What changed in this filing

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Item 1. Financial Statements

2021-11-15 compared with 2021-08-11 · 152 added, 173 removed, 412 unchanged (44% of the section changed)

2 unchanged sentences

Consolidated Balance Sheets

June 30, 2021

December 31, 2020

September 30,

Current assets:

42 unchanged sentences

Consolidated Statements of Operations

For the three months

ended June 30,

For the six months

ended June 30,

the three and nine months ended September 30, 2021 and 2020

For the three months ended September 30

For the nine months ended September 30

Cost of revenue

7 unchanged sentences

( 2,936,392 )

( 2,100,008 )

Other (income)/expenses

Other (income)/expenses/loss from derivative liability

Other (income) from debt extinguishment - PPP

Other (income)/expenses/loss from debt extinguishment

(Gain)/Loss from derivative liability

(Gain)/Loss from debt extinguishment - PPP

(Gain)/Loss on extinguishment of debt

Interest expense

Total other (income) expense

9 unchanged sentences

Consolidated Statements of Cash Flows

the six months ended June 30, 2021 and 2020

the nine months ended September 30, 2021 and 2020

Net Cash (used for) operating activities

9 unchanged sentences

Repayment of convertible notes

Payments for Debt issue cost

Payments of operating leases

3 unchanged sentences

Cash and restricted cash, end of year

Accrued interest paid in stock

Net carrying value of convertible notes and accrued interest settled through issuance of stock (debt extinguishment)

Extinguishment of derivative liability

Non-cash financing and investing activities

Executive deferred compensation settled through issuance of warrants

Net carrying value of convertible notes and accrued interest settled through issuance of stock (debt extinguishment)

Accrued interest settled through issuance of stock

Debt discount warrant and derivative liability

Offering and debt issuance costs included in accounts payable

Extinguishment of derivative liability

Equipment included in accrued liability

the accompanying notes to the condensed consolidated financial statements.

23 unchanged sentences

cash on deposit that exceeds $ 250,000 in the financial institutions is financially sound and the risk of loss is minimal.

June 30, 2021 and December 31, 2020, the Company had $ 142,382 and $ 142,382 , respectively, in restricted cash related to a co-packing

September 30, 2021 and December 31, 2020, the Company had $ 142,382 and $ 142,382 , respectively, in restricted cash related to a co-packing

Value Measurement

17 unchanged sentences

used to determine the fair value.

financial instruments consist of cash, accounts receivable, accounts payable, advanced payments, restricted cash, and the PPP loan.

carrying value of our financial instruments approximates their fair value.

The PPP loan approximates fair value as forgiveness is expected

in the near term.

Food Group Inc.

to Condensed Consolidated Financial Statements

financial instruments consist of cash, accounts receivable, accounts payable, advanced payments, restricted cash, convertible debt, derivative

liability and the PPP loan.

The carrying value of our financial instruments approximates their fair value.

The PPP loan approximates

fair value as forgiveness is expected in the near term.

receivable are typically unsecured.

2 unchanged sentences

is evaluated prior to a sale.

As of June 30, 2021 and December 31, 2020, the Company’s allowance for doubtful accounts was $ 128,230

As of September 30, 2021 and December 31, 2020, the Company’s allowance for doubtful accounts was

$ 131,576 and $ 133,424 , respectively.

2 unchanged sentences

The Company monitors the remaining useful life of its inventory and establishes a reserve of obsolescence where appropriate.

As of September

30, 2021 and December 31, 2020, the Company’s inventory reserve was $ 53,188 and $ 59,093 , respectively.

20 unchanged sentences

We have not recorded any impairment charges during the periods presented.

Property,Plant,

and Equipment

Plant, and Equipment

plant, and equipment is stated at cost less accumulated depreciation and accumulated impairment loss, if any.

4 unchanged sentences

The estimated useful lives used for financial statement purposes are:

Furniture and fixtures:

and fixtures:

Manufacturing

35 unchanged sentences

and Development

for research activities relating to product development and improvement are charged to expense as incurred.

We incurred $ 70,304 and $ 93,730 ,

in research and development expenses for the three months ending June 30, 2021 and 2020, respectively.

For the six months ending June

30, 2021 and 2020, research and development costs totaled $ 138,446 and $ 179,154 , respectively.

for research activities relating to product development and improvement are charged to general and administrative expense as incurred.

We incurred $ 34,454 and $ 147,738 , in research and development expenses for the three months ending September 30, 2021 and 2020, respectively.

For the nine months ending September 30, 2021 and 2020, research and development costs totaled $ 172,900 and $ 326,892 , respectively.

Food Group Inc.

to Condensed Consolidated Financial Statements

and Storage Costs

and handling costs are included in general and administrative expenses.

For the three months ending June 30, 2021 and 2020, shipping

For the three months ending September 30, 2021 and 2020, shipping

and storage costs totaled $ 335,414 and $ 126,737 , respectively.

For the six months ending June 30, 2021 and 2020, shipping and storage

For the nine months ending September 30, 2021 and 2020, shipping and storage

costs totaled $ 716,552 and $ 356,270 , respectively.

9 unchanged sentences

As a lessee, the Company leases office space.

Food Group Inc.

to Condensed Consolidated Financial Statements

provision for income taxes is determined in accordance with the provisions of ASC Topic 740, Accounting for Income Taxes (“ASC

41 unchanged sentences

or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

Food Group Inc.

to Condensed Consolidated Financial Statements

Extinguishment

3 unchanged sentences

extinguished.

Accordingly, the Company recorded a net loss of $ 193,562 and net gain of $ 379,200 , respectively, non-cash gain/loss on

extinguishment of debt in its statements of operations for the six months ended June 30, 2021 and 2020, and a net loss of $ 193,562 and

$ 0 for the three months ended June 30, 2021 and 2020 respectively.

Accordingly, the Company recorded a net loss of $ 193,562

and net gain of $ 379,200 ,

respectively, non-cash gain/loss on extinguishment of debt in its statements of operations for the nine months ended September 30, 2021

and 2020, and zero net loss for the three months ended September 30, 2021 and 2020 respectively.

calculate net loss per share in accordance with ASC Topic 260.

2 unchanged sentences

equivalents outstanding for the period in the denominator.

At June 30, 2021 and 2020 any equivalents would have been anti-dilutive as

we had losses for the years then ended.

Food Group Inc.

to Condensed Consolidated Financial Statements

At September 30, 2021 and 2020 any equivalents would have been anti-dilutive

as we had losses for the periods then ended.

Based Compensation

4 unchanged sentences

stock ownership plans.

consists of the following at June 30, 2021 and December 31, 2020:

Schedule of Inventory

consists of the following at September 30, 2021 and December 31, 2020:

Raw materials

2 unchanged sentences

Property Plant and Equipment

classes of property and equipment at June 30, 2021 and December 31, 2020:

classes of property and equipment at September 30, 2021 and December 31, 2020:

of Major Classes of Property and Equipment

7 unchanged sentences

Property and equipment, net of depreciation

recorded depreciation expense related to these assets of $ 130,258 and $ 153,500 for the three-months ended June 30, 2021 and 2020, respectively

and $ 261,086 and $ 303,648 for the six months ended June 30, 2021 and 2020, respectively.

Depreciation expense in Cost of Goods Sold was

$ 11,564 and $ 1,155 for three months ended June 30, 2021 and 2020, respectively, and $ 17,673 and $ 9,602 for the six months ended June

30, 2021 and 2020, respectively.

Intangible Assets

of June 30, 2021, intangible assets consist of patent costs of $ 768,138 , trademarks of $ 121,661 and accumulated amortization of $ 490,043 .

of December 31, 2020, intangible assets consist of patent costs of $ 768,138 , trademarks of $ 119,911 and accumulated amortization of $ 457,833 .

Food Group Inc.

to Condensed Consolidated Financial Statements

recorded depreciation expense related to these assets of $ 146,346 and $ 122,827 for the three-months ended September 30, 2021 and 2020,

respectively and $ 407,432 and $ 394,670 for the nine months ended September 30, 2021 and 2020, respectively.

Depreciation expense in Cost

of Goods Sold was $ 0 and $ 5,115 for three months ended September 30, 2021 and 2020, respectively, and $ 17,673 and $ 14,717 for the nine

months ended September 30, 2021 and 2020, respectively.

Intangible Assets

of September 30, 2021, intangible assets consist of patent costs of $ 768,138 , trademarks of $ 124,285 and accumulated amortization of

of December 31, 2020, intangible assets consist of patent costs of $ 768,138 , trademarks of $ 119,911 and accumulated amortization of $ 457,833 .

amounts carried on the balance sheet represent cost to acquire, legal fees and similar costs relating to the patents incurred by the

1 unchanged sentence

The amount charged to amortization

was $ 16,105 and $ 15,902 for the three months ended June 30, 2021 and 2020, respectively, and $ 32,210 and $ 31,805 for the six months ended

June 30, 2021 and 2020, respectively.

future amortization expense related to patents as of June 30, 2021, is as follows:

Schedule of Estimated Future Amortization Expense Related to Intangible Property

was $ 16,105 and $ 15,902 for the three months ended September 30, 2021 and 2020, respectively, and $ 48,316 and $ 47,707 for the nine months

ended September 30, 2021 and 2020, respectively.

future amortization expense related to patents as of September 30, 2021, is as follows:

of Estimated Future Amortization Expense Related to Intangible Property

Total Amortization

Years ending December 31,

asset, net of amortization

Intangible asset, net of amortization

Related Parties

3 unchanged sentences

Paycheck Protection Program (PPP) loan

May 7, 2020 the Company was granted a $ 568,131 loan under the PPP administered by a Small Business Administration (SBA) approved partner.

The loan, which matures in two years , is uncollateralized and is fully guaranteed by the Federal government.

The Company is eligible

for loan forgiveness of up to 100 % of the loan, upon meeting certain requirements.

On May 20, 2021 the loan for $ 568,131 was legally

released and forgiven by the SBA.

Forgiveness income of $ 568,131 has been recorded for the three and six months ended June 30, 2021.

January 27, 2021, the Company was granted a second $ 568,131 loan under the PPP administered by an SBA approved partner.

The loan, which

matures in five years , at an interest rate of 1 %, and is uncollateralized and is fully guaranteed by the Federal government.

period is 24 weeks plus 10 months from the loan note date .

The Company is eligible for loan forgiveness of up to 100 % of the loan, upon

meeting certain requirements.

The Company has recorded a note payable and will record the forgiveness upon being legally released from

the loan obligation by the SBA.

The Company will be required to repay any remaining balance, plus interest accrued at 1 percent, in monthly

payments commencing upon notification that the loan will not be forgiven or only partially forgiven.

repayment for the PPP loan as of June 30, 2021, are as follows:

Schedule of Repayment of Paycheck Protection Program (PPP) Loan

Total Repayment

Years ending December 31,

2021 (six months remaining)

Repayment of debt

On May 7, 2020 the Company was granted a $ 568,131

loan under the PPP administered by a Small Business Administration (SBA) approved partner.

The loan, which was to mature in two

years , was uncollateralized and was fully guaranteed by the Federal government.

The Company was eligible for loan

forgiveness of up to 100 % of the loan, upon meeting certain requirements.

On May 20, 2021 the loan for $ 568,131 was legally released

and forgiven by the SBA.

Forgiveness income of $ 568,131 has been recorded for the nine months ended September 30, 2021.

On January 27, 2021, the Company was granted a second

$ 568,131 loan under the PPP administered by an SBA approved partner.

The loan, which matures in five years , has an interest

rate of 1 %, and is uncollateralized and is fully guaranteed by the Federal government.

The deferral period is 24 weeks plus 10 months

from the loan note date.

The Company is eligible for loan forgiveness of up to 100 % of the loan, upon meeting certain requirements.

Company has recorded a note payable and will record the forgiveness upon being legally released from the loan obligation by the SBA.

The Company will be required to repay any remaining balance, plus interest accrued at 1 percent, in monthly payments commencing upon

notification that the loan will not be forgiven or only partially forgiven.

Food Group Inc.

to Condensed Consolidated Financial Statements

repayment for the PPP loan as of September 30, 2021, are as follows:

of Repayment of Paycheck Protection Program (PPP) Loan

ending December 31,

(three months remaining)

Convertible Notes (Related and Unrelated Party)

of June 30, 2021, the Company settled all outstanding convertible note which included the $ 1,071,000

Series CN Note 1 noteholders.

The debt settlement

consisted of debt converted to company stock of $ 231,000

related party) in principal and $ 192,663

related party) in interest into 1,159,243

shares of common stock, and debt in the amount

related party) was repaid.

convertible notes consist of the following components as of June 30, 2021 and December 31, 2020:

of September 30, 2021, the Company settled all outstanding convertible note which included the $ 1,071,000 Series CN Note 1 noteholders.

The debt settlement consisted of debt converted to company stock of $ 231,000 ($ 30,000 related party) in principal and $ 192,663 ($ 37,689

related party) in interest into 1,159,243 shares of common stock, and debt in the amount of $ 840,000 ($ 180,000 related party) was repaid.

convertible notes consist of the following components as of September 30, 2021 and December 31, 2020:

Schedule of Convertible Notes

June 30, 2021

December 31, 2020

September 30,

Convertible notes

6 unchanged sentences

Total convertible notes

of June 30, 2021, the Company settled all outstanding convertible note holders which included the $ 168,000

Series CN Note 2 noteholders.

The debt settlement consisted of debt converted to company stock of $ 168,000

in principal and $ 41,747

in interest into 582,630

shares of common stock.

convertible notes consist of the following components as of June 30, 2021 and December 31, 2020:

Schedule of Convertible Notes

June 30, 2021

December 31, 2020

of September 30, 2021, the Company settled all outstanding convertible note holders which included the $ 168,000 Series CN Note 2 noteholders.

The debt settlement consisted of debt converted to company stock of $ 168,000 in principal and $ 41,747 in interest into 582,630 shares

of common stock.

convertible notes consist of the following components as of September 30, 2021 and December 31, 2020:

of Convertible Notes

September 30,

Convertible notes

9 unchanged sentences

Note – net of Discount $ 810,995 .

Food Group Inc.

to Condensed Consolidated Financial Statements

Derivative Liabilities

discussed in Note 7, Convertible Notes, the Company had $ 168,000 of principal outstanding in CN Notes 2 that contained variable conversion

The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the Company’s

The conversion terms of the convertible notes were variable based on certain factors, such as the future price of

the Company’s common stock.

The number of shares of common stock to be issued was based on the future price of the Company’s

common stock;

The number of shares of common stock to be issued was based on the future price of the Company’s common stock, therefore

the number of shares of common stock issuable upon conversion of the promissory note is indeterminate.

The Company fair valued the variable

conversion provisions each reporting period.

The fair value was reported as a derivative liability in the accompanying consolidated balance

sheets and the change in value was recorded as a gain or loss in the accompanying consolidated statements of operations.

therefore the number of shares of common stock issuable upon conversion of the promissory note was indeterminate.

The Company fair valued the variable conversion provisions each reporting period.

The fair value was reported as a derivative liability

in the accompanying consolidated balance sheets and the change in value was recorded as a gain or loss in the accompanying consolidated

statements of operations.

fair values of the Company’s derivative liabilities are estimated at the issuance date and are revalued at each subsequent reporting

As of June 30, 2021, the Convertible Noteholders discussed in Note 7 were settled.

As of September 30, 2021, the Convertible Noteholders discussed in Note 7 were settled.

Upon debt extinguishment the Company’s

derivative liability was revalued at May 26, 2021 with value of $ 25,170 ,

which resulted in a loss of $ 483

for the three months

ended June 30, 2021, and a gain of $ 16,305

for the six months

ended June 30, 2021.

Food Group Inc.

to Condensed Consolidated Financial Statements

derivative liability was revalued at May 26, 2021 with value of $ 25,170 , which resulted in a gain of $ 16,305 for the nine months ended

September 30, 2021.

fair value of the derivative liabilities for CN Notes 2 was calculated using the Black-Scholes model using the following assumptions.

Schedule of Fair Value of the Derivative Liability

of Fair Value of the Derivative Liability

Expected life

4 unchanged sentences

of the derivative liability measured at fair value on a recurring basis with the use of significant unobservable inputs (level 3) from

December 31, 2020 to June 30, 2021:

Schedule of Derivative Liability Measured at Fair Value on a Recurring Basis

December 31, 2020 to September 30, 2021:

of Derivative Liability Measured at Fair Value on a Recurring Basis

December 31, 2020

1 unchanged sentence

Extinguishment change in derivative from debt settlement

June 30, 2021

September 30, 2021

following table presents the Company’s fair value hierarchy for applicable assets and liabilities measured at fair value as of

December 31, 2020 and June 30, 2021:

Schedule of Fair Value Hierarchy of Assets and Liabilities

December 31, 2020 and September 30, 2021:

of Fair Value Hierarchy of Assets and Liabilities

Derivative Liability December 31, 2020

Derivative Liability June 30, 2021

Derivative Liability September 30, 2021

Commitments and Contingencies

lease office space under non-cancelable operating lease which expires on March

lease office space under a non-cancelable operating lease which expires on March 31, 2023 .

Our periodic lease cost and operating

cash flows was $ 19,752 and

the three months ended June 30, 2021 and 2020, respectively.

Our periodic lease cost and operating cash flow was $ 39,670

for the six months ended June 30, 2021 and 2020,

respectively.

As of June 30, 2021, our right of use asset and related liability was $ 118,068

and $ 127,771 .

cash flows were $ 19,818 and $ 19,813 for the three months ended September 30, 2021 and 2020, respectively.

Our periodic lease cost

and operating cash flow were $ 59,489 and $ 59,657 for the nine months ended September 30, 2021 and 2020, respectively.

As of September

30, 2021, our right of use asset and related liability was $ 102,525 and $ 111,180 .

Food Group Inc.

to Condensed Consolidated Financial Statements

determining the present value of our operating lease right-of-use asset and liability, we used a 10 % discount rate (which approximated

1 unchanged sentence

The remaining term on the lease is 3 years.

following table presents the future operating lease payment as of June 30, 2021.

following table presents the future operating lease payment as of September 30, 2021:

of Estimate Future Maturities of Lease Liabilities

2021 (six months remaining)

2021 (three months remaining)

Total Lease payments

7 unchanged sentences

unfavorable outcome to be remote.

Food Group Inc.

to Condensed Consolidated Financial Statements

Stockholders’ Equity

the six months ended June 30, 2021, we issued 520,000 options to purchase our common stock to employees.

The exercise price of the options

were $ 0.43 -$ 0.46 per share, with a combination of both cliff and graded vesting over 3 years and are exercisable for a period of 8 years.

fair value of the options issued ($ 177,751 , in the aggregate) was calculated using the Black-Sholes option pricing model, based on the

criteria shown below.

Summary of Fair Value of Options Using Black-Sholes Option Pricing Model

life (in years)

(based on a comparable company)

the nine months ended September 30, 2021, we issued 539,998 options to purchase our common stock to employees.

The exercise price of

the options were $ 0.38 -$ 0.59 per share, with a combination of both cliff and graded vesting over 3 years and are exercisable for a period

fair value of the options issued ($ 177,751 , in the aggregate) was calculated using the Black-Scholes option pricing model, based

on the criteria shown below.

of Fair Value of Options Using Black-Sholes Option Pricing Model

Expected life (in years)

Volatility (based on a comparable company)

85.05 %- 89.37 %

Free interest rate

Risk Free interest rate

.725 %- 1.32 %

yield (on common stock)

the six months ended June 30, 2021, the Company issued 148,810 options for board director compensation, and 450,000 options were cancelled.

Dividend yield (on common stock)

the nine months ended September 30, 2021, the Company issued 148,810 options for board director compensation, and 460,000 options were

The total amount of equity-based compensation included in additional paid in capital was $ 41,574

and $ 55,812 for the three-months ended June 30, 2021 and 2020, respectively.

The total amount of equity-based compensation included in

additional paid in capital was $ 10,284 and $ 194,524 for the six-months ended June 30, 2021 and 2020, respectively.

The following

is a summary of outstanding stock options issued to employees and directors as of June 30, 2021:

Summary of Outstanding Stock Options Issued to Employees and Directors

and $ 45,692 for the three months ended September 30, 2021 and 2020, respectively.

The total amount of equity-based compensation included

in additional paid in capital was $ 51,857 and $ 240,216 for the nine months ended September 30, 2021 and 2020, respectively.

following is a summary of outstanding stock options issued to employees and directors as of September 30, 2021:

of Outstanding Stock Options Issued to Employees and Directors

price per share $

5 unchanged sentences

Cancelled/Expired

Outstanding June 30 2021

Exercisable, June 30, 2021

of June 30, 2021, the Company has $ 230,519

of total unrecognized

share-based compensation expense related to unvested options, which is expected to be amortized over the remaining weighted average period

of 2.85 years .

Outstanding September 30 2021

Exercisable, September 30, 2021

Food Group Inc.

to Condensed Consolidated Financial Statements

The following

is Changes in Stockholders’ Equity as of June 30, 2020 and June 30, 2021:

Schedule of Changes in Stockholders' Equity

of September 30, 2021, the Company has $ 192,500 of total unrecognized share-based compensation expense related to unvested options, which

is expected to be amortized over the remaining weighted average period of 3.21 years .

following is Changes in Stockholders’ Equity as of September 30, 2020 and September 30, 2021:

of Changes in Stockholders' Equity

Balance January 1, 2020

1 unchanged sentence

Issuance of stock for capital raise, net of offering costs of $ 27,200

Conversion of debt and accrued interest

Conversion of debt and accrued interest,shares

Conversion of debt

9 unchanged sentences

( 2,800,843 )

Balance June 30, 2020

Balance September 30, 2020

( 49,547,965 )

Food Group Inc.

to Condensed Consolidated Financial Statements

Balance January 1, 2021

( 50,899,628 )

Issuance of stock for capital raise,

4 unchanged sentences

Net (loss) for the year

Balance June 30, 2021

( 1,395,419 )

Food Group Inc.

to Condensed Consolidated Financial Statements

Balance September 30, 2021

( 52,295,047 )

June 1, 2021, the Company completed a private placement of 16,666,666 shares of its common stock at $ 0.36 per share, resulting in gross

3 unchanged sentences

Outstanding Warrants

following is a summary of all outstanding warrants as of June 30, 2021:

Summary of Outstanding Warrants

following is a summary of all outstanding warrants as of September 30, 2021:

of Outstanding Warrants

Remaining term

5 unchanged sentences

Warrants issued in connection with settlement of deferred compensation

$ 0.27 – 0.70

Warrants issued in connection with Settlement of services

740 requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of evidence, it is more than likely

2 unchanged sentences

a valuation allowance on all tax assets.

As of June 30, 2021, the estimated effective tax rate for the year will be zero .

are open statutes of limitations for taxing authorities in federal and state jurisdictions to audit our tax returns from 2009 through

the current period.

Our policy is to account for income tax related interest and penalties in income tax expense in the statement of

As of September 30, 2021, the estimated effective tax rate for the year will be zero .

is to account for income tax related interest and penalties in income tax expense in the statement of operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements