QUANTA This form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may", "will", "expect", "believe", "anticipate", "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include by are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.
Overview
We are an applied science company founded in 2016, focusing on increasing energy levels in plant matter to increase performance within the human body. Our proprietary technology uses quantum mechanics to increase bio-activity of targeted molecules to enhance the desired effects. We specialize in potentiating rare naturally occurring elements to create impactful and sustainable healing solutions that we believe will one day be as powerful and predictable as pharmaceutical drugs. We offer our technology as a platform, making it accessible to existing high-quality product makers with existing distribution channels, as well as consumer products. Our mission is to power as many impactful, high-performing and wholly organic solutions as possible through product lines and a series of licensing and distribution
Our Company History
The company was founded in
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Simultaneously with the merger, we accepted subscriptions for 6,500,000 shares
of common stock in a private placement offering at a purchase price of
Following the consummation of the merger, Quanta shareholders beneficially owned approximately 63% of our issued and outstanding common stock.
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Medolife provides contract research services. The Company focuses on research,
development, and production of pharmaceutical-grade products, as well as
clinical evidence-based nutraceuticals utilizing patented polarization
technology. Medolife Rx serves clients in
In 2007, Medolife began its venom-to-drug research and development concept. In
2008, Medolife identified the Rhopalurus princeps scorpion species, which are
endemic to the
Quanta, which entered the CBD pain-relief rub market ("Muscle Rub"), is the first in a series of products to emerge from our labs. At the heart of its well-documented effectiveness is our proprietary "polarization" process, which uses electromagnetic force to markedly enhance bioactivity at the molecular level-a polarized ingredient creates stronger bonds with the body's receptors providing higher bioavailability. The company believes this natural solution has nearly limitless applications in the world of plant-based consumer products.
In early 2020, the company was preparing to apply to the FDA to initiate the
approval process for Escozine as an orphan drug for pancreatic cancer.
As the COVID-19 pandemic spread during the Spring of 2020, Medolife studied the
scorpion venom peptide as a potential COVID-19 drug treatment and began
confirming its antiviral properties. The company applied to the FDA as a
Pre-Investigational New Drug (PIND), which opened PIND #150335. For PIND
Submission and Clinical Trial Strategy in
In August of 2020, Medolife initiated clinical studies at the
EFFICACY STUDY.
Escozine was used as a 3-pillar treatment: a Therapeutic, a Palliative, and a Preventative.
Therapeutic
? Escozine was used as a monotherapy
? All therapeutic participants were tested COVID-19 positive prior to
observation.
? 100% of patients were discharged with a negative COVID-19 test result within 7
to 10 days of treatment with Escozine.
Conclusion: Within 4-5 days, all COVID-19 patients using Escozine tested negative for the virus, indicating Escozine eliminated the COVID-19 virus or accelerated recovery.
Palliative
? COVID-19 positive patients report a dramatic decrease of symptoms within 2-4
days of Escozine treatments. The World Health Organization Quality of Life
("WHOQOL") Bref quality of life questionnaire by the World Health Organization
(WHO ) was used since July 2020 to evaluating symptoms in patients, including:
? Shortness of breath
? Pain
? Fatigue
? Headache
? Loss of taste
? Fever
? Loss of smell (anosmia)
Conclusion: All participants reported significant improvement on all their COVID-19-related symptoms within 5 days, indicating that Escozine can be used to treat the symptoms of COVID-19.
Preventative
? Transmission of virus to treating physicians and nurses of COVID-19
patients is inhibited upon administering Escozine.
? Substantial reduction in infectability and spread of the SARS-CoV-2 virus.
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Conclusion: All hospital workers remained healthy during the clinical observation while taking Escozine, indicating that Escozine can be used as a preventative measure for COVID-19. The preventative capabilities require additional study.
SAFETY STUDY.
To verify the safety of using Escozine, patients were tested before and after treatment for:
? Hematology
? Clinical chemistry (Kidney and Liver function tests, Enzymes, Glucose, Calcium
and Phosphorus)
? Urine
? CD4/CD8
Conclusion: No toxic response was observed in 100% of patients and no side-effects were reported, indicating that Escozine is safe to use for COVID-19 patients.
ADDITIONAL FINDINGS.
During the clinical study, Medolife observed that Escozine prevents Acute Kidney Injury (AKI) caused by COVID-19:
? During the clinical study, no deaths occurred. ? 40% of the monitored COVID-19 patientswho were administered Escozine, had serum creatinine that was higher than normal, indicating AKI before Escozine administration. ? After Escozine administration, most of the patient's creatinine concentrations dropped or did not change. ? Overall, the frequency of patients that developed normal creatinine levels after Escozine administration was statistically significant (p<0.05). Medolife has received a new reply from the FDA on their latest submission of requested data. In the reply, the FDA: ? Stated that they acknowledge the Company's clinical trial as an informal proof-of-concept study ? Laid out very specific guidelines for the next steps required by the regulatory body in order to garner approval for Escozine as a treatment for COVID-19, in which the FDA requested: ? Pharmacokinetic (PK) study, which Medolife has initiated in theUnited Kingdom . ? DNA toxicology study, for which Medolife is negotiating with a GLP certified laboratory inthe United States . ? Additional Chemistry, Manufacturing and Controls (CMC) data from Medolife's contract manufacturer,CURE Pharmaceutical Corporation .
R&D Expenses related to Escozine.
Over the last 24 months, the company has spent more than
Quanta Basics
The established resonance theory behind Quanta's polarization process has many potential applications. Quanta believes this technology has the opportunity to upend how commercial products are made and the benefits from them. Already we see multi-trillion-dollar global industries benefiting from Quanta's technology.
Our proof of concept, Quanta's market-leading CBD pain-relief rub ("Muscle Rub"), is only the first in a series of paradigm shift products to emerge from our labs. At the heart of its well-documented effectiveness is our proprietary "polarization" process, which uses electromagnetic force to markedly enhance bioactivity at the molecular level-a polarized ingredient is more soluble and creates stronger bonds with the body's receptors.
Proof of Concept
Creating, producing and selling consumer products was never our primary focus; Quanta's Muscle Rub was simply a means to an end - proof of concept and a revenue driver in a small emerging market as our business model took shape. Fundamentally, Quanta will be a licensing concern designed to collaborate with large brands to improve product quality and the profit margins of existing and new products. But the market needed proof and we chose to start in the under-developed category of CBD because of its speed to market.
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Understandably, we met the same initial hurdles every start-up encounters. In addition to simply explaining quantum mechanics, we had no track record of success from a business standpoint. The immediate goal was to prove our model was defensible. Hence, we chose CBD as a launch category. This market provided protection from industry titans that may have felt threatened by such a powerful technology while allowing us to drive profits during R&D.
Over the last two years, we have developed and sold products largely to the medical and wellness industries, along with some consumer retail. This effort was designed to drive revenue and to prove the concept of our model: that polarizing a single ingredient can produce a demonstrably superior product that consumers find safe and effective (establish consumer appetite).
Discovery Synopsys
Using our product development process and business-to-business and direct-to-consumer sales approaches as a benchmark for future business, we developed the Quanta business model. The company believes that its technology unique ability to strengthen ingredients renders them more potent without added chemicals or penetrating cells means Quanta is in a first-of-its-kind position in the market. As the world's first company focused on Quantum Biology we sit in a strong, but unique position in the market.
Upcoming products and ventures will be designed to achieve or surpass this level of consumer benefit and uptake.
Quanta Business Model in 3 P's: Potentiation, Partners, and Profits
After two years we believe the best possible model for the long-term success of the company is collaborating with best-in-class partners through joint ventures for new verticals, products, and research. These joint ventures may involve a jointly owned special purpose entity or they may be entirely based on contractual obligations.
The unique ability to increase the ingredient and product performance opens the doors for major opportunities. Higher performing ingredients mean less is needed to make a strong impact (increased margins, increase overall efficacy). We proved this with our Muscle Rub, which uses approximately 1/3 the CBD of competing products with demonstrably improved results.
The level of potentiation delivered by Quanta allows our partners the unique ability to provide higher-performing products, lower material costs, more competitive pricing and increased profit margins. In short, our partners will be able to make better performing, more affordable products with a higher repeat purchase. This is true disruption and consumer utopia.
We aim to work with groups that specialize in manufacturing, marketing, selling and distributing existing product lines that utilize ingredients we can potentiate. Partners like this facilitate efficient market delivery of joint innovations.
We believe this strategy provides greater shareholder value, enhances revenue potential, defrays upfront expenses and affords us the ability to raise capital.
Ultimately, these ventures would result in licensing out our technology to other reputable brands and companies to create co-branded products whereas the term "Powered by Quanta" becomes as recognized as "Intel Inside."
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We believe this type of partnership will afford a company Quanta partners with:
? Development of emerging products with cutting edge ingredients. ? A product line with a true point of differentiation. ? New SKUs with an increased margin. ? Decreased cost of goods sold.
Simultaneously these partnerships can allow Quanta:
? Greater brand recognition.
? Increased revenue and in turn profitability.
? Quicker timeline to more licensing opportunities because of a track record of
success.
? Brand to become synonymous with improving the performance of ingredients
within products.
Manufacturing Partnerships -
Quanta is currently focused on partnering with large-scale manufacturers and distributors able to produce products that meet the requirements of applicable regulations IE: Good Manufacturing Practices to fulfill orders of our own product line. This type of partnership is crucial because it will afford:
? New product development that meets certification requirements ? Much larger production scale ? Speed to market ? Increased distribution and profitability
With our licensing capabilities, Quanta believes this technology can render better, more efficacious products that cost less to create but command a higher purchase value because of polarized ingredients. This, in turn, allows companies to diversify their catalog of products while simultaneously providing them with a distinguished advantage. More efficacious ingredients.
20 Government Regulation
We believe we are in compliance with applicable federal, state and other regulations and that we have compliance programs in place to ensure compliance going forward. There are no regulatory notifications or actions pending.
Results of Operations Summary of Key Results
Results of Operations for three months ended
Revenue
Net sales are comprised of wholesale sales to our retail partners and sales through our direct-to-consumer channel. Net sales in both channels reflect the impact of product returns as well as discounts for certain sales programs or promotions.
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Revenue
Net sales are comprised of wholesale sales to our retail partners and sales through our direct-to-consumer channel. Net sales in both channels reflect the impact of product returns as well as discounts for certain sales programs or promotions.
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21 Liquidity
We have yet to establish any history of profitable operations. For the nine
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Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with accounting principles
generally accepted in
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to, among others, impairment analysis of long-term assets, valuation allowance on deferred income taxes, assumptions used in valuing stock instruments issued for services, assumptions made in valuing derivative liabilities, and the accrual of potential liabilities. Actual results may differ from these estimates.
Revenue Recognition
Product Sales-Substantially all of the Company's revenue is derived from product sales. Product revenue and costs of sales are recognized when control of the products transfers to our customer, which generally occurs upon shipment from our facilities. The Company's performance obligations are satisfied at that time. The Company does not have any significant contracts with customers requiring performance beyond delivery, and contracts with customers contain no incentives or discounts that could cause revenue to be allocated or adjusted over time.
License revenue- Revenue from symbolic IP is recognized over the access period to the Company's IP (see Note 2).
Cost of goods sold includes direct costs and fees related to the sale of our products.
22 Stock Compensation
The Company periodically issues stock options, warrants, shares of common stock, and restricted stock unit awards, as share-based compensation to employees and non-employees. The Company accounts for its share-based compensation in accordance with FASB ASC 718, Compensation - Stock Compensation (Topic 718). Stock-based compensation cost for employees is measured at the grant date, based on the estimated fair value of the award, and is recognized as expense over the requisite service period. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.
Recently Issued Accounting Pronouncements
See Note 1 to the Condensed Consolidated Financial Statements
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