BDPT 10-Q
Bioadaptives, Inc. (BDPT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
Commission File Number
(Exact name of registrant as specified in its charter) |
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(State or other jurisdiction of incorporation or organization) |
| (IRS Employer Identification No.) |
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(Address of principal executive offices) |
| (Zip Code) |
(
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non- accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-Accelerated filer | ☐ | Smaller reporting Company | |
Emerging Growth Company |
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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)
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Form 10-Q
Table of Contents
PART I – FINANCIAL INFORMATION | ||
Item 1. | Financial Statements | |
Management’s Discussion and Analysis of Financial Condition and Results of operations | 17 | |
23 | ||
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25 | ||
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Exhibits (Certifications) | ||
| 2 |
| Table of Contents |
BIOADAPTIVES, INC.
CONSOLIDATED BALANCE SHEETS
|
| September 30, |
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| December 31, |
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| 2021 |
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| 2020 |
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ASSETS |
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Current Assets: |
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Cash |
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Prepaid expense |
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Marketable securities |
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Inventory |
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Total Current Assets |
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License, net |
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TOTAL ASSETS |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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Current Liabilities: |
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Accounts payable and accrued liabilities |
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Derivative liabilities |
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Current portion of convertible notes - net of discount of $ |
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Note payable - related party |
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Total Current Liabilities |
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Total Liabilities |
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Stockholders' Deficit: |
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Preferred stock, ($ |
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Series A Preferred Stock |
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Common stock ($ |
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Additional paid-in capital |
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Accumulated deficit |
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Total Stockholders' Deficit |
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT |
| $ |
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| $ |
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The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 3 |
| Table of Contents |
BIOADAPTIVES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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| Three Months Ended |
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| Nine months ended |
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| September 30, |
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Revenues |
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Cost of revenue |
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Gross Profit |
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Operating Expenses |
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General and administrative |
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Professional fees |
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Stock based compensation |
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Amortization of license |
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Total Operating Expenses |
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Other Income (Expense) |
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Unrealized gain (loss) on marketable securities |
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Interest expense |
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Change in fair value of derivative liabilities |
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Loss on settlement of debt |
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Total Other Income (Expense) |
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Loss before income taxes |
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Net Loss |
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| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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Net Loss Per Common Share: |
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Basic and Diluted |
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Weighted Average Number of Common Shares Outstanding: |
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Basic and Diluted |
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The accompanying notes are an integral part of these unaudited consolidated financial statements
| 4 |
| Table of Contents |
BIOADAPTIVES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
(UNAUDITED)
For the Nine months ended September 30, 2021
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| Additional |
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| Series A Preferred stock |
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| Common stock |
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| paid-in |
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| Accumulated |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| capital |
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| Deficit |
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| Total |
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Balance, December 31, 2020 |
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| - |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | ||||
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Series A preferred stock issued for settlement of debt - related party |
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| - |
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Series A preferred stock issued for license fee |
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| - |
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Common stock issued for conversion of debt |
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Common stock issued for service |
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Cancellation of common stock - officers |
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Net loss for the period |
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| - |
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| - |
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Balance, March 31, 2021 |
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| $ |
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| $ |
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| $ |
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Net loss for the period |
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| - |
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| - |
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Balance, June 30, 2021 |
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| $ |
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Series A preferred stock issued for license fee |
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| - |
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Common stock issued for conversion of debt |
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Net loss for the period |
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| - |
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| - |
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Balance, September 30, 2021 |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) | |||||
| 5 |
| Table of Contents |
For the Nine months ended September 30, 2020
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| Additional |
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| Preferred stock |
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| Common stock |
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| paid-in |
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| Accumulated |
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| Shares |
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| Amount |
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| Shares |
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| Amount |
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| capital |
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| Deficit |
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| Total |
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Balance, December 31, 2019 |
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Common stock issued for service |
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Common stock issued for service - related party |
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Stock based compensation |
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| - |
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Net loss for the period |
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| - |
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| - |
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Balance, March 31, 2020 |
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| $ |
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| $ |
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Common stock issued for conversion of debt |
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Common stock issued for service - related party |
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Stock based compensation |
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| - |
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Net loss for the period |
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| - |
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| - |
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Balance, June 30, 2020 |
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| - |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | ||||
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Common stock issued for conversion of debt |
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Net loss for the period |
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| - |
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| - |
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Balance, September 30, 2020 |
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| - |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 6 |
| Table of Contents |
BIOADAPTIVES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Unaudited)
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| Nine months ended |
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| September 30, |
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| 2021 |
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| 2020 |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net loss |
| $ | ( | ) |
| $ | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Stock-based compensation |
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Stock-based compensation - related party |
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Change in fair value of derivative liabilities |
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Amortization of license |
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Amortization of debt discount |
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Loss on settlement of debt |
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Unrealized loss on investments in marketable securities |
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Changes in operating assets and liabilities: |
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Inventory |
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Prepaid expense and other current assets |
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Accounts payable and accrued liabilities |
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Net Cash Used in Operating Activities |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Proceeds from Notes payable |
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Repayments of notes payable |
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Proceed from related party |
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Repayment to related party |
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Proceeds from notes payable - related party |
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Repayment of notes payable - related party |
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Proceeds from convertible notes |
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Net Cash Provided by Financing Activities |
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Net change in cash |
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Cash at beginning of period |
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Cash at end of period |
| $ |
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| $ |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Cash paid for income taxes |
| $ |
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| $ |
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Cash paid for interest |
| $ |
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| $ |
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NON-CASH INVESTING AND FINANCING ACTIVITIES |
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Derivative liability recognized as debt discount |
| $ |
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| $ |
| ||
Issuance of common stock for conversion of debt |
| $ |
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| $ |
| ||
Issuance Series A preferred stock for license fee |
| $ |
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| $ |
| ||
Issuance Series A preferred stock for settlement of debt - related party |
| $ |
|
| $ |
| ||
Cancellation of common stock |
| $ |
|
| $ |
| ||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
| 7 |
| Table of Contents |
BioAdaptives, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 PrimiLung™ 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.
The Company’s corporate office is located at 2620 Regatta Drive, Suite 102, Las Vegas, NV 89128, and it maintains 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 September 30, 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 Quarterly Report on Form 10-Q. These estimates may change, as new events occur, and additional information is obtained.
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2. SUMMARY OF SIGNIFICANT POLICIES
Basis of presentation
The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10K. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim period presented, have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10K filed with SEC on March 30, 2021, have been omitted.
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its
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.
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. Diluted earnings per share excludes all dilutive potential shares if their effect is anti-dilutive.
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).
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The following table summarizes fair value measurements by level on September 30, 2021, and December 31, 2020, measured at fair value on a recurring basis:
Fair Value Measurements as of September 30, 2021, Using:
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| Total Carrying Value as of September 30, |
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| Quoted Market Prices in Active Markets |
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| Significant Other Observable Inputs |
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| Significant Unobservable Inputs |
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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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Fair Value Measurements as of December 31, 2020, Using:
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| Significant Other Observable Inputs |
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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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Intangible Assets
The Company capitalizes certain costs to acquire intangible assets; if such assets are determined to have a finite useful life they are amortized on a straight-line basis over the estimated useful life.
The Company tests its intangible assets for impairment at least annually and whenever events or circumstances change that indicate impairment may have occurred. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include, among others and without limitation: a significant decline in the Company’s expected future cash flows; a sustained, significant decline in the Company’s stock price and market capitalization; a significant adverse change in legal factors or in the business climate of the Company’s segments; unanticipated competition; and slower growth rates.
Recent Accounting Pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on our financial statements.
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.
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4. MARKETABLE SECURITIES
Equity securities on September 30, 2021, and December 31, 2020, were comprised of
5. LICENSE FEE
During the nine months ended September 30, 2021, the Company entered into three license and royalty agreements for human and animal nutraceutical products, which is currently markets. These agreements are for a period of one year and the Company issued
During the nine months ended September 30, 2021, the Company recognized $
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities on September 30, 2021, and December 31, 2020, consists of the following.
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Accounts payable |
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Credit card |
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Accrued salary |
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Accrued interest |
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Accrued liabilities |
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7. CONVERTIBLE NOTES
Convertible notes on September 30, 2021, and December 31, 2020, consists of the following:
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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 nine months ended September 30, 2021, and 2020, the interest expense on convertible notes was $
The Company recognized amortization expense related to the debt discount of $
Conversion
During the nine months ended September 30, 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 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 year; |
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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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Convertible Notes - Issued during the year ended December 31, 2021
During the nine months ended September 30, 2021, the Company issued a total principal amount of $
| • | Term one year; |
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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 nine months ended September 30, 2021 amounted to $
8. 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 September 30, 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 nine months ended September 30, 2021, and year ended December 31, 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 nine months ended September 30, 2021.
Fair Value Measurements Using Significant Observable Inputs (Level 3) | ||||
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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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Loss on change in fair value of the derivative |
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Balance - September 30, 2021 |
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The aggregate loss on derivatives during the nine months ended September 30, 2021, and 2020 was as follows.
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Day one loss due to derivative liabilities on convertible notes |
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9. STOCKHOLDERS’ EQUITY
Preferred Stock
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 at a
During the nine months ended September 30, 2021, the Company issued
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Common Stock
The Company is authorized to issue
During the nine months ended September 30, 2021, the Company issued
During the nine months ended September 30, 2021, the Company issued
During the nine months ended September 30, 2021, the Company cancelled
As of September 30, 2021, and December 31, 2020, there were
10. RELATED PARTY TRANSACTIONS
Notes payable - related party
During the nine months ended September 30, 2021, the Company issued
During the nine months ended September 30, 2021, and 2020, the Company repaid notes payable to a related party of $
As of September 30, 2021, and December 31, 2020, the Company recorded notes payable - related party of $
Due to related party
During the nine months ended September 30, 2021, Dr. Edward E. Jacobs, M.D., our CEO, advanced $
Employee agreements
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
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Effective July 1, 2021, the Company entered into an Employment Contract with Dr. Edward E. Jacobs, M.D., our CEO. The Contract provides for a
During the nine months ended September 30, 2021, the Company accrued salary of $
11. SUBSEQUENT EVENTS
We have commenced marketing our PrimiLive® and PrimiSleep™ formulations, which are, respectively, botanical, all-natural nootropic and sleep aid compounds. We are also continuing our efforts in the Gadolinium – metal toxicity and Pain Relief area.
We have issued a total of
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD LOOKING STATEMENTS
This current report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward- looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
As used in this quarterly report, the terms “we”, “us”, “our”, “Company” and "BioAdaptives" mean BioAdaptives Inc., unless otherwise indicated.
1. OUR BUSINESS
Overview
BioAdaptives investigates, markets and distributes 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 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 includes PrimiCell®, PluriPain®, PrimiLung™, PrimiLive® and PrimiSleep™ for humans and Canine Regen® and Equine Regen® for dogs and horses. We also market an Equine All-in-One® formulation evolved from Equine Regen® to trainers, horse owners and boarding stables. All of these products are sold under licensing and manufacturing agreements. The PrimiLive® and PrimiSleep™ licenses were acquired during this reporting period, effective July 30, 2021, and we have just begun a marketing campaign for these products. 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, neither of which have produced any significant revenue yet. We are a new company and thus have very limited experience in order 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. We also are developing affiliate marketing opportunities. 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.
Our efforts have not shown significant results to date, and we are refining our processes to reflect the early feedback from our efforts. As previously noted, the Company previously operated numerous social media accounts on multiple platforms. Our consultants report significant efforts in consolidating existing accounts with new accounts and creating compliant postings and copy to encourage consumer engagement, but revenues have not responded. We intend to employ additional consultants, and are still considering use of influencers, and other “guerrilla” marketing activities.
As noted above, we entered into licensing agreements for the PrimiLive® and PrimiSleep™ products on July 31, 2021. While these products are all-natural botanical formulations, 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. Obviously the market for these products is undetermined, and we will provide more information about our marketing initiatives as they are developed.
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With regard to animal products, in 2020, the Company formed the Livestock Impact Division, which markets supplement feeds for equine and companion animals. 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.
We have expanded our social media footprint with respect to our products. We have retained an equine photographer and influencer who is using social media postings of rodeo event and “before and after” animal photos to promote our products. Additionally, we have 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 have 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. We have also been working with doctors and researchers on our Pluripain® product in particular in relation to Gadolinium toxicity.
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, and 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.
Manufacturing
All of the Company’s products are considered dietary supplements or supplement feeds, 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 strict compliance facilities.
We contract with manufacturers that utilize C-Gmp 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.
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2. LIQUITITY AND CAPITAL RESOURCES:
Liquidity -- Financial Performance – Three Months Ended September 30, 2021 and 2020
We had a net loss of $34,516 for the three-month period ended September 30, 2021, which was $21,053 more than the net loss of $13,463 for the three-month period ended September 30, 2020. The change in our results over the two periods is primarily due to an increase in operating and other expenses and a positive adjustment to the value of our derivative liabilities.
The following table summarizes key items of comparison and their related increase (decrease) for the three-month periods ended September 30, 2021 and 2020:
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| 2021 |
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| 2020 |
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Revenue |
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| 5,342 |
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| 4,439 |
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| 903 |
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Cost of Sales |
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| 2,227 |
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| 3,388 |
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| (1161 | ) |
Operation Expenses |
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| 175,968 |
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| 25,711 |
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| (150,257 | ) |
Other income (expenses) |
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| (138,337 | ) |
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| (11,197 | ) |
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| (127,140 | ) |
Net Income (loss) |
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| (34,516 | ) |
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| (13,463 | ) |
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| (21,053 | ) |
Revenue
Our revenues have been derived entirely from product sales.
Cost of Sales
Our cost of sales is primarily derived from contract manufacturing expenses and shipping and handling expenses related to customer fulfillment. We also expense small amounts for marketing expenses, which includes the cost of samples or products provided for promotional purposes and website content development.
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Operation Expenses
Our general, administrative and professional fees are largely attributable to office, rent, advertising, consultants and transfer agent, legal, accounting and audit fees related to our reporting requirements as a public company as well as stock-based compensation for officers, directors and consultants.
Other Income (Expense)
The Company recorded interest expense of $64,543 and $66,213 for the three months ended September 30, 2021, and 2020.
Net Loss
As a result of our operating expenses the Company reported a net loss of ($34,516) and ($13,463) for the three months ended September 30, 2021 and 2020.
Comprehensive Income (Loss)
The Company reported an unrealized loss on marketable securities of $423 and a gain of $328 for the three months ended September 30, 2021 and 2020.
Capital Resources – Balance Sheet and Cash Flows
Our balance sheet as of September 30, 2021 reflects current assets of $77,278, including cash in the amount of $66,339. We currently meet cash requirements by infusions of cash from issuance of notes to finance partners. Most of these notes have conversion features that require accounting for derivative liabilities.
Working Capital (Deficiency)
|
| September 30 2021 |
|
| September 30 2020 |
|
| Change |
| |||
Current Assets |
|
| 77,278 |
|
|
| 32,010 |
|
|
| 45,268 |
|
Current Liabilities |
|
| 1,390,981 |
|
|
| 1,285,111 |
|
|
| (105,870 | ) |
Working Capital (Deficiency) |
|
| (1,313,703 | ) |
|
| (1,253,101 | ) |
|
| (60,602 | ) |
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Cash Flows
|
| Nine Months Ended September30 |
|
|
|
| ||||||
|
| 2021 |
|
| 2020 |
|
| Change |
| |||
Cash provided by (used in) Operating Activities Cash provided in Investing Activities |
|
| (123,248 | ) |
|
| (97,027 | ) |
|
| (26,221 | ) |
Cash provided by (used in) Financing Activities |
|
| 185,000 |
|
|
| 99,163 |
|
|
| 85,837 |
|
Net Increase (Decrease) In Cash During Period |
|
| 61,752 |
|
|
| 2,136 |
|
|
| 59,616 |
|
As of September 30, 2021, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. The success of our business plan beyond the next 12 months is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.
Critical Accounting Estimates -- Going Concern
We are required to provide qualitative and quantitative information necessary to understand any critical accounting estimations, including uncertainties associated with such estimates. Our critical accounting estimates, as well as the financial statements contained in this report, are all reliant on the assumption that we will continue as a going concern, which contemplates our ability to generate sufficient cash flows from operations and financing activities necessary to continue in business by employing our assets and satisfying our liabilities in the normal course of business.
On September 30, 2021, we had $66,339 cash on-hand and an accumulated deficit of $1,313,703. As noted throughout this report and our financial statements and notes thereto, our independent auditors expressed their substantial doubt as to our ability to continue as a going concern as of December 31, 2020, and we expect a similar qualification for the period ended December 31, 2021. We anticipate incurring significant losses in the future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.
Because our business plan relies on marketing products we license from others, our capital requirements are generally limited to general operations and administration, including the costs of continuing as a public company, and our variable costs scale up or down based on our actual sales. We believe that increasing our marketing expenses will be critical to establishing sales sufficient to cover our expenses and, if possible, generate a profit. We anticipate using our existing financing operations to do so, which will almost certainly require either the issuance of equity or increases in existing levels of debt or, most likely, both.
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Management's plans include the raising of capital through the equity markets to fund future operations, seeking additional acquisitions, and generating of revenue through our business. However, even if we do raise sufficient capital to support our operating expenses and generate adequate revenues, there can be no assurances that the revenue will be sufficient to enable us to develop business to a level where we will generate profits and positive cash flows from operations. These matters raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
Our financial statements are based on the application of accounting principles generally accepted in the United States ("US GAAP"). US 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 US GAAP and are consistently and conservatively a 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.
Recent Accounting Pronouncements
The Company has evaluated recent pronouncements through Accounting Standards Updates ("ASU") and believes that none of them will have a material impact on the Company's financial position, results of operations or cash flows.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” we are not required to provide the information required by this Item.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, September 30, 2021. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company's reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report due to a material weakness in our internal control over financial reporting, which is described below.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of September 30, 2020, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of September 30, 2020, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment. and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.
We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2021: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
To a certain extent, the size of our operation provides inherent checks and balances relative to internal controls: Because of our limited staff size and the integration of our executives and directors in operations, the prospect for significant internal control failures resulting in unreliable financial statements or worse is remote. Regardless, we recognize the importance of multiple layers of reporting and controls and are working toward improving our capabilities.
Changes in Internal Control over Financial Reporting
There was no change in the Company's internal control over financial reporting that occurred during the Company's most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
At this time, we know of no pending legal proceedings of any manner to which we are a party, either individually or in the aggregate. We are from time-to-time, during the normal course of our business operations, subject to various litigation claims and legal disputes. There are no such claims or disputes pending at this time and we have not been notified of any possible claims or disputes.
Item 1A. Risk Factors
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Covid-19 Pandemic Impact and Risk
At this time, it is not possible to fully assess the impact of the COVID-19 pandemic on the Company’s operations and capital requirements. Business activities in 2020 and so far in 2021 have been substantially curtailed: Our key executives, all of whom are in high-risk categories, were subjected to travel restrictions, which impacted our financing operations. Consumer demand was generally down in our target markets, even though we offer products that are generally considered to promote health. We delayed much of our marketing activity due to travel, funding and perceived demand issues. We re-launched our marketing efforts during the previous reporting period, and they have been slow to gain traction; we cannot determine whether that is due to the pandemic or failures in these efforts.
Should the COVID-19 pandemic reignite, the Company may be faced with the same headwinds we faced during 2020, which may adversely affect the Company’s ability to (i) retain employees and consultants; (ii) obtain additional financing on terms acceptable to the Company, if at all; (iii) delay regulatory submissions and approvals, if required; (iv) delay, limit or preclude the Company from securing manufacturing sites, partnerships or marketing agreements; (v) delay, limit or preclude the Company from achieving technology or product development goals, milestones, or objectives; and (vi) preclude or delay entry into joint venture or partnership arrangements. The occurrence of any one or more of such events may affect the Company’s ability to execute on its business plan.
The Company’s priority and commitment is to the health and security of its team members, their families and its partners through this unprecedented pandemic.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
We issued 5,756,251 shares of common stock to our finance partner, Power-Up Lending Group, Ltd. during the period from July 1, 2021, to and including the date of filing this report. These shares were issued pursuant to existing, previously disclosed financing agreements, on Power-Up’s demand for conversion. We do anticipate additional demands for conversion during the period ended December 31, 2021; because these conversions are effected at prices based on the market price for the Company’s securities, we cannot estimate with any reasonable certainty how many additional shares will be issued. The Company also issued 500,000 of Series A Preferred Stock for licenses to two new nutraceutical formulations, PrimiLive® and PrimiSleep™ effective July 31, 2021. These preferred shares contain limited voting, conversion, and other rights, as previously disclosed.
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Item 3. Defaults Upon Senior Securities
The Company has arranged extension and forbearance agreements with the holders of the 12% Debentures, which were issued in 2018 and due at various times in 2020. Our agreement calls for the extension of these obligations on the same terms until December 31, 2021, in exchange for current interest payments and delivery of 280,000 shares of its common stock (total). We anticipate issuance of these shares during 4Q 2021
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
We entered into an Employment Agreement with Dr. Edward E. Jacobs, M.D., our Chief Executive Officer and Chairman, effective July 1, 2021. The Agreement provides for a one-year term and payment of annual compensation of $100,000, payable in Restricted Stock Units (RSUs) until such time as the Company’s cash-flow permits cash payment. The terms of the RSUs are set out in our 2021 Incentive Plan, which was attached to our Form 8-K filed on June 11, 2021.
Item 6. Exhibits
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BioAdaptives Inc. | ||
| (Registrant) |
|
| Dated: November 10, 2021 | /s/ Dr. Edward E. Jacobs, M.D. | |
| Dr. Edward E. Jacobs, M.D. | |
| Chief Executive Officer | ||
| /s/ Robert W. Ellis |
|
| Robert W. Ellis |
|
| Chief Financial Officer |
|
| 27 |