Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 22, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | QUANTA INC | |
Entity Central Index Key | 0001691430 | |
Document Type | 10-Q/A | |
Document Period End Date | Mar. 31, 2021 | |
Amendment Flag | true | |
Amendment Description | The purpose of this Amendment No. 1 (this "Amendment") to our Quarterly Report on Form 10-Q for the period ended March 31, 2021 (the "Form 10-Q"), as filed with the Securities and Exchange Commission (the "SEC") on May 25, 2021, is solely to incorporate the hyperlink to the XBRL data related to Form 10Q as filed. This Amendment makes no other changes to the Form 10-Q as filed with the SEC on May 24, 2021, and no attempt has been made in this Amendment to modify or update the other disclosures presented in the Form 10-Q. This Amendment does not reflect subsequent events occurring after the original filing of the Form 10-Q (i.e., those events occurring after May 25, 2021) or modify or update in any way those disclosures that may be affected by subsequent events. Accordingly, this Amendment should be read in conjunction with the Form 10-Q and our other filings with the SEC. No other changes have been made to the Quarterly Report, except that Part II, Item 6 of the Quarterly Report is also being amended to refer to the updated Exhibit Index that is included herein for the purpose of including abbreviated officer certifications that are being filed herewith. This Form 10-Q/A speaks as of the original filing date of the Quarterly Report and has not been updated to reflect events occurring subsequent to the original filing date. | |
Current Fiscal Year End Date | --12-31 | |
Entity's Reporting Status Current | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 176,458,527 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2021 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash | $ 313,525 | $ 6,270 |
Accounts receivable | 685 | |
Accounts receivable (net of reserve of $49,700) - related party | 149,100 | |
Deferred charges - related party | 134,704 | |
Inventories | 44,009 | 19,220 |
Prepaid production cost | 100,000 | |
Total current assets | 606,634 | 160,879 |
Equipment, net | 195,919 | 200,523 |
Operating lease right-of-use asset, net | 341,844 | 362,227 |
Deposits | 16,883 | 16,883 |
Total assets | 1,161,280 | 740,512 |
Current liabilities: | ||
Accounts payable and accrued expenses | 618,195 | 673,494 |
Notes payable (net of deferred finance charges of $38,171 and $42,261 at March 31, 2021 and December 31, 2020, respectively) | 400,165 | 482,724 |
Convertible note payable (net of discount of $29,369 and $539,282 at March 31, 2021 and December 31, 2020, respectively) | 1,393,752 | 1,074,814 |
Deferred revenue, license agreement | 27,002 | 34,818 |
Operating lease liabilities, short-term | 102,400 | 100,901 |
Settlement Reserve | 235,759 | 235,759 |
Total current liabilities | 2,777,272 | 2,602,510 |
Long term liabilities | ||
Notes payable, long term | 454,327 | 451,368 |
Operating lease liabilities, long-term | 273,714 | 294,880 |
Total liabilities | 3,505,314 | 3,348,758 |
Commitments and contingencies: | ||
Mezzanine equity: | ||
Total Mezzanine equity | 1,691,331 | |
Stockholders' equity (deficit): | ||
Preferred stock, $0.001 par value; 25,000,000 shares authorized; 2,500,000 issued and outstanding | 2,500 | 2,500 |
Common stock, $0.001 par value; 500,000,000 shares authorized; 99,897,748 and 46,756,970 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively | 99,900 | 46,757 |
Shares to be issued (4,875,000 and 4,875,000 as of March 31, 2021 and December 31, 2020, respectively) | 3,802,047 | 3,641,868 |
Additional paid-in capital | 9,492,252 | 10,102,805 |
Accumulated deficit | (17,295,903) | (16,402,176) |
Total Quanta, Inc. stockholders deficit | (3,899,204) | (2,608,246) |
Noncontrolling interest in consolidated subsidiary | (136,161) | |
Total stockholders' deficit | (4,035,365) | (2,608,246) |
Total liabilities and stockholders' deficit | 1,161,280 | 740,512 |
Series B Preferred Stock [Member] | ||
Mezzanine equity: | ||
Total Mezzanine equity | 1,522,198 | |
Series C Preferred Stock [Member] | ||
Mezzanine equity: | ||
Total Mezzanine equity | $ 169,133 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Accounts receivable to related party | $ 49,700 | $ 49,700 |
Deferred finance charges, noncurrent | 38,171 | 42,261 |
Convertible note payable, discount | $ 29,369 | $ 539,282 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 25,000,000 | 25,000,000 |
Preferred stock, shares issued | 2,500,000 | 2,500,000 |
Preferred stock, shares outstanding | 2,500,000 | 2,500,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 99,897,748 | 46,756,970 |
Common stock, shares outstanding | 99,897,748 | 46,756,970 |
Shares to be issued, shares | 4,875,000 | 4,875,000 |
Series B Preferred Stock [Member] | ||
Mezzanine equity, par value | $ 0.00001 | $ 0.00001 |
Mezzanine equity, shares authorized | 9,000 | 9,000 |
Mezzanine equity, shares issued | 9,000 | 0 |
Mezzanine equity, shares outstanding | 9,000 | 0 |
Series C Preferred Stock [Member] | ||
Mezzanine equity, par value | $ 0.00001 | $ 0.00001 |
Mezzanine equity, shares authorized | 1,000 | 1,000 |
Mezzanine equity, shares issued | 1,000 | 0 |
Mezzanine equity, shares outstanding | 1,000 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total revenue | $ 326,623 | $ 356,804 |
Cost of goods sold | 34,984 | 28,365 |
Gross profit | 291,639 | 328,439 |
Operating expenses: | ||
Employee compensation and contractors | 129,422 | 382,071 |
Selling, general, and administrative (includes royalty of $105,000 and $75,000 to related party for the three months ended March 31, 2021 and 2020, respectively) | 3,016,277 | 912,240 |
Research and development | 130,825 | 77,876 |
Total operating expenses | 3,276,524 | 1,372,187 |
Loss from operations | (2,984,885) | (1,043,748) |
Other income (expense): | ||
Interest expense | (67,817) | (188,637) |
Discount amortization | (31,945) | |
Private placement | (262,000) | |
Change in fair value derivative | 135,139 | |
Other income and expense, net | (99,762) | (315,498) |
Net loss | (3,084,647) | (1,359,246) |
Net loss attributable to noncontrolling interest | 136,161 | |
Net loss attributable to Quanta, Inc. | $ (2,948,486) | $ (1,359,246) |
Net loss per share, basic and diluted | $ (0.05) | $ (0.02) |
Weighted average common shares outstanding - basic and diluted | 63,300,000 | 39,200,090 |
Sales, Net [Member] | ||
Total revenue | $ 318,807 | $ 350,349 |
License Revenue [Member] | ||
Total revenue | $ 7,816 | $ 6,455 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Operations (Unaudited) (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Statement [Abstract] | ||
Sales to related party | $ 198,800 | |
Royalty expenses, related party | $ 105,000 | $ 75,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) | Mezzanine Equity Series B Preferred Stock [Member] | Mezzanine Equity Series C Preferred Stock [Member] | Series A Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Shares to be Issued [Member] | Accumulated Deficit [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2019 | $ 49,087 | $ 5,619,733 | $ 2,847,868 | $ (8,237,747) | $ 278,941 | ||||
Balance, shares at Dec. 31, 2019 | 49,087,255 | ||||||||
Issuance of shares | $ 5,000 | 495,000 | (500,000) | ||||||
Issuance of shares, shares | 5,000,000 | ||||||||
Shares issued for cash | $ 1,111 | 28,889 | 30,000 | ||||||
Shares issued for cash, shares | 111,111 | ||||||||
Fair value of vested options | 79,995 | 79,995 | |||||||
Fair value of restricted shares | 426,000 | 426,000 | |||||||
Net loss | (1,359,245) | (1,359,246) | |||||||
Balance at Mar. 31, 2020 | $ 55,198 | 6,223,617 | 2,773,868 | (9,596,992) | (544,309) | ||||
Balance, shares at Mar. 31, 2020 | 54,198,366 | ||||||||
Balance at Dec. 31, 2020 | $ 2,500 | $ 46,757 | 10,102,805 | 3,641,868 | (16,402,176) | (2,608,246) | |||
Balance, shares at Dec. 31, 2020 | 2,500,000 | 46,756,970 | |||||||
Issuance of shares | |||||||||
Issuance of shares, shares | |||||||||
Shares issued for cash | $ 32,475 | $ 981,525 | $ 1,014,000 | ||||||
Shares issued for cash, shares | 32,475,000 | ||||||||
Fair value of shares for services | 169,133 | 6,000 | 512,950 | 518,950 | |||||
Fair value of shares for services, shares | $ 1,000 | $ 6,000,000 | |||||||
Fair value of shares issued to employess and officer | $ 1,522,198 | ||||||||
Fair value of shares issued to employess and officer, shares | 9,000 | ||||||||
Fair value of vested options | 70,994 | 70,994 | |||||||
Fair value of restricted shares | 160,179 | 160,179 | |||||||
Shares issued for conversion of Convertible Notes | $ 14,668 | 381,790 | 396,458 | ||||||
Shares issued for conversion of Convertible Notes, shares | 14,665,778 | ||||||||
Adjustment for adoption of ASU 2020-6 | (2,557,812) | 2,054,759 | (503,053) | ||||||
Net loss | (2,948,486) | (136,161) | (3,084,647) | ||||||
Balance at Mar. 31, 2021 | $ 1,522,198 | $ 169,133 | $ 2,500 | $ 99,900 | $ 9,492,252 | $ 3,802,047 | $ (17,295,903) | $ (136,161) | $ (4,035,365) |
Balance, shares at Mar. 31, 2021 | 9,000 | 1,000 | 2,500,000 | 99,897,748 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOW FROM OPERATING ACTIVITIES: | ||
Net loss | $ (3,084,647) | $ (1,359,246) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 17,584 | 51,729 |
Fair value of shares issued for services | 688,083 | 426,409 |
Fair value of vested options | 70,994 | 79,995 |
Fair value of vested restricted shares | 160,179 | |
Fair value of Series B preferred shares issued to officer | 1,522,198 | |
Amortization of convertible note discount | 24,360 | 178,660 |
Amortization of note payable discount | 7,050 | |
Change in fair value of derivative | (135,139) | |
Private placement costs | 262,000 | |
Amortization of right-of-use asset | 20,383 | 41,208 |
Fees paid through conversion of convertible notes | 12,983 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 685 | 9,104 |
Accounts receivable, related party | (198,800) | |
Allowance for doubtful accounts | 49,700 | |
Deferred expenses, related party | 134,704 | |
Inventories | (24,789) | (20,975) |
Prepaid production costs | (100,000) | 7,500 |
Accounts payable and accrued liabilities | (55,300) | 54,169 |
Deferred revenue | (7,816) | (7,808) |
Operating lease liabilities | (19,667) | (38,751) |
Net cash used in operating activities | (782,116) | (451,145) |
CASH FLOW FROM INVESTING ACTIVITIES: | ||
Deposits | (30,000) | |
Purchase of equipment | (12,980) | (80,272) |
Net cash used in investment activities | (12,980) | (110,272) |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Proceeds from convertibles notes payable | 175,000 | 153,000 |
Proceeds from notes payable | 10,000 | |
Principal payments of notes payable | (96,649) | (7,500) |
Proceeds from shares issued for cash | 1,014,000 | 30,000 |
Net cash provided by financing activities | 1,102,351 | 175,500 |
Increase (decrease) in cash | 307,255 | (385,917) |
Cash and cash equivalents, beginning of period | 6,270 | 433,133 |
Cash and cash equivalents, end of period | 313,525 | 47,226 |
Supplemental Disclosures of Cash Flow Information: | ||
Cash paid for taxes | ||
Cash paid for interest | ||
Non-cash investing and financing activities | ||
Adjustment for adoption of ASU 2020-06 | 503,053 | |
Common shares issued for conversion of convertible notes | 396,458 | |
Derivative liabilities allocated to convertible note discount | 153,000 | |
Recognition of operating lease right-of-use asset and operating lease liabilities | $ 431,402 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
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”) 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. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 2 – INVENTORIES Inventories are valued at the lower of cost (first-in, first-out) or net realizable value, and net of reserves, consisted of the following: March 31, 2021 December 31, 2020 Raw materials and packaging $ 22,170 $ 3,144 Finished goods 21,839 16,076 $ 44,009 $ 19,220 The Company has recorded a reserve for slow moving and potentially obsolete inventory. The reserve at March 31, 2021 and December 31, 2020 was $9,125 and $9,125, respectively. |
Equipment
Equipment | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Equipment | NOTE 3 - EQUIPMENT Equipment, stated at cost, less accumulated depreciation consisted of the following: March 31, 2021 December 31, 2020 Machinery-technology equipment $ 704,772 $ 704,772 Machinery-technology equipment under construction 48,949 35,969 753,721 740,741 Less accumulated depreciation (557,802 ) (540,218 ) $ 195,919 $ 200,523 Depreciation expense for the three months ended March 31, 2021 and 2020 was $17,584 and $54,989, respectively. As of March 31, 2021, the equipment under construction is approximately 50% complete, and is expected to be completed and placed into service during the year ended December 31, 2021. |
Operating Lease
Operating Lease | 3 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Operating Lease | NOTE 4 - OPERATING LEASE At March 31, 2021, the Company has one operating lease for its headquarters office space in Burbank. The lease commenced on January 1, 2020, and has a term for 5 years, with annual fixed rental payments ranging from $90,000 to $101,296. At March 31, 2021, the balance of the lease’s right of use asset and corresponding lease liability were $341,844 and $376,114, respectively. At March 31, 2021, the Company is also obligated under a lease that was abandoned in December 2020. The total due to the lessor for the abandoned lease space is $235,759 and is recorded as lease settlement obligation at March 31, 2021. The components of lease expense and supplemental cash flow information related to leases for the period are as follows: Three months ended March 31, 2021 Lease Cost Operating lease cost (included in selling, general, and administrative expense in the Company’s statement of operations) $ 44,274 Other Information Cash paid for amounts included in the measurement of lease liabilities for 2021 $ 23,891 Weighted average remaining lease term – operating leases (in years) 2.75 Average discount rate – operating leases 4 % At March 31, 2021 Operating leases Long-term right-of-use assets $ 341,844 Short-term operating lease liabilities $ 102,400 Long-term operating lease liabilities 273,714 Total operating lease liabilities $ 376,114 Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases 2021(remainder of year) 68,809 2022 95,481 2023 98,345 2024 118,266 Total lease payments 380,901 Less: Imputed interest 4,787 Present value of lease liabilities 376,114 Less current portion (102,400 ) Operating lease liabilities, long-term $ 273,714 Lease expense were $23,891 and $26,897 during the three months ended March 31, 2021 and 2020, respectively. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 5 – NOTES PAYABLE March 31, 2021 December 31, 2020 (a) Notes payable secured by equipment $ 304,218 $ 363,817 (b) Note payable, secured by assets-in default 13,350 33,350 (c) Note payable, Payroll Protection Loan 134,125 134,125 (d) Note payable, Economic Injury Disaster Loan 160,000 160,000 (e) Revenue sharing agreement 242,800 242,800 Total notes payable outstanding 854,492 934,092 Current portion 400,165 482,724 Long term portion $ 454,327 $ 451,368 (a) In April 2020 and May 2020, the Company entered into two financing agreements aggregating $505,646. The notes have a stated interest rate of 10.9%. The notes were issued at a discount including fees for underwriting, legal and administrative costs along with deferred financing costs. The deferred financing costs are being amortized over the terms of the notes. The notes are secured by the Company’s equipment, and require monthly payments of principal and interest of $21,000, and mature in April 2022 and May 2022. At December 31, 2020, the balance due on these notes was $438,634. During the quarter ended March 31, 2021, the Company made payments of $66,649 and at March 31, 2021, the balance due on these notes was $371,985. (b) Note payable, interest at 8.3% per annum, secured by all the assets of the Company. The note was due January 13, 2019 and on April 24, 2020, the note holder waived the default through December 31, 2020, and it is currently in default. During the three months ended March 31, 2021, the company made principal payments of $20,000. The note is in default and the Company is in discussion with the note holder. (c) On May 7, 2020, the Company was granted a loan (the “PPP loan”) from Bank of America in the aggregate amount of $134,125, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP loan agreement is dated May 4, 2020, matures on May 4, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, is payable monthly commencing on November 2020, and is unsecured and guaranteed by the U.S. Small Business Administration (“SBA”). The loan term may be extended to April 20, 2025, if mutually agreed to by the Company and lender. We applied ASC 470, Debt (d) On September 5, 2020, the Company received a $160,000 loan (the “EID Loan”) from the SBA under the SBA’s Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments of $0.7 per month are deferred for twelve months, and commence in June 2021. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The Loan contains customary events of default and other provisions customary for a loan of this type. The Company was in compliance with the terms of the EID loan as of March 31, 2021. (e) Between July 7, 2020, and July 29, 2020, the Company issued notes payable to third-party investors totaling $250,000. Under the terms of the note, the Company is to pay 50% of the net revenues beginning on August 21, 2020, for a product to be designed and produced by the Company. The product has not been produced and therefore no payments have been made. The Company has received a notice of default and demand for payment from three note holders (owed approximately $146,000). The Company has retained counsel who is in discussion with the note holders. See Note 13. |
Convertible Notes Payable
Convertible Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Convertible Notes Payable | NOTE 6 – CONVERTIBLE NOTES PAYABLE Convertible notes payable consisted of the following: March 31, 2021 December 31, 2020 Unsecured (a) Convertible notes with fixed discount percentage conversion prices $ 30,000 $ 180,200 Put premiums on stock settled debt 30,000 127,866 (b) Convertible notes with fixed conversion prices 1,363,752 936,944 Default penalty principal added - 369,086 Total convertible notes principal outstanding 1,423,121 1,614,096 Debt discount (29,369 ) (539,282 ) Convertible notes, net of discount and premium $ 1,393,752 $ 1,074,814 Current portion 1,393,752 1,074,814 Long-term portion $ - $ - (a) At December 31, 2020, there was a $180,200 convertible notes with fixed discount percentage conversion prices outstanding. During the three months ended March 31, 2021, the two note holders fully converted principal and accrued interest into common stock. Upon conversion put premiums associated with these notes were reclassified to additional paid in capital. At the option of the holder, the two notes are convertible into shares of the Company’s common stock at a price per share discount of 50% of the lowest bid price of the Company’s common stock within twenty-five days prior to conversion. The Company determined that the conversion options of the convertible notes were not considered derivatives and qualify as stock settled debt under ASC 480 – “Distinguishing Liabilities from Equity”. (b) As of December 31, 2020, the Company issued convertible notes with fixed conversion prices aggregating $1,306,030 (including default penalties of $369,086). The notes are unsecured, bear interest at 10% per annum, and mature through June 30, 2021. The notes are convertible into common stock at $0.015 per share. The Company recorded debt discounts of $43,000. Beneficial Conversion Features totaling $2,557,812 were recognized with charges to debt discount or other expenses with an offset credit to additional paid in capital. The adoption of ASU 2020-06 (see note 2) using the modified approach yielded a charge of $2,557,812 to additional paid in capital with credits to the remaining Beneficial Conversion Feature debt discounts and retained earnings. The remaining other debt discounts are amortized over the life of the notes or are amortized in full upon the conversion of the corresponding notes to common stock. During the three months ended March 31, 2021, the Company issued two convertible notes with fixed conversion prices aggregating $193,000. The notes are unsecured, bear interest at 10% per annum, and mature through August 31, 2021. The notes are convertible into shares of the Company’s common stock at a fixed conversion price of $0.015 per share. The Company recorded debt discounts and expenses of $18,000 to account for loan fees and original issue discounts ($18,000). The debt discounts are amortized over the life of the notes or are amortized in full upon the conversion of the corresponding notes to common stock. The Company early adopted ASU No. 2020-06 effective January 1, 2021 using the modified retrospective approach. Upon adoption, the following changes resulted: (i) the intrinsic value of the beneficial conversion features recorded in 2020 was reversed as of the effective date of adoption, thereby resulting in an increase in the convertible debentures with an offsetting adjustment to additional paid in capital and (ii) interest expense recorded in 2020 that was related to the amortization of the discount related to the beneficial conversion feature was reversed against opening accumulated deficit. Accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $2,054,759, a decrease in addition paid in capital of $2,557,812, and an increase in convertible notes payable of $503,053 on January 1, 2021. |
Derivative Liabilities and Fina
Derivative Liabilities and Financial Instruments | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities and Financial Instruments | Note 7 – DERIVATIVE LIABILITIES AND FINANCIAL INSTRUMENTS The Company had not derivative liabilities at March 31, 2021 or December 31, 2020. For the three months ended March 31, 2020, a roll-forward of the level 2 valuation financial instruments is as follows: Derivative Liabilities Balance at December 31, 2019 $ 400,139 Recognition of derivative liabilities upon initial valuation 415,000 Change in fair value of derivative liabilities during the three months ended March 31, 2020 (135,139 ) Balance at March 31, 2020 $ 680,000 |
Mezzanine Equity
Mezzanine Equity | 3 Months Ended |
Mar. 31, 2021 | |
Temporary Equity Disclosure [Abstract] | |
Mezzanine Equity | NOTE 8 – MEZZANINE EQUITY The preferred shares below have been determined by the Company to be conditionally redeemable upon the occurrence of certain events that are not solely within the control of the issuer, and upon such event, the shares would become redeemable at the option of the holders, they are classified as ‘mezzanine equity’ (temporary equity). The purpose of this classification is to convey that such a security may not be permanently part of equity and could result in a demand for cash, securities or other assets of the entity in the future. The shares as valued have been classified as mezzanine equity and presented as such on the consolidated balance sheet and statement of shareholders deficit at March 31, 2021 as single line items due to the immaterial par value. The mezzanine equity value is not included in shareholders’ deficit. Series B Convertible Preferred Stock The terms of the Certificate of Designation of the Series C Convertible Preferred Stock, which was filed with the State of Nevada on January 12, 2021, state that such Series C Convertible shares have a par value of $0.00001 per share and a stated value of $100 per share (the “Stated Value”) and each Series C Preferred Share shall be convertible into 6,750 shares of Common Stock (“Conversion Ratio”), at the option of a Holder, at any time and from time to time, from and after the issuance of the Series C Preferred Stock. Anti-dilution terms of the preferred may change the conversion ratio. Each holder of the Series C Preferred Stock shall have the right to vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, on an as converted basis, either by written consent or by proxy. Additionally, the shareholders are entitled to liquidation benefits including a cash payout, the liquidation terms include sales and mergers affection a change in control. 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, which, were issued to Dr. Arthur Mikaelian upon closing on January 14, 2021. The shares issued to Dr. Mikaelian on January 14, 2021 were valued based on the conversion number of common shares at the market price on the date of issuance. Due fact that there Medolife Rx, Inc. was a start-up venture with no net asset value the value associated with the shares of $1,522,198 was charged to compensation expense during the three months ended March 31, 2021. Series C Convertible Preferred Stock The terms of the Certificate of Designation of the Series C Convertible Preferred Stock, which was filed with the State of Nevada on January 12, 2021, state that such Series C Convertible shares have a par value of $0.00001 per share and a stated value of $100 per share (the “Stated Value”) and each Series C Preferred Share shall be convertible into 6,750 shares of Common Stock (“Conversion Ratio”), at the option of a Holder, at any time and from time to time, from and after the issuance of the Series C Preferred Stock. Anti-dilution terms of the preferred may change the conversion ratio. Each holder of the Series C Preferred Stock shall have the right to vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, on an as converted basis, either by written consent or by proxy. Additionally, the shareholders are entitled to liquidation benefits including a cash payout, the liquidation terms include sales and mergers affection a change in control. On January 14, 2021, the Board of Directors of the Company approved the issuance of all 1,000 authorized shares of Series C Convertible Preferred Stock to the following Medolife Rx Designees: Trillium Partners LP 500 Shares of Series C Preferred Stock Sagittarii Holdings, Inc. 500 Shares of Series C Preferred Stock The shares issued to Trillium and Sagittarii were valued based on the conversion number of common shares at the market price on the date of issuance. The shares were valued at $169,133 and were charged to expense for services during the three months ended March 31, 2021. |
Stockholders' Deficit
Stockholders' Deficit | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 9 – STOCKHOLDERS’ DEFICIT Common Stock On November 20, 2020, the Board of Directors approved an increase in the Company’s authorized shares of Common Stock from 100,000,000 to 500,000,000 shares by Unanimous Written Consent. The Secretary of State of Nevada approved the share increase. The Company has 500,000,000 shares of par value $0.001 common stock authorized and 99,897,748 and 46,756,970 shares were outstanding as of March 31, 2021 and December 31, 2020, respectively. Common stock issued for cash During the year Marcher 31, 2021, the Company issued 32,475,000 shares of common stock mostly under the S1 then in effect at $0.04. In total $1,014,000 in cash was received. Common stock issued for cash During the three months ended March 31, 2021, the Company issued 32,475,000 shares of common stock for total proceeds of $1,014,000. The shares were primarily issued under a Form S-1 registration in effect at $0.04 per share. Common stock issued for services During the three months ended December 31, 2021, the Company issued 5,000,000 shares of common stock to service vendors with a fair value of $449,000, and 1,000,000 shares of common stock to employees and officers of the Company with a fair value of $69,950. The fair value of the shares was determined based on the closing price of the Company’s common stock on the date shares were granted, and recorded as stock compensation in selling, general and administrative expense. Restricted common stock In 2019, the Company agreed to issue 8,000,000 shares of the Company’s common stock with vesting terms to Arthur Mikaelian. 1,000,000 shares vested immediately, and the balance of 7,000,000 shares vest 625,000 shares per quarter over 2.8 years. 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 three months ended March 31, 2021 and 2020, total share-based expense recognized related to vested restricted shares totaled $160,179 and $425,768, respectively. At March 31, 2021, there was $271,232 of unvested compensation related to these awards that will be amortized over a remaining vesting period of 1.1 years. The following table summarizes restricted common stock activity for the three months ended March 31, 2021: Number of shares Fair value of shares Non-vested shares, December 31, 2020 3,250,000 431,411 Granted - - Vested (625,000 ) (160,179 ) Forfeited - - Non-vested shares, March 31, 2021 2,625,000 $ 271,232 As of March 31, 2021, no shares have been issued and 5,375,000 vested shares are included in shares to be issued on the accompanying financial statements Common stock issued in conversion of convertible notes payable The Company issued 14,665,778 shares of common stock to holders of convertible notes valued at $396,458, which includes reclassification of put premiums associated with stock settled debt of $97,866. Stock Options During the three months ended March 31, 2021, the Company did not issue any options. The Company used the Black-Scholes-Merton option pricing model to estimate the fair value of the option granted. That value is accreted over the vesting period. During the three months ended March 31, 2021 and 2020, the Company recognized $70,994 and $80,404, respectively, of compensation expense relating to vested stock options. As of March 31, 2021, the amount of unvested compensation related to stock options was approximately $230,000 which will be recorded as an expense in future periods as the options vest. A summary of stock option activity during the three months ended March 31, 2021: Number of options Weighted Average Contractual Options Outstanding as of December 31, 2020 4,130,000 0.10 6.0 Granted - 0.11 10.0 Exercised - - - Forfeited (2,805,000 ) - - Options Outstanding as of March 31, 2021 1,325000 0.11 6.5 Options Exercisable as of March 31, 2021 975,814 $ 0.10 5.5 At March 31, 2021, the options outstanding had no intrinsic value. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 10 – RELATED PARTY TRANSACTIONS On January 14, 2021, the Company completed the acquisition of 51% of Medolife Rx, a company controlled by Arthur Mikaelian (see Note 8). Prior to the acquisition, Mr. Mikaelian was a consultant and shareholder in the Company. In connection with the acquisition of 51% of Medolife Rx, Mr. Mikaelian was appointed as a member of the Board of Directors of the Company, and also appointed to serve as the Company’s Chief Executive Officer, a role which Mr. Mikaelian assumed on January 14, 2021. The Company has an agreement with Mr. Mikaelian in consideration of the Company’s exclusive use of patented technology developed by Mr. Mikaelian. 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. During the three months ended March 31, 2021 and 2020, the Company recognized royalty expenses of $105,000 and $75,000, respectively. During the three months ended March 31, 2021, the Company recorded revenue of $198,800, or 61% of total revenue for the period, from a company controlled by a family member of the Company’s CEO. At March 31, 2021, the net amount due from the related party was $149,100 and represents 100% of the Company’s accounts receivable at that date |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 11 – COMMITMENTS AND CONTINGENCIES COVID-19 During the period ended March 31, 2021, the COVID-19 pandemic has impacted our operating results and the Company anticipates a continued impact for the balance of the year. In addition, the pandemic may cause reduced demand for our products if, for example, the pandemic results in a recessionary economic environment which negatively effects the consumers who purchase our products. The Company monitors guidance from federal, state, and local public health authorities, and has implemented health and safety precautions and protocols in response to these guidelines. The extent of the impact of the COVID-19 pandemic has had and will continue to have on the Company’s business is highly uncertain and difficult to predict and quantify at this time. Contingencies include obligations for lease agreements, including an abandoned lease space discussed at Note 5, along with the Company current lease for its headquarters office, also discussed in Note 5. It is management’s opinion that there are no material contingent liabilities that are not disclosed in the financial statements and footnote disclosures as of March 31, 2021. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 12 – SUBSEQUENT EVENTS Common Stock Issued Between April 1, 2021 and May 21, 2021, the Company issued 24,275,000 shares of common stock under Form S-1 offering (made effective on February 12, 2021). The Company received cash proceeds of $971,000. Between April 1, 2021 and May 21, 2021, the Company issued 6,610,507 shares of common stock (restricted) under privative placements at prices from $0.015 to $0.0256. The Company received cash proceeds of $161,408. Between April 1, 2021 and May 21, 2021, the Company issued a total of 4,982,635 shares of its common stock to individuals as compensation for services, valued at the fair value of the shares of the Company’s stock on the dates issued, totaling $282,750. Between April 1, 2021 and May 21, 2021, a total of 40,510,137 of common shares were issued to convertible note holders in exchange for principal of $589,415 and interest of $18,238 the notes held. The conversions partially liquidated the principal and accrued interest of various convertible notes issued during the year ended December 31, 2020, which were held by Trillium, Alpha, NY Farms and an individual investor from various convertible notes payable issued on April 27, 2020. Between April 1, 2021 and May 21, 2021, the Company issued a total of 182,500 shares of its common stock to employees as compensation, valued at the fair value of the shares of the Company’s stock on the dates issued, totaling $13,888. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation-unaudited Interim Financial Information | 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 | 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 | 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 | 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 | 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 | 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 | 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 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 | 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 | 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 | 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 | 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 | 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 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. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Potentially Dilutive Securities | 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 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories are valued at the lower of cost (first-in, first-out) or net realizable value, and net of reserves, consisted of the following: March 31, 2021 December 31, 2020 Raw materials and packaging $ 22,170 $ 3,144 Finished goods 21,839 16,076 $ 44,009 $ 19,220 |
Equipment (Tables)
Equipment (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Equipment | Equipment, stated at cost, less accumulated depreciation consisted of the following: March 31, 2021 December 31, 2020 Machinery-technology equipment $ 704,772 $ 704,772 Machinery-technology equipment under construction 48,949 35,969 753,721 740,741 Less accumulated depreciation (557,802 ) (540,218 ) $ 195,919 $ 200,523 |
Operating Lease (Tables)
Operating Lease (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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: Three months ended March 31, 2021 Lease Cost Operating lease cost (included in selling, general, and administrative expense in the Company’s statement of operations) $ 44,274 Other Information Cash paid for amounts included in the measurement of lease liabilities for 2021 $ 23,891 Weighted average remaining lease term – operating leases (in years) 2.75 Average discount rate – operating leases 4 % |
Schedule of Supplemental Balance Sheet Information Related to Leases | At March 31, 2021 Operating leases Long-term right-of-use assets $ 341,844 Short-term operating lease liabilities $ 102,400 Long-term operating lease liabilities 273,714 Total operating lease liabilities $ 376,114 |
Schedule of Maturities of Operating Lease Liabilities | Maturities of the Company’s lease liabilities are as follows: Year Ending Operating Leases 2021(remainder of year) 68,809 2022 95,481 2023 98,345 2024 118,266 Total lease payments 380,901 Less: Imputed interest 4,787 Present value of lease liabilities 376,114 Less current portion (102,400 ) Operating lease liabilities, long-term $ 273,714 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Notes Payable | March 31, 2021 December 31, 2020 (a) Notes payable secured by equipment $ 304,218 $ 363,817 (b) Note payable, secured by assets-in default 13,350 33,350 (c) Note payable, Payroll Protection Loan 134,125 134,125 (d) Note payable, Economic Injury Disaster Loan 160,000 160,000 (e) Revenue sharing agreement 242,800 242,800 Total notes payable outstanding 854,492 934,092 Current portion 400,165 482,724 Long term portion $ 454,327 $ 451,368 (a) In April 2020 and May 2020, the Company entered into two financing agreements aggregating $505,646. The notes have a stated interest rate of 10.9%. The notes were issued at a discount including fees for underwriting, legal and administrative costs along with deferred financing costs. The deferred financing costs are being amortized over the terms of the notes. The notes are secured by the Company’s equipment, and require monthly payments of principal and interest of $21,000, and mature in April 2022 and May 2022. At December 31, 2020, the balance due on these notes was $438,634. During the quarter ended March 31, 2021, the Company made payments of $66,649 and at March 31, 2021, the balance due on these notes was $371,985. (b) Note payable, interest at 8.3% per annum, secured by all the assets of the Company. The note was due January 13, 2019 and on April 24, 2020, the note holder waived the default through December 31, 2020, and it is currently in default. During the three months ended March 31, 2021, the company made principal payments of $20,000. The note is in default and the Company is in discussion with the note holder. (c) On May 7, 2020, the Company was granted a loan (the “PPP loan”) from Bank of America in the aggregate amount of $134,125, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP loan agreement is dated May 4, 2020, matures on May 4, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, is payable monthly commencing on November 2020, and is unsecured and guaranteed by the U.S. Small Business Administration (“SBA”). The loan term may be extended to April 20, 2025, if mutually agreed to by the Company and lender. We applied ASC 470, Debt (d) On September 5, 2020, the Company received a $160,000 loan (the “EID Loan”) from the SBA under the SBA’s Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments of $0.7 per month are deferred for twelve months, and commence in June 2021. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The Loan contains customary events of default and other provisions customary for a loan of this type. The Company was in compliance with the terms of the EID loan as of March 31, 2021. (e) Between July 7, 2020, and July 29, 2020, the Company issued notes payable to third-party investors totaling $250,000. Under the terms of the note, the Company is to pay 50% of the net revenues beginning on August 21, 2020, for a product to be designed and produced by the Company. The product has not been produced and therefore no payments have been made. The Company has received a notice of default and demand for payment from three note holders (owed approximately $146,000). The Company has retained counsel who is in discussion with the note holders. See Note 13. |
Convertible Notes Payable (Tabl
Convertible Notes Payable (Table) | 3 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | Convertible notes payable consisted of the following: March 31, 2021 December 31, 2020 Unsecured (a) Convertible notes with fixed discount percentage conversion prices $ 30,000 $ 180,200 Put premiums on stock settled debt 30,000 127,866 (b) Convertible notes with fixed conversion prices 1,363,752 936,944 Default penalty principal added - 369,086 Total convertible notes principal outstanding 1,423,121 1,614,096 Debt discount (29,369 ) (539,282 ) Convertible notes, net of discount and premium $ 1,393,752 $ 1,074,814 Current portion 1,393,752 1,074,814 Long-term portion $ - $ - (a) At December 31, 2020, there was a $180,200 convertible notes with fixed discount percentage conversion prices outstanding. During the three months ended March 31, 2021, the two note holders fully converted principal and accrued interest into common stock. Upon conversion put premiums associated with these notes were reclassified to additional paid in capital. At the option of the holder, the two notes are convertible into shares of the Company’s common stock at a price per share discount of 50% of the lowest bid price of the Company’s common stock within twenty-five days prior to conversion. The Company determined that the conversion options of the convertible notes were not considered derivatives and qualify as stock settled debt under ASC 480 – “Distinguishing Liabilities from Equity”. (b) As of December 31, 2020, the Company issued convertible notes with fixed conversion prices aggregating $1,306,030 (including default penalties of $369,086). The notes are unsecured, bear interest at 10% per annum, and mature through June 30, 2021. The notes are convertible into common stock at $0.015 per share. The Company recorded debt discounts of $43,000. Beneficial Conversion Features totaling $2,557,812 were recognized with charges to debt discount or other expenses with an offset credit to additional paid in capital. The adoption of ASU 2020-06 (see note 2) using the modified approach yielded a charge of $2,557,812 to additional paid in capital with credits to the remaining Beneficial Conversion Feature debt discounts and retained earnings. The remaining other debt discounts are amortized over the life of the notes or are amortized in full upon the conversion of the corresponding notes to common stock. During the three months ended March 31, 2021, the Company issued two convertible notes with fixed conversion prices aggregating $193,000. The notes are unsecured, bear interest at 10% per annum, and mature through August 31, 2021. The notes are convertible into shares of the Company’s common stock at a fixed conversion price of $0.015 per share. The Company recorded debt discounts and expenses of $18,000 to account for loan fees and original issue discounts ($18,000). The debt discounts are amortized over the life of the notes or are amortized in full upon the conversion of the corresponding notes to common stock. The Company early adopted ASU No. 2020-06 effective January 1, 2021 using the modified retrospective approach. Upon adoption, the following changes resulted: (i) the intrinsic value of the beneficial conversion features recorded in 2020 was reversed as of the effective date of adoption, thereby resulting in an increase in the convertible debentures with an offsetting adjustment to additional paid in capital and (ii) interest expense recorded in 2020 that was related to the amortization of the discount related to the beneficial conversion feature was reversed against opening accumulated deficit. Accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $2,054,759, a decrease in addition paid in capital of $2,557,812, and an increase in convertible notes payable of $503,053 on January 1, 2021. |
Derivative Liabilities and Fi_2
Derivative Liabilities and Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Level 2 Valuation Financial Instruments | The Company had not derivative liabilities at March 31, 2021 or December 31, 2020. For the three months ended March 31, 2020, a roll-forward of the level 2 valuation financial instruments is as follows: Derivative Liabilities Balance at December 31, 2019 $ 400,139 Recognition of derivative liabilities upon initial valuation 415,000 Change in fair value of derivative liabilities during the three months ended March 31, 2020 (135,139 ) Balance at March 31, 2020 $ 680,000 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Restricted Common Stock Activity | The following table summarizes restricted common stock activity for the three months ended March 31, 2021: Number of shares Fair value of shares Non-vested shares, December 31, 2020 3,250,000 431,411 Granted - - Vested (625,000 ) (160,179 ) Forfeited - - Non-vested shares, March 31, 2021 2,625,000 $ 271,232 |
Schedule of Stock Option Activity | A summary of stock option activity during the three months ended March 31, 2021: Number of options Weighted Average Contractual Options Outstanding as of December 31, 2020 4,130,000 0.10 6.0 Granted - 0.11 10.0 Exercised - - - Forfeited (2,805,000 ) - - Options Outstanding as of March 31, 2021 1,325000 0.11 6.5 Options Exercisable as of March 31, 2021 975,814 $ 0.10 5.5 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | Mar. 31, 2021 | Jan. 03, 2021 | Dec. 21, 2020 | Feb. 28, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Jan. 14, 2021 | Dec. 31, 2019 |
Net loss | $ (2,948,486) | $ (1,359,246) | |||||||
Net cash used in operating activities | (782,116) | (451,145) | |||||||
Stockholders'deficit | $ (4,035,365) | (4,035,365) | (544,309) | $ (2,608,246) | $ 278,941 | ||||
Cash on hand | $ 313,525 | 313,525 | $ 6,270 | ||||||
Subscriptions to purchase, value | $ 1,231,000 | ||||||||
Subscriptions to purchase, share | 73,895,644 | ||||||||
Advertising costs | $ 57,959 | 33,682 | |||||||
Research and development costs | $ 130,825 | $ 77,876 | |||||||
Options outstanding | 1,325,000 | 1,325,000 | 4,130,000 | ||||||
Options exercisable | 975,814 | 975,814 | |||||||
Debt conversion, description | 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. | ||||||||
Accounting Standards Update 2020-06 [Member] | |||||||||
Decrease to accumulated deficit | $ 2,054,759 | ||||||||
Decrease in addition paid in capital | 2,557,812 | ||||||||
Increase in convertible notes payable | $ 503,053 | ||||||||
Revenue Benchmark [Member] | |||||||||
Concentration risk percentage | 61.00% | ||||||||
Accounts Receivable [Member] | |||||||||
Concentration risk percentage | 100.00% | ||||||||
Customer One [Member] | Revenue Benchmark [Member] | |||||||||
Concentration risk percentage | 61.00% | ||||||||
Customer One [Member] | Accounts Receivable [Member] | |||||||||
Concentration risk percentage | 100.00% | 35.00% | |||||||
No Customer [Member] | Revenue Benchmark [Member] | |||||||||
Concentration risk percentage | 10.00% | ||||||||
No Customer [Member] | Accounts Receivable [Member] | |||||||||
Concentration risk percentage | 10.00% | ||||||||
Common Stock [Member] | Convertible Debt [Member] | |||||||||
Convertible debt with accrued interest | $ 1,499,879 | $ 1,499,879 | |||||||
Number of convertible common shares | 97,064,539 | ||||||||
Agent [Member] | |||||||||
Prepaid production costs | $ 100,000 | ||||||||
Vendors One [Member] | Accounts Payable [Member] | Vendor Concentration Risk [Member] | |||||||||
Concentration risk percentage | 61.00% | ||||||||
Vendors Two [Member] | Accounts Payable [Member] | Vendor Concentration Risk [Member] | |||||||||
Concentration risk percentage | 10.00% | ||||||||
No Other Vendor [Member] | Accounts Payable [Member] | Vendor Concentration Risk [Member] | |||||||||
Concentration risk percentage | 10.00% | ||||||||
Two Vendors [Member] | Accounts Payable [Member] | Vendor Concentration Risk [Member] | |||||||||
Concentration risk percentage | 63.00% | ||||||||
Medolife Rx, Inc [Member] | Agent [Member] | |||||||||
Prepaid production costs | $ 300,000 | ||||||||
Securities Exchange Agreement [Member] | Medolife Rx, Inc. [Member] | |||||||||
Acquisition percentage | 51.00% | 51.00% | |||||||
Share issued in exchange | 9,000 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total | 101,014,539 | 9,304,469 |
Stock Options [Member] | ||
Total | 1,325,000 | 3,290,000 |
Unvested Restricted Shares [Member] | ||
Total | 2,625,000 | 5,125,000 |
Convertible Notes Payable [Member] | ||
Total | 97,064,539 | 889,469 |
Inventories (Details Narrative)
Inventories (Details Narrative) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Inventory reserve | $ 9,125 | $ 9,125 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials and packaging | $ 22,170 | $ 3,144 |
Finished goods | 21,839 | 16,076 |
Inventories | $ 44,009 | $ 19,220 |
Equipment (Details Narrative)
Equipment (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation expense | $ 17,584 | $ 51,729 |
Percentage for equipment under construction | 50.00% |
Equipment - Schedule of Equipme
Equipment - Schedule of Equipment (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Equipment, gross | $ 753,721 | $ 740,741 |
Less accumulated depreciation | (557,802) | (540,218) |
Equipment, net | 195,919 | 200,523 |
Machinery-technology Equipment [Member] | ||
Equipment, gross | 704,772 | 704,772 |
Machinery-technology Equipment Under Construction [Member] | ||
Equipment, gross | $ 48,949 | $ 35,969 |
Operating Lease (Details Narrat
Operating Lease (Details Narrative) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Lease term | 5 years | ||
Operating lease right-of-use asset | $ 341,844 | $ 362,227 | |
Operating lease liability | 376,114 | ||
Lease settlement obligation | 235,759 | $ 235,759 | |
Lease expenses | 23,891 | $ 26,897 | |
Minimum [Member] | |||
Rental payments | 90,000 | ||
Maximum [Member] | |||
Rental payments | $ 101,296 |
Operating Lease - Schedule of L
Operating Lease - Schedule of Lease Expense and Supplemental Cash Flow Information Related to Leases (Details) | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Leases [Abstract] | |
Operating lease cost (included in selling, general, and administrative expense in the Company's statement of operations) | $ 44,274 |
Cash paid for amounts included in the measurement of lease liabilities for 2021 | $ 23,891 |
Weighted average remaining lease term - operating leases (in years) | 2 years 9 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 ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Long-term right-of-use assets | $ 341,844 | $ 362,227 |
Short-term operating lease liabilities | 102,400 | 100,901 |
Long-term operating lease liabilities | 273,714 | $ 294,880 |
Total operating lease liabilities | $ 376,114 |
Operating Lease - Schedule of M
Operating Lease - Schedule of Maturities of Operating Lease Liabilities (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
2021(remainder of year) | $ 68,809 | |
2022 | 95,481 | |
2023 | 98,345 | |
2024 | 118,266 | |
Total lease payments | 380,901 | |
Less: Imputed interest | 4,787 | |
Present value of lease liabilities | 376,114 | |
Less current portion | (102,400) | $ (100,901) |
Operating lease liabilities, long-term | $ 273,714 | $ 294,880 |
Notes Payable - Schedule of Not
Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | May 31, 2020 | Apr. 30, 2020 | |
Debt Disclosure [Abstract] | |||||
Notes payable secured by equipment (net of deferred finance charge of $67,767 and $74,817) | [1] | $ 304,218 | $ 363,817 | ||
Note payable, secured by assets-in default | [2] | 13,350 | 33,350 | ||
Note payable, Payroll Protection Loan | [3] | 134,125 | 134,125 | ||
Note payable, Economic Injury Disaster Loan | [4] | 160,000 | 160,000 | ||
Revenue sharing agreement | [5] | 242,800 | 242,800 | ||
Total notes payable outstanding | 854,492 | 934,092 | $ 505,646 | $ 505,646 | |
Current portion | 400,165 | 482,724 | |||
Long-term portion | $ 454,327 | $ 451,368 | |||
[1] | In April 2020 and May 2020, the Company entered into two financing agreements aggregating $505,646. The notes have a stated interest rate of 10.9%. The notes were issued at a discount including fees for underwriting, legal and administrative costs along with deferred financing costs. The deferred financing costs are being amortized over the terms of the notes. The notes are secured by the Company's equipment, and require monthly payments of principal and interest of $21,000, and mature in April 2022 and May 2022. At December 31, 2020, the balance due on these notes was $438,634. During the quarter ended March 31, 2021, the Company made payments of $66,649 and at March 31, 2021, the balance due on these notes was $371,985. | ||||
[2] | Note payable, interest at 8.3% per annum, secured by all the assets of the Company. The note was due January 13, 2019 and on April 24, 2020, the note holder waived the default through December 31, 2020, and it is currently in default. During the three months ended March 31, 2021, the company made principal payments of $20,000. The note is in default and the Company is in discussion with the note holder. | ||||
[3] | On May 7, 2020, the Company was granted a loan (the "PPP loan") from Bank of America in the aggregate amount of $134,125, pursuant to the Paycheck Protection Program (the "PPP") under the CARES Act. The PPP loan agreement is dated May 4, 2020, matures on May 4, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, is payable monthly commencing on November 2020, and is unsecured and guaranteed by the U.S. Small Business Administration ("SBA"). The loan term may be extended to April 20, 2025, if mutually agreed to by the Company and lender. We applied ASC 470, Debt, to account for the PPP loan. The PPP loan may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company intends to use the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, we cannot assure that such forgiveness of any portion of the PPP loan will occur. As for the potential loan forgiveness, once the PPP loan is, in part or wholly, forgiven and a legal release is received, the liability would be reduced by the amount forgiven and a gain on extinguishment would be recorded. The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The Company was in compliance with the terms of the PPP loan as March 31, 2021. | ||||
[4] | On September 5, 2020, the Company received a $160,000 loan (the "EID Loan") from the SBA under the SBA's Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments of $0.7 per month are deferred for twelve months, and commence in June 2021. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The Loan contains customary events of default and other provisions customary for a loan of this type. The Company was in compliance with the terms of the EID loan as of March 31, 2021. | ||||
[5] | Between July 7, 2020, and July 29, 2020, the Company issued notes payable to third-party investors totaling $250,000. Under the terms of the note, the Company is to pay 50% of the net revenues beginning on August 21, 2020, for a product to be designed and produced by the Company. The product has not been produced and therefore no payments have been made. The Company has received a notice of default and demand for payment from three note holders (owed approximately $146,000). The Company has retained counsel who is in discussion with the note holders. See Note 13. |
Notes Payable - Schedule of N_2
Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) - USD ($) | Sep. 05, 2020 | May 07, 2020 | Jul. 29, 2020 | May 31, 2020 | Apr. 30, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Notes payable | $ 505,646 | $ 505,646 | $ 854,492 | $ 934,092 | |||
Notes bear interest | 10.90% | 10.90% | |||||
Monthly interest and principal payments | $ 21,000 | $ 21,000 | |||||
Debt instrument maturity description | April 2022 and May 2022 | April 2022 and May 2022 | |||||
Debt outstanding balance | 371,985 | 438,634 | |||||
Principal payments | 66,649 | ||||||
Deferred finance charge | $ 67,767 | $ 74,817 | |||||
EID Loan [Member] | |||||||
Notes bear interest | 3.75% | ||||||
Proceeds from loans | $ 160,000 | ||||||
Monthly principal and interest payments per share | $ 0.7 | ||||||
Notes Payable [Member] | |||||||
Notes bear interest | 8.30% | 8.30% | |||||
Debt instrument maturity description | Due January 13, 2019 and on April 24, 2020 | ||||||
Principal payments | $ 20,000 | ||||||
Debt maturity date | Jan. 13, 2019 | ||||||
Notes Payable [Member] | Third Party Investors [Member] | |||||||
Debt outstanding balance | $ 250,000 | ||||||
Terms of notes | Under the terms of the note, the Company is to pay 50% of the net revenues beginning on August 21, 2020, for a product to be designed and produced by the Company. The product has not been produced and therefore no payments have been made. | ||||||
Received notice under demand of payment | $ 146,000 | ||||||
PPP Loan [Member] | |||||||
Notes bear interest | 1.00% | ||||||
Debt instrument maturity description | The PPP loan agreement is dated May 4, 2020, matures on May 4, 2022. | ||||||
Proceeds from loans | $ 134,125 | ||||||
Debt maturity date | May 4, 2022 |
Convertible Notes Payable - Sch
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |||
Convertible notes with fixed discount percentage conversion prices | [1] | $ 30,000 | $ 180,200 |
Put premiums on stock settled debt | 30,000 | 127,866 | |
Convertible notes with fixed conversion prices | [2] | 1,363,752 | 936,944 |
Default penalty principal added | 369,086 | ||
Total convertible notes principal outstanding | 1,423,121 | 1,614,096 | |
Debt discount | (29,369) | (539,282) | |
Convertible notes, net of discount and premium | 1,393,752 | 1,074,814 | |
Current portion | 1,393,752 | 1,074,814 | |
Long-term portion | |||
[1] | At December 31, 2020, there was a $180,200 convertible notes with fixed discount percentage conversion prices outstanding. During the three months ended March 31, 2021, the two note holders fully converted principal and accrued interest into common stock. Upon conversion put premiums associated with these notes were reclassified to additional paid in capital. At the option of the holder, the two notes are convertible into shares of the Company's common stock at a price per share discount of 50% of the lowest bid price of the Company's common stock within twenty-five days prior to conversion. The Company determined that the conversion options of the convertible notes were not considered derivatives and qualify as stock settled debt under ASC 480 - "Distinguishing Liabilities from Equity". | ||
[2] | As of December 31, 2020, the Company issued convertible notes with fixed conversion prices aggregating $1,306,030 (including default penalties of $369,086). The notes are unsecured, bear interest at 10% per annum, and mature through June 30, 2021. The notes are convertible into common stock at $0.015 per share. The Company recorded debt discounts of $43,000. Beneficial Conversion Features totaling $2,557,812 were recognized with charges to debt discount or other expenses with an offset credit to additional paid in capital. The adoption of ASU 2020-06 (see note 2) using the modified approach yielded a charge of $2,557,812 to additional paid in capital with credits to the remaining Beneficial Conversion Feature debt discounts and retained earnings. The remaining other debt discounts are amortized over the life of the notes or are amortized in full upon the conversion of the corresponding notes to common stock. During the three months ended March 31, 2021, the Company issued two convertible notes with fixed conversion prices aggregating $193,000. The notes are unsecured, bear interest at 10% per annum, and mature through August 31, 2021. The notes are convertible into shares of the Company's common stock at a fixed conversion price of $0.015 per share. The Company recorded debt discounts and expenses of $18,000 to account for loan fees and original issue discounts ($18,000). The debt discounts are amortized over the life of the notes or are amortized in full upon the conversion of the corresponding notes to common stock. The Company early adopted ASU No. 2020-06 effective January 1, 2021 using the modified retrospective approach. Upon adoption, the following changes resulted: (i) the intrinsic value of the beneficial conversion features recorded in 2020 was reversed as of the effective date of adoption, thereby resulting in an increase in the convertible debentures with an offsetting adjustment to additional paid in capital and (ii) interest expense recorded in 2020 that was related to the amortization of the discount related to the beneficial conversion feature was reversed against opening accumulated deficit. Accordingly, the adoption of ASU 2020-06 resulted in a decrease to accumulated deficit of $2,054,759, a decrease in addition paid in capital of $2,557,812, and an increase in convertible notes payable of $503,053 on January 1, 2021. |
Convertible Notes Payable - S_2
Convertible Notes Payable - Schedule of Convertible Notes Payable (Details) (Parenthetical) - USD ($) | Jan. 03, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | May 31, 2020 | Apr. 30, 2020 |
Debt interest percentage | 10.90% | 10.90% | |||
Debt discount | $ 29,369 | $ 539,282 | |||
Accounting Standards Update 2020-06 [Member] | |||||
Decrease in addition paid in capital | $ 2,557,812 | ||||
Decrease to accumulated deficit | 2,054,759 | ||||
Increase in convertible notes payable | $ 503,053 | ||||
Convertible Notes Payable [Member] | |||||
Unsecured convertible promissory note | 180,200 | ||||
Convertible Notes, Fixed Price [Member] | |||||
Unsecured convertible promissory note | 1,306,030 | ||||
Default penalties | $ 369,086 | ||||
Debt interest percentage | 10.00% | ||||
Debt instrument maturity date | Jun. 30, 2021 | ||||
Fixed conversion price | $ 0.015 | ||||
Debt discount | $ 43,000 | ||||
Beneficial conversion feature | $ 2,557,812 | ||||
Two Convertible Notes, Fixed Price [Member] | |||||
Unsecured convertible promissory note | $ 193,000 | ||||
Debt interest percentage | 10.00% | ||||
Debt instrument maturity date | Aug. 31, 2021 | ||||
Fixed conversion price | $ 0.015 | ||||
Debt discount | $ 18,000 |
Derivative Liabilities and Fi_3
Derivative Liabilities and Financial Instruments - Schedule of Level 3 Valuation Financial Instruments (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Beginning balance | $ 400,139 |
Recognition of derivative liabilities upon initial valuation | 415,000 |
Change in fair value of derivative liabilities during the three months ended March 31, 2020 | (135,139) |
Ending balance | $ 680,000 |
Mezzanine Equity (Details Narra
Mezzanine Equity (Details Narrative) - USD ($) | Dec. 21, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | Jan. 14, 2021 | Dec. 31, 2020 |
Preferred stock, par value | $ 0.001 | $ 0.001 | |||
Number of shares issued, values | |||||
Securities Exchange Agreement [Member] | Medolife Rx, Inc. [Member] | |||||
Acquisition percentage | 51.00% | 51.00% | |||
Share issued in exchange | 9,000 | ||||
Series B Convertible Preferred Stock [Member] | |||||
Preferred stock, par value | 0.00001 | ||||
Preferred stock, stated value per share | $ 100 | ||||
Compensation expense | $ 1,522,198 | ||||
Series C Convertible Preferred Stock [Member] | |||||
Preferred stock, par value | $ 0.00001 | ||||
Preferred stock, stated value per share | $ 100 | ||||
Number of shares issued, shares | 1,000 | ||||
Number of shares issued, values | $ 169,133 | ||||
Series C Convertible Preferred Stock [Member] | Trillium Partners LP [Member] | |||||
Number of shares issued, shares | 500 | ||||
Series C Convertible Preferred Stock [Member] | Sagittarii Holdings, Inc.[Member] | |||||
Number of shares issued, shares | 500 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2020 | Nov. 20, 2020 | Nov. 19, 2020 | |
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | 100,000,000 | ||
Common stock, par value | $ 0.001 | $ 0.001 | ||||
Common stock, shares outstanding | 99,897,748 | 46,756,970 | ||||
Number of common stock shares issued, value | ||||||
Number of shares issued for services, shares | 518,950 | |||||
Number of restricted common stock issued | ||||||
Number of restricted common stock vested | 625,000 | |||||
Number of options issued | ||||||
Restricted Stock [Member] | ||||||
Number of restricted common stock issued | 8,000,000 | |||||
Number of restricted common stock vested | 1,000,000 | |||||
Restricted common stock vested, description | 1,000,000 shares vested immediately, and the balance of 7,000,000 shares vest 625,000 shares per quarter over 2.8 years. | |||||
Restricted common stock vesting term | 1 year 1 month 6 days | 2 years 9 months 18 days | ||||
Stock-based compensation related to grants of restricted stock | $ 160,179 | 425,768 | ||||
Unvested compensation | 271,232 | |||||
Stock Options [Member] | ||||||
Unvested compensation | $ 230,000 | |||||
Number of options issued | ||||||
Share based compensation | $ 70,994 | $ 80,404 | ||||
Common Stock [Member] | ||||||
Number of shares issued, shares | 5,000,000 | |||||
Number of common stock shares issued, value | $ 5,000 | |||||
Number of shares issued for services, shares | 6,000 | |||||
Number of shares issued for services, values | $ 6,000,000 | |||||
Common Stock [Member] | Vendors [Member] | ||||||
Number of shares issued for services, shares | 5,000,000 | |||||
Number of shares issued for services, values | $ 449,000 | |||||
Common Stock [Member] | Employees and Officers [Member] | ||||||
Number of shares issued for services, shares | 1,000,000 | |||||
Number of shares issued for services, values | $ 69,950 | |||||
Common Stock Issued for Cash [Member] | ||||||
Number of shares issued, shares | 32,475,000 | |||||
Number of common stock shares issued, value | $ 1,014,000 | |||||
Share issued price per share | $ 0.04 | |||||
Conversion of Covertible Notes Payable [Member] | Common Stock [Member] | ||||||
Number of shares issued, shares | 14,665,778 | |||||
Number of common stock shares issued, value | $ 396,458 | |||||
Conversion of Covertible Notes Payable [Member] | Common Stock [Member] | Stock Settled Debt [Member] | ||||||
Number of common stock shares issued, value | $ 97,866 |
Stockholders' Deficit - Summary
Stockholders' Deficit - Summary of Restricted Common Stock Activity (Details) | 3 Months Ended |
Mar. 31, 2021USD ($)shares | |
Equity [Abstract] | |
Non-vested shares, Beginning balance | shares | 3,250,000 |
Non-vested shares, Granted | shares | |
Non-vested shares, Vested | shares | (625,000) |
Non-vested shares, Forfeited | shares | |
Non-vested shares, Ending balance | shares | 2,625,000 |
Fair value of non-vested shares, Beginning balance | $ | $ 431,411 |
Fair value of non-vested shares, Granted | $ | |
Fair value of non-vested shares, Vested | $ | (160,179) |
Fair value of non-vested shares, Forfeited | $ | |
Fair value of non-vested shares, Ending balance | $ | $ 271,232 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Stock Option Activity (Details) | 3 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Number of Options Outstanding, Beginning | shares | 4,130,000 |
Number of Options Outstanding, Granted | shares | |
Number of Options Outstanding, Exercised | shares | |
Number of Options Outstanding, Forfeited | shares | (2,805,000) |
Number of Options Outstanding, Ending | shares | 1,325,000 |
Number of Options Exercisable | shares | 975,814 |
Options Outstanding, Weighted average exercise price, Beginning | $ / shares | $ 0.10 |
Options Outstanding, Granted, Weighted average exercise price | $ / shares | 0.11 |
Options Outstanding, Exercised, Weighted average exercise price | $ / shares | |
Options Outstanding, Forfeited, Weighted average exercise price | $ / shares | |
Options Outstanding, Weighted average exercise price, Ending | $ / shares | 0.11 |
Options Exercisable, Weighted average exercise price | $ / shares | $ 0.10 |
Options Outstanding, Contractual Life, Beginning | 6 years |
Options Outstanding, Granted, Contractual Life | 10 years |
Options Outstanding, Exercised, Contractual Life | 0 years |
Options Outstanding, Forfeited, Contractual Life | 0 years |
Options Outstanding, Contractual Life, Ending | 6 years 6 months |
Options Exercisable, Contractual Life | 5 years 6 months |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Jan. 14, 2021 | Dec. 21, 2020 | |
Royalty | $ 105,000 | $ 75,000 | |||
Revenue | 198,800 | ||||
Accounts receivable related party | $ 149,100 | ||||
Revenue Benchmark [Member] | |||||
Concentration risk percentage | 61.00% | ||||
Accounts Receivable [Member] | |||||
Concentration risk percentage | 100.00% | ||||
Securities Exchange Agreement [Member] | Medolife Rx, Inc. [Member] | |||||
Acquisition percentage | 51.00% | 51.00% | |||
Securities Exchange Agreement [Member] | Dr. Mikaelian [Member] | |||||
Royalty percentage | 25.00% | ||||
Royalty | $ 35,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 2 Months Ended | 3 Months Ended | |
May 21, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | |
Cash proceeds from issuance of common stock | $ 1,014,000 | $ 30,000 | |
Number of stock compensation for services, shares | 518,950 | ||
Number of stock compensation | |||
Common Stock [Member] | |||
Number of shares issued, shares | 5,000,000 | ||
Number of stock compensation for services, shares | 6,000 | ||
Number of stock compensation for services | $ 6,000,000 | ||
Number of stock compensation | |||
Subsequent Event [Member] | Employees [Member] | |||
Number of stock compensation, shares | 182,500 | ||
Number of stock compensation | $ 13,888 | ||
Subsequent Event [Member] | Restricted Stock [Member] | Private Placement [Member] | |||
Cash proceeds from issuance of common stock | $ 161,408 | ||
Number of common stock restricted shares issued | 6,610,507 | ||
Subsequent Event [Member] | Restricted Stock [Member] | Private Placement [Member] | Minimum [Member] | |||
Shares issued price per share | $ 0.015 | ||
Subsequent Event [Member] | Restricted Stock [Member] | Private Placement [Member] | Maximum [Member] | |||
Shares issued price per share | $ 0.0256 | ||
Subsequent Event [Member] | Common Stock [Member] | |||
Number of shares issued, shares | 24,275,000 | ||
Cash proceeds from issuance of common stock | $ 971,000 | ||
Common shares issued to convertible notes | 40,510,137 | ||
Debt principal | $ 589,415 | ||
Debt interest | $ 18,238 | ||
Subsequent Event [Member] | Common Stock [Member] | Individuals [Member] | |||
Number of stock compensation for services, shares | 4,982,635 | ||
Number of stock compensation for services | $ 282,750 |