ITEM 2. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS.
Forward-looking Statements
There are “forward-looking statements”
contained in this quarterly report. All statements that express expectations, estimates, forecasts or projections are forward-looking
statements. In addition, other written or oral statements which constitute forward-looking statements may be made by us or on our
behalf. Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,”
“seek,” “estimate,” “project,” “forecast,” “may,” “should,”
variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are
not guarantees of future performance and involve risks, uncertainties and assumptions which are difficult to predict. Therefore,
actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward-looking
statements. We undertake no obligation to update or revise any of the forward-looking statements after the date of this quarterly
report to conform forward-looking statements to actual results. Important factors on which such statements are based are assumptions
concerning uncertainties, including but not limited to, uncertainties associated with the following:
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Inadequate capital and barriers to raising
the additional capital or to obtaining the financing needed to implement our business plans;
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Our failure to earn revenues or profits;
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Inadequate capital to continue business;
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Volatility or decline of our stock price;
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Potential fluctuation in quarterly results;
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Rapid and significant changes in markets;
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Litigation with or legal claims and allegations by outside parties;
and
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Insufficient revenues to cover operating costs.
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The following discussion should be read
in conjunction with the financial statements and the notes thereto which are included in this quarterly report. This discussion
contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ substantially
from those anticipated in any forward-looking statements included in this discussion as a result of various factors.
Overview
We were incorporated in the State of Nevada
on June 6, 2007. On August 26, 2010, we changed our name from Bella Viaggio, Inc. to Kat Gold Holdings Corp. Effective January
1, 2015, we entered into an exchange agreement to purchase 100% of the outstanding interests of RemSleep LLC in exchange for 50,000,000
common shares of RemSleep Holdings, Inc.’s stock (the “Exchange Agreement”). As a result of the exchange, RemSleep
LLC became our wholly-owned subsidiary and constitutes our business and operations and we changed our name to REMSleep Holdings,
Inc. to reflect our new business model of developing and distributing sleep apnea products.
Our officers have 35 years of sleep-industry
experience, including working at sleep industry companies. Our officers invented our DeltaWave CPAP (continuous positive airway
pressure) interface (the “DeltaWave”). We have developed the DeltaWave as an innovative new device to treat patients
with sleep apnea. The patent-pending DeltaWave product is a nasal-pillows type interface designed to result in better comfort and,
therefore, better compliance. The Delta Wave is specifically designed with unique airflow characteristics to enable patients with
sleep apnea to breathe normally. A survey that appeared in DME Business found that 89% of patients stated that mask-interface comfort
was their primary concern. The primary issue that we have addressed with the DeltaWave is the “work of breathing” component.
We believe that our DeltaWave is designed to effectively address the stubborn issues that continue to affect a patient’s
ability to comply with treatment, as follows:
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Does not disrupt normal breathing mechanics;
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Causes zero work of breathing (WOB);
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Minimizes or eliminates drying of the sinuses;
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Uses less driving pressure; and
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Allows users to feel safe and secure while sleeping.
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We plan to conduct clinical trials to test
product effectiveness.
Our goal is to develop sleep products that
achieve optimum compliance and comfort for CPAP patients.
On June 28, 2016, we applied for a patent
for a new, innovative sleep apnea product that serves as an interface for the delivery of CPAP therapy and other respiratory needs.
This patent is still pending.
Our website is located at: http://www.remsleeptech.com.
Results of Operations
The three months ended June 30, 2018 compared to the three
months ended June 30, 2017
Professional fees were $19,950 and $47,612
for the three months ended June 30, 2018 and 2017, respectively, a decrease of $27,662, or 58.1%. Professional fees consist mostly
of accounting, audit and legal fees. The decrease in the current period is due to lower legal and audit expense.
Consulting expense was $266,278 and $223,125
for the three months ended June 30, 2018 and 2017, respectively, an increase of $43,153, or 19.3%. In the current period we recognized
approximately $265,000 of non-cash stock compensation expense, In the previous period we issued 1,000,000 shares of common stock
to consultants for total non-cash expense of $212,500.
Officer compensation was $12,000 and $6,000
for the three months ended June 30, 2018 and 2017, respectively, an increase of $6,000. The increase is due to an increase in monthly
compensation to our CEO.
General and administrative expense was
$8,762 and $7,620 for the three months ended June 30, 2018 and 2017, respectively, an increase of $1,142, or 15.0%.
Interest expense was $623 and $1,239 for
the three months ended June 30, 2018 and 2017, respectively, a decrease of $616, or 49.7%. See Note 4.
Net Loss
For the three months ended June 30, 2018,
we had a net loss of $307,613 as compared to a net loss of $285,596 for the three months ended June 30, 2017. Our net loss was
higher in the current period primarily due to the expense associated with issuing stock for services.
The six months ended June 30, 2018 compared to the six months
ended June 30, 2017
Professional fees were $36,100 and $60,212
for the six months ended June 30, 2018 and 2017, respectively, a decrease of $24,112 or 40.0%. Professional fees consist mostly
of accounting, audit and legal fees. The decrease of $24,112 in the current period is attributed to lower legal and audit fees.
Consulting expense was $383,799 and $370,104
for the six months ended June 30, 2018 and 2017, respectively. In the current and prior periods, we issued shares of common stock
to consultants for total non-cash expense of $383,499 and $370,104, respectively.
Officer compensation was $18,000 and $12,000
for the six months ended June 30, 2018 and 2017, respectively, an increase of $6,000. The increase is due to an increase in monthly
compensation to our CEO.
General and administrative expense was
$13,701 and $14,644 for the six months ended June 30, 2018 and 2017, respectively, a decrease of $943. The decrease in the current
period can be largely attributed to a decrease in transfer agent fees.
Net Loss
For the six months ended June 30, 2018,
we had a net loss of $469,734 as compared to a net loss of $458,199 for the six months ended June 30, 2017. Our net loss was higher
in the current period primarily due to the expense associated with issuing stock for services.
Going Concern
As of June 30, 2018, there is substantial
doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our proposed business.
We have suffered recurring losses from
operations since our inception. In addition, we have yet to generate an internal cash flow from our business operations or successfully
raised the financing required to develop our proposed business. As a result of these and other factors, our independent auditor
has expressed substantial doubt about our ability to continue as a going concern. Our future success and viability, therefore,
are dependent upon our ability to generate capital financing. The failure to generate sufficient revenues or raise additional capital
may have a material and adverse effect upon us and our shareholders.
Management’s plans with regard to
these matters encompass the following actions: (i) obtaining funding from new investors to alleviate our working capital deficiency,
and (ii) implementing a plan to generate sales. Our continued existence is dependent upon our ability to resolve our liquidity
problems and increase profitability in our current business operations. However, the outcome of management’s plans cannot
be ascertained with any degree of certainty. Our financial statements do not include any adjustments that might result from the
outcome of these risks and uncertainties.
Liquidity and Capital Resources
Cash flow from operations
Net cash flow used in operating activities
for the six months ended June 30, 2018 was $64,313 as compared to $49,961 of net cash flows used in operating activities for the
same period ended 2017.
Cash Flows from Investing
Net cash flow used in investing activities for the six months
ended June 30, 2018 was $6,648 as compared to $nil of net cash flows used in investing activities for the same period ended 2017.
Cash Flows from Financing
The net cash flows from financing activities
for the six months ended June 30, 2018 were $69,500 as compared to $49,961 for the same period ended 2017.
Off Balance Sheet Arrangements
We have no off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies
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 and the disclosure of contingent assets and liabilities
of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Note
1 to the Financial Statements describes the significant accounting policies and methods used in the preparation of the Financial
Statements. Estimates are used for, but not limited to, contingencies and taxes. Actual results could differ materially from
those estimates. The following critical accounting policies are impacted significantly by judgments, assumptions, and estimates
used in the preparation of the Financial Statements.
We are subject to various loss contingencies
arising in the ordinary course of business. We consider the likelihood of loss or impairment of an asset or the incurrence
of a liability, as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated
loss contingency is accrued when management concludes that it is probable that an asset has been impaired, or a liability has been
incurred and the amount of the loss can be reasonably estimated. We regularly evaluate current information available to us
to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future
tax benefits) and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts
and the tax basis of assets and liabilities. The deferred tax assets and liabilities represent the expected future tax return
consequences of those differences, which are expected to be either deductible or taxable when the assets and liabilities are recovered
or settled. Future tax benefits have been fully offset by a 100% valuation allowance as management is unable to determine
that it is more likely than not that this deferred tax asset will be realized.
Recent Accounting Pronouncements
We have reviewed all recently issued, but
not yet effective, accounting pronouncements and do not believe that any future adoption of such pronouncements will have a material
impact on our financial condition or the results of our operations.