| 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 a range of pharmaceutical, nutraceutical, topical relief and
cosmetic products utilizing patented polarization technology. The Company’s operations are based in Burbank, California. On April
28, 2016, the Company was incorporated as Freight Solution, Inc. in the State of Nevada. Effective June 6, 2018, the Company (then known
as Bioanomaly Inc.) was acquired by Freight Solution in a transaction accounted for as a reverse merger transaction. On July 11, 2018,
the Company changed its name to Quanta, Inc. 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 9,000 51 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,
2022, are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2022. These
financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2021
and notes thereto contained in the Annual Report on Form 10-K of the Company as filed with the SEC on April 15, 2022. The
consolidated financial statements include the accounts of Quanta Inc, and its 51 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, 2022, the Company incurred a net loss of $ 949,154
and used cash in operating activities of $ 249,499 ,
and at March 31, 2022, the Company had a stockholders’ deficit of $ 4,560,537 .
These factors raise substantial doubt about the
Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. The consolidated
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. At
March 31, 2022, the Company had cash on hand in the amount of $ 7,786 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 Advertising
costs Advertising
costs are expensed as incurred. During the quarters ended March 31, 2022 and March 31, 2021, advertising costs totaled $ 5,000 57,959 Research
and Development Costs Costs
incurred for research and development are expensed as incurred. During the quarters ended March 31, 2022 and March 31, 2021, research
and development costs totaled $ 105,000 130,825 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, 2022 and 2021, 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, 2022, 1,325,000 975,814 1,840,877 102,103,193 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 SCHEDULE OF POTENTIALLY DILUTIVE SECURITIES
March
31, 2022 March
31, 2021
Stock
options 1,325,000 1,325,000
Unvested
restricted shares 750,000 2,625,000
Convertible
notes payable 102,103,193 97,064,539
Total 104,178,193 101,014,539 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, 2022 and December 31, 2021, 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, 2022, no customer accounted for 10 61 100 10 As
of March 31, 2022, two vendors accounted for 75 10 63 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 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) 2,054,759 2,557,812 503,053 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. Accounts
Receivable Accounts
receivable are recorded net of an allowance for any uncollectible accounts if deemed necessary, and payments are generally due within
thirty to forty-five days of invoicing. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using
historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition,
credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances
are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered
remote. At December 31, 2021 and December 31, 2020, the Company did not record any allowance for uncollectible accounts. Inventories Inventories
are stated at the lower of cost or net realizable value with cost determined on a first-in, first-out (“FIFO”) basis. We
regularly review our inventory quantities on hand and record a provision for excess and obsolete inventory based primarily on our estimated
forecast of product demand and our ability to sell the product(s) concerned. Demand for our products can fluctuate significantly. Additionally,
our management’s estimates of future product demand may be inaccurate, which could result in an understated or overstated provision
required for excess and obsolete inventory. A reserve for raw materials, product obsolescence and packaging for products that may no
longer be viable of $ 13,125 9,125 Equipment Equipment
is stated at cost less accumulated depreciation. Depreciation is provided over the estimated useful lives of the equipment, which is
three years, using the straight-line method. Expenditures for major additions and improvements are capitalized and minor repairs and
maintenance are charged to expense as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation
are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Management
assesses the carrying value of equipment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
If there is indication of impairment, management prepares an estimate of future cash flows expected to result from the use of the asset
and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to
write down the asset to its estimated fair value. For the years ended December 31, 2021 and 2020, the Company determined there were no
indicators of impairment of its property and equipment. Impairment
of Long-lived Assets The
Company reviews its equipment, right-of-use assets, and other long-lived assets, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset group may not be recoverable. Recoverability is measured by a comparison of the carrying
amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an
asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount
of the asset exceeds the fair value of the assets. Fair value is generally determined using the asset’s expected future discounted
cash flows or market value, if readily determinable. For the years ended December 31, 2021 and 2020, the Company had no Leases The
Company accounts for its leases in accordance with the guidance of ASC 842, Leases. The Company determines whether a contract is, or
contains, a lease at inception. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term,
and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Right-of-use assets and
lease liabilities are recognized at lease commencement based upon the estimated present value of unpaid lease payments over the lease
term. The Company uses its incremental borrowing rate based on the information available at lease commencement in determining the present
value of unpaid lease payments The Company adopted ASC 842 on January 1, 2019. There was no cumulative-effect adjustment to accumulated
deficit (see Note 5). Derivative
Financial Instruments The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded
derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded
at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.
For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton model to value
the derivative instruments at inception and on subsequent valuation dates through the December 31, 2021, reporting date. The classification
of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end
of each reporting period. Income
taxes The
Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred
tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred
taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more
likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is
uncertain. |
