UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  

 

For the Quarterly Period Ended June 30,December 31, 2021

 

OR

 

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

 

For the Transition Period from _______ to _______

 

Commission file number

333-191083

 

RASNA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada 39-2080103

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

 

420 Lexington Ave, Suite 2525, New York, NY 10170

(Address of principal executive offices)   (Zip Code)

 

Telephone: (646) 396-4087

(Registrant’s telephone number)

 

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 and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer  ☐Accelerated filer  ☐
Non-accelerated filer ☒Smaller reporting company ☒
 Emerging growth company   

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐  No ☒

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 68,908,003��179,979,361 shares of common stock were issued and outstanding as of August 11, 2021.June 16, 2022.  

 

 

 

TABLE OF CONTENTS

 

  PAGE
PART 1FINANCIAL INFORMATION 
   
ITEM 1.FINANCIAL STATEMENTS (Unaudited)1
 Condensed Consolidated Balance Sheets - June 30,2021 (unaudited)– December 31, 2021 and September 30, 202020211
 Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended June 30,2021December 31 ,2021 and 20202
 Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity/(Deficit) for the Three and Nine Months Ended June 30,December 31, 2021 and 20203
 Unaudited Condensed Consolidated Statements of Cash Flows for the NineThree Months Ended June 30,December 31, 2021 and 20204
 Notes to the unauditedUnaudited Condensed Consolidated Financial Statements5
ITEM 2.Management’s discussion and analysis of financial condition and results of operations1112
ITEM 3.Controls and Procedures17
   
PART IIOTHER INFORMATION 
   
ITEM 1ARisk factors18
ITEM 6.ExhibitsExhibits18
SIGNATURES19

 

i

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

RASNA THERAPEUTICS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

 

  June 30,  September 30, 
  2021  2020 
ASSETS      
Current assets:      
Cash $50,840  $14,241 
Prepaid expenses  43,816   17,641 
Related party receivable     748 
Total current assets  94,656   32,630 
         
Property and equipment, net     314 
Total non-current assets     314 
         
Total assets $94,656  $32,944 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
         
Liabilities:        
Current liabilities:        
Accounts payable and accrued expenses $1,674,351  $1,635,788 
Related party payables  557,757   550,000 
Loan payable and accrued interest, related party  79,200   74,880 
Convertible notes payable, net - related party  216,140   90,262 
Convertible notes payable, net  488,896   356,702 
Total current liabilities  3,016,344   2,707,632 
         
Total liabilities  3,016,344   2,707,632 
         
Commitments and contingencies        
         
Shareholders’ equity        
Common stock, $0.001 par value; 200,000,000 shares authorized; 68,908,003 shares issued and outstanding  68,909   68,909 
Additional paid-in capital  20,229,696   19,914,884 
Accumulated deficit  (23,220,293)  (22,658,481)
Total shareholders’ deficit  (2,921,688)  (2,674,688)
Total liabilities and shareholders’ deficit $94,656  $32,944 

  December 31, 2021  September 30, 2021 
ASSETS      
Current assets:        
Cash $21,064  $10,848 
Prepaid expenses  12,391   33,729 
Total current assets $33,455  $44,577 
         
LIABILITIES AND SHAREHOLDERS’ DEFICIT        
         
Liabilities:        
Current liabilities:        
Accounts payable and accrued expenses $1,488,989  $1,516,001 
Related party payables  574,127   561,446 
Loan payable and accrued interest, related party  82,080   80,640 
Convertible notes payable, net - related party  43,920   230,287 
Convertible notes payable, net  267,619   371,997 
Derivative liabilities  80,683   38,018 
Total Current Liabilities  2,537,418   2,798,389 
         
Commitments and contingencies        
         
Shareholders’ deficit        
Common stock, $0.001 par value; 200,000,000 shares authorized; 68,908,003 shares issued and outstanding  68,909   68,909 
Additional paid-in capital  21,236,238   20,711,758 
Accumulated deficit  (23,809,110)  (23,534,479)
Total shareholders’ deficit  (2,503,963)  (2,753,812)
Total liabilities and shareholders’ deficit $33,455  $44,577 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


 

RASNA THERAPEUTICS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

  For the 
Three Months Ended 
June 30,
  For the
Nine Months Ended 
June 30,
 
  2021  2020  2021  2020 
Revenue $  $  $  $ 
Cost of revenue            
Gross profit            
                 
Operating expenses:                
General and administrative  64,573   81,178   268,397   356,686 
Research and development  -   11,386   44,739   66,739 
Total operating expenses  64,573   92,564   313,136   423,425 
                 
Loss from operations  (64,573)  (92,564)  (313,136)  (423,425)
                 
Other income/(expense):                
Accretion of debt discount  (40,909)     (68,182)   
Beneficial conversion feature on convertible notes         (123,718)   
Interest expense  (18,108)  (11,631)  (56,824)  (29,785)
Gain on sale of asset     120,000      120,000 
Impairment of goodwill     (2,722,985)     (2,722,985)
Foreign currency transaction gain        48    
Total other income expense  (59,017)  (2,614,616)  (248,676)  (2,632,770)
                 
Loss from operations before income taxes  (123,590)  (2,707,180)  (561,812)  (3,056,195)
                 
Income tax provision            
                 
Net loss $(123,590)  (2,707,180)  (561,812)  (3,056,195)
                 
Basic and diluted net loss per share attributable to common shareholders $(0.00) $(0.04) $(0.01) $(0.04)
                 
Basic and diluted weighted average common shares outstanding  68,908,003   68,908,003   68,908,003   68,908,003 

  For the
Three Months Ended 
December 31,
 
  2021  2020 
Revenue $  $ 
Cost of revenue      
Gross profit      
         
Operating expenses:        
General and administrative  72,656   154,941 
Research and development  9,135    
Total operating expenses  81,791   154,941 
        
Loss from operations�� (81,791)  (154,941)
         
Other income/(expense):        
         
         
Accretion of debt discount  (203,399)   
Gain on derivative liability  28,855    
Interest expense  (18,296)  (17,077)
Foreign currency transaction gain     156 
Total other income expense  (192,840)  (16,921)
         
Loss from operations before income taxes  (274,631)  (171,862)
         
Income tax provision      
         
Net loss $(274,631) $(171,862)
         
Basic and diluted net loss per share attributable to common shareholders  0.00   0.00 
         
Basic and diluted weighted average common shares outstanding  68,908,003   68,908,003 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 


 

RASNA THERAPEUTICS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY/DEFICIT(DEFICIT)

(UNAUDITED)

 

  Nine Months Ended June 30, 2021 
  Common Stock  Additional
Paid-In
  Accumulated  Total
Shareholders’
 
  Shares  Amount  Capital  Deficit  Deficit 
Balance at October 1, 2020  68,908,003  $68,909  $19,914,884  $(22,658,481) $(2,674,688)
                     
Share based compensation        41,094      41,094 
Beneficial conversion feature related to convertible notes          273,718       273,718 
Net loss           (561,812)  (561,812)
                     
Balance at June 30, 2021  68,908,003  $68,909  $20,229,696  $(23,220,294) $(2,921,688)
  Three Months Ended December 31, 2021 
  Common Stock  Additional
Paid-In
  Accumulated  Total
Shareholders’
 
  Shares  Amount  Capital  Deficit  Deficit 
Balance at October 1, 2021  68,908,003  $68,909  $20,711,758  $(23,534,479) $(2,753,812)
                     
Beneficial conversion feature related to convertible notes        524,480      524,480 
Net loss           (274,631)  (274,631)
Balance at December 31, 2021  68,908,003  $68,909  $21,236,238  $(23,809,110) $(2,503,963)

  

  Nine Months Ended June 30, 2020 
  Common Stock  Additional
Paid-In
  Accumulated  Total
Shareholders’
 
  Shares  Amount  Capital  Deficit  Deficit 
Balance at October 1, 2019  68,908,003  $68,909  $19,780,252  $(17,311,809) $2,537,352 
                     
Share based compensation        114,375      114,375 
Net loss           (3,056,195)  (3,056,195)
Balance at June 30, 2020  68,908,003  $68,909  $19,894,627  $(20,368,004) $(404,468)

  Three Months Ended June 30, 2021 
  Common Stock  Additional
Paid-In
  Accumulated  Total
Shareholders’
 
  Shares  Amount  Capital  Deficit  Deficit 
Balance at March 31, 2021  68,908,003  $68,909  $20,224,591  $(23,096,703) $(2,803,204)
                     
Share based compensation        5,107      5,107 
Net loss           (123,591)  (123,591)
                     
Balance at June 30, 2021  68,908,003  $68,909  $20,229,696  $(23,220,294) $(2,921,688)

 Three Months Ended June 30, 2020  Three Months Ended December 31, 2020 
 Common Stock Additional
Paid-In
 Accumulated Total
Shareholders’
  Common Stock  Additional
Paid-In
  Accumulated  Total
Shareholders’
 
 Shares Amount Capital Deficit Equity  Shares  Amount  Capital  Deficit  Deficit 
Balance at March 31, 2020  68,908,003  $68,909  $19,869,933  $(17,660,824) $2,278,018 
Balance at October 1, 2020  68,908,003  $68,909  $19,914,884  $(22,658,481) $(2,674,688)
                                        
Share based compensation        24,694      24,694         18,192      18,192 
Net loss           (2,707,180)  (2,707,180)           (171,862)  (171,862)
Balance at June 30, 2020  68,908,003  $68,909  $19,894,627  $(20,368,004) $(404,468)
Balance at December 31, 2020  68,908,003  $68,909  $19,933,076  $(22,830,343) $(2,828,358)

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


 

RASNA THERAPEUTICS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 For the
Nine Months Ended 
June 30,
   For the  
Three Months Ended 
December 31,
 
 
 2021  2020  2021  2020 
CASH FLOWS FROM OPERATING ACTIVITIES:             
Net loss $(561,812) $(3,056,195) $(274,631) $(171,862)
Adjustments to reconcile net loss to net cash used in operating activities:                
Share based compensation  41,094   114,375      18,192 
Depreciation  314   1,226      314 
Beneficial conversion feature related to convertible notes  123,718    
Impairment of goodwill     2,722,985 
Non-cash interest expense  18,296   1,440 
Accretion of debt discount  68,182      203,399   16,132 
Derivative liability  (28,855)   
Changes in operating assets and liabilities:                
Accounts payable and accrued expenses  70,263   33,944   (27,012)  65,573 
Related party payable  30,267   4,265   12,681   932 
Prepayments and other receivables  (26,175)  (28,106)
Prepaid expenses  21,338   17,641 
Related party receivable  748   13,587      748 
Net cash used in operating activities  (253,401)  (193,919)  (74,784)  (50,890)
                
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from issuance of loan payable - related party     72,000 
Proceeds from issuance of convertible note payable  290,000   108,500 
Net cash provided by financing activities  290,000   180,500 
        
Effect of foreign exchange rate      
Proceeds from issuance of convertible notes  85,000   40,000 
                
Net change in cash  36,599   (13,419)  10,216   (10,890)
                
Cash, beginning of period  14,241   50,068   10,848   14,241 
                
Cash, end of period $50,840  $36,649  $21,064  $3,351 
        
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:        
Derivative liabilities in connection with issuance and extension of convertible notes $71,520  $ 
Beneficial conversion feature related to issuance and extension of convertible notes $524,480  $ 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 


 

RASNA THERAPEUTICS, INC.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 

1.  GENERAL INFORMATION

 

Rasna Therapeutics, Inc. (“Rasna DE”, “Rasna Inc.” or the “Company”), is a biotechnology company incorporated in the State of Delaware on March 28, 2016. The Company is engaged in modulating the molecular targets NPM1 and LSD1, which are implicated in the disease progression of leukemia and lymphoma. 

 

These unaudited condensed consolidated financial statements are presented in United States dollars (“USD”) which is also the functional currency of the primary economic environment in which the Company operates.

 

Risks and Uncertainties 

 

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or ability to secure additional cash resources, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

2.  ACCOUNTING POLICIES

 

The principal accounting policies applied in the preparation of these unaudited condensed consolidated financial statements are set out below. These policies have been applied consistently to all the periods presented unless otherwise stated. There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s annual report on Form 10-K/A  for the year ended September 30, 2021.

 

Basis of preparation 

 

These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (the “SEC”) and United States generally accepted accounting principles (“US GAAP”) for interim reporting. The principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended September 30, 20202021 and notes thereto included in the Company’s Annual Report on Form 10-K10-K/A filed with the SEC on January 15, 2021.June 9, 2022. The accompanying unaudited condensed consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (United States), but in the opinion of management, such financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial information.

 

The results of the operations for the Ninethree months ended June 30,December 31, 2021 may not be indicative of the results that may be expected for the year ending September 30, 2021.2022. 

 

Principles of Consolidation

 

The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary, Rasna DE,Research Inc, and Rasna DE’sResearch Inc’s subsidiary, Arna Therapeutics Limited. All significant intercompany accounts and transactions have been eliminateseliminated in the preparation of the accompanying consolidated financial statements. 

 

Use of Estimates

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates its estimates on an ongoing basis, including those related to the fair values of share based awards, income taxes and contingent liabilities, among others. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates and such differences could be material to the Company’s consolidated financial position and results of operations.

 


 

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to current period presentation. These reclassifications had no effect on the reported results of operations.

Net Loss per Share

 

Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share includes potentially dilutive securities such as outstanding options, warrants and convertible loan notes, using various methods such as the treasury stock, modified treasury stock, and if converted methods in the determination of dilutive shares outstanding during each reporting period.

 

The following table sets forth potential common shares issuable upon the exercise of outstanding options and the exercise of warrants and convertible loan notes, all of which have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive: 

 

 June 30,
2021
  June 30,
2020
  Dec. 31,
2021
 Dec. 31,
2020
 
Stock options  3,648,675   3,948,675  3,648,675 3,648,675 
Warrants  1,926,501   1,926,501  1,926,501 1,926,501 
Convertible notes & associated fees  81,877,887   12,233,333   92,744,106  2,382,692 
Total shares issuable upon exercise or conversion  87,453,063   18,108,509   98,319,282  7,957,868 

 

The following is the computation of net loss per share for the following periods:

  For the
Three Months Ended 
June 30,
 
  2021  2020 
  (Unaudited)  (Unaudited) 
Net loss for the period $(123,590) $(2,707,180)
Weighted average number of shares  68,908,003   68,908,003 
Net loss per share (basic and diluted) $(0.00) $(0.04)

  For the
Nine Months Ended 
June 30,
 
  2021  2020 
  (Unaudited)  (Unaudited) 
Net loss for the period $(561,812) $(3,0056,195)
Weighted average number of shares  68,908,003   68,908,003 
Net loss per share (basic and diluted) $(0.01) $(0.04)

Recent Accounting Pronouncements

 

In August 2020, the FASB issued ASU 2020-06, which simplifies the guidance on the issuer’s accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, entities will not separately present in equity an embedded conversion feature in such debt and will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. The elimination of these models will reduce reported interest expense and increase reported net income for entities that have issued a convertible instrument that is within the scope of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and treasury stock method will be no longer available. ASU 2020-06 is applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company does not intend to early adopt and continues to evaluate the impact of the provisions of ASU 2020-06 on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12,2019 -12, Income Taxes - Simplifying the Accounting for Income Taxes (“ASU 2019-12”). Among other items, the amendments in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a change in tax law in the period of enactment;enactment; however, there is an exception for tax laws with delayed effective dates. Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law is effective. This exception was removed under ASU 2019-12, thereby providing that all effects of a tax law change are recognized in the period of enactment, including adjustment of the estimated annual effective tax rate. Regarding year-to-date losses in interim periods, an entity is required to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that rate to calculate its income taxes on a year-to-date basis. However, current guidance provides an exception that when a loss in an interim period exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date loss were the anticipated loss for the full year. ASU 2019-12 removes this exception and provides that, in this situation, an entity would compute its income tax benefit at each interim period based on its estimated annual effective tax rate. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods. Early adoption is permitted. The Company has not yet evaluatedimplemented this and the effect thatof this update will haveamendment is immaterial on its consolidated financial statements and related disclosures.

The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations.


 

3. LIQUIDITY AND GOING CONCERN

 

The Company has no present revenue and has experienced net losses and significant cash outflows from cash used in operating activities since inception. 

The Company is subject to a number of risks similar to those of other pre-commercial stage companies, including its dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with research, development, testing, and obtaining related regulatory approvals of its pipeline products, suppliers and collaborators, successful protection of intellectual property, competition with larger, better-capitalized companies, successful completion of the Company’s development programs and, ultimately, the attainment of profitable operations are dependent on future events, including obtaining adequate financing to fulfill its development activities and generating a level of revenues adequate to support the Company’s cost structure.

The Company has experienced net losses and significant cash outflows from cash used in operating activities over the past two years, and as of December 31, 2021, had an accumulated deficit of $23,809,110, a net loss for the year ended December 31, 2021 of $274,631 and net cash used in operating activities of $74,784.

 

The Company expects to continue to incur net losses and have significant cash outflows for at least the next 12 months and will require significant additional cash resources to launch new development phases of existing products in its pipeline. 

 

In the event that the Company is unable to secure the additional cash resources needed, the Company may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date of this filing. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern one year from the date of this filing. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the Company’s cost structure.

 

4. SHARE-BASED COMPENSATION

For the three and Nine months ended June 30,December 31, 2021, $5,106 and $41,094 respectively,December 31, 2020, $0 and $18,192 related to share based compensation to directors and employees respectively, has been included within the general and administrative expense category in the accompanying unaudited condensed consolidated interim financial statements. 

For the three and Nine months ended June 30, 2020 $24,694 and $114,375 respectively,No costs related to share based compensation to directors and employees respectively, hasnon-employees have been included within the general and administrativeconsultancy fees expense category in the accompanying unaudited condensed consolidated interim financial statements. 

As of June 30,statements in the three months ended December 31, 2021 there was $1,580 of total unrecognized compensation cost related to stock options. The cost is expected to be recognized over a weighted average period of 0.17 years.and the three months ended December 31, 2020. 

 


5. CONVERTIBLE NOTES

 

The table below summarizes outstanding convertible notes as of June 30, 2021 and September 30,December 31, 2021and December 31, 2020: 

 

Convertible Notes Payable: June 30,
2021
  September 30,
2020
 
Principal value of Non-Related Party Notes  392,500   292,500 
Interest accrued  96,396   64,202 
Carrying Value of Notes  488,896   356,702 
         
Principal value of Related Party Notes  276,000   86,000 
Interest accrued  21,958   4,262 
Beneficial conversion feature of new notes  (81,818)  - 
Carrying Value of Notes  216,140   90,262 
         
Total carrying value of convertible notes payable  705,036   446,964 

Most notes accrue interest at 12% per annum and are due on December 31, 2021. The most recent note issued for $100,000 accrues interest at 1% per annum and is due on December 31, 2021.

Balance of non-related notes payable, net as of September 30, 2021 $371,997 
Accrued Interest  7,505 
Accretion of debt discount  123,117 
Beneficial conversion feature related to issuance and extension of convertible notes  (206,800)
Derivative liabilities in connection with issuance and extension of convertible notes  (28,200)
Balance of non-related notes payable, net as of December 31 2021 $267,619 
     
Balance of related party notes payable, net as of September 30, 2021 $230,287 
Issuance of debt  85,000 
Accrued Interest  9,351 
Accretion of debt discount  80,282 
Beneficial conversion feature related to issuance and extension of convertible notes  (317,680)
Derivative liabilities in connection with issuance and extension of convertible notes  (43,320)
Balance of related party notes payable, net as of December 31, 2021 $43,920 
     
Balance of related notes payable, net as of September 30, 2020 $89,768 
New convertible notes issued  40,000 
Accrued Interest  3,542 
Balance of related notes payable, net as of December 31 2020 $133,310 
     
Balance of non-related notes payable, net as of September 30, 2020 $357,196 
Accrued Interest  12,590 
Balance of non-related notes payable, net as of December 31, 2020 $369,786 

 

On February 3, 2021, all previously outstanding notes were reissued with amended expiry and conversion terms. The amended terms are as follows:

1.Conversion

The amended Notes provide the Holders with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) the price of the next equity financing, which raises at least US $1,000,000, subject to adjustments noted within the Agreement.

2.Expiry of the notes was amended to December 31, 2021.

The fair value of the amended notes was calculated as the principal plus interest.

The original notes were deemed to be extinguished, and a loss on extinguishment of $nil was recorded.


On January 14,November 18, 2021, the Company entered into aan eleventh 12% Convertible Promissory Note with Panetta Partners Ltd. (the “Holder”) pursuant to which the Company issuedwith a Convertible Promissory Note to the Holder.maturity date of December 31, 2023. The Holder provided the Company with $60,000$30,000 in cash. The Company promised to pay the principal amount, together with guaranteed interest at the annual rate of 12%, with principal and accrued interest on the Note due and payable on December 21, 2021 (unless converted under terms and provisions as set forth within the Agreement). The Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) the price of the next equity financing, which raises at least US $1,000,000, subject to adjustments noted within the Agreement. The number of shares issuable upon a conversion shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of the Note to be converted by (y) the Conversion Price. The Note requires the Company to reserve and keep available out of its authorized and unissued shares of common stock the amount of shares that would be issued upon conversion of the Note, which includes the outstanding principal amount of the Note and interest accrued and to be accrued through the date of maturity. 

On February 10,November 29, 2021, the Company entered into a 12%the twelfth 12 % Convertible Promissory Note again with Panetta Partners Ltd. (the “Holder”) pursuant to which the Company issued a Convertible Promissory Note to the Holder. The Holder provided the Company with $90,000$55,000 in cash. All other terms were the same as the note before.eleventh note.


Upon

Amendment

On December 31, 2021, all previously outstanding notes due December 31, 2021 were modified with amended expiry terms. The expiry of the notes was amended to December 31, 2023.   

The Company determined that the extension of maturity dates resulted in extinguishment for Notes carrying interest at 12%, while the Notes carrying interest at 1% resulted in modification.

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The Company measured the present value of future cash flows that existed just prior to the earliest restructuring in the twelve-month period, which was used to apply the 10% test, since the earlier restructurings was accounted for as a modification. As the change in cash flows for all Notes carrying interest at 12% was greater than 10%, the term amendment was accounted for as an extinguishment. Under extinguishment accounting, the debt was remeasured and recorded at fair value. There was no difference between the carrying value of the debt, prior to the extinguishment, and the new fair value of the debt..

The Notes carrying interest at 1% did not have a change in cash flows greater than 10%, so these Notes were accounted for as a modification.

The Company also noted that the stock was thinly traded with any trading activity resulting in a disproportionate effect on the stock price. Therefore, a Black Scholes valuation was deemed to be inappropriate in this case.

Embedded Derivative Liability

Under the promissory note agreement, the interest rate will reset upon the event of a default and an additional penalty of 6% will be accrued. The Company analyzed the conversion features of the note agreement for derivative accounting consideration under ASC 815, Derivatives and Hedging, and determined the interest rate resets met the definition of a derivative. It also noted that the Contingent Interest Rate feature required bifurcation from the host note contract and was to be accounted for at fair value. In accordance with ASC 815-15, the Company bifurcated the Contingent Interest Rate feature of the note and recorded a derivative liability.

The embedded derivatives for the notes are carried on the Company’s balance sheet at fair value. During the period to Dec 31, 2021, the Company recognized an additional $71,520 due to the extension and issuance of these notes,the convertible notes. Additionally, the Company recognized a debt discountgain of $28,855 on the extinguishment of convertible notes.

The Company noted due to the short-term nature of the note in addition to the relatively small incremental increase in the interest rate in the event of default (6%) the maximum overall impact would be approximately $150,000, resulting from$61,320 for the recognitionextinguished notes and $10,200 for the new notes issued (calculated as the increase in interest rate multiplied by the principal balance). In addition, the Company assessed all Events of Default and concluded that they are generally within the Company’s control and have a very low probability of occurrence.

Management will continue to assess the valuation of the embedded derivative at each reporting period and will record any changes in value through other income and expenses.

Beneficial Conversion Feature

The conversion features for all notes issued are in the money as of the issuance date and accordingly a beneficial conversion feature (BCF). This BCFwas recorded upon issuance. As the intrinsic value of the Beneficial Conversion Feature exceeds the face value, the recorded Beneficial Conversion Feature will be amortized on a straight line basis overlimited to the term ofgross proceeds less any debt discounts. As at December 31, 2021 this amounted to $524,483 for the note due to its short life.amended and new notes issued.

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6. RELATED PARTY TRANSACTIONS

The following is a summary of the related party transactions for the periods presented.

Eurema Consulting

Eurema Consulting S.r.l. is a significant shareholder of the Company. During the three months ended June 30,December 31, 2021 and June 30,December 31, 2020 Eurema Consulting did not supply the Company with consulting services. As of June 30,December 31, 2021, and September 30, 2020,2021, the balance due to Eurema Consulting S.r.l. was $200,000 for past consultancy services. See note 7 for subsequent events information.

Gabriele Cerrone

Gabriele Cerrone is the majority shareholder of Panetta Partners, one of the Company’s principal shareholders. As of June 30,December 31, 2021, and September 30, 2020,2021, the balance due to Gabriele Cerrone was $175,000 for past consultancy services. In March 2020, the Company entered into a 12% Convertible Promissory Note with Gabriele Cerrone for $20,000 with an extended maturity date of December 31, 2021.2023. In February 2021, Gabriele Cerrone assigned the Note to Panetta Partners Ltd. In November 2021, the Company entered into two 12% Convertible Promissory Notes with Panetta Partners Ltd for the aggregate amount of $85,000.

Roberto Pellicciari and TES Pharma 

Roberto Pellicciari is the majority shareholder of TES Pharma Srl, one of the Company’s principal shareholders. During the three months ended June 30,December 31, 2021 and June 30,December 31, 2020 Roberto Pellicciari did not supply the Company with consulting services. As of June 30,December 31, 2021, and September 30, 2020,2021, the balance due to Roberto Pellicciari was $175,000 for past consultancy services. At June 30,December 31, 2021 and September 30, 2020,2021, TES Pharma was owed $75,000.  See note 7 for subsequents events information



Tiziana Life Sciences Plc (“Tiziana”)

The Company is party to a Shared Services Agreement with Tiziana, whereby the Company is charged for shared services and rent. Tiziana had previously agreed to waive all charges for shared services from October 2018 onwards, until further notice since the amounts due for such services are de minimis. Notice was given and recharges from October 1, 2020 were resumed. Keeren Shah, the Company’s Finance Director, is also Finance Director of Tiziana, and the Company’s directors, Willy Simon and John Brancaccio are also non executivenon-executive directors of Tiziana.

During the three months ended December 31, 2021, $12,681 was charged under this shared services agreement. As of June 30,December 31, 2021, $7,757$24,127 was due to Tiziana underfor services charged under the shared services agreement. This is recorded as a related party payable in the accompanying condensed consolidated balance sheets. As of September 30, 2020, the Company made payments on behalf of Tiziana of $748, which are recorded as a related party receivable in the accompanying condensed consolidated balance sheets. 

On June 30,In March 2020, Tiziana extended a loan facility to Rasna of $65,000. The loan is repayable within 18 months and is incurring an interest charge of 8% per annum. In April 2020, the loan facility was extended by a further $7,000, so the loan facility totals $72,000. As of June 30,December 31, 2021, the amounts due to Tiziana under this loan facility were $79,200.$82,080. Interest expense for the period ended December 31, 2021 and 2020 was $1,440, respectively.

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Panetta Partners

Panetta Partners Limited, a shareholder of Rasna, is a company in which Gabriele Cerrone is a major shareholder and also serves as a director.

In February 2020, September 2020 and October 2020 the The Company has entered into numerous 12% Convertible Promissory Notes with Panetta Partners for $31,000, $35,000 and $40,000 with extended maturity datesa total of December 31, 2021.$361,000. The amount due for these notes as at June 30,December 31, 2021, with respect to the principal and accrued interest is $36,198, $38,243$392,225. As at September 30, 2021 $276,303 was due with respect to notes issued.

Apart from the Convertible Promissory Notes, there is no interest charged on the balances with related parties. There are no defined repayment terms and $43,320 respectively.such amounts can be called for payment at any time. 

 

7. SUBSEQUENT EVENTS

In February 2021, Gabriele Cerrone, a major shareholder of2022, Panetta Partners Ltd assignedadvanced $30,000 to the Company. This advance was converted into promissory notes, at an interest rate of 16% with a 12% Convertible Promissory Note that he entered into in February 2020 toconversion price of $0.005.

In March 2022, Panetta Partners Ltd. The amount dueLtd advanced an additional $45,000 to the Company. This advance was converted into promissory notes, at an interest rate of 16% with a conversion price of $0.005.

In March 2022, the Company agreed to return back to TES Pharma S.R.L and Eurema Consulting S.R.L all intellectual property rights and assignments relating to NPM1.  In exchange for this, note at June 30, 2021, with respectTES Pharma S.R.L and Eurema Consulting S.R.L agreed to waive any payments due to them and their affiliates by Rasna.  

On May 13, 2022, the principal and accrued interest is $23,067.

7. SUBSEQUENT EVENTS

Company received notice from all noteholders that all notes were to be converted into stock. The Company has evaluated subsequent events that occurred after the balance sheet date up to the date that the consolidated financial statements were issued and did not identify any subsequent events that would have required adjustment or disclosure111,071,358 of common stock on May 13, 2022 in the consolidated financial statements.respect of these conversions.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements 

This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the Company’s Annual Report on Form 10-K filed on January 15, 2021 under the heading “Risk Factors,” which are incorporated herein by reference.

We assume no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Unless expressly indicated or the context requires otherwise, the terms “Rasna,”,” the “Company,” “we,” “us,” and “our” refer to Rasna Therapeutics, Inc., a Nevada corporation, and, where appropriate, its wholly owned subsidiaries.

Company Background

To date, we have devoted substantially all of our resources to research and development efforts relating to our therapeutic candidates, including conducting clinical trials and developing manufacturing capabilities, in-licensing related intellectual property, protecting our intellectual property and providing general and administrative support for these operations. Since our inception, we have funded our operations primarily through the issuance of equity securities and convertible notes.

We anticipate that our expenses will increase substantially if and as we:

initiate new clinical trials;
seek to identify, assess, acquire and develop other products, therapeutic candidates and technologies;
seek regulatory and marketing approvals in multiple jurisdictions for our therapeutic candidates that successfully complete clinical studies;
establish collaborations with third parties for the development and commercialization of our products and therapeutic candidates;
make milestone or other payments under our agreements pursuant to which we have licensed or acquired rights to intellectual property and technology;

seek to maintain, protect, and expand our intellectual property portfolio;
seek to attract and retain skilled personnel;
incur the administrative costs associated with being a public company and related costs of compliance;
create additional infrastructure to support our operations as a commercial stage public company and our planned future commercialization efforts; and 
experience any delays or encounter issues with any of the above.


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We expect to continue to incur significant expenses and increasing losses for at least the next several years. Accordingly, we anticipate that we will need to raise additional capital in addition to the net proceeds from this offering in order to obtain regulatory approval for, and the commercialization of our therapeutic candidates. Until such time that we can generate meaningful revenue from product sales, if ever, we expect to finance our operating activities through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any approved therapies or products or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially adversely affect our business, financial condition and results of operations.

We only have one segment of activity, which is that of a biotechnology company focused on targeted drugs to treat diseases in oncology and immunology, mainly focusing on the treatment of leukemia and lymphoma.

The Company is currently looking into raising funds to progress its R&D pipeline.

Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or US GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. In accordance with US GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

In December 2019, the FASB issued ASU 2019 -12, Income Taxes – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). Among other items, the amendments in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a change in tax law in the period of enactment; however, there is an exception for tax laws with delayed effective dates. Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law is effective. This exception was removed under ASU 2019-12, thereby providing that all effects of a tax law change are recognized in the period of enactment, including adjustment of the estimated annual effective tax rate. Regarding year-to-date losses in interim periods, an entity is required to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that rate to calculate its income taxes on a year-to-date basis. However, current guidance provides an exception that when a loss in an interim period exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date loss were the anticipated loss for the full year. ASU 2019-12 removes this exception and provides that, in this situation, an entity would compute its income tax benefit at each interim period based on its estimated annual effective tax rate. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods. Early adoption is permitted. The Company has determined that it was not subject to any new accounting pronouncements that became effective duringimplemented this and the Nine months ended June 30, 2021.effect of this amendment is immaterial on its consolidated financial statements and related disclosures.

Basis of preparation 

The accompanying financial statements have been prepared in conformity with US GAAP. Any reference in these notes to applicable guidance is meant to refer to US GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“the FASB”).

Liquidity and Going Concern

We are subject to a number of risks similar to those of other pre-commercial stage companies, including our dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with research, development, testing, and obtaining related regulatory approvals of its pipeline products, suppliers and collaborators, successful protection of intellectual property, competition with larger, better-capitalized companies, successful completion of our development programs and, ultimately, the attainment of profitable operations are dependent on future events, including obtaining adequate financing to fulfill our development activities and generating a level of revenues adequate to support our cost structure. 

We have no present revenue and have experienced net losses and significant cash outflows from cash used in operating activities since inception, and at June 30,December 31, 2021, had a working capital deficit of $2,921,688, a net loss for the Nine months ended June 30, 2021 of $561,812 and net cash used in operating activities of $253,401 for the Nine months ended June 30,$2,503,963 at December 31, 2021.

 


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We expect to continue to incur net losses and have significant cash outflows for at least the next twelve months and will require significant additional cash resources to launch new development phases of existing products in its pipeline. In the event that the Company is unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about our ability to continue as a going concern one year from the date of this filing. The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern one year from the date of this filing. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure.

Results of Operations

The following paragraphs set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.

Results of Operations for the NineThree months ended June 30,December 31, 2021 and 2020

The following table sets forth the summary statements of operations for the periods indicated:

  For the 
Nine Months Ended
June 30,
 
  2021  2020 
  (Unaudited)  (Unaudited) 
Revenue $  $ 
Cost of revenue      
Gross profit      
         
Operating expenses:        
Research and Development  44,739   66,739 
General and administrative  268,398   356,686 
Total operating expenses  313,137   423,425 
         
Loss from operations  (313,137)  (423,425)
         
Other expense:        
         
        
Accretion of debt discount  (68,182)   
Beneficial conversion feature on convertible notes  (123,718)   
Gain on sale of asset     120,000 
Impairment of goodwill     (2,722,985)
Interest expense  (56,824)  (29,785)
Foreign currency transaction gain  48    
Other expense  (248,676)  (2,632,770)
         
Net loss $(561,812) $(3,056,195)
  For the 
Three Months Ended
December 31,
 
  2021  2020 
  (Unaudited)  (Unaudited) 
Revenue $  $ 
Cost of revenue      
Gross profit      
         
Operating expenses:        
Research and Development  9,135    
General and administrative  72,656   154,941 
Total operating expenses  81,791   154,941 
         
Loss from operations  (81,791   (154,941)
         
Other expense:        
         
Accretion of debt discount  (203,399)   
Gain on derivative liability  28,855    
Interest on convertible notes payable  (18,296)  (17,077)
Foreign currency transaction gain     156 
Other expense  (192,840)  (16,921)
         
Net loss $(274,631) $(171,862)

Revenues

There were no revenues for the Ninethree months ended June 30,December 31, 2021, and 2020 because the Company does not have any commercial biopharmaceutical products.

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Operating Expenses

Operating expenses, consisting of research and development costs, consultancy fees, legal and professional fees and general and administrative expenses, for the Ninethree months ended June 30,December 31, 2021 decreased to $268,398$81,791 from $356,686$154,941 for the Ninethree months ended June 30,December 31, 2020, a decrease of $88,288$73,150. The decrease is primarily attributable to a reduction in the share based payments charge due to more options having reachedoverall activities of the end of their vesting period (approximately $74,000) and a reduction in consulting fees (approximately $14,000).Company.

Other expense

During the ninethree months ended June 30,December 31, 2021, other expense decreasedincreased to approximately $249,000$192,840 from $2,632,000 in$16,921 for the prior year.three months ended December 31, 2020. This is due to one off charges in the prior year for the impairment of goodwill ($2,723,000) and the gain on the sale of an asset of $120,000 offset by the additional interest accrued on the convertible debt of $27,000, a charge recognized for the beneficial conversion feature of $124,000 and the accretion of debt discount by $203,399 caused by the modification and new issuances of $68,000.convertible debt during the quarter, and interest expense of $18,296 offset by a gain on the adjustment of a derivative liability of $28,855.

Net Loss

Net loss for the Ninethree months ended June 30,December 31, 2021 decreasedincreased to $561,812$274,631 from $3,056,195$171,862 for the Ninethree months ended June 30,December 31, 2020, an increase of $102,769.  This is due to accretion of debt discount by $203,399 and interest expense of $18,296 offset by a gain on the adjustment of a derivative liability of $28,855 and a decrease in general expenses due to a reduction of $2,494,383.activity in the company.

Liquidity and Capital Resources 

We believe we will require significant additional cash resources to continue to launch new development phases of existing products in the Company’s pipeline. In the event that we are unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience significant dilution. Any debt financing, if available, may (i) involve restrictive covenants that impact our ability to conduct, delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize its self on unfavorable terms. 

On November 12, 2019, we issued a18, 2021, the Company entered into an eleventh 12% convertible promissory noteConvertible Promissory Note with Panetta Partners Ltd. (the “Note”“Holder”) to an investor, in the principal amount of $57,500 with a maturity date of November 12, 2020. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.65 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. 

On February 07, 2020, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $31,000 with a maturity date of February 07, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. 


On March 20, 2020, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $20,000 with a maturity date of March 20, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. 

On September 22, 2020, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $35,000 with a maturity date of September 22, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. 

On October 21, 2020, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $40,000 with a maturity date of October 21, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.05 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. 

All notes contain an anti-dilution provision, which adjusts the conversion price in the event of an issuance by us of common stock below the then effective conversion price. All of these notes were amended and restated in February 2021. The maturity date of the notes were extended to December 31, 20201 and the conversion price amended to the lower of (i) $0.01 per share or (ii) t the price of the next equity financing, which raises at least US$1,000,000.

On January 14, 2021, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $60,000 with a maturity date of December 31, 2021.2023. The Holder provided the Company with $30,000 in cash. The Note was convertible byprovides the holderHolder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of ourthe Company’s common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) t the price of the next equity financing, which raises at least US$1,000,000. IfUS $1,000,000, subject to adjustments noted within the holder has not converted the Note into common stockAgreement. The number of shares issuable upon a conversion shall be determined by the maturity date, we must repayquotient obtained by dividing (x) the outstanding principal amount plus accrued interest.

On February 10, 2021, we issued a 12% convertible promissory note (the “Note”)of the Note to an investor, inbe converted by (y) the principalConversion Price. The Note requires the Company to reserve and keep available out of its authorized and unissued shares of common stock the amount of $90,000 with a maturity date of December 31, 2021. The Note was convertible by the holder at any time into shares of our common stock at athat would be issued upon conversion price equal to the lower of (i) $0.01 per share or (ii) t the price of the next equity financing,Note, which raises at least US$1,000,000. If the holder has not converted the Note into common stock by the maturity date, we must repayincludes the outstanding principal amount plusof the Note and interest accrued interest.

On May 25, 2021, we issued a 1% convertible promissory note (the “Note”)and to an investor, inbe accrued through the principal amount of $100,000 with a maturity date of December 31, 2021. The Note was convertible bymaturity. 

On November 29, 2021, the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) t the price of the next equity financing, which raises at least US$1,000,000. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.

On April 16, 2020, weCompany entered into an asset purchase agreementanother 12% Convertible Promissory Note again with TizianaPanetta Partners Ltd. (the “Holder”) pursuant to which we agreedthe Company issued a Convertible Promissory Note to sell all of the intellectual property relating to a nanoparticle-based formulation of Act D to TizianaHolder. The Holder provided the Company with $55,000 in exchange for an upfront payment of $120,000 and milestone payments of up to an aggregate $630,000.cash. All other terms were the same as the note before.

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Capital Resources

The following table summarizes total current assets, liabilities and working capital deficiency as of the periods indicated:

  December 31, 2021 (Unaudited)   September 30, 2021
 (Unaudited)
  Change 
          
Current assets $33,455  $44,577  $(11,122)
Current liabilities  2,537,418   2,798,389   (260,971)
Working capital deficit $(2,503,963) $(2,753,812) $249,849 

 

  June 30,
2021
(Unaudited)
  September 30,
2020
  Change 
          
Current assets $94,656  $32,630  $62,026 
Current liabilities  3,016,344   2,707,632   308,711 
Working capital deficit $(2,921,688) $(2,675,002) $(246,686)

We had a cash balance of $50,840$21,064 and $14,241 at June 30,$10,848 on December 31, 2021, and September 30, 2020,2021, respectively. 


Liquidity

The following table sets forth a summary of our cash flows for the periods indicated:

  For the
Nine months ended
June 30,
 
  2021  2020  Increase/
(Decrease)
 
Net cash used in operating activities $(253,401) $(193,919) $59,482 
Net cash used in investing activities $  $  $ 
Net cash provided by financing activities $290,000  $180,500  $109,500 
  For the
Three months ended
December 31,
 
  2021  2020  Increase/
(Decrease)
 
Net cash used in operating activities $(74,784) $(50,890) $23,894 
Net cash used in investing activities $-   -   - 
Net cash provided by financing activities $85,000  $40,000  $45,000 

Net Cash Used in Operating Activities

Net cash used in operating activities consists of net loss adjusted for the effect of changes in operating assets and liabilities.

Net cash used in operating activities was $253,401$74,784 for the Ninethree months ended June 30,December 31, 2021 compared to $193,919$50,890 for the Ninethree months ended June 30,December 31, 2020.  The net loss of $561,812$274,631 for the Ninethree months ended June 30,December 31, 2021 was partially offset primarily by non-cash share-based compensation of $41,094, interest accrued on the Convertible Loan Notes and the loan from Tiziana of $54,209, other expenses related to the convertible notes$18,296, accretion of $191,900debt discount of $203,399, reversal of a derivative liability of ($28,855) and changes in operating assets and liabilities of $20,894. The net loss of $3,056,195 for the nine months ended June 30, 2020 was partially offset primarily by non-cash share based compensation of $114,375, a good will impairment charge of $2,722,985, interest accrued on the Convertible Loan Notes of $28,345 and changes in operating assets and liabilities of $4,655.$7,007.

Net Cash Provided by Financing Activities

Net cash provided by financing activities consists of proceeds from the issuance of convertible notes of $190,000$85,000 for the Ninethree months ended June 30,December 31, 2021 compared to proceeds from the issuance of a convertible notenotes of $108,500 and a related party loan payable of $72,000$40,000 for the Ninethree months ended June 30,December 31, 2020.

 


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ITEM 3. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within the required time periods. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures 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.

As of the end of the period covered by this Report, the Company’s Chief Executive Officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation,  the Chief Executive officer concluded that, as of the date of the evaluation, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed in the Company’s periodic filings under the Securities Exchange Act of 1934 is accumulated and communicated to management to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

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

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PART II – OTHER INFORMATION

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K as of and for the year ended September 30, 2020, filed with the SEC on February 15, 2021. 

ITEM 6. EXHIBITS

31.1Certification of Principal Executive Officer and Principal Financial and Accounting Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
32.1Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
101.INSInline XBRL Instance Document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


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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.

Rasna Therapeutics, Inc.
AugustJune 16, 20212022By:/s/ Keeren Shah
Name: Keeren Shah
Title:Finance Director, (PrincipalChief Financial Officer,
(Principal
Executive Officer and
Principal Financial and Accounting Officer)

 

 

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