UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————

FORM 10-Q

———————

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

þ

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020


OR


¨

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: 000-54129

——————————

EVOLUTIONARY GENOMICS, INC.

(Exact name of registrant as specified in its charter)

Nevada000-5412926-4369698

Nevada

26-4369698

(State of other jurisdiction of

incorporation or organization)

(Commission File Number)

(I.R.S. Employer

Identification No.)

1026 Anaconda Drive, Castle Rock, CO

80108

(Address of principal executive offices)

(Zip Code)


(720) 900-86664220 Morning Star Drive, Castle Rock, CO 80108

(Registrant'sAddress of Principal Executive Office)

Registrants telephone number, including area code)code: (720)900-8666

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

Trading Symbol(s)

Name of each exchange on which registered

N/A

N/A

N/A


Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes    No 

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 

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. Yesþ  No ¨


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesþ  No ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filerþ

Smaller reporting company þ

Emerging growth company ¨


If an emerging growth company, indicate by checkmark 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨Noþ


As of September 30, 2020,2021, the Registrant had 5,881,898 shares of common stock, $.001 par value, 577,063 shares of Series A-1 preferred stock, $.001 par value and 102,860 shares of Series A-2 preferred stock, $.001 par value outstanding. The Registrant’s common stock trades on the OTC Markets under the trading symbol “FNAM”.

EVOLUTIONARY GENOMICS, INC.

 



INDEX




EVOLUTIONARY GENOMICS, INC.

INDEX

Page
Number

Page
Number

PART I.  FINANCIAL INFORMATION

Item 1.

Financial Statements

1

Condensed and Consolidated Balance Sheets as of September 30, 20202021 (unaudited) and December 31, 2019

2020

2

Condensed and Consolidated Statements of Operations, Three and Nine Months ended September 30, 2021 and 2020 and 2019 (unaudited)

3

Condensed and Consolidated Statements of Stockholders’ EquityDeficit for the Quarterly Periods Ended September 30, 2021 and 2020 and 2019 (unaudited)

4

Condensed and Consolidated Statements of Cash Flows, Nine Months ended September 30, 2021 and 2020 and 2019 (unaudited)

5

Notes to Condensed and Consolidated Financial Statements

6

Item 2.

Management's Discussion and Analysis of Financial Conditions and Results of Operations

14

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

20

19

Item 4.

Controls and Procedures

20

19

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

22

21

Item 1A.

Risk Factors

22

21

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

22

21

Item 3.

Defaults Upon Senior Securities

22

21

Item 4.

Mine Safety Disclosures.

22

21

Item 5.

Other Information

22

21

Item 6.

Exhibits

22

21








PART I. FINANCIAL STATEMENTS

ITEM 1.FINANCIAL STATEMENTS

ITEM 1.

FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by Evolutionary Genomics, Inc., without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position of the Company as of September 30, 20202021 and for the three and nine month periods ended September 30, 20202021 and 20192020 have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed and consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 20192020 audited financial statements. The results of operations for these interim periods are not necessarily indicative of the results for the entire year.




1



Evolutionary Genomics, Inc. and Subsidiary

Condensed and Consolidated Balance Sheets


 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(unaudited)

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

Cash

 

$

320,636

 

 

$

45,441

 

Accounts receivable

 

 

 

 

 

6,845

 

Investments

 

 

68,357

 

 

 

41,694

 

Prepaid expenses

 

 

9,547

 

 

 

24,183

 

Total current assets

 

 

398,540

 

 

 

118,163

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

60,292

 

 

 

88,882

 

Intangible assets, net

 

 

3,997,391

 

 

 

4,035,592

 

Total non-current assets

 

 

4,057,683

 

 

 

4,124,474

 

Total assets

 

$

4,456,223

 

 

$

4,242,637

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

32,026

 

 

$

19,415

 

Current portion of notes payable

 

 

43,286

 

 

 

 

Total current liabilities

 

 

75,312

 

 

 

19,415

 

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

Notes payable, less current portion

 

 

980,982

 

 

 

 

Deferred tax liability

 

 

 

 

 

987,353

 

Total liabilities

 

 

1,056,294

 

 

 

1,006,768

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Preferred Stock subject to possible redemption, $0.001 par value,

 

 

 

 

 

 

 

 

20,000,000 authorized at September 30, 2020 and December 31, 2019

 

 

 

 

 

 

 

 

Series A-1 Convertible Preferred Stock, $0.001 par value; 600,000

 

 

 

 

 

 

 

 

shares authorized, 577,063 shares issued and outstanding at

 

 

 

 

 

 

 

 

September 30, 2020  and December 31, 2019; liquidation

 

 

 

 

 

 

 

 

preference at September 30, 2020 of $4,135,002

 

 

3,029,579

 

 

 

3,029,579

 

Series A-2 Convertible Preferred Stock, $0.001 par value; 200,000

 

 

 

 

 

 

 

 

shares authorized, 102,860 shares issued and outstanding at

 

 

 

 

 

 

 

 

September 30, 2020 and December 31, 2019; liquidation

 

 

 

 

 

 

 

 

preference at September 30, 2020 of $599,428

 

 

540,015

 

 

 

540,015

 

Total preferred stock subject to possible redemption

 

 

3,569,594

 

 

 

3,569,594

 

Stockholders' (deficit) equity

 

 

 

 

 

 

 

 

Preferred Stock

 

 

1,164,836

 

 

 

950,661

 

Common Stock, $0.001 par value; 780,000,000 shares authorized, 5,881,898

 

 

 

 

 

 

 

 

shares issued and outstanding at September 30, 2020 and December 31, 2019

 

 

5,882

 

 

 

5,882

 

Additional paid-in capital

 

 

12,032,015

 

 

 

12,081,401

 

Accumulated deficit

 

 

(13,372,398

)

 

 

(13,371,669

)

Total stockholders' (deficit) equity

 

 

(169,665

)

 

 

(333,725

)

Total liabilities and stockholders' (deficit) equity

 

$

4,456,223

 

 

$

4,242,637

 




         
  September 30,  December 31, 
  2021  2020 
  (unaudited)    
ASSETS        
         
Current assets        
Cash $605,508  $215,836 
Prepaid expenses  24,293   61,757 
Total current assets  629,801   277,593 
         
Non-current assets        
Property and equipment, net  26,714   50,763 
Intangible assets, net  2,909,280   3,664,343 
Total non-current assets  2,935,994   3,715,106 
Total assets $3,565,795  $3,992,699 
         
LIABILITIES AND STOCKHOLDERS' DEFICIT        
         
Current liabilities        
Accounts payable and accrued expenses $39,655  $3,164 
Total current liabilities  39,655   3,164 
         
Long-term liabilities        
Notes payable  3,743,747   2,245,831 
Total liabilities  3,783,402   2,248,995 
Commitments and contingencies      
Preferred Stock subject to possible redemption, $0.001 par value, 20,000,000 authorized at September 30, 2021 and December 31, 2020        
Series A-1 Convertible Preferred Stock, $0.001 par value; 600,000 shares authorized, 577,063 shares issued and outstanding at September 30, 2021 and December 31, 2020; liquidation preference at September 30, 2021 of $4,377,597  3,029,579   3,029,579 
Series A-2 Convertible Preferred Stock, $0.001 par value; 200,000 shares authorized, 102,860 shares issued and outstanding at September 30, 2021 and December 31, 2020; liquidation preference at September 30, 2021 of $642,988  540,015   540,015 
Total preferred stock subject to possible redemption  3,569,594   3,569,594 
Stockholders' deficit        
Preferred Stock  1,450,404   1,236,228 
Common Stock, $0.001 par value; 780,000,000 shares authorized, 5,881,898 shares issued and outstanding at September 30, 2021 and December 31, 2020  5,882   5,882 
Additional paid-in capital  11,966,165   12,015,552 
Accumulated deficit  (17,209,652)  (15,083,552)
Total stockholders' deficit  (3,787,201)  (1,825,890)
Total liabilities and stockholders' deficit $3,565,795  $3,992,699 

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

2



Evolutionary Genomics, Inc. and Subsidiary

Condensed and Consolidated Statements of Operations

(unaudited)


 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grant revenue

 

$

 

 

$

32,722

 

 

$

12,500

 

 

$

115,841

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

138,132

 

 

 

115,771

 

 

 

398,880

 

 

 

361,113

 

Salaries and benefits

 

 

217,430

 

 

 

37,500

 

 

 

403,089

 

 

 

134,341

 

General and administrative

 

 

118,947

 

 

 

41,962

 

 

 

225,454

 

 

 

166,576

 

Total operating expenses

 

 

474,509

 

 

 

195,233

 

 

 

1,027,423

 

 

 

662,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(474,509

)

 

 

(162,511

)

 

 

(1,014,923

)

 

 

(546,189

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment income

 

 

177

 

 

 

46

 

 

 

178

 

 

 

82

 

Unrealized gain on investments

 

 

22,864

 

 

 

6,144

 

 

 

26,663

 

 

 

7,644

 

Total other income

 

 

23,041

 

 

 

6,190

 

 

 

26,841

 

 

 

7,726

 

Loss before income taxes

 

 

(451,468

)

 

 

(156,321

)

 

 

(988,082

)

 

 

(538,463

)

Income tax benefit

 

 

987,353

 

 

 

 

 

 

987,353

 

 

 

 

Net income (loss)

 

 

535,885

 

 

 

(156,321

)

 

 

(729

)

 

 

(538,463

)

Preferred stock dividend

 

 

(71,392

)

 

 

(71,392

)

 

 

(214,175

)

 

 

(197,987

)

Net income (loss) loss attributable to common stockholders

 

$

464,493

 

 

$

(227,713

)

 

$

(214,904

)

 

$

(736,450

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per common share, basic and diluted

 

$

0.08

 

 

$

(0.04

)

 

$

(0.04

)

 

$

(0.13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, basic

 

 

5,881,898

 

 

 

5,881,898

 

 

 

5,881,898

 

 

 

5,881,898

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, diluted

 

 

6,068,565

 

 

 

5,881,898

 

 

 

5,881,898

 

 

 

5,881,898

 



                 
  Three Months Ended  Nine Months Ended 
  September 30,  September 30, 
  2021  2020  2021  2020 
             
Grant revenue $  $  $  $12,500 
                 
Operating expenses                
  Research and development  744,542   138,132   977,556   398,880 
  Salaries and benefits  92,430   217,430   277,289   403,089 
  General and administrative  305,335   118,947   955,019   225,454 
          Total operating expenses  1,142,307   474,509   2,209,864   1,027,423 
                 
Operating loss  (1,142,307)  (474,509)  (2,209,864)  (1,014,923)
                 
Other income                
  Investment income  255   177   369   178 
  Loan forgiveness  83,395      83,395    
  Unrealized gain on investments     22,864      26,663 
          Total other income  83,650   23,041   83,764   26,841 
Loss before income taxes  (1,058,657)  (451,468)  (2,126,100)  (988,082)
Income taxes     987,353      987,353 
Net (loss) income  (1,058,657)  535,885   (2,126,100)  (729)
Preferred stock dividend  (71,392)  (71,392)  (214,176)  (214,175)
Net (loss) income attributable to common stockholders $(1,130,049) $464,493  $(2,340,276) $(214,904)
                 
Net (loss) income per common share, basic and diluted $(0.19) $0.08  $(0.40) $(0.04)
                 
Weighted average common shares outstanding, basic and diluted  5,881,898   6,068,565   5,881,898   5,881,898 



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

3



Evolutionary Genomics, Inc. and Subsidiary

Condensed and Consolidated Statement of Stockholders' EquityDeficit


 

 

Nine Months Ended September 30, 2020

 

 

 

Common Stock

 

 

Preferred

 

 

Additional

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Dividend

 

 

Paid-In Capital

 

 

Deficit

 

 

(Deficit) Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

5,881,898

 

 

$

5,882

 

 

$

950,661

 

 

$

12,081,401

 

 

$

(13,371,669

)

 

$

(333,725

)

Stock compensation

 

 

 

 

 

 

 

 

 

 

 

54,930

 

 

 

 

 

 

54,930

 

Preferred stock dividends

 

 

 

 

 

 

 

 

71,391

 

 

 

(71,391

)

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(241,816

)

 

 

(241,816

)

Balance, March 31, 2020

 

 

5,881,898

 

 

$

5,882

 

 

$

1,022,052

 

 

$

12,064,940

 

 

$

(13,613,485

)

 

$

(520,611

)

Stock compensation

 

 

 

 

 

 

 

 

 

 

 

54,929

 

 

 

 

 

 

54,929

 

Preferred stock dividends

 

 

 

 

 

 

 

 

71,392

 

 

 

(71,392

)

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(294,798

)

 

 

(294,798

)

Balance, June 30, 2020

 

 

5,881,898

 

 

$

5,882

 

 

$

1,093,444

 

 

$

12,048,477

 

 

$

(13,908,283

)

 

$

(760,480

)

Stock compensation

 

 

 

 

 

 

 

 

 

 

 

54,930

 

 

 

 

 

 

54,930

 

Preferred stock dividends

 

 

 

 

 

 

 

 

71,392

 

 

 

(71,392

)

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

535,885

 

 

 

535,885

 

Balance, September 30, 2020

 

 

5,881,898

 

 

$

5,882

 

 

$

1,164,836

 

 

$

12,032,015

 

 

$

(13,372,398

)

 

$

(169,665

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Nine Months Ended September 30, 2019

 

 

 

Common Stock

 

 

Preferred

 

 

Additional

 

 

Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Dividend

 

 

Paid-In Capital

 

 

Deficit

 

 

(Deficit) Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

5,881,898

 

 

$

5,882

 

 

$

681,282

 

 

$

12,294,952

 

 

$

(12,578,529

)

 

$

403,587

 

Stock compensation

 

 

 

 

 

 

 

 

 

 

 

17,278

 

 

 

 

 

 

17,278

 

Preferred stock dividends

 

 

 

 

 

 

 

 

60,591

 

 

 

(60,591

)

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(200,397

)

 

 

(200,397

)

Balance, March 31, 2019

 

 

5,881,898

 

 

$

5,882

 

 

$

741,873

 

 

$

12,251,639

 

 

$

(12,778,926

)

 

$

220,468

 

Stock compensation

 

 

 

 

 

 

 

 

 

 

 

4,563

 

 

 

 

 

 

4,563

 

Preferred stock dividends

 

 

 

 

 

 

 

 

66,004

 

 

 

(66,004

)

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(181,745

)

 

 

(181,745

)

Balance, June 30, 2019

 

 

5,881,898

 

 

$

5,882

 

 

$

807,877

 

 

$

12,190,198

 

 

$

(12,960,671

)

 

$

43,286

 

Preferred stock dividends

 

 

 

 

 

 

 

 

71,392

 

 

 

(71,392

)

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(156,321

)

 

 

(156,321

)

Balance, September 30, 2019

 

 

5,881,898

 

 

$

5,882

 

 

$

879,269

 

 

$

12,118,806

 

 

$

(13,116,992

)

 

$

(113,035

)



                         
  Nine Months Ended September 30, 2021 
  Common Stock  Preferred  Additional  Accumulated  Stockholders' 
  Shares  Amount  Dividend  Paid-In Capital  Deficit  Deficit 
                   
Balance, December 31, 2020  5,881,898  $5,882  $1,236,228  $12,015,552  $(15,083,552) $(1,825,890)
Stock compensation           54,930      54,930 
Preferred stock dividends        71,392   (71,392)      
Net loss              (513,742)  (513,742)
Balance, March 31, 2021  5,881,898  $5,882  $1,307,620  $11,999,090  $(15,597,294) $(2,284,702)
Stock compensation           54,929      54,929 
Preferred stock dividends        71,392   (71,392)      
Net loss              (553,701)  (553,701)
Balance, June 30, 2021  5,881,898  $5,882  $1,379,012  $11,982,627  $(16,150,995) $(2,783,474)
Stock compensation           54,930      54,930 
Preferred stock dividends        71,392   (71,392)      
Net loss              (1,058,657)  (1,058,657)
Balance, September 30, 2021  5,881,898  $5,882  $1,450,404  $11,966,165  $(17,209,652) $(3,787,201)




  Nine Months Ended September 30, 2020 
  Common Stock  Preferred  Additional  Accumulated  Stockholders' 
  Shares  Amount  Dividend  Paid-In Capital  Deficit  Deficit 
                   
Balance, December 31, 2019  5,881,898  $5,882  $950,661  $12,081,401  $(13,371,669) $(333,725)
Stock compensation           54,930      54,930 
Preferred stock dividends        71,391   (71,391)      
Net loss              (241,816)  (241,816)
Balance, March 31, 2020  5,881,898  $5,882  $1,022,052  $12,064,940  $(13,613,485) $(520,611)
Stock compensation           54,929      54,929 
Preferred stock dividends        71,392   (71,392)      
Net loss              (294,798)  (294,798)
Balance, June 30, 2020  5,881,898  $5,882  $1,093,444  $12,048,477  $(13,908,283) $(760,480)
Stock compensation           54,930      54,930 
Preferred stock dividends        71,392   (71,392)      
Net income              535,885   535,885 
Balance, September 30, 2020  5,881,898  $5,882  $1,164,836  $12,032,015  $(13,372,398) $(169,665)

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

4



Evolutionary Genomics, Inc. and Subsidiary

Condensed and Consolidated Statements of Cash Flows

(unaudited)


 

 

For the Nine Months Ended

 

 

 

September 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(729

)

 

$

(538,463

)

Adjustments to reconcile net loss to net

 

 

 

 

 

 

 

 

cash flows from operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

66,791

 

 

 

30,541

 

Stock-based compensation

 

 

164,789

 

 

 

21,841

 

Unrealized gain on investments

 

 

(26,663

)

 

 

(7,644

)

Deferred tax benefit

 

 

(987,353

)

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

6,845

 

 

 

7,717

 

Prepaid expenses

 

 

14,636

 

 

 

13,228

 

Accounts payable and accrued expenses

 

 

12,611

 

 

 

19,523

 

Cash flows from operating activities

 

 

(749,073

)

 

 

(453,257

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of notes payable

 

 

1,024,268

 

 

 

 

Proceeds from issuance of preferred stock

 

 

 

 

 

540,015

 

Cash flows from financing activities

 

 

1,024,268

 

 

 

540,015

 

 

 

 

 

 

 

 

 

 

Net change in cash

 

 

275,195

 

 

 

86,758

 

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

45,441

 

 

 

131,406

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$

320,636

 

 

$

218,164

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Preferred stock dividend accrual

 

$

214,175

 

 

$

197,987

 



         
  For the Nine Months Ended 
  September 30, 
  2021  2020 
Cash flows from operating activities:        
  Net loss $(2,126,100) $(729)
  Adjustments to reconcile net loss to net cash flows from operating activities        
    Depreciation and amortization  779,112   66,791 
    Stock-based compensation  164,789   164,789 
    PPP loan forgiveness  (83,395)    
    Unrealized gain on investments     (26,663)
    Deferred tax benefit      (987,353)
    Changes in operating assets and liabilities:        
      Accounts receivable     6,845 
      Prepaid expenses  37,464   14,636 
      Accounts payable and accrued expenses  36,491   12,611 
        Cash flows from operating activities  (1,191,639)  (749,073)
         
Cash flows from investing activities:        
        Cash flows from investing activities      
         
Cash flows from financing activities:        
  Proceeds from issuance of notes payable  1,581,311   1,024,268 
        Cash flows from financing activities  1,581,311   1,024,268 
         
Net change in cash  389,672   275,195 
         
Cash, beginning of period  215,836   45,441 
         
Cash, end of period $605,508  $320,636 
         
Supplemental cash flow information        
        Preferred stock dividend accrual $214,176  $214,175 



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



EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 AND 2020 AND 2019 (Unaudited)


Note 1: Business Activity


Evolutionary Genomics, Inc. (the “Company,” “We,” or “Our”) has developed a technology platform, the Adapted Traits Platform (“ATP”), to identify commercially valuable genes that control important traits in animals and plants. We are using the ATP to identify genes to improve crop plant traits such as yield, sugar content, biomass, drought tolerance, and pest/disease resistance. Our platform identifies key genes that have changed successfully to impart new or improved traits.


TheIn the past, the Company performs itsperformed research on behalf of governmental organizations, non-profit foundations and commercial entities and receivesreceived revenue from grants and commercial research contracts. We have not received any revenue from these grant arrangements since early 2020. The Company now focuses on research projects that may lead to long-term licensing arrangements with agricultural seed companies and crop producers as with our soybean and banana projects. These grants/contracts contain fixed-fee arrangementsprojects take several years to develop, and may also have licensing provisions upon effective commercialization of research results. Successfulsuccessful commercialization may take many years to produce license royalty payments. OwnershipOur banana project, in cooperation with Dole Food Company is an example that has resulted in notes payable funding for the development phase of intellectual property developedour banana genes and may result in research projects varies froma long-term royalty bearing license once the Company retaining no rights to intellectual property, to joint ownership, to the Company retaining all rights.development phase is complete.


During 2014, the Company purchased 75.16%75.16% of the outstanding stock of Fona, Inc., (“Fona”) a public shell company. Since Fona was a public shell company which did not constitute a business and the purchase was done in contemplation of a reverse merger, the Company accounted for the payment as a distribution to Fona shareholders. The Company also entered into an Agreement and Plan of Merger (the “Merger”), which was consummated on October 19, 2015. As a result of the Merger, Evolutionary Genomics, Inc. became a wholly owned subsidiary of Fona. For accounting purposes, the merger was treated as a reverse acquisition with Evolutionary Genomics, Inc. as the acquirer and Fona as the acquired party. Subsequent to the Merger, Fona was renamed Evolutionary Genomics, Inc. and our subsidiary was renamed from Evolutionary Genomics, Inc. to EG Crop Science, Inc.


Note 2: Summary of Significant Accounting Policies


Basis of presentation: The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X.

The condensed consolidated balance sheet as of September 30, 2020, has been derived from the Company’s audited consolidated financial statements. The unaudited interim financial statements should be read in conjunction with the Company’s 2020 Form 10-K, which contains the Company’s audited financial statements and notes thereto, together with the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2020.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnote disclosures necessary for a comprehensive presentation of financial position, results of operations, and cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the three and nine months ended September 30, 2021 are not necessarily indicative of the financial condition and results of operations that may be expected for any future interim period or for the fiscal year ending December 31, 2021.

Principals of Consolidation: These condensed and consolidated financial statements include the accounts of Evolutionary Genomics, Inc. and its wholly owned subsidiary. All material intercompany transactions and balances have been eliminated.


Use of Estimates: The preparation of condensed and consolidated 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 disclosure of contingent assets and liabilities at the date of the condensed and consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates.


EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 AND 2020 (Unaudited)

These consolidated financial statements have been prepared on the basis of going concern. Management’s plans to address the Company’s liquidity are discussed further in Note 13.

Cash: The Company considers all highly liquid investments purchased with an original or remaining maturity of three months or less when purchased to be cash.


Investment: The Company’s short-term investment is equity securities carried at their fair value based on the quoted market price of the securities at September 30, 2020 and December 31, 2019. Net realized and unrealized gains and losses on investments are included in net earnings. For purposes of determining realized gains and losses, the cost of securities sold is based on specific identification.


Property and Equipment: Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is provided for by the straight-line method over 3three- to7 seven-year estimated useful lives offor software, furniture and fixtures and equipment. Maintenance and repairs are expensed as incurred; major renewals and betterments that extend the useful lives of property and equipment are capitalized. When property and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized.





6



EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 AND 2019 (Unaudited)



Long-Lived Assets: The long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed. An impairment is considered to exist if the total estimated undiscounted cash flows are less than the carrying amount of the asset. An impairment loss is measured and recorded to the extent that the carrying amount of the asset exceeds its estimated fair value. NoNaN asset impairment was recorded during the nine months ended September 30, 20202021 and 2019.2020.


Intangible Assets: Intangible assets include acquired research in progress and patents on the Company’s core technology for gene identification. Patents are amortized over their expected useful life of 20 years using the straight-line method. Acquired research in progress was placed into service on August 19, 2020 in conjunction with the Development and Commercialization Agreement discussed in Note 7 and is being amortized over a twelve year, nine month periodfour years consistent with the remaining patent lifeterm of the Dole agreement using the straight-line method. Costs incurred to renew intangible assets are expensed in the period incurred, while costs incurred to extend the lives of patents are capitalized and amortized over the remaining useful life of the asset. Intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any intangible assets may be impaired, an evaluation of recoverability is performed. An impairment is considered to exist if the total estimated undiscounted cash flows are less than the carrying amount of the asset. No impairment was recorded during the nine months ended September 30, 20202021 and 2019.2020.


Revenue Recognition: In May 2014, the FASB issued new guidance related to revenue recognition, which outlines a comprehensive revenue recognition model and supersedes most current revenue recognition guidance. The new guidance requires a company to recognize revenue as control of goods or services transfers to a customer at an amount that reflects the expected consideration to be received in exchange for those goods or services. It defines a five-step approach for recognizing revenue, which may require a company to use more judgment and make more estimates than under the current guidance.


Recognition:Grant revenue which is not within the scope of Topic 606, consists of funding under cost reimbursement programs primarily from federal and non-profit foundation sources for qualified research and development activities performed by us,us. However, these amounts are subject to change upon review by federal and as such, are not based on estimates that are susceptiblenon-profit foundations prior to change.receipt of invoice amounts submitted. Such amounts are invoiced and recorded as revenue as grant-funded activities are performed.


Income Taxes: Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the tax bases of assets and liabilities and their reported amounts. Management regularly assesses the likelihood that deferred tax assets will be recovered from future taxable income, and to the extent management believes that it is more likely than not that a deferred tax asset will not be realized, a valuation allowance is established. When a valuation allowance is established, increased or decreased, an income tax charge or benefit is included in the condensed and consolidated financial statements and net deferred tax assets are adjusted accordingly. As of September 30, 20202021 and December 31, 2019,2020, a full valuation allowance has been established on the net deferred tax asset.


Under the Income Tax topic of the ASC, in order to recognize an uncertain tax benefit, the taxpayer must be more likely than not of sustaining the position, and the measurement of the benefit is calculated as the largest amount that is more than 50% likely to be realized upon resolution of the benefit. The Company has no accruals for uncertain tax benefits.


Stock-Based Compensation: The Company accounts for stock option awards in accordance with ASC 718. The estimated grant-date fair value of stock-based awards is expensed over the requisite service period, which is typically equivalent to the vesting term of the award.


EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 AND 2020 (Unaudited)

The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services received follows the provisions of ASC Topic 718. Accordingly, the measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.


Research and Development: Research and development costs are expensed as incurred. In instances where we enter into agreements with third parties for research and development activities, we may prepay for services at the initiation of the contract. We record the prepayment as a prepaid asset and amortize the asset into research and development expense over the period of time the contracted research and development services are performed.



7



EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 AND 2019 (Unaudited)



Net Loss Per Common Share: Basic net (loss) income per common share excludes any dilutive effects of equity instruments. We compute basic net (loss) income per common share using the weighted average number of common shares outstanding during the period. We compute diluted net (loss) income per common share using the weighted average number of common shares and common stock equivalents outstanding during the period. For the nine months and three months ended September 30, 2021, common stock equivalents including 679,923 shares of convertible preferred stock and options for 1,081,667 shares of common stock were excluded because their effect was anti-dilutive. For the nine months ended September 30, 2020, common stock equivalents including 679,923 shares of convertible preferred stock, options for 1,081,667 shares of common stock and warrants for 110,856 shares of common stock were excluded because their effect was anti-dilutive. For the three months ended September 30, 2020, common stock equivalents including 679,923 shares of convertible preferred stock, options for 895,000 shares of common stock and warrants for 110,856 shares of common stock were excluded because their effect was anti-dilutive, and options for 186,667 shares of common stock equivalents were included in the diluted weighted average common shares outstanding.  For the nine months and three months ended September 30, 2019, common stock equivalents including 679,923 shares of convertible preferred stock, options for 566,667 shares of common stock and warrants for 110,884 shares of common stock were excluded because their effect was anti-dilutive.


Subsequent Events: The Company has evaluated all subsequent events through the date of this filing.


Note 3: New Accounting Standards


Recently Issued Accounting Standards


In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments,” which requires entities to estimate all expected credit losses for certain types of financial instruments, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The updated guidance also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within that reporting period and is not expected to have a significantan impact on the Company’s condensed and consolidated financial statements.


Note 4: Fair Value Measurements


The Company complies with the provisions of ASC 820, in measuring fair value and in disclosing fair value measurements at the measurement date. ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements required under other accounting pronouncements. Fair value is an exit price, representing the amount 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. Fair value measurements also reflect the assumptions market participants would use in pricing an asset or liability based on the best information available. Assumptions include the risks inherent in a particular valuation technique (such as a pricing model) and/or the risks inherent in the inputs to the model.


ASC 820 provides three levels of the fair value hierarchy as described below:


Level 1 Inputs – Quoted prices (unadjusted) in active markets for identical assets or liabilities.


Level 2 Inputs – Observable market-based inputs, other than quoted prices in active markets for identical assets or liabilities.


Level 3 Inputs – Unobservable inputs that are supported by little or no market activity.


EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 AND 2020 (Unaudited)

When determining the fair value measurements for assets or liabilities required or permitted to be recorded at and/or marked to fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. When possible, the Company looks to active and observable markets to price identical assets. When identical assets are not traded in active markets, the Company looks to market observable data for similar assets.




8



EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 AND 2019 (Unaudited)



The following table presents the Company’s financial assets that were accounted for at fair value on a recurring basis as of September 30, 2020 and December 31, 2019, by level within the fair value hierarchy:


 

 

 

Total

 

 

Quoted Prices in Active Markets for Identical Items
(Level 1)

 

 

Significant Other Observable Inputs
(Level 2)

 

 

Significant Unobservable Inputs
(Level 3)

 

Balance at December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

$

41,694

 

 

$

41,694

 

 

$

 

 

$

 

 

 

 

$

41,694

 

 

$

41,694

 

 

$

 

 

$

 

Balance at September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

 

 

$

68,357

 

 

$

68,357

 

 

$

 

 

$

 

 

 

 

$

68,357

 

 

$

68,357

 

 

$

 

 

$

 


For the Company’s Level 1 measures, which represent common stock in publicly traded companies, fair value is based on the last closing trade occurring on, or closest to, the respective period end date. The carrying value of financial instruments, including cash, receivables, accounts payable, accrued expenses, and debt,notes payable approximates their fair value at September 30, 20202021 and December 31, 20192020, due to the relatively short-term nature of these instruments or the existence of variable interest rates that approximate prevailing market rates.instruments.


Note 5: Property and Equipment


Property and equipment is comprised of the following:


Schedule of Property and Equipment        

 

September 30,

 

December 31,

 

 September 30, December 31, 

 

2020

 

2019

 

 2021  2020 

Equipment

 

$

432,499

 

$

432,499

 

 $432,499  $432,499 

Software

 

63,179

 

63,179

 

  63,179   63,179 

Furniture and fixtures

 

 

7,987

 

 

 

7,987

 

  7,987   7,987 

 

503,665

 

503,665

 

  503,665   503,665 

Accumulated depreciation

 

 

(443,373

)

 

 

(414,783

)

  (476,951)  (452,902)

Property and equipment, net

 

$

60,292

 

 

$

88,882

 

 $26,714  $50,763 


Depreciation expense for the nine months ended September 30, 2021 and 2020 was $24,048 and 2019 was $28,590 and $28,589,$28,590, respectively.

Depreciation expense for the three months ended September 30, 2021 and 2020 was $8,015and 2019 was $9,530 and $9,529,$9,530, respectively.


Note 6: Intangible Assets


Intangible assets are comprised of the following:


Schedule of Intangible Assets        
 September 30, December 31, 

 

September 30,

 

December 31,

 

 2021  2020 

 

2020

 

2019

 

Acquired research in progress

 

$

4,016,596

 

$

4,016,596

 

Acquired research in progress - definite lived $4,016,596  $4,016,596 

Patents

 

52,045

 

52,045

 

  52,045   52,045 

Accumulated amortization

 

 

(71,250

)

 

 

(33,049

)

  (1,159,361)  (404,298)

Intangible assets, net

 

$

3,997,391

 

 

$

4,035,592

 

 $2,909,280  $3,664,343 


The Company expects to recognize $317,629 of amortization expense related to its acquired research in progress and patents during each ofaccording to the next five years and the remaining $2,409,246 thereafter. following:

 Schedule of Intangible Assets Amortization     
Year Ending  Amortization 
 December 31, 2021  $251,688 
 December 31, 2022   1,006,751 
 December 31, 2023   1,006,751 
 December 31, 2024   638,105 
 December 31, 2025   2,602 
 Thereafter   3,383 
     Total  $2,909,280 

EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 AND 2020 (Unaudited)

Amortization expense for the acquired research in progress and patents during the nine months ended September 30, 2021 and 2020 was $755,063and 2019 was $38,201 and $1,952,$38,201, respectively. Amortization expense for the acquired research in progress and patents during the three months ended September 30, 2021 and 2020 was $251,688and 2019 was $36,900 and $651,$36,900, respectively.




9



EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 AND 2019 (Unaudited)



In its merger completed on October 19, 2015, the Company acquired research in progress. The value of the acquired research in progress was based upon several factors including, evaluation of other intangible assets, the purchase price, estimated future cash flows, and the amounts expended on the research to date. The research in progress was the identification and validation of genes to provide pest and disease resistance to plants performed by EG I. With the banana development project contract in place and the expected marketing of our soybean genes late in 2020,fall-2021, the Company placed this asset in service on August 19, 2020. Additional costs to complete the soybean research are expected to be approximately $67,600,$33,000, which will be expensed as incurred. The timing and cost of additional research may vary from these estimates as the success of the research is subject to many factors outside of the Company’s control.


Note 7: Notes Payable


Small Business Administration (“SBA”) Paycheck Protection Program:Program (“PPP”): On April 17, 2020,February 22, 2021, the Company received $71,268$76,395 in proceeds from the SBA Paycheck Protection Program.PPP, which was created under the Coronavirus Aid, Relief and Economic Security Act (CARES). Under the program, the Company may applyapplied for and received forgiveness of the debt based onin the use of the proceeds over the 24-week period following funding of the loan.  As ofthree months ended September 30, 2020, the Company’s qualified use of proceeds has exceeded the loan amount and expects to receive forgiveness for the full loan amount.  To the extent that the loan is not forgiven, the loan accrues interest at 1 percent and has monthly payments of $4,010.75 starting October 16, 2020.2021.


SBA Economic Injury Disaster Loan: On June 5, 2020, the Company received a $3,000$3,000 Economic Injury Disaster Loan (“EIDL”) advance and $150,000$150,000 in proceeds from the SBA’s EIDL Program. On July 20, 2021, the Company received an additional $7,000 SBA EIDL Advance which has been forgiven and, on July 14, 2021, the Company received a $50,000 increase in the SBA EIDL Loan. Installment payments, including interest at the rate of 3.75% per annum, of $731$1,022 monthly over thirty years from the date of the original promissory note will begin twelve months from the date of the promissory note (Juneon June 5, 2021).2022. The Company granted to the SBA a continuing security interest in all tangible and intangible personal property. The Company may not make any distribution of assets of the Company to any shareholder without the written consent of the SBA. As of September 30, 2020,2021, the Company recognized $1,323$6,948 of accrued interest on the note.


Dole Food Company:

On August 19, 2020, the Company entered into a Development and Commercialization Agreement (“DCA”) with Dole Food Company (“Dole”) for the development of our banana genes. The DCA provides for payments from Dole to the Company of $800,000$800,000 upon execution, $800,000$800,000 by the twelve-month anniversary, $250,000$250,000 by the thirty-six month anniversary and $250,000$250,000 by the forty-eight month anniversary. Dole will also reimbursereimburses the Company for costs incurred at the University of Wisconsin-Madison (“UW”) not to exceed $2,200,000$2,200,000 in coordination with the Standard Research Agreement that the Company entered into with UW on September 18, 2020 which2020. The agreement with UW includes payments from the Company to UW in the amount of $2,159,719 $2,159,719 over the two yeartwo-year expected term of the project. If the UW research is successful, Dole expects to incur costs of $750,000approximately $750,000 to perform field trials.


The DCA also specifies that the Company will execute notes payable to Dole for the funding that Dole is providing up to $5,050,000.$5,050,000. Upon receipt of the first $800,000 on August 26, 2020, $800,000 on July 28, 2021, $1,295,831 on December 29, 2020 and $647,916 on September 29, 2021, the Company executed the first notenotes under this DCA and recorded itthem as a long term notelong-term notes payable for financial statement purposes. The note isnotes are non-interest bearing and allowsallow Dole to offset fifty percent of future royalty payments to the Company by reducing the amount of principal due on these notes. Other than this offset of future royalty payments, repayment of principal and interest is only required in the case of termination of the DCA by Dole for cause.

10 

EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 AND 2020 (Unaudited)


Note 8: Stockholders’ Equity and Warrants


The Amended and Restated Certificate of Incorporation of the Company dated October 19, 2015 authorized the issuance of 800,000,000 shares of all classes of stock including 780,000,000 shares of Common Stock having a par value of $0.001$0.001 per share and 20,000,000 shares of Preferred Stock having a par value of $0.001$0.001 per share, 600,000 of which were designated as Series A-1 Convertible Preferred Stock (“Series A-1”) and 200,000 of which were designated as Series A-2 Convertible Preferred Stock (“Series A-2”). The Board of Directors, without a vote of the shareholders, is authorized to issue additional shares of Preferred Stock in series and to establish the characteristics thereof.




10



EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 AND 2019 (Unaudited)



Liquidation: Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, the holders of the Series A-1 and Series A-2 shall be entitled to receive out of the assets of the Company for each share of Series A-1 and Series A-2 an amount equal to its stated value, $5.25$5.25 per share as of September 30, 20202021 and December 31, 2019,2020, plus any accrued but unpaid dividends before any distribution or payment shall be made to the holders of any other class or series of stock of the Company that ranks junior to the Series A-1 and Series A-2. The holders shall be entitled to convert their shares of Series A-1 and Series A-2 into Common Stock at any time prior to the consummation of a Liquidation. This is considered a contingent redemption feature.


Conversion: The holders of Series A-1 and Series A-2 may convert their shares into shares of Common Stock, at the option of the holder, on a one-share-for-one-share basis and shall be subject to certain adjustments at any time.


Optional Redemption; Sinking Fund Account: The Company may elect to redeem some or all of the then outstanding shares of Series A-1, (i) for cash in an amount equal to the liquidation preference per share, $5.25 per share as of September 30, 2020,2021, subject to adjustment and (ii) by issuing one share, subject to adjustment, of Common Stock for each share of Series A-1 and Series A-2 outstanding being redeemed. 50% of all licensing fees received by the Company will be deposited into a separate sinking fund for use in an optional redemption. As of September 30, 2020,2021, no licensing revenue has been received under these provisions and no sinking fund account has been established.


Dividends: The Company shall pay to the holders of the Series A-1 and Series A-2 dividends at the rate of 8%8% per annum and the Company has accrued these dividends since issuance of the Series A-1 and Series A-2. The dividend amount shall accrue and shall be payable in shares of Common Stock upon the conversion of the Series A-1 and Series A-2, or upon the redemption of the Series A-1 and Series A-2. No dividends shall be paid on any Common Stock of the Company or any capital stock of the Company that ranks junior to the Series A-1 and Series A-2 until dividends of Series A-1 and Series A-2 been paid. As of September 30, 2020,2021, there were $1,164,836$1,450,404 in accrued stock dividends.


Voting: The holders of the Series A-1 and Series A-2 are entitled to vote on all matters submitted to the stockholders for a vote on an as-if-converted to Common Stock basis, with all stockholders voting as a single class.


Warrants: As of September 30, 2020 and December 31, 2019, the Company had outstanding warrants to purchase 110,856 and 110,884 shares, respectively of the Company’s Common Stock. The following table summarizes the status of the Company’s aggregate warrants outstanding:


 

 

 

Number of
Warrants

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Term(Years)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2019

 

 

 

110,884

 

 

$

6.60

 

 

 

1.87

 

Granted

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

Expired

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

 

110,884

 

 

$

6.60

 

 

 

0.87

 

Granted

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

Expired

 

 

 

(28

)

 

 

6.60

 

 

 

 

Balance, September 30, 2020

 

 

 

110,856

 

 

$

6.60

 

 

 

0.12

 


Note 9: Stock-Based Compensation


The Company grants stock-based instruments under the 2015 Stock Incentive Plan (“Plan”) for which 1,400,000 shares of the Company’s Common Stock has been reserved. The Plan allows for the issuance of incentive stock options and non-qualified stock options with a maximum contractual term of 10 years. Shares and options that are cancelled are available for reissuance under the Plan. For the nine months ended September 30, 20202021 and 2019,2020, the Company recorded compensation costs for stock options of $164,789$164,789. For three months ended September 30, 2021 and $21,841, respectively.2020, the Company recorded compensation costs for stock options of $54,930. Stock options are generally issued with an exercise price at or above the estimated per-share value of the Company’s Common Stock. The Company granted no0 options during the nine months ended September 30, 20202021 and 2019.2020.


11 



11



EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 AND 2020 AND 2019 (Unaudited)



Management has valued the options at their date of grant utilizing the Black-Scholes option pricing model. As of the issuance of the outstanding options, there was not a public market for the Company’s shares. Accordingly, the Company utilized the value obtained in equity transactions with unrelated parties to estimate the fair value of the Company’s Common Stock on the date of grant. Volatility of the underlying common shares was determined based on the historical volatility for similar companies that are actively traded in the public markets for a term consistent with the expected life of the options. The risk-free interest rate used in the calculations is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options on the date of the grant. Due to the lack of sufficient historical activity, the expected life of the options was estimated using the formula set forth in Securities and Exchange Commission SAB 107.


The following table summarizes the status of the Company’s aggregate stock options granted:


Schedule of Stock Option ActivitySchedule of Stock Option Activity                 
  

Number of
Options

  Weighted
Average
Exercise
Price
  Weighted
Average
Remaining
Term(Years)
  Total
Intrinsic
Value
 

 

 

Number of Options

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Term(Years)

 

Total Intrinsic Value

 

 

 

 

 

 

 

 

 

 

 

 

Balance, January 1, 2019

 

566,667

 

 

$

2.33

 

 

5.95

 

 

 

 

Granted

 

640,000

 

 

 

1.54

 

 

9.83

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

Cancelled

 

 

(125,000

)

 

 

3.00

 

 

 

7.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

1,081,667

 

 

$

1.74

 

 

 

7.67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

         

Balance, January 1, 2020

 

1,081,667

 

 

$

1.74

 

 

7.67

 

 

 

 

Balance, January 1, 2020   1,081,667  $1.74   7.67     

Granted

 

 

 

 

 

 

 

 

 

 

Granted              

Exercised

 

 

 

 

 

 

 

 

 

 

Exercised              

Cancelled

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancelled              

 

 

 

 

 

 

 

 

 

 

 

 

 

                 

Balance, September 30, 2020

 

 

1,081,667

 

 

$

1.74

 

 

 

6.92

 

 

$

 

Balance, December 31, 2020Balance, December 31, 2020   1,081,667  $1.74   6.67     

 

 

 

 

 

 

 

 

 

 

 

 

 

                  

Exercisable at September 30, 2020

 

 

508,333

 

 

$

1.96

 

 

 

4.50

 

 

$

84,000

 

Balance, January 1, 2021Balance, January 1, 2021   1,081,667  $1.74   6.67     
GrantedGranted              
ExercisedExercised              
CancelledCancelled              
                 
Balance, September 30, 2021Balance, September 30, 2021   1,081,667  $1.74   5.91  $ 
                 
Exercisable at September 30, 2021Exercisable at September 30, 2021   688,332  $1.85   4.68  $46,667 


During each of the nine months ended September 30, 20202021 and 2019,2020, options for 0 and 116,667 shares vested, respectively.vested. As of September 30, 2020,2021 there was $460,379$240,661 of unrecognized compensation cost related to share-based compensation arrangements that will be recognized through the year ending December 31, 2022.


Note 10: Commitments and Contingencies


Officer Indemnification: Under the Company’s organizational documents, the Company’s officers, employees, and directors are indemnified against certain liabilities arising out of the performance of their duties. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company expects any risk of loss to be remote. The Company also has an insurance policy for its directors and officers to insure them against liabilities arising from their performance in their positions with the Company.


Lease Commitments: The Company leases its operating facility and pays its rent in monthly installments. The lease was renewed in June 2016 for a period of twelve months and monthly rentals for the period of July 1, 2016 through December 31, 2019September 30, 2021 are $2,378$2,378 per month which continues on a month-to-month basis. There is no minimum lease commitment as of September 30, 2020.2021. Renewals after June 30, 2017 are by mutual agreement. The Company’s rent expense for each of the nine months ended September 30, 2021 and 2020 was $21,401.

12 

EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2021 AND 2020 (Unaudited)

Royalty: Effective March 1, 2012, the Company entered into an Agreement for Contract Services with SmithBucklin Corporation (the “Contractor”) on behalf of the United Soybean Board. The contract includes the payment of certain royalties, as defined in the Agreement.

The Company is obligated to pay royalties to the United Soybean Board of 10% of the sale of products derived from the soybean genes that were the subject of the research performed by the Contractor or from royalties received by the Company from the sale of products by a third party not to exceed 150% of the total amount paid to the Contractor under this Agreement. The Company has recognized to date grant revenue from the contract of $262,400 as of September 30, 2021, thus limiting any future royalties as of September 30, 2021 to a total of $393,600. The Company has not accrued or paid any royalties under the terms of the Agreement as of and 2019 was $21,401.during the nine months ended September 30, 2021 because it has not received any revenue from the sale of products to date.


Research Agreement: Other Commitments: On September 18, 2020, the Company entered into a Standard Research Agreement with the University of Wisconsin-MadisonUW for the development of our banana genes. The agreement includes payments from the Company to UW in the amount of $2,159,719$2,159,719 over the2 two-year expected term of the project. These costs will be reimbursed, in the form of notes payable by Dole Food Company in accordance with our Development and Commercialization Agreement dated August 19, 2020.DCA.



12



EVOLUTIONARY GENOMICS, INC. AND SUBSIDIARY

NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2020 AND 2019 (Unaudited)



Note 11: Related Parties and Transactions


Steve B. Warnecke: Mr. Warnecke is the Company’s Chief Executive Officer and Chairman of the Board and owns, directly or indirectly, 1,932,0881,902,088 shares or 29.9%29.45% of the Common Stock outstanding as of September 30, 2020.2021.


Note 12: Concentrations


Considerations of Credit Risk: Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains its cash balances at high-credit, quality financial institutions. The balances, at times, may exceed federally insured limits. The Company routinely monitors the credit quality of its customers.


Note 13: Liquidity


On August 19, 2020,

As of September 30, 2021, the Company entered into a Development had $605,508 in operating cash and Commercialization Agreement with Dole Food Company for the development of plant varieties within the Musa genus of the Musaceae family (including the Cavendish variety of banana) that exhibit resistance to Fusarium Wilt Tropical Race 4 (popularly known as Panama Disease).  Subject to compliance with various provisions of the agreement, the agreement includes working capital funding from Dole to the Company over the next four years. In addition to working capital funding, Dole will reimburse the Company for the development of banana plants and incur additional costs for the commercialization of plants upon successful completion of the development portion of this project. Per the Agreement, 50% of future royalties may be offset with the research funding provided by Dole. In the event that Dole terminates the agreement for material breach by the Company or the Company’s bankruptcy, the Company must repay all funding provided by Dole balances to Dole within six months of termination. The parties have agreed to negotiate the terms of the long-term license agreement upon successful completion of the development portion of this project. We expect that the funding from these sources will be more than enough to cover our operating expenses for the next twelve months.  Ifmonths will be $908,513. Management believes the Company’s existing cash balances along with contractually obligated future funding doesfrom our current agreement with Dole are not arrive persufficient to provide the agreement, the Company may not be ablenecessary liquidity to meet itsour obligations as they become due.


Note 14: Income Taxes


The Company recorded a deferred tax liability relatedcome due over the next year. Additional possible sources of funding include revenue from marketing other genes which we intend to the indefinite lived in progress research and development that was acquired as part of the merger on October 19, 2015 and discussed further in Note 6.  During the three month period ended September 30, 2020, in conjunction with the DCA entered into and discussed further in Note 7, the Company placed the in progress research and development in service and began to amortize this asset over a twelve year, nine month life.  As a result, the Company reassessed the net deferred tax assets and related valuation allowance as the indefinite lived in progress research and development now has a finite life.  This reassessment resultedmarket in the Company relieving a portion ofnext six months, additional SBA EIDL loans, loans from our largest shareholder, additional capital infusions and reductions in operating expenses. Management believes that funding from these sources will be adequate to cover our expenses over the valuation allowance of $987,353 during the three month period ended September 30, 2020.next twelve months.






13



13 
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 


ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Caution Regarding Forward-Looking Information

 

This report includes “forward-looking statements” that are subject to risks, uncertainties and other factors. All statements other than statements of historical fact are statements that could be deemed forward-looking statements including continued compliance with government regulations, changing legislation or regulatory environments; any statements of expectation or belief and any statements of assumptions underlying any of the foregoing. These risks, uncertainties and other factors, and the general risks associated with the businesses of the Company described in the reports and other documents filed with the SEC, could cause actual results to differ materially from those referred to in the forward-looking statements. The Company cautions readers not to rely on these forward-looking statements. All forward-looking statements are based on information currently available to the Company and are qualified in their entirety by this cautionary statement. The Company anticipates that subsequent events and developments may cause its views to change. The information contained in this report speaks as of the date hereof and the Company has or undertakes no obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise unless required by law.


Company Overview


Evolutionary Genomics, Inc.(the (the "registrant" or "Company") was incorporated under the laws of the state of Minnesota in November 1990 under the name Fonahome Corporation. On March 24, 2009, the Company reincorporated in the state of Nevada and merged with its wholly-owned subsidiary, Fona, Inc., adopting the surviving company’s name, Fona, Inc. Theand simultaneously adopted the capital structure of Fona Inc., which includes total authorized capital stock of 800,000,000 shares, of which 780,000,000 are common stock and 20,000,000 are blank check preferred stock. The preferred stock may be issued from time to time in one or more series with such designations, preferences and relative participating, optional or other special rights and qualifications, limitations or restrictions thereof, as shall be stated in the resolutions adopted by the Corporation’s Board providing for the issuance of such preferred stock or series thereof.


On June 6, 2014, Evolutionary Genomics, Inc., a Delaware corporation merged with Fona, Inc. treated as a reverse acquisition with Evolutionary Genomics, Inc. as the acquirer and Fona as the acquired party. Subsequent to the Merger, Fona, Inc. was renamed Evolutionary Genomics, Inc. and our subsidiary was renamed from Evolutionary Genomics, Inc. to EG Crop Science, Inc. On May 9, 2016, we formed ICAM Therapeutics, Inc. (a Delaware corporation) as a wholly owned subsidiary of Evolutionary Genomics, Inc. We have not incurred any transactions in this company nor have we established any business plan for the future.


The Company maintains headquarters at the office of its Chief Executive Officer. The Company maintains a website at www.evolgen.com. The Company is not required to deliver an annual report to security holders and at this time does not anticipate the distribution of such a report. The Company will file reports with the SEC.


On August 14, 2000, the Company was issued patent number 6274319, titled “Methods to identify evolutionarily significant changes in polynucleotide and polypeptide sequences in domestic plants and animals”. On June 1, 2004, the Company was issued patent number 6743580, titled “Methods for producing transgenic plants containing evolutionarily significant polynucleotides”. These patents are for the core Adapted Traits Platform that we use for the discovery of genes in humans, animals and commercial crops. The Company has applied the Adapted Traits Platform in research projects including identifying genes believed to be responsible for increases in yield in corn, increases in yield in rice, salt tolerance and sugar content in tomatoes and pest/disease resistance in soybeans, bananas and multiple other crops.


In the past century, agriculture has been characterized by enhanced productivity, the use of synthetic fertilizers and pesticides, selective breeding, mechanization, water contamination, and farm subsidies. Proponents of organic farming such as Sir Albert Howard argued in the early 20th century that the overuse of pesticides and synthetic fertilizers damages the long-term fertility of the soil. While this feeling lay dormant for decades, as environmental awareness has increased in the 21st century there has been a movement towards sustainable agriculture by some farmers, consumers, and policymakers.


Advances in genetic research and modification of crop species have led to increased yield, drought tolerance and disease/pest resistance. These advances have also led to an increased concentration within the providers of seed and seedling plants to the industry.crop producers. The top seed companiesand plantlet providers control much of the implementation of new seedcrop varieties through patents and licensing agreements. Genetic traits providers, like Evolutionary Genomics, identify and develop genes that impact traits of interest to the industry and market those genes to these seed companies.




14




On June 26, 2018, the Company was awarded an Advanced Industries Accelerator Grant by the State of Colorado in the amount of $250,000 to identify and validate pathogen resistance genes in bananas and complete validation and marketing tomato and corn genes. The Company maintains ownership of all intellectual property developed from the use of grant funds.  The Company has recognized all revenue from this grant.


Evolutionary Genomics intends to continue to pursue grant funding from governmental agencies, industry associations and grant making foundations. These sources of funding are often subject to limitations in available funds, funding priorities in areas other than our area of focus, political uncertainties, long approval processes and competition with other research proposals. If such funding is not available, Evolutionary Genomics may incur the costs of these projects with the prospect of revenue uncertain and likely many years in the future.


14 

The single most valuable step in the process of crop improvement is the identification of the key genes among the 30,000 or more in the genome that hashave the desired impact. Evolutionary Genomics’ soybeanEG set out to find genes in soybeans that impact pest resistance project is an illustration of the evolution of a project from concept through marketing to seed companies. The project has yieldedand disease resistance. We identified genes for pest resistance in soybeanstwo that showed promise and, in hairy root assays on one of these genes, EG261, at the University of Wisconsin – Madison, proved that EG261 impacted resistance. Evolutionary Genomics has had discussionsWhen we discussed these results with the larger seed companies, they indicated interest but wanted to commercialize the genes and intends to continue those discussions after completion of validation testing withsee two generation, whole plant validation results. The Company has extended this pest resistance research to other crops including beans, tomatoes, cotton and maize in various stages or progress.


On April 29, 2014, the United States Patent and Trademark Office issued patent 8,710,300 titled EXPRESSION OF DIRIGENT GENE EG261 AND ITS ORTHOLOGS AND PARALOGS ENHANCES PATHOGEN RESISTANCE IN PLANTS. On December 5, 2017, the United States Patent and Trademark Office issued patent 9,834,783 which extended the previous patent to include additional variations of the gene. During 2017, the Company was issued similar patents in Canada, Brazil and China and has additional patents pending in Argentina and India. On January 16, 2020, the Company filed a patent application on its second soybean pest/disease resistance gene, EG19 and has included that gene in its ongoing two generation, whole plant validation research with the University of Missouri and with the Wisconsin Crop Innovation Center. Evolutionary Genomicstesting results before entering licensing negotiations. We have engaged in discussions with seed companies regarding further validation of the effectiveness of EG261. Based on information received in those discussions, Evolutionary Genomics has engaged in a whole plant validation trial of EG261 and EG19 at the University of Missouri and the University of Wisconsin’s Wisconsin Crop Innovation Center.Center (“UW”) to independently perform these validation studies for us.


As a small company restricted by our limited resources, we cannot afford to generate vast numbers of transformation plant lines, known as events. Moderate success is important enough to indicate that further optimization can lead to significantly improved results. We must prove that there is enough evidence to warrant additional trials by companies with vastly more resources to build on our success but the single most valuable step in this process is the identification of the gene that has the desired impact and we have identified two of these genes, in soybeans, EG261 and EG19.  We cannot assure you

On April 29, 2014, the United States Patent and Trademark Office issued patent 8,710,300 titled EXPRESSION OF DIRIGENT GENE EG261 AND ITS ORTHOLOGS AND PARALOGS ENHANCES PATHOGEN RESISTANCE IN PLANTS. On December 5, 2017 and March 3, 2020, the United States Patent and Trademark Office issued additional patents which extended the previous patent to include additional variations of the gene. Subsequently, the Company was issued similar patents in Canada, Brazil, Argentina and China and has additional patents pending in India. On January 15, 2021, the Company filed a patent application on its second soybean pest/disease resistance gene, EG19, and has included that gene in its ongoing two generation, whole plant validation research. The Company has also discovered additional candidate genes that may impact pathogen resistance. There can be no assurance that any of these identified genes will be successfulproven effective in SCNvalidation testing or field trials.lead to licensing agreements or revenue.


We entered into a Service Agreement with Wisconsin Crop Innovation Center (“WCIC”)UW under which they have transformed soybeans using our genes. WCIC guarantees a minimum number of successful events, havegenes and helped to establish the right combinations to achieve a range of expression and tested to assure us of successful events. WCIC has harvested the seeds ofexpression. UW grew events from seven constructs of EG261 and EG19.EG19 in their greenhouses. These plants were harvested in May 2020 for generation T2 seeds. The seeds have beenwere transferred to the University of Missouri for SCNand testing began in November 2020. We have completed five cycles of planting, growing and testing. The results of the second cycle were discarded because of process issues but the results of other cycles were promising with improvement in disease resistance observed in plants transformed with our genes. The Company has decided to place this testing which are currently underway and are expectedon hold to generate validation results over the next six months.focus resources on its banana genes.


If we are able tofuture results confirm thethese findings, of the University of Wisconsin-Madison for EG261 and the effectiveness of the new gene, EG19, the Company will lookintends to enter into negotiations for a long-term research collaboration and licensing agreement with seed companies. ThisIf these negotiations are successful, this type of agreement will likely have an upfront payment, milestone payments during their testing and a licensing royalty stream once the genes are incorporated into commercial seed lines. The testing phase includes field trials which may proceed for several years prior to generating licensing revenue. There are many risks in this process including some that are outside of Evolutionary Genomics’ control and there can be no guarantee that we will ever generate any revenue from these potential agreements. If Evolutionary Genomics receives product royalties from the soybean genes, it is required to pay the United Soybean Board a ten percent royalty stream not to exceed 150% of the grant amount of $262,400.




15




The Company has identified pest/disease resistance genes in other commercially valuable crops. The Company is currently engaged with the Universityin various stages of Missouri to perform two generation, whole plant testing ofprojects identifying genes in tomatoes and corn that may lead to increased pest/disease resistance. This project is currently on hold pending results from our soybean project and the availability of funding. If successful, we intend to market them to the seed industry. This strategy will require Evolutionary Genomics to incur significant research costs prior to any confirmation of commercial viability and there can be no guarantee that the desired results can be achieved or that commercialization can be reached.


Evolutionary Genomics has identified a gene in tomatoes that impacts the plant’s ability to tolerate salt and a gene that appears to control sweetness. On January 9, 2018, the United States Patent and Trademark Office issued patent 9,862,962 titled IDENTIFICATION AND USE OF TOMATO GENES CONTROLLING SALT/DROUGHT TOLERANCE AND FRUIT SWEETNESS. Despite discussions with seed companies, the Company has not been able to reach any agreement to license these genes and there can be no assurance that we will ever realize any revenue from these genes.


In 2014, the Company began a project to identify genes in cotton that may impact traits of commercial interest. In particular, we intend to focus on pest resistance and fiber length. We have used our Adapted Traits Platform to identify positively selected candidate genes and intend to further research these genes to confirm that they were positively selected. If any of these genes remain promising, we intend to contract with an independent lab to validate the effectiveness of those genes. These studies can be very costly and there can be no assurance that we will be successful with this project.


During the 1950s the global banana industry was devastated by a disease (caused by Fusarium fungus) that effectively wiped out the predominate variety of commercial bananas know as Gros Michel leading to the development of the Cavendish banana, which makes up well over 90% of the commercial banana market today. Cavendish was resistant to the strain of Fusarium that wiped out the Gros Michel variety but, in recent years, is being challenged by a new race of Fusarium that threatens to, once again, devastate the global banana industry. This crisis is imminent and has no solution. The recent emergence of Panama Disease TR4 in the Western Hemisphere makes a swift solution to the crisis even more urgent. A substantial part of the banana market consists of exports from Central and South America to the United States. This market is now critically imperiled.


15 

In 2018, the Company began a project to identify genes in wild banana relatives that are resistant to Fusarium. We have previously used our technology to identify genes in common beans and, in our project for the Bill and Melinda Gates Foundation in common beans, proved that these genes provided increased resistance to Fusarium fungus. We used our platform to isolate a banana gene that controls Fusarium Wilt (FW), aka Panama Disease, Tropical Race 4. The gene, which we have named FusR1 (Fusarium Resistance 1), is a native gene in Musa species, including cultivated bananas. We have found that, for all FW-resistant banana cultivars/species that we have tested, one version of our gene exists while, in all FW-sensitive banana cultivars/species that we have tested, there is a different version of FusR1. And notably, a third version exists in semi-resistant varieties that has allowed us to identify the particular nucleotide changes that are crucial for resistance to Fusarium Wilt.


We believe that this native banana gene can be introduced into cultivated bananas, particularly the Fusarium-sensitive Cavendish cultivar in order to make these cultivars resistant to Fusarium Wilt. Cavendish cultivars are sterile and seedless, but it should be possible to use MAB (marker assisted breeding), though perhaps difficult and time-consuming, to move FusR1 into Cavendish and other cultivated bananas. We believe that a gene transformation approach would be faster and easier. Given the threat of possible extinction for Cavendish, rapid approaches are not only warranted but essential and minimally genetically edited bananas will be accepted depending upon how the gene transfer is accomplished. Transfer of this native banana gene to cultivated bananas can also be accomplished with CRISPR technology, which allows a targeted, clean, and efficient transfer and which, as compared to more traditional genetic editing techniques, minimizes potential side effects. We believe that Cavendish bananas can be rendered Fusarium Wilt resistant by changing only a few base pairs. These sorts of minimal changes have been allowed by the USDA and FDA in several crops. Even in Europe, use of CRISPR technology has gained substantial traction.


On June 26, 2019, we filed a United States patent application titled IDENTIFICATION AND RESISTANCE GENES FROM WILD RELATIVES OF BANANA AND THEIR USES IN CONTROLLING PANAMA DISEASE. We are awaiting review of these patents by the United States Patent Office.




16




On August 19, 2020, the Company entered into a Development and Commercialization Agreementthe DCA with Dole Food Company for the development of plant varieties within the Musa genus of the Musaceae family (including the Cavendish variety of banana) that exhibit resistance to Fusarium Wilt Tropical Race 4 (popularly known as Panama Disease). Subject to compliance with various provisions of the agreement, the agreement includes working capital funding from Dole to the Company over the next four years. In addition to working capital funding, Dole will reimburse the Company for the development of banana plants and incur additional costs for the commercialization of plants upon successful completion of the development portion of this project. Upon receipt of $800,000 on August 26, 2020, $800,000 on July 28, 2021, $1,295,831 on December 29, 2020 and $647,916 on September 29, 2021, the Company executed the notes under this DCA and recorded them as long-term notes payable for financial statement purposes. Per the Agreement, 50% of future royalties may be offset with the research funding provided by Dole. In the event that Dole terminates the agreement for material breach by the Company or the Company’s bankruptcy, the Company must repay all funding provided by Dole balances to Dole within six months of termination. The parties have agreed to negotiate the terms of the long-term license agreement upon successful completion of the development portion of this project. We expect that the funding from these sources will be more than enough to cover our operating expenses for the next twelve months.  If the funding does not arrive per the agreement, the Company may not be able to meet its obligations as they become due.


If we are able to successfully transform and validate our banana genes, which will likely take 24-36 months from the start of the project in September 2020, under the terms of the agreement with Dole, we expect to negotiate a long termlong-term royalty contract for the commercialization of banana plants using our genes. This licensing arrangement will likely be exclusively with Dole and contain royalty payments based on the number of plants and/or hectares of plants. Even if EG’s genes are provedproven to be effective, it is difficult to predict the future revenue stream that any licensing arrangement can generate and will be heavily dependent upon the speed with which Panama Disease spreads throughout the world necessitating a solution and any changes in the price of bananas based on supply and demand. Many articles are available in the public realm detailing the significance of the disease and the spread throughout the world.


Since bananas are seedless, they are propagated by clones which allows for very rapid production of plants. An initial batch of 100 successful plants can generate a secondary propagation of over 15,000 plants in one year (enough for 10 hectares) and 15 million in the next generation. There are over 400,000 hectares of banana production in Latin America from Mexico to Peru. Adoption of the new variety will be dependent upon its effectiveness and the infection rate of Panama disease.


There are many risks associated with achieving these desired results including but not limited to:


-

-

We may not be able to adequately establish patent protection for our intellectual property or others may have competing claims;

claims.

-

Others may develop competitive approaches to compete with our genes;

genes.

-

Our transformation academic labs may fail to develop enough events for testing;

testing.

16 

-

Our genes may cause unforeseen and undesirable changes beyond the pest resistance such as yield degradation or changes in the appearance or taste of the fruit;

fruit.

-

Our genes may fail to deliver the desired results of resistance to Fusarium;

Fusarium.

-

Globally regulations and/or consumer preference may prevent the successful commercial launch of bananas with genetics changed using our methods; and

methods.

-

We will be dependent on others for the successful production and marketing of bananas with our genes and many factors will be outside of our control.

-

Our cash flow is highly dependent upon our only expected source of funding provided under our Development and Commercialization Agreement with Dole Food Company.

-

Our expected future royalty revenue will be highly dependent upon the successful execution of the banana development project in the Development and Commercialization AgreementDCA with Dole Food Company and the negotiation of a long termlong-term royalty licensing agreement expected in the third year of that agreement.


These and other risk factors are discussed in more detail in our 10-K filing dated March 30, 2020.31, 2021.


While Panama Disease 1) is potentially existential to the banana industry, 2) has no known treatment and 3) is not yet widespread, Black Sigatoka Disease is a different disease the is very wide-spread and is treated with toxins at a cost of up to $2300 per hectare per year. We spent the last two years researching wild banana plants to identify a gene that could potentially be used to develop plants that are resistant to Black Sigatoka with no or reduced use of toxins. On October 21, 2021, we filed a United States patent application titled IDENTIFICATION AND RESISTANCE GENES FROM WILD RELATIVES OF BANANA AND THEIR USES IN CONTROLLING BLACK SIGATOKA DISEASE. We are awaiting review of these patents by the United States Patent Office. We are in the early stages of developing this gene and others are working on competing approaches. There is no guarantee that this will lead to commercial success.

Evolutionary Genomics has no registered trademarks. The Company had two full time employees and one part-time employee as of September 30, 20202021 and leases its operating facility on a month-to-month basis after JuneSeptember 30, 2017. Evolutionary Genomics is not currently involved in or aware of any threatened or actual legal proceedings.




17



 


Unaudited Results of Operations


 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 Three Months Ended September 30,  Nine Months Ended September 30, 

 

2020

 

2019

 

 

2020

 

 

2019

 

 2021  2020  2021  2020 

 

Amount

 

 

Percent of Revenue

 

Amount

 

 

Percent of Revenue

 

 

Amount

 

 

Percent of Revenue

 

 

Amount

 

 

Percent of Revenue

 

 Amount  Percent of Revenue  Amount  Percent of Revenue  Amount  Percent of Revenue  Amount  Percent of Revenue 

Grant revenue

 

$

 

 

 

N/A

 

 

$

32,722

 

 

 

100.0

%

 

$

12,500

 

 

 

100.0

%

 

$

115,841

 

 

 

100.0

%

 $   N/A  $   N/A  $   N/A  $12,500   100.0%

Research and development

 

 

138,132

 

 

N/A

 

 

 

115,771

 

 

 

353.8

%

 

 

398,880

 

 

 

3191.0

%

 

 

361,113

 

 

 

311.7

%

  744,542   N/A   138,132   N/A   977,556   N/A   398,880   3191.0%

Salaries and benefits

 

 

217,430

 

 

N/A

 

 

37,500

 

 

114.6

%

 

 

403,089

 

 

3224.7

%

 

 

134,341

 

 

116.0

%

  92,430   N/A   217,430   N/A   277,289   N/A   403,089   3224.7%

General and administrative

 

 

118,947

 

 

 

N/A

 

 

 

41,962

 

 

 

128.2

%

 

 

225,454

 

 

 

1803.6

%

 

 

166,576

 

 

 

143.8

%

  305,335   N/A   118,947   N/A   955,019   N/A   225,454   1803.6%

Total operating expenses

 

 

474,509

 

 

 

N/A

 

 

 

195,233

 

 

 

596.6

%

 

 

1,027,423

 

 

 

8219.4

%

 

 

662,030

 

 

 

571.5

%

  1,142,307   N/A   474,509   N/A   2,209,864   N/A   1,027,423   8219.4%

Operating loss

 

 

(474,509

)

 

N/A

 

 

(162,511

)

 

-496.6

%

 

 

(1,014,923

)

 

-8119.4

%

 

 

(546,189

)

 

-471.5

%

  (1,142,307)  N/A   (474,509)  N/A   (2,209,864)  N/A   (1,014,923)  -8119.4%

Other income

 

 

23,041

 

 

N/A

 

 

6,190

 

 

18.9

%

 

 

26,841

 

 

214.7

%

 

 

7,726

 

 

6.7

%

  83,650   N/A   23,041   N/A   83,764   N/A   26,841   214.7%

Income Taxes

 

 

987,353

 

 

 

N/A

 

 

 

 

 

 

0.0

%

 

 

987,353

 

 

 

7898.8

%

 

 

 

 

 

0.0

%

     N/A   987,353   N/A      N/A   987,353   7898.8%

Net income (loss)

 

$

535,885

 

 

N/A

 

$

(156,321

)

 

-477.7

%

 

$

(729

)

 

-5.8

%

 

$

(538,463

)

 

-464.8

%

Net (loss) income ($1,058,657)  N/A  $535,885   N/A  ($2,126,100)  N/A  ($729)  -5.8%

Preferred stock dividend

 

 

(71,392

)

 

 

N/A

 

 

 

(71,392

)

 

 

-218.2

%

 

 

(214,175

)

 

 

-1713.4

%

 

 

(197,987

)

 

 

-170.9

%

  (71,392)  N/A   (71,392)  N/A   (214,176)  N/A   (214,175)  -1713.4%

Net income (loss) attributable to common stockholders

 

$

464,493

 

 

 

N/A

 

 

$

(227,713

)

 

 

-695.9

%

 

$

(214,904

)

 

 

-1719.2

%

 

$

(736,450

)

 

 

-635.7

%

Net (loss) income attributable to common stockholders ($1,130,049)  N/A  $464,493   N/A  ($2,340,276)  N/A  ($214,904)  -1719.2%


Service and Grant Revenue


ServiceGrant revenue decreased $103,341,$12,500, or 89.2%100.0%, to $0 for the nine months ended September 30, 2021 from $12,500 for the nine months ended September 30, 2020 from $115,841 for the nine months ended September 30, 2019.2020. The decrease was due to decreased revenue recognized from the State of Colorado grant which ended in January 2020.


ServiceGrant revenue decreased $32,722, or 100.0%, toremained unchanged at $0 for the three months ended September 30, 2020 from $32,7222021 and 2020.

Operating Expenses

Operating expenses increased $1,182,441, or 115.1% to $2,209,864 for the threenine months ended September 30, 2019. The decrease was due to decreased revenue recognized2021 from the State of Colorado grant which ended in January 2020.


Operating Expenses


Operating expenses increased $365,393, or 55.2% to $1,027,423 for the nine months ended September 30, 2020 from $662,030 for the nine months ended September 30, 2019.2020. Changes in these items are described below.


Operating expenses increased $279,276,$667,798, or 143.0%140.7% to $1,142,307 for the three months ended September 30, 2021 from $474,509 for the three months ended September 30, 2020 from $195,233 for the three months ended September 30, 2019.2020. Changes in these items are described below.


17 

Research and Development


Research and development increased $37,767,$578,676, or 10.5%145.1%, to $398,880$977,556 for the nine months ended September 30, 20202021 from $361,113$398,880 for the nine months ended September 30, 2019. The increase was primarily due to increased patent costs partially offset by decreased costs for our soybean pest resistance project and our banana disease resistance project.


Research and development increased $22,361, or 19.3%, to $138,132 for the three months ended September 30, 2020 from $115,771 for the three months ended September 30, 2019. The increase was primarily due to increased patent costs.




18




Salaries and Benefits


Salaries and benefits increased $268,748, or 200.0%, to $403,089 for the nine months ended September 30, 2020 from $134,341 for the nine months ended September 30, 2019. The increase was primarily due to increased stock compensation costs and bonuses.  


Salaries and benefits increased $179,930, or 479.8%, to $217,430 for the three months ended September 30, 2020 from $37,500 for the three months ended September 30, 2019. The increase was primarily due to increased stock compensation costs and bonuses.  


General and Administrative


General and administrative expenses increased $58,878, or 35.3%, to $225,454 for the nine months ended September 30, 2020 from $166,576 for the nine months ended September 30, 2019. The increase was primarily due to increased professional fees and the start of amortization of our research in progress asset.


General and administrative expenses increased $76,985, or 183.5%, to $118,947 for the three months ended September 30, 2020 from $41,962 for the three months ended September 30, 2019. The increase was primarily due to increased professional fees and the start of amortization of our research in progress asset.


Other Income


Total other income increased $19,115, or 247.4%, to $26,841 for the nine months ended September 30, 2020 from $7,726 for the nine months ended September 30, 2019. The increase was due to an increase in the market price of marketable securities.


Total other income increased $16,851, or 272.2%, to $23,041 for the three months ended September 30, 2020 from $6,190 for the three months ended September 30, 2019. The increase was due to an increase in the market price of marketable securities.


Income Tax Benefit


Income tax benefit increased to $987,353, or 100%, from $0 for the three and nine months ended September 30, 2020. The increase was the result of placing the In Progress primarily due to increased costs on our banana project partially offset by decreased costs on our soybean project and decreased patent costs.

Research and Developmentdevelopment increased $606,410, or 439.0%, to $744,542 for the three months ended September 30, 2021 from $138,132 for the three months ended September 30, 2020. The increase was primarily due to increased costs on our banana project partially offset by decreased patent costs.

Salaries and Benefits

Salaries and benefits decreased $125,800, or 31.2%, to $277,289 for the nine months ended September 30, 2021 from $403,089 for the nine months ended September 30, 2020. The decrease was primarily due to bonuses in 2020 not given in 2021.

Salaries and benefits decreased $125,000, or 57.5%, to $92,430 for the three months ended September 30, 2021 from $217,430 for the three months ended September 30, 2020. The decrease was primarily due to bonuses in 2020 not given in 2021.

General and Administrative

General and administrative expenses increased $729,565, or 323.6%, to $955,019 for the nine months ended September 30, 2021 from $225,454 for the nine months ended September 30, 2020. The decrease was primarily due to the amortization of our research in progress which was placed into service on August 19, 2020 partially offset by decreased legal costs.

General and administrative expenses increased $186,388, or 156.7%, to $305,335 for the asset now having a finite life.three months ended September 30, 2021 from $118,947 for the three months ended September 30, 2020. The increase was primarily due to the amortization of our research in progress which was placed into service on August 19, 2020 partially offset by decreased legal costs.


Other Income

Total other income increased $56,923, or 212.1%, to $83,764 for the nine months ended September 30, 2021 from $26,841 for the nine months ended September 30, 2020. The increase was primarily due to forgiveness of SBA debt partially offset by decreased gains in investments.

Total other income increased $60,609, or 263.0%, to $83,650 for the three months ended September 30, 2021 from $23,041 for the three months ended September 30, 2020. The increase was primarily due to forgiveness of SBA debt partially offset by decreased gains in investments.

Net Loss


Net loss decreased $537,734,increased $2,125,371, or 99.9%291,546.1%, to $2,126,100 for the nine months ended September 30, 2021 from $729 for the nine months ended September 30, 2020. The increase was primarily due to recognition of a tax benefit in the year ended December 31, 2020, from $538,463increased banana project costs, the amortization of our research in progress and a decrease in grant revenue partially offset by decreased patent costs, decreased soybean project costs and decreased legal costs.

Net loss increased $1,594,542, or 297.6%, to $1,058,657 for the ninethree months ended September 30, 2019. The decrease was primarily due to the recognition of income tax benefit, decreased costs on our soybean and banana projects and an increase in the market price of marketable securities partially offset by decreased revenue2021 from the State of Colorado grant, increased patent costs, increased stock compensation costs, bonuses and increased professional fees partially offset by.


Net income (loss) increased $692,206, or 442.8%, toa net incomeprofit of $535,885 for the three months ended September 30, 2020 from $156,321 of net loss for the three months ended September 30, 2019.2020. The increase was primarily due to the recognition of incomea tax benefit and an increase in the market priceyear ended December 31, 2020, increased banana project costs, the amortization of marketable securitiesour research in progress and a decrease in grant revenue partially offset by decreased revenue from the State of Colorado grant, increased patent costs increased stock compensation costs and bonuses.decreased legal costs.


Financial Condition


The Company’s working capital increased $224,480$315,717 to $323,228$590,146 as of September 30, 20202021 from $98,748$274,429 as of December 31, 20192020 primarily due to the proceeds of notes payable funding partially offset by the operating loss.


Liquidity


The Company has historically financed operations through cash flows from operations and equity transactions. Net cash used in operating activities was $749,073 for the nine months ended September 30, 2020 compared to $453,257 for the nine months ended September 30, 2019. The $295,816, or 65.3%, increase was primarily due to the operating loss partially offset by an increase in amortization and an increase in stock compensation. Net cash flows for investing activities was $0 for the nine months ended September 30, 2020 and 2019. Net cash provided from financing activities was $1,024,268 of proceeds from notes payable for the nine months ended September 30, 2020 and $540,015 of proceeds from the issuance of preferred stock in the nine months ended September 30, 2019.



19




As of September 30, 2020 we2021, the Company had $320,636$605,508 in our bank accountsoperating cash and $68,357 of trading securities. Sources of funding to meet prospective cash requirements include the Company’s existing cash balances and investments along with funding from our agreement with Dole. We expect that the funding from these sources will be more than enough to cover our operating expenses for the next twelve months.  Ifmonths will be $908,513. Management believes the Company’s existing cash balances along with contractually obligated future funding doesfrom our current agreement with Dole are not arrive persufficient to provide the agreement, the Company may not be ablenecessary liquidity to meet itsour obligations as they become due.come due over the next year. Additional possible sources of funding include revenue from marketing other genes which we intend to market in the next six months, additional SBA EIDL loans, loans from our largest shareholder, additional capital infusions and reductions in operating expenses. Management believes that funding from these sources will be adequate to cover our expenses over the next twelve months.


Off-Balance Sheet Arrangements


The Company has no off-balance sheet arrangements that have a material current effect, or that are reasonably likely to have a material future effect, on its financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources.


Contractual Obligations


The Company leases its operating facility and pays its rent in monthly installments. The lease was renewed in June 2016 for a period of twelve months and monthly rentals for the period of July 1, 2016 through December 31, 2019September 30, 2021 are $2,378 per month which continues on a month-to-month basis. There is no minimum lease commitment as of September 30, 2020.2021. Renewals after June 30, 2017 are by mutual agreement. The Company’s rent expense for each of the nine months ended September 30, 20202021 and 20192020 was $21,401.


On February 21, 2015, Evolutionary Genomics entered into a Sponsored Research Contract with The CuratorsCompany is obligated to pay royalties to the United Soybean Board of 10% of the Universitysale of Missouri for phenotyping transgenicproducts derived from the soybean plants.  As amendedgenes that were the subject of the research performed by the Contractor or from royalties received by the Company from the sale of products by a third party not to exceed 150% of the total amount paid to the Contractor under this Agreement. The Company has recognized to date grant revenue from the contract calls for paymentsof $262,400 as of September 30, 2021, thus limiting any future royalties as of September 30, 2021 to be made on a per plant basis with no minimum future payments.  We expecttotal of $393,600. The Company has not accrued or paid any royalties under the terms of the Agreement as of and during the nine months ended September 30, 2021 because it has not received any revenue from the sale of products to continue this contract and will likely have additional amounts payable but the amount is indeterminable.date.


On September 18, 2020, the Company entered into a Standard Research Agreement with the University of Wisconsin-MadisonUW for the development of our banana genes. The agreement includes payments from the Company to UW in the amount of $2,159,719 over the two-year expected term of the project. These costs will be reimbursed, in the form of notes payable by Dole Food Company in accordance with our Development and Commercialization Agreement dated August 19, 2020.DCA.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not required by smaller reporting companies.

ITEM 4.CONTROLS AND PROCEDURES


ITEM 4.

CONTROLS AND PROCEDURES


(a) Evaluation of disclosure controls and procedures.


UnderThe Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the supervisionExchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. Furthermore, smaller reporting companies such as the Company face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of our operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

Our management, with the participation of the Company’s management, including the principal executive officer and principal financial officer, as of the end of the period covered by this report, the Company conducted an evaluation ofChief Executive Officer, evaluated the effectiveness of our internal control over financial reporting as of September 30, 2021. In making this assessment, our management used the design and operationcriteria set forth by the Committee of Sponsoring Organizations of the Company’s disclosure controls and procedures, as definedTreadway Commission (COSO) in Rule 13a-15(e) and 15d-15(e) under the Exchange Act. The Company’s disclosure controls and procedures are designed to provide reasonable assurance that the information required to be included in the Company’s reports to the Commission is recorded, processed, summarized and reported within the time periods specified in Commission rules and forms and to provide reasonable assurance that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.Internal Control — 2013 Integrated Framework. Based on this evaluation, our management, with the Company’s principal executive officer and principal financial officerparticipation of the President, concluded that, as of the period covered by this report,December 31, 2020, our disclosure controls and procedures areinternal control over financial reporting was not effective at these reasonable assurance levels fordue to the reasons statedmaterial weaknesses in the system of internal control described below.


19 

Specifically, management identified the following control deficiencies: (1) the Company has not properly segregated duties as one or two individuals initiate, authorize, and complete all transactions. The Company has not implemented measures that would prevent the individuals from overriding the internal control system. The Company does not believe that this control deficiency has resulted in deficient financial reporting because the Chief Financial Officer is aware of his responsibilities under the SEC’s reporting requirements and personally certifies the financial reports. (2) The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software. (3) Due to the size of the Company and limited personnel, the Company has not hired an individual with technical accounting expertise within the accounting function.




20




Our internal control system is designed to provide reasonable cost-effective assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. There is no assurance that our disclosure controls or our internal controls over financial reporting can prevent all errors. An internal control system, no matter how well designed and operated, has inherent limitations, including the possibility of human error. Because of the inherent limitations in a cost-effective control system, misstatements due to error may occur and not be detected. We monitor our disclosure controls and internal controls and make modifications as we believe appropriate given our financial resources and limited level of activities. Our intent in this regard is that our disclosure controls and our internal controls will improve as systems change and conditions warrant.


(b) Changes in internal controls.


Our Certifying Officers have indicated that there were no changes in our internal controls over financial reporting or other factors during the three months ended September 30, 2020, that could significantly affect such controls subsequent to the date of theirhis evaluation, and there were no such control actions with regard to significant deficiencies and material weaknesses.


20 



21




PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS


ITEM 1.

LEGAL PROCEEDINGS


None.

ITEM 1A.RISK FACTORS


ITEM 1A.

RISK FACTORS


Impacts of COVID-19 on our business


The impact of a novel strain of coronavirus (COVID-19), and measures to prevent its spread are affecting the macroeconomic environment and while the full impact is uncertain, our business and results of operations could be materially adversely affected. We previously expected to complete the soybean research in the second quarter of 2020.  During the second quarter of 2020, our academic labs informed us that they were not starting any new projects due to the COVID-19 pandemic.  As of October 2020, the project is underway. If this research is not completed within a reasonable timeframe or within estimated costs, future licensing revenue, the valuation of our research in progress and the financial condition of the Company could be significantly impacted.  The impact on our business will depend on a number of factors such as the duration and extent of COVID-19, governmental actions, changes in consumer behavior, responses of our third-party business partners that offer our content through their platforms, and general economic activity.


We are attempting to conduct business as usual to the extent possible and are complying with the applicable orders issued by the Governor of Colorado. The Company has been granted the status of essential operations and our staff continues to work in our lab while staggering working hours to limit exposure.lab.


The impact of the COVID-19 outbreak may also exacerbate other risks discussed in Item 1A. Risk Factors in our Annual Report on Form 10-K, any of which could have a material effect on us.

ITEM 2.UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS


ITEM 2.

UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS


None

ITEM 3.DEFAULTS UPON SENIOR SECURITIES


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES


None.

ITEM 4.MINE SAFETY DISCLOSURES


ITEM 4.

MINE SAFETY DISCLOSURES


Not applicable.

ITEM 5.OTHER INFORMATION


ITEM 5.

OTHER INFORMATION


None.


ITEM 6.

EXHIBITS


10.1

ITEM 6.
EXHIBITS

 

31.1

Development and Commercialization Agreement, dated August 19, 2020, by and between EG Crop Science, Inc. and Dole Food Company, Inc.

10.2

Standard Research Agreement, dated September 15, 2020, by and between the Board of Regents of the University of Wisconsin System on behalf of the University of Wisconsin-Madison and EG Crop Science, Inc.

31.1

Rule 13a-14(a)/15d-14(a) Certification

31.2

R31.2

Ruleule 13a-14(a)/15d-14(a) Certification

32.1

32.1

Section 1350 Certification

101.INS

101

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File

because its XBRL tags are embedded within the Inline XBRL document)
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)




22



 

21 

SIGNATURES


SIGNATURES


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


EVOLUTIONARY GENOMICS, INC.

BY:  

/s/ Steve B Warnecke

Steve B Warnecke

Chief Executive Officer and Chief Financial Officer

November 13, 2020

1, 2021





22





23