UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington,
D.C. 20549



FORM
10-K/A

(Amendment No. 1)





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



For
the fiscal year ended December 31, 2019



[  ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the transition period from _____________to ____________



000-56025

Commission
file number



Quanta,
Inc.

(formerly
known as Freight Solution, Inc.)

(Exact
name of registrant as specified in its charter)



|Nevada                                                             |  | 81-2749032                              
|------------------------------------------------------------------ |  | ----------------------------------------
|(State
    or other jurisdiction of incorporation or organization) |  | (I.R.S.
    Employer Identification No.)



|3606
    W Magnolia Blvd, Burbank, CA        |  | 91505         
|-------------------------------------------- |  | --------------
|(Address
    of principal executive offices) |  | (Zip
    Code)



(424)
261-2568

Registrant’s
telephone number, including area code



Securities
registered under Section 12(b) of the Exchange Act: None



Securities
registered under Section 12(g) of the Exchange Act:

Common
Stock, par value $0.001



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ]
No [X]



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [  ]
No [X]



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 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 [  ]
|-------------------------------- | -------------------------- | ------------------------------



|Smaller
    reporting company [X] | Emerging
    growth company [X]
|--------------------------------- | -------------------------------



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 in Rule 12b-2 of the Exchange Act). Yes [  ] No
[X]



The
aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of
the registrant’s most recently completed second fiscal quarter was $41,203,885.



As
of April 3, 2020, the registrant had 55,322,712 shares of Common Stock outstanding.
















TABLE
OF CONTENTS



|Explanatory Note | 3                                                                                                            
|---------------- | -------------------------------------------------------------------------------------------------------------
|Item
    1.      | Business.                                                                                                    
|Item
    1A.     | Risk Factors                                                                                                 
|Item
    1B.     | Unresolved Staff Comments.                                                                                   
|Item
    2.      | Properties.                                                                                                  
|Item
    3.      | Legal Proceedings.                                                                                           
|Item
    5.      | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|Item
    7.      | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                       
|Item
    7A.     | Quantitative and Qualitative Disclosures About Market Risk.                                                  
|Item
    8.      | Financial Statements and Supplementary Data.                                                                 
|Item
    9.      | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.                        
|Item
    9A.     | Controls and Procedures.                                                                                     
|Item
    9B.     | Other Information.                                                                                           
|Item
    10.     | Directors, Executive Officers and Corporate Governance.                                                      
|Item
    11.     | Executive Compensation.                                                                                      
|Item
    12.     | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.              
|Item
    13.     | Certain Relationships and Related Transactions, and Director Independence.                                   
|Item
    14.     | Principal Accounting Fees and Services.                                                                      
|Item
    15.     | Exhibits, Financial Statement Schedules.                                                                     
|SIGNATURES       | 38                                                                                                           



2









EXPLANATORY NOTE



We are filing this Amendment No. 1 to our
Annual Report on Form 10-K for the year ended December 31, 2019 (the “Original Form 10-K”), as filed with the Securities
and Exchange Commission on April 3, 2020 (the “Original Filing Date”), solely to (i) update Item 10 with previously
omitted information regarding delinquent Section 16(a) reports, and (ii) correct an administrative error in the date of Report
of the Independent Registered Public Accounting Firm (the “Report”). The Report in the Original Form 10-K incorrectly
identified the date of the auditors' report on the applicable financial statements as April 1, 2020 instead of April 3, 2020.



Pursuant to Rule 12b-15 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), Amendment No. 1 also contains new certifications of the Company’s
Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.



For convenience and ease of reference,
the Company is filing the annual report in its entirety with applicable changes. This Amendment No. 1 does not reflect events
occurring after the April 3, 2020 filing of the Original Form 10-K or modify or update the disclosure contained in the Original
Form 10-K in any way other than as required to reflect the amendments discussed above and reflected below.





3







SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS



This
report contains forward-looking statements that involve a number of risks and uncertainties. Although our forward-looking statements
reflect the good faith judgment of our management, these statements can be based only on facts and factors of which we are currently
aware. Consequently, forward-looking statements are inherently subject to risks and uncertainties. Actual results and outcomes
may differ materially from results and outcomes discussed in the forward-looking statements.



Forward-looking
statements can be identified by the use of forward-looking words such as “may,” “will,” “should,”
“anticipate,” “believe,” “expect,” “plan,” “future,” “intend,”
“could,” “estimate,” “predict,” “hope,” “potential,” “continue,”
or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements under
the captions “Risk Factors,” “Management’s Discussion and Analysis or Plan of Operation” and “Description
of Business,” as well as other sections in this report. Such forward-looking statements are based on our management’s
current plans and expectations and are subject to risks, uncertainties and changes in plans that may cause actual results to differ
materially from those anticipated in the forward-looking statements. You should be aware that, as a result of any of these factors
materializing, the trading price of our common stock may decline. These factors include, but are not limited to, the following:



| | ● | the
    availability and adequacy of capital to support and grow our business;                                                                   
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | economic,
    competitive, business and other conditions in our local and regional markets;                                                      
| | ● | actions
    taken or not taken by others, including competitors, as well as legislative, regulatory, judicial and other governmental authorities;
| | ● | competition
    in our industry;                                                                                                                 
| | ● | changes
    in our business and growth strategy, capital improvements or development plans;                                                      
| | ● | the
    availability of additional capital to support development; and                                                                           
| | ● | other
    factors discussed elsewhere in this annual report.                                                                                     



The
cautionary statements made in this annual report are intended to be applicable to all related forward-looking statements
wherever they may appear in this report.



We
urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake
no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.



4







PART
I



Item
1. Business.



The
Merger



Effective
June 6, 2018, Quanta, Inc., formerly known as Freight Solution, Inc., a Nevada corporation (the “Registrant” or the
“Company”) consummated an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”), with
Bioanomaly, Inc., a California corporation d/b/a Quanta (“Quanta”) and Quanta Acquisition Corp., a California corporation
and wholly-owned subsidiary of the Company (“Acquisition”). Pursuant to the terms of the Merger Agreement, Acquisition
merged with and into Quanta in a statutory reverse merger (the “Merger”) with Quanta surviving as a wholly-owned subsidiary
of the Company.



Pursuant
to the merger agreement, all the shareholders of Bioanomaly exchanged all of their shares of Bioanomaly for an aggregate of 21,908,810
newly issued shares of Freight Solution’s common stock. Freight Solution shareholders retained 6,500,000 shares of common
stock, which represents 23% of the issued and outstanding stock following the merger.



Simultaneously
with the Merger, the Company accepted subscriptions for 6,500,000 shares of common stock in a private placement offering (the
“Offering”) at a purchase price of $0.20 per share, offered pursuant to Regulation D of the Securities Act of 1933,
as amended (the “Securities Act”) for the aggregate offering amount of $1,300,000. The Company also issued two non-affiliated
individuals four-year warrants to purchase 3,000,000 shares of common stock at an exercise price of $0.30 per share.



Following
the consummation of the Merger, Quanta shareholders beneficially owned approximately sixty-three percent (63%) of the issued and
outstanding Common Stock of the Registrant.



Overview



Quanta
is an applied science company focused on increasing energy levels in plant matter to increase performance within the human body.
Our proprietary technology uses quantum mechanics to increase bio-activity of targeted molecules to enhance the desired effects.
We specialize in potentiating rare naturally occurring elements to create impactful and sustainable healing solutions that we
believe will one day be as powerful and predictable as pharmaceutical drugs.



We
offer our technology as a platform, making it accessible to existing high-quality product makers with existing distribution channels,
as well as consumer products. Our mission is to power as many impactful, high-performing and wholly organic solutions as possible
through product lines and a series of licensing and distribution partnerships.



Bioanomaly
Inc. was founded in 2016 by a group of technology and industry entrepreneurs and provides licensed technology solutions to natural
product companies in multiple verticals. Our headquarters is located in Burbank, California.



Quanta
Basics



Quanta,
Inc. (“Quanta”) is a cutting-edge technology platform whose patented, proprietary technology harnesses advances in
quantum biology to increase the potency of active ingredients. Currently, Quanta supports product formulations in pain management,
anti-inflammation, skincare, agriculture, nutritional supplements, and plant-based consumables. Ultimately, Quanta’s mission
is to deliver better, more effective ingredients to elevate product efficacy, reduce waste and facilitate healthier, more sustainable
consumption.



The
established resonance theory behind Quanta’s polarization process has many potential applications. From potentiating bio-ingredients
to produce more-effective carbon-trapping plants to transformative anti-aging solutions Quanta’s technology has the opportunity
to upend how commercial products are made and the benefits from them. Already we see multi-trillion-dollar global industries benefiting
from Quanta’s technology.



Our
proof of concept, Quanta’s market-leading CBD pain-relief rub (“Muscle Rub”), is only the first in a series
of paradigm shift products to emerge from our labs. At the heart of its well-documented effectiveness is our proprietary “polarization”
process, which uses electromagnetic force to markedly enhance bioactivity at the molecular level—a polarized active ingredient
is more soluble and creates stronger bonds with the body’s receptors. This allows us to enhance ingredients so they work
faster and more powerfully without the use of chemical by-products or cellular penetration. Quanta believes this natural solution
has nearly limitless applications in the world of plant-based consumer products.



5







Quanta
is involved in ambitious projects that we believe will reshape the next wave of climate science, sustainability, nutrition,
and more. Having harnessed the technology of the future, Quanta is dedicated to bringing tomorrow’s health and wellness
solutions to the billions in need today.



Proof
of Concept



Creating,
producing and selling consumer products was never our primary focus; Quanta’s Muscle Rub was simply a means to an end -
proof of concept and a revenue driver in a small emerging market as our business model took shape. Fundamentally, Quanta will
be a licensing concern designed to collaborate with large brands to improve product quality and the profit margins of existing
and new products. But the market needed proof and we chose to start in the under-developed category of CBD because of its speed
to market.



Understandably,
we met the same initial hurdles every start-up encounters. In addition to simply explaining quantum mechanics, we had no track
record of success from a business standpoint. The immediate goal was to prove our model was defensible. Hence, we chose CBD as
a launch category. This market provided protection from industry titans that may have felt threatened by such a powerful technology
while allowing us to drive profits during R&D.



Over
the last two years, we have developed and sold products largely to the medical industry, along with some consumer retail. This
effort was designed to drive revenue and to prove the concept of our model: that polarizing a single ingredient can produce a
demonstrably superior product that consumers find safe and effective (establish consumer appetite).



Discovery
Synopsys



Using
our product development process and business-to-business and direct-to-consumer sales approaches as a benchmark for future
business, we developed the Quanta business model. Our technology’s unique ability to strengthen ingredients renders them
more potent without added chemicals or penetrating cells means Quanta is in a first-of-its-kind position in the market. As the
world’s first company focused on Quantum Biology we sit in a strong, but unique position in the market.



Our
ability to increase ingredient efficacy by up to 500% means we are in a rare position to truly disrupt many areas of material
science.



Quanta’s
technology renders products superior to any on the market today. A 30% re-purchase rate (on one SKU alone) illustrates consumer
appetite for the product.



Upcoming
products and ventures will be designed to achieve or surpass this level of consumer benefit and uptake.



Quanta
Business Model in 3 P’s: Potentiation, Partners, and Profits



After
two years we believe the best possible model for the long-term success of the company is collaborating with best-in-class partners
through joint ventures for new verticals, products, and research. These joint ventures may involve a jointly owned special purpose
entity or they may be entirely based on contractual obligations.



Our
mission has never been to create the best novel products on the planet. Our mission has always been to revolutionize the way formulations
are developed and how products perform. We seek to work with the best product makers in the world to positively impact as many
industries as possible.



The
unique ability to increase the ingredient and product performance opens the doors for major opportunities. Higher performing ingredients
mean less is needed to make a strong impact (increased margins, increase overall efficacy). We proved this with our Muscle Rub,
which uses approximately 1/3 the CBD of competing products with demonstrably improved results.



6







The
level of potentiation delivered by Quanta allows our partners the unique ability to provide higher-performing products, lower
material costs, more competitive pricing and increased profit margins. In short, our partners will be able to make better performing,
more affordable products with a higher repeat purchase. This is true disruption and consumer utopia.



We
aim to work with groups that specialize in manufacturing, marketing, selling and distributing existing product lines that utilize
ingredients we can potentiate. Partners like this facilitate efficient market delivery of joint innovations.



We
believe this strategy provides greater shareholder value, enhances revenue potential, defrays upfront expenses and affords us
the ability to raise capital for new projects without massive dilution.



Ultimately,
these ventures would result in licensing out our technology to other reputable brands and companies to create co-branded products
whereas the term “Powered by Quanta” becomes as recognized as “Intel Inside.”



We
believe this type of partnership will afford a company Quanta partners with:



| | ● | Development
    of emerging products with cutting edge ingredients.
| | - | -------------------------------------------------------------------
| |   |                                                                    
| | ● | A
    product line with a true point of differentiation.           
| |   |                                                                    
| | ● | New
    SKUs with an increased margin.                             
| |   |                                                                    
| | ● | Decreased
    cost of goods sold.                                  



Simultaneously
these partnerships will allow Quanta:



| | ● | Greater
    brand recognition.                                                               
| | - | ---------------------------------------------------------------------------------------------
| |   |                                                                                              
| | ● | Increased
    revenue and in turn profitability.                                             
| |   |                                                                                              
| | ● | Quicker
    timeline to more licensing opportunities because of a track record of success.   
| |   |                                                                                              
| | ● | Brand
    to become synonymous with improving the performance of ingredients within products.



Manufacturing
Partnerships -



Quanta
is currently focused on partnering with large-scale manufacturers and distributors able to produce products that meet the requirements
of applicable regulations IE: Good Manufacturing Practices to fulfill orders of our own product line. This type of partnership
is crucial because it will afford:



| | ● | New
    product development that meets certification requirements
| | - | -----------------------------------------------------------------
| |   |                                                                  
| | ● | Much
    larger production scale                                 
| |   |                                                                  
| | ● | Speed
    to market                                              
| |   |                                                                  
| | ● | Increased
    distribution and profitability                     



With
our licensing capabilities, Quanta technology can render better, more efficacious products that cost less to create but command
a higher purchase value because of polarized ingredients. This, in turn, allows companies to diversify their catalog of products
while simultaneously providing them with a distinguished advantage. More efficacious ingredients.



Employees



As
of the date of this report, Quanta has 21 full time and 2 part time employees. We believe we enjoy good employee relations. None
of our employees are members of any labor union, and we are not a party to any collective bargaining agreement.



7







Government
Regulation



We
believe we are in compliance with applicable federal, state and other regulations and that we have compliance programs in place
to ensure compliance going forward. There are no regulatory notifications or actions pending.



Item
1A. Risk Factors.



Risks
Related to the Business



There
is substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.



We
have yet to establish any history of profitable operations. For the year ended December 31, 2019, the Company incurred a net loss
of $5,787,364 and used cash in operating activities of $2,221,320, and at December 31, 2019, the Company had a had
a working capital deficiency of $113,909. In addition, the Company’s independent registered public accounting firm,
in their report on the Company’s December 31, 2019 audited financial statements, raised substantial doubt about the Company’s
ability to continue as a going concern. These factors raise substantial doubt about the Company’s ability to continue as
a going concern within one year of the date that the financial statements are issued. The financial statements do not include
any adjustments that might be necessary if the Company is unable to continue as a going concern. This going concern opinion could
materially limit our ability to raise additional funds through the issuance of new debt or equity securities and future reports
on our financial statements may also include an explanatory paragraph with respect to our ability to continue as a going concern.



At
December 31, 2019, the Company had cash on hand in the amount of $433,143. Subsequent to December 31, 2019 the Company
received $153,000 from the issuance of a convertible note payable and $30,000 for subscriptions to purchase shares of common
stock. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months.
The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial
support from its shareholders. Management believes the existing shareholders or external financing will provide the additional
cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed,
will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able
to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing,
or cause substantial dilution for its stockholders, in the case of equity financing



8







Quanta
is and will continue to be completely dependent on the services of our Chief Executive Officer and President, the loss of whose
services may cause our business operations to cease, and we will need to engage and retain qualified employees and consultants
to further implement our strategy.



Quanta’s
operations and business strategy are completely dependent upon the knowledge and business connections of Eric Rice and Jeffrey
Doiron. They are under no contractual obligation to remain employed by us. If any should choose to leave us for any reason or
become ill and unable to work for an extended period of time before we have hired additional personnel, our operations will likely
fail. Even if we are able to find additional personnel, it is uncertain whether we could find someone who could develop our business
along the lines described in this Annual Report on Form 10-K. We will likely fail without the services of our officers
or an appropriate replacement(s).



Because
we have only recently commenced business operations, we face a high risk of business failure.



The
Company was formed in 2016. We face a high risk of business failure. The likelihood of the success
of the Company must be considered in light of the expenses, complications and delays frequently encountered in connection with
the establishment and expansion of new businesses and the competitive environment in which the Company will operate. There can
be no assurance that future revenues will occur or be significant enough or that we will be able to sell its products and services
at a profit, if at all. Future revenues and/or profits, if any, will depend on many various factors, including, but not limited
to both initial and continued market acceptance of the Company’s website and the successful implementation of its planned
growth strategy.



9







We
may not be successful in hiring technical personnel because of the competitive market for qualified technical people.



The
Company’s future success depends largely on its ability to attract, hire, train and retain highly qualified technical personnel
to provide the Company’s services. Competition for such personnel is intense. There can be no assurance that the Company
will be successful in attracting and retaining the technical personnel it requires to conduct and expand its operations successfully
and to differentiate itself from its competition. The Company’s results of operations and growth prospects could be materially
adversely affected if the Company were unable to attract, hire, train and retain such qualified technical personnel.



We
may be unable to adequately establish, protect or enforce our intellectual property rights.



Our
success depends in part upon our ability to establish, protect and enforce our intellectual property and other proprietary rights.
If we fail to establish, protect or enforce our intellectual property rights, we may lose an important advantage in the market
in which we compete. We rely on a combination of trademark, copyright and trade secret law and contractual obligations to protect
our key intellectual property rights, all of which provide only limited protection. Our intellectual property rights may not be
sufficient to help us maintain our position in the market and our competitive advantages.



We
primarily rely on trade secrets to protect our proprietary technology. Trade secrets may not be protectable if not properly kept
confidential. We strive to enter into non-disclosure agreements with our employees, customers, contractors and business partners
to limit access to and disclosure of our proprietary information. However, the steps we have taken may not be sufficient to prevent
unauthorized use of our technology, and adequate remedies may not be available in the event of unauthorized use or disclosure
of our trade secrets and proprietary technology. Moreover, others may reverse engineer or independently develop technologies that
are competitive to ours or infringe our intellectual property.



10







Accordingly,
despite our efforts, we may be unable to prevent third-parties from using our intellectual property for their competitive advantage.
Any such use could have a material adverse effect on our business, results of operations and financial condition. Monitoring unauthorized
uses of and enforcing our intellectual property rights can be difficult and costly. Legal intellectual property actions are inherently
uncertain and may not be successful, and may require a substantial amount of resources and divert our management’s attention.



Claims
by others that we infringe their intellectual property could force us to incur significant costs or revise the way we conduct
our business.



Our
competitors protect their proprietary rights by means of patents, trade secrets, copyrights, trademarks and other intellectual
property. We have not conducted an independent review of patents and other intellectual property issued to third-parties, who
may have patents or patent applications relating to our proprietary technology. We may receive letters from third parties alleging,
or inquiring about, possible infringement, misappropriation or violation of their intellectual property rights. Any party asserting
that we infringe, misappropriate or violate proprietary rights may force us to defend ourselves, and potentially our customers,
against the alleged claim. These claims and any resulting lawsuit, if successful, could subject us to significant liability for
damages and/or invalidation of our proprietary rights or interruption or cessation of our operations. Any such claims or lawsuit
could:



| | ● | be
    time-consuming and expensive to defend, whether meritorious or not;                                                                                                                                                                                                  
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                             
| | ● | require
    us to stop providing products or services that use the technology that allegedly infringes the other party’s intellectual
    property;                                                                                                                         
| |   |                                                                                                                                                                                                                                                                             
| | ● | divert
    the attention of our technical and managerial resources;                                                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                             
| | ● | require
    us to enter into royalty or licensing agreements with third-parties, which may not be available on terms that we deem acceptable;                                                                                                                               
| |   |                                                                                                                                                                                                                                                                             
| | ● | prevent
    us from operating all or a portion of our business or force us to redesign our products, services or technology platforms,
    which could be difficult and expensive and may make the performance or value of our product or service offerings less attractive;
| |   |                                                                                                                                                                                                                                                                             
| | ● | subject
    us to significant liability for damages or result in significant settlement payments; or                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                                                             
| | ● | require
    us to indemnify our customers.                                                                                                                                                                                                                                  



Furthermore,
during the course of litigation, confidential information may be disclosed in the form of documents or testimony in connection
with discovery requests, depositions or trial testimony. Disclosure of our confidential information and our involvement in intellectual
property litigation could materially adversely affect our business. Some of our competitors may be able to sustain the costs of
intellectual property litigation more effectively than we can because they have substantially greater resources. In addition,
any litigation could significantly harm our relationships with current and prospective customers. Any of the foregoing could disrupt
our business and have a material adverse effect on our business, operating results and financial condition.



We
have identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting.



Maintaining
effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce
reliable financial statements. As discussed in Item 9A – “Controls and Procedures” of this Form 10-K, we have
evaluated our internal control over financial reporting and our disclosure controls and procedures and concluded that they
were not effective as of December 31, 2019.



A
material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be
prevented or detected on a timely basis. The material weaknesses we identified are(i) We do not have written documentation
of our internal control policies and procedures, including written policies and procedures to ensure the correct application of
accounting and financial reporting with respect to the current requirements of U.S. GAAP and SEC disclosure requirements; and
(ii) The Company did not maintain effective policies to ensure adequate segregation of duties within its accounting processes.
Specifically, due to the size of the Company and the smaller nature of department teams, opportunities are limited to segregate
duties, resulting in inabilities to soundly manage segregation of job responsibilities.



The
Company is committed to remediating its material weaknesses as promptly as possible. Implementation of the Company’s remediation
plans has commenced and is being overseen by the board. However, there can be no assurance as to when these material
weaknesses will be remediated or that additional material weaknesses will not arise in the future. Even effective internal control
can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements. Any failure
to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial reporting,
could result in material misstatements in our financial statements, which in turn could have a material adverse effect on our
financial condition and the trading price of our common stock and we could fail to meet our financial reporting obligations. We
have identified weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively
remediated or that additional material weaknesses will not occur in the future.



If
not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial
reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial
obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common
stock.



The
recent global coronavirus outbreak could harm our business and results of operations.



In March 2020, the World Health Organization
declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, and any related
adverse public health developments, have adversely affected workforces, customers, economies, and financial markets globally,
likely leading to an economic downturn. It has also disrupted the normal operations of many businesses. This outbreak could decrease
spending, adversely affect demand for our product and harm our business and results of operations. It is not possible for us to
predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or results of operations
at this time.



Risks
Related to Our Securities



Our
Chairman, Chief Executive Officer and Chief Financial Officer currently own a majority of our voting power, and through this ownership,
controls our Company and our corporate actions.



Eric
Rice, our current Chairman, Chief Executive Officer and Chief Financial Officer currently holds approximately 32.5% of
the voting power of the Company’s outstanding voting capital stock. He has a controlling influence in determining the outcome
of any corporate transaction or other matters submitted to our stockholders for approval, including mergers, consolidations and
the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. As such, this
shareholder has the power to prevent or cause a change in control; therefore, without the aforementioned consent we could be prevented
from entering into transactions that could be beneficial to us. The interests of our Chairman and Chief Executive Officer may
give rise to a conflict of interest between the Company and the Company’s shareholders.



11







There
is a substantial lack of liquidity of our common stock and volatility risks.



Our
common stock is quoted on the OTC Markets platform under the symbol “QNTA.” The liquidity of our common stock may
be very limited and affected by our limited trading market. The OTC Markets quotation platform is an inter-dealer market much
less regulated than the major exchanges, and is subject to abuses, volatilities and shorting. There is currently no broadly followed
and established trading market for our common stock. An established trading market may never develop or be maintained. Active
trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an
active trading market reduces the liquidity of the shares traded.



The
trading volume of our common stock may be limited and sporadic. This situation is attributable to a number of factors, including
the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and
others in the investment community that generate or influence sales volume, and that even if we came to the attention of such
persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend
the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several
days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We
cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained,
or that current trading levels will be sustained. As a result of such trading activity, the quoted price for our common stock
on the OTC Markets may not necessarily be a reliable indicator of our fair market value. In addition, if our shares of common
stock cease to be quoted, holders would find it more difficult to dispose of or to obtain accurate quotation as to the market
value of, our common stock and as a result, the market value of our common stock likely would decline.



Our
common stock may never be listed on a major stock exchange.



We
currently do not satisfy the initial listing standards and cannot ensure that we will be able to satisfy such listing standards
or that our common stock will be accepted for listing on any such exchange. Should we fail to satisfy the initial listing standards
of such exchanges, or our common stock is otherwise rejected for listing, the trading price of our common stock could suffer,
the trading market for our common stock may be less liquid, and our common stock price may be subject to increased volatility.



A
decline in the price of our common stock could affect our ability to raise working capital and adversely impact our ability to
continue operations.



A
prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction
in our ability to raise capital. A decline in the price of our common stock could be especially detrimental to our liquidity and
our operations. Such reductions may force us to reallocate funds from other planned uses and may have a significant negative effect
on our business plan and operations, including our ability to develop new services and continue our current operations. If our
common stock price declines, we can offer no assurance that we will be able to raise additional capital or generate funds from
operations sufficient to meet our obligations. If we are unable to raise sufficient capital in the future, we may not be able
to have the resources to continue our normal operations.



Future
sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans or
otherwise, could result in dilution of the percentage ownership of our stockholders and could cause our stock price to fall.



We
expect that significant additional capital will be needed in the future to continue our planned operations. To raise capital,
we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner
we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than one transaction,
investors in a prior transaction may be materially diluted by subsequent sales. Additionally, any such sales may result in material
dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to those of holders
of our common stock. Further, any future sales of our common stock by us or resales of our common stock by our existing stockholders
could cause the market price of our common stock to decline.

12







Sales
of a substantial number of shares of our common stock in the public market, or the perception that such sales could occur, could
cause our stock price to fall.



If
our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market
after the contractual restrictions on resale of such common stock discussed in this report lapse, or after those shares become
registered for resale pursuant to an effective registration statement, the trading price of our common stock could decline. As
of April 3, 2020, a total of 55,322,712 shares of our common stock were outstanding. Of those shares, only 42,080,494
are currently without restriction, in the public market. Upon the effectiveness of any registration statement we could elect to
file with respect to any outstanding shares of common stock, any sales of those shares or any perception in the market that such
sales may occur could cause the trading price of our common stock to decline. As of the date of effectiveness of such registration
statement, such shares registered for resale will be freely tradable without restriction.



We
do not plan to declare or pay any dividends to our stockholders in the near future.



We
have not declared any dividends in the past, and we do not intend to distribute dividends in the near future. The declaration,
payment and amount of any future dividends will be made at the discretion of the board of directors and will depend upon, among
other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors
as the board of directors considers relevant. There is no assurance that future dividends will be paid, and if dividends are paid,
there is no assurance with respect to the amount of any such dividend.



The
requirements of being a public company may strain our resources and distract management.



We are
subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). These requirements are extensive. The Exchange Act requires
that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act
requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting.



We
may incur significant costs associated with our public company reporting requirements and costs associated with applicable corporate
governance requirements. This may divert management’s attention from other business concerns, which could have a material
adverse effect on our business, financial condition and results of operations. We also expect that these applicable rules and
regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may
be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage.
As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or
as executive officers.



Persons
associated with securities offerings, including consultants, may be deemed to be broker dealers.



In
the event that any of our securities are offered without engaging a registered broker-dealer, we may face claims for rescission
and other remedies. If any claims or actions were to be brought against us relating to our lack of compliance with the broker-dealer
requirements, we could be subject to penalties, required to pay fines, make damages payments or settlement payments, or repurchase
such securities. In addition, any claims or actions could force us to expend significant financial resources to defend our company,
could divert the attention of our management from our core business and could harm our reputation.



13







Future
changes in financial accounting standards or practices may cause adverse unexpected financial reporting fluctuations and affect
reported results of operations.



A
change in accounting standards or practices can have a significant effect on our reported results and may even affect our reporting
of transactions completed before the change is effective. New accounting pronouncements and varying interpretations of accounting
pronouncements have occurred and may occur in the future. Changes to existing rules or the questioning of current practices may
adversely affect our reported financial results or the way we conduct business.



“Penny
Stock” rules may make buying or selling our common stock difficult.



Trading
in our common stock is subject to the “penny stock” rules. The SEC has adopted regulations that generally define a
penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These
rules require that any broker-dealer that recommends our common stock to persons other than prior customers and accredited investors,
must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s
written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to
any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with
trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and
the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers
by such requirements may discourage broker-dealers from effecting transactions in our common stock, which could severely limit
the market price and liquidity of our common stock.



FINRA
sales practice requirements may limit a stockholder’s ability to buy and sell our stock.



The
Financial Industry Regulatory Authority, or FINRA, has adopted rules requiring that, in recommending an investment to a customer,
a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending
speculative or low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain
information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations
of these rules, FINRA has indicated its belief that there is a high probability that speculative or low-priced securities will
not be suitable for at least some customers. These FINRA requirements may make it more difficult for broker-dealers to recommend
that at least some of their customers buy our common stock, which may limit the ability of our stockholders to buy and sell our
common stock and could have an adverse effect on the market for and price of our common stock.



If
securities or industry analysts do not publish, or cease publishing, research or publish inaccurate or unfavorable research about
our business or our market, or if they change their recommendations regarding our stock adversely, our stock price and any trading
volume could decline.



Any
trading market for our common stock that may develop will depend in part on the research and reports that securities or industry
analysts publish about us or our business, markets or competitors. Securities and industry analysts do not currently, and may
never, publish research on us or our business. If no securities or industry analysts commence coverage of our company, the trading
price for our stock would be negatively affected. If securities or industry analysts initiate coverage, and one or more of those
analysts downgrade our stock or publish inaccurate or unfavorable research about our business or our market, our stock price would
likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand
for our stock could decrease, which might cause our stock price and any trading volume to decline.



We
may have material liabilities that were not discovered before, and have not been discovered since, the closing of the Merger.



As
a result of the Merger, the former business plan and management of the Company have been abandoned and replaced with the business
and management team of Bioanomaly Inc. Prior to the Merger, there were no relationships or other connections among the businesses
or individuals associated with those two entities. As a result, we may have material liabilities based on activities before the
Merger that have not been discovered or asserted. We could experience losses as a result of any such undisclosed liabilities that
are discovered in the future, which could materially harm our business and financial condition. Although the Merger Agreement
contains customary representations and warranties from the Company concerning its assets, liabilities, financial condition and
affairs, there may be limited or no recourse against our pre-Merger stockholders or principals in the event those representations
prove to be untrue. As a result, our current and future stockholders will bear some, or all, of the risks relating to any such
unknown or undisclosed liabilities.



14







We
may be exposed to additional risks as a result of “going public” by means of a reverse acquisition transaction.



We
may be exposed to additional risks because the business of Quanta has become a public company through a “reverse acquisition”
transaction. There has been increased focus by government agencies on transactions such as the Merger in recent years, and we
may be subject to increased scrutiny by the SEC and other government agencies and holders of our securities as a result of the
completion of that transaction. Further, as a result of our existence as a “shell company” under applicable rules
of the SEC prior to the closing of the Merger and the filing of appropriate disclosures with the SEC on December 21, 2018, we
are subject to certain restrictions and limitations for certain specified periods of time relating to potential future issuances
of our securities and compliance with applicable SEC rules and regulations. Additionally, our “going public” by means
of a reverse acquisition transaction may make it more difficult for us to obtain coverage from securities analysts of major brokerage
firms following the Merger because there may be little incentive to those brokerage firms to recommend the purchase of our common
stock. Further, investment banks may be less likely to agree to underwrite secondary offerings on our behalf than they might if
we became a public reporting company by means of an initial public offering, or IPO, because they may be less familiar with our
company as a result of more limited coverage by analysts and the media, and because we became public at an early stage in our
development. The failure to receive research coverage or support in the market for our shares will have an adverse effect on our
ability to develop a liquid market for our common stock. The occurrence of any such event could cause our business or stock price
to suffer.



We
are not subject to compliance with rules requiring the adoption of certain corporate governance measures and as a result our stockholders
have limited protections against interested director transactions, conflicts of interest and similar matters.



The
Sarbanes-Oxley Act, as well as rule changes enacted by the SEC, the New York Stock Exchange and the NASDAQ Stock Market as a result
of the Sarbanes-Oxley Act, require the implementation of various measures relating to corporate governance. These measures are
designed to enhance the integrity of corporate management and the securities markets and apply to securities which are listed
on those exchanges. Because we are not presently required to comply with many of the corporate governance provisions we have not
yet adopted certain of these measures. Until we comply with such corporate governance measures, regardless of whether such compliance
is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested
director transactions, conflicts of interest and similar matters.



We
are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies
will make our common stock less attractive to investors.



We
are an emerging growth company under the JOBS Act. For as long as we continue to be an emerging growth company, we intend to take
advantage of certain exemptions from various reporting requirements that are applicable to other public companies including, but
not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements,
exemptions from the requirements of holding a nonbinding advisory stockholder vote on executive compensation and any golden parachute
payments not previously approved, exemption from the requirement of auditor attestation in the assessment of our internal control
over financial reporting and exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board.
If we do, the information that we provide stockholders may be different than what is available with respect to other public companies.
We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors
find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock
price may be more volatile.



Under
the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards
apply to private companies. We have irrevocably elected to take advantage of this extended transition period. Since we will not
be required to comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required
for other public companies, our financial statements may not be comparable to the financial statements of companies that comply
with the effective dates of those accounting standards.



We
will remain an emerging growth company until the earliest of (1) the end of the fiscal year in which the market value of our common
stock that is held by non-affiliates exceeds $700 million as of the end of the second fiscal quarter, (2) the end of the fiscal
year in which we have total annual gross revenues of $1.07 billion or more during such fiscal year, (3) the date on which we issue
more than $1 billion in non-convertible debt in a three-year period, (4) December 31, 2022, the end of the fiscal year following
the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement filed
under the Securities Act or (v) the date on which we qualify as a large accelerated filer. Decreased disclosures in our SEC filings
due to our status as an “emerging growth company” may make it harder for investors to analyze our results of operations
and financial prospects.



Item
1B. Unresolved Staff Comments



None.



Item
2. Properties



The
Company does not own any physical location. Quanta currently leases its corporate headquarters and other offices in Burbank, California
which lease expires in August, 2023. Because our current offices are insufficient in size for current and future operations, the
Company plans to seek replacement office space around the Los Angeles area at the time of the expiration of the current lease.



Item
3. Legal Proceedings



From
time to time, we are a party to, or otherwise involved in, legal proceedings arising in the normal and ordinary course of business.
As of the date of this report, we are not aware of any other proceeding, threatened or pending, against us which, if determined
adversely, would have a material effect on our business, results of operations, cash flows or financial position.



15







PART
II



Item
5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



(a)
Market Information



Our
common stock first became quoted on the OTC Markets under the trading symbol “FSIZ” on January 17, 2018. On August
16,,2018 the Company changed its stock symbol to “QNTA.” The following table lists the high and low bid
information for our common stock as quoted on the OTC Markets for the fiscal year ended April 30, 2018 and transition period ended
December 31, 2018. Quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.





|Fiscal
    Year Ended December 31, 2017 |  |   | High |  |  |   | Low  | 
|--------------------------------------- |  | - | ---- |  |  | - | ---- | 
|Second Quarter                          |  | $ | N/A* |  |  | $ | N/A* | 
|Third Quarter                           |  | $ | N/A* |  |  | $ | N/A* | 
|Fourth Quarter                          |  | $ | N/A* |  |  | $ | N/A* | 



|Fiscal
    Year Ended December 31, 2018 |  | High |      |  | Low |  
|--------------------------------------- |  | ---- | ---- |  | --- | -
|First Quarter                           |  | $    | N/A* |  |     | $
|Second Quarter                          |  | $    | 3.00 |  |     | $
|Third Quarter                           |  | $    | 3.00 |  |     | $
|Fourth Quarter                          |  | $    | 2.00 |  |     | $



|Fiscal
    Year Ended December 31, 2019 |  | High |       |  | Low |  
|--------------------------------------- |  | ---- | ----- |  | --- | -
|First Quarter                           |  | $    | 5.00  |  |     | $
|Second Quarter                          |  | $    | 2.35  |  |     | $
|Third Quarter                           |  | $    | 19.00 |  |     | $
|Fourth Quarter                          |  | $    | 0.58  |  |     | $



*
The first trade of common stock occurred in April 2018.



(b)
Holders of Our Common Stock



As
of the date of filing approximately we had 120 shareholders of record.



(c)
Dividends



Since
inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the
foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growth
of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends
in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.



(d)
Securities authorized for issuance under equity compensation plans



To
date we have not authorized the issuance of any shares of common stock under equity compensation plans.



Transfer
Agent and Registrar



The
Company’s transfer agency is Action Stock Transfer located at 2469 E. Fort Union Blvd., Suite 214, Salt Lake City, UT 84121.
Telephone (801) 274-1088.



16







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



FORWARD-LOOKING
STATEMENTS



This
form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
For this purpose any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, words such as “may”, “will”, “expect”, “believe”,
“anticipate”, “estimate” or “continue” or comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may
differ materially depending on a variety of factors, many of which are not within our control. These factors include by are not
limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry,
including competition from much larger competitors; technological advances and failure to successfully develop business relationships.



This
discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially
from those anticipated in these forward-looking statements.



SUMMARY
OF BUSINESS



Quanta
Basics



Quanta,
Inc. (“Quanta”) is a cutting-edge technology platform whose patented, proprietary technology harnesses advances in
quantum biology to increase the potency of active ingredients. Currently, Quanta supports product formulations in pain management,
anti-inflammation, skincare, agriculture, nutritional supplements, and plant-based consumables. Ultimately, Quanta’s mission
is to deliver better, more effective ingredients to elevate product efficacy, reduce waste and facilitate healthier, more sustainable
consumption.



The
established resonance theory behind Quanta’s polarization process has many potential applications. From potentiating bio-ingredients
to produce more-effective carbon-trapping plants to transformative anti-aging solutions Quanta’s technology has the opportunity
to upend how commercial products are made and the benefits from them. Already we see multi-trillion-dollar global industries benefiting
from Quanta’s technology.



Our
proof of concept, Quanta’s market-leading CBD pain-relief rub (“Muscle Rub”), is only the first in a series
of paradigm shift products to emerge from our labs. At the heart of its well-documented effectiveness is our proprietary “polarization”
process, which uses electromagnetic force to markedly enhance bioactivity at the molecular level—a polarized active ingredient
is more soluble and creates stronger bonds with the body’s receptors. This allows us to enhance ingredients so they work
faster and more powerfully without the use of chemical by-products or cellular penetration. Quanta believes this natural solution
has nearly limitless applications in the world of plant-based consumer products.



Quanta
is involved in ambitious projects that we believe will reshape the next wave of climate science, sustainability, nutrition,
and more. Having harnessed the technology of the future, Quanta is dedicated to bringing tomorrow’s health and wellness
solutions to the billions in need today.



17







Proof
of Concept



Creating,
producing and selling consumer products was never our primary focus; Quanta’s Muscle Rub was simply a means to an end -
proof of concept and a revenue driver in a small emerging market as our business model took shape. Fundamentally, Quanta can
be a licensing concern designed to collaborate with large brands to improve product quality and the profit margins of existing
and new products. But the market needed proof and we chose to start in the under-developed category of CBD because of its speed
to market.



Understandably,
we met the same initial hurdles every start-up encounters. In addition to simply explaining quantum mechanics, we had no track
record of success from a business standpoint. The immediate goal was to prove our model was defensible. Hence, we chose CBD as
a launch category. This market provided protection from industry titans that may have felt threatened by such a powerful technology
while allowing us to drive profits during R&D.



Over
the last two years, we have developed and sold products largely to the medical industry, along with some consumer retail. This
effort was designed to drive revenue and to prove the concept of our model: that polarizing a single ingredient can produce a
demonstrably superior product that consumers find safe and effective (establish consumer appetite).



Discovery
Synopsys



Using
our product development process and business-to-business and direct-to-consumer sales approaches as a benchmark for future
business, we developed the Quanta business model. Our technology’s unique ability to strengthen ingredients renders them
more potent without added chemicals or penetrating cells means Quanta is in a first-of-its-kind position in the market. As the
world’s first company focused on Quantum Biology we sit in a strong, but unique position in the market.



Our
ability to increase ingredient efficacy by up to 500% means we are in a rare position to truly disrupt many areas of material
science.



Quanta’s
technology renders products superior to any on the market today. A 30% re-purchase rate (on one SKU alone) illustrates consumer
appetite for the product.



Upcoming
products and ventures will be designed to achieve or surpass this level of consumer benefit and uptake.



18







Quanta
Business Model in 3 P’s: Potentiation, Partners, and Profits



After
two years we believe the best possible model for the long-term success of the company is collaborating with best-in-class partners
through joint ventures for new verticals, products, and research. These joint ventures may involve a jointly owned special purpose
entity or they may be entirely based on contractual obligations.



Our
mission has never been to create the best novel products on the planet. Our mission has always been to revolutionize the way formulations
are developed and how products perform. We seek to work with the best product makers in the world to positively impact as many
industries as possible.



The
unique ability to increase the ingredient and product performance opens the doors for major opportunities. Higher performing ingredients
mean less is needed to make a strong impact (increased margins, increase overall efficacy). We proved this with our Muscle Rub,
which uses approximately 1/3 the CBD of competing products with demonstrably improved results.



The
level of potentiation delivered by Quanta allows our partners the unique ability to provide higher-performing products, lower
material costs, more competitive pricing and increased profit margins. In short, our partners will be able to make better performing,
more affordable products with a higher repeat purchase. This is true disruption and consumer utopia.



We
aim to work with groups that specialize in manufacturing, marketing, selling and distributing existing product lines that utilize
ingredients we can potentiate. Partners like this facilitate efficient market delivery of joint innovations.



We
believe this strategy provides greater shareholder value, enhances revenue potential, defrays upfront expenses and affords us
the ability to raise capital for new projects without massive dilution.



Ultimately,
these ventures would result in licensing out our technology to other reputable brands and companies to create co-branded products
whereas the term “Powered by Quanta” becomes as recognized as “Intel Inside.”



We
believe this type of partnership will afford a company Quanta partners with:



| | ● | Development
    of emerging products with cutting edge ingredients.
| | - | -------------------------------------------------------------------
| |   |                                                                    
| | ● | A
    product line with a true point of differentiation.           
| |   |                                                                    
| | ● | New
    SKUs with an increased margin.                             
| |   |                                                                    
| | ● | Decreased
    cost of goods sold.                                  



Simultaneously
these partnerships will allow Quanta:



| | ● | Greater
    brand recognition.                                                               
| | - | ---------------------------------------------------------------------------------------------
| |   |                                                                                              
| | ● | Increased
    revenue and in turn profitability.                                             
| |   |                                                                                              
| | ● | Quicker
    timeline to more licensing opportunities because of a track record of success.   
| |   |                                                                                              
| | ● | Brand
    to become synonymous with improving the performance of ingredients within products.



Manufacturing
Partnerships -



Quanta
is currently focused on partnering with large-scale manufacturers and distributors able to produce products that meet the requirements
of applicable regulations IE: Good Manufacturing Practices to fulfill orders of our own product line. This type of partnership
is crucial because it will afford:



| | ● | New
    product development that meets certification requirements
| | - | -----------------------------------------------------------------
| |   |                                                                  
| | ● | Much
    larger production scale                                 
| |   |                                                                  
| | ● | Speed
    to market                                              
| |   |                                                                  
| | ● | Increased
    distribution and profitability                     



19







With
our licensing capabilities, Quanta technology can render better, more efficacious products that cost less to create but command
a higher purchase value because of polarized ingredients. This, in turn, allows companies to diversify their catalog of products
while simultaneously providing them with a distinguished advantage. More efficacious ingredients.



Employees



As
of the date of this report, Quanta has 21 full time and 2 part time employees. We believe we enjoy good employee relations. None
of our employees are members of any labor union, and we are not a party to any collective bargaining agreement.



RESULTS
OF OPERATIONS



Summary
of Key Results



Results
of Operations for year ended December 31, 2019 compared to the nine months ended December 31, 2018



Revenue



Net
sales are comprised of wholesale sales to our retail partners and sales through our direct to consumer channel. Net sales in both
channels reflect the impact of product returns as well as discounts for certain sales programs or promotions.



For
the year ended December 31, 2019, the Company recognized $1,268,988 in net sales. For the nine-month transition period ended
December 31, 2018, the Company recognized $225,254 in net sales. The increase in sales is due to an increase in our customers
for a full year of operations in 2019 compared to four months of full operations in the transition period.



|By Geographic Territory: |  | Year ended December 31, 2019 |           |  | Transition period ended 
    December 31, 2018 |  
|------------------------ |  | ---------------------------- | --------- |  | ---------------------------------------------- | -
|California               |  | $                            | 766,469   |  |                                                | $
|Other states             |  |                              | 477,139   |  |                                                |  
|International            |  |                              | 25,380    |  |                                                |  
|                         |  | $                            | 1,268,988 |  |                                                | $
|                         |  |                              |           |  |                                                |  
|By Sales Channel:        |  |                              |           |  |                                                |  
|Direct to consumer       |  | $                            | 443,916   |  |                                                | $
|Wholesale                |  |                              | 793,284   |  |                                                |  
|License Revenue          |  |                              | 31,788    |  |                                                |  
|                         |  | $                            | 1,268,988 |  |                                                | $



Expenses



Operating
expenses for the year ended December 31, 2019 were $6,453,091. The Company incurred $351,670 in research and development
costs, and $4,799,030 in administrative and other costs associated with operations, including legal and professional fees of $651,764,
and $1,302,391 of labor and related costs. These costs were not associated with our direct public offering efforts and therefor
expensed as incurred.



Operating
expenses for the nine-month transition period ended December 31, 2018 were $1,717,584. The Company incurred $207,600 in research
and development costs, and $1,055,805 in administrative and other costs associated with operations, including legal and professional
fees of $128,289, and $454,179 of labor and related costs. These costs were not associated with our direct public offering
efforts and therefor expensed as incurred.



Other
Income (Expense)



For
the year ended December 31, 2019, the Company recognized $299,541 of net other expenses, including interest expense of $226,239,
private placement costs of $238,395 and $145,565 of extinguishment of derivative liabilities.



For
the nine-month transition period ended December 31, 2018, the Company recognized $41,000 as gain on extinguishment of debt and
$21,000 as gain on forgiveness of accrued interest.



Net
Loss



Net
loss for the year ended December 31, 2019 was $5,787,364. Net loss for the nine-months transition period ended December
31, 2018 was $1,613,972. We recorded no provision for federal income taxes for either period. We recorded $800 in minimum franchise
tax for the state of California for the year ended December 31, 2019 and nine-month transition period ended December 31, 2018,
respectively, which are included in administrative expenses.



Basic
and diluted loss per share -Basic and diluted loss per share for the year ended December 31, 2019 was $.14 per share.
Basic and diluted number of shares outstanding was 40,528,456 for 2019. Basic and diluted loss per share for the transition
period ended December 31, 2018 was $.05 per share. Basic and diluted number of shares outstanding was 35,100,108 for 2018.



20







Liquidity



We have yet to establish any history of
profitable operations. For the year ended December 31, 2019, the Company incurred a net loss of $5,787,364 and used cash
in operating activities of $2,221,320, and at December 31, 2019, the Company had a had a working capital deficiency of
$113,909. These factors raise substantial doubt about our ability to continue as a going concern within one year after
the date the financial statements are issued. As a result, our independent registered public accounting firm included an explanatory
paragraph in its report on our financial statements as of and for the year ended December 31, 2019 with respect to this uncertainty.
This going concern opinion could materially limit our ability to raise additional funds through the issuance of new debt or equity
securities and future reports on our financial statements may also include an explanatory paragraph with respect to our ability
to continue as a going concern.



At
December 31, 2019, the Company had cash on hand in the amount of $433,143. Subsequent to December 31, 2019 the Company
received $153,000 from the issuance of a convertible note payable and $30,000 for subscriptions to purchase shares of common
stock. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months.
The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial
support from its shareholders. Management believes the existing shareholders or external financing will provide the additional
cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed,
will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able
to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing,
or cause substantial dilution for its stockholders, in the case of equity financing



21







Critical
Accounting Policies and Estimates



Our
financial statements are prepared in accordance with accounting principles generally accepted in the United States of America,
or GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our financial statements including
various allowances and reserves for accounts receivable and inventories, the estimated lives of long-lived assets and trademarks
and trademark licenses, as well as claims and contingencies arising out of litigation or other transactions that occur in the
normal course of business. The following summarizes our most significant accounting and reporting policies and practices:



Use
of estimates



The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant
accounting estimates include certain assumptions related to, among others, impairment analysis of long-term assets, valuation
allowance on deferred income taxes, assumptions used in valuing stock instruments issued for services, assumptions made in valuing
derivative liabilities, and the accrual of potential liabilities. Actual results may differ from these estimates.



Revenue
Recognition



The
Company recognizes revenue when risk of loss transfers to our customers and collection of the receivable is reasonably assured,
typically upon delivery of products. The Company historically has offered no discounts, rebates, rights of return, or other allowances
to clients which would result in the establishment of reserves against revenue.



Effective
April 1, 2018, the Company adopted the guidance of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts
with Customers. The implementation of ASC 606 did not have a material impact on the Company’s consolidated financial statements.
ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes
(1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement,
(3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing
revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable
that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.



Stock
Compensation



The
Company issues stock options, warrants, and shares of common stock as share-based compensation to employees and non-employees.
The Company accounts for its share-based compensation to employees in accordance with FASB ASC 718, Compensation – Stock
Compensation(Topic 718). Stock-based compensation cost is measured at the grant date, based on the estimated fair value of
the award, and is recognized as expense over the requisite service period.



In
periods through December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants
in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based
payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or
services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined
at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied
to that estimate to determine the cumulative expense recorded.



On
January 1, 2019, the Company adopted ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting. ASU 2018-07 simplifies the accounting for share-based transactions by expanding the scope
of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions
for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions are measured by estimating
the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance
conditions. The adoption of ASU 2018-07 did not have a material impact on the Company’s financial statements.



Derivative
Financial Instruments



The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported
in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average
Black-Scholes-Merton model to value the derivative instruments at inception and on subsequent valuation dates through the December
31, 2019, reporting date. The classification of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is evaluated at the end of each reporting period.



Recently
Issued Accounting Pronouncements



See
Note 1 to the Consolidated Financial Statements



22







Item
7A. Quantitative and Qualitative Disclosures About Market Risk.



We
are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required
under this item



Item
8. Financial Statements and Supplementary Data.



The financial statements together with
the report of our independent registered public accounting firm, required to be filed pursuant to this Item 8 are appended to
this Annual Report on Form 10-K. An index of those consolidated financial statements is found in Item 15 of this Annual
Report on Form 10-K.



Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.



On
July 26, 2018, the Company’s Board of Directors dismissed PLS CPA as the Company’s independent registered public accounting
firm. PLS CPA’s reports on the Company’s financial statements for the years ended April 30, 2017 and April 28, 2016
(date of inception) through April 30, 2016 contained no adverse opinion or disclaimer of opinion and was not qualified or modified
as to the audit scope or accounting principles, except that reports for the fiscal year ended April 30, 2017 and for the period
from April 28, 2016 (date of inception) through April 30, 2016 contained an explanatory paragraph stating that there was substantial
doubt about the Company’s ability to continue as a going concern. During the years ended April 30, 2018 and 2017, and through
July 26, 2018, there were no disagreements with PLS CPA on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PLS CPA, would have caused
it to make reference thereto in connection with its reports on the financial statements for such years



On
July 27, 2018, the Board engaged B F Borgers CPA PC (“B F Borgers”) as the Company’s new independent registered
public accounting firm. During the period ended April 30, 2018 and 2017, and through July 27, 2018, we did not consult with B
F Borgers regarding the application of accounting principles to a specific transaction or the type of audit opinion that might
be rendered on the Company’s financial statements, and no written report or oral advice was provided that B F Borgers concluded
was an important factor considered by the Company in reaching a decision as to any such accounting, auditing or financial reporting
issue.During the years ended April 30, 2018 and 2017, and through July 26, 2018, there were no matters that were either
the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(1)(v)
of Regulation S-K.



On
February 11, 2019, the Company’s Board of Directors approved the dismissal of B F Borgers as the Company’s independent
registered public accounting firm. The audit report of B F Borgers on the consolidated financial statements of the Company for
the most recent fiscal year ended April 30, 2018 did not contain an adverse opinion or a disclaimer of opinion and was not qualified
or modified as to uncertainty, audit scope or accounting principles, except that the report contained an explanatory paragraph
stating that there was substantial doubt about the Company’s ability to continue as a going concern. During the Company’s
most recent fiscal year ended April 30, 2018 and the subsequent interim periods through February 11, 2019, (i) there were no disagreements
with B F Borgers on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures
that, if not resolved to B F Borgers’ satisfaction, would have caused B F Borgers to make reference to the subject matter
of the disagreement in connection with its reports and (ii) there were no “reportable events” as defined in Item 304(a)(1)(v)
of Regulation S-K.



On
February 11, 2019, the Board engaged Weinberg & Company (“Weinberg”) as the Company’s independent registered
public accounting firm. During the two most recent fiscal years ended April 30, 2018 and April 30, 2017, and the subsequent interim
periods through February 11, 2019, neither the Company nor anyone on its behalf consulted Weinberg regarding either (i) the application
of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be
rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company
that Weinberg concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing
or financial reporting issue, or (ii) (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv)
of Regulation S-K and the related instructions) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).



23







Item
9A. Controls and Procedures.



Disclosure
Controls and Procedures



We
have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in our
reports filed or submitted 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 information relating to the Company is accumulated and communicated to management,
including our principal officers, as appropriate to allow timely decisions regarding required disclosure. Our Chief Executive
Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of December
31, 2019, and have concluded that our disclosure controls and procedures were not effective as of December 31, 2019 due to material
weaknesses in our internal control over financial reporting as described below.



Management’s
Annual Report on Internal Control over Financial Reporting



Management
is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act
Rule 13a-15. Internal control over financial reporting is defined in Rule 13a-15(f) and 15(d)-15(f) under the Exchange Act as
a process designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation
and fair presentation of published financial statements. Management conducted an assessment of the Company’s internal control
over financial reporting as of December 31, 2019 based on the framework and criteria established by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013) (COSO). Based on the assessment, management
concluded that, as of December 31, 2019, the Company’s internal controls over financial reporting were not effective.



We
identified material weaknesses in our internal controls over financial reporting. A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement
of our financial statements will not be prevented or detected on a timely basis. The material weaknesses identified include (i)
We do not have written documentation of our internal control policies and procedures, including written policies and procedures
to ensure the correct application of accounting and financial reporting with respect to the current requirements of U.S. GAAP
and SEC disclosure requirements; and (ii) The Company did not maintain effective policies to ensure adequate segregation of duties
within its accounting processes. Specifically, due to the size of the Company and the smaller nature of department teams, opportunities
are limited to segregate duties, resulting in inabilities to soundly manage segregation of job responsibilities.



Notwithstanding
the identified material weaknesses, management has concluded that the Financial Statements included in this Annual Report on Form
10-K present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for
the periods disclosed in conformity with U.S. GAAP.



Planned
Remediation of Material Weaknesses



Our
management has been actively engaged in developing and implementing remediation plans to address material weaknesses described
above. These remediation efforts are ongoing and include or are expected to include preparation of written documentation of our
internal control policies and procedures, increasing personnel resources and technical accounting expertise within the accounting
function, and to hire one or more additional personnel.



Changes
in Internal Control over Financial Reporting



There
were no changes in internal control over financial reporting (as defined by Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
during the quarter ended December 31, 2019, that have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.



Inherent
Limitations on Effectiveness of Controls



Our
management, including our Chief Executive Officer and Chief Financial Officer, intends that our disclosure controls and procedures
and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives. However,
our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will
prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further, 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 a simple error or mistake. Additionally, controls can be circumvented
by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design
of any system of controls also 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; over time, controls
may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate.
Because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not
be detected.



Item
9B. Other Information.



None.



24







PART
III



Item
10. Directors, Executive Officers and Corporate Governance.



The
following table sets forth the name and age of officers and director as of the date hereof. Our executive officers are elected
annually by our board of directors. Our executive officers hold their offices until they resign, are removed by the Board, or
his successor is elected and qualified.



Our
management consists of:



|Name               |  | Age |  | Title                                                                     
|------------------ |  | --- |  | --------------------------------------------------------------------------
|                   |  |     |  |                                                                           
|Eric
    Rice      |  | 43  |  | Founder,
    Chairman, Chief Executive Officer and Chief Financial Officer
|                   |  |     |  |                                                                           
|Jeffrey
    Doiron |  | 47  |  | President
    and Chief Operations Officer                                



Eric
Rice, Founder, Chairman, Chief Executive Officer and Chief Financial Officer.Eric Rice, Quanta CEO and Chairman, is a leading
American entrepreneur. He started his business career in Chicago in wealth management and high-net-worth financial advising before
spending more than a decade building businesses at the nexus of multiple industries including artificial intelligence, machine
learning, technology. Along the way, he worked with founders across multiple sectors to create profitable, enduring enterprises,
demonstrating a keen eye for the nuances of markets and corresponding growth opportunities. In 2013, he cofounded 25 Ventures,
a venture studio that developed multiple companies in various areas including wellness, ad tech, and cannabis. He is a sought-after
partner for start-ups and established businesses around the globe. With its world-changing ambitions, Quanta represents the culmination
of Eric’s years of insight and experience, merging his market acumen with his longstanding interest in the applied sciences.
He lives in Burbank with his wife and two children, and still finds time to make it to the batting cages.



Jeffrey
Doiron, President and Chief Operations Officer.Before taking over operations for Quanta, Mr. Doiron founded and grew one
of the continent’s most innovative advanced digital agencies. He was the Managing Director and Cofounder of Fuel Industries
Inc from 1999 through 2017. He uses his vast experience to connect new and exciting ideas with the right partners and brands.
He guides the team to unlock their most creative selves and drive forward the momentum of the company. The Company concluded that
Mr. Doiron’s past experiences and training render him qualified to serve in these capacities.



Board
of Directors



Each
director is elected by the Board and serves until his or her successor is elected and qualified, unless he or she resigns or is
removed earlier. Each of our officers is elected by the Board to a term of one (1) year and serves until his or her successor
is duly elected and qualified, or until he or she is earlier removed from office or resigns.



At
the very least all directors will be reimbursed by the Company for expenses incurred in attending directors’ meetings provided
that the Company has sufficient resources to pay these expenses. The Company will consider in applying for officers and directors
liability insurance at such time that it has the financial resources to do so.



Committees
of the Board of Directors



Concurrent
with having sufficient members and resources, our Board of Directors intends to establish an audit committee and a compensation
committee. The audit committee will review the results and scope of the audit and other services provided by the independent auditors
and review and evaluate the system of internal controls. The compensation committee will review and recommend compensation arrangements
for the officers and employees. No final determination has yet been made as to the memberships of these committees or when we
will have sufficient members to establish committees. We believe that we will need a minimum of three independent directors to
have effective committee systems.



As
of the date hereof, we have not established any Board committees.



Family
Relationships



No
family relationship exists between any director, executive officer, or any person contemplated to become such.



Director
Independence



We
currently do not have any independent directors serving on our board of directors.



25







Possible
Potential Conflicts



The
OTC Markets, on which we have our shares of common stock quoted, does not currently have any director independence
requirements.



Certain conflicts of interest may
arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they
devote their attention, and they may be expected to continue to do so although management time must also be devoted to our business.
As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent
with each officer’s understanding of his/her fiduciary duties to us.



Currently
we have three officers and one director and will seek to add additional officer(s)
and/or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and
we have sufficient capital resources and cash flow to make such offers.



We
cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.



Involvement
in Certain Legal Proceedings



None
of our directors or executive officers has, during the past ten years:



| | ● | has
    had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either
    at the time of the bankruptcy or within two years prior to that time;                                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                      
| | ● | been
    convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other
    minor offences);                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                      
| | ● | been
    subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
    permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities,
    futures, commodities or banking activities;
| |   |                                                                                                                                                                                                                                                                                                                                      
| | ● | been
    found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures
    Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed,
    suspended, or vacated; or                             
| |   |                                                                                                                                                                                                                                                                                                                                      
| | ● | been
    subject or a party to or any other disclosable event required by Item 401(f) of Regulation S-K.                                                                                                                                                                                                                             



Code
of Business Conduct and Ethics



Upon
incorporation we adopted a written code of ethics applicable to our board of directors, officers and employees in accordance with
applicable Federal and states securities laws. Our board of directors shall oversee compliance with the code of ethics as it relates
to the Company through an officer designated by the board. Employees are required to report known and suspected breaches of our
code of ethics to an appropriate supervisor, or in the case of officers and directors, to a senior officer designated by our board
of directors. Our code of ethics is designed to deter wrongdoing and to promote:



| | ● | honest
    and ethical conduct;                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                              
| | ● | full,
    fair, accurate, timely and understandable disclosure in reports and documents that we will file with securities regulators
    and in our other public communications;             
| |   |                                                                                                                                                                                              
| | ● | compliance
    with applicable laws, rules and regulations, including insider trading compliance; and                                                                                        
| |   |                                                                                                                                                                                              
| | ● | accountability
    for adherence to the code and prompt internal reporting of violations of the code, including illegal or unethical behavior
    regarding accounting or auditing practices.



A
copy of our Code of Business Conduct and Ethics has been filed with the Securities and Exchange Commission as Exhibit 14.1 to
our Registration Statement filed on Form S-1 on June 1, 2017





Delinquent Section 16(a) Reports



Section 16(a) of the Exchange Act requires
our directors, executive officers and holders of more than 10% of our common stock to file with the SEC initial statements of
beneficial ownership of our securities (Form 3) and statements of changes in beneficial ownership of our securities (Forms 4 and
5). As of December 31, 2019, none of our directors, executive officers and holders of more than 10% of our common stock had filed
such reports with the SEC.



Based on a review of Forms 3 filed in January
2020, the Company believes that each of Eric Rice, Jeffrey Doiron, Blake Gillette and Kirk Westwood filed such forms late. Messrs.
Doiron, Gillette and Westwood also each filed a Form 4 in January 2020 each untimely reporting one transaction that occurred in
December 2019. Mr. Rice also filed a Form 4 in January 2020 untimely reporting 29 transactions that had occurred between November
and December 2019.



26







Item
11. Executive Compensation.



The
following table sets forth all of the compensation awarded to, earned by or paid to our named executive officers for the fiscal
year ended December 31, 2019, the transition period ended December 31, 2018 and the fiscal year ended April 30, 2018:



|Name
    and Principal Position                                                                                                   |  | Period |                                                                                     |  | Base
     Salary  ($) |  |         | Option
    Awards  ($)(2) |  |  | All
     Other  Compensation  ($) |  |  | Total
     ($) |       
|--------------------------------------------------------------------------------------------------------------------------------- |  | ------ | ----------------------------------------------------------------------------------- |  | --------------------- |  | ------- | ------------------------- |  |  | --------------------------------- |  |  | -------------- | ------
|Eric Rice                                                                                                                         |  |        | Fiscal
                                         Year ended December 31, 2019        |  |                       |  | 103,044 |                           |  |  | —                                 |  |  |                | —     
|Founder, Chairman and Chief                                                                                                       |  |        | Transition
                                         Period ended December 31, 2018  |  |                       |  | 14,500  |                           |  |  | —                                 |  |  |                | —     
|Executive
                                    Officer  (Principal
                                         Executive Officer) (1) |  |        | Fiscal
                                         Year ended April 30, 2018           |  |                       |  | —       |                           |  |  | —                                 |  |  |                | —     
|                                                                                                                                  |  |        |                                                                                     |  |                       |  |         |                           |  |  |                                   |  |  |                |       
|Jeffrey Doiron                                                                                                                    |  |        | Fiscal
                                         Year ended  December 31, 2019       |  |                       |  | 93,732  |                           |  |  | 415,672                           |  |  |                | —     
|President (1)                                                                                                                     |  |        | Transition
                                         Period ended  December 31, 2018 |  |                       |  | —       |                           |  |  | —                                 |  |  |                | 59,027
|                                                                                                                                  |  |        | Fiscal
                                         Year ended April 30, 2018           |  |                       |  | —       |                           |  |  | —                                 |  |  |                | —     
|                                                                                                                                  |  |        |                                                                                     |  |                       |  |         |                           |  |  |                                   |  |  |                |       
|Kirk Westwood                                                                                                                     |  |        | Fiscal
                                         Year ended  December 31, 2019       |  |                       |  | 71,803  |                           |  |  | 566,826                           |  |  |                | 30,293
|Vice President (2)                                                                                                                |  |        | Transition
                                         Period ended  December 31, 2018 |  |                       |  | —       |                           |  |  | —                                 |  |  |                | 87,710
|                                                                                                                                  |  |        | Fiscal
                                         Year ended April 30, 2018           |  |                       |  | —       |                           |  |  | —                                 |  |  |                | —     



| | (1) | Mr.
    Doiron was granted an option to purchase 1,100,000 shares of our common stock, which vested as to one-half of the shares on
    the grant date, December 9, 2019, and the remainder of the shares vest ratably in monthly installments over 24 months commencing
    after the grant date.                         
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Mr.
    Westwood was granted an option to purchase 1,500,000 shares of our common stock, which vested as to two-thirds of the shares
    on the grant date, December 9, 2019, and the remainder of the shares vest ratably in monthly installments over one year commencing
    on the first anniversary of the grant date.



The
Company and its board may grant awards as it sees fit to its employees as well as key consultants and other outside professionals.



Director
Compensation



We
have no arrangement to compensate directors for their services in their capacity as directors. Directors are not paid for meetings
attended. However, we intend to review and consider future proposals regarding board compensation. All travel and lodging expenses
associated with corporate matters are reimbursed by us, if and when incurred.



Pension
Table



None.



Retirement
Plans



We
do not offer any annuity, pension, or retirement benefits to be paid to any of our officers, directors, or employees in the event
of retirement. There are also no compensatory plans or arrangements with respect to any individual named above which results or
will result from the resignation, retirement, or any other termination of employment with our company, or from a change in the
control of our Company.



27







Compensation
Committee



We
do not have a separate compensation committee. Instead, our Board reviews and approves executive compensation policies and practices,
reviews salaries and bonuses for other officers, administers our stock option plans and other benefit plans, if any, and considers
other matters that may be brought forth to it.



Risk
Management Considerations



We
believe our compensation policies and practices for our employees, including our executive officers, do not create risks that
are reasonably likely to have a material adverse effect on our Company.



Item
12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.



The
following table sets forth information known to the Company regarding beneficial ownership of the Company’s common stock
as of March 17, 2020 by:



| | ● | each
    person known by the Company to be the beneficial owner of more than 5% of outstanding Company common stock;
| | - | --------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                     
| | ● | each
    of the Company’s executive officers and directors; and                                                     
| |   |                                                                                                                     
| | ● | all
    executive officers and directors of the Company as a group.                                                 



Beneficial
ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a
security if he, she or it possesses sole or shared voting or investment power over that security, including options and warrants
that are currently exercisable or exercisable within 60 days. Common stock issuable upon exercise of options or warrants currently
exercisable or exercisable within 60 days are deemed outstanding solely for purposes of calculating the percentage of class and
percentage of total voting power of the beneficial owner thereof.



The
beneficial ownership of the Company’s common stock is based on 55,322,712 shares of Company common stock issued and
outstanding as of April 3, 2020.



Unless
otherwise indicated, New CPH believes that each person named in the table below has sole voting and investment power with respect
to all shares of New CPH common stock beneficially owned by him or her.





|Name
    And Address (1)                              |  | Beneficially
    Owned |            |  | Percentage
    Owned (2) | 
|----------------------------------------------------- |  | ---------------------- | ---------- |  | ------------------------ | 
|Eric Rice, Chairman, Chief
    Executive Officer      |  |                        | 17,951,432 |  |                          | 
|Jeffrey Doiron,
    President                         |  |                        | -          |  |                          | 
|All directors and officers as a group
    (2 persons) |  |                        | 17,951,432 |  |                          | 
|                                                      |  |                        |            |  |                          | 
|Other 5% Holders                                      |  |                        |            |  |                          | 
|Brothers Pascarella LLC                               |  |                        | 4,000,000  |  |                          | 








(1)
The address for all officers, directors and beneficial owners is 3606 W Magnolia Blvd, Burbank, Ca 91505.



Long-Term
Incentive Plans and Awards



We
do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. No individual
grants or agreements regarding future payouts under non-stock price-based plans have been made to any executive officer or any
director or any employee or consultant since our inception; accordingly, no future payouts under non-stock price-based plans or
agreement s have been granted or entered into or exercised by our officer or director or employees or consultants since we were
founded.



28











Grants
of Plan-Based Awards Table



None
of our named executive officers received any grants of stock, option awards or other plan-based awards during the years ended
December 31, 2019 and December 31, 2018. The Company has no activity with respect to these awards.



Options
Exercised and Stock Vested Table





On
June 27, 2019, our board of directors adopted the Quanta, Inc. 2019 Omnibus Stock Incentive Plan (the “2019 Plan”).
The following is a summary of the principal features of the 2019 Plan:



|Provision
    of Plan      |  | Description                                                                                                                      
|-------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------
|Eligible
    Participants: |  | Employees,
    directors, and consultants of the Company, any related entity, and any successor entity that adopts the 2019 Plan.



|Share
    Reserve: |  | ● | Total
    of 12,000,000 shares of the Company’s Common Stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------------ |  | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |  | ● | The
    reserved shares will be reduced (i) by one share for each share granted pursuant to stock options, stock appreciation rights,
    or other awards awarded under the 2019 Plan, and (ii) to the extent cash is delivered in lieu of shares of Common Stock upon
    the exercise of a stock appreciation right, the Company will be deemed to have issued the greater of the number of shares
    of Common Stock which it was entitled to issue upon such exercise or on the exercise of any related stock option.



|Award
    Types: |  | ● | Incentive
    stock options     
|---------------- |  | - | --------------------------------
|                 |  | ● | Nonstatutory
    stock options  
|                 |  | ● | Stock
    appreciation rights   
|                 |  | ● | Restricted
    stock awards     
|                 |  | ● | Restricted
    stock unit awards
|                 |  | ● | Dividend
    equivalent rights  



|Vesting:                   |  | Determined
    by the board of directors.                                                                                                                                                              
|-------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                           |  |                                                                                                                                                                                                        
|Award
    Limits:          |  | No
    more than 1,200,000 shares may be issued to a single participant pursuant to stock options and stock appreciation rights in
    a calendar year.                                                
|                           |  |                                                                                                                                                                                                        
|Repricings:                |  | Repricing
    of outstanding stock awards is not permitted without the approval of the Company’s stockholders, except for certain
    ratable capitalization adjustments as set forth in the 2019 Plan.
|                           |  |                                                                                                                                                                                                        
|Plan
    Termination Date: |  | June
    27, 2029.                                                                                                                                                                                     



29







Outstanding
Equity Awards at Fiscal Year-End



None
of our named executive officers had any outstanding stock or option awards as of the fiscal year ended December 31, 2019 and transition
period ended December 31, 2018. The Company has not issued any awards to its named executive officers. The Company and its board
may grant awards as it sees fit to its employees as well as key consultants and other outside professionals.



Securities
Authorized for Issuance under Equity Compensation Plans



None.



Description
of our Capital Stock



We
were incorporated under the laws of the State of Nevada on April 28, 2016. The Company is authorized to issue 100,000,000 shares
of common stock, par value $0.001 per share (the “Common Stock”) and 25,000,000 shares of preferred stock, par value
$0.001 per share (the “Preferred Stock”).



Preferred
Stock



Our
articles of incorporation authorizes the issuance of 25,000,000 shares of Preferred Stock with designations, rights and preferences
determined from time to time by our board of directors. No shares of Preferred Stock have been designated, issued or were outstanding
as of the date of this report. Accordingly, our board of directors is empowered, without stockholder approval, to issue up to
25,000,000 shares of Preferred Stock with voting, liquidation, conversion, or other rights that could adversely affect the rights
of the holders of the common stock. Although we have no present intention to issue any shares of Preferred Stock, there can be
no assurance that we will not do so in the future.



Among
other rights, our board of directors may determine, without further vote or action by our stockholders:



| | ● | the
    number of shares and the designation of the series;                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | whether
    to pay dividends on the series and, if so, the dividend rate, whether dividends will be cumulative and, if so, from which
    date or dates, and the relative rights of priority of payment of dividends on shares of the series;                    
| | ● | whether
    the series will have voting rights in addition to the voting rights provided by law and, if so, the terms of the voting rights;                                                                                                                      
| | ● | whether
    the series will be convertible into or exchangeable for shares of any other class or series of stock and, if so, the terms
    and conditions of conversion or exchange;                                                                             
| | ● | whether
    or not the shares of the series will be redeemable and, if so, the dates, terms and conditions of redemption and whether there
    will be a sinking fund for the redemption of that series and, if so, the terms and amount of the sinking fund; and
| | ● | the
    rights of the shares of the series in the event of our voluntary or involuntary liquidation, dissolution or winding up and
    the relative rights or priority, if any, of payment of shares of the series.                                              



30







We
presently do not have plans to issue any shares of Preferred Stock. However, our Preferred Stock could be used to dilute a potential
hostile acquirer. Accordingly, any future issuance of Preferred Stock or any rights to purchase preferred shares may have the
effect of making it more difficult for a third party to acquire control of us. This may delay, defer or prevent a change of control
in our Company or an unsolicited acquisition proposal. The issuance of Preferred Stock also could decrease the amount of earnings
attributable to, and assets available for distribution to, the holders of our Common Stock and could adversely affect the rights
and powers, including voting rights, of the holders of our Common Stock.



Common
Stock



Our
articles of incorporation authorizes the issuance of 100,000,000 shares of Common Stock. There are 39,200,090 shares of our Common
Stock issued and outstanding at April 16, 2019. The holders of our Common Stock:



| | ● | have
    equal ratable rights to dividends from funds legally available for payment of dividends when, as and if declared by the board
    of directors;                    
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | are
    entitled to share ratably in all of the assets available for distribution to holders of Common Stock upon liquidation, dissolution
    or winding up of our affairs;
| | ● | do
    not have preemptive, subscription or conversion rights, or redemption or access to any sinking fund; and                                                             
| | ● | are
    entitled to one non-cumulative vote per share on all matters submitted to stockholders for a vote at any meeting of stockholders                                    



See
Plan of Distribution regarding negative implications of being classified as a “Penny Stock.”



Authorized
but Unissued Capital Stock



Nevada
law does not require stockholder approval for the issuance of authorized shares. These additional shares may be used for a variety
of corporate purposes, including future public offerings to raise additional capital or to facilitate corporate acquisitions.



One
of the effects of the existence of unissued and unreserved Common Stock (or Preferred Stock) may be to enable our board of directors
to issue shares to persons friendly to current management, which issuance could render more difficult or discourage an attempt
to obtain control of our board by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity
of our management and possibly deprive the stockholders of opportunities to sell their shares of our Common Stock at prices higher
than prevailing market prices.



Shareholder
Matters



As
an issuer of “penny stock” the protection provided by the federal securities laws relating to forward looking statements
does not apply to us if our shares are considered to be penny stocks (which they currently are and probably will be for the foreseeable
future). Although the federal securities law provide a safe harbor for forward-looking statements made by a public company that
files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we
will not have the benefit of this safe harbor protection in the event of any claim that the material provided by us, including
this Annual Report, contained a material misstatement of fact or was misleading in any material respect because of our
failure to include any statements necessary to make the statements not misleading.



As
a Nevada corporation, we are subject to the Nevada Revised Statutes (“NRS” or “Nevada law”). Certain provisions
of Nevada law described below create rights that might be deemed material to our shareholders. Other provisions might delay or
make more difficult acquisitions of our stock or changes in our control or might also have the effect of preventing changes in
our management or might make it more difficult to accomplish transactions that some of our shareholders may believe to be in their
best interests.



31









Directors’
Duties. Section 78.138 of the Nevada law allows our directors and officers, in exercising their powers to further our interests,
to consider the interests of our employees, suppliers, creditors and shippers. They can also consider the economy of the state
and the nation, the interests of the community and of society and our long-term and short-term interests and shareholders, including
the possibility that these interests may be best served by our continued independence. Our directors may resist a change or potential
change in control if they, by a majority vote of a quorum, determine that the change or potential change is opposed to or not
in our best interest. Our board of directors may consider these interests or have reasonable grounds to believe that, within a
reasonable time, any debt which might be created as a result of the change in control would cause our assets to be less than our
liabilities, render us insolvent, or cause us to file for bankruptcy protection



Dissenters’
Rights. Among the rights granted under Nevada law which might be considered material is the right for shareholders to dissent
from certain corporate actions and obtain payment for their shares (see NRS 92A.380-390). This right is subject to exceptions,
summarized below, and arises in the event of mergers or plans of exchange. This right normally applies if shareholder approval
of the corporate action is required either by Nevada law or by the terms of the articles of incorporation.



A
shareholder does not have the right to dissent with respect to any plan of merger or exchange, if the shares held by the shareholder
are part of a class of shares which are:



| | ● | listed
    on a national securities exchange,                                                            
| | - | ---------------------------------------------------------------------------------------------------------
| | ● | included
    in the national market system by the Financial Industry Regulatory Authority (“FINRA”), or \
| | ● | held
    of record by not less than 2,000 holders.                                                       



This
exception notwithstanding, a shareholder will still have a right of dissent if it is provided for in the articles of incorporation
or if the shareholders are required under the plan of merger or exchange to accept anything but cash or owner’s interests,
or a combination of the two, in the surviving or acquiring entity, or in any other entity falling in any of the three categories
described above in this paragraph.



Inspection
Rights. Nevada law also specifies that shareholders are to have the right to inspect company records (see NRS 78.105). This
right extends to any person who has been a shareholder of record for at least six months immediately preceding his demand. It
also extends to any person holding, or authorized in writing by the holders of, at least 5% of outstanding shares. Shareholders
having this right are to be granted inspection rights upon five days’ written notice. The records covered by this right
include official copies of:



| | i.   | the
    articles of incorporation, and all amendments thereto,                                                                                                                                                                                                                    
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii.  | bylaws
    and all amendments thereto; and                                                                                                                                                                                                                                        
| | iii. | a
    stock ledger or a duplicate stock ledger, revised annually, containing the names, alphabetically arranged, of all persons
    who are stockholders of the corporation, showing their places of residence, if known, and the number of shares held by them,
    respectively.



In
lieu of the stock ledger or duplicate stock ledger, Nevada law provides that the corporation may keep a statement setting out
the name of the custodian of the stock ledger or duplicate stock ledger, and the present and complete post office address, including
street and number, if any, where the stock ledger or duplicate stock ledger specified in this section is kept.



Control
Share Acquisitions. Sections 78.378 to 78.3793 of Nevada law contain provisions that may prevent any person acquiring a controlling
interest in a Nevada-registered company from exercising voting rights. To the extent that these rights support the voting power
of minority shareholders, these rights may also be deemed material. These provisions will be applicable to us as soon as we have
200 shareholders of record with at least 100 of these having addresses in Nevada as reflected on our stock ledger. While we do
not yet have the required number of shareholders in Nevada or elsewhere, it is possible that at some future point we will reach
these numbers and, accordingly, these provisions will become applicable. We do not intend to notify shareholders when we have
reached the number of shareholders specified under these provisions of Nevada law. Shareholders can learn this information pursuant
to the inspection rights described above and can see the approximate number of our shareholders by checking under Item 5 of our
Annual Report on Form 10-K. This form is filed with the Securities and Exchange Commission within 90 days after the close
of each fiscal year hereafter. You can view these and our other filings at www.sec.gov in the “EDGAR” database.



32









Under
NRS Sections 78.378 to 78.3793, an acquiring person who acquires a controlling interest in company shares may not exercise voting
rights on any of these shares unless these voting rights are granted by a majority vote of our disinterested shareholders at a
special shareholders’ meeting held upon the request and at the expense of the acquiring person. If the acquiring person’s
shares are accorded full voting rights and the acquiring person acquires control shares with a majority or more of all the voting
power, any shareholder, other than the acquiring person, who does not vote for authorizing voting rights for the control shares,
is entitled to demand payment for the fair value of their shares, and we must comply with the demand. An “acquiring person”
means any person who, individually or acting with others, acquires or offers to acquire, directly or indirectly, a controlling
interest in our shares. “Controlling interest” means the ownership of our outstanding voting shares sufficient to
enable the acquiring person, individually or acting with others, directly or indirectly, to exercise one-fifth or more but less
than one-third, one-third or more but less than a majority, or a majority or more of the voting power of our shares in the election
of our directors. Voting rights must be given by a majority of our disinterested shareholders as each threshold is reached or
exceeded. “Control shares” means the company’s outstanding voting shares that an acquiring person acquires or
offers to acquire in an acquisition or within 90 days immediately preceding the date when the acquiring person becomes an acquiring
person.



These
Nevada statutes do not apply if a company’s articles of incorporation or bylaws in effect on the tenth day following the
acquisition of a controlling interest by an acquiring person provide that these provisions do not apply.



According
to NRS 78.378, the provisions referred to above will not restrict our directors from taking action to protect the interests of
our Company and its shareholders, including without limitation, adopting or executing plans, arrangements or instruments that
deny rights, privileges, power or authority to a holder of a specified number of shares or percentage of share ownership or voting
power. Likewise, these provisions do not prevent directors or shareholders from including stricter requirements in our articles
of incorporation or bylaws relating to the acquisition of a controlling interest in the Company.



Our
articles of incorporation and bylaws do not exclude us from the restrictions imposed by NRS 78.378 to 78.3793, nor do they impose
any more stringent requirements.



Certain
Business Combinations. Sections 78.411 to 78.444 of the Nevada law may restrict our ability to engage in a wide variety of
transactions with an “interested shareholder.” As was discussed above in connection with NRS 78.378 to 78.3793, these
provisions could be considered material to our shareholders, particularly to minority shareholders. They might also have the effect
of delaying or making more difficult acquisitions of our stock or changes in our control. These sections of NRS are applicable
to any Nevada company with 200 or more stockholders of record and that has a class of securities registered under Section 12 of
the 1934 Securities Exchange Act, unless the company’s articles of incorporation provide otherwise. By the filing of our
Registration Statement on Form S-1, we are not registering our Common Stock under Section 12(g) of the Exchange Act. However upon
effectiveness of the Registration Statement on Form S-1 we became subject to those very statutes.



These
provisions of Nevada law prohibit us from engaging in any “combination” with an interested stockholder for three years
after the interested stockholder acquired the shares that cause him/her to become an interested shareholder, unless he had prior
approval of our board of directors. The term “combination” is described in NRS 78.416 and includes, among other things,
mergers, sales or purchases of assets, and issuances or reclassifications of securities. If the combination did not have prior
approval, the interested shareholder may proceed after the three-year period only if the shareholder receives approval from a
majority of our disinterested shares or the offer meets the requirements for fairness that are specified in NRS 78.441-42. For
the above provisions, a “resident domestic corporation” means a Nevada corporation that has 200 or more shareholders.
An “interested stockholder” is defined in NSR 78.423 as someone who is either:



| | ● | the
    beneficial owner, directly or indirectly, of 10% or more of the voting power of our outstanding voting shares; or                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ● | our
    affiliate or associate and who within three years immediately before the date in question, was the beneficial owner, directly
    or indirectly, of 10% or more of the voting power of our outstanding shares at that time.



33







Amendments
to Bylaws.Our articles of incorporation provide that the power to adopt, alter, amend, or repeal our bylaws is vested exclusively
with the board of directors. In exercising this discretion, our board of directors could conceivably alter our bylaws in ways
that would affect the rights of our shareholders and the ability of any shareholder or group to effect a change in our control;
however, the board would not have the right to do so in a way that would violate law or the applicable terms of our articles of
incorporation.



Transfer
Agent



The
transfer agent for our Common Stock is Action Stock Transfer Corporation, 2469 E. Fort Union Blvd, Suite 214, Salt Lake City,
Utah 84121. Its telephone number is (801) 274-1088.



Item
13. Certain Relationships and Related Transactions, and Director Independence.



We
have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners
of 5% or more of our common stock, or family members of those persons wherein the amount involved in the transaction or a series
of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last two fiscal years
or the transition period ended December 31, 2018.



Related
Person Transaction Policy



Our
Board of Directors is responsible to approve all related party transactions. We have not adopted written policies and procedures
specifically for related person transactions.



Director
Independence



For
purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The NASDAQ definition
of “Independent Director” means a person other than an Executive Officer or employee of the Company or any other individual
having a relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director.



According
to the NASDAQ definition, Mr. Eric Rice is not an independent director because he currently holds the title of officer in the
Company.



Item
14. Principal Accounting Fees and Services.



The
following tables present the fees billed for the year ended December 31, 2019 and transition period ended December 31, 2018 by
Weinberg & Company.



The
caption “Audit Fees” refers to the aggregate fees billed for the audit of the Company’s financial statements
and review of financial statements included in the Company’s Form 10-Q and other SEC filings or services that were normally
provided by the accountants in connection with statutory and regulatory filings or engagements for such periods. The caption “Audit-Related
Fees” refers to the aggregate fees billed for assurance and related services that are reasonably related to the performance
of the audit or review of the Company’s financial statements and are not reported under “Audit Fees”. The caption
“Tax Fees” refers to the aggregate fees billed for professional services rendered for tax compliance, tax advice,
and tax planning. The caption “All Other Fees” refers to the aggregate fees billed for products and services other
than the services previously described.



All
services reflected in the following fee tables were pre-approved, respectively, in accordance with the policy of the Board.



34







Weinberg
& Company



|                   |  | Year Ended December 31, 2019 |        |  | Nine Month
    Transition Period Ended 
    December 31, 2018 |  
|------------------ |  | ---------------------------- | ------ |  | ------------------------------------------------------------- | -
|Audit fees         |  | $                            | 40,000 |  |                                                               | $
|Audit-related fees |  |                              |        |  |                                                               |  
|Tax fees           |  |                              |        |  |                                                               |  
|All other fees     |  |                              |        |  |                                                               |  
|Total Fees         |  | $                            | 40,000 |  |                                                               | $



Policy
on Pre-Approval by the Board of Services Performed by Independent Auditors.



In
its capacity, the Board pre-approves all audit (including audit-related) and permitted non-audit services to be performed by the
independent auditors. The Board will annually approve the scope and fee estimates for the year-end audit to be performed by the
Company’s independent auditors for the fiscal year. With respect to other permitted services, the Board pre-approves specific
engagements, projects and categories of services on a fiscal year basis, subject to individual project and annual maximums. To
date, the Company has not engaged its auditors to perform any non-audit related services.



Where
You Can Find Additional Information



We
have filed with the SEC this Annual Report on Form 10-K including exhibits. You may read and copy all or any portion of any reports,
statements or other information in the files at Commission’s Public Reference Room located at 100 F Street, NE., Washington,
DC 20549, on official business days during the hours of 10 a.m. to 3 p.m.



You
can request copies of these documents upon payment of a duplicating fee by writing to the SEC. You may call the SEC at 1-800-SEC-0330
for further information on the operation of its public reference room. The Company’s filings, including this Annual Report
on Form 10-K, will also be available to you on the website maintained by the SEC at http://www.sec.gov.



The
Company’s website is located at http://www.BuyQuanta.com. The Company’s website and the information to be contained
on that site, or connected to that site, are not part of or incorporated by reference into this filing.



35









PART
IV



Item
15. Exhibits, Financial Statement Schedules.



The
following exhibits are incorporated into this Form 10-K/A Annual Report:





|Exhibit
    Number |  | Description                                                                                                                                                                                                                                                                              
|------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |  |                                                                                                                                                                                                                                                                                          
|2.1                |  | Agreement
    and Plan of Merger and Reorganization among Freight Solution, Inc., Bioanomaly, Inc. and Quanta Acquisition Corp. (Incorporated
    by reference to Exhibit 2.1 to the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on June
    18, 2018)
|                   |  |                                                                                                                                                                                                                                                                                          
|3.1                |  | Articles
    of Incorporation of Quanta, Inc. (Incorporated by reference to Exhibit 3.1 to the S-1 Registration Statement filed with the
    Securities and Exchange Commission on March 27, 2017)                                                                                       
|                   |  |                                                                                                                                                                                                                                                                                          
|3.2                |  | Bylaws
    of Quanta, Inc. (Incorporated by reference to Exhibit 3.2 to the S-1 Registration Statement filed with the Securities and
    Exchange Commission on March 27, 2017)                                                                                                          
|                   |  |                                                                                                                                                                                                                                                                                          
|3.3                |  | Amended
    and Restated Articles of Incorporation (Incorporated by reference to Exhibit 4.1 to the Current Report filed with the Securities
    and Exchange Commission on February 5, 2019)                                                                                            
|                   |  |                                                                                                                                                                                                                                                                                          
|4.1                |  | Description of Securities (incorporated by reference to Exhibit 4.1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 3, 2020)                                                                                                                
|                   |  |                                                                                                                                                                                                                                                                                          
|10.1               |  | Conflict
    of Interest Agreement (Incorporated by reference to Exhibit 10.1 to the S-1 Registration Statement filed with the Securities
    and Exchange Commission on March 27, 2017)                                                                                                 
|                   |  |                                                                                                                                                                                                                                                                                          
|10.2               |  | Form
    of Subscription Agreement dated June 2018 (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed
    with the Securities and Exchange Commission on June 15, 2018)                                                                                   
|                   |  |                                                                                                                                                                                                                                                                                          
|10.3               |  | Form
    of Warrant dated June 2018 (Incorporated by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the Securities
    and Exchange Commission on June 15, 2018)                                                                                                  
|                   |  |                                                                                                                                                                                                                                                                                          
|10.4               |  | Joint
    Venture Agreement by and between Quanta, Inc. and 2664431 Ontario Inc. dated as of September 5, 2018 (Incorporated by reference
    to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on September 25, 2018)                 
|                   |  |                                                                                                                                                                                                                                                                                          
|10.5               |  | Exclusive License and Joint Venture Agreement dated March 23, 2017 (Incorporated by reference to Exhibit 10.6 to the Transition Report on Form 10-KT filed with the Securities and Exchange Commission on April 16, 2019)                                                                
|                   |  |                                                                                                                                                                                                                                                                                          
|10.6               |  | Quanta,
    Inc. 2019 Omnibus Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on
    Form 8-K filed with the Commission on June 27, 2019)                                                                                                 
|                   |  |                                                                                                                                                                                                                                                                                          
|10.7               |  | Form
    of Employment Agreement, dated as of September 4, 2019, by and between Quanta, Inc. and Eric Rice (incorporated by reference
    to Exhibit 10.1 of Registrant’s Current Report on Form 8-K filed with the Commission on September 5, 2019)                                     
|                   |  |                                                                                                                                                                                                                                                                                          
|10.8               |  | Form,
    of Employment Agreement, dated as of September 4, 2019, by and between Quanta, Inc. and Jeffrey Doiron (incorporated by reference
    to Exhibit 10.2 of Registrant’s Current Report on Form 8-K filed with the Commission on September 5, 2019)                               
|                   |  |                                                                                                                                                                                                                                                                                          
|10.9               |  | Form
    of Employment Agreement, dated as of September 4, 2019, by and between Quanta, Inc. and Blake Gillette (incorporated by reference
    to Exhibit 10.3 of Registrant’s Current Report on Form 8-K filed with the Commission on September 5, 2019)                                
|                   |  |                                                                                                                                                                                                                                                                                          
|10.10              |  | Form
    of Employment Agreement, dated as of September 4, 2019, by and between Quanta, Inc. and Kirk Westwood (incorporated by reference
    to Exhibit 10.4 of Registrant’s Current Report on Form 8-K filed with the Commission on September 5, 2019)                                 
|                   |  |                                                                                                                                                                                                                                                                                          
|10.10              |  | Form
    of Securities Purchase Agreement, dated as of November 25, 2019, by and between Quanta, Inc. and the Purchasers Signatory
    Thereto (incorporated by reference to Exhibit 10.1 of Registrant’s Current Report on Form 8-K filed with the Commission
    on November 26, 2019) 
|                   |  |                                                                                                                                                                                                                                                                                          
|10.11              |  | Form
    of Registration Rights Agreement, dated as of November 25, 2019, by and between Quanta, Inc. and the Purchasers Signatory
    Thereto (incorporated by reference to Exhibit 10.2 of Registrant’s Current Report on Form 8-K filed with the Commission
    on November 26, 2019) 
|                   |  |                                                                                                                                                                                                                                                                                          
|10.12              |  | Ten
    Percent (10%) Convertible Note, dated as of November 25, 2019, issued by Quanta, Inc. in favor of Livingston Asset Management
    LLC (incorporated by reference to Exhibit 10.3 of Registrant’s Current Report on Form 8-K filed with the Commission
    on November 26, 2019)  
|                   |  |                                                                                                                                                                                                                                                                                          
|14.1               |  | Quanta,
    Inc. Code of Business Ethics and Conduct (Incorporated by reference to Exhibit 14.1 to the S-1 Registration Statement filed
    with the Securities and Exchange Commission on March 27, 2017)                                                                               
|                   |  |                                                                                                                                                                                                                                                                                          
|21.1               |  | Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 3, 2020)                                                                                                             
|                   |  |                                                                                                                                                                                                                                                                                          
|31.1               |  | Certification of Chief Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 31.1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 3, 2020)                        
|                   |  |                                                                                                                                                                                                                                                                                          
|31.2 *             |  | Certification of Chief Executive and Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 with respect to this Amendment No. 1                                                                                                                                    
|                   |  |                                                                                                                                                                                                                                                                                          
|32.1               |  | Certification of Chief Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (incorporated by reference to Exhibit 32.1 to the Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 3, 2020)                        
|                   |  |                                                                                                                                                                                                                                                                                          
|32.2 *             |  | Certification of Chief Executive and Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 with respect to this Amendment No. 1                                                                                                                                    
|                   |  |                                                                                                                                                                                                                                                                                          
|101.INS
    *      |  | XBRL
    Instance Document.                                                                                                                                                                                                                                                              
|                   |  |                                                                                                                                                                                                                                                                                          
|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.                                                                                                                                                                                 
|                   |  |                                                                                                                                                                                                                                                                                          
|104                |  | Cover
    Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)                                                                                                                                                                                             



*
Filed along with this document



36









The
following are included as part of this Form 10-K/A:



|                                                                                                                                                | Page
|----------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                |     
|Report
    of Independent Registered Public Accounting Firm                                                                                     | F-2 
|                                                                                                                                                |     
|Consolidated
    Balance Sheets as of December 31, 2019 and December 31, 2018                                                                   | F-3 
|                                                                                                                                                |     
|Consolidated Statements of Operations for the year ended December 31, 2019 and for the Nine Months Ended December 31, 2018                      | F-4 
|                                                                                                                                                |     
|Consolidated Statements of Changes in Stockholders’ Equity for the Year ended December 31, 2019 and for the Nine Months Ended December 31, 2018 | F-5 
|                                                                                                                                                |     
|Consolidated Statements of Cash Flows for the Year Ended December 31, 2019 and Nine Months Ended December 31, 2018                              | F-6 
|                                                                                                                                                |     
|Notes
    to Consolidated Financial Statements                                                                                                  | F-7 



Item
16. Form 10-K Summary.



None.



37









SIGNATURES



Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.



|                          | Quanta,
    Inc.
|------------------------- | ----------------
|                          |                 
|Dated:
    April 10, 2020 | By:             
|                          |                 
|                          |                 



Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the date indicated.



|Signature         |  | Title                                                                         |  | Date         
|----------------- |  | ----------------------------------------------------------------------------- |  | -------------
|                  |  |                                                                               |  |              
|/s/
    Eric Rice |  | Chairman,
        Chief
        Executive Officer and Chief Financial Officer |  | April 10,2020
|Eric
    Rice     |  | (Principal
    Executive and Principal Accounting Officer)                    |  |              



38







QUANTA,
INC.



INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                                                | Page
|----------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                                |     
|Report of Independent Registered Public Accounting Firm                                                                                         | F-2 
|                                                                                                                                                |     
|Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018                                                                       | F-3 
|                                                                                                                                                |     
|Consolidated Statements of Operations for the year ended December 31, 2019 and for the Nine Months Ended December 31, 2018                      | F-4 
|                                                                                                                                                |     
|Consolidated Statements of Changes in Stockholders’ Equity for the Year ended December 31, 2019 and for the Nine Months Ended December 31, 2018 | F-5 
|                                                                                                                                                |     
|Consolidated Statements of Cash Flows for the Year Ended December 31, 2019 and Nine Months Ended December 31, 2018                              | F-6 
|                                                                                                                                                |     
|Notes to Consolidated Financial Statements                                                                                                      | F-7 



F-1







Report
of Independent Registered Public Accounting Firm



The
Stockholders and Board of Directors of Quanta, Inc.



Opinion
on the Financial Statements



We
have audited the accompanying consolidated balance sheets of Quanta, Inc. and Subsidiary (the “Company”) as
of December 31, 2019 and 2018, the related consolidated statements of operations, changes in stockholders’ equity (deficit),
and cash flows for the year ended December 31, 2019 and the nine-month transition period ended December 31, 2018, and the
related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its
operations and its cash flows for the year ended December 31, 2019, and for the nine-month transition period ended December
31, 2018, in conformity with accounting principles generally accepted in the United States of America.



Going
Concern



The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the financial statements, during the year ended December 31, 2019, the Company incurred a net loss and
utilized cash in operations, and at December 31, 2019, had a working capital deficiency. These conditions raise substantial doubt
about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also
described in Note 1. The financial statements do not include any adjustments that might result from the outcome of
this uncertainty.



Basis
for Opinion



These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities
and Exchange Commission and the PCAOB.



We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.



Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.



We
have served as the Company’s auditor since 2019.



|/s/
    Weinberg & Company, P.A. | 
|-------------------------------- | 
|Los
    Angeles, California      | 
|April 3, 2020                    | 



F-2







QUANTA,
INC. AND SUBSIDIARY

CONSOLIDATED
BALANCE SHEETS





|                                                                                                                                                                                   |  | December 31, 2019 |            |   | December 31, 2018 |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | -
|ASSETS                                                                                                                                                                             |  |                   |            |   |                   |  
|Current assets:                                                                                                                                                                    |  |                   |            |   |                   |  
|Cash                                                                                                                                                                               |  | $                 | 433,143    |   |                   | $
|Accounts receivable                                                                                                                                                                |  |                   | 28,260     |   |                   |  
|Inventories                                                                                                                                                                        |  |                   | 122,519    |   |                   |  
|Prepaid expenses                                                                                                                                                                   |  |                   | 7,500      |   |                   |  
|Total current assets                                                                                                                                                               |  |                   | 591,422    |   |                   |  
|                                                                                                                                                                                   |  |                   |            |   |                   |  
|Equipment, net                                                                                                                                                                     |  |                   | 313,478    |   |                   |  
|Operating lease right-of-use asset                                                                                                                                                 |  |                   | 332,980    |   |                   |  
|Security deposits                                                                                                                                                                  |  |                   | 33,652     |   |                   |  
|                                                                                                                                                                                   |  |                   |            |   |                   |  
|Total assets                                                                                                                                                                       |  | $                 | 1,271,532  |   |                   | $
|                                                                                                                                                                                   |  |                   |            |   |                   |  
|LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                                                     |  |                   |            |   |                   |  
|Current liabilities:                                                                                                                                                               |  |                   |            |   |                   |  
|Accounts payable and accrued expenses                                                                                                                                              |  | $                 | 73,598     |   |                   | $
|Notes payable ($55,850 in default at December 31, 2019)                                                                                                                            |  |                   | 55,850     |   |                   |  
|Deferred revenue, license agreement                                                                                                                                                |  |                   | 32,742     |   |                   |  
|Operating lease liabilities                                                                                                                                                        |  |                   | 85,662     |   |                   |  
|Convertible note payable (net of discount of $224,660)                                                                                                                             |  |                   | 57,340     |   |                   |  
|Derivative liabilities                                                                                                                                                             |  |                   | 400,139    |   |                   |  
|Total current liabilities                                                                                                                                                          |  |                   | 705,331    |   |                   |  
|                                                                                                                                                                                   |  |                   |            |   |                   |  
|Long term liabilities                                                                                                                                                              |  |                   |            |   |                   |  
|Deferred revenue, licenses agreement, long-term                                                                                                                                    |  |                   | 35,470     |   |                   |  
|Operating lease liabilities, long-term                                                                                                                                             |  |                   | 251,791    |   |                   |  
|Total liabilities                                                                                                                                                                  |  |                   | 992,592    |   |                   |  
|                                                                                                                                                                                   |  |                   |            |   |                   |  
|Stockholders’ equity:                                                                                                                                                              |  |                   |            |   |                   |  
|Preferred stock, $0.001 par value; 25,000,000 shares authorized; none issued or outstanding                                                                                        |  |                   | -          |   |                   |  
|Common stock, $0.001 par value; 100,000,000 shares authorized; 49,087,255 and 39,200,090 shares issued and outstanding as of December 31, 2019 and December 31, 2018, respectively |  |                   | 49,087     |   |                   |  
|Shares to be issued (7,318,519 and 612,000 shares to be issued as of December 31, 2019 and December 31, 2018, respectively)                                                        |  |                   | 2,847,868  |   |                   |  
|Additional paid-in capital                                                                                                                                                         |  |                   | 5,619,733  |   |                   |  
|Accumulated deficit                                                                                                                                                                |  |                   | (8,237,748 | ) |                   |  
|Total stockholders’ equity                                                                                                                                                         |  |                   | 278,940    |   |                   |  
|                                                                                                                                                                                   |  |                   |            |   |                   |  
|Total liabilities and stockholders’ equity                                                                                                                                         |  | $                 | 1,271,532  |   |                   | $



See
notes to consolidated financial statements



F-3







QUANTA,
INC. AND SUBSIDIARY

CONSOLIDATED
STATEMENTS OF OPERATIONS





|                                                               |  | Year ended
December 31, 2019 |            |   | Nine months ended December 31, 2018 |  
|-------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ----------------------------------- | -
|                                                               |  |                              |            |   |                                     |  
|Sale of products, net                                          |  | $                            | 1,237,200  |   |                                     | $
|License revenue                                                |  |                              | 31,788     |   |                                     |  
|Total revenue                                                  |  |                              | 1,268,988  |   |                                     |  
|Cost of goods sold                                             |  |                              | 303,720    |   |                                     |  
|Gross profit                                                   |  |                              | 965,268    |   |                                     |  
|                                                               |  |                              |            |   |                                     |  
|Operating expenses:                                            |  |                              |            |   |                                     |  
|Labor and related                                              |  |                              | 1,302,391  |   |                                     |  
|Research and development                                       |  |                              | 351,670    |   |                                     |  
|Selling, general, and administrative                           |  |                              | 4,799,030  |   |                                     |  
|Total operating expenses                                       |  |                              | 6,453,091  |   |                                     |  
|Loss from operations                                           |  |                              | (5,487,823 | ) |                                     |  
|                                                               |  |                              |            |   |                                     |  
|Other income (expense):                                        |  |                              |            |   |                                     |  
|Interest expense                                               |  |                              | (226,239   | ) |                                     |  
|Interest income                                                |  |                              | 37         |   |                                     |  
|Extinguishment of derivative liabilities                       |  |                              | 145,565    |   |                                     |  
|Change in fair value of derivative liabilities                 |  |                              | 19,491     |   |                                     |  
|Private placement costs                                        |  |                              | (238,395   | ) |                                     |  
|Gain on forgiveness of accrued interest                        |  |                              | -          |   |                                     |  
|Gain on extinguishment of debt                                 |  |                              | -          |   |                                     |  
|Other income and expense, net                                  |  |                              | (299,541   | ) |                                     |  
|                                                               |  |                              |            |   |                                     |  
|Net loss                                                       |  | $                            | (5,787,364 | ) |                                     | $
|                                                               |  |                              |            |   |                                     |  
|Net loss per share, basic and diluted                          |  | $                            | (0.14      | ) |                                     | $
|Weighted average common shares outstanding – basic and diluted |  |                              | 42,808,603 |   |                                     |  



See
notes to consolidated financial statements.



F-4









QUANTA,
INC. AND SUBSIDIARY

CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)



FOR THE YEAR ENDED DECEMBER 31, 2019

AND THE NINE MONTHS
ENDED DECEMBER 31, 2018



|                                                                        |  | Common Stock, par value $0.001 |            |  | Additional |   |        |                 |  |   |                     |   |  |                     |          
|----------------------------------------------------------------------- |  | ------------------------------ | ---------- |  | ---------- | - | ------ | --------------- |  | - | ------------------- | - |  | ------------------- | ---------
|                                                                        |  | Number of shares               |            |  | Amount     |   |        | paid-in capital |  |   | Shares to be issued |   |  | Accumulated deficit |          
|Balance, March 31, 2018                                                 |  |                                | 21,908,810 |  |            | $ | 21,909 |                 |  | $ | (11,909             | ) |  | $                   | -        
|Shares issued for recapitalization                                      |  |                                | 6,500,000  |  |            |   | 6,500  |                 |  |   | (6,500              | ) |  |                     | -        
|Costs of recapitalization                                               |  |                                | -          |  |            |   | -      |                 |  |   | (495,760            | ) |  |                     | -        
|Shares issued for cash                                                  |  |                                | 6,500,090  |  |            |   | 6,500  |                 |  |   | 1,293,518           |   |  |                     | -        
|Fair value of shares issued for settlement of convertible notes payable |  |                                | 3,771,040  |  |            |   | 3,771  |                 |  |   | 1,011,229           |   |  |                     | -        
|Fair value of shares issued for services                                |  |                                | 520,150    |  |            |   | 520    |                 |  |   | 193,510             |   |  |                     | -        
|Fair value of warrants issued for services                              |  |                                | -          |  |            |   | -      |                 |  |   | 376,510             |   |  |                     | -        
|Cash received for shares to be issued                                   |  |                                | -          |  |            |   | -      |                 |  |   | -                   |   |  |                     | 306,000  
|Net loss for the nine months ended December 31, 2018                    |  |                                | -          |  |            |   | -      |                 |  |   | -                   |   |  |                     | -        
|Balance, December 31, 2018                                              |  |                                | 39,200,090 |  |            |   | 39,200 |                 |  |   | 2,360,598           |   |  |                     | 306,000  
|Issuance of shares                                                      |  |                                | 612,000    |  |            |   | 612    |                 |  |   | 305,388             |   |  |                     | (306,000 
|Shares issued for cash                                                  |  |                                | 6,330,750  |  |            |   | 6,331  |                 |  |   | 2,084,044           |   |  |                     | -        
|Cash received for shares to be issued                                   |  |                                | -          |  |            |   | -      |                 |  |   | -                   |   |  |                     | 530,000  
|Shares issued for cashless exercise of warrants                         |  |                                | 2,590,910  |  |            |   | 2,590  |                 |  |   | (2,590              | ) |  |                     | -        
|Fair value of shares for services                                       |  |                                | 212,505    |  |            |   | 213    |                 |  |   | 106,040             |   |  |                     | 2,317,868
|Fair value of vested options                                            |  |                                | -          |  |            |   | -      |                 |  |   | 711,404             |   |  |                     | -        
|Fair value of shares issued for loan fee                                |  |                                | 141,000    |  |            |   | 141    |                 |  |   | 54,849              |   |  |                     | -        
|Net loss                                                                |  |                                | -          |  |            |   | -      |                 |  |   | -                   |   |  |                     | -        
|Balance, December 31, 2019                                              |  |                                | 49,087,255 |  |            | $ | 49,087 |                 |  | $ | 5,619,733           |   |  | $                   | 2,847,868



See
accompanying notes to financial statements



F-5







QUANTA,
INC. AND SUBSIDIARY

CONSOLIDATED
STATEMENTS OF CASH FLOWS





|                                                                            |  | Year Ended December 31, 2019 |            |   | Nine Months Ended December 31, 2018 |  
|--------------------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ----------------------------------- | -
|CASH FLOW FROM OPERATING ACTIVITIES:                                        |  |                              |            |   |                                     |  
|Net loss                                                                    |  | $                            | (5,787,364 | ) |                                     | $
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                              |            |   |                                     |  
|Depreciation                                                                |  |                              | 173,902    |   |                                     |  
|Fair value of shares issued for services                                    |  |                              | 2,424,121  |   |                                     |  
|Fair value of vested options                                                |  |                              | 711,404    |   |                                     |  
|Fair value of warrants issued for services                                  |  |                              | -          |   |                                     |  
|Extinguishment of derivative liabilities                                    |  |                              | (145,565   | ) |                                     |  
|Change in fair value of derivatives                                         |  |                              | (19,491    | ) |                                     |  
|Private placement costs                                                     |  |                              | 238,395    |   |                                     |  
|Amortization of convertible note discount                                   |  |                              | 185,330    |   |                                     |  
|Gain on forgiveness of accrued interest                                     |  |                              | -          |   |                                     |  
|Gain on extinguishment of debt                                              |  |                              | -          |   |                                     |  
|Amortization of operating lease right-of-use asset                          |  |                              | 87,132     |   |                                     |  
|Changes in operating assets and liabilities:                                |  |                              |            |   |                                     |  
|Accounts receivable                                                         |  |                              | (8,699     | ) |                                     |  
|Inventories                                                                 |  |                              | (122,519   | ) |                                     |  
|Prepaid expenses                                                            |  |                              | (7,500     | ) |                                     |  
|Accounts payable and accrued liabilities                                    |  |                              | 63,981     |   |                                     |  
|Deferred revenue, license agreement                                         |  |                              | 68,212     |   |                                     |  
|Operating lease liabilities                                                 |  |                              | (82,659    | ) |                                     |  
|Net cash used in operating activities                                       |  |                              | (2,221,320 | ) |                                     |  
|                                                                            |  |                              |            |   |                                     |  
|CASH FLOW FROM INVESTING ACTIVITIES:                                        |  |                              |            |   |                                     |  
|Purchase of equipment                                                       |  |                              | (114,500   | ) |                                     |  
|Payment of security deposit                                                 |  |                              | (16,882    | ) |                                     |  
|Net cash used in investment activities                                      |  |                              | (131,382   | ) |                                     |  
|                                                                            |  |                              |            |   |                                     |  
|CASH FLOW FROM FINANCING ACTIVITIES:                                        |  |                              |            |   |                                     |  
|Proceeds from shares issued for cash                                        |  |                              | 2,090,375  |   |                                     |  
|Proceeds from shares to be issued                                           |  |                              | 530,000    |   |                                     |  
|Proceeds from convertibles notes payable                                    |  |                              | 326,800    |   |                                     |  
|Proceeds from notes payable                                                 |  |                              | -          |   |                                     |  
|Principal payments of notes payable                                         |  |                              | (124,150   | ) |                                     |  
|Principal payment of convertible note payable                               |  |                              | (73,000    | ) |                                     |  
|Costs of recapitalization                                                   |  |                              | -          |   |                                     |  
|Net cash provided by financing activities                                   |  |                              | 2,750,025  |   |                                     |  
|Decrease in cash                                                            |  |                              | 397,323    |   |                                     |  
|Cash and cash equivalents, beginning of period                              |  |                              | 35,820     |   |                                     |  
|Cash and cash equivalents, end of period                                    |  | $                            | 433,143    |   |                                     | $
|                                                                            |  |                              |            |   |                                     |  
|Supplemental Disclosures of Cash Flow Information:                          |  |                              |            |   |                                     |  
|Cash paid for taxes                                                         |  | $                            | 800        |   |                                     | $
|Cash paid for Interest                                                      |  |                              | 15,080     |   |                                     |  
|                                                                            |  |                              |            |   |                                     |  
|Non-cash investing and financing activities                                 |  |                              |            |   |                                     |  
|Derivative liabilities allocated to convertible note discount               |  | $                            | 326,800    |   |                                     | $
|Original issue discount                                                     |  |                              | 28,200     |   |                                     |  
|Fair value of shares issued for loan fee                                    |  |                              | 54,990     |   |                                     |  
|Shares issued for cashless exercise of warrant                              |  |                              | 2,590      |   |                                     |  
|Fair value of shares issued for settlement of convertible notes payable     |  |                              | -          |   |                                     |  



See
notes to consolidated financial statements



F-6







QUANTA,
INC. AND SUBSIDIARY

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS



FOR THE YEAR ENDED DECEMBER 31, 2019
AND

THE NINE MONTHS
ENDED DECEMBER 31, 2018





NOTE
1 – DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Quanta,
Inc (“the Company”) was incorporated as Freight Solution, Inc. (“Freight Solution”) on April 28, 2016
in the State of Nevada. Effective June 6, 2018, Bioanomaly Inc. (“Bioanomaly”) was acquired by Freight Solution pursuant
to a merger agreement in which the shareholders of Bioanomaly exchanged all of the outstanding shares of Bioanomaly for 21,908,810
newly issued shares of Freight Solution’s common stock. Freight Solution shareholders retained 6,500,000 shares of common
stock, which represented 23% of the issued and outstanding stock following the merger. The acquisition was accounted for as a
reverse merger transaction. In connection with the closing of the merger, Freight Solution’s management was replaced by
Bioanomaly’s management. On July 11, 2018, the Company changed its name to Quanta, Inc. The Company is an applied science
company focused on increasing energy levels in plant matter to increase performance within the human body. The Company’s
operations are based in Burbank, California.



Going
Concern



The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying financial statements,
for the year ended December 31, 2019, the Company incurred a net loss of $5,787,364 and used cash in operating activities
of $2,221,320, and at December 31, 2019, the Company had a had a working capital deficiency of $113,909. These factors
raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the
financial statements are issued. The consolidated financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.



At
December 31, 2019, the Company had cash on hand in the amount of $433,143. Subsequent to December 31, 2019 the Company
received $153,000 from the issuance of a convertible note payable and $30,000 for subscriptions to purchase shares of common
stock. Management estimates that the current funds on hand will be sufficient to continue operations through the next six months.
The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial
support from its shareholders. Management believes the existing shareholders or external financing will provide the additional
cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed,
will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able
to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing,
or cause substantial dilution for its stockholders, in the case of equity financing



Basis
of presentation and principles of Consolidation



The
accompanying consolidated financial statements have been prepared in accordance with accounting standards generally accepted in
the United States of America.



In
December 2018, the Company its fiscal year end from March 31 to December 31. The transition period covering the nine-month
period from April 1, 2018 to December 31, 2018 is included in the accompany consolidated financial statements.



The
consolidated financial statements include the accounts of Quanta Inc, and its wholly-owned subsidiary, Bioanomaly, Inc. All intercompany
balances and transactions have been eliminated in consolidation.



F-7







Use
of estimates



The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant
accounting estimates include certain assumptions related to, among others, allowance for doubtful accounts receivable,
impairment analysis of long-term assets, valuation allowance on deferred income taxes, assumptions used in valuing stock instruments
issued for services, assumptions made in valuing derivative liabilities, and the accrual of potential liabilities. Actual results
may differ from these estimates.



Accounts
Receivable



Accounts
receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts if deemed necessary, and payments
are generally due within thirty to forty-five days of invoicing. Management reviews the adequacy of the allowance for doubtful
accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates
individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the
allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection
have been exhausted and the potential for recovery is considered remote. At December 31, 2019 and December 31, 2018, the Company
did not record any allowance for uncollectible accounts.



Inventories



Inventories
are stated at the lower of cost or net realizable value. We regularly review our inventory quantities on hand and record
a provision for excess and obsolete inventory based primarily on our estimated forecast of product demand and our ability to sell
the product(s) concerned. Demand for our products can fluctuate significantly. Additionally, our management’s estimates
of future product demand may be inaccurate, which could result in an understated or overstated provision required for excess and
obsolete inventory. At December 31, 2019 and 2018, the Company had no reserve for inventory obsolescence.



Equipment



Equipment is stated at cost less accumulated
depreciation. Depreciation is provided over the estimated useful lives of the equipment, which is three years, using the straight-line
method. Expenditures for major additions and improvements are capitalized and minor repairs and maintenance are charged
to expense as incurred. When equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed
from the accounts and any resulting gain or loss is included in the results of operations for the respective period.



Management
assesses the carrying value of equipment whenever events or changes in circumstances indicate that the carrying value may not
be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result
from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an
impairment loss is recognized to write down the asset to its estimated fair value. For the year ended December 31, 2019 and for
the nine-months period ended December 31, 2018, the Company determined there were no indicators of impairment of its property
and equipment.



Revenue



The Company follows the guidance
of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers. ASC 606 creates a
five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying
the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining
the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue
as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that
the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.



Product Sales—Revenue from
sales of the Company’s CBD products is recognized at the point in time when the Company’s performance obligations
with the applicable customers have been satisfied. At contract inception, the Company determines if the contract is within the
scope of ASC Topic 606 and then evaluates the contract using the following five steps: (1) identify the contract with the customer;
(2) identify the performance obligations; (3) determine the transaction price; (4) allocate the transaction price to the performance
obligations; and (5) recognize revenue at the point in time when the entity satisfies a performance obligation.





F-8







Revenue
is recorded at the transaction price, which is the amount of consideration the Company expects to receive in exchange for transferring
products to a customer.Generally, the Company’s performance
obligations are transferred to the customer at a point in time, typically upon delivery of products. The Company historically
has offered no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of
reserves against revenue.



The
Company sells its products (i) directly to customers (“DTC”) through online orders from our websites, and DTC sales
at conventions and events; and (ii) through wholesalers, including physicians, pharmacies, fitness studios, grocery stores, and
other organizations.



License revenue— Revenue from
symbolic IP is recognized over the access period to the Company’s IP (see Note 2).





Cost
of goods sold includes direct costs and fees related to the sale of our products.



Disaggregated
Revenue



The
composition of the Company’s net revenues recognized during the year ended December 31, 2019 and the nine-month period ended
December 31, 2018, disaggregated by source and nature, are as follows:



|                         |  | Year ended December 31, 2019 |           |  | Nine-months ended December 31, 2018 |  
|------------------------ |  | ---------------------------- | --------- |  | ----------------------------------- | -
|By Sales Channel:        |  |                              |           |  |                                     |  
|Direct to consumer       |  | $                            | 443,916   |  |                                     | $
|Wholesale                |  |                              | 793,284   |  |                                     |  
|License Revenue          |  |                              | 31,788    |  |                                     |  
|                         |  | $                            | 1,268,988 |  |                                     | $
|                         |  |                              |           |  |                                     |  
|By Geographic Territory: |  |                              |           |  |                                     |  
|California               |  | $                            | 766,469   |  |                                     | $
|Other states             |  |                              | 477,139   |  |                                     |  
|International            |  |                              | 25,380    |  |                                     |  
|                         |  | $                            | 1,268,988 |  |                                     | $



Leases



Prior
to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company
adopted the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for
virtually all leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative financial
information has not been updated and the required disclosures prior to the date of adoption have not been updated and continue
to be reported under the accounting standard in effect for those periods. The adoption of ASC 842 on January 1, 2019 resulted
in the recognition of operating lease right-of-use assets and lease liabilities of $420,112 and did not result in a cumulative-effect
adjustment to accumulated deficit (see Note 5).



Derivative
Financial Instruments



The
Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify
as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported
in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average
Black-Scholes-Merton model to value the derivative instruments at inception and on subsequent valuation dates through the December
31, 2019, reporting date. The classification of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is evaluated at the end of each reporting period





Income
taxes



The
Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred
tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred
taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax
assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that
future deductibility is uncertain.



Stock
Compensation



The
Company issues stock options, warrants, shares of common stock, and restricted stock unit awards, as share-based compensation
to employees and non-employees. The Company accounts for its share-based compensation to employees in accordance with FASB ASC
718, Compensation – Stock Compensation(Topic 718). Stock-based compensation cost is measured at the grant date,
based on the estimated fair value of the award, and is recognized as expense over the requisite service period.



In
periods through December 31, 2018, the Company accounted for share-based compensation issued to non-employees and consultants
in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based
payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or
services received; or (b) the equity instruments issued. The final fair value of the share-based payment transaction is determined
at the performance completion date. For interim periods, the fair value is estimated, and the percentage of completion is applied
to that estimate to determine the cumulative expense recorded.



On
January 1, 2019, the Company adopted ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee
Share-Based Payment Accounting. ASU 2018-07 simplifies the accounting for share-based transactions by expanding the scope
of Topic 718 from only being applicable to share-based payments to employees to also include share-based payment transactions
for acquiring goods and services from nonemployees. As a result, nonemployee share-based transactions are measured by estimating
the fair value of the equity instruments at the grant date, taking into consideration the probability of satisfying performance
conditions. The adoption of ASU 2018-07 did not have a material impact on the Company’s financial statements.



Advertising
costs



Advertising
costs are expensed as incurred. During the year ended December 31, 2019 and the nine-month period ended December 31, 2018, advertising
costs totaled $103,401 and $27,529, respectively.



Research
and Development Costs



Costs
incurred for research and development are expensed as incurred. During the year ended December 31, 2019 and the nine-month period
ended December 31, 2018, research and development costs totaled $351,670 and 207,600, respectively and include salaries, benefits,
and overhead costs of personnel conducting research and development of the Company’s products.



Net
Loss per Share



Basic
net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of
common shares outstanding during the period. Shares used in the calculation of basic net loss per common share include vested
but unissued shares underlying awards of restricted common stock. Diluted loss per share reflects the potential dilution,
using the treasury stock method that could occur if securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared in the loss of the Company. In computing diluted
loss per share, the treasury stock method assumes that outstanding warrants and convertible notes are exercised and the proceeds
are used to purchase common stock at the average market price during the period. Warrants and convertible notes may have a dilutive
effect under the treasury stock method only when the average market price of the common stock during the period exceeds the exercise
price of the options and warrants.



F-9







For
the year ended December 31, 2019, the dilutive impact of stock options exercisable into 3,290,000 shares of common stock, 8,000,000
shares of restricted stock to be issued, and convertible notes payable that can convert into 889,469 shares of common stock have
been excluded from calculation of weighted average shares because their impact on the loss per share is anti-dilutive. For the
year ended December 31, 2019, the dilutive impact of stock warrants exercisable into 3,000,000 shares of common stock have been
excluded because their impact on the loss per share is anti-dilutive.



Fair
Value of Financial Instruments



The
Company follows the authoritative guidance issued by the Financial Accounting Standards Board (“FASB”) for fair value
measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the
measurement date. A fair value hierarchy was established, which prioritizes the inputs used in measuring fair value into three
broad levels as follows:



Level
1—Quoted prices in active markets for identical assets or liabilities.

Level
2—Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly.

Level
3—Unobservable inputs based on the Company’s assumptions.



The
Company is required to use of observable market data if such data is available without undue cost and effort.



The
Company believes the carrying amount reported in the balance sheet for cash, accounts receivable, accounts payable and accrued
liabilities, and notes payable, approximate their fair values because of the short-term nature of these financial instruments



As
of December 31, 2019, the Company’s balance sheet includes Level 2 liabilities comprised of the fair value of embedded derivative
liabilities of $400,139 (see Note 8).



Concentrations
of risks



For
the year ended December 31, 2019 and the nine-month period ended December 31, 2018, no customer accounted for 10% or more of revenue.
As of December 31, 2019, two customers accounted for 19% and 12% of accounts receivable, respectively, and no other customer
accounted for 10% or more of accounts receivable. As of December 31, 2018, no customer accounted for more than 10% of accounts
receivable.



F-10







Additionally,
for the same periods, no vendor accounted for 10% or more of the Company’s cost of goods sold, or accounts payable at period-end.



The
Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits that are insured
by the Federal Deposit Insurance Corporation, or FDIC. At times, deposits held may exceed the amount of insurance provided by
the FDIC. The Company has not experienced any losses in its cash and believes it is not exposed to any significant credit risk.



Segments



The
Company operates in one segment for the development and distribution of our CBD products. In accordance with the “Segment
Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as the Chief Executive
Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance for
the entire Company. Existing guidance, which is based on a management approach to segment reporting, establishes requirements
to report selected segment information quarterly and to report annually entity-wide disclosures about products and services, major
customers, and the countries in which the entity holds material assets and reports revenue. All material operating units qualify
for aggregation under “Segment Reporting” due to their similar customer base and similarities in economic characteristics;
nature of products and services; and procurement, manufacturing and distribution processes. Since the Company operates in one
segment, all financial information required by “Segment Reporting” can be found in the accompanying financial statements.



Recent
Accounting Pronouncements



In
June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC
326”). The standard significantly changes how entities will measure credit losses for most financial assets, including accounts
and notes receivables. The standard will replace today’s “incurred loss” approach with an “expected loss”
model, under which companies will recognize allowances based on expected rather than incurred losses. Entities will apply the
standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting
period in which the guidance is effective. The standard is effective for interim and annual reporting periods beginning after
December 15, 2022. The Company is currently assessing the impact of adopting this standard on the Company’s financial statements
and related disclosures.



Other
recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact
on the Company’s present or future consolidated financial statements.



NOTE
2 – LICENSE AGREEMENT



Effective
January 22, 2019, the Company entered into an agreement with a wholesaler for the exclusive rights to distribute the Company’s
products in the state of Colorado for three years. In consideration, the Company received an up-front payment of $100,000. The
Company determined that the exclusive distribution agreement was a distinct agreement for the license of symbolic IP and thus
should be recognized on a straight-line basis over the three-year life of the agreement. For the year ended December 31, 2019,
the Company recognized revenue related to this agreement of $31,788. For the nine month period ended December 31, 2018, no distribution
fee revenue was recorded.



F-11







NOTE
3 – INVENTORIES



Inventories
are valued at the lower of cost (first-in, first-out) or net realizable value, and consisted of the following:



|                            |  | December 31, 2019 |         |  | December 31, 2018 |  
|--------------------------- |  | ----------------- | ------- |  | ----------------- | -
|                            |  |                   |         |  |                   |  
|Raw materials and packaging |  | $                 | 102,428 |  |                   | $
|Finished goods              |  |                   | 20,091  |  |                   |  
|                            |  |                   |         |  |                   |  
|                            |  | $                 | 122,519 |  |                   | $



NOTE
4 - EQUIPMENT



Equipment,
stated at cost, less accumulated depreciation consisted of the following:



|                                                  |  | December 31, 2019 |          |   | December 31, 2018 |  
|------------------------------------------------- |  | ----------------- | -------- | - | ----------------- | -
|                                                  |  |                   |          |   |                   |  
|Machinery-technology equipment                    |  | $                 | 607,000  |   |                   | $
|Machinery-technology equipment under construction |  |                   | 30,000   |   |                   |  
|                                                  |  |                   | 637,000  |   |                   |  
|Less accumulated depreciation                     |  |                   | (323,522 | ) |                   |  
|                                                  |  |                   |          |   |                   |  
|                                                  |  | $                 | 313,478  |   |                   | $



Depreciation
expense for the year ended December 31, 2019 and transition period ended December 31, 2018 was $173,903 and $185,835, respectively.
As of December 31, 2019, the equipment under construction is approximately 33% complete, and is expected to be completed and placed
into service during the year ended December 31, 2020.



NOTE
5 - OPERATING LEASE



The
Company leases its headquarters office space in Burbank, California under an operating lease that expires on July 31, 2023. At
December 31, 2019, the Company did not have any other leases.



Operating
lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of
lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities
represent our obligation to make lease payments arising from the lease. Generally the implicit rate of interest in arrangements
is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease
payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit
rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.



Prior to
January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company
adopted the guidance of ASC 842, Leases (“ASC 842”), which requires an entity to recognize a right-of-use asset and
a lease liability for certain leases. The Company adopted ASC 842 using a modified retrospective approach. As a result, the comparative
financial information has not been updated and the required disclosures prior to the date of adoption have not been updated and
continue to be reported under the accounting standards in effect for those periods. The adoption of ASC 842 on January 1, 2019,
resulted in the recognition of operating lease right-of-use assets of $420,112 and corresponding lease liabilities of approximately
the same amount. There was no cumulative-effect adjustment to accumulated deficit. As of December 31, 2019, the unamortized right
of use asset was $332,980 and total lease liabilities were $337,453, of which $85,662 was current.



F-12







The
components of lease expense and supplemental cash flow information related to leases for the period are as follows:



|                                                                                                                             |  | Year ended December 31, 2019 |        
|---------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------
|Lease Cost                                                                                                                   |  |                              |        
|Operating lease cost (included in selling, general, and administrative
    expense in the Company’s statement of operations) |  | $                            | 107,588
|                                                                                                                             |  |                              |        
|Other Information                                                                                                            |  |                              |        
|Cash paid for amounts included in the measurement of lease liabilities for 2019                                              |  | $                            | 98,375 
|Weighted average remaining lease term – operating leases (in years)                                                          |  |                              | 3.5    
|Average discount rate – operating leases                                                                                     |  |                              | 4      

The
supplemental balance sheet information related to leases for the period is as follows:



|                                       |  | At December 31, 2019 |        
|-------------------------------------- |  | -------------------- | -------
|Operating leases                       |  |                      |        
|Long-term right-of-use assets          |  | $                    | 332,980
|                                       |  |                      |        
|Short-term operating lease liabilities |  | $                    | 85,662 
|Long-term operating lease liabilities  |  |                      | 251,791
|Total operating lease liabilities      |  | $                    | 337,453



Maturities
of the Company’s lease liabilities are as follows:





|Year Ending                                       |  | Operating
    Leases |        
|------------------------------------------------- |  | -------------------- | -------
|2020                                              |  | $                    | 97,625 
|2021                                              |  |                      | 102,506
|2022                                              |  |                      | 107,632
|2023                                              |  |                      | 55,126 
|Total lease payments                              |  |                      | 362,889
|Less: Imputed interest/present
    value discount |  |                      | (25,436
|Present value of lease liabilities                |  |                      | 337,453
|Less current portion                              |  |                      | (85,662
|Operating lease liabilities, long-term            |  | $                    | 251,791



Lease
expense were $107,588 and $42,040 during the year ended December 31, 2019 and the nine-month period ended December 31, 2018, respectively.



Subsequent to December 31, 2019, the
Company commenced leasing a second facility in addition to its headquarters facility described above (See Note 13).



NOTE
6 – NOTES PAYABLE



|                                                                                                                                                                                                                                                                                     |  | December 31, 2019 |        |  | December 31, 2018 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ------ |  | ----------------- | -
|                                                                                                                                                                                                                                                                                     |  |                   |        |  |                   |  
|Note payable, in default, due January 13, 2019, interest at 8.3% per annum,
    secured by all the assets of the Company. As of the date of the financial statements, the note has not been fully paid, and
    the Company is in negotiations with the lender to cure this default. |  | $                 | 55,850 |  |                   | $
|                                                                                                                                                                                                                                                                                     |  |                   |        |  |                   |  
|Note payable, unsecured, due January 6, 2019, interest at 10% per year. The note was paid off in 2019.                                                                                                                                                                               |  |                   | -      |  |                   |  
|                                                                                                                                                                                                                                                                                     |  |                   |        |  |                   |  
|Total notes payable (all current portion)                                                                                                                                                                                                                                            |  | $                 | 55,850 |  |                   | $



F-13







NOTE
7 – CONVERTIBLE NOTES PAYABLE



At
December 31, 2018, there was no balance of convertible notes payable. During 2019, the Company issued two convertible promissory
notes for the principal sum of $355,000, of which $326,800 was received as proceeds, and $28,200 was recorded as original issue
discount (OID). During 2019, one convertible note for $73,000 was repaid. At December 31, 2019, one convertible note for $282,000
was outstanding. The outstanding note is unsecured, bears interest at 12%, and is due April 29, 2020.



At
the option of the holders, the notes issued in 2019 are convertible into shares of the Company’s common stock at a price
per share discount of 39% to 40% of the average market price of the Company’s common stock, as defined. As a result, the
Company determined that the conversion option of the convertible notes were not considered indexed to the Company’s own
stock and characterized the fair value of the conversion features as derivative liabilities upon issuance. The Company determined
that upon issuance of the convertible notes in October 2019, the initial fair value of the embedded conversion features totaled
$565,195 (see Note 8), of which $326,800 was recorded as debt discount offsetting the face amount of the convertible notes, and
the remainder of $238,395 was recorded as private placement costs.



At
December 31, 2018, there was no balance of discount on convertible notes payable. During 2019, note discount of $355,000 was
recorded, made up of $28,200 OID and $326,800 of discount related to derivative liabilities. In addition, $54,990 of loan
costs recorded on one convertible note (see below) are included with the discount. The discount and loan costs are amortized
over the term of the related note payable. During 2019, total debt discount and loan costs amortization was $185,330, and at
December 31, 2019, the unamortized debt discount and loan fee totaled $224,660.



In
connection with the issuance of one convertible note with the principal balance of $282,000, the Company issued as a commitment
fee 141,000 shares of its common stock (the “Non-Returnable Shares”) as well as 705,000 shares of its common stock
(the “Returnable Shares”). The Company recorded the fair value of the Non-Returnable fees of $54,990 as a loan cost.
The Returnable Shares are an own-share lending arrangement issued in contemplation of a debt offering and such shares will be
returned to the Company if no event of default has occurred prior to April 29, 2020, the maturity date of the note. At issuance,
the fair value of the share lending arrangement was determined to be immaterial. In accordance with ASC 470-20, the shares are
not deemed issued until it becomes more likely than not that they will not be returned and at such point the shares should be
measured at fair value and such value recognized as a financing cost. At December 31, 2019, management determined that it is probable
that the Company will pay the note in full when due, and meet all other conditions in the note agreement. Accordingly, management
feels that it is more likely than not that the returnable shares will be returned to the Company and therefore the 705,000 Returnable
Shares have not been recorded as being issued as of December 31, 2019, nor are they included in basic net loss per share or as
potentially dilutive shares in calculating the diluted net loss per share.



Note
8 – DERIVATIVE FINANCIAL INSTRUMENTS



During
2019, the Company had convertible promissory notes outstanding that are convertible into shares of common stock of the Company
at the option of the holder at price per share discounts ranging from 39% to 40% of the Company’s common stock market price,
as defined in the note agreements. As the ultimate determination of shares to be issued upon conversion of these notes could exceed
the current number of available authorized shares, the Company determined that the conversion features of the convertible notes
were not considered indexed to the Company’s own stock and characterized the fair value of the conversion features as derivative
liabilities. Accordingly, the conversion features of the notes were separated from the host contracts (i.e. the notes) and characterized
as derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement
of operations.



At
December 31, 2018, there was no balance of derivative liabilities. During the year ended December 31, 2019, the Company recorded
additions of $565,195 related to the conversion features of notes issued during the period (see Note 7), and a decrease
in fair value of derivatives of ($19,491). In addition, the Company recorded a decrease in derivative liability of ($145,565)
related to derivative liabilities that were extinguished when the related convertible note payable was paid off (see Note 7).
At December 31, 2019, the balance of the derivative liabilities was $400,139.



The
derivative liabilities were valued at the following dates using a probability weighted Black-Scholes-Merton model with the following
assumptions:





|                         |  | December 31, 2019 |         |   | October 2019 
(dates of inception) |  
|------------------------ |  | ----------------- | ------- | - | ---------------------------------- | -
|Conversion feature:      |  |                   |         |   |                                    |  
|Risk-free interest rate  |  |                   | 1.77    | % |                                    |  
|Expected volatility      |  |                   | 222     | % |                                    |  
|Expected life (in years) |  |                   | 1 year  |   |                                    |  
|Expected dividend yield  |  |                   | -       |   |                                    |  
|                         |  |                   |         |   |                                    |  
|Fair Value:              |  |                   |         |   |                                    |  
|Conversion feature       |  | $                 | 400,139 |   |                                    | $





F-14







The
risk-free interest rate was based on rates established by the Federal Reserve Bank. The expected volatility is based on the historical
volatility of the Company’s stock. The expected life of the conversion feature of the notes was based on the remaining terms
of the related notes. The expected dividend yield was based on the fact that the Company has not customarily paid dividends to
its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future.



NOTE
9 – INCOME TAXES



The
Company had no income tax expense for the year ended December 31, 2019and the nine-month period ended December 31, 2018. The following is a reconciliation of the statutory federal income tax rate
to the Company’s effective tax rate:





|                                  |  | Year ended December
    31, 2019 |       |   | Nine-months ended December
    31, 2018 | 
|--------------------------------- |  | -------------------------------- | ----- | - | --------------------------------------- | 
|                                  |  |                                  |       |   |                                         | 
|Federal tax at statutory rate     |  |                                  | 21.0  | % |                                         | 
|State tax, net of federal benefit |  |                                  | 7.0   |   |                                         | 
|Change in valuation allowance     |  |                                  | (28.0 | ) |                                         | 
|                                  |  |                                  |       |   |                                         | 
|Effective income tax rate         |  |                                  | 0.0   | % |                                         | 



Deferred
tax assets and liabilities consist of the following:





|                                   |  | December 31, 2019 |            |   | December 31, 2018 |  
|---------------------------------- |  | ----------------- | ---------- | - | ----------------- | -
|Deferred tax assets:               |  |                   |            |   |                   |  
|Stock-based compensation           |  | $                 | 1,039,000  |   |                   | $
|Operating lease liability          |  |                   | 94,000     |   |                   |  
|Derivative expenses                |  |                   | 67,000     |   |                   |  
|Net operating loss carryforwards   |  |                   | 1,132,000  |   |                   |  
|Gross deferred tax assets          |  |                   | 2,332,000  |   |                   |  
|Less: valuation allowance          |  |                   | (2,103,000 | ) |                   |  
|Total deferred tax assets          |  |                   | 229,000    |   |                   |  
|Deferred tax liabilities:          |  |                   |            |   |                   |  
|Depreciation                       |  |                   | 90,000     |   |                   |  
|Derivative gain                    |  |                   | 46,000     |   |                   |  
|Operating lease right-of-use asset |  |                   | 93,000     |   |                   |  
|Total deferred tax liabilities     |  |                   | 229,000    |   |                   |  
|Net deferred tax asset (liability) |  | $                 | -          |   |                   | $



F-15







The
provisions of ASC Topic 740, Accounting for Income Taxes, require an assessment of both positive and negative evidence when determining
whether it is more likely than not that deferred tax assets are recoverable. For the year ended December 31, 2019 and the nine-month
period ended December 31, 2018, based on all available objective evidence, including the existence of cumulative losses, the Company
determined that it was more likely than not that the net deferred tax assets were not fully realizable. Accordingly, the Company
established a full valuation allowance against its net deferred tax assets. The Company intends to maintain a full valuation allowance
on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance. During the
year ended December 31, 2019 and the nine-month period ended December 31, 2018, the valuation allowance increased by $1.5 million
and $0.5 million, respectively.



At
December 31, 2019 and 2018, the Company had available Federal and state net operating loss carryforwards (“NOL”s)
to reduce future taxable income. For Federal purposes the amounts available were approximately $4.3 million and $1.6 million,
respectively. For state purposes approximately $3.1 million and $1.1 was available at December 31, 2019 and 2018, respectively.
The Federal carryforwards expire on various dates through 2039 and the state carryforwards expire through 2036. Due to restrictions
imposed by Internal Revenue Code Section 382 regarding substantial changes in ownership of companies with loss carryforwards,
the utilization of the Company’s NOL may be limited as a result of changes in stock ownership. NOLs incurred subsequent
to the latest change in control are not subject to the limitation.



The
Company’s operations are based in California and it is subject to Federal and California state income tax. Tax years after
2015 are open to examination by United States and state tax authorities.



The
Company adopted the provisions of ASC 740, which requires companies to determine whether it is “more likely than not”
that a tax position will be sustained upon examination by the appropriate taxing authorities before any tax benefit can be recorded
in the financial statements. ASC 740 also provides guidance on the recognition, measurement, classification and interest and penalties
related to uncertain tax positions.As of December 31, 2019
and December 31, 2018, no liability for unrecognized tax benefits was required to be recorded or disclosed.



NOTE
10 – STOCKHOLDERS’ EQUITY



The
Company’s authorized capital consists of 125,000,000 shares, of which 100,000,000 shares are designated as shares of common
stock, par value $0.001 per share, and 25,000,000 shares are designated as shares of preferred stock, par value $0.001 per share.
No shares of preferred stock are currently outstanding. Shares of preferred stock may be issued in one or more series, each series
to be appropriately designated by a distinguishing letter or title, prior to the issuance of any shares thereof. The voting powers,
designations, preferences, limitations, restrictions, relative, participating, options and other rights, and the qualifications,
limitations, or restrictions thereof, of the preferred stock are to be determined by the Board of Directors before the issuance
of any shares of preferred stock in such series.



Common
stock issued for cash



During
the year ended December 31, 2019 and the nine-month period ended December 31, 2018, the Company completed a private placements
of shares at prices ranging from $.10 to $0.50 per share. A total of $2,926,375 was received, including $2,090,375 in 2019
for shares issued in 2019, $530,000 in 2019 for shares subscribed, and $306,000 in 2018 for shares issued in 2019.



The
Company agreed to issue a total 12,011,269 shares in the private placements, of which 6,942,750 shares were
issued through December 31, 2019, and 5,068,519 shares are included in shares to be issued on the accompanying financial statements.



NOTE
11 – SHARE-BASED PAYMENTS



Restricted
common stock



On
May 20, 2019, the Company agreed to issue 8,000,000 shares of the Company’s common stock with vesting terms to a consultant
for services (see Note 12). 1,000,000 shares vested immediately, and the balance of 7,000,000 shares will vest 625,000 shares
per quarter over 2.8 years. In the event the consultants service with the Company terminates, any or all of the shares of common
stock held by such recipient that have not vested as of the date of termination are forfeited to the Company in accordance with
such restricted grant agreement.



The
total fair value of the 8,000,000 shares was determined to be $4,000,000 based on the price per shares of a contemporaneous private
placement of the Company’s common stock on the date granted. The Company accounts for the share awards using a graded vesting
attribution method over the requisite service period, as if each tranche were a separate award. During the year ended December
31, 2019, total share-based expense recognized related to vested restricted shares totaled $2,317,868. At December 31, 2019, there was $1,628,132 of unvested compensation related to these awards that will be amortized over a remaining
vesting period of 2.3 years.



F-16







The
following table summarizes restricted common stock activity for the year ended December 31, 2019:



|                                         |  | Number
    of shares |            |   | Fair
    value of shares |  
|---------------------------------------- |  | -------------------- | ---------- | - | ------------------------ | -
|Non-vested
    shares, January 1, 2019   |  |                      | -          |   |                          | $
|Granted                                  |  |                      | 8,000,000  |   |                          |  
|Vested                                   |  |                      | (2,250,000 | ) |                          |  
|Forfeited                                |  |                      | -          |   |                          |  
|Non-vested
    shares, December 31, 2019 |  |                      | 5,750,000  |   |                          | $



As of December 31, 2019, no shares have been issued and 2,250,000 vested shares are
included in shares to be issued on the accompanying financial statements



Common
stock issued for services



During
the year ended December 31, 2019, the Company issued 212,505 shares of common stock to a consultant for services rendered. The
shares were valued at $106,253 based on the price per share of a contemporaneous private placement of the Company’s common
stock on the date granted and included in selling, general, and administrative expense on the accompanying financial statements.



Stock
Options



During
the year ended December 31, 2019, the Company issued options exercisable into 3,290,000 shares of common stock. 1,800,000 options
vested immediately, and the balance of 1,490,000 options vest over various periods up to four years. The options have an exercise
price of $0.23 per share, and expire in ten years. Total fair value of these options at grant date was approximately $1,179,000,
which was determined using the Black-Scholes-Merton option pricing model with the following average assumption: stock price ranging
from $0.23 to $0.38 per share, expected term ranging from five to seven years, volatility ranging from 213% to 218%, dividend
rate of 0% and risk-free interest rate of 1.77%. During the year ended December 31, 2019, the Company recognized $711,404 of compensation
expense relating to vested stock options. As of December 31, 2019, the amount of unvested compensation related to stock options
was approximately $468,000 which will be recorded as an expense in future periods as the options vest.



The
risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding with the
expected term of the share option award; the expected term represents the weighted-average period of time that share option awards
granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise behavior;
the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend yield
is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.



A
summary of stock option activity during the year ended December 31, 2019 and the nine-month period ended December 31, 2018 is
as follows:



|                                                            |  |  | Number of warrants |           |  | Weighted Average  Exercise Price |   |      | Contractual 
Life in Years | 
|----------------------------------------------------------- |  |  | ------------------ | --------- |  | -------------------------------- | - | ---- | -------------------------- | 
|                                                            |  |  |                    |           |  |                                  |   |      |                            | 
|Options Outstanding and Exercisable as of March 31, 2018    |  |  |                    | -         |  |                                  | $ | -    |                            | 
|Granted                                                     |  |  |                    | -         |  |                                  | $ | -    |                            | 
|Exercised                                                   |  |  |                    | -         |  |                                  |   | -    |                            | 
|Expired                                                     |  |  |                    | -         |  |                                  |   | -    |                            | 
|Options Outstanding and Exercisable as of December 31, 2018 |  |  |                    | -         |  |                                  | $ | -    |                            | 
|Granted                                                     |  |  |                    | 3,290,000 |  |                                  |   | 0.23 |                            | 
|Exercised                                                   |  |  |                    | -         |  |                                  |   | -    |                            | 
|Expired                                                     |  |  |                    | -         |  |                                  |   | -    |                            | 
|Options Outstanding as of December 31, 2019                 |  |  |                    | 3,290,000 |  |                                  |   | 0.23 |                            | 
|Options Exercisable as of December 31, 2019                 |  |  |                    | 1,800,000 |  |                                  | $ | 0.23 |                            | 



F-17







At
December 31, 2019, the aggregate intrinsic value of the stock options was $322,749.



Stock
Warrants



In
2018, the Company issued warrants exercisable into 3,000,000 shares of common stock. The warrants were fully vested when issued,
have an exercise price of $0.30 per share, and expire in 2022. Total fair value of these warrants at grant date was approximately
$377,000, which was determined using the Black-Scholes-Merton option pricing model with the following average assumption: stock
price of $0.20 per share, expected term of four years, volatility of 170%, dividend rate of 0% and risk-free interest rate of
1.76%. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of measurement corresponding
with the expected term of the share option award; the expected term represents the weighted-average period of time that share
option awards granted are expected to be outstanding giving consideration to vesting schedules and historical participant exercise
behavior; the expected volatility is based upon historical volatility of the Company’s common stock; and the expected dividend
yield is based on the fact that the Company has not paid dividends in the past and does not expect to pay dividends in the future.
During the year ended December 31, 2019, there was a cashless exercise of all of the 3,000,000 warrants.



A
summary of warrant activity during the year ended December 31, 2019 and the nine-month period ended December 31, 2018 is as follows:



|                                                             |  |  | Number of warrants |            |   | Weighted Average  Exercise Price |   |      | Contractual 
Life in Years | 
|------------------------------------------------------------ |  |  | ------------------ | ---------- | - | -------------------------------- | - | ---- | -------------------------- | 
|                                                             |  |  |                    |            |   |                                  |   |      |                            | 
|Warrants Outstanding and Exercisable as of March 31, 2018    |  |  |                    | -          |   |                                  | $ | -    |                            | 
|Granted                                                      |  |  |                    | 3,000,000  |   |                                  | $ | 0.30 |                            | 
|Exercised                                                    |  |  |                    | -          |   |                                  |   | -    |                            | 
|Expired                                                      |  |  |                    | -          |   |                                  |   | -    |                            | 
|Warrants Outstanding and Exercisable as of December 31, 2018 |  |  |                    | 3,000,000  |   |                                  | $ | 0.30 |                            | 
|Granted                                                      |  |  |                    | -          |   |                                  |   | -    |                            | 
|Exercised                                                    |  |  |                    | (3,000,000 | ) |                                  | $ | 0.30 |                            | 
|Expired                                                      |  |  |                    | -          |   |                                  |   | -    |                            | 
|Warrants Outstanding and Exercisable as of December 31, 2019 |  |  |                    | -          |   |                                  | $ | -    |                            | 



NOTE
12 – COMMITMENTS AND CONTINGENCIES





The
Company has an agreement with an individual in consideration of the Company’s exclusive use of patented technology developed
by the individual. Pursuant to the agreement, as amended, the Company shall pay a royalty of 25% of all the net income from the
sale of licensed products, as defined with a minimum royalty of $35,000 per month payable in cash or common stock of the Company.
In addition, the Company agreed to issue 8,000,000 shares of the Company’s common stock with vesting terms to the individual
(see Note 11). During the year ended December 31, 2019, the Company paid $343,300 to the individual.



NOTE
13 – SUBSEQUENT EVENTS



In
February 2020, the Company issued one unsecured convertible promissory note for $153,000, bearing interest at 22% per annum, and
maturing in August 2020. The note is convertible at a 39% discount to the price of the Company’s common stock, as defined.



In
February 2020, the Company received $30,000 for subscriptions for shares of common stock to be issued in a private placement.









On
December 19, 2019, the Company entered into a non-cancelable real property lease agreement for approximately 3096 square feet
of office, research, and production space in Burbank, California. The Company took possession of the space in February
2020. The lease term is for 60 months with an option to extend the term for an additional five years thereafter. The lease
has with the annual fixed rental payments escalating from $7,500 to $8,441 during the original term. The aggregate total
fixed rent is approximately $478,000 and will result in the recognition of an operating lease right-of-use asset of
approximately $430,000 and corresponding lease liabilities of approximately the same amount. The Company also paid a security
deposit of $16,883.



In
March 2020, the World Health Organization declared coronavirus COVID-19 a global pandemic. This contagious disease outbreak, which
has continued to spread, and any related adverse public health developments, have adversely affected workforces, customers, economies,
and financial markets globally, likely leading to an economic downturn. It has also disrupted the normal operations of many businesses.
This outbreak could decrease spending, adversely affect demand for our product and harm our business and results of operations.
It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business
or results of operations at this time.



In March 2020, the Company issued approximately 241,000 shares of
common stock with a fair value of approximately $28,000 to employees for services.



F-18