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As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 11/05/21 Kraig Biocraft Laboratories, Inc. 10-Q 9/30/21 64:7.3M M2 Compliance LLC/FA |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 1.43M
2: EX-31.1 Certification -- §302 - SOA'02 HTML 24K
3: EX-31.2 Certification -- §302 - SOA'02 HTML 24K
4: EX-32.1 Certification -- §906 - SOA'02 HTML 20K
5: EX-32.2 Certification -- §906 - SOA'02 HTML 20K
12: R1 Cover HTML 65K
13: R2 Condensed Consolidated Balance Sheets HTML 125K
14: R3 Condensed Consolidated Balance Sheets HTML 42K
(Parenthetical)
15: R4 Condensed Consolidated Statements of Operations HTML 83K
(Unaudited)
16: R5 Condensed Consolidated Statement of Changes in HTML 82K
Stockholders Deficit (Unaudited)
17: R6 Condensed Consolidated Statement of Changes in HTML 23K
Stockholders Deficit (Unaudited) (Parenthetical)
18: R7 Condensed Consolidated Statements of Cash Flows HTML 118K
(Unaudited)
19: R8 Summary of Significant Accounting Policies and HTML 87K
Organization
20: R9 Going Concern HTML 23K
21: R10 Equipment HTML 32K
22: R11 Right to Use Assets and Lease Liabilitity HTML 42K
23: R12 Accrued Interest - Related Party HTML 31K
24: R13 Note Payable HTML 34K
25: R14 Convertible Notes HTML 87K
26: R15 Stockholders? Deficit HTML 233K
27: R16 Commitments and Contingencies HTML 78K
28: R17 Related Party Transactions HTML 67K
29: R18 Subsequent Events HTML 27K
30: R19 Summary of Significant Accounting Policies and HTML 124K
Organization (Policies)
31: R20 Summary of Significant Accounting Policies and HTML 49K
Organization (Tables)
32: R21 Equipment (Tables) HTML 28K
33: R22 Right to Use Assets and Lease Liabilitity (Tables) HTML 32K
34: R23 Convertible Notes (Tables) HTML 47K
35: R24 Stockholders? Deficit (Tables) HTML 175K
36: R25 Schedule of Antidilutive Securities of Earnings HTML 23K
Per Share (Details) (Parenthetical)
37: R26 Schedule of Antidilutive Securities of Earnings HTML 31K
Per Share (Details)
38: R27 Schedule of Fair Value of Financial Instruments HTML 26K
(Details)
39: R28 Schedule of Gold in Bullion (Details) HTML 35K
40: R29 Summary of Significant Accounting Policies and HTML 30K
Organization (Details Narrative)
41: R30 Going Concern (Details Narrative) HTML 27K
42: R31 Schedule of Property and Equipment (Details) HTML 35K
43: R32 Equipment (Details Narrative) HTML 23K
44: R33 Schedule of Right Use of Assets (Details) HTML 25K
45: R34 Schedule of Lease Liability (Details) HTML 29K
46: R35 Schedule of Lease Cost (Details) HTML 26K
47: R36 Right to Use Assets and Lease Liabilitity (Details HTML 58K
Narrative)
48: R37 Accrued Interest - Related Party (Details HTML 43K
Narrative)
49: R38 Note Payable (Details Narrative) HTML 67K
50: R39 Schedule of Fair Value Warrants (Details) HTML 44K
51: R40 Summary of Convertible Debt (Details) HTML 45K
52: R41 Convertible Notes (Details Narrative) HTML 91K
53: R42 Schedule of Option Assumption (Details) HTML 53K
54: R43 Schedule of Warrants Activity (Details) HTML 44K
55: R44 Schedule of Warrants Outstanding (Details) HTML 68K
56: R45 Schedule of Options Outstanding (Details) HTML 27K
57: R46 Stockholders? Deficit (Details Narrative) HTML 277K
58: R47 Commitments and Contingencies (Details Narrative) HTML 363K
59: R48 Related Party Transactions (Details Narrative) HTML 292K
60: R49 Subsequent Events (Details Narrative) HTML 33K
62: XML IDEA XML File -- Filing Summary XML 109K
11: XML XBRL Instance -- form10-q_htm XML 1.89M
61: EXCEL IDEA Workbook of Financial Reports XLSX 87K
7: EX-101.CAL XBRL Calculations -- kblb-20210930_cal XML 134K
8: EX-101.DEF XBRL Definitions -- kblb-20210930_def XML 625K
9: EX-101.LAB XBRL Labels -- kblb-20210930_lab XML 1.10M
10: EX-101.PRE XBRL Presentations -- kblb-20210930_pre XML 830K
6: EX-101.SCH XBRL Schema -- kblb-20210930 XSD 178K
63: JSON XBRL Instance as JSON Data -- MetaLinks 337± 449K
64: ZIP XBRL Zipped Folder -- 0001493152-21-027377-xbrl Zip 197K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
| i ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended i September 30, i 2021 /
OR
| i ☐ | TRANSITION REPORT PURSUANT TO PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from_____ to _____
Commission File Number: i 333-146316
i KRAIG BIOCRAFT LABORATORIES, INC.
(Exact Name of Registrant as Specified in Charter)
| i Wyoming | i 83-0459707 | |
(State or Other Jurisdiction of Incorporation) |
(I.R.S. Employer Identification No.) |
| (Address of Principal Executive Offices) |
(Registrant’s telephone number, including area code)
(Former name and address, if changed since last report)
Copies to:
Hunter Taubman Fischer & Li LLC
800 Third Ave., Suite 2800
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
| None | - | - |
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. i Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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). i Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and emerging growth company in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| i Non-accelerated filer ☒ | Smaller reporting company i ☒ | |
| Emerging growth company i ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes i ☐ No ☒
As of November 4, 2021, there were shares of the issuer’s Class A common stock, no par value per share, outstanding, 0 shares of the issuer’s Class B common stock, no par value per share, outstanding and 2 shares of preferred stock, no par value per share, outstanding.
C:
TABLE OF CONTENTS
C:
| C: 2 |
Kraig Biocraft Laboratories, Inc. and Subsidiary
(A Development Stage Company)
Condensed Consolidated Balance Sheets
| September 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | i 2,693,669 | $ | i 816,907 | ||||
| Prepaid expenses | i 9,169 | i 2,588 | ||||||
| Total Current Assets | i 2,702,838 | i 819,495 | ||||||
| Property and Equipment, net | i 100,543 | i 89,247 | ||||||
| Investment in gold bullions | i 412,514 | - | ||||||
| Operating lease right-of-use asset, net | i 114,906 | i 365,025 | ||||||
| Security deposit | i 3,518 | i 3,518 | ||||||
| Total Assets | $ | i 3,334,319 | $ | i 1,277,285 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | i 619,585 | $ | i 600,003 | ||||
| Note payable - related party | i 1,657,000 | i 1,657,000 | ||||||
| Royalty agreement payable - related party | i 65,292 | i 65,292 | ||||||
| Accounts payable and accrued expenses - related party | i 5,086,258 | i 4,802,985 | ||||||
| Operating lease liability, current | i 33,492 | i 124,909 | ||||||
| Loan payable | i 60,000 | i 60,000 | ||||||
| Convertible note payable, net of debt discount of $776,540 and $949,945, respectively | i 1,523,460 | i 50,505 | ||||||
| SBA Paycheck Protection Loan | - | i 90,100 | ||||||
| Total Current Liabilities | i 9,045,087 | i 7,450,794 | ||||||
| Long Term Liabilities | ||||||||
| Loan payable, net of current | i 110,244 | i 145,244 | ||||||
| Operating lease liability, net of current | i 81,414 | i 254,811 | ||||||
| Total Liabilities | i 9,236,745 | i 7,850,849 | ||||||
| Commitments and Contingencies | - | - | ||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, par value; shares authorized, , issued and outstanding | - | - | ||||||
| Preferred stock Series A, par value; and shares issued and outstanding, respectively | i 5,217,800 | i 5,217,800 | ||||||
| Preferred stock, value | ||||||||
| Common stock Class A, par value; shares authorized, and shares issued and outstanding, respectively | i 20,693,728 | i 17,122,236 | ||||||
| Common stock Class B, par value; shares authorized, shares issued and outstanding | - | - | ||||||
| Common stock, value | - | - | ||||||
| Common Stock Issuable, and shares, respectively | i 22,000 | i 22,000 | ||||||
| Additional paid-in capital | i 9,814,813 | i 5,833,583 | ||||||
| Accumulated Deficit | ( i 41,650,767 | ) | ( i 34,769,183 | ) | ||||
| Total Stockholders’ Deficit | ( i 5,902,426 | ) | ( i 6,573,564 | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | i 3,334,319 | $ | i 1,277,285 | ||||
C:
| 3 |
Kraig Biocraft Laboratories, Inc.
Condensed Consolidated Statements of Operations (Unaudited) for the nine and three months ended September 30, 2021 and 2020
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||||
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | |||||||||||||
| Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| Operating Expenses | ||||||||||||||||
| General and Administrative | i 637,611 | i 366,243 | i 1,313,510 | i 3,507,302 | ||||||||||||
| Professional Fees | i 33,179 | i 39,169 | i 259,702 | i 89,643 | ||||||||||||
| Officer’s Salary | i 162,498 | i 161,861 | i 494,090 | i 361,276 | ||||||||||||
| Rent - Related Party | - | i 3,556 | i 3,683 | i 9,819 | ||||||||||||
| Research and Development | i 39,254 | i 27,626 | i 171,748 | i 65,408 | ||||||||||||
| Total Operating Expenses | i 872,542 | i 598,455 | i 2,242,733 | i 4,033,448 | ||||||||||||
| Loss from Operations | ( i 872,542 | ) | ( i 598,455 | ) | ( i 2,242,733 | ) | ( i 4,033,448 | ) | ||||||||
| Other Income/(Expenses) | ||||||||||||||||
| Gain on debt extinguishment (PPP) | - | - | i 90,100 | - | ||||||||||||
| Net change in unrealized depreciation on investment in gold bullion | ( i 37,702 | ) | - | ( i 37,702 | ) | - | ||||||||||
| Interest expense | ( i 188,416 | ) | ( i 94,703 | ) | ( i 518,294 | ) | ( i 279,846 | ) | ||||||||
| Amortization of original issue discount | ( i 2,088,487 | ) | - | ( i 4,172,955 | ) | - | ||||||||||
| Total Other Income/(Expenses) | ( i 2,314,605 | ) | ( i 94,703 | ) | ( i 4,638,851 | ) | ( i 279,846 | ) | ||||||||
| Net (Loss) before Provision for Income Taxes | ( i 3,187,147 | ) | ( i 693,158 | ) | ( i 6,881,584 | ) | ( i 4,313,294 | ) | ||||||||
| Provision for Income Taxes | - | - | - | - | ||||||||||||
| Net (Loss) | $ | ( i 3,187,147 | ) | $ | ( i 693,158 | ) | $ | ( i 6,881,584 | ) | $ | ( i 4,313,294 | ) | ||||
| Net Income (Loss) Per Share - Basic and Diluted | $ | ( i 0.00 | ) | $ | ( i 0.00 | ) | $ | ( i 0.01 | ) | $ | ( i 0.01 | ) | ||||
| Weighted average number of shares outstanding during the period - Basic and Diluted | i 879,561,355 | i 851,168,167 | i 865,640,011 | i 846,717,942 | ||||||||||||
C:
| 4 |
Kraig Biocraft Laboratories, Inc. and Subsidiary
Condensed Consolidated Statement of Changes in Stockholders Deficit
For the nine and three months ended September 30, 2021
(Unaudited)
| Shares | Par | Shares | Par | Shares | Par | Shares | Par | APIC | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Preferred
Stock - Series A | Common
Stock - Class A | Common
Stock - Class B | Common Stock - Class A Shares To be issued | Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | Shares | Par | Shares | Par | APIC | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2020 (Audited) | i 2 | $ | i 5,217,800 | i 854,410,001 | $ | i 17,122,236 | - | $ | - | i 1,122,311 | $ | i 22,000 | $ | i 5,833,583 | $ | ( i 34,769,183 | ) | $ | ( i 6,573,564 | ) | ||||||||||||||||||||||||
| Warrants issued for services - related parties | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 505,809 | $ | - | $ | i 505,809 | ||||||||||||||||||||||||
| Warrants issued for services | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 78,693 | $ | - | $ | i 78,693 | ||||||||||||||||||||||||
| Common stock issued for services | - | $ | - | i 3,000,000 | $ | i 242,100 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 242,100 | ||||||||||||||||||||||||
| Cancellations of warrants | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | ( i 42,707 | ) | $ | - | $ | ( i 42,707 | ) | ||||||||||||||||||||||
| Exercise of warrants in exchange for stock | - | $ | - | i 3,816,522 | $ | i 470,091 | $ | - | $ | - | $ | - | $ | - | $ | ( i 292,533 | ) | $ | - | $ | i 177,558 | |||||||||||||||||||||||
| Convertible debt conversion into common stock ($ - $/Sh) | - | $ | - | i 36,325,230 | $ | i 2,859,301 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 2,859,301 | ||||||||||||||||||||||||
| Imputed interest - related party | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 61,968 | $ | - | $ | i 61,968 | ||||||||||||||||||||||||
| Beneficial conversion feature | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 3,670,000 | $ | - | $ | i 3,670,000 | ||||||||||||||||||||||||
| Contributed capital - related party | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss for the nine months ended September 30, 2021 | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | ( i 6,881,584 | ) | $ | ( i 6,881,584 | ) | ||||||||||||||||||||||
| Balance, September 30, 2021 (Unaudited) | i 2 | $ | i 5,217,800 | i 897,551,753 | $ | i 20,693,728 | - | $ | - | i 1,122,311 | $ | i 22,000 | $ | i 9,814,813 | $ | ( i 41,650,767 | ) | $ | ( i 5,902,426 | ) | ||||||||||||||||||||||||
| Preferred Stock - Series A | Common
Stock - Class A | Common Stock - Class B | Common
Stock - Class A Shares To be issued | Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | Shares | Par | Shares | Par | APIC | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2021 (Unaudited) | i 2 | $ | i 5,217,800 | i 868,038,875 | $ | i 18,636,669 | - | $ | - | i 1,122,311 | $ | i 22,000 | $ | i 9,572,046 | $ | ( i 38,463,620 | ) | $ | ( i 5,015,105 | ) | ||||||||||||||||||||||||
| Warrants issued for services - related parties | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 166,978 | $ | - | $ | i 166,978 | ||||||||||||||||||||||||
| Warrants issued for services | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 54,906 | $ | - | $ | i 54,906 | ||||||||||||||||||||||||
| Common stock issued for services | - | $ | - | i 3,000,000 | $ | i 242,100 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 242,100 | ||||||||||||||||||||||||
| Convertible debt conversion into common stock ($ - $/Sh) | - | $ | - | i 26,512,878 | $ | i 1,814,959 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 1,814,959 | ||||||||||||||||||||||||
| Imputed interest - related party | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | i 20,883 | $ | - | $ | i 20,883 | ||||||||||||||||||||||||
| Net loss for the three months ended September 30, 2021 | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | ( i 3,187,147 | ) | $ | ( i 3,187,147 | ) | ||||||||||||||||||||||
| Balance, September 30, 2021 (Unaudited) | i 2 | $ | i 5,217,800 | i 897,551,753 | $ | i 20,693,728 | - | $ | - | i 1,122,311 | $ | i 22,000 | $ | i 9,814,813 | $ | ( i 41,650,767 | ) | $ | ( i 5,902,426 | ) | ||||||||||||||||||||||||
C:
| 5 |
Kraig Biocraft Laboratories, Inc. and Subsidiary
Condensed Consolidated Statement of Changes in Stockholders Deficit
For the nine and three months ended September 30, 2020
(Unaudited)
| Preferred
Stock - Series A | Common
Stock - Class A | Common
Stock - Class B | Common
Stock - Class A Shares To be issued | Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | Shares | Par | Shares | Par | APIC | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, December 31, 2019 (Audited) | i 2 | $ | i 5,217,800 | i 844,468,378 | $ | i 16,757,079 | - | $ | - | i 1,122,311 | $ | i 22,000 | $ | i 2,412,969 | $ | ( i 29,797,906 | ) | $ | ( i 5,388,058 | ) | ||||||||||||||||||||||||
| Warrants issued for services - related parties | - | - | - | - | - | - | - | - | i 2,754,031 | - | i 2,754,031 | |||||||||||||||||||||||||||||||||
| Warrants issued for services | - | - | - | - | - | - | - | - | i 50,763 | - | i 50,763 | |||||||||||||||||||||||||||||||||
| Exercise of warrants in exchange for stock | - | - | i 9,941,623 | i 365,157 | - | - | - | - | ( i 365,157 | ) | - | |||||||||||||||||||||||||||||||||
| Contributed capital - related party | - | - | - | - | - | - | - | - | i 17,495 | - | i 17,495 | |||||||||||||||||||||||||||||||||
| Imputed interest - related party | - | - | - | - | - | - | - | - | i 38,981 | - | i 38,981 | |||||||||||||||||||||||||||||||||
| Net loss for the nine months ended September 30, 2020 | - | - | - | - | - | - | - | - | - | ( i 4,313,294 | ) | ( i 4,313,294 | ) | |||||||||||||||||||||||||||||||
| Balance, September 30, 2020 (Unaudited) | i 2 | $ | i 5,217,800 | i 854,410,001 | $ | i 17,122,236 | - | $ | - | i 1,122,311 | $ | i 22,000 | $ | i 4,909,082 | $ | ( i 34,111,200 | ) | $ | ( i 6,840,082 | ) | ||||||||||||||||||||||||
| Preferred Stock - Series A | Common Stock - Class A | Common Stock - Class B | Common
Stock - Class A Shares To be issued | Accumulated | ||||||||||||||||||||||||||||||||||||||||
| Shares | Par | Shares | Par | Shares | Par | Shares | Par | APIC | Deficit | Total | ||||||||||||||||||||||||||||||||||
| Balance, June 30, 2020 (Unaudited) | i 2 | $ | i 5,217,800 | i 844,468,378 | $ | i 16,757,079 | - | $ | - | i 1,122,311 | $ | i 22,000 | $ | i 5,107,560 | $ | ( i 33,418,042 | ) | $ | ( i 6,313,603 | ) | ||||||||||||||||||||||||
| Warrants issued for services - related parties | - | - | - | - | - | - | - | - | i 141,620 | - | i 141,620 | |||||||||||||||||||||||||||||||||
| Warrants issued for services | - | - | - | - | - | - | - | - | i 8,050 | - | i 8,050 | |||||||||||||||||||||||||||||||||
| Exercise of warrants in exchange for stock | - | - | i 9,941,623 | i 365,157 | - | - | - | - | ( i 365,157 | ) | - | |||||||||||||||||||||||||||||||||
| Imputed interest - related party | - | - | - | - | - | - | - | - | i 17,009 | - | i 17,009 | |||||||||||||||||||||||||||||||||
| Net loss for the three months ended September 30, 2020 | - | - | - | - | - | - | - | - | - | ( i 693,158 | ) | ( i 693,158 | ) | |||||||||||||||||||||||||||||||
| Balance, September 30, 2020 (Unaudited) | i 2 | $ | i 5,217,800 | i 854,410,001 | $ | i 17,122,236 | - | $ | - | i 1,122,311 | $ | i 22,000 | $ | i 4,909,082 | $ | ( i 34,111,200 | ) | $ | ( i 6,840,082 | ) | ||||||||||||||||||||||||
C:
| 6 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
for the nine months ended September 30, 2021 and 2020
| 2021 | 2020 | |||||||
| For the nine months ended | ||||||||
| September 30, | ||||||||
| 2021 | 2020 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net Loss | $ | ( i 6,881,584 | ) | $ | ( i 4,313,294 | ) | ||
| Adjustments to reconcile net loss to net cash used in operations | ||||||||
| Depreciation expense | i 19,304 | i 21,277 | ||||||
| Gain on debt extinguishment (PPP) | ( i 90,100 | ) | - | |||||
| Net change in unrealized depreciation in gold bullions | i 37,702 | - | ||||||
| Stock issued for services | i 242,100 | - | ||||||
| Loss on disposal of fixed assets | i 49,321 | - | ||||||
| Amortization of debt discount | i 4,172,955 | - | ||||||
| Imputed interest - related party | i 61,968 | i 38,981 | ||||||
| Fair value of options issued for services | - | i 2,804,794 | ||||||
| Warrants issued/(cancelled) to consultants | i 541,795 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease (Increase) in prepaid expenses | ( i 6,581 | ) | i 18,766 | |||||
| Operating lease right-of-use, net | i 79,290 | i 87,806 | ||||||
| Increase in accrued expenses and other payables - related party | i 283,273 | i 469,268 | ||||||
| (Decrease)Increase in accounts payable | i 178,883 | ( i 40,538 | ) | |||||
| Operating lease liabilities, current | ( i 93,985 | ) | ( i 81,617 | ) | ||||
| Net Cash Used In Operating Activities | ( i 1,405,659 | ) | ( i 994,557 | ) | ||||
| Cash Flows From Investing Activities: | ||||||||
| Investment in gold bullions | ( i 450,216 | ) | - | |||||
| Purchase of Fixed Assets | ( i 79,921 | ) | - | |||||
| Net Cash Used In Investing Activities | ( i 530,137 | ) | - | |||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from notes payable - related party | - | i 850,000 | ||||||
| Proceeds from convertible note payable, net of original issue discount | i 3,670,000 | - | ||||||
| Principal payments on debt | ( i 35,000 | ) | ( i 45,000 | ) | ||||
| Proceeds from warrant exercise | i 177,558 | - | ||||||
| Contributed capital - related party | - | i 17,495 | ||||||
| Proceeds from SBA Paycheck Protection Loan | - | i 90,100 | ||||||
| Net Cash Provided by Financing Activities | i 3,812,558 | i 912,595 | ||||||
| Net Increase in Cash | i 1,876,762 | ( i 81,962 | ) | |||||
| Cash at Beginning of Period | i 816,907 | i 125,024 | ||||||
| Cash at End of Period | $ | i 2,693,669 | $ | i 43,062 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for taxes | $ | - | $ | - | ||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Shares issued in connection with cashless warrants exercise | $ | i 292,533 | $ | i 365,157 | ||||
| Beneficial conversion feature in connection with convertible debt | $ | i 3,670,000 | $ | - | ||||
| Shares issued in connection with convertible note payable | $ | i 2,859,301 | $ | - | ||||
| Adoption of lease standard ASC 842 | $ | i 115,390 | $ | - | ||||
| Shares issued in connection with settlement of accounts payable | $ | i 159,301 | - | |||||
| Cancellation and forgiveness of lease - related party | $ | i 44,419 | $ | - | ||||
| Cancellation and forgiveness of lease | $ | i 241,800 | $ | - | ||||
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Kraig Biocraft Laboratories, Inc.
Notes to Condensed Consolidated Financial Statements as of September 30, 2021 and 2020
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NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
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The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.
It is management’s opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year.
Kraig Biocraft Laboratories, Inc. (the “Company”) was incorporated under the laws of the State of Wyoming on April 25, 2006. The Company was organized to develop high strength, protein based fiber, using recombinant DNA technology, for commercial applications in the textile and specialty fiber industries.
Kraig Biocraft Laboratories, Inc. (the “Company”) was incorporated under the laws of the State of Wyoming on April 25, 2006. The Company was organized to develop high strength, protein based fiber, using recombinant DNA technology, for commercial applications in the textile and specialty fiber industries.
On March 5, 2018, the Company issued a board resolution authorizing investment in a Vietnamese subsidiary and appointing a representative for the subsidiary.
On April 24, 2018, the Company announced that it had received its investment registration certificate for its new Vietnamese subsidiary Prodigy Textiles Co., Ltd.
On May 1, 2018, the Company announced that it had received its enterprise registration certificate for its new Vietnamese subsidiary Prodigy Textiles Co., Ltd.
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The assets and liabilities of Prodigy Textiles, Co., Ltd. (the Company’s Vietnamese subsidiary) whose functional currency is the Vietnamese Dong, are translated into US dollars at period-end exchange rates prior to consolidation. Income and expense items are translated at the average rates of exchange prevailing during the period. The adjustments resulting from translating the Company’s financial statements are reflected as a component of other comprehensive (loss) income. Foreign currency transaction gains and losses are recognized in net earnings based on differences between foreign exchange rates on the transaction date and settlement date.
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In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.
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For the purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. There were i i no / cash equivalents as of September 30, 2021 or December 31, 2020.
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Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by the Financial Accounting Standards Board (“FASB” Accounting Standards Codification (“ASC”) No. 260, “Earnings per Share.” For September 30, 2021 and December 31, 2020, warrants were not included in the computation of income/ (loss) per share because their inclusion is anti-dilutive.
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SCHEDULE OF ANTIDILUTIVE SECURITIES OF EARNINGS PER SHARE
| September 30, 2021 | December 31, 2020 | |||||||
| Stock Warrants (Exercise price - $ i i 0.001 / - $ i i 0.25 / /share) | i 53,411,461 | i 49,120,917 | ||||||
| Stock Options (Exercise price - $/Share) | i 26,802,500 | i 27,340,000 | ||||||
| Convertible Debt | i 19,434,477 | - | ||||||
| Convertible Preferred Stock | i 2 | i 2 | ||||||
| Total | i 99,648,440 | i 76,460,919 | ||||||
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Research and Development Costs
The Company expenses all research and development costs as incurred for which there is no alternative future use. These costs also include the expensing of employee compensation and employee stock based compensation.
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The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC No. 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC No. 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
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The Company accounts for stock-based compensation for employees and directors in accordance with ASC 718, Compensation (“ASC 718”). ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the statement of operations based on their fair values. Under the provisions of ASC 718, stock-based compensation costs are measured at the grant date, based on the fair value of the award, and are recognized as expense over the employee’s requisite service period (generally the vesting period of the equity grant). The fair value of the Company’s common stock options are estimated using the Black Scholes option-pricing model with the following assumptions: expected volatility, dividend rate, risk free interest rate and the expected life. The Company expenses stock-based compensation by using the straight-line method. In accordance with ASC 718 and, excess tax benefits realized from the exercise of stock-based awards are classified as cash flows from operating activities. All excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) are recognized as income tax expense or benefit in the condensed consolidated statements of operations.
The Company accounts for stock-based compensation awards issued to non-employees for services, as prescribed by ASC 718-10, at either the fair value of the services rendered or the instruments issued in exchange for such services, whichever is more readily determinable, using the measurement date guidelines enumerated in ASU 2018-07.
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Recent Accounting Pronouncements
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof.
On January 1, 2021, we adopted Accounting Standards Update (ASU) No. 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (ASU 2020-01), which clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments, to require financial assets carried at amortized cost to be presented at the net amount expected to be collected based on historical experience, current conditions, and forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU No. 2019-04, ASU No. 2019-05, ASU 2019-10, ASU 2019-11, ASU 2020-02, and ASU 2020-03 to provide additional guidance on the credit losses standard. Adoption of the ASUs is on a modified retrospective basis. We adopted the ASUs on January 1, 2020. The ASUs did not have a material impact on our consolidated financial statements. ASU No. 2016-13 applies to all financial assets including loans, trade receivables and any other financial assets not excluded from the scope that have the contractual right to receive cash. The adoption of this ASU did not have any impact on our financial statements.
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The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life.
In accordance with FASB ASC No. 360, Property, Plant and Equipment, the Company carries long-lived assets at the lower of the carrying amount or fair value. Impairment is evaluated by estimating future undiscounted cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the expected undiscounted future cash flow is less than the carrying amount of the assets, an impairment loss is recognized. Fair value, for purposes of calculating impairment, is measured based on estimated future cash flows, discounted at a market rate of interest.
There were i i no / impairment losses recorded for the nine months ended September 30, 2021 and 2020.
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Fair Value of Financial Instruments
We hold certain financial assets, which are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“ASC Topic 820-10”). ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques 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 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Level 1 instruments include cash, account receivable, prepaid expenses, inventory and account payable and accrued liabilities. The carrying values are assumed to approximate the fair value due to the short term nature of the instrument.
The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:
| ● | Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. We believe our carrying value of level 1 instruments approximate their fair value at September 30, 2021 and 2020. | |
| ● | Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. | |
| ● | Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider depleting assets, asset retirement obligations and net profit interest liability to be Level 3. We determine the fair value of Level 3 assets and liabilities utilizing various inputs, including NYMEX price quotations and contract terms. |
SCHEDULE OF FAIR VALUE OF FINANCIAL INSTRUMENTS
| September 30, 2021 | December 31, 2020 | |||||||
| Level 1 – Investment in Gold | $ | i 412,514 | $ | - | ||||
| Level 2 | $ | - | $ | - | ||||
| Level 3 | $ | - | $ | - | ||||
| Total | $ | i 412,514 | $ | - | ||||
The Board of Directors, who serves as the Custodian, is responsible for the safekeeping of gold bullion owned by the Company.
Fair value of the gold bullion held by the Company is based on that day’s London Bullion Market Association (“LBMA”) Gold Price PM. “LBMA Gold Price PM” is the price per fine troy ounce of gold, stated in U.S. dollars, determined by ICE Benchmark Administration (“IBA”) following an electronic auction consisting of one or more 30-second rounds starting at 3:00 p.m. (London time), on each day that the London gold market is open for business and published shortly thereafter.
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SCHEDULE OF GOLD BULLION
The following tables summarize activity in gold bullion for the three and nine months ended September 30, 2021:
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| Three and Nine Months Ended September 30, 2021 | Ounces | Cost | Fair Value | |||||||||
| Beginning balance | - | $ | - | $ | - | |||||||
| Investment in Gold bullion | i 239 | i 1,884 | i 450,216 | |||||||||
| Net change in unrealized depreciation | - | - | ( i 37,702 | ) | ||||||||
| Ending balance | i 239 | $ | i 1,884 | $ | i 412,514 | |||||||
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The Company’s revenues have been generated primarily from a contract with the U.S. Government. The Company performed work under a cost-plus-fixed-fee contract. Under the base phase of that contract, the Company produced recombinant spider silk woven into ballistic shootpack panels. Those shootpack panels were delivered to the U.S. Government customer. Under an option period award starting in July 2017 and ending in September 2018, to that original contract, the Company worked to develop new recombinant silks.
Effective January 1, 2018, the Company adopted ASC No. 606 — Revenue from Contracts with Customers. Under ASC No. 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
For the three and nine months ended September 30, 2021 and 2020, the Company recognized $0 and $0 respectively in revenue.
On January 25, 2021, the Company signed an amendment to a strategic partnership agreement with Kings Group for and exclusive sales agreement for up to $40 million. On April 8, 2021, the Company and Kings Group formed Spydasilk Enterprises Pte. Ltd., a Singapore company, to formalize this partnership.
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The Company at times has cash in banks in excess of FDIC insurance limits. At September 30, 2021 and December 31, 2020, the Company had approximately $ i 2,344,000 and $ i 500,000, respectively in excess of FDIC insurance limits.
For the nine months ended September 30, 2021 and 2020, the Company booked $0 and $0 for doubtful accounts.
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For certain notes issued, the Company provides the debt holder with an original issue discount. The original issue discount is recorded as a debt discount, reducing the face amount of the note, and is amortized to amortization of original issue discount in the consolidated statements of operations over the life of the debt.
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Debt issuance cost paid to lenders, or third parties are recorded as debt discounts and amortized to interest expense in the consolidated statements of operations, over the life of the underlying debt instrument.
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For conventional convertible debt where the rate of conversion is below market value, the Company records a “beneficial conversion feature” (“BCF”) and related debt discount.
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When the Company records a BCF, the relative fair value of the BCF is recorded as a debt discount against the face amount of the respective debt instrument. The discount is amortized to interest expense over the life of the debt.
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As reflected in the accompanying condensed unaudited financial statements, the Company has a working capital deficiency of $ i 6,342,249 and stockholders’ deficiency of $ i 5,902,426 and used $ i 1,405,659 of cash in operations for the nine months ended September 30, 2021. This raises substantial doubt about its ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Management believes that actions presently being taken to obtain additional funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.
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At September 30, 2021 and December 31, 2020, property and equipment, net, is as follows:
SCHEDULE OF PROPERTY AND EQUIPMENT
| September 30, 2021 | December 31, 2020 | |||||||
| Automobile | $ | i 41,805 | $ | i 41,805 | ||||
| Laboratory Equipment | i 101,656 | i 96,536 | ||||||
| Office Equipment | i 7,260 | i 7,260 | ||||||
| Leasehold Improvements | i 82,742 | i 85,389 | ||||||
| Less: Accumulated Depreciation | ( i 132,920 | ) | ( i 141,743 | ) | ||||
| Total Property and Equipment, net | $ | i 100,543 | $ | i 89,247 | ||||
Depreciation expense for the nine months ended September 30, 2021 and 2020, was $ i 19,304 and $ i 21,277, respectively.
Depreciation expense for the three months ended September 30, 2021 and 2020, was $ i 5,858 and $ i 8,159, respectively.
During the three and nine months ended September 30, 2021 and 2020, the Company recorded a loss on disposal of fixed assets of $ i i 49,321 / and $ i i 0 / , respectively.
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NOTE 4 - RIGHT TO USE ASSETS AND LEASE LIABILITITY
Since September of 2015, we rent office space at 2723 South State Street, Suite 150, Ann Arbor, Michigan 48104, which is our principal place of business. We pay an annual rent of $ i 2,508 for conference facilities, mail, fax, and reception services located at our principal place of business.
On January 23, 2017 the Company signed an 8 year property lease with the Company’s President for land in Texas where the Company grows its mulberry. The Company pays a monthly rent of $ i 960. Rent expense – related party for the nine months ended September 30, 2021 and 2020, was $ i 3,683 and $ i 6,263, respectively (See Note 9). On April 5, 2021, the Company ended this lease agreement with its President and removed the associated ROU asset and lease liability of $ i i 44,419 / .
On September 5, 2019, we signed a two-year lease for a i 5,000 square foot property in Lansing, MI that commenced on October 1, 2019 and ends on September 30, 2021, for its research and development headquarters. We pay an annual rent of $ i 42,000 for year one of the lease and will pay $ i i 44,800 / for year two of the lease. On April 16, 2021, the Company signed a two year amendment to this lease. Commencing on July 1, 2021 and ending on September 30, 2022, the Company will pay an annualized rent of $ i 42,000. From October 1, 2022 through September 30, 2023, the Company will pay an annual rent of $ i 44,800. The Company recorded ROU asset of $ i 79,862 and lease liability of $ i 79,862 in accordance with the adoption of the new guidance.
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On May 9, 2019 the Company signed a i 5 year property lease with the Socialist Republic of Vietnam which consists of i 4,560.57 square meters of space, which it leases at a current rent of approximately $ i i i 45,150 / / per year one and two and with the i 5% increase per year for years three through five. On July 1, 2021, the Company ended this lease agreement, and the company recovered the associated ROU asset and lease liability of $ i 241,800.
On July 1, 2021, the Company signed a i 5-year property lease with the Socialist Republic of Vietnam which consists of i 6,000 square meters of space, which it leases at a current rent of approximately $ i 8,645 per year.
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Right to use assets is summarized below:
SCHEDULE OF RIGHT USE OF ASSETS
| September 30, 2021 | ||||
| Right to use assets, net | i 79,862 | |||
| Right to use assets, net | i 35,044 | |||
| Total | $ | i 114,906 | ||
During the nine months ended September 30, 2021, the Company recorded $ i 87,874 as lease expense to current period operations.
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Lease liability is summarized below:
| September 30, 2021 | ||||
| Operating lease liability, net | i 79,862 | |||
| Operating lease liability, net | i 35,044 | |||
| Total | i 114,906 | |||
| Less: short term portion | ( i 33,492 | ) | ||
| Long term position | $ | i 81,414 | ||
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Lease expense for the nine months ended September 30, 2021 was comprised of the following:
| Operating lease expense | $ | i 34,786 | ||
| Operating lease expense | $ | i 53,673 | ||
| Operating lease expense – related party | $ | i 3,683 |
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NOTE 5 ACCRUED INTEREST – RELATED PARTY
On June 6, 2016, the Company received a $ i 50,000 loan from our principal stockholder. Subsequently on December 1, 2017, the Company received an additional $ i 30,000 loan from the same stockholder. On January 8, 2018 and March 31, 2018 the Company received an additional loan of $ i 100,000 and $ i 15,000, respectively. The Company received additional loan funds from the same stockholder as follows: $ i 20,000 on April 26, 2018; $ i 15,000 on June 21, 2018; $ i 15,000 on June 29, 2018; $ i 20,000 on July 5, 2018; $ i 26,000 on October 1, 2018; $ i 11,000 on October 12, 2018; $ i 20,000 on December 21, 2018; $ i 3,000 on January 4, 2019; $ i 30,000 on January 17, 2019; $ i 30,000 on February 1, 2019; $ i 20,000 on February 15, 2019; $ i 20,000 on March 1, 2019; $ i 17,000 on January 4, 2019, $ i 100,000 on November 20, 2019, $ i 100,000 on December 18, 2019, $ i 100,000 on January 24, 2020, $ i 100,000 on February 19, 2020 $ i 100,000 on March 9, 2020, $ i 100,000 on April 8, 2020, $ i 150,000 on June 3, 2020, $ i 100,000 on July 16, 2020, $ i 100,000 on August 12, 2020,$ i 100,000 on September 10, 2020, $ i 30,000 on October 19, 2020, $ i 30,000 on November 4, 2020, $ i 35,000 on November 17, 2020 and $ i 70,000 on December 1, 2020. Pursuant to the terms of the loan, the advance bears an interest at i 3%, is unsecured, and due on demand. Total loan payable to principal stockholder for as of December 31, 2020 is $ i 1,657,000. Total loan payable to this principal stockholder as of September 30, 2021 is $ i 1,657,000. During the nine months ended September 30, 2021, the Company recorded $ i 61,968 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $ i 40,138. During the nine months ended September 30, 2020, the Company recorded $ i 38,981 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $ i 24,485.
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On March 1, 2019, the Company entered into an unsecured promissory note with Notre Dame - an unrelated party in the amount of $ i 265,244 in exchange for outstanding account payable due to the debtor. Pursuant to the terms of the note, the note bears i 10% interest per year from the date of default until the date the loan is paid in full. The term of the loan is twenty four months. The loan repayment commenced immediately over a twenty-four month period according to the following table. During the nine months ended September 30, 2021, the Company paid $ i 35,000 of the loan balance (See Note 8 (A)):
1. $ i 1,000 per month for the first six months;
2. $ i 2,000 per month for the months seven and eight;
3. $ i 5,000 per month for months nine through twenty three; and,
4. Final payment of all remaining balance, in the amount of $ i 180,224 in month 24.
On July 8, 2021, the Company entered into an amendment to the March 1, 2019 agreement. As of the date of the amendment, the remaining outstanding balance is $ i 180,244. The loan repayment commenced immediately following the amendment and will extend over a fourteen month period with the following terms:
On April 16, 2020, the Company, was granted a loan (the “Loan”) from The Huntington National Bank, in the aggregate amount of $ i 90,100, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a Note dated on or about i April 16, 2020 issued by the Borrower, matures on or about April 16, 2022 and bears interest at an approximate rate of i 1% per annum. The Note may be prepaid by the Borrower at any time prior to maturity with no prepayment penalties. Funds from the Loan may only be used for payroll costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations incurred before February 15, 2020. The Company intends to use the entire Loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. On March 5, 2021, the loan was i 100% forgiven by the SBA. As a result, the Company recorded a gain on debt extinguishment of the loan in the amount of $ i 90,100.
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The Company issued a $ i 1,000,000, thirteen-month (13), unsecured, convertible note on December 11, 2020, which is due i January 11, 2022. The convertible note bears interest at i 10%, with a i 5% original issue discount ($ i 50,000), resulting in net proceeds of $ i 950,000. i The note contains a discount to market feature, whereby, the lender can purchase stock at 90% of the lowest trading price for a period of ten (10) days preceding the conversion date.
Additionally, the Company issued i 3,125,000 five-year ( i 5) warrants. The warrants had a fair value of $ i 2,599,066, based upon using a black-scholes option pricing model with the following inputs:
iSCHEDULE OF FAIR VALUE WARRANTS
| Stock Price | $ | i 0.14 | ||
| Exercise price | $ | i 0.16 | ||
| Expected term (in years) | i 5 | |||
| Expected volatility | i 60.64 | % | ||
| Annual rate of quarterly dividends | i 0 | % | ||
| Risk free interest rate | i 0.10 | % |
The Company has determined that ASC 815 does not apply since the Company has unlimited authorized shares, which in turn satisfies the requirement of having sufficient authorized shares available to settle any potential instruments that may require physical net-share settlement.
Pursuant to ASC 470, the Company will record a beneficial conversion feature (“BCF”) based upon the relative fair value of the conversion feature within the convertible note and the related warrants. The BCF cannot exceed the face amount of the note, therefore, the discount for this note is $ i 1,000,000, and was recorded on the commitment date. The discount is amortized to amortization of debt discount over the life of the underlying convertible note.
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The Company also paid $ i 86,000 as a debt issuance cost to a placement agent for services rendered. These costs are considered to be a component of the total debt discount.
On March 25, 2021, the Company entered into one year, unsecured, convertible note in the aggregate principal amount of $ i 4,000,000 for which the first convertible debenture for $ i 500,000, a one year, unsecured, convertible note on March 25, 2021, which is due i March 25, 2022. The convertible note bears interest at i 10%. i The note contains a discount to market feature, whereby, the lender can purchase stock at 80% of the lowest trading price for a period of ten (10) days preceding the conversion date. The second convertible debenture of $ i 500,000 was issued on April 6, 2021 and the third convertible debenture of $ i 3,000,000 was issued on April 22, 2021.
Additionally, the Company issued i 8,000,000 five-year ( i 5) warrants. The warrants had a fair value of $ i 3,359,716, based upon using a black-scholes option pricing model with the following inputs:
The Company has determined that ASC 815 does not apply since the Company has unlimited authorized shares, which in turn satisfies the requirement of having sufficient authorized shares available to settle any potential instruments that may require physical net-share settlement.
Pursuant to ASC 470, the Company will record a beneficial conversion feature (“BCF”) based upon the relative fair value of the conversion feature within the convertible note and the related warrants. The BCF cannot exceed the face amount of the note, therefore, the discount for this note is $ i 3,670,000, and was recorded on the commitment date. The discount is amortized to amortization of debt discount over the life of the underlying convertible note.
The Company also paid $ i 330,000 as a debt issuance cost to a placement agent for services rendered. These costs are a component of the total debt discount.
On April 23, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 100,000 of principle balance on a convertible debenture and $ i 1,644 of accrued interest (See Note 9).
On April 26, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 3,178 of accrued interest (See Note 9).
On April 30, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 3,630 of accrued interest. The shares had a fair value of $338,654 (See Note 9).
On June 7, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 25,644 of accrued interest (See Note 9).
On June 23, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 10,247 of accrued interest (See Note 9).
On July 6, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 7,671 of accrued interest (See Note 9).
On July 20, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 100,000 of principle balance on a convertible debenture and $ i 60,822 of accrued interest (See Note 9).
On July 29, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 11,836 of accrued interest (See Note 9).
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On August 16, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 150,000 of principle balance on a convertible debenture and $ i 6,904 of accrued interest (See Note 9).
On August 23, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 11,397 of accrued interest (See Note 9).
On August 30, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 150,000 of principle balance on a convertible debenture and $ i 3,082 of accrued interest (See Note 9).
On September 8, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 6,521 of accrued interest (See Note 9).
On September 14, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 2,630 of accrued interest (See Note 9).
On September 20, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 4,095 of accrued interest (See Note 9).
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The following represents a summary of the Company’s convertible debt at September 30, 2021:
Convertible Note Payable
| Amounts | In-Default | |||||||
| Balance – December 31, 2020 | i 50,505 | - | ||||||
| Proceeds – net | i 4,000,000 | - | ||||||
| Debt discount recorded | ( i 4,000,000 | ) | - | |||||
| Conversion of debt into common shares | ( i 2,700,000 | ) | ||||||
| Amortization of debt discount | i 4,172,955 | - | ||||||
| Balance – September 30, 2021 | $ | i 1,523,460 | $ | - | ||||
Accrued Interest Payable
| Amounts | In-Default | |||||||
| Balance – December 31, 2020 | i 5,479 | - | ||||||
| Interest Expense September 30, 2021 | i 201,507 | - | ||||||
| Interest conversion into common shares | ( i 167,274 | ) | ||||||
| Balance – September 30, 2021 | $ | i 39,712 | $ | - | ||||
/ / i
(A) Common Stock Issued for Cash
On March 9, 2019, the Company entered into a purchase agreement with one investor (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company issued the investor Units at a purchase price of $ per Unit, for total gross proceeds to the Company of $ i 1,000,000. The Units consist of i 14,797,278 shares of the Company’s Class A Common Stock (the “Common Stock”) and two warrants (the “Warrants”): (i) one warrant entitles the investor to purchase up to i 14,797,278 shares of Common Stock at an exercise price of $ i 0.06 per share (the “6 Cent Warrants”) and (ii) one warrant entitles the investor to purchase up to i 7,398,639 shares of Common Stock at an exercise price of $ i 0.08 per share (the “8 Cent Warrant”). The Warrants shall be exercisable at any time from the issuance date until the following expiration dates:
| ● | ½ of all $ i 0.06 Warrants shall expire on i March 8, 2021; |
| ● | ½ of all $ i 0.06 Warrants shall expire on i March 8, 2022; |
| ● | ½ of all $ i 0.08 Warrants shall expire on i March 8, 2022; and, |
| ● | ½ of all $ i 0.08 Warrants shall expire on i March 8, 2023. |
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On March 2, 2021, the Company determined to amend and extend the expiration of the warrants expiring on March 8, 2021 as follows:
| ● | i 1,479,728 of all $ i 0.06 Warrants shall expire on i March 8, 2021. | |
| ● | i 1,479,728 of all $ i 0.06 Warrants shall expire on i May 8, 2021 | |
| ● | i 1,479,728 shares of all $ i 0.06 Warrants shall expire on i July 8, 2021 | |
| ● | i 1,479,728 shares of all $ i 0.06 Warrants shall expire on i September 8, 2021 | |
| ● | i 1,479,727 shares of all $ i 0.06 Warrants shall expire on i November 8, 2021 |
On March 2, 2021, the Company issued i 1,479,728 shares of Common stock in connection with the exercise of i 1,479,728 warrants for $ i 88,784 (See Note 8 (C)).
On May 4, 2021, the Company issued i 1,479,728 shares of Common stock in connection with the exercise of i 1,479,728 warrants for $ i 88,784 (See Note 8 (C)).
(B) Common Stock Issued for Services
Shares issued for services as mentioned below were valued at the closing price of the stock on the date of grant.
On September 3, 2021, the Company issued shares of its class A common stock for services with a fair value of $ i 242,100 ($/share) on the date of grant.
(C) Common Stock Warrants and Options
On March 5, 2021, the Company issued shares of Common stock in connection with the cashless exercise of warrants.
On March 2, 2021, the Company issued i 1,479,728 shares of Common stock in connection with the exercise of i 1,479,728 warrants for $ i 88,784 (See Note 8 (A)).
On May 4, 2021, the Company issued i 1,479,728 shares of Common stock in connection with the exercise of i 1,479,728 warrants for $ i 88,784 (See Note 8 (A)).
On February 24, 2021, the Company issued shares of Common stock in connection with the cashless exercise of warrants.
On July 30, 2020, the Company issued shares of Common stock in connection with the cashless exercise of warrants.
iOn July 8, 2021, the Company issued a 4-year option to purchase i 500,000 shares of common stock at an exercise price of $ per share to employees for services rendered. The options had a fair value of $ i 46,890, based upon the Black-Scholes option-pricing model on the date of grant and options are fully vested on the date granted.
| Expected dividends | % | |||
| Expected volatility | i 130.18 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 0.37 | % | ||
| Expected forfeitures | i 0 | % |
On July 8, 2021, the Company extended the expiration date of the warrant issued on February 9, 2018, to July 8, 2025. During the nine months ended September 30, 2021, the Company recorded an additional $ as an expense for the warrant extension.
| Expected dividends | % | |||
| Expected volatility | i 130.18 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 0.37 | % | ||
| Expected forfeitures | i 0 | % |
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On April 27, 2021, the Company extended the expiration date of the warrant issued on October 2, 2016 to October 1, 2026. During the nine months ended September 30, 2021 the Company recorded an additional $ as an expense for the warrant extension.
| Expected dividends | % | |||
| Expected volatility | i 158.54 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 1.37 | % | ||
| Expected forfeitures | i 0 | % |
On February 2, 2021, the Company extended the expiration date of the warrant to May 29, 2026. During the nine months ended September 30, 2021 the Company recorded an additional $ as an expense for the warrant extension.
| Expected dividends | % | |||
| Expected volatility | i 112 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 0.18 | % | ||
| Expected forfeitures | i 0 | % |
On January 1, 2016, the Company issued 3-year warrant to purchase i 6,000,000 shares of common stock at $ per share to a related party for services to be rendered. The warrants had a fair value of $ i 142,526, based upon the Black-Scholes option-pricing model on the date of grant and vested on February 20, 2017, and will be exercisable commencing on February 20, 2018, and for a period expiring on February 20, 2021. On February 2, 2021, the Company extended the expiration date of the warrant to May 29, 2026. During the nine months ended September 30, 2021 the Company recorded an additional $ as an expense for the warrant extension.
| Expected dividends | % | |||
| Expected volatility | i 112 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 0.18 | % | ||
| Expected forfeitures | i 0 | % |
On January 25, 2021, the Company issued a 7-year option to purchase shares of common stock at an exercise price of $ per share to a related party for services rendered. The options had a fair value of $ i 310,165, based upon the Black-Scholes option-pricing model on the date of grant. i Options vest 33.3% on the year one anniversary of the grant date, 33.3% will vest on the second anniversary, and 33.3% will vest on the third year anniversary as long as the employee remains with the Company at the end of each successive year for three years. Options will be exercisable on January 25, 2021, and for a period of 7 years expiring on January 25, 2028. During the nine months ended September 30, 2021, the Company recorded $ as an expense for options issued.
| Expected dividends | % | |||
| Expected volatility | i 133.22 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 1.46 | % | ||
| Expected forfeitures | i 0 | % |
On February 19, 2020 the Company issued a 10-year option to purchase shares of common stock at an exercise price of $ per share to a related party for services rendered. The options had a fair value of $ i 626,047, based upon the . During the nine months ended September 30, 2021, the Company recorded $ as an expense for options issued.
| Expected dividends | % | |||
| Expected volatility | i 125.19 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 1.50 | % | ||
| Expected forfeitures | i 0 | % |
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On February 19, 2020 the Company issued a 7-year option to purchase shares of common stock at an exercise price of $ per share to employees for services rendered. The options had a fair value of $ i 133,063, based upon the During the nine months September 30, 2021, the Company recorded $ as an expense for options issued, net of $ for the options cancelled due to termination of employment.
| Expected dividends | % | |||
| Expected volatility | i 125.19 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 1.46 | % | ||
| Expected forfeitures | i 0 | % |
On August 8, 2019, the Company issued a 3-year option to purchase shares of common stock at an exercise price of $ per share to a related party for services rendered. The options had a fair value of $ i 291,842, based upon the . During the nine months ended September 30, 2021, the Company recorded $ as an expense for options issued.
| Expected dividends | % | |||
| Expected volatility | i 105.73 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 1.54 | % | ||
| Expected forfeitures | i 0 | % |
On August 8, 2019, the Company issued a 2-year options to purchase shares of common stock at an exercise price of $ per share to a related party for services rendered. The options had a fair value of $18,240, based upon the . The options were cancelled on March 2, 2021. The Company also recorded a $ i 12,751 reduction to warrant expense related to the warrant cancellation.
| Expected dividends | % | |||
| Expected volatility | i 105.73 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 1.54 | % | ||
| Expected forfeitures | i 0 | % |
On August 8, 2019, the Company issued a 2-year options to purchase shares of common stock at an exercise price of $ per share to a related party for services rendered. The options had a fair value of $ i 19,525, based upon the . The options were cancelled on March 2, 2021. The Company also recorded a $ i 9,103 reduction to warrant expense related to the warrant cancellation.
| Expected dividends | % | |||
| Expected volatility | i 105.73 | % | ||
| Expected term | years | |||
| Risk free interest rate | i 1.54 | % | ||
| Expected forfeitures | i 0 | % |
i
| Number of Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (in Years) | ||||||||||
| Balance, December 31, 2020 | i 49,120,917 | - | ||||||||||
| Granted | i 8,500,000 | - | - | |||||||||
| Exercised | ( i 2,959,456 | ) | - | - | ||||||||
| Cancelled/Forfeited | ( i 1,250,000 | ) | - | - | ||||||||
| Balance, September 30, 2021 | i 53,411,461 | - | i 2.65 | |||||||||
| Intrinsic Value | $ | i 1,741,631 | ||||||||||
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i
For the nine months ended September 30, 2021, the following warrants were outstanding:
SCHEDULE OF WARRANTS OUTSTANDING
For the year ended December 31, 2020, the following warrants were outstanding:
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i
SCHEDULE OF OPTIONS OUTSTANDING
| Weighted Average | ||||||||||||||
| Exercise | Options | Options | Remaining | |||||||||||
| Price | Outstanding | Exercisable | Contractual Life | |||||||||||
| $ | i 0.115 | - | i 26,802,500 | |||||||||||
For the year ended December 31, 2020, the following options were outstanding:
| Weighted Average | ||||||||||||||
| Exercise | Options | Options | Remaining | |||||||||||
| Price | Outstanding | Exercisable | Contractual Life | |||||||||||
| $ | i 0.115 | - | i 22,267,800 | |||||||||||
(D) Amendment to Articles of Incorporation
On February 16, 2009, the Company amended its articles of incorporation to amend the number and class of shares the Company is authorized to issue as follows:
| ● | Common stock Class A, unlimited number of shares authorized, no par value |
| ● | Common stock Class B, unlimited number of shares authorized, no par value |
| ● | Preferred stock, unlimited number of shares authorized, no par value |
Effective December 17, 2013, the Company amended its articles of incorporation to designate a Series A no par value preferred stock. Two shares of Series A Preferred stock have been authorized.
(E) Common Stock Issued for Debt
On April 23, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 100,000 of principle balance on a convertible debenture and $ i 1,644 of accrued interest (See Note 7).
On April 26, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 3,178 of accrued interest (See Note 7).
On April 30, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 3,630 of accrued interest. The shares had a fair value of $ (See Note 7).
On June 7, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 25,644 of accrued interest (See Note 7).
On June 23, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 10,247 of accrued interest (See Note 7).
On July 6, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 7,671 of accrued interest (See Note 7).
On July 20, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 100,000 of principle balance on a convertible debenture and $ i 60,822 of accrued interest (See Note 7).
On July 29, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 11,836 of accrued interest (See Note 7).
On August 16, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 150,000 of principle balance on a convertible debenture and $ i 6,904 of accrued interest (See Note 7).
On August 23, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 11,397 of accrued interest (See Note 7).
On August 30, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 150,000 of principle balance on a convertible debenture and $ i 3,082 of accrued interest (See Note 7).
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On September 8, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 6,521 of accrued interest (See Note 7).
On September 14, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 2,630 of accrued interest (See Note 7).
On September 20, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 4,095 of accrued interest (See Note 7).
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NOTE 9 COMMITMENTS AND CONTINGENCIES
On November 10, 2010, the Company entered into an employment agreement with its CEO, effective January 1, 2011 through the December 31, 2015. i The term of the agreement is a five year period at an annual salary of $ i 210,000. There is a i 6% annual increase. For the year ending December 31, 2015, the annual salary was $ i 281,027. The employee is also to receive a i 20% bonus based on the annual based salary. Any stock, stock options bonuses have to be approved by the board of directors. On January 1, 2016 the agreement was renewed with the same terms for another i 5 years with an annual salary of $ i 297,889 for the year ended December 31, 2016. On January 1, 2017, the agreement renewed with the same terms for another i 5 years, but with an annual salary of $ i 315,764 for the year ended December 31, 2017. On January 1, 2019 the agreement renewed again with the same terms for another i 5 years. On January 1, 2021 the agreement renewed again with the same terms, but with an annual salary of $ i 398,643 for the year ended December 31, 2021. As of September 30, 2021 and December 31, 2020, the accrued salary balance is $ i 2,918,540 and $ i 2,804,725, respectively (See Note 10).
On January 20, 2015, the board of directors appointed Mr. Jonathan R. Rice as our Chief Operating Officer. Mr. Rice’s employment agreement has a term of one year and can be terminated by either the Company or Mr. Rice at any time. Under the employment agreement, Mr. Rice is entitled to an annual cash compensation of $ i 120,000, which includes salary, health insurance, 401K retirement plan contributions, etc. The Company also agreed to reimburse Mr. Rice for his past educational expenses of approximately $ i 11,000. In addition, Mr. Rice was issued a i three-year warrant to purchase i 2,000,000 shares of common stock of the Company at an exercise price of $ i 0.001 per share (the “January 2015 Warrant”) pursuant to the employment agreement. Additionally, on May 28, 2015, the Company issued a three-year warrant to purchase i 3,000,000 shares of common stock of the Company at an exercise price of $ i 0.001 per share (the “May 2015 Warrant”) to Mr. Rice. The May 2015 warrant fully vested on October 28, 2016 and will expire on i May 28, 2022. For the year ended December 31, 2015, the Company recorded $ i 121,448 for the warrants issued to Mr. Rice. On January 14, 2016, the Company signed a new employment agreement with Mr. Rice. The employment agreement has a term of one year and can be terminated by either the Company or Mr. Rice at any time. Under the employment agreement, Mr. Rice is entitled to annual cash compensation of $ i 140,000, which includes salary, health insurance, 401K retirement plan contributions, etc. In addition, Mr. Rice was issued a i three-year warrant to purchase i 6,000,000 shares of common stock of the Company at an exercise price of $ i 0.001 per share pursuant to the employment agreement (the “May 2016 Warrant”). The May 2016 warrant fully vested on February 20, 2017 and will expire on i May 20, 2026. On January 9, 2018, i the Company extended the expiration date of the January 2015 warrant from January 19, 2018 to January 31, 2020, and on January 10, 2020 the Company extended the expiration date of the January 2015 warrant to January 10, 2025 and on March 15, 2018, the Company signed an extension of its at-will employment agreement with its COO, extending the term to January 31, 2019. On March 25, 2019, the Company signed an extension of its at-will employment agreement with its COO, extending the term to January 1, 2020. On March 5, 2021, the Company signed an extension of its at-will employment agreement with its COO, extending the term to January 1, 2022. On August 8, 2019, Mr. Rice was issued a set of three five-year warrants to purchase a total of i 6,000,000 shares of common stock of the Company at an exercise price of $ i 0.2299 per share pursuant to the employment agreement. On April 26, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $ i 20,000 per year and issue a one-time $ i 20,000 bonus. Additionally, on August 15, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by an additional $ i 20,000 per year. The salary increase and the bonus is accrued and to be paid in full earlier by the direction of the Board or upon the earlier of:
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As of September 30, 2021 and December 31, 2020, the Company owes $ i 6,391 and $ i 103,730, respectively, to Mr. Rice for payroll payable.
On October 21, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $ i 20,000 per year (effective August 15, 2019). The salary increase is accrued and to be paid in full earlier by the direction of the Board or upon the earlier of:
On July 3, 2019, the board of directors appointed Mr. Kenneth Le as the Company’s Director of Government relations and President of Prodigy Textiles. Mr. Le’s employment agreement has a term of one year and can be terminated by either the Company or Mr. Rice at any time. Under the employment agreement, Mr. Le is entitled to annual cash compensation of $ i 60,000. In addition, Mr. Le was issued two i three-year warrants to purchase i 2,000,000 shares of common stock of the Company at an exercise price of $ i 0.2299 per share. As of September 30, 2021 and December 31, 2020, the accrued salary balance is $ i 2,130 and $ i 888, respectively.
(A) License Agreement
On May 8, 2006, the Company entered into a license agreement. Pursuant to the terms of the agreement, the Company paid a non- refundable license fee of $ i 10,000. The Company will pay a license maintenance fee of $ i 10,000 on the one year anniversary of this agreement and each year thereafter. The Company will pay an annual research fee of $ i 13,700 with first payment due January 2007, then on each subsequent anniversary of the effective date commencing May 4, 2007. The annual research fees are accrued by the Company for future payment. Pursuant to the terms of the agreement the Company may be required to pay additional fees aggregating up to a maximum of $ i 10,000 a year for patent maintenance and prosecution relating to the licensed intellectual property.
On October 28, 2011, the Company entered into a license agreement with the University of Notre Dame. Under the agreement, the Company received exclusive and non-exclusive rights to certain spider silk technologies including commercial rights with the right to sublicense such intellectual property. In consideration of the licenses granted under the agreement, the Company agreed to issue to the University of Notre Dame shares of its common stock and to pay a royalty of i 2% of net sales. The license agreement has a term of i 20 years which can be extended on an annual basis after that. It can be terminated by the University of Notre Dame if the Company defaults on its obligations under the agreement and fails to cure such default within 90 days of a written notice by the university. i The Company can terminate the agreement upon a 90 day written notice subject to payment of a termination fee of $ i 5,000 if the termination takes place within 2 years after its effectiveness, $10,000 if the termination takes place within i 4 years after its effectiveness and $20,000 if the Agreement is terminated after 4 years / . On May 5, 2017, the Company signed an addendum to that agreement relating to tangible property and project intellectual property. On March 1, 2019, the Company singed an addendum to that agreement. The Company entered into a separate loan agreement and promissory noted dated March 1, 2019 as a payment for expenses paid by the University prior to January 31, 2019 totalling $ i 265,244 and issued shares of Class A common stock with a fair value of $ i 281,659 as payment of certain debt. In the event of default the license agreement will be terminated. During the nine months ended September 30, 2021, the Company paid $ i 35,000 of the balance (See Notes 6).
On December 26, 2006, the Company entered into an addendum to the intellectual property transfer agreement with Mr. Thompson, its CEO. In accordance with FASB ASC No 480, Distinguishing Liabilities from Equity, the Company determined that the present value of the payment of $ i 120,000 that was due on December 26, 2007. As of September 30, 2021 and December 31, 2020, the outstanding balance is $ i i 65,292 / . For the nine months ended September 30, 2021, the Company recorded $ i 490 in interest expensed and related accrued interest payable. As of September 30, 2021 the Company recorded interest expense and related accrued interest payable of $ i 9,973.
On December 30, 2015, the Company entered into a cooperative agreement for the research and pilot production of hybrid silkworms in Vietnam. Under this agreement, the Company will establish a subsidiary in Vietnam where it will develop and produce hybrid silkworms. On April 24, 2018, the Company announced that it had received its investment registration certificate for its new Vietnamese subsidiary Prodigy Textiles Co., Ltd. On May 1, 2018, the Company announced that it had received its enterprise registration certificate for its new Vietnamese subsidiary Prodigy Textiles Co., Ltd.
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(B) Operating Lease Agreements
Since September of 2015, we rent office space at 2723 South State Street, Suite 150, Ann Arbor, Michigan 48104, which is our principal place of business. We pay an annual rent of $ i 2,508 for conference facilities, mail, fax, and reception services located at our principal place of business.
On May 9, 2019, i the Company signed a i 5 year property lease with the Socialist Republic of Vietnam which consists of i 4,560.57 square meters of space, which it leases at a current rent of approximately $ i 45,150 per year one and two and with the 5% increase per year for years three through five / . On July 1, 2021, the Company ended this lease agreement and entered into a new agreement effective July 1, 2021.
On July 1, 2021, the Company signed a i 5 year property lease with the Socialist Republic of Vietnam which consists of i 6,000 square meters of space, which it leases at a current rent of approximately $ i 8,645 per year.
On January 23, 2017 the Company signed an i 8 year property lease with the Company’s President for land in Texas where the Company grows its mulberry. The Company pays a monthly rent of $ i 960. Rent expense – related party for the nine months ended September 30, 2021 and 2020, was $ i 3,683 and $ i 6,263, respectively (See Note 10). On April 5, 2021, the Company ended this lease agreement with its President.
On September 13, 2017, the Company signed a new two year lease with a 2 year option commencing on October 1, 2017 and ending on September 31, 2019. The Company paid an annual rent of $ i 39,200 for the year one of lease and $ i 42,000 for the year two of lease for office and manufacturing space. On September 5, 2019, the Company signed a new i two-year lease for this 5,000 square foot property in Lansing, MI that commenced on October 1, 2019 and ends on September 30, 2021, for its research and development headquarters. The Company pays an annual rent of $ i 42,000 for year one of the lease and $ i 44,800 for year two of the lease. On April 16, 2021, the Company signed a two year amendment to this lease. Commencing on July 1, 2021 and ending on September 30, 2022, the Company will pay an annualized rent of $ i 42,000. From October 1, 2022 through September 30, 2023, the Company will pay an annual rent of $ i 44,800.
/ i
NOTE 10 RELATED PARTY TRANSACTIONS
On December 26, 2006, the Company entered into an addendum to the intellectual property transfer agreement with Mr. Thompson, its CEO. Pursuant to the addendum, the Company agreed to issue either preferred shares with the following preferences; no dividends and i voting rights equal to 100 common shares per share of preferred stock or the payment of $120,000, the officer agreed to terminate the royalty payments due under the agreement and give title to the exclusive license for the non-protective apparel use of the intellectual property to the Company. On the date of the agreement, the Company did not have any preferred stock authorized with the required preferences. In accordance with FASB ASC No. 480, Distinguishing Liabilities from Equity, the Company determined that the present value of the payment of $ i 120,000 that was due on December 26, 2007, one year anniversary of the addendum, should be recorded as an accrued expense until such time as the Company has the ability to assert that it has preferred shares authorized. As of September 30, 2021 the outstanding balance is $ i 65,292. Additionally, the accrued expenses are accruing i 7% interest per year. As of September 30, 2021, the Company recorded interest expense and related accrued interest payable of $ i 9,973.
On November 10, 2010, the Company entered into an employment agreement, with its CEO, effective January 1, 2011 through the December 31, 2015. Subsequently, on January 1, 2018 the agreement renewed with the same terms for another 5 years with an annual salary of $ i 398,643 for the year ended December 31, 2021. As of September 30, 2021 and December 31, 2020, the accrued salary balance is $ i 2,918,540 and $ i 2,804,725, respectively.
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On January 14, 2016, the Company signed a new employment agreement with Mr. Rice, the Company’s COO. The employment agreement has a term of one year and can be terminated by either the Company or Mr. Rice at any time. Under the employment agreement, Mr. Rice is entitled to annual cash compensation of $ i 140,000, which includes salary, health insurance, 401K retirement plan contributions, etc. In addition, Mr. Rice was issued a i three-year warrant to purchase i 6,000,000 shares of common stock of the Company at an exercise price of $ i 0.001 per share pursuant to the employment agreement. On January 9, 2018, i the Company extended the expiration date of a warrant for 2,000,000 shares of common stock from January 19, 2018 to January 31, 2020 and on January 10, 2020, the Company extended the expiration date of the warrant to January 10, 2025 for Mr. Rice. Additionally, on March 15, 2018, the Company signed an extension of its at-will employment agreement with its COO. On March 5, 2021, the Company signed an extension of its at-will employment agreement with its COO extending until January 1, 2022. On April 26, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $ i 20,000 per year and issue a one-time $ i 20,000 bonus. Additionally, on August 15, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by an additional $ i 20,000 per year. The salary increase and the bonus is accrued and to be paid in full earlier by the direction of the Board or upon the earlier of:
As of September 30, 2021 and December 31, 2020, the Company owes $ i 6,390 and $ i 103,730, respectively, to Mr. Rice for payroll payable.
On July 3, 2019, the board of directors appointed Mr. Kenneth Le as the Company’s Director of Government relations and President of Prodigy Textiles. Mr. Le’s employment agreement has a term of one year and can be terminated by either the Company or Mr. Rice at any time. Under the employment agreement, Mr. Le is entitled to an annual cash compensation of $ i 60,000. In addition, Mr. Le was issued two i three-year warrants to purchase i 2,000,000 shares of common stock of the Company at an exercise price of $ i 0.2299 per share. As of September 30, 2021 and December 31, 2020, the accrued salary balance is $ i 2,130 and $ i 888, respectively.
June 6, 2016, the Company received a $ i 50,000 loan from our principal stockholder. Subsequently on December 1, 2017, the Company received an additional $ i 30,000 loan from the same stockholder. On January 8, 2018 and March 31, 2018 the Company received an additional loan of $ i 100,000 and $ i 15,000, respectively. The Company received additional loan funds from the same stockholder as follows: $ i 20,000 on April 26, 2018; $ i 15,000 on June 21, 2018; $ i 15,000 on June 29, 2018; $ i 20,000 on July 5, 2018; $ i 26,000 on October 1, 2018; $ i 11,000 on October 12, 2018; $ i 20,000 on December 21, 2018; $ i 3,000 on January 4, 2019; $ i 30,000 on January 17, 2019; $ i 30,000 on February 1, 2019; $ i 20,000 on February 15, 2019; $ i 20,000 on March 1, 2019; $ i 17,000 on January 4, 2019, $ i 100,000 on November 20, 2019, $ i 100,000 on December 18, 2019, $ i 100,000 on January 24, 2020, $ i 100,000 on February 19, 2020, $ i 100,000 on March 9, 2020, $ i 100,000 on April 8, 2020, $ i 150,000 on June 3, 2020, $ i 100,000 on July 16, 2020, $ i 100,000 on August 12, 2020,$ i 100,000 on September 10, 2020, $ i 30,000 on October 19, 2020, $ i 30,000 on November 4, 2020, $ i 35,000 on November 17, 2020 and $ i 70,000 on December 1, 2020. Pursuant to the terms of the loan, the advance bears an interest at i 3%, is unsecured, and due on demand. Total loan payable to principal stockholder for as of December 31, 2020 is $ i 1,657,000. Total loan payable to this principal stockholder as of September 30, 2021 is $ i 1,657,000. Total loan payable to this principal stockholder as of September 30, 2021 is $ i 1,657,000. During the nine months ended September 30, 2021, the Company recorded $ i 61,968 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $ i 40,138. During the nine months ended September 30, 2020, the Company recorded $ i 38,981 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $ i 24,485.
On January 23, 2017, the Company signed an 8 year property lease with the Company’s President for land in Texas. The Company pays $ i 960 per month starting on February 1, 2017 and uses this facility to grow mulberry for its U.S. silk operations. Rent expense – related party for years ended September 30, 2021 and 2020 was $ i 3,683 and $ i 6,263, respectively. The Company ended this lease on April 5, 2021.
As of September 30, 2021 and December 31, 2020, there was $ i 338,049 and $ i 331,143, respectively, included in accounts payable and accrued expenses - related party, which is owed to the Company’s Chief Executive Officer and Chief Operations Officer.
As of September 30, 2021, there was $ i 1,732,191 of accrued interest- related party and $ i 108,900 in shareholder loan interest – related party included in accounts payable and accrued expenses – related party, which is owed to the Company’s Chief Executive officer.
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As of December 31, 2020, there was $ i 1,562,499 of accrued interest- related party and $ i 82,238 in shareholder loan interest – related party included in accounts payable and accrued expenses – related party, which is owed to the Company’s Chief Executive officer.
As of September 30, 2021, the Company owes $ i 2,924,436 in accrued salary to its principal stockholder, $ i 29,943 to the Company’s COO, $ i 3,018 to Director of Prodigy Textiles and $ i 26,110 to its office employees.
As of December 31, 2020, the Company owes $ i 2,804,725 in accrued salary to its principal stockholder, $ i 103,730 to the Company’s COO, $ i 888 to Director of Prodigy Textiles and $ i 22,900 to its office employees.
The Company owes $ i i 65,292 / in royalty payable to related party as of September 30, 2021 and December 31, 2020.
/ i
The Company has analyzed its operations subsequent to November 5, 2021 through the date these financial statements were issued, and has determined that, other than disclosed below, it does not have any material subsequent events to disclose.
On October 4, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 2,301 of accrued interest.
On October 12, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 250,000 of principle balance on a convertible debenture and $ i 5,671of accrued interest.
On October 25, 2021, the Company issued shares of Common Stock in exchange for conversion of $ i 200,000 of principle balance on a convertible debenture and $ i 1,205 of accrued interest.
On October 28, 2021, the Company issued a 7-year option to purchase shares of common stock at an exercise price of $ i 0.0785 per share to a related party for services rendered.
/
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING INFORMATION
The following information should be read in conjunction with Kraig Biocraft Laboratories, Inc. and its subsidiaries (“we”, “us”, “our”, or the “Company”) condensed unaudited financial statements and the notes thereto contained elsewhere in this report. Information in this Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Form 10-Q that does not consist of historical facts, are “forward-looking statements.” Statements accompanied or qualified by, or containing words such as “may,” “will,” “should,” “believes,” “expects,” “intends,” “plans,” “projects,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,” “presume,” and “assume” constitute forward-looking statements, and as such, are not a guarantee of future performance.
Forward-looking statements are subject to risks and uncertainties, certain of which are beyond our control. Actual results could differ materially from those anticipated as a result of the factors described in the “Risk Factors” and detailed in our other Securities and Exchange Commission (“SEC”) filings. Risks and uncertainties can include, among others, 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; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to obtain sufficient financing to continue and expand business operations; the ability to develop technology and products; changes in technology and the development of technology and intellectual property by competitors; the ability to protect technology and develop intellectual property; and other factors referenced in this and previous filings. Consequently, investors should not place undue reliance on forward-looking statements as predictive of future results.
Because of these risks and uncertainties, the forward-looking events and circumstances discussed in this report or incorporated by reference might not transpire. Factors that cause actual results or conditions to differ from those anticipated by these and other forward-looking statements include those more fully described elsewhere in this report and in the “Risk Factors” section of our registration statement on Form S-1.
The Company disclaims any obligation to update the forward-looking statements in this report.
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Overview
Kraig Biocraft Laboratories, Inc. is a corporation organized under the laws of Wyoming on April 25, 2006. We were organized to develop high strength fibers using recombinant DNA technology for commercial applications in technical textile. We use genetically engineered silkworms that produce spider silk to create our recombinant spider silk. Applications include performance apparel, workwear, filtration, luxury fashion, flexible composites, medical implants, and more. We believe that we have been a leader in the research and development of commercially scalable and cost effective spider silk for technical textile. Our primary proprietary fiber technology includes natural and engineered variants of spider silk produced in domesticated mulberry silkworms. Our business brings twenty-first century biotechnology to the historical silk industry, permitting us to introduce materials with innovative properties and claims into an established commercial ecosystem of silkworm rearing, silk spinning and weaving, and manufacture of garments and other products that can include our specialty fibers and textiles. Specialty fibers are engineered for specific uses that require exceptional strength, flexibility, heat resistance and/or chemical resistance. The specialty fiber market is exemplified by two synthetic fiber products that come from petroleum derivatives: (1) aramid fibers; and (2) ultra-high molecular weight polyethylene fibers. The technical textile industry involves products for both industrial and consumer products, such as filtration fabrics, medical textiles (e.g., sutures and artificial ligaments), safety and protective clothing and fabrics used in military and aerospace applications (e.g., high-strength composite materials).
We are using genetic engineering technologies to develop fibers with greater strength, resiliency and flexibility for use in our target markets, namely the specialty fiber and technical textile industries.
On April 16, 2020, we announced that we successfully developed a new technology platform, based on a non-CRISPR gene editing knock-in knock-out technology. CRISPR is the most recent and efficient gene editing technology2 CRISPR stands for “Clustered regularly interspaced short palindromic repeats.” This is our first knock-in knock-out technology of essentially pure spider silk transgenic. This new system is built on our eco-friendly and cost-effective silkworm production system, which we believe is significantly more advanced than any competing methods. Knock-in knock-out technology allows for the targeting of specific locations and genetic traits for modification, addition, and removal. This new capability will accelerate new product developments, which should allow us to bring products to market more quickly. This capability also allows for genetic trait modifications that were previously impractical, creating opportunities for products outside of silk fibers and increased flexibility in production location. Based on our internal studies, the new technology has a purity rate that is significantly greater than Dragon Silk, a fiber that we developed with our previous tools. Samples of Dragon Silk has already demonstrated to be tougher than many fibers used in bullet proof vests and we expect that the increased spider silk purity, created using this new approach, will yield materials beyond those capabilities. This new system utilizes our eco-friendly and cost-effective silkworm production system, which we believe is significantly more advanced than any of the competing methods. We have already begun the validation process for the first of these new transgenics and anticipate that U.S. production will be possible as early as 2022 or 2023.
This does not affect our current work of overseeing our production facility to ramp up our production of Dragon SilkTM and Monster Silk®, as these fibers are designed to address their own markets.
In August 2019, we received authorization to begin rearing genetically enhanced silkworms at our production facility in Vietnam. We received our investment registration certificate for the facility in April 2018. In October 2019, we delivered the first batch of these silkworms and began operations. These silkworms will serve as the basis for the commercial expansion of our proprietary silk technology. On November 4, 2019, we reported that we had successfully completed rearing the first batch of its transgenic silkworms at the Quang Nam production factory. Seasonal challenges in late December 2019 slowed production operations and the restrictions imposed due to the global pandemic further delayed our operations in 2020 by about 4-6 months. However, we were able to resume production operations of our specialized silk in October 2020, once travel and work restrictions for COVID-19 were lifted. In January 2021, we delivered the first sample silk shipment from this factory. We believe that we will be able to target a capacity of 40 metric tons of our recombinant spider silk fiber per annum from this factory once it reaches maximum utilization. This capacity will allow us to address initial demand for our products and materials for various applications in the protective, performance, and luxury textile markets.
2 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5131771/
https://www.yourgenome.org/facts/what-is-genome-editing
https://ghr.nlm.nih.gov/primer/genomicresearch/genomeediting
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On November 23, 2020, we entered into a Strategic Partnership Agreement (the “SPA”) with Mthemovement Kings Pte Ltd (“Kings”). Kings is an eco-friendly luxury streetwear apparel line, part of the Kings Group of Companies and its affiliated companies. On January 25, 2021, the parties exchanged signatures for an amendment to the Agreement, which amended the procedures for termination of the SPA to only allow for the termination of the SPA by mutual agreement of the Company and Kings following a consultation period of 120 (one hundred and twenty) calendar days or such period as agreed otherwise between the parties (the “Amendment,” together with the SPA, the “Agreement”).
Pursuant to the Agreement, the parties formed a joint venture, Spydasilk Enterprises Pte. Ltd., to develop and sell the Company’s spider silk fibers under the new innovative apparel and fashion brand, trade named SpydaSilk™ and potential other trademarks to be announced. All intellectual property related to SpydaSilk™ will be jointly owned by the Company and Kings.
Under the terms of the Agreement, the Company granted the joint venture and the SpydaSilk brand an exclusive geographic license to all the Company’s technologies for the Association of Southeast Asian Nations, in exchange for a 4-year firm commitment to purchase up to $32 million of the Company’s raw recombinant spider silk over the 4-year period, with an initial payment of $250,000 to the Company. Kings is projected to purchase an additional $8 million of material in the fourth year, but there is no guarantee that such additional purchase will be made.
In consideration for its ownership position in the joint venture, the Company shall issue 1,000,000 shares of its common stock to Kings. The Agreement has a 60-month term, which can be terminated at any time by mutual agreement following a consultation period of 120 days, or such other period as agreed by the parties. If applicable, the parties will honor their share of committed expenditures of the joint venture and King will repay the Company any unused brand funds.
The Report of Independent Registered Public Accounting Firm to our financial statements as of December 31, 2020 includes an explanatory paragraph stating that our net loss from operations and net capital deficiency at December 31, 2020 raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Plan of Operations
During the next twelve months, we expect to take the following steps in connection with the further development of our business and the implementation of our plan of operations:
| ● | We plan to develop a line of fabrics and apparel under joint venture with Kings, creating a line of fashion wear under the Company Spydasilk Enterprises Pte. Ltd with trade names including SpydasilkTM, SpydraTM, and others. |
| ● | We plan to continue the expansion of our production operations at our facilities in Quang Nam, Vietnam in accordance with our investment and enterprise registration certificates, including the planting of additional mulberry fields in collaboration with local farming cooperatives and the hiring of additional direct staff for our factory as needed. |
| ● | We plan to accelerate both our microbiology and selective breeding programs as well as provide more resources for our material testing protocols. We spent approximately $237,000 over the last 9 months on research and development of high strength polymers. In the first three quarters of 2021, we directed our research and development efforts on growing our internal capabilities; we plan to continue to dedicate our efforts in 2021/2022 to grow our internal research and development programs. |
| ● | We will consider buying an established revenue producing company in a compatible business, in order to broaden our financial base and facilitate the commercialization of our products; as of the date hereof, we have not had any formal discussion or entered into any definitive agreements regarding any such purchase. |
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| ● | We will also actively consider pursuing collaborative research opportunities with both private and university laboratories in areas of research which overlap the company’s existing research and development. One such potential area for collaborative research which the company is considering is protein expression platforms. If our financing allows, management will strongly consider increasing the breadth of our research to include protein expression platform technologies. |
| ● | We plan to actively pursue collaborative research and product testing opportunities with companies in the biotechnology, materials, textile and other industries. |
| ● | We plan to actively pursue additional collaborative commercialization, marketing and manufacturing opportunities with companies in the textile and material sectors for the fibers we developed and for any new polymers that we create in the remainder of 2021 and going forward. |
| ● | We plan to actively pursue the development of commercial scale production of our recombinant materials including Monster Silk®, Dragon SilkTM, SpydasilkTM, and SpydraTM |
| ● | We have initiated and plan to accelerate our efforts for large scale U.S. production. This work will include the research and possible production of a new transgenic tailored specifically domestic production. |
Limited Operating History
We have not previously demonstrated that we will be able to expand our business through an increased investment in our research and development efforts. We cannot guarantee that the research and development efforts described in this filing will be successful. Our business is subject to risks inherent in growing an enterprise, including limited capital resources, risks inherent in the research and development process and possible rejection of our products in development.
If financing is not available on satisfactory terms, we may be unable to continue our research and development and other operations. Equity financing will result in dilution to existing stockholders.
Impact of COVID-19 Outbreak
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates. While the closures and limitations on movement, domestically and internationally, are expected to be temporary, if the outbreak continues on its current trajectory the duration of the supply chain disruption could reduce the availability, or result in delays, of materials or supplies to and from the Company, which in turn could materially interrupt the Company’s business operations. As stated above, U.S. travel restrictions impacted our ability to ship eggs to our Vietnam facility and without such eggs, we cannot conduct operations there. In October of 2020, with restrictions lifted, we were able to deliver silkworm eggs to the Vietnam facility and production resumed. In January 2021 we delivered the first sample silk shipment from the factory. Given the speed and frequency of the continuously evolving developments with respect to this pandemic, the Company cannot reasonably estimate the magnitude of the impact to its consolidated results of operations. The Company’s manufacturing facilities support business that have been deemed essential by their respective state governments and remain operational. We have taken every precaution possible to ensure the safety of our employees.
On March 19, 2020, we furloughed non-essential staff consistent with leading health official recommendations in order to help prevent the spread of COVID-19. This decision was made in an abundance of caution and will primarily impact staff at our fully owned subsidiary, Prodigy Textiles, in Vietnam and will result in the temporary closing of silk rearing operations at that facility. As of the date hereof, we have resumed silk production operations at the factory in Vietnam. The temporary suspension of rearing operations resulted in a delay of 4-6 months in the Company’s production expansion schedule. The Company supported its furloughed staff and paid their salaries through June 30, 2020. During the duration of the furlough, the Company CEO did not receive or accrue any salary. On July 1, 2020, furloughed staff returned to work preparing the factory in Vietnam to receive the next shipment of silkworm eggs. On October 24, 2020, silk production operations at the factory resumed. In January 2021, we delivered the first sample silk shipment from the factory. The global pandemic of COVID-19 continues to evolve rapidly, and we will continue to monitor the situation closely, including its potential effect on our plans and timelines. The actions of governments in response to COVID-19, both domestic and foreign, have impacted our ability to transport goods, people, essential equipment, and other items essential to our production. In turn, these restrictions are impacting our ability to produce intermediate and end products and are delaying our timelines for commercialization and revenue.
Additionally, it is reasonably possible that estimates made in the financial statements have been, or will be, materially and adversely impacted in the near term as a result of these conditions, including losses on inventory; impairment losses related to goodwill and other long-lived assets and current obligations.
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Three months ended September 30, 2021 compared to the three months ended September 30, 2020
Our revenue, operating expenses, and net loss from operations for the three month period ended September 30, 2021 as compared to the three month period ended September 30, 2020, were as follows – some balances on the prior period’s combined financial statements have been reclassified to conform to the current period presentation:
| Three Months Ended | % Change | |||||||||||||||
| September 30, | Increase | |||||||||||||||
| 2021 | 2020 | Change | (Decrease) | |||||||||||||
| NET REVENUES | $ | - | $ | - | - | - | ||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| General and Administrative | 637,611 | 366,243 | 271,368 | 74.10 | % | |||||||||||
| Professional Fees | 33,179 | 39,169 | (5,990 | ) | -15.29 | % | ||||||||||
| Officer’s Salary | 162,498 | 161,861 | 637 | 0.39 | % | |||||||||||
| Rent - Related Party | - | 3,556 | (3,556 | ) | -100.00 | % | ||||||||||
| Research and Development | 39,254 | 27,626 | 11,628 | 42.09 | % | |||||||||||
| Total operating expenses | 872,542 | 598,455 | 274,087 | 45.80 | % | |||||||||||
| Loss from operations | (872,542 | ) | (598,455 | ) | (274,087 | ) | 45.80 | % | ||||||||
| Net change in unrealized depreciation on investment in gold bullion | (37,702 | ) | - | (37,702 | ) | -100.00 | % | |||||||||
| Interest expense | (188,416 | ) | (94,703 | ) | (93,713 | ) | 98.95 | % | ||||||||
| Amortization of original issue discount | (2,088,487 | ) | - | (2,088,487 | ) | -100.00 | % | |||||||||
| Net Loss | $ | (3,187,147 | ) | $ | (693,158 | ) | (2,493,989 | ) | 359.80 | % | ||||||
Net Revenues: During the three months ended September 30, 2021, we realized $0 of revenues from our business. During the three months ended September 30, 2020, we realized $0 of revenues from our business. The change in revenues between the quarter ended September 30, 2021 and 2020 was $0 or 0%.
Cost of Revenues: Costs of revenues for the three months ended September 30, 2021 were $0, as compared to $0 for the three months ended September 30, 2020, a change of $0 or 0%.
Gross Profit: During the three months ended September 30, 2021, we realized a gross profit of $0, as compared to $0 for the three months ended September 30, 2020, a change of $0 or 0%.
Research and development expenses: During the three months ended September 30, 2021, we incurred $39,254 of research and development expenses. During the three months ended September 30, 2020, we incurred $27,626 of research and development expenses. This was an increase of $11,628 or 42.09% in 2021 compared with the same period in 2020. This increase was due to an increase in research spending.
Professional Fees: During the three months ended September 30, 2021, we incurred $33,179 of professional expenses, which decreased by $5,990 or 15.29% from $39,169 for the three months ended September 30, 2020. This decrease was primarily due to a decrease in professional fees and in investor relations services.
Officers Salary: During the three months ended September 30, 2021, officers’ salary expenses increased to $162,498 or 0.39% from $161,861 for the three months ended September 30, 2020. This increase was primarily due to a 6% annual increase for the Company’s CEO and a reinstatement of salary for the CEO, which he voluntarily suspended during the forced shutdown of the Company’s Vietnam operations due to COVID in 2020.
General and Administrative Expense: General and administrative expenses increased by $271,368 or 74.10% to $637,611 for the three months ended September 30, 2021 from $366,243 for the three months ended September 30, 2020. Our general and administrative expenses for the three months ended September 30, 2021 consisted of other general and administrative expenses (which includes expenses such as auto, business development, SEC filings, investor relations, general office, warrants and shares issued for services) of $315,184, travel of $3,847, consulting $242,100 and office salary of $76,480 for a total of $637,611. Our general and administrative expenses for the three months ended September 30, 2020 consisted of other general and administrative expenses (which includes expenses such as auto, business development, SEC filings, investor relations, general office, warrants issued for services) of $288,450, travel of $2,885 and office salary of $74,908, for a total of $366,243.
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Rent – Related Party: During the three months ended September 30, 2021, rent- related party expense decreased to $0 or 100% from $3,556 for the three months ended September 30, 2020. The rent-related party expense was attributable to the Company signing an eight-year property lease with the Company’s President on January 23, 2017. On April 5, 2021, the Company ended this lease agreement with its President.
Net Change in Unrealized Depreciation on Investment in Gold Bullion: Net change in unrealized depreciation on investment in gold bullion increased by $37,702 to $37,702 for the three-month period ended September 30, 2021 from $0 for the three month period ended September 30, 2020. The increase was primarily due to a net change in unrealized depreciation on investment in gold bullion.
Interest Expense: Interest expense increased by $93,713 to $188,416 for the three-month period ended September 30, 2021 from $94,703 for the three month period ended September 30, 2020. The increase was primarily due to interest on certain Company loans.
Amortization of original issue and debt discounts: Amortization of original issue and debt discount increased to $2,088,487, or 100% for the three months ended September 30, 2021 compared to $0 for the three months ended September 30, 2020. The increase was primarily due to amortization of original issue and debt discounts on convertible loans.
Net Loss: Net loss increased by $2,493,989, or 359.80 %, to a net loss of $3,187,147 for the three-month period ended September 30, 2021 from a net loss of $693,158 for the three month period ended September 30, 2020. This increase in net loss was primarily attributable to increases in amortization of original issue debt discount, shares of common stock issued for consulting services, warrant expense and officer’s salary due to a reinstatement of salary for the CEO, which he voluntarily suspended during the forced shutdown of the Company’s Vietnam operations due to COVID in 2020 and offset by a decrease in professional fees.
Nine months ended September 30, 2021 compared to the nine months ended September 30, 2020
Our revenue, operating expenses, and net loss from operations for the nine month period ended September 30, 2021 as compared to the nine month period ended September 30, 2020, were as follows – some balances on the prior period’s combined financial statements have been reclassified to conform to the current period presentation:
| Nine Months Ended | % Change | |||||||||||||||
| September 30, | Increase | |||||||||||||||
| 2021 | 2020 | Change | (Decrease) | |||||||||||||
| NET REVENUES | $ | - | $ | - | - | - | ||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| General and Administrative | 1,313,510 | 3,507,302 | (2,193,792 | ) | -62.55 | % | ||||||||||
| Professional Fees | 259,702 | 89,643 | 170,059 | 189.71 | % | |||||||||||
| Officer’s Salary | 494,090 | 361,276 | 132,814 | 36.76 | % | |||||||||||
| Rent - Related Party | 3,683 | 9,819 | (6,136 | ) | -62.49 | % | ||||||||||
| Research and Development | 171,748 | 65,408 | 106,340 | 162.58 | % | |||||||||||
| Total operating expenses | 2,242,733 | 4,033,448 | (1,790,715 | ) | -44.40 | % | ||||||||||
| Loss from operations | (2,242,733 | ) | (4,033,448 | ) | 1,790,715 | -44.40 | % | |||||||||
| Interest expense | (518,294 | ) | (279,846 | ) | (238,448 | ) | 85.21 | % | ||||||||
| Amortization of original issue discount | (4,172,955 | ) | - | (4,172,955 | ) | -100.00 | % | |||||||||
| Net change in unrealized depreciation on investment in gold bullion | (37,702 | ) | - | (37,702 | ) | -100.00 | % | |||||||||
| Gain on debt extinguishment (PPP) | 90,100 | - | 90,100 | 100.00 | % | |||||||||||
| Net Loss | $ | (6,881,584 | ) | $ | (4,313,294 | ) | (2,568,290 | ) | 59.54 | % | ||||||
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Net Revenues: During the nine months ended September 30, 2021, we realized $0 of revenues from our business. During the nine months ended September 30, 2020, we realized $0 of revenues from our business. The change in revenues between the quarter ended September 30, 2021 and 2020 was $0 or 0%.
Cost of Revenues: Costs of revenues for the nine months ended September 30, 2021 were $0, as compared to $0 for the nine months ended September 30, 2020, a change of $0 or 0%.
Gross Profit: During the nine months ended September 30, 2021, we realized a gross profit of $0, as compared to $0 for the nine months ended September 30, 2020, a change of $0 or 0%.
Research and development expenses: During the nine months ended September 30, 2021, we incurred $171,748 of research and development expenses. During the nine months ended September 30, 2020, we incurred $65,408 of research and development expenses. This was an increase of $106,340 or 162.58% in 2021 compared with the same period in 2020. This increase was due to an increase in research spending.
Professional Fees: During the nine months ended September 30, 2021, we incurred $259,702 of professional expenses, which increased by $170,059 or 189.71% from $89,643 for the nine months ended September 30, 2020. This increase was primarily due to an increase in professional fees and an increase in investor relations services.
Officers Salary: During the nine months ended September 30, 2021, officers’ salary expenses increased to $494,090 or 36.76% from $361,276 for the nine months ended September 30, 2020. This increase was primarily due to a 6% annual increase for the Company’s CEO, a reinstatement of salary for the CEO, which he voluntarily suspended during the forced shutdown of the Company’s Vietnam operations due to COVID in 2020, and partial payment of accrued officer salaries.
General and Administrative Expense: General and administrative expenses decreased by $2,193,792 or 62.55% to $1,313,510 for the nine months ended September 30, 2021 from $3,507,302 for the nine months ended September 30, 2020. Our general and administrative expenses for the nine months ended September 30, 2021 consisted of other general and administrative expenses (which includes expenses such as auto, business development, SEC filings, investor relations, general office, warrants and shares issued for services) of $1,105,858, travel of $10,362, and office salary of $197,290 for a total of $1,313,510. Our general and administrative expenses for the nine months ended September 30, 2020 consisted of other general and administrative expenses (which includes expenses such as auto, business development, SEC filings, investor relations, general office, warrants issued for services) of $3,4485,316, Travel of $2,900 and office salary of $19,086 for a total of $3,507,302.
Rent – Related Party: During the nine months ended September 30, 2021, rent- related party expense decreased to $6,136 or 62.49% from $9,819 for the nine months ended September 30, 2020. The rent-related party expense was attributable to the Company signing an eight-year property lease with the Company’s President on January 23, 2017. On April 5, 2021, the Company ended this lease agreement with its President.
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Net Change in Unrealized Depreciation on Investment in Gold Bullion: Net change in unrealized depreciation on investment in gold bullion increased by $37,702 to $37,702 for the nine month period ended September 30, 2021 from $0 for the nine month period ended September 30, 2020. The increase was primarily due to a net change in unrealized depreciation on investment in gold bullion.
Interest Expense: Interest expense increased by $238,448 to $518,294 for the six month period ended September 30, 2021 from $279,846 for the six month period ended September 30, 2020. The increase was primarily due to interest on certain Company loans.
Amortization of original issue and debt discounts: Amortization of original issue and debt discount increased to $4,172,955, or 100% for the nine months ended September 30, 2021 compared to $0 for the nine months ended September 30, 2020. The increase was primarily due to amortization of original issue and debt discounts on convertible loans.
Gain on Debt Extinguishment: On March 5, 2021, the Paycheck Protection Program (“PPP”) loan was 100% forgiven by the SBA. As a result, the Company recorded a gain on the forgiveness of the loan in the amount of $90,100.
Net Loss: Net loss increased by $2,568,290, or 59.54%, to a net loss of $6,881,584 for the six month period ended September 30, 2021 from a net loss of $4,313,294 for the six month period ended September 30, 2020. This increase in net loss was primarily attributable to increases in amortization of original issue debt discount, common stock issued for consulting services and officer’s salary due to a reinstatement of salary for the CEO, which he voluntarily suspended during the forced shutdown of the Company’s Vietnam operations due to COVID in 2020 and offset by a decrease in warrant expense and general and administrative expenses.
Capital Resources and Liquidity
Our financial statements have been presented on the basis that are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As presented in the financial statements, we incurred a net loss of $6,881,584 during the nine months ended September 30, 2021, and losses are expected to continue in the near term. The accumulated deficit is $41,650,767 at September 30, 2021. Refer to Note 2 for our discussion of stockholder deficit. We have been funding our operations through private loans and the sale of common stock in private placement transactions. Refer to Note 6 and Note 7 in the financial statements for our discussion of notes payable and shares issued, respectively. Our cash resources are insufficient to meet our planned business objectives without additional financing. These and other factors raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of our company to continue as a going concern.
Management anticipates that significant additional expenditures will be necessary to develop and expand our business before significant positive operating cash flows can be achieved. Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations. At September 30, 2021, we had $2,693,669 of cash on hand. These funds are insufficient to complete our business plan and as a consequence, we will need to seek additional funds, primarily through the issuance of debt or equity securities for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in the case of equity financing.
Management has undertaken steps as part of a plan to improve operations with the goal of sustaining our operations for the next twelve months and beyond. These steps include (a) raising additional capital and/or obtaining financing; (b) controlling overhead and expenses; and (c) executing material sales or research contracts. There can be no assurance that the Company can successfully accomplish these steps and it is uncertain that the Company will achieve a profitable level of operations and obtain additional financing. There can be no assurance that any additional financing will be available to the Company on satisfactory terms and conditions, if at all. As of the date of this Report, we have not entered into any formal agreements regarding the above.
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In the event the Company is unable to continue as a going concern, the Company may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy. To date, management has not considered this alternative, nor does management view it as a likely occurrence.
Cash, total current assets, total assets, total current liabilities and total liabilities as of September 30, 2021 as compared to December 31, 2020, were as follows:
| September 30, 2021 | December 31, 2020 | |||||||
| Cash | $ | 2,693,669 | $ | 816,907 | ||||
| Prepaid expenses | $ | 9,169 | $ | 2,588 | ||||
| Total current assets | $ | 2,702,838 | $ | 819,495 | ||||
| Total assets | $ | 3,334,319 | $ | 1,277,285 | ||||
| Total current liabilities | $ | 9,045,087 | $ | 7,450,794 | ||||
| Total liabilities | $ | 9,236,745 | $ | 7,850,849 | ||||
At September 30, 2021, we had a working capital deficit of $6,342,249 compared to a working capital deficit of $6,631,299 at December 31, 2020. Current liabilities increased to $9,045,087 at September 30, 2021 from $7,450,794 at December 31, 2020, primarily as a result of accounts payable, note payable and accrued compensation.
For the nine months ended September 30, 2021, net cash used in operations of $1,405,659 was the result of a net loss of $6,881,584 offset by depreciation expense of $19,304, gain on debt extinguishment of PPP loan of $90,100, net change in unrealized depreciation in gold bullions of $37,702, stock issued for services of $242,100, loss on disposal of fixed assets of $49,321, amortization of debt discount of $4,172,955, warrants issuance of $541,795, imputed interest on related party loans of $61,968, increase in prepaid expenses of $6,581 and a decrease in operating lease right of use of $79,290, an increase of accrued expenses and other payables-related party of $283,273, increase in accounts payable of $178,883 and a decrease in operating lease liabilities of $93,985. For the nine months ended September 30, 2020, net cash used in operations of $994,557 was the result of a net loss of $4,313,294 offset by offset by depreciation expense of $21,277, options issuance of $2,804,794, imputed interest on related party loans of $38,981, decrease in prepaid expenses of $18,766 and a decrease in operating lease right of use of $87,806, an increase of accrued expenses and other payables-related party of $469,268, decrease in accounts payable of $40,538 and a decrease in operating lease liabilities of $81,617.
Net cash used in our investing activities were $530,137 and $0 for the nine months ended September 30, 2021 and September 30, 2020, respectively. Our cash outflow of $530,137, is represented by $450,216 investment in gold bullion and purchase of fixed assets of $79,921.
Our financing activities resulted in a cash inflow of $3,812,558 for the nine months ended September 30, 2021, which is represented by proceeds from convertible notes payable, net of $3,670,000, $35,000 loan repayment and proceeds from a warrant exercise for $177,558. Our financing activities resulted in a cash inflow of $912,595 for the nine months ended September 30, 2020, which is represented by $45,000 loan repayment, $850,000 proceeds from a shareholder note payable, $17,495 contributed capital from a shareholder and $90,100 proceeds from the SBA Paycheck Protection Loan.
Critical Accounting Policies
Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2020, for disclosures regarding the Company’s critical accounting policies and estimates, as well as updates further disclosed in our interim financial statements as described in this Form 10-Q.
Recent Accounting Pronouncements
Changes to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification. We consider the applicability and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows, or presentation thereof.
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In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Measurement of Credit Losses on Financial Instruments, which supersedes current guidance by requiring recognition of credit losses when it is probable that a loss has been incurred. The new standard requires the establishment of an allowance for estimated credit losses on financial assets including trade and other receivables at each reporting date. The new standard will result in earlier recognition of allowances for losses on trade and other receivables and other contractual rights to receive cash. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842), which extends the effective date of Topic 326 for certain companies until fiscal years beginning after December 15, 2022. The new standard will be effective for the Company in the first quarter of fiscal year beginning October 1, 2023, and early adoption is permitted. The Company has not completed its review of the impact of this standard on its consolidated financial statements.
However, based on the Company’s history of immaterial credit losses from trade receivables, management does not expect that the adoption of this standard will have a material effect on the Company’s consolidated financial statements.
In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes.” This guidance, among other provisions, eliminates certain exceptions to existing guidance related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. This guidance also requires an entity to reflect the effect of an enacted change in tax laws or rates in its effective income tax rate in the first interim period that includes the enactment date of the new legislation, aligning the timing of recognition of the effects from enacted tax law changes on the effective income tax rate with the effects on deferred income tax assets and liabilities. Under existing guidance, an entity recognizes the effects of the enacted tax law change on the effective income tax rate in the period that includes the effective date of the tax law. ASU 2019-12 is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. We adopted this pronouncement on January 1, 2021; however, the adoption of this standard did not have material effect on the Company’s consolidated financial statements.
In August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, to reduce complexity in applying GAAP to certain financial instruments with characteristics of liabilities and equity. ASU 2020-06 is effective for interim and annual periods beginning after December 15, 2023, with early adoption permitted. We adopted this pronouncement on January 1, 2021; however, the adoption of this standard did not have material effect on the Company’s consolidated financial statements
All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of our fiscal quarter ended September 30, 2021, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon those evaluations, management concluded that our disclosure controls and procedures were not effective as of September 30, 2021, to cause the information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods prescribed by SEC, and that such information is accumulated and communicated to management, including our chief executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
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Going forward from this filing, the Company intends to work on establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.
In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute assurance of achieving the desired objectives. Also, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
During the quarter covered by this Report, there were no changes in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. Although we continue to educate our management personnel to increase its ability to comply with the disclosure requirements and financial reporting controls and management oversight of accounting and reporting functions in the future, as we stated in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, we do not expect to remediate the weaknesses in our internal controls over financial reporting until the time when we start to commercialize a recombinant fiber or such time as we have sufficient cash flow to carry out our remediation plans.
From time to time, the Company may become a party to litigation or other legal proceedings that it considers to be a part of the ordinary course of its business. To the best of our knowledge, the Company is not currently involved in any legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations; however, the Company may become involved in material legal proceedings in the future.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Information regarding any equity securities we have sold during the period covered by this Report that were not registered under the Securities Act of 1933, as amended is set forth below. Each such transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D promulgated by the SEC, unless otherwise noted. Unless stated otherwise: (i) the securities were offered and sold only to accredited investors; (ii) there was no general solicitation or general advertising related to the offerings; (iii) each of the persons who received these unregistered securities had knowledge and experience in financial and business matters which allowed them to evaluate the merits and risk of the receipt of these securities, and that they were knowledgeable about our operations and financial condition; (iv) no underwriter participated in, nor did we pay any commissions or fees to any underwriter in connection with the transactions; and, (v) each certificate issued for these unregistered securities contained a legend stating that the securities have not been registered under the Securities Act and setting forth the restrictions on the transferability and the sale of the securities.
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On July 6, 2021, the Company issued 2,343,919 shares of Common Stock in exchange for conversion of $200,000 of principle balance on a convertible debenture and $7,671 of accrued interest.
On July 20, 2021, the Company issued 1,664,823 shares of Common Stock in exchange for conversion of $100,000 of principle balance on a convertible debenture and $60,822 of accrued interest.
On July 29, 2021, the Company issued 3,101,546 shares of Common Stock in exchange for conversion of $200,000 of principle balance on a convertible debenture and $11,836 of accrued interest.
On August 16, 2021, the Company issued 2,277,273 shares of Common Stock in exchange for conversion of $150,000 of principle balance on a convertible debenture and $6,904 of accrued interest.
On August 23, 2021, the Company issued 3,454,203 shares of Common Stock in exchange for conversion of $200,000 of principle balance on a convertible debenture and $11,397 of accrued interest.
On August 30, 2021, the Company issued 2,284,808 shares of Common Stock in exchange for conversion of $150,000 of principle balance on a convertible debenture and $3,082 of accrued interest.
On September 3, 2021, the Company issued 3,000,000 shares of its common stock for services rendered, with a fair value of $242,100 ($0.0807/share) on the date of grant.
On September 8, 2021, the Company issued 4,311,269 shares of Common Stock in exchange for conversion of $250,000 of principle balance on a convertible debenture and $6,521 of accrued interest.
On September 14, 2021, the Company issued 2,936,668 shares of Common Stock in exchange for conversion of $200,000 of principle balance on a convertible debenture and $2,630 of accrued interest.
On September 20, 2021, the Company issued 4,138,369 shares of Common Stock in exchange for conversion of $250,000 of principle balance on a convertible debenture and $4,095 of accrued interest.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
| (a) | Not applicable. |
| (b) | None. |
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ITEM 6. EXHIBITS
EXHIBIT INDEX
| 1. | Incorporated by reference to our Registration Statement on Form SB-2 (Reg. No. 333-146316) filed with the SEC on September 26, 2007. |
| 2. | Incorporated by reference to our Registration Statement on Form S-1 (Reg. No. 333-162316) filed with the SEC on October 2, 2009. |
| 3. | Incorporated by reference to our Current Report on Form 8-K filed with the SEC on November 22, 2013. |
| 4. | Incorporated by reference to our Current Report on Form 8-K filed with the SEC on December 19, 2013. |
| 5. | Incorporated by reference to our Annual Report on Form 10-K filed with the SEC on March 22, 2017. |
| 6. | Incorporated by reference to our Current Report on Form 8-K filed with the SEC on January 21, 2015. |
| 7. | Incorporated by reference to our Current Report on Form 8-K filed with the SEC on March 11, 2019. |
| 8. | Incorporated by reference to our Current Report on Form 8-K filed with the SEC on March 26, 2021. |
| 9. | Incorporated by reference to our Current Report on Form 8-K filed with the SEC on January 26, 2021. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned thereunto duly authorized.
| Kraig Biocraft Laboratories, Inc. | ||
| (Registrant) | ||
| Date: November 5, 2021 | By: | /s/ Kim Thompson |
| Kim Thompson | ||
President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
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| This ‘10-Q’ Filing | Date | Other Filings | ||
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| 1/11/22 | ||||
| 1/1/22 | ||||
| 12/31/21 | 10-K | |||
| 11/8/21 | ||||
| Filed on: | 11/5/21 | |||
| 11/4/21 | ||||
| 10/28/21 | ||||
| 10/25/21 | ||||
| 10/12/21 | ||||
| 10/4/21 | ||||
| For Period end: | 9/30/21 | |||
| 9/20/21 | ||||
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| 7/29/21 | 4 | |||
| 7/20/21 | 4 | |||
| 7/8/21 | 4 | |||
| 7/6/21 | 4 | |||
| 7/1/21 | ||||
| 6/30/21 | 10-Q, 4 | |||
| 6/23/21 | ||||
| 6/7/21 | 4 | |||
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| 5/4/21 | 4 | |||
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| 4/22/21 | 8-K/A, EFFECT | |||
| 4/16/21 | 4 | |||
| 4/8/21 | 4 | |||
| 4/6/21 | 4 | |||
| 4/5/21 | 4, S-1 | |||
| 3/26/21 | 8-K, 8-K/A | |||
| 3/25/21 | ||||
| 3/8/21 | ||||
| 3/5/21 | ||||
| 3/2/21 | 4 | |||
| 2/24/21 | ||||
| 2/20/21 | ||||
| 2/19/21 | ||||
| 2/2/21 | CORRESP | |||
| 1/26/21 | 8-K | |||
| 1/25/21 | CORRESP, PRE 14C | |||
| 1/1/21 | ||||
| 12/31/20 | 10-K, 5 | |||
| 12/15/20 | ||||
| 12/11/20 | 3, 8-A12G, 8-K | |||
| 12/1/20 | ||||
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| 11/17/20 | ||||
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| 12/31/19 | 10-K | |||
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| 3/11/19 | 8-K | |||
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| 6/29/18 | ||||
| 6/21/18 | ||||
| 5/1/18 | 8-K | |||
| 4/26/18 | ||||
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| 12/31/17 | 10-K | |||
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| 5/5/17 | ||||
| 3/22/17 | 10-K | |||
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| 1/1/17 | ||||
| 12/31/16 | 10-K | |||
| 10/28/16 | ||||
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| 1/1/16 | ||||
| 12/31/15 | 10-K | |||
| 12/30/15 | ||||
| 5/28/15 | ||||
| 1/21/15 | 8-K | |||
| 1/20/15 | 8-K | |||
| 12/19/13 | 8-K | |||
| 12/17/13 | 8-K | |||
| 11/22/13 | 8-K | |||
| 10/28/11 | 8-K | |||
| 1/1/11 | ||||
| 11/10/10 | ||||
| 10/2/09 | S-1 | |||
| 2/16/09 | ||||
| 12/26/07 | ||||
| 9/26/07 | SB-2 | |||
| 5/4/07 | ||||
| 12/26/06 | ||||
| 5/8/06 | ||||
| 4/25/06 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 3/26/21 Kraig Biocraft Laboratories, Inc. 8-K:1,2,8,9 3/26/21 10:1.2M M2 Compliance LLC/FA 1/26/21 Kraig Biocraft Laboratories, Inc. 8-K:1,3,8,9 1/26/21 4:217K M2 Compliance LLC/FA 12/11/20 Kraig Biocraft Laboratories, Inc. 8-K:1,2,8,912/11/20 5:541K M2 Compliance LLC/FA 3/11/19 Kraig Biocraft Laboratories, Inc. 8-K:3,8 3/11/19 4:204K Blueprint/FA 3/31/15 Kraig Biocraft Laboratories, Inc. 10-K 12/31/14 50:4.1M Issuer Direct/FA 1/21/15 Kraig Biocraft Laboratories, Inc. 8-K:5,7,9 1/20/15 3:98K Issuer Direct/FA 12/19/13 Kraig Biocraft Laboratories, Inc. 8-K:3,5,9 12/17/13 2:901K Issuer Direct/FA 10/02/09 Kraig Biocraft Laboratories, Inc. S-1 4:2.3M EdgarAgents LLC/FA 9/26/07 Kraig Biocraft Laboratories, Inc. SB-2 9:1.7M EdgarAgents LLC/FA |