NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. DESCRIPTION
OF BUSINESS AND HISTORY
Description
of business – Skinvisible, Inc., (referred to as the “Company”) is focused on the development and manufacture
and sales of innovative topical, transdermal and mucosal polymer-based delivery system technologies and formulations incorporating
its patent-pending formula/process for combining hydrophilic and hydrophobic polymer emulsions. The technologies and formulations
have broad industry applications within the pharmaceutical, over-the-counter, personal skincare and cosmetic arenas. Additionally,
the Company’s non-dermatological formulations, offer solutions for a broad spectrum of markets women’s health, pain
management, and others. The Company maintains executive and sales offices in Las Vegas, Nevada.
History –
The Company was incorporated in Nevada on March 6, 1998, under the name of Microbial Solutions, Inc. The Company underwent a name
change on February 26, 1999, when it changed its name to Skinvisible, Inc. The Company’s subsidiary’s name of Manloe
Labs, Inc. was also changed to Skinvisible Pharmaceuticals, Inc.
On September
26, 2017, the Company purchased 5,750,000 shares of common stock of Ovation Science Inc. (“Ovation”) for $32,286 which
at the time of purchase the Company represented 99.9% of the then issued and outstanding common stock. On March 28, 2018 the Company
sold its interest in Ovation to officers of the Company for $500,000 which at the time represented a 37.80% interest in Ovation.
Skinvisible,
Inc., together with its subsidiaries, shall herein be collectively referred to as the “Company.”
2. BASIS
OF PRESENTATION AND GOING CONCERN
Basis of presentation
– The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim financial information and with the instructions to Quarterly
Report on Form 10-Q and Article 10 of Regulation S-X , and should be read in conjunction with the audited financial statements
and notes thereto contained in the Company’s most recent Annual Financial Statements on Form 10-K filed with the SEC on
May 14, 2020. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim period presented have been reflected herein.
The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year.
Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements
for the most recent fiscal period, as reported in the Form 10-K, have been omitted.
The condensed
consolidated balance sheet at December 31, 2019 has been derived from the audited financial statements at that date, but does
not include all of the information and footnotes required by generally accepted accounting principles in the U.S. for complete
financial statements.
Going
concern – The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $33,682,880
since its inception and requires capital for its contemplated operational and marketing activities to take place. These factors, among
others, raises substantial doubt about the Company’s ability to continue as a going concern. Managements
plans for the Company are to generate the necessary funding through licensing of its core
products and to seek additional debt and equity funding. However, the Company’s ability to generate the necessary
funds through licensing or raise additional capital through the future issuances of common stock or debt is unknown. The obtainment
of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition,
ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The consolidated financial
statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.
The
Company's operations and business have experienced disruption due to the unprecedented conditions surrounding the COVID-19 pandemic
spreading throughout the United States and elsewhere. The spread of COVID-19 has caused a change in the availability of our staff
and support services. Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial
markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments
or a revision of the carrying value of its assets or liabilities as of the date of issuance of this Quarterly Report on Form 10-Q.
These estimates could change in the future, as new events occur, or additional information is obtained
3. SUMMARY
OF SIGNIFICANT POLICIES
This
summary of significant accounting policies of Skinvisible Inc. is presented to assist in understanding the Company’s condensed
consolidated financial statements. The condensed consolidated financial statements and notes are representations of the Company’s
management, who are responsible for their integrity and objectivity. These accounting
policies conform to accounting principles generally accepted in the United States of America and have been consistently applied
in the preparation of the condensed consolidated financial statements.
Principles
of consolidation – The condensed consolidated financial statements include the accounts of the Company and its subsidiary
Skinvisible Pharmaceuticals Inc. All significant intercompany balances and transactions have been eliminated.
Use of estimates
– The preparation of consolidated financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant
estimates include estimates used to review the Company’s, impairments and estimations of long-lived assets, allowances for
uncollectible accounts, inventory valuation, and the valuations of non-cash capital stock issuances. The Company bases its estimates
on historical experience and on various other assumptions that are believed to be reasonable in the circumstances, the results
of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Cash and
cash equivalents – For purposes of the statement of cash flows, the Company considers all highly liquid investments
and short-term instruments with original maturities of three months or less to be cash equivalents. There are $6,579 and $1,298
in cash as of March 31, 2020 and December 31, 2019 respectively.
Fair Value
of financial instruments –The carrying value of cash, accounts payable and accrued expenses, and debt (See Notes 6 &
8) approximate their fair values because of the short-term nature of these instruments. Management believes the Company is not
exposed to significant interest or credit risks arising from these financial instruments. The carrying amount of the Company’s
convertible debt is also stated at a fair value of $4,807,284 since the stated rate of interest approximates market rates.
Fair value is
defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal
or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement
date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable
inputs. The Company utilizes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable
and the last unobservable.
|
•
|
Level
1 Quoted prices in active markets for identical assets or liabilities. These are typically obtained from real-time quotes
for transactions in active exchange markets involving identical assets. The Company uses Level 1 measurements to value the
transactions when it issues shares, warrants, options and debt with beneficial conversion features.
|
|
•
|
Level 2 Quoted prices
for similar assets and liabilities in active markets; quoted prices included for identical or similar assets and liabilities
that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable
in active markets. These are typically obtained from readily available pricing sources for comparable instruments. The Company
did not rely on any Level 2 measurements for any of its transactions in the periods included in these financial statements.
|
|
•
|
Level 3 Unobservable
inputs, where there is little or no market activity for the asset or liability. These inputs reflect the reporting entity’s
own beliefs about the assumptions that market participants would use in pricing the asset or liability, based on the best
information available in the circumstances. The Company did not rely on any Level 3 measurements for any of its transactions
in the periods included in these financial statements.
|
Revenue recognition
– We recognize revenue in accordance with generally accepted accounting principles as outlined in the Financial Accounting
Standard Board's (“FASB”) Accounting Standards Codification (“ASC”) 606, Revenue From Contracts with Customers,
which requires that five steps be followed in evaluating revenue recognition: (i) identify the contract with the customer; (ii)
identity the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price;
and (v) recognize revenue when or as the entity satisfied a performance obligation.
As of March
31, 2020 and March 31, 2019, the Company had $8,409 and $10,204, respectively, in receivables related to royalty contracts.
The company
has made an accounting policy election to exclude from the measurement of the transaction price all taxes assessed by governmental
authorities that are collected by the company from its customers (sales and use taxes, value added taxes, some excise taxes).
Accounts
Receivable – Accounts receivable is comprised of uncollateralized customer obligations due under normal trade terms
requiring payment within 30 days from the invoice date. The carrying amount of accounts receivable is reviewed periodically
for collectability. If management determines that collection is unlikely, an allowance that reflects management’s best
estimate of the amounts that will not be collected is recorded. Management reviews each accounts receivable balance that
exceeds 30 days from the invoice date and, based on an assessment of creditworthiness, estimates the portion, if any, of the
balance that will not be collected. As of March 31, 2020 and December 31, 2019, the Company had not recorded a reserve for
doubtful accounts.
Intangible
assets – The Company follows Financial Accounting Standard Board’s (FASB) Codification Topic 350-10 (“ASC
350-10”), “Intangibles – Goodwill and Other”. According to this statement, intangible assets with
indefinite lives are no longer subject to amortization, but rather an annual assessment of impairment by applying a fair-value
based test. Under ASC 350-10, the carrying value of assets are calculated at the lowest level for which there are identifiable
cash flows.
Income taxes
– The Company accounts for its income taxes in accordance with FASB Codification Topic ASC 740-10, “Income
Taxes”, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases
and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets
and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Stock-based
compensation – The Company follows the guidelines in FASB Codification Topic ASC 718-10 “Compensation-Stock
Compensation”, which requires the measurement and recognition of compensation expense for all share-based payment awards
made to employees and directors including employee stock options and employee stock purchases related to an Employee Stock Purchase
Plan based on the estimated fair values.
Earnings
(loss) per share – The Company reports earnings (loss) per share in accordance with FASB Codification Topic ASC
260-10 “Earnings Per Share”, Basic earnings (loss) per share is computed by dividing income (loss) available to
common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed
similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares had been issued and if the additional common
shares were dilutive. Diluted earnings (loss) per share has not been presented for the three months ending March 31, 2020
since the effect of the assumed exercise of options and warrants to purchase common shares (common stock equivalents) would
have an anti-dilutive effect. There are 26,147,998 additional shares issuable in connection with outstanding options,
warrants, stock payable and convertible debts as of March 31, 2020. The shares issuable under each instrument is as follows;
100,000 shares issuable for options, 60,000 shares issuable for warrants, 59,602 shares issuable for shares payable and
25,928,396 shares issuable under convertible notes. There were 7,506,688
additional shares issuable in connection with outstanding options, warrants, stock payable and convertible debts as of March 31,
2019. The shares which were issuable at that date under each instrument were as follows; 135,000 shares issuable for options,
72,000 shares issuable for warrants, 1,614,305 shares issuable for shares payable and 5,685,183 shares issuable under convertible
notes.
Recently
issued accounting pronouncements – The Company has evaluated all other recent accounting pronouncements and believes
that none of them will have a material effect on the Company's financial position, results of operations or cash flows.
4. INTANGIBLE
AND OTHER ASSETS
Patents
and trademarks and other intangible assets are capitalized at their historical cost and are amortized over their estimated useful
lives. As of March 31, 2020 intangible assets total $699,670, net of $543,135 of accumulated amortization. As of December 31,
2019, intangible assets total $698,800, net of $533,415 of accumulated amortization.
The Company capitalized
$870 in patent cost during the three months ended March 31, 2020.
Amortization expense for
the three months ended March 31, 2020 and 2019 was $9,720 and $9,592, respectively.
License and distributor
rights were acquired by the Company in January 1999 and provide exclusive use distribution of polymers and polymer based products.
The Company has a non-expiring term on the license and distribution rights. Accordingly, the Company annually assesses this license
and distribution rights for impairment and has determined that no impairment write-down is considered necessary as of March 31,
2020.
5. STOCK
OPTIONS AND WARRANTS
Stock options
The following is a summary
of option activity during the three months ended March 31, 2020.
|
|
Number
of Shares
|
|
Weighted
Average Exercise Price
|
Balance,
December 31, 2019
|
|
|
100,000
|
|
|
|
1.
51
|
|
|
|
|
|
|
|
|
Options granted and
assumed
|
|
|
—
|
|
|
|
—
|
Options expired
|
|
|
—
|
|
|
|
—
|
Options canceled
|
|
|
—
|
|
|
|
—
|
Options
exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2020
|
|
|
100,000
|
|
|
|
1.
51
|
The
following is a summary of option activity during the three months ended March 31, 2019.
|
|
Number
of Shares
|
|
Weighted
Average Exercise Price
|
Balance,
December 31, 2018
|
|
|
161,000
|
|
|
$
|
1.80
|
|
|
|
|
|
|
|
|
Options granted and assumed
|
|
|
—
|
|
|
|
—
|
Options expired
|
|
|
(26,000
|
)
|
|
|
2.00
|
Options canceled
|
|
|
—
|
|
|
|
—
|
Options exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Balance, March
31, 2019
|
|
|
135,000
|
|
|
$
|
1.76
|
As of March 31, 2020, all
stock options outstanding are exercisable.
Stock warrants
The following
is a summary of warrants activity during the the three months ended March 31, 2020
|
|
Number
of Shares
|
|
Weighted
Average Exercise Price
|
Balance,
December 31, 201 9
|
|
|
72,200
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
Warrants granted and
assumed
|
|
|
—
|
|
|
|
—
|
Warrants expired
|
|
|
(12,200
|
)
|
|
|
1.50
|
Warrants canceled
|
|
|
—
|
|
|
|
—
|
Warrants
exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Balance,
March 31, 20 20
|
|
|
60,000
|
|
|
$
|
1.11
|
The
following is a summary of warrants activity during the three months ended March 31, 2019.
|
|
Number
of Shares
|
|
Weighted
Average Exercise Price
|
Balance,
December 31, 2018
|
|
|
72,200
|
|
|
$
|
1.18
|
|
|
|
|
|
|
|
|
Warrants granted and assumed
|
|
|
—
|
|
|
|
—
|
Warrants expired
|
|
|
—
|
|
|
|
—
|
Warrants canceled
|
|
|
—
|
|
|
|
—
|
Warrants exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
Balance, March
31, 2019
|
|
|
72,200
|
|
|
$
|
1.18
|
As of March 31, 2020, all
stock warrants outstanding are exercisable.
6. NOTES
PAYABLE
Secured debt offering
During the period from May
22, 2013 and December 31, 2018, the Company entered into 9% notes payable to nineteen investors and received proceeds of $552,000.
The notes were due two years from the anniversary date of execution. The Notes are secured by the US Patent rights granted for
the Company's Sunscreen Products: US patent number #8,128,913: "Sunscreen Composition with Enhanced UV-A Absorber Stability
and Methods.”
As of March 31, 2020, $552,000
of the outstanding notes payable are past due and in default and have been classified as current notes payable.
7.
RELATED PARTY TRANSACTIONS
During the three months
ended March 31, 2020, $22,000 was advanced by an officer.
As of December 31, 2019,
$68,899 in advances remained due to officers of the company. All other related party notes have been extinguished or re-negotiated
as convertible notes. (See note 9 for additional details.)
License Agreement
with Ovation Science for DermSafe hand sanitizer - On
February 3, 2020, we entered into a License Agreement with Ovation Science Inc., a related party, pursuant to which
Skinvisible granted to Ovation Science Inc. a license for the manufacture and distribution rights to its hand sanitizer
product, DermSafe. In exchange for the license, Ovation Science Inc. agreed to pay to Skinvisible a percentage on all net
sales on the licensed products subject to adjustment in certain situations plus
a license fee payable in year 3 of the agreement if it chooses to continue the license. The Company earned $7,643 in
royalties under the license agreement during the three months ending March 31, 2020.
8. CONVERTIBLE
NOTES PAYABLE
Convertible Notes
Payable consists of the following:
|
|
March
31,
|
|
December
31,
|
|
|
20 20
|
|
2019
|
$40,000
face value 9% secured notes payable to investors, due in 2015. At the investor’s option until the repayment date, the
note and related interest may be converted to shares of the Company’s common stock a discount of 90% of the current
share price after the first anniversary of the note. The notes are secured by the accounts receivable of a license agreement
the Company has with Womens Choice Pharmaceuticals, LLC on its proprietary prescription product, ProCort®. The notes have
reached maturity and are now in default, under the notes default provisions the entire balance is now due upon demand.
|
|
|
40,000
|
|
|
|
40,000
|
Original issue discount
|
|
|
—
|
|
|
|
—
|
Unamortized
debt discount
|
|
|
—
|
|
|
|
—
|
Total,
net of unamortized discount
|
|
|
40,000
|
|
|
|
40,000
|
|
|
|
|
|
|
|
|
On
October 26, 2015 the Company issued a $135,000 face value 9% unsecured notes payable to investors, due October 26, 2017. At
the investor’s option until the repayment date, the note and related interest may be converted to shares of the Company’s
common stock a discount of 90% of the current share price after the first anniversary of the note. The notes are secured by
the accounts receivable of a license agreement the Company has with Womens Choice Pharmaceuticals, LLC on its proprietary
prescription product, ProCort®. The note has reached maturity and is in default.
|
|
|
135,000
|
|
|
|
135,000
|
Unamortized
debt discount
|
|
|
—
|
|
|
|
—
|
Total,
net of unamortized discount
|
|
|
135,000
|
|
|
|
135,000
|
|
|
|
|
|
|
|
|
On
February 17, 2016, the Company entered into a convertible promissory note pursuant to which it borrowed $20,000. Interest
under the convertible promissory note is 9% per annum, and the principal and all accrued but unpaid interest is due on February
17, 2018. The note is convertible at any time following 90 days after the issuance date at noteholders option into shares
of our common stock at a variable conversion price of 90% of the average five day market price of our common stock during
the 5 trading days prior to the notice of conversion, subject to adjustment as described in the note. The holder’s ability
to convert the note, however, is limited in that it will not be permitted to convert any portion of the note if the number
of shares of our common stock beneficially owned by the holder and its affiliates, together with the number of shares of our
common stock issuable upon any full or partial conversion, would exceed 4.99% of the Company’s outstanding shares of
common stock. The note has reached maturity and is in default
|
|
|
20,000
|
|
|
|
20,000
|
Unamortized
debt discount
|
|
|
—
|
|
|
|
—
|
Total, net of unamortized
discount
|
|
|
20,000
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
On
August 11, 2016, the Company entered into a convertible promissory note pursuant to which it borrowed $15,000. Interest under
the convertible promissory note is 9% per annum, and the principal and all accrued but unpaid interest is due on August 11,
2018. The note is convertible into shares of our common stock at a variable conversion price of 90% of the average market
price of our common stock during the 5 trading days prior to the notice of conversion, subject to adjustment as described
in the note. The note has reached maturity and is in default
|
|
|
15,000
|
|
|
|
15,000
|
Unamortized
debt discount
|
|
|
—
|
|
|
|
—
|
Total, net of unamortized
discount
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
On
January 27, 2017, the Company entered into a convertible promissory note pursuant to which it borrowed $10,000. Interest under
the convertible promissory note is 9% per annum, and the principal and all accrued but unpaid interest is due on January 27,
2019. The note is convertible into shares of our common stock at a variable conversion price of 90% of the average market
price of our common stock during the 5 trading days prior to the notice of conversion, subject to adjustment as described
in the note. The note has reached maturity and is in default.
|
|
|
10,000
|
|
|
|
10,000
|
Unamortized
debt discount
|
|
|
—
|
|
|
|
—
|
Total, net of unamortized
discount
|
|
|
10,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
On
June 30, 2019, the Company renegotiated accrued salaries and interest and outstanding convertible notes for a former
employee. Under the terms of the agreements, all outstanding notes totaling $224,064, accrued interest of $119,278, accrued
salaries of $7,260 and accrued vacation of $1,473 were converted to a promissory note convertible into common stock with a
warrant feature. The promissory note is unsecured, due five years from issuance, and bears an interest rate of 10%. At the
noteholder’s option until the repayment date, the note may be converted to shares of the Company’s common stock
at a fixed price of $0.20 per share along with warrants to purchase one share for every two shares issued at the exercise
price of $0.30 per share for three years after the conversion date.
The Company has determined the value
associated with the beneficial conversion feature in connection with the notes to be $280,076. The aggregate beneficial
conversion feature has been accreted and charged to interest expenses as a financing expense in the amount of $12,674 during
the three months ended March 31, 2020 and nil for the three months ended March 31, 2019. The beneficial conversion feature is
valued under the intrinsic value method
|
|
|
352,075
|
|
|
|
352,075
|
Unamortized
debt discount
|
|
|
(241,776
|
)
|
|
|
(254,450)
|
Total, net of unamortized
discount
|
|
|
110,299
|
|
|
|
97,625
|
Total
Convertible Notes
|
|
$
|
330,299
|
|
|
$
|
317,625
|
Current
portion:
|
|
|
220,000
|
|
|
|
220,000
|
Total
long-term convertible notes
|
|
$
|
110,299
|
|
|
$
|
97,625
|
9. CONVERTIBLE
NOTES PAYABLE RELATED PARTY
Convertible Notes Payable Related Party consists
of the following:
|
|
March
31, 2020
|
|
December
31, 201 9
|
On June 30, 2019, the Company
renegotiated accrued salaries, accrued interest, unpaid reimbursements, cash advances, and outstanding convertible notes for
its two officers. Under the terms of the agreements, all outstanding notes totaling $2,464,480, accrued interest of $966,203,
accrued salaries of $617,915, accrued vacation of $64,423, unpaid reimbursements of $11,942 and cash advances of $110,245
were converted to promissory notes convertible into common stock with a warrant feature. The promissory notes are unsecured,
due five years from issuance, and bear an interest rate of 10%. At the investor’s option until the repayment date, the
note may be converted to shares of the Company’s common stock at a fixed price of $0.20 per share along with warrants
to purchase one share for every two shares issued at the exercise price of $0.30 per share for three years after the conversion
date.
The Company has determined the value associated with the beneficial conversion feature in connection
with the notes to be $3,369,244. The aggregate beneficial conversion feature associated with these notes has been accreted
and charged to interest expenses as a financing expense in the amount of $152,463 during the three months ended March 31,
2020 and nil for the three months ended March 31, 2019.
|
|
$
|
4,235,209
|
|
|
$
|
4,235,209
|
Unamortized debt discount
|
|
|
(2,908,507
|
)
|
|
|
(3,060,970)
|
Total, net of unamortized discount
|
|
$
|
1,326,702
|
|
|
$
|
1,174,239
|
10. STOCKHOLDERS’
DEFICIT
The Company
is authorized to issue 200,000,000 shares of $0.001 par value common stock. The Company had 4,471,746 and 4,471,746 issued and
outstanding shares of common stock as of March 31, 2020 and December 31, 2019, respectively.
As of March
31, 2020, and December 31, 2019, the Company had 68,097 shares remaining to be issued to the investors as a result of the settlement
agreements and has a remaining stock payable of $59,602.
11. LICENSE
AGREEMENT
On October 17,
2019, Skinvisible entered an Exclusive License Agreement with Quoin pursuant to which Skinvisible granted to Quoin a license to
certain patents for the development of products for commercial sale. In exchange for the license, Quoin agreed to pay to Skinvisible
a license fee of $1,000,000 and a single digit royalty interest of all net sales on the licensed products subject to adjustment
in certain situations. The agreement also requires that Quoin make certain milestone payments to Skinvisible upon achieving regulatory
approval milestones for certain drug products.
The
agreement terminated, if among other things, 50% of the license fee is not paid by December 31, 2019 and if the full License Fee
is not paid by March 31, 2020. No payments were made by Quoin and the agreement was terminated. Both Parties subsequently determined
that they continue to see the value in a partnership and therefore on May 8, 2020 the companies agreed to extend the Exclusive
License Agreement under the same terms to expire now on July 31, 2020. As
of the date of this filing no payments had been received.
12. SUBSEQUENT
EVENTS
In accordance with ASC Topic 855-10,
the Company has analyzed its operations subsequent to March 31, 2020 to the date these financial statements were issued and has
determined that it does not have any material subsequent events to disclose in these financial statements.