0001493152-20-006856.txt : 20200421 0001493152-20-006856.hdr.sgml : 20200421 20200421170155 ACCESSION NUMBER: 0001493152-20-006856 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 57 CONFORMED PERIOD OF REPORT: 20200331 FILED AS OF DATE: 20200421 DATE AS OF CHANGE: 20200421 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Kraig Biocraft Laboratories, Inc CENTRAL INDEX KEY: 0001413119 STANDARD INDUSTRIAL CLASSIFICATION: PLASTIC MATERIAL, SYNTH RESIN/RUBBER, CELLULOS (NO GLASS) [2820] IRS NUMBER: 830459707 STATE OF INCORPORATION: WY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-146316 FILM NUMBER: 20805848 BUSINESS ADDRESS: STREET 1: 2723 SOUTH STATE STREET STREET 2: SUITE 150 CITY: ANN ARBOR STATE: MI ZIP: 48104 BUSINESS PHONE: (734) 619-8066 MAIL ADDRESS: STREET 1: 2723 SOUTH STATE STREET STREET 2: SUITE 150 CITY: ANN ARBOR STATE: MI ZIP: 48104 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2020

 

OR

 

[  ] 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: 333-146316

 

KRAIG BIOCRAFT LABORATORIES, INC.

(Exact Name of Registrant as Specified in Charter)

 

Wyoming   83-0459707
(State or Other Jurisdiction
of Incorporation)
  (I.R.S. Employer
Identification No.)

 

2723 South State St. Suite 150

Ann Arbor, Michigan 48104

(Address of Principal Executive Offices)

 

(734) 619-8066

 (Registrant’s telephone number, including area code)

 

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

 

Copies to:

Hunter Taubman Fischer & Li LLC

1450 Broadway, 26th Floor

New York, NY 10018

 

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. Yes [X] 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). Yes [X] 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 [  ]
Non-accelerated filer [X]     Smaller reporting company [X]
      Emerging growth company [  ]

 

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 [  ] No [X]

 

As of April 21, 2020, there were 844,468,378 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.

 

 

 

 
 

 

TABLE OF CONTENTS

 

  Page
   
PART I FINANCIAL INFORMATION  
   
Item 1. Unaudited Condensed Financial Statements: 3
   
Condensed Consolidated Balance Sheets as of March 31, 2020 (Unaudited) and December 31, 2019 (Audited) 3
   
Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2020 and 2019 4
   
Condensed Consolidated Statements of Stockholders’ Deficit for the three months ended March 31, 2020 and 2019 (Unaudited) 5
   
Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2020 and 2019 7
   
Notes to Condensed Consolidated Financial Statements (Unaudited) 8
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27
   
Item 3. Quantitative and Qualitative Disclosures about Market Risk 33
   
Item 4. Controls and Procedures 33
   
PART II OTHER INFORMATION
   
Item 1. Legal proceedings 34
   
Item 1A. Risk Factors 34
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 34
   
Item 3. Defaults upon Senior Securities 34
   
Item 4. Mine Safety Disclosures 34
   
Item 5. Other information 35

 

2
 

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

(Unaudited)

 

   March 31,
2020
   December 31, 2019 
   (Unaudited)     
ASSETS        
Current Assets          
Cash  $37,411   $125,024 
Prepaid expenses   12,670    31,745 
Total Current Assets   50,081    156,769 
           
Property and Equipment, net   109,942    117,321 
Operating lease right-of-use asset, net   444,514    473,242 
Security deposit   3,518    3,518 
           
Total Assets  $608,055   $750,850 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities          
Accounts payable and accrued expenses  $482,435   $560,948 
Note payable - related party   942,000    642,000 
Royalty agreement payable - related party   65,292    65,292 
Accounts payable and accrued expenses - related party   4,320,170    4,145,465 
Operating lease liability, current   113,764    110,678 
Loan payable   60,000    60,000 
Total Current Liabilities   5,983,661    5,584,383 
           
Long Term Liabilities          
Loan payable, net of current   170,244    185,244 
Operating lease liability, net of current   339,548    369,281 
           
Total Liabilities   6,493,453    6,138,908 
           
Commitments and Contingencies          
           
Stockholders’ Deficit          
Preferred stock, no par value; unlimited shares authorized, none, issued and outstanding   -    - 
Preferred stock Series A, no par value; 2 and 2 shares issued and outstanding, respectively   5,217,800    5,217,800 
Common stock Class A, no par value; unlimited shares authorized, 844,468,378 and 844,468,378 shares issued and outstanding, respectively   16,757,079    16,757,079 
Common stock Class B, no par value; unlimited shares authorized, no shares issued and outstanding   -    - 
Common Stock Issuable, 1,122,311 and 1,122,311 shares, respectively   22,000    22,000 
Additional paid-in capital   4,966,968    2,412,969 
Accumulated Deficit   (32,849,245)   (29,797,906)
           
Total Stockholders’ Deficit   (5,885,398)   (5,388,058)
           
Total Liabilities and Stockholders’ Deficit  $608,055   $750,850 

 

3
 

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Statements of Operations

(Unaudited)

 

   For the Three Months Ended 
   March 31, 2020   March 31, 2019 
         
Revenue  $-   $- 
           
Operating Expenses          
General and Administrative   2,792,781    117,967 
Professional Fees   19,374    150,311 
Officer’s Salary   144,562    118,155 
Rent - Related Party   3,135    3,273 
Research and Development   4,812    22,304 
Total Operating Expenses   2,964,664    412,010 
           
Loss from Operations   (2,964,664)   (412,010)
           
Other Income/(Expenses)          
Interest expense   (86,675)   (66,920)
Interest income   -    1,184 
Total Other Income/(Expenses)   (86,675)   (65,736)
           
Net (Loss) before Provision for Income Taxes   (3,051,339)   (477,746)
           
Provision for Income Taxes   -    - 
           
Net (Loss)  $(3,051,339)  $(477,746)
           
Net Income (Loss) Per Share - Basic and Diluted  $(0.00)  $(0.00)
           
Weighted average number of shares outstanding during the period - Basic and Diluted   844,468,378    822,016,321 

 

4
 

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Statement of Changes in Stockholders Deficit

For the three months ended March 31, 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   2   $ 5,217,800    844,468,378   $ 16,757,079    -   $-    1,122,311   $ 22,000   $ 2,412,969   $ (29,797,906)  $ (5,388,058)
                                                        
Options issued for services   -    -    -    -    -    -    -    -    2,544,215    -    2,544,245 
                                                        
Imputed interest - related party   -    -    -    -    -    -    -    -    9,784    -    9,784 
                                                        
Net loss for the three months ended March 31, 2020 -    -    -    -    -    -    -    -    -    (3,051,339)   (3,051,339)
                                                        
Balance, March 31, 2020   2   $5,217,800    844,468,378   $16,757,079    -   $-    1,122,311   $22,000   $4,966,968    $(32,849,245)  $(5,885,398)

 

5
 

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Statement of Changes in Stockholders Deficit

For the three months ended March 31, 2019

(Unaudited)

 

   Preferred Stock - Series A   Common Stock -
Class A
   Common Stock -
Class B
   Class A Shares To be issued           Accumulated     
   Shares   Par   Shares   Par   Shares   Par   Shares   Par   APIC   Deficit   Total 
Balance, December 31, 2018      2   $ 5,217,800     816,883,910   $ 15,145,798       -   $-     1,122,311   $ 22,000   $ 2,043,235   $ (26,888,056)  $ (4,459,223)
                                                        
Units issued for cash   -    -    14,797,278    1,000,000    -    -    -    -    -    -    1,000,000 
                                                        
Shares issued in exchange for accounts payable   -    -    4,052,652    281,659    -    -    -    -    -    -    281,659 
                                                        
Imputed interest - related party   -    -    -    -    -    -    -    -    4,947    -    4,947 
                                                        
Net loss for the three months ended March 31, 2019   -    -    -    -    -    -    -    -    -    (477,746)   (477,746)
                                                        
Balance, March 31, 2019   2   $5,217,800    835,733,840   $16,427,457    -   $-    1,122,311   $22,000   $2,048,182   $(27,365,802)  $(3,650,363)

 

6
 

 

Kraig Biocraft Laboratories, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

   For the three months ended March 31, 
   2020   2019 
Cash Flows From Operating Activities:          
Net Loss  $(3,051,339)  $(477,746)
Adjustments to reconcile net loss to net cash used in operations          
Depreciation expense   7,379    6,665 
Imputed interest - related party   9,784    4,947 
Fair value of options issued for services   2,544,215    - 
Changes in operating assets and liabilities:          
Decrease in prepaid expenses   19,075    1,713 
Operating lease right-of-use, net   28,728    10,737 
Increase in accrued expenses and other payables - related party   174,705    162,725 
(Decrease)Increase in accounts payable   (78,513)   76,003 
Operating lease liabilities   (26,647)   (10,090)
Net Cash Used In Operating Activities   (372,613)   (225,046)
           
Cash Flows From Investing Activities:          
Purchase of Fixed Assets and Leasehold Improvements   -    - 
Net Cash Used In Investing Activities   -    - 
           
Cash Flows From Financing Activities:          
Proceeds from Notes Payable - related party   300,000    120,000 
Principal payments on debt   (15,000)   (1,000)
Proceeds from issuance of common stock   -    1,000,000 
Net Cash Provided by Financing Activities   285,000    1,119,000 
           
Net Increase in Cash   (87,613)   893,954 
           
Cash at Beginning of Period   125,024    13,697 
           
Cash at End of Period  $37,411   $907,651 
           
Supplemental disclosure of cash flow information:          
           
Cash paid for interest  $-   $- 
Cash paid for taxes  $-   $- 
           
Supplemental disclosure of non-cash investing and financing activities:          
Settlement of accounts payable with note payable  $-   $265,244 
Settlement of accounts payable with stock issuance  $-   $281,659 
Adoption of lease standard ASC 842  $-   $167,867 

 

7
 

 

Kraig Biocraft Laboratories, Inc.

Notes to Condensed Consolidated Financial Statements as of March 31, 2020 and 2019

 

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

 

(A) Basis of Presentation

 

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.

 

(B) Foreign Currency

 

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.

 

(C) Use of Estimates

 

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.

 

(D) Cash

 

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 no cash equivalents as of March 31, 2020 or December 31, 2019.

 

(E) Loss Per Share

 

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 March 31, 2020 and March 31, 2019, warrants were not included in the computation of income/ (loss) per share because their inclusion is anti-dilutive.

 

8
 

 

The computation of basic and diluted loss per share for March 31, 2020 and March 31, 2019 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

 

   March 31, 2020   March 31, 2019 
Stock Warrants (Exercise price - $0.001/share)   55,995,917    58,595,917 
Stock Options (Exercise price - $0.1150/Share)   27,340,000    - 
Convertible Preferred Stock   2    2 
Total   83,335,919    58,595,919 

 

(F) 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.

 

(G) Income Taxes

 

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.

 

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.

 

Effective January 1, 2009, the Company adopted guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all federal or state income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. As of December 31, 2019 and December 31, 2017 there were no amounts that had been accrued in respect to uncertain tax positions.

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

9
 

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

 

(H) Stock-Based Compensation

 

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.

 

(I) Recent Accounting Pronouncements

 

In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, “Compensation — Stock Compensation (Topic 718),” (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted ASU 2018-07 effective April 1, 2018. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. As a result, the Company has recorded Right-to-use assets and corresponding Lease obligations as more fully discussed in Note 4.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

 

(J) Equipment

 

The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a five year life for automobiles.

 

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.

 

10
 

 

There were no impairment losses recorded for the three months ended March 31, 2020 and 2019.

 

(K) 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 March 31, 2020 and December 31, 2019.
     
  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.

 

   March 31,
2020
  

December 31,

2019

 
Level 1  $        -   $          - 
Level 2  $-   $- 
Level 3  $-   $- 
Total  $-   $- 

 

(L) Revenue Recognition

 

During the year ended December 31, 2019, the Company’s revenues were generated primarily from a contract with the U.S. Government. The Company performs work under this 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, to that original contract, the Company has 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.

 

11
 

 

For the three months ended March 31, 2020 and 2019, the Company recognized $0 and $0 respectively in revenue from the Government contract. These revenues were generated for work performed in the development and production of the Company’s recombinant silks under the base and option period phases of our ongoing contract with the US Army.

 

On July 24, 2017, the Company signed a contract option extension with the US Army to research and deliver recombinant spider silk fibers and threads. This contract option increased the total contract award by an additional $921,130 to a total of $1,021,092 and added 12 months to the contract duration. This effort was scheduled to end on September 24, 2018, but the Company requested an extension of this contract option period through April 2019 to complete the work. The Company has been in communication with the contracting office and is working with them as they determine the best path forward; Management believes there is a possibility of securing a follow-up contract to complete the delivery of all materials for the contract. The Company is also continuing to pursue additional contract opportunities with the Department of Defense, Department of Energy and other governmental agencies.

 

(M) Concentration of Credit Risk

 

The Company at times has cash in banks in excess of FDIC insurance limits. At March 31, 2020 and December 31, 2019, the Company had approximately $0 and $0, respectively in excess of FDIC insurance limits.

 

For the three months ended March 31, 2020 and 2019, the Company booked $0 and $0 for doubtful accounts.

 

NOTE 2 GOING CONCERN

 

As reflected in the accompanying financial statements, the Company has a working capital deficiency of $5,933,580 and stockholders’ deficiency of $5,885,398 and used $372,613 of cash in operations for three months ended March 31, 2020. 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.

 

NOTE 3 EQUIPMENT

 

At March 31, 2020 and December 31, 2019, property and equipment, net, is as follows:

 

   As of March 31, 2020   December 31, 2019 
Automobile  $41,805   $41,805 
Laboratory Equipment   96,536    96,536 
Office Equipment   7,260    7,260 
Leasehold Improvements   85,389    85,389 
Less: Accumulated Depreciation   (121,048)   (113,669)
Total Property and Equipment, net  $109,942   $117,321 

 

Depreciation expense for the three months ended March 31, 2020 and 2019, was $7,379 and $6,665, respectively.

 

12
 

 

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 $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 $960. Rent expense – related party for the three months ended March 31, 2020 and 2019, was $3,135 and $5,760, respectively (See Note 9).

 

On September 13, 2017, the Company signed a new two year lease commencing on October 1, 2017 and ending on September 30, 2019. The Company pays an annual rent of $39,200 for the year one of lease and $42,000 for the year two of lease for office and manufacturing space.

 

On May 9, 2019 the Company signed a 5 year property lease with the Socialist Republic of Vietnam which consists of 4,560.57 square meters of space, which it leases at a current rent of approximately $45,150 per year one and two and with the 5% increase per year for years three through five.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

 

The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. The adoption of the new guidance resulted in the recognition of ROU assets of $529,135 and lease liabilities of $531,462.

 

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the January 1, 2019 adoption date. This rate was determined to be 8% and the Company determined the initial present value, at inception, of $559,568.

 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any.

 

The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.

 

The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, we will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight line basis over the term of the lease

 

13
 

 

Right to use assets is summarized below:

 

   March 31, 2020 
Right to use assets, net – related party  $60,486 
Right to use assets, net   51,621 
Right to use assets, net   332,407 
Total  $444,514 

 

During the three months ended March 31, 2020, the Company recorded $26,550 as lease expense to current period operations.

 

During the three months ended March 31, 2020, the Company recorded $2,178 as lease expense – related party to current period operations.

 

Lease liability is summarized below:

 

   March 31, 2020 
Right to use liability, net – related party   53,442 
Right to use liability, net   61,789 
Right to use liability, net   338,081 
Total   453,312 
Less: short term portion  $(113,764)
Long term position  $339,548 

 

Lease expense for the three months ended March 31, 2020 was comprised of the following:

 

Operating lease expense  $15,582 
Operating lease expense  $9,142 
Operating lease expense – related party  $1,923 

 

NOTE 5 ACCRUED INTEREST – RELATED PARTY

 

On June 6, 2016, the Company received a $50,000 loan from our principal stockholder. Subsequently on December 1, 2017, the Company received an additional $30,000 loan from the same stockholder. On January 8, 2018 and March 31, 2018 the Company received an additional loan of $100,000 and $15,000, respectively. The Company received additional loan funds from the same stockholder as follows: $20,000 on April 26, 2018; $15,000 on June 21, 2018; $15,000 on June 29, 2018; $20,000 on July 5, 2018; $26,000 on October 1, 2018; $11,000 on October 12, 2018; $20,000 on December 21, 2018; $3,000 on January 4, 2019; $30,000 on January 17, 2019; $30,000 on February 1, 2019; $20,000 on February 15, 2019; $20,000 on March 1, 2019; $17,000 on January 4, 2019, $100,000 on November 20, 2019, $100,000 on December 18, 2019, $100,000 on January 24, 2020, $100,000 on February 19, 2020 and $100,000 on March 9, 2020. Pursuant to the terms of the loan, the advance bears an interest at 3%, is unsecured, and due on demand. Total loan payable to principal stockholder for as of December 31, 2019 is $642,000. Total loan payable to this principal stockholder as of March 31, 2020 is $942,000. During the three months ended March 31, 2020, the Company recorded $9,784 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $5,958. During the three months ended March 31, 2019, the Company recorded $4,947 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $3,445.

 

14
 

 

NOTE 6 NOTE PAYABLE

 

On March 1, 2019, the Company entered into an unsecured promissory note with Notre Dame - an unrelated party in the amount of $265,244 in exchange for outstanding account payable due to the debtor. Pursuant to the terms of the note, the note bears 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 three months ended March 31, 2020, the Company paid $15,000 of the loan balance (See Note 8 (A)):

 

1. $1,000 per month for the first six months;

2. $2,000 per month for the months seven and eight;

3. $5,000 per month for months nine through twenty three; and,

4. Final payment of all remaining balance, in the amount of $180,224 in month 24.

 

NOTE 7 STOCKHOLDERS’ DEFICIT

 

(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 14,797,278 Units at a purchase price of $0.06758 per Unit, for total gross proceeds to the Company of $1,000,000. The Units consist of 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 14,797,278 shares of Common Stock at an exercise price of $0.06 per share (the “6 Cent Warrants”) and (ii) one warrant entitles the investor to purchase up to 7,398,639 shares of Common Stock at an exercise price of $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 $0.06 Warrants shall expire on March 8, 2021;

● ½ of all $0.06 Warrants shall expire on March 8, 2022;

● ½ of all $0.08 Warrants shall expire on March 8, 2022; and,

● ½ of all $0.08 Warrants shall expire on March 8, 2023.

 

(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 March 20, 2019, the Company issued 4,052,652 shares of its class A common stock with a fair value of $281,659 ($0.0695/share) on the date of settlement. The Company settled $243,159 of accounts payable to the University of Notre Dame. The Company recorded an additional amount of $38,500 based on the fair value of the shares on the date of settlement. See Note 8 (A).

 

15
 

 

(C) Common Stock Warrants and Options

 

On February 19, 2020 the Company issued a 20-year option to purchase 20,000,000 shares of common stock at an exercise price of $0.0115 per share to a related party for services rendered. The options had a fair value of $2,198,411, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on February 19, 2025, and for a period of 15 years expiring on February 19, 2040. During the three months ended March 31, 2020, the Company recorded $2,198,411 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   125.19%
Expected term   

3 years

 
Risk free interest rate   1.56%
Expected forfeitures   0%

 

On February 19, 2020 the Company issued a 10-year option to purchase 6,000,000 shares of common stock at an exercise price of $.00115 per share to a related party for services rendered. The options had a fair value of $626,047, based upon the Black-Scholes option-pricing model  on the date of grant and 2,000,000 options are fully vested on the date granted and 1,000,000 options vest at the end of each successive year for four years. Options will be exercisable on February 19, 2021, and for a period of 10 years expiring on February 19, 2030. During the three months ended March 31, 2020, the Company recorded $208,682 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   125.19%
Expected term   3 years 
Risk free interest rate   1.50%
Expected forfeitures   0%

 

On February 19, 2020 the Company issued a 7-year option to purchase 1,340,000 shares of common stock at an exercise price of $0.0115 per share to employees for services rendered. The options had a fair value of $133,063, based upon the Black-Scholes option-pricing model on the date of grant and 268,000 options are fully vested on the date granted and the remaining option vest equally over the remaining 4 years at the end of each successive year. Options will be exercisable on February 19, 2021, and for a period of 6 years expiring on February 19, 2027. During the three months ended March 31, 2020, the Company recorded $26,613 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   125.19%
Expected term   6 years 
Risk free interest rate   1.46%
Expected forfeitures   0%

 

On September 26, 2019, the Company issued 766,667 shares in connection with the cashless exercise of the 1,000,000 warrants. On August 14, 2019, the Company issued 7,967,871 shares in connection with the cashless exercise of the 8,000,000 warrants.

 

16
 

 

On August 8, 2019, the Company issued a 2-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $267,574, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2024. During the year ended December 31, 2019, the Company recorded $267,574 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $267,574, based upon the Black-Scholes option-pricing model on the date of grant and is fully vested on August 8, 2020. Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025. During the three months ended March 31, 2020, the Company recorded $66,528 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 3-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $291,842, based upon the Black-Scholes option-pricing model on the date of grant and is fully vested on August 8, 2021. Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026. During the three months ended March 31, 2020, the Company recorded $36,331 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   3 years 
Risk free interest rate   1.54%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year option to purchase 1,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $118,874, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023. During the year ended December 31, 2019, the Company recorded $118,874 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

17
 

 

On August 8, 2019, the Company issued a 2-year option to purchase 1,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $118,874, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2021, and for a period of 3 years expiring on August 8, 2024. During the year ended December 31, 2019, the Company recorded $118,874 as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year option to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to an employee for services rendered. The options had a fair value of $14,859, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023. During the year ended December 31, 2019, the Company recorded $14,859, as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year option to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $16,723, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2020. Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025. During the three months ended March 31, 2020, the Company recorded $4,158, as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   2 years 
Risk free interest rate   1.62%
Expected forfeitures   0%

 

18
 

 

On August 8, 2019, the Company issued a 2-year options to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $18,240, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2021. Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026. During the three months ended March 31, 2020, the Company recorded $2,271, as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   3 years 
Risk free interest rate   1.54%
Expected forfeitures   0%

 

On August 8, 2019, the Company issued a 2-year options to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $19,525, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2022. Options will be exercisable on August 8, 2024, and for a period of 3 years expiring on August 8, 2027. During the three months ended March 31, 2020, the Company recorded $1,621, as an expense for options issued.

 

Expected dividends   0%
Expected volatility   105.73%
Expected term   3 years 
Risk free interest rate   1.54%
Expected forfeitures   0%

 

On March 20, 2018, the Company issued a 4-year warrant to purchase 600,000 shares of common stock at an exercise price of $0.001 per share to a consultant for services rendered. The warrants had a fair value of $19,915, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on March 20, 2018. Warrants will be exercisable on March 20, 2019, and for a period of 3 years expiring on March 20, 2022. During the year ended December 31, 2019, the Company recorded $19,915 as an expense for warrants issued. On April 5, 2019, the Company cancelled 600,000 warrant issued to a consultant on February 20, 2018 in exchange for $6,000 cash payment. In addition the Company also recorded a $19,915 reduction to warrant expense related to the warrant cancellation.

 

Expected dividends   0%
Expected volatility   97.56%
Expected term   4 years 
Risk free interest rate   2.65%
Expected forfeitures   0%

 

On September 26, 2019, the Company issued 766,667 shares in connection with the cashless exercise of the 1,000,000 warrants.

 

19
 

 

On August 14, 2019, the Company issued 7,967,871 shares in connection with the cashless exercise of the 8,000,000 warrants.

 

  

Number of

Warrants

  

Weighted

Average

Exercise

Price

  

Weighted

Average Remaining

Contractual Life

(in Years)

 
             
Balance, December 31, 2019   55,395,917         2.77 
Granted   -        -     
Exercised   -    -     
Cancelled/Forfeited   -    -     
Balance, March 31, 2020   55,395,917         2.52 
Intrinsic Value  $9,799,286          

 

For the three months ended March 31, 2020, the following warrants were outstanding:

 

Exercise Price

Warrants

Outstanding

  

Warrants

Exercisable

  

Weighted Average Remaining

Contractual Life

  

Aggregate

Intrinsic Value

 
$0.001    21,000,000    1.40   $3,675,000 
$0.056    3,000,000    1.36   $350,000 
$0.04    2,300,000    1.40   $402,500 
$0.06    7,398,639    0.94   $1,294,762 
$0.06    7,398,639    1.94   $1,294,762 
$0.08    3,699,320    1.94   $647,381 
$0.08    3,699,320    2.94   $647,381 
$0.2299    8,500,000    5.14   $1,487,500 

 

For the year ended December 31, 2019, the following warrants were outstanding:

 

Exercise Price

Warrants

Outstanding

  

Warrants

Exercisable

  

Weighted Average Remaining

Contractual Life

  

Aggregate

Intrinsic Value

 
$0.001    21,000,000    1.65   $4,069,800 
$0.056    3,000,000    1.61   $387,600 
$0.04    2,300,000    1.70   $445,740 
$0.06    7,398,639    1.19   $1,433,856 
$0.06    7,398,639    2.19   $1,433,856 
$0.08    3,699,320    2.19   $716,928 
$0.08    3,699,320    3.19   $719,928 
$0.2299    8,500,000    5.39   $1,647,300 

 

20
 

 

For the three months ended March 31, 2020, the following options were outstanding:

 

            Weighted Average 
Exercise   Options   Options   Remaining 
Price   Outstanding   Exercisable   Contractual Life 
              
$0.115    -    22,267,800    23.34 

 

(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

 

None

 

NOTE 8 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. The term of the agreement is a five year period at an annual salary of $210,000. There is a 6% annual increase. For the year ending December 31, 2015, the annual salary was $281,027. The employee is also to receive a 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 5 years with an annual salary of $297,889 for the year ended December 31, 2016. On January 1, 2017 the agreement renewed with the same terms for another 5 years, but with an annual salary of $315,764 for the year ended December 31, 2017. On January 1, 2019 the agreement renewed again with the same terms for another 5 years, but with an annual salary of $354,791 for the year ended December 31, 2019. On January 1, 2020 the agreement renewed again with the same terms for another 5 years, but with an annual salary of $376,078 for the year ended December 31, 2020. As of March 31, 2020 and December 31, 2019, the accrued salary balance is $2,616,686 and $2,535,203, respectively. (See Note 9).

 

21
 

 

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 $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 $11,000. In addition, Mr. Rice was issued a three-year warrant to purchase 2,000,000 shares of common stock of the Company at an exercise price of $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 3,000,000 shares of common stock of the Company at an exercise price of $0.001 per share (the “May 20165 Warrant”) to Mr. Rice. The 2,000,000 share warrant fully vested on October 28, 2016. For the year ended December 31, 2015, the Company recorded $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 $140,000, which includes salary, health insurance, 401K retirement plan contributions, etc. In addition, Mr. Rice was issued a three-year warrant to purchase 6,000,000 shares of common stock of the Company at an exercise price of $0.001 per share pursuant to the employment agreement. On January 9, 2018, 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 warrant to January 23, 2015 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 April 26, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $20,000 per year and issue a one-time $20,000 bonus. Additionally, on August 15, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by an additional $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:

 

●The Company maintaining $6,000,000 or more in working capital,

●Upon the transfer of ownership of more than 50% of the Corporation’s voting share or an assignment for the benefit of creditors or bankruptcy, or

●Upon the fifth year anniversary of the salary increase and the bonus issuance.

 

As of March 31, 2020 and December 31, 2019 the Company owes $73,582 and $64,352, respectively, to Mr. Rice for payroll payable.

 

On October 21, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $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:

 

●The Company maintaining $6,000,000 or more in working capital,

●Upon the transfer of ownership of more than 50% of the Corporation’s voting share or an assignment for the benefit of creditors or bankruptcy, or

●Upon the fifth year anniversary of the salary increase and the bonus issuance.

 

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 $60,000. In addition, Mr. Le was issued two three-year warrants to purchase 2,000,000 shares of common stock of the Company at an exercise price of $0.2299 per share. As of March 31, 2020 and December 31, 2019, the accrued salary balance is $1,154 and $1,154, respectively.

 

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(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 $10,000. The Company will pay a license maintenance fee of $10,000 on the one year anniversary of this agreement and each year thereafter. The Company will pay an annual research fee of $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 $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 2,200,000 shares of its common stock and to pay a royalty of 2% of net sales. The license agreement has a term of 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. The Company can terminate the agreement upon a 90 day written notice subject to payment of a termination fee of $5,000 if the termination takes place within 2 years after its effectiveness, $10,000 if the termination takes place within 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 totaling $265,244 and issued 4,025,652 shares of Class A common stock with a fair value of $281,659 as payment of certain debt. In the event of default the license agreement will be terminated. During the three months ended March 31, 2020, the Company paid $15,000 of the balance (See Notes 6).

 

(B) Royalty and Research Agreements

 

On May 1, 2008 the Company entered into a five year consulting agreement for research and development. Pursuant to the terms of the agreement, the Company will be required to pay $1,000 per month, or at the Company’s option, the consulting fee may be paid in the form of Company common stock based upon the greater of $0.05 per share or the average of the closing price of the Company’s shares over the five days preceding such stock issuance. On April 6, 2018, the Company issued 36,000 shares with a fair value of $1,076 ($0.0299/share) to a consultant as consideration for consulting fees owed from October 1, 2014 through December 31, 2019 of $21,000. The issuance of shares resulted in gain on settlement of accounts payable of $19,924. On April 1, 2018, the Company ended the consulting agreement and no additional compensation will be issued. (See Note 7 (B)).

 

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 $120,000 that was due on December 26, 2007. As of March 31, 2020 and December 31, 2019, the outstanding balance is $65,292. As of December 31, 2019, the Company recorded interest expense and related accrued interest payable of $2,623. In 2020 the Company recorded $490 in interest expensed and related accrued interest payable. As of March 31, 2020, the Company recorded interest expense and related accrued interest payable of $7,033.

 

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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(C) Consulting Agreement

 

On February 20, 2018, the Company signed an agreement with a consultant to provide services. Under this agreement the consultant will receive a warrant for 600,000 shares of common stock and may be awarded additional warrants for up to 3,000,000 shares of common stock if performance metrics are achieved. On March 20, 2018, the Company issued a 4-year warrant to purchase 600,000 shares of common stock at an exercise price of $0.001 per share to a consultant for services rendered. The warrants had a fair value of $19,915, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on March 20, 2018. Warrants will be exercisable on March 20, 2019, and for a period of 3 years expiring on March 20, 2022. During the year ended December 31, 2018, the Company recorded $19,915 as an expense for warrants issued (See Note 7 (C)).’ On April 5, 2019, the Company cancelled 600,000 warrant issued to a consultant on February 20, 2018 in exchange for $6,000 cash payment.

 

(D) 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 $2,508 for conference facilities, mail, fax, and reception services located at our principal place of business.

 

On May 9, 2019 the Company signed an 5 year property lease Socialist Republic of Vietnam which consists of 4,560.57 square meters of space, which it leases at a current rent of approximately $45,150 per year one and two and with the 5% increase per year for years three through five.

 

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 $960. Rent expense – related party for the three months ended March 31, 2020 and 2019, was $3,135 and $3,273, respectively (See Note 9).

 

On September 13, 2017, the Company signed a new two year lease commencing on October 1, 2017 and ending on March 31, 2020. The Company pays an annual rent of $39,200 for the year one of lease and $42,000 for the year two of lease for office and manufacturing space. On September 5, 2019, the Company signed a new 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 $42,000 for year one of the lease and $44,800 for year two of the lease.

 

NOTE 9 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 200,000 preferred shares with the following preferences; no dividends and 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 $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 March 31, 2020 the outstanding balance is $65,292. Additionally, the accrued expenses are accruing 7% interest per year. As of March 31, 2020, the Company recorded interest expense and related accrued interest payable of $7,033.

 

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 $334,708 for the year ended December 31, 2019. As of March 31, 2020 and December 31, 2019, the accrued salary balance is $2,616,686 and $2,535,203, 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 $140,000, which includes salary, health insurance, 401K retirement plan contributions, etc. In addition, Mr. Rice was issued a three-year warrant to purchase 6,000,000 shares of common stock of the Company at an exercise price of $0.001 per share pursuant to the employment agreement. On January 9, 2018, 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 23, 2015 for Mr. Rice. Additionally, on March 15, 2018, the Company signed an extension of its at-will employment agreement with its COO. On April 26, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $20,000 per year and issue a one-time $20,000 bonus. Additional, on August 15, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by an additional $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:

 

  The Company maintaining $6,000,000 or more in working capital,
     
  Upon the transfer of ownership of more than 50% of the Corporation’s voting share or an assignment for the benefit of creditors or bankruptcy, or
     
  Upon the fifth year anniversary of the salary increase and the bonus issuance.

 

As of March 31, 2020 and December 31, 2019, the Company owes $73,582 and $64,351, 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 $60,000. In addition, Mr. Le was issued two three-year warrants to purchase 2,000,000 shares of common stock of the Company at an exercise price of $0.2299 per share. As of March 31, 2020 and December 31, 2019, the accrued salary balance is $1,154 and $1,154, respectively. ..

 

On June 6, 2016, the Company received a $50,000 loan from our principal stockholder. Subsequently on December 1, 2017, the Company received an additional $30,000 loan from the same stockholder. On January 8, 2018 and March 31, 2018 the Company received an additional loan of $100,000 and $15,000, respectively. The Company received additional loan funds from the same stockholder as follows: $20,000 on April 26, 2018; $15,000 on June 21, 2018; $15,000 on June 29, 2018; $20,000 on July 5, 2018; $26,000 on October 1, 2018; $11,000 on October 12, 2018; $20,000 on December 21, 2018; $3,000 on January 4, 2019; $30,000 on January 17, 2019; $30,000 on February 1, 2019; $20,000 on February 15, 2019; $20,000 on March 1, 2019; $17,000 on January 4, 2019, $100,000 on November 20, 2019, $100,000 on December 18, 2019, $100,000 on January 24, 2020, $100,000 on February 19, 2020 and $100,000 on March 9, 2020. Pursuant to the terms of the loan, the advance bears an interest at 3%, is unsecured, and due on demand. Total loan payable to principal stockholder for as of December 31, 2019 is $642,000. Total loan payable to this principal stockholder as of March 31, 2020 is $942,000. During the three months ended March 31, 2020, the Company recorded $9,784 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $5,958. During the three months ended March 31, 2019, the Company recorded $4,947 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $3,445.

 

On January 23, 2017, the Company signed an 8 year property lease with the Company’s President for land in Texas. The Company pays $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 three months ended March 31, 2020 and 2019 was $3,135 and $3,273, respectively.

 

As of March 31, 2020 and December 31, 2019, there was $311,638 and $304,539, respectively, included in accounts payable and accrued expenses - related party, which is owed to the Company’s Chief Executive Officer and Chief Operations Officer.

 

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As of March 31, 2020, there was $1,269,213 of accrued interest- related party and $50,163 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 December 31, 2019, there was $1,196,503 of accrued interest- related party and $43,715 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 March 31, 2020, the Company owes $2,616,686 in accrued salary to principal stockholder, $73,582 to the Company’s COO, $1,153 to Director of Prodigy Textiles and $4,892 to its office employees.

 

As of December 31, 2019, the Company owes $2,535,203 in accrued salary to principal stockholder, $64,351 to the Company’s COO, $1,153 to Director of Prodigy Textiles and $4,477 to its office employees.

 

The Company owes $65,292 in royalty payable to related party as of March 31, 2020 and December 31, 2019.

 

NOTE 10 SUBSEQUENT EVENTS

 

The Company has analyzed its operations subsequent to April 21, 2020 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 April 16, 2020, the Company held a press conference announcing the development of the first Knock In / Knock Out essentially pure spider silk transgenic.

 

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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.

 

27
 

 

The Company disclaims any obligation to update the forward-looking statements in this report.

 

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 both the specialty fiber and technical textile industries. 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: aramid fibers and ultra-high molecular weight polyethylene fiber. 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 textile, specialty fiber and technical textile industries.

 

The Report of Independent Registered Public Accounting Firm to our financial statements as of December 31, 2019 include an explanatory paragraph stating that our net loss from operations and net capital deficiency at December 31, 2019 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 accelerate both our microbiology and selective breeding programs as well as provide more resources for our material testing protocols. We spent approximately $123,050 over the last 12 months on research and development of high strength polymers. In 2019, we directed our research and development efforts on growing our internal capabilities; we plan to continue to dedicate our efforts in 2020 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.
   
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 give strong consideration to 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 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 2020 and going forward.
   

Once safe to restart operation, following the COVID-19 pandemic, we plan resume production operations at our factory in Vietnam and expect to continue to expand our monthly production volumes to address demand for materials.

   
We have initiated and plan to accelerate our efforts for large scale US production. This work will include the research and 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.

 

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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 shareholders.

 

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. 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, the Company 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. The Company is supporting its furloughed staff and will continue to pay their salaries through at least April 30 and is actively considering continuing that financial support through May. During the duration of the furlough, the Company CEO will not receive or accrue any pay.

 

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 March 31, 2020 compared to the three months ended March 31, 2019

 

Our revenue, operating expenses, and net loss from operations for the three month period ended March 31, 2020 as compared to the three month period ended March 31, 2019, 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

March 31,

       % Change
Increase
 
   2020   2019   Change   (Decrease) 
NET REVENUES  $-   $-    -    0.00%
OPERATING EXPENSES:                    
General and Administrative   2,792,781    117,967    2,674,814    2,267.43%
Professional Fees   19,374    150,311    (130,937)   -87.11%
Officer’s Salary   144,562    118,155    26,407    22.35%
Rent - Related Party   3,135    3,273    (138)   -4.22%
Research and Development   4,812    22,304    (17,492)   -78.43%
Total operating expenses   2,964,664    412,010    2,552,654    619.56%
Loss from operations   (2,964,664)   (412,010)   (2,552,654)   619.56%
Interest expense   (86,675)   (66,920)   (19,755)   29.52%
Interest income   -    1,184    (1,184)   100.00%
Net Loss  $(3,051,339)  $(477,746)   (2,573,593)   538.69%

 

Net Revenues: During the three months ended March 31, 2020, we realized $0 of revenues from our business. During the three months ended March 31, 2019, we realized $0 of revenues from our business. The change in revenues between the quarter ended March 31, 2020 and 2019 was $0 or 0%.

 

Cost of Revenues: Costs of revenues for the three months ended March 31, 2020 were $0, as compared to $0 for the three months ended March 31, 2019, a change of $0 or 0%.

 

Gross Profit: During the three months ended March 31, 2020, we realized a gross profit of $0, as compared to $0 for the three months ended March 31, 2019, a change of $0 or 0%.

 

Research and development expenses: During the three months ended March 31, 2020, we incurred $4,812 of research and development expenses. During the three months ended March 31, 2019, we incurred $22,304 of research and development expenses, a decrease of $17,492 or 78.43% compared with the same period in 2019. This decrease was due to a reduction in research spend.

 

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Professional Fees: During the three months ended March 31, 2020, we incurred $19,374 of professional expenses, which decresed by $130,937 or 87.11% from $150,311 for the three months ended March 31, 2019. This decrease was primarily due to a decrease in professional fees associated with valuation services for the Company’s stock.

 

Officers Salary: During the three months ended March 31, 2020, officers’ salary expenses increased to $144,562 or 22.35% from $118,155 for the three months ended March 31, 2019.

 

General and Administrative Expense: General and administrative expenses increased by $2,674,814 or 2,267.43% to $2,792,781 for the three months ended March 31, 2020 from $117,967 for the three months ended March 31, 2019. Our general and administrative expenses for the three months ended March 31, 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 $2,711,283, Travel of $14 and office salary of $81,484, for a total of $2,792,781. Our general and administrative expenses for the three months ended March 31, 2019 consisted of consulting fees of $0 and other general and administrative expenses (which includes expenses such as Auto, Business Development, SEC Filing, Investor Relations, General Office) of $73,665, Travel of $30 and office salary of $44,272, for a total of $117,967. The primary reason for this increase March 31, 2020 was primarily due to an increase in the expense associated with the issuance of warrants for services.

 

Rent – Related Party: During the three months ended March 31, 2020, rent- related party expense decreased to $3,135 or 4.22 % from $3,273 for the three months ended March 31, 2019. The rent-related party expense was attributable to the signing on January 23, 2017 the Company signed an eight year property lease with the Company’s President.

 

Interest Expense: Interest expense increase by $19,755 to $86,675 for the three month period ended March 31, 2020 from $66,920 for the three month period ended March 31, 2019. The increase was primarily due to interest on certain Company loans.

 

Interest Income: Interest income decreased by $1,184 to $0 for the three month period ended March 31, 2020 from $1,184 for the three month period ended March 31, 2019. The decrease was primarily due to interest on bank accounts.

 

Net Loss: Net loss increased by $2,573,593, or 538.69 %, to a net loss of $3,051,339 for the three month period ended March 31, 2020 from a net loss of $477,746 for the three month period ended March 31, 2019. This increase in net loss was primarily attributable to both increases in general and administrative expenses and a decrease in revenues.

 

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 $3,051,339 during the three months ended March 31, 2020, and losses are expected to continue in the near term. The accumulated deficit is $32,849,245 at March 31, 2020. 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 March 31, 2020, we had $37,411 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.

 

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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.

 

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 March 31, 2020 as compared to December 31, 2019, were as follows:

 

  

March 31,

2020

  

December 31,

2019

 
Cash  $37,411   $125,024 
Prepaid expenses  $12,670   $31,745 
Total current assets  $50,081   $156,769 
Total assets  $608,055   $750,850 
Total current liabilities  $5,983,661   $5,584,383 
Total liabilities  $6,493,453   $6,138,908 

 

At March 31, 2020, we had a working capital deficit of $5,933,580 compared to a working capital deficit of $5,427,614 at December 31, 2019. Current liabilities increased to $5,983,661 at March 31, 2020 from $5,584,383 at December 31, 2019, primarily as a result of primarily as a result of accounts payable, note payable and accrued compensation.

 

For the three months ended March 31, 2020, net cash used in operations of $372,613 was the result of a net loss of $3,051,339 offset by offset by depreciation expense of $7,379, options issuance to related parties of $2,544,215, imputed interest on related party loans of $9,784, decrease in prepaid expenses of $19,075 and a decrease in operating lease right of use of $28,728, an increase of accrued expenses and other payables-related party of $174,705, decrease in accounts payable of $78,513 and a decrease in operating lease liabilities of $26,647. For the three months ended March 31, 2019, net cash used in operations of $225,046 was the result of a net loss of $477,746 offset by offset by depreciation expense of $6,665, imputed interest on related party loans of $4,947, decrease in prepaid expenses of $1,713 and increase in operating lease right of use of $162,725, an increase of accrued expenses and other payables-related party of $10,737, an increase in accounts payable of $76,003 and a decrease in operating lease liabilities of $10,090.

 

Net cash used in our investing activities were $0 and $0 for the three months ended March 31, 2020 and March 31, 2019, respectively. Our investing activities for the three months ended March 31, 2019 are attributable to purchases of fixed assets.

 

32
 

 

Our financing activities resulted in a cash inflow of $285,000 for the three months ended March 31, 2020, which is represented by $15,000 loan repayment and $300,000 proceeds from a shareholder note payable. Our financing activities resulted in a cash inflow of $1,119,000 for the three months ended March 31, 2019, which is represented by $1,000,000 proceeds from issuance of common stock, $1,000 loan repayment and $120,000 proceeds from shareholder note payable.

 

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, 2019, 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

 

In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, “Compensation — Stock Compensation (Topic 718),” (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted ASU 2018-07 effective April 1, 2018. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. As a result, the Company has recorded Right-to-use assets and corresponding Lease obligations as more fully discussed in Note 4.

 

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 March 31, 2020, 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 March 31, 2020, 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.

 

33
 

 

Going forward from this filing, the Company intends to work on re-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 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, 2019, 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 and, therefore may have sufficient cash flow to carry out our remediation plans.

 

Part II – Other Information

 

Item 1. Legal Proceedings

 

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.

 

Item 1A. Risk Factors

 

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 

 

None

 

Item 3. Defaults upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

34
 

 

Item 5. Other Information

 

(a) Not applicable.
(b) None.

 

ITEM 6. EXHIBITS

 

EXHIBIT INDEX

 

Exhibit No.   Description
3.1   Articles of Incorporation (1)
3.2   Articles of Amendment (2)
3.3   Articles of Amendment, filed with the Wyoming Secretary of State on November 15, 2013 (3)
3.4   Articles of Amendment, filed with the Wyoming Secretary of State on December 17, 2013 (4)
3.5   Bylaws(1)
4.1   Form of Warrant issued Mr. Jonathan R. Rice (5)
4.1   Form of Warrant issued pursuant to that certain Purchase Agreement dated as of March 8, 2019 (7)
10.1   Employment Agreement between Mr. Jonathan Rice and the Company (6)
10.2   Form of Purchase Agreement dated March 8, 2019 (7)
31.1   Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
31.2   Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1   Certification of the Principal Executive Officer pursuant to U.S.C. Section 1350 As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2   Certification of the Principal Financial Officer pursuant to U.S.C. Section 1350 As adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
101.INS   XBRL Instance Document (filed herewith)
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

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. Incorporate by reference to our Current Report on Form 8-K filed with the SEC on March 11, 2019.

 

35
 

 

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: April 21, 2020 By: /s/ Kim Thompson
    Kim Thompson
    President, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer)

 

36

EX-31.1 2 ex31-1.htm

 

EXHIBIT 31.1

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO EXCHANGE ACT RULE 13A-14(A) OR RULE 15D-14(A), AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Kim Thompson, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2020, of Kraig Biocraft Laboratories, Inc.;
   
2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4 The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5 The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 21, 2020 By:  /s/ Kim Thompson
    Kim Thompson
    Chief Executive Officer
    (Principal Executive Officer)

 

 

 

 

EX-31.2 3 ex31-2.htm

 

EXHIBIT 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO EXCHANGE ACT RULE 13A-14(A), AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Kim Thompson, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended March 31, 2020, of Kraig Biocraft Laboratories, Inc.;
   
2 Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3 Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4 The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5 The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

 

  a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: April 21, 2020 By:  /s/ Kim Thompson
    Kim Thompson
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

 

 

 

EX-32.1 4 ex32-1.htm

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Kim Thompson, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

 

  1. The Quarterly Report on Form 10-Q of Kraig Biocraft Laboratories, Inc. (the “Company”) for the period ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and
     
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: April 21, 2020 By:  /s/ Kim Thompson
    Kim Thompson
   

Chief Executive Officer

(Principal Executive Officer)

 

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

 

 

 

 

EX-32.2 5 ex32-2.htm

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Kim Thompson, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

 

  1. The Quarterly Report on Form 10-Q of Kraig Biocraft Laboratories, Inc. (the “Company”) for the period ended March 31, 2020 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (U.S.C. 78m or 78o(d)); and
     
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: April 21, 2020 By: /s/ Kim Thompson
    Kim Thompson
    Chief Financial Officer
    (Principal Financial and Accounting Officer)

 

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and is not being filed as part of a separate disclosure document.

 

 

 

 

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Stockholders' Deficit - Schedule of Warrants Outstanding (Details) - USD ($)
3 Months Ended 12 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Mar. 31, 2019
Mar. 09, 2019
Exercise Price Warrants Outstanding $ 0.001   $ 0.001  
Weighted Average Remaining Contractual Life 2 years 9 months 7 days      
Aggregate Intrinsic Value $ 9,799,286      
Warrant [Member]        
Exercise Price Warrants Outstanding $ 0.001 $ 0.001   $ 0.06
Warrants Exercisable 21,000,000 21,000,000    
Weighted Average Remaining Contractual Life 1 year 4 months 24 days 1 year 7 months 24 days    
Aggregate Intrinsic Value $ 3,675,000 $ 4,069,800    
Warrant One [Member]        
Exercise Price Warrants Outstanding $ 0.056 $ 0.056   0.06
Warrants Exercisable 3,000,000 3,000,000    
Weighted Average Remaining Contractual Life 1 year 4 months 9 days 1 year 7 months 10 days    
Aggregate Intrinsic Value $ 350,000 $ 387,600    
Warrant Two [Member]        
Exercise Price Warrants Outstanding $ 0.04 $ 0.04   0.08
Warrants Exercisable 2,300,000 2,300,000    
Weighted Average Remaining Contractual Life 1 year 4 months 24 days 1 year 8 months 12 days    
Aggregate Intrinsic Value $ 402,500 $ 445,740    
Warrant Three [Member]        
Exercise Price Warrants Outstanding $ 0.06 $ 0.06   $ 0.08
Warrants Exercisable 7,398,639 7,398,639    
Weighted Average Remaining Contractual Life 11 months 8 days 1 year 2 months 8 days    
Aggregate Intrinsic Value $ 1,294,762 $ 1,433,856    
Warrant Four [Member]        
Exercise Price Warrants Outstanding $ 0.06 $ 0.06    
Warrants Exercisable 7,398,639 7,398,639    
Weighted Average Remaining Contractual Life 1 year 11 months 8 days 2 years 2 months 8 days    
Aggregate Intrinsic Value $ 1,294,762 $ 1,433,856    
Warrant Five [Member]        
Exercise Price Warrants Outstanding $ 0.08 $ 0.08    
Warrants Exercisable 3,699,320 3,699,320    
Weighted Average Remaining Contractual Life 1 year 11 months 8 days 2 years 2 months 8 days    
Aggregate Intrinsic Value $ 647,381 $ 716,928    
Warrant Six [Member]        
Exercise Price Warrants Outstanding $ 0.08 $ 0.08    
Warrants Exercisable 3,699,320 3,699,320    
Weighted Average Remaining Contractual Life 2 years 11 months 8 days 3 years 2 months 8 days    
Aggregate Intrinsic Value $ 647,381 $ 719,928    
Warrant Seven [Member]        
Exercise Price Warrants Outstanding $ 0.2299 $ 0.2299    
Warrants Exercisable 8,500,000 8,500,000    
Weighted Average Remaining Contractual Life 5 years 1 month 20 days 5 years 4 months 20 days    
Aggregate Intrinsic Value $ 1,487,500 $ 1,647,300    
XML 16 R13.htm IDEA: XBRL DOCUMENT v3.20.1
Stockholders' Deficit
3 Months Ended
Mar. 31, 2020
Equity [Abstract]  
Stockholders' Deficit

NOTE 7 STOCKHOLDERS’ DEFICIT

 

(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 14,797,278 Units at a purchase price of $0.06758 per Unit, for total gross proceeds to the Company of $1,000,000. The Units consist of 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 14,797,278 shares of Common Stock at an exercise price of $0.06 per share (the “6 Cent Warrants”) and (ii) one warrant entitles the investor to purchase up to 7,398,639 shares of Common Stock at an exercise price of $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 $0.06 Warrants shall expire on March 8, 2021;

● ½ of all $0.06 Warrants shall expire on March 8, 2022;

● ½ of all $0.08 Warrants shall expire on March 8, 2022; and,

● ½ of all $0.08 Warrants shall expire on March 8, 2023.

 

(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 March 20, 2019, the Company issued 4,052,652 shares of its class A common stock with a fair value of $281,659 ($0.0695/share) on the date of settlement. The Company settled $243,159 of accounts payable to the University of Notre Dame. The Company recorded an additional amount of $38,500 based on the fair value of the shares on the date of settlement. See Note 8 (A).

 

(C) Common Stock Warrants and Options

 

On February 19, 2020 the Company issued a 20-year option to purchase 20,000,000 shares of common stock at an exercise price of $0.0115 per share to a related party for services rendered. The options had a fair value of $2,198,411, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on February 19, 2025, and for a period of 15 years expiring on February 19, 2040. During the three months ended March 31, 2020, the Company recorded $2,198,411 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     125.19 %
Expected term     3 years  
Risk free interest rate     1.56 %
Expected forfeitures     0 %

 

On February 19, 2020 the Company issued a 10-year option to purchase 6,000,000 shares of common stock at an exercise price of $.00115 per share to a related party for services rendered. The options had a fair value of $626,047, based upon the Black-Scholes option-pricing model on the date of grant and 2,000,000 options are fully vested on the date granted and 1,000,000 options vest at the end of each successive year for four years. Options will be exercisable on February 19, 2021, and for a period of 10 years expiring on February 19, 2030. During the three months ended March 31, 2020, the Company recorded $208,682 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     125.19 %
Expected term     3 years  
Risk free interest rate     1.50 %
Expected forfeitures     0 %

 

On February 19, 2020 the Company issued a 7-year option to purchase 1,340,000 shares of common stock at an exercise price of $0.0115 per share to employees for services rendered. The options had a fair value of $133,063, based upon the Black-Scholes option-pricing model on the date of grant and 268,000 options are fully vested on the date granted and the remaining option vest equally over the remaining 4 years at the end of each successive year. Options will be exercisable on February 19, 2021, and for a period of 6 years expiring on February 19, 2027. During the three months ended March 31, 2020, the Company recorded $26,613 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     125.19 %
Expected term     6 years  
Risk free interest rate     1.46 %
Expected forfeitures     0 %

 

On September 26, 2019, the Company issued 766,667 shares in connection with the cashless exercise of the 1,000,000 warrants. On August 14, 2019, the Company issued 7,967,871 shares in connection with the cashless exercise of the 8,000,000 warrants.

 

On August 8, 2019, the Company issued a 2-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $267,574, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2024. During the year ended December 31, 2019, the Company recorded $267,574 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $267,574, based upon the Black-Scholes option-pricing model on the date of grant and is fully vested on August 8, 2020. Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025. During the three months ended March 31, 2020, the Company recorded $66,528 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 3-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $291,842, based upon the Black-Scholes option-pricing model on the date of grant and is fully vested on August 8, 2021. Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026. During the three months ended March 31, 2020, the Company recorded $36,331 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     3 years  
Risk free interest rate     1.54 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 1,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $118,874, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023. During the year ended December 31, 2019, the Company recorded $118,874 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 1,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $118,874, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2021, and for a period of 3 years expiring on August 8, 2024. During the year ended December 31, 2019, the Company recorded $118,874 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to an employee for services rendered. The options had a fair value of $14,859, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023. During the year ended December 31, 2019, the Company recorded $14,859, as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $16,723, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2020. Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025. During the three months ended March 31, 2020, the Company recorded $4,158, as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year options to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $18,240, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2021. Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026. During the three months ended March 31, 2020, the Company recorded $2,271, as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     3 years  
Risk free interest rate     1.54 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year options to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $19,525, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2022. Options will be exercisable on August 8, 2024, and for a period of 3 years expiring on August 8, 2027. During the three months ended March 31, 2020, the Company recorded $1,621, as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     3 years  
Risk free interest rate     1.54 %
Expected forfeitures     0 %

 

On March 20, 2018, the Company issued a 4-year warrant to purchase 600,000 shares of common stock at an exercise price of $0.001 per share to a consultant for services rendered. The warrants had a fair value of $19,915, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on March 20, 2018. Warrants will be exercisable on March 20, 2019, and for a period of 3 years expiring on March 20, 2022. During the year ended December 31, 2019, the Company recorded $19,915 as an expense for warrants issued. On April 5, 2019, the Company cancelled 600,000 warrant issued to a consultant on February 20, 2018 in exchange for $6,000 cash payment. In addition the Company also recorded a $19,915 reduction to warrant expense related to the warrant cancellation.

 

Expected dividends     0 %
Expected volatility     97.56 %
Expected term     4 years  
Risk free interest rate     2.65 %
Expected forfeitures     0 %

 

On September 26, 2019, the Company issued 766,667 shares in connection with the cashless exercise of the 1,000,000 warrants.

 

On August 14, 2019, the Company issued 7,967,871 shares in connection with the cashless exercise of the 8,000,000 warrants.

 

   

Number of

Warrants

   

Weighted

Average

Exercise

Price

   

Weighted

Average Remaining

Contractual Life

(in Years)

 
                   
Balance, December 31, 2019     55,395,917               2.77  
Granted     -           -          
Exercised     -       -          
Cancelled/Forfeited     -       -          
Balance, March 31, 2020     55,395,917               2.52  
Intrinsic Value   $ 9,799,286                  

 

For the three months ended March 31, 2020, the following warrants were outstanding:

 

Exercise Price

Warrants

Outstanding

   

Warrants

Exercisable

   

Weighted Average Remaining

Contractual Life

   

Aggregate

Intrinsic Value

 
$ 0.001       21,000,000       1.40     $ 3,675,000  
$ 0.056       3,000,000       1.36     $ 350,000  
$ 0.04       2,300,000       1.40     $ 402,500  
$ 0.06       7,398,639       0.94     $ 1,294,762  
$ 0.06       7,398,639       1.94     $ 1,294,762  
$ 0.08       3,699,320       1.94     $ 647,381  
$ 0.08       3,699,320       2.94     $ 647,381  
$ 0.2299       8,500,000       5.14     $ 1,487,500  

 

For the year ended December 31, 2019, the following warrants were outstanding:

 

Exercise Price

Warrants

Outstanding

   

Warrants

Exercisable

   

Weighted Average Remaining

Contractual Life

   

Aggregate

Intrinsic Value

 
$ 0.001       21,000,000       1.65     $ 4,069,800  
$ 0.056       3,000,000       1.61     $ 387,600  
$ 0.04       2,300,000       1.70     $ 445,740  
$ 0.06       7,398,639       1.19     $ 1,433,856  
$ 0.06       7,398,639       2.19     $ 1,433,856  
$ 0.08       3,699,320       2.19     $ 716,928  
$ 0.08       3,699,320       3.19     $ 719,928  
$ 0.2299       8,500,000       5.39     $ 1,647,300  

 

For the three months ended March 31, 2020, the following options were outstanding:

 

                  Weighted Average  
Exercise     Options     Options     Remaining  
Price     Outstanding     Exercisable     Contractual Life  
                     
$ 0.115       -       22,267,800       23.34  
                             

 

(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

 

None

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Summary of Significant Accounting Policies and Organization (Policies)
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

(A) Basis of Presentation

 

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.

Foreign Currency

(B) Foreign Currency

 

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.

Use of Estimates

(C) Use of Estimates

 

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.

Cash

(D) Cash

 

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 no cash equivalents as of March 31, 2020 or December 31, 2019.

Loss Per Share

(E) Loss Per Share

 

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 March 31, 2020 and March 31, 2019, warrants were not included in the computation of income/ (loss) per share because their inclusion is anti-dilutive.

 

The computation of basic and diluted loss per share for March 31, 2020 and March 31, 2019 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

 

    March 31, 2020     March 31, 2019  
Stock Warrants (Exercise price - $0.001/share)     55,995,917       58,595,917  
Stock Options (Exercise price - $0.1150/Share)     27,340,000       -  
Convertible Preferred Stock     2       2  
Total     83,335,919       58,595,919  

Research and Development Costs

(F) 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.

Income Taxes

(G) Income Taxes

 

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.

 

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.

 

Effective January 1, 2009, the Company adopted guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all federal or state income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. As of December 31, 2019 and December 31, 2017 there were no amounts that had been accrued in respect to uncertain tax positions.

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

Stock-Based Compensation

(H) Stock-Based Compensation

 

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.

Recent Accounting Pronouncements

(I) Recent Accounting Pronouncements

 

In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, “Compensation — Stock Compensation (Topic 718),” (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted ASU 2018-07 effective April 1, 2018. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. As a result, the Company has recorded Right-to-use assets and corresponding Lease obligations as more fully discussed in Note 4.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

Equipment

(J) Equipment

 

The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a five year life for automobiles.

 

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 no impairment losses recorded for the three months ended March 31, 2020 and 2019.

Fair Value of Financial Instruments

(K) 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 March 31, 2020 and December 31, 2019.
     
  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.

 

    March 31,
2020
   

December 31,

2019

 
Level 1   $         -     $           -  
Level 2   $ -     $ -  
Level 3   $ -     $ -  
Total   $ -     $ -  

Revenue Recognition

(L) Revenue Recognition

 

During the year ended December 31, 2019, the Company’s revenues were generated primarily from a contract with the U.S. Government. The Company performs work under this 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, to that original contract, the Company has 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 months ended March 31, 2020 and 2019, the Company recognized $0 and $0 respectively in revenue from the Government contract. These revenues were generated for work performed in the development and production of the Company’s recombinant silks under the base and option period phases of our ongoing contract with the US Army.

 

On July 24, 2017, the Company signed a contract option extension with the US Army to research and deliver recombinant spider silk fibers and threads. This contract option increased the total contract award by an additional $921,130 to a total of $1,021,092 and added 12 months to the contract duration. This effort was scheduled to end on September 24, 2018, but the Company requested an extension of this contract option period through April 2019 to complete the work. The Company has been in communication with the contracting office and is working with them as they determine the best path forward; Management believes there is a possibility of securing a follow-up contract to complete the delivery of all materials for the contract. The Company is also continuing to pursue additional contract opportunities with the Department of Defense, Department of Energy and other governmental agencies.

Concentration of Credit Risk

(M) Concentration of Credit Risk

 

The Company at times has cash in banks in excess of FDIC insurance limits. At March 31, 2020 and December 31, 2019, the Company had approximately $0 and $0, respectively in excess of FDIC insurance limits.

 

For the three months ended March 31, 2020 and 2019, the Company booked $0 and $0 for doubtful accounts.

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Going Concern
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern

NOTE 2 GOING CONCERN

 

As reflected in the accompanying financial statements, the Company has a working capital deficiency of $5,933,580 and stockholders’ deficiency of $5,885,398 and used $372,613 of cash in operations for three months ended March 31, 2020. 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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Commitments and Contingencies (Details Narrative)
1 Months Ended 3 Months Ended 12 Months Ended 55 Months Ended 63 Months Ended
Oct. 21, 2019
USD ($)
Sep. 26, 2019
shares
Sep. 05, 2019
USD ($)
Aug. 15, 2019
USD ($)
Aug. 14, 2019
shares
Jul. 03, 2019
USD ($)
$ / shares
shares
May 09, 2019
USD ($)
ft²
Apr. 26, 2019
USD ($)
Apr. 05, 2019
shares
Mar. 20, 2019
USD ($)
shares
Jan. 31, 2019
USD ($)
shares
Apr. 06, 2018
USD ($)
$ / shares
shares
Mar. 20, 2018
USD ($)
$ / shares
shares
Feb. 20, 2018
USD ($)
shares
Jan. 09, 2018
Sep. 13, 2017
USD ($)
Jan. 23, 2017
USD ($)
Jan. 14, 2016
USD ($)
$ / shares
shares
Jan. 20, 2015
USD ($)
$ / shares
shares
Oct. 28, 2011
shares
Nov. 10, 2010
USD ($)
May 01, 2008
USD ($)
$ / shares
Dec. 26, 2006
USD ($)
May 08, 2006
USD ($)
Jan. 31, 2007
USD ($)
Mar. 31, 2020
USD ($)
$ / shares
Mar. 31, 2019
USD ($)
$ / shares
Dec. 31, 2020
USD ($)
Dec. 31, 2019
USD ($)
Dec. 31, 2018
USD ($)
Dec. 31, 2017
USD ($)
Dec. 31, 2016
USD ($)
Dec. 31, 2015
USD ($)
Mar. 31, 2020
USD ($)
$ / shares
Dec. 31, 2019
USD ($)
Oct. 28, 2015
shares
May 28, 2015
$ / shares
shares
Annual salary                                                   $ 144,562 $ 118,155                    
Warrant exercise price | $ / shares                                                   $ 0.001 $ 0.001             $ 0.001      
Working capital                                                   $ (5,933,580)               $ (5,933,580)      
Number of shares issued | shares   766,667     7,967,871         4,052,652                                                      
Payment for debt                                                   15,000 $ 1,000                    
Stock issued during period, value                   $ 281,659                                 1,000,000                    
Consulting fee                                                   19,374 150,311                    
Interest expensed and related accrued interest payable                                                   5,958 3,445             5,958      
Payments for rent                                 $ 960                                 2,508      
Annual rent, year one                               $ 39,200                                          
Annual rent, year two                               42,000                                          
Socialist Republic of Vietnam [Member]                                                                          
Annual rent, year one             $ 45,150                                                            
Annual rent, year two             $ 45,150                                                            
Area of Land | ft²             4,560.57                                                            
Three through Five Years [Member] | Socialist Republic of Vietnam [Member]                                                                          
Rent increase percentage             5.00%                                                            
Mr. Jonathan R. Rice [Member]                                                                          
Payroll payable                                                   73,582     $ 64,352         73,582 $ 64,352    
Employment Agreement [Member]                                                                          
Extended expiration date description                             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 23, 2015 for Mr. Rice.                                            
Employment Agreement [Member] | CEO [Member]                                                                          
Agreement term                                         5 years               5 years   5 years 5 years          
Annual salary                                         $ 210,000               $ 354,791   $ 315,764 $ 297,889 $ 281,027        
Annual salary rate, increase                                         6.00%                                
Accrued salary balance                                                   2,616,686     2,535,203         2,616,686 2,535,203    
Employment Agreement [Member] | CEO [Member] | Forecast [Member]                                                                          
Agreement term                                                       5 years                  
Annual salary                                                       $ 376,078                  
Employment Agreement [Member] | Employee [Member]                                                                          
Employee bonus rate                                                                 20.00%        
Employment Agreement [Member] | Mr. Jonathan R. Rice [Member]                                                                          
Agreement term                                     1 year                                    
Annual salary $ 20,000     $ 20,000       $ 20,000                                                          
Annual cash compensation                                   $ 140,000 $ 120,000                                    
Educational expenses                                     $ 11,000                                    
Warrant term                                   3 years                                      
Warrant to purchase shares | shares                                   6,000,000                                      
Warrant exercise price | $ / shares                                   $ 0.001                                      
Warrant shares fully vested | shares                                                                       2,000,000  
Warrants issued value                                                                 $ 121,448        
Extended expiration date description                             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 warrant to January 23, 2015 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.                                            
Working capital $ 6,000,000     $ 6,000,000                                                                  
Ownership percentage 50.00%     50.00%                                                                  
Employment Agreement [Member] | Mr. Jonathan R. Rice [Member] | January 2015 Warrant [Member]                                                                          
Warrant term                                     3 years                                    
Warrant to purchase shares | shares                                     2,000,000                                    
Warrant exercise price | $ / shares                                     $ 0.001                                    
Employment Agreement [Member] | Mr. Jonathan R. Rice [Member] | May 2015 Warrant [Member]                                                                          
Warrant term                                                                         3 years
Warrant to purchase shares | shares                                                                         3,000,000
Warrant exercise price | $ / shares                                                                         $ 0.001
Employment Agreement [Member] | Mr. Jonathan R. Rice [Member] | One-Time Bonus [Member]                                                                          
Annual salary               $ 20,000                                                          
Employment Agreement [Member] | Mr. Kenneth Le [Member]                                                                          
Agreement term           1 year                                                              
Accrued salary balance                                                   1,154     1,154         1,154 1,154    
Annual cash compensation           $ 60,000                                                              
Warrant term           3 years                                                              
Warrant to purchase shares | shares           2,000,000                                                              
Warrant exercise price | $ / shares           $ 0.2299                                                              
License Agreement [Member]                                                                          
Agreement term                                       20 years       1 year                          
License fee                                               $ 10,000                          
License maintenance fee                                               $ 10,000                          
Annual research fee                                                 $ 13,700                        
Number of shares issued | shares                                       2,200,000                                  
Royalty percentage                                       2.00%                                  
Termination agreement description                                       The Company can terminate the agreement upon a 90 day written notice subject to payment of a termination fee of $5,000 if the termination takes place within 2 years after its effectiveness, $10,000 if the termination takes place within 4 years after its effectiveness and $20,000 if the Agreement is terminated after 4 years                                  
Payment for debt                                                   15,000                      
License Agreement [Member] | Maximum [Member]                                                                          
Annual research fee                                                 $ 10,000                        
License Agreement [Member] | Common Stock Class A [Member]                                                                          
Number of shares issued | shares                     4,025,652                                                    
Payment for debt                     $ 265,244                                                    
Stock issued during period, value                     $ 281,659                                                    
Royalty and Research Agreements [Member]                                                                          
Agreement term                                           5 years                              
Consulting fee                                           $ 1,000                              
Interest expensed and related accrued interest payable                                                   7,033     2,623         7,033 2,623    
Royalty and Research Agreements [Member] | Maximum [Member]                                                                          
Shares issued, price per share | $ / shares                                           $ 0.05                              
Royalty and Research Agreements [Member] | Forecast [Member]                                                                          
Interest expensed and related accrued interest payable                                                       $ 490                  
Royalty and Research Agreements [Member] | Consultant [Member]                                                                          
Number of shares issued | shares                       36,000                                                  
Stock issued during period, value                       $ 1,076                                                  
Consulting fee                                                                     21,000    
Shares issued, price per share | $ / shares                       $ 0.0299                                                  
Gain on settlement of accounts payable                                                                     19,924    
Royalty and Research Agreements [Member] | Mr. Thompson [Member]                                                                          
Payment for debt                                             $ 120,000                            
Maturity date                                             Dec. 26, 2007                            
Outstanding balance                                                   65,292     $ 65,292         $ 65,292 $ 65,292    
Consulting Agreement [Member] | Consultant [Member]                                                                          
Annual cash compensation                           $ 6,000                                              
Warrant term                         4 years                                                
Warrant to purchase shares | shares                         600,000 600,000                                              
Warrant exercise price | $ / shares                         $ 0.001                                                
Fair value of warrants                         $ 19,915                                                
Warrants exercisable date                         Mar. 20, 2019                                                
Warrants exercisable description                         Warrants will be exercisable on March 20, 2019, and for a period of 3 years expiring on March 20, 2022.                                                
Warrants expenses                                                           $ 19,915              
Cancelled warrant issued | shares                 600,000                                                        
Consulting Agreement [Member] | Consultant [Member] | Maximum [Member]                                                                          
Warrant to purchase shares | shares                           3,000,000                                              
Operating Lease Agreements [Member]                                                                          
Payments for rent     $ 44,800                         $ 39,200                   2,508                      
Operating lease, term     2 years                         2 years                                          
Operating lease, description     The Company signed a new 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.                                                                    
Operating leases, rent expense                                                   3,135 $ 3,273                    
Operating Lease Agreements [Member] | Office and Manufacturing Space [Member]                                                                          
Payments for rent                               $ 42,000                                          
Operating Lease Agreements [Member] | Socialist Republic of Vietnam [Member]                                                                          
Operating lease, term             5 years                                                            
Operating lease, description             The Company signed a 5 year property lease Socialist Republic of Vietnam which consists of 4,560.57 square meters of space, which it leases at a current rent of approximately $45,150 per year one and two and with the 5% increase per year for years three through five.                                                            
Annual rent, year one             $ 45,150                                                            
Annual rent, year two             $ 45,150                                                            
Area of Land | ft²             4,560.57                                                            
Operating Lease Agreements [Member] | Three through Five Years [Member] | Socialist Republic of Vietnam [Member]                                                                          
Rent increase percentage             5.00%                                                            
Operating Lease Agreements [Member] | President [Member]                                                                          
Payments for rent                                 $ 960                 $ 960                      
Operating lease, term                                 8 years                                        
XML 20 R4.htm IDEA: XBRL DOCUMENT v3.20.1
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Income Statement [Abstract]    
Revenue
Operating Expenses    
General and Administrative 2,792,781 117,967
Professional Fees 19,374 150,311
Officer's Salary 144,562 118,155
Rent - Related Party 3,135 3,273
Research and Development 4,812 22,304
Total Operating Expenses 2,964,664 412,010
Loss from Operations (2,964,664) (412,010)
Other Income/(Expenses)    
Interest expense (86,675) (66,920)
Interest income 1,184
Total Other Income/(Expenses) (86,675) (65,736)
Net (Loss) before Provision for Income Taxes (3,051,339) (477,746)
Provision for Income Taxes
Net (Loss) $ (3,051,339) $ (477,746)
Net Income (Loss) Per Share - Basic and Diluted $ (0.00) $ 0.00
Weighted average number of shares outstanding during the period - Basic and Diluted 844,468,378 822,016,321
XML 21 R29.htm IDEA: XBRL DOCUMENT v3.20.1
Right to Use Assets and Lease Liability - (Details Narrative)
3 Months Ended 55 Months Ended
May 09, 2019
USD ($)
ft²
Jan. 23, 2017
USD ($)
Mar. 31, 2020
USD ($)
Mar. 31, 2019
USD ($)
Mar. 31, 2020
USD ($)
Dec. 31, 2019
USD ($)
Jan. 02, 2019
USD ($)
Sep. 13, 2017
USD ($)
Rent payments   $ 960     $ 2,508      
Lease term   8 years           2 years
Annual rent, year one               $ 39,200
Annual rent, year two               $ 42,000
Right of Use Assets     $ 444,514   444,514 $ 473,242 $ 529,135  
Lease liabilities     $ 113,764   $ 113,764 $ 110,678 $ 531,462  
Lease percentage     8.00%   8.00%      
Lease present value     $ 559,568   $ 559,568      
Lease expenses     26,550          
Socialist Republic of Vietnam [Member]                
Lease term 5 years              
Annual rent, year one $ 45,150              
Annual rent, year two $ 45,150              
Area of Land | ft² 4,560.57              
Socialist Republic of Vietnam [Member] | Three through Five Years [Member]                
Rent increase percentage 5.00%              
Related Party [Member]                
Rent payments     3,135 $ 5,760        
Lease expenses     $ 2,178          
XML 22 R21.htm IDEA: XBRL DOCUMENT v3.20.1
Stockholders' Deficit (Tables)
3 Months Ended
Mar. 31, 2020
Equity [Abstract]  
Schedule of Option Assumption

On February 19, 2020 the Company issued a 20-year option to purchase 20,000,000 shares of common stock at an exercise price of $0.0115 per share to a related party for services rendered. The options had a fair value of $2,198,411, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on February 19, 2025, and for a period of 15 years expiring on February 19, 2040. During the three months ended March 31, 2020, the Company recorded $2,198,411 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     125.19 %
Expected term     3 years  
Risk free interest rate     1.56 %
Expected forfeitures     0 %

 

On February 19, 2020 the Company issued a 10-year option to purchase 6,000,000 shares of common stock at an exercise price of $.00115 per share to a related party for services rendered. The options had a fair value of $626,047, based upon the Black-Scholes option-pricing model on the date of grant and 2,000,000 options are fully vested on the date granted and 1,000,000 options vest at the end of each successive year for four years. Options will be exercisable on February 19, 2021, and for a period of 10 years expiring on February 19, 2030. During the three months ended March 31, 2020, the Company recorded $208,682 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     125.19 %
Expected term     3 years  
Risk free interest rate     1.50 %
Expected forfeitures     0 %

 

On February 19, 2020 the Company issued a 7-year option to purchase 1,340,000 shares of common stock at an exercise price of $0.0115 per share to employees for services rendered. The options had a fair value of $133,063, based upon the Black-Scholes option-pricing model on the date of grant and 268,000 options are fully vested on the date granted and the remaining option vest equally over the remaining 4 years at the end of each successive year. Options will be exercisable on February 19, 2021, and for a period of 6 years expiring on February 19, 2027. During the three months ended March 31, 2020, the Company recorded $26,613 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     125.19 %
Expected term     6 years  
Risk free interest rate     1.46 %
Expected forfeitures     0 %

 

On September 26, 2019, the Company issued 766,667 shares in connection with the cashless exercise of the 1,000,000 warrants. On August 14, 2019, the Company issued 7,967,871 shares in connection with the cashless exercise of the 8,000,000 warrants.

 

On August 8, 2019, the Company issued a 2-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $267,574, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2024. During the year ended December 31, 2019, the Company recorded $267,574 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $267,574, based upon the Black-Scholes option-pricing model on the date of grant and is fully vested on August 8, 2020. Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025. During the three months ended March 31, 2020, the Company recorded $66,528 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 3-year option to purchase 2,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $291,842, based upon the Black-Scholes option-pricing model on the date of grant and is fully vested on August 8, 2021. Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026. During the three months ended March 31, 2020, the Company recorded $36,331 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     3 years  
Risk free interest rate     1.54 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 1,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $118,874, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023. During the year ended December 31, 2019, the Company recorded $118,874 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 1,000,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $118,874, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2021, and for a period of 3 years expiring on August 8, 2024. During the year ended December 31, 2019, the Company recorded $118,874 as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to an employee for services rendered. The options had a fair value of $14,859, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on the date granted. Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023. During the year ended December 31, 2019, the Company recorded $14,859, as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year option to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $16,723, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2020. Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025. During the three months ended March 31, 2020, the Company recorded $4,158, as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     2 years  
Risk free interest rate     1.62 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year options to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $18,240, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2021. Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026. During the three months ended March 31, 2020, the Company recorded $2,271, as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     3 years  
Risk free interest rate     1.54 %
Expected forfeitures     0 %

 

On August 8, 2019, the Company issued a 2-year options to purchase 125,000 shares of common stock at an exercise price of $0.2299 per share to a related party for services rendered. The options had a fair value of $19,525, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on August 8, 2022. Options will be exercisable on August 8, 2024, and for a period of 3 years expiring on August 8, 2027. During the three months ended March 31, 2020, the Company recorded $1,621, as an expense for options issued.

 

Expected dividends     0 %
Expected volatility     105.73 %
Expected term     3 years  
Risk free interest rate     1.54 %
Expected forfeitures     0 %

 

On March 20, 2018, the Company issued a 4-year warrant to purchase 600,000 shares of common stock at an exercise price of $0.001 per share to a consultant for services rendered. The warrants had a fair value of $19,915, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on March 20, 2018. Warrants will be exercisable on March 20, 2019, and for a period of 3 years expiring on March 20, 2022. During the year ended December 31, 2019, the Company recorded $19,915 as an expense for warrants issued. On April 5, 2019, the Company cancelled 600,000 warrant issued to a consultant on February 20, 2018 in exchange for $6,000 cash payment. In addition the Company also recorded a $19,915 reduction to warrant expense related to the warrant cancellation.

 

Expected dividends     0 %
Expected volatility     97.56 %
Expected term     4 years  
Risk free interest rate     2.65 %
Expected forfeitures     0 %

Schedule of Warrants Activity

   

Number of

Warrants

   

Weighted

Average

Exercise

Price

   

Weighted

Average Remaining

Contractual Life

(in Years)

 
                   
Balance, December 31, 2019     55,395,917               2.77  
Granted     -           -          
Exercised     -       -          
Cancelled/Forfeited     -       -          
Balance, March 31, 2020     55,395,917               2.52  
Intrinsic Value   $ 9,799,286                  

Schedule of Warrants Outstanding

For the three months ended March 31, 2020, the following warrants were outstanding:

 

Exercise Price

Warrants

Outstanding

   

Warrants

Exercisable

   

Weighted Average Remaining

Contractual Life

   

Aggregate

Intrinsic Value

 
$ 0.001       21,000,000       1.40     $ 3,675,000  
$ 0.056       3,000,000       1.36     $ 350,000  
$ 0.04       2,300,000       1.40     $ 402,500  
$ 0.06       7,398,639       0.94     $ 1,294,762  
$ 0.06       7,398,639       1.94     $ 1,294,762  
$ 0.08       3,699,320       1.94     $ 647,381  
$ 0.08       3,699,320       2.94     $ 647,381  
$ 0.2299       8,500,000       5.14     $ 1,487,500  

 

For the year ended December 31, 2019, the following warrants were outstanding:

 

Exercise Price

Warrants

Outstanding

   

Warrants

Exercisable

   

Weighted Average Remaining

Contractual Life

   

Aggregate

Intrinsic Value

 
$ 0.001       21,000,000       1.65     $ 4,069,800  
$ 0.056       3,000,000       1.61     $ 387,600  
$ 0.04       2,300,000       1.70     $ 445,740  
$ 0.06       7,398,639       1.19     $ 1,433,856  
$ 0.06       7,398,639       2.19     $ 1,433,856  
$ 0.08       3,699,320       2.19     $ 716,928  
$ 0.08       3,699,320       3.19     $ 719,928  
$ 0.2299       8,500,000       5.39     $ 1,647,300  

Schedule of Options Outstanding

For the three months ended March 31, 2020, the following options were outstanding:

 

                  Weighted Average  
Exercise     Options     Options     Remaining  
Price     Outstanding     Exercisable     Contractual Life  
                     
$ 0.115       -       22,267,800       23.34  

XML 23 R25.htm IDEA: XBRL DOCUMENT v3.20.1
Summary of Significant Accounting Policies and Organization - Schedule of Fair Value of Financial Instruments (Details) - USD ($)
Mar. 31, 2020
Dec. 31, 2019
Fair value of assets and liabilities
Level 1 [Member]    
Fair value of assets and liabilities
Level 2 [Member]    
Fair value of assets and liabilities
Level 3 [Member]    
Fair value of assets and liabilities
XML 24 R5.htm IDEA: XBRL DOCUMENT v3.20.1
Condensed Consolidated Statement of Changes in Stockholders Deficit (Unaudited) - USD ($)
Preferred Stock - Series A [Member]
Common Stock - Class A [Member]
Common Stock - Class B [Member]
Common Stock - Class A Shares to Be Issued [Member]
Additional Paid-In Capital [Member]
Accumulated Deficit [Member]
Total
Beginning Balance at Dec. 31, 2018 $ 5,217,800 $ 15,145,798 $ 22,000 $ 2,043,235 $ (26,888,056) $ (4,459,223)
Beginning Balance, shares at Dec. 31, 2018 2 816,883,910 1,122,311      
Units issued for cash $ 1,000,000 1,000,000
Units issued for cash, shares 14,797,278      
Shares issued in exchange for accounts payable $ 281,659 281,659
Shares issued in exchange for accounts payable, shares 4,052,652      
Imputed interest - related party 4,947 4,947
Net loss (477,746) (477,746)
Ending Balance at Mar. 31, 2019 $ 5,217,800 $ 16,427,457 $ 22,000 2,048,182 (27,365,802) (3,650,363)
Ending Balance, shares at Mar. 31, 2019 2 835,733,840 1,122,311      
Beginning Balance at Dec. 31, 2019 $ 5,217,800 $ 16,757,079 $ 22,000 2,412,969 (29,797,906) (5,388,058)
Beginning Balance, shares at Dec. 31, 2019 2 844,468,378 1,122,311      
Imputed interest - related party 9,784 9,784
Options issued for services 2,544,215 2,544,245
Net loss (3,051,339) (3,051,339)
Ending Balance at Mar. 31, 2020 $ 5,217,800 $ 16,757,079 $ 22,000 $ 4,966,968 $ (32,849,245) $ (5,885,398)
Ending Balance, shares at Mar. 31, 2020 2 844,468,378 1,122,311      
XML 25 R1.htm IDEA: XBRL DOCUMENT v3.20.1
Document Entity Information - shares
3 Months Ended
Mar. 31, 2020
Apr. 21, 2020
Entity Registrant Name Kraig Biocraft Laboratories, Inc  
Entity Central Index Key 0001413119  
Document Type 10-Q  
Document Period End Date Mar. 31, 2020  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2020  
Common Stock Class A [Member]    
Entity Common Stock, Shares Outstanding   844,468,378
Common Stock Class B [Member]    
Entity Common Stock, Shares Outstanding   0
XML 26 R9.htm IDEA: XBRL DOCUMENT v3.20.1
Equipment
3 Months Ended
Mar. 31, 2020
Property, Plant and Equipment [Abstract]  
Equipment

NOTE 3 EQUIPMENT

 

At March 31, 2020 and December 31, 2019, property and equipment, net, is as follows:

 

    As of March 31, 2020     December 31, 2019  
Automobile   $ 41,805     $ 41,805  
Laboratory Equipment     96,536       96,536  
Office Equipment     7,260       7,260  
Leasehold Improvements     85,389       85,389  
Less: Accumulated Depreciation     (121,048 )     (113,669 )
Total Property and Equipment, net   $ 109,942     $ 117,321  

 

Depreciation expense for the three months ended March 31, 2020 and 2019, was $7,379 and $6,665, respectively.

XML 27 R41.htm IDEA: XBRL DOCUMENT v3.20.1
Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended 29 Months Ended 55 Months Ended
Mar. 09, 2020
Feb. 19, 2020
Jan. 24, 2020
Dec. 18, 2019
Nov. 20, 2019
Oct. 21, 2019
Sep. 26, 2019
Sep. 05, 2019
Aug. 15, 2019
Aug. 14, 2019
Jul. 03, 2019
Apr. 26, 2019
Mar. 20, 2019
Mar. 02, 2019
Feb. 15, 2019
Feb. 01, 2019
Jan. 17, 2019
Jan. 05, 2019
Jan. 04, 2019
Dec. 21, 2018
Oct. 12, 2018
Oct. 02, 2018
Jul. 05, 2018
Jun. 29, 2018
Jun. 21, 2018
Apr. 26, 2018
Mar. 31, 2018
Jan. 09, 2018
Jan. 08, 2018
Sep. 13, 2017
Jan. 23, 2017
Jun. 06, 2016
Jan. 14, 2016
Jan. 20, 2015
Nov. 10, 2010
Dec. 26, 2006
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Dec. 31, 2017
Dec. 31, 2016
Dec. 31, 2015
Apr. 18, 2020
Mar. 31, 2020
Number of shares issued             766,667     7,967,871     4,052,652                                                              
Number of shares issued, value                         $ 281,659                                                 $ 1,000,000            
Accrued interest percentage                                                                         3.00%   3.00%         3.00%
Interest expense and related accrued interest payable                                                                         $ 5,958 3,445           $ 5,958
Annual salary                                                                         $ 144,562 $ 118,155            
Warrant exercise price                                                                         $ 0.001 $ 0.001           $ 0.001
Working capital                                                                         $ (5,933,580)             $ (5,933,580)
Payments for rent                                                             $ 960                         2,508
Related Party [Member]                                                                                        
Interest expense and related accrued interest payable                                                                         1,269,213   $ 1,196,503         1,269,213
Loan interest - related party                                                                         50,163   43,715         50,163
Royalty payable to related party                                                                         65,292   65,292          
Mr. Jonathan R. Rice [Member]                                                                                        
Payroll payable                                                                         73,582   64,352         73,582
Stockholder [Member]                                                                                        
Outstanding balance                                                                         $ 9,784 $ 4,947           $ 9,784
Accrued interest percentage                                                                         3.00%             3.00%
Interest expense and related accrued interest payable                                                                         $ 5,958 3,445           $ 5,958
Loan received $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000                 $ 20,000 $ 20,000 $ 30,000 $ 30,000 $ 17,000 $ 3,000 $ 20,000 $ 11,000 $ 26,000 $ 20,000 $ 15,000 $ 15,000 $ 20,000 $ 15,000   $ 100,000     $ 50,000                        
Loans payable                                                                         942,000   642,000         942,000
Stockholder [Member] | Subsequent Event [Member]                                                                                        
Loan received                                                                                     $ 30,000  
Chief Executive Officer and Chief Operations Officer [Member]                                                                                        
Accounts payable and accrued expenses                                                                         311,638   304,539         311,638
Principal Stockholder [Member]                                                                                        
Accrued salary balance                                                                         2,616,686   2,535,203         2,616,686
Chief Operating Officer [Member]                                                                                        
Accrued salary balance                                                                         73,582   64,351         73,582
Board of Directors [Member]                                                                                        
Accrued salary balance                                                                         1,153   1,153         1,153
Office Employee [Member]                                                                                        
Accrued salary balance                                                                         4,892   $ 4,477         4,892
Intellectual Property Transfer Agreement [Member] | Mr. Thompson [Member]                                                                                        
Number of shares issued                                                                       200,000                
Dividends, preferred stock                                                                                      
Preferred stock voting rights                                                                       Voting rights equal to 100 common shares per share of preferred stock                
Number of shares issued, value                                                                       $ 120,000                
Fair value of the payment                                                                       $ 120,000                
Maturity date                                                                       Dec. 26, 2007                
Debt instrument, term                                                                       1 year                
Outstanding balance                                                                         $ 65,292             $ 65,292
Accrued interest percentage                                                                         7.00%             7.00%
Interest expense and related accrued interest payable                                                                         $ 7,033             $ 7,033
Employment Agreement [Member]                                                                                        
Extended expiration date description                                                       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 23, 2015 for Mr. Rice.                                
Employment Agreement [Member] | CEO [Member]                                                                                        
Agreement term                                                                     5 years       5 years 5 years 5 years      
Annual salary                                                                     $ 210,000       $ 354,791 $ 315,764 $ 297,889 $ 281,027    
Accrued salary balance                                                                         2,616,686   2,535,203         2,616,686
Employment Agreement [Member] | Mr. Jonathan R. Rice [Member]                                                                                        
Agreement term                                                                   1 year                    
Annual salary           $ 20,000     $ 20,000     $ 20,000                                                                
Annual cash compensation                                                                 $ 140,000 $ 120,000                    
Warrant term                                                                 3 years                      
Warrant to purchase shares                                                                 6,000,000                      
Warrant exercise price                                                                 $ 0.001                      
Extended expiration date description                                                       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 warrant to January 23, 2015 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.                                
Working capital           $ 6,000,000     $ 6,000,000                                                                      
Ownership percentage           50.00%     50.00%                                                                      
Employment Agreement [Member] | Mr. Jonathan R. Rice [Member] | One-Time Bonus [Member]                                                                                        
Annual salary                       $ 20,000                                                                
Employment Agreement [Member] | Mr. Kenneth Le [Member]                                                                                        
Agreement term                     1 year                                                                  
Accrued salary balance                                                                         1,154   $ 1,154         $ 1,154
Annual cash compensation                     $ 60,000                                                                  
Warrant term                     3 years                                                                  
Warrant to purchase shares                     2,000,000                                                                  
Warrant exercise price                     $ 0.2299                                                                  
Operating Lease Agreements [Member]                                                                                        
Operating lease, term               2 years                                           2 years                            
Payments for rent               $ 44,800                                           $ 39,200             2,508              
Operating Lease Agreements [Member] | President [Member]                                                                                        
Operating lease, term                                                             8 years                          
Payments for rent                                                             $ 960           960              
Operating leases, rent expense                                                                         $ 3,135 $ 3,273            
XML 28 R20.htm IDEA: XBRL DOCUMENT v3.20.1
Right to Use Assets and Lease Liabilitity (Tables)
3 Months Ended
Mar. 31, 2020
Right To Use Assets And Lease Liability  
Schedule of Right Use of Assets

Right to use assets is summarized below:

 

    March 31, 2020  
Right to use assets, net – related party   $ 60,486  
Right to use assets, net     51,621  
Right to use assets, net     332,407  
Total   $ 444,514  

Schedule of Lease Liability

Lease liability is summarized below:

 

    March 31, 2020  
Right to use liability, net – related party     53,442  
Right to use liability, net     61,789  
Right to use liability, net     338,081  
Total     453,312  
Less: short term portion   $ (113,764 )
Long term position   $ 339,548  

Schedule of Lease Cost

Lease expense for the three months ended March 31, 2020 was comprised of the following:

 

Operating lease expense   $ 15,582  
Operating lease expense   $ 9,142  
Operating lease expense – related party   $ 1,923  

XML 29 R24.htm IDEA: XBRL DOCUMENT v3.20.1
Summary of Significant Accounting Policies and Organization - Schedule of Antidilutive Securities of Earnings Per Share (Details) (Parenthetical) - $ / shares
Mar. 31, 2020
Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Warrants exercise price $ 0.001 $ 0.001
Option exercise price $ 0.1150 $ 0.1150
XML 30 R28.htm IDEA: XBRL DOCUMENT v3.20.1
Equipment - Schedule of Property and Equipment (Details) - USD ($)
Mar. 31, 2020
Dec. 31, 2019
Less: Accumulated Depreciation $ (121,048) $ (113,668)
Total Property and Equipment, net 109,942 117,321
Automobile [Member]    
Property and Equipment, gross 41,805 41,805
Laboratory Equipment [Member]    
Property and Equipment, gross 96,536 96,536
Office Equipment [Member]    
Property and Equipment, gross 7,260 7,260
Leasehold Improvements [Member]    
Property and Equipment, gross $ 85,389 $ 85,389
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Stockholders' Deficit - Schedule of Options Outstanding (Details)
3 Months Ended
Mar. 31, 2020
$ / shares
shares
Equity [Abstract]  
Exercise Price | $ / shares $ 0.115
Options Outstanding
Options Exercisable 22,267,800
Weighted Average Remaining Contractual Life 23 years 4 months 2 days
XML 33 R35.htm IDEA: XBRL DOCUMENT v3.20.1
Stockholders' Deficit (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Feb. 19, 2020
Sep. 26, 2019
Aug. 14, 2019
Aug. 08, 2019
Mar. 20, 2019
Mar. 09, 2019
Mar. 20, 2018
Mar. 31, 2020
Mar. 31, 2019
Aug. 08, 2020
Apr. 05, 2020
Dec. 31, 2019
Dec. 31, 2018
Mar. 08, 2019
Number of shares issued   766,667 7,967,871   4,052,652                  
Share price         $ 0.0695                  
Proceeds from issuance of common stock               $ 1,000,000          
Warrants to purchase up share   1,000,000 8,000,000                      
Warrants exercise price               $ 0.001 $ 0.001          
Number of shares issued, value         $ 281,659       $ 1,000,000          
Number of warrants cancelled                          
University of Notre Dame [Member]                            
Number of shares issued, value         38,500                  
Accounts payable         $ 243,159                  
Common Stock and Warrants [Member]                            
Number of shares issued           14,797,278                
6 Cent Warrants [Member]                            
Warrants to purchase up share                           14,797,278
Warrants exercise price                           $ 0.06
8 Cent Warrants [Member]                            
Warrants to purchase up share           7,398,639                
Warrants exercise price           $ 0.08                
Warrant [Member]                            
Warrants exercise price           $ 0.06   $ 0.001       $ 0.001    
Warrant expiration date           Mar. 08, 2021                
Warrant One [Member]                            
Warrants exercise price           $ 0.06   0.056       0.056    
Warrant expiration date           Mar. 08, 2022                
Warrant Two [Member]                            
Warrants exercise price           $ 0.08   0.04       0.04    
Warrant expiration date           Mar. 08, 2022                
Warrant Three [Member]                            
Warrants exercise price           $ 0.08   $ 0.06       $ 0.06    
Warrant expiration date           Mar. 08, 2023                
Common Stock Warrants and Options [Member]                            
Number of shares issued 20,000,000     2,000,000                    
Share price $ 0.0115     $ 0.2299                    
Warrants to purchase up share             600,000              
Warrants exercise price             $ 0.001              
Warrants term             4 years              
Fair value of adjustments of warrants             $ 19,915              
Warrants cancelled amount                     $ 6,000      
Option term 20 years     2 years                    
Fair value of options $ 2,198,411     $ 267,574                    
Common stock warrants and options, description Options will be exercisable on February 19, 2025, and for a period of 15 years expiring on February 19, 2040.     Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2024.     Warrants will be exercisable on March 20, 2019, and for a period of 3 years expiring on March 20, 2022.              
Share based compensation               $ 2,198,411       $ 267,574    
Warrants expenses                         $ 19,915  
Number of warrants cancelled                     600,000      
Common Stock Warrants and Options One [Member]                            
Number of shares issued 6,000,000                          
Share price $ 0.00115                          
Option term 10 years                          
Fair value of options $ 626,047                          
Common stock warrants and options, description Black-Scholes option-pricing model on the date of grant and 2,000,000 options are fully vested on the date granted and 1,000,000 options vest at the end of each successive year for four years. Options will be exercisable on February 19, 2021, and for a period of 10 years expiring on February 19, 2030.                          
Share based compensation               208,682            
Common Stock Warrants and Options Two [Member]                            
Number of shares issued 1,340,000                          
Share price $ 0.0115                          
Option term 7 years                          
Fair value of options $ 133,063                          
Common stock warrants and options, description Black-Scholes option-pricing model on the date of grant and 268,000 options are fully vested on the date granted and the remaining option vest equally over the remaining 4 years at the end of each successive year. Options will be exercisable on February 19, 2021, and for a period of 6 years expiring on February 19, 2027.                          
Share based compensation               26,613            
Common Stock Warrants and Options One [Member]                            
Number of shares issued       2,000,000                    
Share price       $ 0.2299                    
Option term       2 years                    
Fair value of options       $ 267,574                    
Common stock warrants and options, description       Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025.                    
Share based compensation               66,528            
Common Stock Warrants and Options Two [Member]                            
Number of shares issued       2,000,000                    
Share price       $ 0.2299                    
Option term       3 years                    
Fair value of options       $ 291,842                    
Common stock warrants and options, description       Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026.                    
Share based compensation               36,331            
Common Stock Warrants and Options Three [Member]                            
Number of shares issued       1,000,000                    
Share price       $ 0.2299                    
Option term       2 years                    
Fair value of options       $ 118,874                    
Common stock warrants and options, description       Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023.                    
Share based compensation                       118,874    
Common Stock Warrants and Options Four [Member]                            
Number of shares issued       1,000,000                    
Share price       $ 0.2299                    
Option term       2 years                    
Fair value of options       $ 118,874                    
Common stock warrants and options, description       Options will be exercisable on August 8, 2021, and for a period of 3 years expiring on August 8, 2024.                    
Share based compensation                       118,874    
Common Stock Warrants and Options Five [Member]                            
Number of shares issued                   125,000        
Share price       $ 0.2299                    
Option term                   2 years        
Fair value of options                   $ 14,859        
Common stock warrants and options, description                   Options will be exercisable on August 8, 2020, and for a period of 3 years expiring on August 8, 2023.        
Share based compensation                       $ 14,859    
Common Stock Warrants and Options Six [Member]                            
Number of shares issued       125,000                    
Share price       $ 0.2299                    
Option term       2 years                    
Fair value of options       $ 16,723                    
Common stock warrants and options, description       Options will be exercisable on August 8, 2022, and for a period of 3 years expiring on August 8, 2025.                    
Share based compensation               4,158            
Common Stock Warrants and Options Seven [Member]                            
Number of shares issued       125,000                    
Share price       $ 0.2299                    
Option term       2 years                    
Fair value of options       $ 18,240                    
Common stock warrants and options, description       Options will be exercisable on August 8, 2023, and for a period of 3 years expiring on August 8, 2026.                    
Share based compensation               2,271            
Common Stock Warrants and Options Eight [Member]                            
Number of shares issued       125,000                    
Share price       $ 0.2299                    
Option term       2 years                    
Fair value of options       $ 19,525                    
Common stock warrants and options, description       Options will be exercisable on August 8, 2024, and for a period of 3 years expiring on August 8, 2027.                    
Share based compensation               $ 1,621            
Purchase Agreement [Member] | Investor [Member]                            
Number of shares issued           14,797,278                
Share price           $ 0.06758                
Proceeds from issuance of common stock           $ 1,000,000                
XML 34 R31.htm IDEA: XBRL DOCUMENT v3.20.1
Right to Use Assets and Lease Liability - Schedule of Lease Liability (Details) - USD ($)
Mar. 31, 2020
Dec. 31, 2019
Jan. 02, 2019
Total $ 453,312    
Less: short term portion (113,764) $ (110,678) $ (531,462)
Long term position 339,548 $ 369,281  
Right to Use Liability Net - Related Party [Member]      
Total 53,442    
Right to Use Liability Net [Member]      
Total 61,789    
Right to Use Liability Net One [Member]      
Total $ 338,081    
XML 35 R12.htm IDEA: XBRL DOCUMENT v3.20.1
Note Payable
3 Months Ended
Mar. 31, 2020
Debt Disclosure [Abstract]  
Note Payable

NOTE 6 NOTE PAYABLE

 

On March 1, 2019, the Company entered into an unsecured promissory note with Notre Dame - an unrelated party in the amount of $265,244 in exchange for outstanding account payable due to the debtor. Pursuant to the terms of the note, the note bears 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 three months ended March 31, 2020, the Company paid $15,000 of the loan balance (See Note 8 (A)):

 

1. $1,000 per month for the first six months;

2. $2,000 per month for the months seven and eight;

3. $5,000 per month for months nine through twenty three; and,

4. Final payment of all remaining balance, in the amount of $180,224 in month 24.

XML 36 R16.htm IDEA: XBRL DOCUMENT v3.20.1
Subsequent Events
3 Months Ended
Mar. 31, 2020
Subsequent Events [Abstract]  
Subsequent Events

NOTE 10 SUBSEQUENT EVENTS

 

The Company has analyzed its operations subsequent to April 21, 2020 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 April 16, 2020, the Company held a press conference announcing the development of the first Knock In / Knock Out essentially pure spider silk transgenic.

XML 37 R7.htm IDEA: XBRL DOCUMENT v3.20.1
Summary of Significant Accounting Policies and Organization
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Summary of Significant Accounting Policies and Organization

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

 

(A) Basis of Presentation

 

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.

 

(B) Foreign Currency

 

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.

 

(C) Use of Estimates

 

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.

 

(D) Cash

 

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 no cash equivalents as of March 31, 2020 or December 31, 2019.

 

(E) Loss Per Share

 

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 March 31, 2020 and March 31, 2019, warrants were not included in the computation of income/ (loss) per share because their inclusion is anti-dilutive.

 

The computation of basic and diluted loss per share for March 31, 2020 and March 31, 2019 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

 

    March 31, 2020     March 31, 2019  
Stock Warrants (Exercise price - $0.001/share)     55,995,917       58,595,917  
Stock Options (Exercise price - $0.1150/Share)     27,340,000       -  
Convertible Preferred Stock     2       2  
Total     83,335,919       58,595,919  

 

(F) 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.

 

(G) Income Taxes

 

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.

 

On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affected us, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as determining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation are expected over the next 12 months, we consider the accounting of the transition tax, deferred tax re-measurements, and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the measurement period in accordance with SAB 118.

 

Effective January 1, 2009, the Company adopted guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the financial statements and applies to all federal or state income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. As of December 31, 2019 and December 31, 2017 there were no amounts that had been accrued in respect to uncertain tax positions.

 

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments, and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black-Scholes option-pricing model. In assessing the convertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt, the Company will continue its evaluation process of these instruments as derivative financial instruments.

 

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the fair value being recorded in results of operations as an adjustment to fair value of derivatives. In addition, the fair value of freestanding derivative instruments such as warrants, are also valued using the Black-Scholes option-pricing model.

 

(H) Stock-Based Compensation

 

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.

 

(I) Recent Accounting Pronouncements

 

In June 2018, the FASB issued Accounting Standards Update (“ASU”) No. 2018-07, “Compensation — Stock Compensation (Topic 718),” (“ASU 2018-07”). ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. Currently, the accounting requirements for nonemployee and employee share-based payment transactions are significantly different. ASU 2018-07 expands the scope of Topic 718, Compensation — Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU supersedes Subtopic 505-50, Equity — Equity-Based Payments to Nonemployees. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within that fiscal year. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted ASU 2018-07 effective April 1, 2018. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. As a result, the Company has recorded Right-to-use assets and corresponding Lease obligations as more fully discussed in Note 4.

 

All other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

 

(J) Equipment

 

The Company values property and equipment at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a five year life for automobiles.

 

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 no impairment losses recorded for the three months ended March 31, 2020 and 2019.

 

(K) 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 March 31, 2020 and December 31, 2019.
     
  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.

 

    March 31,
2020
   

December 31,

2019

 
Level 1   $         -     $           -  
Level 2   $ -     $ -  
Level 3   $ -     $ -  
Total   $ -     $ -  

 

(L) Revenue Recognition

 

During the year ended December 31, 2019, the Company’s revenues were generated primarily from a contract with the U.S. Government. The Company performs work under this 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, to that original contract, the Company has 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 months ended March 31, 2020 and 2019, the Company recognized $0 and $0 respectively in revenue from the Government contract. These revenues were generated for work performed in the development and production of the Company’s recombinant silks under the base and option period phases of our ongoing contract with the US Army.

 

On July 24, 2017, the Company signed a contract option extension with the US Army to research and deliver recombinant spider silk fibers and threads. This contract option increased the total contract award by an additional $921,130 to a total of $1,021,092 and added 12 months to the contract duration. This effort was scheduled to end on September 24, 2018, but the Company requested an extension of this contract option period through April 2019 to complete the work. The Company has been in communication with the contracting office and is working with them as they determine the best path forward; Management believes there is a possibility of securing a follow-up contract to complete the delivery of all materials for the contract. The Company is also continuing to pursue additional contract opportunities with the Department of Defense, Department of Energy and other governmental agencies.

 

(M) Concentration of Credit Risk

 

The Company at times has cash in banks in excess of FDIC insurance limits. At March 31, 2020 and December 31, 2019, the Company had approximately $0 and $0, respectively in excess of FDIC insurance limits.

 

For the three months ended March 31, 2020 and 2019, the Company booked $0 and $0 for doubtful accounts.

XML 38 R3.htm IDEA: XBRL DOCUMENT v3.20.1
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
3 Months Ended 12 Months Ended
Mar. 31, 2020
Dec. 31, 2019
Preferred stock, par value
Preferred stock, shares authorized Unlimited Unlimited
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock issuable 1,122,311 1,122,311
Series A Preferred Stock [Member]    
Preferred stock, par value
Preferred stock, shares issued 2 2
Preferred stock, shares outstanding 2 2
Common Stock Class A [Member]    
Common stock, par value
Common stock, shares authorized Unlimited Unlimited
Common stock, shares issued 844,468,378 844,468,378
Common stock, shares outstanding 844,468,378 844,468,378
Common Stock Class B [Member]    
Common stock, par value
Common stock, shares authorized Unlimited Unlimited
Common stock, shares issued
Common stock, shares outstanding
XML 39 R22.htm IDEA: XBRL DOCUMENT v3.20.1
Summary of Significant Accounting Policies and Organization (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Jan. 02, 2018
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Dec. 31, 2017
Jul. 24, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]            
Cash equivalents        
Income tax rate, percentage 21.00%          
Income tax, uncertain tax positions        
Impairment losses on equipment        
Revenue        
Additional contract award           $ 921,130
Contract award           $ 1,021,092
Cash excess of FDIC insurance limits   0   $ 0    
Doubtful accounts   $ 0 $ 0      
XML 40 R26.htm IDEA: XBRL DOCUMENT v3.20.1
Going Concern (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]        
Working capital $ (5,933,580)      
Stockholders' deficiency (5,885,398) $ (3,650,363) $ (5,388,058) $ (4,459,223)
Cash used in operating activities $ (372,613) $ (225,046)    
XML 41 R18.htm IDEA: XBRL DOCUMENT v3.20.1
Summary of Significant Accounting Policies and Organization (Tables)
3 Months Ended
Mar. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Antidilutive Securities of Earnings Per Share

The computation of basic and diluted loss per share for March 31, 2020 and March 31, 2019 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:

 

    March 31, 2020     March 31, 2019  
Stock Warrants (Exercise price - $0.001/share)     55,995,917       58,595,917  
Stock Options (Exercise price - $0.1150/Share)     27,340,000       -  
Convertible Preferred Stock     2       2  
Total     83,335,919       58,595,919  

Schedule of Fair Value of Financial Instruments

    March 31,
2020
   

December 31,

2019

 
Level 1   $         -     $           -  
Level 2   $ -     $ -  
Level 3   $ -     $ -  
Total   $ -     $ -  

XML 42 R10.htm IDEA: XBRL DOCUMENT v3.20.1
Right to Use Assets and Lease Liability
3 Months Ended
Mar. 31, 2020
Right To Use Assets And Lease Liability  
Right to Use Assets and Lease Liability

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 $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 $960. Rent expense – related party for the three months ended March 31, 2020 and 2019, was $3,135 and $5,760, respectively (See Note 9).

 

On September 13, 2017, the Company signed a new two year lease commencing on October 1, 2017 and ending on September 30, 2019. The Company pays an annual rent of $39,200 for the year one of lease and $42,000 for the year two of lease for office and manufacturing space.

 

On May 9, 2019 the Company signed a 5 year property lease with the Socialist Republic of Vietnam which consists of 4,560.57 square meters of space, which it leases at a current rent of approximately $45,150 per year one and two and with the 5% increase per year for years three through five.

 

In February 2016, the FASB issued ASU 2016-02, “Leases” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

 

The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. The adoption of the new guidance resulted in the recognition of ROU assets of $529,135 and lease liabilities of $531,462.

 

The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In calculating the present value of the lease payments, the Company elected to utilize its incremental borrowing rate based on the remaining lease terms as of the January 1, 2019 adoption date. This rate was determined to be 8% and the Company determined the initial present value, at inception, of $559,568.

 

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred, if any.

 

The Company has elected the practical expedient to combine lease and non-lease components as a single component. The lease expense is recognized over the expected term on a straight-line basis. Operating leases are recognized on the balance sheet as right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.

 

The new standard also provides practical expedients and certain exemptions for an entity’s ongoing accounting. We have elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases where the initial lease term is one year or less or for which the ROU asset at inception is deemed immaterial, we will not recognize ROU assets or lease liabilities. Those leases are expensed on a straight line basis over the term of the lease

 

Right to use assets is summarized below:

 

    March 31, 2020  
Right to use assets, net – related party   $ 60,486  
Right to use assets, net     51,621  
Right to use assets, net     332,407  
Total   $ 444,514  

 

During the three months ended March 31, 2020, the Company recorded $26,550 as lease expense to current period operations.

 

During the three months ended March 31, 2020, the Company recorded $2,178 as lease expense – related party to current period operations.

 

Lease liability is summarized below:

 

    March 31, 2020  
Right to use liability, net – related party     53,442  
Right to use liability, net     61,789  
Right to use liability, net     338,081  
Total     453,312  
Less: short term portion   $ (113,764 )
Long term position   $ 339,548  

 

Lease expense for the three months ended March 31, 2020 was comprised of the following:

 

Operating lease expense   $ 15,582  
Operating lease expense   $ 9,142  
Operating lease expense – related party   $ 1,923  

XML 43 R14.htm IDEA: XBRL DOCUMENT v3.20.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 8 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. The term of the agreement is a five year period at an annual salary of $210,000. There is a 6% annual increase. For the year ending December 31, 2015, the annual salary was $281,027. The employee is also to receive a 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 5 years with an annual salary of $297,889 for the year ended December 31, 2016. On January 1, 2017 the agreement renewed with the same terms for another 5 years, but with an annual salary of $315,764 for the year ended December 31, 2017. On January 1, 2019 the agreement renewed again with the same terms for another 5 years, but with an annual salary of $354,791 for the year ended December 31, 2019. On January 1, 2020 the agreement renewed again with the same terms for another 5 years, but with an annual salary of $376,078 for the year ended December 31, 2020. As of March 31, 2020 and December 31, 2019, the accrued salary balance is $2,616,686 and $2,535,203, respectively. (See Note 9).

 

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 $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 $11,000. In addition, Mr. Rice was issued a three-year warrant to purchase 2,000,000 shares of common stock of the Company at an exercise price of $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 3,000,000 shares of common stock of the Company at an exercise price of $0.001 per share (the “May 20165 Warrant”) to Mr. Rice. The 2,000,000 share warrant fully vested on October 28, 2016. For the year ended December 31, 2015, the Company recorded $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 $140,000, which includes salary, health insurance, 401K retirement plan contributions, etc. In addition, Mr. Rice was issued a three-year warrant to purchase 6,000,000 shares of common stock of the Company at an exercise price of $0.001 per share pursuant to the employment agreement. On January 9, 2018, 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 warrant to January 23, 2015 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 April 26, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $20,000 per year and issue a one-time $20,000 bonus. Additionally, on August 15, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by an additional $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:

 

●The Company maintaining $6,000,000 or more in working capital,

●Upon the transfer of ownership of more than 50% of the Corporation’s voting share or an assignment for the benefit of creditors or bankruptcy, or

●Upon the fifth year anniversary of the salary increase and the bonus issuance.

 

As of March 31, 2020 and December 31, 2019 the Company owes $73,582 and $64,352, respectively, to Mr. Rice for payroll payable.

 

On October 21, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $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:

 

●The Company maintaining $6,000,000 or more in working capital,

●Upon the transfer of ownership of more than 50% of the Corporation’s voting share or an assignment for the benefit of creditors or bankruptcy, or

●Upon the fifth year anniversary of the salary increase and the bonus issuance.

 

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 $60,000. In addition, Mr. Le was issued two three-year warrants to purchase 2,000,000 shares of common stock of the Company at an exercise price of $0.2299 per share. As of March 31, 2020 and December 31, 2019, the accrued salary balance is $1,154 and $1,154, 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 $10,000. The Company will pay a license maintenance fee of $10,000 on the one year anniversary of this agreement and each year thereafter. The Company will pay an annual research fee of $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 $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 2,200,000 shares of its common stock and to pay a royalty of 2% of net sales. The license agreement has a term of 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. The Company can terminate the agreement upon a 90 day written notice subject to payment of a termination fee of $5,000 if the termination takes place within 2 years after its effectiveness, $10,000 if the termination takes place within 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 totaling $265,244 and issued 4,025,652 shares of Class A common stock with a fair value of $281,659 as payment of certain debt. In the event of default the license agreement will be terminated. During the three months ended March 31, 2020, the Company paid $15,000 of the balance (See Notes 6).

 

(B) Royalty and Research Agreements

 

On May 1, 2008 the Company entered into a five year consulting agreement for research and development. Pursuant to the terms of the agreement, the Company will be required to pay $1,000 per month, or at the Company’s option, the consulting fee may be paid in the form of Company common stock based upon the greater of $0.05 per share or the average of the closing price of the Company’s shares over the five days preceding such stock issuance. On April 6, 2018, the Company issued 36,000 shares with a fair value of $1,076 ($0.0299/share) to a consultant as consideration for consulting fees owed from October 1, 2014 through December 31, 2019 of $21,000. The issuance of shares resulted in gain on settlement of accounts payable of $19,924. On April 1, 2018, the Company ended the consulting agreement and no additional compensation will be issued. (See Note 7 (B)).

 

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 $120,000 that was due on December 26, 2007. As of March 31, 2020 and December 31, 2019, the outstanding balance is $65,292. As of December 31, 2019, the Company recorded interest expense and related accrued interest payable of $2,623. In 2020 the Company recorded $490 in interest expensed and related accrued interest payable. As of March 31, 2020, the Company recorded interest expense and related accrued interest payable of $7,033.

 

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.

 

(C) Consulting Agreement

 

On February 20, 2018, the Company signed an agreement with a consultant to provide services. Under this agreement the consultant will receive a warrant for 600,000 shares of common stock and may be awarded additional warrants for up to 3,000,000 shares of common stock if performance metrics are achieved. On March 20, 2018, the Company issued a 4-year warrant to purchase 600,000 shares of common stock at an exercise price of $0.001 per share to a consultant for services rendered. The warrants had a fair value of $19,915, based upon the Black-Scholes option-pricing model on the date of grant and are fully vested on March 20, 2018. Warrants will be exercisable on March 20, 2019, and for a period of 3 years expiring on March 20, 2022. During the year ended December 31, 2018, the Company recorded $19,915 as an expense for warrants issued (See Note 7 (C)).’ On April 5, 2019, the Company cancelled 600,000 warrant issued to a consultant on February 20, 2018 in exchange for $6,000 cash payment.

 

(D) 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 $2,508 for conference facilities, mail, fax, and reception services located at our principal place of business.

 

On May 9, 2019 the Company signed an 5 year property lease Socialist Republic of Vietnam which consists of 4,560.57 square meters of space, which it leases at a current rent of approximately $45,150 per year one and two and with the 5% increase per year for years three through five.

 

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 $960. Rent expense – related party for the three months ended March 31, 2020 and 2019, was $3,135 and $3,273, respectively (See Note 9).

 

On September 13, 2017, the Company signed a new two year lease commencing on October 1, 2017 and ending on March 31, 2020. The Company pays an annual rent of $39,200 for the year one of lease and $42,000 for the year two of lease for office and manufacturing space. On September 5, 2019, the Company signed a new 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 $42,000 for year one of the lease and $44,800 for year two of the lease.

XML 44 R37.htm IDEA: XBRL DOCUMENT v3.20.1
Stockholders' Deficit - Schedule of Warrants Activity (Details)
3 Months Ended
Mar. 31, 2020
USD ($)
$ / shares
shares
Equity [Abstract]  
Number of Warrants, Beginning balance | shares 55,395,917
Number of Warrants, Granted | shares
Number of Warrants, Exercised | shares
Number of Warrants, Cancelled/Forfeited | shares
Number of Warrants, Ending balance | shares 55,395,917
Number of Warrants, Intrinsic Value | $ $ 9,799,286
Weighted Average Exercise Price, Beginning balance
Weighted Average Exercise Price, Granted
Weighted Average Exercise Price, Exercised
Weighted Average Exercise Price, Cancelled/Forfeited
Weighted Average Exercise Price, Ending balance
Weighted Average Exercise Price, Intrinsic Value
Weighted Average Remaining Contractual Life (In Years), Beginning balance 2 years 9 months 7 days
Weighted Average Remaining Contractual Life (In Years), Ending balance 2 years 6 months 7 days
XML 45 R33.htm IDEA: XBRL DOCUMENT v3.20.1
Accrued Interest - Related Party (Details Narrative) - USD ($)
3 Months Ended
Mar. 09, 2020
Feb. 19, 2020
Jan. 24, 2020
Dec. 18, 2019
Nov. 20, 2019
Mar. 01, 2019
Feb. 15, 2019
Feb. 01, 2019
Jan. 17, 2019
Jan. 04, 2019
Dec. 21, 2018
Oct. 12, 2018
Oct. 01, 2018
Jul. 05, 2018
Jun. 29, 2018
Jun. 21, 2018
Apr. 26, 2018
Mar. 31, 2018
Jan. 09, 2018
Dec. 01, 2017
Jun. 06, 2016
Mar. 31, 2020
Mar. 31, 2019
Dec. 31, 2019
Proceeds from debt $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 100,000 $ 20,000 $ 20,000 $ 30,000 $ 30,000 $ 3,000 $ 20,000 $ 11,000 $ 26,000 $ 20,000 $ 15,000 $ 15,000 $ 20,000 $ 15,000 $ 100,000 $ 30,000 $ 50,000      
Debt Instrument, Interest rate                                           3.00%   3.00%
Loans payable amount                                           $ 942,000   $ 642,000
In-kind contribution of interest                                           9,784 $ 4,947  
Accrued interest                                           $ 5,958 $ 3,445  
Loan One [Member]                                                
Proceeds from debt                   $ 17,000                            
XML 46 R11.htm IDEA: XBRL DOCUMENT v3.20.1
Accrued Interest - Related Party
3 Months Ended
Mar. 31, 2020
Accrued Interest - Related Party  
Accrued Interest - Related Party

NOTE 5 ACCRUED INTEREST – RELATED PARTY

 

On June 6, 2016, the Company received a $50,000 loan from our principal stockholder. Subsequently on December 1, 2017, the Company received an additional $30,000 loan from the same stockholder. On January 8, 2018 and March 31, 2018 the Company received an additional loan of $100,000 and $15,000, respectively. The Company received additional loan funds from the same stockholder as follows: $20,000 on April 26, 2018; $15,000 on June 21, 2018; $15,000 on June 29, 2018; $20,000 on July 5, 2018; $26,000 on October 1, 2018; $11,000 on October 12, 2018; $20,000 on December 21, 2018; $3,000 on January 4, 2019; $30,000 on January 17, 2019; $30,000 on February 1, 2019; $20,000 on February 15, 2019; $20,000 on March 1, 2019; $17,000 on January 4, 2019, $100,000 on November 20, 2019, $100,000 on December 18, 2019, $100,000 on January 24, 2020, $100,000 on February 19, 2020 and $100,000 on March 9, 2020. Pursuant to the terms of the loan, the advance bears an interest at 3%, is unsecured, and due on demand. Total loan payable to principal stockholder for as of December 31, 2019 is $642,000. Total loan payable to this principal stockholder as of March 31, 2020 is $942,000. During the three months ended March 31, 2020, the Company recorded $9,784 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $5,958. During the three months ended March 31, 2019, the Company recorded $4,947 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $3,445.

XML 47 R15.htm IDEA: XBRL DOCUMENT v3.20.1
Related Party Transactions
3 Months Ended
Mar. 31, 2020
Related Party Transactions [Abstract]  
Related Party Transactions

NOTE 9 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 200,000 preferred shares with the following preferences; no dividends and 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 $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 March 31, 2020 the outstanding balance is $65,292. Additionally, the accrued expenses are accruing 7% interest per year. As of March 31, 2020, the Company recorded interest expense and related accrued interest payable of $7,033.

 

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 $334,708 for the year ended December 31, 2019. As of March 31, 2020 and December 31, 2019, the accrued salary balance is $2,616,686 and $2,535,203, respectively.

 

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 $140,000, which includes salary, health insurance, 401K retirement plan contributions, etc. In addition, Mr. Rice was issued a three-year warrant to purchase 6,000,000 shares of common stock of the Company at an exercise price of $0.001 per share pursuant to the employment agreement. On January 9, 2018, 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 23, 2015 for Mr. Rice. Additionally, on March 15, 2018, the Company signed an extension of its at-will employment agreement with its COO. On April 26, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by $20,000 per year and issue a one-time $20,000 bonus. Additional, on August 15, 2019, the Company signed an agreement to increase Mr. Rice’s base salary by an additional $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:

 

  The Company maintaining $6,000,000 or more in working capital,
     
  Upon the transfer of ownership of more than 50% of the Corporation’s voting share or an assignment for the benefit of creditors or bankruptcy, or
     
  Upon the fifth year anniversary of the salary increase and the bonus issuance.

 

As of March 31, 2020 and December 31, 2019, the Company owes $73,582 and $64,351, 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 $60,000. In addition, Mr. Le was issued two three-year warrants to purchase 2,000,000 shares of common stock of the Company at an exercise price of $0.2299 per share. As of March 31, 2020 and December 31, 2019, the accrued salary balance is $1,154 and $1,154, respectively. .

 

On June 6, 2016, the Company received a $50,000 loan from our principal stockholder. Subsequently on December 1, 2017, the Company received an additional $30,000 loan from the same stockholder. On January 8, 2018 and March 31, 2018 the Company received an additional loan of $100,000 and $15,000, respectively. The Company received additional loan funds from the same stockholder as follows: $20,000 on April 26, 2018; $15,000 on June 21, 2018; $15,000 on June 29, 2018; $20,000 on July 5, 2018; $26,000 on October 1, 2018; $11,000 on October 12, 2018; $20,000 on December 21, 2018; $3,000 on January 4, 2019; $30,000 on January 17, 2019; $30,000 on February 1, 2019; $20,000 on February 15, 2019; $20,000 on March 1, 2019; $17,000 on January 4, 2019, $100,000 on November 20, 2019, $100,000 on December 18, 2019, $100,000 on January 24, 2020, $100,000 on February 19, 2020 and $100,000 on March 9, 2020. Pursuant to the terms of the loan, the advance bears an interest at 3%, is unsecured, and due on demand. Total loan payable to principal stockholder for as of December 31, 2019 is $642,000. Total loan payable to this principal stockholder as of March 31, 2020 is $942,000. During the three months ended March 31, 2020, the Company recorded $9,784 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $5,958. During the three months ended March 31, 2019, the Company recorded $4,947 as an in-kind contribution of interest related to the loan and recorded accrued interest payable of $3,445.

 

On January 23, 2017, the Company signed an 8 year property lease with the Company’s President for land in Texas. The Company pays $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 three months ended March 31, 2020 and 2019 was $3,135 and $3,273, respectively.

 

As of March 31, 2020 and December 31, 2019, there was $311,638 and $304,539, 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 March 31, 2020, there was $1,269,213 of accrued interest- related party and $50,163 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 December 31, 2019, there was $1,196,503 of accrued interest- related party and $43,715 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 March 31, 2020, the Company owes $2,616,686 in accrued salary to principal stockholder, $73,582 to the Company’s COO, $1,153 to Director of Prodigy Textiles and $4,892 to its office employees.

 

As of December 31, 2019, the Company owes $2,535,203 in accrued salary to principal stockholder, $64,351 to the Company’s COO, $1,153 to Director of Prodigy Textiles and $4,477 to its office employees.

 

The Company owes $65,292 in royalty payable to related party as of March 31, 2020 and December 31, 2019.

XML 48 R19.htm IDEA: XBRL DOCUMENT v3.20.1
Equipment (Tables)
3 Months Ended
Mar. 31, 2020
Property, Plant and Equipment [Abstract]  
Schedule of Property and Equipment

At March 31, 2020 and December 31, 2019, property and equipment, net, is as follows:

 

    As of March 31, 2020     December 31, 2019  
Automobile   $ 41,805     $ 41,805  
Laboratory Equipment     96,536       96,536  
Office Equipment     7,260       7,260  
Leasehold Improvements     85,389       85,389  
Less: Accumulated Depreciation     (121,048 )     (113,669 )
Total Property and Equipment, net   $ 109,942     $ 117,321  

XML 49 R36.htm IDEA: XBRL DOCUMENT v3.20.1
Stockholders' Deficit - Schedule of Option Assumption (Details)
Feb. 19, 2020
Aug. 08, 2019
Mar. 20, 2018
Common Stock Warrants and Options [Member]      
Expected dividends 0.00%    
Expected volatility 125.19%    
Expected term 3 years    
Risk free interest rate 1.56%    
Expected forfeitures 0.00%    
Common Stock Warrants and Options One [Member]      
Expected dividends 0.00%    
Expected volatility 125.19%    
Expected term 3 years    
Risk free interest rate 1.50%    
Expected forfeitures 0.00%    
Common Stock Warrants and Options Two [Member]      
Expected dividends 0.00%    
Expected volatility 125.19%    
Expected term 6 years    
Risk free interest rate 1.46%    
Expected forfeitures 0.00%    
Common Stock Warrants and Options [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   2 years  
Risk free interest rate   1.62%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options One [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   2 years  
Risk free interest rate   1.62%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options Two [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   3 years  
Risk free interest rate   1.54%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options Three [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   2 years  
Risk free interest rate   1.62%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options Four [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   2 years  
Risk free interest rate   1.62%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options Five [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   2 years  
Risk free interest rate   1.62%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options Six [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   2 years  
Risk free interest rate   1.62%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options Seven [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   3 years  
Risk free interest rate   1.54%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options Eight [Member]      
Expected dividends   0.00%  
Expected volatility   105.73%  
Expected term   3 years  
Risk free interest rate   1.54%  
Expected forfeitures   0.00%  
Common Stock Warrants and Options Nine [Member]      
Expected dividends     0.00%
Expected volatility     97.56%
Expected term     4 years
Risk free interest rate     2.65%
Expected forfeitures     0.00%
XML 50 R32.htm IDEA: XBRL DOCUMENT v3.20.1
Right to Use Assets and Lease Liability - Schedule of Lease Cost (Details)
3 Months Ended
Mar. 31, 2020
USD ($)
Operating Lease Expenses [Member]  
Lease expenses $ 15,582
Operating Lease Expenses One [Member]  
Lease expenses 9,142
Operating Lease Expenses - Related Party [Member]  
Lease expenses $ 1,923
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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Cash Flows From Operating Activities:    
Net Loss $ (3,051,339) $ (477,746)
Adjustments to reconcile net loss to net cash used in operations    
Depreciation expense 7,379 6,665
Imputed interest - related party 9,784 4,947
Fair value of options issued for services 2,544,215
Changes in operating assets and liabilities:    
Decrease in prepaid expenses 19,075 1,713
Operating lease right-of-use, net 28,728 10,737
Increase in accrued expenses and other payables - related party 174,705 162,725
(Decrease) Increase in accounts payable (78,513) 76,003
Operating lease liabilities (26,647) (10,090)
Net Cash Used In Operating Activities (372,613) (225,046)
Cash Flows From Investing Activities:    
Purchase of Fixed Assets and Leasehold Improvements
Net Cash Used In Investing Activities
Cash Flows From Financing Activities:    
Proceeds from Notes Payable - related party 300,000 120,000
Principal payments on debt (15,000) (1,000)
Proceeds from issuance of common stock 1,000,000
Net Cash Provided by Financing Activities 285,000 1,119,000
Net Increase in Cash (87,613) 893,954
Cash at Beginning of Period 125,024 13,697
Cash at End of Period 37,411 907,651
Supplemental disclosure of cash flow information:    
Cash paid for interest
Cash paid for taxes
Supplemental disclosure of non-cash investing and financing activities:    
Settlement of accounts payable with note payable 265,244
Settlement of accounts payable with stock issuance 281,659
Adoption of lease standard ASC 842 $ 167,867
XML 55 R2.htm IDEA: XBRL DOCUMENT v3.20.1
Condensed Consolidated Balance Sheets - USD ($)
Mar. 31, 2020
Dec. 31, 2019
Current Assets    
Cash $ 37,411 $ 125,024
Prepaid expenses 12,670 31,745
Total Current Assets 50,081 156,769
Property and Equipment, net 109,942 117,321
Operating lease right-of-use asset, net 444,514 473,242
Security deposit 3,518 3,518
Total Assets 608,055 750,850
Current Liabilities    
Accounts payable and accrued expenses 482,435 560,948
Note payable - related party 942,000 642,000
Royalty agreement payable - related party 65,292 65,292
Accounts payable and accrued expenses - related party 4,320,170 4,145,465
Operating lease liability, current 113,764 110,678
Loan payable 60,000 60,000
Total Current Liabilities 5,983,661 5,584,383
Long Term Liabilities    
Loan payable, net of current 170,244 185,244
Operating lease liability, net of current 339,548 369,281
Total Liabilities 6,493,453 6,138,908
Commitments and Contingencies
Stockholders' Deficit    
Preferred stock, value
Common Stock Issuable, 1,122,311 and 1,122,311 shares, respectively 22,000 22,000
Additional paid-in capital 4,966,968 2,412,969
Accumulated Deficit (32,849,245) (29,797,906)
Total Stockholders' Deficit (5,885,398) (5,388,058)
Total Liabilities and Stockholders' Deficit 608,055 750,850
Series A Preferred Stock [Member]    
Stockholders' Deficit    
Preferred stock, value 5,217,800 5,217,800
Common Stock Class A [Member]    
Stockholders' Deficit    
Common stock, value 16,757,079 16,757,079
Common Stock Class B [Member]    
Stockholders' Deficit    
Common stock, value
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Summary of Significant Accounting Policies and Organization - Schedule of Antidilutive Securities of Earnings Per Share (Details) - shares
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Antidilutive Securities 83,335,919 58,595,919
Stock Warrants [Member]    
Antidilutive Securities 55,995,917 58,595,917
Stock Options [Member]    
Antidilutive Securities 27,340,000
Convertible Preferred Stock [Member]    
Antidilutive Securities 2 2
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Equipment (Details Narrative) - USD ($)
3 Months Ended
Mar. 31, 2020
Mar. 31, 2019
Property, Plant and Equipment [Abstract]    
Depreciation expense $ 7,379 $ 6,665