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, 2021March 31, 2022
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: 001-35027
BIOXYTRAN, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 2834 | 26-2797630 | ||
| (State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
| 75 | 02494 | |
| (Address of principal executive offices) | (Zip Code) |
617-454-1199
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller Reporting Company | ☒ |
| 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 Exchange Act).
Yes ☐ No☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | Outstanding at | |
| Common Stock, $0.001 par value per share | shares |
BIOXYTRAN, INC.
FORM 10-Q
TABLE OF CONTENTS
Except as otherwise required by the context, all references in this report to “we”, “us”, “our” or “Company” refer to the consolidated operations of BIOXYTRAN, Inc.
i
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements: BIOXYTRAN, Inc., June 30, 2021March 31, 2022
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2021MARCH 31, 2022 AND DECEMBER 31, 20202021
(UNAUDITED)
| June 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: | ||||||||||||||||
| Cash | $ | 388,043 | $ | 41,688 | $ | 739,584 | $ | 72,358 | ||||||||
| Pre-paid expenses | 499,300 | 274,715 | ||||||||||||||
| Total current assets | 887,343 | 316,403 | 739,584 | 72,358 | ||||||||||||
| Intangibles, net | 18,954 | 10,000 | 68,343 | 46,932 | ||||||||||||
| Total assets | $ | 906,297 | $ | 326,403 | $ | 807,927 | $ | 119,290 | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||
| Current liabilities: | ||||||||||||||||
| Accounts payable and accrued expenses | $ | 151,420 | $ | 348,127 | $ | 516,139 | $ | 624,316 | ||||||||
| Accounts payable related party | — | 307,176 | 796,506 | 531,000 | ||||||||||||
Convertible notes payable, net of premium and discount, related party | 1,000,000 | — | ||||||||||||||
| Un-issued shares liability | 16,000 | — | ||||||||||||||
| Un-issued shares liability related party | 6,400 | — | ||||||||||||||
| Convertible notes payable, net of premium and discount | 1,062,253 | 1,612,356 | 3,552,225 | 2,122,181 | ||||||||||||
| Total current liabilities | 2,213,673 | 2,267,659 | 4,887,270 | 3,277,497 | ||||||||||||
| Total liabilities | 2,213,673 | 2,267,659 | 4,887,270 | 3,277,497 | ||||||||||||
| Commitments and contingencies | — | — | — | — | ||||||||||||
| Stockholders’ equity (deficit): | ||||||||||||||||
| Stockholders’ deficit: | ||||||||||||||||
| Preferred stock, $ par value; shares authorized, issued and outstanding | — | — | — | — | ||||||||||||
| Common stock, $ par value; shares authorized; issued and outstanding as at June 30, 2021 and as at December 31, 2020 | 109,872 | 97,451 | ||||||||||||||
| Common stock, $ par value; shares authorized; issued and outstanding | 110,841 | 110,841 | ||||||||||||||
| Additional paid-in capital | 4,736,091 | 1,795,125 | 5,924,126 | 5,881,876 | ||||||||||||
| Non-controlling interest | 1,086,992 | 888,091 | (448,372 | ) | (397,256 | ) | ||||||||||
| Accumulated deficit | (7,240,331 | ) | (4,721,923 | ) | (9,665,938 | ) | (8,753,668 | ) | ||||||||
| Total stockholders’ equity (deficit) | (1,307,376 | ) | (1,941,256 | ) | ||||||||||||
| Total stockholders’ deficit | (4,079,343 | ) | (3,158,207 | ) | ||||||||||||
| Total liabilities and stockholders’ equity (deficit) | $ | 906,297 | $ | 326,403 | ||||||||||||
| Total liabilities and stockholders’ deficit | $ | 807,927 | $ | 119,290 | ||||||||||||
See the accompanying notes to these unaudited condensed consolidated financial statements
1
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021MARCH 31, 2022 AND 20202021
(UNAUDITED)
| 3-Months Ended | ||||||||
| March 31, 2022 | March 31, 2021 | |||||||
| Operating expenses: | ||||||||
| Research and development | $ | 240,125 | $ | 347,033 | ||||
| General and administrative | 556,581 | 567,320 | ||||||
| Compensation expense | 22,400 | 774,558 | ||||||
| Total operating expenses | 819,106 | 1,688,911 | ||||||
| Loss from operations | (819,106 | ) | (1,688,911 | ) | ||||
| Other expenses: | ||||||||
| Interest expense | 52,035 | 87,410 | ||||||
| Amortization | 92,245 | — | ||||||
| Total other expenses | 144,280 | 87,410 | ||||||
| Net loss before provision for income taxes | (963,386 | ) | (1,776,321 | ) | ||||
| Provision for income taxes | — | — | ||||||
| Net loss | (963,386 | ) | (1,776,321 | ) | ||||
| Net loss attributable to the non-controlling interest | 51,116 | 154,614 | ||||||
| NET LOSS ATTRIBUTABLE TO BIOXYTRAN | $ | (912,270 | ) | $ | (1,621,707 | ) | ||
| Loss per common share, basic and diluted | $ | (0.01 | ) | $ | (0.02 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 110,840,998 | 100,118,229 | ||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 718,652 | $ | — | $ | 1,065,685 | $ | — | ||||||||
| General and administrative | 272,614 | 102,418 | 839,934 | 212,960 | ||||||||||||
| Compensation Expense | 51,050 | 9,491 | 825,608 | 164,992 | ||||||||||||
| Total operating expenses | 1,042,316 | 111,909 | 2,731,227 | 377,952 | ||||||||||||
| Loss from operations | (1,042,316 | ) | (111,909 | ) | (2,731,227 | ) | (377,952 | ) | ||||||||
| Other expenses: | ||||||||||||||||
| Interest expense | (84,217 | ) | (740,424 | ) | (171,627 | ) | (848,154 | ) | ||||||||
| Debt discount amortization | (17,103 | ) | (76,265 | ) | (17,103 | ) | (242,987 | ) | ||||||||
| Total other income (expenses) | (101,320 | ) | (816,689 | ) | (188,730 | ) | (1,091,141 | ) | ||||||||
| Net loss before provision for income taxes | (1,143,636 | ) | (928,598 | ) | (2,919,957 | ) | (1,469,093 | ) | ||||||||
| Provision for income taxes | — | — | — | — | ||||||||||||
| NET LOSS | (1,143,636 | ) | (928,598 | ) | (2,919,957 | ) | (1,469,093 | ) | ||||||||
| Net loss attributable to the non-controlling interest | 246,935 | — | 401,549 | — | ||||||||||||
| NET LOSS ATTRIBUTABLE TO BIOXYTRAN | $ | (896,701 | ) | $ | (928,598 | ) | $ | (2,518,408 | ) | $ | (1,469,093 | ) | ||||
| Loss per common share, basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
| Weighted average number of common shares outstanding, basic | 103,371,579 | 97,031,673 | 101,753,891 | 92,144,316 | ||||||||||||
| diluted | 119,868,472 | |||||||||||||||
See the accompanying notes to these unaudited condensed consolidated financial statements
2
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)DEFICIT
FOR THE SIXTHREE MONTHS ENDED JUNE 30,MARCH 31, 2022 AND 2021 AND 2020
(UNAUDITED)
| Common Stock | Preferred Stock | Additional Paid in Capital | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Common | Preferred | Accumulated Deficit | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||
| December 31, 2019 | 86,475,673 | $ | 86,476 | 0 | $ | 0 | $ | 1,355,542 | $ | — | $ | (2,241,305 | ) | $ | 0 | $ | (799,287 | ) | ||||||||||||||||||
| Issuance of warrants | 145,438 | 145,438 | ||||||||||||||||||||||||||||||||||
| Conversion of warrants | 750,000 | 750 | 0 | (750 | ) | 0 | — | |||||||||||||||||||||||||||||
| Options issued and vested - 2010 Plan | 5,004 | 5,004 | ||||||||||||||||||||||||||||||||||
| Shares issued to BoD & Mgmnt - 2010 Plan | 6,000 | 6 | 2,241 | 2,247 | ||||||||||||||||||||||||||||||||
| Shares issued to Consultants - 2010 Plan | 650,000 | 650 | 147,600 | 148,250 | ||||||||||||||||||||||||||||||||
| Debt premium on convertible note | (937,007 | ) | (937,007 | ) | ||||||||||||||||||||||||||||||||
| Debt premium accretion | 104,568 | 104,568 | ||||||||||||||||||||||||||||||||||
| Shares issued for conversion of principal and accrued interest | 350,000 | 350 | 33,782 | 34,132 | ||||||||||||||||||||||||||||||||
| Net loss | (540,495 | ) | (540,495 | ) | ||||||||||||||||||||||||||||||||
| March 31, 2020 | 88,231,673 | $ | 88,232 | 0 | $ | 0 | $ | 856,418 | $ | — | $ | (2,781,800 | ) | $ | 0 | $ | (1,837,150 | ) | ||||||||||||||||||
| Options issued and vested - 2010 Plan | 691 | 691 | ||||||||||||||||||||||||||||||||||
| Shares issued to BoD & Mgmnt - 2010 Plan | 8,800,000 | 8,800 | 0 | 0 | 8,800 | |||||||||||||||||||||||||||||||
| Debt premium accretion | 856,560 | 856,560 | ||||||||||||||||||||||||||||||||||
| Net loss | (928,598 | ) | (928,598 | ) | ||||||||||||||||||||||||||||||||
| June 30, 2020 | 97,031,673 | $ | 97,032 | 0 | $ | 0 | $ | 1,713,669 | — | $ | (3,710,398 | ) | $ | 0 | $ | (1,899,697 | ) | |||||||||||||||||||
| Common Stock | Preferred Stock | Additional Paid in Capital | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Common | Preferred | Accumulated Deficit | Non-controlling Interest | Total Equity | ||||||||||||||||||||||||||||
| December 31, 2020 | 97,450,673 | $ | 97,451 | 0 | $ | 0 | $ | 1,795,125 | $ | — | $ | (4,721,923 | ) | $ | 888,091 | $ | (1,941,256 | ) | ||||||||||||||||||
| Options issued and vested - 2021 Plan | 6,750 | 6,750 | ||||||||||||||||||||||||||||||||||
| Shares issued to BoD & Mgmnt - 2010 Plan | 1,366,800 | 1,367 | 0 | 326,665 | 328,032 | |||||||||||||||||||||||||||||||
| Shares issued to Consultants - 2010 Plan | 1,832,400 | 1,832 | 437,944 | 439,776 | ||||||||||||||||||||||||||||||||
| Subsidiary stock transactions | 450,000 | 450,000 | ||||||||||||||||||||||||||||||||||
| Net loss attributable to the non-controlling interest | (154,614 | ) | (154,614 | ) | ||||||||||||||||||||||||||||||||
| Net loss | (1,621,707 | ) | (1,621,707 | ) | ||||||||||||||||||||||||||||||||
| March 31, 2021 | 100,649,873 | $ | 100,650 | 0 | $ | 0 | $ | 2,566,484 | $ | — | $ | (6,343,630 | ) | $ | 1,183,477 | $ | (2,493,019 | ) | ||||||||||||||||||
| Options issued and vested - 2021 Plan | 7,650 | 7,650 | ||||||||||||||||||||||||||||||||||
| Shares issued to BoD & Mgmnt - 2021 Plan | 90,000 | 90 | 0 | 15,210 | 15,300 | |||||||||||||||||||||||||||||||
| Shares issued to Consultants - 2021 Plan | 610,000 | 610 | 27,040 | 27,650 | ||||||||||||||||||||||||||||||||
| Shares issued to BoD & Mgmnt for conversion of debt | 7,591,261 | 7,591 | 979,273 | 986,864 | ||||||||||||||||||||||||||||||||
| Shares issued to Consultants for conversion of debt | 930,864 | 931 | 120,111 | 121,042 | ||||||||||||||||||||||||||||||||
Forgiveness of related party | 1,020,323 | 1,020,323 | ||||||||||||||||||||||||||||||||||
| Subsidiary stock options | 450 | 450 | ||||||||||||||||||||||||||||||||||
| Subsidiary stock transactions | 150,000 | 150,000 | ||||||||||||||||||||||||||||||||||
| Net loss attributable to the non-controlling interest | (246,935 | ) | (246,935 | ) | ||||||||||||||||||||||||||||||||
| Net loss | (896,701 | ) | (896,701 | ) | ||||||||||||||||||||||||||||||||
| June 30, 2021 | 109,871,998 | $ | 109,872 | 0 | $ | 0 | $ | 4,736,091 | $ | — | $ | (7,240,331 | ) | $ | 1,086,992 | $ | (1,307,376 | ) | ||||||||||||||||||
See the accompanying notes to these unaudited condensed consolidated financial statements
| Common Stock | Preferred Stock | Additional Paid in Capital | Accumulated | Non-controlling | Total | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Common | Preferred | Deficit | Interest | Deficit | ||||||||||||||||||||||||||||
| December 31, 2020 | 97,450,673 | $ | 97,451 | 0 | — | $ | 1,795,125 | $ | — | $ | (4,721,923 | ) | $ | 888,091 | $ | (1,941,256 | ) | |||||||||||||||||||
Option s issued and vested - 2021 Plan | 6,750 | 6,750 | ||||||||||||||||||||||||||||||||||
| Shares issued to BoD & Mgmnt - 2010 Plan | 1,366,800 | 1,367 | 326,665 | 328,032 | ||||||||||||||||||||||||||||||||
| Shares issued to Consultants - 2010 Plan | 1,832,400 | 1,832 | 437,944 | 439,776 | ||||||||||||||||||||||||||||||||
| Subsidiary stock transactions | 450,000 | 450,000 | ||||||||||||||||||||||||||||||||||
| Net loss attributable to the non-controlling interest | (154,614 | ) | (154,614 | ) | ||||||||||||||||||||||||||||||||
| Net loss | — | (1,621,707 | ) | (1,621,707 | ) | |||||||||||||||||||||||||||||||
| March 31, 2021 | 100,649,873 | $ | 100,650 | 0 | — | $ | 2,566,484 | $ | — | $ | (6,343,630 | ) | $ | 1,183,477 | $ | (2,493,019 | ) | |||||||||||||||||||
| December 31, 2021 | 110,840,998 | $ | 110,841 | 0 | — | $ | 5,881,876 | $ | — | $ | (8,753,668 | ) | $ | (397,256 | ) | $ | (3,158,207 | ) | ||||||||||||||||||
| Issuance of Warrants | 42,250 | 42,250 | ||||||||||||||||||||||||||||||||||
| Net loss attributable to the non-controlling interest | (51,116 | ) | (51,116 | ) | ||||||||||||||||||||||||||||||||
| Net loss | — | — | (912,270 | ) | (912,070 | ) | ||||||||||||||||||||||||||||||
| March 31, 2022 | 110,840,998 | $ | 110,841 | 0 | — | $ | 5,924,126 | $ | — | $ | (9,665,938 | ) | $ | (448,372 | ) | $ | (4,079,343 | ) | ||||||||||||||||||
3
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(UNAUDITED)
| Six Months Ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (2,919,957 | ) | $ | (1,469,093 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Debt discount amortization, incl. issuance of warrants | 17,103 | 242,987 | ||||||
| Default fee convertible notes | — | 666,456 | ||||||
| Stock-based compensation | 825,608 | 164,992 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Pre-paid expenses | (224,586 | ) | — | |||||
| Other receivable | — | 50,000 | ||||||
| Accounts payable and accrued expenses | 217,851 | 61,048 | ||||||
| Accounts payable related party | 674,290 | 87,176 | ||||||
| Net cash used in operating activities | (1,409,691 | ) | (196,434 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in intangibles | (8,954 | ) | — | |||||
| Net cash used in investing activities | (8,954 | ) | — | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from subsidiary stock transactions | 600,000 | — | ||||||
| Proceeds from issuance of convertible notes payable | 1,165,000 | 264,000 | ||||||
| Repayment of convertible notes payable | — | (232,948 | ) | |||||
| Net cash provided by financing activities | 1,765,000 | 31,052 | ||||||
| Net increase (decrease) in cash | 346,355 | (165,382 | ) | |||||
| Cash, beginning of period | 41,688 | 169,628 | ||||||
| Cash, end of period | $ | 388,043 | $ | 4,246 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Interest paid | $ | — | $ | 91,362 | ||||
| Income taxes paid | — | — | ||||||
| NON-CASH INVESTING & FINANCING ACTIVITIES | ||||||||
| Issuance of warrants | — | 145,438 | ||||||
| Debt discount on convertible note | 102,747 | — | ||||||
| Debt premium on convertible note | — | 937,007 | ||||||
| Accretion of debt premium to additional paid-in capital | — | 961,128 | ||||||
| Common shares issued for the conversion of principal and accrued interest | 1,107,906 | 34,132 | ||||||
| Forgiveness of related party debt recorded to additional paid-in capital | $ | 1,020,323 | $ | — | ||||
See the accompanying notes to these unaudited condensed consolidated financial statements
43
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021
(UNAUDITED)
| 3-Months Ended | ||||||||
| March 31, 2022 | March 31, 2021 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (963,386 | ) | $ | (1,776,321 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization | 92,245 | — | ||||||
| Stock-based compensation expense | 22,400 | 774,558 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | (108,176 | ) | 169,673 | |||||
| Accounts payable related party | 265,506 | 20,240 | ||||||
| Other short-term debt | — | 420,750 | ||||||
| Net cash used in operating activities | (691,411 | ) | (391,100 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in intangibles | (22,323 | ) | (8,953 | ) | ||||
| Net cash used in investing activities | (22,323 | ) | (8,953 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from subsidiary stock transactions | — | 450,000 | ||||||
| Proceeds from issuance of convertible notes payable | 1,380,960 | — | ||||||
| Net cash provided by financing activities | 1,380,960 | 450,000 | ||||||
| Net increase in cash | 667,226 | 49,947 | ||||||
| Cash, beginning of period | 72,358 | 41,688 | ||||||
| Cash, end of period | $ | 739,584 | $ | 91,635 | ||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
| Interest paid | $ | — | $ | — | ||||
| Income taxes paid | $ | — | $ | — | ||||
| NON-CASH INVESTING & FINANCING ACTIVITIES: | ||||||||
| Issuance of warrants | $ | 42,250 | $ | — | ||||
| Debt discount on convertible note | $ | 86,040 | $ | — | ||||
See the accompanying notes to these unaudited condensed consolidated financial statements
4
BIOXYTRAN, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,MARCH 31, 2022 AND 2021 AND 2020
(UNAUDITED)
NOTE 1 – BACKGROUND AND ORGANIZATION
Business Operations
Bioxytran, Inc. (the “Company”) is a clinical stage pharmaceutical company focused on the development, manufacture and commercialization of therapeutic drugs designed to address hypoxia in humans, which is a lack of oxygen to tissues, in a safe and efficient manner.
Our Subsidiary, Pharmalectin, Inc. (the “Subsidiary”) is a clinical stage pharmaceutical company focused on the development, manufacture and commercialization of therapeutic drugs designed to address conditions related to Covid-19.
Our Foreign Subsidiary, Pharmalectin (BVI), Inc. (the “Foreign Subsidiary”) is the owner and custodian of the Company’s Copyrights, Trade Marks and Patents.
Organization
Bioxytran, Inc. was organized on October 5, 2017 as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with authorized common shares with a par value of $, and preferredPreferred shares with a par value of $. On September 21, 2018, the Company went under a reorganization in the form of a reverse merger and is currently registered as a Nevada corporation with a taxing structure for U.S. federal and state income tax as a C-Corporation with authorized common shares with a par value of $, and preferredPreferred shares with a par value of $. There are currently outstanding shares, 272,000 cashless warrants with an average remaining exercise time of years at a price of $ and 623,000 options with an average remaining exercise time of years at an average price of $.
The SubsidiaryPharmalectin was organized on October 5, 2017 as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with authorized commonCommon shares with a par value of $, and preferredPreferred shares with a par value of $. The Subsidiary was founded under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2020, the name was changed to Pharmalectin, Inc. There are currently issued and outstanding shares; Common shares are held by Bioxytran and Common shares are held by an affiliate. An additional options are also held by an affiliate. The option agreement includes provisions for dilutive issuance and cash-less exercise. The beneficial ownership of the affiliate are Mike Sheikh, Ola Soderquist and David Platt.
Pharmalectin BVI was organized on March 17, 2021 as a British Virgin Islands (BVI) Business Corporation with a BVI corporate taxing structure with authorized shares with a par value of $. There are currently outstanding shares and 4,500,000 with an average remaining exercise time of years at a price of $; 21,000,000 shares (82%) are held by the Company and 4,500,000 (18%) shares by minority shareholders. The options, originally issued to the Subsidiary’s management under the 2017 Stock Plan, are currently held by an affiliated company.Company.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited consolidated financial statements.
While the information presented in the accompanying financial statements is unaudited, it includes all adjustments which are, in the opinion of the management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are statements prepared in accordance with US GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company’s December 31, 2021 audited financial statements and notes that can be expected for the year ending December 31, 2022.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of Bioxytran, Inc. a Nevada Corporation, and its whollymajority owned subsidiary, Pharmalectin, Inc. of Delaware (collectively, the “Company”)., as well as its wholly owned subsidiary, Pharmalectin (BVI), Inc of British Virgin Islands. All intercompany accounts have been eliminated upon consolidation.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
Cash
For purposes of the Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with aan original maturity date of three months or less to be cash equivalents.
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Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation, valuation of warrants, valuations in connection with convertible notes and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.
The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of common stockCommon Stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stockCommon Stock using the “treasury stock” and/or “if converted” method.methods as applicable.
At March 31, 2022, we would, based on the market price of $/share, be obligated to issue approximately 23,509,009 shares of Common Stock upon conversion of the currently outstanding convertible notes (the “New Notes”) and shares upon exercise of the warrants and shares upon exercise of outstanding options. For the New Notes, the shares total is based on $ of currently outstanding principal, and unpaid interest.
The 2021 1-year notes (the “New Notes”), have an interest rate of 6% and are convertible at the lower of (i) a fixed price of $0.13, or (ii) 85% of the closing price of any Qualified Financing, which consist of any fundraising receiving gross proceeds of not less than $500,000.
The 2022 1-year notes (the “New Notes”), have an interest rate of 6% and are convertible at a fixed price of $0.25. The New Notes are limited to converting no more than 4.99% of our issued an outstanding Common Stock.
The Company measures the cost of services received from employees and non-employees in exchange for an award of equity instruments based on the fair value of the award on the grant date pursuant ASC 718. Stock-based compensation expense is recorded by the Company over the requisite service period, or vesting period, in the same expense classifications in the statements of operations, as if such amounts were paid in cash.
Accounting for subsidiary stock transactions
The Company accounts for subsidiary stock transactions in accordance with Opinions of the Accounting Principles Board 09 (APBO No. 9). In paragraph 28, this pronouncement excluded all adjustments formfrom transactions in a company’s own stock “. . . from the determination of net income or the results of operations under all circumstances.” During the sixthree months ended June 30,March 31 2021, the Company sold 1.8 millionshares in its subsidiary Pharmalectin to external investors for a total amount of $. Accordingly, APIC has beenwas adjusted with this amount for the six3 months ended June 30,March 31, 2021, no such transactiontransactions took place during the six3 months ended June 30, 2020.
Income Taxes
The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or be settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion of the gross deferred tax asset will not be realized. The Company records interest and penalties related to income taxes as a component of provision for income taxes. The Company did not recognize any interest and penalty expense for the three and six months ended June 30, 2021 and 2020.
On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law by the President of the United States. TCJA is a tax reform act that among other things, reduced corporate tax rates to 21 percent effective January 1, 2018. FASB ASC 740, Income Taxes, requires deferred tax assets and liabilities to be adjusted for the effect of a change in tax laws or rates in the year of enactment, which is the year in which the change was signed into law. Accordingly, the Company adjusted its deferred tax assets and liabilities at DecemberMarch 31, 2020, using the new corporate tax rate of 21 percent.2022.
Research and Development
The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period
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incurred. DuringFor the sixthree months ended June 30, 2021March 31, 2022 the Company incurred $1,065,685240,125 in research and development expenses, while during the sixthree months ended March 31, 20202021 the Company did not incur any such expenses.incurred $347,033.
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Intangibles – Goodwill and Other
Valuation of intangibles are in accordance with ASC 350. Costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at award date, which varies depending on the pendency period of the application, generally approximating seventeen years. Capitalized patent costs, also referred to as patent prosecution costs, include internal legal labor, professional legal fees, government filing fees and translation fees related to expanding the Company’s patent portfolio. Costs associated with the maintenance and annuity fees of patents are accounted for as prepaid assets at the time of payment and amortized over the shorter of the maintenance period or remaining life of the related patent.
Accrued Expenses
As part of the process of preparing our condensed consolidated financial statements, we are required to estimate accrued expenses. This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the associated cost incurred on these services as at each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers. In the event that we do not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated. The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance with accounting principles generally accepted in the U.S.
Warrants
The Company has issued common stockCommon Stock warrants in connection with the execution of certain equity and debt financings. The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price, remaining life of the warrant, and risk-free interest rates at each period end.
Fair Value
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.
Debt Restructuring
We follow the provisions of ASC 470-50, Modifications and Extinguishments, to account for all modifications or extinguishments of debt instruments. Under ASC 470-50, modifications or exchanges are considered extinguishments with gains or losses recognized in current earnings if the terms of the new debt and original instrument are substantially different.
Recent Accounting Pronouncements
There were various updates recentlyIn August 2020, the Financial Accounting Standards Board (“FASB”) issued mostAccounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of which represented technical correctionsbeneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the accounting literaturediluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or application to specific industries and aremodified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not expected to a have a materialan impact on the Company’s financial position, results of operations or cash flows.statements.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed interim financial statements.
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NOTE 3 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As at June 30, 2021,March 31, 2022, the Company had cash of $388,043739,584 and a negative working capital of $1,326,3294,147,687. The Company has not yet generated any revenues, and has incurred cumulative net losses of $7,240,3319,665,939. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
During the sixthree months ending June 30, 2021,ended March 31, 2022, the Company had raised a net of $600,0001,380,960 in cash proceeds from the issuance of common stock in our Subsidiary and $1,165,000 cash generating 1-year convertible notes at 6% interest, with net cash proceeds of $1,045,150.notes. During the same period in 2020,2021, the Company raised $264,000450,000 from the issuance of convertible notes, and paid back $242,938.common stock in our subsidiary. The Company is aware that its current cash on hand will not be sufficient to fund its projected operating requirements through the month of September 2021.June 2022 and is pursuing alternative opportunities to funding.
On June 24, 2021 theThe Company issued an S-1 for shares at $1/share, for an amount of $5,300,000 with an estimated $477,000 Dealer Manager Fee, aimingintends to raise a netadditional capital through private placements of $4,823,000. Further, the Company issued a selling shareholder prospectus for up to shares through conversion of outstanding convertible notes at $0.13/share for a total of $2,165,000 plus accrued interest. Theredebt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
The Company’s management dodoes not know the full extent or foresee thatthe impact COVID-19 has any impact for the Company andhad on our business or our operations or its ability to carry out theirour plans. We will continue to monitor and follow this situation closely.
Accordingly, the accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE 4 – PRE-PAID EXPENSES AND OTHER CURRENT ASSETS
On June 30, 2021 there was $499,300 in Pre-paid Expenses for a Contract Research Organization (CRO) for the upcoming Indian Phase III clinical trial of ProLectin-M as an oral treatment of mild to moderate Covid-19 patients planned for the third quarter of 2021. At December 31, 2020, there were $274,715 in Pre-paid Expenses.
NOTE 5 - INTANGIBLES
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. NoNaN impairment charges were recorded for the six3 months ended June 30, 2021March 31, 2022 and the year ended December 31, 2020.2021.
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Amortization of capitalized patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, generally approximating twenty years. The current patent applications are still on-going, and are therefore not yet subject to amortization.
| Estimated Life (years) | June 30, 2021 | December 31, 2020 | Estimated Life (years) | March 31, 2022 | December 31, 2021 | |||||||||||||||||||
| Capitalized patent costs | 20 | $ | 18,954 | $ | 10,000 | 20 | $ | 69,254 | $ | 46,931 | ||||||||||||||
| Accumulated amortization | 0 | 0 | (911 | ) | — | |||||||||||||||||||
| Intangible assets, net | $ | 18,954 | $ | 10,000 | $ | 68,343 | $ | 49,931 | ||||||||||||||||
NOTE 65 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
On June 30, 2021,March 31, 2022, there was no$796,506 in accounts payable to related parties in the form of payroll and accrued expenses.expenses and $6,400 in un-issued shares liability related party. On December 31, 20202021 there was $307,176$531,000 in Accountsaccounts payable to related parties.
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The following table represents the major components of accounts payables and accrued expenses and other current liabilities at June 30, 2021March 31, 2022 and at December 31, 2020:2021:
| June 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||
| Accounts payable related party (1) | $ | — | $ | 307,176 | $ | 796,506 | $ | 531,000 | ||||||||
| Professional fees | 125,352 | 84,325 | 120,696 | 375,371 | ||||||||||||
| Other | 1,155 | — | ||||||||||||||
| Interest | 20,735 | 263,135 | 137,720 | 85,685 | ||||||||||||
| Other accounts payable | 5,333 | 667 | ||||||||||||||
| Default Penalty | — | 673,956 | ||||||||||||||
| Convertible notes payable, net of premium and discount | 2,062,253 | 938,400 | ||||||||||||||
| Payroll taxes | 59,693 | 32,010 | ||||||||||||||
| Pension/401K | 196,875 | 131,250 | ||||||||||||||
| Un-issued share liability, consultant | 16,000 | — | ||||||||||||||
| Un-issued share liability, related party (2) | 6,400 | — | ||||||||||||||
| Convertible note payable | 3,552,225 | 2,122,181 | ||||||||||||||
| Total | $ | 2,213,673 | $ | 2,267,659 | $ | 4,887,270 | $ | 3,277,497 | ||||||||
| (1) | |
| (2) | There are currently 40,000 shares of Common Stock awarded but not issued to four Board Members in the |
NOTE 76 – CONVERTIBLE NOTES PAYABLE
As long asPrivate Placement, 2021 Notes
Around May 3, 2021, we entered into four (4)Securities Purchase Agreements, or “the SPA’s”, under which we agreed to sell convertible promissory notes, “the Notes”, in an aggregate principal amount of $2,165,000 with 6% interest.
At any time after the following convertible notes remain outstanding,issue date of the Company is restricted from incurring any indebtedness or liens, except as permitted (as defined)Notes, The Holders of the Notes, “the Holders”, and cannot amend its charter in any matter that materially effects rights of noteholders, repay or repurchase more than de minimis number of shares of common stock other than conversion or warrant shares, repay or repurchasehave the option to convert all or any portion of any indebtedness, or pay cash dividends.
Debt Restructuring
On April 16, 2020, SEC ordered, pursuant to Section 12(k)part of the Securities Exchange Act of 1934, that trading of BIXT is suspended for the period April 16 through April 29, 2020.
As a resultoutstanding and unpaid principal amount and accrued and unpaid interest of the SEC ordered suspension the Company defaulted on ten outstanding Convertible Notes; resulting in an increaseNotes into shares of the interest to 21% and the principal to increase to 168% of principal loan amount. The convertible debt increased by $666,456 to $1,604,856 while the interest accrual increased to approximately $28,563/month. At the default date, April 16, 2020, remaining debt discount of $76,265 was amortized to interest expense and the remaining debt premium of $856,560 was accreted to additional paid-in capital.
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On May 2 and 3, 2021, Bioxytran, Inc. (the “Company”) entered into nine Note Agreements for a total amount of $3,266,846 in 1-year notes (the “New Notes”), with an interest rate of 6% convertibleour common stock at the lowerConversion Price. The “Conversion Price” will be the lesser of(i) a fixed price of $0.13,$.13 per share or (ii) 85% of the closing price of anyAny Qualified Financing, which consistconsists of any fundraising receiving gross proceeds of not less than $500,000.
The Holders are limited to holding a total of 4.99% of our issued and outstanding common stock.
The Common Stock underlying the Notes, require the Company preparewhen issued, bear a restrictive legend and file a Registration Statement on Form S-1 within a period of 60 days from issuance of the New Notes. A Form S-1 was filed with the SEC on June 24, 2021 and was declared effective by SEC on July 23, 2021, wherein the notes havehas a 180-day lock-up period. They are currently eligible for resale under Rule 144.
If the Notes are converted prior to us paying off such note, it would lead to substantial dilution to our shareholders as a result of the conversion discounted for the Notes. There can be no assurance that there will be any funds available to pay of the Notes, or if available, on terms that will be acceptable to us or our shareholders. If we fail to obtain such additional financing on a timely basis, the Holders may convert the Notes and sell the underlying shares, which may result in significant dilution to shareholders due to the conversion discount, as well as a significant decrease in our stock price.
Private Placement, 2022 Notes
Throughout the quarter, we entered into thirty-four (34) Securities Purchase Agreements, or “the SPA’s”, with accredited investors, under which we agreed to sell the Notes, in an aggregate principal amount of $1,467,000 with 6% interest to the Holders of the Notes, “the Holders”.
At any time after the issue date of the Notes, “the Holders”, have the option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the Notes into shares of our Common Stock at the Conversion Price. The “Conversion Price” is set to $0.25 per share.
The transactions set forth below were approved byHolders are limited to holding a total of 4.99% of our issued and outstanding Common Stock. The Common Stock underlying the Company’s Board of Directors on June 4, 2021.Notes, when issued, bear a restrictive legend are currently eligible for resale under Rule 144.
| Name | Amount due June 30, 2021 | Accrued interest June 30, 2021 | Converted notes | Interest due at conversion | Converted price | Stock issued for Note conversion | ||||||||||||
| Notes sold in exchange for cash | (1) | $ | 1,165,000 | $ | 10,270 | $ | $ | $ | — | — | ||||||||
| Notes issued in exchange for accounts payable related party | (2) | 981,466 | 5,398 | 0.13 | 7,591,261 | |||||||||||||
| Notes issued in exchange for accounts payable consultant | (2) | 120,380 | 662 | 0.13 | 930,864 | |||||||||||||
| Note issued in exchange for defaulted notes | (3) | 1,000,000 | 10,105 | — | — | |||||||||||||
| $ | 2,165,000 | $ | 20,375 | $ | 1,101,846 | $ | 6,060 | 8,522,125 | ||||||||||
The defaulted notes were returnedIf the Notes are converted prior to the Company on May 26, 2021. The debt forgiveness of $1,020,323 recorded as additional paid-in capital.
| Name | Due at May 26, 2019 | Principal Amount | Default Penalty | Warrants Issued | Term | Exercise Price | Amortization of Warrants | Accrued Interest | ||||||||||||||||||||||||
| Old Notes | Defaulted | $ | 938,400 | $ | 673,956 | 272,000 | 5 | 2.00 | $ | 97,279 | $ | 407,967 | ||||||||||||||||||||
As part of the pay-off, the debt originating from a January 20, 2021 summary judgement by the Supreme Court of the State of New York, County of Nassau, awarding Power Up damages in the amount of $420,750 for Breach of Contact was agreedus paying off such note, it would lead to be dismissed by prejudice. anddilution to our shareholders as a result of the damages recordedconversion discounted for the Notes. There can be no assurance that there will be any funds available to pay of the Notes, or if available, on terms that will be acceptable to us or our shareholders. If we fail to obtain such additional financing on a timely basis, the Holders may convert the Notes and sell the underlying shares, which may result in dilution if converted, as well as a decrease in our stock price.
Schedule of converted notes
| Name | Principal due March 31, 2022 | Accrued interest March 31, 2022 | Total amount due March 31, 2022 | |||||||
| Private Placement, 2021 Notes | (1) | $ | 2,165,000 | $ | 118,160 | 2,283,160 | ||||
| Private Placement, 2022 Notes | (2) | 1,467,000 | 19,560 | 1,486,560 | ||||||
| $ | 3,632,000 | $ | 137,720 | 3,769,720 | ||||||
| (1) $1,000,000 of this amount was used to extinguish the Old Notes. Net cash received for these notes were $1,045,150, after a Debt Discount of $119,850 was paid to the sole Placement Agent: WallachBeth Capital, LLC (Member FINRA / SIPC). | ||||||||||
| (2) Net cash received for these notes were $1,380,960, after a Debt Discount of $86,040 was paid to the sole Placement Agent: WallachBeth Capital, LLC (Member FINRA / SIPC). | ||||||||||
At December 31, 2021 the first quarter of 2021 was reversed in the Statement of operations.outstanding convertible notes were as follows:
| Name | Principal due December 31, 2021 | Accrued interest December 31, 2021 | Total amount due December 31, 2021 | |||||||
| Notes sold in exchange for cash | (1) | $ | 1,165,000 | $ | 46,108 | 1,211,108 | ||||
| Note issued in exchange for defaulted Old Notes | (2) | 1,000,000 | 39,577 | 1,039,577 | ||||||
| $ | 2,165,000 | $ | 85,685 | 2,250,685 | ||||||
| (3) Net cash received for these notes were $1,045,150, after a Debt Discount of $119,850 was paid to the sole Placement Agent: WallachBeth Capital, LLC (Member FINRA / SIPC). | ||||||||||
| (4) The "Old Notes" were paid off and assumed by a different entity/company. Portions of the balance was forgiven and a new note of $1,000,000 was issued. | ||||||||||
The outstanding warrants were transferred to the Company’s officers in lieu of interest on amounts due as at May 31, 2021.
Convertible notes payable consists of the following at June 30, 2021March 31, 2022 and December 31, 2020:2021:
| June 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||
| Principal balance | $ | 2,165,000 | $ | 938,400 | $ | 3,632,000 | $ | 2,165,000 | ||||||||
| Default penalty | — | 673,956 | ||||||||||||||
| Unamortized debt discount | (102,747 | ) | — | (79,775 | ) | (42,819 | ) | |||||||||
| Outstanding, net of premium and discount | $ | 2,062,253 | $ | 1,612,356 | ||||||||||||
| Outstanding, net of debt discount and premium | $ | 3,552,225 | $ | 2,122,181 | ||||||||||||
NOTE 87 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue shares of Common Stock, and shares of Preferred Stock.
Preferred stock
As of June 30,March 31, 2022, or December 31, 2021, no preferred shares have been designated ornor issued.
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Common stock
On January 3, 2020, shares of common stock were issued as a result of conversion of accrued interest and principal on the Auctus Note #2 for a total of $12,000.
On February 18, 2020, shares of common stock were issued as a result of conversion of accrued interest and principal on the Auctus Note #2 for a total of $22,132.
On March 12, 2020, of common stock were issued in exchange for 416,666 warrants with cashless exercise, originating from Auctus Notes #1 and #2.
For the six3 months ending June 30, 2020,March 31, 2021, shares were awarded to the board of directors and management under the 2010 Stock Plan for a total value of $.
On June 4, 2021,1 shares of common stock were issued to management as a result of conversion of accrued interest and principal for three convertible notes for a total of $986,864, in reliance on an exemption under Section 4(2)(a).
On June 4, 2021, shares of common stock were issued to management as a result of conversion of accrued interest and principal for two convertible notes for a total of $121,042, in reliance on an exemption under Section 4(2)(a).
For the six3 months ending June 30,March 31, 2021, shares were awarded to consultants under the 2010 and the 2021 Stock PlansPlan for a total value of $.
As at June 30, 2021,of March 31, 2022, the Company has shares of common stock issued and outstanding. At December 31, 20202021 there were shares of common stock issued and outstanding.
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Common Stock Warrants
For the six3 months ended June 30,March 31, 2022, in connection with the issuance of the convertible notes, the Company issued 5-year warrants exercisable at $/share, valued at $, based on Black and Scholes Option Pricing Model, for a total value of $. For the 3 months ended March 31, 2021 the Company did not issue any warrants. For the six months ended June 30, 2020 the Company issued Warrants as part of convertible note agreements. The warrants total value allocated to debt discount was $129,929.Warrants.
The fair value of stock warrants granted for the six3 months ended June 30, 2021March 31, 2022 was calculated with the following assumptions:
2022 | ||||||||
| Risk-free interest rate | % | |||||||
| Expected dividend yield | % | |||||||
| Volatility factor (monthly) | % | |||||||
| Expected life of warrant | years | |||||||
The following table summarizes the Company’s common stock warrant activity for the six3 months ended June 30, 2021March 31, 2022 and 2020:2021:
| Number of Warrants | Weighted Average Exercise Price | Weighted- Average Remaining Expected Term | Number of Warrants | Weighted Average Exercise Price | Weighted- Average Remaining Expected Term | |||||||||||||||||||
| Outstanding as at January 1, 2020 | 616,666 | $ | 1.06 | 4.2 | ||||||||||||||||||||
| Outstanding as at December 31, 2021 | 272,000 | $ | 2.00 | 3.9 | ||||||||||||||||||||
| Granted | 405,334 | 0.36 | 0.9 | — | — | — | ||||||||||||||||||
| Exercised | (750,000 | ) | — | — | — | — | — | |||||||||||||||||
| Forfeited/Canceled | — | — | — | — | — | — | ||||||||||||||||||
| Outstanding as at December 31, 2020 | 272,000 | $ | 2.00 | 3.9 | ||||||||||||||||||||
| Outstanding as at March 31, 2021 | 272,000 | 2.00 | 3.7 | |||||||||||||||||||||
| Outstanding as at December 31, 2022 | 272,000 | $ | 2.00 | 2.9 | ||||||||||||||||||||
| Granted | — | — | — | 264,060 | 0.25 | 5.0 | ||||||||||||||||||
| Exercised | — | — | — | — | — | — | ||||||||||||||||||
| Forfeited/Canceled | — | — | — | — | — | — | ||||||||||||||||||
| Outstanding as at June 30, 2021 | 272,000 | $ | 2.00 | 3.4 | ||||||||||||||||||||
| Outstanding as at March 31, 2022 | 536,060 | $ | 1.14 | 3.7 | ||||||||||||||||||||
On June 4, 2021, the Warrants were transferred to the Company’s officers in lieu of interest on amounts due as at May 31, 2021.
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The following table summarizes information about stock warrants that are vested or expected to vest at June 30, 2021:March 31, 2022:
| Warrants Outstanding | Exercisable Warrants | |||||||||||||||||||||||||||||||||
| Exercise Price | Number of Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | Number of Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||||||||||||||||||
| $ | 2.00 | 272,000 | $ | 2.00 | 3.40 | $ | — | 272,000 | $ | 2.00 | 3.40 | $ | — | |||||||||||||||||||||
| Warrants Outstanding | Exercisable Warrants | |||||||||||||||||||||||||||||
| Number of Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | Number of Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||||||||||||||
| 264,060 | 0.25 | 4.8 | $ | — | 264,060 | 0.25 | 4.8 | $ | — | |||||||||||||||||||||
| 272,000 | $ | 2.00 | 2.6 | $ | — | 272,000 | $ | 2.00 | 2.6 | $ | — | |||||||||||||||||||
| 536,060 | $ | 1.14 | 3.7 | $ | — | 536,060 | $ | 1.14 | 3.7 | $ | — | |||||||||||||||||||
The following table sets forth the status of the Company’s non-vested warrants as at June 30, 2021 and DecemberMarch 31, 2020:2022, there were no warrants issued for the three months ended at March 31, 2021:
| Number of Warrants | Weighted- Average Grant-Date Fair Value | |||||||
| Non-vested as at December 31, 2022 | — | $ | — | |||||
| Granted | 264,060 | 0.25 | ||||||
| Forfeited | 0 | 0 | ||||||
| Vested | 264,060 | 0.25 | ||||||
| Non-vested as at March 31, 2022 | 0 | $ | 0 | |||||
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The weighted-average remaining contractual life for warrants exercisable at June 30, 2021March 31, 2022 is 3.65 years. years. The aggregate intrinsic value for fully vested, exercisable warrants was $0 at June 30, 2021March 31, 2022 and at December 31, 2020 was $20210.
Sales of Shares in Subsidiary
| # of shares | # of options | June 30, 2021 | December 31, 2020 | ||||||||||||
| Minority owners cash investment | 4,500,000 | $ | 1,550,000 | $ | 950,000 | ||||||||||
| Bioxytran non-dilutive equity | 15,000,000 | 1,500 | 1,500 | ||||||||||||
| Bioxytran dilutive equity | 6,000,000 | 2,000,000 | — | ||||||||||||
| Issued stock options @ $0.33 | 4,500,000 | 450 | — | ||||||||||||
| 25,500,000 | 4,500,000 | 3,551,950 | 951,500 | ||||||||||||
For the six3 months ended June 30,March 31, 2022 there were no shares sold in the Company’s Subsidiary, Pharmalectin, Inc.. For the 3 months ended March 31, 2021 there were 1,800,0001,350,000 shares sold in the Company’s Subsidiary, Pharmalectin, Inc. for a total of $600,000450,000. For the six months ended June 30, 2020 there were no such transaction.
On January 19, 2010, the Company adopted a stock option plan entitled “The 2010 Stock Plan” (2010 Plan) under which the Company may grant Options to Purchase Stock, Stock Awards or Stock Appreciation Rights up to 15%15% of common stock, automatically adjusted on January 1 each year. Under the terms of the stock plans, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically immediate and the options typically expire in five years. Stock Awards may be directly issued under the Plan (without any intervening options). Stock Awards may be issued which are fully and immediately vested upon issuance.
As at January 18, 2021, the 2010 Stock Planplan was retired and depleted. On January 19, 2021, the Board of Directors “The 2021 Stock Plan” (2021 Plan) with the same terms as the 2010 Plan, as at June 30, 2021, options and shares have been awarded from the 2021 Plan.
Shares Awarded and Issued under the 2010 Plan:
On January 1, 2020 the Company granted shares with a fair market value of $/share at the time of award, to a consultant for assistance with the Companies PR work, for a total of $.
On January 31, 2020 the Company granted two subcontractors a total of shares with a fair market value of $/share at the time of award, as compensation for their work with the Company’s marketing efforts, for a total of $.
12
On February 21, 2020 the Company granted shares with a fair market value of $/share to three members of the Audit Committee as compensation for their contribution in the Audit Committee, for a total of $.
On March 18, 2020 the Company granted shares with a fair market value of $/share at the time of award, to a consultant for assistance with the Companies PR work, for a total of $.
On May 1, 2020 the Company appointed Mr. Mike Sheikh as EVP of Business Development. Mr. Sheikh was issued shares with a fair market value of $/share to be equally vested over a period of 3 years, but fully vested upon a change of control. The shares total fair value at the time of the award was $.
On January 1, 2021 the Company granted shares, with a fair market value of $/share at the time of award, to a Medical Advisory Board Member for her contribution in the Company’s Advisory Board, for a total of $.
Shares Awarded and Issued 2021 Plan:
On April 1, 2021 the Company granted shares, with a fair market value of $/share at the time of award, to a Medical Advisory Board Member for her contribution in the Company’s Advisory Board, for a total of $.
On April 1, 2021 the Company granted shares with a fair market value of $/share to three members of the Audit Committee as compensation for their contribution in the Audit Committee, for a total of $.
On April 22, 2021 the Company granted shares with a fair market value of $/share at the time of award, to a consultant for assistance with the Companies PR work, for a total of $.
On June 15, 2021 the Company granted shares with a fair market value of $/share at the time of award, to a consultant for assistance with the Companies PR work, for a total of $.
Number of Shares | Fair Value per Share | Weighted Average Market Value per Share | ||||||||||||||||||||||
| Shares Issued as of December 31, 2019 | 471,000 | $ | – | $ | 0.77 | |||||||||||||||||||
| Shares Issued | 9,456,000 | – | 0.01 | |||||||||||||||||||||
| Shares Issued as of June 30, 2020 | 9,927,000 | $ | – | $ | 0.10 | |||||||||||||||||||
Number of Shares | Fair Value per Share | Weighted Average Market Value per Share | ||||||||||||||||||||||
| Shares Issued as of December 31, 2020 | 11,002,000 | $ | – | $ | 0.10 | 11,002,000 | $ | – | $ | 0.10 | ||||||||||||||
| Shares Issued | 3,899,200 | – | 0.21 | 3,199,200 | 0.24 | |||||||||||||||||||
| Shares Issued as of June 30, 2021 | 15,001,200 | $ | – | $ | 0.13 | |||||||||||||||||||
| Shares Issued as of March 31, 2021 | 14,201,200 | $ | – | $ | 0.13 | |||||||||||||||||||
| Shares Issued as of December 31, 2021 | 18,706,909 | – | 0.088 | |||||||||||||||||||||
| Shares Issued | — | — | — | |||||||||||||||||||||
| Shares Issued as of March 31, 2022 | 18,706,909 | $ | – | $ | 0.088 | |||||||||||||||||||
For the sixthree months ended June 30,March 31, 2022 and 2021, the Company recorded stock-based compensation expense of $ in connection with share-based payment awards. For the six months ended June 30, 2021, the Company recorded stock-based compensation expense ofand $, respectively, in connection with share-based payment awards.
Shares awarded, but not yet issued, under the 2021 Stock Plan:
On January 10, 2022 the Company granted shares of Common Stock to four Board Members in reward of their attendance at Board and Committee meetings during the fourth quarter of 2021. The total fair market value at the time of the award was $, or $/share.
On February 18, 2022 the Company granted shares of Common Stock to two Consultants in reward of their assistance for the product development and our clinical trials in India. The total fair market value at the time of the award was $, or $/share.
Stock options granted and vested 20102021 Plan:
On JanuaryFebruary 1, 20202021 the Company granted three-year options immediately vested at an exercise price of $ to a Medical Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at the time of award was $.
On February 1, 2020 the Company granted three-year options immediately vested at an exercise price of $ an Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at the time of award was $.
StockThere were no stock options granted and vested 2021 Plan:
On February 1, 2021 the Company granted three-year options immediately vested at an exercise price of $ to an Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at the time of award was $.
On May 1, 2021 the Company granted three-year options immediately vested at an exercise price of $ to a Medical Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at the time of award was $.
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| June 30, 2021 | June 30, 2020 | |||||||
| Risk-free interest rate | – | % | – | % | ||||
| Expected dividend yield | 0 | % | 0 | % | ||||
| Volatility factor (monthly) | 161.18 | % | 126.37 | % | ||||
| Expected life of options | ||||||||
| March 31, 2021 | ||||
| Risk-free interest rate | % | |||
| Expected dividend yield | 0 | % | ||
| Volatility factor (monthly) | 161.18 | % | ||
| Expected life of options | 3 years | |||
There were no stock options granted the three months ended March 31, 2022. For the sixthree months ended June 30,March 31, 2021, the Company recorded compensation expense of $$6,750 in connection with awarded stock options. For the six months ended June 30, 2020 the amount was $. As at June 30, 2021,March 31, 2022, there was no unrecognized compensation expense related to non-vested stock option awards.
| Number of Options | Exercise Price per Share | Weighted Average Exercise Price per Share | ||||||||||||||||||||||
| Outstanding as of December 31, 2019 | 341,000 | $ | – | $ | 0.96 | |||||||||||||||||||
| Granted | 96,000 | – | 0.08 | |||||||||||||||||||||
| Exercised | — | — | — | |||||||||||||||||||||
| Options forfeited/cancelled | — | — | — | |||||||||||||||||||||
| Outstanding as of June 30, 2020 | 437,000 | $ | – | $ | 0.77 | |||||||||||||||||||
| Number of Options | Exercise Price per Share | Weighted Average Exercise Price per Share | ||||||||||||||||||||||
| Outstanding as of December 31, 2020 | 533,000 | $ | – | $ | 0.71 | 533,000 | $ | - | $ | 0.73 | ||||||||||||||
| Granted | 90,000 | – | 0.20 | 45,000 | 0.20 | |||||||||||||||||||
| Exercised | — | — | — | — | — | — | ||||||||||||||||||
| Options forfeited/cancelled | — | — | — | — | — | — | ||||||||||||||||||
| Outstanding as of June 30, 2021 | 623,000 | $ | – | $ | 0.59 | |||||||||||||||||||
| Outstanding as of March 31, 2021 | 578,000 | $ | - | $ | 0.72 | |||||||||||||||||||
| Outstanding as of December 31, 2021 | 668,000 | $ | - | $ | 0.55 | |||||||||||||||||||
| Granted | — | — | — | |||||||||||||||||||||
| Exercised | — | — | — | |||||||||||||||||||||
| Options forfeited/cancelled | — | — | — | |||||||||||||||||||||
| Outstanding as of March 31, 2022 | 668,000 | $ | - | $ | 0.55 | |||||||||||||||||||
| Options Outstanding | Exercisable Options | ||||||||||||||||||||||||||||||||||||
| Exercise Price | Number of Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | Number of Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||||||||||||||||||||
| $ | 0.001 | 45,000 | $ | 0.001 | 1.83 | $ | 0 | 45,000 | $ | 0.001 | 1.83 | $ | 0 | ||||||||||||||||||||||||
| 0.05 | 3,000 | 0.05 | 2.25 | 0 | 3,000 | 0.05 | 2.25 | 0 | |||||||||||||||||||||||||||||
| 0.15 | 90,000 | 0.15 | 1.83 | 0 | 90,000 | 0.15 | 1.83 | 0 | |||||||||||||||||||||||||||||
| 0.18 | 45,000 | 0.18 | 2.33 | 0 | 45,000 | 0.18 | 2.33 | 0 | |||||||||||||||||||||||||||||
| 0.19 | 45,000 | 0.19 | 2.58 | 0 | 45,000 | 0.19 | 2.58 | 0 | |||||||||||||||||||||||||||||
| 0.20 | 48,000 | 0.20 | 2.55 | 0 | 48,000 | 0.20 | 2.55 | 0 | |||||||||||||||||||||||||||||
| 0.31 | 3,000 | 0.31 | 1.50 | 0 | 3,000 | 0.31 | 1.50 | 0 | |||||||||||||||||||||||||||||
| 0.32 | 3,000 | 0.32 | 1.75 | 0 | 3,000 | 0.32 | 1.75 | 0 | |||||||||||||||||||||||||||||
| 0.73 | 3,000 | 0.73 | 1.25 | 0 | 3,000 | 0.73 | 1.25 | 0 | |||||||||||||||||||||||||||||
| 0.61 | 45,000 | 0.61 | 1.34 | 0 | 45,000 | 0.61 | 1.34 | 0 | |||||||||||||||||||||||||||||
| 0.95 | 200,000 | 0.95 | 1.20 | 0 | 200,000 | 0.95 | 1.20 | 0 | |||||||||||||||||||||||||||||
| 1.09 | 3,000 | 1.09 | 1.00 | 0 | 3,000 | 1.09 | 1.00 | 0 | |||||||||||||||||||||||||||||
| 1.10 | 45,000 | 1.10 | 1.08 | 0 | 45,000 | 1.10 | 1.08 | 0 | |||||||||||||||||||||||||||||
| 1.21 | 45,000 | 1.21 | 0.83 | 0 | 45,000 | 1.21 | 0.83 | 0 | |||||||||||||||||||||||||||||
| $ | – | 623,000 | $ | 0.59 | 1.63 | $ | 0 | 623,000 | $ | 0.59 | 1.63 | $ | 0 | ||||||||||||||||||||||||
| Options Outstanding | Exercisable Options | ||||||||||||||||||||||||||||
| Exercise Price | Number of Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | Number of Options | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||||||||||||
| $ | 0.001 | 90,000 | $ | 0.001 | 1.70 | $ | 0 | 90,000 | $ | 0.001 | 1.70 | $ | 0 | ||||||||||||||||
| 0.05 | 3,000 | 0.05 | 1.50 | 0 | 3,000 | 0.05 | 1.50 | 0 | |||||||||||||||||||||
| 0.15 | 90,000 | 0.15 | 1.08 | 0 | 90,000 | 0.15 | 1.08 | 0 | |||||||||||||||||||||
| 0.18 | 45,000 | 0.18 | 1.58 | 0 | 45,000 | 0.18 | 1.58 | 0 | |||||||||||||||||||||
| 0.19 | 45,000 | 0.19 | 2.08 | 0 | 45,000 | 0.19 | 2.08 | 0 | |||||||||||||||||||||
| 0.20 | 48,000 | 0.20 | 1.79 | 0 | 48,000 | 0.20 | 1.79 | 0 | |||||||||||||||||||||
| 0.31 | 3,000 | 0.31 | 0.75 | 0 | 3,000 | 0.31 | 0.75 | 0 | |||||||||||||||||||||
| 0.32 | 3,000 | 0.32 | 1.00 | 0 | 3,000 | 0.32 | 1.00 | 0 | |||||||||||||||||||||
| 0.73 | 3,000 | 0.73 | 0.58 | 0 | 3,000 | 0.73 | 0.58 | 0 | |||||||||||||||||||||
| 0.61 | 45,000 | 0.61 | 0.50 | 0 | 45,000 | 0.61 | 0.50 | 0 | |||||||||||||||||||||
| 0.95 | 200,000 | 0.95 | 0.45 | 0 | 200,000 | 0.95 | 0.45 | 0 | |||||||||||||||||||||
| 1.09 | 3,000 | 1.09 | 0.25 | 0 | 3,000 | 1.09 | 0.25 | 0 | |||||||||||||||||||||
| 1.10 | 45,000 | 1.10 | 0.33 | 0 | 45,000 | 1.10 | 0.33 | 0 | |||||||||||||||||||||
| 1.21 | 45,000 | 1.21 | 0.08 | 0 | 45,000 | 1.21 | 0.08 | 0 | |||||||||||||||||||||
| $ | - | 668,000 | $ | 0.55 | 0.97 | $ | 0 | 668,000 | $ | 0.55 | 0.97 | $ | 0 | ||||||||||||||||
14
The following table sets forth the status of the Company’s non-vested stockThere were no granted options as of June 30, 2021granted, nor any options issued between March 31, 2022 and December 31, 2020:2021:
| Number of Options | Weighted Average Grant-Date Fair Value | |||||||
| Non-vested as of December 31, 2020 | 0 | $ | 0 | |||||
| Granted | 90,000 | 0.20 | ||||||
| Forfeited | 0 | — | ||||||
| Vested | 90,000 | 0.20 | ||||||
| Non-vested as of June 30, 2021 | 0 | $ | 0 | |||||
The weighted-average remaining estimated life for options exercisable at June 30, 2021March 31, 2022 is 0.97 years.
The aggregate intrinsic value for fully vested, exercisable options was $ at June 30, 2021. The aggregate intrinsic value of options exercised for the six months endedMarch 31, 2022 and at June 30,December 31, 2021 was $$0 as no options were exercised. The actual tax benefit realized from stock option exercises for the sixthree months ended at DecemberMarch 31, 20202022 and 2021 was $ as no options available for exercise.were exercised.
At June 30, 2021As at March 31, 2022 the Company there are has options or stock awards available for grant under the 2021 Plan.
Options granted in Subsidiary
For the six months ended June 30, 2021 there were -year options grated in the Company’s Subsidiary, Pharmalectin, Inc., under the 2017 Plan. The options are immediately exercisable at a price of 3 shares for one dollar. The options total fair value at the time of award were $. For the six months ended June 30, 2020 there were no such transaction.
At June 30, 2021 the Subsidiary there are no options or stock awards available for grant under the 2017 Plan.
NOTE 109 –NON-CONTROLLING INTEREST
Schedule of non-controlling interest
| June 30, 2021 | December 31, 2020 | March 31, 2022 | December 31, 2021 | |||||||||||||||||||||||||||
| Net loss Subsidiary | (2,063,754 | ) | (687,883 | ) | (215,818 | ) | (2,089,253 | ) | ||||||||||||||||||||||
| Net loss attributable to the non-controlling interest | 401,549 | 61,909 | 51,116 | 496,297 | ||||||||||||||||||||||||||
| Net loss affecting Bioxytran | (1,662,205 | ) | (625,974 | ) | (164,702 | ) | (1,592,956 | ) | ||||||||||||||||||||||
| Accumulated losses | (2,751,637 | ) | (687,883 | ) | (2,992,953 | ) | (2,777,135 | ) | ||||||||||||||||||||||
| Accumulated losses attributable to the non-controlling interest | 463,459 | 61,909 | 609,322 | 558,206 | ||||||||||||||||||||||||||
| Accumulated losses Bioxytran | (2,288,178 | ) | (625,974 | ) | (2,383,631 | ) | (2,218,929 | ) | ||||||||||||||||||||||
| Net equity non-controlling interest | 1,086,992 | 888,091 | (448,372 | ) | (397,256 | ) | ||||||||||||||||||||||||
AtAs at March 31, 2022 and at December 31, 2020 there were outstanding of issued in the Subsidiary. The Company owed (%) of shares. At June 30, 20212022 there are shares outstanding and the Company owns (issued and Common shares are held by Bioxytran and Common shares are held by an affiliate. An additional 3-year options exercisable at $ has been granted to the management of the Subsidiary under the 2017 Plan.
NOTE 1110 – COMMITMENTS AND CONTINGENCIES
Employment contracts
The Company’s executive officers have entered employment contracts and confidentiality, non-disclosure and assignment of invention agreements. The employment agreements do not provide for the payment of any compensation to our executive officers but provide for the payment of $100,000 in severance upon termination of employment without cause and make no provisions for any payment upon a change of control.
15
Litigation
In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters are expensed as incurred and we accrue for adverse outcomes as they become probable and estimable.
On June 5, 2020 the Supreme Court of the State of New York, County of Nassau, issued a commencement of Action based on behalf of Power Up Lending Group, Ltd (“Power Up” or the “Claimant”). The claimant request that due to the default of their note requesting a judgment for an amount of not less than $420,750. Among other claims Power Up asserts that the Company willfully failed to maintain the trading status, and manipulated its stock in its efforts to defraud the public and its investors by making false press statements and the like. The Company is denying any wrong-doing. On January 20, 2021 the Supreme Court of the State of New York, County of Nassau, granted Power Up a summary judgement against the Company for Breach of Contact, awarding Power Up damages in the amount of $420,750.
The underlying convertible note was, per agreement of the parties, cancelled on June 4, 2021, with Power Up agreeing to a stipulation of discontinuance with prejudice of the law-suite and forfeiture of earlier awarded damages.
NOTE 1211 – SUBSEQUENT EVENTS
The Company has evaluated events from June 30, 2021March 31, 2022 through the date the financial statements were issued. The events requiring disclosure for this period are as follows;
Common stock
Shares awarded, but not yet issued,Awarded and Issued under the 20212022 Stock Plan:
On JulyApril 1, 20212022 the Company granted shares to a Medical Advisory Board Member for her contribution to the Company during the secondfirst quarter of 2021.2022. The total fair market value at the time of the award was $, or $/share.
On JulyApril 1, 20212022 the Company granted shares to threefour Board Members in reward of their attendance at Board and Committee meetings during the secondfirst quarter of 2021.2022. The total fair market value at the time of the award was $, or $/share.
Stock options granted and vested, under the 2021 Stock Plan:
On August 1, 2021April 11, 2022 the Company granted shares to three-year options immediately vested at an exercise price Consultants for the management of $ to an Advisory Board Member for his contributionour clinical trials in the Company’s Advisory Board.India. The options total fair market value at the time of the award was $., or $/share.
The Company’s management has evaluated events occurring after June 30, 2021 through the date the financial statements were issued and did not identify any further subsequent events requiring disclosure.
14
16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based on, and should be read in conjunction with, the audited financial statements and the notes thereto for the two years ended December 31, 20202021 included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 9, 2021.11, 2022. This discussion contains forward-looking statements. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so, except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
Overview
We do not currently have sufficient capital resources to fund operations. To stay in business and to continue the development of our products, we will need to raise additional capital through public or private sales of our securities, debt financing or short-term bank loans, or a combination of the foregoing. We believe that if we can raise $3,700,000, we will have sufficient working capital to repay the ten convertible notes and develop our business over the next approximately 15 months. At funding raised that is significantly less than $3,700,000, we can likely repay the ten convertible notes and continue to develop our business over the same 15-month period, but funding at that level will delay the development of our technology and business.
Bioxytran, Inc. is headquartered in Needham,Newton, Massachusetts. The Company’s initial product pipeline is focused on developing and commercializing therapeutic molecules for stroke. BXT-25 will be designed to be an injectable anti-necrosis drug specifically designed to treat a person immediately after that person suffers an ischemic stroke. The drug is designed to be injected intravenously to travel to the lungs to pick up oxygen molecules to carry to the brain. Like a red blood cell, the drug will cross the blood brain barrier, which is a protective semi-permeable membrane allowing some material to cross but preventing others from crossing. BXT-25 will be designed to diffuse oxygen into the brain tissues. We expect the BXT-25 molecule to be 5,000 times smaller than a red blood cell.
Our Subsidiary is continuing our clinical trials with a candidate named, ProLectin-RxProLectin a complex polysaccharide derived from galactomannan and pectin respectively, that binds to, and blocks the activity of galectin-1 and -3, a type of galectin. Galectins are a member of a family of proteins in the body called lectins. These proteins interact with carbohydrate sugars located in, on the surface of, and in between cells. This interaction causes the cells to change behavior, including cell movement, multiplication, and other cellular functions. The interactions between lectins and their target carbohydrate sugars occur via a carbohydrate recognition domain, or CRD, within the lectin. Galectins are a subfamily of lectins that have a CRD that bind specifically to ß-galactoside proteins. Galectins have a broad range of functions, including regulation of cell survival and adhesion, promotion of cell-to-cell interactions, growth of blood vessels, regulation of the immune response and inflammation. During viral infections galectins are upregulated and downregulated based on the type of virus.
ProLectin-M’s clinical data shows non-toxicity and efficacy for treatment of mild to moderate COVID-19. In our initial Phase I/II clinical trial are published as a peer-reviewed scientific report in the Journal of Vaccines & Vaccinations: https://www.longdom.org/open-access/galectin-antagonist-use-in-mild-cases-of-sarscov2-pilot-feasibility-randomised-open-label-controlled-trial-61087.html. The Company is currently working on a Phase III clinical trial with the CDCSO in India, and is preparing its IND for a Phase III clinical trial with the FDA, soon to be followed by a Phase III submission with the EMEA. The clinical trials are expected to take place in May through July, through August, 2021.2022. Further, the Company is also preparing an IND for a second drug candidate ProLectin-I with similar galactin blocking capabilities as the oral drug, ProLectin-M, but IV-injectable for severe cases of COVID-19. The initial Phase I/II clinical trial is planned for AugustApril through October, 2021.June, 2022. The described clinical trials are subject to additional funding.
The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited resources and operating history. As described in Note 76 of the financial statements, the Company has currently fourthirty-eight (38) convertible loans outstanding at a total face value of $2,165,000.$3,632,000. As shown in the accompanying unaudited condensed consolidated financial statements, the Company had an accumulated deficit of $9,665,938 as at March 31, 2022. The accumulated deficit as at December 31, 2021 was $8,753,668.
The future of the Company is dependent upon its ability to obtain financing to develop its new business opportunities and support the cost of the drug development including clinical trials and regulatory submission to the FDA.
17
Potential Impact of the Covid-19 Pandemic in December 2019,2020, a strain of novel coronavirus (now commonly known as Covid-19) was reported to have surfaced in Wuhan, China. Covid-19 has since spread rapidly throughout many countries, and, on March 12, 2020,2021, the World Health Organization declared Covid-19 to be a pandemic. In an effort to contain and mitigate the spread of Covid-19, many countries, including the United States, Canada and China, have imposed unprecedented restrictions on travel, and there have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks of Covid-19. Covid-19 may have a future material impact on our results of operation with respect to product development and clinical trials. However, significant uncertainty remains as to the potential impact of the Covid-19 pandemic on our operations, and on the global economy as a whole. It is currently not possible to predict how long the pandemic will last or the time that it will take for economic activity to return to prior levels. We do not yet know the full extent of any impact on our business or our operations, however, we will continue to monitor the Covid-19 situation closely, and we intend to follow health and safety guidelines as they evolve.
Management plans to seek additional capital through private placements and public offerings of its common stock. There can be no assurance that the Company will be successful in accomplishing its objectives. Without such additional capital or the establishment of strategic relationships with established pharmaceutical companies, the Company may be required to cease operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue operations.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021Results of Operations
We are a clinical stagestart-up company. Historically, Bioxytranthe Company was engaged in formation, fund raising and identifying and consulting with the scientific community regarding the development, formulation and testing of its products as of the fourth quarter of 2020 the Company has engaged in research and development activities through its Subsidiary, Pharmalectin, Inc., developing the ProLectin-Rx.products.
Operating Expenses
Research and Development (R&D) expenses for the 3-months ended March 31, 2022 were $240,125, while for 3 months ended March 31, 2021, they were $347,033.
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| Research and development: | ||||||||||||||||
| Process development | $ | 166,800 | $ | — | $ | 339,000 | $ | — | ||||||||
| Product development | 109,000 | — | 221,600 | — | ||||||||||||
| Regulatory | 39,956 | — | 59,189 | — | ||||||||||||
| Clinical trials | 274,715 | — | 308,715 | — | ||||||||||||
| Project management | 128,181 | — | 137,181 | — | ||||||||||||
| Total research and development | $ | 718,652 | $ | — | $ | 1,065,685 | $ | — | ||||||||
General and Administrativeadministrative (G&A) expenses for the three months ended March 31, 2022 were $556,581, while for the three months ended March 31, 2021, they were $567,320. The components of G&A expenses are as follows:
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| General and administrative expenses: | ||||||||||||||||
| Payroll and related expenses | $ | 616,287 | $ | 48,000 | $ | 668,260 | $ | 84,000 | ||||||||
| Costs for legal, accounting and other professional services | 35,991 | 20,788 | 95,114 | 43,361 | ||||||||||||
| Marketing expense | — | 124 | 3,500 | 9,613 | ||||||||||||
| Miscellaneous expenses | 41,086 | 33,506 | 493,810 | 75,986 | ||||||||||||
| Total general and administrative | $ | 693,364 | $ | 102,418 | $ | 1,260,684 | $ | 212,960 | ||||||||
| Payroll and related expenses for the three |
| Costs for legal, accounting and other professional services for the three |
| ● | Sales and marketing expensefor the |
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| ● | The |
Stock-based Compensation
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| Compensation expense to BoD and Management | $ | 15,750 | $ | 8,800 | $ | 343,782 | $ | 11,047 | ||||||||
| Compensation expense to consultants | 35,300 | 691 | 481,826 | 153,945 | ||||||||||||
| Total compensation expense | $ | 51,050 | $ | 9,491 | $ | 825,608 | $ | 164,992 | ||||||||
Stock-based compensation mounted to $22,400 for the three months ended March 31, 2022. The stock-based compensation for the three months ended March 31, 2021 was $774,558. The decrease was due to the liquidation of the 2010 Stock Plan in January 2021.
Other expensesInterest Expense and Amortization of Debt Discount and Premium
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| Other (expenses): | ||||||||||||||||
| Interest expense | (84,217 | ) | (740,424 | ) | (171,627 | ) | (848,154 | ) | ||||||||
| Debt discount amortization | (17,103 | ) | (76,265 | ) | (17,103 | ) | (242,987 | ) | ||||||||
| Total other income (expenses) | $ | (101,320 | ) | $ | (816,689 | ) | $ | (188,730 | ) | $ | (1,091,141 | ) | ||||
During the three months ended March 31, 2022, the Company amortized $92,245 (consisting of $49,084 in debt discount, $42,250 of warrants and $911 of IP). For the three months ended in March 31, 2021, the Company didn’t record any amortization. The interest for the convertible notes outstanding amounted to $52,035, as compared to $87,410 for the three months ended March 31, 2021.
|
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Non-Controlling Interest
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| Net loss attributable to the non-controlling interest | $ | 246,935 | $ | — | $ | 401,549 | $ | — | ||||||||
For the three months ending March 31, 2022 there was a non-controlling interest attribution of $51,116. For the three months ending March 31, 2022 the company recorded a non-controlling interest attribution of $154,614
Net Loss
| Three months ended | Six months ended | |||||||||||||||
| June 30, 2021 | June 30, 2020 | June 30, 2021 | June 30, 2020 | |||||||||||||
| Net loss attributable to Bioxytran | $ | (896,701 | ) | $ | (928,598 | ) | $ | (2,518,408 | ) | $ | (1,469,093 | ) | ||||
| Loss per common share, basic and diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||
| Weighted average number of common shares outstanding, basic | 103,371,579 | 97,031,673 | 101,753,891 | 92,144,316 | ||||||||||||
| diluted | 119,868,472 | |||||||||||||||
The Company generated a net loss for the three months ended March 31, 2022 of $912,270. In comparison, for the three months ended March 31, 2021, the Company generated a net loss of $1,621,707. The decreased loss is a result of the summary judgement against the Company, the commencement of Research & Development as well as the liquidation of the 2010 Stock Plan.
CASH-FLOWSCash-Flows
| Six months ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Net cash used in operating activities | $ | (1,409,691 | ) | $ | (196,434 | ) | ||
| Net cash used in investing activities | (8,954 | ) | — | |||||
| Net cash provided by financing activities | 1,765,000 | 31,052 | ||||||
| Cash, beginning of period | 41,688 | 169,628 | ||||||
| Cash, end of period | 388,043 | 4,246 | ||||||
| Net increase (decrease) in cash | $ | 346,355 | $ | (165,382 | ) | |||
Net cash used in operating activities was $691,411 and $391,100 for the three months ended March 31, 2022 and 2021, respectively. The decrease was due to Research and Development where the clinical trials were temporarily suspended for lack of patients.
In the three months ended March 31, 2022 the Company is in the process of filing a patent, and $22,323 was spent in legal fees. In the three months ended March 31, 2021 the Company was in the process of filing a patent, and $8,953 was spent in legal fees. | |
| |
| |
20Cash flows from financing activities were $1,380,960 and $450,000 for the three months ended March 31, 2022 and 2021, respectively. The significant change was an increase in convertible debt.
Available cash was $739,584 and $91,635 at March 31, 2022 and March 31, 2021, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Current Assets
As at March 31, 2022, our assets consisted of was $739 584 in cash and $68,343 in intangible assets in the form of capitalized patent expenses. We had total liabilities of $4,887,086, which were all current liabilities, and which consisted of $1,312,646 in accounts payable and accrued expenses (of which $796,506 was payable to related parties), and $3,552,225 in the form of convertible loans and $22,400 in liability for un-issued shares (whereof $6,400 to related party). The equivalent numbers at December 31, 2021, our assets consisted of was $72,358 in cash and $46,931 in intangible assets in the form of capitalized patent expenses. We had total liabilities of $3,277,497, which were all current liabilities, and which consisted of $1,155,316 in accounts payable and accrued expenses (of which $531,000 was payable to related parties), and $2,122,181 in the form of convertible loans.
| June 30, 2021 | December 31, 2020 | |||||||
| Current assets: | ||||||||
| Cash | $ | 388,043 | $ | 41,688 | ||||
| Pre-paid expenses | 499,300 | 274,715 | ||||||
| Total current assets | $ | 887,343 | $ | 316,403 | ||||
Current Liabilities
| June 30, 2021 | December 31, 2020 | |||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 151,400 | $ | 348,127 | ||||
| Accounts payable related party | — | 307,176 | ||||||
Convertible notes payable, net of premium and discount, related party | 1,000,000 | — | ||||||
| Convertible notes payable, net of premium and discount | 1,062,253 | 1,612,356 | ||||||
| Other short-term debt | — | — | ||||||
| Total current liabilities | $ | 2,213,673 | $ | 2,267,659 | ||||
Net Working CapitalAt March 31, 2022, we have total working capital of negative $4,147,687 and Accumulated Deficit
| June 30, 2021 | December 31, 2020 | |||||||
| Net working capital | $ | (1,326,329 | ) | $ | (1,951,256 | ) | ||
| Accumulated deficit | $ | (7,240,331 | ) | $ | (4,721,923 | ) | ||
Cash Proceeds from Financing Activities
| Six months ended | ||||||||
| June 30, 2021 | June 30, 2020 | |||||||
| Cash proceeds from financing activities | ||||||||
| Proceeds from Subsidiary stock transactions | $ | 600,000 | $ | — | ||||
| Proceeds from issuance of convertible notes payable | 1,165,000 | 264,000 | ||||||
| Repayment of convertible notes payable | — | (232,948 | ) | |||||
| Net cash provided by financing activities | $ | 1,765,000 | $ | 31,052 | ||||
21
Upcoming Financing Activities
| Title of each class of security being registered | Amount to be registered | Proposed offering price | Proposed aggregate offering price | ||||||||||||||
| Common Stock, $0.001 par value | 5,300,000 | $ | 1.00 | $ | 5,300,000 | ||||||||||||
| Common Stock, $0.001 par value | 17,653,077 | $ | 0.13 | 2,294,900 | |||||||||||||
| Total | 22,953,077 | $ | 7,594,900 | ||||||||||||||
There can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
Debt Restructuring
On April 16, 2020, SEC ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading of BIXT is suspended for the period April 16 through April 29, 2020.
As a result of the SEC ordered suspension the Company defaulted on ten outstanding Convertible Notes; resulting in an increase of the interest to 21% and the principal to increase to 168% of principal loan amount. The convertible debt increased by $666,456 to $1,604,856 while the interest accrual increased to approximately $28,563/month. At the default date, April 16, 2020, remaining debt discount of $76,265 was amortized to interest expense and the remaining debt premium of $856,560 was accreted to additional paid-in capital.
On May 2 and 3, 2021, Bioxytran, Inc. (the “Company”) entered into nine Note Agreements for a total amount of $3,266,846 in 1-year notes (the “New Notes”), with an interest rate of 6% convertible at the lower of (i) a fixed price of $0.13, or (ii) 85% of the closing price of any Qualified Financing, which consist of any fundraising receiving gross proceeds of not less than $500,000.$3,700,000 in addition to current cash on hand to be able to continue our business operations for approximately the next 15 months and repay the ten convertible notes.
The Notes require the Company prepare and file a Registration Statement on Form S-1 within a period of 60 days from issuance of the New Notes. A Form S-1 was filed with the SEC on June 24, 2021 and was declared effective by SEC on July 23, 2021, wherein the notes have a 180-day lock-up period.
The transactions set forth below were approved by the Company’s Board of Directors on June 4, 2021.
| Name | Amount due June 30, 2021 | Accrued interest June 30, 2021 | Converted notes | Interest due at conversion | Converted price | Stock issued for Note conversion | ||||||||||||
| Notes sold in exchange for cash | (1) | $ | 1,165,000 | $ | 10,270 | $ | $ | $ | — | — | ||||||||
| Notes issued in exchange for accounts payable related party | (2) | 981,466 | 5,398 | 0.13 | 7,591,261 | |||||||||||||
| Notes issued in exchange for accounts payable consultant | (2) | 120,380 | 662 | 0.13 | 930,864 | |||||||||||||
| Note issued in exchange for defaulted notes | (3) | 1,000,000 | 10,105 | — | — | |||||||||||||
| $ | 2,165,000 | $ | 20,375 | $ | 1,101,846 | $ | 6,060 | 8,522,125 | ||||||||||
22
The defaulted notes were returned to the Company on May 26, 2021. The debt forgiveness of $1,020,323 recorded as additional paid-in capital.
| Name | Due at May 26, 2019 | Principal Amount | Default Penalty | Warrants Issued | Term | Exercise Price | Amortization of Warrants | Accrued Interest | ||||||||||||||||||||||||
| Old Notes | Defaulted | $ | 938,400 | $ | 673,956 | 272,000 | 5 | 2.00 | $ | 97,279 | $ | 407,967 | ||||||||||||||||||||
As part of the pay-off, the debt originating from a January 20, 2021 summary judgement by the Supreme Court of the State of New York, County of Nassau, awarding Power Up damages in the amount of $420,750 for Breach of Contact was agreed to be dismissed by prejudice. and as a result, the damages recorded in the first quarter of 2021 was reversed in the Statement of operations.
The outstanding warrants were transferred to the Company’s officers in lieu of interest on amounts due as at May 31, 2021.
Subsidiary Equity Transactions
| # of shares | # of options | June 30, 2021 | December 31, 2020 | ||||||||||||
| Minority owners cash investment | 4,500,000 | $ | 1,550,000 | $ | 950,000 | ||||||||||
| Bioxytran non-dilutive equity | 15,000,000 | 1,500 | 1,500 | ||||||||||||
| Bioxytran dilutive equity | 6,000,000 | 2,000,000 | — | ||||||||||||
| Issued stock options @ $0.33 | 4,500,000 | 450 | — | ||||||||||||
| 25,500,000 | 4,500,000 | $ | 3,551,950 | $ | 951,500 | ||||||||||
| Net loss Subsidiary | $ | (2,063,754 | ) | $ | (687,883 | ) | |||||||||
| Net loss attributable to the non-controlling interest | 401,549 | 61,909 | |||||||||||||
| Net loss affecting Bioxytran | (1,662,205 | ) | (625,974 | ) | |||||||||||
| Accumulated losses | (2,751,637 | ) | (687,883 | ) | |||||||||||
| Accumulated losses attributable to the non-controlling interest | 463,459 | 61,909 | |||||||||||||
| Accumulated losses Bioxytran | (2,288,178 | ) | (625,974 | ) | |||||||||||
| Net equity non-controlling interest | $ | 1,086,992 | $ | 888,091 | |||||||||||
| ||||||||||||||||
CommitmentsFuture Financing
We have no current commitment from our officers and directors or any of our shareholders, to supplement our operations or provide us with financing in the future. If we are unable to raise additional capital from conventional sources and/or additional sales of stock in the future, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the failure to obtain financing could have a substantial adverse effect on our business and financial results. In the future, we may be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.
23
Contractual Obligations
| June 30, 2021 | December 31, 2020 | |||||||
| Interest on notes payable | $ | 20,735 | $ | 263,135 | ||||
| Default penalty | — | 673,956 | ||||||
| Convertible notes payable | 2,165,000 | 938,400 | ||||||
| Total | $ | 2,185,735 | $ | 1,875,491 | ||||
As at March 31, 2022, our contractual obligations include two sets of convertible notes, with a face value of $3,632,000 and of accrued interest for these notes mounting to $137,720, described under Note 6 to the Financial Statements.
The Company’s executive officers have entered employment contracts and confidentiality, non-disclosure and assignment of invention agreements. The employment agreements provide for the payment of $100,000 in severance upon termination of employment without cause and make no provisions for any payment upon a change of control.
17
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING POLICIES
In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our businesses operate in environments where we pay a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.
Stock Based Compensation
The Company has share-based compensation plans under which non-employees, consultants and suppliers may be granted restricted stock, as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date, based on the fair value of the award over the requisite service period.
The Company applies ASC 718 for options, common stock and other equity-based grants to its employees and directors. ASC 718 requires measurement of all employee equity-based payment awards using a fair-value method and recording of such expense in the consolidated financial statements over the requisite service period. The fair value concepts have not changed significantly in ASC 718; however, in adopting this standard, companies must choose among alternative valuation models and amortization assumptions. After assessing alternative valuation models and amortization assumptions, the Company will continue using both the Black-Scholes valuation model and straight-line amortization of compensation expense over the requisite service period for each separately vesting portion of the grant.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of AASU 2020-06 did not have an impact on the Company’s financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3 is not applicable to us because we are a smaller reporting company.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) reviewed the effectiveness of our disclosure controls and procedures as at the end of the period covered by this report and concluded that as at June 30, 2021,March 31, 2022, (i) the Company’s disclosure controls and procedures were not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii) the Company’s controls and procedures have not been designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934,
as amended, is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
24
Based on this evaluation, our principal executive officer and principal financial officer concluded as at the evaluation date that our disclosure controls and procedures were not effective due primarily to a material weakness in the segregation of duties in the Company’s internal controls.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of June 30, 2021.March 31, 2022. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As disclosed in our previous filings, there are material weaknesses in the Company’s internal control over financial reporting due to the fact that the Company does not have an adequate process established to ensure appropriate levels of review of accounting and financial reporting matters, which resulted in our closing process not identifying all required adjustments and disclosures in a timely fashion. The Company’s CEO/CFO has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.
Although the Company has hired a consultant to assist with SEC reporting and accounting matters, we expect that the Company will need to hire accounting personnel with the requisite knowledge to improve the levels of review of accounting and financial reporting matters. The Company may experience delays in doing so and any such additional employees would require time and training to learn the Company’s business and operating processes and procedures. For the near-term future, until such personnel are in place, this will continue to constitute a material weakness in the Company’s internal control over financial reporting that could result in material misstatements in the Company’s financial statements not being prevented or detected.
Because of the above material weakness, management has concluded that we did not maintain effective internal control over financial reporting as of June 30, 2021,March 31, 2022, based on the criteria established in “Internal Control-Integrated Framework” issued by the COSO.
No Attestation Report by Independent Registered Accountant
The effectiveness of our internal control over financial reporting as of March 31, 2022 has not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a smaller reporting company.
Changes in Internal Controls Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the six3 months ended June 30, 2021March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
The Company’s management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on 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. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
2519
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company may become involved in certain legal proceedings and claims which arise in the normal course of business.
On June 5, 2020 the Supreme Court of the State of New York, County of Nassau, issued a commencement of Action based on behalf of Power Up Lending Group, Ltd (“Power Up” or the “Claimant”). The Claimantclaimant request that due to the default of their note requesting a judgment for an amount of not less than $420,750. Among other claims Power Up asserts that the Company willfully failed to maintain the trading status, and manipulated its stock in its efforts to defraud the public and its investors by making false press statements and the like. The Company is denying any wrong-doing. On January 20, 2021 the Supreme Court of the State of New York, County of Nassau, granted Power Up a summary judgement against the Company for Breach of Contact, awarding Power Up damages in the amount of $420,750.
The underlying convertible note was, per agreement of the parties, cancelled on May 26,June 4, 2021, with Power Up agreeing to a stipulation of discontinuance with prejudice of the law-suite and forfeiture of the mentionedearlier awarded damages.
Item 1A. Risk Factors
The company is a smaller reporting company and is not required to provide this information.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no sales of equity securities sold during the period covered by this Report that were not previously included in a Current Report on Form 8-K.
The Company claims an exemption from the registration requirements of the Securities Act of 1933 (the “Securities Act”) for the private placement of these securities pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.
Item 3. Defaults Upon Senior Securities
On
There are currently no defaults upon Senior Securities.
However, on April 16, 2020, SEC ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading of BIXT is suspended for the period April 16 through April 29, 2020. As a result of the SEC ordered suspension the Company defaulted onCompany’s ten outstanding Convertible Notes.Notes went into default.
OnAt May 26, 2021, the ten outstanding notes defaulted notes,in default were returned to the “Old Notes”, were retired, as the result of an agreement dated May 2, 2020, with the issuance ofCompany in exchange for a 1-year $1,000,0006% note payable with a 6% interest.principal of $1,000,000 by a Company affiliate. The net gain on the forgiveness, $1,020,323, was recorded as additional paid-in capital. The underlying convertible notes was, per agreement of the parties, cancelled on June 4, 2021.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
AsOn March 30, 2022, FINRA finalized their review our 15c-211 filing and issued a resultClearance Letter. OTC Markets are in the process of reviewing the removal of the SEC ordered suspensionCaveat Emptor symbol. A requirement for the period April 16, through April 29, 2020, pursuantbrokers to Section 12(k) of the Securities Exchange Act of 1934, the company was requiredbe able to reapply for trading on the OTCBB.offer our stock to a broader investor base.
On July 23, 2021 the Company’s S-1 was declared effective by the SEC, with the objective to raise funds for the continued clinical trials and to get the Company traded on the OTCQB exchange, in accordance with regulations as outlined by the SEC. The work in getting the filing done with FINRA, in order to get listed again on the OTCQB, is in progress.
On July 15, 2021 Dr. Henry Esber resigned from the Board of Directors for health reasons. Dr. Esber was replaced by Dr. Hana Chen-Walden.
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Dr. Hana Chen-Walden, M.D. is an Endocrinologist and has specialized in regulatory affairs in the pharmaceutical industry in the US and Europe. Dr. Chen-Walden has more than 35 years of regulatory experience with the EMEA and in individual European countries. Since 2004 to present, Dr. Chen-Walden consulted for European Clinical and Regulatory Consultancy in medical monitoring, quality assurance and regulatory input for clinical studies in the fields of oncology, cardiology, diabetes, neurology, respiratory diseases and medical devices. Dr. Chen Walden received her Doctorate of Medicine from University of Tel Aviv, Israel. Dr. Chen-Walden has practiced medicine in Germany and France. Our board of directors believes that Dr. Chen-Walden’s expertise and experience in practicing medicine, her perspective, depth and background in medical monitoring and quality assurance, and her leadership in regulatory affairs provide her with the qualifications and skills to serve on our board of directors.
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Item 6. Exhibits
| Exhibit No. | Title of Document | |
| 31.1 | Certification of Principal Executive and Financial Officers pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. * | |
| 32.1 | Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Executive and Financial Officer). ** | |
| 100 | The following financial statements from the Quarterly Report on Form 10-Q of BIOXYTRAN, Inc. for the quarter ended |
| * | Filed as an exhibit hereto. |
| ** | These certificates are furnished to, but shall not be deemed to be filed with, the Securities and Exchange Commission. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
| BIOXYTRAN, INC. | ||
| Date: | By: | /s/ David Platt |
| David Platt | ||
| Chief Executive Officer | ||
| /s/ Ola Soderquist | ||
| Ola Soderquist | ||
| Chief Financial Officer | ||
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