0001014897-20-000030.txt : 20200601 0001014897-20-000030.hdr.sgml : 20200601 20200601160307 ACCESSION NUMBER: 0001014897-20-000030 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 72 CONFORMED PERIOD OF REPORT: 20191231 FILED AS OF DATE: 20200601 DATE AS OF CHANGE: 20200601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Astro Aerospace Ltd. CENTRAL INDEX KEY: 0001425203 STANDARD INDUSTRIAL CLASSIFICATION: CONSTRUCTION SPECIAL TRADE CONTRACTORS [1700] IRS NUMBER: 980557091 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-55971 FILM NUMBER: 20933395 BUSINESS ADDRESS: STREET 1: 320 W. MAIN STREET CITY: LEWISVILLE STATE: TX ZIP: 75057 BUSINESS PHONE: 972-221-1199 MAIL ADDRESS: STREET 1: 320 W. MAIN STREET CITY: LEWISVILLE STATE: TX ZIP: 75057 FORMER COMPANY: FORMER CONFORMED NAME: CPSM, Inc. DATE OF NAME CHANGE: 20151116 FORMER COMPANY: FORMER CONFORMED NAME: LUX ENERGY CORP DATE OF NAME CHANGE: 20100420 FORMER COMPANY: FORMER CONFORMED NAME: Lux Energy Corp. DATE OF NAME CHANGE: 20090526 10-K/A 1 astroaerospace10ka2019.htm ASTRO AEROSPACE FORM 10-K/A Converted by EDGARwiz

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K/A


[X]  15, ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2019

OR

 

[ ]  15, TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to

 

Commission File Number:  333-149000


ASTRO AEROSPACE LTD.

(Exact name of registrant as specified in its charter)


Nevada


98-0557091

(State or other jurisdiction of incorporation or organization)


(I.R.S. Employer Identification)


320 W Main Street, Lewisville, Tx 75057

(Address of principal executive offices, including zip code)


(469) 702-8344

(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 Exchange Act: Common Stock, par value $0.001 per share.


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in 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 Section 15(d) of the Exchange 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.[ ]





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 (section

232.405 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, a smaller reporting company, or emerging growth company.


Large accelerated filer [  ]


Accelerated filer                     [  ]

Non-accelerated filer   [  ]


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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [x]


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter. The market value of the registrants voting $0.001 par value common stock held by non-affiliates of the registrant as of June 28, 2019 was approximately $5,088,270 which is based on 17,791,155 shares of common stock held by non-affiliates and the price ($.2860) at which the common equity was sold on that date.


Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date. The number of shares outstanding of the registrant's only class of common stock, as of May 29, 2020 was 78,129,504 shares of its $.001 par value common stock.


EXPLANATORY NOTE


The sole purpose of this Amendment to the registrants Annual Report on Form 10-K for the year ended December 31, 2019 is to furnish revised Interactive Data File exhibits pursuant to Rule 405 of Regulation S-T.


No other changes have been made to the 10-K, and this Amendment has not been updated to reflect events occurring subsequent to the filing of the 10-K.



DOCUMENTS INCORPORATED BY REFERENCE

None













2




2


TABLE OF CONTENTS




Page

PART I



Item 1. Business


5

Item 1A. Risk Factors


7

Item 1B. Unresolved Staff Comments


7

Item 2. Properties


7

Item 3. Legal Proceedings


7

Item 4. Mine Safety Disclosures


7




PART II



Item 5.  Market for Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities


8

Item 6.  Selected Financial Data


9

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations


9

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk


18

Item 8.  Consolidated Financial Statements and Supplementary Data


18

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosures


47

Item 9A. Controls and Procedures


47

Item 9B. Other Information


48




PART III



Item 10. Directors and Executive Officers, Promoters, Control Persons, and Corporate Governance


49

Item 11. Executive Compensation


51

Item 12. Security Ownership of Certain Beneficial Owners and Management


53

Item 13. Certain Relationships and Related Transactions, and Director Independence


54

Item 14. Principal Accountant Fees and Services


54




PART IV



Item 15. Exhibits and Consolidated Financial Statement Schedules


55

Signatures


57













3





CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION


This report contains forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, our ability to consummate the acquisition of an operating entity and/or assets, our ability to generate revenues and pay our operating expenses, our ability to raise capital as necessary, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.


































4




PART I


ITEM 1.

BUSINESS


The Company was originally incorporated in the State of Nevada on March 27, 2007.  On March 14, 2018, the majority of the stock was purchased by MAAB Global Limited, resulting in the name change from CPSM, Inc to Astro Aerospace Ltd. and the business change from pool sales to the research and development of manned and cargo drones.


Current Operations

The Company has acquired the software, firmware and hardware for Version 1.0 of a manned drone which has executed multiple flights. It is Astros goal to transform how people and things get from place to place. This will be done by making safe, affordable user-friendly autonomous manned and unmanned Electric Vertical Take-Off and Landing (eVTOL) aircraft available to the mass market anywhere. Astro is currently working on Version 2.0 of the aircraft product which will feature design changes that enhance performance characteristics and safety features. The target market will be government, private sector operators and individuals for a wide range of commercial, logistical and personal uses.  The Company is currently in the flight testing mode of its Passenger Drone Version 1.0, as well as in the development stages of its version 2.0 Passenger Drone model.


The Company is working with Infly Technology Ltd., our design and manufacturing partner, who is leading the design and development team with responsibility for developing the team as well as building the new prototypes for the two new aircraft models. The Company applied for approval to test the Passenger Drone 1.0 version in Canada in order to display new software, avionics and stability. The Company received an SFOC (Special Flight Operations Certificate) from Transport Canada in September 2018, allowing Astro to take to the sky, and put the Passenger Drone 1.0 Elroy through critical elements of integrated flight testing.  The testing culminated on Wednesday, September 19, 2018 with a 4 minute and 30 second flight, reaching heights of over 60 feet and speeds of over 50 km/h. The avionics and flight control systems were put to task with a multitude of maneuvers and the vehicle remained exceptionally stable, even under the effects of a couple of unexpected wind gusts.


The Company's newest prototype focuses on a multitude of applications including passenger transport, cargo delivery, ambulance and med-evac services, rescue and disaster assistance, military, and B2B. Its newly designed modular structure allows the Astro Top Frame (ALTA) to fly independently, as well as in combination with the individually designed "Astro Pods" for the specific need in that specific industry. A fly-in and pick-up system will allow the vehicle to connect, fly, disconnect and repeat, effectively and efficiently, changing from one application to the next. We refer to it as the Swiss Army Knife of the eVTOL world.


Along with recent Avionics and Control system upgrades this modularity opens the door to the evergrowing opportunities that (eVTOL) electric take-off and landing short haul vehicles bring.  


The Company anticipates the new prototype to be completed and flying by the end of the second quarter, 2021. We have completed the engineering and firmware for the prototype and are now in development of the body for the new prototype.


Asset Purchase Agreement with Confida Aerospace Ltd.

On May 8, 2018, the Company entered into an Asset Purchase Agreement with Confida Aerospace Ltd. Pursuant to the Asset Purchase Agreement, the Company purchased in-process research and development (IPRD) consisting of inventory, hardware designs, software designs, and a trademark all pertaining to passenger drone design and use from Confida Aerospace Ltd. As consideration for the Asset Purchase Agreement, the Company issued Confida Aerospace Ltd., 10,000 of the registrants Series B preferred shares.Each preferred share is convertible into 1,333 common shares and 1,333 warrants. Each warrant is exercisable into one of the Companys common shares at an exercise price of $.75. The warrants have an exercise period of five years upon conversion. Additionally, the Company assumed $25,000 of debts incurred by Confida Aerospace Ltd. related to drone development.




5




4


Competition

The Company is currently a research and development company focused on the creation of aerial drones for use in carrying passengers or cargo. It is expected that research and development will continue for at least two years, at which point we will seek out a joint venture to help manufacture the design. Once the research and development is complete, we intend to supply our products to a variety of industries, such as government, military, and for private use. The cargo drone is intended to be the first available product.


Our prime competitors are Volocopter, a German company, and Ehang, a Chinese company, which are both developing manned eVTOL craft. Our primary competitive advantage is our proprietary avionics and control systems. Currently, we have a working prototype that has flown while manned, and testing has shown that the design is very stable.


Employees

As of May 29, 2020, we do not have any employees who are not executive officers.


Change of Control/Discontinued Operations

On March 14, 2018, Lawrence and Loreen Calarco, officers and directors of the Company, the Lawrence & Loreen Calarco Family Trust and the Lawrence and Loreen Calarco Trust of June 3, 2014, majority stockholders controlled by Lawrence and Loreen Calarco, sold 51,711,571 common shares and 1,562,500 preferred shares to MAAB Global Limited (MAAB), a non-affiliate of the Company, paid from Bruce Bent, officer and director of MAABs personal funds resulting in a change of control of the Company.  The stock was transferred to MAAB effective March 14, 2018.  The 51,711,571 common shares and 1,562,500 preferred shares represented 62.35% and 100% of the then issued and outstanding common and preferred stock of the Company, respectively.


On April 30, 2018, pursuant to a Share Exchange Agreement dated April 16, 2018, the Company exchanged all of the issued and outstanding common shares of Custom Pool & Spa Mechanics, Inc. and Custom Pool Plastering, its wholly owned subsidiaries, for 13,668,900 common shares of the Company held by the Lawrence & Loreen Calarco Family Trust, an entity controlled by Lawrence & Loreen Calarco, former officers and directors of the Company. The Board of Directors subsequently authorized the cancellation of those common shares.  After said cancellation, the total issued and outstanding common shares was 69,270,060.  The Share Exchange Agreement was approved by the Board of Directors and written consent of shareholders holding 62.35% of the voting securities of the Company as of April 16, 2018.


The Companys discontinued operation, Custom Pool, historically was a full-service pool maintenance, resurfacing and repair company whose main service area is the Martin, Palm Beach, St. Lucie, Indian River and Brevard counties of Florida.  The Company earned revenue by charging service fees in the pool service business and by payments under contracts in the pool resurfacing business.  The Company managed its operating margins of the businesses by controlling personnel costs, chemical and material purchases and other service costs such as motor vehicle and insurance costs.  Personnel were critical to the business since customers choose those companies who have the most experience and perform the service in a timely and professional manner.


Custom Pool competed in its markets on the basis of price and the quality of the service.  There are many pool service companies in the market and throughout Florida.  However, this also presented an opportunity for the Company since many of its competitors are smaller and lack the infrastructure and depth of the Company.  This allowed the Company to compete through offering a larger range of services with a lower cost structure and to pursue growth opportunities either through internal growth or through opportunistic acquisitions.







6


ITEM 1A.

RISK FACTORS


The occurrence of the COVID-19 pandemic may negatively affect our operations depending on the severity and longevity of the pandemic.

 

The COVID-19 pandemic is currently impacting countries, communities, supply chains and markets as well as the global financial markets. A pandemic typically results in social distancing, travel bans and quarantine, and this may limit access to our facilities, management, support staff and professional advisors. These factors, in turn, may not only impact our operations, financial condition and demand for our goods and services but our overall ability to react timely to mitigate the impact of this event. Also, it may hamper our efforts to comply with our filing obligations with the Securities and Exchange Commission. Depending on the severity and longevity of the COVID-19 pandemic, our business and shareholders may experience a significant negative impact.  Currently, the COVID-19 pandemic has limited our ability to move forward with our operations and has negatively affected our ability to timely comply with our ongoing filing obligations with the Securities and Exchange Commission.



ITEM 1B.

UNRESOLVED STAFF COMMENTS


None.



ITEM 2.

PROPERTIES


The Company is currently using office space at 320 W. Main Street, Lewisville, TX 75057 for corporate management. This office space consists of 4,700 square feet and is provided for the Companys use rent-free by Bruce Bent, the Companys CEO. In addition, we have 1,500 square feet allocated to our use at Paterson Composites Inc. at their offices at 20 Fasken Dr., Etobicoke, ON, Canada M9W 1K6 for purposes of research and development. We do not pay rent for this space, and the lease terms for both properties are currently indefinite.



ITEM 3.

LEGAL PROCEEDINGS


From time to time, we may become involved in various lawsuits and legal proceedings that may arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may have an adverse effect on our business, financial conditions, or operating results. We are not aware of any legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.



ITEM 4.

MINE SAFETY DISCLOSURES


Not applicable.










7




6


PART III


ITEM 5.

MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES


There is a limited public trading market for the common stock. Our common stock is quoted on the OTC Market OTCQB under the symbol "ASDN", with quotations that commenced in October 2009; however, the market for common shares is extremely limited. No assurance can be given that the present limited market for our common stock will continue or will be maintained.


For any market that is maintained for our common stock, the resale of restricted securities pursuant to Rule 144 of the Commission by members of management or other persons may have a substantial adverse impact on any such public market.  Present members of management have already satisfied the one-year holding period of Rule 144 for public sales of a large portion of their holdings in the Company thereunder.


A minimum holding period of six months is required for resales under Rule 144. In addition, affiliates of the Company must comply with certain other requirements, including publicly available information concerning the Company; limitations on the volume of restricted securities which can be sold in any 90-day period; the requirement of unsolicited brokers transactions; and the filing of a Notice of Sale on Form 144.


Holders

As of May 29, 2020, we have approximately 41 shareholders of record of our common stock.


Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about the Company. Under Rule 144(k), a person who has not been one of our affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least six months, is entitled to sell shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144.


Dividend Policy

As of the date of this annual report, we have not paid any dividends to shareholders. There are no restrictions which would limit our ability to pay dividends on common equity or that are likely to do so in the future. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend; we would not be able to pay our debts as they become due in the usual course of business; or our total assets would be less than the sum of the total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution


Recent Sales of Unregistered Securities

During the last three years, we issued the following securities:

   (a) 5/8/18 10,000 Series B preferred shares to Confida Aerospace Ltd. pursuant to an Asset Purchase Agreement.

   (b) 10/22/18 38,886 common shares to MAAB Global Limited, valued at $52,534, upon conversion of notes payable.

   (c) 11/21/18 156,250 common shares to Oasis Capital, valued at $89,531, pursuant to a security purchase agreement.  344,029 common shares underlying warrants issued, with an exercise price of $0.51 per share.

   (d) 2/12/19 421,656 common shares underlying warrants issued to Oasis Capital, with an exercise price of $0.40 per share for the 2nd tranche.

   (e) 2/22/19 215,054 common shares to Oasis Capital for debt conversion valued at $55,387

   (f) 3/19/19 150,000 common shares to Oasis Capital for debt conversion valued at $38,633 with an additional 26,712 common shares for subsequently discovered miscalculation issued in April 2019.

   (g) 2nd quarter 2019 1,830,373 common shares to Oasis Capital for debt conversion valued at $449,397

   (h) 3rd quarter 2019 750,000 common shares to Oasis Capital for debt conversion valued at $93,830.

   (i) 4th quarter 2019 491,099 common shares to Oasis Capital for debt conversion valued at $20,000.

   (j) 1st quarter 2020 3,227,782 common shares to Oasis Capital for debt conversion valued at $166,724.


8




   (k)  1st quarter 2020 550,000 common shares were put to Oasis Capital under the Equity Purchase Agreement and the Company received $41,881.

   (l) 2nd quarter 2020 650,000 common shares to Oasis Capital for debt conversion valued at $31,841.

 (m) 2nd quarter 2020 500,000 common shares were put to Oasis Capital under the Equity Purchase Agreement and the Company received $21,783.


The above issued common shares were issued to sophisticated investors under an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.


Issuer Purchases of Equity Securities

We have not repurchased any of our common shares since inception.



ITEM 6.

SELECTED FINANCIAL DATA


Not applicable



ITEM 7.

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Recent Events

COVID-19 Pandemic

The COVID-19 pandemic is currently impacting countries, communities, supply chains and markets as well as the global financial markets. Governments have imposed laws requiring social distancing, travel bans and quarantine, and these laws may limit access to the Companys facilities, management, support staff and professional advisors. These factors, in turn, may not only impact the Companys operations, financial condition and demand for the Companys goods and services, but the Companys overall ability to react timely to mitigate the impact of this event. Also, it has affected the Companys efforts to comply with filing obligations with the Securities and Exchange Commission. Depending on the severity and longevity of the COVID-19 pandemic, the Companys business, customers, and stockholders may experience a significant negative impact. Currently, the COVID-19 pandemic has limited our ability to move forward with our operations and has negatively affected our ability to timely comply with our ongoing filing obligations with the Securities and Exchange Commission.


Sale of Common Stock of Majority Stockholders

On March 14, 2018, Lawrence and Loreen Calarco, officers and directors of the Company, the Lawrence & Loreen Calarco Family Trust and the Lawrence and Loreen Calarco Trust of June 3, 2014, majority stockholders controlled by Lawrence and Loreen Calarco, sold 51,711,571 common shares and 1,562,500 preferred shares to MAAB Global Limited (MAAB), a non-affiliate of the Company, paid from Bruce Bent, officer and director of MAABs personal funds resulting in a change of control of the Company.  The stock was transferred to MAAB effective March 14, 2018.  The 51,711,571 common shares and 1,562,500 preferred shares represented 62.35% and 100% of the then issued and outstanding common and preferred stock of the Company, respectively.


Resignation of Directors and Election of Directors

On March 14, 2018, Lawrence Calarco, Loreen Calarco and Charles Dargan II resigned as officers and directors of the Company.  Additionally, on March 14, 2018, Jeffrey Michel and Randy Sofferman resigned as directors of the Company.


On March 14, 2018, Bruce Bent, age 62, was appointed as Chief Executive Officer and Director of the Company.  He will stand for re-election at the next annual meeting of the shareholders.  There are no material arrangements to which Mr. Bent is a party, and there is no family relationship between him and any other party connected to the Company.


9



Sale of Custom Pool and Spa Mechanics, Inc. and Custom Pool Plastering, Inc.

On April 30, 2018, pursuant to a Share Exchange Agreement dated April 16, 2018, the Company exchanged all of the issued and outstanding common shares of Custom Pool & Spa Mechanics, Inc. and Custom Pool Plastering, its wholly owned subsidiaries, for 13,668,900 common shares of the Company held by the Lawrence & Loreen Calarco Family Trust, an entity controlled by Lawrence & Loreen Calarco, former officers and directors of the Company. The Board of Directors subsequently authorized the cancellation of those common shares.  After said cancellation, the total issued and outstanding common shares was 69,270,060.  The Share Exchange Agreement was approved by the Board of Directors and written consent of shareholders holding 62.35% of the voting securities of the Company as of April 16, 2018.


Authorization of the Series B Convertible Preferred Stock

On May 4, 2018, the Board of the Company authorized 10,000 shares of the Series B Convertible Preferred Stock, par value $0.001 per share. The Preferred is entitled to a dividend, when declared by the Board of Directors, votes with all other classes of stock as a single class of stock on all actions to be voted on by the stockholders of the Company, and each share of Preferred is convertible into 1,333 shares of common stock and a five-year warrant to purchase 1,333 shares of common stock at an exercise price of $0.75 per share.


Asset Purchase Agreement with Confida Aerospace Ltd.

On May 8, 2018, the Company entered into an Asset Purchase Agreement with Confida Aerospace Ltd. Pursuant to the Asset Purchase Agreement, the Company purchased in-process research and development (IPRD) consisting of inventory, hardware designs, software designs, and a trademark all pertaining to passenger drone design and use from Confida Aerospace Ltd. As consideration for the Asset Purchase Agreement, the Company issued Confida Aerospace Ltd., 10,000 of the registrants Series B preferred shares. Each preferred share is convertible into 1,333 common shares and 1,333 warrants. Each warrant is exercisable into one of the Companys common shares at an exercise price of $.75. The warrants have an exercise period of five years upon conversion. Additionally, the Company assumed $25,000 of debts incurred by Confida Aerospace Ltd. related to drone development.


Current Operations Astro Aerospace, Ltd.

The Company has acquired the software, firmware and hardware for Version 1.0 of a manned drone which has executed multiple flights. It is Astros goal to transform how people and things get from place to place. This will be done by making safe, affordable user-friendly autonomous manned and unmanned Electric Vertical Take-Off and Landing (eVTOL) aircraft available to the mass market anywhere. Astro is currently working on Version 2.0 of the aircraft product which will feature design changes that enhance performance characteristics and safety features. The target market will be government, private sector operators and individuals for a wide range of commercial, logistical and personal uses.  The Company is currently in the flight testing mode of its Passenger Drone Version 1.0, as well as in the development stages of its version 2.0 Passenger Drone model.


The Company is working with Infly Technology Ltd., our design and manufacturing partner, who is leading the design and development team with responsibility for developing the team as well as building the new prototypes for the two new aircraft models. The Company applied for approval to test the Passenger Drone 1.0 version in Canada in order to display new software, avionics and stability. The Company received an SFOC (Special Flight Operations Certificate) from Transport Canada in September 2018, allowing Astro to take to the sky, and put the Passenger Drone 1.0 Elroy through critical elements of integrated flight testing.  The testing culminated on Wednesday, September 19, 2018 with a 4 minute and 30 second flight, reaching heights of over 60 feet and speeds of over 50 km/h. The avionics and flight control systems were put to task with a multitude of maneuvers and the vehicle remained exceptionally stable, even under the effects of a couple of unexpected wind gusts.


The Company's newest prototype focuses on a multitude of applications including passenger transport, cargo delivery, ambulance and med-evac services, rescue and disaster assistance, military, and B2B. Its newly designed modular structure allows the Astro Top Frame (ALTA) to fly independently, as well as in combination with the individually designed "Astro Pods" for the specific need in that specific industry. A fly-in and pick-up system will allow the vehicle to connect, fly, disconnect and repeat, effectively and efficiently, changing from one application to the next. We refer to it as the Swiss Army Knife of the eVTOL world.


10



8


Along with recent Avionics and Control system upgrades this modularity opens the door to the evergrowing opportunities that (eVTOL) electric take-off and landing short haul vehicles bring.  


The Company anticipates the new prototype to be completed and flying by the end of the second quarter, 2021. We have completed the engineering and firmware for the prototype and are now in development of the body for the new prototype.


Overview Discontinued Operation, Custom Pool

The Companys discontinued operation, Custom Pool, historically was a full-service pool maintenance, resurfacing and repair company whose main service area is the Martin, Palm Beach, St. Lucie, Indian River and Brevard counties of Florida.  The Company earned revenue by charging service fees in the pool service business and by payments under contracts in the pool resurfacing business.  The Company managed its operating margins of the businesses by controlling personnel costs, chemical and material purchases and other service costs such as motor vehicle and insurance costs.  Personnel were critical to the business since customers choose those companies who have the most experience and perform the service in a timely and professional manner.


Custom Pool competed in its markets on the basis of price and the quality of the service.  There are many pool service companies in the market and throughout Florida.  However, this also presented an opportunity for the Company since many of its competitors are smaller and lack the infrastructure and depth of the Company.  This allowed the Company to compete through offering a larger range of services with a lower cost structure and to pursue growth opportunities either through internal growth or through opportunistic acquisitions.


Plan of Operations

Management will expand the business through further investment of capital provided by the controlling shareholder and through additional capital raises from third party investors. The Company raised an additional $1.2 million of cash in November 2018 through the issuance of an 8% Senior Secured Convertible Promissory Note in the principal amount of $1,383,636. The first tranche of $600,000 was received in November 2018 and the second tranche of $600,000 was received in February 2019. In December 2019, the Company raised an additional $125,000, in the first tranche, through the issuance of a new 8% Senior Secured Convertible Promissory Note in the principal amount of $575,682.


On August 26, 2019, the Company entered into an Equity Purchase Agreement and Registration Rights Agreement with the same investor who provided the Senior Secured Convertible Promissory Notes. Under the terms of the Equity Purchase Agreement, the investor agreed to purchase from the Company up to $5,000,000 of the Companys common stock upon effectiveness of a registration statement on Form S-1. The maximum amount that the Company shall be entitled to put to the investor in each put notice shall not exceed the lesser of $500,000 or one hundred fifty percent (150%) of the average daily trading volume of the Companys Common Stock during the ten (10) trading days preceding the put. In 2019, no funds were raised by the Company, and no stock issued, under the Equity Purchase Agreement. Through May 28, 2020, the Company raised $63,664 through the Equity Purchase Agreement by selling 1,050,000 shares of its common stock to the investor.


In April 2020, the Company amended the MAAB Promissory Note to increase the maximum principal amount to $1,250,000 and to extend the maturity date to February 28, 2022.


The Company will continue to keep expenses as low as possible with closely monitoring working capital, development cost and schedule, while the Company continues the development of Passenger Drone Version 1.0 and 2.0.


Results of Operations

The Year Ended December 31, 2019 compared to The Year Ended December 31, 2018

For the year ended December 31, 2019, the Company did not have any revenue. It is developing an eVTOL aircraft and expects that it will be marketing the aircraft sometime in 2021. Astro did incur $1,147,261 in operating expenses, which the majority of the expenses was from $232,084 in sales and marketing and $545,639 in research and development. There was also $369,538 in general and administrative expenses. Other expenses were $1,157,812 and


11




consisting mainly of banking and financing fees and interest expense. The interest expense of $1,316,407 includes $1,191,894 of amortization of the debt discount. Other expense was offset by $178,394 in miscellaneous income, all of which came from the disgorgement of short swing profits under Section 16(a) of the Securities and Exchange Act of 1934.The Company expects to incur operating losses until the eVTOL aircraft is marketable and has passed government and safety regulations.


For the year ended December 31, 2018, the Company did not have any revenue. It is developing an eVTOL aircraft and expects that it will be marketing the aircraft sometime in 2021. Astro did incur $7,436,347 in operating expenses, which the majority of the expenses was from an impairment of the assets acquired from Confida Aerospace of $6,285,214. The impairment expense was reduced by $25,000 due to a reduction of assumed accrued expenses as the expenses were incurred. The Company also incurred $901,857 in research and development expenses from the design and engineering of the eVTOL aircraft. There was $249,276 in sales and marketing and general and administrative expenses. Other expenses were $331,185 and consist of banking and financing fees and interest expense, offset by an adjustment to prepaid corporate taxes. The Company expects to incur operating losses until the eVTOL aircraft is marketable and has passed government and safety regulations


Discontinued Operations

The discontinued operations of Custom Pool are not comparable in the year ended December 31, 2019 and 2018 since Custom Pool was sold on April 30, 2018 and therefore only had operations in the 2018 period. Custom Pool had a pre-tax income of $178,300 on revenue of $1,786,911 during the year ended December 31, 2018.  The pre-tax income is a result of revenue at the resurfacing business having rebounded from a poor fourth quarter in 2017. This also improved the operating margin. Some of the improvement was offset in general and administrative expenses due to higher compensation and more employees hired in the office. Additionally, this created a higher allocation of employee expenses, such as health and workers compensation insurance.


Net Loss

The Company had a net loss of $2,305,073 for the year ended December 31, 2019 versus a net loss of $7,626,599 for the year ended December 31, 2018, largely comprised of the eVTOL aircraft operations. The reduction in the loss between 2019 and 2018 is largely due to the impairment expense of $6,285,214 incurred in 2018. The reduction is also due to the short swing profit disgorgement of income of $178,394 during 2019. This was offset somewhat by the increase in interest expense from the $1,383,636 principal amount of the 8% Senior Secured Convertible Promissory Note issued on November 21, 2018 and the interest expense from the issuance of a new 8% Senior Secured Convertible Promissory Note issued in December 2019 in the principal amount up to $575,682. The first tranche had a principal amount of $149,546. There was also an undeclared preferred dividend of $10,000, in both the 2019 and 2018 periods, which made the net loss available to common stockholders of $2,315,073 in 2019 and $7,636,599 in 2018.


The Company also had a foreign currency translation loss of $42,802 from the difference in the Canadian dollar and U.S. dollar exchange rates, which produced a comprehensive loss of $2,347,875 for the year ended December 31, 2019. In the comparable 2018 period, Astro had a foreign currency translation gain of $22,704 which produced a comprehensive loss of $7,603,895.


Capital Resources and Liquidity

The Company currently is not profitable and must finance its business through raising additional capital. The Company is financed through its parent, MAAB, which has loaned the Company $750,017 and there is $499,983 available under the terms of the note through December 31, 2019. The note was amended on April 22, 2020 to increase the maximum principal amount to $1,250,000 and to extend the maturity to February 28, 2022.


The Company also raised an additional $1.2 million of cash in November 2018 through the issuance of a Senior Secured Convertible Promissory Note in the principal amount of $1,383,636. The first tranche of $600,000 was received in November 2018 and the second tranche of $600,000 was received in February 2019. On December 2, 2019, the Company issued a new 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of up to $575,682. The initial tranche principal of $149,546 was issued, and the Company received $125,000 in proceeds.


12




10


On August 26, 2019, the Company entered into an Equity Purchase Agreement and Registration Rights Agreement with the same Investor who provided the funding with the 8% Senior Secured Convertible Promissory Notes. Under the terms of the Equity Purchase Agreement, the Investor agreed to purchase from the Company up to $5,000,000 of the Companys common stock upon effectiveness of a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission and subject to certain limitations and conditions set forth in the Equity Purchase Agreement.  In 2019, no funds were raised by the Company, and no stock issued, under the Equity Purchase Agreement. Through May 29, 2020, the Company raised $63,664 through the Equity Purchase Agreement by selling 1,050,000 shares of its common stock to the investor.


Further capital support will come from the parent, and additional capital from third party sources. There is no assurance that the third party capital will be available. In the event that additional capital from the private or public markets is not available, the Company will need to reduce its spending on development and operations to the level of the capital that is available from the parent.


The Company has prepared its consolidated financial statements for the year ended December 31, 2019 on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of our business. As reflected in the consolidated financial statements, for the year ended December 31, 2019 the Company had a net loss of $2,305,073, and used $950,546 cash in operations, and at December 31, 2019, had negative working capital of $921,829, current assets of $62,299, and an accumulated deficit of $10,316,875. The foregoing factors raise substantial doubt about the Companys ability to continue as a going concern. Ultimately, the ability to continue as a going concern is dependent upon the Companys ability to attract significant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations by licensing or otherwise commercializing products incorporating the Companys technologies. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


While the Company has Net Operating Losses (NOL) for tax purposes due to the net losses through the year ended December 31, 2019, the Company has taken a 100% income tax valuation allowance against it resulting in no deferred tax asset. At this time, it is not known if the Company will become profitable with the ability to use the NOL.


The Company expects to spend $250,000 in the next six months and then another $1,000,000 in the subsequent six months on the development of the eVTOL aircraft.




In December 2015, the Company authorized 50,000,000 shares of Series A Preferred Stock, with a $0.0001 par value. The Series A Preferred has an 8% dividend paid quarterly and is convertible into one share of common stock. The Series A Preferred is senior to the common stock as to dividends, and any liquidation, dissolution or winding up of the Company. The Series A Preferred also has certain voting and registration rights.


On March 14, 2018, Lawrence and Loreen Calarco, officers and directors of the Company, the Lawrence & Loreen Calarco Family Trust and the Lawrence and Loreen Calarco Trust of June 3, 2014, sold all 1,562,500 preferred shares to MAAB, a non-affiliate of CPSM, Inc.


On March 14, 2018, 1,500,000 stock options were cancelled and two 10% Convertible Promissory Notes (Notes) with a six month maturity were issued to the former option holders. The principal amount was $25,000 each and there was no prepayment penalty. The Notes were convertible into the Companys common stock based upon the average of the previous ten trading days closing price of the stock, at the maturity date of the Notes. Upon conversion of the notes, Bruce Bent or MAAB had the option to purchase the common stock issued at a 5% discount to the average closing price of the stock over the previous 10 trading days. The option to purchase expired ten days after the issuance of the common stock.


On September 18, 2018, at the maturity of the Notes, the entire outstanding balance was converted into 38,886 shares of common stock of the Company, which included $2,534 of accrued interest. The Company issued the shares of common stock on October 22, 2018



13


On May 4, 2018, the Board of Directors of the Company authorized 10,000 shares of the Series B Convertible Preferred Stock, par value $0.001 per share. The Preferred is entitled to a dividend, when declared by the Board of Directors, votes with all other classes of stock as a single class of stock on all actions to be voted on by the stockholders of the Company, and each share of Preferred is convertible into 1,333 shares of common stock and a five year warrant to purchase 1,333 shares of common stock at an exercise price of $0.75 per share. On May 8, 2018, the Company issued all of the 10,000 authorized Series B Preferred shares in the acquisition of certain assets from Confida Aerospace Ltd.


On March 14, 2018, MAAB Global Limited, the parent of Astro, issued a Promissory Note for monetary advances to the Company of up to $750,000. The Promissory Note matures on February 28, 2021. The Promissory Note has an interest rate of 10%, compounded monthly. On April 22, 2020, the Promissory Note was amended to increase the maximum principal amount to $1,250,000 and to extend the maturity to February 28, 2022.


Interest accrues on the principal amount or portion thereof which remains unpaid from time to time as well as any interest outstanding, from the date the principal amount is advanced until and including the date upon which the principal amount and all interest due under this promissory note shall be fully paid. The principal amount advanced under the Promissory Note is $750,017 through December 31, 2019. The Company has accrued interest expense of $89,797 at December 31, 2019.


On November 21, 2018, the Company issued an 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of $1,383,636 in exchange for a total investment of $1,200,000, less commissions and expenses, payable in two tranches. The first tranche was payable upon the closing of the agreement, and the second tranche was payable within ten (10) business days of the Investor receiving written notice confirming the effectiveness of the initial registration statement. The first tranche principal of $701,818 was issued, with an Original Issue Discount (OID) of $81,818, a $20,000 financing fee for the lenders transactional expenses that was expensed and the Company received proceeds of $600,000. Each tranche matured 6 months after the issue date. The Company also received the second tranche of $600,000 in February 2019.


The note is convertible into common shares of the Company at a price equal to 75% of the lowest market value in the thirty trading days prior to the conversion date.  The Company is subject to certain penalties if the shares are not issued within two business days of receiving the conversion notice.  Pursuant to a Security Agreement between the Company and the Investor, the Company has granted to the Investor a security interest in its assets to secure repayment of the Notes. The Company must reserve a number of shares equal to 500% of the total amount of shares issuable upon full conversion of the promissory note. The Company meets this requirement since it has 250,000,000 common shares authorized and as of May 29, 2020, 88,882,955 common shares available to be issued.


As additional consideration for the investment, the Company issued 156,250 shares of its common stock to the Investor, valued at $89,531 at the date of issuance, plus warrants to acquire up to an aggregate 344,029 shares of the Companys common stock at an exercise price of $0.51 per share. Upon the closing of the second tranche in February 2019, the Company issued additional warrants to acquire up to an aggregate of 421,656 shares of the Companys common stock at an exercise price of $0.40 per share.  Each Warrant is exercisable by the Investor beginning on the Effective Date through the fifth year anniversary thereof.


The Note has a beneficial conversion feature (BCF) for both tranches, which were valued, along with the warrants, on a relative fair value method. In the first tranche, the warrant fair value was $171,121 and the beneficial conversion feature fair value was $523,326 for a total debt discount of $694,447. The exercise price was $0.375 per share which converts into 1,871,515 common shares. The common stock price at the valuation date was $0.573 per share and the effective conversion price was calculated as $0.293, so that the BCF was calculated to be $0.280 per share valuing the BCF at $523,326.


However, adding the OID and the inducement shares to the debt discount, made final total debt discount $865,796, larger than the principal amount of the Note. Consequently, $163,978 of the debt discount was expensed. Additionally, $108,886 of the debt discount was amortized to interest expense for the year ended December 31, 2018, with an


14


additional $534,682 amortized to interest in the year ended December 31, 2019, bringing the debt discount to $58,250 at December 31, 2019.


In the second tranche, the warrant fair value was $121,320 and the beneficial conversion feature fair value was $403,689 for a debt discount of $525,009. The exercise price was $0.2475 per share which converts into 2,754,820 common shares. The common stock price at the valuation date was $0.35 per share and the effective conversion price was calculated as $0.204, so that the BCF was calculated to be $0.146 per share valuing the BCF at $403,689.


Including the $81,818 of OID, the total debt discount is $606,827. Prior to the forbearance agreement dated September 11, 2019, $498,402 of the debt discount was amortized into interest expense, bringing the debt discount to $108,425. However, the forbearance agreement increased the principal amount, and the debt discount, which were allocated to the second tranche, so there was a net increase in the principal and the debt discount in the second tranche of $257,135 (See Note 10, Default and Forbearance on the 8% Senior Secured Convertible Promissory Note). Additional amortization of the debt discount into interest expense in the fourth quarter of the year ended December 31, 2019 was $117,986 bringing the debt discount to $230,843 at December 31, 2019.


On February 22, 2019, the Investor converted $55,387 in principal amount of the Note into 215,054 shares of the Companys common stock. Likewise, on March 19, 2019, the Investor converted $38,633 in principal amount of the Note into 150,000 shares of the Companys common stock. However, the conversion share calculation was incorrect for the March 19, 2019 conversion of the $38,633 in principal amount of the Note and the actual shares issued for the conversion were 26,712 shares less than what it should have been. These shares were added to a subsequent conversion in April 2019.


In the second quarter ended June 30, 2019, the Investor converted $449,397 in principal amount of the Note into 1,830,373 shares of the Companys common stock. In the third quarter ended September 30, 2019, the Investor converted $93,830 in principal amount of the Note into 750,000 shares of the Companys common stock. In the fourth quarter ended December 31, 2019, the Investor converted $20,000 in principal amount of the Note into 491,099 shares of the Companys common stock. The Company has accrued interest on the Note of $83,557 through December 31, 2019. The effective interest rate for both tranches of this Note was 8.33% as of December 31, 2019 and 2018.


On May 21, 2019, six months after the issuance of the first tranche of the 8% Senior Secured Convertible Promissory Note, the Note matured with $307,798 in principal outstanding and approximately $24,118 in accrued interest. The Company was unable to repay the principal and accrued interest and therefore was in default of the Note. The Note has default provisions permitting default interest of 18% to be charged on the Note as well as to charge a default amount of 150% of the unpaid principal and interest.


The Note was issued with two $600,000 tranches of cash payments. Since both tranches are in one Note, both tranches are in default as of May 21, 2019.


The Company and the Investor promptly began negotiations on a Forbearance Agreement and on September 11, 2019, the Company and the Investor agreed to a Forbearance Agreement. Pursuant to this agreement, the Investor is willing to postpone pursuing its rights and remedies under the agreements, in particular and without limitation with respect to the acceleration of the promissory note and the immediate payment of the default amount and reduce the balance of the promissory note to the pre-default balance plus accrued non-default interest of $1,062,784 on the following terms:


1)    Subject to the Companys compliance with the forbearance agreement, the forbearance shall commence on the effective date and will expire on June 30, 2020.  

2)    Should the Company fail to abide by any of the terms and conditions of the forbearance agreement, fail to comply with the terms of the other agreements, or fail to timely make the payments required under the promissory notes, or should the Company trigger an event of default, the forbearance period will immediately terminate.  

3)    Subject to the Companys compliance with the forbearance period, the repayment of the promissory note will be reduced from 35% to 0%.


15


On December 2, 2019, the Company issued a new 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of up to $575,682. The initial tranche principal of $149,546 was issued, with an OID of $17,046, the pro-rated portion of the $68,182 OID for the entire principal amount of $575,682, a $7,500 financing fee for the lenders transactional expenses that was expensed and the Company received proceeds of $125,000. The Note will mature on June 2, 2020.


The Note is convertible into common shares of the Company at a price equal to 75% of the lowest market value in the thirty trading days prior to the conversion date, which created a BCF valued at greater than the total principal amount of the Note issued of $149,546. The exercise price was $0.0375 per share which converts into 3,987,880 common shares. The common stock price at the valuation date was $0.13 per share and the effective conversion price was calculated as $0.0375, so that the BCF was calculated to be $0.0925 per share valuing the BCF at $368,879.


In accordance with ASC 470-20-30-8, if the intrinsic value of the beneficial conversion feature is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the beneficial conversion feature shall be limited to the amount of the proceeds allocated to the convertible instrument. Therefore, the beneficial conversion feature is limited to $132,500, which when added to the OID of $17,046 equals the principal amount of $149,546. The beneficial conversion feature is being amortized using the effective interest method over the term of the note.


Amortization of the debt discount into interest expense was $24,093 for the year ended December 31, 2019, bringing the debt discount to $125,453 at December 31, 2019. The Company has accrued interest of $1,927 on the Note through the year ended December 31, 2019. The effective interest rate for this Note was 8.33% at December 31, 2019.


On August 26, 2019, the Company entered into an Equity Purchase Agreement and Registration Rights Agreement with the same Investor who provided the funding with the 8% Senior Secured Convertible Promissory Note. Under the terms of the Equity Purchase Agreement, the Investor agreed to purchase from the Company up to $5,000,000 of the Companys common stock upon effectiveness of a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission and subject to certain limitations and conditions set forth in the Equity Purchase Agreement.


On August 26, 2019, in connection with its entry into the Equity Purchase Agreement and the Registration Rights Agreement, the Company committed to 600,000 Commitment Shares (as defined in the Equity Purchase Agreement) to the Investor.  These shares are initially being issued pursuant to the Section 4(a)(2) exemption and will be registered pursuant to the Registration Rights Agreement. Subsequent to the Agreement and prior to the issuance of the Commitment Shares, the Company renegotiated the payment to 300,000 shares of common stock. The fair value of the Commitment Shares as of August 26, 2019 was $48,300. The fair value was entirely expensed in the year ended December 31, 2019.


As of December 31, 2019, the Company had not issued any stock under the Equity Purchase Agreement. Through May 29, 2020, the Company raised $63,664 through the Equity Purchase Agreement by selling 1,050,000 shares of its common stock to the investor.


For the Year Ended December 31, 2019 compared to the Year Ended December 31, 2018

For the year ended December 31, 2019, we had a net loss of $2,305,073. We had the following adjustment to reconcile net loss to cash flows from operating activities: an increase of $1,191,894 due to the amortization of the 8% Senior Secured Convertible Promissory Note discounts.


We had the following changes in operating assets and liabilities: an increase of $27,860 in other receivables, a decrease of $18,567 in prepaid expenses, a decrease of $274 in deposits and an increase of $171,652 in accounts payable and accrued liabilities.


As a result, we had net cash used in operating activities of $950,546 for the year ended December 31, 2019 which is largely due to the continued development of the eVTOL aircraft.


16

For the year ended December 31, 2018, we had a net loss of $7,626,599. We had the following adjustments to reconcile net loss to cash flows from operating activities: an increase of $6,285,214 due to an impairment expense and an increase of $295,398 due to the amortization of the 8% Senior Secured Convertible Promissory Note discounts.


We had the following changes in operating assets and liabilities: an increase of $32,657 in other receivables, an increase of $19,190 in prepaid expenses, an increase of $14,199 in deposits, an increase of $96,452 in accounts payable and accrued expenses, and a decrease of $358,355 from the discontinued operations.


As a result, we had net cash used in operating activities of $1,373,936 for the year ended December 31, 2018 which is largely due to the continued development of the eVTOL aircraft.


For the year ended December 31, 2019, we received $158,578 from a Promissory Note from the parent, received $600,000 from the issuance of the 8% Senior Secured Convertible Promissory Note, received $125,000 from the issuance of a new 8% Senior Secured Promissory Note and an increase of $48,300 from the issuance of 300,000 shares of common stock for a financing fee. We also had a non-cash financing fee of $7,500 issued as a component of the new 8% Senior Secured Convertible Promissory Note of December 2, 2019.


As a result, we had net cash provided by financing activities of $939,378 for the year ended December 31, 2019.




12


For the year ended December 31, 2018, we accrued a preferred stock dividend of $2,500, received $591,439 from a Promissory Note from the parent and received $600,000 from the issuance of the 8% Senior Secured Convertible Promissory Note. As a result, we had net cash provided by financing activities of $1,188,939 for the year ended December 31, 2018.


For the year ended December 31, 2019, we had a loss on foreign currency translation of $42,802. For the year ended December 31, 2018, we had a gain on foreign currency translation of $22,704.


Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16(a) of the Securities Exchange Act of 1934, as amended, an officer, director, or greater-than-10% shareholder of the Company must file a Form 4 reporting the acquisition or disposition of Companys equity securities with the Securities and Exchange Commission no later than the end of the second business day after the day the transaction occurred unless certain exceptions apply.  Transactions not reported on Form 4 must be reported on Form 5 within 45 days after the end of the Companys fiscal year.  Such persons must also file initial reports of ownership on Form 3 upon becoming an officer, director, or greater-than-10% shareholder.  Mr. Bruce Bent, the Companys Chief Executive Officer, is currently up to date in meeting these requirements and has notified the Company that he is now compliant.  On August 30, 2019, pursuant to Section 16(a), Mr. Bent disgorged short swing profits of $178,394 to the Company.


Critical Accounting Policies and Estimates

Management's Discussion and Analysis of its Consolidated Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on- going basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses and the valuation of our assets and contingencies. We believe our estimates and assumptions to be reasonable under the circumstances. However, actual results could differ from those estimates under different assumptions or conditions. Our consolidated financial statements are based on the assumption that we will continue as a going concern. If we are unable to continue as a going concern, we would experience additional losses from the write-down of assets.


Recent Accounting Pronouncements

See Note 6 to the Consolidated Financial Statements, Recent Accounting Pronouncements, for the applicable accounting pronouncements affecting the Company.


17


Off - Balance Sheet Arrangements

We had no material off-balance sheet arrangements as of December 31, 2019.


Contractual Obligations

The registrant has no material contractual obligations


The long-term debt repayments are as follows:


2019

2020

2021


2022


2023

Thereafter

Total

Promissory Note - MAAB

    $      -

      -

 $    -


$750,017


$   -

$        -

$750,017

8% Senior Secured Convertible Promissory Notes

      -

$1,133,070

       -


-


-

-

$1,133,070

 Total Repayments

    $     -  

 $1,133,170

$     -

 

$750,017


 $   -

 $       -

$1,883,087



ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK


The Company does not have any significant market risk exposures.



ITEM 8.

CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Index to Consolidated Financial Statements

Page 


Report of Independent Registered Public Accounting Firm

19

Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018

20

Consolidated Statements of Operations for the years ended December 31, 2019

and 2018

21

Consolidated Statements of Comprehensive Loss

23

Consolidated Statements of Stockholders (Deficit) Equity for the years ended

  December 31, 2019 and 2018

24

Consolidated Statements of Cash Flow for the years ended December 31, 2019

  and 2018

26

Notes to Consolidated Financial Statements

28

















18


Report of Independent Registered Public Accounting Firm




To the Shareholders and the Board of Directors

Astro Aerospace Ltd.

Lewisville, Texas:


Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Astro Aerospace Ltd. and Subsidiaries (the "Company"), as of December 31, 2019 and 2018 and the related consolidated statements of operations, comprehensive loss stockholders' (deficit) equity 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 referred to above present fairly, in all material respects, the consolidated financial position of the Company at December 31, 2019 and 2018, and the consolidated results of its operations and its cash flows for 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 to the consolidated financial statements, the Company has an accumulated deficit of $10,316,875 at December 31, 2019 and a loss from operations of $2,305,073 for the year ended December 31, 2019, and a working capital deficiency of $921,829 which raises substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to this matter are also described in Note 1. The 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 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, an 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. 


/s/ HACKER, JOHNSON & SMITH PA

We have served as the Company's auditor since 2014.

Fort Lauderdale, Florida

May 29, 2020





19


Astro Aerospace Ltd. and Subsidiaries

Consolidated Balance Sheets


December 31,

 


2019

2018

 

Assets



 

Cash

$              1,159

$             55,129

 

Other Receivables

60,517

32,657

 

Prepaids

                   623

               19,190

 

Total Current Assets

62,299

 106,976

 




 

Acquired In-Process Research and Development

871,000

871,000

 

Deposits

              13,925

              14,199

 

Total Assets

$          947,224

$          992,175

 




 

Liabilities and Stockholders' (Deficit) Equity



 




 

Current Liabilities



 

Accounts Payable and Accrued Liabilities

$          265,604

$            93,952

 

8% Senior Secured Convertible Promissory Note, net of discounts of $289,093 and $592,932 at December 31, 2019 and 2018


694,431


108,886

 

8% Senior Secured Convertible Promissory Note issued December 2, 2019, net of discounts of $125,453 at December 31, 2019


              24,093


                        -

 

Total Current Liabilities

            984,128

            202,838

 




 

Long Term Liabilities



 

Promissory Note from MAAB

            750,017

            591,439

 

Total Liabilities

         1,734,145

            794,277

 




 

Commitments and Contingencies (Notes 1, 19 and 20)



 




 

Stockholders' (Deficit) Equity



 

Series A Convertible Preferred Stock, $0.0001 par value, 50,000,000 Shares Authorized, 1,562,500 shares Issued and Outstanding at December 31, 2019 and 2018

156

156

 

Series B Convertible Preferred Stock, $0.001 par value, 10,000 Shares Authorized, 10,000 Shares Issued and Outstanding at December 31, 2019 and 2018

10

10

 

Common Stock, $0.001 par value, 250,000,000 Shares

Authorized, 73,201,722 and 69,308,946 shares Issued and

Outstanding at December 31, 2019 and 2018

73,202

69,309

 

Additional Paid-in Capital:



 

Series A Convertible Preferred Stock

124,844

124,844

 

Series B Convertible Preferred Stock

           7,156,204

7,156,204

 

Common Stock

           2,195,636

836,473

 

Accumulated Other Comprehensive (Loss) Income

(20,098)

22,704

 

Accumulated Deficit

    (10,316,875)

     (8,011,802)

 

Total Stockholders' (Deficit) Equity

         (786,921)

          197,898

 

Total Liabilities and Stockholders' (Deficit) Equity

$        947,224

$        992,175


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

20

Astro Aerospace Ltd. and Subsidiaries

Consolidated Statements of Operations



Year Ended December 31,


2019

2018




Revenue

$                   -

$                   -

Operating Expenses:



Sales and Marketing

232,084

60,487

General and Administrative

369,538

188,789

Research and Development

545,639

901,857

Impairment Expense

                     -

      6,285,214

Total Operating Expenses

      1,147,261

      7,436,347

Loss from Operations

     (1,147,261)

     (7,436,347)




Other Expense (Income)



Interest Expense, Net

1,316,407

318,038

Bank and Financing Fees

19,799

23,147

Miscellaneous Income

        (178,394)

        (10,000)

Total Other Expense

     1,157,812

        331,185

Loss Before Income Tax

(2,305,073)

(7,767,532)




Income Tax



Current

-

-

Deferred

                    -

                   -

Total Income Tax Expense

                    -

                   -

Loss from Continuing Operations, Net

    (2,305,073)

   (7,767,532)




Discontinued Operations:



Income from Discontinued Operations

-

178,300

Income Tax

                    -

          37,367

Income from Discontinued Operations, Net

-

140,933




Net Loss

(2,305,073)

(7,626,599)

Less: Preferred Stock Dividends

          10,000

         10,000

Net Loss Available to Common Stockholders

$ (2,315,073)

$ (7,636,599)




Net Loss per Common Share:



Net Loss From Continuing Operations per Common Share:



Basic

$          (0.03)

$         (0.11)

Diluted

$          (0.03)

$         (0.11)




Net Earnings From Discontinued Operations per Common Share:



Basic

$                -

    $                -

Diluted

$                -

$                -






21


Astro Aerospace Ltd. and Subsidiaries

Consolidated Statements of Operations

(Continued)



Year Ended December 31,


2019

2018

Net Loss per Common Share:



Basic

$          (0.03)

$          (0.10)

Diluted

$          (0.03)

$          (0.10)  




Weighted Average Number of Common Shares Outstanding - Basic


71,297,272


73,771,722

Weighted Average Number of Common Shares Outstanding - Diluted


71,297,272


73,771,722



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









22


Astro Aerospace Ltd. and Subsidiaries

Consolidated Statements of Comprehensive Loss



Year Ended December 31,


2019

2018




Net Loss

$   (2,305,073)

$   (7,626,599)

Foreign Currency Translation (Loss) Gain

          (42,802)

           22,704

Comprehensive Loss

     (2,347,875)

     (7,603,895)

 

The accompanying notes are an integral part of the consolidated financial statements









23


Astro Aerospace Ltd. and Subsidiaries

Consolidated Statements of Stockholders (Deficit) Equity

Years Ended December 31, 2019 and 2018


 

Series A

Preferred Stock

Series B

Preferred Stock

Common Stock

Additional

Paid - In

Capital

Series A

Additional

Paid - In

Capital Series

B

Additional

Paid - In

Capital

Accumulated

Other

Comprehensive

Retained Earnings

Total

Stockholders'

 

Shares

Amount

Shares

Amount

Shares

Amount

Preferred

Preferred

Common

Income (Loss)

(Accumulated Deficit)

Equity (Deficit)

 

 

Balance at December 31, 2017

1,562,500

$ 156

-

$      -

82,938,960

$82,939

$124,844

$             -

$ 229,744

$        -

$ 277,467

$ 715,150

 

 













 

Issuance of 10% Convertible Promissory Notes

-

-

-

-

-

-

-

-

(50,000)

-

-

(50,000)

 

Series A Preferred Stock Dividend

-

-

-

-

-

-

-

-

-


(2,500)

(2,500)

 

Stock Option Expense

-

-

-

-

-

-

-

-

22,857

-

-

22,857

 

Acquisition of Common Stock for Common Stock of Subsidiaries

-

-

-

-

(13,668,900)



(13,669)

-

-

(202,601)

-

(660,170)

(876,440)

 

Issuance of Series B Convertible Preferred Stock

-

-

10,000

10

-

-

-

7,156,204

-

-

-

7,156,214

 

Conversion into Common Stock of the 10% Convertible Promissory Notes with Accrued Interest

-

-

-

-

-

-

-

-

52,534

-

-

52,534

 

Issuance of 10% Convertible Promissory Notes Conversion Shares

-

-

-

-

38,886

39

-

-

(39)

-

-

-

 

Fair Value of Warrants Issued with 8% Senior Secured Convertible Promissory Note

-

-

-

-

-

-

-

-

171,121

-

-

171,121

 

Fair Value of Beneficial Conversion Feature of the 8% Senior Secured Convertible Promissory Note

-

-

-

-

-

-

-

-

523,326

-

-

523,326

 

Inducement Shares Issued for the 8% Senior Secured Convertible Promissory Note

-

-

-

-

-

-

-

-

89,531

-

-

89,531

 

Foreign Currency Translation Gain

-

-

-

-

-

-

-

-

-

22,704

-

22,704

 

Net Loss

-

-

-

-

-

-

-

-

-

-

(7,626,599)

(7,626,599)

 

 













 

Balance at December 31, 2018

1,562,500

$156

10,000

$10

69,308,946

$69,309

$124,844

$7,156,204

$836,473

$22,704

$(8,011,802)

$197,898

 


24



Astro Aerospace Ltd. and Subsidiaries

Consolidated Statements of Stockholders (Deficit) Equity continued

Years Ended December 31, 2019 and 2018


 

Series A

Preferred Stock

Series B

Preferred Stock

Common Stock

Additional

Paid - In

Capital

Series A

Additional

Paid - In

Capital Series

B

Additional

Paid - In

Capital

Accumulated

Other

Comprehensive

Retained Earnings

Total

Stockholders'

 

Shares

Amount

Shares

Amount

Shares

Amount

Preferred

Preferred

Common

Income (Loss)

(Accumulated Deficit)

Equity (Deficit)

 

Balance at December 31, 2018

1,562,500

$156

10,000

$10

69,308,946

$69,309

$124,844

$7,156,204

$836,473

$22,704

$(8,011,802)

$197,898

 


Issuance of Inducement common shares

                -

           -

            -

                 -

      156,250

   156

            -

                -

           (156)

            -

                     -

                 -

 

Partial Conversion of 8% Senior Secured Convertible Promissory Notes

-

-

-

-

3,436,526

3,437

-

-

653,810

-

-

657,247

 

Fair Value of Warrants Issued with 8% Senior Secured Convertible Promissory Note 2nd Tranche

-

-

-

-

                -

           -

-

-

121,320

-

-

121,320

 

Fair Value of Beneficial Conversion Feature of the 8% Senior Secured Convertible Promissory Note 2nd Tranche

-

-

-

-

-

-

-

-

403,689

-

-

403,689

 

Fair Value of Beneficial Conversion Feature of the 8% Senior Secured Convertible Promissory Note 12/2/2019 Note

-

-

-

-

                -

-

-

-

132,500

-

-

132,500

 

Common Stock issued as Financing Fee for the Equity Purchase Agreement

-

-

-

-

300,000

300

-

-

48,000

-

-

48,300

 

Foreign Currency Translation Loss

-

-

-

-

-

-

-

-

-

(42,802)

-

(42,802)

 

Net Loss

-

-

-

-

-

-

-

-

-

-

(2,305,073)

(2,305,073)

 

Balance at December 31, 2019

1,562,500

$156

10,000

$10

73,201,722

$73,202

$ 124,844

$7,156,204

$2,195,636

$(20,098)

$(10,316,875)

$(786,921)

 



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







25


Astro Aerospace Ltd. and Subsidiaries

Consolidated Statements of Cash Flow



Year Ended December 31,


2019

2018

 




 

Cash Flow from Operating Activities:



 

Net Loss

$(2,305,073)

$(7,626,599)

 




 

Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:



 

Impairment Expense

-

6,285,214

 

Amortization of Note Discounts

1,191,894

295,398

 




 

Changes in Operating Assets and Liabilities:



 

Other Receivables

(27,860)

(32,657)

 

Prepaids

18,567

(19,190)

 

Deposits

274

(14,199)

 

Accounts Payable and Accrued Liabilities

171,652

96,452

 

Discontinued Operations, net

-

(358,355)

 




 

Net Cash Used In Operating Activities

(950,546)

(1,373,936)

 




 

Cash Flow from Financing Activities:



 

Preferred Stock Dividend

-

(2,500)

 

Promissory Note from MAAB

158,578

591,439

 

8% Senior Secured Convertible Promissory Note

600,000

600,000

 

8% Senior Secured Convertible Promissory Note, Issued December 2, 2019

125,000

-

 

Issuance of Common Stock for Financing Fee

48,300

-

 

Non-cash Financing Fee

7,500

-

 

Net Cash Provided By Financing Activities

939,378

1,188,939

 




 

Effect of Foreign Currency Translation (Loss) Gain

(42,802)

22,704

 




 

Net Decrease in Cash

  $    (53,970)

$(162,293)

 




 

Cash at the Beginning of the Year

$       55,129

$ 217,422

 

Cash at the End of the Year

$        1,159

$   55,129

 




 

Supplemental Disclosures of Cash Flow Information:



 

Cash Paid During the Year for:



 

   Interest

$        4,598

$     9,232

 

   Taxes

$                -

$   24,930

 




 






26


Astro Aerospace Ltd. and Subsidiaries

Consolidated Statements of Cash Flow

(Continued)

 


Year Ended December 31,


2019

2018

Supplemental Disclosures of Non-Cash Information:



10% Convertible Promissory Notes Issued in Exchange for Stock Options


$                -


          $        50,000  

Common Stock Received in Sale of Discontinued Operations


$                -  


$  876,440

Assets Sold in Discontinued Operations for Common Stock


$                -


$1,941,259

Liabilities Sold in Discontinued Operations for Common Stock


$                -


$(1,064,818)

Series B Preferred Stock Issued in Acquisition of Assets

$                -

$  7,156,214

Acquired In-Process Research and Development

$                -

$  7,181,214

Accounts Payable and Accrued Liabilities Assumed in Acquisition of Assets


$                -


$       25,000

Conversion into Common Stock of the 10% Convertible Promissory Notes with Accrued Interest


$                -


 $         52,534

Conversion of 8% Senior Secured Conversion Promissory Notes into Common Stock


$    657,247


$                 -

Discounts Issued with 8% Senior Secured Convertible Promissory Notes


$    606,827


$     101,818

Discounts Issued with 8% Senior Secured Convertible Promissory Note, Issued December 2, 2019


$    149,546


$                 -

Discounts Issued in Connection with Forbearance Agreement for 8% Senior Secured Convertible Promissory Notes



$    257,135



$                 -

Amortization to Interest Expense of the Debt Discount from the 8% Senior Secured Convertible Promissory Note


$ 1,167,801


$     108,886

Amortization to Interest Expense of the Debt Discount from the 8% Senior Secured Convertible Promissory Note, Issued December 2, 2019



$      24,093



$                 -

Allocation to Interest Expense from Debt Discount of the 8% Senior Secured Convertible Promissory Note


$                -


$     163,978

Common Stock issued as Financing Fee for the Equity Purchase Agreement


$      48,300


$                 -

Reduction in MAAB Promissory Note from Section 16(a) Short Swing Profit Income


$    178,394


$                 -



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







27


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 1 NATURE OF OPERATIONS


Astro Aerospace Ltd. (Astro or the Company) and its wholly-owned subsidiaries, is a developer of self-piloted and autonomous, manned and unmanned, eVTOL (Electric Vertical Take Off and Landing) aerial vehicles. The Company intends to provide the market with a mainstream mode of everyday, aerial transportation for both humans and cargo. Astro currently has a working prototype and is making engineering and mechanical improvements to it.


Astro is the successor corporation to CPSM, Inc., which through its subsidiaries, Custom Pool and Spa Mechanics, Inc. (Custom Pool and Spa), and Custom Pool Plastering, Inc. (CPP) collectively (Custom Pool) were primarily engaged in the provision of full line pool and spa services, specializing in pool maintenance and service, repairs, leak detection, renovations, decking and remodeling.  The primary market area included Martin, Palm Beach, St Lucie, Indian River and Brevard counties, Florida.


On March 14, 2018, MAAB Global Limited (MAAB), the majority stockholder and parent of Astro, acquired control of CPSM, Inc. and on April 30, 2018, Custom Pool was sold to the Lawrence & Loreen Calarco Family Trust, an entity controlled by Lawrence Calarco and Loreen Calarco, former officers and directors of the CPSM (See Note 2, Sale of Common Stock of Majority Stockholders and Resignation and Election of the Board of Directors and Note 3, Sale of Custom Pool).


On March 24, 2018 the articles of incorporation were amended to change the name of the Company from CPSM, Inc. to Astro Aerospace Ltd. As of December 31, 2019, the Company has one subsidiary, Astro Aerospace Ltd. (Canada), which is incorporated in Canada and is used mainly for refunds of the Goods and Services Tax in Canada.


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 our business. As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2019 the Company had a net loss of $2,305,073 and used $950,546 in cash in operations, and at December 31, 2019, had negative working capital of $921,829, current assets of $62,299, and an accumulated deficit of $10,316,875. The foregoing factors raise substantial doubt about the Companys ability to continue as a going concern. Ultimately, the ability to continue as a going concern is dependent upon the Companys ability to attract significant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations by licensing or otherwise commercializing products incorporating the Companys technologies. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


The Company acknowledges that its current cash position is insufficient to maintain the current level of operations and research and development, and that the Company will be required to raise substantial additional capital to continue its operations and fund its future business plans. The Company has continued to raise funds through its parent, MAAB and the outstanding note payable balance was $750,017 and there is $499,983 available under the terms of the note at December 31, 2019. The note was amended on April 22, 2020 (See Note 20, Subsequent Events). The Company has also raised funds through independent capital sources, of which the Company has two 8% Senior Secured Convertible Promissory Notes, the first of which has an outstanding balance of $983,524 at December 31, 2019 and the second of which has an outstanding balance of $149,546 at December 31, 2019. The first 8% Senior secured Convertible Note is subject to a forbearance agreement (See Note 10, Default and Forbearance on the 8% Senior Secured Convertible Promissory Note). The Company has also executed an Equity Purchase Agreement whereby the Investor agreed to purchase from the Company up to $5,000,000 of the Companys common stock. (See Note 16, Equity Purchase Agreement and Registration Rights Agreement). Through May 29, 2020, the Company put 1,050,000 shares of common stock at prices ranging from $.055 to $.081 per share for total proceeds of $63,664.


28


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 2 SALE OF COMMON STOCK OF MAJORITY STOCKHOLDERS AND RESIGNATION AND ELECTION OF THE BOARD OF DIRECTORS


Astro plans to raise additional capital in the private and public securities markets in 2020.


On March 14, 2018, Lawrence and Loreen Calarco, officers and directors of the Company, the Lawrence & Loreen Calarco Family Trust and the Lawrence and Loreen Calarco Trust of June 3, 2014, majority stockholders controlled by Lawrence and Loreen Calarco, sold 51,711,571 common shares and 1,562,500 preferred shares to MAAB, a non-affiliate of the Company, paid from Bruce Bent, officer and director of MAABs personal funds resulting in a change of control of the Company.  The stock was transferred to MAAB effective March 14, 2018. The 51,711,571 common shares and 1,562,500 preferred shares represented 62.35% and 100% of the issued and outstanding common and preferred stock of the Company, respectively.


On March 14, 2018, Lawrence Calarco, Loreen Calarco and Charles Dargan II resigned as officers and directors of the Company. Additionally, on March 14, 2018, Jeffrey Michel and Randy Sofferman resigned as directors of the Company.


On March 14, 2018, Bruce Bent, age 62, was appointed as Chief Executive Officer and Director of the Company. He stood for re-election at the subsequent annual meeting of the shareholders. There are no material arrangements to which Mr. Bent is a party, and there is no family relationship between him and any other party connected to the Company.



NOTE 3 SALE OF CUSTOM POOL


On April 30, 2018, pursuant to a Share Exchange Agreement dated April 16, 2018, the Company sold all of the issued and outstanding common shares of Custom Pool & Spa Mechanics, Inc. and Custom Pool Plastering, its wholly owned subsidiaries, for 13,668,900 common shares of the Company held by the Lawrence & Loreen Calarco Family Trust, an entity controlled by Lawrence Calarco and Loreen Calarco, former officers and directors of the Company.  The Board of Directors subsequently authorized the cancellation of those common shares.  After said cancellation, the total issued and outstanding common shares was 69,270,060.  The Share Exchange Agreement was approved by the Board of Directors and written consent of shareholders holding 62.35% of the voting securities of the Company as of April 16, 2018.


The Company determined that there would be no gain or loss on the sale in accordance with Accounting Standards Codification 505-30-10, Equity Nonreciprocal Transfers with Owners. Essentially the transaction is similar to a spin-off or reorganization since the Company acquired shares of its own common stock for the common shares of Custom Pool & Spa Mechanics, Inc. and Custom Pool Plastering, its wholly owned subsidiaries. As such, the transaction is accounted for at the recorded (book value) amount. The book value of the net assets was $876,440.


Custom Pool is presented as a discontinued operation in the consolidated financial statements. The following is a reconciliation of the major line items constituting income of discontinued operations, net that are presented in the accompanying Consolidated Statements of Operations:




29


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 3 SALE OF CUSTOM POOL, CONTINUED



                      Year Ended


                      December 31,


2019

        2018

Major Classes of Line Items Constituting Pre-Tax Income on Discontinued Operations:



     Revenue

$            -

$  1,786,911

     Cost of Services

              -

    1,208,619

     General and Administrative

              -

       338,877

     Other Operating Expenses

              -

         51,370

Total Operating Expenses

              -

    1,598,866

Operating Income

              -

       188,045

      Other Expense

              -

          9,745

Total Pre-Tax Income from Discontinued Operations

              -

       178,300

        

  Income Tax Expense

              -

       (37,367)

Income from Discontinued Operations

$            -

$      140,933





NOTE 4 ACQUSITION OF ASSETS FROM CONFIDA AEROSPACE, LTD.


On May 8, 2018, the Company entered into an Asset Purchase Agreement with Confida Aerospace Ltd. Pursuant to the Asset Purchase Agreement, the Company purchased in-process research and development (IPRD) consisting of inventory, hardware designs, software designs, and a trademark all pertaining to passenger drone design and use from Confida Aerospace Ltd. As consideration for the Asset Purchase Agreement, the Company issued Confida Aerospace Ltd., 10,000 of the Companys Series B preferred shares (See, Note 13, Convertible Preferred Stock).  Each preferred share is convertible into 1,333 common shares and 1,333 warrants.  Each warrant is exercisable into one of the Companys common shares at an exercise price of $.75. The warrants have an exercise period of five years upon

conversion. Additionally, the Company assumed $50,000 of debts incurred by Confida Aerospace Ltd. related to drone development.


All of the authorized shares of the Series B Convertible Stock were issued for the assets and $50,000 of accrued liabilities were assumed. The fair market value of the preferred stock was $7,131,214 as determined by an independent third party valuation firm. The fair market value was arrived at using an equivalent conversion into the common stock of Astro, which is trading in the Over-The-Counter Market. Appropriate restrictions and marketability discounts were applied, including using the 40 day volume weighted average price of $0.46 per share. The fair value of the common stock equivalent was $3,753,271. As well, the warrants issued in conjunction with the common stock were valued using the Black Scholes Model. The inputs used were a 40 day volume weighted average price of $0.46 per share, exercise price of $0.75 per share, a ten year term, a risk free rate of 2.97%, a volatility of 51% and no dividend yield. The fair value of the warrants was $3,377,943.


The Company determined the fair value of the IPRD based on the fair market value of the consideration paid for the IPRD: 10,000 shares of Series B Convertible Preferred Stock, each share of which is convertible into 1,333 shares of common stock and 1,333 common stock warrants. The drone prototype is in an early development stage and the fair value is not determinable using cash flow projections and such projections were not available. It is anticipated that the drone will be marketable and flying by the end of the second quarter of 2021 and at that time that cash flows are expected to commence.


30


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 4 ACQUSITION OF ASSETS FROM CONFIDA AEROSPACE, LTD., CONTINUED


Further analysis of the IPRD determined that the recoverability of the fair value carrying amount was not probable and an impairment expense of $6,310,214 was incurred to reduce the carrying value of the net assets to $871,000, which approximates cost.


As well, after the initial 90 day period for the assumption of liabilities, the Company determined that it would most likely only assume $25,000 of liabilities and has adjusted the consolidated financial statements accordingly. During 2018, the expenses related to the liabilities had been incurred and the impairment expense was reduced by $25,000 to $6,285,214.


NOTE 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Principles of Consolidation


The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.


Basis of Presentation


The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles general accepted in the United States of America (GAAP).


Cash


All highly liquid investments with original maturities of three months or less or money market accounts held at financial institutions are considered to be cash. Substantially all of the cash is placed with one financial institution. From time to time during the year the cash accounts are exposed to credit loss for amounts in excess of insured limits of $250,000 in the event of non-performance by the institution, however, it is not anticipated that there will be non-performance.


Intangible Assets Acquired In-Process Research and Development


Acquired in-process research and development consists of acquired drone technology and engineering and trademarks. The Company reviews the IPRD, which currently has an indefinite useful life, for impairment at least annually or more frequently if an event occurs creating the potential for impairment, until such time as the research and development efforts are completed or abandoned.  If the research and   development efforts are abandoned, the related costs will be written off in the period of such determination. If the research and development efforts are completed successfully, the related assets will be amortized over the estimated useful life of the underlying products. The Company will amortize the cost of identified intangible assets using amortization methods that reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. An impairment expense of $6,285,214 was incurred in the year ended December 31, 2018. An updated valuation by an independent third party was performed for the year ended December 31, 2019, and no further impairment expense was required.


Revenue Recognition


The Company does not currently have any revenue. In discontinued operations, revenue was recognized when the pool service was completed and the collectability was reasonably assured. For pool resurfacing and remediation work, revenue was recognized at the time of completion of the job.


31


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


Stock-Based Compensation


The Company accounts for stock-based compensation under the fair value recognition provisions of GAAP which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors including stock options and restricted stock issuances based on estimated fair values.


In accordance with GAAP, the fair value of stock-based awards is generally recognized as compensation expense over the requisite service period, which is defined as the period during which an employee is required to provide service in exchange for an award. The Company uses a straight-line attribution method for all grants that include only a service condition. Compensation expense related to all awards is included in operations.


Convertible Notes, Warrants and Beneficial Conversion Feature (BCF)


The convertible note is recorded at its fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant. Further, the convertible promissory note is examined for any intrinsic BCF of which the convertible price of the note is less than the closing common stock price on date of issuance. If the relative fair value method is used to value the convertible promissory note and there is an intrinsic BCF, a further analysis is undertaken of the BCF using an effective conversion price which assumes the conversion price is the relative fair value divided by the number of shares the convertible debt is converted into by its terms. The BCF value is accounted for as equity.


Warrants issued with the 8% Senior Secured Convertible Promissory Note are accounted for under the fair value and relative fair value method. The warrant is first analyzed per its terms as to whether it has derivative features or not. If the warrant is determined to be a derivative and not qualify for equity treatment, then it is measured at fair value using the Black Scholes option model and recorded as a liability on the consolidated balance sheet. The warrant is re-measured at its then current fair value at each subsequent reporting date (it is marked-to-market).


If the warrant is determined to not have derivative features, it is recorded into equity at its fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the convertible note.


The warrant and BCF relative fair values are also recorded as a discount to the convertible promissory notes and as additional paid-in-capital. The discount on the convertible notes is amortized to interest expense over the life of the debt. At present, these equity features of the convertible promissory notes have recorded a discount to the convertible notes that is substantially equal to the proceeds received.


Research and Development


Research and development costs are expensed as incurred.

Income Taxes

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of asset and liabilities.  Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.  The effect on deferred tax asset and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

32


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP.  Under GAAP, the tax effects of a position are recognized only if it is more-likely-than-not to be sustained by the taxing authority as of the reporting date.  If the tax position is not considered more-likely-than-not to be sustained, then no benefits of the position are recognized.  Management believes there are no unrecognized tax benefits or uncertain tax positions as of December 31, 2019 and 2018.

The Company assessed its earnings history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of December 31, 2019. Accordingly, a valuation allowance was recorded against the net deferred tax asset.

The Company recognizes interest and penalties on income taxes as a component of income tax expense, should such an expense be realized.

Basic and Diluted Net Loss per Share


The Company computes loss per share in accordance with ASC-260, Earnings per Share which requires presentation of both basic and diluted loss per share on the face of the consolidated statements of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the year. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the year, computed using the treasury stock method for outstanding stock options and the if converted method for convertible notes and preferred stock. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Common stock equivalents are anti-dilutive for the years ended December 31, 2019 and 2018 due to the net loss during the years. The common stock equivalents are comprised of stock options (cancelled as of March 14, 2018), convertible promissory notes and the Series A and Series B Convertible Preferred Stock.


Further, the Company has presented its discontinued operations in accordance with ASC 205-20, Presentation of Financial Statements, Discontinued Operations, which requires the presentation of both basic and diluted loss per share from continuing operations and the basic and diluted net earnings per share from discontinued operations in addition to the basic and diluted net loss per share.






33


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


For the years ended December 31, 2019 and 2018, the basic and diluted net loss per share from continuing operations, the basic and diluted net earnings from discontinued operations and the basic and diluted net loss per share were computed as follows:



Year Ended


December 31,


2019

2018

Loss from Continuing Operations, net


$   (2,305,073)


 $ (7,767,532)

Income from Discontinued Operations, net


             -


        140,933

 Net Loss Available to Common Stockholders

     (2,305,073)

    (7,626,599)

Series A Preferred Stock Dividends

             

10,000

            

10,000

Net Loss Available to Common Stockholders and Assumed Conversions

 


$  ( 2,315,073)

 


$  (7,636,599)

Weighted Average Shares -      

   Basic

    71,297,272

 73,771,722

Effective Dilutive Securities Stock Options

        -

     

        -

Shares Issuable Upon Conversion of Convertible Promissory Notes

    


   -



         -

Shares Issuable Upon Conversion of Preferred Stock Series A



         -



         -

Shares Issuable Upon Conversion of Preferred Stock Series B



         -



         -

Weighted Average Shares - Diluted

   

71,297,272

 

73,771,722

Net Loss Per Common Share from Continuing Operations:



    Basic

    $   (0.03)

$     (0.11)

    Diluted

    $   (0.03)

$     (0.11)

Net Earnings Per Common Share from Discontinued Operations:





    Basic

   $     -

$      -

    Diluted

   $     -

$      -

Net Loss Per Common Share:



    Basic

   $   (0.03)

$    (0.10)

    Diluted

   $   (0.03)

$    (0.10)


34


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 5 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED


Comprehensive Loss


Comprehensive loss consists of net loss plus the foreign currency translation (loss) gain.


Foreign Currency Translation


The translation of assets and liabilities for the Companys foreign subsidiary is made at year end exchange rates, while revenue and expense accounts are translated at the average exchange rates during the year transactions occurred.


Fair Value Measurement


Generally accepted accounting principles establishes a hierarchy to prioritize the inputs of valuation techniques used to measure fair value. The hierarchy gives the highest ranking to the fair values determined by using unadjusted quoted prices in active markets for identical assets (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). Observable inputs are those that market participants would use in pricing the assets based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Companys assumptions about inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The Company has determined the appropriate level of the hierarchy and applied it to its financial assets and liabilities. At December 31, 2019 and 2018, there were no assets or liabilities carried or measured at fair value.


Use of Estimates and Assumptions


The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of IPRD. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustments, if any, are reflected in operations.



NOTE 6 RECENT ACCOUNTING PRONOUNCEMENTS


In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-2, Leases (Topic 842) which will require lessees to recognize on the consolidated balance sheet the assets and liabilities for the rights and obligations created by those leases with term of more than twelve months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease.  The new ASU will require both types of leases to be recognized on the consolidated balance sheet. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the consolidated financial statements. The ASU became effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. The ASU had no effect on the Companys consolidated financial statements.

35


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 6 RECENT ACCOUNTING PRONOUNCEMENTS, CONTINUED


In June 2018, the FASB issued ASU No. 2018-07, Compensation Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting, to include share based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantors own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2018 but no earlier than an entitys adoption date of Topic 606. The Company evaluated the impact of adopting the new guidance on the consolidated financial statements, but it does not have a material impact.



NOTE 7 CONCENTRATIONS OF CREDIT RISK


Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company maintains its cash with high-credit quality financial institutions. At December 31, 2019 and 2018 the Company did not have any cash balances in excess of federally insured limits.



NOTE 8 FAIR VALUE ESTIMATES


The Company measures financial instruments at fair value in accordance with ASC 820, which specifies a valuation hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Companys own assumptions.


Management believes the carrying amounts of the Company's cash, other receivables, accounts payable and accrued liabilities as of December 31, 2019 and 2018 approximate their respective fair values because of the short-term nature of these instruments. The Company measures its notes payable and loans in accordance with the hierarchy of fair value based on whether the inputs to those valuation techniques are observable or unobservable. The hierarchy is:


Level 1 Quoted prices for identical instruments in active markets;


Level 2 Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and


Level 3 Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.




36


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 8 FAIR VALUE ESTIMATES, CONTINUED


The estimated fair value of the cash, notes payable, and loans at December 31, 2019 and 2018, were as follows:



Quoted Prices

In Active

Markets for

Identical

Assets



Significant

Other

Observable

Inputs




Significant

Unobservable

Inputs




(Level 1)


(Level 2)


(Level 3)

Carrying

Value

At December 31, 2019:





 

Assets





 

  Cash

$   1,159

-

-

  $     1,159

 

Liabilities

-

-



 

  8% Senior Secured Convertible Promissory Note, Net

-

-

$ 694,431

  $ 694,431

 

  8% Senior Secured Convertible Promissory Note issued December 2, 2019, Net

-

-

$   24,093

 $  24,093

 

  Loan from MAAB

-

-

$ 750,017

  $750,017

 






 

At December 31, 2018:





 

Assets





 

  Cash

$ 55,129

-

-

  $  55,129

 






 

Liabilities





 

  8% Senior Secured Convertible Promissory Note, Net

-

-

$ 108,886

  $ 108,886

 

  Loan from MAAB

-

-

$ 591,439

  $ 591,439

 


NOTE 9 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTES


On November 21, 2018, the Company issued an 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of $1,383,636 in exchange for a total investment of $1,200,000, less commissions and expenses, payable in two tranches. The first tranche was payable upon the closing of the agreement, and the second tranche was payable within ten (10) business days of the Investor receiving written notice confirming the effectiveness of the initial registration statement. The first tranche principal of $701,818 was issued, with an Original Issue Discount (OID) of $81,818, a $20,000 financing fee for the lenders transactional expenses that was expensed and the Company received proceeds of $600,000. The second tranche was issued on February 12, 2019 in the principal amount of $681,818, with an OID of $81,818 and the Company received proceeds of $600,000. Each tranche matured 6 months after the issue date, the first tranche matured on May 21, 2019 and the second tranche matured on August 12, 2019 (See Note 10, Default And Forbearance On The 8% Senior Secured Convertible Promissory Note).


The Note is convertible into common shares of the Company at a price equal to 75% of the lowest market value in the thirty trading days prior to the conversion date. The Company is subject to certain penalties if the shares are not issued within two business days of receiving the conversion notice. Pursuant to a Security Agreement between the Company and the Investor (the Security Agreement), the Company has granted to the Investor a security interest in its assets


37


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 9 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTES, CONTINUED


to secure repayment of the Notes. The Company must reserve an amount of shares equal to 500% of the total amount of shares issuable upon full conversion of the promissory note. The Company meets this requirement since it has 250,000,000 common shares authorized and as of May 29, 2020, 88,882,955 shares available to be issued.


As additional consideration for the investment, the Company issued 156,250 shares of its common stock to the Investor, valued at $89,531 at the date of issuance, plus warrants to acquire up to an aggregate 344,029 shares of the Companys common stock at an exercise price of $0.51 per share. Upon the closing of the second tranche in February 2019, the Company issued additional warrants to acquire up to an aggregate amount of 421,656 shares of the Companys common stock at an exercise price of $0.40 per share. Each Warrant is exercisable by the Investor beginning on the Effective Date through the fifth year anniversary thereof.


The Note has a beneficial conversion feature (BCF) for both tranches, which were valued, along with the warrants, on a relative fair value method. In the first tranche, the warrant fair value (See Note 15, Warrants) was $171,121 and the beneficial conversion feature fair value was $523,326 for a total debt discount of $694,447. The exercise price was $0.375 per share which converts into 1,871,515 common shares. The common stock price at the valuation date was $0.573 per share and the effective conversion price was calculated as $0.293, so that the BCF was calculated to be $0.280 per share valuing the BCF at $523,326.


However, adding the OID and the inducement shares to the debt discount, made final total debt discount $865,796, larger than the principal amount of the Note. Consequently, $163,978 of the debt discount was expensed. Additionally, $108,886 of the debt discount was amortized to interest expense for the year ended December 31, 2018, with an additional $534,682 amortized to interest in the year ended December 31, 2019, bringing the debt discount to $58,250 at December 31, 2019.


In the second tranche, the warrant fair value (See Note 15, Warrants) was $121,320 and the beneficial conversion feature fair value was $403,689 for a debt discount of $525,009. The exercise price was 0.2475 per share which converts into 2,754,820 common shares. The common stock price at the valuation date was $0.35 per share and the effective conversion price was calculated as $0.204, so that the BCF was calculated to be $0.146 per share valuing the BCF at $403,689.  Including the $81,818 of OID, the total debt discount is $606,827. Prior to the forbearance agreement dated September 11, 2019, $498,402 of the debt discount was amortized into interest expense, bringing the debt discount to $108,425. However, the forbearance agreement increased the principal amount, and the debt discount, which were allocated to the second tranche, so there was a net increase in the principal and the debt discount in the second tranche of $257,135 (See Note 10, Default and Forbearance on the 8% Senior Secured Convertible Promissory Note). Additional amortization of the debt discount into interest expense in the fourth quarter of the year ended December 31, 2019 was $117,986 bringing the debt discount to $230,843 at December 31, 2019.


On February 22, 2019, the Investor converted $55,387 in principal amount of the Note into 215,054 shares of the Companys common stock. Likewise, on March 19, 2019, the Investor converted $38,633 in principal amount of the Note into 150,000 shares of the Companys common stock. However, the conversion share calculation was incorrect for the March 19, 2019 conversion of the $38,633 in principal amount of the Note and was 26,712 shares less than what it should have been. These shares were added to a subsequent conversion in April 2019.


In the second quarter ended June 30, 2019, the Investor converted $449,397 in principal amount of the Note into 1,830,373 shares of the Companys common stock. In the third quarter ended September 30, 2019, the Investor converted $93,830 in principal amount of the Note into 750,000 shares of the Companys common stock. In the fourth quarter ended December 31, 2019, the Investor converted $20,000 in principal amount of the Note into 491,099 shares of the Companys common stock. The Company has accrued interest on the Note of $83,557 through December 31, 2019.

38



ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 9 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTES, CONTINUED


On December 2, 2019, the Company issued a new 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of up to $575,682. The initial tranche principal of $149,546 was issued, with an OID of $17,046, the pro-rated portion of the $68,182 OID for the entire principal amount of $575,682, a $7,500 financing fee for the lenders transactional expenses that was expensed and the Company received proceeds of $125,000. The Note will mature on June 2, 2020.


The Note is convertible into common shares of the Company at a price equal to 75% of the lowest market value in the thirty trading days prior to the conversion date, which created a BCF valued at greater than the total principal amount of the Note issued of $149,546. The exercise price was $0.0375 per share which converts into 3,987,880 common shares. The common stock price at the valuation date was $0.13 per share and the conversion price was calculated as $0.0375, so that the BCF was calculated to be $0.0925 per share valuing the BCF at $368,879.


In accordance with ASC 470-20-30-8, if the intrinsic value of the BCF is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the BCF shall be limited to the amount of the proceeds allocated to the convertible instrument. Therefore, the BCF is limited to $132,500, which when added to the OID of $17,046 equals the principal amount of $149,546. The BCF is being amortized using the effective interest method over the term of the note.


Amortization of the debt discount into interest expense was $24,093 for the year ended December 31, 2019, bringing the debt discount to $125,453 at December 31, 2019. The Company has accrued interest of $1,927 on the Note through the year ended December 31, 2019.



NOTE 10 DEFAULT AND FORBEARANCE ON THE 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE


On May 21, 2019, six months after the issuance of the first tranche of the 8% Senior Secured Convertible Promissory Note, the Note matured with $307,798 in principal outstanding and approximately $24,118 in accrued interest. The Company was unable to repay the principal and accrued interest and therefore was in default of the Note. The Note has default provisions permitting default interest of 18% to be charged on the Note as well as to charge a default amount of 150% of the unpaid principal and interest.


The Note was issued with two $600,000 tranches of cash payments. Since both tranches are in one Note, both tranches are in default as of May 21, 2019.


The Company and the Investor promptly began negotiations on a Forbearance Agreement and on September 11, 2019, the Company and the Investor agreed to a Forbearance Agreement. Pursuant to this agreement, the Investor is willing to postpone pursuing its rights and remedies under the agreements, in particular and without limitation with respect to the acceleration of the promissory note and the immediate payment of the default amount and reduce the balance of the promissory note to the pre-default balance plus accrued non-default interest of $1,062,784 on the following terms:

 

1) Subject to the Companys compliance with the forbearance agreement, the forbearance shall commence on the effective date and will expire on June 30, 2020.  

2) Should the Company fail to abide by any of the terms and conditions of the forbearance agreement, fail to comply with the terms of the other agreements, or fail to timely make the payments required under the promissory notes, or should the Company trigger an event of default, the forbearance period will immediately terminate.

39


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 10 DEFAULT AND FORBEARANCE ON THE 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE, CONTINUED


3) Subject to the Companys compliance with the forbearance period, the repayment of the promissory note will be reduced from 35% to 0%.


The Companys outstanding principal amount of the Note, after conversions, and the accrued interest as of the Forbearance Agreement date of September 11, 2019, was $805,649. The Forbearance Agreement for the outstanding principal amount and accrued interest of $1,062,784 produces a forbearance penalty of $257,135. This amount increased both the principal balance of the Note and increased the debt discount by the same amount. The $257,135 penalty is being amortized over the new maturity of the Note, June 30, 2020, and resulted in a $97,747 amortization expense during the year ended December 31, 2019. The outstanding principal amount of the Note is $983,524 at December 31, 2019.



NOTE 11 CONVERTIBLE PROMISSORY NOTES


On March 14, 2018, 1,500,000 stock options were cancelled and two 10% Convertible Promissory Notes (Notes) with a six month maturity were issued to the former option holders. The principal amount was $25,000 each and there was no prepayment penalty. The Notes were convertible into the Companys common stock based upon the average of the previous ten trading days closing price of the stock, at the maturity date of the Notes. Upon conversion of the notes, Bruce Bent or MAAB had the option to purchase the common stock issued at a 5% discount to the average closing price of the stock over the previous 10 trading days. The option to purchase was set to expire ten days after the issuance of the common stock. The option was not exercised.


On September 18, 2018, at the maturity of the Notes, the entire outstanding balance was converted into 38,886 shares of common stock of the Company, which included $2,534 of accrued interest. The Company issued the shares of common stock on October 22, 2018.



NOTE 12 PROMISSORY NOTE FROM MAAB


On March 14, 2018, MAAB, the parent of Astro, issued a Promissory Note for monetary advances to the Company of up to $750,000. The Promissory Note matures on February 28, 2021. The Promissory Note has an interest charge of 10%, compounded monthly. Interest accrues on the principal amount or portion thereof which remains unpaid from time to time as well as any interest outstanding, from the date the principal amount is advanced until and including the date upon which the principal amount and all interest due under this promissory note shall be fully paid. The principal amount advanced under the Promissory Note was $591,439 through December 31, 2018 and $750,017 through December 31, 2019. The Company has accrued interest expense of $41,291 and $89,797 at December 31, 2018 and 2019, respectively. On April 22, 2020, the Promissory Note was amended to increase the principal amount and the maturity date. (See Note 20, Subsequent Events).







40


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 13 INCOME TAX


A reconciliation of differences between the effective income tax rates and the statutory federal rates from continuing operations is as follows:


2019

2018


Rate

Amount

Rate

Amount

Income Tax benefit at US statutory Rate

21%

$   484,065

21%

$   1,631,172

State taxes, net of federal benefit

5%

114,471

3%

263,914

Change in valuation allowance

(26)%

(598,546)

(24)%

(1,895,086)



$              -


$                 -


The differences between the statutory Federal income tax rate and the effective tax rate are summarized as follows for the year ended December 31, 2018 for discontinued operations:


Income Taxes (benefit) at Statutory Rate



$ 37,443

21.0%

Increase (Decrease) in Taxes Resulting From:


State Taxes, net of Federal Tax Benefit



(76)

-

Graduated Tax Rates

     


-

-

Reduction in Federal Income Tax Rate



-

-

Other, Net



-

-

Income Taxes



$ 37,367

21.0%


Deferred income taxes primarily relate to differences between the amounts recorded for financial reporting purposes and the amounts recorded for income tax purposes.


Significant components of the Companys deferred tax assets and liabilities are as follows:



December 31


2019

2018

Deferred Income Tax Assets (Liabilities):

     

      

 Net Operational Loss Carryforwards

$     703,548

 $     165,505

 Intangible Assets

  1,415,989

    1,522,188

 Research & Development Costs

     366,868

      228,699

 Other, Net

         7,227

      (21,296)

Gross Deferred Income Tax Assets (Liabilities)

$  2,493,632

$  1,895,096

Less: Valuation Allowance

    (2,493,632)

    (1,895,096)

Net Deferred Income Tax Asset

 $                 -

$                 -


At December 31, 2019, the Company has net operating loss carryforwards of approximately $2,776,000 available to offset future taxable income with no expiration. Realization of the deferred tax assets, which relate to operating loss carry-forwards and timing differences, is dependent on future earnings. The timing and amount of future earnings are uncertain and therefore the Company has established a 100% valuation allowance.



41


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 13 INCOME TAX, CONTINUED


As of December 31, 2019, the U.S. Federal and Florida income tax returns filed prior to 2016 are no longer subject to examination by the respective taxing authorities.



NOTE 14 CONVERTIBLE PREFERRED STOCK


In December 2015, the Company authorized 50,000,000 shares of Series A Preferred Stock, with a $0.0001 par value and no liquidation value. The Series A Preferred has an 8% dividend paid quarterly and is convertible into one share of common stock. The Series A Preferred is senior to the common stock as to dividends, and any liquidation, dissolution or winding up of the Company. The Series A Preferred also has certain voting and registration rights.


In January 2016, the Company issued 1,562,500 shares of the Series A Preferred Stock to Lawrence and Loreen Calarco, former officers and directors of the Company.


On March 14, 2018, Lawrence and Loreen Calarco, officers and directors of the Company, the Lawrence & Loreen Calarco Family Trust and the Lawrence and Loreen Calarco Trust of June 3, 2014, sold all 1,562,500 preferred shares to MAAB, a non-affiliate of CPSM, Inc. Cumulative undeclared Series A Preferred dividends were $17,500 at December 31, 2019.


On May 4, 2018, the Board of Directors of Astro Aerospace Ltd. authorized 10,000 shares of the Series B Convertible Preferred Stock, par value $0.001 per share. The Preferred is entitled to a dividend, when declared by the Board of Directors, votes with all other classes of stock as a single class of stock on all actions to be voted on by the stockholders of the Company, and each share of Preferred is convertible into 1,333 shares of common stock and a five year warrant to purchase 1,333 shares of common stock at an exercise price of $0.75 per share. On May 8, 2018, the Company issued all of the 10,000 authorized Series B Preferred shares in the acquisition of certain assets from Confida Aerospace Ltd.


Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of the shares of the Series B Preferred Stock shall share pro rata with the holders of the common stock, on an as if converted basis.



NOTE 15 WARRANTS


As part of the 8% Senior Secured Convertible Promissory Note issuance, the Company issued warrants to acquire up to an aggregate 344,029 shares of the Companys common stock at an exercise price of $0.51 per share. These warrants were fair valued using the Black Scholes Model with the following inputs: stock price on November 21, 2018, date of issuance, $0.57, strike price $0.51, time to expiration, five years, five year Treasury constant maturity rate, 2.33%, volatility 253% and no dividend yield. The result was a fair value of $0.5676 per warrant or $195,271 in aggregate. This fair value was reduced with the relative fair value method when including the BCF of the convertible note (See Note 9, 8% Senior Secured Convertible Promissory Note) to $171,121. The warrant relative fair value was added to additional paid in capital common stock.


In the second tranche, the Company issued warrants to acquire up to an aggregate amount of 421,656 shares of the Companys common stock at an exercise price of $0.40 per share. These warrants were fair valued using the Black Scholes Model with the following inputs: stock price on February 12, 2019, date of issuance, $0.33, strike price $0.40,



42


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 15 WARRANTS, CONTINUED


time to expiration, five years, five year Treasury constant maturity rate, 2.34%, volatility 173% and no dividend yield. The result was a fair value of $0.35 per warrant or $147,580 in aggregate. This fair value was reduced with the relative fair value method when including the BCF of the convertible note (See Note 9, 8% Senior Secured Convertible Promissory Note) to $121,320. The warrant relative fair value was added to additional paid in capital common stock.


A summary of the warrant activity follows:


 



Warrants outstanding




Exercise price

per share




       Price per    

      Share on

     Date of

      Issuance


 
























Balance December 31, 2017



-





-




-

 

Granted Confida Acquisition



13,330,000





$0.75




$1.00

 

Convertible Promissory Note



344,029





0.51




0.57

 

Expired



-





-




-

 

Balance, December 31, 2018



13,674,029



 


0.51 0.75          




0.57 1.00

 

Granted



     421,656





   0.40




 0.33

 

Expired



      -





      -




      -

 

Balance, December 31, 2019



14,095,685





0.40 0.75




0.33 1.00

 














 



NOTE 16 - EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT


On August 26, 2019, the Company entered into an Equity Purchase Agreement and Registration Rights Agreement with the same Investor who provided the funding with the 8% Senior Secured Convertible Promissory Note. Under the terms of the Equity Purchase Agreement, the Investor agreed to purchase from the Company up to $5,000,000 of the Companys common stock upon effectiveness of a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission and subject to certain limitations and conditions set forth in the Equity Purchase Agreement.

 

Following effectiveness of the Registration Statement, and subject to certain limitations and conditions set forth in the Equity Purchase Agreement, the Company shall have the discretion to deliver put notices to the Investor and the Investor will be obligated to purchase shares of the Companys common stock, par value $0.001 per share based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to the Investor in each put notice shall not exceed the lesser of $500,000 or one hundred fifty percent (150%) of the average daily trading volume of the Companys Common Stock during the ten (10) trading days preceding the put. Pursuant to the Equity Purchase Agreement, the Investor and its affiliates will not be permitted to purchase and the Company may not put shares of the Companys Common Stock to the Investor that would result in the Investors beneficial ownership of the Companys outstanding Common Stock exceeding 9.99%. The price of each put share



43


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 16 - EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT, CONTINUED


shall be equal to eighty five percent (85%) of the Market Price (as defined in the Equity Purchase Agreement). Puts may be delivered by the Company to the Investor until the earlier of (i) the date on which the Investor has purchased an aggregate of $5,000,000 worth of Common Stock under the terms of the Equity Purchase Agreement, (ii) August 26, 2022, or (iii) written notice of termination delivered by the Company to the Investor, subject to certain equity conditions set forth in the Equity Purchase Agreement.


On August 26, 2019, in connection with its entry into the Equity Purchase Agreement and the Registration Rights Agreement, the Company committed to 600,000 Commitment Shares (as defined in the Equity Purchase Agreement) to the Investor.  These shares are initially being issued pursuant to the Section 4(a)(2) exemption and will be registered pursuant to the Registration Rights Agreement. Subsequent to the Agreement and prior to the issuance of the Commitment Shares, the Company renegotiated the payment to 300,000 shares of common stock. The fair value of the Commitment Shares as of August 26, 2019 was $48,300. The fair value was entirely expensed in the year ended December 31, 2019.


As of December 31, 2019, the Company has not issued any stock under the Equity Purchase Agreement.

 

The Registration Rights Agreement provides that the Company shall (i) file with the Commission the Registration Statement by November 25, 2019; and (ii) use its best efforts to have the Registration Statement declared effective by the Commission at the earliest possible date (in any event, within 120 days after the execution date of the definitive agreements). The Company filed a Registration Statement on Form S-1 with the Commission on November 25, 2019 and the S-1 was declared effective on December 27, 2019.



NOTE 17 2014 STOCK AWARDS PLAN

 

In November 2014, the board of directors of the Company approved the adoptions of a Stock Awards Plan. A total of 7,000,000 shares was authorized to be issued under the plan. For incentive stock options, at the grant date the stock options exercise price is required to be at least 110% of the fair value of the Companys common stock. The Plan permits the grants of common stock or options to purchase common stock. As plan administrator, the Board of Directors has sole discretion to set the price of the options. Further, the Board of Directors may amend or terminate the plan.


On March 14, 2018, the Company cancelled all 3,250,000 outstanding stock options under the 2014 Stock Awards Plan, with 1,500,000 of the stock options exchanged for two 10% Convertible Promissory Notes with a six month maturity (see Note 11, Convertible Promissory Notes). Consequently, there are 7,000,000 shares available for issuance at December 31, 2019.





44



ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 17 2014 STOCK AWARDS PLAN, CONTINUED

 

A summary of the stock option activity over the years ended December 31, 2019 and 2018 is as follows:





Number of Options

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term


Aggregate Intrinsic Value

 

Outstanding at December 31, 2017

3,250,000

$0.037

3.3 Years

$ 56,125

Options Cancelled

(3,250,000)

-

-

-

Outstanding at December 31, 2018

-

-

-

-

Exercisable at December 31, 2018

-

-

-

-

Outstanding at December 31, 2019

-

-

-

-

Exercisable at December 31, 2019

-

-

-

-


The Company expensed $22,857 of stock option compensation during the year ended December 31, 2018.



NOTE 18 - SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


Under Section 16(a) of the Securities Exchange Act of 1934, as amended, an officer, director, or greater-than-10% shareholder of the Company must file a Form 4 reporting the acquisition or disposition of Companys equity securities with the Securities and Exchange Commission no later than the end of the second business day after the day the transaction occurred unless certain exceptions apply.  Transactions not reported on Form 4 must be reported on Form 5 within 45 days after the end of the Companys fiscal year.  Such persons must also file initial reports of ownership on Form 3 upon becoming an officer, director, or greater-than-10% shareholder.  Mr. Bruce Bent, the Companys Chief Executive Officer, is currently up to date in meeting these requirements and has notified the Company that he is now compliant.  On August 30, 2019, pursuant to Section 16(a), Mr. Bent disgorged short swing profits of $178,394 to the Company, which was recorded as miscellaneous income and a reduction of the debt owed to MAAB, the parent of the Company.



NOTE 19 COMMITMENTS AND CONTINGENCIES


The Company does not have any significant or long term commitments. The Company is not currently subject to any litigation.



NOTE 20 - SUBSEQUENT EVENTS


The Company has evaluated subsequent events from the consolidated balance sheet date through May 29, 2020 (the consolidated financial statement issuance date) and noted the following disclosures:


The COVID-19 pandemic is currently impacting countries, communities, supply chains and markets as well as the global financial markets. Governments have imposed laws requiring social distancing, travel bans and quarantine, and these laws may limit access to the Companys facilities, management, support staff and professional advisors. These factors, in turn, may not only impact the Companys operations, financial condition and demand for the Companys goods and services, but the Companys overall ability to react timely to mitigate the impact of this event. Also, it has affected the Companys efforts to comply with filing obligations with the Securities and Exchange Commission.


45


ASTRO AEROSPACE LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2019 and 2018 And For The Years Then Ended


NOTE 20 - SUBSEQUENT EVENTS, CONTINUED


Depending on the severity and longevity of the COVID-19 pandemic, the Companys business, and stockholders may experience a significant negative impact. Currently, the COVID-19 pandemic has limited our ability to move forward with our operations and has negatively affected our ability to timely comply with our ongoing filing obligations with the Securities and Exchange Commission.


On April 22, 2020, the MAAB Note Payable was amended to increase the maximum outstanding principal balance to $1,250,000 and the maturity was extended to February 28, 2022.


On January 3, 2020, the Investor converted $16,724 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.04110 into 406,908 shares of the Companys common stock.


On January 29, 2020, the Investor converted $150,000 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.053175 into 2,820,874 shares of the Companys common stock


On February 11, 2020, the Company put 400,000 common shares at a $0.1025950 net price under the Equity Purchase Agreement and received $32,288 in net proceeds.


On March 27, 2020, the Company put 150,000 common shares at $0.0656200 under the Equity Purchase Agreement and received $9,593 in proceeds.


On April 8, 2020, the Company put 150,000 common shares at $0.06851 under the Equity Purchase Agreement and received $7,527 in proceeds.


On April 13, 2020, the Investor converted $10,305 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.051525 into 200,000 shares of the Companys common stock.


On April 20, 2020, the Company put 150,000 common shares at $0.0581533 under the Equity Purchase Agreement and received $5,973 in proceeds.


On April 24, 2020, the Investor converted $10,305 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.051525 into 200,000 shares of the Companys common stock.


On May 4, 2020, the Company put 200,000 common shares at $0.055165 under the Equity Purchase Agreement and received $8,283 in proceeds.


On May 8, 2020, the Investor converted $11,231 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.044925 into 250,000 shares of the Companys common stock.






46


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


None



ITEM 9A. CONTROLS AND PROCEDURES


Controls and Procedures.


During the year ended December 31, 2019, the Company has undergone operational and management changes, specifically with the sale of the discontinued operations and the acquisition of the new eVTOL aircraft in-process research and development and trademarks. In light of these changes, management has assessed its internal controls and procedures.


Managements Report on Internal Control over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the consolidated financial statements.


Evaluation of Disclosure Controls and Procedures


We carried out an evaluation as required by paragraph (b) of Rule 13a-15 and 15d-15 of the Exchange Act, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer (who are the same person), of the effectiveness of our disclosure, controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of December 31, 2019.


A material weakness can be defined as an insufficiency of internal controls that may result in a more than remote likelihood that a material misstatement will not be prevented, detected or corrected in a companys consolidated financial statements.


Based upon that evaluation, our Chief Executive Officer /Chief Financial Officer concluded that as of December 31, 2019, our disclosure controls and procedures were not effective, based on the following deficiencies:


Weaknesses in Accounting and Finance Personnel: We have a small accounting staff and we do not have the robust employee resources and expertise needed to meet complex and intricate GAAP and SEC reporting requirements of a U.S. public company. Additionally, numerous adjustments and proposed adjustments have been noted by our auditors. This is deemed by management to be a material weakness in preparing consolidated financial statements.


We do not have written accounting policies and control procedures, and do not have sufficient staff to implement the related controls. Management had determined that this lack of written accounting policies and control procedures and the lack of the implantation of segregation of duties, represents a material weakness in our internal controls.




47



Internal control has as its core a basic tenant of segregation of duties. Due to our limited size and economic constraints, the Company is not able to segregate for control purposes various asset control and recording duties and functions to different employees. This lack of segregation of duties had been evaluated by management and has been deemed to be a material weakness in our internal control.


This Annual Report does not include an attestation report of the Companys independent registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to rules of the SEC that permit the company to provide only managements report in this Annual Report.


Our management, including our chief executive officer/chief financial officer, does not expect that our disclosure controls or our internal control over financial reporting, or any system we design or implement in the future, will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems objectives will be met. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.


ITEM 9B. OTHER INFORMATION


None









48


PART III


ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE


The following persons listed below have been retained to provide services as director until the qualification and election of his successor. All holders of common stock will have the right to vote for directors.


The board of directors has primary responsibility for adopting and reviewing implementation of the business plan of the registrant, supervising the development business plan, review of the officers' performance of specific business functions. The board is responsible for monitoring management, and from time to time, to revise the strategic and operational plans of the registrant.  A director shall be elected by the shareholders to serve until the next annual meeting of shareholders, or until his or her death, or resignation and his or her successor is elected.  


The Executive Officer and Director is:


Name


Position


Term(s) of Office

Bruce Bent


Chief Executive Officer


March 22, 2018 to present



Director


March 22, 2018 to present



Chief Financial Officer


March 22, 2018 to present

Resume

Bruce Bent, age 62, has been the CEO and director of the Company since March 22, 2018. From September 18, 2017 to present, Mr. Bent has acted as Chief Executive Officer and Director of MAAB Global Limited. Mr. Bent is President of Matthews Development (Alberta) Inc. a Canadian based project management company and is Chief Financial Officer of Matthews Acquisitions LLC, a holding company for the Matthews Group of Companies in the United States. Mr. Bent is Chairman and Director of Enerdynamic Hybrid Technologies Corp, a TSXV listed company. Mr. Bent received a Bachelor of Commerce from the University of Manitoba in April 1981.


Significant Employees

We have no significant employees who are not executive officers.  


Family Relationships

No officer or director of the registrant has a family relationship with any other member of the registrant.


Directorships

None


Involvement in Certain Legal Proceedings

During the past ten years, no director, promoter or control person:


o

has filed a petition under federal bankruptcy laws or any state insolvency laws, nor had a receiver, fiscal agent or similar officer appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;


o

was convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);


o

was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from or otherwise limiting the following activities:


49



o

Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;


o

Engaging in any type of business practice; or


o

Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;


o

was the subject of any order, judgment or decree, not subsequently reverse, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in the preceding bullet point, or to be associated with persons engaged in any such activity;


o

was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated;


o

was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;


o

was the 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; or


·

any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or


·

any law or regulation prohibiting mail or wire fraud in connection with any business activity; or


·

was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, or any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.


Promoters and control person

Not applicable.


50


Code of Ethics

The Company adopted a written code of ethics that applies to the Companys principal executive officer, principal financial officer, principal accounting officer and controller and any persons performing similar functions.


Corporate Governance

Committees of the Board of Directors

We do not have standing audit, nominating or compensation committees, or committees performing similar functions. Our board of directors believes that it is not necessary to have standing audit, nominating or compensation committees at this time because the functions of such committees are adequately performed by our board of directors.



ITEM 11.

EXECUTIVE COMPENSATION


Executive Compensation

The following table sets forth the compensation paid to officers and board of directors during the fiscal years ended December 31, 2019 and 2018. The table sets forth this information for salary, bonus, and certain other compensation to the board of directors and named executive officers for the past two fiscal years and includes all board of directors and officers as of December 31, 2019.


SUMMARY COMPENSATION TABLE


Name and Principal Position

(a)

Year

(b)

Salary ($)

(c)

Bonus ($)

(d)

Stock

Awards ($)

(e)

Option

Awards ($)

(f)

Non-Equity

Incentive Plan

Compensation ($)

(g)

Nonqualified

Deferred

Compensation

Earnings ($)

(h)

All Other

Compensation ($)

(i)

Total ($)

(j)

Bruce Bent

2019

0

0

0

0

0

0

0

0

CEO, CFO,

Director

2018

0

0

0

0

0

0

0

0


Except for such compensation and as indicated above, no cash compensation, deferred compensation, pension benefits or long-term incentive plan awards were issued or granted to our management during the fiscal years indicated above. Further, no member of management has been granted any option or stock appreciation rights, except as indicated below; accordingly, no tables relating to such items have been included within this Item.


2014 Stock Awards Plan

In November 2014, the board of directors of the Company approved the adoptions of a Stock Awards Plan. A total of 7,000,000 shares was authorized to be issued under the plan. For incentive stock options, at the grant date the stock options exercise price is required to be at least 110% of the fair value of the Companys common stock. The Plan permits the grants of common stock or options to purchase common stock. As plan administrator, the Board of Directors has sole discretion to set the price of the options. Further, the Board of Directors may amend or terminate the plan.


On March 14, 2018, the Company cancelled all 3,250,000 outstanding stock options under the 2014 Stock Awards Plan, with 1,500,000 of the stock options exchanged for two 10% Convertible Promissory Notes with a six month maturity (see Note 11, Convertible Promissory Notes). Consequently, there are 7,000,000 shares available for issuance at December 31, 2019.






51


A summary of the stock option activity over the years ended December 31, 2019 and 2018 is as follows:



Number of Options

Weighted Average Exercise Price

Weighted Average Remaining Contractual Term

Aggregate Intrinsic Value

Outstanding at Dec. 31, 2017

3,250,000

$0.0367

3.3 Years

$ 56,125

Options Cancelled

(3,250,000)

-

-

-

Outstanding at December 31, 2018

-

-

-

-

Exercisable at December 31, 2018

-

-

-

-






Outstanding at December 31, 2019

-

-

-

-

Exercisable at December 31, 2018

-

-

-

-


The Company expensed $22,857 of stock option compensation for the year ended December 31 2018.


Limitation on Liability and Indemnification

We are a Nevada corporation. The Nevada Revised Statutes (NRS) provides that the articles of incorporation of a Nevada corporation may contain a provision eliminating or limiting the personal liability of a director to the corporation or its shareholders for monetary damages for breach of fiduciary duty as a director, except that any such provision may not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its shareholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) acts specified in Section 78 (concerning unlawful distributions), or (iv) any transaction from which a director directly or indirectly derived an improper personal benefit. Our articles of incorporation contain a provision eliminating the personal liability of our directors or our shareholders for monetary damages to the fullest extent provided by the NRS.


The NRS provides that a Nevada corporation must indemnify a person who was wholly successful, on the merits or otherwise, in defense of any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative and whether formal or informal, in which he or she was a party because the person is or was a director, against reasonable expenses incurred by him or her in connection with the proceeding, unless such indemnity is limited by the corporation's articles of incorporation. Our articles of incorporation do not contain any such limitation.


The NRS provides that a Nevada corporation may indemnify a person made a party to a proceeding because the person is or was a director against any obligation incurred with respect to a proceeding to pay a judgment, settlement, penalty, fine (including an excise tax assessed with respect to an employee benefit plan) or reasonable expenses incurred in the proceeding if the person conducted himself or herself in good faith and the person reasonably believed, in the case of conduct in an official capacity with the corporation, that the person's conduct was in the corporation's best interests and, in all other cases, his or her conduct was at least not opposed to the corporation's best interests and, with respect to any criminal proceedings, the person had no reasonable cause to believe that his or her conduct was unlawful.  Our articles of incorporation and bylaws allow for such indemnification. A corporation may not indemnify a director in connection with any proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation or, in connection with any other proceeding charging that the director derived an improper personal benefit, whether or not involving actions in an official capacity, in which proceeding the director was judged liable on the basis that he or she derived an improper personal benefit. Any indemnification permitted in connection with a proceeding by or in the right of the corporation is limited to reasonable expenses incurred in connection with such proceeding.


52


The NRS, unless otherwise provided in the articles of incorporation, a Nevada corporation may indemnify an officer, employee, fiduciary, or agent of the corporation to the same extent as a director and may indemnify such a person who is not a director to a greater extent, if not inconsistent with public policy and if provided for by its bylaws, general or specific action of its board of directors or shareholders, or contract. Our articles of incorporation provide for indemnification of directors, officers, employees, fiduciaries and agents of the Company to the full extent permitted by Nevada law.


Our articles of incorporation also provide that we may purchase and maintain insurance on behalf of any person who is or was a director or officer of the Company or who is or was serving at the request of the Company as a director, officer or agent of another enterprise against any liability asserted against him or her and incurred by him or her in any such capacity or arising out of his or her status as such, whether or not we would have the power to indemnify him or her against such liability.



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


The table below sets forth the beneficial ownership of our common stock, as of May 29, 2020, by:


All of our current directors and executive officers, individually; and 

All persons who beneficially own more than 5% of our outstanding common stock. 


The beneficial ownership of each person was calculated based on 78,129,504 shares of our common stock outstanding as of May 29, 2020. The SEC has defined beneficial ownership to mean more than ownership in the usual sense. For example, a person has beneficial ownership of a share not only if he owns it in the usual sense, but also if he has the power (solely or shared) to vote, sell or otherwise dispose of the share. Beneficial ownership also includes the number of shares that a person has the right to acquire within 60 days, pursuant to the exercise of options or warrants or the conversion of notes, debentures or other indebtedness, but excludes stock appreciation rights. Two or more persons might count as beneficial owners of the same share. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. Each person named in the table has sole voting and investment power with respect to all of the shares of our common stock shown as beneficially owned by such person, except as otherwise set forth in the notes to the table. Unless otherwise noted, the address of the following persons listed below is c/o Astro Aerospace Ltd., 320 W. Main Street, Lewisville, TX 75057.


Name and Address


Amount


Percentage

Bruce Bent (1)

320 W. Main Street

Lewisville, TX 75057


48,761,571 (indirect)


62.41%


All Officers and Directors as a Group (1 person)


48,761,571 (indirect)

 

62.41%

 

(1)These shares are held by MAAB Global Limited. Bruce Bent is the owner and president of MAAB Global Limited.


Changes in Control

There are no present arrangements or pledges of our securities that may result in a change in control of the registrant.


53


ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


Transactions with Related Persons

On March 14, 2018, MAAB, the parent of Astro, issued a Promissory Note for monetary advances to the Company of up to $750,000. The Promissory Note matures on February 28, 2021. The Promissory Note has an interest charge of 10%, compounded monthly. Interest accrues on the principal amount or portion thereof which remains unpaid from time to time as well as any interest outstanding, from the date the principal amount is advanced until and including the date upon which the principal amount and all interest due under this promissory note shall be fully paid. The principal amount advanced under the Promissory Note was $591,439 through December 31, 2018 and $750,017 through December 31, 2019. The Company has accrued interest expense of $41,291 and $89,797 at December 31, 2018 and 2019, respectively. On April 22, 2020, the Promissory Note was amended to increase the principal amount and the maturity date.


Under Section 16(a) of the Securities Exchange Act of 1934, as amended, an officer, director, or greater-than-10% shareholder of the Company must file a Form 4 reporting the acquisition or disposition of Companys equity securities with the Securities and Exchange Commission no later than the end of the second business day after the day the transaction occurred unless certain exceptions apply.  Transactions not reported on Form 4 must be reported on Form 5 within 45 days after the end of the Companys fiscal year.  Such persons must also file initial reports of ownership on Form 3 upon becoming an officer, director, or greater-than-10% shareholder.  Mr. Bruce Bent, the Companys Chief Executive Officer, is currently up to date in meeting these requirements and has notified the Company that he is now compliant.  On August 30, 2019, pursuant to Section 16(a), Mr. Bent disgorged short swing profits of $178,394 to the Company, which was recorded as miscellaneous income and a reduction of the debt owed to MAAB, the parent of the Company.


Promoters and Certain Control Persons

Except as indicated under the heading Transactions with Related Persons above, there have been no transactions since the beginning of our last fiscal year, or any currently proposed transaction in which we were or are to be a participant and the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years.


Director Independence

Our Common Stock is currently quoted on the OTCQB, which does not impose specific standards relating to director independence or the makeup of committees with independent directors or provide definitions of independence. In accordance with the rules of the SEC, we determine the independence of our directors by reference to the rules of The Nasdaq Stock Market. In accordance with such rules, the Board has determined that we do not have any independent directors. There were no transactions, relationships or arrangements not disclosed under the caption Certain Relationships and Related Transactions of this report that were considered by the Board of Directors under the applicable independence definitions in determining that there are no independent directors.



ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES


Audit Fees

We have incurred fees and expenses from Hacker, Johnson & Smith PA of $52,500 and $42,000, respectively, for the 2019 and 2018 fiscal years.  Fees included work completed for our annual audit and for the review of our consolidated financial statements included in our Forms 10-Q and 10-K. The fees in 2019 and 2018 included $5,000 related to Form 10K.  The fees for 2019 and 2018 included $5,000 for each quarterly review, $5,000 for Form S-1.


Tax Fees

We have incurred fees of $4,000 and $5,500, respectively, for the 2019 and 2018 fiscal years for professional services rendered for tax compliance, tax advice, and tax planning.


54


All Other Fees

The Board of Directors, acting as the Audit Committee considered whether, and determined that, the auditor's provision of non-audit services was compatible with maintaining the auditor's independence. All of the services described above for fiscal years 2019 and 2018 were approved by the Board of Directors pursuant to its policies and procedures. We intend to continue using Hacker, Johnson & Smith PA solely for audit and audit-related services, tax consultation and tax compliance services, and, as needed, for due diligence in acquisitions.



ITEM 15.

EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES


(a)(1) List of Consolidated Financial Statements included in Part II hereof


Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets:

 December 31, 2019 and 2019

Consolidated Statements of Operation:

  For the years ended December 31, 2019 and 2018

Consolidated Statements of Comprehensive Loss:

  For the years ended December 31, 2019 and 2018

Consolidated Statements of Stockholders (Deficit) Equity

  For the years ended December 31, 2019 and 2018

Consolidated Statements of Cash Flows:

  For the years ended December 31, 2019 and 2018

Notes to Consolidated Financial Statements

  For the years ended December 31, 2019 and 2018


(a)(2) List of Consolidated Financial Statement schedules included in Part IV hereof:  None

(a)(3) Exhibits


The following exhibits are included herewith:


Exhibit No. Description 

31Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.SCH*XBRL Taxonomy Extension Schema Document 

101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document 

101.DEF*XBRL Taxonomy Extension Definition Linkbase Document 

101.LAB*XBRL Taxonomy Extension Label Linkbase Document 

101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document 


*XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.


55


Following are a list of exhibits which we previously filed in other reports which we filed with the SEC, including the Exhibit No., description of the exhibit and the identity of the Report where the exhibit was filed.


No.

Description

Filed With

Date Filed

3.1(a)

Articles of Incorporation dated March 27, 2007

Form S-1

11/13/2015

3.1(b)

Amendment to Articles of Incorporation dated May 1, 2009

Form S-1

11/13/2015

3.1(c)

Amendment to Articles of Incorporation dated September 16,

2011

Form S-1/A

3.1(d)

Amendment to Articles of Incorporation dated January 31, 2014

Form S-1/A

3.1(e)

Amendment to Articles of Incorporation dated July 3, 2014

Form S-1

11/13/2015

3.1(f)

Amendment to Articles of Incorporation dated March 27, 2018

Form 8-K

4/2/2018

3.2

Bylaws

Form S-1

11/13/2015

10.1

Code of Ethics Policy

Form S-1

11/13/2015

10.2

Key Man Insurance Policy dated July 15, 2015

Form S-1

11/13/2015

10.3

Employment Agreement by and between Custom Pool & Spa

Mechanics, Inc. and Larry Calarco dated May 1, 2014

Form S-1

11/13/2015

10.4

Employment Agreement by and between Custom Pool & Spa

Mechanics, Inc. and Loreen Calarco dated May 1, 2014

Form S-1

11/13/2015

10.5

Agreement by and between CPSM, Inc. and CFO 911 dated

February 18, 2015

Form S-1

11/13/2015

10.6

Contract re: Whaler Street dated August 2, 2015

Form S-1

11/13/2015

10.7

Promissory note between Custom Pool & Spa Mechanics, Inc. and

Lawrence Calarco dated June 3, 2014

Form S-1/A

11/13/2015

10.8

Asset Purchase Agreement between CPSM, Inc. and Sundook

Advanced Pool Services LLC dated 1/5/2016

Form 10-K

3/30/2016

10.9

Mutual General Release Agreement

Form 10-K

3/30/2016

10.10

Non-exclusive applicator license agreement between Custom Pool

Plastering, Inc. and Pebble Technology, Inc., dated March 8, 2016

Form 8-K

6/21/2016

10.11

Real estate contract between Custom Pool & Spa Mechanics, Inc.

and Luke Walker, dated July 14, 2016

Form 8-K

7/15/2016

10.12

Share exchange agreement by and among Custom Pool & Spa

Mechanics, Inc. and Custom Pool Plastering, the registrant as the

sole shareholder of Custom Pool & Spa Mechanics, Inc. and

Custom Pool Plastering and Lawrence & Loreen Calarco Family

Trust, dated April 16, 2018

Form 8-K

5/8/2018

10.13

Asset Purchase Agreement between Confida Aerospace Ltd. and Astro Aerospace Ltd.

Form 8-K

5/14/2018

10.14

Securities Purchase Agreement between Astro Aerospace Ltd. and

Oasis Capital, LLC, executed November 27, 2018

Form 8-K

12/7/2018

10.15

Registration Rights Agreement between Astro Aerospace Ltd. and

Oasis Capital, LLC, executed November 27, 2018

Form 8-K

12/7/2018

10.16

Senior Secured Convertible Promissory Note between Astro

Aerospace Ltd. and Oasis Capital, LLC, executed November 27,

2018

Form 8-K

12/7/2018

10.17

Common stock purchase warrant between Astro Aerospace Ltd.

and Oasis Capital, LLC, executed November 27, 2018

Form 8-K

12/7/2018

10.18

Security Agreement between Astro Aerospace Ltd. and Oasis

Capital, LLC, executed November 27, 2018

Form 8-K

12/7/2018

10.19

Forbearance Agreement between Astro Aerospace Ltd. and Oasis Capital, LLC executed September 11, 2019

Form 8-K

9/13/2019


56


SIGNATURES


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


/s/Bruce Bent

May 29, 2020 

Bruce Bent

Chief Executive Officer

Chief Financial Officer











57



EX-31 2 astro10k19exhibit31.htm EXHIBIT 31 Converted by EDGARwiz

302 CERTIFICATION


I, Bruce Bent, certify that:


   1. I have reviewed this annual report on Form 10-K of Astro Aerospace Ltd.;


   2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


   3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


   4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


     b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


     c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report, our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


     d) Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and


   5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):


     a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and


     b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.


Date: May 29, 2020


/s/Bruce Bent

Bruce Bent

Chief Executive Officer

Chief Financial Officer




EX-32 3 astro10k19exhibit32.htm EXHIBIT 32 Converted by EDGARwiz

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Annual Report of Astro Aerospace Ltd. (the "Company") on Form 10-K for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bruce Bent, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


    (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

    (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

 

/s/Bruce  Bent

Bruce Bent

Chief Executive Officer

Chief Financial Officer


May 29, 2020




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Debt Disclosure [Abstract]  
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NOTE 11 – CONVERTIBLE PROMISSORY NOTES

 

On March 14, 2018, 1,500,000 stock options were cancelled and two 10% Convertible Promissory Notes (“Notes”) with a six month maturity were issued to the former option holders. The principal amount was $25,000 each and there was no prepayment penalty. The Notes were convertible into the Company’s common stock based upon the average of the previous ten trading days’ closing price of the stock, at the maturity date of the Notes. Upon conversion of the notes, Bruce Bent or MAAB had the option to purchase the common stock issued at a 5% discount to the average closing price of the stock over the previous 10 trading days. The option to purchase was set to expire ten days after the issuance of the common stock. The option was not exercised.

 

On September 18, 2018, at the maturity of the Notes, the entire outstanding balance was converted into 38,886 shares of common stock of the Company, which included $2,534 of accrued interest. The Company issued the shares of common stock on October 22, 2018.

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12 Months Ended
Dec. 31, 2019
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NOTE 15 – WARRANTS

 

As part of the 8% Senior Secured Convertible Promissory Note issuance, the Company issued warrants to acquire up to an aggregate 344,029 shares of the Company’s common stock at an exercise price of $0.51 per share. These warrants were fair valued using the Black Scholes Model with the following inputs: stock price on November 21, 2018, date of issuance, $0.57, strike price $0.51, time to expiration, five years, five year Treasury constant maturity rate, 2.33%, volatility 253% and no dividend yield. The result was a fair value of $0.5676 per warrant or $195,271 in aggregate. This fair value was reduced with the relative fair value method when including the BCF of the convertible note (See Note 9, “8% Senior Secured Convertible Promissory Note”) to $171,121. The warrant relative fair value was added to additional paid in capital – common stock.

 

In the second tranche, the Company issued warrants to acquire up to an aggregate amount of 421,656 shares of the Company’s common stock at an exercise price of $0.40 per share. These warrants were fair valued using the Black Scholes Model with the following inputs: stock price on February 12, 2019, date of issuance, $0.33, strike price $0.40, time to expiration, five years, five year Treasury constant maturity rate, 2.34%, volatility 173% and no dividend yield. The result was a fair value of $0.35 per warrant or $147,580 in aggregate. This fair value was reduced with the relative fair value method when including the BCF of the convertible note (See Note 9, “8% Senior Secured Convertible Promissory Note”) to $121,320. The warrant relative fair value was added to additional paid in capital – common stock.

 

A summary of the warrant activity follows:

 

  

 

Warrants outstanding

 

Exercise price

per share

 

 

Price per

Share on

Date of

Issuance

          
          
 Balance, December 31, 2018    13,674,029    0.51 – 0.75              0.57 – 1.00 
 Granted    421,656    0.40    0.33 
 Expired    —      —      —   
 Balance, December 31, 2019    14,095,685    0.40 – 0.75    0.33 – 1.00 
                  
                  
XML 12 R28.htm IDEA: XBRL DOCUMENT v3.20.1
Commitments And Contingencies
12 Months Ended
Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 19 – COMMITMENTS AND CONTINGENCIES

 

The Company does not have any significant or long term commitments. The Company is not currently subject to any litigation.

XML 13 R49.htm IDEA: XBRL DOCUMENT v3.20.1
Default And Forbearance On The 8% Senior Secured Convertible Promissory Note (Narrative) (Details) - USD ($)
12 Months Ended
Dec. 02, 2019
Sep. 11, 2019
May 21, 2019
Nov. 21, 2018
Dec. 31, 2019
Dec. 31, 2018
Debt Instrument [Line Items]            
8% senior convertible promissory note         $ 694,431 $ 108,886
8% Senior Secured Convertible Promissory Note - First Tranche [Member]            
Debt Instrument [Line Items]            
8% senior convertible promissory note     $ 307,798   983,524  
Accrued interest     $ 24,118      
Debt default terms     The Company was unable to repay the principal and accrued interest and therefore was in default of the Note. The Note has default provisions permitting default interest of 18% to be charged on the Note as well as to charge a default amount of 150% of the unpaid principal and interest.      
Debt instrument maturity date       May 21, 2019    
8% Senior Secured Convertible Promissory Note [Member]            
Debt Instrument [Line Items]            
8% senior convertible promissory note   $ 805,649        
Accrued interest $ 1,927          
Debt instrument description The initial tranche principal of $149,546 was issued, with an OID of $17,046, the pro-rated portion of the $68,182 OID for the entire principal amount of $575,682, a $7,500 financing fee for the lender’s transactional expenses that was expensed and the Company received proceeds of $125,000 The Company and the Investor promptly began negotiations on a Forbearance Agreement and on September 11, 2019, the Company and the Investor agreed to a Forbearance Agreement. Pursuant to this agreement, the Investor is willing to postpone pursuing its rights and remedies under the agreements, in particular and without limitation with respect to the acceleration of the promissory note and the immediate payment of the default amount and reduce the balance of the promissory note to the pre-default balance plus accrued non-default interest of $1,062,784 on the following terms: 1) subject to the Company’s compliance with the forbearance agreement, the forbearance shall commence on the effective date and will expire on June 30, 2020. 2) Should the Company fail to abide by any of the terms and conditions of the forbearance agreement, fail to comply with the terms of the other agreements, or fail to timely make the payments required under the promissory notes, or should the Company trigger an event of default, the forbearance period will immediately terminate. 3) Subject to the Company’s compliance with the forbearance period, the repayment of the promissory note will be reduced from 35% to 0%. The Note was issued with two $600,000 tranches of cash payments. Since both tranches are in one Note, both tranches are in default as of May 21, 2019. On November 21, 2018, the Company issued an 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of $1,383,636 in exchange for a total investment of $1,200,000, less commissions and expenses, payable in two tranches. The first tranche was payable upon the closing of the agreement, and the second tranche was payable within ten (10) business days of the Investor receiving written notice confirming the effectiveness of the initial registration statement.    
Debt instrument maturity date Jun. 02, 2020 Jun. 30, 2020        
Forbearance agreement outstanding principal and accrued interest   $ 1,062,784        
Forbearance penalty   $ 257,135        
Amortization of forbearance penalty         97,747  
First 8% Senior Secured Convertible Promissory Note [Member]            
Debt Instrument [Line Items]            
Accrued interest         83,557  
Debt instrument carrying amount         $ 983,524  
XML 14 R45.htm IDEA: XBRL DOCUMENT v3.20.1
Nature Of Operations (Narrative) (Details) - USD ($)
Dec. 31, 2019
May 21, 2019
Dec. 31, 2018
Working capital $ (921,829)    
Promissory note from MAAB 750,017   $ 591,439
8% senior convertible promissory note 694,431   108,886
Promissory Notes Payable [Member] | MAAB Global Limited (MAAB), Parent Company [Member]      
Promissory note from MAAB 750,017   $ 591,439
Amount available under the terms of the note 499,983    
8% Senior Secured Convertible Promissory Note - First Tranche [Member]      
8% senior convertible promissory note 983,524 $ 307,798  
8% Senior Secured Convertible Promissory Note - Second Tranche [Member]      
8% senior convertible promissory note $ 149,546    
XML 15 R41.htm IDEA: XBRL DOCUMENT v3.20.1
Income Tax (Schedule Of Statutory Income Tax Rate From Discontinued Operations) (Details) - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Income Taxes (benefit) at Statutory Rate $ 484,065 $ 1,631,172
Increase (Decrease) in Taxes Resulting From:    
State Taxes, net of Federal Tax Benefit $ 114,471 $ 263,914
Income Taxes (benefit) at Statutory Rate-Percent 21.00% 21.00%
Increase (Decrease) in Taxes Resulting From:    
State Taxes, net of Federal Tax Benefit-Percent 5.00% 3.00%
Income Tax For Dicontinued Operations [Member]    
Income Taxes (benefit) at Statutory Rate   $ 37,443
Increase (Decrease) in Taxes Resulting From:    
State Taxes, net of Federal Tax Benefit   (76)
Graduated Tax Rates  
Reduction in Federal Income Tax Rate  
Other, Net  
Income Taxes   $ 37,367
Income Taxes (benefit) at Statutory Rate-Percent   21.00%
Increase (Decrease) in Taxes Resulting From:    
State Taxes, net of Federal Tax Benefit-Percent  
Graduated Tax Rates-Percent  
Reduction in Federal Income Tax Rate-Percent  
Other, Net-Percent  
Income Taxes-Percent   21.00%
XML 16 R50.htm IDEA: XBRL DOCUMENT v3.20.1
Convertible Promissory Notes (Narrative) (Details) - Former Option Holders [Member] - USD ($)
Sep. 18, 2018
Mar. 14, 2018
Two 10% Convertible Promissory Notes [Member]    
Debt Instrument [Line Items]    
Debt instrument description   On March 14, 2018, 1,500,000 stock options were cancelled and two 10% Convertible Promissory Notes (“Notes”) with a six month maturity were issued to the former option holders.
Debt instrument interest rate   10.00%
Debt instrument conversion terms   The Notes were convertible into the Company’s common stock based upon the average of the previous ten trading days’ closing price of the stock, at the maturity date of the Notes. Upon conversion of the notes, Bruce Bent or MAAB Global Limited had the option to purchase the common stock issued at a 5% discount to the average closing price of the stock over the previous 10 trading days. The option to purchase expired ten days after the issuance of the common stock. The option was not exercised.
No of shares issued in conversion of debt 38,886  
Accrued interest portion of debt converted into shares of common stock $ 2,534  
10% Convertible Promissory Note - One [Member]    
Debt Instrument [Line Items]    
Debt instrument face amount   $ 25,000
10% Convertible Promissory Note - Two [Member]    
Debt Instrument [Line Items]    
Debt instrument face amount   $ 25,000
XML 17 R54.htm IDEA: XBRL DOCUMENT v3.20.1
Warrants (Narrative) (Details) - Warrant [Member] - USD ($)
Feb. 12, 2019
Nov. 21, 2018
8% Senior Secured Convertible Promissory Note - First Tranche [Member]    
Fair value assumptions - warrants:    
Fair value assumption methodology   Black scholes model
Stock price   $ 0.57
Strike price   $ 0.51
Time to expiration   5 years
Five year treasury constant maturity rate   2.33%
Volatility   253.00%
Dividend yield   0.00%
Fair value of each warrant   $ 0.5676
Fair value of warrant in aggregate   $ 195,271
8% Senior Secured Convertible Promissory Note - Second Tranche [Member]    
Fair value assumptions - warrants:    
Fair value assumption methodology Black scholes model  
Stock price $ 0.33  
Strike price $ 0.40  
Time to expiration 5 years  
Five year treasury constant maturity rate 2.34%  
Volatility 173.00%  
Dividend yield 0.00%  
Fair value of each warrant $ 0.35  
Fair value of warrant in aggregate $ 147,580  
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.20.1
Consolidated Statements Of Stockholders’ (Deficit) Equity (Parenthetical)
12 Months Ended
Dec. 31, 2019
Statement of Stockholders' Equity [Abstract]  
Note Date Dec. 02, 2019
XML 20 R58.htm IDEA: XBRL DOCUMENT v3.20.1
Subsequent Events (Narrative) (Details) - USD ($)
May 08, 2020
May 04, 2020
Apr. 24, 2020
Apr. 22, 2020
Apr. 20, 2020
Apr. 13, 2020
Apr. 08, 2020
Mar. 07, 2020
Feb. 19, 2020
Jan. 29, 2020
Jan. 03, 2020
Dec. 02, 2019
Sep. 11, 2019
Nov. 21, 2018
Mar. 14, 2018
Aug. 26, 2019
Equity Purchase And Registration Rights Agreement [Member]                                
No of shares committed to be issued under the agreement                               600,000
Subsequent Event [Member] | Equity Purchase And Registration Rights Agreement [Member]                                
No of shares committed to be issued under the agreement   200,000     150,000   150,000 150,000 400,000              
Price per share   $ 0.0551     $ 0.0581   $ 0.0685 $ 0.0748 $ 0.0807              
Proceeds from equity purchase agreement   $ 8,283     $ 5,973   $ 7,527 $ 9,593 $ 32,288              
Promissory Notes Payable [Member] | MAAB Global Limited (MAAB), Parent Company [Member]                                
Debt instrument maximum borrowing capacity                             $ 750,000  
Debt instrument maturity date                             Feb. 28, 2021  
Promissory Notes Payable [Member] | MAAB Global Limited (MAAB), Parent Company [Member] | Subsequent Event [Member]                                
Debt instrument maximum borrowing capacity       $ 1,250,000                        
Debt instrument maturity date       Feb. 28, 2022                        
8% Senior Secured Convertible Promissory Note [Member]                                
Debt instrument maturity date                       Jun. 02, 2020 Jun. 30, 2020      
No of shares issued in conversion of debt                           1,871,515    
Conversion price per share                       $ 0.0375        
8% Senior Secured Convertible Promissory Note [Member] | Subsequent Event [Member]                                
Value of principal portion of debt converted into shares of common stock                   $ 150,000 $ 16,724          
No of shares issued in conversion of debt                   2,820,874 406,908          
Conversion price per share                   $ 0.053175 $ 0.04          
No of shares committed to be issued under the agreement 250,000   200,000     200,000                    
Price per share $ 0.0449   $ 0.0515     $ 0.0515                    
Proceeds from equity purchase agreement $ 11,231   $ 10,305     $ 10,305                    
XML 21 R3.htm IDEA: XBRL DOCUMENT v3.20.1
Consolidated Balance Sheets (Parenthetical) - $ / shares
Dec. 31, 2019
Dec. 31, 2018
Common stock, shares authorized 250,000,000 250,000,000
Common stock, par value per share $ 0.001 $ 0.001
Common stock, shares issued 73,201,722 69,308,946
Common stock, shares outstanding 73,201,722 69,308,946
Series A Convertible Preferred Stock [Member]    
Preferred stock, shares authorized 50,000,000 50,000,000
Preferred stock, par value per share $ 0.0001 $ 0.0001
Preferred stock, shares issued 1,562,500 1,562,500
Preferred stock, shares outstanding 1,562,500 1,562,500
Series B Convertible Preferred Stock [Member]    
Preferred stock, shares authorized 10,000 10,000
Preferred stock, par value per share $ 0.001 $ 0.001
Preferred stock, shares issued 10,000 10,000
Preferred stock, shares outstanding 10,000 10,000
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Sale Of Custom Pool
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Sale Of Custom Pool

NOTE 3 – SALE OF CUSTOM POOL

 

On April 30, 2018, pursuant to a Share Exchange Agreement dated April 16, 2018, the Company sold all of the issued and outstanding common shares of Custom Pool & Spa Mechanics, Inc. and Custom Pool Plastering, its wholly owned subsidiaries, for 13,668,900 common shares of the Company held by the Lawrence & Loreen Calarco Family Trust, an entity controlled by Lawrence Calarco and Loreen Calarco, former officers and directors of the Company. The Board of Directors subsequently authorized the cancellation of those common shares. After said cancellation, the total issued and outstanding common shares was 69,270,060. The Share Exchange Agreement was approved by the Board of Directors and written consent of shareholders holding 62.35% of the voting securities of the Company as of April 16, 2018.

 

The Company determined that there would be no gain or loss on the sale in accordance with Accounting Standards Codification 505-30-10, “Equity – Nonreciprocal Transfers with Owners”. Essentially the transaction is similar to a spin-off or reorganization since the Company acquired shares of its own common stock for the common shares of Custom Pool & Spa Mechanics, Inc. and Custom Pool Plastering, its wholly owned subsidiaries. As such, the transaction is accounted for at the recorded (book value) amount. The book value of the net assets was $876,440.

 

Custom Pool is presented as a discontinued operation in the consolidated financial statements. The following is a reconciliation of the major line items constituting income of discontinued operations, net that are presented in the accompanying Consolidated Statements of Operations:

  

   Years Ended
   December 31,
   2019  2018
Major Classes of Line Items Constituting Pre-Tax Income on Discontinued Operations:          
     Revenue  $—     $1,786,911 
     Cost of Services   —      1,208,619 
     General and Administrative   —      338,877 
     Other Operating Expenses   —      51,370 
Total Operating Expenses   —      1,598,866 
Operating Income   —      188,045 
      Other Expense   —      9,745 
Total Pre-Tax Income from Discontinued Operations   —      178,300 
  Income Tax Expense   —      (37,367)
Income from Discontinued Operations  $—     $140,933 
           
XML 24 R16.htm IDEA: XBRL DOCUMENT v3.20.1
Concentrations Of Credit Risk
12 Months Ended
Dec. 31, 2019
Risks and Uncertainties [Abstract]  
Concentrations of Credit Risk

NOTE 7CONCENTRATIONS OF CREDIT RISK

 

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company maintains its cash with high-credit quality financial institutions. At December 31, 2019 and 2018 the Company did not have any cash balances in excess of federally insured limits.

XML 25 R39.htm IDEA: XBRL DOCUMENT v3.20.1
Fair Value Of Estimates (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Liabilities    
8% Senior Secured Convertible Promissory Note, Net $ 694,431 $ 108,886
8% Senior Secured Convertible Promissory Note issued December 2, 2019, Net 24,093
Loan from MAAB 750,017 591,439
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member]    
Assets    
Cash 1,159 55,129
Liabilities    
8% Senior Secured Convertible Promissory Note, Net
8% Senior Secured Convertible Promissory Note issued December 2, 2019, Net
Loan from MAAB
Significant Other Observable Inputs (Level 2) [Member]    
Assets    
Cash
Liabilities    
8% Senior Secured Convertible Promissory Note, Net
8% Senior Secured Convertible Promissory Note issued December 2, 2019, Net
Loan from MAAB
Significant Unobservable Inputs (Level 3) [Member]    
Assets    
Cash
Liabilities    
8% Senior Secured Convertible Promissory Note, Net 694,431 108,886
8% Senior Secured Convertible Promissory Note issued December 2, 2019, Net 24,093
Loan from MAAB 750,017 591,439
Significant Unobservable Inputs - Carrying Value [Member]    
Assets    
Cash 1,159 55,129
Liabilities    
8% Senior Secured Convertible Promissory Note, Net 694,431 108,886
8% Senior Secured Convertible Promissory Note issued December 2, 2019, Net 24,093
Loan from MAAB $ 750,017 $ 591,439
XML 26 R35.htm IDEA: XBRL DOCUMENT v3.20.1
Warrants (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Warrants Tables Abstract  
Schedule of Warrants Activity

A summary of the warrant activity follows:

 

  

 

Warrants outstanding

 

Exercise price

per share

 

 

Price per

Share on

Date of

Issuance

          
          
 Balance, December 31, 2018    13,674,029    0.51 – 0.75              0.57 – 1.00 
 Granted    421,656    0.40    0.33 
 Expired    —      —      —   
 Balance, December 31, 2019    14,095,685    0.40 – 0.75    0.33 – 1.00 
                  
                  
XML 27 R31.htm IDEA: XBRL DOCUMENT v3.20.1
Sale Of Custom Pool (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Sale Of Custom Pool Tables Abstract  
Schedule of Reconciliation of Discontinued Operations

The following is a reconciliation of the major line items constituting income of discontinued operations, net that are presented in the accompanying Consolidated Statements of Operations:

  

   Years Ended
   December 31,
   2019  2018
Major Classes of Line Items Constituting Pre-Tax Income on Discontinued Operations:          
     Revenue  $—     $1,786,911 
     Cost of Services   —      1,208,619 
     General and Administrative   —      338,877 
     Other Operating Expenses   —      51,370 
Total Operating Expenses   —      1,598,866 
Operating Income   —      188,045 
      Other Expense   —      9,745 
Total Pre-Tax Income from Discontinued Operations   —      178,300 
  Income Tax Expense   —      (37,367)
Income from Discontinued Operations  $—     $140,933 
           
XML 28 R6.htm IDEA: XBRL DOCUMENT v3.20.1
Consolidated Statements Of Stockholders’ (Deficit) Equity - USD ($)
Series A Preferred Stock [Member]
Series B Preferred Stock [Member]
Common Stock [Member]
Additional Paid In Capital-Series A Preferred Stock [Member]
Additional Paid In Capital-Series B Preferred Stock [Member]
Additional Paid In Capital-Common Stock [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings (Accumulated Deficit) [Member]
Total
Balance preferred stock, shares at Dec. 31, 2017 1,562,500              
Balance common stock, shares at Dec. 31, 2017     82,938,960            
Balance, value at Dec. 31, 2017 $ 156 $ 82,939 $ 124,844 $ 229,744 $ 277,467 $ 715,150
Issuance of 10% Convertible Promissory Notes (50,000) (50,000)
Series A Preferred Stock Dividend (2,500) (2,500)
Stock Option Expense 22,857 22,857
Acquisition of Common Stock for Common Stock of Subsidiaries, shares (13,668,900)            
Acquisition of Common Stock for Common Stock of Subsidiaries, value $ (13,669) (202,601) (660,170) (876,440)
Issuance of Series B Convertible Preferred Stock, shares 10,000            
Issuance of Series B Convertible Preferred Stock, value $ 10 7,156,204 7,156,214
Conversion into Common Stock of the 10% Convertible Promissory Notes with Accrued Interest 52,534 52,534
Issuance of 10% Convertible Promissory Notes Conversion, Shares 38,886            
Issuance of 10% Convertible Promissory Notes Conversion, value $ 39 (39)
Fair Value of Warrants Issued with 8% Senior Secured Convertible Promissory Note 171,121 171,121
Fair Value of Beneficial Conversion Feature of the 8% Senior Secured Convertible Promissory Note 523,326 523,326
Inducement Shares Issued for the 8% Senior Secured Convertible Promissory Note 89,531 89,531
Common Stock issued as Financing Fee for the Equity Purchase Agreement, value                
Foreign Currency Translation Gain/(Loss) 22,704 22,704
Net Loss (7,626,599) $ (7,626,599)
Balance preferred stock , shares at Dec. 31, 2018 1,562,500 10,000              
Balance common stock, shares at Dec. 31, 2018     69,308,946           69,308,946
Balance, value at Dec. 31, 2018 $ 156 $ 10 $ 69,309 124,844 7,156,204 836,473 22,704 (8,011,802) $ 197,898
Conversion into Common Stock of the 10% Convertible Promissory Notes with Accrued Interest                
Issuance of Inducement common shares, shares 156,250            
Issuance of Inducement common shares, value $ 156 (156)
Partial Conversion of 8% Senior Secured Convertible Promissory Notes, shares 3,436,526            
Partial Conversion of 8% Senior Secured Convertible Promissory Notes, value $ 3,437 653,810 657,247
Fair Value of Warrants Issued with 8% Senior Secured Convertible Promissory Note - 2nd Tranche 121,320 121,320
Fair Value of Beneficial Conversion Feature of the 8% Senior Secured Convertible Promissory Note - 2nd Tranche 403,689 403,689
Fair Value of Beneficial Conversion Feature of the 8% Senior Secured Convertible Promissory Note – 12/2/2019 Note 132,500 132,500
Common Stock issued as Financing Fee for the Equity Purchase Agreement, shares 300,000            
Common Stock issued as Financing Fee for the Equity Purchase Agreement, value $ 300 48,000 (48,300)
Foreign Currency Translation Gain/(Loss) (42,802) (42,802)
Net Loss (2,305,073) $ (2,305,073)
Balance preferred stock , shares at Dec. 31, 2019 1,562,500 10,000              
Balance common stock, shares at Dec. 31, 2019     73,201,722           73,201,722
Balance, value at Dec. 31, 2019 $ 156 $ 10 $ 73,202 $ 124,844 $ 7,156,204 $ 2,195,636 $ (20,098) $ (10,316,875) $ (786,921)
XML 29 R2.htm IDEA: XBRL DOCUMENT v3.20.1
Consolidated Balance Sheets - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Assets    
Cash $ 1,159 $ 55,129
Other Receivables 60,517 32,657
Prepaids 623 19,190
Total Current Assets 62,299 106,976
Acquired In-Process Research and Development 871,000 871,000
Deposits 13,925 14,199
Total Assets 947,224 992,175
Current Liabilities    
Accounts Payable and Accrued Liabilities 265,604 93,952
8% Senior Secured Convertible Promissory Note, net of discounts of $289,093 and $592,932 at December 31, 2019 and 2018 694,431 108,886
8% Senior Secured Convertible Promissory Note issued December 2, 2019, net of discounts of $125,453 at December 31, 2019 24,093
Total Current Liabilities 984,128 202,838
Long Term Liabilities    
Promissory Note from MAAB 750,017 591,439
Total Liabilities 1,734,145 794,277
Stockholders' (Deficit) Equity    
Series A Convertible Preferred Stock, $0.0001 par value, 50,000,000 Shares Authorized, 1,562,500 shares Issued and Outstanding at December 31, 2019 and 2018; Series B Convertible Preferred Stock, $0.001 par value, 10,000 Shares Authorized, 10,000 Shares Issued and Outstanding at December 31, 2019 and 2018 166 166
Common Stock, $0.001 par value, 250,000,000 Shares Authorized, 73,201,722 and 69,308,946 shares Issued and Outstanding at December 31, 2019 and 2018 73,202 69,309
Additional Paid-in Capital:Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Common Stock 9,476,684 8,117,521
Accumulated Other Comprehensive (Loss) Income (20,098) 22,704
Accumulated Deficit (10,316,875) (8,011,802)
Total Stockholders' (Deficit) Equity (786,921) 197,898
Total Liabilities and Stockholders' (Deficit) Equity 947,224 992,175
Additional Paid-In Capital Series A Preferred Stock [Member]    
Stockholders' (Deficit) Equity    
Additional Paid-in Capital:Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Common Stock 124,844 124,844
Total Stockholders' (Deficit) Equity 124,844 124,844
Total Liabilities and Stockholders' (Deficit) Equity 124,844 124,844
Additional Paid - In Capital Series B Preferred Stock [Member]    
Stockholders' (Deficit) Equity    
Additional Paid-in Capital:Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Common Stock 7,156,204 7,156,204
Total Stockholders' (Deficit) Equity 7,156,204 7,156,204
Total Liabilities and Stockholders' (Deficit) Equity 7,156,204 7,156,204
Additional Paid - In Capital Common Stock [Member]    
Stockholders' (Deficit) Equity    
Additional Paid-in Capital:Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Common Stock 2,195,636 836,473
Total Stockholders' (Deficit) Equity 2,195,636 836,473
Total Liabilities and Stockholders' (Deficit) Equity 2,195,636 836,473
Series A Convertible Preferred Stock [Member]    
Stockholders' (Deficit) Equity    
Series A Convertible Preferred Stock, $0.0001 par value, 50,000,000 Shares Authorized, 1,562,500 shares Issued and Outstanding at December 31, 2019 and 2018; Series B Convertible Preferred Stock, $0.001 par value, 10,000 Shares Authorized, 10,000 Shares Issued and Outstanding at December 31, 2019 and 2018 156 156
Total Stockholders' (Deficit) Equity 156 156
Total Liabilities and Stockholders' (Deficit) Equity 156 156
Series B Convertible Preferred Stock [Member]    
Stockholders' (Deficit) Equity    
Series A Convertible Preferred Stock, $0.0001 par value, 50,000,000 Shares Authorized, 1,562,500 shares Issued and Outstanding at December 31, 2019 and 2018; Series B Convertible Preferred Stock, $0.001 par value, 10,000 Shares Authorized, 10,000 Shares Issued and Outstanding at December 31, 2019 and 2018 10 10
Total Stockholders' (Deficit) Equity 10 10
Total Liabilities and Stockholders' (Deficit) Equity $ 10 $ 10
XML 30 R51.htm IDEA: XBRL DOCUMENT v3.20.1
Promissory Note From MAAB (Narrative) (Details) - USD ($)
Mar. 14, 2018
Dec. 31, 2019
Dec. 31, 2018
Debt Instrument [Line Items]      
Promissory note from MAAB   $ 750,017 $ 591,439
Promissory Notes Payable [Member] | MAAB Global Limited (MAAB), Parent Company [Member]      
Debt Instrument [Line Items]      
Debt instrument maximum borrowing capacity $ 750,000    
Debt instrument maturity date Feb. 28, 2021    
Debt instrument interest rate terms The Promissory Note has an interest charge of 10%, compounded monthly. Interest accrues on the principal amount or portion thereof which remains unpaid from time to time as well as any interest outstanding, from the date the principal amount is advanced until and including the date upon which the principal amount and all interest due under this promissory note shall be fully paid.    
Promissory note from MAAB   750,017 591,439
Accrued interest   $ 89,797 $ 41,291
XML 31 R55.htm IDEA: XBRL DOCUMENT v3.20.1
Equity Purchase Agreement And Registration Rights Agreement (Narrative) (Details) - Equity Purchase And Registration Rights Agreement [Member] - USD ($)
Dec. 31, 2019
Aug. 26, 2019
Agreement description Subsequent to the Agreement and prior to the issuance of the Commitment Shares, the Company renegotiated the payment to 300,000 shares of common stock. Under the terms of the Equity Purchase Agreement, the Investor agreed to purchase from the Company up to $5,000,000 of the Company’s common stock upon effectiveness of a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission and subject to certain limitations and conditions set forth in the Equity Purchase Agreement. Following effectiveness of the Registration Statement, and subject to certain limitations and conditions set forth in the Equity Purchase Agreement, the Company shall have the discretion to deliver put notices to the Investor and the Investor will be obligated to purchase shares of the Company’s common stock, par value $0.001 per share based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to the Investor in each put notice shall not exceed the lesser of $500,000 or one hundred fifty percent (150%) of the average daily trading volume of the Company’s Common Stock during the ten (10) trading days preceding the put notice. Pursuant to the Equity Purchase Agreement, the Investor and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s Common Stock to the Investor that would result in the Investor’s beneficial ownership of the Company’s outstanding Common Stock exceeding 9.99%. The price of each put share shall be equal to eighty five percent (85%) of the Market Price (as defined in the Equity Purchase Agreement). Puts may be delivered by the Company to the Investor until the earlier of (i) the date on which the Investor has purchased an aggregate of $5,000,000 worth of Common Stock under the terms of the Equity Purchase Agreement, (ii) August 26, 2022, or (iii) written notice of termination delivered by the Company to the Investor, subject to certain equity conditions set forth in the Equity Purchase Agreement.
Agreed value of shares to be purchased under the agreement   $ 5,000,000
No of shares committed to be issued under the agreement   600,000
Fair value of commitment shares recorded as deferred offering cost   $ 48,300
XML 32 R13.htm IDEA: XBRL DOCUMENT v3.20.1
Acqusition Of Assets From Confida Aerospace Ltd
12 Months Ended
Dec. 31, 2019
Business Combinations [Abstract]  
Acquisition of Assets from Confida Aerospace, Ltd

NOTE 4 – ACQUSITION OF ASSETS FROM CONFIDA AEROSPACE, LTD.

 

On May 8, 2018, the Company entered into an Asset Purchase Agreement with Confida Aerospace Ltd. Pursuant to the Asset Purchase Agreement, the Company purchased in-process research and development (“IPRD”) consisting of inventory, hardware designs, software designs, and a trademark all pertaining to passenger drone design and use from Confida Aerospace Ltd. As consideration for the Asset Purchase Agreement, the Company issued Confida Aerospace Ltd., 10,000 of the Company’s Series B preferred shares (See, Note 13, “Convertible Preferred Stock”).  Each preferred share is convertible into 1,333 common shares and 1,333 warrants.  Each warrant is exercisable into one of the Company’s common shares at an exercise price of $.75. The warrants have an exercise period of five years upon

conversion. Additionally, the Company assumed $50,000 of debts incurred by Confida Aerospace Ltd. related to drone development.

 

All of the authorized shares of the Series B Convertible Stock were issued for the assets and $50,000 of accrued liabilities were assumed. The fair market value of the preferred stock was $7,131,214 as determined by an independent third party valuation firm. The fair market value was arrived at using an equivalent conversion into the common stock of Astro, which is trading in the Over-The-Counter Market. Appropriate restrictions and marketability discounts were applied, including using the 40 day volume weighted average price of $0.46 per share. The fair value of the common stock equivalent was $3,753,271. As well, the warrants issued in conjunction with the common stock were valued using the Black Scholes Model. The inputs used were a 40 day volume weighted average price of $0.46 per share, exercise price of $0.75 per share, a ten year term, a risk free rate of 2.97%, a volatility of 51% and no dividend yield. The fair value of the warrants was $3,377,943.

 

The Company determined the fair value of the IPRD based on the fair market value of the consideration paid for the IPRD: 10,000 shares of Series B Convertible Preferred Stock, each share of which is convertible into 1,333 shares of common stock and 1,333 common stock warrants. The drone prototype is in an early development stage and the fair value is not determinable using cash flow projections and such projections were not available. It is anticipated that the drone will be marketable and flying by the end of the second quarter of 2021 and at that time that cash flows are expected to commence.

 

Further analysis of the IPRD determined that the recoverability of the fair value carrying amount was not probable and an impairment expense of $6,310,214 was incurred to reduce the carrying value of the net assets to $871,000, which approximates cost.

 

As well, after the initial 90 day period for the assumption of liabilities, the Company determined that it would most likely only assume $25,000 of liabilities and has adjusted the consolidated financial statements accordingly. During 2018, the expenses related to the liabilities had been incurred and the impairment expense was reduced by $25,000 to $6,285,214.

XML 33 R17.htm IDEA: XBRL DOCUMENT v3.20.1
Fair Value Estimates
12 Months Ended
Dec. 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Estimates

NOTE 8 – FAIR VALUE ESTIMATES

 

The Company measures financial instruments at fair value in accordance with ASC 820, which specifies a valuation hierarchy based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions.

 

Management believes the carrying amounts of the Company's cash, other receivables, accounts payable and accrued liabilities as of December 31, 2019 and 2018 approximate their respective fair values because of the short-term nature of these instruments. The Company measures its notes payable and loans in accordance with the hierarchy of fair value based on whether the inputs to those valuation techniques are observable or unobservable. The hierarchy is:

 

Level 1 – Quoted prices for identical instruments in active markets;

 

Level 2 – Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and

 

Level 3 – Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

The estimated fair value of the cash, notes payable, and loans at December 31, 2019 and 2018, were as follows:

 

  

Quoted Prices

In Active

Markets for

Identical

Assets

 

 

 

Significant

Other

Observable

Inputs

 

 

 

 

Significant

Unobservable

Inputs

   (Level 1) 

 

(Level 2)

 

 

(Level 3)

 

Carrying

Value

At December 31, 2019:                    
Assets                    
  Cash  $1,159    —      —     $1,159 
Liabilities   —      —             
  8% Senior Secured Convertible Promissory Note, Net   —      —     $694,431   $694,431 
  8% Senior Secured Convertible Promissory Note issued December 2, 2019, Net   —      —     $24,093   $24,093 
  Loan from MAAB   —      —     $750,017   $750,017 
                     
At December 31, 2018:                    
Assets                    
  Cash  $55,129    —      —     $55,129 
                     
Liabilities                    
  8% Senior Secured Convertible Promissory Note, Net   —      —     $108,886   $108,886 
  Loan from MAAB   —      —     $591,439   $591,439 
                     
                    
XML 34 R34.htm IDEA: XBRL DOCUMENT v3.20.1
Income Tax (Tables)
12 Months Ended
Dec. 31, 2019
Disclosure Organziation And Summary Of Significiant Accounting Policies Tables Abstract  
Schedule of Income Tax Rates and the Statutory Federal Rates from Continuing Operations

A reconciliation of differences between the effective income tax rates and the statutory federal rates from continuing operations is as follows:

   2019  2018
   Rate  Amount  Rate  Amount
Income Tax benefit at US statutory Rate   21%  $484,065    21%  $1,631,172 
State taxes, net of federal benefit   5%   114,471    3%   263,914 
Change in valuation allowance   (26)%   (598,546)   (24)%   (1,895,086)
        $—          $—   
                     

 

Schedule of Statutory Federal Income Tax Rate for Discontinued Operations

The differences between the statutory Federal income tax rate and the effective tax rate are summarized as follows for the year ended December 31, 2018 for discontinued operations:

 

Income Taxes (benefit) at Statutory Rate  $37,443    21.0%
Increase (Decrease) in Taxes Resulting From:          
State Taxes, net of Federal Tax Benefit   (76)   —   
Graduated Tax Rates   —      —   
Reduction in Federal Income Tax Rate   —      —   
Other, Net   —      —   
Income Taxes  $37,367    21.0%
          
Schedule of Deferred Tax Assets

Significant components of the Company’s deferred tax assets and liabilities are as follows:

December 31,

   2019  2018
Deferred Income Tax Assets (Liabilities):          
 Net Operational Loss Carryforwards  $703,548   $165,505 
 Intangible Assets   1,415,989    1,522,188 
 Research & Development Costs   366,868    228,699 
 Other, Net   7,227    (21,296)
Gross Deferred Income Tax Assets (Liabilities)  $2,493,632   $1,895,096 
Less: Valuation Allowance   (2,493,632)   (1,895,096)
Net Deferred Income Tax Asset  $—     $—   
XML 35 R30.htm IDEA: XBRL DOCUMENT v3.20.1
Summary Of Significant Accounting Policies (Policies)
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

Basis of Presentation

Basis of Presentation

 

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles general accepted in the United States of America (“GAAP).

 

Cash

Cash

 

All highly liquid investments with original maturities of three months or less or money market accounts held at financial institutions are considered to be cash. Substantially all of the cash is placed with one financial institution. From time to time during the year the cash accounts are exposed to credit loss for amounts in excess of insured limits of $250,000 in the event of non-performance by the institution, however, it is not anticipated that there will be non-performance.

Intangible Assets – Acquired In-Process Research and Development

Intangible Assets – Acquired In-Process Research and Development

 

Acquired in-process research and development consists of acquired drone technology and engineering and trademarks. The Company reviews the IPRD, which currently has an indefinite useful life, for impairment at least annually or more frequently if an event occurs creating the potential for impairment, until such time as the research and development efforts are completed or abandoned. If the research and development efforts are abandoned, the related costs will be written off in the period of such determination. If the research and development efforts are completed successfully, the related assets will be amortized over the estimated useful life of the underlying products. The Company will amortize the cost of identified intangible assets using amortization methods that reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. An impairment expense of $6,285,214 was incurred in the year ended December 31, 2018. An updated valuation by an independent third party was performed for the year ended December 31, 2019, and no further impairment expense was required.

Revenue Recognition

Revenue Recognition

 

The Company does not currently have any revenue. In discontinued operations, revenue was recognized when the pool service was completed and the collectability was reasonably assured. For pool resurfacing and remediation work, revenue was recognized at the time of completion of the job.

Stock-Based Compensation

Stock-Based Compensation

 

The Company accounts for stock-based compensation under the fair value recognition provisions of GAAP which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors including stock options and restricted stock issuances based on estimated fair values.

 

In accordance with GAAP, the fair value of stock-based awards is generally recognized as compensation expense over the requisite service period, which is defined as the period during which an employee is required to provide service in exchange for an award. The Company uses a straight-line attribution method for all grants that include only a service condition. Compensation expense related to all awards is included in operations.

Convertible Notes, Warrants and Beneficial Conversion Feature (“BCF”)

Convertible Notes, Warrants and Beneficial Conversion Feature (“BCF”)

 

The convertible note is recorded at its fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant. Further, the convertible promissory note is examined for any intrinsic BCF of which the convertible price of the note is less than the closing common stock price on date of issuance. If the relative fair value method is used to value the convertible promissory note and there is an intrinsic BCF, a further analysis is undertaken of the BCF using an effective conversion price which assumes the conversion price is the relative fair value divided by the number of shares the convertible debt is converted into by its terms. The BCF value is accounted for as equity.

 

Warrants issued with the 8% Senior Secured Convertible Promissory Note are accounted for under the fair value and relative fair value method. The warrant is first analyzed per its terms as to whether it has derivative features or not. If the warrant is determined to be a derivative and not qualify for equity treatment, then it is measured at fair value using the Black Scholes option model and recorded as a liability on the consolidated balance sheet. The warrant is re-measured at its then current fair value at each subsequent reporting date (it is “marked-to-market”).

 

If the warrant is determined to not have derivative features, it is recorded into equity at its fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the convertible note.

 

The warrant and BCF relative fair values are also recorded as a discount to the convertible promissory notes and as additional paid-in-capital. The discount on the convertible notes is amortized to interest expense over the life of the debt. At present, these equity features of the convertible promissory notes have recorded a discount to the convertible notes that is substantially equal to the proceeds received.

Research and Development

Research and Development

 

Research and development costs are expensed as incurred.

Income Taxes

Income Taxes

 

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of asset and liabilities. Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax asset and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. Under GAAP, the tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. Management believes there are no unrecognized tax benefits or uncertain tax positions as of December 31, 2019 and 2018.

 

The Company assessed its earnings history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of December 31, 2019. Accordingly, a valuation allowance was recorded against the net deferred tax asset.

 

The Company recognizes interest and penalties on income taxes as a component of income tax expense, should such an expense be realized.

Basic and Diluted Net Loss per Share

Basic and Diluted Net Loss per Share

 

The Company computes loss per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted loss per share on the face of the consolidated statements of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the year. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the year, computed using the treasury stock method for outstanding stock options and the if converted method for convertible notes and preferred stock. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Common stock equivalents are anti-dilutive for the years ended December 31, 2019 and 2018 due to the net loss during the years. The common stock equivalents are comprised of stock options (cancelled as of March 14, 2018), convertible promissory notes and the Series A and Series B Convertible Preferred Stock.

 

Further, the Company has presented its discontinued operations in accordance with ASC 205-20, “Presentation of Financial Statements, Discontinued Operations”, which requires the presentation of both basic and diluted loss per share from continuing operations and the basic and diluted net earnings per share from discontinued operations in addition to the basic and diluted net loss per share.

 

For the years ended December 31, 2019 and 2018, the basic and diluted net loss per share from continuing operations, the basic and diluted net earnings from discontinued operations and the basic and diluted net loss per share were computed as follows:

 

   Year Ended
   December 31,
   2019  2018
Loss from Continuing Operations, net  $(2,305,073)  $(7,767,532)
Income from Discontinued Operations, net   —      140,933 
 Net Loss Available to Common Stockholders   (2,305,073)   (7,626,599)
Series A Preferred Stock Dividends   10,000    10,000 
Net Loss Available to Common Stockholders and Assumed Conversions  $(2,315,073)  $(7,636,599)
           
Weighted Average Shares - Basic   71,297,272    73,771,722 
Effective Dilutive Securities – Stock Options   —      —   
Shares Issuable Upon Conversion of Convertible Promissory Notes   —      —   
Shares Issuable Upon Conversion of Preferred Stock – Series A   —      —   
Shares Issuable Upon Conversion of Preferred Stock – Series B   —      —   
Weighted Average Shares - Diluted   71,297,272    73,771,722 
Net Loss Per Common Share from Continuing Operations:          
    Basic  $(0.03)  $(0.11)
    Diluted  $(0.03)  $(0.11)
Net Earnings Per Common Share from Discontinued Operations:          
    Basic  $—     $—   
    Diluted  $—     $—   
Net Loss Per Common Share:          
    Basic  $(0.03)  $(0.10)
    Diluted  $(0.03)  $(0.10)
Comprehensive Loss

Comprehensive Loss

 

Comprehensive loss consists of net loss plus the foreign currency translation (loss) gain.

Foreign Currency Translation

Foreign Currency Translation

 

The translation of assets and liabilities for the Company’s foreign subsidiary is made at year end exchange rates, while revenue and expense accounts are translated at the average exchange rates during the year transactions occurred.

 

Fair Value Measurement

Fair Value Measurement

 

Generally accepted accounting principles establishes a hierarchy to prioritize the inputs of valuation techniques used to measure fair value. The hierarchy gives the highest ranking to the fair values determined by using unadjusted quoted prices in active markets for identical assets (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). Observable inputs are those that market participants would use in pricing the assets based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The Company has determined the appropriate level of the hierarchy and applied it to its financial assets and liabilities. At December 31, 2019 and 2018, there were no assets or liabilities carried or measured at fair value.

Use of Estimates and Assumptions

Use of Estimates and Assumptions

 

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of IPRD. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustments, if any, are reflected in operations.

XML 36 R38.htm IDEA: XBRL DOCUMENT v3.20.1
Summary Of Significant Accounting Policies (Details) - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Disclosure Summary Of Significant Accounting Policies Details Abstract    
Loss from Continuing Operations, net $ (2,305,073) $ (7,767,532)
Income from Discontinued Operations, net 140,933
Net Loss Available to Common Stockholders (2,305,073) (7,626,599)
Series A Preferred Stock Dividends 10,000 10,000
Net Loss Available to Common Stockholders and Assumed Conversions $ (2,315,073) $ (7,636,599)
Weighted Average Shares - Basic 71,297,272 73,771,722
Effective Dilutive Securities – Stock Options
Shares Issuable Upon Conversion of Convertible Promissory Notes
Shares Issuable Upon Conversion of Preferred Stock – Series A
Shares Issuable Upon Conversion of Preferred Stock – Series B
Weighted Average Shares - Diluted 71,297,272 73,771,722
Net Loss Per Common Share from Continuing Operations:    
Basic $ (0.03) $ (0.11)
Diluted (0.03) (0.11)
Net Earnings Per Common Share from Discontinued Operations:    
Basic
Diluted
Net Loss Per Common Share:    
Basic (0.03) (0.10)
Diluted $ (0.03) $ (0.10)
XML 37 R29.htm IDEA: XBRL DOCUMENT v3.20.1
Subsequent Events
12 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

NOTE 20 - SUBSEQUENT EVENTS

 

The Company has evaluated subsequent events from the consolidated balance sheet date through May 29, 2020 (the consolidated financial statement issuance date) and noted the following disclosures:

 

The COVID-19 pandemic is currently impacting countries, communities, supply chains and markets as well as the global financial markets. Governments have imposed laws requiring social distancing, travel bans and quarantine, and these laws may limit access to the Company’s facilities, management, support staff and professional advisors. These factors, in turn, may not only impact the Company’s operations, financial condition and demand for the Company’s goods and services, but the Company’s overall ability to react timely to mitigate the impact of this event. Also, it has affected the Company’s efforts to comply with filing obligations with the Securities and Exchange Commission. Depending on the severity and longevity of the COVID-19 pandemic, the Company’s business, and stockholders may experience a significant negative impact. Currently, the COVID-19 pandemic has limited our ability to move forward with our operations and has negatively affected our ability to timely comply with our ongoing filing obligations with the Securities and Exchange Commission.

 

On April 22, 2020, the MAAB Note Payable was amended to increase the maximum outstanding principal balance to $1,250,000 and the maturity was extended to February 28, 2022.

 

On January 3, 2020, the Investor converted $16,724 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.04 into 406,908 shares of the Company’s common stock.

 

On January 29, 2020, the Investor converted $150,000 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.053175 into 2,820,874 shares of the Company’s common stock

 

On February 19, 2020, the Company put 400,000 common shares at a $0.0807 net price under the Equity Purchase Agreement and received $32,288 in net proceeds.

 

On March 27, 2020, the Company put 150,000 common shares at $0.0748 under the Equity Purchase Agreement and received $9,593 in proceeds.

 

On April 8, 2020, the Company put 150,000 common shares at $0.0685 under the Equity Purchase Agreement and received $7,527 in proceeds.

 

On April 13, 2020, the Investor converted $10,305 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.0515 into 200,000 shares of the Company’s common stock.

 

On April 20, 2020, the Company put 150,000 common shares at $0.0581 under the Equity Purchase Agreement and received $5,973 in proceeds.

 

On April 24, 2020, the Investor converted $10,305 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.0515 into 200,000 shares of the Company’s common stock.

 

On May 4, 2020, the Company put 200,000 common shares at $0.0551 under the Equity Purchase Agreement and received $8,283 in proceeds.

 

On May 8, 2020, the Investor converted $11,231 of the principal amount of the 8% Senior Secured Convertible Promissory Note at $0.0449 into 250,000 shares of the Company’s common stock.

XML 38 R21.htm IDEA: XBRL DOCUMENT v3.20.1
Promissory Note From MAAB
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Promissory Note From MAAB

NOTE 12 – PROMISSORY NOTE FROM MAAB

 

On March 14, 2018, MAAB, the parent of Astro, issued a Promissory Note for monetary advances to the Company of up to $750,000. The Promissory Note matures on February 28, 2021. The Promissory Note has an interest charge of 10%, compounded monthly. Interest accrues on the principal amount or portion thereof which remains unpaid from time to time as well as any interest outstanding, from the date the principal amount is advanced until and including the date upon which the principal amount and all interest due under this promissory note shall be fully paid. The principal amount advanced under the Promissory Note was $591,439 through December 31, 2018 and $750,017 through December 31, 2019. The Company has accrued interest expense of $41,291 and $89,797 at December 31, 2018 and 2019, respectively. On April 22, 2020, the Promissory Note was amended to increase the principal amount and the maturity date. (See Note 20, “Subsequent Events”).

 

XML 39 R25.htm IDEA: XBRL DOCUMENT v3.20.1
Equity Purchase Agreement And Registration Rights Agreement
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Equity Purchase Agreement and Registration Rights Agreement

NOTE 16 - EQUITY PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT

 

On August 26, 2019, the Company entered into an Equity Purchase Agreement and Registration Rights Agreement with the same Investor who provided the funding with the 8% Senior Secured Convertible Promissory Note. Under the terms of the Equity Purchase Agreement, the Investor agreed to purchase from the Company up to $5,000,000 of the Company’s common stock upon effectiveness of a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission and subject to certain limitations and conditions set forth in the Equity Purchase Agreement.

 

Following effectiveness of the Registration Statement, and subject to certain limitations and conditions set forth in the Equity Purchase Agreement, the Company shall have the discretion to deliver put notices to the Investor and the Investor will be obligated to purchase shares of the Company’s common stock, par value $0.001 per share based on the investment amount specified in each put notice. The maximum amount that the Company shall be entitled to put to the Investor in each put notice shall not exceed the lesser of $500,000 or one hundred fifty percent (150%) of the average daily trading volume of the Company’s Common Stock during the ten (10) trading days preceding the put. Pursuant to the Equity Purchase Agreement, the Investor and its affiliates will not be permitted to purchase and the Company may not put shares of the Company’s Common Stock to the Investor that would result in the Investor’s beneficial ownership of the Company’s outstanding Common Stock exceeding 9.99%. The price of each put share shall be equal to eighty five percent (85%) of the Market Price (as defined in the Equity Purchase Agreement). Puts may be delivered by the Company to the Investor until the earlier of (i) the date on which the Investor has purchased an aggregate of $5,000,000 worth of Common Stock under the terms of the Equity Purchase Agreement, (ii) August 26, 2022, or (iii) written notice of termination delivered by the Company to the Investor, subject to certain equity conditions set forth in the Equity Purchase Agreement.

 

On August 26, 2019, in connection with its entry into the Equity Purchase Agreement and the Registration Rights Agreement, the Company committed to 600,000 Commitment Shares (as defined in the Equity Purchase Agreement) to the Investor. These shares are initially being issued pursuant to the Section 4(a)(2) exemption and will be registered pursuant to the Registration Rights Agreement. Subsequent to the Agreement and prior to the issuance of the Commitment Shares, the Company renegotiated the payment to 300,000 shares of common stock. The fair value of the Commitment Shares as of August 26, 2019 was $48,300. The fair value was entirely expensed in the year ended December 31, 2019.

 

As of December 31, 2019, the Company has not issued any stock under the Equity Purchase Agreement.

 

The Registration Rights Agreement provides that the Company shall (i) file with the Commission the Registration Statement by November 25, 2019; and (ii) use its best efforts to have the Registration Statement declared effective by the Commission at the earliest possible date (in any event, within 120 days after the execution date of the definitive agreements). The Company filed a Registration Statement on Form S-1 with the Commission on November 25, 2019 and the S-1 was declared effective on December 27, 2019.

XML 40 R44.htm IDEA: XBRL DOCUMENT v3.20.1
2014 Stock Award Plan (Details) - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Number of Options    
Outstanding -beginning of the year 3,250,000
Options Cancelled 3,250,000
Outstanding - end of the year
Exercisable at the end of the year
Weighted Average Exercise Price    
Outstanding -beginning of the year $ 0.037
Options Cancelled
Outstanding - end of the year
Excercisable at the end of the year
Weighted-Average Remaining Contractual Term (years)    
Outstanding - beginning of the year 3 years 3 months 18 days
Aggregate Intrinsic Value    
Outstanding - beginning of the year $ 56,125
XML 41 R40.htm IDEA: XBRL DOCUMENT v3.20.1
Income Tax (Schedule Of Income Tax Rates From Continuing Operations) (Details) - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Income Tax Schedule Of Income Tax Rates From Continuing Operations    
Income Tax benefit at US statutory Rate $ 484,065 $ 1,631,172
State income tax, net of federal benefit 114,471 263,914
Change in valuation allowances $ (598,546) $ (1,895,086)
Income Tax benefit at US statutory Rate-Percent 21.00% 21.00%
State income tax, net of federal benefit-Percent 5.00% 3.00%
Change in valuation allowances-Percent (26.00%) 24.00%
XML 42 R48.htm IDEA: XBRL DOCUMENT v3.20.1
8% Senior Secured Convertible Promissory Note (Narrative) (Details) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Jan. 29, 2020
Jan. 03, 2020
Dec. 02, 2019
Sep. 11, 2019
May 21, 2019
Mar. 19, 2019
Feb. 22, 2019
Feb. 12, 2019
Nov. 21, 2018
Dec. 31, 2019
Dec. 31, 2019
Sep. 30, 2019
Jun. 30, 2019
Dec. 31, 2019
Dec. 31, 2018
May 29, 2020
Debt Instrument [Line Items]                                
Common stock, shares authorized                   250,000,000 250,000,000     250,000,000 250,000,000  
Stock issued as additional consideration for debt, value                              
Amortization of debt discount                           $ 1,191,894 $ 295,398  
Common Stock [Member]                                
Debt Instrument [Line Items]                                
Stock issued as additional consideration for debt, shares                           156,250    
Stock issued as additional consideration for debt, value                           $ 156    
Subsequent Event [Member]                                
Debt Instrument [Line Items]                                
Common stock, shares authorized                               250,000,000
Common shares available to be issued                               88,882,955
8% Senior Secured Convertible Promissory Note [Member]                                
Debt Instrument [Line Items]                                
Debt instrument face amount     $ 575,682           $ 1,383,636              
Total investment                 $ 1,200,000              
Debt instrument interest rate                 8.00%              
Debt instrument description     The initial tranche principal of $149,546 was issued, with an OID of $17,046, the pro-rated portion of the $68,182 OID for the entire principal amount of $575,682, a $7,500 financing fee for the lender’s transactional expenses that was expensed and the Company received proceeds of $125,000 The Company and the Investor promptly began negotiations on a Forbearance Agreement and on September 11, 2019, the Company and the Investor agreed to a Forbearance Agreement. Pursuant to this agreement, the Investor is willing to postpone pursuing its rights and remedies under the agreements, in particular and without limitation with respect to the acceleration of the promissory note and the immediate payment of the default amount and reduce the balance of the promissory note to the pre-default balance plus accrued non-default interest of $1,062,784 on the following terms: 1) subject to the Company’s compliance with the forbearance agreement, the forbearance shall commence on the effective date and will expire on June 30, 2020. 2) Should the Company fail to abide by any of the terms and conditions of the forbearance agreement, fail to comply with the terms of the other agreements, or fail to timely make the payments required under the promissory notes, or should the Company trigger an event of default, the forbearance period will immediately terminate. 3) Subject to the Company’s compliance with the forbearance period, the repayment of the promissory note will be reduced from 35% to 0%. The Note was issued with two $600,000 tranches of cash payments. Since both tranches are in one Note, both tranches are in default as of May 21, 2019.       On November 21, 2018, the Company issued an 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of $1,383,636 in exchange for a total investment of $1,200,000, less commissions and expenses, payable in two tranches. The first tranche was payable upon the closing of the agreement, and the second tranche was payable within ten (10) business days of the Investor receiving written notice confirming the effectiveness of the initial registration statement.              
Original issue discount     $ 132,500                          
Debt instrument maturity description                 Each tranche matures 6 months after the issue date              
Debt instrument maturity date     Jun. 02, 2020 Jun. 30, 2020                        
Debt instrument conversion terms     The Note is convertible into common shares of the Company at a price equal to 75% of the lowest market value in the thirty trading days prior to the conversion date, which created a BCF valued at greater than the total principal amount of the Note issued of $149,546. The conversion price was $0.0375 per share which converts into 3,987,880 common shares. The common stock price at the valuation date was $0.13 per share, so that the BCF was calculated to be $0.0925 per share valuing the BCF at $368,879.           The Note is convertible into common shares of the Company at a price equal to 75% of the lowest market value in the thirty trading days prior to the conversion date. The Company is subject to certain penalties if the shares are not issued within two business days of receiving the conversion notice.              
Debt instrument collateral terms                 Pursuant to a Security Agreement between the Company and the Investor (the “Security Agreement”), the Company has granted to the Investor a security interest in its assets to secure repayment of the Notes. The Company must reserve an amount of shares equal to 500% of the total amount of shares issuable upon full conversion of the promissory note. The Company meets this requirement since it has 250,000,000 common shares authorized and as of May 26, 2020, 88,882,955 shares available to be issued.              
Debt instrument beneficial conversion feature fair value     $ 149,546                          
Conversion price per share     $ 0.0375                          
Amortization of debt discount                   $ 125,453            
No of shares issued in conversion of debt                 1,871,515              
Stock price at valuation date     $ 0.13                          
Additional debt discount into interest expenses                   24,093            
Accrued interest     $ 1,927                          
8% Senior Secured Convertible Promissory Note [Member] | Common Stock [Member]                                
Debt Instrument [Line Items]                                
Debt instrument conversion terms           However, the conversion share calculation was incorrect for the March 19, 2019 conversion of the $38,633 in principal amount of the Note and was 26,712 shares less than what it should have been. These shares were added to a subsequent conversion in April 2019.                    
Value of principal portion of debt converted into shares of common stock           $ 38,633 $ 55,387       $ 20,000 $ 93,830 $ 449,397      
No of shares issued in conversion of debt     3,987,880     150,000 215,054       491,099 750,000 1,830,373      
8% Senior Secured Convertible Promissory Note [Member] | Subsequent Event [Member]                                
Debt Instrument [Line Items]                                
Conversion price per share $ 0.053175 $ 0.04                            
Value of principal portion of debt converted into shares of common stock $ 150,000 $ 16,724                            
No of shares issued in conversion of debt 2,820,874 406,908                            
8% Senior Secured Convertible Promissory Note - First Tranche [Member]                                
Debt Instrument [Line Items]                                
Debt instrument face amount                 $ 701,818              
Original issue discount                 81,818              
Financing fee                 20,000              
Proceeds from senior convertible promissory note                 $ 600,000              
Debt instrument maturity date                 May 21, 2019              
Debt instrument beneficial conversion feature fair value                 $ 523,326              
Total debt discount                 694,447              
Unamortized debt discount                 $ 865,796 88,022 $ 88,022     88,022    
Conversion price per share                 $ 0.375              
Amortization of debt discount                 $ 163,978         534,682 $ 108,886  
Stock price at valuation date                 $ 0.57              
Accrued interest         $ 24,118                      
8% Senior Secured Convertible Promissory Note - First Tranche [Member] | Warrant [Member]                                
Debt Instrument [Line Items]                                
No of common shares called by warrants                 344,029              
Exercise price of warrants                 $ 0.51              
Warrant terms                 5 years              
Fair value of warrants                 $ 171,121              
8% Senior Secured Convertible Promissory Note - First Tranche [Member] | Common Stock [Member]                                
Debt Instrument [Line Items]                                
Stock issued as additional consideration for debt, shares                 156,250              
Stock issued as additional consideration for debt, value                 $ 89,531              
8% Senior Secured Convertible Promissory Note - Second Tranche [Member]                                
Debt Instrument [Line Items]                                
Debt instrument face amount               $ 681,818                
Original issue discount               81,818                
Proceeds from senior convertible promissory note               $ 600,000                
Debt instrument maturity date               Aug. 12, 2019                
Debt instrument beneficial conversion feature fair value               $ 403,689                
Total debt discount               525,009                
Unamortized debt discount               $ 606,827   108,425 108,425     108,425    
Amortization of debt discount                           498,402    
8% Senior Secured Convertible Promissory Note - Second Tranche [Member] | Warrant [Member]                                
Debt Instrument [Line Items]                                
No of common shares called by warrants               421,656                
Exercise price of warrants               $ 0.40                
Warrant terms               5 years                
Fair value of warrants               $ 121,320                
Amortization of debt discount                           230,843    
Additional debt discount into interest expenses                           117,986    
First 8% Senior Secured Convertible Promissory Note [Member]                                
Debt Instrument [Line Items]                                
Accrued interest                   $ 83,557 $ 83,557     $ 83,557    
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Consolidated Statements Of Operations - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Income Statement [Abstract]    
Revenue
Operating Expenses:    
Sales and Marketing 232,084 60,487
General and Administrative 369,538 188,789
Research and Development 545,639 901,857
Impairment Expense 6,285,214
Total Operating Expenses 1,147,261 7,436,347
Loss from Operations (1,147,261) (7,436,347)
Other Expense (Income)    
Interest Expense, Net 1,316,407 318,038
Bank and Financing Fees 19,799 23,147
Miscellaneous Income (178,394) (10,000)
Total Other Expense 1,157,812 331,185
Loss Before Income Tax (2,305,073) (7,767,532)
Income Tax    
Current
Deferred
Loss from Continuing Operations, Net (2,305,073) (7,767,532)
Discontinued Operations:    
Income from Discontinued Operations 178,300
Income Tax 37,367
Income from Discontinued Operations, Net 140,933
Net Loss (2,305,073) (7,626,599)
Less: Preferred Stock Dividends 10,000 10,000
Net Loss Available to Common Stockholders $ (2,315,073) $ (7,636,599)
Net Loss From Continuing Operations per Common Share:    
Basic $ (0.03) $ (0.11)
Diluted (0.03) (0.11)
Net Earnings From Discontinued Operations per Common Share:    
Basic
Diluted
Net Loss per Common Share:    
Basic (0.03) (0.10)
Diluted $ (0.03) $ (0.10)
Weighted Average Number of Common Shares Outstanding - Basic 71,297,272 73,771,722
Weighted Average Number of Common Shares Outstanding - Diluted 71,297,272 73,771,722
XML 45 R8.htm IDEA: XBRL DOCUMENT v3.20.1
Consolidated Statements Of Cash Flow - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Cash Flow from Operating Activities:    
Net Loss $ (2,305,073) $ (7,626,599)
Adjustments to Reconcile Net (Loss) to Net Cash Used In Operating Activities:    
Impairment Expense 6,285,214
Amortization of Note Discounts 1,191,894 295,398
Changes in Operating Assets and Liabilities:    
Other Receivables 27,860 32,657
Prepaids (18,567) 19,190
Deposits 274 (14,199)
Accounts Payable and Accrued Liabilities 171,652 96,452
Discontinued Operations, net (358,355)
Net Cash Used In Operating Activities (950,546) (1,373,936)
Cash Flow from Financing Activities:    
Preferred Stock Dividend 2,500
Promissory Note from MAAB 158,578 591,439
8% Senior Secured Convertible Promissory Note 600,000 600,000
8% Senior Secured Convertible Promissory Note, Issued December 2, 2019 125,000
Issuance of Common Stock for Financing Fee (48,300)
Non-cash Financing Fee 7,500
Net Cash Provided By Financing Activities 939,378 1,188,939
Effect of Foreign Currency Translation (Loss) Gain (42,802) 22,704
Net Decrease in Cash (53,970) (162,293)
Cash at the Beginning of the Year 55,129 217,422
Cash at the End of the Year 1,159 55,129
Supplemental Disclosures of Cash Flow Information:    
Cash Paid During the Period for: Interest 4,598 9,232
Cash Paid During the Period for: Taxes 24,930
Supplemental Disclosures of Non-Cash Information:    
10% Convertible Promissory Notes Issued in Exchange for Stock Options 50,000
Common Stock Received in Sale of Discontinued Operations 876,440
Assets Sold in Discontinued Operations for Common Stock 1,941,259
Liabilities Sold in Discontinued Operations for Common Stock (1,064,818)
Series B Preferred Stock Issued in Acquisition of Assets 7,156,214
Acquired In-Process Research and Development 7,181,214
Accounts Payable and Accrued Liabilities Assumed in Acquisition of Assets 25,000
Conversion into Common Stock of the 10% Convertible Promissory Notes with Accrued Interest 52,534
Conversion of 8% Senior Secured Convertible Promissory Notes into Common Stock 657,247
Discounts Issued with 8% Senior Secured Convertible Promissory Notes 606,827 101,818
Discounts Issued with 8% Senior Secured Convertible Promissory Note, Issued December 2, 2019 149,546
Discounts Issued in Connection with Forbearance Agreement for 8% Senior Secured Convertible Promissory Notes 257,135
Amortization to Interest Expense of the Debt Discount from the 8% Senior Secured Convertible Promissory Note 1,167,801 108,886
Amortization to Interest Expense of the Debt Discount from the 8% Senior Secured Convertible Promissory Note, Issued December 2, 2019 24,093
Allocation to Interest Expense from Debt Discount of the 8% Senior Secured Convertible Promissory Note 163,978
Common Stock issued as Financing Fee for the Equity Purchase Agreement (48,300)
Reduction in MAAB Promissory Note from Section 16(a) Short Swing Profit Income $ 178,394
XML 46 R53.htm IDEA: XBRL DOCUMENT v3.20.1
Convertible Preferred Stock (Narrative) (Details) - USD ($)
1 Months Ended 12 Months Ended 22 Months Ended
May 04, 2018
Jan. 31, 2016
Dec. 31, 2015
Dec. 31, 2019
Series A Convertible Preferred Stock [Member]        
Preferred stock, shares authorized     50,000,000  
Preferred stock, par value per share     $ 0.0001  
Preferred stock liquidation value     $ 0  
Preferred stock dividend rate     8.00%  
Preferred stock dividend terms     The Series A Preferred has an 8% dividend paid quarterly  
Preferred stock conversion terms     Convertible into one share of common stock.  
Series A Convertible Preferred Stock [Member] | MAAB Global Limited (MAAB) [Member]        
Cumulative undeclared series A preferred dividends       $ 17,500
Series A Convertible Preferred Stock [Member] | Lawrence & Loreen Calarco, Former Officers And Directors [Member]        
Preferred stock issued   1,562,500    
Series B Convertible Preferred Stock [Member]        
Preferred stock, shares authorized 10,000      
Preferred stock, par value per share $ 0.001      
Preferred stock dividend terms The Preferred is entitled to a dividend, when declared by the Board of Directors, votes with all other classes of stock as a single class of stock on all actions to be voted on by the stockholders of the Company      
Preferred stock conversion terms Each share of Preferred is convertible into 1,333 shares of common stock and a five year warrant to purchase 1,333 shares of common stock at an exercise price of $0.75 per share.      
Preferred stock liquidation preference Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of the shares of the Series B Preferred Stock shall share pro rata with the holders of the common stock, on an as if converted basis.      
XML 47 R57.htm IDEA: XBRL DOCUMENT v3.20.1
Section 16(A) Beneficial Ownership Reporting Compliance (Narrative) (Details) - USD ($)
12 Months Ended
Aug. 30, 2019
Dec. 31, 2019
Dec. 31, 2018
Short swing profits   $ 19,799 $ 23,147
Mr. Bent - Chief Executive Officer [Member]      
Short swing profits $ 178,394    
XML 48 R36.htm IDEA: XBRL DOCUMENT v3.20.1
2014 Stock Award Plan (Tables)
12 Months Ended
Dec. 31, 2019
Stock Award Plan  
A Summary of Stock Option Activity

A summary of the stock option activity over the years ended December 31, 2019 and 2018 is as follows:

 

   Number of Options  Weighted Average Exercise Price  Weighted Average Remaining Contractual Term  Aggregate Intrinsic Value
Outstanding at December 31, 2017   3,250,000   $0.037    3.3 Years   $56,125 
Options Cancelled   (3,250,000)   —      —      —   
Outstanding at December 31, 2018   —      —      —      —   
Exercisable at December 31, 2018   —      —      —      —   
Outstanding at December 31, 2019   —      —      —      —   
Exercisable at December 31, 2019   —      —      —      —   
                     

 

The Company expensed $22,857 of stock option compensation during the year ended December 31, 2018.

XML 49 R32.htm IDEA: XBRL DOCUMENT v3.20.1
Summary Of Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2019
Summary Of Significant Accounting Policies  
Schedule of Earnings Per Share Basic and Diluted

For the years ended December 31, 2019 and 2018, the basic and diluted net loss per share from continuing operations, the basic and diluted net earnings from discontinued operations and the basic and diluted net loss per share were computed as follows:

 

   Year Ended
   December 31,
   2019  2018
Loss from Continuing Operations, net  $(2,305,073)  $(7,767,532)
Income from Discontinued Operations, net   —      140,933 
 Net Loss Available to Common Stockholders   (2,305,073)   (7,626,599)
Series A Preferred Stock Dividends   10,000    10,000 
Net Loss Available to Common Stockholders and Assumed Conversions  $(2,315,073)  $(7,636,599)
           
Weighted Average Shares - Basic   71,297,272    73,771,722 
Effective Dilutive Securities – Stock Options   —      —   
Shares Issuable Upon Conversion of Convertible Promissory Notes   —      —   
Shares Issuable Upon Conversion of Preferred Stock – Series A   —      —   
Shares Issuable Upon Conversion of Preferred Stock – Series B   —      —   
Weighted Average Shares - Diluted   71,297,272    73,771,722 
Net Loss Per Common Share from Continuing Operations:          
    Basic  $(0.03)  $(0.11)
    Diluted  $(0.03)  $(0.11)
Net Earnings Per Common Share from Discontinued Operations:          
    Basic  $—     $—   
    Diluted  $—     $—   
Net Loss Per Common Share:          
    Basic  $(0.03)  $(0.10)
    Diluted  $(0.03)  $(0.10)
XML 50 R11.htm IDEA: XBRL DOCUMENT v3.20.1
Sale Of Common Stock Of Majority Stockholders And Resignation And Election Of The Board Of Directors
12 Months Ended
Dec. 31, 2019
Sale Of Common Stock Of Majority Stockholders And Resignation And Election Of Board Of Directors  
Sale of Common Stock of Majority Stockholders and Resignation and Election of the Board of Directors

NOTE 2 – SALE OF COMMON STOCK OF MAJORITY STOCKHOLDERS AND RESIGNATION AND ELECTION OF THE BOARD OF DIRECTORS

 

On March 14, 2018, Lawrence and Loreen Calarco, officers and directors of the Company, the Lawrence & Loreen Calarco Family Trust and the Lawrence and Loreen Calarco Trust of June 3, 2014, majority stockholders controlled by Lawrence and Loreen Calarco, sold 51,711,571 common shares and 1,562,500 preferred shares to MAAB, a non-affiliate of the Company, paid from Bruce Bent, officer and director of MAAB’s personal funds resulting in a change of control of the Company.  The stock was transferred to MAAB effective March 14, 2018. The 51,711,571 common shares and 1,562,500 preferred shares represented 62.35% and 100% of the issued and outstanding common and preferred stock of the Company, respectively.

 

On March 14, 2018, Lawrence Calarco, Loreen Calarco and Charles Dargan II resigned as officers and directors of the Company. Additionally, on March 14, 2018, Jeffrey Michel and Randy Sofferman resigned as directors of the Company.

 

On March 14, 2018, Bruce Bent, age 62, was appointed as Chief Executive Officer and Director of the Company. He stood for re-election at the subsequent annual meeting of the shareholders. There are no material arrangements to which Mr. Bent is a party, and there is no family relationship between him and any other party connected to the Company.

XML 51 R15.htm IDEA: XBRL DOCUMENT v3.20.1
Recent Accounting Pronouncements
12 Months Ended
Dec. 31, 2019
Accounting Changes and Error Corrections [Abstract]  
Recent Accounting Pronouncements

NOTE 6 – RECENT ACCOUNTING PRONOUNCEMENTS

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-2, Leases (Topic 842) which will require lessees to recognize on the consolidated balance sheet the assets and liabilities for the rights and obligations created by those leases with term of more than twelve months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. The new ASU will require both types of leases to be recognized on the consolidated balance sheet. The ASU also will require disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the consolidated financial statements. The ASU became effective for fiscal years beginning after December 15, 2018 and for interim periods within those fiscal years. The ASU had no effect on the Company’s consolidated financial statements.

 

In June 2018, the FASB issued ASU No. 2018-07, “Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting,” to include share based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for under Topic 606, Revenue from Contracts with Customers. The amendments in this update become effective for annual periods and interim periods within those annual periods beginning after December 15, 2018 but no earlier than an entity’s adoption date of Topic 606. The Company evaluated the impact of adopting the new guidance on the consolidated financial statements, but it does not have a material impact.

XML 52 R19.htm IDEA: XBRL DOCUMENT v3.20.1
Default And Forbearance On The 8% Senior Secured Convertible Promissory Note
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Default and Forbearance on the 8% Senior Secured Convertible Promissory Note

NOTE 10 – DEFAULT AND FORBEARANCE ON THE 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

 

On May 21, 2019, six months after the issuance of the first tranche of the 8% Senior Secured Convertible Promissory Note, the Note matured with $307,798 in principal outstanding and approximately $24,118 in accrued interest. The Company was unable to repay the principal and accrued interest and therefore was in default of the Note. The Note has default provisions permitting default interest of 18% to be charged on the Note as well as to charge a default amount of 150% of the unpaid principal and interest.

 

The Note was issued with two $600,000 tranches of cash payments. Since both tranches are in one Note, both tranches are in default as of May 21, 2019.

 

The Company and the Investor promptly began negotiations on a Forbearance Agreement and on September 11, 2019, the Company and the Investor agreed to a Forbearance Agreement. Pursuant to this agreement, the Investor is willing to postpone pursuing its rights and remedies under the agreements, in particular and without limitation with respect to the acceleration of the promissory note and the immediate payment of the default amount and reduce the balance of the promissory note to the pre-default balance plus accrued non-default interest of $1,062,784 on the following terms:

 

1) Subject to the Company’s compliance with the forbearance agreement, the forbearance shall commence on the effective date and will expire on June 30, 2020.

2) Should the Company fail to abide by any of the terms and conditions of the forbearance agreement, fail to comply with the terms of the other agreements, or fail to timely make the payments required under the promissory notes, or should the Company trigger an event of default, the forbearance period will immediately terminate.

3) Subject to the Company’s compliance with the forbearance period, the repayment of the promissory note will be reduced from 35% to 0%.

 

The Company’s outstanding principal amount of the Note, after conversions, and the accrued interest as of the Forbearance Agreement date of September 11, 2019, was $805,649. The Forbearance Agreement for the outstanding principal amount and accrued interest of $1,062,784 produces a forbearance penalty of $257,135. This amount increased both the principal balance of the Note and increased the debt discount by the same amount. The $257,135 penalty is being amortized over the new maturity of the Note, June 30, 2020, and resulted in a $97,747 amortization expense during the year ended December 31, 2019. The outstanding principal amount of the Note is $983,524 at December 31, 2019.

XML 53 R23.htm IDEA: XBRL DOCUMENT v3.20.1
Convertible Preferred Stock
12 Months Ended
Dec. 31, 2019
Convertible Preferred Stock  
Convertible Preferred Stock

NOTE 14 – CONVERTIBLE PREFERRED STOCK

 

In December 2015, the Company authorized 50,000,000 shares of Series A Preferred Stock, with a $0.0001 par value and no liquidation value. The Series A Preferred has an 8% dividend paid quarterly and is convertible into one share of common stock. The Series A Preferred is senior to the common stock as to dividends, and any liquidation, dissolution or winding up of the Company. The Series A Preferred also has certain voting and registration rights.

 

In January 2016, the Company issued 1,562,500 shares of the Series A Preferred Stock to Lawrence and Loreen Calarco, former officers and directors of the Company.

 

On March 14, 2018, Lawrence and Loreen Calarco, officers and directors of the Company, the Lawrence & Loreen Calarco Family Trust and the Lawrence and Loreen Calarco Trust of June 3, 2014, sold all 1,562,500 preferred shares to MAAB, a non-affiliate of CPSM, Inc. Cumulative undeclared Series A Preferred dividends were $17,500 at December 31, 2019.

 

On May 4, 2018, the Board of Directors of Astro Aerospace Ltd. authorized 10,000 shares of the Series B Convertible Preferred Stock, par value $0.001 per share. The Preferred is entitled to a dividend, when declared by the Board of Directors, votes with all other classes of stock as a single class of stock on all actions to be voted on by the stockholders of the Company, and each share of Preferred is convertible into 1,333 shares of common stock and a five year warrant to purchase 1,333 shares of common stock at an exercise price of $0.75 per share. On May 8, 2018, the Company issued all of the 10,000 authorized Series B Preferred shares in the acquisition of certain assets from Confida Aerospace Ltd.

 

Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of the shares of the Series B Preferred Stock shall share pro rata with the holders of the common stock, on an as if converted basis.

XML 54 R27.htm IDEA: XBRL DOCUMENT v3.20.1
Section 16(A) Beneficial Ownership Reporting Compliance
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
Section 16(A) Beneficial Ownership Reporting Compliance

NOTE 18 - SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

 

Under Section 16(a) of the Securities Exchange Act of 1934, as amended, an officer, director, or greater-than-10% shareholder of the Company must file a Form 4 reporting the acquisition or disposition of Company’s equity securities with the Securities and Exchange Commission no later than the end of the second business day after the day the transaction occurred unless certain exceptions apply. Transactions not reported on Form 4 must be reported on Form 5 within 45 days after the end of the Company’s fiscal year. Such persons must also file initial reports of ownership on Form 3 upon becoming an officer, director, or greater-than-10% shareholder. Mr. Bruce Bent, the Company’s Chief Executive Officer, is currently up to date in meeting these requirements and has notified the Company that he is now compliant. On August 30, 2019, pursuant to Section 16(a), Mr. Bent disgorged short swing profits of $178,394 to the Company, which was recorded as miscellaneous income and a reduction of the debt owed to MAAB, the parent of the Company.

XML 55 R46.htm IDEA: XBRL DOCUMENT v3.20.1
Sale Of Common Stock Of Majority Stockholders And Resignation And Election Of The Board Of Directors (Narrative) (Details) - MAAB Global Limited (MAAB) [Member]
Mar. 14, 2018
shares
Common Stock [Member]  
Sale of stock by majority stockholders 51,711,571
Percentage of shares held by Parent 62.35%
Preferred Stock [Member]  
Sale of stock by majority stockholders 1,562,500
Percentage of shares held by Parent 100.00%
XML 56 R42.htm IDEA: XBRL DOCUMENT v3.20.1
Income Tax (Schedule Of Deferred Tax Assets) (Details) - USD ($)
Dec. 31, 2019
Dec. 31, 2018
Deferred Income Tax Assets (Liabilities):    
Net Operational Loss Carryforwards $ 703,548 $ 165,505
Intangible Assets 1,415,989 1,522,188
Research & Development Costs 366,868 228,699
Other, Net 7,227 (21,296)
Gross Deferred Income Tax Assets (Liabilities) 2,493,632 1,895,096
Less: Valuation Allowance 2,493,632 1,895,096
Net Deferred Income Tax Asset
XML 57 Show.js IDEA: XBRL DOCUMENT // Edgar(tm) Renderer was created by staff of the U.S. Securities and Exchange Commission. Data and content created by government employees within the scope of their employment are not subject to domestic copyright protection. 17 U.S.C. 105. var Show={};Show.LastAR=null,Show.showAR=function(a,r,w){if(Show.LastAR)Show.hideAR();var e=a;while(e&&e.nodeName!='TABLE')e=e.nextSibling;if(!e||e.nodeName!='TABLE'){var ref=((window)?w.document:document).getElementById(r);if(ref){e=ref.cloneNode(!0); e.removeAttribute('id');a.parentNode.appendChild(e)}} if(e)e.style.display='block';Show.LastAR=e};Show.hideAR=function(){Show.LastAR.style.display='none'};Show.toggleNext=function(a){var e=a;while(e.nodeName!='DIV')e=e.nextSibling;if(!e.style){}else if(!e.style.display){}else{var d,p_;if(e.style.display=='none'){d='block';p='-'}else{d='none';p='+'} e.style.display=d;if(a.textContent){a.textContent=p+a.textContent.substring(1)}else{a.innerText=p+a.innerText.substring(1)}}} XML 58 R22.htm IDEA: XBRL DOCUMENT v3.20.1
Income Tax
12 Months Ended
Dec. 31, 2019
Income Tax Narrative  
Income tax

NOTE 13 – INCOME TAX

 

A reconciliation of differences between the effective income tax rates and the statutory federal rates from continuing operations is as follows:

   2019  2018
   Rate  Amount  Rate  Amount
Income Tax benefit at US statutory Rate   21%  $484,065    21%  $1,631,172 
State taxes, net of federal benefit   5%   114,471    3%   263,914 
Change in valuation allowance   (26)%   (598,546)   (24)%   (1,895,086)
        $—          $—   
                     

 

The differences between the statutory Federal income tax rate and the effective tax rate are summarized as follows for the year ended December 31, 2018 for discontinued operations:

 

Income Taxes (benefit) at Statutory Rate  $37,443    21.0%
Increase (Decrease) in Taxes Resulting From:          
State Taxes, net of Federal Tax Benefit   (76)   —   
Graduated Tax Rates   —      —   
Reduction in Federal Income Tax Rate   —      —   
Other, Net   —      —   
Income Taxes  $37,367    21.0%
           

 

Deferred income taxes primarily relate to differences between the amounts recorded for financial reporting purposes and the amounts recorded for income tax purposes.

 

Significant components of the Company’s deferred tax assets and liabilities are as follows:

December 31,

   2019  2018
Deferred Income Tax Assets (Liabilities):          
 Net Operational Loss Carryforwards  $703,548   $165,505 
 Intangible Assets   1,415,989    1,522,188 
 Research & Development Costs   366,868    228,699 
 Other, Net   7,227    (21,296)
Gross Deferred Income Tax Assets (Liabilities)  $2,493,632   $1,895,096 
Less: Valuation Allowance   (2,493,632)   (1,895,096)
Net Deferred Income Tax Asset  $—     $—   

 

At December 31, 2019, the Company has net operating loss carryforwards of approximately $2,776,000 available to offset future taxable income with no expiration. Realization of the deferred tax assets, which relate to operating loss carry-forwards and timing differences, is dependent on future earnings. The timing and amount of future earnings are uncertain and therefore the Company has established a 100% valuation allowance.

 

As of December 31, 2019, the U.S. Federal and Florida income tax returns filed prior to 2016 are no longer subject to examination by the respective taxing authorities.

XML 59 R26.htm IDEA: XBRL DOCUMENT v3.20.1
2014 Stock Awards Plan
12 Months Ended
Dec. 31, 2019
Notes to Financial Statements  
2014 Stock Awards Plan

NOTE 17 – 2014 STOCK AWARDS PLAN

 

In November 2014, the board of directors of the Company approved the adoptions of a Stock Awards Plan. A total of 7,000,000 shares was authorized to be issued under the plan. For incentive stock options, at the grant date the stock options exercise price is required to be at least 110% of the fair value of the Company’s common stock. The Plan permits the grants of common stock or options to purchase common stock. As plan administrator, the Board of Directors has sole discretion to set the price of the options. Further, the Board of Directors may amend or terminate the plan.

 

On March 14, 2018, the Company cancelled all 3,250,000 outstanding stock options under the 2014 Stock Awards Plan, with 1,500,000 of the stock options exchanged for two 10% Convertible Promissory Notes with a six month maturity (see Note 11, “Convertible Promissory Notes”). Consequently, there are 7,000,000 shares available for issuance at December 31, 2019.

 

A summary of the stock option activity over the years ended December 31, 2019 and 2018 is as follows:

 

   Number of Options  Weighted Average Exercise Price  Weighted Average Remaining Contractual Term  Aggregate Intrinsic Value
Outstanding at December 31, 2017   3,250,000   $0.037    3.3 Years   $56,125 
Options Cancelled   (3,250,000)   —      —      —   
Outstanding at December 31, 2018   —      —      —      —   
Exercisable at December 31, 2018   —      —      —      —   
Outstanding at December 31, 2019   —      —      —      —   
Exercisable at December 31, 2019   —      —      —      —   
                     

 

The Company expensed $22,857 of stock option compensation during the year ended December 31, 2018.

XML 60 R47.htm IDEA: XBRL DOCUMENT v3.20.1
Acqusition Of Assets From Confida Aerospace Ltd (Narrative) (Details) - USD ($)
12 Months Ended
May 08, 2018
May 04, 2018
Dec. 31, 2019
Dec. 31, 2018
Fair market value of preferred stock       $ (876,440)
Impairment expense     6,285,214
Acquired in-process research and development     $ 871,000 871,000
Common Stock [Member]        
Fair market value of preferred stock       (13,669)
Series B Convertible Preferred Stock [Member]        
Preferred stock conversion terms   Each share of Preferred is convertible into 1,333 shares of common stock and a five year warrant to purchase 1,333 shares of common stock at an exercise price of $0.75 per share.    
Fair market value of preferred stock      
Asset Purchase Agreement With Confida Aerospace Ltd [Member]        
Agreement description On May 8, 2018, the Company entered into an Asset Purchase Agreement with Confida Aerospace Ltd. Pursuant to the Asset Purchase Agreement, the Company purchased in-process research and development (“IPRD”) consisting of inventory, hardware designs, software designs, and a trademark all pertaining to passenger drone design and use from Confida Aerospace Ltd. As consideration for the Asset Purchase Agreement, the Company issued Confida Aerospace Ltd., 10,000 of the Company’s Series B preferred shares (See, Note 13, “Convertible Preferred Stock”). Each preferred share is convertible into 1,333 common shares and 1,333 warrants. Each warrant is exercisable into one of the Company’s common shares at an exercise price of $.75. The warrants have an exercise period of five years upon As well, after the initial 90 day period for the assumption of liabilities, the Company determined that it would most likely only assume $25,000 of liabilities and has adjusted the consolidated financial statements accordingly. During 2018, the expenses related to the liabilities had been incurred and the impairment expense was reduced by $25,000 to $6,285,214.      
Debts assumed $ 50,000      
Impairment expense 6,310,214      
Acquired in-process research and development $ 871,000      
Asset Purchase Agreement With Confida Aerospace Ltd [Member] | Common Stock [Member]        
Weighted average stock price $ 0.46      
Fair value of common stock $ 3,753,271      
Asset Purchase Agreement With Confida Aerospace Ltd [Member] | Warrant [Member]        
No of common shares called by each warrant 1      
Exercise price of warrants $ 75      
Warrant terms 5 years      
Weighted average stock price $ 0.46      
Fair value assumption methodology Black scholes model      
Exercise price $ 0.75      
Weighted average term 10 years      
Risk free rate 2.97%      
Volatility 51.00%      
Dividend yield 0.00%      
Fair value of warrants $ 3,377,943      
Asset Purchase Agreement With Confida Aerospace Ltd [Member] | Series B Convertible Preferred Stock [Member]        
No of preferred stock issued in consideration for the asset purchase agreement 10,000      
Preferred stock conversion terms Each preferred share is convertible into 1,333 common shares and 1,333 warrants.      
Fair market value of preferred stock $ 7,131,214      
XML 61 R43.htm IDEA: XBRL DOCUMENT v3.20.1
Warrants (Details) - Warrant [Member]
12 Months Ended
Dec. 31, 2019
$ / shares
shares
Warrants Outstanding  
Outstanding -beginning of year | shares 13,674,029
Granted | shares 421,656
Expired | shares
Outstanding - end of year | shares 14,095,685
Exercise Price Per Share  
Granted $ 0.40
Expired
Price Per Share On Date Of Issuance  
Granted .33
Expired
Minimum [Member]  
Warrants Outstanding  
Granted | shares 0
Exercise Price Per Share  
Outstanding -beginning of year $ 0.51
Outstanding - end of year 0.40
Price Per Share On Date Of Issuance  
Outstanding -beginning of year 0.57
Outstanding - end of year $ .33
Maximum [Member]  
Warrants Outstanding  
Granted | shares 0
Exercise Price Per Share  
Outstanding -beginning of year $ 0.75
Outstanding - end of year 0.75
Price Per Share On Date Of Issuance  
Outstanding -beginning of year 1.00
Outstanding - end of year $ 1.00
XML 62 R52.htm IDEA: XBRL DOCUMENT v3.20.1
Income Tax (Narrative) (Details)
12 Months Ended
Dec. 31, 2019
USD ($)
Income Tax Narrative  
Net operating loss carryforward $ 2,776,000
Operating loss carryforward limitations on use Offset future taxable income with no expiration
Percentage of valuation allowance 100.00%
XML 63 R9.htm IDEA: XBRL DOCUMENT v3.20.1
Consolidated Statements Of Cash Flow (Parenthetical)
12 Months Ended
Dec. 31, 2019
Statement of Cash Flows [Abstract]  
Note Date Dec. 02, 2019
XML 64 R56.htm IDEA: XBRL DOCUMENT v3.20.1
2014 Stock Awards Plan (Narrative) (Details) - USD ($)
1 Months Ended 12 Months Ended
Mar. 14, 2018
Nov. 30, 2014
Dec. 31, 2019
Dec. 31, 2018
Stock options cancelled     3,250,000
Shares available for issuance     7,000,000  
Stock option compensation     $ 22,857  
2014 Stock Awards Plan [Member] | Stock Options [Member]        
Shares authorized to be issued under stock awards plan   7,000,000    
Stock awards plan description   For incentive stock options, at the grant date the stock options exercise price is required to be at least 110% of the fair value of the Company’s common stock. The Plan permits the grants of common stock or options to purchase common stock. As plan administrator, the Board of Directors has sole discretion to set the price of the options. Further, the Board of Directors may amend or terminate the plan.    
Stock options cancelled 3,250,000      
2014 Stock Awards Plan [Member] | Stock Options [Member] | Two 10% Convertible Promissory Notes [Member]        
Stock options exchanged for debt 1,500,000      
XML 65 R5.htm IDEA: XBRL DOCUMENT v3.20.1
Consolidated Statements Of Comprehensive Loss - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Income Statement [Abstract]    
Net Loss $ (2,305,073) $ (7,626,599)
Foreign Currency Translation Loss (42,802) 22,704
Comprehensive Loss $ (2,347,875) $ (7,603,895)
XML 66 R1.htm IDEA: XBRL DOCUMENT v3.20.1
Document And Entity Information - USD ($)
12 Months Ended
Dec. 31, 2019
May 29, 2020
Jun. 28, 2019
Cover [Abstract]      
Document Type 10-K/A    
Amendment Flag true    
Amendment Description The sole purpose of this Amendment to the registrant’s Annual Report on Form 10-K for the period ended December 31, 2019 is to furnish revised Interactive Data File exhibits pursuant to Rule 405 of Regulation S-T. No other changes have been made to the 10-K, and this Amendment has not been updated to reflect events occurring subsequent to the filing of the 10-K.    
Document Annual Report true    
Document Period End Date Dec. 31, 2019    
Document Fiscal Period Focus FY    
Document Fiscal Year Focus 2019    
Current Fiscal Year End Date --12-31    
Entity File Number 333-149000    
Entity Registrant Name Astro Aerospace Ltd.    
Entity Central Index Key 0001425203    
Entity Tax Identification Number 98-0557091    
Entity Incorporation, State or Country Code NV    
Entity Address, Address Line One 320 W. Main Street    
Entity Address, City or Town Lewisville    
Entity Address, State or Province TX    
Entity Address, Country US    
Entity Address, Postal Zip Code 75057    
City Area Code 972    
Local Phone Number 221-1199    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Interactive Data Current Yes    
Entity Filer Category Non-accelerated Filer    
Entity Small Business true    
Entity Emerging Growth Company false    
Entity Shell Company false    
Entity Public Float     $ 17,791,155
Entity Common Stock, Shares Outstanding   78,129,504  
XML 67 R37.htm IDEA: XBRL DOCUMENT v3.20.1
Sale Of Custom Pool (Details) - USD ($)
12 Months Ended
Dec. 31, 2019
Dec. 31, 2018
Major Classes of Line Items Constituting Pre-Tax Income on Discontinued Operations:    
Revenue $ 1,786,911
Cost of Services 1,208,619
General and Administrative 338,877
Other Operating Expenses 51,370
Total Operating Expenses 1,598,866
Operating Income 188,045
Other Expense 9,745
Total Pre-Tax Loss from Discontinued Operations 178,300
Income Tax Expense 37,367
Loss from Discontinued Operations $ 140,933
XML 68 R33.htm IDEA: XBRL DOCUMENT v3.20.1
Fair Value Of Estimates (Tables)
12 Months Ended
Dec. 31, 2019
Fair Value Of Estimates  
Schedule of Fair Value of Cash, Notes Payable and Loans

The estimated fair value of the cash, notes payable, and loans at December 31, 2019 and 2018, were as follows:

 

  

Quoted Prices

In Active

Markets for

Identical

Assets

 

 

 

Significant

Other

Observable

Inputs

 

 

 

 

Significant

Unobservable

Inputs

   (Level 1) 

 

(Level 2)

 

 

(Level 3)

 

Carrying

Value

At December 31, 2019:                    
Assets                    
  Cash  $1,159    —      —     $1,159 
Liabilities   —      —             
  8% Senior Secured Convertible Promissory Note, Net   —      —     $694,431   $694,431 
  8% Senior Secured Convertible Promissory Note issued December 2, 2019, Net   —      —     $24,093   $24,093 
  Loan from MAAB   —      —     $750,017   $750,017 
                     
At December 31, 2018:                    
Assets                    
  Cash  $55,129    —      —     $55,129 
                     
Liabilities                    
  8% Senior Secured Convertible Promissory Note, Net   —      —     $108,886   $108,886 
  Loan from MAAB   —      —     $591,439   $591,439 
                     
                    
XML 69 R18.htm IDEA: XBRL DOCUMENT v3.20.1
8% Senior Secured Convertible Promissory Notes
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
8% Senior Secured Convertible Promissory Notes

NOTE 9 – 8% SENIOR SECURED CONVERTIBLE PROMISSORY NOTES

 

On November 21, 2018, the Company issued an 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of $1,383,636 in exchange for a total investment of $1,200,000, less commissions and expenses, payable in two tranches. The first tranche was payable upon the closing of the agreement, and the second tranche was payable within ten (10) business days of the Investor receiving written notice confirming the effectiveness of the initial registration statement. The first tranche principal of $701,818 was issued, with an Original Issue Discount (“OID”) of $81,818, a $20,000 financing fee for the lender’s transactional expenses that was expensed and the Company received proceeds of $600,000. The second tranche was issued on February 12, 2019 in the principal amount of $681,818, with an OID of $81,818 and the Company received proceeds of $600,000. Each tranche matured 6 months after the issue date, the first tranche matured on May 21, 2019 and the second tranche matured on August 12, 2019 (See Note 10, “Default And Forbearance On The 8% Senior Secured Convertible Promissory Note”).

 

The Note is convertible into common shares of the Company at a price equal to 75% of the lowest market value in the thirty trading days prior to the conversion date. The Company is subject to certain penalties if the shares are not issued within two business days of receiving the conversion notice. Pursuant to a Security Agreement between the Company and the Investor (the “Security Agreement”), the Company has granted to the Investor a security interest in its assets to secure repayment of the Notes. The Company must reserve an amount of shares equal to 500% of the total amount of shares issuable upon full conversion of the promissory note. The Company meets this requirement since it has 250,000,000 common shares authorized and as of May 29, 2020, 88,882,955 shares available to be issued.

 

As additional consideration for the investment, the Company issued 156,250 shares of its common stock to the Investor, valued at $89,531 at the date of issuance, plus warrants to acquire up to an aggregate 344,029 shares of the Company’s common stock at an exercise price of $0.51 per share. Upon the closing of the second tranche in February 2019, the Company issued additional warrants to acquire up to an aggregate amount of 421,656 shares of the Company’s common stock at an exercise price of $0.40 per share. Each Warrant is exercisable by the Investor beginning on the Effective Date through the fifth year anniversary thereof.

 

The Note has a beneficial conversion feature (“BCF”) for both tranches, which were valued, along with the warrants, on a relative fair value method. In the first tranche, the warrant fair value (See Note 15, “Warrants”) was $171,121 and the beneficial conversion feature fair value was $523,326 for a total debt discount of $694,447. The conversion price was $0.375 per share which converts into 1,871,515 common shares. The common stock price at the valuation date was $0.57 per share, so that the BCF was calculated to be $0.28 per share valuing the BCF at $523,326.

 

However, adding the OID and the inducement shares to the debt discount, made final total debt discount $865,796, larger than the principal amount of the Note. Consequently, $163,978 of the debt discount was expensed. Additionally, $108,886 of the debt discount was amortized to interest expense for the year ended December 31, 2018, with an additional $534,682 amortized to interest in the year ended December 31, 2019, bringing the debt discount to $58,250 at December 31, 2019.

 

In the second tranche, the warrant fair value (See Note 15, “Warrants”) was $121,320 and the beneficial conversion feature fair value was $403,689 for a debt discount of $525,009. Including the $81,818 of OID, the total debt discount is $606,827. Prior to the forbearance agreement dated September 11, 2019, $498,402 of the debt discount was amortized into interest expense, bringing the debt discount to $108,425. However, the forbearance agreement increased the principal amount, and the debt discount, which were allocated to the second tranche, so there was a net increase in the principal and the debt discount in the second tranche of $257,135 (See Note 10, “Default and Forbearance on the 8% Senior Secured Convertible Promissory Note”). Additional amortization of the debt discount into interest expense in the fourth quarter of the year ended December 31, 2019 was $117,986 bringing the debt discount to $230,843 at December 31, 2019.

 

On February 22, 2019, the Investor converted $55,387 in principal amount of the Note into 215,054 shares of the Company’s common stock. Likewise, on March 19, 2019, the Investor converted $38,633 in principal amount of the Note into 150,000 shares of the Company’s common stock. However, the conversion share calculation was incorrect for the March 19, 2019 conversion of the $38,633 in principal amount of the Note and was 26,712 shares less than what it should have been. These shares were added to a subsequent conversion in April 2019.

 

In the second quarter ended June 30, 2019, the Investor converted $449,397 in principal amount of the Note into 1,830,373 shares of the Company’s common stock. In the third quarter ended September 30, 2019, the Investor converted $93,830 in principal amount of the Note into 750,000 shares of the Company’s common stock. In the fourth quarter ended December 31, 2019, the Investor converted $20,000 in principal amount of the Note into 491,099 shares of the Company’s common stock. The Company has accrued interest on the Note of $83,557 through December 31, 2019. The effective interest rate for both tranches of this Note was 8.33% as of December 31, 2019 and 2018.

  

On December 2, 2019, the Company issued a new 8% Senior Secured Convertible Promissory Note in the aggregate principal amount of up to $575,682. The initial tranche principal of $149,546 was issued, with an OID of $17,046, the pro-rated portion of the $68,182 OID for the entire principal amount of $575,682, a $7,500 financing fee for the lender’s transactional expenses that was expensed and the Company received proceeds of $125,000. The Note will mature on June 2, 2020.

 

The Note is convertible into common shares of the Company at a price equal to 75% of the lowest market value in the thirty trading days prior to the conversion date, which created a BCF valued at greater than the total principal amount of the Note issued of $149,546. The conversion price was $0.0375 per share which converts into 3,987,880 common shares. The common stock price at the valuation date was $0.13 per share, so that the BCF was calculated to be $0.0925 per share valuing the BCF at $368,879.

 

In accordance with ASC 470-20-30-8, if the intrinsic value of the BCF is greater than the proceeds allocated to the convertible instrument, the amount of the discount assigned to the BCF shall be limited to the amount of the proceeds allocated to the convertible instrument. Therefore, the BCF is limited to $132,500, which when added to the OID of $17,046 equals the principal amount of $149,546. The BCF is being amortized using the effective interest method over the term of the note.

 

Amortization of the debt discount into interest expense was $24,093 for the year ended December 31, 2019, bringing the debt discount to $125,453 at December 31, 2019. The Company has accrued interest of $1,927 on the Note through the year ended December 31, 2019. The effective interest rate for this Note was 8.33% at December 31, 2019.

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Nature Of Operations
12 Months Ended
Dec. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations

NOTE 1 – NATURE OF OPERATIONS

 

Astro Aerospace Ltd. (“Astro” or the “Company”) and its wholly-owned subsidiaries, is a developer of self-piloted and autonomous, manned and unmanned, eVTOL (Electric Vertical Take Off and Landing) aerial vehicles. The Company intends to provide the market with a mainstream mode of everyday, aerial transportation for both humans and cargo. Astro currently has a working prototype and is making engineering and mechanical improvements to it.

 

Astro is the successor corporation to CPSM, Inc., which through its subsidiaries, Custom Pool and Spa Mechanics, Inc. (“Custom Pool and Spa”), and Custom Pool Plastering, Inc. (“CPP”) collectively (“Custom Pool”) were primarily engaged in the provision of full line pool and spa services, specializing in pool maintenance and service, repairs, leak detection, renovations, decking and remodeling. The primary market area included Martin, Palm Beach, St Lucie, Indian River and Brevard counties, Florida.

 

On March 14, 2018, MAAB Global Limited (“MAAB”), the majority stockholder and parent of Astro, acquired control of CPSM, Inc. and on April 30, 2018, Custom Pool was sold to the Lawrence & Loreen Calarco Family Trust, an entity controlled by Lawrence Calarco and Loreen Calarco, former officers and directors of the CPSM (See Note 2, “Sale of Common Stock of Majority Stockholders and Resignation and Election of the Board of Directors” and Note 3, “ Sale of Custom Pool”).

 

On March 24, 2018 the articles of incorporation were amended to change the name of the Company from CPSM, Inc. to Astro Aerospace Ltd. As of December 31, 2019, the Company has one subsidiary, Astro Aerospace Ltd. (Canada), which is incorporated in Canada and is used mainly for refunds of the Goods and Services Tax in Canada.

 

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 our business. As reflected in the accompanying consolidated financial statements, for the year ended December 31, 2019 the Company had a net loss of $2,305,073 and used $950,546 in cash in operations, and at December 31, 2019, had negative working capital of $921,829, current assets of $62,299, and an accumulated deficit of $10,316,875. The foregoing factors raise substantial doubt about the Company’s ability to continue as a going concern. Ultimately, the ability to continue as a going concern is dependent upon the Company’s ability to attract significant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations by licensing or otherwise commercializing products incorporating the Company’s technologies. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

The Company acknowledges that its current cash position is insufficient to maintain the current level of operations and research and development, and that the Company will be required to raise substantial additional capital to continue its operations and fund its future business plans. The Company has continued to raise funds through its parent, MAAB and the outstanding note payable balance was $750,017 and there is $499,983 available under the terms of the note at December 31, 2019. The note was amended on April 22, 2020 (See Note 20, “Subsequent Events”). The Company has also raised funds through independent capital sources, of which the Company has two 8% Senior Secured Convertible Promissory Notes, the first of which has an outstanding balance of $983,524 at December 31, 2019 and the second of which has an outstanding balance of $149,546 at December 31, 2019. The first 8% Senior secured Convertible Note is subject to a forbearance agreement (See Note 10, “Default and Forbearance on the 8% Senior Secured Convertible Promissory Note”). The Company has also executed an Equity Purchase Agreement whereby the Investor agreed to purchase from the Company up to $5,000,000 of the Company’s common stock. (See Note 16, “Equity Purchase Agreement and Registration Rights Agreement”). Through May 29, 2020, the Company put 1,050,000 shares of common stock at prices ranging from $.055 to $.081 per share for total proceeds of $63,664.

 

Astro plans to raise additional capital in the private and public securities markets in 2020.

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Summary Of Significant Accounting Policies
12 Months Ended
Dec. 31, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

NOTE 5 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation

 

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

 

Basis of Presentation

 

The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles general accepted in the United States of America (“GAAP).

 

Cash

 

All highly liquid investments with original maturities of three months or less or money market accounts held at financial institutions are considered to be cash. Substantially all of the cash is placed with one financial institution. From time to time during the year the cash accounts are exposed to credit loss for amounts in excess of insured limits of $250,000 in the event of non-performance by the institution, however, it is not anticipated that there will be non-performance.

 

Intangible Assets – Acquired In-Process Research and Development

 

Acquired in-process research and development consists of acquired drone technology and engineering and trademarks. The Company reviews the IPRD, which currently has an indefinite useful life, for impairment at least annually or more frequently if an event occurs creating the potential for impairment, until such time as the research and development efforts are completed or abandoned. If the research and development efforts are abandoned, the related costs will be written off in the period of such determination. If the research and development efforts are completed successfully, the related assets will be amortized over the estimated useful life of the underlying products. The Company will amortize the cost of identified intangible assets using amortization methods that reflect the pattern in which the economic benefits of the intangible assets are consumed or otherwise realized. An impairment expense of $6,285,214 was incurred in the year ended December 31, 2018. An updated valuation by an independent third party was performed for the year ended December 31, 2019, and no further impairment expense was required.

 

Revenue Recognition

 

The Company does not currently have any revenue. In discontinued operations, revenue was recognized when the pool service was completed and the collectability was reasonably assured. For pool resurfacing and remediation work, revenue was recognized at the time of completion of the job.

 

Stock-Based Compensation

 

The Company accounts for stock-based compensation under the fair value recognition provisions of GAAP which requires the measurement and recognition of compensation for all stock-based awards made to employees and directors including stock options and restricted stock issuances based on estimated fair values.

 

In accordance with GAAP, the fair value of stock-based awards is generally recognized as compensation expense over the requisite service period, which is defined as the period during which an employee is required to provide service in exchange for an award. The Company uses a straight-line attribution method for all grants that include only a service condition. Compensation expense related to all awards is included in operations.

 

Convertible Notes, Warrants and Beneficial Conversion Feature (“BCF”)

 

The convertible note is recorded at its fair value, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the warrant. Further, the convertible promissory note is examined for any intrinsic BCF of which the convertible price of the note is less than the closing common stock price on date of issuance. If the relative fair value method is used to value the convertible promissory note and there is an intrinsic BCF, a further analysis is undertaken of the BCF using an effective conversion price which assumes the conversion price is the relative fair value divided by the number of shares the convertible debt is converted into by its terms. The BCF value is accounted for as equity.

 

Warrants issued with the 8% Senior Secured Convertible Promissory Note are accounted for under the fair value and relative fair value method. The warrant is first analyzed per its terms as to whether it has derivative features or not. If the warrant is determined to be a derivative and not qualify for equity treatment, then it is measured at fair value using the Black Scholes option model and recorded as a liability on the consolidated balance sheet. The warrant is re-measured at its then current fair value at each subsequent reporting date (it is “marked-to-market”).

 

If the warrant is determined to not have derivative features, it is recorded into equity at its fair value using the Black Scholes option model, however, limited to a relative fair value based upon the percentage of its fair value to the total fair value including the fair value of the convertible note.

 

The warrant and BCF relative fair values are also recorded as a discount to the convertible promissory notes and as additional paid-in-capital. The discount on the convertible notes is amortized to interest expense over the life of the debt. At present, these equity features of the convertible promissory notes have recorded a discount to the convertible notes that is substantially equal to the proceeds received.

 

Research and Development

 

Research and development costs are expensed as incurred.

 

Income Taxes

 

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of asset and liabilities. Deferred tax assets and liabilities are determined based on the differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The effect on deferred tax asset and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date.

 

The Company accounts for uncertainties in income tax law under a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns as prescribed by GAAP. Under GAAP, the tax effects of a position are recognized only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If the tax position is not considered “more-likely-than-not” to be sustained, then no benefits of the position are recognized. Management believes there are no unrecognized tax benefits or uncertain tax positions as of December 31, 2019 and 2018.

 

The Company assessed its earnings history, trends and estimates of future earnings and determined that the deferred tax asset could not be realized as of December 31, 2019. Accordingly, a valuation allowance was recorded against the net deferred tax asset.

 

The Company recognizes interest and penalties on income taxes as a component of income tax expense, should such an expense be realized.

 

Basic and Diluted Net Loss per Share

 

The Company computes loss per share in accordance with “ASC-260”, “Earnings per Share” which requires presentation of both basic and diluted loss per share on the face of the consolidated statements of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the year. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the year, computed using the treasury stock method for outstanding stock options and the if converted method for convertible notes and preferred stock. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Common stock equivalents are anti-dilutive for the years ended December 31, 2019 and 2018 due to the net loss during the years. The common stock equivalents are comprised of stock options (cancelled as of March 14, 2018), convertible promissory notes and the Series A and Series B Convertible Preferred Stock.

 

Further, the Company has presented its discontinued operations in accordance with ASC 205-20, “Presentation of Financial Statements, Discontinued Operations”, which requires the presentation of both basic and diluted loss per share from continuing operations and the basic and diluted net earnings per share from discontinued operations in addition to the basic and diluted net loss per share.

 

For the years ended December 31, 2019 and 2018, the basic and diluted net loss per share from continuing operations, the basic and diluted net earnings from discontinued operations and the basic and diluted net loss per share were computed as follows:

 

   Year Ended
   December 31,
   2019  2018
Loss from Continuing Operations, net  $(2,305,073)  $(7,767,532)
Income from Discontinued Operations, net   —      140,933 
 Net Loss Available to Common Stockholders   (2,305,073)   (7,626,599)
Series A Preferred Stock Dividends   10,000    10,000 
Net Loss Available to Common Stockholders and Assumed Conversions  $(2,315,073)  $(7,636,599)
           
Weighted Average Shares - Basic   71,297,272    73,771,722 
Effective Dilutive Securities – Stock Options   —      —   
Shares Issuable Upon Conversion of Convertible Promissory Notes   —      —   
Shares Issuable Upon Conversion of Preferred Stock – Series A   —      —   
Shares Issuable Upon Conversion of Preferred Stock – Series B   —      —   
Weighted Average Shares - Diluted   71,297,272    73,771,722 
Net Loss Per Common Share from Continuing Operations:          
    Basic  $(0.03)  $(0.11)
    Diluted  $(0.03)  $(0.11)
Net Earnings Per Common Share from Discontinued Operations:          
    Basic  $—     $—   
    Diluted  $—     $—   
Net Loss Per Common Share:          
    Basic  $(0.03)  $(0.10)
    Diluted  $(0.03)  $(0.10)

 

Comprehensive Loss

 

Comprehensive loss consists of net loss plus the foreign currency translation (loss) gain.

 

Foreign Currency Translation

 

The translation of assets and liabilities for the Company’s foreign subsidiary is made at year end exchange rates, while revenue and expense accounts are translated at the average exchange rates during the year transactions occurred.

 

Fair Value Measurement

 

Generally accepted accounting principles establishes a hierarchy to prioritize the inputs of valuation techniques used to measure fair value. The hierarchy gives the highest ranking to the fair values determined by using unadjusted quoted prices in active markets for identical assets (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). Observable inputs are those that market participants would use in pricing the assets based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The Company has determined the appropriate level of the hierarchy and applied it to its financial assets and liabilities. At December 31, 2019 and 2018, there were no assets or liabilities carried or measured at fair value.

 

Use of Estimates and Assumptions

 

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

A material estimate that is particularly susceptible to significant change in the near-term relate to the determination of the impairment of IPRD. The Company uses various assumptions and actuarial data it believes to be reasonable under the circumstances to make this estimate. Although considerable variability is likely to be inherent in this estimate, management believes that the amount provided is reasonable. This estimate is continually reviewed and adjusted if necessary. Such adjustments, if any, are reflected in operations.