BOTH Bioethics Ltd (PK)

NOTES TO FINANCIAL STATEMENTS

December 31, 2020 and 2019

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - Bioethics, Ltd. (“the Company”) was organized under the laws of the State of Nevada on July 26, 1990.  The Company was organized to provide a vehicle for participating in potentially profitable business ventures which may become available through the personal contacts, and at the complete discretion, of the Company’s officers and directors.  The Company has not paid any dividends, and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.

Cash and Cash Equivalents - The Company considers all highly liquid debt investments purchased with a maturity of three months or less to be cash equivalents.

Loss Per Share -The computation of loss per share is based on the weighted average number of shares outstanding during the period presented in accordance with ASC Topic No. 260, “Earnings Per Share” [See Note 5].

Accounting Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reported period.  Actual results could differ from those estimated.

Recently Enacted Accounting Standards - The FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”).  Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants.  Certain accounting pronouncements have been issued by the FASB.  The Company has reviewed these pronouncements, and none will have an effect on the financial statements of the Company.  

Fixed Assets - Property and equipment are recorded at cost.  Maintenance and repair costs are charged to expense as incurred, and renewals and improvements that extend the useful life of assets are capitalized. Depreciation on property and equipment is computed using the straight-line method over the assets' estimated useful lives.  

The Company’s only fixed asset is computer equipment acquired in 2016 with a cost of $1,429 that is depreciated over a useful life of five years.  Depreciation expense was $286 and $286 during the years ended December 31, 2020 and 2019, respectively, resulting in net fixed assets of $226 and $512 at December 31, 2020 and 2019, respectively.

NOTE 2 - INCOME TAXES

The Company accounts for income taxes in accordance with ASC Topic No. 740, “Income Taxes.”  This standard requires the Company to provide a net deferred tax asset or liability equal to the expected future tax benefit or expense of temporary reporting differences between book and tax accounting and any available operating loss or tax credit carryforwards.

The Company has no tax provisions at December 31, 2020 and 2019, for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. During the years ended December 31, 2020 and 2019, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at December 31, 2020 and 2019.

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss (NOL) and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets (liabilities) consist of the following components as of December 31, 2020 and 2019:

F-8

The income tax provision differs from the amount of estimated income tax determined by applying the U.S. Federal income tax rate of 21% to pretax income from continuing operations for the periods ended December 31, 2020 and 2019 due to the following:

At December 31, 2020, the Company had net operating loss carryforwards of approximately $979,000 that may be offset against future taxable income from the year 2021 through 2040.  No tax benefit has been reported in the December 31, 2020 or 2019 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.  There is no provision for state taxes, since the Company’s operations have been limited to administrative expenses and fund-raising in the state of its incorporation (Nevada) which has no income tax.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carryforwards for Federal income tax reporting purposes are subject to annual limitations.  Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years. The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended December 31, 2020, 2019 and 2018.

NOTE 3 - RELATED PARTY TRANSACTIONS

Management Compensation - For the years ended December 2020 and 2019, the Company did not pay any compensation to its officers and directors.

Office Space – Beginning August 2017, the Company entered into an oral agreement to pay the Company’s President $500 per month as payment for use of his personal residence as the Company’s office and mailing address.  The Company has recorded rent expense of $6,000 and $6,000 during the years ended December 31, 2020 and 2019, respectively, which is included in the general and administrative expenses on the statements of operations.  The amount payable at December 31, 2019 was $1,500.  During the year ended December 31. 2020, the Company paid $6,000, resulting in $1,500 payable at December 31, 2020.  

Notes Payable – On December 12, 2017, the Company borrowed $107,000 from its President pursuant to an unsecured promissory note.  On various dates since then, the officer advanced the Company additional money and the Company made payments on the principal amount of the note resulting in total note balances of $139,584 and $108,984 at December 31, 2020 and 2019, respectively.  The cumulative note balance is uncollateralized, due on demand, and accrues interest at 12% per annum.  Interest expense on the note for the years ended December 31, 2020 and 2019 was $14,802 and $12,473, respectively. During the years ended 2020 and 2019, interest in the amount of $10,000 and $15,314, respectively, was paid on the note. Accrued interest on the note totaled $10,806 and $6,004 at December 31, 2020 and 2019, respectively.

Notes Payable - On March 8, 2018 the Company entered into a promissory note with a newly affiliated party in the amount of $43,250. The note is payable on demand and carries interest at 10% per annum.  Interest expense for the years ended December 31, 2020 and 2019 was $3,470 and $3,460, respectively, resulting in accrued interest of $9,755 and $6,285 at December 31, 2020 and 2019, respectively.  Principal balance on the note at December 31, 2020 and 2019 was $43,250 and $43,250, respectively.

F-9

BIOETHICS, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2020 and 2019

NOTE 4 - GOING CONCERN

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.  However, the Company has incurred losses since its inception totaling $980,344 as of December 31, 2020 and has no on-going operations.  These factors raise substantial doubt about the ability of the Company to continue as a going concern.  In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans, additional sales of its common stock, or through a possible business combination.  There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations.  In addition, the COVID-19 pandemic could have an impact on our ability to obtain financing to fund the operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

NOTE 5 - LOSS PER SHARE

The computation of basic loss per share is based on the weighted average number of shares outstanding during each year.  

The following data show the amounts used in computing loss per share:

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents as detailed in the following chart.  In 2020 and 2019, the inclusion of these shares on the statement of operations would have resulted in a weighted average shares fully diluted number that was anti-dilutive and as such they are excluded.  

The following data show the fully diluted shares for the years ended December 31, 2020 and 2019:

NOTE 6 – NOTE PAYABLE

On June 14, 2016, the Company issued a promissory note in the principal amount of $35,000 to an unaffiliated lender. The Note is due on demand at any time after its original maturity date of June 14, 2017 and carries an interest rate of 8% per annum.  Interest expense for the years ended December 31, 2020 and 2019 totaled $2,808 and $2,800, respectively, resulting in accrued interest at December 31, 2020 and 2019 of $12,742 and $9,934, respectively. Principal balance on the note at December 31, 2020 and 2019 was $35,000.

On August 15, 2018, the Company issued a promissory note in the principal amount of $10,000 to an unaffiliated lender. The Note was due on November 15, 2018, is currently in default, and carries an interest rate of 12% per annum. Interest expense for the years ended December 31, 2020 and 2019 totaled $1,203 and $1,200, respectively, of which the Company repaid $750 during the year ended December 31, 2019, resulting in accrued interest at December 31, 2020 and 2019 of $2,107 and $904, respectively. Principal balance on the note at December 31, 2020 and 2019 was $10,000.  

On November 15, 2018, the Company issued a promissory note in the principal amount of $20,000 to an unaffiliated lender. The Note was due on February 15, 2019, is currently in default, and carries an interest rate of 12% per annum.  Interest expense for the years ended December 31, 2020 and 2019 totaled $2,406 and $2,400, respectively, of which the Company repaid $894 during the year ended December 31, 2019, resulting in accrued interest at December 31, 2020 and 2019 of $4,215 and $1,808, respectively. Principal balance on the note at December 31, 2020 and 2019 was $20,000.

F-10

On December 31, 2018, the Company issued a promissory note in the principal amount of $30,000 to an unaffiliated lender. The Note was due on December 31, 2019, is currently in default, and carries an interest rate of 12% per annum.  Interest expense for the years ended December 31, 2020 and 2019 totaled $3,610 and $3,600, respectively, of which the Company repaid $888 during the year ended December 31, 2019, resulting in accrued interest at December 31, 2020 and 2019 of $6,322 and $2,712, respectively. Principal balance on the note at December 31, 2020 and 2019 was $30,000.  

On January 23, 2019, the Company issued a promissory note in the principal amount of $50,000 to an unaffiliated lender. The Note was due on January 23, 2020, is currently in default, and carries an interest rate of 12% per annum.  Interest expense for the years ended December 31, 2020 and 2019 totaled $6,016 and $5,622, respectively, of which the Company repaid $1,101 during the year ended December 31, 2019, resulting in accrued interest at December 31, 2020 and 2019 of $10,537 and $4,521, respectively. Principal balance on the note at December 31, 2020 and 2019 was $50,000 and $-0-, respectively.

On May 1, 2020, the Company issued a promissory note in the principal amount of $5,000 to an unaffiliated lender. The Note is due on May 1, 2021 and carries an interest rate of 12% per annum.  Interest expense for the year ended December 31, 2020 totaled $391, resulting in accrued interest at December 31, 2020 of $391.  Principal balance on the note at December 31, 2020 was $5,000.

NOTE 7 – CONVERTIBLE NOTE PAYABLE

On December 18, 2019, the Company issued a convertible promissory note in the original principal amount of $10,000 to a lender. The Note was due on June 18, 2020, is currently in default, and carries an interest rate of 8% per annum. The Note is due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a conversion rate of $.20 per share.  The Company recognized a beneficial conversion feature and recorded a debt discount in the amount of $4,000, which is being amortized over the life of the promissory note.  At December 31, 2020 and 2019, the unamortized debt discount was $-0- and $3,716, respectively, and the net convertible note balance was $10,000 and $6,284, respectively.  The amortization of debt discount was $3,716 during the year ended December 31, 2020.  Interest expense for the years ended December 31, 2020 and 2019 was $1,203 and $43, resulting in accrued interest at December 31, 2020 and 2019 of $1,246 and $43, respectively.  Principal balance on the note at December 31, 2020 and 2019 was $10,000.

On June 9, 2020, the Company issued a convertible promissory note in the original principal amount of $10,000 to a lender. The Note is due on June 9, 2021 and carries an interest rate of 10% per annum. The Note is due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a conversion rate of $.25 per share.  The Company recognized a beneficial conversion feature and recorded a debt discount in the amount of $6,200, which is being amortized over the life of the promissory note.  At December 31, 2020, the unamortized debt discount was $2,718 and the net convertible note balance was $7,282.  The amortization of debt discount was $3,482 during the year ended December 31, 2020.  Interest expense for the years ended December 31, 2020 totaled $449, resulting in accrued interest at December 31, 2020 of $449.  Principal balance on the note at December 31, 2020 was $10,000.

On August 3, 2020, the Company issued a convertible promissory note in the original principal amount of $15,000 to a lender. The Note is due on August 3, 2021 and carries an interest rate of 8% per annum. The Note is due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a conversion rate of $.70 per share.  The Company did not recognize a beneficial conversion feature or debt discount as the conversion price was higher than the market price at the time of issuance of the note.  Interest expense for the year ended December 31, 2020 totaled $493, resulting in accrued interest at December 31, 2020 of $493. Principal balance on the note at December 31, 2020 was $15,000.

F-11

BIOETHICS, LTD.

NOTES TO FINANCIAL STATEMENTS

December 31, 2020 and 2019

NOTE 8 – EQUITY TRANSACTIONS

On December 2, 2019, the Company amended its articles of incorporation with the state of Nevada increasing the number of authorized common stock of the Company to 250,000,000 shares.  There were no equity transactions during the years ended December 31, 2020 or 2019, resulting in 1,135,194 shares of common stock issued and outstanding at December 31, 2020 and December 31, 2019.

Effective November 2, 2020, the Company effectuated a 1 share for 10 shares reverse stock split which reduced the issued and outstanding shares of common stock from 11,000,000 shares to 1,135,194 shares.  The accompanying financial statements have been retroactively adjusted to reflect this reverse stock split.  

NOTE 9 – MERGER AGREEMENT

On November 30, 2020, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with XCR Diagnostics, Inc. (“XCR”) to, subject to a number of conditions, acquire 100% of the ownership of XCR for consideration of (1) approximately 38,843,906 shares of the Company’s unregistered common stock, and (2) options to purchase approximately 7,500,000 shares of the Company’s unregistered common stock at various exercise prices.

Closing of the acquisition of XCR is subject to a number of conditions, including but not limited to approval of the Company’s stockholders, providing required stockholder information and notice, the completion, filing and clearance of all necessary state and securities filings. The parties must also create and execute several exhibits and schedules, including formation of a merger subsidiary, Certificate of Merger, Articles of Merger and Disclosure Schedules for both the Company and XCR.  The Merger Agreement states that XCR may rescind this Agreement in its sole discretion in the event that the company and/or XCR are unable to transfer at least $300,000 in paid in capital into XCR’s bank account within 90 days from the Closing of the Merger.

As of the date these financial statements were issued, the conditions to the closing of the Merger Agreement have not been met, therefore, the closing of the acquisition has not occurred and no stock has been issued by the Company.