ACQUIRED ASSETS AND ASSUMED LIABILITIES OF DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2021

ACQUIRED ASSETS AND ASSUMED LIABILITIES OF DISCONTINUED OPERATIONS

NOTE 3 - ACQUIRED ASSETS AND ASSUMED LIABILITIES OF DISCONTINUED OPERATIONS

NOTE 3: ACQUIRED ASSETS AND ASSUMED LIABILITIES OF DISCONTINUED OPERATIONS

Assets Acquired and Liabilities Assumed through Reverse Merger

Pursuant to the terms of the Merger Agreement dated August 9, 2018, and in exchange for all one hundred (100) issued and outstanding shares of LJR Security Services, Inc., LJR stockholders received one thousand (1,000) shares of series D senior convertible preferred stock, par value $.001 per share (the “Series D Preferred Stock”) of the Company, convertible into fifty million two hundred thirty-three thousand five hundred forty-one (50,239,541) shares of common stock of the Company. In addition, the LJR shareholder received one (1) share of series C super-voting preferred stock of the Company which granted the holder 50.1% of the votes of the Company at all times.

As a result of the Reverse Merger, the Company has acquired the following assets and liabilities which were recorded at fair value. The fair values of assets acquired and liabilities assumed are as follows:

	August 9, 2018			December 31, 2020			June 30, 2021
Security deposit	$	4,871		$	-		$	-
Goodwill		612,771			-			-
Accrued expenses		(125,647	)		-			-
Accrued interest		(49,261	)		(33,221	)		(38,873	)
Notes payable		(117,500	)		-			-
Convertible notes		(138,500	)		(138,500	)		(138,500	)
Derivative liability		(172,532	)		(238,395	)		(232,898	)
Liabilities of discontinued operations		-			(71,574	)		(71,574	)
Total identified net assets (liabilities)	$	14,202		$	(481,690	)	$	(481,845	)

As a result of the Reverse Merger, we acquired $603,440 liabilities of the former operations of NuLife Sciences, Inc., which have been discontinued. As of June 30, 2021, these liabilities amounted to $481,845. We are evaluating the means to relieve the Company of these liabilities. The assets and liabilities described below have been classified as discontinued operations in the condensed consolidated financial statements.

Goodwill

The Company acquired goodwill through the Reverse Merger described above. The carrying value of $612,771 was impaired and written down to $0 as of December 31, 2018.

Notes Payable

As a result of the Reverse Merger the Company assumed notes payable with total outstanding principal of $117,500 and accrued interest of $36,304, detailed as follows:

	·	Demand note payable with outstanding principal of $25,000, and accrued interest of $17,400. The note matured on September 30, 2015 and carries an interest rate of 12%. This note is in default.

	·	Demand notes payable to East West Secured Developments, LLC, with a combined outstanding principal of $74,500, and accrued interest of $18,061. These notes matured on October 31, 2016 and carry an interest rate of 12%. These notes are in default.

	·	Term note payable with outstanding principal of $18,000, and accrued interest of $843. The note matured on July 31, 2019 and carries an interest at the rate of 3%. This note is in default.

In 2020, the Company settled the notes payable of $99,500 and accrued interest of $60,493 for $92,500 and 200,000 shares of preferred stock valued at $200,000, which not yet issued and presented as stock payable in consolidated balance sheet as of June 30, 2021 and December 31, 2020.

Convertible Notes

As a result of the Reverse Merger the Company assumed convertible notes with total outstanding principal of $138,500 and accrued interest of $11,078, detailed as follows:

	June 30, 2021
(A) Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.11 per share and was due December 2019 (in default)	$	5,000
(B) Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.11 per share (in default)		50,000
(C) Convertible note payable, annual interest rate of 5%, convertible into common stock at a variable rate per share and was due September 2018 (in default)		63,500
(D) Convertible note payable, annual interest rate of 8%, convertible into common stock at $0.30 per share and is due October 13, 2020		20,000
Total convertible debt	$	138,500

A. Originally issued in 2017, outstanding principal of $5,000, and accrued interest of $715.

B. Hayden note was issued on August 23, 2017, outstanding principal of $50,000, and accrued interest of $4,538.

C. Current holder acquired the note in May 2018. Current outstanding principal of $63,500, and accrued interest of $4,295.

D. Escala note was issued October 13, 2017, outstanding principal of $20,000, and accrued interest of $1,530.

As of June 30, 2021 and December 31, 2020, convertible notes had total outstanding principal of $138,500 and $138,500 and accrued interest of $38,873 and $33,221, all respectively. These liabilities have been incorporated into liabilities from discontinued operations.

Derivative Liability

As of June 30, 2021 and December 31, 2020, the derivative liabilities were valued at $232,898 and $238,395, respectively, related to convertible notes [A to D above]. This derivative liability has been incorporated into liabilities from discontinued operations.

The fair value of the embedded derivative was determined using the Black-Scholes Model with the following assumptions:

	June 30, 2021	December 31, 2020
(1) dividend yield of	0%;	0%;
(2) expected volatility of	292%;	315%;
(3) risk-free interest rate of	0.05%;	0.09%;
(4) expected life of	0.33 year;	0.33 year;
(5) fair value of the Company’s common stock of	$0.10 per share.	$0.06 per share.