Document and Entity Information
Document and Entity Information | 12 Months Ended |
Dec. 31, 2019 | |
Document And Entity Information | |
Entity Registrant Name | QUANTA INC |
Entity Central Index Key | 0001691430 |
Document Type | S-1 |
Amendment Flag | false |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business Flag | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 433,143 | $ 35,820 |
Accounts receivable | 28,260 | 19,561 |
Inventories | 122,519 | |
Prepaid expenses | 7,500 | |
Total current assets | 591,422 | 55,381 |
Equipment, net | 313,478 | 372,880 |
Operating lease right-of-use asset | 332,980 | |
Security deposits | 33,652 | 16,770 |
Total assets | 1,271,532 | 445,031 |
Current liabilities: | ||
Accounts payable and accrued expenses | 73,598 | 9,617 |
Notes payable ($55,850 in default at December 31, 2019) | 55,850 | 180,000 |
Deferred revenue, license agreement | 32,742 | |
Operating lease liabilities | 85,662 | |
Convertible note payable (net of discount of $224,660) | 57,340 | |
Derivative liabilities | 400,139 | |
Total current liabilities | 705,331 | 189,617 |
Long term liabilities | ||
Deferred revenue, licenses agreement, long-term | 35,470 | |
Operating lease liabilities, long-term | 251,791 | |
Total liabilities | 992,592 | |
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 25,000,000 shares authorized; none issued or outstanding | ||
Common stock, $0.001 par value; 100,000,000 shares authorized; 49,087,255 and 39,200,090 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively | 49,087 | 39,200 |
Shares to be issued (7,318,519 and 612,000 shares to be issued as of December 31, 2019 and December 31, 2018, respectively) | 2,847,868 | 306,000 |
Additional paid-in capital | 5,619,733 | 2,360,598 |
Accumulated deficit | (8,237,748) | (2,450,384) |
Total stockholders' equity | 278,940 | 255,414 |
Total liabilities and stockholders' equity | $ 1,271,532 | $ 445,031 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Notes payable | $ 55,850 | |
Convertible note payable, discount | $ 224,660 | |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 49,087,255 | 39,200,090 |
Common stock, shares outstanding | 49,087,255 | 39,200,090 |
Shares to be issued, shares | 7,318,519 | 612,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Total revenue | $ 225,254 | $ 1,268,988 |
Cost of goods sold | 183,681 | 303,720 |
Gross profit | 41,573 | 965,268 |
Operating expenses: | ||
Labor and related | 454,179 | 1,302,391 |
Research and development | 207,600 | 351,670 |
Selling, general, and administrative | 1,055,805 | 4,799,030 |
Total operating expenses | 1,717,584 | 6,453,091 |
Loss from operations | (1,676,011) | (5,487,823) |
Other income (expense): | ||
Interest expense | (226,239) | |
Interest income | 39 | 37 |
Extinguishment of derivative liabilities | 145,565 | |
Change in fair value of derivative liabilities | 19,491 | |
Private placement costs | (238,395) | |
Gain on forgiveness of accrued interest | 21,000 | |
Gain on extinguishment of debt | 41,000 | |
Other income and expense, net | 62,039 | (299,541) |
Net loss | $ (1,613,972) | $ (5,787,364) |
Net loss per share, basic and diluted | $ (0.05) | $ (0.14) |
Weighted average common shares outstanding - basic and diluted | 35,100,108 | 42,808,603 |
Sale of Products, Net [Member] | ||
Total revenue | $ 225,254 | $ 1,237,200 |
License Revenue [Member] | ||
Total revenue | $ 31,788 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Shares to be Issued [Member] | Accumulated Deficit [Member] | Total |
Balance at Mar. 31, 2018 | $ 21,909 | $ (11,909) | $ (836,412) | $ (826,412) | |
Balance, shares at Mar. 31, 2018 | 21,908,810 | ||||
Shares issued for recapitalization | $ 6,500 | (6,500) | |||
Shares issued for recapitalization, Shares | 6,500,000 | ||||
Costs of recapitalization | (495,760) | (495,760) | |||
Shares issued for cash | $ 6,500 | 1,293,518 | 1,300,018 | ||
Shares issued for cash, Shares | 6,500,090 | ||||
Fair value of shares issued for settlement of convertible notes payable | $ 3,771 | $ 1,011,229 | $ 1,015,000 | ||
Fair value of shares issued for settlement of convertible notes payable, shares | 3,771,040 | ||||
Fair value of shares issued for services | 520 | 193,510 | 194,030 | ||
Fair value of shares issued for services, Shares | $ 520,150 | ||||
Fair value of warrants issued for services | $ 376,510 | $ 376,510 | |||
Cash received for shares to be issued | 306,000 | 306,000 | |||
Net loss | (1,613,972) | (1,613,972) | |||
Balance at Dec. 31, 2018 | $ 39,200 | 2,360,598 | 306,000 | (2,450,384) | 255,414 |
Balance, shares at Dec. 31, 2018 | 39,200,090 | ||||
Shares issued for cash | $ 6,331 | $ 2,084,044 | $ 2,090,375 | ||
Shares issued for cash, Shares | 6,330,750 | 12,011,269 | |||
Fair value of shares issued for services | 213 | 106,040 | 2,317,868 | 2,424,121 | |
Fair value of shares issued for services, Shares | $ 212,505 | ||||
Issuance of shares | $ 612 | $ 305,388 | $ (306,000) | ||
Issuance of shares, shares | 612,000 | ||||
Cash received for shares to be issued | 530,000 | 530,000 | |||
Shares issued for cashless exercise of warrants | $ 2,590 | (2,590) | |||
Shares issued for cashless exercise of warrants, shares | 2,590,910 | ||||
Fair value of vested options | 711,404 | 711,404 | |||
Fair value of shares issued for loan fee | $ 141 | 54,849 | 54,990 | ||
Fair value of shares issued for loan fee, shares | 141,000 | ||||
Net loss | (5,787,364) | (5,787,364) | |||
Balance at Dec. 31, 2019 | $ 49,087 | $ 5,619,733 | $ 2,847,868 | $ (8,237,748) | $ 278,940 |
Balance, shares at Dec. 31, 2019 | 49,087,255 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
CASH FLOW FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,613,972) | $ (5,787,364) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 86,875 | 173,902 |
Fair value of shares issued for services | 194,030 | 2,424,121 |
Fair value of vested options | 711,404 | |
Fair value of warrants issued for services | 376,510 | |
Extinguishment of derivative liabilities | (145,565) | |
Change in fair value of derivatives | (19,491) | |
Private placement costs | 238,395 | |
Amortization of convertible note discount | 185,330 | |
Gain on forgiveness of accrued interest | (21,000) | |
Gain on extinguishment of debt | (41,000) | |
Amortization of operating lease right-of-use asset | 87,132 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (19,561) | (8,699) |
Inventories | (122,519) | |
Prepaid expenses | (7,500) | |
Accounts payable and accrued liabilities | 9,617 | 63,981 |
Deferred revenue, license agreement | 68,212 | |
Operating lease liabilities | (82,659) | |
Net cash used in operating activities | (1,028,501) | (2,221,320) |
CASH FLOW FROM INVESTING ACTIVITIES: | ||
Purchase of equipment | (175,000) | (114,500) |
Payment of security deposit | (16,770) | (16,882) |
Net cash used in investment activities | (191,770) | (131,382) |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Proceeds from shares issued for cash | 1,300,018 | 2,090,375 |
Proceeds from shares to be issued | 306,000 | 530,000 |
Proceeds from convertibles notes payable | 326,800 | |
Proceeds from notes payable | 100,000 | |
Principal payments of notes payable | (124,150) | |
Principal payment of convertible note payable | (73,000) | |
Costs of recapitalization | (495,760) | |
Net cash provided by financing activities | 1,210,258 | 2,750,025 |
Decrease in cash | (10,013) | 397,323 |
Cash and cash equivalents, beginning of period | 45,833 | 35,820 |
Cash and cash equivalents, end of period | 35,820 | 433,143 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for taxes | 1,600 | 800 |
Cash paid for Interest | 15,080 | |
Non-cash investing and financing activities | ||
Derivative liabilities allocated to convertible note discount | 326,800 | |
Original issue discount | 28,200 | |
Fair value of shares issued for loan fee | 54,990 | |
Shares issued for cashless exercise of warrant | 2,590 | |
Fair value of shares issued for settlement of convertible notes payable | $ 1,015,000 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Quanta, Inc (“the Company”) was incorporated as Freight Solution, Inc. (“Freight Solution”) on April 28, 2016 in the State of Nevada. Effective June 6, 2018, Bioanomaly Inc. (“Bioanomaly”) was acquired by Freight Solution pursuant to a merger agreement in which the shareholders of Bioanomaly exchanged all of the outstanding shares of Bioanomaly for 21,908,810 newly issued shares of Freight Solution’s common stock. Freight Solution shareholders retained 6,500,000 shares of common stock, which represented 23% of the issued and outstanding stock following the merger. The acquisition was accounted for as a reverse merger transaction. In connection with the closing of the merger, Freight Solution’s management was replaced by Bioanomaly’s management. On July 11, 2018, the Company changed its name to Quanta, Inc. The Company is an applied science company focused on increasing energy levels in plant matter to increase performance within the human body. The Company’s operations are based in Burbank, California. Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the year ended December 31, 2019, the Company incurred a net loss of $5,787,364 and used cash in operating activities of $2,221,320, and at December 31, 2019, the Company had a had a working capital deficiency of $113,909. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At December 31, 2019, the Company had cash on hand in the amount of $433,143. Subsequent to December 31, 2019 the Company received $153,000 from the issuance of a convertible note payable and $30,000 for subscriptions to purchase shares of common stock. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial support from its shareholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing Basis of presentation and principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting standards generally accepted in the United States of America. In December 2018, the Company its fiscal year end from March 31 to December 31. The transition period covering the nine-month period from April 1, 2018 to December 31, 2018 is included in the accompany consolidated financial statements. The consolidated financial statements include the accounts of Quanta Inc, and its wholly-owned subsidiary, Bioanomaly, Inc. All intercompany balances and transactions have been eliminated in consolidation. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to, among others, allowance for doubtful accounts receivable, impairment analysis of long-term assets, valuation allowance on deferred income taxes, assumptions used in valuing stock instruments issued for services, assumptions made in valuing derivative liabilities, and the accrual of potential liabilities. Actual results may differ from these estimates. Accounts Receivable Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts if deemed necessary, and payments are generally due within thirty to forty-five days of invoicing. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At December 31, 2019 and December 31, 2018, the Company did not record any allowance for uncollectible accounts. Inventories Inventories are stated at the lower of cost or net realizable value. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and our ability to sell the product(s) concerned. Demand for our products can fluctuate significantly. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. At December 31, 2019 and 2018, the Company had no reserve for inventory obsolescence. Equipment Equipment is stated at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the equipment, which is three years, using the straight-line method. Expenditures for major additions and improvements are capitalized and minor repairs and maintenance are charged to expense as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Management assesses the carrying value of equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the year ended December 31, 2019 and for the nine-months period ended December 31, 2018, the Company determined there were no indicators of impairment of its property and equipment. Revenue The Company follows the guidance of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Product Sales Revenue is recorded at the transaction price, which is the amount of consideration the Company expects to receive in exchange for transferring products to a customer. Generally, the Company’s performance obligations are transferred to the customer at a point in time, typically upon delivery of products. The Company historically has offered no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against revenue. The Company sells its products (i) directly to customers (“DTC”) through online orders from our websites, and DTC sales at conventions and events; and (ii) through wholesalers, including physicians, pharmacies, fitness studios, grocery stores, and other organizations. License revenue Cost of goods sold includes direct costs and fees related to the sale of our products. Disaggregated Revenue The composition of the Company’s net revenues recognized during the year ended December 31, 2019 and the nine-month period ended December 31, 2018, disaggregated by source and nature, are as follows: Year ended December 31, 2019 Nine-months ended December 31, 2018 By Sales Channel: Direct to consumer $ 443,916 $ 67,806 Wholesale 793,284 157,448 License Revenue 31,788 - $ 1,268,988 $ 225,254 By Geographic Territory: California $ 766,469 $ 156,974 Other states 477,139 68,280 International 25,380 - $ 1,268,988 $ 225,254 Leases Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standard in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease right-of-use assets and lease liabilities of $420,112 and did not result in a cumulative-effect adjustment to accumulated deficit (see Note 5). Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton model to value the derivative instruments at inception and on subsequent valuation dates through the December 31, 2019, reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period Income taxes The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. Stock Compensation The Company issues stock options, warrants, shares of common stock, and restricted stock unit awards, as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation In periods through December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees On January 1, 2019, the Company adopted ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting Advertising costs Advertising costs are expensed as incurred. During the year ended December 31, 2019 and the nine-month period ended December 31, 2018, advertising costs totaled $103,401 and $27,529, respectively. Research and Development Costs Costs incurred for research and development are expensed as incurred. During the year ended December 31, 2019 and the nine-month period ended December 31, 2018, research and development costs totaled $351,670 and 207,600, respectively and include salaries, benefits, and overhead costs of personnel conducting research and development of the Company’s products. Net Loss per Share Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Shares used in the calculation of basic net loss per common share include vested but unissued shares underlying awards of restricted common stock. Diluted loss per share reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted loss per share, the treasury stock method assumes that outstanding warrants and convertible notes are exercised and the proceeds are used to purchase common stock at the average market price during the period. Warrants and convertible notes may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. For the year ended December 31, 2019, the dilutive impact of stock options exercisable into 3,290,000 shares of common stock, 8,000,000 shares of restricted stock to be issued, and convertible notes payable that can convert into 889,469 shares of common stock have been excluded from calculation of weighted average shares because their impact on the loss per share is anti-dilutive. For the year ended December 31, 2019, the dilutive impact of stock warrants exercisable into 3,000,000 shares of common stock have been excluded because their impact on the loss per share is anti-dilutive. Fair Value of Financial Instruments The Company follows the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs based on the Company’s assumptions. The Company is required to use of observable market data if such data is available without undue cost and effort. The Company believes the carrying amount reported in the balance sheet for cash, accounts receivable, accounts payable and accrued liabilities, and notes payable, approximate their fair values because of the short-term nature of these financial instruments As of December 31, 2019, the Company’s balance sheet includes Level 2 liabilities comprised of the fair value of embedded derivative liabilities of $400,139 (see Note 8). Concentrations of risks For the year ended December 31, 2019 and the nine-month period ended December 31, 2018, no customer accounted for 10% or more of revenue. As of December 31, 2019, two customers accounted for 19% and 12% of accounts receivable, respectively, and no other customer accounted for 10% or more of accounts receivable. As of December 31, 2018, no customer accounted for more than 10% of accounts receivable. Additionally, for the same periods, no vendor accounted for 10% or more of the Company’s cost of goods sold, or accounts payable at period-end. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits that are insured by the Federal Deposit Insurance Corporation, or FDIC. At times, deposits held may exceed the amount of insurance provided by the FDIC. The Company has not experienced any losses in its cash and believes it is not exposed to any significant credit risk. Segments The Company operates in one segment for the development and distribution of our CBD products. In accordance with the “ Segment Reporting Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after December 15, 2022. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
License Agreement
License Agreement | 12 Months Ended |
Dec. 31, 2019 | |
License Agreement | |
License Agreement | NOTE 2 – LICENSE AGREEMENT Effective January 22, 2019, the Company entered into an agreement with a wholesaler for the exclusive rights to distribute the Company’s products in the state of Colorado for three years. In consideration, the Company received an up-front payment of $100,000. The Company determined that the exclusive distribution agreement was a distinct agreement for the license of symbolic IP and thus should be recognized on a straight-line basis over the three-year life of the agreement. For the year ended December 31, 2019, the Company recognized revenue related to this agreement of $31,788. For the nine month period ended December 31, 2018, no distribution fee revenue was recorded. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 3 – INVENTORIES Inventories are valued at the lower of cost (first-in, first-out) or net realizable value, and consisted of the following: December 31, 2019 December 31, 2018 Raw materials and packaging $ 102,428 $ - Finished goods 20,091 - $ 122,519 $ - |
Equipment
Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Equipment | NOTE 4 - EQUIPMENT Equipment, stated at cost, less accumulated depreciation consisted of the following: December 31, 2019 December 31, 2018 Machinery-technology equipment $ 607,000 $ 347,500 Machinery-technology equipment under construction 30,000 175,000 637,000 522,500 Less accumulated depreciation (323,522 ) (149,620 ) $ 313,478 $ 372,880 Depreciation expense for the year ended December 31, 2019 and transition period ended December 31, 2018 was $173,903 and $185,835, respectively. As of December 31, 2019, the equipment under construction is approximately 33% complete, and is expected to be completed and placed into service during the year ended December 31, 2020. |
Operating Lease
Operating Lease | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Operating Lease | NOTE 5 - OPERATING LEASE The Company leases its headquarters office space in Burbank, California under an operating lease that expires on July 31, 2023. At December 31, 2019, the Company did not have any other leases. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Generally the implicit rate of interest in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives. Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases (“ASC 842”), which requires an entity to recognize a right-of-use asset and a lease liability for certain leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 842 on January 1, 2019, resulted in the recognition of operating lease right-of-use assets of $420,112 and corresponding lease liabilities of approximately the same amount. There was no cumulative-effect adjustment to accumulated deficit. As of December 31, 2019, the unamortized right of use asset was $332,980 and total lease liabilities were $337,453, of which $85,662 was current. The components of lease expense and supplemental cash flow information related to leases for the period are as follows: Year ended December 31, 2019 Lease Cost Operating lease cost (included in selling, general, and administrative expense in the Company’s statement of operations) $ 107,588 Other Information Cash paid for amounts included in the measurement of lease liabilities for 2019 $ 98,375 Weighted average remaining lease term – operating leases (in years) 3.5 Average discount rate – operating leases 4 % The supplemental balance sheet information related to leases for the period is as follows: At December 31, 2019 Operating leases Long-term right-of-use assets $ 332,980 Short-term operating lease liabilities $ 85,662 Long-term operating lease liabilities 251,791 Total operating lease liabilities $ 337,453 Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases 2020 $ 97,625 2021 102,506 2022 107,632 2023 55,126 Total lease payments 362,889 Less: Imputed interest/present value discount (25,436 ) Present value of lease liabilities 337,453 Less current portion (85,662 ) Operating lease liabilities, long-term $ 251,791 Lease expense were $107,588 and $42,040 during the year ended December 31, 2019 and the nine-month period ended December 31, 2018, respectively. Subsequent to December 31, 2019, the Company commenced leasing a second facility in addition to its headquarters facility described above (See Note 13). |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 6 – NOTES PAYABLE December 31, 2019 December 31, 2018 Note payable, in default, due January 13, 2019, interest at 8.3% per annum, secured by all the assets of the Company. As of the date of the financial statements, the note has not been fully paid, and the Company is in negotiations with the lender to cure this default. $ 55,850 $ 80,000 Note payable, unsecured, due January 6, 2019, interest at 10% per year. The note was paid off in 2019. - 100,000 Total notes payable (all current portion) $ 55,850 $ 180,000 |
Convertible Notes Payable
Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Convertible Notes Payable | |
Convertible Notes Payable | NOTE 7 – CONVERTIBLE NOTES PAYABLE At December 31, 2018, there was no balance of convertible notes payable. During 2019, the Company issued two convertible promissory notes for the principal sum of $355,000, of which $326,800 was received as proceeds, and $28,200 was recorded as original issue discount (OID). During 2019, one convertible note for $73,000 was repaid. At December 31, 2019, one convertible note for $282,000 was outstanding. The outstanding note is unsecured, bears interest at 12%, and is due April 29, 2020. At the option of the holders, the notes issued in 2019 are convertible into shares of the Company’s common stock at a price per share discount of 39% to 40% of the average market price of the Company’s common stock, as defined. As a result, the Company determined that the conversion option of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined that upon issuance of the convertible notes in October 2019, the initial fair value of the embedded conversion features totaled $565,195 (see Note 8), of which $326,800 was recorded as debt discount offsetting the face amount of the convertible notes, and the remainder of $238,395 was recorded as private placement costs. At December 31, 2018, there was no balance of discount on convertible notes payable. During 2019, note discount of $355,000 was recorded, made up of $28,200 OID and $326,800 of discount related to derivative liabilities. In addition, $54,990 of loan costs recorded on one convertible note (see below) are included with the discount. The discount and loan costs are amortized over the term of the related note payable. During 2019, total debt discount and loan costs amortization was $185,330, and at December 31, 2019, the unamortized debt discount and loan fee totaled $224,660. In connection with the issuance of one convertible note with the principal balance of $282,000, the Company issued as a commitment fee 141,000 shares of its common stock (the “Non-Returnable Shares”) as well as 705,000 shares of its common stock (the “Returnable Shares”). The Company recorded the fair value of the Non-Returnable fees of $54,990 as a loan cost. The Returnable Shares are an own-share lending arrangement issued in contemplation of a debt offering and such shares will be returned to the Company if no event of default has occurred prior to April 29, 2020, the maturity date of the note. At issuance, the fair value of the share lending arrangement was determined to be immaterial. In accordance with ASC 470-20, the shares are not deemed issued until it becomes more likely than not that they will not be returned and at such point the shares should be measured at fair value and such value recognized as a financing cost. At December 31, 2019, management determined that it is probable that the Company will pay the note in full when due, and meet all other conditions in the note agreement. Accordingly, management feels that it is more likely than not that the returnable shares will be returned to the Company and therefore the 705,000 Returnable Shares have not been recorded as being issued as of December 31, 2019, nor are they included in basic net loss per share or as potentially dilutive shares in calculating the diluted net loss per share. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | NOTE 8 – DERIVATIVE FINANCIAL INSTRUMENTS During 2019, the Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company at the option of the holder at price per share discounts ranging from 39% to 40% of the Company’s common stock market price, as defined in the note agreements. As the ultimate determination of shares to be issued upon conversion of these notes could exceed the current number of available authorized shares, the Company determined that the conversion features of the convertible notes were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative liabilities. Accordingly, the conversion features of the notes were separated from the host contracts (i.e. the notes) and characterized as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. At December 31, 2018, there was no balance of derivative liabilities. During the year ended December 31, 2019, the Company recorded additions of $565,195 related to the conversion features of notes issued during the period (see Note 7), and a decrease in fair value of derivatives of ($19,491). In addition, the Company recorded a decrease in derivative liability of ($145,565) related to derivative liabilities that were extinguished when the related convertible note payable was paid off (see Note 7). At December 31, 2019, the balance of the derivative liabilities was $400,139. The derivative liabilities were valued at the following dates using a probability weighted Black-Scholes-Merton model with the following assumptions: December 31, 2019 October 2019 Conversion feature: Risk-free interest rate 1.77 % 1.75 % Expected volatility 222 % 223 % Expected life (in years) 1 year 1 year Expected dividend yield - - Fair Value: Conversion feature $ 400,139 $ 565,195 The risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected volatility is based on the historical volatility of the Company’s stock. The expected life of the conversion feature of the notes was based on the remaining terms of the related notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 9 – INCOME TAXES The Company had no income tax expense for the year ended December 31, 2019 and the nine-month period ended December 31, 2018. The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate: Year ended Nine-months ended Federal tax at statutory rate 21.0 % 21.0 % State tax, net of federal benefit 7.0 7.0 Change in valuation allowance (28.0 ) (28.0 ) Effective income tax rate 0.0 % 0.0 % Deferred tax assets and liabilities consist of the following: December 31, 2019 December 31, 2018 Deferred tax assets: Stock-based compensation $ 1,039,000 $ 160,000 Operating lease liability 94,000 - Derivative expenses 67,000 - Net operating loss carryforwards 1,132,000 425,000 Gross deferred tax assets 2,332,000 585,000 Less: valuation allowance (2,103,000 ) (540,000 ) Total deferred tax assets 229,000 45,000 Deferred tax liabilities: Depreciation 90,000 45,000 Derivative gain 46,000 - Operating lease right-of-use asset 93,000 - Total deferred tax liabilities 229,000 45,000 Net deferred tax asset (liability) $ - $ - The provisions of ASC Topic 740, Accounting for Income Taxes, require an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. For the year ended December 31, 2019 and the nine-month period ended December 31, 2018, based on all available objective evidence, including the existence of cumulative losses, the Company determined that it was more likely than not that the net deferred tax assets were not fully realizable. Accordingly, the Company established a full valuation allowance against its net deferred tax assets. The Company intends to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance. During the year ended December 31, 2019 and the nine-month period ended December 31, 2018, the valuation allowance increased by $1.5 million and $0.5 million, respectively. At December 31, 2019 and 2018, the Company had available Federal and state net operating loss carryforwards (“NOL”s) to reduce future taxable income. For Federal purposes the amounts available were approximately $4.3 million and $1.6 million, respectively. For state purposes approximately $3.1 million and $1.1 was available at December 31, 2019 and 2018, respectively. The Federal carryforwards expire on various dates through 2039 and the state carryforwards expire through 2036. Due to restrictions imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with loss carryforwards, the utilization of the Company’s NOL may be limited as a result of changes in stock ownership. NOLs incurred subsequent to the latest change in control are not subject to the limitation. The Company’s operations are based in California and it is subject to Federal and California state income tax. Tax years after 2015 are open to examination by United States and state tax authorities. The Company adopted the provisions of ASC 740, which requires companies to determine whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded in the financial statements. ASC 740 also provides guidance on the recognition, measurement, classification and interest and penalties related to uncertain tax positions. As of December 31, 2019 and December 31, 2018, no liability for unrecognized tax benefits was required to be recorded or disclosed. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Equity [Abstract] | |
Stockholders' Equity | NOTE 10 – STOCKHOLDERS’ EQUITY The Company’s authorized capital consists of 125,000,000 shares, of which 100,000,000 shares are designated as shares of common stock, par value $0.001 per share, and 25,000,000 shares are designated as shares of preferred stock, par value $0.001 per share. No shares of preferred stock are currently outstanding. Shares of preferred stock may be issued in one or more series, each series to be appropriately designated by a distinguishing letter or title, prior to the issuance of any shares thereof. The voting powers, designations, preferences, limitations, restrictions, relative, participating, options and other rights, and the qualifications, limitations, or restrictions thereof, of the preferred stock are to be determined by the Board of Directors before the issuance of any shares of preferred stock in such series. Common stock issued for cash During the year ended December 31, 2019 and the nine-month period ended December 31, 2018, the Company completed a private placements of shares at prices ranging from $.10 to $0.50 per share. A total of $2,926,375 was received, including $2,090,375 in 2019 for shares issued in 2019, $530,000 in 2019 for shares subscribed, and $306,000 in 2018 for shares issued in 2019. The Company agreed to issue a total 12,011,269 shares in the private placements, of which 6,942,750 shares were issued through December 31, 2019, and 5,068,519 shares are included in shares to be issued on the accompanying financial statements. |
Share-Based Payments
Share-Based Payments | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Share-Based Payments | NOTE 11 – SHARE-BASED PAYMENTS Restricted common stock On May 20, 2019, the Company agreed to issue 8,000,000 shares of the Company’s common stock with vesting terms to a consultant for services (see Note 12). 1,000,000 shares vested immediately, and the balance of 7,000,000 shares will vest 625,000 shares per quarter over 2.8 years. In the event the consultants service with the Company terminates, any or all of the shares of common stock held by such recipient that have not vested as of the date of termination are forfeited to the Company in accordance with such restricted grant agreement. The total fair value of the 8,000,000 shares was determined to be $4,000,000 based on the price per shares of a contemporaneous private placement of the Company’s common stock on the date granted. The Company accounts for the share awards using a graded vesting attribution method over the requisite service period, as if each tranche were a separate award. During the year ended December 31, 2019, total share-based expense recognized related to vested restricted shares totaled $2,317,868. At December 31, 2019, there was $1,628,132 of unvested compensation related to these awards that will be amortized over a remaining vesting period of 2.3 years. The following table summarizes restricted common stock activity for the year ended December 31, 2019: Number of shares Fair value of shares Non-vested shares, January 1, 2019 - $ - Granted 8,000,000 4,000,000 Vested (2,250,000 ) (2,317,868 ) Forfeited - - Non-vested shares, December 31, 2019 5,750,000 $ 1,682,132 As of December 31, 2019, no shares have been issued and 2,250,000 vested shares are included in shares to be issued on the accompanying financial statements Common stock issued for services During the year ended December 31, 2019, the Company issued 212,505 shares of common stock to a consultant for services rendered. The shares were valued at $106,253 based on the price per share of a contemporaneous private placement of the Company’s common stock on the date granted and included in selling, general, and administrative expense on the accompanying financial statements. Stock Options During the year ended December 31, 2019, the Company issued options exercisable into 3,290,000 shares of common stock. 1,800,000 options vested immediately, and the balance of 1,490,000 options vest over various periods up to four years. The options have an exercise price of $0.23 per share, and expire in ten years. Total fair value of these options at grant date was approximately $1,179,000, which was determined using the Black-Scholes-Merton option pricing model with the following average assumption: stock price ranging from $0.23 to $0.38 per share, expected term ranging from five to seven years, volatility ranging from 213% to 218%, dividend rate of 0% and risk-free interest rate of 1.77%. During the year ended December 31, 2019, the Company recognized $711,404 of compensation expense relating to vested stock options. As of December 31, 2019, the amount of unvested compensation related to stock options was approximately $468,000 which will be recorded as an expense in future periods as the options vest. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. A summary of stock option activity during the year ended December 31, 2019 and the nine-month period ended December 31, 2018 is as follows: Number of warrants Weighted Average Contractual Options Outstanding and Exercisable as of March 31, 2018 - $ - - Granted - $ - - Exercised - - - Expired - - - Options Outstanding and Exercisable as of December 31, 2018 - $ - - Granted 3,290,000 0.23 6.0 Exercised - - - Expired - - - Options Outstanding as of December 31, 2019 3,290,000 0.23 6.0 Options Exercisable as of December 31, 2019 1,800,000 $ 0.23 5.8 At December 31, 2019, the aggregate intrinsic value of the stock options was $322,749. Stock Warrants In 2018, the Company issued warrants exercisable into 3,000,000 shares of common stock. The warrants were fully vested when issued, have an exercise price of $0.30 per share, and expire in 2022. Total fair value of these warrants at grant date was approximately $377,000, which was determined using the Black-Scholes-Merton option pricing model with the following average assumption: stock price of $0.20 per share, expected term of four years, volatility of 170%, dividend rate of 0% and risk-free interest rate of 1.76%. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the expected term of the share option award; the expected term represents the weighted-average period of time that share option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future. During the year ended December 31, 2019, there was a cashless exercise of all of the 3,000,000 warrants. A summary of warrant activity during the year ended December 31, 2019 and the nine-month period ended December 31, 2018 is as follows: Number of warrants Weighted Average Contractual Warrants Outstanding and Exercisable as of March 31, 2018 - $ - - Granted 3,000,000 $ 0.30 4.00 Exercised - - - Expired - - - Warrants Outstanding and Exercisable as of December 31, 2018 3,000,000 $ 0.30 4.00 Granted - - - Exercised (3,000,000 ) $ 0.30 - Expired - - - Warrants Outstanding and Exercisable as of December 31, 2019 - $ - - |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 12 – COMMITMENTS AND CONTINGENCIES The Company has an agreement with an individual in consideration of the Company’s exclusive use of patented technology developed by the individual. Pursuant to the agreement, as amended, the Company shall pay a royalty of 25% of all the net income from the sale of licensed products, as defined with a minimum royalty of $35,000 per month payable in cash or common stock of the Company. In addition, the Company agreed to issue 8,000,000 shares of the Company’s common stock with vesting terms to the individual (see Note 11). During the year ended December 31, 2019, the Company paid $343,300 to the individual. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 13 – SUBSEQUENT EVENTS In February 2020, the Company issued one unsecured convertible promissory note for $153,000, bearing interest at 22% per annum, and maturing in August 2020. The note is convertible at a 39% discount to the price of the Company’s common stock, as defined. In February 2020, the Company received $30,000 for subscriptions for shares of common stock to be issued in a private placement. On December 19, 2019, the Company entered into a non-cancelable real property lease agreement for approximately 3096 square feet of office, research, and production space in Burbank, California. The Company took possession of the space in February 2020. The lease term is for 60 months with an option to extend the term for an additional five years thereafter. The lease has with the annual fixed rental payments escalating from $7,500 to $8,441 during the original term. The aggregate total fixed rent is approximately $478,000 and will result in the recognition of an operating lease right-of-use asset of approximately $430,000 and corresponding lease liabilities of approximately the same amount. The Company also paid a security deposit of $16,883. In March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related adverse public health developments, have adversely affected workforces, customers, economies, and financial markets globally, likely leading to an economic downturn. It has also disrupted the normal operations of many businesses. This outbreak could decrease spending, adversely affect demand for our product and harm our business and results of operations. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or results of operations at this time. In March 2020, the Company issued approximately 241,000 shares of common stock with a fair value of approximately $28,000 to employees for services. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Going Concern | Going Concern The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements, for the year ended December 31, 2019, the Company incurred a net loss of $5,787,364 and used cash in operating activities of $2,221,320, and at December 31, 2019, the Company had a had a working capital deficiency of $113,909. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At December 31, 2019, the Company had cash on hand in the amount of $433,143. Subsequent to December 31, 2019 the Company received $153,000 from the issuance of a convertible note payable and $30,000 for subscriptions to purchase shares of common stock. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months. The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial support from its shareholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing |
Basis of Presentation and Principles of Consolidation | Basis of presentation and principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting standards generally accepted in the United States of America. In December 2018, the Company its fiscal year end from March 31 to December 31. The transition period covering the nine-month period from April 1, 2018 to December 31, 2018 is included in the accompany consolidated financial statements. The consolidated financial statements include the accounts of Quanta Inc, and its wholly-owned subsidiary, Bioanomaly, Inc. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to, among others, allowance for doubtful accounts receivable, impairment analysis of long-term assets, valuation allowance on deferred income taxes, assumptions used in valuing stock instruments issued for services, assumptions made in valuing derivative liabilities, and the accrual of potential liabilities. Actual results may differ from these estimates. |
Accounts Receivable | Accounts Receivable Accounts receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts if deemed necessary, and payments are generally due within thirty to forty-five days of invoicing. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. At December 31, 2019 and December 31, 2018, the Company did not record any allowance for uncollectible accounts. |
Inventories | Inventories Inventories are stated at the lower of cost or net realizable value. We regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and our ability to sell the product(s) concerned. Demand for our products can fluctuate significantly. Additionally, our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and obsolete inventory. At December 31, 2019 and 2018, the Company had no reserve for inventory obsolescence. |
Equipment | Equipment Equipment is stated at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the equipment, which is three years, using the straight-line method. Expenditures for major additions and improvements are capitalized and minor repairs and maintenance are charged to expense as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Management assesses the carrying value of equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. For the year ended December 31, 2019 and for the nine-months period ended December 31, 2018, the Company determined there were no indicators of impairment of its property and equipment. |
Revenue | Revenue The Company follows the guidance of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. Product Sales Revenue is recorded at the transaction price, which is the amount of consideration the Company expects to receive in exchange for transferring products to a customer. Generally, the Company’s performance obligations are transferred to the customer at a point in time, typically upon delivery of products. The Company historically has offered no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against revenue. The Company sells its products (i) directly to customers (“DTC”) through online orders from our websites, and DTC sales at conventions and events; and (ii) through wholesalers, including physicians, pharmacies, fitness studios, grocery stores, and other organizations. License revenue Cost of goods sold includes direct costs and fees related to the sale of our products. Disaggregated Revenue The composition of the Company’s net revenues recognized during the year ended December 31, 2019 and the nine-month period ended December 31, 2018, disaggregated by source and nature, are as follows: Year ended December 31, 2019 Nine-months ended December 31, 2018 By Sales Channel: Direct to consumer $ 443,916 $ 67,806 Wholesale 793,284 157,448 License Revenue 31,788 - $ 1,268,988 $ 225,254 By Geographic Territory: California $ 766,469 $ 156,974 Other states 477,139 68,280 International 25,380 - $ 1,268,988 $ 225,254 |
Leases | Leases Prior to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standard in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the recognition of operating lease right-of-use assets and lease liabilities of $420,112 and did not result in a cumulative-effect adjustment to accumulated deficit (see Note 5). |
Derivative Financial Instruments | Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton model to value the derivative instruments at inception and on subsequent valuation dates through the December 31, 2019, reporting date. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period |
Income Taxes | Income taxes The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain. |
Stock Compensation | Stock Compensation The Company issues stock options, warrants, shares of common stock, and restricted stock unit awards, as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock Compensation In periods through December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees On January 1, 2019, the Company adopted ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting |
Advertising Costs | Advertising costs Advertising costs are expensed as incurred. During the year ended December 31, 2019 and the nine-month period ended December 31, 2018, advertising costs totaled $103,401 and $27,529, respectively. |
Research and Development Costs | Research and Development Costs Costs incurred for research and development are expensed as incurred. During the year ended December 31, 2019 and the nine-month period ended December 31, 2018, research and development costs totaled $351,670 and 207,600, respectively and include salaries, benefits, and overhead costs of personnel conducting research and development of the Company’s products. |
Net Loss Per Share | Net Loss per Share Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period. Shares used in the calculation of basic net loss per common share include vested but unissued shares underlying awards of restricted common stock. Diluted loss per share reflects the potential dilution, using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted loss per share, the treasury stock method assumes that outstanding warrants and convertible notes are exercised and the proceeds are used to purchase common stock at the average market price during the period. Warrants and convertible notes may have a dilutive effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise price of the options and warrants. For the year ended December 31, 2019, the dilutive impact of stock options exercisable into 3,290,000 shares of common stock, 8,000,000 shares of restricted stock to be issued, and convertible notes payable that can convert into 889,469 shares of common stock have been excluded from calculation of weighted average shares because their impact on the loss per share is anti-dilutive. For the year ended December 31, 2019, the dilutive impact of stock warrants exercisable into 3,000,000 shares of common stock have been excluded because their impact on the loss per share is anti-dilutive. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company follows the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three broad levels as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly. Level 3—Unobservable inputs based on the Company’s assumptions. The Company is required to use of observable market data if such data is available without undue cost and effort. The Company believes the carrying amount reported in the balance sheet for cash, accounts receivable, accounts payable and accrued liabilities, and notes payable, approximate their fair values because of the short-term nature of these financial instruments As of December 31, 2019, the Company’s balance sheet includes Level 2 liabilities comprised of the fair value of embedded derivative liabilities of $400,139 (see Note 8). |
Concentrations of Risks | Concentrations of risks For the year ended December 31, 2019 and the nine-month period ended December 31, 2018, no customer accounted for 10% or more of revenue. As of December 31, 2019, two customers accounted for 19% and 12% of accounts receivable, respectively, and no other customer accounted for 10% or more of accounts receivable. As of December 31, 2018, no customer accounted for more than 10% of accounts receivable. Additionally, for the same periods, no vendor accounted for 10% or more of the Company’s cost of goods sold, or accounts payable at period-end. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits that are insured by the Federal Deposit Insurance Corporation, or FDIC. At times, deposits held may exceed the amount of insurance provided by the FDIC. The Company has not experienced any losses in its cash and believes it is not exposed to any significant credit risk. |
Segments | Segments The Company operates in one segment for the development and distribution of our CBD products. In accordance with the “ Segment Reporting |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after December 15, 2022. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements and related disclosures. Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregated Revenue | The composition of the Company’s net revenues recognized during the year ended December 31, 2019 and the nine-month period ended December 31, 2018, disaggregated by source and nature, are as follows: Year ended December 31, 2019 Nine-months ended December 31, 2018 By Sales Channel: Direct to consumer $ 443,916 $ 67,806 Wholesale 793,284 157,448 License Revenue 31,788 - $ 1,268,988 $ 225,254 By Geographic Territory: California $ 766,469 $ 156,974 Other states 477,139 68,280 International 25,380 - $ 1,268,988 $ 225,254 |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories are valued at the lower of cost (first-in, first-out) or net realizable value, and consisted of the following: December 31, 2019 December 31, 2018 Raw materials and packaging $ 102,428 $ - Finished goods 20,091 - $ 122,519 $ - |
Equipment (Tables)
Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Equipment | Equipment, stated at cost, less accumulated depreciation consisted of the following: December 31, 2019 December 31, 2018 Machinery-technology equipment $ 607,000 $ 347,500 Machinery-technology equipment under construction 30,000 175,000 637,000 522,500 Less accumulated depreciation (323,522 ) (149,620 ) $ 313,478 $ 372,880 |
Operating Lease (Tables)
Operating Lease (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases [Abstract] | |
Schedule of Lease Expense and Supplemental Cash Flow Information Related to Leases | The components of lease expense and supplemental cash flow information related to leases for the period are as follows: Year ended December 31, 2019 Lease Cost Operating lease cost (included in selling, general, and administrative expense in the Company’s statement of operations) $ 107,588 Other Information Cash paid for amounts included in the measurement of lease liabilities for 2019 $ 98,375 Weighted average remaining lease term – operating leases (in years) 3.5 Average discount rate – operating leases 4 % |
Schedule of Supplemental Balance Sheet Information Related to Leases | The supplemental balance sheet information related to leases for the period is as follows: At December 31, 2019 Operating leases Long-term right-of-use assets $ 332,980 Short-term operating lease liabilities $ 85,662 Long-term operating lease liabilities 251,791 Total operating lease liabilities $ 337,453 |
Schedule of Maturities of Operating Lease Liabilities | Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases 2020 $ 97,625 2021 102,506 2022 107,632 2023 55,126 Total lease payments 362,889 Less: Imputed interest/present value discount (25,436 ) Present value of lease liabilities 337,453 Less current portion (85,662 ) Operating lease liabilities, long-term $ 251,791 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | December 31, 2019 December 31, 2018 Note payable, in default, due January 13, 2019, interest at 8.3% per annum, secured by all the assets of the Company. As of the date of the financial statements, the note has not been fully paid, and the Company is in negotiations with the lender to cure this default. $ 55,850 $ 80,000 Note payable, unsecured, due January 6, 2019, interest at 10% per year. The note was paid off in 2019. - 100,000 Total notes payable (all current portion) $ 55,850 $ 180,000 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Fair Value Assumption of Derivative Instruments | The derivative liabilities were valued at the following dates using a probability weighted Black-Scholes-Merton model with the following assumptions: December 31, 2019 October 2019 Conversion feature: Risk-free interest rate 1.77 % 1.75 % Expected volatility 222 % 223 % Expected life (in years) 1 year 1 year Expected dividend yield - - Fair Value: Conversion feature $ 400,139 $ 565,195 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate | The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate: Year ended Nine-months ended Federal tax at statutory rate 21.0 % 21.0 % State tax, net of federal benefit 7.0 7.0 Change in valuation allowance (28.0 ) (28.0 ) Effective income tax rate 0.0 % 0.0 % |
Schedule of Deferred Tax Assets and Liabilities | Deferred tax assets and liabilities consist of the following: December 31, 2019 December 31, 2018 Deferred tax assets: Stock-based compensation $ 1,039,000 $ 160,000 Operating lease liability 94,000 - Derivative expenses 67,000 - Net operating loss carryforwards 1,132,000 425,000 Gross deferred tax assets 2,332,000 585,000 Less: valuation allowance (2,103,000 ) (540,000 ) Total deferred tax assets 229,000 45,000 Deferred tax liabilities: Depreciation 90,000 45,000 Derivative gain 46,000 - Operating lease right-of-use asset 93,000 - Total deferred tax liabilities 229,000 45,000 Net deferred tax asset (liability) $ - $ - |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Restricted Common Stock Activity | The following table summarizes restricted common stock activity for the year ended December 31, 2019: Number of shares Fair value of shares Non-vested shares, January 1, 2019 - $ - Granted 8,000,000 4,000,000 Vested (2,250,000 ) (2,317,868 ) Forfeited - - Non-vested shares, December 31, 2019 5,750,000 $ 1,682,132 |
Schedule of Stock Option Activity | A summary of stock option activity during the year ended December 31, 2019 and the nine-month period ended December 31, 2018 is as follows: Number of warrants Weighted Average Contractual Options Outstanding and Exercisable as of March 31, 2018 - $ - - Granted - $ - - Exercised - - - Expired - - - Options Outstanding and Exercisable as of December 31, 2018 - $ - - Granted 3,290,000 0.23 6.0 Exercised - - - Expired - - - Options Outstanding as of December 31, 2019 3,290,000 0.23 6.0 Options Exercisable as of December 31, 2019 1,800,000 $ 0.23 5.8 |
Schedule of Warrant Activity | A summary of warrant activity during the year ended December 31, 2019 and the nine-month period ended December 31, 2018 is as follows: Number of warrants Weighted Average Contractual Warrants Outstanding and Exercisable as of March 31, 2018 - $ - - Granted 3,000,000 $ 0.30 4.00 Exercised - - - Expired - - - Warrants Outstanding and Exercisable as of December 31, 2018 3,000,000 $ 0.30 4.00 Granted - - - Exercised (3,000,000 ) $ 0.30 - Expired - - - Warrants Outstanding and Exercisable as of December 31, 2019 - $ - - |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies (Details Narrative) | Jun. 06, 2018shares | Mar. 30, 2020USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2019USD ($)Segmentsshares | Dec. 31, 2018USD ($) | Oct. 31, 2019USD ($) | Jan. 02, 2019USD ($) |
Number of offering shares of common stock | shares | 12,011,269 | ||||||
Net loss | $ (1,613,972) | $ (5,787,364) | |||||
Net cash used in operating activities | (1,028,501) | (2,221,320) | |||||
Working capital deficiency | 113,909 | ||||||
Cash on hand | 35,820 | 433,143 | $ 35,820 | ||||
Proceeds from issuance of convertible note payable | 326,800 | ||||||
Allowance of uncollectible accounts | |||||||
Inventory reserve | |||||||
Estimated useful lives of equipment | 3 years | ||||||
Impairment of property plant and equipment | |||||||
Operating lease right-of-use assets | 332,980 | ||||||
Operating lease liabilities | 85,662 | ||||||
Advertising costs | 27,529 | 103,401 | |||||
Research and development costs | $ 207,600 | 351,670 | |||||
Derivative liability fair value | $ 400,139 | $ 565,195 | |||||
Operating segments | Segments | 1 | ||||||
Accounts Receivable [Member] | Customer One [Member] | |||||||
Concentration risk percentage | 19.00% | ||||||
Accounts Receivable [Member] | Customer Two [Member] | |||||||
Concentration risk percentage | 12.00% | ||||||
Accounts Receivable [Member] | No Other Customer [Member] | |||||||
Concentration risk percentage | 10.00% | 10.00% | |||||
No Customer [Member] | Revenue Benchmark [Member] | |||||||
Concentration risk percentage | 10.00% | 10.00% | |||||
No Vendor [Member] | Accounts Payable [Member] | |||||||
Concentration risk percentage | 10.00% | ||||||
Convertible Notes Payable [Member] | |||||||
Potentially dilutive shares outstanding | shares | 889,469 | ||||||
Restricted Stock [Member] | |||||||
Potentially dilutive shares outstanding | shares | 8,000,000 | ||||||
Stock Options [Member] | |||||||
Potentially dilutive shares outstanding | shares | 3,290,000 | ||||||
Warrants [Member] | |||||||
Potentially dilutive shares outstanding | shares | 3,000,000 | ||||||
ASC 842 [Member] | |||||||
Operating lease right-of-use assets | $ 420,112 | ||||||
Operating lease liabilities | $ 420,112 | ||||||
Subsequent Event [Member] | |||||||
Proceeds from issuance of convertible note payable | $ 153,000 | ||||||
Subscription for shares of common stock received | $ 30,000 | ||||||
Freight Solution [Member] | |||||||
Shares issued and outstanding percentage | 23.00% | ||||||
Bioanomaly, Inc. [Member] | |||||||
Business acquisition number of shares issued | shares | 21,908,810 | ||||||
Number of offering shares of common stock | shares | 6,500,000 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Schedule of Disaggregated Revenue (Details) - USD ($) | Jan. 22, 2019 | Dec. 31, 2018 | Dec. 31, 2019 |
Net revenues recognized | $ 100,000 | $ 225,254 | $ 1,268,988 |
California [Member] | |||
Net revenues recognized | 156,974 | 67,806 | |
Other States [Member] | |||
Net revenues recognized | 68,280 | 157,448 | |
International [Member] | |||
Net revenues recognized | |||
Direct to Consumer [Member] | |||
Net revenues recognized | 766,469 | 443,916 | |
Wholesale [Member] | |||
Net revenues recognized | 477,139 | 793,284 | |
License Revenue [Member] | |||
Net revenues recognized | $ 25,380 | $ 31,788 |
License Agreement (Details Narr
License Agreement (Details Narrative) - USD ($) | Jan. 22, 2019 | Dec. 31, 2018 | Dec. 31, 2019 |
Revenues | $ 100,000 | $ 225,254 | $ 1,268,988 |
Agreement term | 3 years | ||
Distributor License Fees [Member] | |||
Revenues | $ 31,788 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials and packaging | $ 102,428 | |
Finished goods | 20,091 | |
Inventories | $ 122,519 |
Equipment (Details Narrative)
Equipment (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 86,875 | $ 173,902 |
Percentage of equipment completion | 33.00% |
Equipment - Schedule of Equipme
Equipment - Schedule of Equipment (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Equipment, gross | $ 637,000 | $ 522,500 |
Less accumulated depreciation | (323,522) | (149,620) |
Equipment, net | 313,478 | 372,880 |
Machinery-technology Equipment [Member] | ||
Equipment, gross | 607,000 | 347,500 |
Machinery-technology Equipment Under Construction [Member] | ||
Equipment, gross | $ 30,000 | $ 175,000 |
Operating Lease (Details Narrat
Operating Lease (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Leases [Abstract] | ||
Operating lease description | The Company leases its headquarters office space in Burbank, California under an operating lease that expires on July 31, 2023. | |
Operating lease right-of-use asset | $ 332,980 | |
Total lease liabilities | 337,453 | |
Lease liabilities current | 85,662 | |
Lease expenses | $ 42,040 | $ 107,588 |
Operating Lease - Schedule of L
Operating Lease - Schedule of Lease Expense and Supplemental Cash Flow Information Related to Leases (Details) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Leases [Abstract] | |
Operating lease cost (included in selling, general, and administrative expense in the Company's statement of operations) | $ 107,588 |
Cash paid for amounts included in the measurement of lease liabilities for 2019 | $ 98,375 |
Weighted average remaining lease term - operating leases (in years) | 3 years 6 months |
Average discount rate - operating leases | 4.00% |
Operating Lease - Schedule of S
Operating Lease - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
Long-term right-of-use assets | $ 332,980 | |
Short-term operating lease liabilities | 85,662 | |
Long-term operating lease liabilities | 251,791 | |
Total operating lease liabilities | $ 337,453 |
Operating Lease - Schedule of M
Operating Lease - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Leases [Abstract] | ||
2020 | $ 97,625 | |
2021 | 102,506 | |
2022 | 107,632 | |
2023 | 55,126 | |
Total lease payments | 362,889 | |
Less: Imputed interest/present value discount | (25,436) | |
Present value of lease liabilities | 337,453 | |
Less current portion | (85,662) | |
Operating lease liabilities, long-term | $ 251,791 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Total notes payable (all current portion) | $ 55,850 | $ 180,000 |
Note Payable One [Member] | ||
Total notes payable (all current portion) | 55,850 | 80,000 |
Note Payable Two [Member] | ||
Total notes payable (all current portion) | $ 100,000 |
Notes Payable - Schedule of N_2
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Note Payable One [Member] | ||
Note payable due date | Jan. 13, 2019 | Jan. 13, 2019 |
Note payable interest rate | 8.30% | 8.30% |
Note Payable Two [Member] | ||
Note payable due date | Jan. 6, 2019 | Jan. 6, 2019 |
Note payable interest rate | 10.00% | 10.00% |
Convertible Notes Payable (Deta
Convertible Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | 12 Months Ended |
Oct. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2019 | |
Proceeds from notes payable | $ 100,000 | ||
Repayment of convertible note | 73,000 | ||
Derivative liabilities conversion features | $ 565,195 | 400,139 | |
Private placement costs | 238,395 | ||
Derivative liabilities | 400,139 | ||
Two Convertible Notes Payable [Member] | |||
Convertible notes payable issued | 355,000 | ||
Proceeds from notes payable | 326,800 | ||
Original issue discount | $ 28,200 | ||
Derivative liabilities conversion features | 565,195 | ||
Debt discount | 326,800 | ||
Private placement costs | $ 238,395 | ||
Number of returnable shares | 705,000 | ||
Convertible Note One [Member] | |||
Repayment of convertible note | $ 73,000 | ||
Convertible note outstanding | $ 282,000 | ||
Debt interest percentage | 12.00% | ||
Debt instrument maturity date | Apr. 29, 2020 | ||
Convertible Note One [Member] | Minimum [Member] | |||
Debt conversion price percentage | 39.00% | ||
Convertible Note One [Member] | Maximum [Member] | |||
Debt conversion price percentage | 40.00% | ||
Convertible Note Two [Member] | |||
Convertible notes payable issued | |||
Original issue discount | $ 28,200 | ||
Convertible note outstanding | 282,000 | ||
Debt discount | 355,000 | ||
Derivative liabilities | 326,800 | ||
Loan costs | 54,990 | ||
Loan fee | 224,660 | ||
Amortization of debt discount | 185,330 | ||
One Convertible Notes Payable [Member] | Non-Returnable Shares [Member] | |||
Non-returnable fees recorded as a loan cost | $ 54,990 |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2019 | Oct. 31, 2019 | |
Derivative liabilities conversion features | $ 400,139 | $ 565,195 | |
Decrease in fair value of derivatives | 19,491 | ||
Extinguishment of derivative liabilities | 145,565 | ||
Note [Member] | |||
Derivative liabilities conversion features | $ 565,195 | ||
Minimum [Member] | |||
Price per share discount percent | 39.00% | ||
Maximum [Member] | |||
Price per share discount percent | 40.00% |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Fair Value Assumption of Derivative Instruments (Details) | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2018 | Dec. 31, 2019USD ($)Integer | Oct. 31, 2019USD ($)Integer | |
Fair Value: Conversion feature | $ | $ 400,139 | $ 565,195 | |
Risk Free Interest Rate [Member] | |||
Conversion feature | 1.77 | 1.75 | |
Expected Volatility [Member] | |||
Conversion feature | 222 | 223 | |
Expected Life [Member] | |||
Conversion feature: Expected life (in years) | 1 year | 1 year | |
Expected Dividend Yield [Member] | |||
Conversion feature | 0 | 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Income tax expenses | ||
Increase in valuation allowance | 500,000 | 1,500,000 |
Federal, net operating loss forwards | 1,600,000 | 4,300,000 |
State, net operating loss forwards | 1,100,000 | 3,100,000 |
Unrecognized tax benefits | ||
Foreign Tax Authority [Member] | ||
Federal carryforwards, description | Expire on various dates through 2039. | |
State and Local Jurisdiction [Member] | ||
Federal carryforwards, description | Expire through 2036. |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate (Details) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||
Federal tax at statutory rate | 21.00% | 21.00% |
State tax, net of federal benefit | 7.00% | 7.00% |
Change in valuation allowance | (28.00%) | (28.00%) |
Effective income tax rate | 0.00% | 0.00% |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | ||
Stock-based compensation | $ 1,039,000 | $ 160,000 |
Operating lease liability | 94,000 | |
Derivative expenses | 67,000 | |
Net operating loss carryforwards | 1,132,000 | 425,000 |
Gross deferred tax assets | 2,332,000 | 585,000 |
Less: valuation allowance | (2,103,000) | (540,000) |
Total deferred tax assets | 229,000 | 45,000 |
Depreciation | 90,000 | 45,000 |
Derivative gain | 46,000 | |
Operating lease right-of-use asset | 93,000 | |
Total deferred tax liabilities | 229,000 | 45,000 |
Net deferred tax asset (liability) |
Stockholders' Equity (Details N
Stockholders' Equity (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Shares authorized | 125,000,000 | |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Proceeds from issuance of stock | $ 1,300,018 | $ 2,090,375 |
Number of common stock shares issued, value | 1,300,018 | $ 2,090,375 |
Number of common stock shares issued | 12,011,269 | |
Common stock shares to be issued | 5,068,519 | |
Through December 31, 2019 [Member] | ||
Number of common stock shares issued | 6,942,750 | |
Private Placement [Member] | ||
Proceeds from issuance of stock | $ 2,926,375 | |
Number of common stock shares issued, value | 2,090,375 | |
Number of shares subscribed | $ 306,000 | $ 530,000 |
Private Placement [Member] | Minimum [Member] | ||
Shares issued, price per share | $ 0.10 | |
Private Placement [Member] | Maximum [Member] | ||
Shares issued, price per share | $ 0.50 |
Share-Based Payments (Details N
Share-Based Payments (Details Narrative) - USD ($) | May 20, 2019 | Dec. 31, 2018 | Dec. 31, 2019 |
Number of restricted common stock issued | 8,000,000 | ||
Number of restricted common stock vested | 2,250,000 | ||
Number of stock issued for services, shares | 194,030 | 2,424,121 | |
Number of options issued | 3,290,000 | ||
Options exercise price | $ 0.23 | ||
Options term | 6 years | ||
Warrants [Member] | |||
Stock price | $ 0.20 | ||
Expected term | 4 years | ||
Volatility | 170.00% | ||
Dividend rate | 0.00% | ||
Risk-free interest rate | 1.76% | ||
Number of warrants issued | 3,000,000 | ||
Warrants exercise price | $ 0.30 | ||
Warrants expiration period | Expire in 2022 | ||
Fair value of warrants | $ 377,000 | ||
Cashless exercise warrants | 3,000,000 | ||
Consultant [Member] | |||
Number of stock issued for services | $ 212,505 | ||
Number of stock issued for services, shares | 106,253 | ||
Restricted Stock [Member] | |||
Number of restricted common stock issued | 8,000,000 | ||
Number of restricted common stock vested | 1,000,000 | 2,250,000 | |
Restricted common stock vested, description | 1,000,000 shares vested immediately, and the balance of 7,000,000 shares will vest 625,000 shares per quarter over 2.8 years. | ||
Restricted common stock vesting term | 2 years 9 months 18 days | 2 years 3 months 19 days | |
Fair value of restricted common stock | $ 4,000,000 | ||
Share-based expense | $ 2,317,868 | ||
Unvested compensation | 1,628,132 | ||
Restricted Stock [Member] | Per Quarter [Member] | |||
Number of restricted common stock vested | 625,000 | ||
Stock Options [Member] | |||
Share-based expense | 711,404 | ||
Unvested compensation | $ 468,000 | ||
Number of options issued | 3,290,000 | ||
Number of options vested | 1,800,000 | ||
Number of options non vested | 1,490,000 | ||
Options vesting term | 4 years | ||
Options exercise price | $ 0.23 | ||
Options term | 10 years | ||
Fair value of options | $ 1,179,000 | ||
Dividend rate | 0.00% | ||
Risk-free interest rate | 1.77% | ||
Options outstanding, aggregate intrinsic | $ 322,749 | ||
Stock Options [Member] | Minimum [Member] | |||
Stock price | $ 0.23 | ||
Expected term | 5 years | ||
Volatility | 213.00% | ||
Stock Options [Member] | Maximum [Member] | |||
Stock price | $ 0.38 | ||
Expected term | 7 years | ||
Volatility | 218.00% |
Share-Based Payments - Summary
Share-Based Payments - Summary of Restricted Common Stock Activity (Details) | 12 Months Ended |
Dec. 31, 2019USD ($)shares | |
Share-based Payment Arrangement [Abstract] | |
Non-vested shares, Beginning balance | shares | |
Non-vested shares, Granted | shares | 8,000,000 |
Non-vested shares, Vested | shares | (2,250,000) |
Non-vested shares, Forfeited | shares | |
Non-vested shares, Ending balance | shares | 5,750,000 |
Fair value of non-vested shares, Beginning balance | $ | |
Fair value of non-vested shares, Granted | $ | 4,000,000 |
Fair value of non-vested shares, Vested | $ | (2,317,868) |
Fair value of non-vested shares, Forfeited | $ | |
Fair value of non-vested shares, Ending balance | $ | $ 1,682,132 |
Share-Based Payments - Schedule
Share-Based Payments - Schedule of Stock Option Activity (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Number of Options Outstanding and Exercisable | ||
Number of Options Outstanding, Granted | 3,290,000 | |
Number of Options Outstanding, Exercised | ||
Number of Options Outstanding, Expired | ||
Number of Options Outstanding and Exercisable | ||
Number of Options Outstanding | 3,290,000 | |
Number of Options Exercisable | 1,800,000 | |
Options Outstanding and Exercisable, Weighted average exercise price | ||
Options Outstanding, Granted, Weighted average exercise price | 0.23 | |
Options Outstanding, Exercised, Weighted average exercise price | ||
Options Outstanding, Expired, Weighted average exercise price | ||
Options Outstanding and Exercisable, Weighted average exercise price | ||
Options Outstanding, Weighted average exercise price | 0.23 | |
Options Exercisable, Weighted average exercise price | $ 0.23 | |
Options Outstanding and Exercisable, Contractual Life | 0 years | 0 years |
Options Outstanding, Granted, Contractual Life | 0 years | 6 years |
Options Outstanding, Exercised, Contractual Life | 0 years | 0 years |
Options Outstanding, Expired, Contractual Life | 0 years | 0 years |
Options Outstanding and Exercisable, Contractual Life | 0 years | |
Options Outstanding, Contractual Life | 6 years | |
Options Exercisable, Contractual Life | 5 years 9 months 18 days |
Share-Based Payments - Schedu_2
Share-Based Payments - Schedule of Warrant Activity (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Number of Warrants Outstanding and Exercisable, Beginning Balance | 3,000,000 | |
Number of Warrants Outstanding and Exercisable, Granted | 3,000,000 | |
Number of Warrants Outstanding and Exercisable, Exercised | (3,000,000) | |
Number of Warrants Outstanding and Exercisable, Expired | ||
Number of Warrants Outstanding and Exercisable, Ending Balance | 3,000,000 | |
Warrants Weighted Average Exercise Price, Beginning Balance | $ 0.30 | |
Warrants Weighted Average Exercise Price, Granted | 0.30 | |
Warrants Weighted Average Exercise Price, Exercised | 0.30 | |
Warrants Weighted Average Exercise Price, Expired | ||
Warrants Weighted Average Exercise Price, Ending Balance | $ 0.30 | |
Warrants Contractual Life in Years, Beginning Balance | 0 years | 4 years |
Warrants Contractual Life in Years, Granted | 4 years | 0 years |
Warrants Contractual Life in Years, Exercised | 0 years | 0 years |
Warrants Contractual Life in Years, Expired | 0 years | 0 years |
Warrants Contractual Life in Years, Ending Balance | 4 years | 0 years |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - Patented Technology Developed [Member] | 12 Months Ended |
Dec. 31, 2019USD ($)shares | |
Royalty percentage | 25.00% |
Royalty | $ 35,000 |
Common stock shares available for future issuance | shares | 8,000,000 |
Individual [Member] | |
Royalty | $ 343,300 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Dec. 19, 2019USD ($)ft² | Mar. 31, 2020USD ($)shares | Feb. 29, 2020USD ($) | Dec. 31, 2018USD ($)shares | Dec. 31, 2019USD ($)shares | Mar. 30, 2020USD ($) |
Proceeds from promissory note | $ 100,000 | |||||
Operating lease right-of-use asset | 332,980 | |||||
Security deposit | $ 16,770 | $ 33,652 | ||||
Number of shares issued for services | shares | 194,030 | 2,424,121 | ||||
Private Placement [Member] | ||||||
Common stock, subscriptions amount | $ 306,000 | $ 530,000 | ||||
Non-cancelable Real Property Lease Agreement [Member] | ||||||
Area for land | ft² | 3,096 | |||||
Aggregate total fixed rent | $ 478,000 | |||||
Operating lease right-of-use asset | 430,000 | |||||
Security deposit | 16,883 | |||||
Non-cancelable Real Property Lease Agreement [Member] | Minimum [Member] | ||||||
Aggregate total fixed rent | 7,500 | |||||
Non-cancelable Real Property Lease Agreement [Member] | Maximum [Member] | ||||||
Aggregate total fixed rent | $ 8,441 | |||||
Subsequent Event [Member] | ||||||
Common stock, subscriptions amount | $ 30,000 | |||||
Subsequent Event [Member] | Employees [Member] | ||||||
Number of shares issued for services | shares | 241,000 | |||||
Fair value of shares issued for services | $ 28,000 | |||||
Subsequent Event [Member] | Private Placement [Member] | ||||||
Common stock, subscriptions amount | $ 30,000 | |||||
Subsequent Event [Member] | One Convertible Promissory Note [Member] | ||||||
Proceeds from promissory note | $ 153,000 | |||||
Interest rate | 22.00% | |||||
Maturity date | Aug. 31, 2020 | |||||
Convertible discount rate | 39.00% |