BIEI Premier Biomedical Inc (PK)

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.)

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 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.

 

On October 31, 2017 we entered into an Agreement, Final Payment under Contract, and Release of all Claims, whereby we agreed to pay them a total of $326,336 arising out of the research and development agreements with an initial payment of $22,211, and monthly payments of varying amounts between $5,000 and $20,000 thereafter for twenty eight months until the balance is paid in full. Subject to the compliance of all terms, the intellectual property rights established and arising out of the collaborative agreements remain in full force and effect and the parties agreed to a mutual release upon the final contracted payment. The full amount of the liability has been recognized as accounts payable, with $155,024 outstanding as of the end of this period, which is currently in default.

 

Note 9 – Changes in Stockholders’ Equity (Deficit)

 

Reverse Stock Split

On June 27, 2018, the Company effected a 1-for-250 reverse stock split (the “Reverse Stock Split”). No fractional shares were issued, and no cash or other consideration was paid in connection with the Reverse Stock Split. Instead, the Company issued one whole share of the post-Reverse Stock Split common stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split. The Company was authorized to issue 1,000,000,000 shares of common stock prior to the Reverse Stock Split, which remains unaffected. The Reverse Stock Split did not have any effect on the stated par value of the common stock, or the Company’s authorized preferred stock. Unless otherwise stated, all share and per share information in this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the Reverse Stock Split.

 

Convertible Preferred Stock

The Company has 10,000,000 authorized shares of Preferred Stock, of which 2,000,000 shares of $0.001 par value Series A Convertible Preferred Stock (“Series A Preferred Stock”) have been designated, and another 1,000,000 shares of $0.001 par value Series B Convertible Preferred Stock (“Series B Preferred Stock”) were designated on November 23, 2018. The Company shall reserve and keep available out of its authorized but unissued shares of Common Stock such number of shares sufficient to effect the conversions, and agreed to reserve no less than 225 million shares.

 

 

17

 

 

Premier Biomedical, Inc.

Notes to Condensed Financial Statements

 (Unaudited)

 

Convertible Preferred Stock, Series A

Each share of Series A Preferred Stock is convertible, at the option of the holder thereof, at any time after the issuance of such share into one (1) fully paid and non-assessable share of Common Stock. Each outstanding share of Series A Preferred Stock is entitled to one hundred (100) votes per share on all matters to which the shareholders of the Corporation are entitled or required to vote.

 

Convertible Preferred Stock, Series B

Each share of Series B Preferred Stock is convertible, at the option of the holder thereof, at any time after the issuance of such share into that number of fully paid and nonassessable shares of our common stock equal to the quotient of the Conversion Principal Amount divided by the lesser of (a) the Fixed Conversion Price established by our Board of Directors on the date of conversion, and (b) the Fair Market Value. The Certificate of Designation defines Fair Market Value as 60% of the lowest Traded Price for the common stock for the previous fifteen (15) trading days prior to the Conversion Date on the market or exchange where our common stock is trading. The Conversion Principal Amount is equal to the Original Issue Price ($1.00) divided by nine-tenths (0.9). The Fixed Conversion Price is the price set by our Board of Directors upon conversion but in no event less than the last Traded Price of our common stock. Traded Price is defined as the price at which our common stock changes hands on the designated exchange or market. Conversion of the Series B Preferred Stock is subject to a Beneficial Ownership Limitation that prohibits the conversion of the Series B Preferred Stock if the conversion would result in beneficial ownership by the holder and its affiliates of more than 4.99% of our outstanding shares of common stock. A holder of Series B Preferred Stock may increase its Beneficial Ownership Limitation up to 9.99% but only after 61 days have passed since the holder gave notice to the Company. The Series B Preferred Stock has no voting rights. The rights of the Series B Preferred Stock survive any reorganization, merger or sale of the Company.

 

The holders of Series B Preferred Stock shall receive noncumulative dividends on an as-converted basis in the same form as any dividends to be paid out on shares of our common stock. Any dividends paid will first be paid to the holders of Series B Preferred Stock prior and in preference to any payment or distribution to holders of common stock. Other than as set forth in the previous sentence, the Certificate of Designation provides that no other dividends shall be paid on Series B Preferred Stock. Dividends on the Series B Preferred Stock are not mandatory or cumulative. There are no sinking fund provisions applicable to the Series B Preferred Stock, and the holders of Series B Preferred Stock have no redemption rights. The Corporation may redeem the Series B Preferred Stock upon 30 days’ prior notice at a price equal to the sum of 133% of the Original Issue Price plus the amount of any unpaid dividends on the shares to be redeemed.

 

As long as any shares of Series B Preferred Stock remain outstanding, the Certificate of Designation provides that without the approval of 75% of the holders of the outstanding Series B Preferred Stock, we may not (i) alter or change the rights, preferences, or privileges of the Series B Convertible Preferred Stock, (ii) increase or decrease the number of authorized shares of Series B Convertible Preferred Stock, or (iii) authorize the issuance of securities having a preference over or on par with the Series B Preferred Stock.

 

Common Stock Issuances for Series B Preferred Stock Conversions

On August 8, 2019, the Company issued 925,927 shares of common stock pursuant to the conversion of 2,500 of Series B Convertible Preferred Stock held by RedDiamond Partners.

 

On August 2, 2019, the Company issued 851,853 shares of common stock pursuant to the conversion of 2,300 of Series B Convertible Preferred Stock held by RedDiamond Partners.

 

On July 29, 2019, the Company issued 796,297 shares of common stock pursuant to the conversion of 2,150 of Series B Convertible Preferred Stock held by RedDiamond Partners.

 

On July 23, 2019, the Company issued 741,741 shares of common stock pursuant to the conversion of 2,470 of Series B Convertible Preferred Stock held by RedDiamond Partners.

 

 

18

 

 

Premier Biomedical, Inc.

Notes to Condensed Financial Statements

 (Unaudited)

 

On July 16, 2019, the Company issued 707,071 shares of common stock pursuant to the conversion of 3,500 of Series B Convertible Preferred Stock held by RedDiamond Partners.

 

On July 8, 2019, the Company issued 666,667 shares of common stock pursuant to the conversion of 3,300 of Series B Convertible Preferred Stock held by RedDiamond Partners.

 

Common Stock

The Company has one billion authorized shares of $0.00001 par value Common Stock, as increased pursuant to an amendment to the articles of incorporation on February 9, 2016.

 

Common Stock Issuances for Debt Conversions

On September 30, 2019, the Company issued 1,947,368 shares of common stock pursuant to the conversion of $7,400 of principal from the First PowerUp Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 26, 2019, the Company issued 2,150,000 shares of common stock pursuant to the conversion of $6,450 of principal from the Third RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 23, 2019, the Company issued 2,050,000 shares of common stock pursuant to the conversion of $6,150 of principal from the Third RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 18, 2019, the Company issued 1,950,000 shares of common stock pursuant to the conversion of $5,850 of principal from the Third RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 17, 2019, the Company issued 1,920,000 shares of common stock pursuant to the conversion of $6,912 of principal from the Second SEG-RedaShex Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 16, 2019, the Company issued 1,863,000 shares of common stock pursuant to the conversion of $5,589 of principal from the Third RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 12, 2019, the Company issued 1,680,000 shares of common stock pursuant to the conversion of $5,040 of principal from the Third RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 10, 2019, the Company issued 1,590,000 shares of common stock pursuant to the conversion of $5,724 of principal from the Second SEG-RedaShex Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 6, 2019, the Company issued 1,600,000 shares of common stock pursuant to the conversion of $4,960 of principal from the Third RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On September 3, 2019, the Company issued 1,540,000 shares of common stock pursuant to the conversion of $4,774, consisting of $2,221 of principal and $2,553 of interest from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

 

19

 

 

Premier Biomedical, Inc.

Notes to Condensed Financial Statements

 (Unaudited)

 

On August 28, 2019, the Company issued 1,469,000 shares of common stock pursuant to the conversion of $4,554 of principal from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 22, 2019, the Company issued 1,360,000 shares of common stock pursuant to the conversion of $4,216 of principal from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 20, 2019, the Company issued 1,295,000 shares of common stock pursuant to the conversion of $4,533 of principal from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 19, 2019, the Company issued 1,230,000 shares of common stock pursuant to the conversion of $3,936 of principal from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 15, 2019, the Company issued 1,124,000 shares of common stock pursuant to the conversion of $2,810 of principal from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 15, 2019, the Company issued 833,333 shares of common stock pursuant to the conversion of $2,500 of principal from the First SEG-RedaShex Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 14, 2019, the Company issued 1,080,000 shares of common stock pursuant to the conversion of $2,700 of principal from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 13, 2019, the Company issued 1,030,000 shares of common stock pursuant to the conversion of $2,575 of principal from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 12, 2019, the Company issued 833,333 shares of common stock pursuant to the conversion of $2,500 of principal from the First SEG-RedaShex Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 12, 2019, the Company issued 982,400 shares of common stock pursuant to the conversion of $2,456 of principal from the Second RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On August 1, 2019, the Company issued 833,333 shares of common stock pursuant to the conversion of $2,500 of principal from the First SEG-RedaShex Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On July 11, 2019, the Company issued 634,057 shares of common stock pursuant to the conversion of $3,500 of principal from the First SEG-RedaShex Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On June 27, 2019, the Company issued 640,000 shares of common stock pursuant to the conversion of $2,944 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

 

20

 

 

Premier Biomedical, Inc.

Notes to Condensed Financial Statements

 (Unaudited)

 

On June 21, 2019, the Company issued 612,500 shares of common stock pursuant to the conversion of $2,817 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On June 17, 2019, the Company issued 550,000 shares of common stock pursuant to the conversion of $2,530 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On June 7, 2019, the Company issued 530,000 shares of common stock pursuant to the conversion of $2,703 of interest from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On May 28, 2019, the Company issued 505,000 shares of common stock pursuant to the conversion of $4,596 of interest from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On May 22, 2019, the Company issued 497,512 shares of common stock pursuant to the conversion of $6,000 of principal from the First SEG-RedaShex Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On May 16, 2019, the Company issued 480,000 shares of common stock pursuant to the conversion of $4,992, consisting of $1,141 of principal and $3,851 of interest, from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On May 7, 2019, the Company issued 460,000 shares of common stock pursuant to the conversion of $5,106 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On April 26, 2019, the Company issued 400,000 shares of common stock pursuant to the conversion of $4,520 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On March 22, 2019, the Company issued 386,000 shares of common stock pursuant to the conversion of $6,369, consisting of $2,136 of principal and $4,233 of interest, from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On March 6, 2019, the Company issued 370,000 shares of common stock pursuant to the conversion of $5,739 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On February 26, 2019, the Company issued 349,463 shares of common stock pursuant to the conversion of $6,500 of principal from the First SEG-RedaShex Note. The shares were subsequently issued in May of 2019. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On February 26, 2019, the Company issued 340,000 shares of common stock pursuant to the conversion of $5,273 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On February 12, 2019, the Company issued 346,200 shares of common stock pursuant to the conversion of $6,924 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

 

21

 

 

Premier Biomedical, Inc.

Notes to Condensed Financial Statements

 (Unaudited)

 

On February 1, 2019, the Company issued 315,000 shares of common stock pursuant to the conversion of $7,875 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On January 23, 2019, the Company issued 260,000 shares of common stock pursuant to the conversion of $6,513 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On January 11, 2019, the Company issued 280,000 shares of common stock pursuant to the conversion of $5,597 of principal from the Second Diamond Rock Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On January 2, 2019, the Company issued 281,385 shares of common stock pursuant to the conversion of $6,500 of principal from the First SEG-RedaShex Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

Common Stock Issuances on Subscriptions Payable

 

On January 1, 2019, the Company issued 276,960 shares to DiamondRock, LLC for the conversion of $5,345 of debt on December 31, 2018.

 

Note 10 – Income Taxes

 

The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.

 

For the nine months ended September 30, 2019, and the year ended December 31, 2018, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At September 30, 2019, and December 31, 2018, the Company had approximately $5,540,000 and $5,277,000 of federal net operating losses, respectively. The net operating loss carry forwards, if not utilized, will begin to expire in 2031.

 

The components of the Company’s deferred tax asset are as follows:

 

	September 30,	December 31,
	2019	2018
Deferred tax assets:
Net operating loss carry forwards	$1,163,400	$1,108,170
Net deferred tax assets before valuation allowance	$1,163,400	$1,108,170
Less: Valuation allowance	(1,163,400)	(1,108,170)
Net deferred tax assets	$-	$-

 

Based on the available objective evidence, including the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at September 30, 2019, and December 31, 2018, respectively.

 

 

22

 

 

Premier Biomedical, Inc.

Notes to Condensed Financial Statements

 (Unaudited)

 

A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and state statutory income tax rate to pre-tax loss is as follows:

 

	September 30,	December 31,
	2019	2018
Federal and state statutory rate	21%	21%
Change in valuation allowance on deferred tax assets	(21%)	(21%)

 

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.

 

Note 11 – Subsequent Events

 

Convertible Debt Financing

On October 3, 2019, the Company received net proceeds of $25,000, carrying a $150,000 face value after a $125,000 commitment fee, pursuant to the first tranche of the securities purchase agreement with Green Coast Capital International SA (“First GCCI Note”) on a 12% interest bearing; unsecured convertible promissory note; maturing on October 3, 2020, with the first twelve (12) months of interest guaranteed. 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. In addition, the holder is entitled to deduct $1,000 from the conversion amount in each conversion to cover the holder’s deposit fees.

 

Common Stock Issuances for Debt Conversions

On various dates from October 4, 2019 through November 11, 2019, the Company issued a total of 48,950,000 shares of common stock pursuant to the conversion of $46,374 of principal from the Third RedDiamond Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On various dates from October 28, 2019 through November 12, 2019, the Company issued a total of 45,969,063 shares of common stock pursuant to the conversion of $39,900, consisting of $38,000 of principal and $1,900 of interest, from the Second PowerUp Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On various dates from October 2, 2019 through October 21, 2019, the Company issued a total of 27,225,607 shares of common stock pursuant to the conversion of $64,000 of convertible debt, consisting of $60,600 of principal and $3,400 of interest, from the First PowerUp Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

On various dates from October 18, 2019 through November 5, 2019, the Company issued a total of 15,600,000 shares of common stock pursuant to the conversion of $8,860 of principal and $1,500 of selling of fees, from the First Crown Bridge Note. The note was converted in accordance with the conversion terms; therefore, no gain or loss has been recognized.

 

 

23

 

  

ITEM 2  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

 

Although the forward-looking statements in this Quarterly Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

The following discussion and analysis of financial condition and results of operations of the Company is based upon, and should be read in conjunction with, its unaudited financial statements and related notes elsewhere in this Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States.

 

Summary Overview

 

We were strictly a research-based company that intended to discover cures for PTSD, cancer and various other diseases. In order to fund on-going research and development in these areas, we developed a line of topical hemp oil pain relief products. We began selling these pain relief products in January of 2017 with a single product and currently have nine topical pain relief products.

 

Through our continued development and expansion of proprietary drugs and treatments, we have reorganized the company into six technology centers: (1) extra-corporeal treatment of disease, (2) PTSD treatment, (3) anti-breast cancer drugs, (4) hemp oil/CBD pain relief products, (5) anti-aging treatments, and (6) chemical and alcohol addiction treatment.

 

Pain Management Products

 

We have developed and are now marketing all-natural, hemp-oil based products that are pesticide and solvent free. These products provide generalized, neuropathic and localized topical pain relief.

 

 

24

 

 

We offer alternatives to dangerous and addictive opioid pain killers. In the past year we have rapidly expanded our product offerings, and we now offer nine pain relief products that are leaders in the pain-relief field:

  

1.

96-hour pain relief patch with 50 mg of hemp oil extract, the highest level of pain relief ingredient available in the industry;

 

2.

120 mg/ 10 ml water-based roll-on applicator;

 

3.

150 mg/ 10 ml oil-based roll-on applicator;

 

4.

150 mg/ 30 ml oil-based pump spray applicator;

 

5.

150 mg/ 2 oz. ointment;

 

6.

200 mg/10 ml oil-based roll-on applicator;

 

7.

500 mg/ 30 ml oil-based pump spray applicator; and

 

8.

500 mg/ 1 oz. ointment.

 

We believe that this nine-product array positions us favorably in the topical pain relief marketplace. The topical pain relief market is expected to grow rapidly in the next few years, due to the focus on reduction of opioid pain medication use, and we intend to be a major player in that expanding market.

 

Now that we have completed the product design and development phase, we are aggressively embarking on the product distribution and sales phase by:

 

1.

Expanding our online sales beyond our web site at: www.painreliefmeds.com;

 

2.

Securing the services of a social media coordinator to ensure that we optimize that promotional tool;

 

3.

Recruiting a National Sales Director to coordinate our growing field of sales representatives and distributors;

 

4.

Securing the services of a sales organization with expertise in marketing to the government and senior care facilities;

 

5.

Engaging an investor relations firm to facilitate television appearances designed to gain optimum exposure for our company and its products;

 

6.

Appearing in radio and television broadcasts, and podcasts, via Uptick Newswire periodically to ensure that our story gets out to the public; and

 

7.

Retaining the services of marketing firms to promote the Company and its products through social media.

 

8.

Establishing relationships with major distributors who will blanket specialized sales outlets such as pharmacies, doctors’ offices, convenience stores, long-term care facilities, large retail facilities, etc.

 

In addition, we are in the process of seeking potential partnerships outside the United States to manufacture and market our products worldwide. We anticipate that these partnerships will make new markets available to us and allow us to rapidly increase our sales and profitability through favorable manufacturing arrangements.

 

 

25

 

 

Customers indicate that they were able to achieve pain relief from our products and stop the use of opioid painkillers. Public awareness of the harmful side effects of opioid painkillers has grown significantly, and many states have initiated litigation against drug makers claiming they misrepresented the risks of opioid painkillers. As patients seek to cut back their use of opioid painkillers and look for alternatives, we believe demand for our products will see an increase. We intend to petition national insurance agencies to urge them to consider covering the use of our all-natural pain relief products as a safe alternative to opioid painkillers.

 

Financing

 

In the past, as we worked through the development of our products, we have relied heavily on financing through various issuances of common stock, warrants and convertible debt. As our sales grow, we expect to find financing solutions in the future that help us expand our operations, avoid dilution to our shareholders, and ultimately increase our company valuation.

 

During the three months ended September 30, 2019, we received $128,400 from the sale of convertible notes, and for the nine months ended September 30, 2019, we have received $308,400 from the sale of convertible notes. Despite the recent sales of convertible notes, our goal is to move forward with more favorable financing as we begin to grow our revenues. To date, the cash generated by these new products is not yet sufficient to finance our volume ramp-up and planned product introductions.

 

Through the remainder of 2019, we will continue to market our pain management products and seek a wider distribution network through the negotiation of distribution agreements with large pharmacy chains, military branches, government agencies, senior care facilities and international partners.

 

Through our reorganization into six technology centers, we are positioned to take advantage of opportunities to individually sell, license or commercialize the technologies produced within each of these centers to suitable investment partners, without dilutive equity issuances. In the long run, we believe that this will be most beneficial to our investors.

 

Going Concern

 

As a result of our current financial condition, we have received a report from our independent registered public accounting firm for our financial statements for the years ended December 31, 2018 and 2017 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern. In order to continue as a going concern, we must effectively balance many factors and generate more revenue so that we can fund our operations from our sales and revenues. If we are not able to do this, we may not be able to continue as an operating company. During the nine months ended September 30, 2019, we completed the sale of convertible notes to raise $ 308,400 of net proceeds from several investors. We cannot be sure that sources of capital will be available to us for the remainder of 2019 and into 2020. However, without additional capital in the short term, we may not be able to push forward in the production and marketing of our new pain management products. Until we are able to grow revenues sufficient to meet our operating expenses, we must continue to raise capital by issuing debt or through the sale of our stock. There is no assurance that our cash flow will be adequate to satisfy our operating expenses and capital requirements.

 

 

26

 

 

Results of Operations for the Three and Nine Months Ended September 30, 2019 and 2018

 

Introduction

 

We had revenues of $3,465 and $12,975 for the three and nine months ended September 30, 2019, respectively, compared to $8,225 and $30,709 for the three and nine months ended September 30, 2018, respectively. This was a decrease of $9,510, or 73%, for the three months ended September 30, 2019 compared to 2018, and $22,484, or 73%, for the nine months ended September 30, 2019 compared to 2018.

 

Our operating expenses were $66,366 and $227,193 for the three and nine months ended September 30, 2019, respectively, compared to $85,185 and $240,834 for the three and nine months ended September 30, 2018, respectively. This was a decrease of $18,819, or 22%, for the three months ended September 30, 2019 compared 2018, and a decrease of $13,641, or 6%, for the nine months ended September 30, 2019 compared to 2018.

 

Our results of operations for the three and nine months ended September 30, 2019 and 2018 were as follows:

 

	Three Months	Three Months	Nine Months	Nine Months
	September 30,	September 30,	September 30,	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	65,572	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)	(117,080)	(282,202)	(120,483)	333,485
Net income (loss)	$(181,634)	$(363,535)	$(340,171)	$102,783

 

Revenues

 

The Company was established on May 10, 2010, and began to generate revenues during the third quarter of 2017 from the sale of pain patches made with CBD oils. Our sales are comprised of both website sales to individual consumers and brick and mortar pharmacies, and we have expanded from patches to oils, sprays, and roll-ons. Our cost of goods sold primarily consists of the products and the packaging. The decrease in our revenues for the three and nine months ended September 30, 2019, compared to three and nine months ended September 30, 2018, while significant in percentage terms, was not material in absolute terms and reflects the timing of product sales.

 

 

27

 

 

Cost of Goods Sold

 

Cost of goods sold for the three and nine months ended September 30, 2019 were $1,653, or 48% of sales, and $5,470, or 42% of sales, compared to $4,373, or 53% of sales, and $20,577, or 67% of sales, for the three and nine months ended September 30, 2018. Cost of sales consists primarily of product materials and packaging supplies. Our cost of goods sold as a percentage of sales was reduced because of lower prices in the marketplace and slightly higher volume pricing.

 

General and Administrative

 

General and administrative expenses were $36,757 and $138,589, respectively, for the three and nine months ended September 30, 2019, compared to $62,572 and $139,881, respectively, for the three and nine months ended September 30, 2018, a decrease of $25,815 and $1,292, or 41% and less than 1%, respectively. The decrease was primarily due to decreased investor relations and advertising expenses.

 

Professional Fees

 

Professional fees expense was $29,609 and $88,604, respectively, for the three and nine months ended September 30, 2019, compared to $22,613 and $100,953, respectively, for the three and nine months ended September 30, 2018, an increase of $6,996 and a decrease of $12,349, or 31% and 12%, respectively. Professional fees consist primarily of legal and, accounting and auditing services.

 

Net Operating Loss

 

Net operating loss was $64,554 and $219,688, respectively, for the three and nine months ended September 30, 2019, compared to $81,333 and $230,702, respectively, for the three and nine months ended September 30, 2018, a decrease of $16,779 and $11,014, or 21% and 5%, respectively. The net operating loss decreased during the nine months ended September 30, 2019 because of decreased operating expenses as previously described.

 

Other Income/Expense

 

Other income (expense) was ($117,080) and ($120,483), respectively, for the three and nine months ended September 30, 2019, compared to ($282,202) and $333,485, respectively, for the three and nine months ended September 30, 2018, a decrease in expenses of $165,122 and $453,968, respectively. Other expense for the nine months ended September 30, 2019 consisted of interest expense of $101,793 and a change in derivative liabilities of $18,690. Other expense for the nine months ended September 30, 2018 consisted of interest expense of $322,323 offset by a gain of $655,808 in market value of derivative liabilities.

 

Net Income (Loss)

 

Net income (loss) for the three and nine months ended September 30, 2019, was ($181,634) or ($0.01) per share, and ($340,171) or ($0.02) per share, respectively, compared to ($363,535) or ($0.11) per share, and $102,783 or $0.03 per share, respectively, for the three and nine months ended September 30, 2018. Net loss changes, as set forth above, were primarily due to the change in derivative liabilities.

 

 

28

 

 

Liquidity and Capital Resources

 

Introduction

 

During the three and nine months ended September 30, 2019, we had negative operating cash flows. Our cash on hand as of September 30, 2019 was $117,209, which was derived from the sale of convertible promissory notes to investors. Our monthly cash flow burn rate for the first nine months of 2018 was approximately $35,000, and our monthly burn rate through the nine months ended September 30, 2019 was approximately $30,000. Although we have moderate short term cash needs, as our operating expenses increase as we ramp up production and sales of our new products we will face strong medium to long term cash needs. We anticipate that these needs will be satisfied through the issuance of debt or the sale of our securities until such time as our cash flows from operations will satisfy our cash flow needs.

 

Our cash, current assets, total assets, current liabilities, and total liabilities as of September 30, 2019 and December 31, 2018, respectively, are as follows:

 

	September 30,	December 31,
	2019	2018	Change
Cash	$117,209	$86,827	$30,382
Total Current Assets	177,582	159,787	17,795
Total Assets	185,500	164,990	20,510
Total Current Liabilities	2,303,710	2,312,382	(8,672)
Total Liabilities	$2,303,710	$2,312,382	$(8,672)

 

Our cash and total current assets remained relatively steady as we continued to sustain losses funded by the sale of convertible notes. Our total current liabilities decreased primarily due to the reduction of our accounts payable of $66,718 and the conversion of outstanding convertible notes of $177,423, offset by a net increase in accrued interest of $27,049 and the change in the value of our derivative liabilities of $148,348, along with $338,300 of additional debt financing, net of debt discounts of $278,228. Our stockholders’ deficit decreased by $29,182 to ($2,118,210).

 

In order to repay our obligations in full or in part when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.

 

Cash Requirements

 

Our cash on hand as of September 30, 2019 was $117,209. Based on our minimal revenues and current monthly burn rate of approximately $30,000 per month, we will need to continue to fund operations by raising capital from the sale of our stock and debt financings.

 

Sources and Uses of Cash

 

Operations

 

We had net cash used in operating activities of ($273,168) for the nine months ended September 30, 2019, compared to ($318,471) for the nine months ended September 30, 2018. This decrease in net cash used in operating activities was primarily a result of the difference in the change in fair market value of derivative liabilities of $674,498, and increased change in inventory of $39,861, and a decrease in accounts payable of $66,718, offset by a decrease in amortization of debt discounts of $246,886 from the comparative period.

 

 

29

 

 

Investments

 

We had $4,850 net cash used in investing activities for the nine months ended September 30, 2019, and $2,029 net cash used in investing activities for the nine months ended September 30, 2018. We outsource the manufacturing of our products, so our investment expenses are minimal.

 

Financing

 

Our net cash provided by financing activities for the nine months ended September 30, 2019 was $308,400, which consisted of the proceeds from the sale of convertible notes. For the nine months ended September 30, 2018, net cash provided by financing activities was $300,000, which consisted of the proceeds from the sale of convertible notes.

 

ITEM 3  Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 4  Controls and Procedures

 

(a) Disclosure Controls and Procedures

 

We conducted an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as of September 30, 2019, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities Exchange Commission’s rules and forms, including to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2019, our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses identified and described in our Annual Report on Internal Control Over Financial Reporting filed in our Annual Report on Form 10-K.

 

Our principal executive officers do not expect that our disclosure controls or internal controls will prevent all errors and all fraud. Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive officers are determined to make our disclosure controls and procedures effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

(b) Changes in Internal Control over Financial Reporting

 

No change in our system of internal control over financial reporting occurred during the period covered by this report, the three-month period ended September 30, 2019, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

30

 

PART II – OTHER INFORMATION

 

ITEM 1 Legal Proceedings

 

We are not a party to or otherwise involved in any legal proceedings.

 

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, other than as set forth herein, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

 

ITEM 1A Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

 

Securities Purchase Agreement and Convertible Note - Crown Bridge Partners, LLC

 

On March 27, 2019, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) by and between the Company and Crown Bridge Partners, LLC (the “Purchaser”) to sell Convertible Promissory Notes (each a “Note”) in the principal amount of up to $154,500, with a purchase price of up to $141,000. The Purchaser purchased the first Note on April 17, 2019 for an aggregate amount of $47,000 (the “First Tranche”). The Note has a maturity date of twelve (12) months from each funding date, or April 17, 2020 with respect to the first Note. Each Note has an interest rate of 12% and a default interest rate of 15%. The Note is convertible into our common stock at a conversion price equal to 60% of the lowest trading price during the last twenty (20) trading days prior to the conversion date. The above stated transaction was reported in Premier’s April 17, 2019 Form 8-K.

 

On July 8, 2019, pursuant to the Securities Purchase Agreement, the Purchaser purchased the second Note for an aggregate amount of $32,900 (the “Second Tranche”). The Note has a maturity date of twelve (12) months from each funding date, or July 8, 2020 with respect to the second Note. Each Note has an interest rate of 12% and a default interest rate of 15%. The Note is convertible into our common stock at a conversion price equal to 60% of the lowest trading price during the last twenty (20) trading days prior to the conversion date.

 

On September 13, 2019, pursuant to the Purchase Agreement, the Purchaser purchased the third Note for an aggregate amount of $23,500 (the “Third Tranche”). The third Note has a maturity date of September 13, 2020.

 

We must reserve shares of our authorized common stock equal to four times the number of shares issuable upon full conversion of the Note, initially 26,580,645 shares. The Note can be prepaid by us at any time for a cash amount equal to the sum of the then outstanding principal amount of the note and interest multiplied by a prepayment percentage that ranges from as low as 125% to as high as 150%, depending on when we prepay the Note.

 

The Note limits the Purchaser to beneficial ownership of our common stock of no more than 4.99%. The Purchaser has the right to receive any dividend or distribution of assets as if the Note had been fully converted on the applicable record date. The Purchase Agreement and Note also contain customary representations and warranties made by the Company and by the Purchaser.

 

The sale of the Note pursuant to the Purchase Agreement was offered and sold in reliance on an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D. The Purchaser has represented that it is an accredited investor, as defined in Regulation D, and has acquired the securities for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof. The securities were not issued through any general solicitation or advertisement. 

 

 

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Securities Purchase Agreement and Convertible Note – Power Up Lending Group Ltd.

 

On August 2, 2019, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) by and between the Company and Power Up Lending Group Ltd. (the “Purchaser”) to sell a Convertible Promissory Note (“Note”). The Purchaser purchased the Note at the signing of the Purchase Agreement for an aggregate amount of $38,000. The Note has a maturity date of August 2, 2020, an interest rate of 10% and a default interest rate of 22%. The Note is convertible into our common stock at a conversion price equal to 61% of the average of the lowest two (2) trading prices during the last twenty (20) trading days prior to the conversion date. We closed the sale of the Note on August 7, 2019.

 

On August 15, 2019, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) by and between the Company and Power Up Lending Group Ltd. (the “Purchaser”) to sell a Convertible Promissory Note (“Note”). The Purchaser purchased the Note at the signing of the Purchase Agreement for an aggregate amount of $43,000. The Note has a maturity date of August 15, 2020, an interest rate of 10% and a default interest rate of 22%. The Note is convertible into our common stock at a conversion price equal to 61% of the average of the lowest two (2) trading prices during the last twenty (20) trading days prior to the conversion date. We closed the sale of the Note on August 16, 2019.

 

We must reserve shares of our authorized common stock equal to four times the number of shares issuable upon full conversion of the Note, initially 40,849,234. The Note can be prepaid by us at any time upon three (3) days written notice to the Purchaser for a cash amount equal to the sum of the then outstanding principal amount of the note and interest multiplied by a prepayment percentage that ranges from as low as 115% to as high as 140%, depending on when we prepay the Note.

 

The Note limits the Purchaser to beneficial ownership of our common stock of no more than 4.99%. The Purchaser has the right to receive any dividend or distribution of assets as if the Note had been fully converted on the applicable record date. The Purchase Agreement and Note also contain customary representations and warranties made by the Company and by the Purchaser.

 

The sale of the Note pursuant to the Purchase Agreement was offered and sold in reliance on an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D. The Purchaser has represented that it is an accredited investor, as defined in Regulation D, and has acquired the securities for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof. The securities were not issued through any general solicitation or advertisement.

 

ITEM 3 Defaults Upon Senior Securities

 

There have been no events which are required to be reported under this Item.

 

 

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ITEM 4 Mine Safety Disclosures

 

Not applicable.

 

ITEM 5 Other Information

 

None.

 

ITEM 6 Exhibits

 

(a) Exhibits

 

Exhibit No.		Description of Exhibits
3.1 (1)		Articles of Incorporation of Premier Biomedical, Inc.
3.2 (2)		Amendment to Articles of Incorporation of Premier Biomedical, Inc.
3.2 (1)		Bylaws of Premier Biomedical, Inc., as amended
3.3 (1)		Certificate of Designation of Series A Convertible Preferred Stock
3.3 (3)		Certificate of Designation of Series B Convertible Preferred Stock
10.1 (4)		Securities Purchase Agreement with Crown Bridge Partners, LLC entered into on March 27, 2019
10.2 (4)		Convertible Promissory Note with Crown Bridge Partners, LLC entered into on March 27, 2019
10.3 (4)		Securities Purchase Agreement with Power Up Lending Group, Ltd. entered into on April 23, 2019
10.4 (4)		Convertible Promissory Note with Power Up Lending Group, Ltd. entered into on April 23, 2019
10.5 (4)		Securities Purchase Agreement with Power Up Lending Group, Ltd. entered into on June 7, 2019
10.6 (4)		Convertible Promissory Note with Power Up Lending Group, Ltd. entered into on June 7, 2019
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1		Chief Executive Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Chief Financial Officer Certification Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Schema Document
101.CAL		XBRL Calculation Linkbase Document
101.DEF		XBRL Definition Linkbase Document
101.LAB		XBRL Labels Linkbase Document
101.PRE		XBRL Presentation Linkbase Document

 

(1) 

Incorporated by reference from our Registration Statement on Form S-1 dated June 13, 2011, filed with the Commission on June 14, 2011.

(2) 

Incorporated by reference from our Current Report on Form 8-K dated February 9, 2016, filed with the Commission on February 10, 2016.

(3) 

Incorporated by reference from our Current Report on Form 8-K dated and filed with the Commission on November 29, 2018.

(4) 

Incorporated by reference from our Quarterly Report on Form 10-Q dated and filed with the Commission on August 14, 2019.

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  

	Premier Biomedical, Inc.
Dated: November 14, 2019		/s/ William A. Hartman
		By: William A. Hartman
		Its:  Chief Executive Officer

 

 

 

 

 

 

 

 

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