Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
Note
1 - Organization and Description of Business
Signet
International Holdings, Inc. (the “Company”) was incorporated in the State of Delaware on February 2, 2005. The Company’s
principal business plan was to focus in developing advanced technologies, energy solutions and medical devices. The Company has no operating
history as of yet.
Note
2 - Going Concern
The
accompanying consolidated financial statements are prepared on a going concern basis which contemplates the realization of assets and
satisfaction of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial
statements, the Company had a net loss and net cash used in operations of $174,911 and $159,150 respectively, for the year ended December
31, 2021 and has no revenues in 2021 or 2020. Additionally, the Company had an accumulated deficit, stockholders’ deficit and working
capital deficit of $8,029,435, $18,558, and $18,558, respectively, as of December 31, 2021. These matters raise substantial doubt about
the Company’s ability to continue as a going concern for twelve months from the issuance date of this report. The ability of the
Company to continue as a going concern is dependent on the Company’s ability to implement its business plan, raise capital, and
generate revenues. The consolidated financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
COVID-19
In
March 2020, the World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide.
The Company is monitoring this closely. Although the Company has had occasion to travel overseas for meetings, expos, and demonstrations,
the Company experienced similar restrictions. The outcome of the Company’s business meeting is indeterminate. However, the Company
continues to maintain a dialogue with its European counterparts. The Company’s operations have not been affected by the COVID-19
outbreak to date, however, the ultimate duration and severity of the outbreak and its impact on the economic environment and our business
is uncertain. As of the date of this report, the Company’s business remains open. At this time, the Company does not foresee any
material changes to its operations from COVID-19. While the Company does not anticipate an impact on its operations, the Company cannot
estimate the duration of the pandemic and potential impact on its business if the Company’s business must close. In addition, a
severe or prolonged economic downturn could result in a variety of risks to its business, including weakened demand for the Company’s
products and a decreased ability to raise additional capital when needed on acceptable terms, if at all. At this time, the Company is
unable to estimate the impact of this event on its operations.
Note
3 - Summary of Significant Accounting Policies
Basis
of presentation and principles of consolidation
The
Company’s consolidated financial statements include the financial statements of its three wholly-owned subsidiaries. All inter-company
balances and transactions have been eliminated in consolidation. All wholly-owned subsidiaries were inactive subsidiaries at December
31, 2021 and 2020 and for each of the two years in the period ended December 31, 2021.
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, liabilities, revenues, expenses, and the related
disclosures at the date of the financial statements and during the reporting period. Actual results could materially differ from these
estimates. Significant estimates include the valuation of equity-based instruments issued for other than cash, valuation of right-of-use
assets and liabilities and the valuation allowance on deferred tax assets.
Risks
and uncertainties for development stage company
The
Company is considered to be in an early stage since we have not commenced planned principal operations. Our activities since inception
include devoting substantially all of the Company’s efforts to business planning and development. Additionally, the Company has
allocated a substantial portion of its time and investment to the completion of the Company’s development activities to launch
its marketing plan and generate revenues and to raising capital. The Company has not generated revenue from operations and is currently
in the development stage. The Company’s activities during this early stage are subject to significant risks and uncertainties.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
Cash
and cash equivalents
The
Company considers all highly liquid investments with a maturity of three months or less when acquired to be cash equivalents. The Company
did not have cash equivalents as of December 31, 2021 and 2020. The Company places its cash with high credit quality financial institutions.
The Company’s accounts at these institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to
$250,000. As of December 31, 2021, the Company had not reached bank balances exceeding the FDIC insurance limit on interest bearing accounts.
To reduce its risk associated with the failure of such financial institutions, the Company evaluates at least annually the rating of
the financial institutions in which it holds deposits.
Fair
value measurements and fair value of financial instruments
The
Company follows Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements and Disclosures” (“ASC
820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair
value to be applied to existing generally accepted accounting principles that requires the use of fair value measurements, establishes
a framework for measuring fair value and expands disclosure about such fair value measurements.
ASC 820
defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use
of observable inputs and minimize the use of unobservable inputs.
These
inputs are prioritized below:
Level
1: |
Observable
inputs such as quoted market prices in active markets for identical assets or liabilities |
|
|
Level
2: |
Observable
market-based inputs or unobservable inputs that are corroborated by market data |
|
|
Level
3: |
Unobservable
inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions. |
The
Company analyzes all financial instruments with features of both liabilities and equity under the Financial Accounting Standard Board’s
(“FASB”) accounting standard for such instruments. Under this standard, financial assets and liabilities are classified in
their entirety based on the lowest level of input that is significant to the fair value measurement.
The
estimated fair value of certain financial instruments, including prepaid expense, accounts payable, accrued expenses and accrued salaries
are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
Property
Property
is carried at cost which made up of office equipment. The cost of repairs and maintenance is expensed as incurred; major replacements
and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the
accounts, and any resulting gains or losses are included in income in the year of disposition. Depreciation is calculated on a straight-line
basis over the estimated useful life of the assets. The Company shall capitalize cost of property over $1,500.
Stock-based
compensation
The
Company accounts for stock-based compensation in accordance with ASC 718-10, “Share-Based Payment,” which requires the
measurement and recognition of compensation expense for all share-based payment awards made to non-employees for goods and services,
and to employees and directors including employee stock options, restricted stock awards, and employee stock purchases based on estimated
fair values.
Determining
Fair Value Under ASC 718-10
The
Company estimates the fair value of stock options granted using the Black-Scholes option-pricing formula. This fair value is then amortized
on a straight-line basis over the requisite service periods of the awards. The Company’s determination of fair value using an option-pricing
model is affected by the stock price as well as assumptions regarding the number of highly subjective variables.
The
Company estimates volatility based upon the historical stock price of the Company and estimates the expected term for employee stock
options using the simplified method for employees and directors and the contractual term for non-employees. The risk-free rate is determined
based upon the prevailing rate of United States Treasury securities with similar maturities.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
Income
taxes
The
Company accounts for income taxes pursuant to the provision of ASC 740-10, “Accounting for Income Taxes” (“ASC 740-10”),
which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach
require the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets
for which management believes it is more likely than not that the net deferred asset will not be realized.
The
Company follows the provision of ASC 740-10 related to Accounting for Uncertain Income Tax Positions. When tax returns are filed, there
may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. In accordance
with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which,
based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination,
including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions.
Tax
positions that meet the more likely than not recognition threshold is measured at the largest amount of tax benefit that is more than
50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with
tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits
in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon
examination. The Company believes its tax positions are all more likely than not to be upheld upon examination. As such, the Company
has not recorded a liability for uncertain tax benefits.
The
federal and state income tax returns of the Company are subject to examination by the IRS and state taxing authorities, generally for
three years after they are filed.
Research
and development
In
accordance with ASC 730-10, “Research and Development-Overall,” research and development costs are expensed when incurred.
During the year ended December 31, 2021 and 2020, research and development costs were $1,000 and $6,000, respectively, and are included
in general and administrative expenses on the accompanying consolidated statements of operations.
Net
loss per share of common stock
Basic
net loss per share is computed by dividing the net loss by the weighted average number of common shares during the period. Diluted net
loss per share is computed using the weighted average number of common shares and potentially dilutive securities outstanding during
the period. At December 31, 2021 and 2020, the Company had 50,000,000 potentially dilutive securities outstanding related to Series A
Convertible Preferred Stock for both periods (see Note 4). Those potentially dilutive common stock equivalents were excluded from the
dilutive loss per share calculation as they would be antidilutive due to the net loss.
Impairment
of long-lived assets
In
accordance with ASC 360-10, “Long-lived assets,” which include property and equipment and intangible assets, are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability
of long-lived assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted
future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future
cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the
assets. Fair value is generally determined using the asset’s expected future discounted cash flows or market value, if readily
determinable.
Leases
The
Company follows ASC Topic 842, Leases (Topic 842) and applying the package of practical expedients, which permit it not to reassess under
the new standard its prior conclusions about lease identification, lease classification and initial direct costs. In addition, the Company
elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. Operating lease right of use assets (“ROU”)
represents the right to use the leased asset for the lease term and operating lease liabilities are recognized based on the present value
of future minimum lease payments over the lease term at commencement date. As most leases do not provide an implicit rate, the Company
use an incremental borrowing rate based on the information available at the adoption date in determining the present value of future
payments. Lease expense for minimum lease payments is amortized on a straight-line basis over the lease term and will be included in
general and administrative expenses.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
Recent
accounting pronouncements
Accounting
standards which are not yet effective are not expected to have a material impact on the Company’s financial position or results
of operations.
Note
4 – Stockholders’ Deficit
The
authorized capital stock consists of 100,000,000 shares of common stock and 50,000,000 shares of preferred stock.
Preferred
stock
The
Board of Directors has the authority, without further action by the shareholders, to issue, from time to time, preferred stock in one
or more series for such consideration and with such relative rights, privileges, preferences and restrictions that the Board may determine.
The preferences, powers, rights and restrictions of different series of preferred stock may differ with respect to dividend rates, amounts
payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions and purchase funds and other
matters. The issuance of preferred stock could adversely affect the voting power or other rights of the holders of common stock.
On
March 14, 2007, the Company formally designated a series of Super Voting Convertible Preferred Stock (the “Series A Super Voting
Preferred Stock”) of the Company’s 50,000,000 authorized shares of the capital preferred stock of the Corporation. The
designated Series A Super Voting Convertible Preferred Stock, consists of 5,000,000 shares, par value $.001 per share, which shall have
the following preferences, powers, designations and other special rights:
Voting and conversion: | Holders of the Series A Super Voting Convertible Preferred Stock shall have ten votes per share held on all matters submitted to the shareholders of the Company for a vote thereon. Each holder of these shares shall have the option to appoint two additional members to the Board of Directors. Each share shall be convertible into ten (10) shares of common stock. The Company may redeem at $0.10 per share with 30 days’ notice. |
Dividends: |
The
holders of Series A Super Voting Convertible Preferred Stock shall be entitled to receive dividends or distributions on a pro rata
basis with the holders of common stock when and if declared by the Board of Directors of the Company. Dividends shall
not be cumulative. No dividends or distributions shall be declared or paid or set apart for payment on the Common Stock
in any calendar year unless dividends or distributions on the Series A Preferred Stock for such calendar year are likewise declared
and paid or set apart for payment. No declared and unpaid dividends shall bear or accrue interest. |
Liquidation
Preference: |
Upon
the liquidation, dissolution and winding up of the Company, whether voluntary or involuntary, the holders of the Series A Super Voting
Convertible Preferred Stock then outstanding shall be entitled to, on a pro-rata basis with the holders of common stock, distributions
of the assets of the Corporation, whether from capital or from earnings available for distribution to its stockholders. |
There
were 5,000,000 shares of Series A preferred stock issued and outstanding as of December 31, 2021 and 2020.
Common
stock
During
the year ended December 31, 2020:
In
January 2020, the Company settled accrued salaries to its former Chief Executive Officer (“Former CEO”) in the amount of
$94,422 by issuing 829,721 shares of common stock at a price of approximately $0.11 per share, based on recent private placement sales
of common stock on the date of grant. Additionally, the Former CEO forgave accrued salary of $366,530.
During
fiscal year 2020, the Company issued an aggregate of 1,456,603 to various consultants of the Company for services rendered with fair
value of $165,368 or an average of approximately $0.1135 per share, based on recent private placement sales of common stock on the dates
of grants.
During
fiscal year 2020, the Company issued an aggregate of 25,000 to a consultant of the Company
for services rendered with fair value of $4,125 or an average of approximately $0.165 per
share, based on the quoted trading price on the date of grants.
During
fiscal year 2020, the Company received total gross proceeds of $161,028 or an average of approximately $0.098 per share, from the sale
of 1,648,300 shares of the Company’s common stock. Additionally, the Company collected the $25,000 subscription receivable that
was previously recorded at December 31, 2019.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
During
the year ended December 31, 2021:
| ● | Between January 2021 and June 2021, the Company became obligated to issue a total of 122,000 shares of common stock to two consultants of which 120,000 will be earned and the related expense will be recognized over a 36-month term. During the year ended December 31, 2021, the Company issued an aggregate of 22,000 shares of common stock to the two consultants for services rendered and the balance of 100,000 shares remains to be issued as of December 31, 2021 (see Note 6). The fair value of these shares were valued on the grant dates at $12,400 or an average of approximately $0.10 per share, based on the quoted trading price on the date of grants of which $3,400 were recognized as stock based consulting expense during the year ended December 31, 2021. |
| ● | Between February 2021 and March 2021, the Company received total gross proceeds of $33,750 or an average of approximately $0.08 per share, from the sale of 450,000 shares of the Company’s common stock. |
| ● | In April 2021, the Company received total gross proceeds of $14,981 or an average of approximately $0.07 per share, from the sale of 214,018 shares of the Company’s common stock. A portion of the 214,018 shares of common stock were not issued and has been recorded as common stock issuable as of December 31, 2021. In July 2021, the Company issued 150,000 shares and the balance of 64,018 shares remains to be issued. |
Note
5 – Income Taxes
The
Company has incurred historical aggregate net operating losses of approximately $2,182,527 for income tax purposes as of December 31,
2021. The net operating loss carries forward for United States income taxes, which may be available to reduce future years’ taxable
income. Management believes that the realization of the benefits from these losses appears not more than likely than not due to the Company’s
limited operating history and continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation
allowance on the deferred tax asset to reduce the asset to zero. Management will review this valuation allowance periodically and make
adjustments as necessary.
The
items accounting for the difference between income taxes at the effective statutory rate and the provision for income taxes were as follows:
| |
Year
Ended December
31, 2021 | | |
Year
Ended December
31, 2010 | |
Income tax benefit at U.S. statutory rate of 21% | |
$ | (36,731 | ) | |
$ | (74,503 | ) |
Income tax benefit – State tax rate at 5% | |
| (8,746 | ) | |
| (17,739 | ) |
Non-deductible
expenses | |
| 884 | | |
| 44,068 | |
Increase
in valuation allowance | |
| 44,593 | | |
| 48,174 | |
Total
provision for income tax | |
$ | - | | |
$ | - | |
The
Company’s approximate net deferred tax asset was as follows:
Deferred
Tax Asset: | |
December
31, 2021 | | |
December
31, 2010 | |
Net
operating loss carryforward | |
$ | 567,457 | | |
$ | 522,864 | |
Valuation
allowance | |
| (567,457 | ) | |
| (522,864 | ) |
Net
deferred tax asset | |
$ | - | | |
$ | - | |
On
December 22, 2017, the Tax Cuts and Jobs Act (the “Act”) was signed into law. The Act decreases the U.S. corporate federal
income tax rate from a maximum of 34% to a flat 21% effective January 1, 2018. The Act also includes a number of other provisions including,
among others, the elimination of net operating loss carrybacks and limitations on the use of future losses, the repeal of the Alternative
Minimum Tax regime and the repeal of the domestic production activities deduction. These provisions are not expected to have a material
effect on the Corporation. Given the significant complexity of the Act and anticipated additional implementation guidance from the Internal
Revenue Service, further implications of the Act may be identified in future periods.
The
Company provided a valuation allowance equal to the deferred income tax asset for the year ended December 31, 2021 and 2020 because it
was not known whether future taxable income will be sufficient to utilize the loss carryforward. The increase in the allowance was $44,593
in fiscal 2021. The potential tax benefit arising from the loss carryforward of approximately $1,668,018 accumulated through December
31, 2017 will expire in 2037 and the fiscal 2018, 2019, 2020 and 2021 net operating loss carryforward of approximately $514,509 may be
carried forward indefinitely.
Additionally,
the future utilization of the net operating loss carryforward to offset future taxable income may be subject to an annual limitation
as a result of ownership changes or business changes that could occur in the future. If necessary, the deferred tax assets will be reduced
by any carryforward that expires prior to utilization as a result of such limitations, with a corresponding reduction of the valuation
allowance. The Company does not have any uncertain tax positions or events leading to uncertainty in a tax position. The Company’s
2019, 2020 and 2021 Corporate Income Tax Returns are subject to Internal Revenue Service examination.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
Note
6 – Commitments and Contingencies
Operating
lease
In
January 2018, the Company entered into a one-year sub-lease agreement related to its leased office facilities in Palm Beach, FL
with the Former CEO of the Company (see Note 7). The lease shall automatically be extended for successive one-year renewal term not to
exceed 5 annual renewal terms in total unless the landlord or tenant gives a written notice of non-renewal on or before 30 days prior
to expiration of the term. The lease required monthly payments of approximately $1,136 plus sales tax and the Company was not responsible
for any additional charges for common area maintenance. The monthly rent was subject to an increase by 2% at the end of each year. On
July 1, 2021, the Company early terminated the sub-lease agreement and entered into a new one-year lease agreement with the landlord
(see Note 7). Accordingly, on July 1, 2021, the Company reversed the remaining balance of the ROU asset of $19,379, operating lease liability
of $20,018 and credited the difference to lease expense of $639. In March 2022, the Company early terminated the new lease agreement.
In
adopting ASC Topic 842, Leases (Topic 842), the Company has elected the ‘package of practical expedients’, which permit it
not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.
In addition, the Company elected not to apply ASC Topic 842 to arrangements with lease terms of 12 month or less. On January 1, 2020,
upon adoption of ASC Topic 842, the Company recorded right-of-use assets $45,645 and total lease liabilities of $45,645 based on an incremental
borrowing rate of 12%. For the respective years ended December 31, 2021 and 2020, we paid an aggregate of $14,564 and $15,100 for rent
under this agreement, respectively.
Right
of Use (“ROU”) Asset is summarized below:
| |
As
of December 31, 2021 | | |
As
of December 31,
2020 | |
| |
| | |
| |
Office
lease, ROU Asset | |
$ | 45,645 | | |
$ | 45,645 | |
Less:
Accumulated amortization | |
| (26,266 | ) | |
| (20,368 | ) |
Less:
reversal of remaining balance due to termination on July 1, 2021 | |
| (19,379 | ) | |
| - | |
Balance
of ROU asset | |
$ | - | | |
$ | 25,277 | |
Operating
lease liability related to the ROU asset is summarized below:
| |
As
of December 31, 2021 | | |
As
of December 31,
2020 | |
| |
| | |
| |
Office
lease liability | |
$ | 45,645 | | |
$ | 45,645 | |
Reduction
of lease liability | |
| (25,627 | ) | |
| (19,802 | ) |
Total | |
| 20,018 | | |
| 25,843 | |
Less:
current portion | |
| - | | |
| (12,007 | ) |
Less:
reversal of remaining balance due to termination on July 1, 2021 | |
| (20,018 | ) | |
| - | |
Long
term portion of lease liability | |
$ | - | | |
$ | 13,836 | |
Option
agreements
In
November 2018, the Company entered into an Option Agreement (the “November 2018 Option Agreement”) whereby the licensor agreed
to grant an option to exclusively license to the Company patents owned or controlled by licensor. The licensor is a University located
in the state of Florida. The licensed patents are related to technology for graphene foam coating and deicing. The option period commenced
on the effective date of this November 2018 Option Agreement and expired 6 months from the effective date unless terminated by either
party by giving 30 days written notice. During the option period, the Company shall reimburse the licensor for all patent related expenses
incurred during the term of this agreement in connection with obtaining or maintaining the patent rights. The Company paid an option
fee of $1,500 on the date of this agreement which was recorded in professional and consulting fees during calendar year 2018. In May
2019, the Company entered into an amendment agreement to extend the option period to August 2019. In October 2020, the Company entered
into an exclusive licensing agreement with this licensor (see discussion below).
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
In
March 2019, the Company entered into an Option Agreement (the “March 2019 Option Agreement”) whereby the licensor agreed
to grant an option to exclusively license to the Company patents owned or controlled by licensor. The licensor is a University located
in the state of Florida. The licensed patents are related to technology for rechargeable battery device. The option period commenced
on the effective date of this March 2019 Option Agreement and expires 12 months from the effective date unless terminated by either party
by giving 30 days written notice. During the option period, the Company shall reimburse the licensor for all patent related expenses
incurred during the term of this agreement in connection with obtaining or maintaining the patent rights. The Company paid an option
fee of $5,000 on the date of this agreement which was recorded in professional and consulting fees during calendar year 2019. In October
2020, the Company entered into an exclusive licensing agreement with this licensor (see discussion below).
In
August 2019, the Company entered into an Option Agreement (the “August 2019 Option Agreement”) whereby the licensor agreed
to grant an option to exclusively license to the Company patents owned or controlled by licensor. The licensor is a University located
in the state of Florida. The licensed patents are related to technology for detecting melanoma cancer. The option period commenced on
the effective date of this August 2019 Option Agreement and expires in August 2020 unless terminated by the Company by giving 30 days
written notice. During the option period, the Company shall reimburse the licensor for all patent related expenses incurred during the
term of this agreement in connection with obtaining or maintaining the patent rights. The Company paid an option fee of $1,200 on the
date of this agreement which was recorded in professional and consulting fees during calendar year 2019. In August 2020, the Company
entered into an amendment agreement to extend the option period to August 31, 2021 unless sooner terminated by the execution of a license
agreement between the parties. All other provision of this option agreement shall remain in full force and effect and unmodified by this
amendment. The option period for this option agreement has expired.
In
September 2019, the Company entered into an Option Agreement (the “September 2019 Option Agreement”) whereby the licensor
agreed to grant an option to exclusively license to the Company patents owned or controlled by licensor. The licensor is a University
located in the state of Florida. The licensed patents are related to technology for self-sterilizing device using plasma fields. The
option period commenced on the effective date of this September 2019 Option Agreement and expires in September 2020 unless terminated
by the Company by giving 30 days written notice. During the option period, the Company shall reimburse the licensor for all patent related
expenses incurred during the term of this agreement in connection with obtaining or maintaining the patent rights. The Company paid an
option fee of $1,200 on the date of this agreement which was recorded in professional and consulting fees during calendar year 2019.
In July 2020, the Company entered into an amendment agreement to extend the option period to September 30, 2021 unless sooner terminated
by the execution of a license agreement between the parties. All other provision of this option agreement shall remain in full force
and effect and unmodified by this amendment. The option period for this option agreement has expired.
In
September 2019, the Company entered into an Option Agreement (the “September 11, 2019 Option Agreement”) whereby the licensor
agreed to grant an option to exclusively license to the Company patents owned or controlled by licensor. The licensor is a University
located in the state of Florida. The licensed patents are related to technology for low-cost disposable medical sensor for heart-attack.
The option period commenced on the effective date of this September 11, 2019 Option Agreement and expires in September 2020 unless terminated
by the Company by giving 30 days written notice. During the option period, the Company shall reimburse the licensor for all patent related
expenses incurred during the term of this agreement in connection with obtaining or maintaining the patent rights. The Company paid an
option fee of $1,200 on the date of this agreement which was recorded in professional and consulting fees during calendar year 2019.
In July 2020, the Company requested the licensor to grant the Company an extension for this option agreement. After the Company’s
initial request, the Company notified the licensor of exercising the option and request for a licensing agreement. Despite the repeated
efforts from the Company, the licensor did not respond. As a result, such option agreement has expired.
In
September 2019, the Company entered into an Option Agreement (the “September 13, 2019 Option Agreement”) whereby the licensor
agreed to grant an option to exclusively license to the Company patents owned or controlled by licensor. The licensor is a University
located in the state of Florida. The licensed patents are related to technology for multifunctional oral prosthetic system. The option
period commenced on the effective date of this September 13, 2019 Option Agreement and expires in September 2020 unless terminated by
the Company by giving 30 days written notice. During the option period, the Company shall reimburse the licensor for all patent related
expenses incurred during the term of this agreement in connection with obtaining or maintaining the patent rights. The Company paid an
option fee of $1,200 on the date of this agreement which was recorded in professional and consulting fees during calendar year 2019.
In July 2020, the Company requested the licensor to grant the Company an extension for this option agreement. After the Company’s
initial request, the Company notified the licensor of exercising the option and request for a licensing agreement. Despite the repeated
efforts from the Company, the licensor did not respond. As a result, such option agreement has expired.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
In
October 2019, the Company entered into an Option Agreement (the “October 2019 Option Agreement”) whereby the licensor agreed
to grant an option to exclusively license to the Company patents owned or controlled by licensor. The licensor is a University located
in the state of Florida. The licensed patents are related to technology for arc melted glass piles for structural foundations. The option
period commenced on the effective date of this October 2019 Option Agreement and expires in October 2020 unless terminated by the Company
by giving 30 days written notice. During the option period, the Company shall reimburse the licensor for all patent related expenses
incurred during the term of this agreement in connection with obtaining or maintaining the patent rights up to a maximum of $3,500. The
Company paid an option fee of $1,500 on the date of this agreement which was recorded in professional and consulting fees during calendar
year 2019. In October 2020, the Company entered into an amendment agreement to extend the option period to October 15, 2021. The option
period for this option agreement has expired.
Exclusive
licensing agreements
Graphene
foam coating and deicing
On
October 30, 2020, the (“Effective Date”) the Company had entered into an exclusive licensing agreement with a University
for the licensed patents related to the technology for graphene foam coating and deicing. The term of this license shall continue until
licensee permanently discontinue the sale of any licensed products or unless terminated pursuant to the terms of this agreement. Licensee
may grant written sublicenses to third parties. However, the licensee shall notify the University of the initiation of the license negotiation.
Licensee may terminate this agreement by giving at least sixty days written notice to University. The University may terminate this agreement
by giving the licensee at least thirty days written notice upon the occurrence of certain events as defined in the agreement.
The
Company agreed to pay license issue fee of $5,000 in two separate installments. The first installment of $1,500 shall be made within
thirty days of the Effective Date and the second installment of $3,500 at the first anniversary of the effective date. The Company paid
the $1,500 first installment in November 2020.
Additionally,
the Company agreed to pay certain royalty payments as follows:
(i)
5.5% for Net Revenues of licensed products; and
(ii)
5.5% for Net Revenues of licensed processes.
Furthermore,
the Company agreed to pay Licensor minimum royalty payments, as follows:
Payment | | |
Year |
$ | 2,000 | | |
2021 |
$ | 3,000 | | |
2022 |
$ | 5,000 | | |
2023 |
$ | 10,000 | | |
2024
and every year thereafter on the same date, for the life of this License Agreement. |
The
first minimum royalty payment was due on December 31, 2021 for calendar year 2021. In March 2022, the Company sent a notice of termination
of this exclusive licensing agreement to the University.
Rechargeable
battery device
October
30, 2020, the (“Effective Date”) the Company had entered into an exclusive licensing agreement with a University for the
licensed patents related to the technology for rechargeable battery device. The term of this license shall continue until licensee permanently
discontinue the sale of any licensed products or unless terminated pursuant to the terms of this agreement. Licensee may grant written
sublicenses to third parties. However, the licensee shall notify the University of the initiation of the license negotiation. Licensee
may terminate this agreement by giving at least sixty days written notice to University. The University may terminate this agreement
by giving the licensee at least thirty days written notice upon the occurrence of certain events as defined in the agreement.
The
Company agreed to pay license issue fee of $5,000 in two separate installments. The first installment of $1,418 shall be made within
thirty days of the Effective Date and the second installment of $3,582 at the first anniversary of the effective date. The Company paid
the $1,418 first installment in November 2020.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
Additionally,
the Company agreed to pay certain royalty payments as follows:
(i)
5.5% for Net Revenues of licensed products; and
(ii)
5.5% for Net Revenues of licensed processes.
Furthermore,
the Company agreed to pay Licensor minimum royalty payments, as follows:
Payment | | |
Year |
$ | 2,000 | | |
2021 |
$ | 3,000 | | |
2022 |
$ | 5,000 | | |
2023 |
$ | 10,000 | | |
2024
and every year thereafter on the same date, for the life of this License Agreement. |
The
first minimum royalty payment was due on December 31, 2021 for calendar year 2021. In March 2022, the Company sent a notice of termination
of this exclusive licensing agreement to the University.
Currently,
the Company is in negotiation with the University to settle any unpaid obligations for the licensed patents related to the technology
for graphene foam coating and deicing and the technology for rechargeable battery device for $6,000.
Consulting
agreements
On
January 5, 2020, the Company entered into a twelve-month agreement, effective as of March 13, 2020, with a consultant to serve as a technical
science consultant, for $2,500 cash payment and 30,000 shares of the Company’s common stock. This agreement may be terminated without
cause by either party in 30 days upon submitting a written notice. These shares had a fair value of $2,250 or $0.075 per share, based
on recent private placement sales of common stock which was recorded as stock-based consulting. This agreement was not renewed and therefore
there was no further obligation as of December 31, 2021.
On
February 13, 2020, the Company entered into a six-month agreement with an individual to serve as a chief engineer consultant. The Company
will pay the consultant a consulting fee in cash and shares of the Company’s common stock for services to be rendered, to be determined
and agreed upon by both parties when services begin. This agreement was not renewed and therefore there was no further obligation as
of December 31, 2021.
On
May 21, 2020, the Company entered into an amended agreement with an individual related to a six-month consulting agreement dated on August
29, 2019. The consultant will provide business advisory, investor relations, and promotion services in exchange for 3,125 shares of the
Company’s common stock per month. The consulting agreement may be renewed or extended for any period as may be agreed by the parties.
This agreement may be terminated, without cause by either party, upon submitting 30 days written notice. This agreement was not renewed
and therefore there was no further obligation as of December 31, 2021.
In January 2021, the Company entered into a thirty-six
month consulting agreement with an individual. The consultant will provide promotion services in exchange for the issuance of 20,000
shares for a period of six months, a total of 120,000 shares of the Company’s common stock. This agreement may be terminated, without
cause by either party, upon submitting 30 days written notice. During the year ended December 31, 2021, the Company issued 20,000 shares
and the balance of 100,000 shares remains to be issued at December 31, 2021. During the year ended December 31, 2021, the Company recognized
stock-based consulting of $3,000 (see Note 4).
Distributor
agreement
On
January 18, 2021, The Company had executed an Exclusive Distributor Agreement with Jarada, Inc. Ltd (“Jarada”) of Seoul Korea.
The Agreement appointed Jarada an exclusive South Korean territorial distribution rights to all of the Company’s Graphene products
that will be developed and made available for worldwide commercialization. The Company shall pay Jarada 15% commission on all sales made
by Jarada of the Company’s Graphene products. The term of this agreement was for two years from the date of execution and shall
automatically renewed unless either party provides notice of termination. No sales of the Graphene products had occurred during the year
ended December 31, 2021. In March 2022, the Company sent a notice of termination of this Exclusive Distributor Agreement to Jarada.
Note
7 – Related Party Transactions
In
January 2020, the Company settled accrued salary owed to its Former CEO by issuing 829,721 shares of common stock valued at $94,422,
based on recent private placement sales of common stock on the date of grant (see Note 4). Additionally, the Former CEO forgave accrued
salary of $366,530. The Company reduced total accrued salary by $460,952 in connection with the issuance of the 829,721 shares of common
stock and recorded contributed capital of $366,530 for the forgiveness of accrued salary.
The
Company paid rental fees for personal housing of $3,150 and $12,600 during the years ended December 31, 2021 and 2020, respectively,
to an affiliated company owned by the Former CEO of the Company which was recorded as compensation to the Former CEO and included in
general and administrative expenses as reflected in the accompanying consolidated statements of operations.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
In
January 2018, the Company entered into a one-year sub-lease agreement related to its leased office facilities in Palm Beach, FL
with the Former CEO of the Company. The lease shall automatically be extended for successive one-year renewal term not to exceed 5 annual
renewal terms in total unless the landlord or tenant gives a written notice of non-renewal on or before 30 days prior to expiration of
the term. The lease currently requires monthly payments of approximately $1,136 plus sales tax and the Company is not responsible
for any additional charges for common area maintenance. The monthly rent will increase by 2% at the end of each year. On July 1, 2021,
the Company early terminated the sub-lease agreement and entered into a new one-year lease agreement with the landlord (see Note 6).
In March 2022, the landlord agreed to early terminate the one-year lease effective March 31, 2022 in the condition that the Company’s
Interim Chief Executive Officer will assume and enter into a new lease agreement with the landlord on April 1, 2022.
On
May 21, 2021, a majority of the shareholders of the Company, voted to appoint Alysia WolfsKeil, Esq. as the Interim Chief Executive Officer
and Interim Chief Financial Officer, in order to fulfill the positions within the Company left vacant by the recent passing of Ernest
W. Letiziano, the Former CEO and CFO of the Company. Ms. WolfsKeil is the daughter of Ernest W. Letiziano, the Former CEO and CFO of
the Company. Ms. WolfsKeil, Esq. shall have limited powers in her positions, specifically she shall be empowered to direct all relevant
services providers of the Company as they relate to any and all such filings with the SEC, gain access and be provided banking authority
over any and all bank accounts or other trade accounts in the name of the Company, and enter into negotiations with potential third parties
who may be considered potential acquisition targets of the Company. Ms. WolfsKeil, Esq. shall serve the shorter of a) her termination
by the shareholders or b) six months from the May 21, 2021 and will receive compensation of $10,000 per month. During the year ended
December 31, 2021, Ms. WolfsKeil was paid $30,000 for services related to keeping the Company’s required public filings current.
As of December 31, 2021, accrued compensation to Ms. WolfsKeil amounted to $43,000 (from June 21, 2021 to December 31, 2021) and is included
in accounts payable and accrued expenses in the consolidated balance sheet.
Note
8 - Subsequent Events
On
February 28, 2022, the Company, Estate of Ernest W. Letiziano, Ms. Hope Hillabrand, and Mr. Thomas Donaldson (collectively,
the “Controlling Shareholders”) and Golden Ally Lifetech Group Co., Ltd., a Delaware corporation (“Golden Ally”)
entered into a Share Purchase and Exchange Agreement (the “SPA”).
Under
the SPA, the Controlling Shareholders of the Company agreed to sell to Golden Ally their capital stock of the Company, consisting of
5,000,000 shares of Series A Convertible Super Preferred Stock (convertible into 50,000,000 common shares) and 4,474,080 common shares
for $375,000 in cash (the “Purchase”).
Immediately
after the completion of the Purchase, at the closing (the “Closing”) and subject to the terms and conditions of the
SPA, Golden Ally shall cause the Golden Ally shareholders to sell, assign and transfer to the Company all of the Golden Ally
shares in exchange for newly issued shares of the Company based on the Exchange Ratios described below (the “Exchange”, and
together with the Purchase and the other transactions contemplated by the SPA, the “Transactions”).
As
of the date of the SPA, the authorized capital stock of Golden Ally consists of 1 billion Class A common shares, par value $0.00001
per share (the “Golden Ally Class A Common Shares”), each of which has 10 votes and is convertible into one Golden Ally Class
B Common Share, and 9 billion Class B common shares, par value $0.00001 per share (the “Golden Ally Class B Common Shares”).
There are 1 billion Golden Ally Class A Common Shares and 8.5 billion Golden Ally Class B Common Shares issued and outstanding.
Signet
International Holdings, Inc. and Subsidiaries
Notes
to Consolidated Financial Statements
December
31, 2021 and 2020
As
consideration for the sale of the Golden Ally shares by the Golden Ally shareholders to the Company, at the Closing, the Company
shall allot and issue shares of the Company to the Golden Ally shareholders or their nominees in such exchange ratios (the “Exchange
Ratios”) as follows: (i) each share of Golden Ally Class A Common Stock will be exchanged for one share of Series A Preferred
Stock of the Company (as designated by the Amended and Restated Certificate of Incorporation of the Company to be effective prior
to the Closing); and (ii) each share of Golden Ally Class B Common Stock will be exchanged for one share of the Company’s
Common Stock. Immediately after the Closing, the Golden Ally shareholders will hold approximately 99.9% of the total outstanding voting
power of the Company and Golden Ally will become a subsidiary of the Company.
The
SPA contains representations, warranties and covenants customary for a transaction of this nature, as well as certain indemnification
obligations of the parties thereto for breaches of representations, warranties and covenants.
The
consummation of the Transactions is subject to the satisfaction or waiver of certain customary conditions at or prior to the Closing,
including (i) the accuracy of each party’s representations and warranties (subject to certain materiality standards), (ii) each
party’s compliance with its covenants contained in the SPA (subject to a customary materiality standard), (iii) the absence of
any event, change, effect, occurrence or circumstance that, individually or in the aggregate, has had or would reasonably be expected
to have a material adverse effect on the Company and (iv) the absence of any law or order that restrains, enjoins, makes illegal or otherwise
prevents or prohibits the Closing. The parties expect that the Transactions will close in the first or second quarter of 2022.
The
SPA contains certain termination rights for both the Company and Golden Ally. The Company and/or Golden Ally may terminate the SPA by
mutual agreement, for breach of the SPA, or if the Company has not been able to obtain a certificate of good standing before the
Closing. The foregoing summary description of the SPA and the transactions contemplated thereby does not purport to be
complete and is qualified in its entirety by reference to the full text of the SPA and the terms of which are incorporated by reference
herein.
On March 1, 2022, the Controlling Shareholders took action by written
consent appointing Ms. WolfsKeil as the sole director of the Company, effective immediately. On March 1, 2022, Ms. WolfsKeil, in her capacity
as the sole director of the Company, took action by written consent to appoint herself as the Chief Executive Officer and the Chief Financial
Officer of the Company. Ms. WolfsKeil, Esq. shall serve as the sole director, Chief Executive Officer and Chief Financial Officer until
the next annual meeting of the Company or until her successor has been duly elected and qualified or until her earlier death, resignation,
or removal.