NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2021 and 2020
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Bioethics, Ltd. (“the Company”) was organized under the laws of the State of Nevada on July 26, 1990. The Company was organized to provide a vehicle for participating in potentially profitable business ventures which may become available through the personal contacts of and at the complete discretion, of the Company’s officers and directors. The Company has not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows for the six months ended June 30, 2021 and 2020 have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2020 audited financial statements. The results of operations for the six months ended June 30, 2021 are not necessarily indicative of the operating results for the full year.
NOTE 2 - RELATED PARTY TRANSACTIONS
Management Compensation - During the six months ended June 30, 2021 and 2020, the Company did not pay any compensation to its officers and directors.
Beginning August 2017, the Company entered into an oral agreement to pay the Company’s President $500 per month as payment for use of his personal residence as the Company’s office and mailing address. The Company has recorded rent expense of $3,000 during each of the six months ended June 30, 2021 and 2020, which is included in the general and administrative expenses on the statements of operations. The amount payable at December 31, 2020 was $1,500. During the six months ended June 30, 2021, the Company paid $-0-, resulting in $4,500 payable at June 30, 2021.
On March 8, 2018 the Company entered into a promissory note with a newly-affiliated party in the amount of $43,250. The note is payable on demand and carries interest at 10% per annum. Interest expense for the six months ended June 30, 2021 and 2020 was $4,571 and $1,725, respectively, resulting in accrued interest of $14,326 and $9,755 at June 30, 2021 and December 31, 2020, respectively. Principal balance on the note at June 30, 2021 and December 31, 2020 was $43,250.
On December 12, 2017, the Company entered into a promissory note with its President in the amount of $107,000. On various dates from the origin of the note through December 31, 2020, the officer advanced the Company an additional $53,270, and the Company made payments of $20,686, resulting in the total note principal balance of $139,584 at December 31, 2020. During the six months ended June 30, 2021, the Company received an additional $8,150 and paid a total of $-0- of the principal balance resulting in the total note principal balance of $147,734 at June 30, 2021. The cumulative note balance is uncollateralized, due on demand, and carries interest at 12% per annum. Interest expense on the note for the six months ended June 30, 2021 and 2020 was $8,548 and $6,890, respectively, of which the Company repaid $-0- during the six months ended June 30, 2021, resulting in accrued interest totaling $19,354 and $10,806 at June 30, 2021 and December 31, 2020, respectively.
NOTE 3 - NOTES PAYABLE
On June 14, 2016, the Company issued a promissory note in the principal amount of $35,000 to an unaffiliated lender. The Note is due on demand at any time after its original maturity date of June 14, 2017, and carries an interest rate of 8% per annum. Interest expense for the six months ended June 30, 2021 and 2020 totaled $1,388 and $1,396, respectively, resulting in accrued interest at June 30, 2021 and December 31, 2020 of $14,130 and $12,742, respectively. Principal balance due on the note at June 30, 2021 and December 31, 2020 was $35,000.
8
BIOETHICS, LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2021 and 2020
On August 15, 2018, the Company issued a promissory note in the principal amount of $10,000 to an unaffiliated lender. The Note was due on November 15, 2018, is currently in default, and carries an interest rate of 12% per annum. Interest expense for the six months ended June 30, 2021 and 2020 totaled $595 and $598, respectively, resulting in accrued interest at June 30, 2021 and December 31, 2020 of $2,702 and $2,107, respectively. Principal balance on the note at June 30, 2021 and December 31, 2020 was $10,000.
On November 15, 2018, the Company issued a promissory note in the principal amount of $20,000 to an unaffiliated lender. The Note was due on February 15, 2019, is currently in default, and carries an interest rate of 12% per annum. Interest expense for the six months ended June 30, 2021 and 2020 totaled $1,190 and $1,197, respectively, resulting in accrued interest at June 30, 2021 and December 31, 2020 of $5,405 and $4,215, respectively. Principal balance on the note at June 30, 2021 and December 31, 2020 was $20,000.
On December 31, 2018, the Company issued a promissory note in the principal amount of $30,000 to an unaffiliated lender. The Note was due on December 31, 2019, is currently in default, and carries an interest rate of 12% per annum. Interest expense for the six months ended June 30, 2021 and 2020 totaled $1,785 and $1,795, respectively, resulting in accrued interest at June 30, 2021 and December 31, 2020 of $8,107 and $6,322, respectively. Principal balance on the note at June 30, 2021 and December 31, 2020 was $30,000.
On January 23, 2019, the Company issued a promissory note in the principal amount of $50,000 to an unaffiliated lender. The Note was due on January 23, 2020, is currently in default, and carries an interest rate of 12% per annum. Interest expense for the six months ended June 30, 2021 and 2020 totaled $2,975 and $2,992, respectively, resulting in accrued interest at June 30, 2021 and December 31, 2020 of $13,512 and $10,537, respectively. Principal balance on the note at June 30, 2021 and December 31, 2020 was $50,000.
On May 1, 2020, the Company issued a promissory note in the principal amount of $5,000 to an unaffiliated lender. The Note was due on May 1, 2021 and is now due on demand and carries an interest rate of 12% per annum. Interest expense for the six months ended June 30, 2021 and 2020 totaled $298 and $89, respectively, resulting in accrued interest at June 30, 2021 and December 31, 2020 of $689 and $391, respectively. Principal balance on the note at June 30, 2021 and December 31, 2020 was $5,000.
NOTE 4 – CONVERTIBLE NOTE PAYABLE
On December 18, 2019, the Company issued a convertible promissory note in the original principal amount of $10,000 to a lender. The Note was due on June 18, 2020, is currently in default, and carries an interest rate of 8% per annum. The Note is due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a conversion rate of $.20 per share. The Company recognized a beneficial conversion feature and recorded a debt discount in the amount of $4,000, which was amortized over the life of the promissory note. At June 30, 2021 and December 31, 2020, the unamortized debt discount was $-0-, and the net convertible note balance was $10,000. The amortization of debt discount was $-0- and $3,716 during the six months ended June 30, 2021 and 2020, respectively. Interest expense for the six months ended June 30, 2021 and 2020 totaled $595 and $598, respectively, resulting in accrued interest at June 30, 2021 and December 31, 2020 of $1,841 and $1,246, respectively. Principal balance on the note at June 30, 2021 and December 31, 2020 was $10,000.
On June 9, 2020, the Company issued a convertible promissory note in the original principal amount of $10,000 to a lender. The Note was due on June 9, 2021, is currently in default, and carries an interest rate of 10% per annum. The Note is due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a conversion rate of $.25 per share. The Company recognized a beneficial conversion feature and recorded a debt discount in the amount of $6,200, which was amortized over the life of the promissory note. At June 30, 2021 and December 31, 2020, the unamortized debt discount was $-0- and $2,718, respectively, and the net convertible note balance was $10,000 and $7,282, respectively. The amortization of debt discount was $2,718 and $357 during the six months ended June 30, 2021 and 2020, respectively. Interest expense for the six months ended June 30, 2021 and 2020 totaled $608 and $46, respectively, resulting in accrued interest at June 30, 2021 and December 31, 2020 of $1,058 and $449. Principal balance on the note at June 30, 2021 and December 31, 2020 was $10,000.
9
BIOETHICS, LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2021 and 2020
On August 3, 2020, the Company issued a convertible promissory note in the original principal amount of $15,000 to a lender. The Note is due on August 3, 2021 and carries an interest rate of 8% per annum. The Note is due and payable in full unless converted partially or in its entirety upon the election of the lender into fully paid and non-assessable shares of common stock of the Company at a conversion rate of $7.00 per share. The Company did not recognize a beneficial conversion feature or debt discount as the conversion price was higher than the market price at the time of issuance of the note. Interest expense for the six months ended June 30, 2021 totaled $595, resulting in accrued interest at June 30, 2021 of $1,088. Principal balance on the note at June 30, 2021 and December 31, 2020 was $15,000.
NOTE 5 – EQUITY TRANSACTIONS
The Company is authorized to issue 250,000,000 shares of common stock. There were no equity transactions during the six months ended June 30, 2021 or 2020, resulting in 1,135,194 shares of common stock issued and outstanding at June 30, 2021 and December 31, 2020.
Effective November 2, 2020, the Company effectuated a 1 share for 10 shares reverse stock split which reduced the issued and outstanding shares of common stock from 11,000,000 shares to 1,135,194 shares. The accompanying financial statements have been retroactively adjusted to reflect this reverse stock split.
NOTE 6 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. However, the Company has incurred losses since its inception totaling $1,038,402 and has no on-going operations. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans, additional sales of its common stock, or through a possible business combination. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. In addition, the COVID-19 pandemic could have an impact on our ability to obtain financing to fund the operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 7 - LOSS PER SHARE
The computation of basic loss per share is based on the weighted average number of shares outstanding during each period.
The following data show the amounts used in computing loss per share for the six months ended:
|
|
|
June 30, 2021
|
|
June 30,
2020
|
|
|
|
|
|
|
|
Net loss (numerator)
|
$
|
(58,058)
|
$
|
(64,371)
|
|
Weighted average shares outstanding (denominator)
|
|
1,135,194
|
|
1,135,194
|
|
Basic and fully diluted net loss per share amount
|
$
|
(0.05)
|
$
|
(0.06)
|
The following data show the amounts used in computing loss per share for the three months ended:
|
|
|
June 30, 2021
|
|
June 30,
2020
|
|
|
|
|
|
|
|
Net loss (numerator)
|
$
|
(29,883)
|
$
|
(27,714)
|
|
Weighted average shares outstanding (denominator)
|
|
1,135,194
|
|
1,135,194
|
|
Basic and fully diluted net loss per share amount
|
$
|
(0.03)
|
$
|
(0.02)
|
The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents as detailed in the following chart. For the six months ended June 30,
10
BIOETHICS, LTD.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 2021 and 2020
2021 and 2020, the inclusion of these shares on the statements of operations would have resulted in a weighted average shares fully diluted number that was anti-dilutive, and as such they are excluded.
The following data show the fully diluted shares for the six months ended June 30, 2021 and 2020:
|
|
|
June 30,
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
1,135,194
|
|
1,135,194
|
|
Convertible debt
|
|
11,143
|
|
11,143
|
|
Total
|
|
1,146,337
|
|
1,146,337
|
The following data show the fully diluted shares for the three months ended June 30, 2021 and 2020:
|
|
|
June 30,
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
|
1,135,194
|
|
1,135,194
|
|
Convertible debt
|
|
11,143
|
|
11,143
|
|
Total
|
|
1,146,337
|
|
1,146,337
|
NOTE 8 – MERGER AGREEMENT
On November 30, 2020, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with XCR Diagnostics, Inc. (“XCR”) to, subject to a number of conditions, acquire 100% of the ownership of XCR for consideration of (1) approximately 38,843,906 shares of the Company’s unregistered common stock, and (2) options to purchase approximately 7,500,000 shares of the Company’s unregistered common stock at various exercise prices.
Closing of the acquisition of XCR is subject to a number of conditions, including but not limited to approval of the Company’s stockholders, providing required stockholder information and notice, the completion, filing and clearance of all necessary state and securities filings. The parties must also create and execute several exhibits and schedules, including formation of a merger subsidiary, Certificate of Merger, Articles of Merger and Disclosure Schedules for both the Company and XCR. The Merger Agreement states that XCR may rescind this Agreement in its sole discretion in the event that the company and/or XCR are unable to transfer at least $300,000 in paid in capital into XCR’s bank account within 90 days from the Closing of the Merger.
As of the date these financial statements were issued, the conditions to the closing of the Merger Agreement have not been met, therefore, the closing of the acquisition has not occurred and no stock has been issued by the Company.
NOTE 9 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined there are no events requiring disclosure.
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion in conjunction with our financial statements, which are included elsewhere in this report. The following information contains forward-looking statements. (See “Forward-Looking Statements” below.)
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements reflect the Company’s views with respect to future events based upon information available to it at this time. These forward-looking statements are subject to certain uncertainties and other factors that could cause actual results to differ materially from these statements. The words “anticipates,” “believes,” “estimates,” “expects,” “plans,” “projects,” “targets,” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, changes in assumptions, future events or otherwise.
General
The Company is a shell company that conducts no active business operations and is seeking business opportunities for acquisition or participation by the Company.
The Report of Independent Registered Public Accounting Firm on the Company’s December 31, 2020 audited financial statements addresses an uncertainty about the Company’s ability to continue as a going concern, indicating that the Company has incurred losses since its inception and has no on-going operations. The report further indicates that these factors raise substantial doubt about the Company’s ability to continue as a going concern. At June 30, 2021, the Company had a working capital deficit of $536,871 and an accumulated deficit since inception of $1,038,402. The Company incurred net losses of $58,058 and $64,371 for the six months ended June 30, 2021 and 2020, respectively. The Company has not entered into any agreements or arrangements for the provision of additional debt or equity financing and there can be no assurance that it will be able to obtain the additional debt or equity capital required to continue its operations.
On July 29, 2020, the Company entered into a non-binding Term Sheet with XCR Diagnostics, Inc. (“XCR”), subject to a number of conditions, to acquire 100% of the ownership of XCR. On July 31, 2020, the Company filed a Form 8-K further describing the proposed transaction. The Company and XCR have not yet negotiated a definitive agreement for the proposed acquisition.
The Three and Six Months ended June 30, 2021 compared to June 30, 2020
The Company did not conduct any operations during the six-month periods ended June 30, 2021 or 2020. At June 30, 2021, the Company had cash and total current assets in the amount of $467, compared to $667 at December 31, 2020. At June 30, 2021, the Company had total current liabilities of $537,338, compared to $479,623 at December 31, 2020. The Company had a working capital deficit of $536,871 at June 30, 2021 compared to $478,956 at December 31, 2020.
The Company did not generate revenues during the six-month periods ending June 30, 2021 or 2020. The Company incurred general and administrative expenses of $18,250 during the three months ended June 30, 2021, compared to $16,743 during the three months ended June 30, 2020. The Company incurred general and administrative expenses of $32,190 during the six months ended June 30, 2021, compared to $42,972 during the six months ended June 30, 2020. Such expenses consist primarily of legal and accounting fees as well as taxes and annual fees required to maintain the Company’s corporate status.
The Company incurred other expenses of $11,633 during the three months ended June 30, 2021 compared to $10,971 during the three months ended June 30, 2020. The Company incurred other expenses of $25,868 during the six months ended June 30, 2021 compared to $21,399 during the six months ended June 30, 2020. Total other income and expenses consist of interest expense related to the notes payable due from the Company. Increase in
12
interest expense is due to the increase in debt issued by the Company during the three and six months ended June 30, 2021 over the same periods ended June 30, 2020.
The Company incurred a net loss of $29,883 during the three months ended June 30, 2021, compared to a net loss of $27,714 during the three months ended June 30, 2020. The Company incurred a net loss of $58,058 during the six months ended June 30, 2021, compared to a net loss of $64,371 during the six months ended June 30, 2020.
The Company has never had substantial ongoing operations. As a result, since its inception on July 26, 1990, the Company had an accumulated deficit of $1,038,402 as of June 30, 2021.
Liquidity and Capital Resources
Net cash used by operating activities was $8,350 and $36,714 during the six months ended June 30, 2021 and 2020, respectively.
Net cash provided by investing activities was $-0- during both the six months ended June 30, 2021 and 2020.
Net cash provided by financing activities was $8,150 and $29,900 during the six months ended June 30, 2021 and 2020, respectively.
Since the Company does not generate any revenues from operations, it is dependent on sales of securities, loans, or contributions from its stockholders in order to pay its operating costs. In addition, in the event the Company locates a suitable candidate for potential acquisition, the Company will require additional funds to pay the costs of negotiating and completing the acquisition of such candidate. The Company has not entered into any agreement or arrangement for the provision of any additional funding and no assurances can be given that such funding will be available to the Company on terms acceptable to it or at all.
The Company cannot presently foresee the cash requirements of any business opportunity which may ultimately be acquired by the Company. However, since it is likely that any business it acquires will be involved in active business operations, the Company anticipates that an acquisition will result in increased cash requirements as well as increases in the number of employees of the Company.
Off-Balance Sheet Arrangements
The Company has not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.
Critical Accounting Policies
Due to the lack of current operations and limited business activities, the Company does not have any accounting policies that it believes are critical to facilitate an investor’s understanding of the Company’s financial and operating status.