| Description of Business and Summary of Significant Accounting Policies | NOTE 1 – DESCRIPTION OF BUSINESS AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES 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. On December 21, 2020, the
Company entered into a Securities Exchange Agreement with Medolife Rx, Inc., a Wyoming corporation, (“Medolife Rx”) pursuant
to which, the Company agreed to acquire 51% of Medolife Rx in exchange for 9,000 shares of newly created Series B Convertible Preferred
Stock. On January 14, 2021, the Company completed the acquisition of 51% of Medolife, which had nominal assets, liabilities, and operations.
(see Notes 12 and 13). Quanta, Inc. is a biotechnology
company actively involved in both the pharmaceutical and nutraceutical industries. It mostly operates through its majority-owned subsidiary
Medolife which is focused on the research and development of therapeutics for multiple medical indications, including viral infections
such as the SARS-CoV-2 virus and multiple forms of cancer. Medolife was founded by Dr.
Arthur Mikaelian who pioneered the polarization technology that the company uses in all of its products which has been shown to increase
the potency of synthetic and organic compounds. Basis of presentation-Unaudited Interim Financial
Information The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) for interim financial information and with the rules and regulations of the United States Securities and Exchange Commission
(the “SEC”) to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes
required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation of the financial position, results of operations and cash flows for the interim
periods have been included. The results of operations for the three months ended March 31, 2021, are not necessarily indicative of the
results of operations to be expected for the full fiscal year ending December 31, 2021. These financial statements should be read in conjunction
with the financial statements of the Company for the year ended December 31, 2020 and notes thereto contained in the Annual Report on
Form 10-K of the Company as filed with the SEC on April 15, 2021. The consolidated financial statements include the
accounts of Quanta Inc, and its 51% owned subsidiary, Medolife Rx, Inc. All intercompany balances and transactions have been eliminated
in consolidation. 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 quarter ended March 31, 2021, the Company incurred
a net loss of $2,948,486 and used cash in operating activities of $782,116, and at March 31, 2021, the Company had a stockholders’
deficit of $4,035,365. 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. In addition, the Company’s independent registered public accounting firm,
in its report on the Company’s December 31, 2020 financial statements, raised substantial doubt about the Company’s ability
to continue as a going concern. 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 March 31, 2021, the Company had cash on hand in
the amount of $313,525. Subsequent to March 31, 2021, the Company received $1,231,000 for subscriptions to purchase 73,895,644 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 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. Revenue recognition The Company follows the guidance of Accounting Standards
Codification (“ASC”) 606, Revenue from Contracts with Customers. Product Sales License revenue Cost of goods sold includes direct costs and fees
related to the sale of our products. Convertible Notes with Fixed Rate Conversion Options The Company may enter into convertible notes, some
of which contain, predominantly, fixed rate conversion features, whereby the outstanding principal and accrued interest may be converted
by the holder, into common shares at a fixed discount to the market price of the common stock at the time of conversion. This results
in a fair value of the convertible note being equal to a fixed monetary amount. The Company records the convertible note liability at
its fixed monetary amount by measuring and recording a premium, as applicable, on the Note date with a charge to interest expense in accordance
with ASC 480 - “Distinguishing Liabilities from Equity”. Stock-based compensation The Company periodically 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 in accordance with FASB ASC 718, Compensation – Stock Compensation The fair value of the Company’s stock options
is estimated using the Black-Scholes-Merton Option Pricing model, which uses certain assumptions related to risk-free interest rates,
expected volatility, expected life of the stock options or restricted stock, and future dividends. Compensation expense is recorded based
upon the value derived from the Black-Scholes-Merton Option Pricing model and based on actual experience. The assumptions used in the
Black-Scholes-Merton Option Pricing model could materially affect compensation expense recorded in future periods. Prepaid production costs In February 2021, the Company’s subsidiary Medolife
Rx entered into a collaboration and joint development agreement with a company (the “Agent) for Medolife to produce some of its
products in the Agent’s facility. Medolife Rx agreed to pay the Agent $300,000 for the right to use the Agents production facility
for a term of five years. Medolife Rx will also pay a production fee, as defined, to the Agent for any production. The Company determined
that there is no distinct asset that it is purchasing from the Agent and will record amortization of the prepaid fee ratably over the
life of the contract. As of March 31, 2021, the Company had paid the Agent $100,000 of the fee. Advertising costs Advertising costs are expensed
as incurred. During the quarters ended March 31, 2021 and March 31, 2020, advertising costs totaled $57,959 and $33,682, respectively. Research and Development Costs Costs incurred for research and development are expensed
as incurred. During the quarters ended March 31, 2021 and March 31, 2020, research and development costs totaled $130,825 and $77,876,
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 three months ended March 31, 2021 and 2020,
the dilutive impact of common stock equivalents, e.g. stock options, warrants and convertible notes payable have been excluded from calculation
of weighted average shares because their impact on the loss per share is anti-dilutive. As of March 31, 2021, 1,325,000 options were outstanding
of which 975,814 were exercisable, and convertible debt and accrued interest totaling $1,499,879 was convertible into 97,064,539 shares
of common stock. It should be noted that contractually the limitations on the third-party notes (and the related warrant) limit the number
of shares converted to either 4.99% or 9.99% of the then outstanding shares. As of March 31, 2021, and2020 potentially dilutive securities
consisted of the following:
March 31, 2021 March 31, 2020
Stock options 1,325,000 3,290,000
Unvested restricted shares 2,625,000 5,125,000
Convertible notes payable 97,064,539 889,469
Total 101,014,539 9,304,469 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 March 31, 2021 and December 31, 2020, the Company
did not have any Level 2 liabilities comprised of the fair value of embedded derivative liabilities. Concentrations of risks For the three months ended March 31, 2021, one customer
accounted for 61% of revenue. For the three months ended March 31, 2020, no customer accounted for 10% or more of revenue. As of March
31, 2021 and March 31, 2020, one customer accounted for 100% and 35% of accounts receivable. No other customer accounted for 10% or more
of accounts receivable. As of March 31, 2021, two vendors accounted for 61%
and 63% of accounts payable and no other vendor accounted for 10% or more of accounts payable. As of December 31, 2020, two vendors accounted
for 63% of accounts payable. 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 August 2020, the FASB issued ASU No. 2020-06 (“ASU
2020-06”) “ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40) 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. |
