The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND HISTORY
Description of business
BioAdaptives, Inc. (formerly known as APEX 8 Inc.) (“BioAdaptives”,” Company”) was incorporated under the laws of the State of Delaware on April 19, 2013. BioAdaptives is a research, development, and educational company. Our current focus is on products and strategies that improve health and wellness. These products include dietary supplements, specialty food items, and proprietary methods of optimizing the bioelectromagnetic availability of foods and beverages. Our base of products and intellectual property are designed to aid in cognition, focus, fatigue reduction, increased testosterone, improved overall emotional and physical wellness, healing, and anti-ageing and include patent pending solutions in the form of devices and nutraceuticals,
The Company’s strategy is to develop a position as a leader in supplying science-based quality nutraceutical products to an aging population within developed countries such as the United States, Canada, APAC countries, such as China, Japan, Korea, Singapore, Taiwan, Australia and New Zealand, as well as both Western and Eastern Europe, while continuing to create new innovative, health inspired products to start generating growth in sales and profitability. Some of the products have proven to be as effective or even more effective on horses and dogs than on humans and this has caused the Company to expand the target market to include dogs and horses.
Since 2014, BioAdaptives®, has been engaged in the research of primitive cells, including stem cells and their derivatives and natural ingredients which may encourage its proliferation. Such studies were conducted both on human and animals, in particular, canine and equine. The results have been encouraging. More in depth studies on this and other wellness aspects such as anti-aging and sports performance are scheduled.
On May 22, 2019, the Company moved its corporate office to 2620 Regatta Drive, Suite 102, Las Vegas, NV 89128, but maintained fulfillment facilities at 4385 Cameron Street, Suite B, Las Vegas, NV 89103.
COVID-19
A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served. The Company has instituted some and may take additional temporary precautionary measures intended to help ensure the well-being of its temporary employees, officers, directors, consultants and others and minimize business disruption. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that although it believes its overall financial performance and results suffered there were no material adverse impacts on the Company’s reporting of results of operations and financial position on December 31, 2020. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. Future outbreaks and an extended recovery could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to collect accounts receivable and the ability of the Company to continue to provide high quality services to its clients. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of March 8th 2021, the date of issuance of this Annual Report on Form 10-K. These estimates may change, as new events occur, and additional information is obtained.
2. SUMMARY OF SIGNIFICANT POLICIES
Basis of Presentation
The Company represents its consolidated financial statements were prepared in accordance with US GAAP and the rules of the Securities and Exchange Commission and that, in the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations are historical and not necessarily indicative of the results to be expected for any future period.
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its 100% owned subsidiary, Blenders Choice Inc. All inter-company balances and transactions have been eliminated. The Company and its subsidiary will be collectively referred to herein as the “Company.”
Use of estimates
The preparation of consolidated financial statements in conformity with US GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company, and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value. As of December 31, 2020, and 2019, the Company has no cash equivalents.
Investment Securities
In January 2016, the FASB issued ASU 2016-01, Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which addresses certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. ASU 2016-01 was effective for the Company beginning January 1, 2018 and we are now recognizing any changes in the fair value of certain equity investments in net income as prescribed by the new standard rather than in other comprehensive income (“OCI”). We recognized a cumulative effect adjustment to increase the opening balance of accumulative deficit as of January 1, 2018 by $58,336.
Equity securities are classified as available for sale. All available for sale securities are classified as current assets as they are available to support the Company’s current operating needs in the next 12 months.
In accordance with Accounting Standards Codification (“ASC”) 320-10, “Investments-Debt and Equity Securities,” the Company evaluates its securities portfolio for other-than-temporary impairment (“OTTI”) throughout the year. Each investment that has a fair value less than the book value is reviewed on a quarterly basis by management. Management considers at a minimum the following factors that, both individually or combination, could indicate that the decline is other-than-temporary: (a) the Company has the intent to sell the security; (b) it is more likely than not that it will be required to sell the security before recovery; and (c) the Company does not expect to recover the entire amortized cost basis of the security. Among the factors that are considered in determining intent is a review of capital adequacy, interest rate risk profile and liquidity at the Company. An impairment charge is recorded against individual securities if the review described above concludes that the decline in value is other-than-temporary.
Earnings (loss) per share
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued.
For the years ended December 31, 2020 and 2019, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(Shares)
|
|
|
(Shares)
|
|
Warrants
|
|
|
-
|
|
|
|
200,000
|
|
Convertible notes
|
|
|
36,247,341
|
|
|
|
4,529,678
|
|
Total
|
|
|
36,247,341
|
|
|
|
4,729,678
|
|
Revenue recognition
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
|
•
|
identify the contract with a customer;
|
|
•
|
identify the performance obligations in the contract;
|
|
•
|
determine the transaction price;
|
|
•
|
allocate the transaction price to performance obligations in the contract; and
|
|
•
|
recognize revenue as the performance obligation is satisfied.
|
Cost of revenue
Cost of revenue includes the inventory purchased from a related party.
Inventory
Inventories, consisting of products available for sale, are primarily accounted for using the first-in-first-out (“FIFO”) method and are valued at the lower of cost or market value. Inventories on hand are evaluated on an on-going basis to determine if any items are obsolete or in excess of future market needs. Items determined to be obsolete are reserved for. As of December 31, 2020, and 2019, the Company determined that no reserve was required.
Stock-based compensation
The Company accounts for stock-based compensation arrangements with employees, nonemployee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options, on a straight-line basis over the requisite service period in the Company’s consolidated statements of operations. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant. We have not undertaken
Financial Instruments and Fair Value Measurements
As defined in ASC 820” Fair Value Measurements,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The following table summarizes fair value measurements by level as of December 31, 2020, and 2019, measured at fair value on a recurring basis:
Fair Value Measurements as of December 31, 2020 Using:
|
|
Total Carrying Value as of December 31,
|
|
|
Quoted Market Prices in Active Markets
|
|
|
Significant Other Observable Inputs
|
|
|
Significant Unobservable
Inputs
|
|
|
|
2020
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
444
|
|
|
$
|
444
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
827,119
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
827,119
|
|
Fair Value Measurements as of December 31, 2019 Using:
|
|
Total Carrying Value as of
December 31,
|
|
|
Quoted Market Prices in Active Markets
|
|
|
Significant Other Observable
Inputs
|
|
|
Significant Unobservable
Inputs
|
|
|
|
2019
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
772
|
|
|
$
|
772
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities
|
|
$
|
464,024
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
464,024
|
|
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Concentration of credit risk
Financial instruments that potentially expose the Company to significant concentrations of credit risk consist principally of cash. The Company places its cash with financial institutions with high credit ratings.
Income taxes
The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a more- likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives.
The Company recorded valuation allowances on the net deferred tax assets. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results of operations improve, and it becomes more likely than not that the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance.
Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes.
3. GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses since inception and had an accumulated deficit of $5,606,161 as of December 31, 2020. The Company requires capital for its contemplated operational and marketing activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. Obtaining additional financing, successful development of the Company’s contemplated plan of operations, and the transition, ultimately, to profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
In order to mitigate the risk related with this uncertainty, the Company plans to issue additional shares of common stock for cash and services during the next 12 months.
4. MARKETABLE SECURITIES
Equity securities as of December 31, 2020, and 2019, were comprised of 105,736 shares of common stock of Hemp, Inc. (HEMP.PK) recorded at fair value of $444 and $772, respectively.
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities aa of December 31, 2020, and 2019 consists of the following:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Accounts payable
|
|
$
|
5,374
|
|
|
$
|
1,297
|
|
Credit card
|
|
|
7,759
|
|
|
|
20,214
|
|
Accrued interest
|
|
|
49,583
|
|
|
|
2,457
|
|
Accrued liabilities
|
|
|
24,845
|
|
|
|
5,986
|
|
|
|
$
|
87,561
|
|
|
$
|
29,954
|
|
6. CONVERTIBLE NOTES
Convertible notes as of December 31, 2020, and 2019 consist of the following:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Convertible Notes - originated in April 2018
|
|
$
|
95,000
|
|
|
$
|
95,000
|
|
Convertible Notes - originated in June 2018
|
|
|
166,000
|
|
|
|
166,000
|
|
Convertible Notes - originated in October 2018
|
|
|
50,000
|
|
|
|
50,000
|
|
Convertible Notes - issued fiscal year 2019
|
|
|
13,000
|
|
|
|
73,500
|
|
Convertible Notes - issued fiscal year 2020
|
|
|
86,000
|
|
|
|
-
|
|
Total convertible notes payable
|
|
|
410,000
|
|
|
|
384,500
|
|
|
|
|
|
|
|
|
|
|
Less: Unamortized debt discount
|
|
|
(4,764
|
)
|
|
|
(71,607
|
)
|
Total convertible notes
|
|
|
405,236
|
|
|
|
312,893
|
|
|
|
|
|
|
|
|
|
|
Less: current portion of convertible notes
|
|
|
405,236
|
|
|
|
312,893
|
|
Long-term convertible notes
|
|
$
|
-
|
|
|
$
|
-
|
|
The Company recognized amortization expense related to the debt discount of $179,843 and $158,082 for the year ended December 31, 2020, and 2019, respectively, which is included in interest expense in the statements of operation.
For the year ended December 31, 2020, and 2019, the interest expense on convertible notes was $46,779 and $39,457, respectively. As of December 31, 2020, and 2019, the accrued interest was $46,145 and $1,391, respectively.
Conversion
During the year ended December 31, 2020, the Company converted notes with principal amounts of $60,500 and accrued interest of $2,025 into 2,253,173 shares of common stock. The corresponding derivative liability at the date of conversion of $106,167 was credited to additional paid in capital.
Convertible Notes – Issued during the year ended December 31, 2018
During the year ended December 31, 2018, the Company issued a total principal amount of $426,000 in convertible notes for cash proceeds of $426,000. The convertible notes were also provided with a total of 107,000 common shares valued at $22,210. The terms of these convertible notes are summarized as follows:
|
•
|
Term two years;
|
|
|
|
|
•
|
Annual interest rates 12%;
|
|
|
|
|
•
|
Convertible at the option of the holders at any time
|
|
|
|
|
•
|
Conversion prices are based on 50% discount to market value for the common stock based on a 4-week weekly average of the closing price.
|
Convertible Notes – Issued during the year ended December 31, 2019
During the year ended December 31, 2019, the Company issued a total principal amount of $73,500 in convertible notes for cash proceeds of $67,000. The terms of convertible notes are summarized as follows:
|
•
|
Term one years;
|
|
|
|
|
•
|
Annual interest rates 10%;
|
|
|
|
|
•
|
Convertible at 180 days from issuance
|
|
|
|
|
•
|
Conversion prices are based on a 42% discount to the lowest trading price during the 20-trading day period ending on the latest complete training day prior to the conversion date.
|
Convertible Notes – Issued during the year ended December 31, 2020
During the year ended December 31, 2020, the Company issued a total principal amount of $86,000 in convertible note for cash proceeds of $80,000. The terms of convertible note are summarized as follows:
|
·
|
Term one year;
|
|
|
|
|
·
|
Annual interest rates 10%;
|
|
|
|
|
·
|
Convertible at 180 days from issuance
|
|
|
|
|
·
|
Conversion prices are 39% discount to the lowest trading price during the 20-trading day period ending on the latest complete training day prior to the conversion date.
|
The Company valued the conversion feature using the Binomial pricing model. The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2020 amounted to $239,593, and $107,000 of the value assigned to the derivative liability was recognized as a debt discount to the notes while the balance of $132,593 was recognized as a “day 1” derivative loss.
7. DERIVATIVE LIABILITIES
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company accounts for warrants as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.
Fair Value Assumptions Used in Accounting for Derivative Liabilities.
ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2020. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.
For the year ended December 31, 2020, and 2019, the estimated fair values of the liabilities measured on a recurring basis are as follows:
|
|
Year ended
|
|
Year ended
|
|
|
December 31,
|
|
December 31,
|
|
|
2020
|
|
2019
|
Expected term
|
|
0.01- 0.51 years
|
|
0.22 - 1.43 years
|
Expected average volatility
|
|
117% - 317%
|
|
229% - 320%
|
Expected dividend yield
|
|
-
|
|
-
|
Risk-free interest rate
|
|
0.05% - 0.19%
|
|
1.55% - 2.40%
|
The following table summarizes the changes in the derivative liabilities during the year ended December 31, 2020, and 2019
Fair Value Measurements Using Significant Observable Inputs (Level 3)
|
|
|
|
|
|
Balance - December 31, 2018
|
|
$
|
662,038
|
|
|
|
|
|
|
Gain on change in fair value of the derivative
|
|
|
(198,014
|
)
|
Balance - December 31, 2019
|
|
$
|
464,024
|
|
|
|
|
|
|
Addition of new derivatives recognized as debt discounts
|
|
|
107,000
|
|
Addition of new derivatives recognized as loss on derivatives
|
|
|
132,593
|
|
Settled on issuance of common stock
|
|
|
(106,167
|
)
|
Loss on change in fair value of the derivative
|
|
|
229,669
|
|
Balance - December 31, 2020
|
|
$
|
827,119
|
|
The aggregate (gain) loss on derivatives during the year ended December 31, 2020, and 2019 was as follows.
|
|
Year ended
|
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Day one loss due to derivative liabilities on convertible notes
|
|
$
|
132,593
|
|
|
$
|
-
|
|
(Gain) loss on change in fair value of the derivative liabilities
|
|
|
229,669
|
|
|
|
(198,014
|
)
|
|
|
$
|
362,262
|
|
|
$
|
(198,014
|
)
|
8. NOTES PAYABLE
On August 1, 2019, the Company issued a note payable of $11,900 to a third party. The repayment amount is $12,852 and the term is 6 months. During the year ended December 31, 2019, the Company repaid $8,588 including interest expense of $656.
On October 24, 2019, the Company issued a note payable of $3,900 to a third party. The repayment amount is $4,212 and the term is 6 months. During the year ended December 31, 2019, the Company repaid $709 including interest expense of $59.
During the year ended December 31, 2020, the Company issued additional notes payable of $9,800 to a third party. The term is 6 months. During the year ended December 31, 2020, the Company recognized interest expense of $1,079 and repaid $14,840.
As of December 31, 2020, and 2019, the Company owed note payable of $0 and $7,218 and accrued interest of $0 and $256, respectively.
9. STOCKHOLDERS’ EQUITY
Preferred Stock
The Company is authorized to issue 5,000,000 shares of $.0001 par value preferred stock, of which 4,000,000 have been designated as Series A Preferred Stock. As of December 31, 2020, the Company had no shares of preferred stock issued. Subsequently, as of March 8th. 2021,the Company has issued 1,100,000 shares of Series A Preferred Stock for license and marketing agreements and to satisfy debt, all in accordance with the Certificate of Designation for such shares.
Common Stock
The Company is authorized to issue 200,000,000 shares of $.0001 par value common stock as of December 31, 2020. See below.
As of December 31, 2020, and 2019, there were 20,829,552 and 18,576,379 shares of the Company’s common stock issued and outstanding, respectively.
Fiscal year 2020
On February 6, 2020, the Company’s board and a majority of its shareholders approved an amendment to the Company’s Articles of Incorporation to increase the authorized number of shares of its common stock, par value .0001, from 100,000,000 shares to 200,000,000 shares.
During the year ended December 31, 2020, the Company issued 2,253,173 shares of common stock for conversion of debt of $62,525.
During the year ended December 31, 2020, the Company recorded 558,693 common stock issuable valued at $72,000 based on an employment agreement – related party transaction. During the year ended December 31, 2020, all our management have waived their compensation due to COVID-19 related slow-downs and other factors and none of these shares were issued.
During the year ended December 31, 2020, the Company recorded 400,000 common stock issuable valued at $47,115 for services.
Fiscal year 2019
During the year ended December 31, 2019, the Company issued 480,210 shares of restricted common stock to Dr. Edward Jacobs, who is our CEO, as his compensation from August 1, 2018 to June 30, 2019.
During the year ended December 31, 2019, the Company recorded 352,390 shares of common stock issuable valued at $42,000 based on an employment agreement – related party transaction (See Note 10).
During the year ended December 31, 2019, the Company settled 70,758 shares of common stock issuable for consulting service and cancelled 70,758 shares of common stock.
Warrant
During the year ended December 31, 2018, the Company entered into an agreement with consultant to provide the Company with consulting services in exchange for 2-year warrant to purchase 200,000 shares of common stock with an exercise price of $0.1 per share. The Company recognized a warrant expense of $52,365, as stock-based compensation and additional paid-in capital. The Company determined that the warrants qualify for derivative accounting as a result of the related issuance of the convertible note on in April 2018, which had no express limit on the number of shares to be delivered upon future settlement of the conversion options. This warrant expired unexercised during the period ended December 31, 2020.
A summary of activity during the year ended December 31, 2020 and 2019 follows:
|
|
Warrants Outstanding
|
|
|
|
|
|
|
Weighted
Average
|
|
|
|
Shares
|
|
|
Exercise Price
|
|
|
|
|
|
|
|
|
Outstanding, December 31, 2018
|
|
|
200,000
|
|
|
$
|
0.10
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
-
|
|
|
|
-
|
|
Outstanding, December 31, 2019
|
|
|
200,000
|
|
|
$
|
0.10
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Expired
|
|
|
(200,000
|
)
|
|
|
0.10
|
|
Outstanding, December 31, 2020
|
|
|
-
|
|
|
$
|
-
|
|
10. RELATED PARTY TRANSACTIONS
Notes payable – related party
During the year ended December 31, 2020, the Company issued notes for a total principal amount of $27,715 to a company owned by our CEO. The notes bear 4% interest and have terms of 3 and 6 months.
During the year ended December 31, 2019, the Company issued notes for a total principal amount of $50,000 to a company owned by our CEO. The notes bear 4% interest and have a term of 1 year.
As of December 31, 2020, and 2019, the Company recorded notes payable – related party of $77,715 and $50,000 and accrued interest of $3,438 and $809, respectively.
Employee agreements
In June 2018, the Company entered into an employment agreement with Dr. Edwards E. Jacobs, Jr., our CEO, for a base compensation of $10,000 monthly and 100,000 shares of common stock, then valued at $27,500. In October 2018, the agreement was amended to a base compensation is $7,000 in cash or equivalent in common stock. All shares to be issued during fiscal year 2020 were waived due to COVID-19 related slow-downs and other factors. During years ended December 31, 2020 and 2019, the Company recorded Stock based compensation of $42,000 and $84,000, respectively.
In August 2019, the Company entered into an employment agreement with Robert W. Ellis, our president, for a base compensation of $5,000 in cash per monthly and 250,000 shares to be issued on August 31, 2020, then valued at $26,375. All shares to be issued during fiscal year 2020 were waived due to COVID-19 related slow-downs and other factors. During the years ended December 31, 2020 and 2019, the Company recorded Stock based compensation of $13,188 and $8,792 and accrued liabilities of $10,000 and $5,000, respectively.
In September 2019, the Company entered into an employment agreement with Ronald Lambrecht, our Chief Financial Officer, for a base compensation of $5,000, or equivalent in common stock, monthly and 100,000 shares to be issued on September 30, 2020, then valued at $11,010. All shares to be issued during fiscal year 2020 were waived due to COVID-19 related slow-downs and other factors. We extended the period of the original agreement and the services to be provided will commence on January 2, 2020. During the year ended December 31, 2020, the Company recorded Stock based compensation of $37,340.
11. PROVISION FOR INCOME TAXES
The Company provides for income taxes under ASC 740, ”Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 21% to the net loss before provision for income taxes for the following reasons:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net operating loss
|
|
$
|
(64,079
|
)
|
|
$
|
(58,560
|
)
|
Valuation allowance
|
|
|
64,079
|
|
|
|
58,560
|
|
Income tax expense per books
|
|
$
|
-
|
|
|
$
|
-
|
|
The cumulative tax effect at the expected rate of 21% of significant items comprising our net deferred tax amount is as follows:
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
NOL Carryover
|
|
$
|
270,108
|
|
|
$
|
206,029
|
|
Valuation allowance
|
|
|
(270,108
|
)
|
|
|
(206,029
|
)
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards of approximately $1,286,000 for federal income tax reporting purposes are subject to annual limitations. When a change in ownership occurs, net operating loss carry forwards may be limited as to use in future years.
12. COMMITMENT
The Company shares office space with another company affiliated with our largest shareholder; we did not pay rent during the period ended December 31, 2020, and have no obligation to pay rent at present. During the year ended December 31, 2020, and 2019, the Company incurred rental expenses of $0 and $2,724, respectively.
13. SUBSEQUENT EVENTS
On March 1, 2020, the Company’s board affirmed or ratified instructions for the issuance of shares of common and preferred stock to satisfy obligations incurred during the period ended December 31, 2020. The Company issued 250,000 shares of Series A Preferred Stock to Essence Now Ltd. in exchange for licensing rights to products in the Primi and Pluri line of human products; this transaction was effective January 1, 2021. The Company issued 600,000 shares of Series A Preferred Stock to Bioscience Associates, in exchange for the release and termination of $24,000 of debt. The Company issued 1,000,000 shares of common stock to Essence Worldwide, Ltd. as payment for a Consulting Agreement entered into in 2018. As noted above, the Company also issued 10,7692,873 shares of common stock to PowerUp Lending Group, Ltd. since January 1, 2021, to satisfy obligations under the previously referenced convertible notes. On February 17, 2021, the Company issued another convertible note to PowerUp in the principal amount of $43,000; this note carries the same terms as the previous notes discussed above, including conversion rights after six month. The Company accepted releases and waivers from its Chief Operating Officer, President and Chief Financial Officer, agreeing to return or reject stock-based compensation for periods ending December 31, 2019 and 2020, resulting in a return to treasury of 352,390 shares of the Company’s common stock and avoidance for the issuance of an additional 1,158,525 shares. On February 1, 2021, The Company issued 250,000 shares of Series A Preferred Stock to LiveStock Impact, Inc. in exchange for licensing rights to products in the Regen and All In One Animal lines.