Company Quick10K Filing
Kraig Biocraft Laboratories
Price0.21 EPS-0
Shares840 P/E-88
MCap176 P/FCF-229
Net Debt-0 EBIT-2
TEV176 TEV/EBIT-98
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-10
10-Q 2020-06-30 Filed 2020-07-31
S-1 2020-06-02 Public Filing
10-Q 2020-03-31 Filed 2020-04-21
10-K 2019-12-31 Filed 2020-03-27
10-Q 2019-09-30 Filed 2019-11-13
10-Q 2019-06-30 Filed 2019-08-12
10-Q 2019-03-31 Filed 2019-05-13
10-K 2018-12-31 Filed 2019-03-29
10-Q 2018-09-30 Filed 2018-11-13
10-Q 2018-06-30 Filed 2018-08-10
10-Q 2018-03-31 Filed 2018-05-11
10-K 2017-12-31 Filed 2018-03-23
10-Q 2017-09-30 Filed 2017-11-15
10-Q 2017-06-30 Filed 2017-08-14
10-Q 2017-03-31 Filed 2017-05-12
10-K 2016-12-31 Filed 2017-03-22
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-12
10-Q 2016-03-31 Filed 2016-05-13
10-K 2015-12-31 Filed 2016-03-30
10-Q 2015-09-30 Filed 2015-11-05
10-Q 2015-06-30 Filed 2015-08-11
10-Q 2015-03-31 Filed 2015-05-11
10-K 2014-12-31 Filed 2015-03-31
10-Q 2014-09-30 Filed 2014-10-23
10-Q 2014-06-30 Filed 2014-08-14
10-Q 2014-03-31 Filed 2014-05-15
10-K 2013-12-31 Filed 2014-04-15
10-Q 2013-09-30 Filed 2013-11-19
10-Q 2013-06-30 Filed 2013-08-19
10-Q 2013-03-31 Filed 2013-05-15
10-K 2012-12-31 Filed 2013-04-15
10-Q 2012-09-30 Filed 2012-11-19
10-Q 2012-06-30 Filed 2012-08-20
10-Q 2012-03-31 Filed 2012-05-21
10-K 2011-12-31 Filed 2012-04-12
10-Q 2011-09-30 Filed 2011-11-14
10-Q 2011-06-30 Filed 2011-08-15
10-Q 2011-03-31 Filed 2011-05-16
10-K 2010-12-31 Filed 2011-04-15
10-Q 2010-09-30 Filed 2010-11-17
10-Q 2010-06-30 Filed 2010-08-23
10-Q 2010-03-31 Filed 2010-05-25
10-K 2009-12-31 Filed 2010-04-15
8-K 2020-04-20
8-K 2020-03-20
8-K 2020-03-17
8-K 2020-02-27
8-K 2019-07-29
8-K 2019-07-15
8-K 2019-07-11
8-K 2019-03-11
8-K 2018-05-01

KBLB 10Q Quarterly Report

Part I
Item 1. Financial Statements
Note 1 Summary of Significant Accounting Policies and Organization
Note 2 Going Concern
Note 3 Equipment
Note 4 - Right To Use Assets and Lease Liabilitity
Note 5 Accrued Interest - Related Party
Note 6 Note Payable
Note 7 Stockholders' Deficit
Note 8 Commitments and Contingencies
Note 9 Related Party Transactions
Note 10 Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Kraig Biocraft Laboratories Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
1.30.1-1.1-2.3-3.5-4.72012201420172020
Assets, Equity
0.2-1.8-3.9-5.9-8.0-10.02012201420172020
Rev, G Profit, Net Income
1.20.90.60.2-0.1-0.42012201420172020
Ops, Inv, Fin

10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2020

 

OR

 

[  ] TRANSITION REPORT PURSUANT TO PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from_____ to _____

 

Commission File Number: 333-146316

 

KRAIG BIOCRAFT LABORATORIES, INC.

(Exact Name of Registrant as Specified in Charter)

 

Wyoming   83-0459707

(State or Other Jurisdiction

of Incorporation)

 

(I.R.S. Employer

Identification No.)

 

2723 South State St. Suite 150

Ann Arbor, Michigan 48104

(Address of Principal Executive Offices)

 

(734) 619-8066

(Registrant’s telephone number, including area code)

 

 

(Former name and address, if changed since last report)

 

Copies to:

Hunter Taubman Fischer & Li LLC

800 Third Ave., Suite 2800

New York, NY 10022

 

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

 

Title of each class   Trading Symbol(s)   Name of exchange on which registered
None   -   -

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

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

 

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

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer [X]   Smaller reporting company [X]
    Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

As of November 10, 2020, there were 854,410,001 shares of the issuer’s Class A common stock, no par value per share, outstanding, 0 shares of the issuer’s Class B common stock, no par value per share, outstanding and 2 shares of preferred stock, no par value per share, outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
   
PART I FINANCIAL INFORMATION  
   
Item 1. Unaudited Condensed Financial Statements: 3
   
Condensed Consolidated Balance Sheets as of September 30, 2020 (Unaudited) and December 31, 2019 (Audited) 3
   
Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended September 30, 2020 and 2019 4
   
Condensed Consolidated Statements of Stockholders’ Deficit for the three and nine months ended September 30, 2020 and 2019 (Unaudited) 5
   
Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2020 and 2019 7
   
Notes to Condensed Consolidated Financial Statements (Unaudited) 8
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 25
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk 34
   
Item 4. Controls and Procedures 34
   
PART II OTHER INFORMATION  
   
Item 1. Legal proceedings 35
   
Item 1A. Risk Factors 35
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 35
   
Item 3. Defaults upon Senior Securities 35
   
Item 4. Mine Safety Disclosures 35
   
Item 5. Other information 36

 

2

 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

 

   September 30, 2020   December 31, 2019 
   (Unaudited)   (Audited) 
ASSETS          
Current Assets          
Cash  $43,062   $125,024 
Prepaid expenses   12,979    31,745 
Total Current Assets   56,041    156,769 
           
Property and Equipment, net   96,044    117,321 
Operating lease right-of-use asset, net   385,436    473,242 
Security deposit   3,518    3,518 
           
Total Assets  $541,039   $750,850 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities          
Accounts payable and accrued expenses  $520,410   $560,948 
Note payable - related party   1,492,000    642,000 
Royalty agreement payable - related party   65,292    65,292 
Accounts payable and accrued expenses - related party   4,614,733    4,145,465 
Operating lease liability, current   122,028    110,678 
Loan payable   60,000    60,000 
SBA Pacheck Protection Loan   90,100    - 
Total Current Liabilities   6,964,563    5,584,383 
           
Long Term Liabilities          
Loan payable, net of current   140,244    185,244 
Operating lease liability, net of current   276,314    369,281 
           
Total Liabilities   7,381,121    6,138,908 
           
Commitments and Contingencies          
           
Stockholders’ Deficit          
Preferred stock, no par value; unlimited shares authorized, none, issued and outstanding   -    - 
Preferred stock Series A, no par value; 2 and 2 shares issued and outstanding, respectively   5,217,800    5,217,800 
Common stock Class A, no par value; unlimited shares authorized, 854,410,001 and 844,468,378 shares issued and outstanding, respectively   17,122,236    16,757,079 
Common stock Class B, no par value; unlimited shares authorized, no shares issued and outstanding   -    - 
Common Stock Issuable, 1,122,311 and 1,122,311 shares, respectively   22,000    22,000 
Additional paid-in capital   4,909,082    2,412,969 
Deferred Compensation   -    - 
Accumulated Deficit   (34,111,200)   (29,797,906)
           
Total Stockholders’ Deficit   (6,840,082)   (5,388,058)
           
Total Liabilities and Stockholders’ Deficit  $541,039   $750,850 

 

3

 

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Statements of Operations

(Unaudited)

 

   For the Three Months Ended   For the Nine Months Ended 
   September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019 
                 
Revenue  $-   $-   $-   $- 
                     
Operating Expenses                    
General and Administrative   366,243    826,571    3,507,302    1,066,724 
Professional Fees   39,169    54,230    89,643    242,458 
Officer’s Salary   161,861    129,577    361,276    395,782 
Rent - Related Party   3,556    2,487    9,819    11,913 
Research and Development   27,626    43,987    65,408    87,228 
Total Operating Expenses   598,455    1,056,852    4,033,448    1,804,105 
                     
Loss from Operations   (598,455)   (1,056,852)   (4,033,448)   (1,804,105)
                     
Other Income/(Expenses)                    
Interest expense   (94,703)   (73,276)   (279,846)   (210,891)
Interest income   -    1,640    -    6,265 
Total Other Income/(Expenses)   (94,703)   (71,636)   (279,846)   (204,626)
                     
Net (Loss) before Provision for Income Taxes   (693,158)   (1,128,488)   (4,313,294)   (2,008,731)
                     
Provision for Income Taxes   -    -    -    - 
                     
Net (Loss)  $(693,158)  $(1,128,488)  $(4,313,294)  $(2,008,731)
                     
Net Income (Loss) Per Share - Basic and Diluted  $(0.00)  $(0.00)  $(0.01)  $(0.00)
                    
Weighted average number of shares outstanding during the period - Basic and Diluted   851,168,167    839,837,716    846,717,942    832,594,572 

 

4

 

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Statement of Changes in Stockholders Deficit

For the three and nine months ended September 30, 2020

(Unaudited)

 

    Preferred Stock -     Common Stock -     Common Stock -     Common Stock - Class A Shares                    
    Series A     Class A     Class B     To be issued           Accumulated        
    Shares     Par     Shares     Par     Shares     Par     Shares     Par     APIC     Deficit     Total  
                                                                   
Balance, December 31, 2019     2     $ 5,217,800       844,468,378     $ 16,757,079             -     $       -       1,122,311     $ 22,000     $ 2,412,969     $ (29,797,906 )   $ (5,388,058 )
                                                                                         
Warrants issued for services - related parties     -       -       -       -       -       -       -       -       2,754,031       -       2,754,031  
                                                                                         
Warrants issued for services     -       -       -       -       -       -       -       -       50,763       -       50,763  
                                                                                         
Exercise of 10,000,000 warrants in exchange for stock     -       -       9,941,623       365,157       -       -       -       -       (365,157 )     -       -  
                                                                                         
Contributed capital - related party     -       -       -       -       -       -       -       -       17,495       -       17,495  
                                                                                         
Imputed interest - related party     -       -       -       -       -       -       -       -       38,981       -       38,981  
                                                                                         
Net loss for the nine months ended September 30, 2020     -       -       -       -       -       -       -       -       -       (4,313,294 )     (4,313,294 )
                                                                                         
Balance, September 30, 2020     2     $ 5,217,800       854,410,001     $ 17,122,236       -     $ -       1,122,311     $ 22,000     $ 4,909,082     $ (34,111,200 )   $ (6,840,082 )
                                                                                         
Balance, June 30, 2020     2     $ 5,217,800       844,468,378     $ 16,757,079       -     $ -       1,122,311     $ 22,000     $ 5,107,560     $ (33,418,042 )   $ (6,313,603 )
                                                                                         
Warrants issued for services - related parties     -       -       -       -       -       -       -       -       141,620       -       141,620  
                                                                                         
Warrants issued for services     -       -       -       -       -       -       -       -       8,050       -       8,050  
                                                                                         
Exercise of 10,000,000 warrants in exchange for stock     -       -       9,941,623       365,157       -       -       -       -       (365,157 )     -       -  
                                                                                         
Imputed interest - related party     -       -       -       -       -       -       -       -       17,009       -       17,009  
                                                                                         
Net loss for the three months ended September 30, 2020     -       -       -       -       -       -       -       -       -       (693,158 )     (693,158 )
                                                                                         
Balance, September 30, 2020     2     $ 5,217,800       854,410,001     $ 17,122,236       -     $ -       1,122,311     $ 22,000     $ 4,909,082     $ (34,111,200 )   $ (6,840,082 )

 

5

 

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Statement of Changes in Stockholders Deficit

For the three and nine months ended September 30, 2019

(Unaudited)

 

   

Preferred Stock -

Series A

   

Common Stock -

Class A

   

Common Stock -

Class B

   

Common Stock

Class A Shares

To be issued

          Accumulated        
    Shares     Par     Shares     Par     Shares     Par     Shares     Par     APIC     Deficit     Total  
                                                                   
Balance, December 31, 2018     2     $ 5,217,800       816,883,910     $ 15,145,798             -     $       -       1,122,311     $ 22,000     $ 2,043,235     $ (26,888,056 )   $ (4,459,223 )
                                                                                         
Units issued for cash     -       -       14,797,278       1,000,000       -       -       -       -       -       -       1,000,000  
                                                                                         
Shares issued in exchange for accounts payable     -       -       4,052,652       281,659       -       -       -       -       -       -       281,659  
                                                                                         
Options issued for services - related parties     -       -       -       -       -       -       -       -       584,776       -       584,776  
                                                                                         
Exercise of 9,000,000 warrants in exchange for stock     -       -       8,734,538       329,622       -       -       -       -       (329,622 )     -       -  
                                                                                         
Cancellation of warrants issued for services     -       -       -       -       -       -       -       -       (19,915 )     -       (19,915 )
.                                                                                        
Imputed interest - related party     -       -       -       -       -       -       -       -       16,027       -       16,027  
                                                                                         
Net loss for the nine months ended September 30, 2019     -       -       -       -       -       -       -       -       -       (2,008,731 )     (2,008,731 )
                                                                                         
Balance, September 30, 2019     2     $ 5,217,800       844,468,378     $ 16,757,079       -     $ -       1,122,311     $ 22,000     $ 2,294,501     $ (28,896,787 )   $ (4,605,407 )
                                                                                         
Balance, June 30, 2019     2     $ 5,217,800       835,733,840     $ 16,427,457       -     $ -       1,122,311     $ 22,000     $ 2,033,777     $ (27,768,299 )   $ (4,067,265 )
                                                                                         
Options issued for services - related parties     -       -       -       -       -       -       -       -       584,776       -       584,776  
                                                                                         
Exercise of 9,000,000 warrants in exchange for stock     -       -       8,734,538       329,622       -       -       -       -       (329,622 )     -       -  
                                                                                         
Imputed interest - related party     -       -       -       -       -       -       -       -       5,570       -       5,570  
                                                                                      -  
Net loss for the three months ended September 30, 2019     -       -       -       -       -       -       -       -       -       (1,128,488 )     (1,128,488 )
                                                                                         
Balance, September 30, 2019     4     $ 5,217,800       844,468,378     $ 16,757,079       -     $ -       1,122,311     $ 22,000     $ 2,294,501     $ (28,896,787 )   $ (4,605,407 )

 

6

 

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   For the nine months ended
September 30,
 
   2020   2019 
Cash Flows From Operating Activities:          
Net Loss  $(4,313,294)  $(2,008,731)
Adjustments to reconcile net loss to net cash used in operations          
Depreciation expense   21,277    22,448 
Imputed interest - related party   38,981    16,027 
Fair value of options issued for services   2,804,794    584,776 
Warrants issued/(cancelled) to consultants   -    (19,915)
Decrease (Increase) in prepaid expenses   18,766    (5,812)
Operating lease right-of-use, net   87,806    58,123 
Increase in accrued expenses and other payables - related party   469,268    541,175 
(Decrease) Increase in royalty agreement payable - related party          
(Decrease)Increase in accounts payable   (40,538)   95,927 
Operating lease liabilities, current   (81,617)   (53,601)
Net Cash Used In Operating Activities   (994,557)   (769,583)
           
Cash Flows From Investing Activities:          
Purchase of Fixed Assets and Leasehold Improvements   -    (72,966)
Net Cash Used In Investing Activities   -    (72,966)
           
Cash Flows From Financing Activities:          
Proceeds from Notes Payable - related party   850,000    120,000 
Principal payments on debt   (45,000)   (8,000)
Contributed capital - related party   17,495    - 
Proceeds from SBA Paycheck Protection Loan   90,100    - 
Proceeds from issuance of common stock   -    1,000,000 
Net Cash Provided by Financing Activities   912,595    1,112,000 
           
Net Increase (Decrease) in Cash   (81,962)   269,451 
           
Cash at Beginning of Period   125,024    13,697 
           
Cash at End of Period  $43,062   $283,148 
           
Supplemental disclosure of cash flow information:          
           
Cash paid for interest  $-   $- 
Cash paid for taxes  $-   $- 
           
Supplemental disclosure of non-cash investing and financing activities:          
Shares issued in connection with cashless warrants exercise  $365,157   $329,622 
Settlement of accounts payable with note payable  $-   $265,244 
Settlement of accounts payable with stock issuance  $-   $281,659 
Adoption of lease standard ASC 842  $-   $559,568 
 

7

 

 

Kraig Biocraft Laboratories, Inc.

Notes to Condensed Consolidated Financial Statements as of September 30, 2020 and 2019

 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

 

(A) Basis of Presentation

 

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

 

It is management’s opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.

 

Kraig Biocraft Laboratories, Inc. (the “Company”) was incorporated under the laws of the State of Wyoming on April 25, 2006. The Company was organized to develop high strength, protein based fiber, using recombinant DNA technology, for commercial applications in the textile and specialty fiber industries.

 

(B) Foreign Currency

 

The assets and liabilities of Prodigy Textiles, Co., Ltd. (the Company’s Vietnamese subsidiary) whose functional currency is the Vietnamese Dong, are translated into US dollars at period-end exchange rates prior to consolidation. Income and expense items are translated at the average rates of exchange prevailing during the period. The adjustments resulting from translating the Company’s financial statements are reflected as a component of other comprehensive (loss) income. Foreign currency transaction gains and losses are recognized in net earnings based on differences between foreign exchange rates on the transaction date and settlement date.

 

(C) Use of Estimates

 

In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

 

(D) Cash

 

For the purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. There were no cash equivalents as of September 30, 2020 or December 31, 2019.

 

(E) Loss Per Share

 

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by the Financial Accounting Standards Board (“FASB” Accounting Standards Codification (“ASC”) No. 260, “Earnings per Share.” For September 30, 2020 and September 30, 2019, warrants were not included in the computation of income/ (loss) per share because their inclusion is anti-dilutive.

 

The computation of basic and diluted loss per share for September 30, 2020 and September 30, 2019 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

 

   September 30, 2020   September 30, 2019 
Stock Warrants (Exercise price - $0.001/share)   45,995,917    57,995,917 
Stock Options (Exercise price - $0.1150/Share)   27,340,000    - 
Convertible Preferred Stock   2    2 
Total   73,335,919    57,995,919 

 

8

 

 

(F) Research and Development Costs

 

The Company expenses all research and development costs as incurred for which there is no alternative future use. These costs also include the expensing of employee compensation and employee stock based compensation.

 

(G) Income Taxes

 

The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC No. 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC No. 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.

 

Effective January 1, 2009, the Company adopted guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all federal or state income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. As of September 30, 2020 and December 31, 2019 there were no amounts that had been accrued in respect to uncertain tax positions.

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

 

9

 

 

(H) Stock-Based Compensation

 

The Company accounts for stock-based compensation for employees and directors in accordance with ASC 718, Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Under the provisions of ASC 718, stock-based compensation costs are measured at the grant date, based on the fair value of the award, and are recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718 and, excess tax benefits realized from the exercise of stock-based awards are classified as cash flows from operating activities. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized as income tax expense or benefit in the condensed consolidated statements of operations.

 

The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASU 2018-07.

 

(I) Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. As a result, the Company has recorded Right-to-use assets and corresponding Lease obligations as more fully discussed in Note 4.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

 

10

 

 

(J) Equipment

 

The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a five year life for automobiles.

 

In accordance with FASB ASC No. 360, Property, Plant and Equipment, the Company carries long-lived assets at the lower of the carrying amount or fair value. Impairment is evaluated by estimating future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flow is less than the carrying amount of the assets, an impairment loss is recognized. Fair value, for purposes of calculating impairment, is measured based on estimated future cash flows, discounted at a market rate of interest.

 

There were no impairment losses recorded for the nine months ended September 30, 2020 and 2019.

 

(K) Fair Value of Financial Instruments

 

We hold certain financial assets, which are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“ASC Topic 820-10”). ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Level 1 instruments include cash, account receivable, prepaid expenses, inventory and account payable and accrued liabilities. The carrying values are assumed to approximate the fair value due to the short term nature of the instrument.

 

The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

 

  Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. We believe our carrying value of level 1 instruments approximate their fair value at September 30, 2020 and December 31, 2019.
     
  Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
     
  Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider depleting assets, asset retirement obligations and net profit interest liability to be Level 3. We determine the fair value of Level 3 assets and liabilities utilizing various inputs, including NYMEX price quotations and contract terms.

 

   September 30, 2020   December 31, 2019  
Level 1  $    -   $    - 
Level 2  $-   $- 
Level 3  $-   $- 
Total  $-   $- 

 

(L) Revenue Recognition

 

The Company’s revenues have been generated primarily from a contract with the U.S. Government. The Company performed work under a cost-plus-fixed-fee contract. Under the base phase of that contract, the Company produced recombinant spider silk woven into ballistic shootpack panels. Those shootpack panels were delivered to the U.S. Government customer. Under an option period award starting in July 2017, to that original contract, the Company worked to develop new recombinant silks.

 

11

 

 

Effective January 1, 2018, the Company adopted ASC No. 606 — Revenue from Contracts with Customers. Under ASC No. 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

 

For the three and nine months ended September 30, 2020 and 2019, the Company recognized $0 and $0 respectively in revenue from the Government contract. These revenues were generated for work performed in the development and production of the Company’s recombinant silks under the base and option period phases of our ongoing contract with the US Army.

 

On July 24, 2017, the Company signed a contract option extension with the US Army to research and deliver recombinant spider silk fibers and threads. This contract option increased the total contract award by an additional $921,130 to a total of $1,021,092 and added 12 months to the contract duration. This effort was scheduled to end on September 24, 2018, but the Company requested an extension of this contract option period through April 2019 to complete the work. The Company has been in communication with the contracting office and is working with them as they determine the best path forward; Management believes there is a possibility of securing a follow-up contract to complete the delivery of all materials for the contract. The Company is also continuing to pursue additional contract opportunities with the Department of Defense, Department of Energy and other governmental agencies.

 

(M) Concentration of Credit Risk

 

The Company at times has cash in banks in excess of FDIC insurance limits. At September 30, 2020 and December 31, 2019, the Company had approximately $0 and $0, respectively in excess of FDIC insurance limits.

 

For the three and nine months ended September 30, 2020 and 2019, the Company booked $0 and $0 for doubtful accounts.

 

NOTE 2 GOING CONCERN

 

As reflected in the accompanying financial statements, the Company has a working capital deficiency of $6,908,522 and stockholders’ deficiency of $6,840,082 and used $994,557 of cash in operations for nine months ended September 30, 2020. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

 

NOTE 3 EQUIPMENT

 

At September 30, 2020 and December 31, 2019, property and equipment, net, is as follows:

 

  

As of

September 30, 2020

   December 31, 2019 
Automobile  $41,805   $41,805 
Laboratory Equipment   96,536    96,536 
Office Equipment   7,260    7,260 
Leasehold Improvements   85,389    85,389 
Less: Accumulated Depreciation   (134,946)   (113,669)
Total Property and Equipment, net  $96,044   $117,321 

 

Depreciation expense for the nine months ended September 30, 2020 and 2019, was $21,277 and $22,448, respectively

 

Depreciation expense for the three months ended September 30, 2020 and 2019, was $8,159 and $9,045, respectively.

 

12

 

 

NOTE 4 - RIGHT TO USE ASSETS AND LEASE LIABILITITY

 

Since September of 2015, we rent office space at 2723 South State Street, Suite 150, Ann Arbor, Michigan 48104, which is our principal place of business. We pay an annual rent of $2,508 for conference facilities, mail, fax, and reception services located at our principal place of business.

 

On January 23, 2017 the Company signed an 8 year property lease with the Company’s President for land in Texas where the Company grows its mulberry. The Company pays a monthly rent of $960. Rent expense – related party for the nine months ended September 30, 2020 and 2019, was $9,819 and $11,913, respectively (See Note 9).

 

On September 13, 2017, the Company signed a new two year lease commencing on October 1, 2017 and ending on September 30, 2019. The Company pays an annual rent of $39,200 for the year one of lease and $42,000 for the year two of lease for office and manufacturing space.

 

On May 9, 2019 the Company signed a 5 year property lease with the Socialist Republic of Vietnam which consists of 4,560.57 square meters of space, which it leases at a current rent of approximately $45,150 per year one and two and with the 5% increase per year for years three through five.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

 

The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. The adoption of the new guidance resulted in the recognition of ROU assets of $529,135 and lease liabilities of $531,462.

 

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the January 1, 2019 adoption date. This rate was determined to be 8% and the Company determined the initial present value, at inception, of $559,568.

 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any.

 

The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.

 

13

 

 

The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, we will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight line basis over the term of the lease

 

Right to use assets is summarized below:

 

   September 30, 2020 
Right to use assets, net – related party  $47,147 
Right to use assets, net   41,136 
Right to use assets, net   297,153 
Total  $385,436 

 

During the nine months ended September 30, 2020, the Company recorded $72,428 as lease expense to current period operations.

 

During the nine months ended September 30, 2020, the Company recorded $9,819 as lease expense – related party to current period operations.

 

Lease liability is summarized below:

 

   September 30, 2020 
Right to use liability, net – related party   49,466 
Right to use liability, net   42,918 
Right to use liability, net   305,958 
Total   398,342 
Less: short term portion  $(122,028)
Long term position  $276,314 

 

Lease expense for the nine months ended September 30, 2020 was comprised of the following:

 

Operating lease expense  $33,866 
Operating lease expense  $34,743 
Operating lease expense – related party  $9,819 

 

NOTE 5 ACCRUED INTEREST – RELATED PARTY

 

On June 6, 2016, the Company received a $50,000 loan from our principal stockholder. Subsequently on December 1, 2017, the Company received an additional $30,000 loan from the same stockholder. On January 8, 2018 and March 31, 2018 the Company received an additional loan of $100,000 and $15,000, respectively. The Company received additional loan funds from the same stockholder as follows: $20,000 on April 26, 2018; $15,000 on June 21, 2018; $15,000 on June 29, 2018; $20,000 on July 5, 2018; $26,000 on October 1, 2018; $11,000 on October 12, 2018; $20,000 on December 21, 2018; $3,000 on January 4, 2019; $30,000 on January 17, 2019; $30,000 on February 1, 2019; $20,000 on February 15, 2019; $20,000 on March 1, 2019; $17,000 on January 4, 2019, $100,000 on November 20, 2019, $100,000 on December 18, 2019, $100,000 on January 24, 2020, $100,000 on February 19, 2020 $100,000 on March 9, 2020, $100,000 on April 8, 2020, $150,000 on June 3, 2020, $100,000 on July 16, 2020, $100,000 on August 12, 2020 and $100,000 on September 10, 2020. Pursuant to the terms of the loan, the advance bears an interest at 3%, is unsecured, and due on demand. Total loan payable to principal stockholder for as of December 31, 2019 is $642,000. Total loan payable to this principal stockholder as of September 30, 2020 is $1,492,000. During the nine months ended September 30, 2020, the Company recorded $38,981 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $24,485. During the nine months ended September 30, 2019, the Company recorded $16,027 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $10,624.

 

14

 

 

NOTE 6 NOTE PAYABLE

 

On March 1, 2019, the Company entered into an unsecured promissory note with Notre Dame - an unrelated party in the amount of $265,244 in exchange for outstanding account payable due to the debtor. Pursuant to the terms of the note, the note bears 10% interest per year from the date of default until the date the loan is paid in full. The term of the loan is twenty four months. The loan repayment commenced immediately over a twenty-four month period according to the following table. During the nine months ended September 30, 2020, the Company paid $45,000 of the loan balance (See Note 8 (A)):

 

1. $1,000 per month for the first six months;

2. $2,000 per month for the months seven and eight;

3. $5,000 per month for months nine through twenty three; and,

4. Final payment of all remaining balance, in the amount of $180,224 in month 24.

 

On April 16, 2020, the Company, was granted a loan (the “Loan”) from The Huntington National Bank, in the aggregate amount of $90,100, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020.

 

The Loan, which was in the form of a Note dated on or about April 16, 2020 issued by the Borrower, matures on or about April 16, 2022 and bears interest at an approximate rate of 1% per annum. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. 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 as described in the CARES Act.

 

NOTE 7 STOCKHOLDERS’ DEFICIT

 

(A) Common Stock Issued for Cash

 

On March 9, 2019, the Company entered into a purchase agreement with one investor (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company issued the investor 14,797,278 Units at a purchase price of $0.06758 per Unit, for total gross proceeds to the Company of $1,000,000. The Units consist of 14,797,278 shares of the Company’s Class A Common Stock (the “Common Stock”) and two warrants (the “Warrants”): (i) one warrant entitles the investor to purchase up to 14,797,278 shares of Common Stock at an exercise price of $0.06 per share (the “6 Cent Warrants”) and (ii) one warrant entitles the investor to purchase up to 7,398,639 shares of Common Stock at an exercise price of $0.08 per share (the “8 Cent Warrant”). The Warrants shall be exercisable at any time from the issuance date until the following expiration dates:

 

● ½ of all $0.06 Warrants shall expire on March 8, 2021;

½ of all $0.06 Warrants shall expire on March 8, 2022;

½ of all $0.08 Warrants shall expire on March 8, 2022; and,

½ of all $0.08 Warrants shall expire on March 8, 2023.

 

(B) Common Stock Issued for Services

 

Shares issued for services as mentioned below were valued at the closing price of the stock on the date of grant.

 

On March 20, 2019, the Company issued 4,052,652 shares of its class A common stock with a fair value of $281,659 ($0.0695/share) on the date of settlement. The Company settled $243,159 of accounts payable to the University of Notre Dame. The Company recorded an additional amount of $38,500 based on the fair value of the shares on the date of settlement. See Note 8 (A).

 

(C) Common Stock Warrants and Options

 

On July 30, 2020, the Company issued 9,941,623 shares of Common stock in connection with the cashless exercise of 10,000,000 warrants.

 

15

 

 

On February 19, 2020 the Company issued a 20-year option to purchase 20,000,000 shares of common stock at an exercise price of $0.115 per share to a related party for services rendered. The options had a fair value of $2,198,411, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on February 19, 2025, and for a period of 15 years expiring on February 19, 2040. During the nine months ended September 30, 2020, the Company recorded $2,198,411 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   125.19%
Expected term   3 years 
Risk free interest rate   1.56%
Expected forfeitures   0%

 

On February 19, 2020 the Company issued a 10-year option to purchase 6,000,000 shares of common stock at an exercise price of $0.115 per share to a related party for services rendered. The options had a fair value of $626,047, based upon the Black-Scholes option-pricing model on the date of grant and 2,000,000 options are fully vested on the date granted and 1,000,000 options vest at the end of each successive year for four years. Options will be exercisable on February 19, 2021, and for a period of 10 years expiring on February 19, 2030. During the nine months ended September 30, 2020, the Company recorded $272,673 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   125.19%
Expected term   3 years 
Risk free interest rate   1.50%
Expected forfeitures   0%

 

On February 19, 2020 the Company issued a 7-year option to purchase 1,340,000 shares of common stock at an exercise price of $0.115 per share to employees for services rendered. The options had a fair value of $133,063, based upon the Black-Scholes option-pricing model on the date of grant and 268,000 options are fully vested on the date granted and the remaining option vest equally over the remaining 4 years at the end of each successive year. Options will be exercisable on February 19, 2021, and for a period of 6 years expiring on February 19, 2027. During the nine months ended September 30, 2020, the Company recorded $40,935 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   125.19%
Expected term   6 years 
Risk free interest rate   1.46%
Expected forfeitures   0%

 

On September 26, 2019, the Company issued 766,667 shares in connection with the cashless exercise of the 1,000,000 warrants. On August 14, 2019, the Company issued 7,967,871 shares in connection with the cashless exercise of the 8,000,000 warrants.

 

On August 8, 2019, the Company issued a 2-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $267,574, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2024. During the year ended December 31, 2019, the Company recorded $267,574 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

16

 

 

On August 8, 2019, the Company issued a 2-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $267,574, based upon the Black-Scholes option-pricing model on the date of grant and is fully vested on August 8, 2020. Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025. During the nine months ended September 30, 2020, the Company recorded $161,568 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 3-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $291,842, based upon the Black-Scholes option-pricing model on the date of grant and is fully vested on August 8, 2021. Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026. During the nine months ended September 30, 2020, the Company recorded $109,391 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   3 years 
Risk free interest rate   1.54%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year option to purchase 1,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $118,874, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023. During the year ended December 31, 2019, the Company recorded $118,874 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year option to purchase 1,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $118,874, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2021, and for a period of 3 years expiring on August 8, 2024. During the year ended December 31, 2019, the Company recorded $118,874 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

17

 

 

On August 8, 2019, the Company issued a 2-year option to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to an employee for services rendered. The options had a fair value of $14,859, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023. During the year ended December 31, 2019, the Company recorded $14,859, as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year option to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $16,723, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2020. Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025. During the nine months ended September 30, 2020, the Company recorded $10,098, as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year options to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $18,240, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2021. Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026. During the nine months ended September 30, 2020, the Company recorded $6,837, as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   3 years 
Risk free interest rate   1.54%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year options to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $19,525, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2022. Options will be exercisable on August 8, 2024, and for a period of 3 years expiring on August 8, 2027. During the nine months ended September 30, 2020, the Company recorded $4,881, as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   3 years 
Risk free interest rate   1.54%
Expected forfeitures   0%

 

On March 20, 2018, the Company issued a 4-year warrant to purchase 600,000 shares of common stock at an exercise price of $0.001 per share to a consultant for services rendered. The warrants had a fair value of $19,915, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on March 20, 2018. Warrants will be exercisable on March 20, 2019, and for a period of 3 years expiring on March 20, 2022. During the year ended December 31, 2019, the Company recorded $19,915 as an expense for warrants issued. On April 5, 2019, the Company cancelled 600,000 warrant issued to a consultant on February 20, 2018 in exchange for $6,000 cash payment. In addition the Company also recorded a $19,915 reduction to warrant expense related to the warrant cancellation.

 

Expected dividends   0%
Expected volatility   97.56%
Expected term   4 years 
Risk free interest rate   2.65%
Expected forfeitures   0%

 

On September 26, 2019, the Company issued 766,667 shares in connection with the cashless exercise of the 1,000,000 warrants.

 

On August 14, 2019, the Company issued 7,967,871 shares in connection with the cashless exercise of the 8,000,000 warrants.

 

18

 

 

   Number of Warrants   Weighted Average Exercise Price  

Weighted

Average

Remaining Contractual Life

(in Years)

 
             
Balance, December 31, 2019   55,395,917         2.77 
Granted   -    -      
Exercised   (10,000,000)   -      
Cancelled/Forfeited   -    -      
Balance, September 30, 2020   45,395,917         2.02 
Intrinsic Value  $9,799,286         

 

For the nine months ended September 30, 2020, the following warrants were outstanding:

 

Exercise Price
Warrants
Outstanding
   Warrants
Exercisable