Quarterly Report (10-q)

Date : 11/14/2019 @ 9:49PM
Source : Edgar (US Regulatory)
Stock : Premier Biomedical Inc (QB) (BIEI)
Quote : 0.0004  -0.0001 (-20.00%) @ 9:30PM

Quarterly Report (10-q)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended September 30, 2019
 
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _______________ to _______________.
 
Commission File Number: 000-54563
 
 
PREMIER BIOMEDICAL, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
27-2635666
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
P.O. Box 25
Jackson Center, PA
16133
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code (814) 786-8849
 
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 No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
(Do not check if a smaller reporting company)
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 in Rule 12b-2 of the Exchange Act). Yes No
 
As of November 12, 2019, there were 186,961,480 shares of common stock, $0.00001 par value, issued and outstanding.
 

 
 
 
PREMIER BIOMEDICAL, INC.
 
TABLE OF CONTENTS
 
 
 
 
2
 
 
PART I – FINANCIAL INFORMATION
 
This Quarterly Report includes forward-looking statements within the meaning of the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on management’s beliefs and assumptions, and on information currently available to management. Forward-looking statements include the information concerning our possible or assumed future results of operations set forth under the heading: “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements also include statements in which words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “consider” or similar expressions are used.
 
Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. Our future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.
 
ITEM 1    Financial Statements
 
 
 
 
 
 
 
3
 
 
PREMIER BIOMEDICAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
 
September 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
ASSETS
 
 (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash
 $117,209 
 $86,827 
Accounts receivable
  3,387 
  3,092 
Inventory
  20,516 
  25,985 
Other current assets
  36,470 
  43,883 
Total current assets
  177,582 
  159,787 
 
    
    
Property and equipment, net
  7,918 
  5,203 
 
    
    
Total assets
 $185,500 
 $164,990 
 
    
    
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
    
    
 
    
    
Current liabilities:
    
    
Accounts payable
 $192,543 
 $264,398 
Accounts payable, related parties
  31,081 
  25,944 
Accrued interest
  49,148 
  22,099 
Convertible notes payable, net of discounts of $278,228 and $-0- at September 30, 2019
    
    
and December 31, 2018, respectively, including $139,614 currently in default
  192,286 
  309,637 
Derivative liabilities
  1,838,652 
  1,690,304 
Total current liabilities
  2,303,710 
  2,312,382 
 
    
    
Total liabilities
  2,303,710 
  2,312,382 
 
    
    
Commitments and contingencies
  - 
  - 
 
    
    
Stockholders' equity (deficit):
    
    
Series A convertible preferred stock, $0.001 par value, 10,000,000 shares authorized, 2,000,000 shares designated, issued and outstanding at September 30, 2019 and December 31, 2018, respectively
  2,000 
  2,000 
Series B convertible preferred stock, $0.001 par value, 1,000,000 shares designated, 133,780 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
  134 
  150 
Common stock, $0.00001 par value, 1,000,000,000 shares authorized, 49,216,810 and 5,652,410 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively
  492 
  57 
Additional paid in capital
  14,947,033 
  14,572,754 
Subscriptions payable, consisting of 276,960 shares at December 31, 2018
  - 
  5,345 
Accumulated deficit
  (17,067,869)
  (16,727,698)
Total stockholders' equity (deficit)
  (2,118,210)
  (2,147,392)
 
    
    
Total liabilities and stockholders' equity (deficit)
 $185,500 
 $164,990 
 
See accompanying notes to financial statements.
 
 
4
 
 
PREMIER BIOMEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
 
For the Three Months
 
 
For the Nine Months
 
 
 
Ended September 30,
 
 
Ended September 30,
 
 
 
2019
 
 
2018
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 $3,465 
 $8,225 
 $12,975 
 $30,709 
Cost of goods sold
  1,653 
  4,373 
  5,470 
  20,577 
Gross profit
  1,812 
  3,852 
  7,505 
  10,132 
 
    
    
    
    
Operating expenses:
    
    
    
    
General and administrative
  36,757 
  62,572 
  138,589 
  139,881 
Professional fees
  29,609 
  22,613 
  88,604 
  100,953 
Total operating expenses
  66,366 
  85,185 
  227,193 
  240,834 
 
    
    
    
    
Net operating loss
  (64,554)
  (81,333)
  (219,688)
  (230,702)
 
    
    
    
    
Other income (expense):
    
    
    
    
Interest expense
  (56,002)
  (184,624)
  (101,793)
  (322,323)
Change in derivative liabilities
  (61,078)
  (97,578)
  (18,690)
  655,808 
Total other income (expense)
  (117,080)
  (282,202)
  (120,483)
  333,485 
 
    
    
    
    
Net income (loss)
 $(181,634)
 $(363,535)
 $(340,171)
 $102,783 
 
    
    
    
    
Weighted average number of common shares outstanding - basic
  26,817,415 
  3,306,069 
  14,837,666 
  3,058,442 
Weighted average number of common shares outstanding - fully diluted
  26,817,415 
  3,306,069 
  14,837,666 
  3,070,392 
 
    
    
    
    
Net income (loss) per share - basic
 $(0.01)
 $(0.11)
 $(0.02)
 $0.03 
Net income (loss) per share - fully diluted
 $(0.01)
 $(0.11)
 $(0.02)
 $0.03 
 
See accompanying notes to financial statements.
 
 
5
 
 
PREMIER BIOMEDICAL, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
 
 
 
 Series A Convertible
 
 Series B Convertible 
 
 
 
 
 
 
 Additional 
 
 
 
 
 
 
 
 Total
 
 
 
Preferred Stock
 
 
Preferred Stock
 
 
Common Stock
 
 
 Paid-In
 
 
 Subscriptions
 
 
 Accumulated
 
 
 Stockholders'
 
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Shares
 
 
 Amount
 
 
 Capital
 
 
 Payable
 
 
 Deficit
 
 
 Equity (Deficit)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, December 31, 2017
  2,000,000 
 $2,000 
  - 
 $- 
  2,551,443 
 $26 
 $13,442,255 
 $273,805 
 $(16,328,812)
 $(2,610,726)
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on subsctiptions payable
  - 
  - 
  - 
  - 
  254,703 
  2 
  273,803 
  (273,805)
  - 
  - 
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on debt conversions
  - 
  - 
  - 
  - 
  183,161 
  2 
  64,998 
  - 
  - 
  65,000 
 
    
    
    
    
    
    
    
    
    
    
Adjustments to derivative liability due to debt conversions
  - 
  - 
  - 
  - 
  - 
  - 
  52,270 
  - 
  - 
  52,270 
 
    
    
    
    
    
    
    
    
    
    
Net income for the three months ended March 31, 2018
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  566,324 
  566,324 
 
    
    
    
    
    
    
    
    
    
    
Balance, March 31, 2018
  2,000,000 
 $2,000 
  - 
 $- 
  2,989,307 
 $30 
 $13,833,326 
 $- 
 $(15,762,488)
 $(1,927,132)
 
    
    
    
    
    
    
    
    
    
    
Net loss for the three months ended June 30, 2018
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (100,006)
  (100,006)
 
    
    
    
    
    
    
    
    
    
    
Balance, June 30, 2018
  2,000,000 
 $2,000 
  - 
 $- 
  2,989,307 
 $30 
 $13,833,326 
 $- 
 $(15,862,494)
 $(2,027,138)
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on debt conversions
  - 
  - 
  - 
  - 
  784,542 
  8 
  58,012 
  12,500 
  - 
  70,520 
 
    
    
    
    
    
    
    
    
    
    
Adjustments to derivative liability due to debt conversions
  - 
  - 
  - 
  - 
  - 
  - 
  76,401 
  - 
  - 
  76,401 
 
    
    
    
    
    
    
    
    
    
    
Net loss for the three months ended Septmeber 30, 2018
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (363,535)
  (363,535)
 
    
    
    
    
    
    
    
    
    
    
Balance, September 30, 2018
  2,000,000 
 $2,000 
  - 
 $- 
  3,773,849 
 $38 
 $13,967,739 
 $12,500 
 $(16,226,029)
 $(2,243,752)
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on subsctiptions payable
  - 
  - 
  - 
  - 
  172,176 
  2 
  12,498 
  (12,500)
  - 
  - 
 
    
    
    
    
    
    
    
    
    
    
Series B convertible preferred stock sold for cash
  - 
  - 
  150,000 
  150 
  - 
  - 
  149,850 
  - 
  - 
  150,000 
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on debt conversions
  - 
  - 
  - 
  - 
  1,694,385 
  17 
  74,737 
  5,345 
  - 
  80,099 
 
    
    
    
    
    
    
    
    
    
    
Exercise of warrants at $0.00001 per share, related parties
  - 
  - 
  - 
  - 
  12,000 
  - 
  30 
  - 
  - 
  30 
 
    
    
    
    
    
    
    
    
    
    
Warrants issued for services, related parties
  - 
  - 
  - 
  - 
  - 
  - 
  272,585 
  - 
  - 
  272,585 
 
    
    
    
    
    
    
    
    
    
    
Warrants issued for services
  - 
  - 
  - 
  - 
  - 
  - 
  24,359 
  - 
  - 
  24,359 
 
    
    
    
    
    
    
    
    
    
    
Adjustments to derivative liability due to debt conversions
  - 
  - 
  - 
  - 
  - 
  - 
  70,956 
  - 
  - 
  70,956 
 
    
    
    
    
    
    
    
    
    
    
Net loss for the three months ended December 31, 2018
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (501,669)
  (501,669)
 
    
    
    
    
    
    
    
    
    
    
Balance, December 31, 2018
  2,000,000 
 $2,000 
  150,000 
 $150 
  5,652,410 
 $57 
 $14,572,754 
 $5,345 
 $(16,727,698)
 $(2,147,392)
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on subscriptions payable
  - 
  - 
  - 
  - 
  276,960 
  3 
  5,342 
  (5,345)
  - 
  - 
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on debt conversions
  - 
  - 
  - 
  - 
  2,578,585 
  25 
  50,765 
  6,500 
  - 
  57,290 
 
    
    
    
    
    
    
    
    
    
    
Adjustments to derivative liability due to debt conversions
  - 
  - 
  - 
  - 
  - 
  - 
  48,807 
  - 
  - 
  48,807 
 
    
    
    
    
    
    
    
    
    
    
Net loss for the three months ended March 31, 2019
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  68,511 
  68,511 
 
    
    
    
    
    
    
    
    
    
    
Balance, March 31, 2019 (Unaudited)
  2,000,000 
 $2,000 
  150,000 
 $150 
  8,507,955 
 $85 
 $14,677,668 
 $6,500 
 $(16,659,187)
 $(1,972,784)
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on debt conversions
  - 
  - 
  - 
  - 
  5,024,475 
  50 
  42,658 
  (6,500)
  - 
  36,208 
 
    
    
    
    
    
    
    
    
    
    
Adjustments to derivative liability due to debt conversions
  - 
  - 
  - 
  - 
  - 
  - 
  20,475 
  - 
  - 
  20,475 
 
    
    
    
    
    
    
    
    
    
    
Net loss for the three months ended June 30, 2019
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (227,048)
  (227,048)
 
    
    
    
    
    
    
    
    
    
    
Balance, June 30, 2019 (Unaudited)
  2,000,000 
 $2,000 
  150,000 
 $150 
  13,532,430 
 $135 
 $14,740,801 
 $- 
 $(16,886,235)
 $(2,143,149)
 
    
    
    
    
    
    
    
    
    
    
Preferred stock issued on conversions
  - 
  - 
  (16,220)
  (16)
  4,689,556 
  47 
  (31)
  - 
  - 
  - 
 
    
    
    
    
    
    
    
    
    
    
Common stock issued on debt conversions
  - 
  - 
  - 
  - 
  30,994,824 
  310 
  97,319 
  - 
  - 
  97,629 
 
    
    
    
    
    
    
    
    
    
    
Adjustments to derivative liability due to debt conversions
  - 
  - 
  - 
  - 
  - 
  - 
  108,944 
  - 
  - 
  108,944 
 
    
    
    
    
    
    
    
    
    
    
Net loss for the three months ended September 30, 2019
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  - 
  (181,634)
  (181,634)
 
    
    
    
    
    
    
    
    
    
    
Balance, September 30, 2019 (Unaudited)
  2,000,000 
 $2,000 
  133,780 
 $134 
  49,216,810 
 $492 
 $14,947,033 
 $- 
 $(17,067,869)
 $(2,118,210)
 
 See accompanying notes to financial statements.
 
 
6
 
 
PREMIER BIOMEDICAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
 
 
For the Nine Months
 
 
 
Ended September 30,
 
 
 
2019
 
 
2018
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
Net income (loss)
 $(340,171)
 $102,783 
Adjustments to reconcile net income (loss)
    
    
to net cash used in operating activities:
    
    
Depreciation
  2,135 
  1,749 
Change in fair market value of derivative liabilities
  18,690 
  (655,808)
Amortization of debt discounts
  59,556 
  306,442 
Decrease (increase) in assets:
    
    
Accounts receivable
  (295)
  (1,654)
Inventory
  5,469 
  (34,392)
Other current assets
  7,413 
  (3,242)
Increase (decrease) in liabilities:
    
    
Accounts payable
  (71,855)
  (39,787)
Accounts payable, related parties
  5,137 
  (10,443)
Accrued interest
  40,753 
  15,881 
Net cash used in operating activities
  (273,168)
  (318,471)
 
    
    
CASH FLOWS FROM INVESTING ACTIVITIES
    
    
Purchases of property and equipment
  (4,850)
  (2,029)
Net cash used in investing activities
  (4,850)
  (2,029)
 
    
    
CASH FLOWS FROM FINANCING ACTIVITIES
    
    
Proceeds from convertible notes payable
  308,400 
  300,000 
Net cash provided by financing activities
  308,400 
  300,000 
 
    
    
NET CHANGE IN CASH
  30,382 
  (20,500)
CASH AT BEGINNING OF PERIOD
  86,827 
  83,704 
 
    
    
CASH AT END OF PERIOD
 $117,209 
 $63,204 
 
    
    
SUPPLEMENTAL INFORMATION:
    
    
Interest paid
 $1,484 
 $- 
Income taxes paid
 $- 
 $- 
 
    
    
NON-CASH INVESTING AND FINANCING ACTIVITIES:
    
    
Value of preferred stock converted to common stock
 $44,913 
 $- 
Value of debt discounts
 $304,311 
 $300,000 
Value of derivative adjustment due to debt conversions
 $178,226 
 $128,671 
Value of shares issued for conversion of debt
 $191,127 
 $135,520 
 
See accompanying notes to financial statements.
 
 
7
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
Note 1 – Basis of Presentation and Significant Accounting Policies
 
Basis of Presentation
The accompanying unaudited, condensed consolidated financial statements of Premier Biomedical, Inc. (“the Company”) have been prepared pursuant to rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and footnote disclosures normally included in audited financial statements. However, these statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein. It is suggested that these statements be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.
 
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management 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 the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
 
Cash and Cash Equivalents
We maintain cash balances in non-interest-bearing accounts, which do not currently exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.
 
Patent Rights and Applications
Patent rights and applications costs include the acquisition costs and costs incurred for the filing of patents. Patent rights and applications are amortized on a straight-line basis over the legal life of the patent rights beginning at the time the patents are approved. Patent costs for unsuccessful patent applications are expensed when the application is terminated.
 
Fair Value of Financial Instruments
Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, prepaid expenses and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short-term nature of the instruments.
 
Basic and Diluted Loss Per Share
Basic earnings per share (“EPS”) are computed by dividing net income (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). Diluted EPS is computed by dividing net income by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants and restricted stock. The number of potential common shares outstanding relating to stock options, warrants and restricted stock is computed using the treasury stock method.
 
 
 
8
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
The reconciliation of the denominators used to calculate basic EPS and diluted EPS for the nine months ended September 30, 2019 and 2018 are as follows:
 
 
 
For the Nine Months Ended
 
 
 
September 30,
 
 
 
2019
 
 
2018
 
Weighted average common shares outstanding – basic
  14,837,666 
  3,058,442 
Plus: Potentially dilutive common shares:
    
    
Warrants
  - 
  11,950 
Weighted average common shares outstanding – diluted
  14,837,666 
  3,070,392 
 
For the nine months ended September 30, 2019, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share. Warrants excluded from the calculation of diluted EPS because their effect was anti-dilutive were 3,898,000 and 245,760 as of September 30, 2019 and 2018, respectively.
 
Stock-Based Compensation
Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The Company had no stock-based compensation issuances during the nine months ended September 30, 2019 and 2018.
 
Revenue Recognition
On January 1, 2018, we adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition (Topic 605). Results for reporting periods beginning after January 1, 2018 are presented under Topic 606. The impact of adopting the new revenue standard was not material to our financial statements and there was no adjustment to beginning retained earnings on January 1, 2018.
 
Under Topic 606, revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
 
We determine revenue recognition through the following steps:
 
identification of the contract, or contracts, with a customer;
identification of the performance obligations in the contract;
determination of the transaction price;
allocation of the transaction price to the performance obligations in the contract; and
recognition of revenue when, or as, we satisfy a performance obligation.
 
Sales are recorded when the earnings process is complete or substantially complete, and the revenue is measurable and collectability is reasonably assured, which is typically when products are shipped. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue from sales in which payment has been received, but the earnings process has not been completed. Sales commenced on July 5, 2017 with the termination of our joint venture.
 
Advertising and Promotion
All costs associated with advertising and promoting products are expensed as incurred. These expenses were $35,696 and $50,127 for the nine months ended September 30, 2019 and 2018, respectively.
 
 
9
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
Income Taxes
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. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.
 
Uncertain Tax Positions
In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
 
Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.
 
The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.
 
Recent Accounting Pronouncements
In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which modify the disclosure requirements of Topic 820. The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2019, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements.
 
In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases. The amendments in ASU 2018-10 provide additional clarification and implementation guidance on certain aspects of the previously issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) and have the same effective and transition requirements as ASU 2016-02. Upon the effective date, ASU 2018-10 will supersede the current lease guidance in ASC Topic 840, Leases. Under the new guidance, lessees will be required to recognize for all leases, with the exception of short-term leases, a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis. Concurrently, lessees will be required to recognize a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2018-10 is effective for private companies and emerging growth public companies for interim and annual reporting periods beginning after December 15, 2019, with early adoption permitted. The guidance is required to be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented in the financial statements. The Company adopted this guidance effective January 1, 2019, and the standard did not have a material impact on the Company’s combined financial statements and related disclosures.
 
 
10
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The adoption of this ASU has not had a material impact on its consolidated financial statements.
 
In March 2018, the FASB issued ASU No. 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. The amendment provides guidance on accounting for the impact of the Tax Cuts and Jobs Act (the “Tax Act”) and allows entities to complete the accounting under ASC 740 within a one-year measurement period from the Tax Act enactment date. This standard is effective upon issuance. The Tax Act has several significant changes that impact all taxpayers, including a transition tax, which is a one-time tax charge on accumulated, undistributed foreign earnings. The calculation of accumulated foreign earnings requires an analysis of each foreign entity’s financial results going back to 1986. The adoption of this ASU has not had a material impact on its consolidated financial statements.
 
In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The guidance permits entities to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform to retained earnings. This new guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted in annual and interim periods and can be applied retrospectively or in the period of adoption. The adoption of this ASU has not had a material impact on its consolidated financial statements.
 
Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies 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 comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the years ended December 31, 2018 and 2017.
 
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize assets and liabilities for most leases. ASU 2016-02 is effective for public entity financial statements for annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption is permitted, including adoption in an interim period. ASU 2016-02 was further clarified and amended within ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20 which included provisions that would provide us with the option to adopt the provisions of the new guidance using a modified retrospective transition approach, without adjusting the comparative periods presented. We adopted the new standard on January 1, 2019 and used the effective date as our date of initial application under the modified retrospective approach. We elected the short-term lease recognition exemption for all of our leases that qualify. This means, for those leases we will not recognize right-of-use (RoU) assets or lease liabilities. The implementation of this new standard has no impact on our financial statements.
 
No other new accounting pronouncements, issued or effective during the nine months ended September 30, 2019, have had or are expected to have a significant impact on the Company’s financial statements.
 
 
11
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
Note 2 – Going Concern
 
As shown in the accompanying financial statements, the Company has minimal revenues, incurred net losses from operations resulting in an accumulated deficit of $17,067,869, and had negative working capital of ($2,126,128) at September 30, 2019. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company is currently seeking additional sources of capital to fund short term operations. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful; therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.
 
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
Note 3 – Related Parties
 
Accounts Payable
The Company owed $30,006 and $24,116 as of September 30, 2019 and December 31, 2018, respectively, to entities owned by the Chairman of the Board of Directors. The amounts are related to patent costs and reimbursable expenses paid by the Chairman on behalf of the Company.
 
The Company owed $753 as of December 31, 2018 to the Company’s CEO for reimbursable expenses.
 
The Company owed $1,075 as of September 30, 2019 and December 31, 2018 amongst members of the Company’s Board of Directors for reimbursable expenses.
 
Note 4 – Fair Value of Financial Instruments
 
Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
 
The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
 
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
 
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
 
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
 
 
12
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
(Unaudited)
 
The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheets as of September 30, 2019 and December 31, 2018, respectively:
 
 
 
Fair Value Measurements at September 30, 2019
 
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
Assets
 
 
 
 
 
 
 
 
 
Cash
 $117,209 
 $- 
 $- 
Total assets
  117,209 
  - 
  - 
Liabilities
    
    
    
Convertible notes payable, net of discounts
  - 
  192,286 
  - 
Derivative liabilities
  - 
  - 
  1,838,652 
Total liabilities
  - 
  192,286 
  1,838,652 
 
 $117,209 
 $(192,286)
 $(1,838,652)
 
 
 
Fair Value Measurements at December 31, 2018
 
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
Assets
 
 
 
 
 
 
 
 
 
Cash
 $86,827 
 $- 
 $- 
Total assets
  86,827 
  - 
  - 
Liabilities
    
    
    
Convertible notes payable, net of discounts
  - 
  309,637 
  - 
Derivative liabilities
  - 
  - 
  1,690,304 
Total liabilities
  - 
  309,637 
  1,690,304 
 
 $86,827 
 $(309,637)
 $(1,690,304)
 
The fair values of our related party debts are deemed to approximate book value, and are considered Level 2 inputs as defined by ASC Topic 820-10-35.
 
There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the nine months ended September 30, 2019 or the year ended December 31, 2018.
 
Note 5 – Patent Rights and Applications
 
The Company amortizes its patent rights and applications on a straight-line basis over the expected useful technological or economic life of the patents, which is typically 17 years from the legal approval of the patent applications when there are probable future economic benefits associated with the patent. The Company has elected to expense all of their patent rights and application costs due to difficulties associated with having to prove the value of their future economic benefits. All patent applications are currently pending and the Company has no patents that have yet been approved. It is the Company’s policy that it performs reviews of the carrying value of its patent rights and applications on an annual basis.
 
On March 4, 2015, we entered into a Patent License Agreement (“PLA”) with the University of Texas at El Paso (“UTEP”) regarding our joint research and development of CTLA-4 Blockade with Metronomic Chemotherapy for the Treatment of Breast Cancer. This is the first PLA with UTEP following our Collaborative Agreement with them dated May 9, 2012, and memorializes the joint ownership of the applicable patent and the financial and other terms related thereto.
 
On June 19, 2015, we entered into Amendment No. 1 to this Agreement, pursuant to which we explicitly included Provisional Patent Application No. 62/161,116 entitled, “Anti-CTLA-4 Blockade” (the “Application”) under the definition of “Patent Rights” as set forth in the PLA. The Application was filed with the United States Patent and Trademarks Office on May 13, 2015; the underlying technology was invented by Robert Kirken and Georgialina Rodriguez, and is solely-owned by The Board of Regents of The University of Texas System.
 
 
13
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
Note 6 – Convertible Notes Payable
 
Convertible notes payable consists of the following at September 30, 2019 and December 31, 2018, respectively:
 
 
 
September 30,
 
 
December 31,
 
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
On September 12, 2019, the Company received net proceeds of $22,000, carrying a $25,750 face value, in exchange for a 12% interest bearing; unsecured convertible promissory note maturing on September 12, 2020 (“Third Crown Bridge Partners Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the twenty (20) Trading Days prior to the Conversion Date. In addition, the holder is entitled to deduct $500 from the conversion amount in each conversion to cover the holder’s deposit fees.
 $25,750 
 $- 
 
    
    
On August 15, 2019, the Company received net proceeds of $40,000, carrying a $43,000 face value, in exchange for a 10% interest bearing; unsecured convertible promissory note maturing on August 15, 2020 (“Fifth Power Up Lending Note”). The note is convertible 180 days from the date of the note at 61% of the average of the two lowest closing bid prices of the Common Stock in the twenty (20) Trading Days prior to the Conversion Date.
  43,000 
  - 
 
    
    
On August 2, 2019, the Company received net proceeds of $35,000, carrying a $38,000 face value, in exchange for a 10% interest bearing; unsecured convertible promissory note maturing on August 2, 2020 (“Fourth Power Up Lending Note”). The note is convertible 180 days from the date of the note at 61% of the average of the two lowest closing bid prices of the Common Stock in the twenty (20) Trading Days prior to the Conversion Date.
  38,000 
  - 
 
    
    
On July 2, 2019, the Company received net proceeds of $31,400, carrying a $36,050 face value, in exchange for a 12% interest bearing; unsecured convertible promissory note maturing on June 27, 2020 (“Second Crown Bridge Partners Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the twenty (20) Trading Days prior to the Conversion Date. In addition, the holder is entitled to deduct $500 from the conversion amount in each conversion to cover the holder’s deposit fees.
  36,050 
  - 
 
    
    
On June 7, 2019, the Company received net proceeds of $35,000, carrying a $38,000 face value, in exchange for a 10% interest bearing; unsecured convertible promissory note maturing on June 7, 2020 (“Third Power Up Lending Note”). The note is convertible 180 days from the date of the note at 61% of the average of the two lowest closing bid prices of the Common Stock in the twenty (20) Trading Days prior to the Conversion Date.
  38,000 
  - 
 
    
    
On April 23, 2019, the Company received net proceeds of $35,000, carrying a $38,000 face value, in exchange for a 10% interest bearing; unsecured convertible promissory note maturing on April 23, 2020 (“Second Power Up Lending Note”). The note is convertible 180 days from the date of the note at 61% of the average of the two lowest closing bid prices of the Common Stock in the twenty (20) Trading Days prior to the Conversion Date.
  38,000 
  - 
 
    
    
On March 27, 2019, the Company entered into a securities purchase agreement with Crown Bridge Partners, LLC to sell convertible notes with a face value of $154,500, with net proceeds of $141,000 after the deduction of an original issue discount of $13,500 on a 12% interest bearing; unsecured convertible promissory note with the first twelve months of interest of each tranche guaranteed. The maturity date for each tranche funded shall be twelve (12) months from the effective date of each payment. The note is payable in tranches with the first tranche, which was received on April 17, 2019, carrying a $51,500 face value, with net proceeds of $47,000 after a $4,500 original issue discounts (“First Crown Bridge Partners Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the twenty (20) Trading Days prior to the Conversion Date. In addition, the holder is entitled to deduct $500 from the conversion amount in each conversion to cover the holder’s deposit fees.
  51,500 
  - 
 
    
    
On March 26, 2019, the Company received proceeds of $68,000 in exchange for a 10% interest bearing; unsecured convertible promissory note maturing on March 26, 2020 (“First Power Up Lending Note”). The note is convertible 180 days from the date of the note at 61% of the average of the two lowest closing bid prices of the Common Stock in the twenty (20) Trading Days prior to the Conversion Date. A total of $7,400 of principal was converted into 1,947,368 shares of common stock on September 30, 2019.
  60,600 
  - 
 
    
    
On July 11, 2018, the Company received proceeds of $120,000 in exchange for an 8% interest bearing; unsecured convertible promissory note maturing on October 31, 2018 (“Third Red Diamond Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the fifteen (15) Trading Days prior to the Conversion Date. A total of $59,959 of principal was converted into 11,641,667 shares of common stock over various dates between July 27, 2018 and September 26, 2019. Currently in default.
  60,041 
  94,080 
 
    
    
On July 11, 2018, the Company received proceeds of $60,000 in exchange for an 8% interest bearing; unsecured convertible promissory note maturing on October 31, 2018 (“Third SEG-RedaShex Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the fifteen (15) Trading Days prior to the Conversion Date. Currently in default.
  60,000 
  60,000 
 
    
    
On April 24, 2018, the Company received proceeds of $30,000 in exchange for an 8% interest bearing; unsecured convertible promissory note maturing on July 31, 2018 (“Second Red Diamond Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the fifteen (15) Trading Days prior to the Conversion Date. A total of $32,553, consisting of $30,000 of principal and $2,553 of interest, was converted into 11,110,400 shares of common stock over various dates between August 8, 2019 and September 3, 2019.
  - 
  30,000 
 
    
    
On April 24, 2018, the Company received proceeds of $30,000 in exchange for an 8% interest bearing; unsecured convertible promissory note maturing on July 31, 2018 (“Second SEG-RedaShex Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the fifteen (15) Trading Days prior to the Conversion Date. A total of $12,636 of principal was converted into 3,510,000 shares of common stock over various dates between September 10, 2019 and September 17, 2019.Currently in default.
  17,364 
  30,000 
 
    
    
On March 1, 2018, the Company received proceeds of $30,000 in exchange for an 8% interest bearing; unsecured convertible promissory note maturing on May 31, 2018 (“First SEG-RedaShex Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the fifteen (15) Trading Days prior to the Conversion Date. A total of $30,000 of principal was converted into an aggregate of 4,262,416 shares of common stock at various dates between January 2, 2019 and August 15, 2019.
  - 
  30,000 
 
    
    
On October 30, 2017, the Company received proceeds of $50,000 in exchange for an 8% interest bearing; unsecured convertible promissory note maturing on January 31, 2018 (“Second Diamond Rock Note”). The note is convertible at 60% of the lowest traded price of the Common Stock in the fifteen (15) Trading Days prior to the Conversion Date. A $15,000 loss was recognized during the fourth quarter of 2018 due to the enactment of default provision. A total of $76,150, consisting of $65,000 of principal and $11,150 of interest, was converted into 5,169,160 shares of common stock over various dates between December 12, 2018 and June 7, 2019.
  - 
  55,057 
 
    
    
On August 8, 2017, the Company entered into an exchange agreement with Diamond Rock, LLC whereby they exchanged (i) the 13,333,334 Series A Warrants purchased in the First Closing, (ii) the 13,333,334 Series B Warrants purchased in the First Closing, and (iii) the 10,101,011 shares of common stock purchased in the Second Closing (the “Exchange Securities”) for a $50,000 convertible note (“First Diamond Rock Note”) issued by the Company, bearing interest at 8% interest and maturing on November 30, 2017. The notes are convertible at 50% of the lowest traded price of the Common Stock in the fifteen (15) Trading Days prior to the Conversion Date. A $10,500 loss was recognized during the fourth quarter of 2018 due to the enactment of default provision. A total of $15,000 of principal was converted into an aggregate of 31,250 shares of common stock at various dates between November 6, 2017 and November 13, 2017, and another $35,000 of principal was converted into an aggregate of 751,550 shares of common stock at various dates between October 12, 2018 and November 30, 2018, along with $52,581 of principal that was converted into an aggregate of 4,099,700 shares of common stock at various dates between January 11, 2019 and June 27, 2019. Currently in default.
  2,209 
  10,500 
 
    
    
Total convertible notes payable
  470,514 
  309,637 
Less unamortized derivative discounts:
  278,228 
  - 
Convertible notes payable
  192,286 
  309,637 
Less: current portion
  192,286 
  309,637 
Convertible notes payable, less current portion
 $- 
 $- 
 
 
14
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
In accordance with ASC 470-20 Debt with Conversion and Other Options, the Company recorded total discounts of $334,211 and $300,000; including $29,900 and $-0- of loan origination discounts, for the variable conversion features of the convertible debts incurred during the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively. The discounts are being amortized to interest expense over the term of the debentures using the effective interest method. The Company recorded $59,556 and $306,442 of interest expense pursuant to the amortization of note discounts during the nine months ended September 30, 2019 and 2018, respectively.
 
All of the convertible debentures carry default provisions that place a “maximum share amount” on the note holders. The maximum share amount that can be owned as a result of the conversions to common stock by the note holders is 4.99% of the Company’s issued and outstanding shares.
 
In accordance with ASC 815-15, the Company determined that the variable conversion feature and shares to be issued on the Redwood Notes represented embedded derivative features, and these are shown as derivative liabilities on the balance sheet. The Company calculated the fair value of the compound embedded derivatives associated with the convertible debentures utilizing a lattice model.
 
The Company recognized interest expense for the nine months ended September 30, 2019 and 2018, respectively, as follows:
 
 
 
September 30,
 
 
September 30,
 
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
Interest on convertible notes
 $40,753 
 $15,881 
Amortization of debt discounts
  59,556 
  306,442 
Interest on credit cards
  1,484 
  - 
Total interest expense
 $101,793 
 $322,323 
 
Note 7 – Derivative Liabilities
 
As discussed in Note 6 under Convertible Notes Payable, the Company issued debts that consist of the issuance of convertible notes with variable conversion provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment is tainted and all additional convertible debentures and warrants are included in the value of the derivative. Pursuant to ASC 815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded as derivative liabilities on the issuance date.
 
The fair values of the Company’s derivative liabilities were estimated at the issuance date and are revalued at each subsequent reporting date, using a lattice model. The Company recognized current derivative liabilities of $1,838,652 and $1,690,304 at September 30, 2019 and December 31, 2018, respectively. The change in fair value of the derivative liabilities resulted in a loss of $18,690 and a gain of $655,808 for the nine months ended September 30, 2019 and 2018, respectively, which has been reported within other income in the statements of operations. The loss of $18,690 for the nine months ended September 30, 2019 consisted of a gain of $26,267 due to the value attributable to the warrants and a loss in market value of $44,957 on the convertible notes. The gain of $655,808 for the nine months ended September 30, 2018 consisted of a gain of $743,751 due to the value attributable to the warrants and a net loss in market value of $87,943 on the convertible notes.
 
 
15
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
The following is a summary of changes in the fair market value of the derivative liability during the nine months ended September 30, 2019 and the year ended December 31, 2018, respectively:
 
 
 
Derivative
 
 
 
Liability
 
 
 
Total
 
Balance, December 31, 2017
 $2,255,781 
Increase in derivative value due to issuances of convertible promissory notes
  336,643 
Change in fair market value of derivative liabilities due to the mark to market adjustment
  (702,493)
Debt conversions
  (199,627)
Balance, December 31, 2018
 $1,690,304 
Increase in derivative value due to issuances of convertible promissory notes
  307,884 
Change in fair market value of derivative liabilities due to the mark to market adjustment
  18,690 
Debt conversions
  (178,226)
Balance, September 30, 2019
 $1,838,652 
 
Key inputs and assumptions used to value the convertible debentures and warrants issued during the nine months ended September 30, 2019:
Stock price ranging from $0.0285 to $0.0066 during these periods would fluctuate with projected volatility.
The notes convert with variable conversion prices and fixed conversion prices (tainted notes).
An event of default would occur -0-% of the time, increasing 2% per month to a maximum of 10%.
The projected annual volatility curve for each valuation period was based on the historical annual volatility of the company in the range of 246.5% - 452.3%.
The Company would redeem the notes -0-% of the time, increasing 1% per month to a maximum of 5%.
All notes are assumed to be extended at maturity – the time required to convert out this volume of stock.
A change of control and fundamental transaction would occur initially -0-% of the time and increase monthly by -0-% to a maximum of -0-%.
The monthly trading volume would average $336,476 to $357,240 and would increase at 1% per month.
The stock price would fluctuate with the Company projected volatility using a random sampling (500,000 iterations for each valuation) from a normal distribution. The stock price of the underlying instrument is modelled such that it follows a geometric Brownian motion with constant drift and volatility.
The Holder would exercise the warrants after one trading day as they become exercisable (at issuance) at target prices of 3 to 5 times the projected reset price or higher.
Reset events were projected to occur by 9/30/19 – the option expires 3/31/20.
The stock price would fluctuate with an annual volatility. The projected annual volatility curve for each valuation period was based on the historical annual volatility of the company and the term remaining in the range 369.2% - 369.2%.
The Holder would exercise the warrant at maturity in 2020 if the stock price was above the reset exercise price.
 
 
16
 
 
Premier Biomedical, Inc.
Notes to Condensed Financial Statements
 (Unaudited)
 
Note 8 – Commitments and Contingencies
 
Collaborative Patent License Agreements
On May 9, 2012, the Company entered into a Collaborative Agreement with the University of Texas at El Paso. Pursuant to the terms of the Agreement, the Company will work jointly with the University to develop a series of research and development programs around its sequential-dialysis technology in the areas of Alzheimer's Disease, Traumatic Brain Injury (TBI), Chronic Pain Syndrome, Fibromyalgia, Multiple Sclerosis, Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig's disease), Blood Sepsis, Cancer, Heart Attacks and Strokes. The programs will utilize the facilities at one or more of the University of Texas’ campuses. The Company will pay the University’s actual overhead for the projects, plus a negotiated facility and administration overhead expense, and 10% of all gross revenues associated with the sale, license and/or royalties of all products and treatment procedures directly affiliated with programs. Intellectual property jointly invented and developed as a result of the projects will be owned jointly by the University and the Company. The Agreement has an initial term of five (5) years, and is renewable upon mutual agreement of the parties.
 
On March 4, 2015, we entered into a Patent License Agreement (PLA) with the University of Texas at El Paso (UTEP) regarding our joint research and development of CTLA-4 Blockade with Metronomic Chemotherapy for the Treatment of Breast Cancer. This is the first PLA with UTEP following our Collaborative Agreement with them dated May 9, 2012, and memorializes the joint ownership of the applicable patent and the financial and other terms related thereto.
 
On June 19, 2015, we entered into Amendment No. 1 to this Agreement, pursuant to which we explicitly included Provisional Pa