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UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
10-Q/A
(Amendment
No. 1)
(Mark
One)
☒ |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For the
quarterly period ended
September 30,
2021
or
☐ |
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 |
For the
transition period from ____________________ to
____________________
Commission File Number:
000-56025
Quanta, Inc.
(Exact name
of registrant as specified in its charter)
Nevada |
|
81-2749032 |
(State or
other jurisdiction of
incorporation or
organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
|
|
|
632 S Glenwood Pl,
Burbank,
CA |
|
91506 |
(Address of
principal executive offices) |
|
(Zip
Code) |
(Registrant’s telephone
number, including area code): (424) 261-2568
Securities
registered pursuant to Section 12(b) of the Act: None
Indicate by
check mark whether the registrant (1) has filed all reports
required by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by
check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required
to submit and post such files).
Yes ☒ No ☐
Indicate by
check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer ☐ |
Accelerated
filer ☐ |
Non-accelerated filer
☐ |
Smaller
reporting company
☒ |
|
Emerging
growth company
☒ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
Indicate by
check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
As of
November 19, 2021, the registrant had
214,733,156 shares of Common Stock
outstanding.
TABLE OF
CONTENTS
PART I – FINANCIAL
INFORMATION
Item 1. Financial
Information.
QUANTA, INC. AND
SUBSIDIARY
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
|
|
(Unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
22,262 |
|
|
$ |
6,270 |
|
Accounts receivable |
|
|
- |
|
|
|
685 |
|
Inventories, net |
|
|
73,748 |
|
|
|
19,220 |
|
Prepaid
production cost |
|
|
300,000 |
|
|
|
- |
|
Deferred
charges – related party |
|
|
-
|
|
|
|
134,704
|
|
Total current
assets |
|
|
396,010 |
|
|
|
160,879 |
|
|
|
|
|
|
|
|
|
|
Equipment, net |
|
|
187,061 |
|
|
|
200,523 |
|
Operating lease right-of-use asset,
net |
|
|
300,483 |
|
|
|
362,227 |
|
Deposits |
|
|
16,883 |
|
|
|
16,883 |
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
900,437 |
|
|
$ |
740,512 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES . MEZZANINE EQUITY, AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses |
|
$ |
590,448 |
|
|
$ |
673,494 |
|
Advances |
|
|
106,000 |
|
|
|
- |
|
Notes payable (net of deferred finance
charges of $53,667 and
$74,817 at
September 30, 2021 and December 31, 2020, respectively) |
|
|
415,358 |
|
|
|
482,724 |
|
Convertible note payable (net of
discount of $204,230 and
$539,282 at
September 30, 2021 and December 31, 2020, respectively) |
|
|
2,018,564 |
|
|
|
1,074,814 |
|
Deferred revenue, license
agreement |
|
|
11,370 |
|
|
|
34,818 |
|
Operating lease liabilities,
short-term |
|
|
105,443 |
|
|
|
100,901 |
|
Lease
settlement obligation |
|
|
235,759 |
|
|
|
235,759 |
|
Total current
liabilities |
|
|
3,482,942 |
|
|
|
2,602,510 |
|
|
|
|
|
|
|
|
|
|
Long term liabilities |
|
|
|
|
|
|
|
|
Notes payable, long term (net of
deferred finance charge of $-
and $32,556
at September 30, 2021 and December 31, 2020, respectively) |
|
|
294,125 |
|
|
|
451,368 |
|
Operating lease
liabilities, long-term |
|
|
230,742 |
|
|
|
294,880 |
|
Total
liabilities |
|
|
4,007,809 |
|
|
|
3,348,758 |
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies: |
|
|
- |
|
|
|
- |
|
Mezzanine equity: |
|
|
|
|
|
|
|
|
Series B preferred stock, $0.00001 par
value, 9,000
shares authorized, 9,000
and -0-
issued and outstanding at September 30, 2021 and December 31, 2020,
respectively |
|
|
1,522,198 |
|
|
|
- |
|
Series C
preferred stock, $0.00001 par
value, 1,000
shares authorized, 1,000
and -0-
issued and outstanding at September 30, 2021 and December 31, 2020,
respectively |
|
|
169,133 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total Mezzanine
equity |
|
|
1,691,331 |
|
|
|
- |
|
Stockholders’ deficit: |
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value;
25,000,000
shares authorized; 2,500,000
issued and outstanding |
|
|
2,500 |
|
|
|
2,500 |
|
Common stock, $0.001
par value;
3,000,000,000 shares authorized;
207,604,585 and
46,756,970 shares issued and outstanding as of September 30,
2021 and December 31, 2020, respectively |
|
|
207,608 |
|
|
|
46,757 |
|
Shares to be issued (4,875,000 and 4,875,000 as of
September 30, 2021 and December 31, 2020, respectively) |
|
|
4,024,412 |
|
|
|
3,641,868 |
|
Additional paid-in capital |
|
|
13,998,658
|
|
|
|
10,102,805 |
|
Accumulated
deficit |
|
|
(22,300,233 |
) |
|
|
(16,402,176 |
) |
Total
Quanta, Inc. stockholders’ deficit |
|
|
(4,067,055 |
) |
|
|
(2,608,246 |
) |
Noncontrolling interest in consolidated subsidiary |
|
|
(731,648 |
) |
|
|
- |
|
Total
stockholders’ deficit |
|
|
(4,798,703 |
) |
|
|
(2,608,246 |
) |
|
|
|
|
|
|
|
|
|
Total
liabilities, mezzanine equity, and stockholders’ deficit |
|
$ |
900,437 |
|
|
$ |
740,512 |
|
See notes to
condensed consolidated financial statements
QUANTA, INC. AND
SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
See notes to
condensed consolidated financial statements
QUANTA, INC. AND
SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(DEFICIT)
(Unaudited)
|
Three
months ended September 30, 2021 |
|
|
Nine
Months Ended September 30, 2021 |
|
|
Series A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, |
|
|
Common Stock |
|
|
Additional |
|
|
Shares |
|
|
|
|
|
Non |
|
|
Total |
|
|
|
par value $0.001 |
|
|
par value $0.001 |
|
|
Paid-in |
|
|
To
be |
|
|
Accumulated |
|
|
Controlling |
|
|
Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Issued |
|
|
Deficit |
|
|
Interest |
|
|
Deficit |
|
Balance December 31, 2020 |
|
|
2,500,000 |
|
|
$ |
2,500 |
|
|
|
46,756,970 |
|
|
$ |
46,757 |
|
|
$ |
10,102,805 |
|
|
$ |
3,641,868 |
|
|
$ |
(16,402,176 |
) |
|
$ |
- |
|
|
$ |
(2,608,246 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for adoption of ASU
2020-6 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(823,655 |
) |
|
|
- |
|
|
|
320,602 |
|
|
|
- |
|
|
|
(503,053 |
) |
Shares issued for cash |
|
|
- |
|
|
|
- |
|
|
|
56,750,000 |
|
|
|
56,750 |
|
|
|
1,928,250 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,985,000 |
|
Fair value of shares for services |
|
|
- |
|
|
|
- |
|
|
|
14,964,425 |
|
|
|
14,964 |
|
|
|
1,301,920 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,316,884 |
|
Fair value of vested restricted
stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
382,544 |
|
|
|
- |
|
|
|
- |
|
|
|
382,544 |
|
Fair value of vested options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
34,905 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
34,905 |
|
Shares issued for conversion of
convertible notes |
|
|
- |
|
|
|
- |
|
|
|
89,133,190 |
|
|
|
89,137 |
|
|
|
1,454,433 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,543,570 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(6,218,659 |
) |
|
|
(731,648 |
) |
|
|
(6,950,307 |
) |
Balance September 30, 2021 |
|
|
2,500,000 |
|
|
$ |
2,500 |
|
|
|
207,604,585 |
|
|
$ |
207,608 |
|
|
$ |
13,998,658
|
|
|
$ |
4,024,412 |
|
|
$ |
(22,300,233 |
) |
|
$ |
(731,648 |
) |
|
$ |
(4,798,703 |
) |
QUANTA,
INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(DEFICIT)
(Unaudited)
|
Three
months ended September 30, 2020 |
|
|
Series A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, |
|
|
Common Stock |
|
|
Additional |
|
|
Shares |
|
|
|
|
|
Non |
|
|
Total |
|
|
|
par value $0.001 |
|
|
par value $0.001 |
|
|
Paid-in |
|
|
To
be |
|
|
Accumulated |
|
|
Controlling |
|
|
Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Issued |
|
|
Deficit |
|
|
Interest |
|
|
Deficit |
|
Balance June 30, 2020 |
|
|
2,500,000 |
|
|
$ |
2,500 |
|
|
|
56,900,978 |
|
|
$ |
56,901 |
|
|
$ |
7,474,028 |
|
|
$ |
3,115,763 |
|
|
$ |
(11,462,649 |
) |
|
$ |
- |
|
|
$ |
(813,457 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of shares for services |
|
|
- |
|
|
|
- |
|
|
|
(500,117 |
) |
|
|
543 |
|
|
|
(161,572 |
) |
|
|
184,488 |
|
|
|
- |
|
|
|
- |
|
|
|
23,459 |
|
Fair value of vested options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
67,732 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
67,732 |
|
Fair value of shares issued to
employees and officer |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
52,220 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
52,220 |
|
Shares to be issued for cash |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19,897 |
|
|
|
- |
|
|
|
- |
|
|
|
19,897 |
|
Beneficial conversion feature of
issued convertible notes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,277,677 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,277,677 |
|
Shares issued for conversion of
convertible notes |
|
|
- |
|
|
|
- |
|
|
|
3,955,747 |
|
|
|
3,956 |
|
|
|
207,876 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
211,832 |
|
Fair Value of shares issued for loan
fees |
|
|
- |
|
|
|
- |
|
|
|
422,522 |
|
|
|
380 |
|
|
|
16,609 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
16,989 |
|
|
|
|
.
|
|
|
|
. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(2,706,470 |
) |
|
|
- |
|
|
|
(2,706,470 |
) |
Balance September 30, 2020 |
|
|
2,500,000 |
|
|
$ |
2,500 |
|
|
|
60,779,130 |
|
|
$ |
61,780 |
|
|
$ |
8,934,570 |
|
|
$ |
3,320,148 |
|
|
$ |
(14,169,119 |
) |
|
$ |
- |
|
|
$ |
(1,850,121 |
) |
Nine
Months Ended September 30, 2020 |
|
|
Series A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, |
|
|
Common Stock |
|
|
Additional |
|
|
Shares |
|
|
|
|
|
Non |
|
|
Total |
|
|
|
par value $0.001 |
|
|
par value $0.001 |
|
|
Paid-in |
|
|
To be |
|
|
Accumulated |
|
|
Controlling |
|
|
Stockholders’ |
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Issued |
|
|
Deficit |
|
|
Interest |
|
|
Deficit |
|
Balance December 31, 2019 |
|
|
- |
|
|
$ |
- |
|
|
|
49,087,255 |
|
|
$ |
49,087 |
|
|
$ |
5,619,733 |
|
|
$ |
2,847,868 |
|
|
$ |
(8,237,748 |
) |
|
$ |
- |
|
|
$ |
278,940 |
|
Balance |
|
|
- |
|
|
$ |
- |
|
|
|
49,087,255 |
|
|
$ |
49,087 |
|
|
$ |
5,619,733 |
|
|
$ |
2,847,868 |
|
|
$ |
(8,237,748 |
) |
|
$ |
- |
|
|
$ |
278,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of
shares |
|
|
- |
|
|
|
- |
|
|
|
5,018,519 |
|
|
|
5,000 |
|
|
|
499,995 |
|
|
|
(504,995 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Shares
issued for cash |
|
|
- |
|
|
|
- |
|
|
|
388,889 |
|
|
|
1,111 |
|
|
|
103,611 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
104,722 |
|
Fair value of
shares for services |
|
|
- |
|
|
|
- |
|
|
|
750,000 |
|
|
|
1,541 |
|
|
|
24,009 |
|
|
|
946,488 |
|
|
|
- |
|
|
|
- |
|
|
|
972,038 |
|
Fair value of
vested options |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
248,648 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
248,648 |
|
Fair
value of shares issued to employees and officer |
|
|
- |
|
|
|
- |
|
|
|
451,198 |
|
|
|
- |
|
|
|
104,474 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
104,474 |
|
Shares
to be issued for cash |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
19,897 |
|
|
|
- |
|
|
|
- |
|
|
|
19,897 |
|
Fair
value of preferred shares issued to officer |
|
|
2,500,000 |
|
|
|
2,500 |
|
|
|
- |
|
|
|
- |
|
|
|
462,500 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
465,000 |
|
Beneficial conversion feature of issued convertible notes |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,568,677 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,568,677 |
|
Shares
to be issued for conversion of convertible notes |
|
|
- |
|
|
|
- |
|
|
|
3,955,747 |
|
|
|
3,956 |
|
|
|
207,876 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
211,832 |
|
Fair
Value of shares issued for loan fees |
|
|
- |
|
|
|
- |
|
|
|
1,127,522 |
|
|
|
1,085 |
|
|
|
95,047 |
|
|
|
10,890 |
|
|
|
- |
|
|
|
- |
|
|
|
107,022 |
|
|
|
|
. |
|
|
|
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,931,371 |
) |
|
|
- |
|
|
|
(5,931,371 |
) |
Balance September 30, 2020 |
|
|
2,500,000 |
|
|
$ |
2,500 |
|
|
|
60,779,130 |
|
|
$ |
61,780 |
|
|
$ |
8,934,570 |
|
|
$ |
3,320,148 |
|
|
$ |
(14,169,119 |
) |
|
$ |
- |
|
|
$ |
(1,850,121 |
) |
Balance |
|
|
2,500,000 |
|
|
$ |
2,500 |
|
|
|
60,779,130 |
|
|
$ |
61,780 |
|
|
$ |
8,934,570 |
|
|
$ |
3,320,148 |
|
|
$ |
(14,169,119 |
) |
|
$ |
- |
|
|
$ |
(1,850,121 |
) |
See notes to
condensed consolidated financial statements
QUANTA, INC. AND
SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine Months
Ended
September 30, 2021 |
|
|
Nine Months
Ended
September 30, 2020 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
CASH FLOW FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(6,950,307 |
) |
|
$ |
(5,931,371 |
) |
Adjustments to reconcile net loss to
net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
52,752 |
|
|
|
161,707 |
|
Fair value of shares issued for services |
|
|
1,316,884 |
|
|
|
1,068,045 |
|
Fair value of vested options |
|
|
34,905 |
|
|
|
249,619 |
|
Fair value of vested restricted shares |
|
|
382,544 |
|
|
|
- |
|
Fair value of mezzanine equity Series
B and Series C preferred shares issued for services |
|
|
1,691,331 |
|
|
|
- |
|
Fair value of preferred shares issued to officer |
|
|
- |
|
|
|
465,000 |
|
Fair value of shares issued to
employees and officer |
|
|
- |
|
|
|
106,214 |
|
Amortization of convertible note
discount |
|
|
125,322 |
|
|
|
395,789 |
|
Amortization of note payable
discount |
|
|
21,150 |
|
|
|
- |
|
Amortization of right-of-use
asset |
|
|
61,744 |
|
|
|
106,863 |
|
Impairment of operating lease
right-of-use asset |
|
|
- |
|
|
|
255,093 |
|
Deferred finance charges
|
|
|
167,738
|
|
|
|
-
|
|
Fee notes issued |
|
|
- |
|
|
|
60,000 |
|
Accretion of premium |
|
|
113,294
|
|
|
|
225,686 |
|
Change in fair value of
derivative |
|
|
- |
|
|
|
(101,226 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
795,491 |
|
Net gain on settlement of accounts
payable and accrued expenses |
|
|
- |
|
|
|
(16,770 |
) |
Changes in operating assets and
liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
685 |
|
|
|
22,143 |
|
Accounts receivable, related
party |
|
|
(129,300 |
) |
|
|
- |
|
Bad debt expense |
|
|
79,600 |
|
|
|
- |
|
Allowance for doubtful accounts |
|
|
49,700 |
|
|
|
- |
|
Deferred expenses, related party |
|
|
134,704 |
|
|
|
- |
|
Inventories |
|
|
(54,528 |
) |
|
|
(34,793 |
) |
Prepaid production costs |
|
|
(300,000 |
) |
|
|
7,500 |
|
Accounts payable and accrued
liabilities |
|
|
(38,088 |
) |
|
|
387,295 |
|
Advances |
|
|
106,000 |
|
|
|
- |
|
Deferred revenue |
|
|
(23,448 |
) |
|
|
(25,578 |
) |
Operating lease
liabilities |
|
|
(59,596 |
) |
|
|
- |
|
Net cash used
in operating activities |
|
|
(3,216,914 |
) |
|
|
(1,803,293 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOW FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchase of equipment |
|
|
(39,290 |
) |
|
|
(80,272 |
) |
Net cash used
in investment activities |
|
|
(39,290 |
) |
|
|
(80,272 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOW FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from shares issued for
cash |
|
|
1,985,000 |
|
|
|
124,371 |
|
Proceeds from convertibles notes
payable |
|
|
1,532,955 |
|
|
|
712,000 |
|
Proceeds from notes payable |
|
|
- |
|
|
|
378,285 |
|
Proceeds from shares to be issued |
|
|
- |
|
|
|
50,000 |
|
Proceeds from revenue sharing
loan |
|
|
- |
|
|
|
250,000 |
|
Proceeds from PPP and EIDL loans |
|
|
- |
|
|
|
294,125 |
|
Principal payments of notes
payable |
|
|
(245,759 |
) |
|
|
(65,377 |
) |
Principal
payments of convertible notes payable |
|
|
- |
|
|
|
(282,000 |
) |
Net cash
provided by financing activities |
|
|
3,272,196 |
|
|
|
1,461,404 |
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash |
|
|
15,992 |
|
|
|
(422,161 |
) |
Cash and cash
equivalents, beginning of period |
|
|
6,270 |
|
|
|
433,099 |
|
Cash and cash
equivalents, end of period |
|
$ |
22,262 |
|
|
$ |
10,938 |
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures of Cash Flow
Information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
|
59,749 |
|
|
|
17,930 |
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing
activities |
|
|
|
|
|
|
|
|
Adjustment for adoption of ASU
2020-06 |
|
|
503,053 |
|
|
|
- |
|
Common shares issued for conversion of
convertible notes and accrued interest |
|
|
1,543,570 |
|
|
|
211,832 |
|
Fees paid through conversion of
notes |
|
|
69,527 |
|
|
|
- |
|
Recognition
of beneficial conversion feature of issued convertible notes
payable |
|
|
- |
|
|
|
1,277,677 |
|
Derivative liabilities allocated to
convertible note discount |
|
|
- |
|
|
|
153,000 |
|
Recognition of
operating lease right-of-use asset and operating lease
liabilities |
|
$ |
- |
|
|
$ |
431,402 |
|
See notes
to condensed consolidated financial statements
QUANTA, INC. AND
SUBSIDIARY
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE AND
NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(UNAUDITED)
NOTE 1 –
DESCRIPTION OF
BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Quanta, Inc.
(the “Company”) is an applied science company focused on increasing
energy levels in plant matter to increase performance within the
human body. The Company’s operations are based in Burbank,
California.
Basis of
presentation-Unaudited Interim Financial
Information
The
accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”) for
interim financial information and with the rules and regulations of
the United States Securities and Exchange Commission (the “SEC”) to
Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by U.S. GAAP
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the financial
position, results of operations and cash flows for the interim
periods have been included. The results of operations for the three
months and nine months ended September 30, 2021, are not
necessarily indicative of the results of operations to be expected
for the full fiscal year ending December 31, 2021. These financial
statements should be read in conjunction with the financial
statements of the Company for the year ended December 31, 2020 and
notes thereto contained in the Annual Report on Form 10-K of the
Company as filed with the SEC on April 15, 2021. The condensed
consolidated balance sheet as of December 31, 2020 included herein
was derived from the audited consolidated financial statements as
of that date, but does not include all disclosures, including
notes, required by GAAP.
The
consolidated financial statements include the accounts of Quanta
Inc, and its 51% owned subsidiary,
Medolife Rx, Inc. All intercompany balances and transactions have
been eliminated in consolidation.
Going
Concern
The
accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of
business. As reflected in the accompanying financial statements,
for the nine months ended September 30, 2021, the Company incurred
a net loss of $6,950,307
and used
cash in operating activities of $3,216,914,
and at
September 30, 2021, the Company had a stockholders’ deficit of
$4,798,703.
These
factors raise substantial doubt about the Company’s ability to
continue as a going concern within one year of the date that the
financial statements are issued. In addition, the Company’s
independent registered public accounting firm, in its report on the
Company’s December 31, 2020 financial statements, raised
substantial doubt about the Company’s ability to continue as a
going concern. The consolidated financial statements do not include
any adjustments that might be necessary if the Company is unable to
continue as a going concern.
At September
30, 2021, the Company had cash on hand in the amount of $22,262. Management estimates that the
current funds on hand will be sufficient to continue operations
through the next six months. The Company’s ability to continue as a
going concern is dependent upon improving its profitability and the
continuing financial support from its shareholders. Management
believes the existing shareholders or external financing will
provide the additional cash to meet the Company’s obligations as
they become due. No assurance can be given that any future
financing, if needed, will be available or, if available, that it
will be on terms that are satisfactory to the Company. Even if the
Company is able to obtain additional financing, if needed, it may
contain undue restrictions on its operations, in the case of debt
financing, or cause substantial dilution for its stockholders, in
the case of equity financing
Use of
estimates
The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Significant accounting estimates include certain
assumptions related to, among others, allowance for doubtful
accounts receivable, impairment analysis of long-term assets,
valuation allowance on deferred income taxes, assumptions used in
valuing stock instruments issued for services, assumptions made in
valuing derivative liabilities, and the accrual of potential
liabilities. Actual results may differ from these
estimates.
Revenue
recognition
Product
Sales—Substantially all of the Company’s revenue is derived
from product sales. Product revenue and costs of sales are
recognized when control of the products transfers to our customer,
which generally occurs upon shipment from our facilities. The
Company’s performance obligations are satisfied at that time. The
Company does not have any significant contracts with customers
requiring performance beyond delivery, and contracts with customers
contain no incentives or discounts that could cause revenue to be
allocated or adjusted over time.
License
revenue— Revenue from symbolic IP is recognized over the access
period to the Company’s IP (see Note 2).
Cost of
goods sold includes direct costs and fees related to the sale of
our products.
Convertible Notes with Fixed
Rate Conversion Options
The Company
may enter into convertible notes, some of which contain,
predominantly, fixed rate conversion features, whereby the
outstanding principal and accrued interest may be converted by the
holder, into common shares at a fixed discount to the market price
of the common stock at the time of conversion. This results in a
fair value of the convertible note being equal to a fixed monetary
amount. The Company records the convertible note liability at its
fixed monetary amount by measuring and recording a premium, as
applicable, on the Note date with a charge to interest expense in
accordance with ASC 480 - “Distinguishing Liabilities from
Equity”.
Stock-based
compensation
The Company
periodically issues stock options, warrants, shares of common
stock, and restricted stock unit awards, as share-based
compensation to employees and non-employees. The Company accounts
for its share-based compensation in accordance with FASB ASC 718,
Compensation – Stock Compensation (Topic 718). Stock-based
compensation cost for employees is measured at the grant date,
based on the estimated fair value of the award, and is recognized
as expense over the requisite service period. Recognition of
compensation expense for non-employees is in the same period and
manner as if the Company had paid cash for the services.
The fair
value of the Company’s stock options is estimated using the
Black-Scholes-Merton Option Pricing model, which uses certain
assumptions related to risk-free interest rates, expected
volatility, expected life of the stock options or restricted stock,
and future dividends. Compensation expense is recorded based upon
the value derived from the Black-Scholes-Merton Option Pricing
model and based on actual experience. The assumptions used in the
Black-Scholes-Merton Option Pricing model could materially affect
compensation expense recorded in future periods.
Prepaid production
costs
In February
2021, the Company’s subsidiary Medolife Rx entered into a
collaboration and joint development agreement with a company (the
“Agent) for Medolife to produce some of its products in the Agent’s
facility. Medolife Rx agreed to pay the Agent $300,000 for the right to
use the Agents production facility for a term of five years.
Medolife Rx will also pay a production fee, as defined, to the
Agent for any production. The Company determined that there is no
distinct asset that it is purchasing from the Agent and will record
amortization of the prepaid fee ratably over the life of the
contract. As of September 30, 2021, the Company had paid the Agent
the entire fee.
Advertising
costs
Advertising
costs are expensed as incurred. During the nine months ended
September 30, 2021 and September 30, 2020, advertising costs
totaled $659,626 and $61,284, respectively.
Research and Development
Costs
Costs
incurred for research and development are expensed as incurred.
During the nine months ended September 30, 2021 and September 30,
2020, research and development costs totaled $348,500
and
$306,544,
respectively and includes salaries, benefits, and overhead costs of
personnel conducting research and development of the Company’s
products.
Net Loss per
Share
Basic net
loss per share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares
outstanding during the period. Shares used in the calculation of
basic net loss per common share include vested but unissued shares
underlying awards of restricted common stock. Diluted loss per
share reflects the potential dilution, using the treasury stock
method that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the
loss of the Company. In computing diluted loss per share, the
treasury stock method assumes that outstanding warrants and
convertible notes are exercised and the proceeds are used to
purchase common stock at the average market price during the
period. Warrants and convertible notes may have a dilutive effect
under the treasury stock method only when the average market price
of the common stock during the period exceeds the exercise price of
the options and warrants.
For the nine
months ended September 30, 2021 and 2020, the dilutive impact of
common stock equivalents, e.g. stock options, warrants and
convertible notes payable have been excluded from calculation of
weighted average shares because their impact on the loss per share
is anti-dilutive.
As of
September 30, 2021, convertible notes of $2,018,564 and accrued
interest are convertible into
124,116,500 shares of common stock. It should be noted that
contractually the limitations on the third-party notes (and the
related warrant) limit the number of shares converted to either
4.99% or 9.99% of the then outstanding shares. As of
September 30, 2021 and 2020, potentially dilutive securities
consisted of the following:
SCHEDULE
OF POTENTIALLY DILUTIVE SECURITIES
|
|
September
30, 2021 |
|
|
September
30, 2020 |
|
Stock options |
|
|
775,000 |
|
|
|
2,732,261 |
|
Unvested restricted shares |
|
|
1,375,000 |
|
|
|
4,500,000 |
|
Convertible
notes payable |
|
|
124,116,500 |
|
|
|
61,171,291 |
|
Total |
|
|
126,266,500 |
|
|
|
68,403,552 |
|
Fair Value of Financial
Instruments
The Company
follows the authoritative guidance issued by the Financial
Accounting Standards Board (“FASB”) for fair value measurements.
Fair value is defined as the price that would be received to sell
an asset or paid to transfer a liability in the principal or most
advantageous market for the asset or liability in an orderly
transaction between market participants at the measurement date. A
fair value hierarchy was established, which prioritizes the inputs
used in measuring fair value into three broad levels as
follows:
Level
1—Quoted prices in active markets for identical assets or
liabilities.
Level
2—Inputs, other than the quoted prices in active markets, that are
observable either directly or indirectly.
Level
3—Unobservable inputs based on the Company’s
assumptions.
The Company
is required to use of observable market data if such data is
available without undue cost and effort.
The Company
believes the carrying amount reported in the balance sheet for
cash, accounts receivable, accounts payable and accrued
liabilities, and notes payable, approximate their fair values
because of the short-term nature of these financial
instruments.
As of
September 30, 2021 and December 31, 2020, the Company did not have
any Level 2 liabilities comprised of the fair value of embedded
derivative liabilities.
Concentrations of
risks
For the nine
months ended September 30, 2021, one customer accounted for
36% of revenue. For
the nine months ended September 30, 2020, one customer accounted
for 15% or more of
revenue. As of September 30, 2020, one customer accounted for
17% of accounts receivable. No other customer accounted for
10% or more of revenue or accounts receivable.
As of
September 30, 2021, two vendors accounted for
82% of accounts payable and no other vendor accounted for
10% or more of accounts payable. As of September 30, 2020, four
vendors accounted for
11%,
17%,
14% and
14%, respectively of accounts payable. No other vendor
accounted for 10% or more of
accounts payable
The Company
maintains the majority of its cash balances with one financial
institution, in the form of demand deposits that are insured by the
Federal Deposit Insurance Corporation, or FDIC. At times, deposits
held may exceed the amount of insurance provided by the FDIC. The
Company has not experienced any losses in its cash and believes it
is not exposed to any significant credit risk.
Segments
The Company
operates in one segment for the
development and distribution of our CBD products. In accordance
with the “Segment Reporting” Topic of the ASC, the Company’s
chief operating decision maker has been identified as the Chief
Executive Officer, who reviews operating results to make decisions
about allocating resources and assessing performance for the entire
Company. Existing guidance, which is based on a management approach
to segment reporting, establishes requirements to report selected
segment information quarterly and to report annually entity-wide
disclosures about products and services, major customers, and the
countries in which the entity holds material assets and reports
revenue. All material operating units qualify for aggregation under
“Segment Reporting” due to their similar customer base and
similarities in economic characteristics; nature of products and
services; and procurement, manufacturing and distribution
processes. Since the Company operates in one segment, all financial
information required by “Segment Reporting” can be found in the
accompanying financial statements.
Recent Accounting
Pronouncements
In August
2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt
with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging—Contracts in Entity’s Own Equity (Subtopic
815-40).” ASU 2020-06 reduces the number of accounting models
for convertible debt instruments by eliminating the cash conversion
and beneficial conversion accounting models. As a result, the
Company’s convertible debt instruments will be accounted for as a
single liability measured at its amortized cost as long as no other
features require bifurcation and recognition as derivatives. For
contracts in an entity’s own equity, the type of contracts
primarily affected by this update are freestanding and embedded
features that are accounted for as derivatives under the current
guidance due to a failure to meet the settlement conditions of the
derivative scope exception. The Company early adopted ASU No.
2020-06 effective January 1, 2021 using the modified retrospective
approach. Upon adoption, the following changes resulted: (i) the
intrinsic value of the beneficial conversion feature recorded in
2020 was reversed as of the effective date of adoption, thereby
resulting in an increase in the convertible debentures with an
offsetting adjustment to additional paid in capital and (ii)
interest expense recorded in 2020 that was related to the
amortization of the discount related to the beneficial conversion
feature was reversed against opening accumulated deficit. The
adoption of ASU 2020-06 on January 1, 2021, resulted in a decrease
in addition paid in capital of $823,655, a
decrease to accumulated deficit of $320,602, and an
increase in total stockholders’ deficit of $503,053.
In June
2016, the FASB issued ASU No. 2016-13, Credit Losses -
Measurement of Credit Losses on Financial Instruments (“ASC
326”). The standard significantly changes how entities will measure
credit losses for most financial assets, including accounts and
notes receivables. The standard will replace today’s “incurred
loss” approach with an “expected loss” model, under which companies
will recognize allowances based on expected rather than incurred
losses. Entities will apply the standard’s provisions as a
cumulative-effect adjustment to retained earnings as of the
beginning of the first reporting period in which the guidance is
effective. The standard is effective for interim and annual
reporting periods beginning after December 15, 2022. The Company is
currently assessing the impact of adopting this standard on the
Company’s financial statements and related disclosures.
Other recent
accounting pronouncements issued by the FASB, including its
Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission did
not or are not believed by management to have a material impact on
the Company’s present or future consolidated financial
statements.
NOTE 2 –
INVENTORIES
Inventories
are valued at the lower of cost (first-in, first-out) or net
realizable value, and net of reserves, consisted of the
following:
SCHEDULE
OF INVENTORIES
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
|
|
|
|
Raw materials and
packaging |
|
$ |
32,333 |
|
|
$ |
3,144 |
|
Finished
goods |
|
|
41,415 |
|
|
|
16,076 |
|
Inventories |
|
$ |
73,748 |
|
|
$ |
19,220 |
|
The Company
has recorded a reserve for slow moving and potentially obsolete
inventory. The reserve at September 30, 2021 and December 31, 2020
was $73,125
and
$9,125,
respectively.
NOTE 3 -
EQUIPMENT
Equipment,
stated at cost, less accumulated depreciation consisted of the
following:
SCHEDULE
OF EQUIPMENT
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
|
|
|
|
|
|
|
Equipment
|
|
$ |
704,772 |
|
|
$ |
704,772 |
|
Equipment under construction
|
|
|
75,259 |
|
|
|
35,969 |
|
Equipment,
gross |
|
|
780,031 |
|
|
|
740,741 |
|
Less
accumulated depreciation |
|
|
(592,970 |
) |
|
|
(540,218 |
) |
Equipment,
net |
|
$ |
187,061 |
|
|
$ |
200,523 |
|
Depreciation
expense for the nine months ended September 30, 2021 and 2020 was
$52,752
and
$161,707,
respectively. As of September 30, 2021, the equipment under
construction is approximately
70% complete, and is
expected to be completed and placed into service during the year
ended December 31, 2021. Equipment under construction is
depreciated only after the asset is placed in service
NOTE 4 -
OPERATING
LEASE
At September
30, 2021, the Company has one operating lease for its headquarters
office space in Burbank. The lease commenced on January 1, 2020,
and has a term for
5 years, with annual fixed
rental payments ranging from $90,000
to
$101,296.
At September 30, 2021, the balance of the lease’s right of use
asset and corresponding lease liability were $300,483
and
$336,185,
respectively. At
September 30, 2021, the Company is also obligated under a lease
that was abandoned in December 2020. The total due to the lessor
for the abandoned lease space is $235,759
and is
recorded as lease settlement obligation at September 30,
2021.
The
components of lease expense and supplemental cash flow information
related to leases for the period are as follows:
SCHEDULE
OF LEASE EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION RELATED TO
LEASES
|
|
Nine
months ended
September
30, 2021
|
|
|
|
|
|
Lease
Cost |
|
|
|
|
Operating lease cost
(included in selling, general, and administrative expense in the
Company’s statement of operations) |
|
$ |
95,586 |
|
|
|
|
|
|
Other
Information |
|
|
|
|
Cash paid for amounts included in the
measurement of lease liabilities for 2021 |
|
$ |
93,165 |
|
Weighted average remaining lease term
– operating leases (in years) |
|
|
2.50 |
|
Average discount rate – operating
leases |
|
|
4 |
% |
SCHEDULE
OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO
LEASES
|
|
At September 30, 2021 |
|
Operating
leases |
|
|
|
|
Long-term right-of-use assets |
|
$ |
300,483 |
|
|
|
|
|
|
Short-term operating lease
liabilities |
|
$ |
105,443 |
|
Long-term
operating lease liabilities |
|
|
230,742 |
|
Total operating
lease liabilities |
|
$ |
336,185 |
|
Maturities
of the Company’s lease liabilities are as follows:
SCHEDULE
OF MATURITIES OF OPERATING LEASE LIABILITIES
Year Ending |
|
Operating Leases |
|
2021(remainder of year) |
|
|
26,286 |
|
2022 |
|
|
95,481 |
|
2023 |
|
|
98,345 |
|
2024 |
|
|
139,767 |
|
Total lease
payments |
|
|
359,879 |
|
Less:
Imputed interest |
|
|
(23,694 |
) |
Present value of lease
liabilities |
|
|
336,185 |
|
|
|
|
|
|
Less
current portion |
|
|
(105,443 |
) |
Operating lease liabilities, long-term |
|
$ |
230,742 |
|
Lease
expense was $95,586
and
$171,333
during the
nine months ended September 30, 2021 and 2020,
respectively.
NOTE 5 –
NOTES
PAYABLE
SCHEDULE
OF NOTES PAYABLE
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
|
|
|
|
|
|
|
(a) Notes payable secured by
equipment |
|
$ |
212,875 |
|
|
$ |
438,634 |
|
(b) Note payable, secured by assets-in
default |
|
|
13,350 |
|
|
|
33,350 |
|
(c) Note payable, Payroll Protection
Program |
|
|
134,125 |
|
|
|
134,125 |
|
(d) Note payable, Economic Injury Disaster
Loan |
|
|
160,000 |
|
|
|
160,000 |
|
(e) Revenue sharing
agreement |
|
|
242,800 |
|
|
|
242,800 |
|
Total notes payable outstanding |
|
|
763,150 |
|
|
|
1,008,909 |
|
Debt
discount |
|
|
(53,667 |
) |
|
|
(74,817 |
) |
Notes payable, net of discount |
|
|
709,483 |
|
|
|
934,092 |
|
Less: Current portion
|
|
|
415,358 |
|
|
|
482,724 |
|
|
|
|
|
|
|
|
|
|
Long term
portion |
|
$ |
294,125 |
|
|
$ |
451,368 |
|
|
(a) |
In April 2020 and May
2020, the Company entered into two financing agreements aggregating
$505,646.
The notes have a stated interest rate of
10.9%. The notes were issued at a discount including
fees for underwriting, legal and administrative costs along with
deferred financing costs. The deferred financing costs are being
amortized over the terms of the notes. The notes are secured by the
Company’s equipment, and require monthly payments of principal and
interest of $21,000,
and mature in
April 2022 and May 2022. At December 31, 2020, the
balance due on these notes was $438,634.
During the nine months ended September 30, 2021, the Company made
principal payments of $225,759
and at September 30, 2021, the balance due on these notes was
$212,875.
At September 30, 2021 and December 31, 2020, the unamortized
discount related to deferred financing charges on these agreements
was $53,667
and $74,817,
respectively.
|
|
|
|
|
(b) |
Note payable, interest
at
8.3% per annum, secured by all the assets of the
Company. The note was
due
January 13, 2019. The note was due January 13, 2019.
The note holder waived the default through December 31, 2020, and
it is currently in default and the Company is in discussion with
the note holder to extend the balance. During the nine months ended
September 30, 2021, the Company made principal payments of
$20,000
and at September 30, 2021, the balance due on this note was
$13,350. |
|
(c) |
On May 7, 2020, the
Company was granted a loan (the “PPP loan”) from Bank of America in
the aggregate amount of $134,125,
pursuant to the Paycheck Protection Program (the “PPP”) under the
CARES Act.
The PPP loan agreement is dated May 4, 2020, matures on May 4,
2022, bears interest at a rate of
1% per annum, with the first six months of interest
deferred, is payable monthly commencing on November 2020, and is
unsecured and guaranteed by the U.S. Small Business Administration
(“SBA”). The loan term may be extended to
April 20, 2025, if mutually agreed to by the Company and
lender. We applied ASC 470, Debt, to account for the PPP
loan. Funds from the PPP loan may only be used for qualifying
expenses as described in the CARES Act, including qualifying
payroll costs, qualifying group health care benefits, qualifying
rent and debt obligations, and qualifying utilities. The Company
believes it used the entire loan amount for qualifying expenses.
Under the terms of the PPP, certain amounts of the loan may be
forgiven if they are used for qualifying expenses. The Company
intends to apply for forgiveness of the PPP loan with respect to
these qualifying expenses, however, we cannot assure that such
forgiveness of any portion of the PPP loan will occur. The terms of
the PPP loan provide for customary events of default including,
among other things, payment defaults, breach of representations and
warranties, and insolvency events. The Company was in compliance
with the terms of the PPP loan and has submitted its application
for forgiveness as of September 30, 2021. |
|
|
|
|
(d) |
On September 5, 2020,
the Company received a $160,000
loan (the “EID Loan”) from the SBA under the SBA’s Economic Injury
Disaster Loan program. The EID Loan has a thirty-year term and
bears interest at a rate of
3.75% per annum. Monthly principal and interest payments are
deferred for twelve months, and commence in June 2021. The EID Loan
may be prepaid at any time prior to maturity with no prepayment
penalties. The proceeds from the EID Loan must be used for working
capital. The Loan contains customary events of default and other
provisions customary for a loan of this type. The Company was in
compliance with the terms of the EID loan as of September 30,
2021. |
|
|
|
|
(e) |
Between July 7, 2020,
and July 29, 2020, the Company issued notes payable to third-party
investors totaling $250,000,
of which $7,200
was repaid in 2020.
Under the terms of the notes, the Company is to pay 50% of the net
revenues beginning on August 21, 2020, for a product to be designed
and produced by the Company. The product has not been produced and
therefore no payments have been made to date. The Company
has received a notice of default and demand for payment from three
note holders (owed approximately $146,000).
The Company has retained counsel who is in discussion with the note
holders. |
NOTE 6 –
CONVERTIBLE NOTES
PAYABLE
Convertible
notes payable consisted of the following:
SCHEDULE
OF CONVERTIBLE NOTES PAYABLE
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
Unsecured |
|
|
|
|
|
|
|
|
(a) Convertible notes with fixed
discount percentage conversion prices |
|
$ |
264,500 |
|
|
$ |
180,200 |
|
Put premiums on stock settled
debt |
|
|
113,294 |
|
|
|
127,866 |
|
|
|
|
|
|
|
|
|
|
(b) Convertible notes with fixed conversion
prices |
|
|
1,845,000 |
|
|
|
936,944 |
|
Default penalty principal added |
|
|
- |
|
|
|
369,086 |
|
Total convertible notes principal
outstanding |
|
|
2,222,794 |
|
|
|
1,614,096 |
|
Debt
discount |
|
|
(204,230 |
) |
|
|
(539,282 |
) |
|
|
|
|
|
|
|
|
|
Convertible notes, net of discount and
premium |
|
$ |
2,018,564 |
|
|
$ |
1,074,814 |
|
Less; Current portion
|
|
|
2,018,564 |
|
|
|
1,074,814 |
|
Long-term
portion |
|
$ |
- |
|
|
$ |
- |
|
|
(a) |
At December 31, 2020,
the balance due on convertible notes with fixed discount percentage
conversion prices was $180,200,
with related put premium of $117,866.
During the nine months ended September 30, 2021, the Company issued
three convertible notes with fixed discount percentage conversion
prices aggregating $264,500.
At the option of the holders, the notes were convertible into
shares of the Company’s common stock at a price per share discount
of
25% to
35% of the lowest bid price of the Company’s common stock
within twenty-five days prior to conversion. The notes were treated
as stock settled debt under ASC 480-Distinguishing Liabilities from
Equity, and a put premium of $113,294
was recognized and charged to interest expense when the notes were
recorded in 2021. Also during the nine months ended September 30,
2021, note holders converted $180,200
principal and accrued interest of $18,266
(total of $198,466)
into
7,492,676 shares of the Company’s common stock. Upon
conversion the related put premiums of $127,866
associated with these notes were reclassified to additional paid-in
capital. As of September 30, 2021, the balance due on convertible
notes with fixed discount percentage conversion prices was
$264,500,
and the related put premium was $113,294. |
|
|
|
|
(b) |
As of December 31, 2020,
the balance due on convertible notes with fixed conversion prices
was $1,306,030
(including default penalties of $369,086).
During the nine months ended September 30, 2021, the Company issued
nine convertible notes with fixed conversion prices aggregating
$1,565,000.
In addition, convertible notes with fixed conversion prices
totaling $1,030,345
of principal and $43,349
of accrued interest (total of $1,073,694)
were converted into
81,640,514 shares of the Company’s common stock. At
September 30, 2021, the balance of the due on convertible notes
with fixed conversion prices was $1,845,000.
The notes are unsecured, convertible into common stock at prices
ranging from $0.015
per share to $0.04
per share, bear interest at
4% to
10% per annum, and mature through September 14,
2022.
At December
31, 2020, the net unamortized balance of debt discounts was
$539,282,
consisting of debt discount related to beneficial conversion
features ($823,655
less accumulated amortization of $320,602,
or net of $503,053)
and other debt discounts for fees and original issue discounts
(OID) ($52,360
less accumulated amortization of $16,096,
or net of $36,229).
The Company early adopted ASU No. 2020-06 (See Note 1) effective
January 1, 2021 using the modified retrospective approach. The
adoption of ASU 2020-06 on January 1, 2021, resulted in a decrease
in addition paid in capital of $823,655,
a decrease to accumulated deficit of $320,602,
and an increase in total stockholders’ deficit of $503,053.
The debt
discounts related to fees and OID are amortized over the life of
the related notes or are amortized in full upon the conversion of
the corresponding note to common stock. During the nine months
ended September 30, 2021, debt discounts of $295,600
were added related to the twelve convertible notes issued above,
and amortization of $146,472
was recorded. At September 30, 2021, the net unamortized balance of
other debt discounts was $204,230.
On May 4, 2021 (“Effective Date”), the Company entered into a
securities purchase agreement (the “SPA”) with Clifton Royale
Apartments, LLC (the “Investor”) pursuant to which the Company
issued a
4% unsecured convertible promissory note (the “Note”) in the
principal amount of $80,000.
On this date, the Company received proceeds of $80,000.
The maturity date of the Note was
November 4, 2021. The Note bears interest at a rate of four
percent (4%)
per annum, which interest shall be paid by the Company to the
Investor in Common Stock at any time the Investor sends a notice of
conversion to the Company.
The Investor is entitled to, at its option, convert all or any
amount of the principal amount and any accrued but unpaid interest
of the Investor Note into Common Stock, at any time, at a fixed
conversion price for each share of Common Stock equal to $0.01 (as
defined in the Note) of the Common Stock as reported on the OTC
Marketplace exchange upon which the Company’s shares are traded
during the twenty (20) consecutive Trading Day period immediately
preceding (i) the applicable Effective Date; or (ii) the conversion
date. The Company also issued a common stock purchase
warrant for
15,000,000 shares (the “Warrant”).
|
NOTE 7 –
MEZZANINE
EQUITY
The Company has determined that its shares of the Series B and
Series C convertible preferred stock are conditionally redeemable
upon the occurrence of certain events that are not solely within
the control of the issuer, and upon such event, the shares would
become redeemable at the option of the holders; accordingly the
Series B and Series C convertible preferred stock are classified as
“mezzanine equity” (temporary equity), between liabilities and
stockholders’ deficit. The purpose of this classification is to
convey that such a security may not be permanently part of equity
and could result in a demand for cash, securities or other assets
of the entity in the future. The shares as valued have been
classified as mezzanine equity and presented as such on the
consolidated balance sheet at September 30, 2021 as single line
items due to the immaterial par value. The mezzanine equity value
is not included in shareholders’ deficit.
Series B Convertible Preferred
Stock
The terms of the Certificate of Designation of the Series B
Convertible Preferred Stock, which was filed with the State of
Nevada on January 12, 2021, state that the shares of Series
B Convertible Preferred Stock are convertible into fifty-four
percent (54%) of the issued and outstanding shares of the Company’s
common stock on a fully converted basis. Each share of
Series B Preferred Stock shall be convertible into 6,750 shares
of Common Stock (“Conversion Ratio”), at the option of a Holder, at
any time and from time to time, from and after the issuance of the
Series B Preferred Stock. Anti-dilution terms of the preferred may
change the conversion ratio. Each holder of the Series B Preferred
Stock shall have the right to vote on any matter that may from time
to time be submitted to the Company’s shareholders for a vote, on
an as converted basis, either by written consent or by proxy.
Additionally, the shareholders are entitled to liquidation benefits
including a cash payout, the liquidation terms include sales and
mergers affection a change in control.
On December
21, 2020, the Company entered into a Securities Exchange Agreement
with Medolife Rx, Inc., a Wyoming corporation, (“Medolife Rx”)
pursuant to which, the Company agreed to acquire 51% of Medolife Rx in
exchange for 9,000 shares of newly
created Series B Convertible Preferred Stock, which, were issued to
Dr. Arthur Mikaelian upon closing on January 14, 2021. The shares
issued to Dr. Mikaelian on January 14, 2021 were valued based on
the conversion number of common shares at the market price on the
date of issuance. Due fact that there Medolife Rx, Inc. was a
start-up venture with no net asset value the value associated with
the shares of $1,522,198 was charged to
compensation expense during the nine months ended September 30,
2021.
Series C Convertible Preferred
Stock
The terms of
the Certificate of Designation of the Series C Convertible
Preferred Stock, which was filed with the State of Nevada on
January 12, 2021, state that such Series C Convertible shares have
a par value of $0.00001 per share and a
stated value of $100 per
share (the “Stated Value”) and each Series C Preferred Share shall
be convertible into 6,750 shares
of Common Stock (“Conversion Ratio”), at the option of a Holder, at
any time and from time to time, from and after the issuance of the
Series C Preferred Stock. Anti-dilution terms of the preferred may
change the conversion ratio. Each holder of the Series C Preferred
Stock shall have the right to vote on any matter that may from time
to time be submitted to the Company’s shareholders for a vote, on
an as converted basis, either by written consent or by proxy.
Additionally, the shareholders are entitled to liquidation benefits
including a cash payout, the liquidation terms include sales and
mergers affection a change in control.
On January
14, 2021, the Board of Directors of the Company approved the
issuance of all 1,000 authorized
shares of Series C Convertible Preferred Stock. 500 shares of Series
C Preferred Stock were issued to Trillium Partners LP, and
500 shares of Series
C Preferred Stock were issued to Sagittarii Holdings, Inc. The
shares issued to Trillium and Sagittarii were valued at $169,133 based on the
conversion number of common shares at the market price on the date
of issuance, and were charged to expense for services during the
nine months ended September 30, 2021.
NOTE 8 –
STOCKHOLDERS’
DEFICIT
Common
Stock
Common stock issued for
cash
During the
nine months ended September 30, 2021, the Company issued 44,750,000 shares of
common stock under a Form S-1 then in effect at a price of
$0.04 per share. Also
during the nine months ended September 30, 2021, the Company issued
12,000,000 shares of
common stock in a private placement of shares at a price of
$0.015 to $0.02 per share. Total
proceeds of $1,985,000 in
cash was received.
During the
nine months ended September 30, 2020, the Company issued 407,408 shares of
common stock in a private placement of shares at a price of
$0.26 per share for
total proceeds of $124,371.
Common stock issued for
services
During the
nine months ended September 30, 2021, the Company issued 13,964,425
shares of common stock to service vendors with a fair value of
$1,246,934,
and 1,000,000
shares of common stock to employees and officers of the Company
with a fair value of $69,950.
The fair value of the shares was determined based on the closing
price of the Company’s common stock on the date shares were
granted, and recorded as stock compensation in selling, general and
administrative expense.
During the
nine months ended September 30, 2020, the Company issued 451,198
shares of common stock to service vendors with a fair value of
$104,474. The
fair value of the shares was determined based on the closing price
of the Company’s common stock on the date shares were granted, and
recorded as stock compensation in selling, general and
administrative expense.
During the
nine months ended September 30, 2020, the Company issued 750,000
shares of common stock to consultants and convertible note holders
for services with a fair value of $209,495. The
fair value of the shares was determined based on the closing price
of the Company’s common stock on the date shares were granted, and
recorded as stock compensation in selling, general and
administrative expense.
During the
nine months ended September 30, 2020, the Company issued 1,127,522
shares of common stock to convertible note holders for fees with a
fair value of $107,022. The
fair value of the shares was determined based on the closing price
of the Company’s common stock on the date shares were granted, and
was recorded as debt discount to be amortized over the term of the
related convertible notes payable.
Preferred Stock
On April 14,
2020, the Company issued 2,500,000 shares of
newly created class of preferred stock, Series A Preferred Stock to
the Company’s Chief Executive Officer in a private placement
transaction. The fair value of the Series A Preferred shares was
determined to be $465,000
and was recorded as a stock compensation expense in selling,
general and administrative expense during the nine months ended
September 30, 2020. The Company determined the fair value of the
Series A Preferred shares by obtaining an independent valuation of
the fair value of the Company’s Series A Preferred
shares.
Restricted common
stock
In 2019, the
Company agreed to issue
8,000,000 shares of the Company’s
common stock with vesting terms to Arthur Mikaelian. 1,000,000
shares vested immediately, and the balance of 7,000,000 shares vest
625,000 shares per quarter over
2.8 years. The Company accounts
for the share awards using a graded vesting attribution method over
the requisite service period, as if each tranche were a separate
award. During the nine months ended September 30, 2021 and 2020,
total share-based expense recognized related to vested restricted
shares totaled $382,544
and
$762,543,
respectively. At September 30, 2021, there was $48,867
of unvested
compensation related to these awards that will be amortized over a
remaining vesting period of approximately six months thru March
2022.
The
following table summarizes restricted common stock activity for the
nine months ended September 30, 2021:
SUMMARY
OF RESTRICTED COMMON STOCK ACTIVITY
|
|
Number of
shares |
|
|
Fair value
of shares |
|
Non-vested shares, December 31, 2020 |
|
|
3,250,000 |
|
|
|
431,411 |
|
Granted |
|
|
- |
|
|
|
- |
|
Vested |
|
|
(1,875,000 |
) |
|
|
(382,544 |
) |
Forfeited |
|
|
- |
|
|
|
- |
|
Non-vested shares, September 30,
2021 |
|
|
1,375,000 |
|
|
$ |
48,867 |
|
As of
September 30, 2021, no shares have been issued and
4,875,000 vested shares are
included in shares to be issued on the accompanying statement of
stockholders’ deficit.
Common stock issued in conversion of
convertible notes payable
During the
nine months ended September 30, 2021, the Company issued 89,133,190 shares of
common stock to holders of convertible notes upon the conversion of
convertible notes payable and accrued interest valued at $1,543,570.
Stock Options
During the
nine months ended September 30, 2021 and 2020, the Company
recognized $34,905
and $248,648,
respectively, of compensation expense relating to vested stock
options.
During the
nine months ended September 30, 2021, the Company did not issue any
options. In April 2020, the Company issued options exercisable into
300,000 shares of common stock
which vested immediately. The options have an exercise price of
$0.14
per share,
and expire in
10 years. The total fair value
of these options at grant date was approximately $30,000,
which was determined using the Black-Scholes-Merton option pricing
model with the following average assumption: stock price $0.14 per
share, expected term ranging from
five years, volatility
236%, dividend rate of
0% and risk-fee interest
rate of
0.17%.
The
risk-free interest rate is based on the U.S. Treasury yield curve
in effect at the time of measurement corresponding with the
expected term of the share option award; the expected term
represents the weighted-average period of time that share option
awards granted are expected to be outstanding giving consideration
to vesting schedules and historical participant exercise behavior;
the expected volatility is based upon historical volatility of the
Company’s common stock; and the expected dividend yield is based on
the fact that the Company has not paid dividends in the past and
does not expect to pay dividends in the future.
As of
September 30, 2021, the amount of unvested compensation related to
stock options was approximately $22,000
which will
be recorded as an expense in future periods as the options
vest.
A summary of
stock option activity during the nine months ended September 30,
2021:
SCHEDULE
OF STOCK OPTION ACTIVITY
|
|
Number of
options |
|
|
Weighted
Average
Exercise Price |
|
|
Contractual
Life in Years |
|
Options Outstanding as of December 31,
2020 |
|
|
4,130,000 |
|
|
|
0.10 |
|
|
|
6.0 |
|
Granted |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised |
|
|
(350,000 |
) |
|
|
- |
|
|
|
- |
|
Forfeited |
|
|
(3,005,000 |
) |
|
|
- |
|
|
|
- |
|
Options Outstanding as of
September 30, 2021 |
|
|
775,000 |
|
|
|
0.10 |
|
|
|
5.5 |
|
Options Exercisable as of
September 30, 2021 |
|
|
775,000 |
|
|
$ |
0.10 |
|
|
|
5.5 |
|
At September
30, 2021, the options outstanding had no intrinsic
value.
NOTE 9 –
RELATED PARTY
TRANSACTIONS
On January
14, 2021, the Company completed the acquisition of 51% of Medolife Rx, a company
controlled by Arthur Mikaelian (see Note 8). Prior to the
acquisition, Mr. Mikaelian was a consultant and shareholder in the
Company. In connection with the acquisition of 51% of Medolife Rx, Mr.
Mikaelian was appointed as a member of the Board of Directors of
the Company, and also appointed to serve as the Company’s Chief
Executive Officer, a role which Mr. Mikaelian assumed on January
14, 2021. As Medolife Rx had nominal assets, liabilities, and
operations, proforma information is not presented.
The Company
has an agreement with Mr. Mikaelian in consideration of the
Company’s exclusive use of patented technology developed by Mr.
Mikaelian. Pursuant to the agreement, as amended, the Company shall
pay a royalty of 25% of all the net income from
the sale of licensed products, as defined with a minimum royalty of
$35,000 per month payable in cash or common
stock of the Company. During the nine months ended September 30,
2021 and 2020, the Company recognized royalty expenses of
$315,000 and $180,000,
respectively.
During the
nine months ended September 30, 2021, the Company recorded revenue
of $198,800
from a company controlled by a family member of the Company’s CEO.
At September 30, 2021, the related accounts receivable balance of
$198,800 had been
fully reserved, and the net amount due from the related party was
zero.
During the
nine months ended September 30, 2021, the Company recorded
administrative expenses of $628,742 to a company
controlled by Mr. Mikaelian.
NOTE 10 –
COMMITMENTS AND
CONTINGENCIES
COVID-19
During the
nine months ended September 30, 2021, the COVID-19 pandemic has
impacted our operating results and the Company anticipates a
continued impact for the balance of the year. In addition, the
pandemic may cause reduced demand for our products if, for example,
the pandemic results in a recessionary economic environment which
negatively effects the consumers who purchase our products. The
Company monitors guidance from federal, state, and local public
health authorities, and has implemented health and safety
precautions and protocols in response to these guidelines. The
extent of the impact of the COVID-19 pandemic has had and will
continue to have on the Company’s business is highly uncertain and
difficult to predict and quantify at this time.
Contingencies include
obligations for lease agreements, including an abandoned lease
space, along with the Company current lease for its headquarters
office (see Note 4).
NOTE 11 –
SUBSEQUENT
EVENTS
Common Stock Issued
Subsequent
to September 30, 2021, the Company issued a total of
7,128,571 shares of common stock
to convertible note holders in exchange for the conversion of
convertible notes payable and accrued interest.
On November 12, 2021 (“Effective Date”), the Company entered into a
securities purchase agreement (the “SPA”) with Trillium Partners LP
(the “Investor”) pursuant to which the Company issued a 12% unsecured convertible
promissory note (the “Note”) in the principal amount of $82,500. On this date, the Company
received proceeds of $75,000.
The maturity date of the Note was November 12, 2022. The Note bears
interest at a rate of twelve percent (12%)
per annum, which interest shall be paid by the Company to the
Investor in Common Stock at any time the Investor sends a notice of
conversion to the Company.
The Investor is entitled to, at its option, convert all or any
amount of the principal amount and any accrued but unpaid interest
of the Investor Note into Common Stock, at any time, at a fixed
conversion price for each share of Common Stock equal to $0.01 (as
defined in the Note) of the Common Stock as reported on the OTC
Marketplace exchange upon which the Company’s shares are traded
during the twenty (20) consecutive Trading Day period immediately
preceding (i) the applicable Effective Date; or (ii) the conversion
date. The Company also issued a common stock purchase
warrant for 8,250,000 shares
(the “Warrant”).
The Company initially reserved 30,000,000
of its authorized and unissued Common Stock (the “Reserved
Amount”), free from pre-emptive rights, to provide for the issuance
of Common Stock upon the full conversion and exercise of the
Investor Note and Warrant. Upon full conversion of the Investor
Note and exercise of the Warrant, any shares remaining in such
reserve will be cancelled.
Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of
Operations.
This form
10-Q contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this Form 10-Q that are not
statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, words such as “may”,
“will”, “expect”, “believe”, “anticipate”, “estimate” or “continue”
or comparable terminology are intended to identify forward-looking
statements. These statements by their nature involve substantial
risks and uncertainties, and actual results may differ materially
depending on a variety of factors, many of which are not within our
control. These factors include by are not limited to economic
conditions generally and in the industries in which we may
participate; competition within our chosen industry, including
competition from much larger competitors; technological advances
and failure to successfully develop business
relationships.
This
discussion contains forward-looking statements that reflect our
plans, estimates and beliefs. Our actual results may differ
materially from those anticipated in these forward-looking
statements.
Overview
We are an
applied science company founded in 2016, focusing on increasing
energy levels in plant matter to increase performance within the
human body. Our proprietary technology uses quantum mechanics to
increase bio-activity of targeted molecules to enhance the desired
effects. We specialize in potentiating rare naturally occurring
elements to create impactful and sustainable healing solutions that
we believe will one day be as powerful and predictable as
pharmaceutical drugs. We offer our technology as a platform, making
it accessible to existing high-quality product makers with existing
distribution channels, as well as consumer products. Our mission is
to power as many impactful, high-performing and wholly organic
solutions as possible through product lines and a series of
licensing and distribution
Quanta, Inc.
(“Quanta”) is a cutting-edge technology platform whose patented,
proprietary technology harnesses advances in quantum biology to
increase the potency of active ingredients. Currently, Quanta
supports product formulations in pain management,
anti-inflammation, skincare, agriculture, nutritional supplements,
and plant-based consumables. Ultimately, Quanta’s mission is to
deliver better, more effective ingredients to elevate product
efficacy.
Our
Company History
The company
was founded in Nevada as Freight Solution, Inc. in 2016.
On June 5,
2018, we underwent a change of control. In connection with the
change of control, our board of directors and officers was
reconstituted through the resignation of Shane Ludington as
Chairman, Chief Executive Officer, Chief Financial Officer,
Secretary and Treasurer of the Registrant and the appointment of
Mr. Eric Rice as Chairman, Chief Executive Officer and Chief
Financial Officer and Mr. Jeffrey Doiron as President and Chief
Operations Officer.
On June 6,
2018 we formed a wholly owned subsidiary, Quanta Acquisition Corp.
in the state of California, and executed an Agreement of Merger and
Plan of Reorganization, with Bioanomaly, Inc., a California
corporation, d/b/a Quanta and Quanta Acquisition Corp., a
California corporation and our wholly-owned subsidiary. Pursuant to
the terms of the Merger Agreement, Quanta Acquisition Corp. merged
with and into Quanta in a statutory reverse triangular merger with
Quanta surviving as a wholly owned subsidiary. Following the
merger, we adopted our business plan.
On June 6,
2018, we cancelled 15,000,000 shares of common stock acquired
through the change in control transaction. As consideration for the
merger, we agreed to issue the shareholders of Quanta an aggregate
of 21,908,810 shares of our common stock, par value $0.001 per
share. Freight Solution shareholders retained 6,500,000 shares of
common stock, which represented 23% of our issued and outstanding
stock following the merger.
Simultaneously with the
merger, we accepted subscriptions for 6,500,000 shares of common
stock in a private placement offering at a purchase price of $0.20
per share for an aggregate offering amount of $1,300,000. We also
issued two non-affiliated investors warrants to purchase 3,000,000
shares of our common stock at an exercise price of $0.30 per share
expiring in four years.
Following
the consummation of the merger, Quanta shareholders beneficially
owned approximately 63% of our issued and outstanding common
stock.
On July 11,
2018 the State of Nevada approved our name change from Freight
Solution, Inc. to Quanta, Inc.
On April 14,
2020, we issued to Eric Rice, our former Chairman, Chief Executive
Officer and Chief Financial Officer, 2,500,000 shares of a newly
created class of preferred stock, Series A Preferred
Stock.
On November
16, 2020, the Company entered into a Control Block Transfer
Agreement with Eric Rice and Phil Sands, pursuant to which, Mr.
Rice agreed to transfer 2,500,000 shares of the Company’s Series A
Super Voting Preferred Stock to Mr. Sands, representing a transfer
of majority voting control over the Company because the holder of
such 2,500,000 shares of our Series A Super Voting Preferred Stock
automatically carries a vote equal to 51% on all matters submitted
to a vote of the holders of our Common Stock and Preferred Stock.
On November 16, 2020, the Company entered into a Share Cancellation
Agreement with Eric Rice, holder of 18,030,032 shares of QNTA
Common Stock, pursuant to which Mr. Rice agreed to cancel
17,030,032 shares (16,951,432 shares were cancelled December 29,
2020), and to retain ownership of 1,000,000 shares of Common
Stock.
On December
21, 2020, the Company entered into a Securities Exchange Agreement
with Medolife Rx, Inc., a Wyoming corporation, (“Medolife”)
pursuant to which, the Company agreed to acquire 51% of Medolife in
exchange for 9,000 shares of newly created Series B Convertible
Preferred Stock. On January 14, 2021, we completed our acquisition
of 51% of Medolife and Medolife’s founder, Arthur Mikaelian, PhD, a
member of our Board of Directors, officially replaced Phil Sands as
our Chief Executive Officer. Phil Sands resigned as an officer and
director of the Company on May 10, 2021. Simultaneously therewith,
the Company executed a Control Block Transfer Agreement with Phil
Sands and Arthur Mikaelian, pursuant to which, effective Mr. Sands
agreed to transfer 2,500,000 shares of the Company’s Series A Super
Voting Preferred Stock to Dr. Mikaelian, representing a transfer of
majority voting control over the Company because the holder of such
2,500,000 shares of our Series A Super Voting Preferred Stock
automatically carries a vote equal to 51% on all matters submitted
to a vote of the holders of our Common Stock and Preferred Stock.
Mr. Sands agreed to transfer the Control Block to Arthur Mikaelian
in exchange for 3,000,000 shares of the Company’s Common Stock, and
for the payment of $22,500 in accrued salary, as well as the
payment of health insurance benefits through January of
2022.
Medolife
provides contract research services. The Company focuses on
research, development, and production of pharmaceutical-grade
products, as well as clinical evidence-based nutraceuticals
utilizing patented polarization technology. Medolife Rx serves
clients in the United States.
In 2007,
Medolife began its venom-to-drug research and development concept.
In 2008, Medolife identified the Rhopalurus princeps scorpion
species, which are endemic to the Dominican Republic, as a possible
candidate. The company entered into an agreement with the local
Ministry of Environment and Natural Resources to investigate the
anticancer properties of scorpion venom peptides. The Company’s
research confirmed the anticancer properties of the peptide. That
same year, Medolife registered its product, Escozine, in the
Dominican Republic due to the prime material and preliminary
studies originating from Dominican Republic. Escozine was
registered under Sanitary Registry Number PN2010-0244 as an
anti-tumoral alternative medicine in the Dominican Republic, which
allowed the company to perform clinical studies and observations in
the country.
Quanta,
which entered the CBD pain-relief rub market (“Muscle Rub”), is the
first in a series of products to emerge from our labs. At the heart
of its well-documented effectiveness is our proprietary
“polarization” process, which uses electromagnetic force to
markedly enhance bioactivity at the molecular level—a polarized
ingredient creates stronger bonds with the body’s receptors
providing higher bioavailability. The company believes this natural
solution has nearly limitless applications in the world of
plant-based consumer products.
In early
2020, the company was preparing to apply to the FDA to initiate the
approval process for Escozine as an orphan drug for pancreatic
cancer. The Weinberg Group was hired as our regulatory compliance
consultants for the FDA application and guidelines.
As the
COVID-19 pandemic spread during the Spring of 2020, Medolife
studied the scorpion venom peptide as a potential COVID-19 drug
treatment and began confirming its antiviral properties. The
company applied to the FDA as a Pre-Investigational New Drug
(PIND), which opened PIND #150335. For PIND Submission and Clinical
Trial Strategy in the United States and the Dominican Republic,
Medolife has contracted Affinity Bio Partners as a consulting firm
on FDA regulatory matters.
In August of
2020, Medolife initiated clinical studies at the Cruz Jiminian
Clinic (Clinica Cruz Jiminian) in Santo Domingo, Dominican
Republic, which is a clinic with a license allowing them to treat
COVID-19 patients. The study included 450 COVID-19 patients. The
observation contained more female than male patients, with 252
female and 198 male participants. Out of 450 participants, there
was an even spread among the age groups, with a higher number in
the 41-to-50-year-old group.
EFFICACY STUDY.
Escozine was
used as a 3-pillar treatment: a Therapeutic, a Palliative, and a
Preventative.
Therapeutic
|
● |
Escozine was
used as a monotherapy |
|
● |
All
therapeutic participants were tested COVID-19 positive prior to
observation. |
|
● |
100% of
patients were discharged with a negative COVID-19 test result
within 7 to 10 days of treatment with Escozine. |
Conclusion:
Within 4-5 days, all COVID-19 patients using Escozine tested
negative for the virus, indicating Escozine eliminated the COVID-19
virus or accelerated recovery.
Palliative
|
● |
COVID-19
positive patients report a dramatic decrease of symptoms within 2-4
days of Escozine treatments. The World Health Organization Quality
of Life (“WHOQOL”) Bref quality of life questionnaire by the World
Health Organization (WHO) was used since July 2020 to evaluating
symptoms in patients, including: |
|
○ |
Shortness of
breath |
|
○ |
Pain |
|
○ |
Fatigue |
|
○ |
Headache |
|
○ |
Loss of
taste |
|
○ |
Fever |
|
○ |
Loss of smell
(anosmia) |
Conclusion: All
participants reported significant improvement on all their
COVID-19-related symptoms within 5 days, indicating that Escozine
can be used to treat the symptoms of COVID-19.
Preventative
|
● |
Transmission
of virus to treating physicians and nurses of COVID-19 patients is
inhibited upon administering Escozine. |
|
● |
Substantial
reduction in infectability and spread of the SARS-CoV-2
virus. |
Conclusion: All
hospital workers remained healthy during the clinical observation
while taking Escozine, indicating that Escozine can be used as a
preventative measure for COVID-19. The preventative capabilities
require additional study.
SAFETY STUDY.
To verify
the safety of using Escozine, patients were tested before and after
treatment for:
|
● |
Hematology |
|
● |
Clinical
chemistry (Kidney and Liver function tests, Enzymes, Glucose,
Calcium and Phosphorus) |
|
● |
Urine |
|
● |
CD4/CD8 |
Conclusion: No
toxic response was observed in 100% of patients and no side-effects
were reported, indicating that Escozine is safe to use for COVID-19
patients.
ADDITIONAL
FINDINGS.
During the
clinical study, Medolife observed that Escozine prevents Acute
Kidney Injury (AKI) caused by COVID-19:
|
● |
During the
clinical study, no deaths occurred. |
|
● |
40% of the
monitored COVID-19 patients who were administered Escozine, had
serum creatinine that was higher than normal, indicating AKI before
Escozine administration. |
|
● |
After
Escozine administration, most of the patient’s creatinine
concentrations dropped or did not change. |
|
● |
Overall, the
frequency of patients that developed normal creatinine levels after
Escozine administration was statistically significant
(p<0.05). |
|
|
Medolife has received a
new reply from the FDA on their latest submission of requested
data. In the reply, the FDA: |
|
● |
Stated that
they acknowledge the Company’s clinical trial
as an informal proof-of-concept study |
|
● |
Laid out
very specific guidelines for the next steps required by the
regulatory body in order to garner approval for Escozine as a
treatment for COVID-19, in which the FDA requested: |
|
○ |
Pharmacokinetic (PK)
study, which Medolife has initiated in the United
Kingdom. |
|
○ |
DNA
toxicology study, for which Medolife is negotiating with a GLP
certified laboratory in the United States. |
|
○ |
Additional
Chemistry, Manufacturing and Controls (CMC) data from Medolife’s
contract manufacturer, CURE Pharmaceutical Corporation. |
R&D Expenses related to
Escozine.
Over the
last 24 months, the company has spent more than $533,000 on
research and development related to Escozine as both a treatment of
cancer and for COVID-19.
Quanta
Basics
Quanta, Inc.
(“Quanta”) is a cutting-edge technology platform whose patented,
proprietary technology harnesses advances in quantum biology that
can increase the potency of various ingredients. Currently, Quanta
supports product formulations in pain management,
anti-inflammation, skincare, agriculture, nutritional supplements,
and plant-based consumables. Ultimately, Quanta’s mission is to
deliver better, more effective ingredients to elevate product
efficacy, reduce waste and facilitate healthier, more sustainable
consumption.
The
established resonance theory behind Quanta’s polarization process
has many potential applications. Quanta believes this technology
has the opportunity to upend how commercial products are made and
the benefits from them. Already we see multi-trillion-dollar global
industries benefiting from Quanta’s technology.
Our proof of concept, Quanta’s market-leading CBD pain-relief rub
(“Muscle Rub”), is only the first in a series of paradigm shift
products to emerge from our labs. At the heart of its
well-documented effectiveness is our proprietary “polarization”
process, which uses electromagnetic force to markedly enhance
bioactivity at the molecular level—a polarized ingredient is more
soluble and creates stronger bonds with the body’s receptors.
Proof of
Concept
Creating,
producing and selling consumer products was never our primary
focus; Quanta’s Muscle Rub was simply a means to an end - proof of
concept and a revenue driver in a small emerging market as our
business model took shape. Fundamentally, Quanta will be a
licensing concern designed to collaborate with large brands to
improve product quality and the profit margins of existing and new
products. But the market needed proof and we chose to start in the
under-developed category of CBD because of its speed to
market.
Understandably, we met
the same initial hurdles every start-up encounters. In addition to
simply explaining quantum mechanics, we had no track record of
success from a business standpoint. The immediate goal was to prove
our model was defensible. Hence, we chose CBD as a launch category.
This market provided protection from industry titans that may have
felt threatened by such a powerful technology while allowing us to
drive profits during R&D.
Over the
last two years, we have developed and sold products largely to the
medical and wellness industries, along with some consumer retail.
This effort was designed to drive revenue and to prove the concept
of our model: that polarizing a single ingredient can produce a
demonstrably superior product that consumers find safe and
effective (establish consumer appetite).
Discovery
Synopsys
Using our
product development process and business-to-business and
direct-to-consumer sales approaches as a benchmark for future
business, we developed the Quanta business model. The company
believes that its technology unique ability to strengthen
ingredients renders them more potent without added chemicals or
penetrating cells means Quanta is in a first-of-its-kind position
in the market. As the world’s first company focused on Quantum
Biology we sit in a strong, but unique position in the
market.
Upcoming
products and ventures will be designed to achieve or surpass this
level of consumer benefit and uptake.
Quanta
Business Model in 3 P’s: Potentiation, Partners, and
Profits
After two
years we believe the best possible model for the long-term success
of the company is collaborating with best-in-class partners through
joint ventures for new verticals, products, and research. These
joint ventures may involve a jointly owned special purpose entity
or they may be entirely based on contractual
obligations.
The unique
ability to increase the ingredient and product performance opens
the doors for major opportunities. Higher performing ingredients
mean less is needed to make a strong impact (increased margins,
increase overall efficacy). We proved this with our Muscle Rub,
which uses approximately 1/3 the CBD of competing products with
demonstrably improved results.
The level of
potentiation delivered by Quanta allows our partners the unique
ability to provide higher-performing products, lower material
costs, more competitive pricing and increased profit margins. In
short, our partners will be able to make better performing, more
affordable products with a higher repeat purchase. This is true
disruption and consumer utopia.
We aim to
work with groups that specialize in manufacturing, marketing,
selling and distributing existing product lines that utilize
ingredients we can potentiate. Partners like this facilitate
efficient market delivery of joint innovations.
We believe
this strategy provides greater shareholder value, enhances revenue
potential, defrays upfront expenses and affords us the ability to
raise capital.
Ultimately,
these ventures would result in licensing out our technology to
other reputable brands and companies to create co-branded products
whereas the term “Powered by Quanta” becomes as recognized as
“Intel Inside.”
We
believe this type of partnership will afford a company Quanta
partners with:
|
● |
Development of emerging
products with cutting edge ingredients. |
|
|
|
|
● |
A product line with a
true point of differentiation. |
|
|
|
|
● |
New SKUs with an
increased margin. |
|
|
|
|
● |
Decreased cost of goods
sold. |
Simultaneously these
partnerships can allow Quanta:
|
● |
Greater brand
recognition. |
|
|
|
|
● |
Increased revenue and in
turn profitability. |
|
|
|
|
● |
Quicker timeline to more
licensing opportunities because of a track record of
success. |
|
|
|
|
● |
Brand to become
synonymous with improving the performance of ingredients within
products. |
Manufacturing
Partnerships -
Quanta is
currently focused on partnering with large-scale manufacturers and
distributors able to produce products that meet the requirements of
applicable regulations IE: Good Manufacturing Practices to fulfill
orders of our own product line. This type of partnership is crucial
because it will afford:
|
● |
New product development
that meets certification requirements |
|
|
|
|
● |
Much larger production
scale |
|
|
|
|
● |
Speed to
market |
|
|
|
|
● |
Increased distribution
and profitability |
With our
licensing capabilities, Quanta believes this technology can render
better, more efficacious products that cost less to create but
command a higher purchase value because of polarized ingredients.
This, in turn, allows companies to diversify their catalog of
products while simultaneously providing them with a distinguished
advantage. More efficacious ingredients.
Government
Regulation
We believe
we are in compliance with applicable federal, state and other
regulations and that we have compliance programs in place to ensure
compliance going forward. There are no regulatory notifications or
actions pending.
Results
of Operations
Summary of Key
Results
Results
of Operations for three months ended September 30, 2021 compared to
the three months ended September 30, 2020
Revenue
Net sales
are comprised of wholesale sales to our retail partners and sales
through our direct-to-consumer channel. Net sales in both channels
reflect the impact of product returns as well as discounts for
certain sales programs or promotions.
For the
three months ended September 30, 2021, the Company recognized
$97,193 in net sales. For the three months ended September 30,
2020, the Company recognized $315,174 in net sales.
Expenses
Operating
expenses for the three months ended September 30, 2021 was
$1,017,632, including $105,000 in research and development costs,
and $912,632 in selling, administrative, and other costs associated
with operations.
Operating
expenses for the three months ended September 30, 2020 was
$1,527,462 including $62,006 in research and development costs,
$1,210,1363 in selling, administrative and other costs associated
with operations and $255,093 in impairment of operating lease right
of use asset.
Other Income
(Expense)
For the
three months ended September 30, 2021, the Company recognized
$(229,961) of net other expenses.
For the
three months ended September 30, 2020, the Company recognized
$(1,450,206) of net other income.
Net
Loss
Net loss for
the three months ended September 30, 2021 was $1,224,570. Net loss
for the three months ended September 30, 2020 was $2,706,470. No
provision for income taxes for either period was
recorded.
Results
of Operations for nine months ended September 30, 2021 compared to
the nine months ended September 30, 2020
Revenue
Net sales
are comprised of wholesale sales to our retail partners and sales
through our direct-to-consumer channel. Net sales in both channels
reflect the impact of product returns as well as discounts for
certain sales programs or promotions.
For the nine
months ended September 30, 2021, the Company recognized $525,053 in
net sales. For the nine months ended September 30, 2020, the
Company recognized $972,308 in net sales.
Expenses
Operating
expenses for the nine months ended September 30, 2021 was
$6,947,011. The Company incurred $348,500 in research and
development costs, and $6,598,511 in selling, administrative and
other costs associated with operations, including legal and
professional fees of $570,067 and $506,476 in compensation and
benefit costs.
Operating
expenses for the nine months ended September 30, 2020 was
$5,212,655. The Company incurred $306,544 in research and
development costs, $4,651,018 in administrative and other costs
associated with operations, including legal and professional fees
of $776,821 and $1,157,657 in compensation and benefit costs, and
$255,093 in impairment of operating lease right of use
asset.
Other
Income (Expense)
For the nine
months ended September 30, 2021, the Company recognized $(390,182)
of net other expenses.
For the nine
months ended September 30, 2020, the Company recognized
$(1,566,413) of net other expenses.
Net
Loss
Net loss for
the nine months ended September 30, 2021 was $6,950,307. Net loss
for the nine months ended September 30, 2020 was $5,931,371. No
provision for income taxes for either period was
recorded.
Liquidity
We have yet
to establish any history of profitable operations. For the nine
months ended September 30, 2021, the Company incurred a net loss of
$6,950,307 and used cash in operating activities of $3,216,914, and
at September 30, 2021, the Company had a working capital deficiency
of $3,086,932. These factors raise substantial doubt about our
ability to continue as a going concern within one year after the
date the financial statements are issued. In addition, the
Company’s independent registered public accounting firm, in its
report on the Company’s December 31, 2020 financial statements,
raised substantial doubt about the Company’s ability to continue as
a going concern. The going concern opinion could materially limit
our ability to raise additional funds through the issuance of new
debt or equity securities, and future reports on our financial
statements may also include an explanatory paragraph with respect
to our ability to continue as a going concern.
At September
30, 2021, the Company had cash on hand in the amount of $22,262.
The Company’s ability to continue as a going concern is dependent
upon improving its profitability and the continuing financial
support from its shareholders. Management believes the existing
shareholders or external financing will provide additional cash to
meet the Company’s obligations as they become due. No assurance can
be given that any future financing if needed, will be available or,
if available, that it will be on terms that are satisfactory to the
Company. Even if the Company can obtain additional financing, if
needed, it may contain undue restrictions on its operations, in the
case of debt financing, or cause substantial dilution for its
stockholders, in the case of equity financing
Critical
Accounting Policies and Estimates
Our
financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America, or
GAAP. GAAP requires us to make estimates and assumptions that
affect the reported amounts in our financial statements including
various allowances and reserves for accounts receivable and
inventories, the estimated lives of long-lived assets and
trademarks and trademark licenses, as well as claims and
contingencies arising out of litigation or other transactions that
occur in the normal course of business. The following summarizes
our most significant accounting and reporting policies and
practices:
Use of estimates
The
preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Significant accounting estimates include certain
assumptions related to, among others, impairment analysis of
long-term assets, valuation allowance on deferred income taxes,
assumptions used in valuing stock instruments issued for services,
assumptions made in valuing derivative liabilities, and the accrual
of potential liabilities. Actual results may differ from these
estimates.
Revenue Recognition
Product Sales—Substantially all of the Company’s revenue is
derived from product sales. Product revenue and costs of sales are
recognized when control of the products transfers to our customer,
which generally occurs upon shipment from our facilities. The
Company’s performance obligations are satisfied at that time. The
Company does not have any significant contracts with customers
requiring performance beyond delivery, and contracts with customers
contain no incentives or discounts that could cause revenue to be
allocated or adjusted over time.
License revenue— Revenue from symbolic IP is recognized over
the access period to the Company’s IP (see Note 2).
Cost of goods sold includes direct costs and fees related to the
sale of our products.
Stock Compensation
The Company
periodically issues stock options, warrants, shares of common
stock, and restricted stock unit awards, as share-based
compensation to employees and non-employees. The Company accounts
for its share-based compensation in accordance with FASB ASC 718,
Compensation – Stock Compensation (Topic 718). Stock-based
compensation cost for employees is measured at the grant date,
based on the estimated fair value of the award, and is recognized
as expense over the requisite service period. Recognition of
compensation expense for non-employees is in the same period and
manner as if the Company had paid cash for the services.
Recently Issued Accounting
Pronouncements
See Note 1
to the Condensed Consolidated Financial Statements
Item 3. Quantitative and Qualitative
Disclosures about Market Risk.
We are a
smaller reporting company as defined in Rule 12b-2 of the Exchange
Act and are not required to provide the information required under
this item
Item 4. Controls and
Procedures.
Evaluation of Disclosure Controls and
Procedures
We conducted
an evaluation under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and operation
of our disclosure controls and procedures. The term “disclosure
controls and procedures”, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities and Exchange Act of 1934, as amended
(“Exchange Act”), means controls and other procedures of a company
that are designed to ensure that information required to be
disclosed by the company in the reports it files or submits under
the Exchange Act is recorded, processed, summarized and reported,
within the time periods specified in the Securities and Exchange
Commission’s rules and forms. Disclosure controls and procedures
also include, without limitation, controls and procedures designed
to ensure that information required to be disclosed by a company in
the reports that it files or submits under the Exchange Act is
accumulated and communicated to the company’s management, including
its principal executive and principal financial officers, or
persons performing similar functions, as appropriate, to allow
timely decisions regarding required disclosure. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer
concluded as of September 30, 2021 that our disclosure controls and
procedures were not effective.
We
identified material weaknesses in our internal controls over
financial reporting. A material weakness is a deficiency, or a
combination of deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a
material misstatement of our financial statements will not be
prevented or detected on a timely basis. The matters involving
internal controls and procedures that our management considered to
be material weaknesses were: (i) we had an insufficient number of
personnel appropriately qualified to perform control design,
execution and monitoring activities; (ii) we did not have written
documentation of our internal control policies and procedures,
including written policies and procedures to ensure the correct
application of accounting and financial reporting with respect to
the current requirements of U.S. GAAP and SEC disclosure
requirements; (iii) we had ineffective controls over our financial
statement close and reporting process and did not provide
reasonable assurance that accounts were complete and accurate and
agreed to detailed support and that reconciliations of accounts
were properly performed, reviewed and approved, (iv) we did not
maintain effective controls over the recording and approval of
recurring and non-recurring journal entries and (v) we had
inadequate segregation of duties consistent with control
objectives.
Changes in Internal Control over
Financial Reporting
There were
no changes in internal control over financial reporting (as defined
by Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
three months ended September 30, 2021, that have materially
affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
PART II – OTHER
INFORMATION
Item 1. Legal
Proceedings.
From time to time, we are a party to, or otherwise involved in,
legal proceedings arising in the normal and ordinary course of
business. On August 5, 2021, the Company received notice the
Securities and Exchange Commission had commenced on investigation
related to the Company and affiliated persons and entities. The
Company is cooperating with the Commission. We are not aware of any
other proceeding, threatened or pending, against us which, if
determined adversely, would have a material effect on our business,
results of operations, cash flows or financial position.
Item 1A. Risk Factors.
The
recent global coronavirus outbreak could harm our business and
results of operations.
The global
outbreak of COVID-19 has negatively affected the U.S. and global
economies, and has negatively impacted businesses, workforces,
customers, and created significant volatility of financial markets.
It has also disrupted the normal operations of many businesses,
including ours. The extent of the impact of the pandemic on our
business and financial results will depend largely on future
developments, including the duration and severity of the outbreak,
the length of restrictions and business closures, and the impact on
capital and financial markets, all of which are highly uncertain
and cannot be predicted. This outbreak could decrease spending,
adversely affect demand for our products and harm our business and
results of operations. In the quarter ended September 30, 2020, we
believe the COVID-19 pandemic did impact our operating results as
shipments to customers in the second quarter were down 13% from the
first quarter of the year. However, we have not observed any
material impairments of our assets or a significant change in the
fair value of our assets due to the COVID-19 pandemic. While it is
not possible at this time to estimate the full impact that COVID-19
will have on our business, restrictions resulting from COVID-19 on
general economic conditions could, among other things, impair our
ability to raise capital when needed. This situation is changing
rapidly, and additional impacts may arise that we are not aware of
currently.
Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds.
No
unregistered sales of equity securities subsequent to September 30,
2021.
Item 3. Defaults Upon Senior
Securities.
None.
Item 4. Mine Safety
Disclosures.
Not
applicable.
Item 5. Other
Information.
Item 6. Exhibits.
The
following exhibits are incorporated into this Form 10-Q Quarterly
Report:
Exhibit
Number
|
|
Description |
|
|
|
3.4 |
|
Certificate of Designation of Series
A Preferred Stock (incorporated by reference to Exhibit 3.4 to the
Registrant’s Current Report on Form 8-K filed with the Commission
on April 14, 2020) |
10.13 |
|
Equity Purchase Agreement, dated as
of April 9, 2020, by and between Quanta, Inc. and Oscaleta Partners
LLC (incorporated by reference to Exhibit 10.13 to the Registrant’s
Registration Statement on Form S-1 filed with the Commission on
April 10, 2020) |
10.14 |
|
Registration Rights Agreement, dated
as of April 9, 2020, by and between Quanta, Inc. and Oscaleta
Partners LLC (incorporated by reference to Exhibit 10.14 to the
Registrant’s Registration Statement on Form S-1 filed with the
Commission on April 10, 2020) |
10.15 |
|
Promissory Note, dated as of April 9,
2020, issued by Quanta, Inc. in favor of Oscaleta Partners LLC
(incorporated by reference to Exhibit 10.15 to the Registrant’s
Registration Statement on Form S-1 filed with the Commission on
April 10, 2020) |
10.16 |
|
Brokerage Agreement, dated as of
March 26, 2020, by and between Quanta, Inc. and Hanson Faso Sales
& Marketing, Inc. (incorporated by reference to Exhibit 10.16
to the Registrant’s Current Report on Form 8-K filed with the
Commission on April 10, 2020) |
10.17 |
|
Form of Securities Purchase
Agreement, dated as of April 27, 2020, by and between Quanta, Inc.
and the Purchasers Signatory Thereto (incorporated by reference to
Exhibit 10.17 to the Registrant’s Current Report on Form 8-K filed
with the Commission on May 1, 2020) |
10.18 |
|
Form of Note dated as of April 27,
2020, issued by Quanta, Inc. in favor of the Holders Thereof
(incorporated by reference to Exhibit 10.18 to the Registrant’s
Current Report on Form 8-K filed with the Commission on May 1,
2020) |
31.1* |
|
Rule 13a-14(a) Certification of the Chief Executive
and Financial Officer |
32.1* |
|
Section 1350 Certification of Chief Executive and
Financial Officer |
101.INS |
|
Inline XBRL
Instance Document |
|
|
|
101.SCH |
|
Inline XBRL
Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
Inline XBRL
Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
|
Inline XBRL
Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB |
|
Inline XBRL
Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
Inline XBRL
Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
|
Cover Page
Interactive Data File (embedded within the Inline XBRL
document) |
* Filed
along with this document
SIGNATURES
Pursuant to
the requirements of Section 13 or 15(d) 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.
|
QUANTA,
INC |
|
|
Dated:
November 23, 2021 |
By: |
/s/
Arthur Mikaelian |
|
|
Arthur
Mikaelian |
|
|
Chairman, Chief
Executive Officer (Principal Executive Officer and Principal
Accounting Officer) |
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