UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

☒  Quarterly report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2015

 

☐  Transition report pursuant Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from _______ to _______

 

000-54949

(Commission file number)

BioAdaptives Inc.

(Exact name of registrant as specified in its charter)

 

Delaware		46-2592228
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1005 S. Cimarron Rd, Las Vegas NV		89145
(Address of principal executive offices)		(Zip Code)

 

(702) 630 2280

(Registrant’s telephone number, including area code)

 

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒  No  ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒  No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer          o	Accelerated filer                     o
Non-accelerated filer            o	Smaller reporting company    þ

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐  No  ☒

 

On May 20, 2015, 12,736,436 shares of the registrant's common stock were outstanding.

 

 

 

TABLE OF CONTENTS

 

PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3.	Defaults Upon Senior Securities	18
Item 4.	Mine Safety Disclosures	18
Item 5.	Other Information	18
Item 6.	Exhibits	19
	Signatures	20

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

BIOADAPTIVES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

		March 31,				December 31,
		2015				2014
ASSETS
Current assets:
Cash		$	2,754			$	37,871
Deposit			1,700				1,700
Marketable securities			26,857				30,135
Total current assets			31,311				69,706
Furniture and Fixtures, net			923				1,055
Total assets		$	32,234			$	70,761
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable		$	18,276			$	2,540
Accrued liabilities - related party			13,309				8,105
Advance from Ferris Holding, Inc. - related party			25,479				26,233
Notes payable - related party			-				34,000
Total current liabilities			57,064				70,878
Stockholders' deficit:
Preferred stock, ($.0001 par value, 5,000,000
shares authorized; none issued and outstanding.)			-				-
Common stock ($.0001 par value, 100,000,000 shares authorized;
12,736,436 and 12,636,436 shares issued and outstanding
as of March 31, 2015 and December 31, 2014, respectively)			1,275				1,265
Additional paid-in capital			2,631,715				2,623,734
Deficit			(2,623,138	)			(2,593,712	)
Accumulated other comprehensive income (loss)			(34,682	)			(31,404	)
Total stockholders' deficit			(24,830	)			(117	)
Total liabilities and stockholders' deficit		$	32,234			$	70,761

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

BIOADAPTIVES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

 

		Three Months Ended March 31, 2015				Three Months Ended March 31, 2014
Revenue		$	-			$	-
Cost of sales			-				-
Gross Margin			-				-
Operating expenses:
Depreciation			132				-
General and administrative			12,607				6,128
Professional fees			16,531				2,258
Total operating expenses			29,270				8,386
Operating income (loss)			(29,270	)			(8,386	)
Other income (expenses)
Interest - related party			(156	)			-
Total other income (expense)			(156	)			-
Net loss		$	(29,426	)		$	(8,386	)
Other comprehensive income (loss), net of tax
Unrealized gain (loss) on marketable securities			(3,278	)			80,000
Other comprehensive income (loss)			(3,278	)			80,000
Comprehensive income (loss)		$	(32,704	)		$	71,614
Basic and diluted loss per common share		$	(0.00	)		$	(0.00	)
Basic and diluted weighted average common shares outstanding			12,654,214				12,053,605

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

BIOADAPTIVES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

		Three Months Ended March 31, 2015				Three Months Ended March 31, 2014
Cash flows from operating activities:
Net loss		$	(29,426	)		$	(8,386	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation			132				-
Stock-based compensation - related party			7,990				-
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities			15,737				1,318
Accrued liabilities - related party			5,204				-
Net cash used in operating activities			(363	)			(7,068	)
Cash flows from financing activities:
Payments to related party			(754	)			-
Payments to note payable - related party			(34,000	)			-
Net cash used by financing activities			(34,754	)			-
Net change in cash			(35,117	)			(7,068	)
Cash, beginning of period			37,871				18,609
Cash, end of period		$	2,754			$	11,541
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest		$	-			$	-
Cash paid for taxes		$	-			$	-
Non-cash investing and financing activities:
Unrealized loss on investments in marketable securities		$	3,278			$	-

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

 

BioAdaptives, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three months Ended March 31, 2015

(Unaudited)

 

1.	DESCRIPTION OF BUSINESS AND HISTORY AND BASIS OF PRESENTATION

 

Description of business – BioAdaptives, Inc. (formerly known as APEX 8 Inc.) (“BioAdaptives”,”Company”) was incorporated under the laws of the State of Delaware on April 19, 2013. BioAdaptives is a research, development, and educational company. Our current focus is on products that improve health and wellness. These products include dietary supplements, specialty food items, and proprietary methods of optimizing the bioelectromagnetic availability of foods and beverages.

 

On September 11, 2013, BioAdaptives incorporated Blenders Choice Inc (“Blenders”) in Nevada. Blenders is a 100% owned subsidiary and was created as a separate sales and marketing organization. BioAdaptives does not plan to sell or market products directly, instead seeking to use Blenders as its marketing arm.

 

On September 1, 2014, the Company entered into a License Agreement (“Agreement”) with Ferris Holding, Inc. (“Ferris”). The Agreement gives the Company the right to use Ferris’s proprietary processes and trade secrets, including its stem cell enhancement products. In consideration for these rights, the Company agrees to pay Ferris a fee of 5% of the gross revenue for the products produced and sold by the Company or by way of sub-license pursuant to the rights granted under this Agreement. The initial term of the Agreement is twelve (12) months.

 

On September 1, 2014, the Company entered into a Sub-License Agreement (“Sub-License”) with Essence International, Ltd. (“Essence”). The Sub-License gives Essence the right to use proprietary processes and trade secrets, including its stem cell enhancement products which were obtained by the Company in the Agreement with Ferris. In consideration for the Sub-License, Essence agreed to pay the Company a royalty of 10% of the gross revenue for the products produced and sold by Essence pursuant to the rights granted under this Sub-License. The initial term of the Agreement is twelve (12) months

 

Basis of presentation- The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim period presented have been reflected herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal period, as reported in the Form 10-K, have been omitted.

 

 

2.	SUMMARY OF SIGNIFICANT POLICIES

 

Investment Securities - Equity securities are classified as available for sale and are stated at fair value with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of tax. All available for sale securities are classified as current assets as they are available to support the Company's current operating needs in the next 12 months. Realized gains and losses on the sale of investment securities are recognized at the settlement date using the specific identification method and are included in the statements of operations.

 

In accordance with Accounting Standards Codification (“ASC”) 320-10, "Investments-Debt and Equity Securities," the Company evaluates its securities portfolio for other-than-temporary impairment ("OTTI") throughout the year. Each investment that has a fair value less than the book value is reviewed on a quarterly basis by management. Management considers at a minimum the following factors that, both individually or in combination, could indicate that the decline is other-than-temporary: (a) the Company has the intent to sell the security; (b) it is more likely than not that it will be required to sell the security before recovery; and (c) the Company does not expect to recover the entire amortized cost basis of the security. Among the factors that are considered in determining intent is a review of capital adequacy, interest rate risk profile and liquidity at the Company. An impairment charge is recorded against individual securities if the review described above concludes that the decline in value is other-than-temporary.

 

Fair value of financial instruments –  As required by the Fair Value Measurements and Disclosures Topic of FASB ASC 820-10 (“ASC 820-10”), fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.. The three levels of the fair value hierarchy are as follows:

 

	Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
	Level 2	Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
	Level 3	Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

 

Pursuant to ASC 825, Financial Instruments, the fair value of cash, marketable securities and stock based compensation is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of cash, accounts receivables, accounts payable and accrued liabilities, and notes payable approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

 

On May 21, 2014, the Company entered into a Stock Sale and Purchase Agreement (the “Agreement”) with BioSwan, Inc., a Nevada corporation (“BioSwan”), pursuant to which, BioSwan agreed to purchase 200,000,000 shares of restricted stock of CleanPath Resources Corp., a Nevada corporation (the “CleanPath Shares”). BioSwan agreed to transfer to the Company, as payment for the CleanPath Shares, a total of 1,057,362 shares of restricted stock of Hemp, Inc. (the “Hemp Shares”) owned by BioSwan. As a result of the Agreement, the Company recorded a loss on sale of marketable securities of $138,462 forthe year ended December 31, 2014.

 

 

Assets measured at fair value on a recurring basis were presented on the Company’s balance sheet as of March 31, 2015.

 

Fair Value Measurements as of March 31, 2015 Using:

 

			Total Carrying Value as of 3/31/2015				Quoted Market Prices in Active Markets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	Assets:
	Equity Securities		$	26,857			$	26,857			$	—			$	—
	Total		$	26,857			$	26,857			$	—			$	—

 

Fair Value Measurements as December 31, 2014 Using:

 

			Total Carrying Value as of 3/31/2015				Quoted Market Prices in Active Markets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
	Assets:
	Equity Securities		$	30,315			$	30,315			$	—			$	—
	Total		$	30,315			$	30,315			$	—			$	—

 

Equity securities at March 31, 2015, were comprised of 1,057,362 shares of common stock of Hemp, Inc. (HEMP.PK) recorded at fair value of $26,857 ($0.0254 per share).

 

3.	GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $2,623,138 as of March 31, 2015. The Company requires capital for its contemplated operational and marketing activities. The Company’s ability to raise additional capital through the future issuances of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

 

In order to mitigate the risk related with this uncertainty, the Company plans to issue additional shares of common stock for cash and services during the next 12 months.

 

4.	ADVANCES FROM FERRIS HOLDINGS, INC. – RELATED PARTY

 

Advances from Ferris Holding, Inc., the controlling shareholder of the Company, may be non-interest bearing, unsecured and due on demand. As of March 31, 2015 and December 31, 2014, the Company had an advances from Ferris Holdings, Inc. – related party balance of $25,479 and $26,233.

 

 

5.	NOTE PAYABLES – RELATED PARTY

 

On April 23, 2014, June 4, 2014 and July 2, 2014, the Company entered into loan agreements for principal of $6,000, $8,000 and $20,000, respectively, with Ferris Holding, Inc., the controlling shareholder of the Company. These loans bear interest of 4% per annum, are unsecured and are due one year after the issue date. As of March 31, 2015 and December 31, 2014, the Company had a note payable - related party balance of $0 and $34,000. In the three months ended March 31, 2015, the Company paid the full principle balance of $34,000 and interest of $901, leaving a zero balance due. Pursuant to the notes payable - related party balance as of March 31, 2015 and December 31, 2014, the Company recorded an accrued interest payable balance of $0 and $746 which is included in our accrued liabilities – related party balance in our consolidated balance sheets.

 

6.	STOCKHOLDERS’EQUITY

 

Preferred Stock – The Company is authorized to issue 5,000,000 shares of $.0001 par value preferred stock. As of March 31, 2015, and December 31, 2014, no shares of preferred stock had been issued.

 

Common Stock - The Company is authorized to issue 100,000,000 shares of $.0001 par value common stock. As of March 31, 2015, there were 12,736,436 shares of the Company’s common stock issued and outstanding. As of December 31, 2014, 12,636,436 shares were issued and outstanding.

 

In the three months ended March 31, 2015, the Company issued 100,000 shares of common stock to its chief executive officer, Christopher G. Hall, as compensation for one year of services to be performed pursuant to an employment agreement dated February 6, 2015. The Company valued the 100,000 shares of common stock on the date of the agreement, $1.10 per share, which resulted in a total consideration of $110,050 which will be expensed throughout the two year term of the employment agreement. As of March 31, 2015, the Company expensed $7,990.

 

7.	RELATED PARTY TRANSACTIONS

 

On February 6, 2015, the Company entered into a two (2) year employment agreement with its chief executive officer, Christopher G. Hall, whereby the Company issued 100,000 shares of restricted common stock as compensation for two (2) years of executive services to be performed. In the three months ended March 31, 2015, the Company issued the 100,000 shares of restricted common stock to Christopher G. Hall. The shares were valued at the closing share price of $1.10 on the date of the agreement. This resulted in compensation expense of $110,050 being amortized over the two (2) year term of the employment agreement.

 

On September 1, 2014, the Company entered into a License Agreement (“Agreement”) with the Ferris Holding, Inc. (“Ferris”). The Agreement gives the Company the right use of the Ferris’s proprietary processes and trade secrets, including its stem cell enhancement products. In consideration for these rights, the Company agrees to pay Ferris a fee of 5% of the gross revenue for the products produced and sold by the Company or by way of sub-license pursuant to the rights granted under this Agreement. The initial term of the Agreement is twelve (12) months.

 

On September 1, 2014, the Company entered into a Sub-License Agreement (“Sub-License”) with Essence International, Ltd. (“Essence”). The Sub-License gives Essence the right to use proprietary processes and trade secrets, including its stem cell enhancement products which were obtained by the Company in the Agreement with Ferris. In consideration for the Sub-License, Essence agreed to pay the Company a royalty of 10% of the gross revenue for the products produced and sold by Essence pursuant to the rights granted under this Sub-License. The initial term of the Agreement is twelve (12) months.

 

On June 1, 2014, the Company entered into a rental agreement with Ferris for the corporate office. Monthly rent is $1,500. The term of the lease is month to month. As of March 31, 2015 and December 31, 2014, the Company has a rent payable due to Ferris in the amount of $11,859 and $7,359 which is included in our accrued liabilities – related party balance in our consolidated balance sheets.

 

8.	SUBSEQUENT EVENTS

 

In May 2015, we received a demand letter arising from unpaid fees of $7,475 related to accounting services by a third party service provider related to services provided during the second quarter of 2015. The Company is disputing this amount.

 

 

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  We have based these forward-looking statements on our current expectations and projections about future events, and they are applicable on as of the dates of such statement.  These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.  In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “forecast,” “expect,” “plan,” anticipate,” believe,” estimate,” continue,” or the negative of such terms or other similar expressions.  Factors that might cause or contribute to such a discrepancy include, but are not limited to, those listed under the heading “Risk Factors” and those listed in our other SEC filings. You should not put undue reliance on any forward-looking statements. These statements speak only as of the date of this Quarterly Report on Form 10-Q, even if subsequently made available on our website or otherwise, and we expressly disclaim any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this Quarterly Report on Form 10-Q.  The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report. Throughout this Quarterly Report on Form 10-Q we will refer to BioAdaptives, Inc., together with its subsidiaries, as “BioAdaptives,” the “Company,” “we,” “us,” and “our.”

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Overview

 

The Company was incorporated as APEX 8 Inc. in the state of Delaware on April 19, 2013. On May 3, 2013, we filed a registration statement on Form 10 to register with the U.S. Securities and Exchange Commission as a public company. We were originally organized as a vehicle to investigate and, if such investigation warranted, acquire a target company or business seeking the perceived advantages of being a publicly held corporation.

 

On June 21, 2013, our former sole officer and director entered into a Share Purchase Agreement pursuant to which he sold an aggregate of 10,000,000 shares of the Company’s common stock to Ferris Holding Inc. (“FHI”) at a purchase price of $40,000. In the aggregate, these shares represented 100% of the Company’s issued and outstanding common stock. Effective upon the closing of the Share Purchase Agreement, our former sole officer and director owned no shares of the Company’s stock.

 

Additionally, on June 21, 2013, the Company accepted the resignations of our former sole officer and directoras the Company’s President, Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board of Directors. These resignations were in connection with the consummation of the Share Purchase Agreement with FHI, and were not the result of any disagreement with the Company on any matter relating to the Company's operations, policies, or practices. Effective as of the same date, to fill the vacancies created by our former sole officer and director's resignations, the Company elected and appointed Barry K. Epling as Chairman of the Board of Directors, and Gerald A. Epling, as President, Chief Executive Officer, Secretary, Chief Financial Officer and Member of the Board of Directors of the Company.

 

On September 24, 2013, the Board of Directors and majority stockholder of the Company approved an amendment to the Company’s Certificate of Incorporation to change the name of the Company from APEX 8 Inc. to BioAdaptives, Inc. On September 25, 2013, the Company filed a Certificate of Amendment to the Certificate of Incorporation with the Secretary of State of Delaware to change the name of the Company to BioAdaptives, Inc

 

On July 14, 2014, the Company announced changes in its management. Gerald A. Epling, who had been serving as the Company's Chief Executive Officer, Chief Financial Officer and a Director, resigned from all positions. His resignation was in connection to pursue other interests, and was not the result of any disagreement with the Company on any matter relating to the Company's operations or practices. On that same day, the Company elected Barry Epling, who also serves as Chief Executive Officer, President and Director of Ferris Holding (FHI) to the positions vacated by Gerald Epling. As of the date of the event, FHI was the Company's controlling stockholder.

 

 

On February 6, 2015, the Company announced changes in its management. Barry Epling, who had been serving as the Company's President, Chief Executive Officer, Chief Financial Officer, and Secretary, resigned from his positions. He remains the Company's Chairman of the Board of Directors. His resignation was in connection to pursue other interests, and was not the result of any disagreement with the Company on any matter relating to the Company's operations or practices. One that same day, the Company elected Christopher G. Hall, as its President, Chief Executive Officer, Chief Financial Officer and Secretary. As of the date of the event, FHI was the Company's controlling stockholder.

 

Discussion

 

BioAdaptives Inc. is a research, development, and educational company. Our current focus is on products that improve health and wellness. These products include dietary supplements, specialty food items, and proprietary methods of optimizing the bioelectromagnetic availability of foods and beverages. Our base of intellectual property and products, which are patent pending solutions in the form of devices and nutraceuticals, are designed to aid in cognition, focus, fatigue reduction, increased testosterone, improved overall emotional and physical wellness, healing, and anti-aging.

 

The Company's strategy is to develop a position as a leader in supplying quality nutraceutical products to an aging population within developed countries such as the United States, Canada, Western Europe, Eastern Europe, and Russia, and in Asian countries such as China, Japan, Korea and Taiwan, while continuing to create new innovative, health inspired products to generate growth in sales and profitability. Specifically, the Company seeks to:

 

1. Create market share in the rapidly growing aging population demographic. The Company's strategy is to create its share in the this demographic within developed countries by (i) emphasizing the benefits of its proprietary nutraceutical and AgronifierTM products and technology as well as creating additional products, and (ii) utilizing its marketing division to act as its sales and distribution arm to seek additional channels for sales coverage.

 

2. Focus on the aging population of developed countries. The Company believes that the population growth in the aged population demographic presents a unique opportunity. The World Health Organization has stated that the population growth for those 60 years and older will more than double from 11% to over 22% between 2000 and 2050, with the absolute number of people aged 60 and over expected to increase from 605 million to 2 billion within the same period. Additionally, according to the World Health Organization, the number of people aged 80 years or older will quadruple to 395 million within the next 30 years. (Source: http://www.who.int/ageing/about/facts/en/. Paper copy on file with the Company.) (The URL of the World Health Organization website is included herein as an inactive textual reference. Information contained on, or accessible through, that website is not a part of, and is not incorporated by reference into, this Form 10-Q.)

 

3. Make strategic acquisitions. The Company plans to capitalize on the significant opportunities for consolidation available in the nutraceutical industry. The Company anticipates that it will seek acquisitions that serve to expand the Company's product brands, broaden its product offerings or facilitate entry into complementary distribution channels. As of the date of this Form 10-Q, the Company had not entered into any definitive agreements or negotiations relating to acquisitions.

 

4. Continue to develop new products and product extensions. The Company seeks to continue to develop and commercialize nutraceutical products and through this effort intends to develop new and innovative products. During 2014, Ferris Holding, Inc., a Nevada corporation (“Ferris”), rebranded NutraLoad™ and Bliss In A Bottle™, to PrimiCell© and PrimiLive© in an effort to keep a more consistent product naming convention going forward, and pursuant to the Product Agreement with Ferris, the Company continues to have the right to develop, market, and sell these products. Additionally, two new products were introduced for general use on a limited basis in the first quarter of 2015. Equine Regen™ and Equine Regen Plus™. Both have been tested extensively in the United States, Australia, Singapore, and Europe. The results of equine products have been favorable. The product comes with a higher cost, however, very cost effective when used by trainers and owners of performance horses. Thoroughbreds, polo ponies, cutting horses, barrel racers, and other competition horses have shown significant improvement in hooves, coat, mane, strength, speed, endurance, recovery, responsiveness, and several other areas which overall improvements has been attributed to the increase in stem cells in horses.

 

 

The Company expects two other products to be introduced in 2015 that are in late stage development. One of which is in late stage development and the other in late stage testing. PrimiTrim™ is a weight control product with many side benefits that add to overall wellness. Tests have shown consistent weight lose of between one and three pounds per week. The loss is not water weight and as a result, is more meaningful to the people using the product. The other product we expect in 2015 is an exercise product targeting those who do extreme work-outs and seek better results. One benefit of the product is that it helps the body process lactic acid more quickly, speeding recovery and allowing more strenuous work-outs. There are several other projected benefits but this product is in its early stage of testing and more studies need to be performed before we can confirm our expectations.

 

5. Capitalize on strong international growth. The Company believes that international sales represent a significant growth opportunity as aging population growth outside North America exceeds 1 billion people. The Company plans to aggressively pursue international sales by adding additional salespeople within its marketing division, developing a network in high growth regions, and continuing its efforts to register products and trademarks in attractive foreign markets.

 

We can make no assurances that we will find commercial success in any of our products. We plan to rely upon our sales and licensing of our licensed Agronifier technology and direct and indirect sales of the P-3 and NutraLoad® products for revenues, neither of which have produced any significant revenue since our inception. We are a new company and thus have very limited experience in sales expectations and forecasting. We also have not fully discovered any seasonality to our business during the first quarter compared to any quarter in fiscal 2014.

 

COMPETITION

 

As a new entrant in the nutraceuticals market, we compete in an industry intensely focused on brand recognition, efficacy claims, pricing, and marketing. The nutraceuticals industry is a largely unregulated and fragmented industry. There are numerous companies that compete with us, and many of our competitors are larger than us, have greater access to capital, and may be better able to withstand volatile market conditions. Moreover, because the nutraceutical industry generally has low barriers to entry, additional competitors could enter the market at any time. In that regard, although the nutraceutical industry to date has been characterized by many relatively small participants, there can be no assurance that national or international companies (which may include pharmaceutical companies or other suppliers to mass merchandisers) will not seek to enter or to increase their presence in this industry. Increased competition in the industry could have an adverse effect on the Company.

 

According to Euromonitor International’s report on Vitamins and Dietary Supplements in the US, dated April 2013 (copy on file with the Company), as of early 2013 there were six companies which controlled more than 2% each of the market, with the largest controlling 6%. Together this group controlled approximately22.4% of the US market. According to the Euromonitor report, another 28 companies controlled approximately 24% of the market. This leaves approximately 53.6% of the market controlled by very small independent companies. The market is extremely competitive for similar products with over one hundred companies competing for market share.

 

DEPENDENCE ON FERRIS HOLDING

 

We rely on our majority shareholder, FHI, to a great extent for support. While we have incurred losses since inception, our business was funded initially by FHI and by majority shareholder and our Chairman of the Board, Barry Epling. If we cannot achieve commercial success in our products, we will need to continue to rely on FHI for support. If FHI at any time decides to alter or change materially our arrangement, we could experience a material adverse effect on the Company.

 

 

RELIANCE ON KEY MANAGEMENT

 

The operation of the Company requires managerial and operational expertise. In particular, the Company is dependent upon the management and leadership skills of Christopher G. Hall, our President, Chief Executive Officer, Chief Financial Officer, Secretary, and Barry Epling, the Chairman of the Board. Additionally, the Company relies heavily upon the professional medical and scientific advice from its Advisory Board which includes Dr. Jun Gu M.D., Ph.D., Dr. Edward E. Jacobs Jr. M.D., and Dr. Antonina Nabokova, M.D. None of the key management employees has a long-term employment contract with the Company, and there can be no assurance that such individuals will remain with the Company. The failure of such key personnel to continue to be active in management could have a material adverse effect on the Company.

 

RISKS ASSOCIATED WITH IMPLEMENTATION OF BUSINESS STRATEGY

 

Implementation of the Company's business strategy is subject to risks and uncertainties, including certain factors that are within the Company's control and other factors that are outside of the Company's control. In addition, certain elements of the Company's business strategy, notably the licensing of additional business lines from FHI, or other companies could result in significant expenditures of cash and management resources.

 

RISKS ASSOCIATED WITH ACQUISITIONS

 

The Company intends to use its equity to pursue acquisitions in the future as a component of the Company's business strategy, although as of the date of this Quarterly Report, the Company did not have any definitive agreements relating to any acquisitions. There can be no assurances that attractive acquisition opportunities will be available to the Company, that the Company will be able to obtain financing for or otherwise consummate any future acquisitions or that any acquisitions which are consummated will prove to be successful. Moreover, acquisitions involve numerous risks, including the risk that the acquired business will not perform in accordance with expectations, difficulties in the integration of the operations and products of the acquired businesses with the Company's other businesses, the diversion of management's attention from other aspects of the Company's business, the risks associated with entering geographic and product markets in which the Company has limited or no direct prior experience and the potential loss of key employees of the acquired business. The acquisition of another business can also subject the Company to liabilities and claims arising out of such business. In addition, future acquisitions would likely require additional financing, which would likely result in an increase in the Company's indebtedness or the issuance of additional capital stock which could be dilutive to holders of shares issued in the event of an Offering.

 

NO ASSURANCE OF FUTURE INDUSTRY GROWTH

 

Although market data referred to in this Quarterly Report and otherwise available to investors regarding the size and projected growth rates of the nutraceuticals market and our target demographic indicate that such markets are large and rapidly growing, there can be no assurance that such markets are as large as reported or that such projected growth will occur or continue. Market data and projections, such as those presented in this Quarterly Report, are inherently uncertain and subject to change. In addition, the underlying market conditions are subject to change based on economic conditions, consumer preferences and other factors that are beyond the Company's control. There can be no assurance that an adverse change in size or growth rate of the nutraceuticals market will not have a material adverse effect on the Company.

 

RISKS ASSOCIATED WITH INTERNATIONAL MARKETS

 

The Company's growth likely will be dependent in part upon its ability to expand its operations into new markets, including international markets. The Company may experience difficulty entering new international markets due to greater regulatory barriers, the necessity of adapting to new regulatory systems and problems related to entering new markets with different cultural bases and political systems. Operating in international markets exposes the Company to certain risks, including, among other things: (i) changes in or interpretations of foreign regulations that may limit the Company's ability to sell certain products or repatriate profits to the United States, (ii) exposure to currency fluctuations, (iii) the potential imposition of trade or foreign exchange restrictions or increased tariffs and (iv) political instability. If the Company seeks to expand international operations, these and other risks associated with international operations are likely to increase.

 

 

Recent Developments

 

Ferris Holding Licensing Agreement

 

On September 1, 2014, the Company entered into a License Agreement (“Agreement”) with the Ferris Holding, Inc. (“FHI”), a related party. The Agreement gives the Company the right use of the Ferris’s proprietary processes and trade secrets, including its stem cell enhancement products. In consideration for these rights, the Company agrees to pay Ferris a fee of 5% of the gross revenue for the products produced and sold by the Company or by way of sub-license pursuant to the rights granted under this Agreement. The initial term of the Agreement is twelve (12) months.

 

Essence International Sub-License Agreement

 

On September 1, 2014, the Company entered into a Sub-License Agreement (“Sub-License”) with Essence International, Ltd. (“Essence”), a related party. The Sub-License gives Essence the right to use proprietary processes and trade secrets, including its stem cell enhancement products which were obtained by the Company in the Agreement with Ferris. In consideration for the Sub-License, Essence agreed to pay the Company a royalty of 10% of the gross revenue for the products produced and sold by Essence pursuant to the rights granted under this Sub-License. The initial term of the Agreement is twelve (12) months.

  

Appointment of Christopher G. Hall

 

On February 6, 2015, following the resignation of Barry Epling, the Company’s Board of Directors appointed Christopher G. Hall as the Company’s President, Chief Executive Officer, Chief Financial Officer and Secretary.

 

Christopher G. Hall has been an executive within the nutraceutical products industry since 2006 and a serial entrepreneur for more than twenty years. He began his career in 1978 with AT&T as a finance and operations manager. With his deep experience in areas of communications, Mr. Hall has become a recognized industry leader having conducted speaking engagements at industry trade shows and conferences. He is an active member of several industry associations. Mr. Hall has worked extensively in entrepreneurship, primarily in the nutraceutical and technology space as a C-level executive since 1995 and has raised more than $30 million in investment capital for various enterprises. Mr. Hall is a graduate of University Southern California with a Bachelors degree in International Relations and he holds an MBA from the Anderson School of Management at the University of California, Los Angeles.

 

Results of Operations for the three months ended March 31, 2015 and March 31, 2014

 

Our operating results are summarized as follows:

  

		Three months ended March 31, 2015				Three months ended  March 31, 2014
Revenue		$	0			$	0
Cost of sales		$	0			$	0
Operating expenses		$	29,270			$	8,386
Other income (expenses)		$	(156	)		$	0
Net income (loss)		$	(29,426	)		$	(8,386	)

 

Revenues

 

The Company did not earn any revenues in the three months ended March 31, 2015 and 2014.

 

 

Operating Expenses

 

Our operating expenses are outlined in the table below:

 

		Three months ended March 31, 2015				Three months ended March 31, 2014
General and administrative		$	4,617			$	6,128
Depreciation			132				0
Stock-based compensation – services			0				0
Stock-based compensation – services - related party			7,990				0
Professional fees			16,531				2,258
Total		$	29,270			$	8,386

 

Our general, administrative and professional fees are largely attributable to office, rent, transfer agent, legal, accounting and audit fees related to our reporting requirements as a public company.

 

We anticipate that we will incur approximately $50,000 for operating expenses, including, legal, accounting and audit expenses associated with our reporting requirements as a public company under the Exchange Act during the next twelve months.

 

Stock-based compensation - related party has been paid to an officer of the Company pursuant to a two year employment agreement for services to be provided which will be instrumental in to the Company.

 

Other income (loss)

 

The Company recorded interest expense – related party of $156 and $0 for the three months ended March 31, 2015 and 2014.

 

Net income (loss)

 

As a result of our operating expenses the Company reported a net loss of ($29,426) and ($8,386) for the three months ended March 31, 2015 and 2014, respectively.

 

Comprehensive income (loss)

 

The Company reported an unrealized gain (loss) on marketable securities of ($3,278) and $80,000 for the three months ended March 31, 2015 and 2014.

 

On October 21, 2013, BioAdaptives entered into an Asset Purchase Agreement in which the Company received stock certificates for 200,000,000 shares of CleanPath Resources Corp. common stock with a quoted value of $200,000 ($0.001 per share). At March 31, 2014, the quoted value of CleanPath Resources Corp. common stock was $180,000 ($0.00009 per share) which resulted in other comprehensive gain of $80,000 for the three months ended March 31, 2014.

 

On May 21, 2014, the Company entered into a Stock Sale and Purchase Agreement (the “Agreement”) with BioSwan, Inc., a Nevada corporation (“BioSwan”), pursuant to which, BioSwan agreed to purchase 200,000,000 shares of restricted stock of CleanPath Resources Corp., a Nevada corporation (the “CleanPath Shares”). BioSwan agreed to transfer to the Company, as payment for the CleanPath Shares, a total of 1,057,362 shares of restricted stock of Hemp, Inc. (the “Hemp Shares”) owned by BioSwan. As a result of the Agreement, the Company recorded a loss on sale of marketable securities of $138,462 for year ended December 31, 2014. At March 31, 2015, the 1,057,362 common shares of Hemp, Inc. had a quoted value of $26,857 ($0.0254 per share) which resulted in other comprehensive loss of $3,278 for the three months ended March 31, 2015.

 

 

Liquidity and Capital Resources

 

Working Capital

 

		March 31, 2015
Current Assets		$	31,311
Current Liabilities		$	57,065
Working Capital (Deficit)		$	(25,754	)

 

Cash Flows

 

		For the three months ended March 31, 2015
Cash used in operating activities		$	(363	)
Cash used in investing activities		$	(0	)
Cash used by financing activities		$	(34,754	)
Increase (Decrease) in cash		$	35,117

 

Cash Used In Operating Activities

 

Our net loss for the three months ended March 31, 2015, was the main contributing factor for our negative operating cash flow.

 

Cash from Financing Activities

 

As of March 31, 2015, we have insufficient cash to operate our business at the current level for the next twelve months and insufficient cash to achieve our business goals. The success of our business plan beyond the next 12 months is contingent upon us obtaining additional financing. We intend to fund operations through debt and/or equity financing arrangements, which may be insufficient to fund our capital expenditures, working capital, or other cash requirements. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all.

 

Going Concern

 

At March 31, 2015, we had $2,754 of cash on-hand and a deficit of $2,623,138, and as noted throughout this report and our financial statements and notes thereto, our independent auditors have expressed their substantial doubt as to our ability to continue as a going concern as of December 31, 2014. We anticipate incurring significant losses in the future. We do not have an established source of revenue sufficient to cover our operating costs. Our ability to continue as a going concern is dependent upon our ability to successfully compete, operate profitably and/or raise additional capital through other means. If we are unable to reverse our losses, we will have to discontinue operations.

 

The financial statements included in this quarterly report have been prepared assuming that we will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.

 

Management’s plans include the raising of capital through the equity markets to fund future operations, seeking additional acquisitions, and generating of revenue through our business. However, even if we do raise sufficient capital to support our operating expenses and generate adequate revenues, there can be no assurances that the revenue will be sufficient to enable us to develop business to a level where we will generate profits and positive cash flows from operations. These matters raise substantial doubt about our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

 

Off-Balance Sheet Arrangements

 

We did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

 

Critical Accounting Policies

 

Our financial statements are based on the application of accounting principles generally accepted in the United States (“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported.  These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition.  We believe our use of estimates and underlying accounting assumptions adhere to US GAAP and are consistently and conservatively applied.  We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.  Actual results may differ materially from these estimates under different assumptions or conditions.  We continue to monitor significant estimates made during the preparation of our financial statements.

 

Our significant accounting policies are summarized in Note 2 of our financial statements.  While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates.  Actual results may differ from those estimates.  Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause an effect on our results of operations, financial position or liquidity for the periods presented in this report.

 

Recently Issued Accounting Pronouncements

 

The Company has evaluated recent pronouncements through Accounting Standards Updates (“ASU”) 2014-16 and believes that none of them will have a material impact on the Company’s financial position, results of operations or cash flows. 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this quarterly report, March 31, 2015. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report due to a material weakness in our internal control over financial reporting, which is described below.

 

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of March 31, 2015, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of March 31, 2015, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both USGAAP and SEC guidelines.

  

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, 2015: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

 

There was no change in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no pending legal proceedings to which we are a party which are material or potentially material, either individually or in the aggregate. We are from time to time, during the normal course of our business operations, subject to various litigation claims and legal disputes. We do not believe that the ultimate disposition of any of these matters will have a material adverse effect on our consolidated financial position, results of operations or liquidity.

 

Item 1A. Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5.Other Information.

 

None.

 

 

Item 6. Exhibits

 

(a) Exhibits

 

Exhibit Number		Description
3.1		Certificate of Incorporation(1)
3.2		Bylaws(1)
4.1		Specimen Stock Certificate(1)
31.1		Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101		The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 formatted in Extensible Business Reporting Language (XBRL).

 

(1)

Incorporated by reference to Current Report on Form 10 filed on May 3, 2013

 

 

SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

By:	/s/ Christopher G. Hall
	Christopher G. Hall
	President, Chief Executive Officer, Chief Financial Officer, Secretary
	(Principal Executive Officer, Principal Financial Officer)
Date: May 20, 2015
By:	/s/ Barry Epling
	Barry Epling
	Chairman of the Board of Directors
Date: May 20, 2015

 

 

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