales infor ~~Arizona (Note 10). The Company based on its assessment, recorded an impairment charge of $1,138,892, which is reflected in~~ the ~~year~~years ended December 31, 2020 and 2019, respectively.

As of December 31, ~~2018~~2020, ~~the~~three ~~remaining~~customers ~~Management~~accounted ~~Agreement~~for ~~obligation~~37%, ~~was $781~~23%,~~408~~ ~~(net~~and 15% of ~~discount~~the ofCompany’s ~~$68,592)~~trade ~~for~~accounts ~~which~~receivable ~~$372~~balance,~~727~~ ~~is reflected as current~~ and ~~$408,681 was reflected~~ as ~~long term in the accompanying consolidated balance sheet. As~~ of December 31, 2019, ~~the~~two ~~remaining~~customers ~~Management~~accounted ~~Agreement~~for ~~obligation~~24% ~~was $798,589 (net of discount of $51,411)~~ and is10% ~~reflected as a current liability in the accompanying consolidated balance sheet. As~~ of ~~December 31, 2019,~~ the Company’s istrade ~~past~~accounts ~~due~~receivable ~~on its Installment Payments obligations under the Management Agreement~~ balance.

~~NOTE~~Segment ~~5 – NOTES PAYABLE TO RELATED PARTIES – PAST DUE~~Reporting

~~Notes~~The ~~payable~~Company tooperates ~~related~~in ~~parties~~one ~~consists~~segment for the manufacture and distribution of our products. In accordance with the ~~following~~“Segment atReporting” Topic ~~December~~of 31the ASC, ~~2019~~the Company’s chief operating decision maker has been identified as the Chief Executive Officer and ~~2018~~President, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one segment, all financial information required by “Segment Reporting” can be found in the accompanying consolidated financial statements.

	December 31, 2019		December 31, 2018
Notes payable to officers/shareholders – past due (a)		600,000		600,000
Notes payable to related party – past due (b)		150,000		-
Notes payable to related parties – past due (c)		40,000		40,000
Total	$	790,000	$	640,000

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. ASU 2016-13 requires entities to use a forward-looking approach based on current expected credit losses (“CECL”) to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. ASU 2016-13 is effective for the Company beginning January 1, 2023, and early adoption is permitted. The Company does not believe the potential impact of the new guidance and related codification improvements will be material to its financial position, results of operations and cash flows.

F-12

a.In August ~~On May 9~~2020, ~~2016,~~ the ~~Company~~FASB ~~entered~~issued ~~into~~ASU ~~note~~No. ~~payable~~2020-06 ~~agreements~~(“ASU 2020-06”) “Debt—Debt with ~~Alan~~Conversion ~~Lien~~and Other Options (Subtopic 470-20) and ~~Alvin~~Derivatives ~~Hao,~~and ~~each~~Hedging—Contracts ain ~~former~~Entity’s ~~officer~~Own ~~and~~Equity ~~director,~~(Subtopic to815-40): ~~borrow~~Accounting ~~$300,000~~for ~~under~~Convertible Instruments ~~each~~and ~~individual~~Contracts ~~note~~in an Entity’s Own Equity.” ~~Pursuant~~ASU to2020-06 ~~the~~will ~~terms~~simplify ofthe ~~each~~accounting offor ~~these~~convertible instruments ~~agreements,~~by reducing the ~~Company~~number ~~borrowed~~of ~~$300,000~~accounting ~~from~~models ~~each~~for ofconvertible ~~Alan~~debt ~~Lien~~instruments and ~~Alvin~~convertible ~~Hao~~preferred stock. ~~The~~Limiting the ~~notes~~accounting ~~accrue~~models ~~interest~~will atresult ain ~~rate~~fewer ofembedded 8%conversion ~~per~~features ~~annum,~~being ~~are~~separately ~~unsecured~~recognized ~~and~~from ~~were~~the ~~due~~host oncontract oras compared ~~before~~with ~~May~~current ~~31, 2018~~GAAP. ~~The~~Convertible ~~loans~~instruments ~~are~~that ~~currently~~continue ~~past~~to ~~due.~~be Asubject ~~total~~to ofseparation ~~$600,000~~models ~~was~~are ~~due~~(1) onthose ~~the~~with ~~combined~~embedded conversion ~~notes~~features atthat ~~December~~are ~~31,~~not ~~2019~~clearly and ~~2018,~~closely ~~respectively.~~related b.to Onthe ~~May~~host 8contract, ~~2019,~~that meet the ~~Company~~definition ~~entered~~of ~~into~~ a ~~note~~derivative, ~~agreement~~and that ~~with~~do ~~the~~not ~~sister~~qualify offor ~~Alvin~~a ~~Hao,~~scope aexception ~~former~~from ~~officer~~derivative accounting and ~~director,~~(2) toconvertible ~~borrow~~debt ~~$150,000.~~instruments ~~The~~issued ~~loan~~with ~~accrues~~substantial premiums ~~interest~~for atwhich 8%the ~~per~~premiums ~~annum~~are ~~(12%~~recorded onas ~~default),~~paid-in iscapital. ~~unsecured~~ASU ~~and~~2020-06 isalso ~~due~~amends onthe ~~November~~guidance 8,for ~~2019.~~the ~~The~~derivatives ~~note~~scope exception isfor ~~currently~~contracts ~~past~~in ~~due.~~an c.entity’s ~~The~~own ~~Company~~equity ~~entered~~to ~~into~~reduce ~~note~~form-over-substance-based ~~agreements~~accounting ~~with~~conclusions. ~~the~~ASU ~~parents~~2020-06 will ofbe ~~Alan~~effective ~~Lien,~~for the Company’s ~~Chief~~beginning ~~Executive~~January ~~Officer~~1, ~~and~~2024. ~~one~~Early ofadoption ~~its~~is ~~directors~~permitted, but no earlier than January 1, 2021, including interim periods within that year. ~~The~~Management ~~loans~~is ~~accrue~~currently ~~interest~~evaluating atthe ~~10%~~effect ~~per~~of ~~annum~~the adoption of ASU 2020-06 on the consolidated financial statements, ~~are~~but ~~unsecured~~currently ~~and~~does ~~were~~not ~~due~~believe onASU or2020-06 ~~before~~will ~~December~~have ~~31,~~a ~~2016.~~significant ~~The~~impact ~~loans~~on ~~are~~the ~~currently~~Company’s accounting ~~past~~for ~~due.~~its Aconvertible ~~total~~debt ofinstruments. ~~$40,000~~The iseffect ~~due~~will largely depend on the ~~loans~~composition asand terms of ~~each~~the offinancial instruments ~~December~~at ~~31,~~the ~~2019~~time ~~and~~of ~~2018~~adoption.

AtOther ~~December~~recent ~~31,~~accounting ~~2018,~~pronouncements ~~accrued~~issued ~~interest~~by on the ~~notes~~FASB, ~~payable~~its toEmerging ~~related~~Issues ~~parties~~Task ~~was $125~~Force,~~039.~~ ~~During~~ the ~~twelve~~American ~~months~~Institute ~~ended~~of ~~December~~Certified Public 31Accountants, ~~2019,~~and the ~~Company~~Securities ~~added~~and ~~$61,740~~Exchange ofCommission ~~additional~~did ~~accrued~~not ~~interest,~~or ~~and~~are ~~made~~not ~~interest~~believed ~~payments~~by ofmanagement ~~$37,347,~~to ~~leaving~~have ana ~~accrued interest~~material onimpact on the ~~notes~~Company’s ~~payable~~present toor ~~related~~future ~~parties~~financial ~~balance of $149,432 at December 31, 2019~~statements.

NOTE 62 –- ~~LEASE~~PROPERTY ~~PAYABLE~~AND EQUIPMENT

~~Our~~Property ~~principal~~and ~~executive~~equipment ~~offices~~consist ~~and~~of ~~warehouse~~the isfollowing ~~located~~ at ~~853~~December ~~Sandhill Avenue~~31, Carson, California, 90746. We occupy a 17,640 square foot facility pursuant to a five-year lease with an independent party ending on June 30, 2023, pursuant to which we pay $15,000 per month in rental charges. Effective January 1, 2020, ~~we relocated our principal executive offices~~ and warehouse to Upland, California (see Note 15), and abandoned our Carson, California lease. The Company remains obligated under its Carson, California lease, until such time the landlord releases us from our lease agreement. As of the date of this report, we have not been released from the lease agreement.2019:

The lease agreement above has a weighted average remaining lease term of 3.50 years as of December 31, 2019. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term.

	2020			2019

Machinery and equipment	$	67,000		$	81,000
Computer equipment		11,000			11,000
Furniture and fixtures		40,000			40,000
		118,000			132,000
Less: accumulated depreciation and amortization		(103,000	)		(110,000	)
Property and equipment, net	$	15,000		$	22,000

OnDepreciation ~~December~~expense ~~31,~~for ~~2019,~~ the ~~Company~~years ~~abandoned~~ended ~~its~~December ~~operating lease in Carson~~31, ~~California.~~2020 ~~Based~~and on2019 ~~the~~was ~~abandonment~~$7,000 ~~the Company determined its ROU asset was impaired~~ and ~~recorded an impairment charge of~~ $~~100~~33,000 ~~during the year ended December 31~~, ~~2019~~respectively.

~~Prior~~During ~~to January 1, 2019,~~ the ~~Company~~year ~~accounted~~ended ~~for~~December ~~leases under ASC 840~~31, ~~Accounting for Leases. Effective January 1~~2020, ~~2019,~~ the Company ~~adopted~~ ~~the~~disposed ~~guidance~~ of ~~ASC~~fully ~~842,~~depreciated ~~Leases~~property ~~(“ASC 842”), which requires an entity to recognize a ROU asset~~ and aequipment ~~lease liability~~of ~~for virtually all leases~~$14,000. ~~The~~During ~~Company adopted ASC 842 using a modified retrospective approach. As a result,~~ the ~~comparative~~year ~~financial~~ended ~~information~~December ~~has~~31, ~~not~~2019, ~~been updated and~~ the ~~required~~Company ~~disclosures~~disposed ~~prior to the date~~ of ~~adoption~~property ~~have not been updated~~ and ~~continue~~ toequipment bewith ~~reported~~a ~~under~~book ~~the~~value ~~accounting~~of ~~standards~~$7,000, resulting in ~~effect~~a ~~for~~loss ~~those periods. The adoption of ASC 842~~ on ~~January 1, 2019~~the ~~resulted~~disposal ~~in the recognition~~ of ~~operating~~property ~~lease ROU assets~~ and ~~lease~~equipment ~~liabilities for operating leases~~ of $~~645~~7,~~025~~000. ~~There was no cumulative-effect adjustment to accumulated deficit.~~

In February 2019, the Company terminated its Arizona facility lease thereby abandoning of leasehold improvements with a remaining unamortized balance of $217,000. The Company recorded the abandonment of leasehold improvements of $217,000 during the year ended December 31, 2019 as a component of operating expense in the consolidated statement of operations (see Note 5).

F-13

NOTE 3 – CONTRACT OBLIGATION ACQUIRED FROM RELATED PARTIES

In May 2018, the Company entered into an acquisition agreement with the members, which in the aggregate, owned 100% of the membership interests in YLK, a related party. The major asset of YLK is a Cultivation Management Services Agreement (the “Management Agreement”) with an Arizona licensee that was entered into on January 5, 2018. During the year ended December 31, 2019, the Company determined the acquired assets were fully impaired, and recorded an impairment charge of $1,139,000 accordingly. The Company has a continuing obligation under the Management Agreement of $799,000 (net of discount of $51,000) as of December 31, 2019. As of December 31, 2020, the remaining Management Agreement obligation was $816,000 (net of discount of $34,000) and is reflected as a current liability in the accompanying consolidated balance sheet. As of December 31, 2020, the Company is past due on its installment payments obligations under the Management Agreement.

NOTE 4 – NOTES PAYABLE TO RELATED PARTIES – PAST DUE

Notes payable to related parties consists of the following at December 31, 2020 and 2019:

	December 31, 2020		December 31, 2019

Notes payable to officers/shareholders – past due (a)		600,000		600,000
Notes payable to related party – past due (b)		150,000		150,000
Notes payable to related parties – past due (c)		40,000		40,000
Total	$	790,000	$	790,000

	a.	On May 9, 2016, the Company entered into note payable agreements with Alan Lien and Alvin Hao, each a former officer and director, to borrow $300,000 under each individual note. Pursuant to the terms of each of these agreements, the Company borrowed $300,000 from each of Alan Lien and Alvin Hao. The notes accrue interest at a rate of 8% per annum, are unsecured and were due on or before May 31, 2018. The loans are currently past due. A total of $600,000 was due on the combined notes at December 31, 2020 and 2019.

	b.	On May 8, 2019, the Company entered into a note agreement with the sister of Alvin Hao, a former officer and director, to borrow $150,000. The loan accrues interest at 8% per annum (12% on default), is unsecured and is due on November 8, 2019. The note is currently past due. A total of $150,000 was due on the loans as of December 31, 2020 and 2019.

	c.	The Company entered into note agreements with the parents of Alan Lien, the Company’s Chief Executive Officer and one of its directors. The loans accrue interest at 10% per annum, are unsecured and were due on or before December 31, 2016. The loans are currently past due. A total of $40,000 was due on the loans as of December 31, 2020 and 2019.

At December 31, 2019, accrued interest on the notes payable to related parties was $149,000. During the year ended December 31, 2020, the Company added $70,000 of additional accrued interest, and made interest payments of $32,000, leaving an accrued interest on the notes payable to related parties balance of $187,000 at December 31, 2020.

NOTE 5 – LEASE PAYABLE

In 2019, our principal executive offices and warehouse were located at 853 Sandhill Avenue, Carson, California, 90746. We occupied a 17,640 square foot facility pursuant to a five-year lease with an independent party ending on June 30, 2023, pursuant to which we paid $15,000 per month in rental charges. On December 31, 2019, we abandoned our Carson, California lease. The Company remains obligated under its Carson, California lease, until such time the landlord releases us from our lease agreement. Based on the abandonment, the Company determined its ROU asset was impaired and recorded an impairment charge of $100,000 during the year ended December 31, 2019. During the year ended December 31, 2020, management determined it no longer had access to the Carson, California facility, and recorded an impairment charge for the remaining ROU asset balance of $427,000, which was charged to operating expenses in the consolidated statements of operations for the year ended December 31, 2020. As of the date of this report, the Company has not been released from the lease agreement, and no lease payments were made during the year ended December 31, 2020. The remaining balance of the lease obligation was $556,000 at both December 31, 2020 and 2019.

F-14

On January 1, 2020, the Company relocated its principal executive offices and warehouse to 1689-A Arrow Rt., Upland, California, 91786. The Upland, California lease is for a 2,974 square foot facility pursuant to a three-year lease with an independent party ending on January 31, 2023, pursuant to which it pays $2,800 per month in rental charges. On January 1, 2020, the Company recognized an operating lease ROU asset and lease liability of $89,000, related to the Upland, California operating lease. During the year ended December 31, 2020, the Company reflected amortization of the ROU assets of $26,000 related to its Upland, California operating lease, resulting in an ROU asset balance of $63,000 as of December 31, 2020.

As of December 31, 2019, liabilities recorded under operating leases were $556,000. During the year ended December 31, 2020, the Company added $89,000 in lease liabilities related to its Upland, California operating lease, and made lease payments of $23,000 towards its operating lease liability. As of December 31, 2020, liabilities under operating leases amounted to $622,000, of which $440,000 were reflected as current due.

The lease agreements above have a weighted average remaining lease term of 3.50 years as of December 31, 2020. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Rent expense is recognized on a straight-line basis over the lease term.

Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.

The components of rent expense and supplemental cash flow information related to leases for the period are as follows:

	Year ended December 31, 2019
	Year ended December 31, 2020
Lease Cost
Operating lease cost (included in general and administration in the Company’s statement of operations)	$	~~180~~36,000
Other Information
Cash paid for amounts included in the measurement of lease liabilities during the year ended December 31, 2019	$	-
Cash paid for amounts included in the measurement of lease liabilities during the year ended December 31, 2020	$	-
Weighted average remaining lease term – operating leases (in years)		3.50
Average discount rate – operating leases		10.0	%

F-13

The supplemental balance sheet information related to leases for the period is as follows:

	At December 31, 2019
	At December 31, 2020
Operating leases
ROU assets, net of accumulated amortization of $117,618 and an impairment charge of $100,000	$	427,407
ROU assets, net of accumulated amortization of $144,000 and an impairment charge of $527,000	$	36,000
Current operating lease liabilities	$	~~133~~440,~~188~~000
Long-term operating lease liabilities		~~422~~182,~~525~~000
Total operating lease liabilities	$	~~555~~622,~~713~~000

F-15

Maturities of the Company’s lease liabilities are as follows:

Year Ending	Operating Leases
2020	$	182,250
2021	$	406,000
2021		189,000
2022		225,000
2022		189,000
2023		97,000
2023		94,500
2024		6,000
2024		-
2025		-
Total lease payments		~~654~~734,~~750~~000
Less: Imputed interest/present value discount		(99,037	)
Less: Imputed interest		(112,000	)
Present value of lease liabilities	$	555,713
Total operating lease liability		622,000
Current portion		(440,000	)
	$	182,000

Rent expense for the twelve months ended December 31, ~~2019~~2020 and ~~2018~~2019 was $~~495~~36,~~670~~000 and $~~361~~316,~~868~~000, respectively.

NOTE 76 – LEGAL ~~SETTLEMENTS~~OBLIGATIONS PAYABLE

Lease Abandonment Settlement

On February 15, 2019, MSCP, L.L.C (“MSCP”), filed suit in the Superior Court of Arizona, County of Maricopa, Case No. CV2019-001613 against the Company and YLK. The case arises from YLK’s alleged breach of a certain lease agreement dated May 19, 2018 (the “Lease”), for the lease of certain real property located at 4301 W. Buckeye Road, Phoenix, Arizona 85043 (the “Premises”), between MSCP and YLK, which the Company guaranteed. MSCP filed the lawsuit after YLK provided a notice of termination for, amongst other reasons, MSCP’s failure to disclose various material information regarding code, safety, structural and other issues in the Premises that rendered the Premises unsuitable for use, unless the Company undertook significant and extraneous costs that were not contemplated under the Lease to remedy said issues in and outside of the Premises. MSCP’s complaint alleged counts for breach of lease and waste and breach of guaranty. MSCP is seeking compensatory damages, rents and other charges due under the lease, and attorney’s fees and costs. The Company just recently filed its answer denying the allegations as well as having filed counterclaims for fraud in the inducement, negligent misrepresentation, breach of the implied covenant of good faith and fair dealing, rescission of contract, unjust enrichment and punitive damages. On December 12, 2019, MSCP was awarded a default ~~judgement~~judgment against the Company in the amount of $1,487,000, which is recorded as a charge to operating expenses in the consolidated statements of operations for the ~~twelve~~year ~~months~~ ended December 31, 2019. NoDuring the year ended December 31, 2020, interest of $147,000 was added, leaving a balance owed of $1,634,000, for which the Company negotiated a settlement for a total consideration of $193,000 and recorded a gain on the settlement of legal obligations of $1,441,000. The $193,000 settlement payments were ~~made~~comprised ~~during~~of ~~the~~$150,000 ~~twelve~~in ~~months~~cash, ~~ended~~and ~~December~~the 31issuance of 3,333,333 ~~2019~~shares of the Company’s common stock valued at $43,000.

Employment Matter ~~Judgement~~Judgment

On ~~September~~or 27about June 25, ~~2019~~2018, ~~Dennis~~Matthew ~~Forchic~~Geschke (the “Plaintiff”) filed a breach of contract case against the Company in the ~~Los~~ ~~Angeles~~San Diego Superior Court of ~~Los~~San ~~Angeles~~Diego, California~~, under case number 19STCV34592, alleging that the Company wrongfully terminated the Plaintiff’s employment agreement on February 5, 2018~~. The Plaintiff ~~claims~~claimed damages ~~of $646,000~~ for ~~unpaid~~breach ~~severance, unpaid~~of ~~reimbursed~~an ~~expenses,~~employment ~~and~~contract ~~unpaid~~when ~~health~~the Company ~~benefits.~~terminated ~~In addition,~~ the Plaintiff’s ~~claims~~employment ~~damages~~agreement ~~for failing to compensate Plaintiff for 3,000,000 stock options which vested~~ on ~~termination.~~February ~~As of December 31~~22, 2018~~, the Company had recorded $558,469 related to this matter as $448,718 Due to former officer and $139,751 as Accounts payable and accrued expenses~~. On ~~March~~June 326, 2020, the Plaintiff was awarded a ~~judgement~~default judgment against the Company in the amount of $646,000, plus post judgment interest, as well as the vesting of options to purchase 1,000,000 shares of the Company’s common stock. During the year ended December 31, 2019, the previous year recording of $448,718 Due to former officer and $139,751 as Accounts payable and accrued expenses, was reclassified to Legal Settlement Payable on the Consolidated Balance Sheet. During the year ended December 31, 2019, the Company recorded an additional $57,531 of legal expenses, leaving a total balance due to Plaintiff of $646,000 ~~at December 31, 2019~~. No payments were made during the ~~twelve~~year ~~months~~ ended December 31, ~~2019~~2020.

~~F-14~~On September 27, 2019, Dennis Forchic (the “Plaintiff”) filed a breach of contract case against the Company in the Los Angeles Superior Court of Los Angeles, California, under case number 19STCV34592, alleging that the Company wrongfully terminated the Plaintiff’s employment agreement on February 5, 2018. The Plaintiff claims damages of $646,000 for unpaid severance, unpaid reimbursed expenses, and unpaid health benefits. In addition, the Plaintiff claims damages for failing to compensate Plaintiff for 3,000,000 stock options which vested on termination. As of December 31, 2018, the Company had recorded $588,000 related to this matter. On March 3, 2020, the Plaintiff was awarded a judgment against the Company in the amount of $646,000, plus post judgment interest, as well as the vesting of options to purchase 1,000,000 shares of the Company’s common stock. During the year ended December 31, 2019, the Company recorded an additional $58,000 of legal expenses, leaving a total balance due to Plaintiff of $646,000 at December 31, 2019. During the year ended December 31, 2020, interest of $38,000 was added, leaving a balance owed of $684,000, for which the Company negotiated a settlement for a total cash consideration of $165,000 and recorded a gain on the settlement of legal obligations of $519,000.

Breach of Contract

On September 12, 2019, DPA, Inc., or DPA, filed suit in the Superior Court of Arizona, County of Maricopa, Case No. CV2019-008265 against us. The plaintiff alleges the Company breached an agreement to pay DPA for architectural design services related to a facility in Arizona and has requested a judgment for $251,923 plus interest. On September 18, 2019, the DPA was awarded judgement against the Company for $251,923 plus interest at 18% per annum from June 6, 2019 until paid. No payments were made during the twelve months ended December 31, 2019.

On August 7, 2019, Rose Law Group PC (“RLG”) filed a breach of contract case against the Company in the Superior Court of the State of Arizona, County of Maricopa, Case No. CV2019-008484 against the Company. RLG alleges breach of a contract to pay RLG for legal representation, and requested a judgment for $143,836. On October 17, 2019, RLG was awarded judgment against the Company for $150,256 plus interest at 12% per annum until paid.

NOTE 8 – LOANS PAYABLE

Loan payable consisted of the following as of December 31, 2019 and 2018:

	December 31, 2019		December 31, 2018
Term loan (a)	$	64,375	$	-
Automobile loan (b)		-		2,548
Loans payable	$	64,375	$	2,548

	a.	On May 21, 2019, the Company entered into a loan agreement with Celtic Bank in the principal amount of $150,000 with interest at 40.44% per annum and due on May 21, 2020. The loan was guaranteed by Alvin Hao, a former officer of the Company. During the twelve months ended December 31, 2019, the Company made principal payments of $85,625, leaving a total of $64,375 owed on the loan as of December 31, 2019.
	b.	At December 31, 2018, $2,548 was due on a loan agreement for a purchased automobile. During the twelve months ended December 31, 2019, the Company made payments of $2,548, and the loan was retired.

NOTE 9 – CONVERTIBLE SECURED NOTE PAYABLE TO RELATED PARTY

Secured note payable to related party consists of the following as of December 31, 2019 and 2018:

	December 31, 2019			December 31, 2018
YA II PN, Ltd.	$	1,750,000		$	1,500,000
Less debt discount		(153,470	)		(247,032	)
Secured note payable, net	$	1,596,530		$	1,252,968

YA II PN Ltd May 2018 Convertible Note

On May 10, 2018, the Company issued a secured debenture (the “2018 Note”) to YA II PN Ltd. (“YA II PN”) in the principal amount of $1,500,000 with interest at 8% per annum (18% on default) and due on February 9, 2019. The 2018 Note was amended effective February 9, 2019 (see below). The 2018 Note is secured by all the assets of the Company and its subsidiaries. As part of the issuance, the Company also granted YA II PN 5-year warrants to purchase a total of 7,500,000 shares of the Company per the following terms.

(a) A warrant, or Warrant #1, to purchase 1,000,000 Warrant Shares at an exercise price of $1.50 per share for a term expiring on May 10, 2023;

F-15

(b) A warrant, or Warrant #2, purchase 2,250,000 shares of common stock at an exercise price of $1.50 per share for a term expiring on May 10, 2023. At any time, the Company has the right and option to purchase any unexercised shares of common stock underlying Warrant #2 for a purchase price of $0.03 per share so purchased if and only if the average volume weighted average price, or VWAP (as reported by Bloomberg, LP) of the Company’s common stock is greater than $1.75 per share for the five (5) consecutive trading days immediately preceding the Company’s delivery of a notice of exercise. The Company has the right and option to compel YA II PN to exercise and purchase shares of common stock underlying Warrant #2 on the terms set forth in Warrant #2 if and only if the average VWAP of the Company’s common stock is greater than $1.75 per share for the five (5) consecutive trading days immediately preceding the Company’s delivery of a notice of exercise.

	(c)	A warrant, or Warrant #3, to purchase 2,250,000 shares of common stock at an exercise price of $1.50 per share for a term expiring on May 10, 2023. At any time, the Company has the right and option to purchase any unexercised shares of common stock underlying Warrant #3 for a purchase price of $0.03 per share so purchased if and only if the average VWAP (as reported by Bloomberg, LP) of the Company’s common stock is greater than $2.00 per share for the five (5) consecutive trading days immediately preceding the Company’s delivery of a notice of exercise.
		The Company has the right and option to compel YA II PN to exercise and purchase shares of common stock underlying Warrant #3 on the terms set forth in Warrant #3 if and only if the average VWAP of the Company’s common stock is greater than $2.00 per share for the five (5) consecutive trading days immediately preceding the Company’s delivery of a notice of exercise.
	(d)	A warrant, or Warrant #4, to purchase 2,000,000 shares of common stock at an exercise price of $1.50 per share for a term expiring on May 10, 2023. At any time, the Company has the right and option to purchase any unexercised shares of common stock underlying Warrant #4 for a purchase price of $0.03 per share so purchased if and only if the average VWAP (as reported by Bloomberg, LP) of the Company’s common stock is greater than $1.50 per share for the five (5) consecutive trading days immediately preceding the Company’s delivery of a notice of exercise.
		The Company has the right and option to compel YA II PN to exercise and purchase the shares of common stock underlying Warrant #4 on the terms set forth in Warrant #4 if and only if the average VWAP of the Company’s common stock is greater than $2.50 per share for the five (5) consecutive trading days immediately preceding the Company’s delivery of a notice of exercise.

The Company determined that the exercises prices of the warrants were not a fixed amount because they were subject to an adjustment based on the occurrence of future events. As such, the Company determined that the conversion feature and the warrants created a derivative with a fair value of $7,677,406 at the date of issuance. The Company accounted for the fair value of the derivative up to the face amount of the 2018 Note of $1,500,000 as a valuation discount to be amortized over the life of the 2018 Note, and the excess of $6,177,406 was recorded as a finance cost for the twelve months ended December 31, 2018. During the twelve months ended December 31, 2019 and 2018, amortization of valuation discount was $247,032 and $1,252,968 was recorded as an interest cost, leaving no remaining unamortized balance of the valuation discount at December 31, 2019.

Amendment to Secured Note Payable to Related Party

On February 25, 2019, the Company entered into an amendment agreement (the “Amendment”) with YA II PN, which amended (i) the secured promissory note in the principal face amount of $1.5 million issued on May 10, 2018 (the “Note”), (ii) a warrant, dated May 10, 2018 for 1,000,000 shares of the Company’s common stock at an exercise price of $1.50 (“Warrant #1”), (iii) a warrant, dated May 10, 2018 for 2,250,000 shares of the Company’s common stock at an exercise price of $1.50 (“Warrant #2”), (iv) a warrant, dated May 10, 2018 for 2,250,000 shares of the Company’s common stock at an exercise price of $1.50 (“Warrant #3”), and (v) a warrant, dated May 10, 2018 for 2,000,000 shares of the Company’s common stock at an exercise price of $1.50 (“Warrant #4”, and together with Warrant #1, Warrant #2 and Warrant #3, the “Warrants”).

Pursuant to the Amendment, the Note was amended to (i) extend the maturity date of the Note from February 9, 2019 to August 9, 2019 and (ii) provide a conversion right, in which the principal amount of the Note, together with any accrued but unpaid interest, could be converted into the Company’s common stock at a conversion price of $0.50 a share. The Note was not convertible previously.

In addition, pursuant to the Amendment, the Warrants were amended to (i) reduce the exercise price from $1.50 per share to $0.50, $0.75, $1.00 and $1.25 per share for Warrant #1, Warrant #2, Warrant #3 and Warrant #4, respectively, and (ii) remove in Warrant #2, Warrant #3 and Warrant #4, the Company’s right of redemption and right to compel exercise of such Warrants. The Company calculated the fair market value of the Warrants before and after the modifications above, and recorded the difference of $129,384 as a financing cost included in other expenses during the twelve months ended December 31, 2019.

F-16

~~Second~~Breach ~~Amendment~~of ~~to Secured Note Payable to Related Party~~Contract

On ~~October~~September 2912, 2019, ~~the~~DPA, ~~Company~~Inc., ~~entered~~or ~~into~~DPA, afiled ~~second~~suit ~~amendment~~in ~~agreement (~~the ~~“Second~~Superior ~~Amendment”)~~Court ~~with~~of YAArizona, IICounty PNof Maricopa, ~~which amended~~Case ~~(i)~~No. ~~the~~CV2019-008265 against ~~secured~~us. ~~promissory~~The ~~note~~plaintiff inalleges the ~~principal~~Company ~~face~~breached ~~amount~~an ofagreement ~~$1.5~~to ~~million~~pay ~~issued~~DPA onfor ~~May~~architectural ~~10,~~design ~~2018.~~services ~~Pursuant~~related to ~~the Amendment,~~a ~~the~~facility ~~Note~~in ~~was~~Arizona ~~amended~~and tohas ~~(i)~~requested ~~extend~~a ~~the~~judgment ~~maturity~~for ~~date~~$252,000 ofplus ~~the~~interest. ~~Note~~On ~~from~~September ~~August 9~~18, 2019 ~~to June 30~~, ~~2020~~the ~~and~~DPA ~~(ii)~~was ~~provide~~awarded a ~~conversion~~judgment ~~right,~~against ~~in which~~ the ~~principal~~Company ~~amount~~for of$252,000 ~~the~~plus ~~Note,~~interest ~~together~~at ~~with~~18% ~~any~~per ~~accrued~~annum ~~but~~from ~~unpaid~~June ~~interest~~6, ~~could~~2019 beuntil ~~converted~~paid. ~~into~~During the ~~Company’s common~~year ~~stock~~ended atDecember a31, 2019, ~~conversion~~interest ~~price at 75%~~ of ~~the~~$22,000 ~~lowest~~was ~~volume~~added, ~~weighted~~leaving ~~average~~a ~~price~~balance ~~(VWAP)~~owed of ~~the~~$274,000 ~~Company~~at ~~Common~~December ~~Stock~~31, ~~during the~~2019. 10During ~~trading~~the ~~days~~year ~~immediately~~ended ~~preceding~~December ~~the~~31, 2020, ~~conversion~~interest ~~date.~~of ~~The~~$26,000 ~~Note~~ was ~~convertible~~added, ~~previously~~leaving ata ~~$0.50~~balance ~~per~~owed ~~share.~~of ~~The~~$300,000, ~~Company concluded~~for ~~that~~which the ~~modification~~Company ~~was~~negotiated a ~~significant~~settlement ~~change~~for ina ~~the~~total consideration ~~conversion~~of ~~feature~~$37,000 and ~~treated~~recorded ~~the change as~~ a ~~debt~~gain ~~extinguishment cost.~~on ~~The Company calculated~~ the ~~fair~~settlement ~~market value~~ of ~~the~~legal ~~Secured~~obligations ~~Note~~of ~~Payable~~$263,000. ~~before~~The ~~and after the modifications above~~$37,000 ~~and~~settlement ~~recorded~~payments ~~the~~were ~~difference~~comprised of $~~962~~20,000 asin acash, ~~debt~~and ~~extinguishment~~the ~~cost~~issuance ~~and~~of ~~included~~1,000,000 inshares ~~other~~of ~~expenses~~the ~~during~~Company’s ~~the~~common ~~twelve~~stock ~~months~~valued ~~ended~~at ~~December 31~~$17, ~~2019~~000.

InOn ~~addition~~August 7, ~~pursuant~~2019, toRose ~~the~~Law ~~Second~~Group ~~Amendment,~~PC ~~the~~(“RLG”) ~~Warrants~~filed ~~were~~a ~~amended~~breach toof ~~(i)~~contract ~~reduce~~case against the ~~exercise~~Company ~~price~~in ~~from~~the ~~$0.50~~Superior Court of the State of Arizona, ~~$0.75~~County of Maricopa, $1Case No.~~00 and~~ $1CV2019-008484 against the Company.25 ~~per~~RLG ~~share~~alleges breach of a contract to pay RLG for ~~Warrant~~legal #1representation, ~~Warrant~~and ~~#2,~~requested ~~Warrant~~a #3judgment ~~and~~for ~~Warrant~~$144,000. #4On October 17, ~~respectively~~2019, toRLG ~~$0.05~~was ~~per~~awarded ~~share~~judgment against the Company for ~~all~~$150,000 ~~four~~plus ~~warrants. The~~interest ~~Company~~at ~~calculated~~12% ~~the~~per ~~fair~~annum ~~market~~until ~~value~~paid. ofDuring the ~~Warrants~~year ~~before~~ended ~~and~~December ~~after~~31, ~~the~~2020, ~~modifications~~additional ~~above~~settlement-related expenses of $7,000, and ~~recorded~~interest ~~the~~of ~~difference~~ $12,000 was added, leaving a balance owed of $64162,~~485~~000, asfor which the Company negotiated a settlement ~~financing~~for ~~cost~~a ~~included~~total incash ~~other~~consideration ~~expenses~~of ~~during~~$15,000 and recorded a gain on the ~~twelve~~settlement ~~months~~of ~~ended~~legal ~~December~~obligations ~~31,~~of ~~2019~~$147,000.

YANOTE II7 PN– ~~Ltd~~LOANS ~~October 2019 Convertible Note~~PAYABLE

OnNotes ~~October~~payable ~~29,~~consists ~~2019,~~of the ~~Company~~following ~~issued a convertible secured debenture (the “2019 Note”) to YA II PN Ltd. (“YA II PN”) in the principal amount of $275,000 with interest~~ at ~~10%~~December ~~per annum (15% on default) and due on April 29~~31, 2020. ~~The Company received net proceeds of $237,500, net of closing costs of $37,500. The 2019 Note is secured by all the assets of the Company~~ and ~~its~~December ~~subsidiaries. The 2019 Note provides a conversion right~~31, in which the principal amount of the Note, together with any accrued but unpaid interest, could be converted into the Company’s common stock at a conversion price at 75% of the lowest volume weighted average price (VWAP) of the Company Common Stock during the 10 trading days immediately preceding the conversion date. As such, the Company determined that the conversion feature created a derivative with a fair value of $167,000 at the date of issuance. The Company also granted YA II PN 5-year warrants to purchase a total of 5,500,000 shares of the Company at an exercise price of $0.05 per common share. The fair value of the warrants was determined to be $63,205. The aggregate amount of the closing costs, fair value of the derivative liability, and the fair value of the warrant, of $267,705 was recorded as a valuation discount to be amortized over the life of the 2019 ~~Note.~~:

During the twelve months ended December 31, 2019, amortization of valuation discount was $89,235 and was recorded as an interest cost, leaving a $178,470 remaining unamortized balance of the valuation discount at December 31, 2019.

	December 31, 2020			December 31, 2019

Notes payable to Celtic Bank – past due (a)	$	11,000		$	64,000
SBA Paycheck Protection Program loan (b)		205,000			-
SBA Economic Injury Disaster Loan (c)		150,000			-
Total loans payable		366,000			64,000
Loans payable, current portion		(11,000	)		(64,000	)
Loans payable, net of current portion	$	355,000		$	-

NOTE 10 – ACQUISITION OF FACILITY, LOAN AGREEMENT, AND SUBSEQUENT SETTLEMENT

	a)	On May 21, 2019, the Company entered into a loan agreement with Celtic Bank in the principal amount of $150,000 with interest at 40.44% per annum and due on May 21, 2020. The loan was guaranteed by Alvin Hao, a former officer of the Company. A total of $64,000 was owed on the loan as of December 31, 2019. During the year ended December 31, 2020, the Company made principal payments of $53,000, leaving a total of $11,000 owed on the loan as of December 31, 2020, and was past due. In February 2021, the loan was paid in full.

	b)	On May 7, 2020, the Company was granted a loan (the “PPP loan”) from Wells Fargo Bank in the aggregate amount of $205,000, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act.

		The PPP loan agreement is dated May 8, 2020, matures on May 7, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, and is unsecured and guaranteed by the U.S. Small Business Administration (“SBA”). The loan term may be extended to May 7, 2025, if mutually agreed to by the Company and lender. The Company applied ASC 470, Debt, to account for the PPP loan. The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company intends to use the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, it cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded. The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The Company was in compliance with the terms of the PPP loan as of December 31, 2020.

F-17

On June 7, 2020, the Company obtained an Economic Injury Disaster Loan (“EIDL”) from the SBA in the amount of $150,000. Interest on the loan is at the rate of 3.75% per year, and all loan payments are deferred for twelve months, at which time the balance is payable in monthly installments of $731 over a 30-year term. The loan is secured by all the Company’s assets. The Company was in compliance with the terms of the EIDL as of December 31, 2020.

NOTE 8 – CONVERTIBLE SECURED NOTE PAYABLE TO RELATED PARTY

Secured notes payable to related party consists of the following as of December 31, 2020 and December 31, 2019:

	December 31, 2020			December 31, 2019

YA II PN, Ltd.	$	2,275,000		$	1,775,000
Less debt discount		(220,000	)		(178,000	)
Secured note payable, net	$	2,055,000		$	1,597,000

On May 10, 2018 and October 29, 2019, the Company issued convertible secured debentures (“Notes”) to YA II PN Ltd. (“YA II PN”) in the principal amounts of $1,500,000 and $275,000, respectively, with interest rates of 8% and 10%, respectively, which matured in June 2020 and April 2020, respectively. The notes are currently past due. The Company is in discussion with YA II PN to extend the maturity date of the Notes. The Notes provide a conversion right, in which the principal amount of the Note, together with any accrued but unpaid interest, could be converted into the Company’s common stock at a conversion price at 75% of the lowest volume weighted average price (VWAP) of the Company’s Common Stock during the 10 trading days immediately preceding the conversion date. As part of the issuance, the Company also granted YA II PN 5-year warrants, which were modified, to purchase a total of 13,000,000 shares of the Company at an exercise price of $0.05 per share, with expiration dates ranging from May 2024 to December 2024.

During the year ended December 31, 2019, the Company twice entered into an amendment agreement with YA II, PN, which amended the secured promissory note in the principal face amount of $1.5 million issued on May 10, 2018 (the “Note”). The maturity date of the Note was first extended to August 9, 2019 and then to June 30, 2020. Furthermore, the Note was first amended to be converted into the Company’s common stock at a conversion price of $0.50 a share, as the Note was not convertible previously, and the Note was further amended to provide a conversion right, in which the principal amount of the Note, together with any accrued but unpaid interest, could be converted into the Company’s common stock at a conversion price at 75% of the lowest volume weighted average price (VWAP) of the Company Common Stock during the 10 trading days immediately preceding the conversion date. The Company calculated the fair market value of the Secured Note Payable before and after the modifications above and recorded the difference of $962,000 as a debt extinguishment cost and included in other expenses during the twelve months ended December 31, 2019.

The 7,500,000 warrants granted as part of the Note issuances were also twice modified to ultimately change the exercise price from $0.50 per share (1,000,000 warrants), $0.75 per share (2,250,000 warrants), $1.00 per share (2,250,000 warrants) and $1.25 per share (2,000,000 warrants) to $0.05 per share for all four warrants. Furthermore, the amendments removed the Company’s right of redemption and right to compel exercise on certain Warrants. The Company calculated the fair market value of the Warrants before and after the modifications above and recorded the difference of $194,000 as a financing cost included in other expenses during the twelve months ended December 31, 2019.

F-18

On February 13, 2020, the Company issued a note (the “2020 Note”) to YAII PN in the amount of $150,000. The 2020 Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of August 10, 2021. The Company received net proceeds of $125,000, net of closing costs of $25,000. The 2020 Note is secured by all the assets of the Company and its subsidiaries. The 2020 Note provides a conversion right, in which any portion of the principal amount of the 2020 Note, together with any accrued but unpaid interest, may be converted into the Company’s common stock at a conversion price equal to 75% of the lowest VWAP of the Company’s common stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. As such, the Company determined that the conversion feature created a derivative with a fair value of $109,000 at the date of issuance. The Company also granted YA II PN 5-year warrants with a fair value of $66,000, to purchase a total of 3,000,000 shares of the Company at an exercise price of $0.05 per common share. The aggregate amount of the closing costs, and the fair value of the derivative liability, was $177,000, of which $150,000 was recorded as a valuation discount on the 2020 Note to be amortized over the life of the 2020 Note, and $27,000 was recorded as a financing cost during the year ended December 31, 2020.

On September 23, 2020, the Company issued a note (the “September 2020 Note”) to YAII PN in the amount of $350,000. The September 2020 Note bears interest at a rate of 10% per annum (15% on default) and has a maturity date of March 23, 2021. The Company received net proceeds of $340,000, net of closing costs of $10,000. The September 2020 Note is secured by all the assets of the Company and its subsidiaries. The September 2020 Note provides a conversion right, in which any portion of the principal amount of the September 2020 Note, together with any accrued but unpaid interest, may be converted into the Company’s common stock at a conversion price equal to 75% of the lowest VWAP of the Company’s common stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. As such, the Company determined that the conversion feature created a derivative with a fair value of $322,000 at the date of issuance. The Company also granted YA II PN 5-year warrants with a fair value of $68,000, to purchase a total of 7,000,000 shares of the Company at an exercise price of $0.05 per common share. The aggregate amount of the closing costs, and the fair value of the warrants and derivative liability, was $389,000, of which $350,000 was recorded as a valuation discount on the September 2020 Note to be amortized over the life of the September 2020 Note, and $39,000 was recorded as a financing cost during the year ended December 31, 2020.

During the year ended December 31, 2019, amortization of valuation discount was $89,000 and was recorded as an interest cost, leaving a $178,000 remaining unamortized balance of the valuation discount at December 31, 2019. During the year ended December 31, 2020, valuation discounts of $500,000 were added as discussed above, and amortization of valuation discount of $458,000 was recorded as an interest cost, leaving a $220,000 remaining unamortized balance of the valuation discount at December 31, 2020.

At December 31, 2019, accrued interest on the convertible secured notes payable to related parties of $202,000 was included in accrued interest to related parties on the consolidated balance sheet. During the year ended December 31, 2020, interest of $29,000 was converted into common stock (see Note 11), and the Company added $171,000 of additional accrued interest, leaving an accrued interest to related parties balance of $344,000 at December 31, 2020.

As of December 31, 2020, 239,274,957 shares of common stock were potentially issuable under the conversion terms of the convertible secured notes.

NOTE 9 – ACQUISITION OF FACILITY, LOAN AGREEMENT, AND SUBSEQUENT SETTLEMENT

Acquisition of Facility

On April 2, 2019, the Company, through its ~~newly formed~~ wholly-owned subsidiary Extracting Point, entered into an agreement to purchase real property located at 2601 West Holly Street in Phoenix, Arizona (the “Property”) for $3,500,000. The Property ~~holds~~ held the approval and authorization for a Conditional Use Permit, which ~~allows~~allowed the Property to be used for the operation of a cultivation and infusion facility, allowing for the cultivation, harvesting, preparation, packaging and storing of medical cannabis, as well as extraction, refinement, infusion, production, preparation, packaging, and storage of manufactured and derivative oils, waxes, concentrates, edible and non-edible products that contain cannabis.

F-19

Loan Agreement

On April 2, 2019, Extracting Point entered into a loan agreement (the “Loan Agreement”) with Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016 (the “Lender”), pursuant to which Extracting Point borrowed $3,500,000 from the Lender (the “Loan”). The Loan iswas evidenced by an installment note – interest included (the “Note”), guaranteed by the Company pursuant to a corporate guaranty (the “Guaranty”) and iswas secured by a first priority lien on the Property pursuant to a deed of trust and assignment of rents between Extracting Point and Thomas Title & Escrow, for the benefit of the Lender (the “Deed of Trust”). Extracting Point used the net proceeds from the Loan to acquire the Property.

The Note, together with accrued and unpaid interest, was due and payable on March 31, 2024 (the “Maturity Date”). Interest on the Note was to accrue at the rate of 10% per annum. For the first 12 months, Extracting Point was to pay the Lender interest only of $29,167 per month. After the first 12 months, Extracting Point was to pay the Lender principal and interest of $88,769 per month. Extracting Point had the right to prepay the Note at any time, however, Extracting Point agreed to pay the first 36 months of interest, even if the Note was repaid prior to that date.

F-17

As additional consideration for the issuance of the Loan, Extracting Point and the Company agreed to pay the Lender an amount equal to five percent (5%) of the management fees (the “Management Royalty”) received relating to the services rendered on the Property, for a period of three years from the date an “Approval to Operate” is granted by the Arizona Department of Health Services (such date, the “Commencement Date”). In the event that the Commencement Date has not occurred on or prior to April 2, 2021, then Extracting Point and the Company agreed to pay the Lender an amount equal to five percent (5%) of the fair market value of the rent of the Property as if the Property was fully occupied (the “Rental Royalty”), such payments to be made each month for a period of thirty-nine months, provided, that, if the Commencement Date occurs after the Rental Royalty has commenced, the Rental Royalty payments shall cease and the Management Royalty payments shall commence, and any amounts paid as a Rental Royalty shall be credited against any Management Royalty owed.

In connection with the Loan, the Company issued to the Lender a warrant (the “Warrant”) to purchase 1,000,000 shares of the Company’s common stock, exercisable for five years from issuance at an exercise price of $1.00 per share. The Warrant exercise price is subject to adjustment only in the event of a stock dividend or split.

Extracting Point was delinquent in payment under the Note, and the Lender informed Extracting Point and the Company that unless payment was made current or an agreement reached between the parties, the Lender would declare Extracting Point in default, call the entire Note due and payable, record a notice of default of the Deed of Trust, and take any other actions it deemed necessary or appropriate against the Company and Extracting Point.

Settlement Agreement

On May 24, 2019, the Company and Extracting Point entered into a Deed in Lieu of Foreclosure Release and Settlement Agreement (the “Settlement Agreement”) with the Lender. Pursuant to the Settlement Agreement, Extracting Point executed a Deed in Lieu of Foreclosure (the “Deed”), conveying the real property located at 2601 West Holly Street in Phoenix, Arizona to the Lender.

In exchange, the Lender agreed to release the Company and Extracting Point from all their obligations under the Loan Agreement, the Note, the Deed of Trust and the Guaranty. Pursuant to the Settlement Agreement, the Loan Agreement, the Note, the Deed of Trust and the Guaranty were terminated. In addition, the Warrant was returned to the Company and canceled.

~~Extracting~~NOTE ~~Point~~10 ~~was~~– ~~delinquent~~DERIVATIVE in payment under the Note, and the Lender informed Extracting Point and the Company that unless payment was made current or an agreement reached between the parties, the Lender would declare Extracting Point in default, call the entire Note due and payable, record a notice of default of the Deed of Trust, and take any other actions it deemed necessary or appropriate against the Company and Extracting Point.LIABILITY

~~NOTE~~The 11FASB –has ~~DERIVATIVE~~issued ~~LIABILITY~~authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion prices and the exercise prices of the notes as described in Note 8 were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or they were variable. Since the number of shares is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to settle the conversion option. In accordance with the FASB authoritative guidance, the conversion features of the notes have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.

The FASB has issued authoritative guidance whereby instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The conversion prices and the exercise prices of the notes, SeriesF-A preferred stock, and warrants described in Notes 8, 9 and 10 were not a fixed amount because they were either subject to an adjustment based on the occurrence of future offerings or events or they were variable. Since the number of shares is not explicitly limited, the Company is unable to conclude that enough authorized and unissued shares are available to settle the conversion option. In accordance with the FASB authoritative guidance, the conversion features have been characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations.20

As of December 31, ~~2019~~2020, and ~~December 31~~2019, ~~2018,~~ the derivative liabilities were valued using either a probability weighted average Monte Carlo pricing model or the Black Scholes pricing model with the following assumptions:

	December 31, 2019			Issued During 2019			December 31, 2018			Issued During 2018
	At December 31, 2020			Issued During 2020			At December 31, 2019			Issued During 2019
Exercise Price	$	0.05		$	0.05		$	$ 0.~~22 – 1.50~~05		$	10.5005
Stock Price	$	0.01013		$	0.02011 – 0.025		$	0.3401		$	10.0902
Risk-free interest rate		10.~~55 – 1.60~~09	%		0.11 – 1.6448	%		21.5055 – 1.60	%		21.8364	%
Expected volatility		~~201-203~~268 – 278	%		~~147-165~~233 – 324	%		~~137~~201 – ~~147~~203	%		~~171~~147-165	%
Expected life (in years)		0.~~33-~~25 – 0.5062			0.50-0 – 1.6750			30.9633 – 40.3650			5.050-0.67	%
Expected dividend yield		0	%		0	%		0	%		0
Convertible Note	$	1,332,000		$	1,129,000		$	-			-
Fair value:
Warrants	$	-		$	-		$	2,160,806		$	7,677,406
Conversion feature	$	2,161,000		$	431,000		$	1,332,000		$	1,129,000
Fair Value:	$	1,332,000		$	1,129,000		$	2,160,806		$	7,677,406

The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the conversion feature of the notes was based on the remaining term of the notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends in the past and does not expect to pay dividends in the future.

~~F-18~~The balance of the derivative liability at December 31, 2019 was $1,332,000. During the year ended December 31, 2020, the Company recognized derivative liabilities of $431,000 upon issuance of a secured convertible notes (see Note 8), and recognized $398,000 as other expense, which represented the change in the fair value of the derivative from the respective prior period, leaving a $2,161,000 balance of the derivative liability at December 31, 2020.

During the prior years, the Company issued 7,950,000 warrants as part of its Convertible Notes and Series A preferred stock financings. The Company determined that the exercises prices of the warrants were not a fixed amount because they were subject to an adjustment based on the occurrence of future offerings or events. As a result, the Company had determined at issuance that the warrants should be classified as liabilities due to variability in shares to be issued and changes in exercise price due to down round protection. The fair value of these liabilities at December 31, 2018 was $2,~~160~~161,~~806~~000. During the year ended December 31, 2019, the Company adopted ASU 2017-11, which simplified the accounting for financial instruments with down round features. The adoption resulted in the reclassification of the Company’s derivative liability to equity of $2,~~160~~161,~~806. The Company recognized derivative liabilities of $167,~~000 ~~upon issuance of a secured convertible note (see Note 9), and recognized $203,000~~ as ~~other expense, which represented the change in the fair value~~ of ~~the~~January ~~derivative from the respective prior period. In addition~~1, ~~the Company recognized $962,000, which represented a change in the terms of two convertible notes, and recorded as a financing cost and included in other expense~~2019.

During the year ended December 31, ~~2018~~2019, the Company recognized derivative liabilities of $167,000 upon issuance of a secured convertible note (see Note 8),~~743~~ and recognized $203,~~170,~~000 as other expense, which represented the change in the fair value of the derivative from the respective prior period. In addition, ~~during~~ the ~~year~~Company ~~ended~~recognized ~~December~~a ~~31,~~derivative ~~2018,~~liability ~~the~~of ~~Company recognized~~ $4962,~~188,430,~~000 ~~which~~that ~~represented~~resulted ~~the~~from ~~extinguishment~~a ofchange ~~derivative~~in ~~liabilities,~~the terms of ~~which~~two ~~$2,389,437,~~convertible ~~was~~notes ~~included~~that inwas ~~other~~recorded ~~income,~~as ~~and~~a ~~the~~financing ~~remaining~~cost ~~$1,799,003,~~and ~~respectively,~~included ~~was recorded~~in toother ~~additional paid-in-capital~~expense. InThe ~~addition,~~balance of the ~~Company recognized~~ derivative ~~liabilities~~liability ofat $7December 31,~~677,406~~ ~~upon~~2019 ~~issuance of~~was ~~warrants (see Note 9)~~$1,332,000.

NOTE 1211 – SHAREHOLDERS’ EQUITY

Common ~~shares~~Shares ~~issued~~Issued ~~for~~on ~~cash~~Conversion of Convertible Note Payable

During the year ended December 31, ~~2018~~2020, the Company ~~received~~was ~~proceeds~~notified by YA II PN (see Note 8) in writing of their election to convert $129,~~068,~~000 of ~~from~~interest ~~the~~accrued ~~issuance~~on ofconvertible ~~821~~notes payable into 2,~~538~~287,066 shares of the Company’s common ~~stock,~~ at a conversion price of $10.300127 per share,. asAs ~~part~~the closing trading price on date of aconversion ~~Regulation~~was D$0.05 ~~offering~~per share, ~~and~~the fair market value of the shares issued on conversion of interest was $114,000. The Company ~~received~~recorded ~~proceeds~~ a loss on extinguishment of accrued interest of $~~500~~85,000, ~~from~~which represents YAthe IIdifference PNbetween ~~from~~the fair market value of the ~~sale~~shares issued of ~~500~~$114,000, ~~shares~~and the carrying value of ~~common~~the ~~stock~~accrued interest atof $~~1.00~~29,000, ~~per~~which ~~share~~is included as a component of other expense on the consolidated statements of operations for the year ended December 31, 2020.

~~Common shares issued for services~~F-21

~~The~~Common ~~Company~~Shares ~~entered~~Issued ~~into various consulting agreements with third parties (“Consultants”) pursuant~~ to which these Consultants provided business development, sales promotion, introduction to new business opportunities, strategic analysis and, sales and marketing activities. During the year ended December 31, 2019 and 2018, the Company issued an aggregate of 426,000 and 1,388,000 shares of common stock to these consultants, with a fair value of $177,750 and $1,676,557 at date of grant, respectively, which was recognized as compensation cost.Directors

~~Common~~The Company appointed certain directors and issued shares as part of their director compensation agreements. During the years ended December 31, 2020 and 2019, the Company issued toan ~~directors~~aggregate of 6,116,867 and ~~employees~~600,000 shares of common stock, with a fair value of $92,000 and $78,000 at date of grant, respectively, which was recognized as compensation cost.

~~The~~Common ~~Company~~Shares ~~appointed~~Issued ~~certain~~for directors and issued shares as part of new executive employment agreements. During the year ended December 31, 2019 and 2018, the Company issued an aggregate of 600,000 and 100,000 shares of common stock, with a fair value of $78,000 and $74,000 at date of grant, respectively, which was recognized as compensation cost.Services

OnThe ~~October~~Company ~~31,~~entered ~~2019,~~into ~~the~~various ~~Board~~consulting ofagreements ~~the~~with ~~Company~~third ~~appointed~~parties ~~Mr.~~(“Consultants”) ~~George~~pursuant ~~O’Leary~~to aswhich athese ~~director~~Consultants provided ~~and~~business ~~Executive~~development, ~~Chairman~~sales ofpromotion, ~~the~~introduction ~~Company. In~~to ~~connection~~new ~~with~~business ~~the~~opportunities, ~~appointment~~strategic ofanalysis ~~Mr.~~and ~~O’Leary,~~sales ~~the~~and ~~Company~~marketing activities. ~~granted~~No ~~him 500,000~~ shares offor ~~common~~services ~~stock,~~were ~~included~~issued infor the ~~common~~ ~~shares~~year ~~issued~~ended toDecember ~~directors~~31, ~~and~~2020. ~~employees~~During ~~above,~~the ~~and~~year ~~which~~ended ~~vested~~December ~~immediately~~31, ~~and~~2019, the heCompany isissued ~~entitled~~an toaggregate ~~receive equity compensation~~ of ~~$15~~426,000 of shares ~~per~~of ~~quarter~~common ~~thereafter~~stock asto ~~well~~these ~~as $5~~consultants,~~000~~ ~~per~~with ~~month~~a asfair ~~determined~~value byof ~~the~~$178,000 ~~Board~~at date of grant.

~~Shares~~Common ~~issued~~Shares onIssued ~~exercise~~for ofLegal ~~warrants~~Judgments

During the year ended December 31, ~~2018~~2020, wethe ~~received~~Company $1issued an aggregate of 4,~~446~~333,~~996~~333 inshares ~~proceeds~~of oncommon stock, with a fair value of $60,000 at the ~~exercise~~date of 2grant,~~306,360~~ ~~warrants~~as settlement of certain legal judgments (see Note 6).

Common shares issued on conversion of convertible note payable

During the year ended December 31, 2018, the Company was notified in writing that the Note holder elected to convert all remaining outstanding principal and interest accrued, which included the conversion of $1,750,000 of principal and $38,082 of interest. Upon the conversion of the Note, the Company issued an aggregate of 1,788,082 shares of its common stock. The balance of the debt discount of $1,555,556 was recorded as an interest cost during the twelve months ended December 31, 2018.

F-19

Common shares issued on conversion of Series-A convertible preferred shares

During the year ended December 31, 2018, the Company received notices of conversion from FirstFire, pursuant to which FirstFire elected to convert all of the outstanding Series-A into common shares of the Company. Upon the conversion of the balance of the Series-A, the Company issued 368,550 shares of common stock and no Series-A were outstanding as of December 31, 2018. Upon conversion, the unamortized discount of $351,000 was reflected as an interest cost for the twelve months ended December 31, 2018.

Standby Equity Distribution Agreement

On April 16, 2018, the Company entered into a SEDA with YA II PN. The SEDA establishes what is sometimes termed an equity line of credit or an equity draw-down facility. The $25,000,000 facility may be drawn-down upon by the Company in installments, the maximum amount of each of which is limited to $1,000,000. For each share of common stock purchased under the SEDA, YA II PN will pay 90% of the lowest VWAP of the Company’s shares during the five trading days following the Company’s draw-down notice to YA II PN. The VWAP that will be used in the calculation will be that reported by Bloomberg, LLC, a third-party reporting service. In general, the VWAP represents the sum of the value of all the sales of the Company’s common stock for a given day (the total shares sold in each trade times the sales price per share of the common stock for that trade), divided by the total number of shares sold on that day.

In connection with the SEDA, the Company issued to YA II PN, a five-year Commitment Fee Warrant (the “Fee Warrant”) to purchase 1,000,000 shares of the Company’s common stock at $0.01 per share. The aggregate fair value of the Fee Warrant granted was determined to be $1,140,000 and recorded as a financing costs in the consolidated statements of operations for the year ended December 31, 2018. On October 12, 2018, the Company issued 1,000,000 shares of common stock to YA Global II SPV LLC (“YA Global”), which shares were issued upon YA Global exercising the warrants issued on April 15, 2018, as a commitment fee in connection with the Standby Equity Distribution Agreement. YA Global paid the Company $10,000, or $0.01 per share, in full settlement of the exercise price.

2018 Stock Incentive Plan

On November 30, 2018, the 2018 Stock Incentive Plan (the “Plan”) for officers, employees, non-employee members of the Board of Directors, and consultants of the Company was approved pursuant to a Joint Written Consent of the Board of Directors and Majority Stockholders of the Company. The Plan authorized the granting of not more than 10,000,000 restricted shares, stock appreciation rights (“SAR’s”), and incentive and non-qualified stock options to purchase shares of the Company’s common stock. The Plan provided that stock options or SAR’s granted can be exercisable immediately as of the effective date of the applicable agreement, or in accordance with a schedule or performance criteria as may be set in the applicable agreement. The exercise price for non-qualified stock options or SAR’s would be the amount specified in the agreement, but shall not be less than the fair value of the Company’s common stock at the date of the grant. The maximum term of options and SARs granted under the plan is ten years. During the years ended December 31, ~~2019~~2020 and ~~2018~~2019, the Company issued ~~833~~8,~~300~~068,910 and 5833,~~394,391~~300 options to purchase shares of its common stock under the Plan, and ~~245~~15,000 and no7,279,391 ~~options~~ were forfeited, respectively. As of ~~December~~ December 31, ~~2019~~2020, options to purchase 42,~~017~~920,~~309~~867 shares of common stock remain reserved for issuance under the Plan.

Summary of Stock Options

A summary of stock options for the ~~year~~years ended December 31, ~~2019~~2020 and ~~2018~~2019, is as follows:

				Weighted
	Number			Average
	of			Exercise
	Options			Price
Balance outstanding, December 31, 2017		3,000,000			0.60
Options granted		10,178,782			0.69
Option exercised		-			-
Options expired or forfeited		(4,784,391	)		(0.77	)
Balance outstanding, December 31, 2018		8,394,391			0.66
Options granted		833,300			0.03
Options exercised		-			-
Option exercised		-			-
Options expired or forfeited		(7,279,391	)		(0.67	)
Balance outstanding, December 31, 2019		1,948,300		$	0.35
Balance exercisable, December 31, 2019		1,938,707		$	0.35
Options granted		8,068,910			0.012
Options exercised		-			-
Options expired or forfeited		(15,000	)		(0.69	)
Balance outstanding, December 31, 2020		10,002,210		$	0.077
Balance exercisable, December 31, 2020		10,002,210		$	0.077

F-2022

Executive Employment ~~Agreements~~Agreement

~~Chief~~On October 31, 2019, the Board of Directors of the Company reappointed Ms. Tiffany Davis as Chief Executive Officer, Chief Financial Officer and as a director, effective immediately. In connection with the appointment of Ms. Davis, the Company granted her options to purchase 833,300 shares of common stock, which vested immediately, expire five years from the date of issuance, and are exercisable at a price of $0.03 per share. The fair value of the stock options granted was determined to be $25,000, which was recorded to stock-based compensation expense during the year ended December 31, 2019. Ms. Davis is entitled to receive stock options of $25,000 of shares per quarter at the then closing market price on the last trading day at the end of each calendar quarter, which expire five years from the date of issuance. Accordingly, during the year ended December 31, 2020, Ms. Davis was granted a total of 8,068,910 stock options, with the fair value determined to be $93,000, and was recorded to stock-based compensation expense during the year ended December 31, 2020.

On February 14, 2018, the Company entered into a three-year employment agreement with Tiffany Davis as the Company’s Chief Operating Officer. As part of the employment agreement, Ms. Davis was granted 1,000,000 shares of the Company’s common stock, of which 250,000 shares vested and were issued on the signing of the employment agreement and 250,000 shares vest annually on the anniversary of the employment agreement. The fair value of the shares on the date of grant was $1,340,000, of which $335,000 was recorded as stock-based compensation expense on the date of grant, and the remaining $1,005,000 was to be amortized ratably over the three-year vesting period, of which $173,353 was recorded as stock-based compensation expense during the year ended December 31, 2018. On August 22, 2018, Ms. Davis entered into an employment agreement that superseded and replaced this employment agreement. On November 30, 2018, in exchange for the cancellation of 250,000 shares of common stock issued to Tiffany Davis above, the Board authorized 250,000 non-statutory stock option awards be granted to Ms. Tiffany Davis pursuant to the terms of the Company’s 2018 Stock Incentive Plan, expiring five years from date of issuance and having an exercise price per share equal to $0.69, the closing price of the Company’s common stock on the date of Board approval. On September 12, 2019, Ms. Tiffany Davis resigned from the Company. On October 31, 2019, the Board of Directors of the Company reappointed Ms. Tiffany Davis as Chief Executive Officer, Chief Financial Officer and as a director, effective immediately. In connection with the appointment of Ms. Davis, the Company granted her options to purchase 833,333 shares of common stock, which vested immediately, expire five years from the date of issuance, and are exercisable at a price of $0.03 per share. The fair value of the stock options granted was determined to be $25,261, which was recorded to stock-based compensation expense during the year ended December 31, 2019. Mr. Davis is entitled to receive stock options of $25,000 of shares per quarter at the then closing market price on the last trading day at the end of each calendar quarter.

In August 2018, the Company granted to its executives, Lien and Davis, stock options to purchase an aggregate of 4,034,391 shares of Common Stock. The fair value of the stock options granted was determined to be $2,164,755, which was recorded to stock-based compensation expense during the year ended December 31, 2018. The stock options immediately vested on the date of issuance. In addition, pursuant to the agreements, on the first, second and third anniversaries, (i) Lien shall receive options to purchase 3% of the total number of shares of common stock then outstanding and (ii) Davis shall receive options to purchase 2%, 2% and 3%, respectively, of the total number of shares of common stock then outstanding, with all such options having an exercise price equal to the closing price of the Company’s common stock on the trading day prior to such anniversary and exercisable for five years from issuance. In addition, Davis received fully vested options to purchase 750,000 shares of Common Stock, exercisable for five years at $0.94 per share with a fair value of $516,356. On November 30, 2018, in exchange for the cancellation of the fully vested stock options to purchase an aggregate of 4,734,891 shares of Common Stock (stock options of 4,034,391 and 750,000 reference above), the Board authorized 4,734,891 fully vested non-statutory stock option awards be granted in aggregate to Lien and Davis, pursuant to the terms of the Company’s 2018 Stock Incentive Plan, expiring five years from date of issuance and having an exercise price per share equal to $0.69 the closing price of the Company’s common stock on the date of Board approval.

The fair value of each option on the date of grant was estimated using the Black-Scholes option pricing model with the following weighted average assumptions:

	2019			2018
	2020			2019
Exercise Price	$	0.03012		$	0.7303
Stock Price	$	0.03012		$	0.7303
Risk-free interest rate		10.5121	%		21.7851	%
Expected volatility		~~155~~211	%		~~125~~155	%
Expected life (in years)		53.0			35.0
Expected dividend yield		0	%		0	%

Information relating to outstanding options at December 31, ~~2019~~2020, summarized by exercise price, is as follows:

		Outstanding						Exercisable
						Weighted				Weighted
Exercise Price Per Share		Shares		Life (Years)		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
						Average				Average
$	0.01-0.03		8,902,210		5.78	$	0.014		8,902,210	$	0.014
Exercise Price Per Share		Shares		Life (Years)		Exercise Price		Shares		Exercise Price
$	0.03		833,300		4.84	$	0.03		833,300	$	0.03
$	0.46		100,000		3.95	$	0.46		100,000	$	0.46
$	0.60		31,000,000		32.11	$	0.60		31,000,000	$	0.60
$	0.69		15,000		3.92	$	0.69		5,417	$	0.69
			10,002,210		2.54	$	0.077		10,002,210	$	0.077
			3,948,300		3.16	$	0.60		3,938,717	$	0.48

FAs of December 31, 2020, the Company has no outstanding unvested options with future compensation costs. In addition, there will be future compensation related to the options to be awarded to Ms. Davis under her employment agreement discussed above. The weighted-21average remaining contractual life of options outstanding and exercisable at December 31, 2020 was 2.54 years. Both the outstanding and exercisable stock options had an intrinsic value of $10,000 at December 31, 2020.

As of December 31, 2019, the Company has outstanding unvested options with future compensation costs of $5,417, which will be recorded as compensation cost as the options vest over their remaining average vesting period of 2.0 years. In addition, there will be future compensation related to the options to be awarded to Davis under her employment agreement discussed above. The weightedF-average remaining contractual life of options outstanding and exercisable at December 31, 2019 was 3.1 years. Both the outstanding and exercisable stock options had no intrinsic value at December 31, 2019.23

Summary of Warrants

A summary of warrants for the ~~year~~years ended December 31, 2020 and 2019, is as follows:

				Weighted
	Number			Average
	of			Exercise
	Warrants			Price
Balance outstanding, December 31, 2017		1,589,500			1.10
Balance outstanding, December 31, 2018		12,783,140		$	0.91
Warrants granted		13,500,000			0.84
Warrants exercised		(2,306,360	)		0.63
Warrants expired or forfeited		-			-
Balance outstanding, December 31, 2018		12,783,140			0.91
Warrants granted		5,500,000			0.05
Warrants exercised		-			-
Warrants expired or forfeited		-			-
Balance outstanding, December 31, 2019		18,283,140		$	0.06
Balance exercisable, December 31, 2019		18,283,140		$	0.06
Warrants granted		10,000,000			0.05
Warrants exercised		-			-
Warrants expired or forfeited		-			-
Balance outstanding, December 31, 2020		28,283,140		$	0.05
Balance exercisable, December 31, 2020		28,283,140		$	0.05

Information relating to outstanding warrants at December 31, ~~2019~~2020, summarized by exercise price, is as follows:

		Outstanding						Exercisable
						Weighted				Weighted
Exercise Price Per Share		Shares		Life (Years)		Weighted Average Exercise Price		Shares		Weighted Average Exercise Price
						Average				Average
$	0.01		5,000,000		2.35	$	0.01		5,000,000	$	0.01
Exercise Price Per Share		Shares		Life (Years)		Exercise Price		Shares		Exercise Price
$	0.05		23,000,000		3.66	$	0.05		23,000,000	$	0.05
$	01.0110		5283,~~000,000~~140		41.3680	$	01.0110		5283,~~000,000~~140	$	01.0110
$	0.05		13,000,000		4.45	$	0.05		13,000,000	$	0.05
			28,283,140		3.41	$	0.05		28,283,140	$	0.05
$	1.10		283,000		2.81	$	1.10		283,000	$	1.10
			18,283,140		4.20	$	0.91		12,783,140	$	0.06

During the ~~year~~years ended December 31, 2020 and 2019, the Company issued five-year warrants towith a fair value of $43,000 and $57,000, to purchase 5,500,000 and 10,000,000 shares of common stock at an exercise price of $0.05 as part of a secured convertible promissory note, respectively (see Note 98). The ~~fair~~weighted-average ~~value~~remaining ofcontractual ~~each~~life ~~option~~of onwarrants ~~the~~outstanding ~~date~~and ofexercisable ~~grant~~at December ~~was~~31, ~~estimated~~2020 ~~using~~was ~~the~~3.41 ~~Black-Scholes~~years. ~~option~~Both ~~pricing~~the ~~model~~outstanding ~~with~~and ~~the~~exercisable ~~following~~warrants ~~weighted~~had ~~average~~an ~~assumptions:~~intrinsic ~~stock~~value ~~price~~ of $~~0.02~~15, ~~risk-free~~000 ~~interest~~at ~~rate~~December ~~of 1.65%~~31, ~~expected volatility of 171%, and an expected life of 3~~2020.~~0 years.~~

~~During~~The ~~the~~fair ~~year~~value ~~ended~~of ~~December~~each ~~31,~~warrant ~~2018,~~on the ~~Company~~date ~~issued five-year warrants to purchase 5,000,000 shares~~ of ~~common~~grant ~~stock~~was atestimated anusing ~~exercise price~~the ~~of $0.01 as consideration for an acquisition (see Note 4). The Company also issued five~~Black-~~year~~Scholes ~~warrants~~option topricing ~~purchase~~model ~~7,500,000 shares of common stock at an exercise price of $1.50 as part of a secured promissory note (see Note 9). Lastly, in connection~~ with the ~~SEDA discussed above, the Company issued five-year warrants to YA II PN to purchase 1,000,000 shares of common stock~~following atweighted anaverage ~~exercise price of $0.01 per share as a commitment fee.~~assumptions:

During the year ended December 31, 2018, the Company issued 2,306,360 shares of its common stock on the conversion of warrants, at $1.10 per share, resulting in proceeds of $1,446,996.

	2020			2019

Exercise Price	$	0.05		$	0.05
Stock Price	$	0.016		$	0.02
Risk-free interest rate		0.53	%		1.65	%
Expected volatility		214	%		171	%
Expected life (in years)		3.0			3.0
Expected dividend yield		0	%		0	%

~~The~~NOTE ~~weighted-average~~12 ~~remaining~~– ~~contractual~~COMMITMENTS ~~life~~AND ~~of warrants outstanding and exercisable at December 31, 2019 was 4.20 years. The intrinsic value of both outstanding and exercisable warrants at December 31, 2019 was $20,500.~~CONTINGENCIES

F-22

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Technology License Agreement

The Company entered into a Technology License Agreement with a third-party vendor for consulting services. Under the agreement, the Company will pay the vendor a minimum consulting amount of $100,000 per year, plus a royalty of 7% of all net sales of the vendor’s products above $1,~~428~~429,~~571~~000 per calendar year. For each of the years ended December 31, ~~2019~~2020 and ~~2018~~2019, $100,000 was recorded as research and development expense under the agreement on the consolidated Statements of Operations related to the minimum annual fee. For each of the years ended December 31, ~~2019~~2020 and ~~2018~~2019, no royalty was recorded as cost of goods sold on the Consolidated ~~Statements~~ Statements of Operations. A total of $~~190~~339,~~713~~000 and $~~190~~239,~~713~~000 was owed under the amended agreement at December 31, ~~2019~~2020 and ~~2018~~2019, respectively.

F-24

Litigation

On September 25, 2018, Matthew Geschke (the “Plaintiff”) filed a breach of contract case against the Company in the San Diego Superior Court of San Diego, California~~, under case number 37-2018-00031350-CU-OE-NC~~. The Plaintiff ~~claims~~claimed damages of $335,000 for breach of an employment contract when the Company terminated the Plaintiff’s employment agreement on February 22, 2018. ~~The~~ ~~case~~On isJune in26, 2020, the ~~early~~Plaintiff ~~discovery~~was awarded ~~phase~~a ofdefault ~~litigation~~judgment ~~and~~against nothe ~~trial date has been set yet. The~~ Company ~~believes~~in the ~~case~~amount isof ~~without merit~~$448,000 ~~and~~(see ~~intends~~Note ~~to vigorously define this case~~6).

NOTE 1413 – INCOME TAXES

At December 31, ~~2019~~2020, the Company had available Federal and state net operating loss carryforwards to reduce future taxable income. The amounts available were approximately $1014,~~075~~119,000 for Federal and state purposes. The carryforwards expire in various amounts through ~~2037~~2040. Given the Company’s history of net operating losses, management has determined that it is more likely than not that the Company will not be able to realize the tax benefit of the carryforwards. Accordingly, the Company has not recognized a deferred tax asset for this benefit. Section 382 generally limits the use of NOLs and credits following an ownership change, which occurs when one or more 5 percent shareholders increase their ownership, in aggregate, by more than 50 percentage points over the lowest percentage of stock owned by such shareholders at any time during the “testing period” (generally three years).

Effective January 1, 2007, the Company adopted FASB guidelines that address the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under this guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. This guidance also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. At the date of adoption, and as of December 31, ~~2019~~2020 and ~~2018~~2019, the Company did not have a liability for unrecognized tax benefits, and no adjustment was required at adoption.

The Company’s policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of December 31, ~~2019~~2020, and ~~2018~~2019, the Company has not accrued interest or penalties related to uncertain tax positions. Additionally, tax years ~~2016~~2017 through ~~2019~~2020 remain open to examination by the major taxing jurisdictions to which the Company is subject.

Upon the attainment of taxable income by the Company, management will assess the likelihood of realizing the tax benefit associated with the use of the carryforwards and will recognize the appropriate deferred tax asset at that time.

F-23

The Company’s effective income tax rate differs from the amount computed by applying the federal statutory income tax rate to loss before income taxes as follows:

	December 31, 2019			December 31, 2018
	December 31, 2020			December 31, 2019
Income tax benefit at federal statutory rate		(21.0	)%		(21.0	)%
State income tax benefit, net of federal benefit		(6.0	)%		(6.0	)%
Change in valuation allowance		27.00	%		27.00	%
Income taxes at effective tax rate		-			-	%

The components of deferred taxes consist of the following at December 31, ~~2019~~2020 and ~~2018~~2019:

	December 31, 2019			December 31, 2018
	December 31, 2020			December 31, 2019
Inventory reserves	$	~~212~~95,000		$	~~798~~212,000
Allowance for doubtful accounts and returns		9100,000			~~(297~~9,000	)
Depreciation and amortization		(5333,000	)		(~~271~~53,000	)
Net operating loss carryforwards		23,~~721~~789,000			12,~~430~~721,000
Less: Valuation allowance		(23,~~889~~951,000	)		(12,~~600~~889,000	)
Net deferred tax assets	$	-		$	-

~~NOTE 15 – SUBSEQUENT EVENTS~~ F-25

~~Relocation~~NOTE of14 ~~Principal~~– ~~Executive~~SUBSEQUENT ~~Offices and Warehouse~~EVENTS

~~Effective~~Chief ~~January~~Executive 1, 2020, our principal executive offices and warehouse are located at 1689-A Arrow Rt., Upland, CA 91786. We occupy a 2,974 square foot facility pursuant to a four-year lease with an independent party ending on January 31, 2023, with an unaffiliated party, pursuant to which we pay $2,825 per month in rental charges.Officer

~~Secured~~On ~~Convertible~~January ~~Note~~1, ~~Payable~~2021, Company entered into a new five year employment agreement with Tiffany Davis as the Company’s Chief Executive Officer. As part of the employment agreement, Ms. Davis is entitled to receive stock options of $12,500 per quarter for a five year period at the then closing market price on the last trading day at the end of each calendar quarter.

OnTrade ~~February~~Accounts ~~13,~~Payable ~~2020,~~Balance ~~the~~Settlement ~~Company issued a secured convertible debenture (the “2020 Note”) in the amount of $150,000. The Note bears interest at a rate of 10% per annum (15% on default)~~ and has a maturity date of August 10, 2021. The 2020 Note is secured by all the assets of the Company and its subsidiaries. The 2020 Note provides a conversion right, in which any portion of the principal amount of the 2020 Note, together with any accrued but unpaid interest, may be converted into the Company’s common stock at a conversion price equal to 75% of the lowest VWAP of the Company’s common stock during the ten (10) trading days immediately preceding the date of conversion, subject to adjustment. As part of the issuance, the Company also granted YA II PN 5-year warrants to purchase a total of 3,000,000 shares of the Company at an exercise price of $0.05 per common share. The Warrant expires on February 13, 2025.Release

~~Common~~On ~~Shares~~March ~~Issued~~30, 2021, the Company entered into a Settlement Agreement and Release (“Agreement”) with Sichenzia Ross Ference LLP (“SRF”), for services that were performed for the Company. The Company owed SRF $160,000, which was included in accounts payable and accrued expenses on the accompanying balance sheet.

OnThe ~~April~~Company 6,agreed ~~2020,~~to pay SRF the ~~Company~~sum ~~issued~~total ~~166~~of Seventy-Five Thousand Dollars ($75,~~667~~000) ~~shares~~(the of“Settlement ~~common~~Payment”). ~~stock~~The Settlement Payment shall be made in fifteen monthly installments to abe ~~director~~paid no later than the fifteenth day of each month (the “Installment Payments”), commencing on March 31, 2021 (the “Initial Installment Payment”), and with athe last ~~fair~~Installment ~~value~~Payment ofdue $1no later than May 31,~~667~~ 2022 (the “Final Payment”). As an alternative to the Settlement Payment, the Company shall have the option to pay to SRF:

~~Subsequent~~a. toThe ~~December~~Initial Installment Payment of $5,000 on or before March 31, ~~2019~~2021, YA$5,000 IIon PNor ~~(see~~before ~~Note~~April 9)30, ~~elected~~2021, toand ~~convert~~a lump sum payment of $2940,000 ofon ~~outstanding~~or ~~interest~~before ~~into~~June 27,~~287~~ 2021,~~066~~ ~~shares~~for ofa ~~the~~total ~~Company’s common~~payment atof $~~0.0127~~50,000; ~~per share.~~or

~~COVID-19~~b. The Initial Installment Payment of $5,000 on or before March 31, 2021, $5,000 on or before April 30, 2021, $5,000 on or before May 31, 2021, $5,000 on or before June 30, 2021, $5,000 on or before July 30, 2021 and a lump sum payment of $50,000 on or before August 6, 2021 for a total payment of $75,000.

~~The~~As ~~outbreak~~further consideration of ~~communicable diseases, such as a new virus known as~~ the ~~Coronavirus~~full ~~(COVID-19), could result in a widespread health crisis that could adversely affect general commercial activity~~ and ~~our~~final ~~business.~~settlement ~~An outbreak~~ of ~~communicable~~these ~~diseases~~matters, in the ~~region that~~Company weissued ~~operate~~to ~~or regions from which our customers travel from or through~~SRF, ora ~~the~~cashless ~~perception~~five ~~that~~year ~~such~~warrant to anpurchase ~~outbreak~~four ~~could~~million ~~occur~~(4, ~~and~~000,000) ~~the~~shares ~~measures taken by the governments~~ of ~~countries~~common ~~affected,~~stock ~~including restricting air travel and other means~~ of ~~transportation, imposing quarantines and curfews and requiring~~ the ~~closure~~Company ofat ~~our~~an ~~offices~~exercise orprice ~~other~~per ~~businesses,~~share ~~including~~equal ~~office~~to ~~buildings,~~$0.001 ~~theatres,~~per ~~retail stores and other commercial venues, could adversely affect our business, financial condition or results of operations~~share.

F-2426

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Management’s evaluation of disclosure controls and procedures.

Our ~~management, with the participation of our~~ Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of December 31, 2020. Based on this evaluation, our principal executive officer and our principal financial officer concluded that as of December 31, ~~2019~~2020, our disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting, as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. In light of the material weaknesses identified by management, we performed additional analyses and procedures in order to conclude that our financial statements for the year ended December 31, ~~2019~~2020, are fairly presented, in all material respects, in accordance with U.S. generally accepted accounting principles.

Management’s report on internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term as defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

As of December 31, 2020, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, our management concluded that, as of December 31, 2020, our internal control over financial reporting was not effective as of December 31, 2020 and identified the material weaknesses described below.

Description of Material Weaknesses and Management’s Remediation Initiatives

AsThe offollowing ~~the date of this report, our remediation efforts continue related to each of the~~ material weaknesses ~~that we have identified~~ in our internal control over financial reporting, and additional time and resources will be required in order to fully address these material weaknesses. We have not been able to complete all actions necessary and test the remediated controls in a manner that would enable us to conclude that such controls are effective. We are committed to implementing the necessary controls to remediate the material weaknesses described below as our resources permit. These material weaknesses will not be considered remediated until (1) the new processes are designed, appropriately controlled and implemented for a sufficient period of time and (2) we have sufficient evidence that the new processes and related controls are operating effectively. The following material weaknesses in our internal control over financial reporting were identified by management as of December 31, ~~2019~~ 2020:

Ineffective ~~Control~~control ~~Environment~~environment. The Company did not maintain an effective control environment, which is the foundation necessary for effective internal control over financial reporting. Specifically, the Company (i) did not maintain a functioning independent audit committee; (ii) did not have its Board of Directors review and approve significant transactions; (iii) had an insufficient number of personnel appropriately qualified to perform control design, execution and monitoring activities; (iv) had an insufficient number of personnel with an appropriate level of U.S. GAAP knowledge and experience and ongoing training in the application of U.S. GAAP and SEC disclosure requirements commensurate with the Company’s financial reporting requirements; (v) had inadequate segregation of duties consistent with control objectives; and (vi) lack of written documentation of the Company’s key internal control policies and procedures over financial reporting. The Company is required under Section 404 of the Sarbanes-Oxley Act to have written documentation of key internal controls over financial reporting. The Company did not formally document policies and controls to enable management and other personnel to understand and carry out their internal control responsibilities including the lack of closing checklists, budget-to-actual analyses, balance sheet variation analysis, and pro-forma financial statements. Additionally, the Company did not have an adequate process in place to complete its testing and assessment of the design and operating effectiveness of internal control over financial reporting in a timely manner;

Ineffective controls over financial statement close and reporting process. The Company did not maintain effective controls over its financial statement close and reporting process. Specifically, the Company: (i) had insufficient preparation and review procedures for disclosures accompanying the Company’s financial statements; and (ii) did not provide reasonable assurance that accounts were complete and accurate and agreed to detailed support and that reconciliations of accounts were properly performed, reviewed and approved; and

Insufficient segregation of duties in our finance and accounting functions due to limited personnel. We do not have sufficient segregation of duties within accounting functions. During the year ended December 31, 2019, we had limited personnel that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. Due to the fact that these duties were often performed by the same person, this creates a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.

~~Changes~~Ineffective incontrols ~~internal~~over ~~control~~financial statement close and reporting process. The Company did not maintain effective controls over its financial statement close and reporting process. Specifically, the Company: (i) had insufficient preparation and review procedures for disclosures accompanying the Company’s financial statements; and (ii) did not provide reasonable assurance that accounts were complete and accurate and agreed to detailed support and that reconciliations of accounts were properly performed, reviewed and approved; and

~~There~~Insufficient ~~were~~segregation noof ~~changes~~duties in our ~~internal~~finance ~~control~~and ~~over~~accounting ~~financial~~functions ~~reporting~~due ~~that~~to ~~occurred~~limited ~~during~~personnel. We do not have sufficient segregation of duties within accounting functions. During the ~~period~~year ended December 31, ~~2019~~2020, we had limited personnel that performed nearly ~~have~~all ~~materially~~aspects ~~affected~~of our financial reporting process, orincluding, ~~are~~but ~~reasonably~~not ~~likely~~limited to, ~~materially~~access ~~affect~~to the underlying accounting records and systems, ~~our~~the ~~internal~~ability ~~control~~to ~~over~~post ~~financial~~and ~~reporting,~~record ~~except~~ journal entries and responsibility for the ~~implementation~~preparation of ~~controls~~the financial statements. Due to ~~account~~the ~~for~~fact ~~leases~~that asthese duties were often performed by the same person, this creates a ~~result~~lack of ~~ASU~~review ~~2016-02.~~over ~~The~~the ~~modified~~financial ~~controls~~reporting process ~~have~~that ~~been~~would ~~designed~~ likely result in a failure to ~~address~~detect ~~risks~~errors ~~associated~~in ~~with~~spreadsheets, ~~accounting~~calculations, ~~for~~or ~~leases~~assumptions ~~and~~used ~~liabilities~~to ~~and~~compile the financial statements and related ~~income~~disclosures ~~and~~as ~~expenses~~filed ~~under~~with ~~ASC~~the ~~842~~SEC. These control deficiencies could result in a material misstatement to our interim or annual financial statements that would not be prevented or detected.

~~Management’s~~As of the date of this report, onour remediation efforts continue related to each of the material weaknesses that we have identified in our internal control over financial reporting, and additional time and resources will be required in order to fully address these material weaknesses. We have not been able to complete all actions necessary and test the remediated controls in a manner that would enable us to conclude that such controls are effective. We are committed to implementing the necessary controls to remediate the material weaknesses described below as our resources permit. These material weaknesses will not be considered remediated until (1) the new processes are designed, appropriately controlled and implemented for a sufficient period of time and (2) we have sufficient evidence that the new processes and related controls are operating effectively.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2019 based on the criteria set forth in Internal Control—Integrated Framework issued in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management concluded that our internal control over financial reporting was not effective as of December 31, 2019 and identified the material weaknesses described above.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to the rules of the SEC that permit us to provide only management’s report in this annual report.

~~ITEM~~Changes 9Bin –internal ~~OTHER~~control ~~INFORMATION~~over financial reporting.

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

The Board of Directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year and until his successor is elected and qualified or until his earlier resignation or removal. Our directors and executive officers are as follows:

NAME	AGE	CURRENT POSITION
Tiffany Davis	4144	Chief Executive Officer, Chief Financial Officer and Director
George O’Leary	5759	Chairman of the Board
Raymond Davison	60	Director
Raymond Davidson	62	Director

The following is certain biographical information relating to each of our directors and executive officers as provided to us by each of the respective directors and executive offers.

Tiffany Davis, 4144, was appointed Chief Executive Officer, Chief Financial Officer and a member of the Board in October 2019. Ms. Davis previously served as the Company’s Chief Operating Officer between February 2018 and September 2019, and as a member of the Board between August 2018 and September 2019. Ms. Davis has had 19 years of experience as a financial professional ~~working~~ working in both Management Consulting and Private Equity. She has held several key leadership positions in accounting, finance, and operations. She has extensive experience in supply chain functionality, financial and operational due diligence, cash flow forecasting, financial statement analysis, development and value retention in a number of industries including most recently in the cannabis industry. Since June 2019, Ms. Davis has been the founder and manager of Trilogy Wellness Brands LLC and Trilogy Wellness Manufacturing LLC, companies developing and manufacturing premium products from hemp CBD. From 2016 through 2017, Ms. Davis worked as a senior executive for a US based cannabis consulting group supporting legal grows, assisting in license applications, developing programs for cultivators, business structuring for medical dispensaries including developing M&A opportunities and initiation of several start-up ventures. Beginning in 2012 into 2016, Ms. Davis worked as a Group Vice President for a US based private equity group, performing due diligence tasks resulting in placing hundreds of millions of dollars in creative investment and debt instruments for appropriate investment opportunities. From 2009 to 2011, Ms. Davis was a Manger of Corporate Advisory for Grant Thornton, one of the Big 6 worldwide accounting firms, again in accounting and supply chain services during the automotive crisis in the US, specifically on the Chrysler turnaround project. From 2005-2008, Ms. Davis worked for an international technology sector company with $500 million in revenues as a Vice President of Special Projects for an automobile parts sourcing project in India from the company’s headquarters in Chicago, Il. Ms. Davis received her B.S. from DePaul University in 2002 and a MBA from University of Chicago Graduate School of Business in 2009. Our board of directors believes Ms. Davis’ extensive cannabis and CBD experience provides her with the qualifications and skills to serve as a director.

George O’Leary, 5759, was appointed as Chairman of the Board on October 21, 2019. Mr. O’Leary has been the Chief Financial Officer and a member of the board of directors of HealthLynked Corp., a publicly-listed company, since August 2014. Mr. O’Leary is also Co-Founder and Managing Director of InLight Capital Partners LLC since January 2014. Mr. O’Leary is currently the Vice-Chairman of the Board of Directors of Timios Holdings Corp. since March 2014 and on the Board of Directors of MedOfficeDirect since October 2013. From June 2009 to May 2013, Mr. O’Leary was Chairman of the Board and Chief Financial Officer of Protection Plus Securities Corporation until it was sold to Universal Protection Services. From February 2007 to June 2015, Mr. O’Leary was a member of the Board of Directors of NeoMedia Technologies. Mr. O’Leary is founder and President of SKS Consulting of South Florida Corp. (“SKS”) since June 2006 where he works with public and private companies in board representation and/or under consulting agreements providing executive level management expertise, as well as helping the implementation and execution of their companies’ strategic & operational plans. From 1996 to 2000, Mr. O’Leary was Chief Executive Officer and President of Communication Resources Incorporated (“CRI”). Prior to CRI, Mr. O’Leary was Vice President of Operations of Cablevision Industries, where he ran $125 million of business until it was sold to Time Warner. Mr. O’Leary started his professional career as a senior accountant with Peat Marwick and Mitchell (KPMG). Mr. O’Leary holds a B.B.A. degree in Accounting with honors from Siena College. Our board of directors believes Mr. O’Leary’s extensive business experience provides him with the qualifications and skills to serve as a director.

Raymond Davison, 60, was appointed to the Board on December 10, 2019. Mr. Davison currently serves as Chief Executive Officer of Timios Holding Corp. (“Timios”), a title and settlement services company, where he has responsibility for all lines of business as well as administrative teams within Timios and its subsidiaries. Mr. Davison is one of the original founders of Timios, previously serving as Chief Financial Officer from its inception in August 2008 until his appointment as Chief Executive Officer in 2018, leading financial, human resources and compliance areas throughout the company. Timios was a wholly-owned, indirect subsidiary of Timios National Corporation, a public company until 2014. Prior to joining Timios, Mr. Davison served as the Chief Financial Officer for Lenders First Choice from January 2003 to July 2008. Prior to that, Mr. Davison served as the executive in charge of Agency Operation for the Automobile Club of Southern California. Prior to his work at the Automobile Club, Mr. Davison served as Senior Vice President/Controller for Coast Federal Services, the financial services subsidiary of Coast Federal Bank, a Los Angeles-based thrift bank. Mr. Davison holds an MBA from the University of Redlands. Our board of directors believes Mr. O’Leary’s extensive business experience provides him with the qualifications and skills to serve as a director.

Raymond Davidson, 62, was appointed to the Board on December 10, 2019. Mr. Davison currently serves as Chief Executive Officer of Timios Holding Corp. (“Timios”), a title and settlement services company, where he has responsibility for all lines of business as well as administrative teams within Timios and its subsidiaries. Mr. Davison is one of the original founders of Timios, previously serving as Chief Financial Officer from its inception in August 2008 until his appointment as Chief Executive Officer in 2018, leading financial, human resources and compliance areas throughout the company. Timios was a wholly-owned, indirect subsidiary of Timios National Corporation, a public company until 2014. Prior to joining Timios, Mr. Davison served as the Chief Financial Officer for Lenders First Choice from January 2003 to July 2008. Prior to that, Mr. Davison served as the executive in charge of Agency Operation for the Automobile Club of Southern California. Prior to his work at the Automobile Club, Mr. Davison served as Senior Vice President/Controller for Coast Federal Services, the financial services subsidiary of Coast Federal Bank, a Los Angeles-based thrift bank. Mr. Davison holds an MBA from the University of Redlands. Our board of directors believes Mr. O’Leary’s extensive business experience provides him with the qualifications and skills to serve as a director.

Family Relationships

No family relationships exist between any of our executive officers or directors.

Director Independence

Our Board of Directors is currently composed of ~~two~~three members. We are not required to have any independent members of the Board of Directors. The board of directors has determined that (i) Tiffany Davis has a relationship with the company which, in the opinion of the board of directors, would not allow her to be considered as an “independent director” as defined in the Marketplace Rules of The NASDAQ Stock Market and (ii) George O’Leary and Raymond ~~Davison~~Davidson are each an independent director as defined in the Marketplace Rules of The NASDAQ Stock Market.

The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, an employee and that neither the director, nor any of his/ her family members has engaged in various types of business dealings with us.

Board Committees

The Board of Directors has no standing committees. However, we intend to implement a comprehensive corporate governance program, including establishing various board committees and adopting a Code of Ethics in the future. In addition, we have secured Directors and Officers insurance.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and holders of more than 10% of our common stock to file with the SEC reports regarding their ownership and changes in ownership of our securities. During ~~fiscal~~ ~~2019~~fiscal 2020, Ms. Davis, Mr. O’Leary and Mr. ~~Davison~~Davidson failed to file a Form 34s ~~after~~relating ~~their~~to ~~appointments~~option asgrants ~~officers~~made ~~and/or directors,~~to each of them, which are the only Section 16(a) filings by our directors, executive officers and 10% stockholders that were delinquent.

Code of Business Conduct and Ethics and Insider Trading Policy

We have not adopted a code of ethics or an insider trading policy. We expect that we will adopt a code of business conduct and ethics and an insider trading policy that apply to all of our employees, officers and directors, including those officers responsible for financial reporting. Once adopted, we will make the code of business conduct and ethics and such insider trading policy available on our website at www.genalphainc.com. We intend to post any amendments to the code, or any waivers of its requirements, on our website.

Involvement in Certain Legal Proceedings

Our directors and executive officers have not been involved in any of the following events during the past ten years:

1. any bankruptcy petition filed by or against such person or any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); 3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting his involvement in any type of business, securities or banking activities or to be associated with any person practicing in banking or securities activities; 4. being found by a court of competent jurisdiction in a civil action, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a Federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; 5. being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or 6. being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

	5.	being subject of, or a party to, any Federal or state judicial or administrative order, judgment decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any Federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
	6.	being subject of or party to any sanction or order, not subsequently reversed, suspended, or vacated, of any self-regulatory organization, any registered entity or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table provides certain summary information concerning compensation awarded to, earned by or paid to our Chief Executive Officer and the two highest paid executive officers and up to two other highest paid individuals whose total annual salary and bonus exceeded $100,000 for fiscal years ~~2019~~2020 and ~~2018~~2019.

Name and Principal Position	Year		Salary ($)		~~Salary ($)~~		Bonus ($) (a)		~~Bonus ($) (a)~~	Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		~~Nonqualified Deferred Compensation Earnings ($)~~	~~All~~Nonqualified ~~Other~~Deferred Compensation Earnings ($)		~~Total~~All Other Compensation ($)		Total ($)
Tiffany Davis, Chief Executive Officer and Chief Financial Officer, former Chief Operating Officer (b)		2019				181,000			-		-		25,261	-		-		-		25,261
Tiffany Davis, Chief Executive Officer and Chief Financial Officer, former Chief Operating Officer (a)	2020			181,000				-			-		93,125		-			-		-		274,125
		2018				230,000			55,000		-		1,230,495	-		-		-		1,460,495
	2019			181,000				-			-		25,261		-			-		-		206,261
Alvin Hao, former Executive Vice President (c)		2019				96,731			-		-		-	-		-		-		96,731
Alvin Hao, former Executive Vice President (b)	2019			96,731				-			-		-		-			-		-		96,731
		2018				160,000			-		-		-	-		-		-		162,500
Alan Lien, former Chief Executive Officer, President, and Chief Financial Officer (c)	2019			156,153				-			-		-		-			-		-		156,153
Alan Lien, former Chief Executive Officer, President, and Chief Financial Officer (d)		2019				156,153			-		-		-	-		-		-		156,153
		2018				250,000			46,500		-		1,372,362	-		-		-		1,622,362

(a) ~~The bonuses in 2018 to Mr. Lien and~~ Ms. Davis ~~were awarded at the date of execution of their new employment agreements on August 22, 2018, but as of December 31, 2018, they were accrued but unpaid. (b) Ms. Davis~~ served as Chief Operating Officer between February 2018 and her resignation in September 2019, and was subsequently hired as Chief Executive Officer and Chief Financial Officer in October 2019. (c) Mr. Hao served as Executive Vice President until his resignation in September 2019. (d) Mr. Lien served as Chief Executive Officer, President and Chief Financial Officer until his resignation in October 2019.

Grants of Plan-Based Awards in Fiscal 2019

The following table provides information with regard to each grant of plan-based award made to a named executive officer under any plan during the fiscal year ended December 31, 2019.

Name		Grant Date				All Other Option Awards: Number of Securities Underlying Options (#)				Exercise or Base Price of Option Awards ($/Share)				Grant Date Fair Value of Stock and Option Awards ($) (1)
Tiffany Davis			10/31/2019				833,300			$	0.03			$	0.03

(1) Represents the aggregate grant date fair value of options granted in accordance with FASB ASC Topic 718.

Outstanding Equity Awards at December 31, 2019

	(b)	Mr. Hao served as Executive Vice President until his resignation in September 2019.

	(c)	Mr. Lien served as Chief Executive Officer, President and Chief Financial Officer until his resignation in October 2019.

~~The~~Grants ~~following~~of ~~table~~Plan-Based ~~presents~~Awards ~~information~~in ~~regarding~~Fiscal ~~outstanding equity awards held by our named executive officers as of December 31, 2019.~~2020

Name	Number of Securities underlying Unexercised Options (#) Exercisable		Number of Securities underlying Unexercised Options (#) Unexercisable		Option Exercise Price($/Sh)		Option Expiration Date
Tiffany Davis		100,000		—	$	0.46		9/13/2022
		833,300		—	$	0.03		10/31/2024

The following table provides information with regard to each grant of plan-based award made to a named executive officer under any plan during the fiscal year ended December 31, 2020.

Name	Grant Date	All Other Option Awards: Number of Securities Underlying Options (#)		Exercise or Base Price of Option Awards ($/Share)		Grant Date Fair Value of Stock and Option Awards ($) ⁽¹⁾
Tiffany Davis	3/31/2020		2,500,000	$	0.010	$	0.010
Tiffany Davis	6/30/2020		1,562,500	$	0.016	$	0.016
Tiffany Davis	9/30/2020		2,083,333	$	0.012	$	0.012
Tiffany Davis	12/31/2020		1,923,077	$	0.013	$	0.013

⁽¹⁾	Represents the aggregate grant date fair value of options granted in accordance with FASB ASC Topic 718.

Outstanding Equity Awards at December 31, 2020

The following table presents information regarding outstanding equity awards held by our named executive officers as of December 31, 2020.

Name	Number of Securities underlying Unexercised Options (#) Exercisable		Number of Securities underlying Unexercised Options (#) Unexercisable		Option Exercise Price($/Sh)		Option Expiration Date

Tiffany Davis		100,000		—	$	0.46	9/13/2022
		833,300		—	$	0.03	10/31/2024
		2,500,000		—	$	0.01	3/31/2025

		1,562,500		—	$	0.016	6/30/2025
		2,083,333		—	$	0.012	9/30/2025
		1,923,077		—	$	0.013	12/31/2025

Option Exercises and Stock Vested

No options were exercised by any of the named executive officers and no named executive officers held restricted stock units during the fiscal year ended December 31, ~~2019~~2020.

Equity Compensation Information

The following table summarizes information about our equity compensation plans as of December 31, ~~2019~~2020.

Plan Category

Number of Shares of Common Stock to be Issued upon Exercise of Outstanding Options (a)

Weighted-Average Exercise Price of Outstanding Options (b)

Number of Options Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (c)

Equity compensation plans approved by stockholders

—

Equity compensation plans not approved by stockholders

~~933~~9,~~300~~002,210

0.48019

92,~~051~~920,~~700~~867

Total

~~933~~9,~~300~~002,210

0.48019

92,~~051~~920,~~700~~867

Employment Agreements with Executive Officers

Tiffany Davis

On ~~October~~January 311, ~~2019~~2021, the Company entered into an employment agreement with Tiffany Davis to serve as our Chief Executive Officer (the “Employment Agreement”). The base salary for Ms. Davis under the Employment Agreement is $~~100~~175,000 per annum. The base salary is subject to review annually by the Board and/or the Compensation Committee and may be increased but not decreased. The Employment Agreement has an initial term of one year and automatically renew for successive one year terms unless either party delivers written notice not to renew at least 60 days prior to the end of the current term. Ms. Davis will receive ~~previously~~ ~~agreed~~a ~~upon sign on~~ year-end bonus of $5530,000, which ~~will~~was ~~be paid as the Company can afford~~ to ~~pay such bonus and should~~ be paid no later than ~~October~~March 31, ~~2020~~2021. Ms. Davis is entitled to receive performance-based bonuses based on increases in our total gross, top-line revenue compared to the prior year. These performance-based bonuses are a percentage of her base salary.

Pursuant to the Employment Agreement, Ms. Davis received options to purchase 833,300 shares of common stock These options are immediately exercisable, expire five years from issuance, and are exercisable at $0.03 per share. In each quarter of the Company’s fiscal year following the quarter in which the Employment Agreement became effective, Ms. Davis shall receive options to purchase $2512,~~000~~ 500 of the Company’s common stock, exercisable for a period of five years, with all such options having an exercise price equal to the then closing market price on the last trading day at the end of each calendar quarter.

Pursuant to the Employment Agreement, if the Company terminates Ms. Davis’ employment without Cause (as defined in the Employment Agreement) or Ms. Davis resigns for Good Reason (as defined in the Employment Agreement), Ms. Davis is entitled to the following payments and benefits: (1) Ms. Davis’ fully earned but unpaid base salary through the date of termination at the rate then in effect, plus all other benefits, if any, under any group retirement plan, nonqualified deferred compensation plan, equity award plan or agreement, health benefits plan or other group benefit plan to which Ms. Davis may be entitled to under the terms of such plans or agreements; (2) a lump sum cash payment in an amount equal to 12 months of Ms. Davis’ base salary as in effect immediately prior to the date of termination; (3) continuation of health benefits for Ms. Davis and Ms. Davis’ eligible dependents for a period of 12 months following the date of termination; and (4) the automatic acceleration of the vesting and exercisability of outstanding unvested stock awards as to the number of stock awards that would have vested over the 12-month period following termination had Ms. Davis remained continuously employed by the Company during such period.

Pursuant to the Employment Agreement, if Ms. Davis’ employment is terminated as a result of death or permanent disability, Ms. Davis or her estate, as applicable, is entitled to Ms. Davis’ fully earned but unpaid base salary through the end of the month in which termination occurs at the rate then in effect.

Directors Compensation Table

The following table sets forth summary information concerning the total compensation paid to our non-employee directors in ~~2019~~2020 for services to our Company.

Name	Cash ($)		Stock Awards ($)(1)		Total ($)
David Lenigas	$	-	$	63,000	$	63,000
Raymond Davidson	$	-	$	20,000	$	20,000
Raymond Davison	$	-	$	2,383	$	2,383
George O’Leary	$	20,000	$	60,000	$	80,000
George O’Leary	$	20,000	$	15,000	$	35,000
Total:	$	20,000	$	80,000	$	100,000
Total:	$	20,000	$	80,383	$	100,383

⁽¹⁾	Represents the aggregate grant date fair value of stock awards granted in accordance with FASB ASC Topic 718.

Option Plan

On November 30, 2018, the 2018 Stock Incentive Plan (the “Plan”) for officers, employees, non-employee members of the Board of Directors, and consultants of the Company was approved pursuant to a Joint Written Consent of the Board of Directors and Majority Stockholders of the Company. The Plan authorized the granting of not more than 10,000,000 restricted shares, stock appreciation rights (“SAR’s”), and incentive and non-qualified stock options to purchase shares of the Company’s common stock. The Plan provided that stock options or SAR’s granted can be exercisable immediately as of the effective date of the applicable agreement, or in accordance with a schedule or performance criteria as may be set in the applicable agreement. The exercise price for non-qualified stock options or SAR’s would be the amount specified in the agreement, but shall not be less than the fair value of the Company’s common stock at the date of the grant. The maximum term of options and SARs granted under the plan is ten years. During the year ended December 31, ~~2018~~2020, the Company issued 58,~~394~~068,~~391~~910 shares and options to purchase ~~shares of its common stock under the Plan~~8, ~~leaving 4~~068,~~605,609~~910 shares of ~~common stock remain reserved for issuance under the Plan at December 31, 2018. During the year ended December 31, 2019, the Company issued 833,300 shares and options to purchase 833,300 shares of~~ its common stock under the Plan, and 515,~~279,391~~000 options were forfeited, leaving 910,~~051~~002,~~700~~210 shares of of common stock remain reserved for issuance under the Plan at December 31, ~~2019~~2020.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding beneficial ownership of our common stock by: (i) each person known by us to own beneficially more than five percent (5%) of our outstanding voting stock; (ii) each of our directors and director nominees; (iii) each of our executive officers and significant employees; and (iv) all of our current executive officers, significant employees and directors as a group, as of ~~April~~March 631, ~~2020~~2021. To the best of our knowledge, each of the persons named in the table below as ~~beneficially~~ beneficially owning the shares set forth therein has sole voting power and sole investment power with respect to such shares, unless otherwise indicated.

Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power and that person’s address is c/o Generation Alpha, Inc., 1689-A Arrow Route, Upland, California 91786.

Name of Beneficial Owner	Title of Class	Number of Shares Owned (1)			Percentage of Class (2)
Tiffany N. Davis	Common Stock		~~933~~9,~~300~~002,210	(3)		113.8913	%
George O’Leary	Common Stock		~~500~~4,~~000~~959,478	(4)		18.0133	%
Raymond Davison	Common Stock		166,667			*
Raymond Davidson	Common Stock		1,526,940			2.56	%
Officers and Directors as a Group (3 persons)	Common Stock		115,~~599~~488,~~967~~628	(45)		322.1959	%
Alan Lien	Common Stock		10,000,000			2016.2979	%
Alvin Hao	Common Stock		10,000,000			2016.2979	%
Dennis G. Forchic (5)	Common Stock		9,196,079	(6)		14.31	%
Dennis G. Forchic (6)	Common Stock		7,196,079	(7)		11.88	%
YA II PN, Ltd. (7)	Common Stock		5,063,734	(8)		9.99	%
YA II PN, Ltd. (8)	Common Stock		6,526,895	(9)		9.99	%
D-Beta One EQ, Ltd. (10)	Common Stock		6,526,895	(9)		9.99	%
Four Leaf Investors Limited Partnership (11)	Common Stock		3,333,333			5.60	%

*	Denotes less than 1%
	(1)	Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of ~~April~~March 631, ~~2020~~2021 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.
	(2)	Percentage based upon 49,274,297 shares of common stock issued and outstanding as of April 6, 2020.
	(3)	Represents shares of common stock issuable upon exercise of options.
	(4)	Includes 933,300 shares of common stock issuable upon exercise of options.
	(5)	The mailing address for this beneficial owner is 4712 Pace Drive, Park City, Utah 84098.
	(6)	Includes 1,000,000 shares of common stock issuable upon exercise of options.
	(7)	Based upon an amended Schedule 13G filed with the SEC on January 9, 2020. The mailing address for this beneficial owner is 1012 Springfield Avenue, Mountainside, New Jersey 07092. Matthew Beckman makes the investment decisions on behalf of this entity and may be deemed to beneficially own the securities held by this entity.
	(8)	Includes 3,650,000 shares of Common Stock beneficially owned directly by YA II PN, Ltd. and D-Beta One EQ, Ltd., plus a number of additional shares underlying warrants exercisable into shares of Common Stock such that the reporting person is deemed the beneficial owner, subject to a beneficial ownership limitation of 9.99%.

	(2)		Percentage based upon 59,557,830 shares of common stock issued and outstanding as of March 31, 2021.

	(3)		Represents shares of common stock issuable upon exercise of options.

	(4)		Represents shares of common stock held by SKS Consulting, of which Mr. O’Leary is the beneficial owner.

	(5)		Includes the shares described in Notes (3) and (4) above.

	(6)		The mailing address for this beneficial owner is 4712 Pace Drive, Park City, Utah 84098.

	(7)		Includes 1,000,000 shares of common stock issuable upon exercise of options.

	(8)		Based upon an amended Schedule 13G filed with the SEC on February 8, 2021. The mailing address for this beneficial owner is 1012 Springfield Avenue, Mountainside, New Jersey 07092. Matthew Beckman makes the investment decisions on behalf of this entity and may be deemed to beneficially own the securities held by this entity.

	(9)		Includes 750,434 shares of Common Stock titled in the name of YA II PN, Ltd., but are beneficially owned by D-Beta One EQ, Ltd. through a participation agreement with YA II PN, Ltd., plus a number of additional shares underlying (i) warrants exercisable into shares of Common Stock and (ii) convertible debt convertible into shares of Common Stock, such that the reporting person is deemed the beneficial owner, subject to a beneficial ownership limitation of 9.99%.

	(10)		Based upon an amended Schedule 13G filed with the SEC on February 8, 2021. The mailing address for this beneficial owner is 1012 Springfield Avenue, Mountainside, New Jersey 07092. Mark Angelo makes the investment decisions on behalf of this entity and may be deemed to beneficially own the securities held by this entity.

	(11)		The mailing address for this beneficial owner is 2920 E. Camelback Road, #200, Phoenix, Arizona 85016. Jerry Tokoph makes the investment decisions on behalf of this entity and may be deemed to beneficially own the securities held by this entity.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Amounts Due to Officers/Shareholders

On May 9, 2016, we entered into note payable agreements with Alan Lien and Alvin Hao, each a former officer and director, to borrow $300,000 under each individual note. Pursuant to the terms of each of these agreements, we borrowed $300,000 from each of Alan Lien and Alvin Hao. The notes accrue interest at a rate of 8% per annum, are unsecured and were due on or before May 31, 2018. The notes are currently past due. A total of $600,000 was due on the combined notes at December 31, ~~2019~~2020 and ~~December 31, 2018~~2019.

We entered into note agreements with the parents of Alan Lien, our former Chief Executive Officer and one of our directors. The loans accrue interest at 10% per annum, are unsecured and were due on or before December 31, 2016. The loans are currently past due. A total of $40,000 was due on the loans at ~~each of~~ December 31, ~~2019~~2020 and ~~December 31, 2018~~2019. ~~The loans are currently past due.~~

Consulting Agreements

On October 21, 2019, the Board appointed George O’Leary as Chairman of the Board effective immediately. Mr. O’Leary is founder and President of SKS Consulting of South Florida Corp. (“SKS”) since June 2006 where he works with public and private companies in board representation and/or under consulting agreements providing executive level management expertise, as well as helping the implementation and execution of their companies’ strategic & operational plans. On October 31, 2019, the Company entered into an executive chairman agreement (the “Chairman Agreement”) with SKS. Pursuant to the Chairman Agreement, Mr. O’Leary received 500,000 shares of common stock of the Company upon his appointment to the Board. In addition, he will receive equity compensation of $15,000 of shares per quarter as well as $5,000 per month as set forth in the Chairman Agreement.

Effective February 5, 2019, we and Mr. Lenigas, a former director, entered into a consulting agreement (the “Consulting Agreement”), pursuant to which we shall pay Mr. Lenigas a monthly consulting fee of $13,000 per calendar month for his marketing, branding, investor and public relations services. We also agreed, during the term of the Consulting Agreement, to issue Mr. Lenigas such number of shares of common stock equal to two percent of the total shares then issued and outstanding upon our common stock reaching a market capitalization (as defined in the Consulting Agreement) of $76 million for ten consecutive trading days, and an additional two percent for each additional $76 million market capitalization achieved for ten consecutive trading days, up to a market capitalization of $380 million. In addition, should we, during the consulting term or for a period of six months thereafter, enter into a transaction that constitutes a change of control in which our enterprise value (as defined in the Consulting Agreement) equals or exceeds, $500 million, then we agreed to pay Mr. Lenigas a bonus equal to 5% of such enterprise value. The Consulting Agreement has a term of two years, and may be terminated by either party after one year upon 30 days’ prior written notice. On September 4, 2019, Mr. Lenigas, notified us that he was resigning, effective immediately. As of September 4, 2019, none of the milestones had been met and therefore, no compensation expense was recorded during the period ended December 31, 2019.

36ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

The following table sets forth the fees billed to us for professional services rendered by our independent registered public accounting firm, for the years ended December 31, ~~2019~~2020 and ~~2018~~2019:

Fees	~~2019~~2020		~~2018~~2019
Weinberg & Company, CPAs
Audit fees	$	~~128~~105,~~536~~000	$	~~173~~129,~~070~~000
Audit Related Fees
Tax fees		3515,~~770~~000		4235,~~811~~000
All other fees
Total Fees	$	~~164~~120,~~306~~000	$	~~215~~164,~~881~~000

Audit Fees. Consist of fees billed for professional services rendered for the audits of our financial statements and reviews of our interim consolidated financial statements included in quarterly reports.

Tax Fees. Weinberg & Company, CPAs did provide us with professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance and consultation in connection with various transactions and acquisitions.

~~ITEM~~PART ~~15 – EXHIBITS, FINANCIAL STATEMENT SCHEDULES~~IV

~~(c)~~ITEM 15. ~~Index~~EXHIBITS, toFINANCIAL ~~Exhibits~~STATEMENT SCHEDULES.

~~The Exhibits listed below are identified by numbers corresponding to the Exhibit Table of Item 601 of Regulation S-K. The Exhibits designated by an asterisk~~ (*a)(1) ~~are~~Consolidated ~~management~~Financial ~~contracts or compensatory plans or arrangements required to be filed pursuant to Item 15.~~statements:

Exhibit Number		Description of Document
2.1		Agreement of Merger and Plan of Reorganization between the Company, Cinjet, Inc., and CJA Acquisition Corp., dated June 23, 2015. Incorporated by reference to the Current Report on Form 8-K filed on June 26, 2015 as Exhibit 2.1 thereto.
3.1		Amended and Restated Articles of Incorporation of the Company, dated August 31, 2015. Incorporated by reference to the Current Report on Form 8-K filed on September 2, 2015 as Exhibit 3.2 thereto.
3.2		Bylaws. Incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on June 28, 2007.
3.3		Agreement of Merger between the Company, Cinjet, Inc., and CJA Acquisition Corp., dated June 23, 2015. Incorporated by reference to Exhibit 3.4 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 20, 2017.
3.4		Certificate of Designation of Series A Preferred Stock, dated October 20, 2017. Agreement of Merger between the Company, Cinjet, Inc., and CJA Acquisition Corp., dated June 23, 2015. Incorporated by reference to Exhibit 3.4 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 3, 2018.
3.5		Articles of Merger between Solis Tek Inc. and Generation Alpha, Inc., effective September 25, 2018. Incorporated by reference to Exhibit 3.01 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 26, 2018.
3.6		Agreement and Plan of Merger, by and between Solis Tek Inc. and Generation Alpha, Inc., effective September 25, 2018. Incorporated by reference to Exhibit 3.01 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 26, 2018.
10.1		Secured Convertible Debenture issued by the Company to YAII PN, Ltd., dated November 8, 2017. Incorporated by reference to the Current Report on Form 8-K filed on November 13, 2017 as Exhibit 10.2 thereto.
10.2		Security Agreement between the Company, Solis Tek East Corporation, Zelda Horticulture, Inc., and YAII PN, Ltd., dated November 8, 2017. Incorporated by reference to the Current Report on Form 8-K filed on November 13, 2017 as Exhibit 10.3 thereto.
10.3		Common Stock Purchase Warrant issued by the Company to FirstFire Global Opportunities Fund, LLC, dated October 20, 2017. Incorporated by reference to the Current Report on Form 8-K filed on November 13, 2017 as Exhibit 10.5 thereto.
10.4		Common Stock Purchase Warrant issued by the Company to FirstFire Global Opportunities Fund, LLC, dated October 20, 2017. Incorporated by reference to the Current Report on Form 8-K filed on November 13, 2017 as Exhibit 10.8 thereto.
10.5		Option Agreement between the Company and MSCP, LLC, dated April 19, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.19. thereto.
10.6		Acquisition Agreement between the Company and LK Ventures, LLC, Future Farm Technologies, Inc., MDM Cultivation, LLC (as the Members of YLK Partners NV, LLC). Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.20 thereto.

The Consolidated Financial Statements of Generation Alpha, Inc. and Report of Independent Registered Public Accounting Firm are included herein beginning on page F-1.

(a)(2)

Financial Statement Schedules:

These schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not applicable or not required.

(a)(3)

Exhibits

Exhibit Index

Exhibit Number		Description of Document
2.1		Agreement of Merger and Plan of Reorganization between the Company, Cinjet, Inc., and CJA Acquisition Corp., dated June 23, 2015. Incorporated by reference to the Current Report on Form 8-K filed on June 26, 2015 as Exhibit 2.1 thereto.

3.1		Amended and Restated Articles of Incorporation of the Company, dated August 31, 2015. Incorporated by reference to the Current Report on Form 8-K filed on September 2, 2015 as Exhibit 3.2 thereto.

3.2		Bylaws. Incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form SB-2 filed with the Securities and Exchange Commission on June 28, 2007.

3.3		Agreement of Merger between the Company, Cinjet, Inc., and CJA Acquisition Corp., dated June 23, 2015. Incorporated by reference to Exhibit 3.4 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on December 20, 2017.

3.4		Certificate of Designation of Series A Preferred Stock, dated October 20, 2017. Agreement of Merger between the Company, Cinjet, Inc., and CJA Acquisition Corp., dated June 23, 2015. Incorporated by reference to Exhibit 3.4 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 3, 2018.

3.5		Articles of Merger between Solis Tek Inc. and Generation Alpha, Inc., effective September 25, 2018. Incorporated by reference to Exhibit 3.01 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 26, 2018.

3.6		Agreement and Plan of Merger, by and between Solis Tek Inc. and Generation Alpha, Inc., effective September 25, 2018. Incorporated by reference to Exhibit 3.01 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 26, 2018.

4.1*		Form of Common Stock Certificate of the Registrant.

4.2		Common Stock Purchase Warrant issued by the Company to FirstFire Global Opportunities Fund, LLC, dated October 20, 2017. Incorporated by reference to the Current Report on Form 8-K filed on November 13, 2017 as Exhibit 10.5 thereto.

4.3		Common Stock Purchase Warrant issued by the Company to FirstFire Global Opportunities Fund, LLC, dated October 20, 2017. Incorporated by reference to the Current Report on Form 8-K filed on November 13, 2017 as Exhibit 10.8 thereto.

10.7		Common Stock Purchase Warrant issued by the Company to Future Farm Technologies, Inc. dated May 10, 2018. Incorporated by reference to Exhibit 10.15 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 3, 2018.
4.4		Common Stock Purchase Warrant issued by the Company to YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.15 thereto.
10.8		Common Stock Purchase Warrant issued by the Company to LK Ventures, LLC, dated May 10, 2018. Incorporated by reference to Exhibit 10.16 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 3, 2018.
4.5		Common Stock Purchase Warrant issued by the Company to YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.16 thereto.
10.09		Common Stock Purchase Warrant issued by the Company to MDM Cultivation, LLC, dated May 10, 2018. Incorporated by reference to Exhibit 10.17 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 3, 2018.
4.6		Common Stock Purchase Warrant issued by the Company to YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.17 thereto.
10.10		Securities Purchase Agreement between the Company, Solis Tek East Corporation, Zelda Horticulture, Inc., and YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.11 thereto.
4.7		Common Stock Purchase Warrant issued by the Company to YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.18 thereto.
10.11		Secured Promissory Note issued by the Company to YA II PN Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.12 thereto.
4.8		Common Stock Purchase Warrant issued by the Company to YA Global II SPV, LLC, dated April 16, 2018. Incorporated by reference to Exhibit 10.29 of the Company’s amended Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on October 19, 2018.
10.12		Amended and Restated Global Guaranty Agreement between the Company, Solis Tek East Corporation, Zelda Horticulture, Inc., and YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.13 thereto.
4.9		Form of Warrant, dated April 2, 2019, issued by Generation Alpha, Inc. to Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.05 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.13		Registration Rights Agreement between the Company and YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.14 thereto.
4.10		Warrant dated October 31, 2019. Incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.14		Common Stock Purchase Warrant issued by the Company to YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.15 thereto.
4.11		Warrant dated February 13, 2020. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2020.
10.15		Common Stock Purchase Warrant issued by the Company to YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.16 thereto.
4.12		Form of Warrant, dated September 23, 2020. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2020.
10.16		Common Stock Purchase Warrant issued by the Company to YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.17 thereto.
4.13*		Description of Registrant’s securities.
10.17		Common Stock Purchase Warrant issued by the Company to YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.18 thereto.
4.14		Form of Warrant, dated March 30, 2021.
10.18		Consulting Services Agreement between the Company and MD Global Partners, LLC, dated May 18, 2018. Incorporated by reference to Exhibit 10.26 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 3, 2018.
10.1		Secured Convertible Debenture issued by the Company to YAII PN, Ltd., dated November 8, 2017. Incorporated by reference to the Current Report on Form 8-K filed on November 13, 2017 as Exhibit 10.2 thereto.
10.19		Standby Equity Distribution Agreement, dated April 16, 2018, by and between the Company and YA II PN, Ltd. Incorporated by reference to Exhibit 10.27 of the Company’s amended Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on October 19, 2018.
10.2		Security Agreement between the Company, Solis Tek East Corporation, Zelda Horticulture, Inc., and YAII PN, Ltd., dated November 8, 2017. Incorporated by reference to the Current Report on Form 8-K filed on November 13, 2017 as Exhibit 10.3 thereto.
10.20		Common Stock Purchase Warrant issued by the Company to YA Global II SPV, LLC, dated April 16, 2018. Incorporated by reference to Exhibit 10.29 of the Company’s amended Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on October 19, 2018.
10.3		Securities Purchase Agreement between the Company, Solis Tek East Corporation, Zelda Horticulture, Inc., and YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.11 thereto.
10.21	*	Employment Agreement, dated August 22, 2018, by and between Solis Tek Inc. and Alan Lien. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 23, 2018.
10.4		Secured Promissory Note issued by the Company to YA II PN Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.12 thereto.
10.22	*	Employment Agreement, dated August 22, 2018, by and between Solis Tek Inc. and Tiffany Davis. Incorporated by reference to Exhibit 10.02 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 23, 2018.
10.23	*	Amendment to Employment Agreement, dated August 27, 2018, by and between Solis Tek Inc. and Tiffany Davis. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2018.

10.24		Consulting Agreement, dated February 5, 2019, by and between Generation Alpha, Inc. and David Lenigas. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 11, 2019.
10.5		Amended and Restated Global Guaranty Agreement between the Company, Solis Tek East Corporation, Zelda Horticulture, Inc., and YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.13 thereto.
10.25		Amendment Agreement, dated February 25, 2019, by and between Generation Alpha, Inc. and YA II PN, Ltd. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 26, 2019.
10.6		Registration Rights Agreement between the Company and YA II PN, Ltd., dated May 10, 2018. Incorporated by reference to the Current Report on Form 8-K filed on May 11, 2018 as Exhibit 10.14 thereto.
10.26		Form of Real Estate Sale Purchase Agreement, dated March 21, 2019, by and between Generation Alpha, Inc. and Black Rock Venture LLC. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 27, 2019.
10.7		Consulting Services Agreement between the Company and MD Global Partners, LLC, dated May 18, 2018. Incorporated by reference to Exhibit 10.26 of the Company’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission on August 3, 2018.
10.27		Form of Loan Agreement, dated April 2, 2019, by and among Extracting Point, LLC, Generation Alpha, Inc. and Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.8		Standby Equity Distribution Agreement, dated April 16, 2018, by and between the Company and YA II PN, Ltd. Incorporated by reference to Exhibit 10.27 of the Company’s amended Registration Statement on Form S-1/A filed with the Securities and Exchange Commission on October 19, 2018.
10.28		Form of Note, dated April 2, 2019, issued by Extracting Point, LLC in favor of Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.02 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.09		Consulting Agreement, dated February 5, 2019, by and between Generation Alpha, Inc. and David Lenigas. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 11, 2019.
10.29		Form of Guaranty, dated April 2, 2019, issued by Generation Alpha, Inc. for the benefit of Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.03 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.10		Amendment Agreement, dated February 25, 2019, by and between Generation Alpha, Inc. and YA II PN, Ltd. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 26, 2019.
10.30		Form of Deed of Trust and Assignment of Rents, dated April 2, 2019, by and between Extracting Point, LLC and Thomas Title & Escrow, for the benefit of Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.04 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.11		Form of Real Estate Sale Purchase Agreement, dated March 21, 2019, by and between Generation Alpha, Inc. and Black Rock Venture LLC. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 27, 2019.
10.31		Form of Warrant, dated April 2, 2019, issued by Generation Alpha, Inc. to Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.05 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.12		Form of Loan Agreement, dated April 2, 2019, by and among Extracting Point, LLC, Generation Alpha, Inc. and Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.32		Form of Deed in Lieu of Foreclosure Release and Settlement Agreement, dated May 24, 2019, by and among Extracting Point, LLC, Generation Alpha, Inc. and Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2019.
10.13		Form of Note, dated April 2, 2019, issued by Extracting Point, LLC in favor of Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.02 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.33		Form of Deed in Lieu of Foreclosure, dated May 24, 2019, issued by Extracting Point, LLC in favor of Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.02 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2019.
10.14		Form of Guaranty, dated April 2, 2019, issued by Generation Alpha, Inc. for the benefit of Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.03 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.34		Securities Purchase Agreement dated October 31, 2019. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.15		Form of Deed of Trust and Assignment of Rents, dated April 2, 2019, by and between Extracting Point, LLC and Thomas Title & Escrow, for the benefit of Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.04 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 8, 2019.
10.35		Secured Convertible Debenture dated October 31, 2019. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.16		Form of Deed in Lieu of Foreclosure Release and Settlement Agreement, dated May 24, 2019, by and among Extracting Point, LLC, Generation Alpha, Inc. and Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.01 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2019.
10.36		Global Security Agreement dated October 31, 2019. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.17		Form of Deed in Lieu of Foreclosure, dated May 24, 2019, issued by Extracting Point, LLC in favor of Michael Cannon and Jennifer Cannon, Trustees of the Core 4 Trust Dated February 29, 2016. Incorporated by reference to Exhibit 10.02 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2019.
10.37		Registration Rights Agreement dated October 31, 2019. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.38		Warrant dated October 31, 2019. Incorporated by reference to Exhibit 10.5 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.

10.39		Security Agreement dated October 31, 2019. Incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.18		Securities Purchase Agreement dated October 31, 2019. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.40	*	Executive Employment Agreement dated October 31, 2019 between the Company and Tiffany Davis. Incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.19		Secured Convertible Debenture dated October 31, 2019. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.41	*	Executive Chairman Agreement dated October 31, 2019 between the Company, SKS and George O’Leary. Incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.20		Global Security Agreement dated October 31, 2019. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.42		Directors Agreement, dated December 10, 2019 between the Company and Raymond Davison.
10.21		Registration Rights Agreement dated October 31, 2019. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.43		Securities Purchase Agreement dated February 13, 2020. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2020.
10.22		Security Agreement dated October 31, 2019. Incorporated by reference to Exhibit 10.6 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.44		Secured Convertible Debenture dated February 13, 2020. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2020.
10.23+		Executive Employment Agreement dated October 31, 2019 between the Company and Tiffany Davis. Incorporated by reference to Exhibit 10.7 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.45		Registration Rights Agreement dated February 13, 2020. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2020.
10.24+		Executive Chairman Agreement dated October 31, 2019 between the Company, SKS and George O’Leary. Incorporated by reference to Exhibit 10.8 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on November 19, 2019.
10.46		Warrant dated February 13, 2020. Incorporated by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2020.
10.25+		Directors Agreement, dated December 10, 2019 between the Company and Raymond Davison. Incorporated by reference to Exhibit 10.42 of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 13, 2020.
21.1		List of Subsidiaries. Incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2019.
10.26		Securities Purchase Agreement dated February 13, 2020. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2020.
31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.27		Secured Convertible Debenture dated February 13, 2020. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2020.
31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
10.28		Registration Rights Agreement dated February 13, 2020. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 20, 2020.
32.01		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
10.29		Form of Securities Purchase Agreement, dated September 23, 2020. Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2020.
101		The following materials from Generation Alpha, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
10.30		Form of Secured Convertible Debenture, dated September 23, 2020. Incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2020.

ITEM 16. FORM 10-K SUMMARY

None.

10.31		Form of Registration Rights Agreement, dated September 23, 2020. Incorporated by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 6, 2020.

10.32*+		Employment Agreement, dated January 1, 2021, by and between the Registrant and Tiffany Davis.

21.1		List of Subsidiaries. Incorporated by reference to Exhibit 21.1 of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2019.

24.1*		Power of Attorney. Reference is made to the signature page hereto.

31.1*		Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following materials from Generation Alpha, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Loss, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.

*	Filed herewith.
**	This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.
+	Indicates management contract or compensatory plan.

ITEM 16. FORM 10-K SUMMARY.

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	GENERATION ALPHA, INC.
Date: April 13, 2020	By:	/s/ TIFFANY DAVIS
Date: April 13, 2021	By:	/s/ TIFFANY DAVIS
		Tiffany Davis
		Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Tiffany Davis his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Position	Date
/s/ TIFFANY DAVIS	Chief Executive Officer, President, Chief Financial	April 13, ~~2020~~2021
Tiffany Davis	Officer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
/s/ GEORGE O’LEARY	Director	April 13, ~~2020~~2021
George O’Leary
/s/ RAYMOND DAVISON	Director	April 13, 2020
	Director	April 13, 2021
Raymond Davison
Raymond Davidson

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