VIASPACE INC. and SUBSIDIARY
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
– VIASPACE Inc. (“we”, “us”, “VIASPACE”, or the “Company”) was founded in July 1998. Its business involves renewable energy and is based on biomass, in particular our license to a dedicated energy crop with the trademark “Giant King
®
Grass” (“GKG”). Through a license for GKG we obtained from Guangzhou Inter-Pacific Arts Corp., a Chinese wholly-owned foreign enterprise registered in Guangdong province ("IPA China") which is owned by VIASPACE Green Energy Inc. (“VGE”), we are able to commercialize GKG throughout the world, except for the People’s Republic of China (“China”) and the Republic of China (“Taiwan”).
GKG can be burned in 100% biomass power plants to generate electricity; made into pellets that can be burned together with coal to reduce carbon emissions from existing power plants; generate bio methane through anaerobic digestion, and can be used as a feedstock for low carbon liquid biofuels for transportation, biochemicals and bio plastics. Cellulosic ethanol, bio butanol and other liquid cellulosic biofuels, do not use corn or other food sources as feedstock. GKG can also be used as animal feed. GKG and other plants absorb and store carbon dioxide from the atmosphere as they grow. When they are burned, they release the carbon dioxide back into the atmosphere, but it is the same carbon dioxide that was removed from the atmosphere, and so this process is carbon neutral. Small amounts of fossil fuel are used by the farm equipment, transportation of GKG and fertilizer, so that the overall process of growing and burning GKG probably has some net carbon dioxide emissions, but much lower emissions than burning coal or other fossil fuels directly to create the same amount of energy. GKG has been independently tested by customers and been shown to have excellent energy content, high bio methane production, and the cellulosic sugar content needed for biofuels and biochemicals.
The Company acquired Bad Love Cosmetics Company, LLC, dba Elite Therapeutics on March 6, 2019. Elite Therapeutics was founded in 2007 as Bad Love Cosmetics Company, LLC and began doing business as Elite Therapeutics with high quality, results-driven, medical grade cosmetics in late 2010. Elite Therapeutics has a full line of luxury products for personal use and high-end hotel amenities. This past year, the company has developed a new, ultralux, hemp-derived "CBD Recovery Crème". This product was launched on February 4, 2019 and can now be found on the Elite Therapeutics website. It uses a highly purified, hemp-derived, CBD isolate which is THC-free and is of the same high quality as the entire, physician-designed Elite Therapeutics product line.
Going Concern –
We have incurred significant losses from operations, resulting in an accumulated deficit of $56,768,000. We expect such losses to continue. However, we entered into a new Loan Agreement with Dr. Schewe on May 24, 2018 whereby he agreed to fund us $100,000 over a two-year period. We expect loans from Mr. Basit and Dr. Schewe and revenue generated from future contracts using the license we have for Giant King Grass to fund operations for the foreseeable future. However, no assurance can be given that Mr. Basit or Dr. Schewe will continue to fund us or that sales contracts will be obtained in the future, or if they are obtained, that they will be profitable. Accordingly, there continues to be substantial doubt as to our ability to continue as a going concern. The financial statements do not include any other adjustments that might result from the outcome of these uncertainties.
Basis of Presentation –
The unaudited interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with our financial statements for the year ended December 31, 2018 and notes thereto included in our annual report on Form 10-K. We follow the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
8
Accounts Receivable
Accounts receivable consist of uncollateralized amounts due from wholesale customers that have bought skin creams and Elite products for retail resale. Accounts receivable are due within 30 days and are stated at amounts net of an allowance for doubtful accounts. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering the length of time accounts receivable are past due, the Company’s previous loss history, and the client’s current ability to pay its obligations. Therefore, if the financial condition of the Company’s clients were to deteriorate beyond the estimates, the Company may have to increase the allowance for doubtful accounts which could have a negative impact on earnings. The Company writes-off accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts.
Inventory
Inventory is valued at the lower of the inventory's cost (weighted average basis) or net realizable value. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to net realizable value, if lower. Inventory is segregated into two areas, raw materials, and finished goods. Below is a breakdown of how much inventory was in each area as of March 31, 2019 (unaudited), and December 31, 2018 (unaudited):
|
March 31, 2019
|
|
|
December 31, 2018
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Raw Materials
|
$
|
144,000
|
|
|
$
|
125,000
|
|
Finished Goods
|
|
197,000
|
|
|
|
173,000
|
|
|
$
|
341,000
|
|
|
$
|
298,000
|
|
Recent Accounting Standards
–
The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07 to simplify the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The new guidance expands the scope of Accounting Standards Codification (ASC) 718 to include share-based payments granted to nonemployees in exchange for goods or services used or consumed in an entity’s own operations and supersedes the guidance in ASC 505-50.
The FASB launched the project in response to requests it received in its post-implementation review of Statement No. 123(R), Share-Based Payment. The ASU aligns much of the guidance on measuring and classifying nonemployee awards with that of awards to employees. The key changes from ASC 505-50 are:
•
|
Equity-classified nonemployee awards are measured on the grant date, rather than on the earlier of (1) the performance commitment date or (2) the date at which the nonemployee’s performance is complete.
|
•
|
Awards to nonemployees are measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably.
|
•
|
During the vesting period, nonemployee awards that contain a performance condition that affects the quantity or other terms (e.g., exercise price) of the award are measured based on the outcome that is probable. This differs from the guidance in ASC 505-50 that requires these types of awards to be measured at the lowest aggregate fair value within a range of possible outcomes.
|
•
|
Entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. This differs from the guidance in ASC 505-50 that requires the use of the contractual term.
|
9
Publ
ic entities must adopt the new standard in the fiscal year beginning on 12/15/2018. Companies can early adopt the new standard but are required to adopt ASC Topic 606 alongside their adoption of ASU 2018-07.
We
adopted the standard utilizing the modified
retrospective adoption method
.
The adoption of this guidance does not have a material impact on our financial statements.
Revenue Recognition -
In May 2014, FASB and the International Accounting Standards Board jointly issued a new revenue recognition standard that is designed to improve financial reporting by creating common recognition guidance for U.S. GAAP and International Financial Reporting Standards. The new guidance issued under Accounting Standards Update
("
ASU
")
2014-09
,
Revenue from Contracts with Customers
("
Topic 606
", "
ASU 2014-09
") provides a more robust framework for addressing revenue issues, improves the comparability of revenue recognition practices across industries, provides more useful information to users of financial statements through improved disclosure requirements and simplifies the presentation of financial statements. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance permits the use of either of the following transition methods: (i) a full retrospective method reflecting the application of the standard in each prior reporting period with the option to elect certain practical expediencies, or (ii) a modified retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption, with additional footnote disclosures. The original effective date of the new standard was for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. In August 2015, the FASB issued an ASU that deferred by one year the effective date of this new revenue recognition standard. As a result, the new standard was effective for annual reporting periods beginning after December 15, 2017, although companies could have adopted the standard as early as the original effective date. Early application prior to the original effective date was not permitted. In the first quarter of 2018, we adopted the standard utilizing the modified retrospective adoption method in order to provide for comparative results in all periods presented. The adoption of this guidance does not have a material impact on our financial statements.
Leases
- In February 2016, the FASB issued Accounting Standards Update No. 2016-02,
Leases (Topic 842).
This update requires organizations that lease assets with lease terms of more than 12 months to recognize assets and liabilities for the rights and obligations created by those leases on their balance sheets. It also requires new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company does not have any leases with terms of more than 12 months as of March 31, 2019.
NOTE 2 – PREPAID EXPENSES
We had previously entered into agreements with certain consultants and vendors whereby we issued unregistered shares of common stock in exchange for financial services to be provided to us. The agreements have been cancelled. As of March 31, 2019 and December 31, 2018, included in prepaid expenses for this third-party provider is $11,000 and $11,000, respectively, for shares of stock issued to the provider in excess of amounts paid on our behalf.
Other prepaid expenses (non-stock related) were $4,000 and $0 at March 31, 2019 and December 31, 2018, respectively.
10
Note 3 – Investments
On April 13, 2015, the Company entered into a Giant King Grass supply contract with Almaden Energy Group, LLC. (“AEG”). AEG is developing an animal feed project in the United States for the domestic and global market. The Company granted AEG a license to grow Giant King Grass only for animal feed, nursery and research purposes anywhere within the 48 contiguous United States. AEG is permitted to sell Giant King Grass anywhere in the world with the exception of the State of Hawaii. Haris Basit, the CEO of AEG, was also the previously the CEO of the Company. For the year ended December 31, 2018 and 2017, the Company recorded $0 and $0, respectively, in revenues from AEG.
On June 1, 2017, we acquired a 2.91% interest in Clean Energy Solutions, LLC’s (“CES”) outstanding membership interest units. We have accounted for this investment by the cost method because the membership interest units of that company are unlisted and the criteria for using the equity method of accounting are not satisfied as we are not able to exercise significant influence over CES. CES is a customer of the Company who is in discussion for future GKG contracts. At March 31, 2019, and December 31, 2018, our interest in CES is recorded at $0.
We also own an 11.57% interest in Viaspace California, Inc (“VSCA”), a company formed on March 1, 2018. VSCA is developing a business related to Cannabidiol (“CBD”), a cannabis compound that has significant medical benefits. The method of accounting for the investment is the equity method because a shareholder and controlling shareholder, both directors of Viaspace, along with the company collectively, control 46.25% of Viaspace California. At March 31, 2019 the Company recorded $0 as Investment in VSCA.
On July 16, 2018 CMAC Agriculture, LLC, a Utah Limited Company (“CMAC”) entered into an agreement with the members of AEG to acquire the majority of the assets of AEG, which included the license agreement with our Company. In return for the assets AEG members would receive ownership interest in CMAC. Due to this agreement our 18.75% ownership interest in AEG was transferred to a 3.375% ownership interest in CMAC. As of December 31, 2018 the Company no longer has equity ownership in AEG. At March 31, 2019, and December 31, 2018, the Company recorded $0 as Investment in CMAC using the cost method of accounting because the cost basis is zero.
As of March 31, 2019 the total balance of all investments is valued at $0.
Note 4 – STOCK OPTIONS
The fair value of each stock option granted is estimated on the date of the grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model has assumptions for risk free interest rates, dividends, stock volatility and expected life of an option grant. The risk free interest rate is based upon market yields for United States Treasury debt securities at a maturity near the term remaining on the option. Dividend rates are based on the Company’s dividend history. The stock volatility factor is based on the historical volatility of the Company’s stock price. The expected life of an option grant is based on management’s estimate as no options have been exercised in the Plan to date. The Company calculated a forfeiture rate for employees and directors based on historical information. A forfeiture rate of 0% is used for options granted to consultants. The fair value of each option grant to employees, directors and consultants is calculated by the Black-Scholes method and is recognized as compensation expense on a straight-line basis over the vesting period of each stock option award. The risk-free interest rate for the period within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.
|
|
2019
|
Dividends
|
|
0%
|
Volatility factor
|
|
156%
|
Expected life
|
|
10 years
|
Annual forfeiture rate
|
|
0%
|
11
The following is a summary
of the Company’s stock option activity for the nine months ended at
March 31
, 201
9
:
|
|
Number of
Shares
|
|
|
Weighted-
Average
Exercise
Price Per
Share
|
|
|
Weighted-
Average
Remaining
Contractual
Term In Years
|
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding at December 31, 2018
|
|
|
1,904,480,000
|
|
|
$
|
0.0012
|
|
|
|
8.81
|
|
|
|
|
|
Granted
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Cancelled and forfeited
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2019
|
|
|
1,904,480,000
|
|
|
$
|
0.0012
|
|
|
|
8.82
|
|
|
$
|
—
|
|
Exercisable at March 31, 2019
|
|
|
1,419,480,441
|
|
|
$
|
0.0014
|
|
|
|
8.61
|
|
|
$
|
—
|
|
No stock options were granted during the three months ended March 31, 2019. The Plan recorded $54,000 of compensation expense for employees and director stock options in the three months ended March 31, 2019. At March 31, 2019, there was $287,000 of unrecognized compensation costs related to non-vested share-based compensation arrangements under the Plan that is expected to be recognized over a weighted average period of approximately two year. There were no options exercised during the three months ended March 31, 2019.
NOTE 5 – CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES
Loan Agreement with Kevin Schewe
Effective May 24, 2018, we entered into a new Loan Agreement with CEO Kevin Schewe whereby Dr. Schewe agreed to loan up to $100,000 to us over a two-year period based on requests from the Company. Each individual loan will accrue interest at 8% per annum. Each note would mature on the first anniversary of the issuance date of such note. Each note is convertible at Dr. Schewe’s request, into a fixed number of shares of our common stock based on the closing price of our common stock for the twenty trading days prior to the issuance of the loan, less an 80% discount. This Loan Agreement also states that Dr. Schewe will not convert any loan into a number of shares that would exceed the number of available authorized common shares calculated as of the date of the conversion. As a result, the conversion feature is not deemed to be a derivative instrument subject to bifurcation.
During the three months ended March 31, 2019, Dr. Schewe made loans of $2,000 to us. We recorded a discount on the loans of $2,000 as a result of a beneficial conversion feature, which will be amortized over the term of the note on a straight-line basis, which approximates the effective interest method. During the three months ended March 31, 2019, Dr. Schewe converted loans totalling $2,000 into 26,143,791 common shares of the Company. At the time of the conversions, we recorded the discount as additional interest expense. There are $0 loans outstanding at March 31, 2019. As of March 31, 2019, we had $58,000 remaining availability under the note.
Loan Agreement with Carl Kukkonen
Effective July 25, 2017, we entered into a Loan Agreement with former CTO and Director Carl Kukkonen whereby Dr. Kukkonen agreed to loan up to $25,000 to us over a two-year period based on requests from the Company. Each individual loan will accrue interest at 8% per annum. Each note would mature on the first anniversary of the issuance date of such note. Each note is convertible at Dr. Kukkonen’s request, into a fixed number of shares of our common stock based on the closing price of our common stock for the twenty trading days prior to the issuance of the loan, less an 80% discount. The Loan Agreement states that Dr. Kukkonen will not convert any loan into a number of shares that would exceed the number of available authorized common shares calculated as of the date of the conversion. As a result, the conversion feature is not deemed to be a derivative instrument subject to bifurcation.
During the three months ended March 31, 2019, Dr. Kukkonen made loans of $0 to the Company and there are $0 loans outstanding at March 31, 2019. As of March 31, 2019, the Company had remaining availability under the note of $13,500.
12
NOTE
6
– STOCKHOLDERS’ EQUITY
Preferred Stock
At March 31, 2019 and December 31, 2018, the number of authorized shares of our preferred stock was 10,000,000. The par value of the preferred stock is $0.0001.
At March 31, 2019 and December 31, 2018, there is one share of Series A Preferred Stock outstanding.
Common Stock
As of March 31, 2019, the number of authorized shares of our common stock was 8,000,000,000. The par value of the common stock is $0.0001.
As of March 31, 2019, we issued 3,200,000 shares of common stock to a consultant of the Company. The shares were issued at fair market value of approximately $1,000 on the date of the issuance.
As of March 31, 2019, we issued 26,143,791 shares of common stock to CEO Kevin Schewe as he converted loans into shares of common stock as allowed under an agreement he has with us as discussed in Note 5.
As of March 31, 2019 we issued 775,984,665 shares of common stock to CEO Kevin Schewe for the purchase of Elite Therapeutics.
As of March 31, 2019, there were
4,732,073,007
shares of common stock issued and 4,632,073,007 shares of common stock outstanding.
NOTE 7 – NET LOSS PER SHARE
We compute net loss per share in accordance with FASB ASC Topic 260. Under its provisions, basic loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the periods presented. Diluted earnings would customarily include, if dilutive, potential shares of common stock issuable upon the exercise of stock options and warrants. The dilutive effect of outstanding stock options and warrants is reflected in earnings per share in accordance with FASB ASC Topic 260 by application of the treasury stock method. For the periods presented, the computation of diluted loss per share was equal to basic loss per share as the inclusion of any dilutive instruments would have had an antidilutive effect on the earnings per share calculation in the periods presented.
The following table sets forth common stock equivalents (potential common stock) at March 31, 2019 and 2018 that are not included in the loss per share calculation since their effect would be anti-dilutive for the periods indicated:
|
|
March 31, 2019
|
|
|
December 31, 2018
|
|
Stock Options
|
|
|
1,904,480,000
|
|
|
|
1,904,480,000
|
|
The following table sets forth the computation of basic and diluted net loss per share for 2018 and 2017, respectively:
|
|
For the Three Months Ended March 31,
|
|
|
|
2019
|
|
|
2018
|
|
Basic and diluted net loss per share:
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
Net loss attributable to common stock
|
|
$
|
(1,677,000
|
)
|
|
$
|
(71,000
|
)
|
Denominator:
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding
|
|
|
4,178,685,161
|
|
|
|
3,485,613,929
|
|
Net loss per share of common stock, basic and diluted
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
NOTE 8 – RELATED PARTY TRANSACTIONS
Included in our balance sheets at March 31, 2019 and December 31, 2018 are Related Party Payables of $749,000 and $749,000, respectively. We have a payable of $689,000 and $689,000, at March 31, 2019 and
13
December 31, 201
8
owed to Dr. Carl Kukkonen, CTO. Of the amount owed to Dr. Kukkonen, there is a cas
h component totalling $185,000 and a common stock component totalling $504,000. Dr. Kukkonen deferred a portion of his 2009, 2010 and 2011 stock awards and is entitled to the following unregistered shares of our common stock at
March 31, 2019
: 11,195,707 s
hares for deferred 2009 compensation; 8,467,939 shares for deferred 2010 compensation; and 24,730,678 shares for deferred 2011 compensation. We also owe Director Haris Basit $60,000 at
March 31, 2019
,
and December 31, 2018,
representing salary earned but n
ot paid
.
In addition, at March 31, 2019 there are Other Related Party Payables owed to Dr. Kukkonen, in the amount of $2,000, to Mr. Basit, in the amount of $20,000 and to Mr. Nicholas Stoll, in the amount of $4,000.
At December 31, 2018 Other Related Party Payables owed to Dr. Kukkonen, Mr. Basit and Mr. Stoll were $6,000, $18,000 and $9,000, respectively.
During 2018 the Company granted Dr. Kevin Schewe, Dr. Carl Kukkonen, Mr. Nick Stoll, Mr. Haris Basit and Ms. Angelina Galiteva 350,000,000, 150,000,000, 100,000,000, 500,000,000 and 10,000,000 options, respectively. See Note 4 for valuations of the stock options.
We have a loan agreement with CEO Dr. Kevin Schewe and former CTO Carl Kukkonen which is described in Note 5.
NOTE 9 – BUSINESS COMBINATIONS
Bad Love Cosmetics, LLC DBA Elite Therapeutics
Effective March 6, 2019, the Company purchased 100% of the outstanding interests of Bad Love Cosmetics, LLC DBA Elite Therapeutics ("Elite").
The consideration paid was $1,862,363 and was made through an all stock purchase of 775,984,665 shares at a price of $0.0024.
A summary of the purchase price allocation at fair value is below.
|
Purchase
Allocation
|
|
Accounts receivable, net
|
|
22,000
|
|
Inventory
|
|
360,000
|
|
Accounts Payable
|
|
(65,000
|
)
|
Liabilities
|
|
(36,000
|
)
|
Retained Earnings Loss
|
|
1,581,000
|
|
Total Consideration
|
$
|
1,862,000
|
|
Pro forma Information
The following is the unaudited Pro forma information assuming the business acquisition occurred on January 1, 2019:
|
|
For the Three Months ended March 31
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
101,000
|
|
|
$
|
58,000
|
|
|
|
|
|
|
|
|
|
|
Net Loss Attributable to Common Stockholders
|
|
$
|
(1,678,000
|
)
|
|
$
|
(109,000
|
)
|
|
|
|
|
|
|
|
|
|
LOSS PER SHARE OF COMMON STOCK – Basic and diluted
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING – Basic and diluted
|
|
|
4,178,685,161
|
|
|
|
3,485,613,929
|
|
14
NOTE 10 – COMMITMENTS AND CONTINGENCIES
Leases
We currently have no long term office lease.
Collaborative Agreements
We are a party to certain collaborative agreements with various entities for the joint operation of test plots to establish that GKG grows well in the area and optimal agronomic practices are developed. These agreements are in the form of development collaborations and licensing agreements. Under these agreements, we have granted rights to grow and use of GKG. In return, we are entitled to receive certain payments for the operations of the test plots and license fees on the harvesting of GKG should it ultimately be commercialized.
All of our collaborative agreements are subject to termination by either party, without significant financial penalty. Under the terms of these agreements, upon a termination we are entitled to reacquire all rights in our technology at no cost and are free to re-license the technology to other collaborative partners.
Revenue earned from collaborative agreements is comprised of negotiated payments for the establishment, evaluation and operations of GKG test plots. Deferred revenue represents customer payments received which are related to future performance. Generally, for collaborative agreements establishing test plots, we recognize revenue only after the Giant King Grass is planted in the customer’s location. Until that time any money received is recorded as deferred revenue. During the three months ended March 31, 2019 and 2018, we received $75,000 and $0 payments under these collaborative agreements. We recognized $34,000 and $0 revenue from these collaborative agreements for the three months ended March 31, 2019 and 2018.
Global Supply, License, and Commercialization Agreement
Executed on April 4, 2016 and effective as of March 28, 2016, the Company, VGE and Guangzhou Inter-Pacific Arts Corp., a Chinese wholly-owned foreign enterprise registered in Guangdong province ("IPA") owned by VGE, entered into the Global Supply, License, and Commercialization Agreement (the "New Agreement").
Prior to the New Agreement, IPA and VGE had entered into a certain Supply and Commercialization Agreement dated September 30, 2012 regarding a license and supply arrangement between IPA and VGE regarding Giant King Grass ("IPA-VGE Agreement"). In turn, VGE and the Company also entered into a certain Supply and Commercialization Agreement dated September 30, 2012 regarding a license and supply arrangement between VGE and the Company regarding Giant King Grass ("VGE-VIASPACE Agreement").
Under the New Agreement, VGE and the Company terminated the VGE-VIASPACE Agreement and IPA directly granted the Company an exclusive, perpetual license to commercialize its intellectual property rights to three (3) types of high yield, non-genetically modified grasses ("Three GK Grasses") throughout the world except Cambodia, People’s Republic of China, Taiwan, Thailand, Myanmar, Malaysia, Laos, Vietnam and Singapore ("VIASPACE Territory"). It and VGE agreed to subordinate the terms of the IPA-VGE Agreement to the terms of the New Agreement. IPA also granted the right to use and market the name "Giant King Grass" and other related names.
The Company would owe royalty payments on the Net Sales of the Three GK Grasses. This license would be sublicenseable in the VIASPACE Territory. IPA held all rights of ownership to the Three GK Grasses. The Company would own any grasses resulting from any modifications or improvements to the Three GK Grasses. IPA would use commercially reasonable efforts to maintain its intellectual property rights. The Company would use commercially reasonable efforts to commercialize the Three GK Grasses throughout the VIASPACE Territory.
Litigation
The Company is not party to any material legal proceedings at the present time.
15
NOTE 1
1
– SUBSEQUENT EVENTS
On April 22, 2019, Dr. Kevin Schewe, CEO of the Company, advanced $7,000 pursuant to a convertible loan agreement and immediately converted the $7,000 loan into 12,939,002 shares of Company common stock at a conversion price of $0.000541 per common share.
On April 24, 2019, we issued 396,231 shares or our common stock to a consultant. The shares were issued at fair market value of approximately $1,000 on the date of the issuance.
On May 21, 2019, Dr. Kevin Schewe, CEO of the Company, advanced $21,000 pursuant to a convertible loan agreement and immediately converted the $21,000 loan into 45,268,377 shares of Company common stock at a conversion price of $0.0004639 per common share.
On June 4, 2019, Mr. Haris Basit, Director of the Company, advanced $5,000 pursuant to a convertible loan agreement and immediately converted the $5,000 loan into 11,039,965 shares of Company common stock at a conversion price of $0.0004529 per common share.
16