BDPT 10-K
Bioadaptives, Inc. (BDPT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form
(Mark one)
For the fiscal year ended
For the transition period from ______________ to _____________
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Securities registered pursuant to Section 12 (b) of the Act - None
Securities registered pursuant to Section 12(g) of the Act: - Common Stock - $0.0001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period the Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post files).
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
The aggregate market value of voting and non-voting common equity held by non-affiliates as of December 31, 2021 was approximately $
As of December 31,2021, there were 50,809,780 shares of common stock issued and outstanding. As of March 20, 2022, we had
BioAdaptives, Inc.
Form 10-K for the Year Ended December 31, 2022
Index to Contents
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Market for Registrant’s Common Equity, Related Stockholder Matters and | 14 | |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 | |
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Item 9 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 44 | |
Certain Relationships and Related Transactions, and Director Independence | 45 | |
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Caution Regarding Forward-Looking Information
Certain statements contained in this annual filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-K and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
Where You Can Find Information
The public may read and copy any materials we file with the SEC in the SEC's Public Reference Section, Room 1580,100 F Street N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, which can be found at www.sec.gov or www.freeedgar.com.
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PART I
Item 1 - Business
The Company’s History
BioAdaptives, Inc., ("BioAdaptives," the "Company," "we" or "us") was incorporated in the State of Delaware on April 19, 2013, as APEX 8 Inc. From inception through October 21, 2013, the Company was in the developmental stage and conducted virtually no business operations, other than organizational activities and preparation of a registration statement on Form 10-12g (the "Registration Statement"), which was filed with the U.S. Securities and Exchange Commission on May 3, 2013. On June 11, 2013, the SEC staff informed the Company that it had no further comments
On January 10, 2014, the SEC notified the Company that the registration statement was effective and on July 9, 2014, the Company’s shares commenced trading in the Over-the-Counter market under the trading symbol BDPT.
On March 31, 2017, the Company filed a Form 15-15D with the SEC, terminating its status as an SEC-reporting company; it was current in its Continuous Disclosure obligations at that time. The Company continued to provide financial and other reports to shareholders and the public by means of the Alternative Reporting System operated by OTC Markets Group, Inc. Its shares continued to trade in the OTC market and it also continued to execute its business plan.
On May 10, 2019, the Company filed a Form 10-12g with the SEC, re-entering the Continuous Disclosure program and registering its common stock under Section 12(g) of the Securities Exchange Act of 1934. On August 1, 2019, the SEC staff informed the Company that it had no further comments on this filing.
On September 11, 2019, the Company appointed Robert Ellis as President and Ron Lambrecht as Chief Financial Officer. Dr. Jacobs remained as Chief Executive Officer.
On February 6, 2020, the Board of Directors exercised its authority under the Delaware General Corporations Law to establish its Series A Preferred Stock. The Series A has enhanced voting and conversion privileges and can be used by the Company to settle recorded debt or exchange for new product rights or techniques. On this same day, the Board of Directors authorized an increase in the Company’s authorized common stock from 100,000,000 to 200,000,000; holders of a majority of the Company’s common shares consented to the increase.
Effective May 31, 2021, Dr. Jacobs appointed Robert Ellis and Charles Townsend as directors of the Company and to serve as President and Chief Operating Officer respectively. Dr. Jacobs also appointed Ronald Lambrecht as the Company’s Chief Financial Officer. Effective December 31, 2021, Mr. Lambrecht resigned.
On January 26, 2022, the Board of Directors exercised its authority under the Delaware General Corporations Law to establish its Series B Preferred Stock. The Series B has enhanced voting and conversion privileges and can be used by the Company to acquire ownership of intellectual property rights and other assets. On this same day, the Board of Directors authorized an increase in the Company’s authorized common stock from 200,000,000 to 750,000,000; this increase received the consent of the holders of a majority of the Company’s common shares.
The Company’s Business
Overview
BioAdaptives’ core business is to investigate, market and distribute natural plant- and algal-based products and medical devices that improve health and wellness for humans and animals, with an emphasis on pain relief, anti-viral function, and anti-aging properties.
Effective November 15, 2021, the Company entered into a marketing agreement for an FDA-cleared Class II medical device, the Lung Flute™. The Company is also exploring agreements with other medical device manufacturers; the owners of intellectual property relating to medical devices and processes; and marketing companies associated with these manufacturers and owners.
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The Company’s current products include dietary supplements using natural ingredients and proprietary methods of optimizing the availability of nutrients in foods and beverages. The human products are designed to aid memory, cognition and focus; assist in sleep and fatigue reduction; provide pain relief and healing; and improve overall emotional and physical wellness. The science behind our human products has proven to be effective for performance enhancement and pain relief for horses and dogs as well as providing improvements in appearance.
Our current product line for humans includes PrimiCell®, PluriPain®, PrimiLungs™, PrimiLive® and PrimiSleep™. We also market the Lung Flute™ and PrimiLungs™ product in our Lung Armor™ packaging, emphasizing the anti-viral properties of the nutraceutical and general respiratory health benefits from use of the device. PrimiLive® is a nootropic formulation that enhances mental clarity and endurance; PrimiSleep™ is a natural soporific that aids relaxation and sleep quality. We acquired the licenses for these products during 2021, and have commence marketing activities for these products.
Our animal products include Canine Regen® and Equine Regen® for dogs and horses, along with versions of the base formulations, including an Equine All-in-One® formulation evolved from Equine Regen® to trainers, horse owners and boarding stables. Anecdotal and testimonial reports are that the equine products provide significant relief from exercise induced pulmonary hemorrhaging, as well as improved coat and mane appearance and hoof health.
Effective February 2, 2022, the Company acquired the exclusive option to purchase U.S. Patent No. 9,783,432B (the “Patent”), covering technology used in enhancing the capability of water to hold significantly larger amounts of oxygen. The Agreement also allows the Company a two-year license to use the technology covered by the Patent, including for further development of oxygenated water products for consumers. The Agreement is more fully discussed in the Company’s Form 8-K filed on February 6, 2022. The Company intends to develop consumer products using the oxygenation technology, and has formed a wholly-owned subsidiary, MORO2, Inc. to conduct these activities.
While we continue to investigate and acquire nutraceutical products for humans and animals, all of our current activities are reliant on marketing and distributing products developed and owned by others. We do not own the formulations for our key products and manufacture and market them under an agreement with the developer that requires payment of a royalty and license agreement
We are reliant on direct and indirect sales of the Primi and Pluri lines for humans and the Regen and All-in-One animal products for revenues, along with Lung Armor™, none of which has produced any significant revenue yet. We have very limited experience in marketing and have yet to develop reliable sales expectations and forecasting.
Market and Marketing
We market our science-based, quality nutraceuticals to a broad base of the population in the U.S., and are exploring marketing prospects in Asia, Australasia, the Middle East, and Europe. The Company’s current target markets also include equine and canine companion animals and equine competitors in the U.S., Australasia and the Middle East.
During June 2021, we commenced use of social media professionals and existing connections to create awareness about our human products’ benefits. The initial results were not satisfactory and a recast, animal product-specific program that followed later in 2021, similarly failed. We are developing affiliate marketing opportunities and recognized that a broader campaign using traditional advertising along with social media and more contemporary marketing tools is necessary.
We are pursuing scientific surveys and other testing to demonstrate the usefulness of our products. While we do not anticipate developing testing protocols suitable for FDA approvals, we expect anecdotal and testimonial reports that will be useful in our marketing efforts. The Company is currently participating in a survey involving the use of PluriPain® by patients suffering from Gadolinium Deposition Disease (“GDD”). The survey, conducted in collaboration with a research team affiliated with Stanford University, has produced early promising results with 60% of a small subject population reporting significant relief. We have undertaken preliminary steps toward developing a survey/research protocol for use of the Lung Flute™ by long-term tobacco smokers and persons regularly exposed to second-hand tobacco smoke. We expect to continue these explorations in 2Q and 3Q 2022.
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Our products have not changed, except for refinements and improvements, and we will continue to emphasize the unique qualities, use and function of our nutraceuticals. We intend to create market share in our target demographic by (i) emphasizing the benefits of our proprietary algal-based, all-natural, stimulant-free, non-GMO ingredients that combine with proven Traditional Chinese Medicine and Ayurvedic botanicals into science-based formulations, (ii) investigating additional products in response to market demand and testing, and (iii) utilizing our marketing operation to act as its sales and distribution arm to seek additional channels for sales coverage.
As noted above, we entered into licensing agreements for the PrimiLive® and PrimiSleep™ products during 2021. While these products are all-natural botanical formulations, as our other nutraceutical products, they represent a departure from our existing product lines because they are targeted to specific markets: PrimiLive® is a nootropic, intended to improve concentration and mental acuity; our initial marketing efforts are oriented toward e-gamers. PrimiSleep™ is intended for use as an aid to relaxation, with an emphasis on improving the quality of sleep. We believe these products can be used in a complementary manner, to maintain on-task endurance and then to unwind and recover from such activities.
The Lung Flute™, especially when used with PrimiLungs™, shows great promise. The device is an FDA-cleared Class II medical device that employs user-generated acoustic waves to loosen lung secretions for expulsion. In short, the device helps users clear their lungs. In conjunction with the anti-viral function of PrimiLungs™, the Lung Armor™ package presents great opportunities in view of current fears of an endemic viral environment.
In addition, we are investigating the use of a formulation of PluriPain® targeted toward the symptoms of pre-menstrual syndrome and menstrual pain. Anecdotal and testimonial reports have long noted that users obtain relief from these symptoms with use of the PluriPain® product, and we have made adjustments and additions to the formulation to target these symptoms. Early reports regarding “PluriPain-PMS” are promising, and we expect marketing efforts to emphasize the usefulness of the new product.
The Company believes that products using our oxygenated water technology will be useful and commercially viable. Water products manufactured using the technology demonstrate dissolved O2 levels approaching above 80mg/L that persist over an extended period, which greatly exceeds levels and persistence in other commercial products. Users of oxygenated water produced with our technology report enhanced physical endurance, stamina and performance. We are currently arranging a Pilot Run of an ingestible oxygenated water product and are exploring usage in topical and other applications.
With regard to animal products, in 2020, the Company formed the Livestock Impact Division. The President of the Division is Bruce Colclasure, a National Cutting Horse Association champion who owns and operates the Flying C Bar Ranch, and is the breeder and trainer of over 80 NCHA champion cutting horses. Mr. Colclasure uses and endorses our Equine All-in-One®, EquineRegen® and EquineRegen® Plus products and provides valuable feedback and testimonials regarding its function. In addition, a high-performance formulation of our All-in-One product is used by quarter horse trainers at facilities in Oklahoma and New Mexico, with exceptional results. We expect to use these results in our marketing efforts in 2022 and to expand our outreach program for performance horse trainers.
In light of the failures of our social media campaigns, in 2021, we commenced a marketing affiliate outreach program, directly contacting the principals of horse clubs and associations, offering discounts, samples and other inducements, seeking to develop “product champion” and “maven” relationships. We have contacted principals in organizations with thousands of members and many more thousands of horses. We have distributed samples and marketing materials to approximately 40 principals and influencers in regional and breed-specific equine associations and anticipate feedback from these marketing initiatives in the fourth quarter. Our expectation is that use of the samples by these principals will demonstrate improvements in appearance and performance and that they will, in turn, recommend the product to their members. We delayed contracting for print and on-line ads with certain of these organizations, as well as traditional magazine and other print placements, pending the results of our sample program, which we expected to learn in 1Q and 2Q 2022. We have, effective March 3, 2022, arranged for a print ad campaign, which will begin in one publication during April 2022, and expand later in 2022.
The Company believes that the population growth in the seasoned and geriatric demographic cohort presents a unique opportunity. The World Health Organization has stated that the 60 years and over population segment will more than double from 11% to over 22% between 2000 and 2050, with the absolute number of people aged 60 and over expected to increase to 2 billion within the same period. The Company also recognizes the rising buying power and interests of the Millennials in wellness products and their choice of communication medium being social media and internet. It intends to establish a major focus to capture the anticipated growth in this sector. We believe that our social media promotion program will eventually gain traction and generate revenues. We are actively seeking a workable, efficient formula to grow consumer engagement and product sales.
The Company believes that international sales represent a significant future growth opportunity as aging population growth outside North America exceeds 1 billion people. The Company plans to aggressively pursue international sales by adding salespeople to its marketing effort, including use of social media influencers, developing a network in high-growth APAC regions, and continuing its efforts to register products and trademarks in attractive foreign markets.
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Manufacturing
All of the Company’s nutraceutical products are considered dietary supplements or natural foods, and we carefully avoid making health, drug or disease cure claims that could trigger regulatory compliance issues and affect our ability to market BioAdaptives products. Our active ingredients are all plant- or algal-based and sourced worldwide from reputable suppliers who employ stringent compliance and sustainable agriculture practices or operate NSF-certified (or equivalent) facilities.
We contract exclusively with manufacturers that utilize pharmaceutical grade facilities to assemble and package our products, all of which is subject to our inspection and approval. Fulfillment of retail internet and direct-to-reseller orders are conducted from our warehouse facilities. BioAdaptives actively investigates new products, techniques and novel applications of existing products or technology in our research. The Company’s research work has centered on investigations of all-natural supplement formulations that activate primitive cells, including stem cells and their derivatives, and natural ingredients that encourage stem cell proliferation.
With regard to medical devices, we purchase the LungFlute™ from a company affiliated with the patent holder; it too is manufactured in NSF-certified/GMP-compliant facilities. We do not expect to develop any direct capability to manufacture medical devices for numerous reasons, including a lack of capital and the fact that amortized cost of such facilities, if we were to construct or acquire them, is generally far higher compared to the cost of purchase of a finished product.
We are exploring the means to bring one or more oxygenated water products to market. Our technology has been employed in large scale plants to produce bottled water, so we know that process is viable and the machinery functional. The costs of using our technology is modest – pennies per bottle – but we recognize there are numerous better-capitalized manufacturers, many of whom also have excellent branding. We are currently arranging a Pilot Run of our oxygenated water product and intend to roll-out a marketing program based on user testimonials. We will also consider licensing opportunities with competitors or other manufacturers.
As noted above, it is our intention to operate primarily as a marketing company, developing consumer markets for nutraceutical products and medical devices that we license or market for others.
Employees
The Company currently has 3 full-time executive employees and 4 part-time employees. We retain hourly labor on an as-needed basis and professional consultants to operate our business.
Management of the Company expects to continue use of outside consultants, attorneys, and accountants, as necessary, so long as it is seeking and evaluating business opportunities.
The need for additional employees, and their availability, will be addressed in connection with the decision whether or not to acquire or participate in specific business opportunities.
Item 1A - Risk Factors
We have a limited operating history with our current business. The Company was incorporated in 2013 and was unsuccessful at previous business plans.
The Company has been engaged in the health and wellness industry since the FHI and BioSwan acquisitions in 2013. We have the benefit of their experience in developing and marketing nutraceutical products but understand that neither of them had significant success exploiting the products and technology we purchased. Future operations are subject to all the problems, expenses, difficulties, complications and delays encountered in establishing new businesses. The Company believes that it will become commercially viable, generate significant revenues, and operate at a profit in future periods but there are no assurances that we will meet these expectations.
The Company has no cash flows to support operations and relies on external sources to maintain the corporate entity.
Our revenues from product sales have not been sufficient to cover our operating expenses, including the expenses associated with our status as a public company, or our research and marketing expenses. We have been reliant on outside financing sources, some of which are dependent on our status as a public company. All of these external sources are subject to general economic and market risks as well as regulatory factors that make future financing uncertain.
The Company will require additional financing to become commercially viable.
The Company's continued existence is dependent on its ability to implement its business plan, generate sufficient cash flows from operations to support its daily operations, and provide sufficient resources to retire existing liabilities and obligations on a timely basis. The Company faces considerable risks in its business plan and a potential shortfall of funding due to uncertainty in our ability to raise adequate capital in the equity securities market.
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During the period ended December 31, 2021, our revenues did not cover our expenses so that we were reliant on outside funding to continue operations. Our products are very good and for a variety of reasons, including because we outsource our manufacturing, we are sufficiently nimble to increase production and sales if and when demand requires. However, our marketing and exposure suffers from lack of an advertising budget, which we have not yet been able to procure.
In the event that working capital sufficient to maintain the corporate entity and implement our business plan is not available, the Company’s existing stockholder have expressed their interest in the possibility of maintaining the corporate status of the Company and provide all necessary working capital on the Company's behalf. However, no formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans exist. There is no legal obligation for either management or existing controlling stockholders to provide additional future funding. Further, the Company is subject to future economic trends and the business operations for the Company’s existing controlling stockholders in order to have the resources available to support the Company.
The Company anticipates offering future sales of equity securities. However, there is no assurance that the Company will be able to obtain additional funding through the sales of additional equity securities or, that such funding, if available, will be obtained on terms favorable to or affordable by the Company.
To-date, a significant portion of our cash needs have been met through issuance of convertible debt securities. The notes generally carry Original Issue Discounts, provide for cash repayments during the first six (6) months after issuance (with a pre-payment penalty), and allow the holder to demand repayment by issuance of shares of common stock at a discount to market price. In function, these convertible notes act as private placements of our securities, with a variable subscription price based on market performance. On those terms, as subscription rather than debt, the rates and conversion amounts have so far been reasonable to us. Moreover, our agreements with these lenders contain representations that 1) there was no public solicitation for the notes, 2) that the note holders are “accredited” investors within the meaning of SEC Regulation D, and 3) that the holders will limit their conversions in a manner to assure they never hold more than 4.99% of the Company’s issued and outstanding shares. We have no assurances that we will be able to continue to borrow funds from these lenders and have been working to develop alternative financing means through more traditional methods.
Effective March 19 2022, the Company’s Articles of Incorporation authorizes the issuance of up to 10,000,000 shares of preferred stock and 750,000,000 shares of common stock. The Company has established a Series A and Series B preferred stock with enhanced voting and conversion privileges for use in settling recorded debt and effecting acquisition of new products and technology. The Company’s ability to issue preferred stock may limit the Company’s ability to obtain debt or equity financing as well as impede the implementation of the Company’s business plan. The Company’s ability to issue these authorized but unissued securities may also negatively impact our ability to raise additional capital through the sale of our debt or equity securities.
In such a restricted cash flow scenario, the Company would be unable to complete steps in its business plan and would, instead, delay all cash intensive activities. Without necessary cash flow, the Company may become dormant during the next twelve months, or until such time as necessary funds could be raised in the equity securities market. The Company believes that its expectations as to its ability to secure additional capital are reasonable but there is no guarantee that the Company will receive sufficient funding to sustain operations or implement any future business plan steps.
The Company filed a Form 1-A on March 4, 2022; this Reg A+ registration statement has not been declared effective. The Company seeks to raise up to $1,000,000 by the sale of up to 200,000,000 shares of common stock. If this offering is effective, we have no assurances that we will be able to successfully raise the maximum amount sought.
COVID-19 Pandemic Responses.
A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served. The Company believes that the general business slow-down and travel restrictions negatively impacted its business during the period beginning December 31, 2020, but, considering our limited history, cannot quantify such impact. Due to travel restrictions, we did rely upon SEC filing deadlines to postpone our quarterly filings during this period. In April 2020, the Company announced the launch of PrimiLungs™, an enhanced formulation of nutraceuticals promoting overall health and wellness through support of pulmonary immune systems. PrimiLungs™ is currently packaged with PluriPain® in the Immune Wellness Health Defense Package. Lack of funding and concerns about regulatory reactions to COVID-19-related product announcements prevented us from capitalizing on this product launch. We believe the business environment will be more conducive to products such as these during 2022 and beyond but can provide no assurances that our funding or other marketing initiatives will be any more successful. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to collect accounts receivable and the ability of the Company to continue to provide high quality services to its clients.
The Company’s current business can be capital intensive.
The Company acknowledges that its Plan of Operations may not result in the consistent generation of positive working capital in the near future. We are in a consumer-driven market space that requires our development and marketing of attractive products, which is expensive. Although management believes that it will be able to successfully execute its business plan, which includes third party financing and the raising of capital to meet the Company’s future liquidity needs, there can be no assurances. We anticipate continuous expenditures, some of which may be significant, to conduct research and development activities relating to existing and new products and marketing. These matters raise substantial doubt about the Company’s ability to continue as a going concern.
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We currently rely on certain key individuals, and the loss of one of these key individuals could have an adverse effect on the Company.
Our success depends to a certain degree upon certain key members of our management. These individuals are a significant factor in our growth and success. The loss of the services of such members of management could have a material adverse effect on our Company. We presently maintain no key-man insurance coverage on any of our officers.
The Company’s success will be dependent in part upon its ability to attract qualified personnel and consultants.
The Company’s success will be dependent in part upon its ability to attract qualified creative marketing, sales and development professionals. The inability to do so on favorable terms may harm the Company’s proposed business.
The Company must effectively meet the challenges of managing expanding operations.
The Company’s business plan anticipates that operations will undergo significant expansion during 2020 and beyond. This expansion will require the Company manage a larger and more complex organization, which could place a significant strain on our managerial, operational and financial resources. Management may not succeed with these efforts. Failure to expand in an efficient manner could cause expenses to be greater than anticipated, revenues to grow more slowly than expected and could otherwise have an adverse effect on the business, financial condition and results of operations.
Our business could be affected by changes in governmental regulation.
Federal, State and Local laws and regulations governing food products and nutritional supplements are broad in scope and are subject to evolving interpretations, which could require us to incur substantial costs associated with compliance. In addition, violations of these laws, actual or alleged, could disrupt the Company’s planned business and adversely affect our financial condition and results of operations. In addition, it is possible that additional or revised Federal, State and Local laws and regulations may be enacted in the future governing the mining industry. There can be no assurance that the Company will be able to comply with any such laws and regulations and its failure to do so could significantly harm our business, financial condition and results of operations.
Our business will be subject to other, uninsured operating risks which may adversely affect the Company’s financial condition.
Our planned operations will be subject to risks normally incidental to our business activities and will be dependent on internal and third-party production and distribution operations that could result in work stoppages, damage to property or unavailable product for resale. This may be caused by:
Breakdown of equipment.
Labor disputes.
Imposition of new government regulations.
Supply chain failures.
Product contamination.
Unanticipated allergic or other reactions.
Sabotage by operational personnel.
Cost overruns; and
Fire, flood, or other acts of God.
We market products that are ingested by our customers and run additional risks incumbent to sales of this manner of consumer good. Our existing insurance coverage would almost certainly be inadequate to deal with any manner of mass tort claim and the ability of our suppliers to indemnify us is uncertain. Additionally, our contract suppliers are reliant on source materials that are imported from China and other countries, so that we are subject to risks associated with interruptions or pricing increases due to political and other reasons.
We will likely face significant competition.
The nutraceutical industry is highly competitive, with numerous companies offering products that claim similar properties to ours. Some of these competitors are better capitalized, with the financial ability to effectively manage product development and marketing at levels we have not yet attained. While we believe our whole plant- and algal-based products have unique benefits that should lead to commercial success, BioAdaptive’s ability to effectively compete could be hindered by a lack of funds, poor positioning, management error, and other factors. The inability to effectively compete could adversely affect our business, financial condition and results of operations.
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RISKS RELATED TO OUR PUBLIC COMPANY STATUS AND OUR COMMON STOCK
Our internal controls may be inadequate, which could cause our financial reporting to be unreliable and lead to misinformation being disseminated to the public.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in Exchange Act Rule 13a-15(f), internal control over financial reporting is a process designed by, or under the supervision of, the principal executive and principal financial officer and effected by the board of directors, management and other personnel to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and/or directors of the Company; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
We do not have a sufficient number of employees to segregate responsibilities and may be unable to afford increasing our staff or engaging outside consultants or professionals to overcome our lack of employees. During the course of our testing, we may identity other deficiencies that we may not be able to timely remediate. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes Oxley”). Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to help prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock, if a market ever develops, could drop significantly.
The costs of being a public company could result in us being unable to continue as a going concern.
As a public company, we are required to comply with numerous financial reporting and legal requirements, including those pertaining to audits and internal control. The costs of this compliance could be significant. If our revenues do not increase and/or we cannot satisfy many of these costs through the issuance of our shares, we may be unable to satisfy these costs in the normal course of business that would result in our being unable to continue as a going concern.
Management and the Board of Directors may be Indemnified.
The Articles of Incorporation and Bylaws of BioAdaptives provide for indemnification of directors and officers at the expense of the respective corporation and limit their liability. This may result in a major cost to the corporation and hurt the interests of stockholders because corporate resources may be expended for the benefit of directors and officers. The Company has been advised that, in the opinion of the SEC, indemnification for liabilities arising under Federal Securities Laws is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
The market for the BioAdaptives Shares is extremely limited and sporadic.
BioAdaptives’ common stock is quoted on the OTC Pink Sheets; trading is limited and sporadic. Trading in stock quoted on the Pink Sheets is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress or exaggerate the market price of BioAdaptives’ common stock for reasons unrelated to operating performance. Moreover, the trading of securities in the Pink Sheets is often more sporadic than the trading of securities listed on a quotation system like NASDAQ, or a stock exchange like the New York Stock Exchange. These factors may impact our ability to obtain financing in the future and will certainly have an impact on the value of our common stock for shareholders.
BioAdaptives’ common stock is a penny stock, which is restricted by the SEC’s penny stock regulations and FINRA’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our common stock.
BioAdaptives’ common stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our common stock is covered by these rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, BioAdaptives’ common stock.
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In addition to the penny stock rules promulgated by the SEC, FINRA (the Financial Industry Regulatory Authority) has adopted rules that require when recommending an investment to a customer a broker- dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low -priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA’s requirements make it more difficult for broker-dealers to recommend that their customers buy BioAdaptives’ common stock, which may limit investor ability to buy and sell our common stock.
The market for penny stocks has experienced numerous frauds and abuses that could adversely impact BioAdaptives’ common stock.
Company management believes that the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:
control of the market for the security by one or a few broker-dealers that are often related to a promoter or issuer.
manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases.
boiler room practices involving high pressure sales tactics and unrealistic price projections by salespersons.
excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
BioAdaptives’ Board of Directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to common stockholders and with the ability to adversely affect common stockholder voting power and rights upon liquidation.
Our Certificate of Incorporation allows us to issue shares of preferred stock without any vote or further action by our stockholders. Our Board of Directors has the authority to fix and determine the relative rights and preferences of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders of preferred stock the rights to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. We have done so recently, by establishing the Series A Preferred Stock. We established the Series A Preferred Stock in 2020 and have recently established the Series B Preferred Stock; these preferred shares provide enhanced voting and conversion privileges to holders. These privileges may impact the rights and privileges of common stockholders in certain circumstances.
Breath of Life’s provision of a proxy to our Board of Directors permits us significant control over our business and may limit or eliminate minority stockholders’ ability to influence corporate affairs.
The Company’s Series A Preferred Shares provide the holders with significant (1:100) voting privileges. There are a total of 1,600,000 shares preferred shares issued and outstanding, which allows these holders more votes than the total number of common shares authorized. The Essence companies, holders of 1,000,000 of these shares, have granted voting authority to the Company’s board of directors, and Biosciences, the holder of the other 600,000 shares, is controlled by Dr. Edward E. Jacobs, our CEO. Additionally, our largest single shareholder, Breath of Life foundation, which holds in excess of 18.9% of the issued and outstanding common shares, has granted voting privileges to our Board of Directors. As a result, our directors not only control BioAdaptives’ business affairs, management and governance but also determine their own election and appointment. This arrangement places an extraordinary burden on the directors to adhere to their fiduciary responsibilities and practically limits the ability of minority shareholders to impact their decisions except through dissent or derivative litigation that may be expensive, impractical or both. The interests of our directors may differ from the interests of other stockholders with respect to the issuance of shares, business transactions with or sales to other companies, selection of other officers and directors and other business decisions. The minority stockholders have no way of overriding decisions made by our directors except through persuasion and litigation. This level of control may also have an adverse impact on the market value of our shares because our principal stockholders may institute or undertake transactions, policies or programs that result in losses and/or may not take any steps to increase our visibility in the financial community and/or may sell sufficient numbers of shares to significantly decrease our price per share.
We do not expect to pay cash dividends in the foreseeable future.
The Company has never paid cash dividends on its common stock and does not expect to pay a cash dividend on its common stock at any time in the foreseeable future. The future payment of dividends depends upon future earnings, capital requirements, financial requirements and other factors that the Company’s board of directors will consider. Since we do not anticipate paying cash dividends on the common stock, return on investment, if any, will depend solely on an increase, if any, in the market value of the common stock.
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Future sales of shares of BioAdaptives common stock pursuant to Reg. A+ and Rule 144 under the Securities Act could adversely affect the market price of BIOADAPTIVES’s common stock.
As of March 20, 2022, the Company has 55,729,899 outstanding shares of its common stock, all of which were issued pursuant to registration statements and/or exemptions from registration under the Securities Act and applicable state securities laws. As of the date of this filing, 37,376,417 are on deposit with CEDE & Co. and are publicly trading or tradeable, and nearly all of the balance is held by purchasers or service providers who obtained shares more than one year ago. All of these “aged” issued and outstanding shares are all now available for public sale pursuant to Rule 144 under the Securities Act and comparable exemptions under applicable state securities laws. The potential of such sales could adversely affect the market price of BioAdaptives’ common stock. As noted herein, the Company expects to conduct a Reg A+ offering during 2022 for up to 200,000,000 shares of common stock, which is almost four times the total number issued and outstanding as of the date of this filing. The impact of these sales on the market cannot be reasonably estimated but absent significant positive news regarding our activities shareholders should expect an adverse impact on market price.
Conversions of Series A or B Preferred Stock to common stock and resales could adversely affect the market price of BIOADAPTIVES’ common stock. Preferred stock ownership provides additional voting rights that may affect management.
The Company has 1,600,000 shares of its Series A Preferred Stock issued and outstanding and no shares of its Series B Preferred Stock as of the date of this filing. These shares have enhanced voting and conversion privileges so that the owners can either convert to common shares, which could impact market price, or hold and vote the shares under circumstances set out in the Certificate of Designation, allowing them an increased authority over certain corporate functions.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protection against interested-director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002 as well as rule changes proposed and enacted by the SEC, national securities exchanges and the NASDAQ Stock Market as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the NASDAQ Stock Market. Because we are not currently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with voluntary compliance, we have not yet adopted these measures.
We do not currently have independent audit or compensation committees. As a result, directors have the ability, among other things, to determine their own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested- director transactions, conflicts of interest and similar matters and investors may be reluctant to provide us with funds necessary to expand our operations as a result thereof.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of Sarbanes-Oxley. The enactment of Sarbanes-Oxley has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.
Item 1B - Unresolved Staff Comments
None
Item 2 - Properties
The Company currently maintains a physical address at 2620 Regatta Dr, Suite 102, Las Vegas, NV 89128. The Company does not currently maintain any other office facilities and does not anticipate the need for maintaining office facilities at any time in the foreseeable future.
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Item 3 - Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.
Item 4 - Mine Safety Disclosures
Not applicable.
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PART II
Item 5 - Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market for Trading and Eligibility for Future Sale
Our common stock started trading on June 10, 2014. Our current trading symbol is “BDPT”. Currently there is only a limited, sporadic, and volatile market for our stock. The following table sets forth the high and low sales prices of our common stock as reported on www.nasdaq.com for the periods indicated. These prices represent prices between inter-dealer prices, do not include retail markups, markdowns, or commissions, and do not necessarily reflect actual transactions.
Fiscal year ended December 31, 2021 |
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Quarter ended December 31, 2021 |
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| .01 |
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| .01 |
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Quarter ended September 30, 2021 |
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| .027 |
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| .027 |
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Quarter ended June 30, 2020 |
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| .036 |
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| .029 |
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Quarter ended March 31, 2020 |
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| .048 |
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| .039 |
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Fiscal year ended December 31, 2020 |
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| .18 |
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| .02 |
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Fiscal year ended December 31, 2019 |
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| .20 |
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| .10 |
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The closing price of our common stock on March 20, 2022 was $0.006 as reported by the OTCQB Bulletin Board.
Holders of Record
As of March 20, 2022, we had 55,729,889 shares of our common stock issued and outstanding held by approximately 187 stockholders of record, exclusive of shares held in street names. We had 1,600,000 shares of Series A preferred stock issued and outstanding.
Transfer Agent
Our stock transfer agent is Madison Stock Transfer LLC. Their address is 2500 Coney Island Ave., Brooklyn, NY 11223. Madison is registered by the Securities and Exchange Commission as a transfer agent and is wholly independent of us, with no common ownership or management.
Common Stock
The Company is authorized to issue up to 750,000,000 shares of common stock with a par value of $0.0001 per share.
Our Board of Directors is authorized to issue additional shares of common stock not to exceed the amount authorized by the Articles of Incorporation, on such terms and conditions and for such consideration as the Board may deem appropriate without further stockholder action.
In the event of our liquidation or dissolution, all shares of our common stock are entitled to share equally in our assets available for distribution to stockholders. However, the rights, preferences and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of preferred stock that our Board of Directors may decide to issue in the future.
Preferred Stock
Effective January 26, 2022, the Company is authorized to issue up to 10,000,000 shares of preferred stock with a par value of $0.0001 per share.
As of March 1, 2021, the Company has authorized 4,000,000 shares of Series A Preferred Stock, of which 1,600,000 shares are issued and outstanding, and has authorized 5,000,000 shares of Series B Preferred Stock, of which there are no shares issued or outstanding.
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Dividend Policy
We have never declared or paid cash dividends. We currently intend to retain all future earnings for the operation and expansion of our business and do not anticipate paying cash dividends on the common stock in the foreseeable future. Any payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, contractual restrictions and other factors deemed relevant by our directors.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares of our stock.
Options
We have not issued and do not have outstanding any options to purchase shares of our stock.
Convertible Securities
The Company entered into a series of convertible note transactions in 2020 and 2021 with PowerUp Lending Group, Ltd., a New York-based lender. During 2021 and early 2022, these notes were paid by issuance of shares to PowerUp as follows:
Power Up Lending Group, Ltd. |
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|
| 1/19/21 | 1,032,609 |
| 1/20/21 | 630,435 |
| 1/20/21 | 813,152 |
| 1/22/21 | 1,032,609 |
| 1/25/21 | 1,032,609 |
| 2/1/21 | 1,032,609 |
| 2/1/21 | 1,260,870 |
| 2/3/21 | 548,913 |
| 2/19/21 | 1,262,411 |
| 3/1/21 | 1,468,085 |
| 3/4/21 | 678,571 |
| 3/8/21 | 1,000,000 |
| 8/23/21 | 877,193 |
| 9/2/21 | 1,094,675 |
| 9/23/21 | 795,752 |
| 10/5/21 | 980,392 |
| 10/19/21 | 1,779,221 |
| 10/29/21 | 229,021 |
| 12/15/21 | 1,924,051 |
| 12/16/21 | 1,924,051 |
| 12/16/21 | 1,924,051 |
| 12/21/21 | 1,922,078 |
| 12/23/21 | 1,923,077 |
| 12/30/21 | 2,413,793 |
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A total of 28,580,228 shares of common stock were issued under these agreements during the period from January 1, 2021, to December 31, 2021; as set out above, 4,920109 shares have been issued under these agreements during the period from January 1, 2022 to and including March 20, 2022. On January 21 2022, we issued another convertible note to Sixth Street Lending Group, Ltd. in the amount of $53,000.00, on these same terms.
Securities Authorized for Issuance Under Equity Compensation Plans
Effective May 31, 2021, we adopted an equity compensation plan that permitted the Company to pay its executives with Restricted Stock Units and also provided for a discretionary pool of share to be awarded to employees, consultants and others. We previously paid our officers and directors by direct issuance of restricted shares. Although the issuance of RSUs impacts our financial statement as an expense item, we have not yet issued any shares under this Plan, and the Company has not made any award of restricted shares. The Company will be liable for some amount of additional income tax due to the release of debt related to these waivers but expect that our loss carry-forward amounts from previous tax years will more than cover any additional amounts due.
Recent Sales or Issues of Unregistered Securities
We did not sell any unregistered securities during the period from January 1, 2021 to and including December 31, 2021. We issued 28,580,228 shares to PowerUp Lending Group, Ltd. to satisfy convertible notes, as reflected above; we issued 150,000 to Bruce Colclasure, 150,000 to Charlie Timmerman, DVM and 100,000 to Karen Kapp-Vance, DVM for consulting services.
Purchases of Equity Securities by the Issuer and Affiliated Purchases
Neither we nor any “affiliated purchaser”, as that term is defined in Rule 10b-18(a)(3) under the Exchange Act, repurchased any of our common stock or other securities during the period from January 1, 2021 to December 31, 2021.
Item 6 - Selected Financial Data
Not applicable
Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
(1) Caution Regarding Forward-Looking Information
Certain statements contained in this annual filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-K and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.
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(2) General
The Company’s History
BioAdaptives, Inc., ("BioAdaptives," the "Company," or "we" or "us") was incorporated in the State of Delaware on April 19, 2013, as APEX 8 Inc. From inception through October 21, 2013, the Company was in the developmental stage and conducted virtually no business operations, other than organizational activities and preparation of a registration statement on Form 10-12g (the "Registration Statement"), which was filed with the U.S. Securities and Exchange Commission on May 3, 2013.
Following a change of control shortly thereafter, the Company commenced executing a plan involving the design, manufacture and marketing of nutraceutical contracts. As part of this plan, it 1) changed its name to BioAdaptives, Inc.; 2) acquired licenses for products and technologies in exchange for shares; and 3) filed a registration statement for these license shares on Form S-1.
On March 31, 2017, the Company filed a Form 15-15D with the SEC, terminating its status as an SEC-reporting company; it was current in its Continuous Disclosure obligations at that time. The Company continued to provide financial and other reports to shareholders and the public by means of the Alternative Reporting System operated by OTC Markets Group, Inc. Its shares continued to trade in the OTC market; it also continued to execute its business plan.
On May 10, 2019, the Company filed a Form 10-12g with the SEC, re-entering the Continuous Disclosure program and registering its common stock under Section 12(g) of the Securities Exchange Act of 1934. On August 1, 2019, the SEC staff informed the Company that it had no further comments on this filing.
On September 11, 2019, the Company appointed Robert Ellis as President and Ron Lambrecht as Chief Financial Officer.
On February 6, 2020, the Board of Directors exercised its authority under the Delaware General Corporations Law to establish its Series A Preferred Stock. The Series A has enhanced voting and conversion privileges and can be used by the Company to settle recorded debt or exchange for new product rights or techniques. On this same day, the Board of Directors authorized an increase in the Company’s authorized common stock from 100,000,000 to 200,000,000; holders of a majority of the Company’s common shares consented to the increase.
Effective May 31, 2021, Dr. Jacobs appointed Robert Ellis and Charles Townsend as directors of the Company and to serve as President and Chief Operating Officer respectively. Dr. Jacobs also appointed Ronald Lambrecht as the Company’s Chief Financial Officer. Effective December 31, 2021, Mr. Lambrecht resigned.
On January 26, 2022, the Board of Directors exercised its authority under the Delaware General Corporations Law to establish its Series B Preferred Stock. The Series B has enhanced voting and conversion privileges and can be used by the Company to acquire ownership of intellectual property rights and other assets. On this same day, the Board of Directors authorized an increase in the Company’s authorized common stock from 200,000,000 to 750,000,000; this holders of a majority of the Company’s common shares consented to the increase.
The Company’s Business
Overview
BioAdaptives’ core business is to investigate, market and distribute natural plant- and algal-based products and medical devices that improve health and wellness for humans and animals, with an emphasis on pain relief, anti-viral function, and anti-aging properties.
Effective November 15, 2021, the Company has also entered into a marketing agreement for an FDA-cleared Class II medical device, the Lung Flute™, and is exploring agreements with other medical device manufacturer; the owners of intellectual property relating to medical devices and processes; and marketing companies associated with these manufacturers and owners.
The Company’s current products include dietary supplements using natural ingredients and proprietary methods of optimizing the availability of nutrients in foods and beverages. The human products are designed to aid memory, cognition and focus; assist in sleep and fatigue reduction; provide pain relief and healing; and improve overall emotional and physical wellness. The science behind our human products has proven to be effective for performance enhancement and pain relief for horses and dogs as well as providing improvements in appearance.
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Our current product line for humans includes PrimiCell®, PluriPain®, PrimiLungs™, PrimiLive® and PrimiSleep™. We also market the Lung Flute™ and PrimiLungs™ product in our Lung Armor™ packaging, emphasizing the anti-viral properties of the nutraceutical and general respiratory health benefits from use of the device. PrimiLive® is a nootropic formulation that enhances mental clarity and endurance; PrimiSleep™ is a natural soporific that aids relaxation and sleep quality. We acquired the licenses for these products during 2021, and we have begun a marketing campaign for these products.
Our animal products include Canine Regen® and Equine Regen® for dogs and horses, along with versions of the base formulations, including an Equine All-in-One® formulation evolved from Equine Regen® to trainers, horse owners and boarding stables. Anecdotal and testimonial reports are that the equine products provide significant relief from exercise induced pulmonary hemorrhaging, as well as improved coat and mane appearance and hoof health.
Effective February 2, 2022, the Company acquired the exclusive option to purchase U.S. Patent No. 9,783,432B (the “Patent”), covering technology used in enhancing the capability of water to hold significantly larger amounts of oxygen. The Agreement furthermore allows the Company a two-year license to use the technology covered by the Patent, including for further development of oxygenated water products for consumers. The Agreement is more fully discussed in the Company’s Form 8-K filed on February 6, 2022. The Company intends to develop consumer products using the oxygenation technology, and has formed a wholly-owned subsidiary, MORO2, Inc. to conduct these activities.
While we continue to investigate and acquire nutraceutical products for humans and animals, all of our current activities are reliant on marketing and distributing products developed and owned by others. We do not own the formulations for our key products and manufacture and market them under an agreement with the developer that requires payment of a royalty and license agreement
We are reliant on direct and indirect sales of the Primi and Pluri lines for humans and the Regen and All-in-One animal products for revenues, along with Lung Armor™, none of which has produced any significant revenue yet. We have very limited experience in marketing and have yet to develop reliable sales expectations and forecasting.
(3) Results of Operations
The Company has recognized revenues for years ended December 31, 2020, and December 31, 2021, of $16,327 and $19,776, respectively.
In conjunction with the Company’s business plan, as discussed in Item I of this document, the Company has expended considerable effort and financial resources to the implementation of its business plan. The Company has incurred operating expenses of $646,186, which required cash payments of $236,202, which was principally funded through convertible debt as disclosed in the accompanying financial statement footnotes and advances from shareholders. The balance of the operating expenses were for activities that did not require cash payments, including stock-based compensation and a discount for amortization of debt.
Earnings (Loss) per share for the respective years ended December 31,2020 and December 31, 2021, were $(0.04) and (0.03), respectively, based on the weighted-average shares issued and outstanding at the end of each respective period.
We anticipate that future expenditure levels will remain relatively consistent until such time that the Company fully implements its current business plan, at which time the Company’s expenses and working capital requirements may increase significantly. The Company does not expect to generate any meaningful revenue or incur operating expenses for purposes other than fulfilling the obligations of a reporting company under the Exchange Act unless and until such time that the Company begins meaningful operations.
(4) Plan of Business
Subject to financing and various regulatory approvals, the Company intends to 1) market its existing products as described herein; 2) continue conducting research and investigation activities to identify new products or markets and improve its existing products and marketing; and 3) seek strategic or complimentary acquisitions in its current market space or, if indicated, others. There is no guarantee that the Company will be able to successfully implement this business plan or that if implemented, said plan will be successful.
(5) Liquidity and Capital Resources
At December 31, 2020 and 2021, respectively, the Company had working capital of approximately $(0) and $(0); inclusive of all related party accounts receivable, accrued expenses and line-of-credit notes payable.
It is the belief of management that our current finance partners, shareholders and the proceeds from our Reg. A+ offering will be able provide sufficient working capital necessary to support and preserve the integrity of the corporate entity. However, there is no legal obligation for either management or significant stockholders to provide additional future funding and we cannot be assured as to the success of our offering. Further, the Company is at the mercy of future economic trends and business operations. Consequently, there is substantial doubt about the Company's ability to continue as a going concern.
The Company's need for working capital may change dramatically as a result of any future business transaction.
There can be no assurance that the Company will identify or enter into any business transaction in the future. Further, there can be no assurance that the Company would be successful in consummating any acquisition on favorable terms or that it will be able to profitably manage the business, product, technology or company it acquires.
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The Company has no current plans, proposals, arrangements or understandings with respect to the sale or issuance of additional securities prior to the location of a potential business transaction. Accordingly, there can be no assurance that sufficient funds will be available to the Company to allow it to cover the expenses related to such activities.
Regardless of whether the Company’s cash assets prove to be inadequate to meet the Company’s operational needs, the Company might seek to compensate providers of services by issuances of stock in lieu of cash.
(6) Critical Accounting Policies
Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Our significant accounting policies are summarized in Note 2 of our financial statements. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our results of operations, financial position or liquidity for the periods presented in this report.
Item 7A - Quantitative and Qualitative Disclosures about Market Risk
Not applicable
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Item 8 - Financial Statements and Supplementary Data
BIOADAPTIVES, INC
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021, AND 2020
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Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of BioAdaptives, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of BioAdaptives, Inc. as of December 31, 2021 and 2020, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/S/ BF Borgers CPA PC
We have served as the Company's auditor since 2018
March 30, 2022
| 21 |
| Table of Contents |
BIOADAPTIVES, INC.
CONSOLIDATED BALANCE SHEETS
|
| December 31, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets: |
|
|
|
|
|
| ||
Cash |
| $ |
|
| $ |
| ||
Prepaid expense |
|
|
|
|
|
| ||
Marketable securities |
|
|
|
|
|
| ||
Inventory |
|
|
|
|
|
| ||
Total Current Assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
License, net |
|
|
|
|
|
| ||
TOTAL ASSETS |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
|
|
|
| ||
Derivative liabilities |
|
|
|
|
|
| ||
Current portion of convertible notes - net of discount of $ |
|
|
|
|
|
| ||
Note payable - related party |
|
|
|
|
|
| ||
Total Current Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Stockholders' Deficit: |
|
|
|
|
|
|
|
|
Preferred stock, ($ |
|
|
|
|
|
|
|
|
Series A Preferred Stock |
|
|
|
|
|
| ||
Series B Preferred Stock |
|
|
|
|
|
| ||
Common stock ($ |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Total Stockholders' Deficit |
|
| ( | ) |
|
| ( | ) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
| 22 |
| Table of Contents |
BIOADAPTIVES, INC. CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE LOSS
|
| Years ended |
| |||||
|
| December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
|
|
|
|
|
|
| ||
Revenues |
| $ |
|
| $ |
| ||
Cost of revenue |
|
|
|
|
|
| ||
Gross Profit |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
| ||
Professional fees |
|
|
|
|
|
| ||
Stock based compensation |
|
|
|
|
|
| ||
Amortization of license |
|
|
|
|
|
| ||
Total Operating Expenses |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
|
Unrealized loss on marketable securities |
|
| ( | ) |
|
| ( | ) |
Interest expense |
|
| ( | ) |
|
| ( | ) |
Change in fair value of derivative liabilities |
|
| ( | ) |
|
| ( | ) |
Loss on settlement of debt |
|
| ( | ) |
|
|
| |
Total Other Expense |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Net Loss |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Net Loss Per Common Share: |
|
|
|
|
|
|
|
|
Basic and Diluted |
| $ | ( | ) |
| $ | ( | ) |
|
|
|
|
|
|
|
|
|
Weighted Average Number of Common Shares Outstanding: |
|
|
|
|
|
|
|
|
Basic and Diluted |
|
|
|
|
|
| ||
The accompanying notes are an integral part of these consolidated financial statements.
| 23 |
| Table of Contents |
BIOADAPTIVES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
|
|
|
|
|
|
|
| Additional |
|
|
|
|
|
|
| |||||||||||||
|
| Series A Preferred stock |
|
| Common stock |
|
| paid-in |
|
| Accumulated |
|
|
|
| |||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| capital |
|
| Deficit |
|
| Total |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Balance, December 31, 2019 |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for conversion of debt |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Common stock issued for service |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Common stock issued for service - related party |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Stock based compensation |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Cancellation of common stock - officers |
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||
Net loss for the period |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2020 |
|
| - |
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A preferred stock issued for settlement of debt - related party |
|
| 600,000 |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Series A preferred stock issued for license fee |
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Common stock issued for conversion of debt |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Common stock issued for service |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cancellation of common stock - officers |
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
| |||
Debts forgiveness - related party |
|
| - |
|
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net loss for the period |
|
| - |
|
|
|
|
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2021 |
|
|
|
| $ |
|
|
|
|
| $ |
|
| $ |
|
| $ | ( | ) |
| $ | ( | ) | |||||
The accompanying notes are an integral part of these consolidated financial statements.
| 24 |
| Table of Contents |
BIOADAPTIVES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
|
| Years ended |
| |||||
|
| December 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| ||
Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
|
|
|
| ||
Stock-based compensation - related party |
|
|
|
|
|
| ||
Change in fair value of derivative liabilities |
|
|
|
|
|
| ||
Amortization of license |
|
|
|
|
|
| ||
Amortization of debt discount |
|
|
|
|
|
| ||
Loss on settlement of debt |
|
|
|
|
|
| ||
Unrealized gain on investments in marketable securities |
|
|
|
|
|
| ||
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Inventory |
|
|
|
|
| ( | ) | |
Prepaid expense and other current assets |
|
| ( | ) |
|
|
| |
Accounts payable and accrued liabilities |
|
|
|
|
|
| ||
Net Cash Used in Operating Activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds from Notes payable |
|
|
|
|
|
| ||
Repayments of notes payable |
|
|
|
|
| ( | ) | |
Proceed from related party |
|
|
|
|
|
| ||
Repayment to related party |
|
| ( | ) |
|
|
| |
Proceeds from notes payable - related party |
|
|
|
|
|
| ||
Repayment of notes payable - related party |
|
| ( | ) |
|
|
| |
Proceeds from convertible notes |
|
|
|
|
|
| ||
Net Cash Provided by Financing Activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Net change in cash |
|
|
|
|
| ( | ) | |
Cash at beginning of period |
|
|
|
|
|
| ||
Cash at end of period |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Cash paid for income taxes |
| $ |
|
| $ |
| ||
Cash paid for interest |
| $ |
|
| $ |
| ||
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
Derivative liability recognized as debt discount |
| $ |
|
| $ |
| ||
Issuance of common stock for conversion of debt |
| $ |
|
| $ |
| ||
Issuance Series A preferred stock for license fee |
| $ |
|
| $ |
| ||
Issuance Series A preferred stock for settlement of debt - related party |
| $ |
|
| $ |
| ||
Debts forgiveness - related party |
| $ |
|
| $ |
| ||
Cancellation of common stock |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these consolidated financial statements.
| 25 |
| Table of Contents |
BIOADAPTIVES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND HISTORY
Description of business
BioAdaptives, Inc. (“BioAdaptives” or the ”Company”) was incorporated in Delaware on April 19, 2013, under the name Apex 8, Inc. Shortly afterwards, the Company’s control person sold his interest; new owners appointed management and changed its name to BioAdaptives, Inc. The Company acquired assets relating to the investigation, development and marketing of nutraceutical products; equipment designed to improve the bioavailability of nutrients in humans and animals; and licenses for specific products. It commenced investigation of the role of various botanicals in primitive cell development and proliferation, including certain algae along with herbs used in Traditional Chinese Medicine and Ayurvedic Practice. In the course of this investigation, BioAdaptives identified several potential human and animal products. The Company terminated further work on the equipment and products licensed in its early stages to concentrate on these products, for both human and animals.
We currently market and distribute natural plant- and algal-based products that improve health and wellness for humans and animals, with an emphasis on pain relief and anti-aging properties. The Company’s current products include dietary supplements for humans developed with our knowledge of natural foods. These products are designed to aid memory, cognition and focus; assist in sleep and fatigue reduction; provide pain relief and healing; and improve overall emotional and physical wellness. The science behind our products has proven to be effective for performance enhancement and pain relief for horses and dogs as well as providing improvements in appearance and we have developed products to utilize these advances.
Our current product line includes PrimiCell®, PluriPain® and PrimiLungs™ for humans, and Canine Regen® and Equine Regen® for dogs and horses, along with Equine All-in-One® and a related Booster. The All-in-One products combine minerals, vitamins, amino acids and other botanicals along with the Regen® compounds and have demonstrated improved performance and appearance in competition and show animals. All of these products are sold under licensing and manufacturing agreements with third parties. While we continue to investigate our own nutraceutical products for humans and animals, most of our current activities are reliant on marketing and distributing products developed and owned by others.
On May 22, 2019, the Company moved its corporate office to 2620 Regatta Drive, Suite 102, Las Vegas, NV 89128, but maintained fulfillment facilities at 4385 Cameron Street, Suite B, Las Vegas, NV 89103.
COVID-19
A novel strain of coronavirus (COVID-19) was first identified in December 2019, and subsequently declared a global pandemic by the World Health Organization on March 11, 2020. As a result of the outbreak, many companies have experienced disruptions in their operations and in markets served. The Company has instituted some and may take additional temporary precautionary measures intended to help ensure the well-being of its employees and minimize business disruption. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impacts on the Company’s results of operations and financial position on December 31, 2021. The full extent of the future impacts of COVID-19 on the Company’s operations is uncertain. A prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to collect accounts receivable and the ability of the Company to continue to provide high quality services to its clients. 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 Annual Report on Form 10-K. These estimates may change, as new events occur, and additional information is obtained.
| 26 |
| Table of Contents |
2. SUMMARY OF SIGNIFICANT POLICIES
Basis of Presentation
The Company represents its consolidated financial statements were prepared in accordance with US GAAP and the rules of the Securities and Exchange Commission and that, 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 are historical and not necessarily indicative of the results to be expected for any future period.
Use of estimates
The preparation of consolidated financial statements in conformity with US GAAP requires the Company to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information that is currently available to the Company, and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents consist of cash and short-term investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions and are primarily in money market funds. The carrying value of those investments approximates fair value. As of December 31, 2021, and 2020, the Company had $
Investment Securities
Equity securities are classified as available for sale. All available for sale securities are classified as current assets as they are available to support the Company’s current operating needs in the next 12 months.
In accordance with Accounting Standards Codification (“ASC”) 320-10, “Investments-Debt and Equity Securities,” the Company evaluates its securities portfolio for other-than-temporary impairment (“OTTI”) throughout the year. Each investment that has a fair value less than the book value is reviewed on a quarterly basis by management. Management considers at a minimum the following factors that, both individually or combination, could indicate that the decline is other-than-temporary: (a) the Company has the intent to sell the security; (b) it is more likely than not that it will be required to sell the security before recovery; and (c) the Company does not expect to recover the entire amortized cost basis of the security. Among the factors that are considered in determining intent is a review of capital adequacy, interest rate risk profile and liquidity at the Company. An impairment charge is recorded against individual securities if the review described above concludes that the decline in value is other-than-temporary.
Earnings (loss) per share
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional shares of common stock that would have been outstanding if potentially dilutive securities had been issued.
For the years ended December 31, 2021 and 2020, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.
|
| December 31, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
| (Shares) |
|
| (Shares) |
| ||
Series A Preferred Stock |
|
|
|
|
| - |
| |
Convertible notes |
|
|
|
|
|
| ||
Total |
|
|
|
|
|
| ||
| 27 |
| Table of Contents |
Revenue recognition
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
| · | identify the contract with a customer; |
| · | identify the performance obligations in the contract; |
| · | determine the transaction price; |
| · | allocate the transaction price to performance obligations in the contract; and |
| · | recognize revenue as the performance obligation is satisfied. |
Cost of revenue
Cost of revenue includes the inventory purchased from a related party.
Inventory
Inventories, consisting of products available for sale, are primarily accounted for using the first-in-first-out (“FIFO”) method and are valued at the lower of cost or market value. Inventories on hand are evaluated on an on-going basis to determine if any items are obsolete or in excess of future market needs. Items determined to be obsolete are reserved for. As of December 31, 2021, and 2020, the Company determined that no reserve was required.
Stock-based compensation
The Company accounts for stock-based compensation arrangements with employees, nonemployee directors and consultants using a fair value method, which requires the recognition of compensation expense for costs related to all stock-based payments, including stock options, on a straight-line basis over the requisite service period in the Company’s consolidated statements of operations. The fair value method requires the Company to estimate the fair value of stock-based payment awards on the date of grant.
Financial Instruments and Fair Value Measurements
As defined in ASC 820” Fair Value Measurements,” fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
| 28 |
| Table of Contents |
The following table summarizes fair value measurements by level as of December 31, 2021, and 2020, measured at fair value on a recurring basis:
Fair Value Measurements as of December 31, 2021, Using:
|
| Total Carrying Value as of December 31, 2021 |
|
| Quoted Market Prices in Active Markets (Level 1) |
|
| Significant Other Observable Inputs (Level 2) |
|
| Significant Unobservable Inputs (Level 3) |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Equity Securities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative liabilities |
| $ |
|
| $ |
|
| $ |
|
| $ |
| ||||
Fair Value Measurements as of December 31, 2020, Using:
|
| Total Carrying Value as of December 31, |
|
| Quoted Market Prices in Active Markets |
|
| Significant Other Observable Inputs |
|
| Significant Unobservable Inputs |
| ||||
|
| 2020 |
|
| (Level 1) |
|
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Assets: |
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Equity Securities |
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Liabilities |
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Derivative liabilities |
| $ |
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| $ |
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Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. We evaluate all of our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Concentration of credit risk
Financial instruments that potentially expose the Company to significant concentrations of credit risk consist principally of cash. The Company places its cash with financial institutions with high credit ratings.
| 29 |
| Table of Contents |
Income taxes
The Company records income taxes under the asset and liability method, whereby deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and attributable to operating loss and tax credit carryforwards. Accounting standards regarding income taxes requires a reduction of the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is more likely than not that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a more- likely-than-not realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, the Company’s experience with operating loss and tax credit carryforwards not expiring unused, and tax planning alternatives.
The Company recorded valuation allowances on the net deferred tax assets. Management will reassess the realization of deferred tax assets based on the accounting standards for income taxes each reporting period. To the extent that the financial results of operations improve, and it becomes more likely than not that the deferred tax assets are realizable, the Company will be able to reduce the valuation allowance.
Significant judgment is required in evaluating the Company’s tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. Accounting standards regarding uncertainty in income taxes provides a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount which is more than 50% likely, based solely on the technical merits, of being sustained on examinations. The Company considers many factors when evaluating and estimating its tax positions and tax benefits, which may require periodic adjustments, and which may not accurately anticipate actual outcomes.
3. GOING CONCERN
The accompanying consolidated 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 losses since inception and had an accumulated deficit of $
In order to mitigate the risk related with this uncertainty, the Company plans to issue additional shares of common stock for cash and services during the next 12 months.
4. MARKETABLE SECURITIES
Equity securities as of December 31, 2021, and 2020, were comprised of
5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities aa of December 31, 2021 and 2020 consists of the following:
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| 2020 |
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Accounts payable |
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Credit card |
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Accrued salary |
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Accrued liabilities |
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| 30 |
| Table of Contents |
6. CONVERTIBLE NOTES
Convertible notes as of December 31, 2021 and 2020 consist of the following:
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| December 31, |
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| December 31, |
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| 2021 |
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| 2020 |
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Convertible Notes - originated in April 2018 |
| $ |
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Convertible Notes - originated in June 2018 |
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Convertible Notes - originated in October 2018 |
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Convertible Notes - issued fiscal year 2019 |
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Convertible Notes - issued fiscal year 2020 |
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Convertible Notes - issued fiscal year 2021 |
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Total convertible notes payable |
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Less: Unamortized debt discount |
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Total convertible notes |
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Less: current portion of convertible notes |
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Long-term convertible notes |
| $ |
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| $ |
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For the years ended December 31, 2021 and 2020, the interest expense on convertible notes was $
The Company recognized amortization expense related to the debt discount of $
Conversion
During the year ended December 31, 2021, the Company converted notes with principal amounts of $
Convertible Notes – Issued during the year ended December 31, 2018
During the year ended December 31, 2018, the Company issued a total principal amount of $
| · | Term two years; |
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| · | Annual interest rates |
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| · | Convertible at the option of the holders at any time |
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| · |
| 31 |
| Table of Contents |
Convertible Notes – Issued during the year ended December 31, 2019
During the year ended December 31, 2019, the Company issued a total principal amount of $
| · | Term one years; |
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| · | Annual interest rates |
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During the year ended December 31, 2021, the unpaid principal of $
Convertible Notes – Issued during the year ended December 31, 2020
During the year ended December 31, 2020, the Company issued a total principal amount of $
| · | Term one year; |
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| · | Annual interest rates |
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During the year ended December 31, 2021, the unpaid principal of $86,000 and accrued interest of $
Convertible Notes - Issued during the year ended December 31, 2021
During the year ended December 31, 2021, the Company issued a total principal amount of $
| · | Term one year; |
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| · | Annual interest rates |
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During the year ended December 31, 2021, the Company converted principal of $
| 32 |
| Table of Contents |
The Company valued the conversion feature using the Black-Scholes pricing model. The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2021 amounted to $
The Company valued the conversion feature using the Binomial pricing model. The fair value of the derivative liability for all the notes that became convertible, including the notes issued in prior years, during the year ended December 31, 2020 amounted to $
7. DERIVATIVE LIABILITIES
The Company analyzed the conversion option for derivative accounting consideration under ASC 815, Derivatives and Hedging, and hedging, and determined that the instrument should be classified as a liability since the conversion option becomes effective at issuance resulting in there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The Company accounts for warrants as a derivative liability due to there being no explicit limit to the number of shares to be delivered upon settlement of all conversion options.
Fair Value Assumptions Used in Accounting for Derivative Liabilities.
ASC 815 requires we assess the fair market value of derivative liability at the end of each reporting period and recognize any change in the fair market value as other income or expense item.
The Company determined our derivative liabilities to be a Level 3 fair value measurement and used the Black-Scholes pricing model to calculate the fair value as of December 31, 2021. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk-free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement. The fair value of each convertible note is estimated using the Black-Scholes valuation model.
For the years ended December 31, 2021 and 2020, the estimated fair values of the liabilities measured on a recurring basis are as follows:
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Expected term |
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Expected average volatility |
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Expected dividend yield |
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Risk-free interest rate |
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The following table summarizes the changes in the derivative liabilities during the years ended December 31, 2021 and 2020
Balance - December 31, 2019 |
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Addition of new derivatives recognized as debt discounts |
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Addition of new derivatives recognized as options compensation |
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Addition of new derivatives recognized as loss on derivatives |
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Settled on issuance of common stock |
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Reclassification from APIC to derivative due to tainted instruments |
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Loss on change in fair value of the derivative |
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Balance - December 31, 2020 |
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Addition of new derivatives recognized as debt discounts |
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Addition of new derivatives recognized as loss on derivatives |
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Settled on issuance of common stock |
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(Gain) on change in fair value of the derivative |
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Balance - December 31, 2021 |
| $ |
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| 33 |
| Table of Contents |
The aggregate (gain) loss on derivatives during the year ended December 31, 2021 and 2020 was as follows.
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| Years ended |
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| 2021 |
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Day one loss due to derivative liabilities on convertible notes |
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(Gain) loss on change in fair value of the derivative liabilities |
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8. NOTES PAYABLE
During the year ended December 31, 2020, the Company issued notes payable of $
9. STOCKHOLDERS’ EQUITY
Preferred Stock
On January 24, 2022, the Board of Directors of the Company’s, approved for an increase in the number of authorized shares of the Company’s preferred stock from
The Company is authorized to issue
Series A Preferred Stock
On February 6, 2020, the Company established its Series A Preferred Stock, par value $
The Company may use the Series A Preferred Stock for purpose of asset acquisition or in satisfaction of recognized debt; they are not otherwise available for sale. The Series A Preferred Stock have enhanced voting privileges under certain circumstances; the collective right to appoint elect one director, at the Holders’ option; and conversion-to-common rights
During the year ended December 31, 2021, the Company issued
| • | 600,000 shares of Series A Preferred Stock valued at |
| • |
Series B Preferred Stock
On January 24, 2022, the Company established its Series B Preferred Stock, par value $.0001, by filing a Certificate of Designation with the Delaware Secretary of State. The Company’s board exercised “blank check” authority to establish classes of preferred stock without approval by shareholders under provision of its original Articles of Incorporation and has designated
| 34 |
| Table of Contents |
The Company may use the Series B Preferred Stock for purpose of asset acquisition or in satisfaction of recognized debt; they are not otherwise available for sale. The Series B Preferred Stock have enhanced voting privileges (100:1); the collective right to appoint elect one director, at the Holders’ option; and conversion-to-common rights at a 10:1 ratio.
As of the date of this filing, no shares of Series B Preferred Stock are issued and outstanding.
Common Stock
On January 24, 2022, the holder of a majority of the Company’s outstanding voting stock, approved for an increase in the number of authorized shares of the Company’s common stock from 200,000,000 shares to
As of December 31, 2021, and 2020, there were
Fiscal year 2021
During the year ended December 31, 2021, the Company issued
During the year ended December 31, 2021, the Company issued
During the year ended December 31, 2021, the Company cancelled
Fiscal year 2020
On February 6, 2020, the Company’s board and a majority of its shareholders approved an amendment to the Company’s Articles of Incorporation to increase the authorized number of shares of its common stock, par value .0001, from 100,000,000 shares to
During the year ended December 31, 2020, the Company issued
During the year ended December 31, 2020, the Company recorded
During the year ended December 31, 2020, the Company recorded
Warrant
During the year ended December 31, 2018, the Company entered into an agreement with consultant to provide the Company with consulting services in exchange for
| 35 |
| Table of Contents |
A summary of activity during the year ended December 31,2020 follows:
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| Warrants Outstanding |
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| Weighted Average |
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| Shares |
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| Exercise Price |
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Outstanding, December 31, 2019 |
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Granted |
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Exercised |
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Expired |
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Outstanding, December 31, 2020 |
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| - |
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| $ | - |
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10. RELATED PARTY TRANSACTIONS
Notes payable – related party
During the year ended December 31, 2021 and 2020, the Company issued notes for a total principal amount of $
During the year ended December 31, 2021, the Company issued 600,000 shares of Series A Preferred Stock valued at $75,000 for settlement of $24,000 notes. As a result, the Company recorded a loss on settlement of debt of $
During the year ended December 31, 2021 and 2020, the Company repaid notes payable to a related party of $
As of December 31, 2021, and 2020, the Company recorded notes payable - related party of $
Employee agreements
Year ended December 2021
Effective May 31, 2021, the Company entered into an Employment Contract with Charles Townsend to serve as its Chief Operating Officer. The Contract provides for a
Effective May 31, 2021, the Company entered into an Employment Contract with Robert Ellis, to continue his service as the Company’s President. The Contract provides for a
Effective May 31, 2021, the Company entered into an Employment Contract with Ronald Lambrecht, to continue his service as its Chief Financial Officer. The Contract provides for a
| 36 |
| Table of Contents |
During the year ended December 31, 2021, the Company accrued salary of $
Year ended December 31, 2020
In June 2018, the Company entered into an employment agreement with Dr. Edwards E. Jacobs, Jr., our CEO, for a base compensation of $
In August 2019, the Company entered into an employment agreement with Robert W. Ellis, our president, for a base compensation of $
In September 2019, the Company entered into an employment agreement with Ronald Lambrecht, our Chief Financial Officer, for a base compensation of $
11. PROVISION FOR INCOME TAXES
The Company provides for income taxes under ASC 740,” Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of
|
| December 31, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Net operating loss |
| $ | ( | ) |
| $ | ( | ) |
Valuation allowance |
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Income tax expense per books |
| $ |
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| $ |
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The cumulative tax effect at the expected rate of
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| December 31, |
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| December 31, |
| ||
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| 2021 |
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| 2020 |
| ||
NOL Carryover |
| $ | 426,096 |
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| $ |
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Valuation allowance |
|
| ( | ) |
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| ( | ) |
Net deferred tax asset |
| $ |
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| $ |
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| 37 |
| Table of Contents |
Due to the change in ownership provisions of the Income Tax laws of United States of America, net operating loss carry forwards of approximately $
12. SUBSEQUENT EVENTS
On February 2, 2022, the Company entered into a Patent Purchase Agreement and Consulting Agreement with Thomas J. Mohr. Under the Agreement, the Company has the exclusive option to purchase Mohr’s U.S. Patent No. 9,783,432B (the “Patent”), which covers technology used in enhancing the capability of water to hold significantly larger amounts of oxygen, for a two-year period. The Agreement furthermore allows the Company a two-year license to use the technology covered by the Patent, including for further development of oxygenated water products for consumers. In exchange for the license, the Company will pay Mohr a royalty, scaled to total product sales.
| 38 |
| Table of Contents |
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following information sets forth the names, ages, and positions of our current directors and executive officers as of December 31, 2022.
Name |
| Age |
| Principal Positions |
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Edward E. Jacobs, Jr MD |
| 81 |
| Director & Chief Executive Officer |
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Robert W. Ellis |
| 80 |
| President and Chief Financial Officer |
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Charles Townsend |
| 75 |
| Chief Operating Officer |
Biographical Information for Edward E. Jacobs, Jr MD
Edward E. Jacobs, Jr, Age 81. Director and Chief Executive Officer
Dr. Edward E. Jacobs, Jr., a graduate of Princeton University and Harvard Medical school, is a biotechnology consultant with over 25 years’ experience in biopharmaceutical and medical device development, as well as, 35 years of teaching and direct patient care. Dr. Jacobs has participated in drug development process from discovery through animal and human studies, including regulatory support for FDA and international regulatory affairs, strategic planning, and investor relations.
Dr. Jacobs has extensive clinical operations experience, having conducted, as chief clinical investigator, more than 15 human trials in the US, Europe, Eastern Europe, and the Republic of South Africa. He has also served as a medical monitor and liaison for clinical investigators involved with international trials with responsibility for regulatory compliance.
After completing surgical training at Harvard and research positions at the National Heart, Lung and Blood Institute, Bethesda, Maryland, and at Saint Thomas’ Hospital Medical School, London, Dr. Jacobs was a member of the Harvard Medical School staff, combining teaching with clinical practice and research. He has also served on the Scientific Advisory Board of the Armenise-Harvard Foundation and the Publications Committee for the New England Journal of Medicine
Scientifically, Dr. Jacobs has made original observations in the field of tissue oxygenation therapy and water modification. His current focus is on natural products for animal and human use, anti-ageing strategy, and primitive cell biology.
He is an author of more than 40 scientific publications and is the holder of four patents.
Biographical Information for Robert W. Ellis
Robert W Ellis, Age 80, President and Chief Financial Officer
Mr. Ellis brings more than forty years of business management experience to the Company. He has worked extensively in senior positions across a variety of industry disciplines, including aerospace, electronics, communications, and international marketing. Mr. Ellis has been an executive officer in private and public companies, both major entities, start-ups, and emerging entities. He has an Accounting Degree from the University of Illinois and is a CPA.
Biographical Information for Charles Townsend
Charles Townsend, Age 75, Chief Operating Officer
Mr. Townsend, 75, has a Bachelor of Arts degree in accounting from the University of Texas and a Master of Business Administration from the University of North Texas. He previously served in the U.S. Navy Submarine Force. Mr. Townsend was a cost accounting manager, comptroller, and Chief Financial Officer for several private and public companies, including NYSE and OTC companies but in the past ten years has not been an officer or director of any publicly traded company. Mr. Townsend’s consulting work has emphasized enterprise marketing programs, predominantly in the telecommunications and home security industries. He most recently was employed by the US Department of Commerce as a District Census Manager for the 2020 US Census.
| 39 |
| Table of Contents |
Advisory Board
The Company uses an Advisory Board to assist the officers and directors with regard to specific scientific and administrative matters. These advisors did not meet during the period ended December 31, 2020, and we did not call on them due to a lack of need.
Name |
| Age |
| Principal Positions with Us |
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Dr. Jun Gu M.D., Ph.D. |
| 57 |
| Medical Advisor |
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Dr. Antonina Nabokova M.D. |
| 59 |
| Medical Advisor |
Dr. Jun Gu has extensive experience in laboratory toxicology work and is frequently called upon as an expert in toxicology and pharmacology. He received his medical degree (M.D.) in 1986 from the Second Military Medicine University in Shanghai, China, and a Ph.D. in pharmacology from Shanghai Medical College at Fudan University in Shanghai, China in 1993.
Dr. Antonina Nabokova M.D has over 11 years' experience in clinical trials and managing development of clinical operations in areas such as psychiatry, orphan indication, and urology. Dr. Nabokova currently maintains an office as the head of Representative office of SynteractHCR Deutschland GmbH, in Moscow, Russia. She holds an M.D. from Leningrad Medical University and also obtained a certificate in cardiology from Leningrad Medical University.
Term of Office
Our Directors are appointed for a one-year term but will hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Family Relationships
None.
Involvement in Certain Legal Proceedings
To the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
| 40 |
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Committees of the Board
Our company currently does not have nominating, compensation or audit committees or committees performing neither similar functions nor does our company have a written nominating, compensation, or audit committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the board of directors can adequately perform the functions of such committees. Our Common Stock trades on the OTC Bulletin Board, which does not impose standards relating to director independence or the makeup of committees with independent directors, or provide definitions of independence
Our company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our President, Robert W. Ellis, at the address appearing on the first page of this annual report.
Financial Expert
The Company does not currently have a designated “financial expert” on the Board of Directors. We believe that the cost of obtaining and retaining an independent director who can also serve as our financial expert is prohibitive at this time.
Information Concerning Non-Director Executive Officers
Neither Dr. Jacobs, Mr. Ellis nor Mr. Townsend are currently officers or directors of other publicly held companies. Each of them has employment contracts with the Company, under which they are compensated with Restricted Stock Units, which they each waived for the year ended December 31, 2021. Our activities were limited during this period but we believe all three directors devote sufficient time to the Company’s business and look forward to their service during the current period.
Code of Ethics
As of December 31, 2021, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
Potential Conflict of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our Board of Directors. Thus, there is a potential conflict of interest in that our directors have the authority to determine issues concerning management compensation, including their own, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our officers or directors.
| 41 |
| Table of Contents |
Board’s Role in Risk Oversight
The Board of Directors assesses on an ongoing basis the risks faced by BioAdaptives. These risks include financial, technological, competitive, and operational risks. The Board dedicates time at each of its meetings to review and consider the relevant risks faced at that time. In addition, since the Company does not have an Audit Committee, the Board of Directors is also responsible for the assessment and oversight of our financial risk exposures.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the Company's directors, executive officers and persons who own more than ten percent of a registered class of the Company's equity securities ("10% holders"), to file with the Securities and Exchange Commission (SEC) initial reports of ownership and reports of changes in ownership of Common stock and other equity securities of the Company.
Directors, officers and 10% holders are required by SEC Regulation to furnish the Company with copies of all of the Section 16(a) reports they file. Based solely on a review of reports furnished to the Company and/or written representations from the Company's directors and executive officers during the fiscal year ended December 31, 2020, there was no compliance with the Section 16(a) filing requirements applicable to its directors, officers and 10% holders for such year.
Involvement on Certain Material Legal Proceedings During the Past Five (5) Years
| (1) | No director, officer, significant employee or consultant has been convicted in a criminal proceeding, exclusive of traffic violations or is subject to any pending criminal proceeding. |
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| (2) | No bankruptcy petitions have been filed by or against any business or property of any director, officer, significant employee or consultant of the Company nor has any bankruptcy petition been filed against a partnership or business association where these persons were general partners or executive officers. |
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| (3) | No director, officer, significant employee or consultant has been permanently or temporarily enjoined, barred, suspended or otherwise limited from involvement in any type of business, securities or banking activities. |
|
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| (4) | No director, officer or significant employee has been convicted of violating a federal or state securities or commodities law. |
| 42 |
| Table of Contents |
Item 11. Executive Compensation
We have employment agreements with our Chief Executive Officer, President and Chief Financial Officer, each of whom was to be compensated by stock grants accrued monthly based on current share prices or block grants during the period ended December 31, 2021. In consideration of the Company’s financial performance and lack of liquidity during this period, each of our officers waived compensation and we adjusted compensation accordingly. Also by agreement, we canceled shares previously issued to the Chief Executive Officer In addition, we have granted Company shares to consultants or key advisors at the discretion of the directors on a case-by-case basis. Total share compensation, with adjustments where appropriate, is set out below.
SUMMARY COMPENSATION TABLE
Name and Principal Position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards (shares) |
|
| Option Awards ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
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Dr. Edward E. |
| 2021 |
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| 0(3,409,091 | ) |
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Jacobs, MD CEO and Chairman |
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Ron Lambrecht |
| 2021 |
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| 1000.00 |
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Chief Financial Officer |
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Robert Ellis |
| 2021 |
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| 0(3,641,217 | ) |
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President |
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Charles Townsend |
| 2021 |
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| 0(3,694,479 | ) |
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Chief Operating Officer |
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Bruce Colclasure |
| 2021 |
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| 150,000 |
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Consultant |
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Karen Kapp-Vance |
| 2021 |
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| 100,000 |
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Consultant |
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Charlie Timmerman |
| 2021 |
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| 150,000 |
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Consultant |
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The Company has no other executive compensation issues which would require the inclusion of other mandated table disclosures.
Director Compensation
Our directors’ compensation is wholly derived from their employment agreement as set out above.
| 43 |
| Table of Contents |
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information as of December 31, 2021, regarding the number of shares of Common Stock beneficially owned by (i) each person or entity known to us to own more than five percent of our Common Stock; (ii) each of our Named Executive Officers; (iii) each of our directors; and (iv) all of our executive officers and directors as a group. The percentages are based on 50,809.780 total outstanding Shares as of December 31, 2021.
Except as otherwise noted, the persons named in the table have sole voting and dispositive power with respect to all shares beneficially owned, subject to community property laws where applicable.
As of December 31, 2021
Title of class |
| Name of beneficial owner |
| Amount of beneficial ownership |
| Percent of class |
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Common Stock |
| Edward E. Jacobs, Jr |
| 2,239,531 |
| 4.4% |
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| Director & Chief Executive Officer |
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All officers and Directors as a Group (3 person) |
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More than 5% Beneficial Owners: (1) |
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Common Stock |
| Breath of Life Foundation |
| 9,628,568 | (2) | 18.9% |
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| 4355 A Cameron Rd, Las Vegas, NV 89103 |
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(1) The terms of our convertible notes with PowerUp Lending Group, Ltd. limit its ownership to less than 4.99% of the Company’s outstanding shares at any given time and it does not otherwise report ownership.
(2) Breath of Life Foundation assigned irrevocable voting rights to the Company’s Board of Directors.
(3) Dr. Jacobs is the sole shareholder of BioScience Associates,Ltd which is the holder of 600,000 shares of the Company’s Series A Preferred Stock. These shares provide him with 100:1 voting rights in certain instances, along with 5:1 conversion rights. As a director holding the Breath of Life proxy as well as the Essence Companies proxy and by reason of these Series A voting rights, Dr. Jacobs’ voting control over the Company’s activities is complete.
Changes in Control
Subsequent to establishment of the Series A Preferred Stock, the enhanced voting privileges provided to the Series A and Series B (when issued) Preferred Stock holders will provide them with sufficient voting authority to exercise control over the Company’s corporate functions. Currently, the Series A voting rights held by BioSciences Associates Ltd and Essence Now, Ltd. and Essence Worldwide, Ltd. Breath of Life Foundation granted irrevocable voting rights of its shares to the Board of BioAdaptives and The Essence Companies also granted the voting rights of its preferred shares to the Board of Directors. See note 3 above.
| 44 |
| Table of Contents |
Item 13 - Certain Relationships and Related Transactions, and Director Independence
Relationships and Transactions
Independence Transactions with Related Persons
BioScience Associates, Ltd
As noted in the accounting, BioScience Associates, Ltd loaned the company $74,715.25 BioScience Associates, Ltd is founded and managed by Dr. Edward E. Jacobs, Jr, Director and Chief Executive Officer of the Company. $24,000 of this debt was converted to 600,000 shares of Series A Preferred Stock after December 31, 2020.
Essence Worldwide, Ltd. and Essence Now, Ltd.
The Essence companies have granted licenses for the Company’s principal nutraceutical products in exchange for 1,000,000 shares of Series A Preferred Stock. The Essence companies are managed by Michele Sheriff, who otherwise has no involvement in the Company’s activities. The Company anticipates that it may license additional products or technologies from Essence in the future, which would increase its voting privileges and rights to additional common shares.
Conflicts of Interest
Certain conflicts of interest could arise in the future, including, but not limited to, the following:
| * | None of our officers and directors is required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating management time among various business activities. |
| * | In the course of their other business activities, our officers and directors may become aware of investment and business opportunities that may be appropriate for presentation to us as well as the other entities with which they are affiliated. They may have conflicts of interest in determining to which entity a particular business opportunity should be presented. |
| * | Our officers and directors may in the future become affiliated with entities, including other blank check companies, engaged in business activities similar to those intended to be conducted by us. |
| * | Since all of our directors own shares of our common stock that could be sold, in whole or in part, as a negotiated element of a business acquisition, our board may have a conflict of interest in determining whether a particular target business is appropriate to effect a business combination. The personal and financial interests of our directors and officers may influence their motivation in identifying and selecting a target business and completing a business combination. |
In general, officers and directors of a Delaware corporation are required to present business opportunities to a corporation if:
| * | the corporation could financially undertake the opportunity. |
| * | the opportunity is within the corporation's line of business; and |
| * | it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation. |
| 45 |
| Table of Contents |
Accordingly, as a result of multiple business affiliations, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity with respect to the above-listed criteria. We cannot assure you that any of the above-mentioned conflicts will be resolved in our favor.
Director Independence
The Board of Directors has determined that none of its directors is "independent" under the criteria set forth in Rule 5065(a)(2) of the Nasdaq Listing Rules. The Board does not have a separately designated audit, nominating, or compensation committee, so the functions normally attributed to these committees are performed by the entire board. Accordingly, none of our directors is "independent" under applicable Nasdaq Listing Rules that define independence for purposes of directors performing the functions of such committees.
Item 14 - Principal Accountant Fees and Services
Below is the table of Audit Fees (amounts in US$) billed by our auditors in connection with the audit of the Company's annual financial statements:
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Year Ended December 31, 2021 |
| $ | 21,960 |
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| $ | 13,605 |
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| $ | 0 |
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Year Ended December 31,2020 |
| $ | 12,960 |
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| $ | 0 |
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| 46 |
| Table of Contents |
Item 15 - Exhibits and Financial Statement Schedules
3.1* |
| Articles of Incorporation (with amendments) |
3.2* |
| Bylaws |
________
* Incorporated by our Registration Statement on Form S-1 filed May 3, 2011
Item 16 - Form 10-K Summary
None
| 47 |
| Table of Contents |
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 31, 2022.
BioAdaptives, Inc.
/s/ Edward E. Jacobs, Jr
Edward E. Jacobs, Jr
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
BioAdaptives, Inc.
/s/ Robert W. Ellis
Robert W. Ellis
President and Chief Financial Officer
(Principal Financial Officer)
March 31, 2022
| 48 |