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
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from __________ to __________
Commission file number
333-191083
RASNA THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Nevada | 39-2080103 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
420 Lexington Ave, Suite 2525, New York, NY 10170
(Address of principal executive offices) (Zip Code)
Telephone: (646) 396-4087
(Registrant’s telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☒ | Smaller reporting company ☒ |
Emerging growth company ☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
Securities registered pursuant to Section 12(b) of the Act: None
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 68,908,003 shares of common stock were issued and outstanding as of February 7, 2018.August 11, 2021.
PAGE | ||||
PART | FINANCIAL INFORMATION | |||
ITEM 1. | 1 | |||
1 | ||||
2 | ||||
3 | ||||
4 | ||||
5 | ||||
ITEM 2. | 11 | |||
ITEM 3. | 17 | |||
PART II | OTHER INFORMATION | |||
ITEM 1A | Risk factors | 18 | ||
ITEM | 18 | |||
19 |
i
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RASNA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, | September 30, | |||||||
2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 50,840 | $ | 14,241 | ||||
Prepaid expenses | 43,816 | 17,641 | ||||||
Related party receivable | — | 748 | ||||||
Total current assets | 94,656 | 32,630 | ||||||
Property and equipment, net | — | 314 | ||||||
Total non-current assets | — | 314 | ||||||
Total assets | $ | 94,656 | $ | 32,944 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities: | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 1,674,351 | $ | 1,635,788 | ||||
Related party payables | 557,757 | 550,000 | ||||||
Loan payable and accrued interest, related party | 79,200 | 74,880 | ||||||
Convertible notes payable, net - related party | 216,140 | 90,262 | ||||||
Convertible notes payable, net | 488,896 | 356,702 | ||||||
Total current liabilities | 3,016,344 | 2,707,632 | ||||||
Total liabilities | 3,016,344 | 2,707,632 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity | ||||||||
Common stock, $0.001 par value; 200,000,000 shares authorized; 68,908,003 shares issued and outstanding | 68,909 | 68,909 | ||||||
Additional paid-in capital | 20,229,696 | 19,914,884 | ||||||
Accumulated deficit | (23,220,293 | ) | (22,658,481 | ) | ||||
Total shareholders’ deficit | (2,921,688 | ) | (2,674,688 | ) | ||||
Total liabilities and shareholders’ deficit | $ | 94,656 | $ | 32,944 |
December 31, 2017 (Unaudited) | September 30, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,286,048 | $ | 2,537,611 | |||
Prepayments and other receivables | 164,476 | 129,157 | |||||
Related party receivable | 28,931 | 28,931 | |||||
Total current assets | 1,479,455 | 2,695,699 | |||||
Property and Equipment, net | 6,037 | 7,047 | |||||
Intellectual Property | 236,269 | 236,269 | |||||
In-process research and development | 613,100 | 613,100 | |||||
Indefinite lived intangible asset | 1,300,000 | 1,300,000 | |||||
Goodwill | 2,722,985 | 2,722,985 | |||||
Total non-current assets | 4,878,391 | 4,879,401 | |||||
Total assets | $ | 6,357,846 | $ | 7,575,100 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Liabilities: | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 769,157 | $ | 987,364 | |||
Related party payables | 550,000 | 550,000 | |||||
Total current liabilities | 1,319,157 | 1,537,364 | |||||
Total liabilities | 1,319,157 | 1,537,364 | |||||
Commitments and Contingencies (Note 9) | |||||||
Shareholders' equity | |||||||
Common stock, $0.001 and $0.01 par value, respectively; 200,000,000 shares authorized, of which 68,908,003 are issued and outstanding. | 68,909 | 68,909 | |||||
Additional paid-in capital | 19,272,299 | 18,267,895 | |||||
Accumulated deficit | (14,302,519 | ) | (12,299,068 | ) | |||
Total shareholders' equity | 5,038,689 | 6,037,736 | |||||
Total liabilities and shareholders' equity | $ | 6,357,846 | $ | 7,575,100 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
RASNA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended December 31, | For the Three Months Ended June 30, | For the Nine Months Ended June 30, | |||||||||||||||||||||
2017 | 2016 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||
Revenue | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Cost of revenue | — | — | — | — | — | — | |||||||||||||||||
Gross profit | — | — | — | — | — | — | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
General and administrative * | 873,801 | 571,215 | |||||||||||||||||||||
General and administrative | 64,573 | 81,178 | 268,397 | 356,686 | |||||||||||||||||||
Research and development | 176,932 | 366,046 | - | 11,386 | 44,739 | 66,739 | |||||||||||||||||
Consultancy fees third parties and related parties ** | 772,395 | 130,180 | |||||||||||||||||||||
Legal and professional fees | 176,647 | 310,104 | |||||||||||||||||||||
Total operating expenses | 1,999,775 | 1,377,545 | 64,573 | 92,564 | 313,136 | 423,425 | |||||||||||||||||
Loss from operations | (1,999,775 | ) | (1,377,545 | ) | (64,573 | ) | (92,564 | ) | (313,136 | ) | (423,425 | ) | |||||||||||
Other income/(expense): | |||||||||||||||||||||||
Accretion of debt discount | (40,909 | ) | — | (68,182 | ) | — | |||||||||||||||||
Beneficial conversion feature on convertible notes | — | (123,718 | ) | — | |||||||||||||||||||
Interest expense | (18,108 | ) | (11,631 | ) | (56,824 | ) | (29,785 | ) | |||||||||||||||
Gain on sale of asset | — | 120,000 | — | 120,000 | |||||||||||||||||||
Impairment of goodwill | — | (2,722,985 | ) | — | (2,722,985 | ) | |||||||||||||||||
Foreign currency transaction gain | (3,676 | ) | 21,461 | — | — | 48 | — | ||||||||||||||||
Other income | (3,676 | ) | 21,461 | ||||||||||||||||||||
Total other income expense | (59,017 | ) | (2,614,616 | ) | (248,676 | ) | (2,632,770 | ) | |||||||||||||||
Loss from operations before income taxes | (2,003,451 | ) | (1,356,084 | ) | (123,590 | ) | (2,707,180 | ) | (561,812 | ) | (3,056,195 | ) | |||||||||||
Income tax provision | — | — | — | — | — | — | |||||||||||||||||
Net loss | $ | (2,003,451 | ) | $ | (1,356,084 | ) | $ | (123,590 | ) | (2,707,180 | ) | (561,812 | ) | (3,056,195 | ) | ||||||||
Basic and diluted loss per share attributable to common shareholders | $ | (0.03 | ) | $ | (0.02 | ) | |||||||||||||||||
Basic and diluted net loss per share attributable to common shareholders | $ | (0.00 | ) | $ | (0.04 | ) | $ | (0.01 | ) | $ | (0.04 | ) | |||||||||||
Basic and diluted weighted average common shares outstanding | 68,908,003 | 65,082,334 | 68,908,003 | 68,908,003 | 68,908,003 | 68,908,003 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
RASNA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTSTATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
Common Stock | Additional Paid-In | Accumulated | Total Shareholders’ | |||||||||||||||||
Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
Balance at September 30, 2017 | 68,908,003 | $ | 68,909 | $ | 18,267,895 | $ | (12,299,068 | ) | $ | 6,037,736 | ||||||||||
Share based compensation | — | — | 224,982 | — | 224,982 | |||||||||||||||
Warrants issued for consulting services | — | — | — | 779,422 | — | — | 779,422 | |||||||||||||
Net loss | — | — | — | (2,003,451 | ) | (2,003,451 | ) | |||||||||||||
Balance at December 31, 2017 | 68,908,003 | $ | 68,909 | $ | 19,272,299 | $ | (14,302,519 | ) | $ | 5,038,689 |
Nine Months Ended June 30, 2021 | ||||||||||||||||||||
Common Stock | Additional Paid-In | Accumulated | Total Shareholders’ | |||||||||||||||||
Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
Balance at October 1, 2020 | 68,908,003 | $ | 68,909 | $ | 19,914,884 | $ | (22,658,481 | ) | $ | (2,674,688 | ) | |||||||||
Share based compensation | — | — | 41,094 | — | 41,094 | |||||||||||||||
Beneficial conversion feature related to convertible notes | 273,718 | 273,718 | ||||||||||||||||||
Net loss | — | — | — | (561,812 | ) | (561,812 | ) | |||||||||||||
Balance at June 30, 2021 | 68,908,003 | $ | 68,909 | $ | 20,229,696 | $ | (23,220,294 | ) | $ | (2,921,688 | ) |
Nine Months Ended June 30, 2020 | ||||||||||||||||||||
Common Stock | Additional Paid-In | Accumulated | Total Shareholders’ | |||||||||||||||||
Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
Balance at October 1, 2019 | 68,908,003 | $ | 68,909 | $ | 19,780,252 | $ | (17,311,809 | ) | $ | 2,537,352 | ||||||||||
Share based compensation | — | — | 114,375 | — | 114,375 | |||||||||||||||
Net loss | — | — | — | (3,056,195 | ) | (3,056,195 | ) | |||||||||||||
Balance at June 30, 2020 | 68,908,003 | $ | 68,909 | $ | 19,894,627 | $ | (20,368,004 | ) | $ | (404,468 | ) |
Three Months Ended June 30, 2021 | ||||||||||||||||||||
Common Stock | Additional Paid-In | Accumulated | Total Shareholders’ | |||||||||||||||||
Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||
Balance at March 31, 2021 | 68,908,003 | $ | 68,909 | $ | 20,224,591 | $ | (23,096,703 | ) | $ | (2,803,204 | ) | |||||||||
Share based compensation | — | — | 5,107 | — | 5,107 | |||||||||||||||
Net loss | — | — | — | (123,591 | ) | (123,591 | ) | |||||||||||||
Balance at June 30, 2021 | 68,908,003 | $ | 68,909 | $ | 20,229,696 | $ | (23,220,294 | ) | $ | (2,921,688 | ) |
Three Months Ended June 30, 2020 | ||||||||||||||||||||
Common Stock | Additional Paid-In | Accumulated | Total Shareholders’ | |||||||||||||||||
Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
Balance at March 31, 2020 | 68,908,003 | $ | 68,909 | $ | 19,869,933 | $ | (17,660,824 | ) | $ | 2,278,018 | ||||||||||
Share based compensation | — | — | 24,694 | — | 24,694 | |||||||||||||||
Net loss | — | — | — | (2,707,180 | ) | (2,707,180 | ) | |||||||||||||
Balance at June 30, 2020 | 68,908,003 | $ | 68,909 | $ | 19,894,627 | $ | (20,368,004 | ) | $ | (404,468 | ) |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
RASNA THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Three Months Ended December 31, 2017 | For the Nine Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2021 | 2020 | ||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||
Net loss | $ | (2,003,451 | ) | $ | (1,356,084 | ) | $ | (561,812 | ) | $ | (3,056,195 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||
Share based compensation | 224,982 | 250,540 | 41,094 | 114,375 | |||||||||||
Warrants issued for consultancy services | 779,422 | — | |||||||||||||
Depreciation | 1,010 | — | 314 | 1,226 | |||||||||||
Beneficial conversion feature related to convertible notes | 123,718 | — | |||||||||||||
Impairment of goodwill | — | 2,722,985 | |||||||||||||
Accretion of debt discount | 68,182 | — | |||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||
Other receivables | (35,319 | ) | 72,520 | ||||||||||||
Accounts payable and accrued expenses | 70,263 | 33,944 | |||||||||||||
Related party payable | 30,267 | 4,265 | |||||||||||||
Prepayments and other receivables | (26,175 | ) | (28,106 | ) | |||||||||||
Related party receivable | — | — | 748 | 13,587 | |||||||||||
Accounts payable and accrued expenses | (221,883 | ) | 283,891 | ||||||||||||
Related party payables | — | (12,500 | ) | ||||||||||||
Net cash used in operating activities | (1,255,239 | ) | (761,633 | ) | (253,401 | ) | (193,919 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||
Net proceeds from issuance of shares of common stock | — | 2,007,500 | |||||||||||||
Proceeds from issuance of loan payable - related party | — | 72,000 | |||||||||||||
Proceeds from issuance of convertible note payable | 290,000 | 108,500 | |||||||||||||
Net cash provided by financing activities | — | 2,007,500 | 290,000 | 180,500 | |||||||||||
Effect of foreign exchange rate | 3,676 | — | — | — | |||||||||||
Net (decrease)/ Increase in cash and cash equivalents | (1,251,563 | ) | 1,245,867 | ||||||||||||
Net change in cash | 36,599 | (13,419 | ) | ||||||||||||
Cash and cash equivalent, beginning of period | 2,537,611 | — | |||||||||||||
Cash, beginning of period | 14,241 | 50,068 | |||||||||||||
Cash and cash equivalent, end of period | $ | 1,286,048 | $ | 1,245,867 | |||||||||||
Non-cash transactions: | |||||||||||||||
Warrants earned, pending issue | $ | — | $ | 484,009 | |||||||||||
Common stock issued for acquisition | $ | — | $ | 7,675,000 | |||||||||||
Cash, end of period | $ | 50,840 | $ | 36,649 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
RASNA THERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL INFORMATION
Rasna Therapeutics, Inc. (“Rasna DE"DE”, “Rasna Inc.” or "Rasna Inc.”the “Company”), is a biotechnology company incorporated in the State of Delaware on March 28, 2016.
These unaudited condensed consolidated financial statements are presented in United States dollars (“USD”) which is also the functional currency of the primary economic environment in which the Company operates. See Note 2, Foreign currency policy.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or ability to secure additional cash resources, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
2. ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these unaudited condensed consolidated financial statements are set out below. These policies have been applied consistently to all the periods presented unless otherwise stated.
Basis of preparation
These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”(the “SEC”) and United States generally accepted accounting principles (“US GAAP”) for interim reporting. InThe principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended September 30, 2020 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on January 15, 2021. The accompanying unaudited condensed consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (United States), but in the opinion of management, the accompanying consolidatedsuch financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial information.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction withresults of the audited financial statements as of andoperations for the sixNine months ended June 30, 2021 may not be indicative of the results that may be expected for the year ending September 30, 2017, contained in the Company's annual report on Form 10-KT filed with the SEC on November 30, 2017.2021.
Principles of Consolidation
The consolidated financial statements include the financial statements of the Company and its wholly owned subsidiary, Rasna DE, and Rasna DE’s subsidiary, Arna Therapeutics Limited as well as the operations of Rasna Inc. for the period from May 17, 2016 through December 31, 2017.Limited. All significant intercompany accounts and transactions have been eliminatedeliminates in the preparation of the accompanying consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates its estimates on an ongoing basis, including those related to the fair values of stockshare based awards, income taxes and contingent liabilities, among others. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates and such differences could be material to the Company’s consolidated financial position and results of operations.
Reclassifications
Certain amounts in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. These deposits may be redeemed upon demand and bear minimal risk. Management believes that the institutions that hold our instruments are financially sound and are subject to minimal credit risk.
Net Loss per Share
Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share includes potentially dilutive securities such as outstanding options, warrants and warrants,convertible loan notes, using various methods such as the treasury stock, or modified treasury stock, methodand if converted methods in the determination of dilutive shares outstanding during each reporting period.
The following table sets forth potential common shares issuable upon the exercise of outstanding options and the exercise of warrants and convertible loan notes, all of which have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive:
June 30, 2021 | June 30, 2020 | |||||||
Stock options | 3,648,675 | 3,948,675 | ||||||
Warrants | 1,926,501 | 1,926,501 | ||||||
Convertible notes & associated fees | 81,877,887 | 12,233,333 | ||||||
Total shares issuable upon exercise or conversion | 87,453,063 | 18,108,509 |
December 31, 2017 | December 31, 2016 | ||||
Stock options | 4,829,875 | 1,662,375 | |||
Warrants | 1,926,501 | — | |||
Total shares issuable upon exercise or conversion | 6,756,376 | 1,662,375 |
The following is the computation of net loss per share for the following periods:
For the Three Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(Unaudited) | (Unaudited) | |||||||
Net loss for the period | $ | (123,590 | ) | $ | (2,707,180 | ) | ||
Weighted average number of shares | 68,908,003 | 68,908,003 | ||||||
Net loss per share (basic and diluted) | $ | (0.00 | ) | $ | (0.04 | ) |
For the Nine Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(Unaudited) | (Unaudited) | |||||||
Net loss for the period | $ | (561,812 | ) | $ | (3,0056,195 | ) | ||
Weighted average number of shares | 68,908,003 | 68,908,003 | ||||||
Net loss per share (basic and diluted) | $ | (0.01 | ) | $ | (0.04 | ) |
Recent Accounting Pronouncements
For the Three Months Ended December 31, | |||||||
2017 (Unaudited) | 2016 (Unaudited) | ||||||
Net loss for the period | $ | (2,003,451 | ) | $ | (1,356,084 | ) | |
Weighted average number of shares | 68,908,003 | 65,082,334 | |||||
Net loss per share (basic and diluted) | $ | (0.03 | ) | $ | (0.02 | ) |
In April 2016,December 2019, the Company committed to issue warrants as compensation toFASB issued ASU 2019-12, Income Taxes - Simplifying the placement agents relating to fundraising. On February 28, 2017,Accounting for Income Taxes (“ASU 2019-12”). Among other items, the Company issuedamendments in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a ten year warrant to purchase 1,440,501 shares of common stock at an exercise price of $0.37 per share.
The Company has determined that thereall other recently issued accounting pronouncements will be nonot have a material impact on its consolidated financial statements.position, results of operations and cash flows, or do not apply to its operations.
3. ACQUISITIONSLIQUIDITY AND GOING CONCERN
The Company has no present revenue and has experienced net losses and significant cash outflows from cash used in operating activities since inception.
The following transactions were accountedCompany expects to continue to incur net losses and have significant cash outflows for usingat least the acquisition accounting method which requires, among other things,next 12 months and will require significant additional cash resources to launch new development phases of existing products in its pipeline.
In the event that the assets acquired and liabilities assumed are recognized at their acquisition date fair value.
Balance as of | |||
May 17, 2016 | |||
Share consideration transferred | $ | 7,675,000 | |
Forgiveness of receivable | 607,159 | ||
Consideration transferred | $ | 8,282,159 | |
Less: Fair value of assets acquired | |||
Cash and cash equivalents | (5,116,609 | ) | |
Other receivables | (14,187 | ) | |
Prepayment | (66,856 | ) | |
Related party receivables | (20,412 | ) | |
Intellectual property | (236,269 | ) | |
In-Process research and development | (613,100 | ) | |
Plus: Liabilities assumed | |||
Accounts payable and accrued expenses | 492,603 | ||
Related party payables | 15,656 | ||
Goodwill | $ | 2,722,985 |
December 31, | September 30, | ||||||
2017 | 2017 | ||||||
Goodwill | $ | 2,722,985 | $ | 2,722,985 | |||
Acquisition of Rasna and its subsidiaries | — | — | |||||
Net Book Value | $ | 2,722,985 | $ | 2,722,985 | |||
December 31, | September 30, | |||||||||
2017 | 2017 | Estimated Useful Life | ||||||||
In-process research and development | $ | 613,100 | $ | 613,100 | Indefinite | |||||
Intellectual Property | 236,269 | 236,269 | Indefinite | |||||||
Indefinite lived intangible asset | 1,300,000 | 1,300,000 | Indefinite | |||||||
$ | 2,149,369 | $ | 2,149,369 |
December 31, 2017 (Unaudited) | September 30, 2017 | |||||||
Accounts payable | $ | 353,877 | $ | 658,921 | ||||
Accrued expenses | 415,280 | 328,443 | ||||||
$ | 769,157 | $ | 987,364 |
4. SHARE-BASED COMPENSATION
For the three and Nine months ended December 31, 2017 were calculated onJune 30, 2021 $5,106 and $41,094 respectively, related to share based compensation to directors and employees respectively, has been included within the date ofgeneral and administrative expense category in the grant using the Black-Scholes option pricing model. Compensation expense is recognized over the period of service, generally the vesting period. Duringaccompanying unaudited condensed consolidated interim financial statements.
For the three and Nine months ended December 31, 2017, no options were granted byJune 30, 2020 $24,694 and $114,375 respectively, related to share based compensation to directors and employees respectively, has been included within the Company. The following assumptions were usedgeneral and administrative expense category in the Black-Scholes options pricing model to estimate the fair value of stock options for the three months ended December 31, 2017:accompanying unaudited condensed consolidated interim financial statements.
Employee – Vesting Period | Non- Employee – Vesting Period | ||||||||||||
1 Year | 2 Years | 3 Years | 4Years | 1 Year | 2 Years | 3 Years | |||||||
Stock Price | $0.85 | $0.85 | $0.85 | $0.85 | $3.00 | $3.00 | $3.00 | ||||||
Expected life (years) | 5.50 | 5.75 | 6.00 | 6.25 | 5.50 | 5.75 | 6.00 | ||||||
Expected volatility | 82.40% | 82.20% | 81.90% | 81.70% | 86.60% | 85.40% | 89.00% | ||||||
Expected dividend yield | —% | —% | —% | —% | —% | —% | —% | ||||||
Risk-free interest rate | 1.57% | 1.57% | 1.57% | 1.57% | 1.57% | 1.57% | 1.57% |
Number of Options | Weighted Average Exercise Price Per Option | Weighted Average remaining Contractual Life (years) | Aggregate Intrinsic Value | |||||||||
Outstanding balance at September 30, 2017 | 4,829,875 | 0.56 | 8.60 | $5,975,874 | ||||||||
Granted | — | — | — | — | ||||||||
Exercised | — | — | — | — | ||||||||
Forfeited and Expired | — | — | — | — | ||||||||
Outstanding balance at December 31, 2017 | 4,829,875 | 0.56 | 8.02 | $ | 11,806,521 | |||||||
Options exercisable at December 31, 2017 | 1,963,156 | 0.27 | 7.01 | $ | 5,365,467 |
As of December 31, 2017,June 30, 2021 there was approximately $1,262,741$1,580 of total unrecognized compensation cost related to stock options. The cost is expected to be recognized over a weighted average period of 1.30.17 years.
5. CONVERTIBLE NOTES
The table below summarizes outstanding convertible notes as of June 30, 2021 and September 30, 2020:
Convertible Notes Payable: | June 30, 2021 | September 30, 2020 | ||||||
Principal value of Non-Related Party Notes | 392,500 | 292,500 | ||||||
Interest accrued | 96,396 | 64,202 | ||||||
Carrying Value of Notes | 488,896 | 356,702 | ||||||
Principal value of Related Party Notes | 276,000 | 86,000 | ||||||
Interest accrued | 21,958 | 4,262 | ||||||
Beneficial conversion feature of new notes | (81,818 | ) | - | |||||
Carrying Value of Notes | 216,140 | 90,262 | ||||||
Total carrying value of convertible notes payable | 705,036 | 446,964 |
Most notes accrue interest at 12% per annum and are due on December 31, 2017, $257,207 related2021. The most recent note issued for $100,000 accrues interest at 1% per annum and is due on December 31, 2021.
On February 3, 2021, all previously outstanding notes were reissued with amended expiry and conversion terms. The amended terms are as follows:
1. | Conversion |
The amended Notes provide the Holders with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.01 per share based compensationor (ii) the price of the next equity financing, which raises at least US $1,000,000, subject to directors and employees which has been includedadjustments noted within the general and administrative expense category in the unaudited condensed consolidated interim financial statements. An additional ($32,225) related to non-employees has been included within the Consultancy fees third parties and related parties expense category in the unaudited condensed consolidated interim financial statements.Agreement.
2. | Expiry of the notes was amended to December 31, 2021. |
The fair value of warrants issued using the Black-Scholes Model (“BSM”) andamended notes was calculated as the Company recorded $484,009 as a liabilityprincipal plus interest.
The original notes were deemed to be extinguished, and a reduction to proceedsloss on extinguishment of the equity offering (additional paid-in-capital). The Company assessed the fair value for each reporting period of the liability and recorded changes to additional paid-in capital. At February 28, 2017, the date the warrants were issued, the obligation$nil was reversed to additional paid-in capital and no outstanding liability existed. Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, “Derivatives and Hedging - Contracts in an Entity’s Own Equity”, the Company determined that the warrants issued as placement agent warrants are classified as equity in additional paid in capital. recorded.
On July 3, 2017,January 14, 2021, the Company entered into a finders agreement12% Convertible Promissory Note with a placement agent whereby they incurred an obligationPanetta Partners Ltd. (the “Holder”) pursuant to issue warrants once a private placement has successfully been entered into. On August 31, 2017, the performance condition had been satisfied andwhich the Company issued a Convertible Promissory Note to the related warrants. Based uponHolder. The Holder provided the Company with $60,000 in cash. The Company promised to pay the principal amount, together with guaranteed interest at the annual rate of 12%, with principal and accrued interest on the Note due and payable on December 21, 2021 (unless converted under terms and provisions as set forth within the Agreement). The Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s analysiscommon stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) the price of the criteria contained in ASC Topic 815-40, “Derivatives and Hedging - Contracts in an Entity’s Own Equity”,next equity financing, which raises at least US $1,000,000, subject to adjustments noted within the Agreement. The number of shares issuable upon a conversion shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of the Note to be converted by (y) the Conversion Price. The Note requires the Company determinedto reserve and keep available out of its authorized and unissued shares of common stock the amount of shares that would be issued upon conversion of the warrants issued as placement agent warrants are classified as equity in additional paid in capital.Note, which includes the outstanding principal amount of the Note and interest accrued and to be accrued through the date of maturity.
On September 1, 2017,February 10, 2021, the Company entered into a 12% Convertible Promissory Note with Panetta Partners Ltd. (the “Holder”) pursuant to which the Company issued warrantsa Convertible Promissory Note to placement agents in lieu of fees for consultancy services to bethe Holder. The Holder provided over a period of 6 months. Based upon the Company’s analysis of the criteria contained in ASC Topic 815-40, “Derivatives and Hedging - Contracts in an Entity’s Own Equity”, the Company determined thatwith $90,000 in cash. All other terms were the warrants issued in lieusame as the note before.
Upon issuance of consultancy fees are classified as equity in additional paid in capital.
September 1, 2017 | August 31, 2017 | February 28, 2017 | |
Fair value at issuance date | $1,420,456 | $424,179 | $2,914,884 |
Warrants issued | 374,000 | 112,000 | 1,440,501 |
Exercise Price | $0.60 | $0.65 | $0.37 |
Stock Price | $4.00 | $4.00 | $2.10 |
Expected Term (Years) | 10 | 10 | 10 |
Volatility % | 91% | 91% | 105% |
Discount Rate - Bond Equivalent Yield | 2.35% | 2.35% | 2.55% |
Dividend Yield | —% | —% | —% |
Number of Warrants | Weighted Average Exercise Price Per Option | Weighted Average remaining Contractual Life (years) | Aggregate Intrinsic Value | |||||||||
Outstanding balance at September 30, 2017 | 1,926,501 | 0.43 | 8.86 | 6,875,819 | ||||||||
Granted | — | — | — | — | ||||||||
Forfeited | — | — | — | — | ||||||||
Outstanding balance at December 31, 2017 | 1,926,501 | 0.43 | 8.61 | $ | 4,949,318 | |||||||
Warrants exercisable at December 31, 2017 | 1,926,501 | 0.43 | 8.61 | $ | 4,949,318 |
6. RELATED PARTY TRANSACTIONS
The following is a summary of the related party transactions duringfor the three months ended December 31, 2017 and 2016.periods presented.
Eurema Consulting
Eurema Consulting S.r.l. wasis a significant shareholder of Arna Therapeutics Limited.the Company. During the three months ended December 31, 2017June 30, 2021 and three months ended December 31, 2016,June 30, 2020 Eurema Consulting S.r.l. did not supply the Company with consulting services. As of December 31, 2017,June 30, 2021, and September 30, 2017,2020, the balance due to Eurema Consulting S.r.lS.r.l. was owed $200,000 and $200,000, respectively, by the Company for past consultancy services.
Gabriele Cerrone
Gabriele Cerrone was a Directoris the majority shareholder of Arna Therpeutics Limited. DuringPanetta Partners, one of the three months ended December 31, 2017,Gabriele Cerrone did not supply the Company with consulting services. During the three months ended December 31, 2016, Gabriele Cerrone charged the Company $25,000, relating to consultancy fees.Company’s principal shareholders. As of December 31, 2017,June 30, 2021, and September 30, 2017,2020, the balance due to Gabriele Cerrone was $175,000 and $175,000, respectively for past consultancy services. In March 2020, the Company entered into a 12% Convertible Promissory Note with Gabriele Cerrone for $20,000 with an extended maturity date of December 31, 2021. In February 2021, Gabriele Cerrone assigned the Note to Panetta Partners Ltd.
Roberto Pellicciari was a Director of Arna Therpeutics Limited and soleTES Pharma
Roberto Pellicciari is the majority shareholder of TES Pharma Srl.Srl, one of the Company’s principal shareholders. During the three months ended December 31, 2017June 30, 2021 and June 30, 2020 Roberto Pellicciari did not supply the Company with consulting services. During the three months ended December 31, 2016, Roberto Pellicciari charged the Company $25,000, relating to consultancy fees. As of December 31, 2017,June 30, 2021, and September 30, 2017,2020, the balance due to Roberto Pellicciari was $175,000 and $175,000, respectively for past consultancy services. At June 30, 2021 and September 30, 2020, TES Pharma was owed $75,000.
Tiziana Life Sciences Plc (“Tiziana”)
The Company is party to a Shared Services Agreement with Tiziana, whereby the Company is charged for shared services and rent. Tiziana had previously agreed to waive all charges for shared services from October 2018 onwards, until further notice since the amounts due for such services are de minimis. Notice was given and recharges from October 1, 2020 were resumed. Keeren Shah the Company’s Finance Director, is also Finance Director of Tiziana, and the Company’s directors, Willy Simon and John Brancaccio are also non executive directors of Tiziana.
As of June 30, 2021, $7,757 was due to Tiziana under services charged under the shared services agreement. This is recorded as a related party payable in the accompanying condensed consolidated balance sheets. As of September 30, 2020, the Company made payments on behalf of Tiziana of $748, which are recorded as a related party receivable in the accompanying condensed consolidated balance sheets.
On June 30, 2020, Tiziana extended a loan facility to Rasna of $65,000. The loan is repayable within 18 months and is incurring an interest charge of 8% per annum. In November 2016,April 2020, the loan facility was extended by a further $7,000, so the loan facility totals $72,000. As of June 30, 2021, the amounts due to Tiziana under this loan facility were $79,200.
Panetta Partners
Panetta Partners Limited, a shareholder of Rasna, is a company in which Gabriele Cerrone is a major shareholder and also serves as a director.
In February 2020, September 2020 and October 2020 the Company entered into a license agreement12% Convertible Promissory Notes with Profs. FaliniPanetta Partners for $31,000, $35,000 and Martelli, wherein it obtained the exclusive rights related$40,000 with extended maturity dates of December 31, 2021. The amount due for these notes at June 30, 2021, with respect to the use or reformulationprincipal and accrued interest is $36,198, $38,243 and $43,320 respectively.
In February 2021, Gabriele Cerrone, a major shareholder of Actinomycin D and intends to utilize these rights for the development of new product. In connection with this agreement, the Company was committed to paying milestone payments, the first beingPanetta Partners Ltd, assigned a EUR 50,000 payment to be paid six months after the agreement was signed. The payment was made to Profs. Falini and Martelli in June 2017.
7. SUBSEQUENT EVENTS
The Company has entered a number of employment agreements commencingevaluated subsequent events that occurred after the balance sheet date up to the date that the consolidated financial statements were issued and did not identify any subsequent events that would have required adjustment or disclosure in January 2017. These agreements relate to clinical and non clinical employees, and are reviewable on an annual basis. The Company's committed to paying approximately $180,000 of salary and bonus expenses for the 12 month period to December 2018.consolidated financial statements.
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the Company’s Annual Report on Form 10-KT10-K filed on November, 30, 2017January 15, 2021 under the heading “Risk Factors,” which are incorporated herein by reference.
We assume no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Unless expressly indicated or the context requires otherwise, the terms "Rasna,"“Rasna,”,” the “Company,” “we,” “us,” and “our” refer to Rasna Therapeutics, Inc., a Nevada corporation, and, where appropriate, its wholly owned subsidiaries.
Company Background
To date, we have devoted substantially all of our resources to research and development efforts relating to our therapeutic candidates, including conducting clinical trials and developing manufacturing capabilities, in-licensing related intellectual property, protecting our intellectual property and providing general and administrative support for these operations. Since our inception, we have funded our operations primarily through the issuance of equity securities.securities and convertible notes.
We anticipate that our expenses will increase substantially if and as we:
● | initiate new clinical trials; |
● | seek to identify, assess, acquire and develop other products, therapeutic candidates and technologies; |
● | seek regulatory and marketing approvals in multiple jurisdictions for our therapeutic candidates that successfully complete clinical studies; |
● | establish collaborations with third parties for the development and commercialization of our products and therapeutic candidates; |
● | make milestone or other payments under our agreements pursuant to which we have licensed or acquired rights to intellectual property and technology; |
● | seek to maintain, protect, and expand our intellectual property portfolio; |
● | seek to attract and retain skilled personnel; |
● | incur the administrative costs associated with being a public company and related costs of compliance; |
● | create additional infrastructure to support our operations as a commercial stage public company and our planned future commercialization efforts; and |
● | experience any delays or encounter issues with any of the above. |
We expect to continue to incur significant expenses and increasing losses for at least the next several years. Accordingly, we anticipate that we will need to raise additional capital in addition to the net proceeds from this offering in order to obtain regulatory approval for, and the commercialization of our therapeutic candidates. Until such time that we can generate meaningful revenue from product sales, if ever, we expect to finance our operating activities through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any approved therapies or products or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially adversely affect our business, financial condition and results of operations.
We only have one segment of activity, which is that of a clinical stage biotechnology company focused on targeted drugs to treat diseases in oncology and immunology, mainly focusing on the treatment of leukemia and lymphoma.
The Company is currently looking into raising funds to progress its R&D pipeline.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or US GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. In accordance with US GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
The Company has determined that it was not subject to any new accounting policies are more fully described in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report, we believepronouncements that became effective during the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements.Nine months ended June 30, 2021.
Basis of preparation
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).US GAAP. Any reference in these notes to applicable guidance is meant to refer to US GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“the FASB”).
Liquidity and have the power to direct its significant activities. Upon review of the relationship between Rasna Therapeutics (“Rasna UK”) and Rasna, Management noted that equity investment in Rasna UK is not sufficient to fund its operations. Accordingly, Rasna is considered to be the primary beneficiary of the assets held within Rasna UK, which primarily consist of cash received from Rasna to fund its operations, and has power to direct its significant activities. As a result, Rasna consolidates this variable interest entity.
We are subject to a number of risks similar to those of other pre-commercial stage companies, including our dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with research, development, testing, and obtaining related regulatory approvals of its pipeline products, suppliers and collaborators, successful protection of intellectual property, competition with larger, better-capitalized companies, successful completion of our development programs and, ultimately, the attainment of profitable operations are dependent on future events, including obtaining adequate financing to fulfill our development activities and generating a level of revenues adequate to support our cost structure.
We have no present revenue and have experienced net losses and significant cash outflows from cash used in operating activities over the past years,since inception, and as at December 31, 2017,June 30, 2021, had accumulateda working capital deficit of $14,302,519 ,$2,921,688, a net loss for the threeNine months ended December 31, 2017June 30, 2021 of $2,003,451$561,812 and net cash used in operating activities of $1,255,239.$253,401 for the Nine months ended June 30, 2021.
We expect to continue to incur net losses and have significant cash outflows for at least the next twelve months. We have sufficient funds to continue operating until the end of November 2018, butmonths and will require significant additional cash resources to launch new development phases of existing products in its pipeline. In the event that the Company is unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about the our ability to continue as a going concern.concern one year from the date of this filing. The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern.concern one year from the date of this filing. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure.
December 31, 2017 | December 31, 2016 | ||||
Stock options | 4,829,875 | 1,662,375 | |||
Warrants | 1,926,501 | — | |||
Total shares issuable upon exercise or conversion | 6,756,376 | 1,662,375 |
Results of Operations
The following paragraphs set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.
Results of Operations for the Three Months Ended December 31, 2017Nine months ended June 30, 2021 and 2016
The following table sets forth the summary statements of operations for the periods indicated:
For the Nine Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
(Unaudited) | (Unaudited) | |||||||
Revenue | $ | — | $ | — | ||||
Cost of revenue | — | — | ||||||
Gross profit | — | — | ||||||
Operating expenses: | ||||||||
Research and Development | 44,739 | 66,739 | ||||||
General and administrative | 268,398 | 356,686 | ||||||
Total operating expenses | 313,137 | 423,425 | ||||||
Loss from operations | (313,137 | ) | (423,425 | ) | ||||
Other expense: | ||||||||
— | ||||||||
Accretion of debt discount | (68,182 | ) | — | |||||
Beneficial conversion feature on convertible notes | (123,718 | ) | — | |||||
Gain on sale of asset | — | 120,000 | ||||||
Impairment of goodwill | — | (2,722,985 | ) | |||||
Interest expense | (56,824 | ) | (29,785 | ) | ||||
Foreign currency transaction gain | 48 | — | ||||||
Other expense | (248,676 | ) | (2,632,770 | ) | ||||
Net loss | $ | (561,812 | ) | $ | (3,056,195 | ) |
For the Three Months Ended December 31, | |||||||
2017 (Unaudited) | 2016 (Unaudited) | ||||||
Revenue | $ | — | $ | — | |||
Cost of revenue | — | — | |||||
Gross profit | — | — | |||||
Operating expenses: | |||||||
General and administrative | 873,801 | 571,215 | |||||
Research and development | 176,932 | 366,046 | |||||
Consultancy fees third parties and related parties | 772,395 | 130,180 | |||||
Legal and professional fees | 176,647 | 310,104 | |||||
Total operating expenses | 1,999,775 | 1,377,545 | |||||
Loss from operations | (1,999,775 | ) | (1,377,545 | ) | |||
Other income/(expense): | |||||||
Foreign currency transaction gain | (3,676 | ) | 21,461 | ||||
Other income | (3,676 | ) | 21,461 | ||||
Net loss | $ | (2,003,451 | ) | $ | (1,356,084 | ) |
Revenues
There were no revenues for the threeNine months ended December 31, 2017June 30, 2021 and 20162020 because the Company does not have any commercial biopharmaceutical products.
Operating Expenses
Operating expenses consisting of research and development costs, consultancy fees, legal and professional fees and general and administrative expenses for the threeNine months ended December 31, 2017 increasedJune 30, 2021 decreased to $1,999,775$268,398 from $1,377,545$356,686 for the threeNine months ended December 31, 2016, an increaseJune 30, 2020, a decrease of $622,230.$88,288 The increasedecrease is primarily attributable to payroll and rental expenditure incurreda reduction in the share based payments charge due to more options having reached the hiring additional employeesend of their vesting period (approximately $74,000) and obtaining additional office spacea reduction in consulting fees (approximately $236,000),$14,000).
Other expense
During the nine months ended June 30, 2021, other expense decreased to approximately $249,000 from $2,632,000 in the prior year. This is due to one off charges in the prior year for the impairment of goodwill ($2,723,000) and the increase
Net Loss
Net loss for the threeNine months ended December 31, 2017 increasedJune 30, 2021 decreased to $2,003,451$561,812 from $1,356,084$3,056,195 for the threeNine months ended December 31, 2016, an increaseJune 30, 2020, a decrease of $647,367. The increase is primarily attributable to payroll and rental expenditure incurred due to the hiring additional employees and obtaining additional office space (approximately $236,000), and the increase in the charge for options and warrants (approximately $754,000), offset by decreases in research and development expenses and legal and professional fees (approximately $322,000)$2,494,383.
Liquidity and Capital Resources
We have sufficientbelieve we will require significant additional cash to carry out our activities until November 2018. We will be required to raise additional capitalresources to continue to launch new development phases of existing products in the Company’s pipeline. In the event that we are unable to secure the necessary additional cash resources needed, we may slow current development and commercializationphases or halt new development phases in order to mitigate the effects of current product candidates andthe costs of development. These conditions, among others, raise substantial doubt about our ability to fund operations.continue as a going concern. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience significant dilution. Any debt financing, if available, may (i) involve restrictive covenants that impact our ability to conduct, delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize its self on unfavorable terms.
On November 12, 2019, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $57,500 with a maturity date of November 12, 2020. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.65 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.
On February 07, 2020, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $31,000 with a maturity date of February 07, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.
On March 20, 2020, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $20,000 with a maturity date of March 20, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.
On September 22, 2020, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $35,000 with a maturity date of September 22, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.
On October 21, 2020, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $40,000 with a maturity date of October 21, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.05 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.
All notes contain an anti-dilution provision, which adjusts the conversion price in the event of an issuance by us of common stock below the then effective conversion price. All of these notes were amended and restated in February 2021. The maturity date of the notes were extended to December 31, 20201 and the conversion price amended to the lower of (i) $0.01 per share or (ii) t the price of the next equity financing, which raises at least US$1,000,000.
On January 14, 2021, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $60,000 with a maturity date of December 31, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) t the price of the next equity financing, which raises at least US$1,000,000. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.
On February 10, 2021, we issued a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $90,000 with a maturity date of December 31, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) t the price of the next equity financing, which raises at least US$1,000,000. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.
On May 25, 2021, we issued a 1% convertible promissory note (the “Note”) to an investor, in the principal amount of $100,000 with a maturity date of December 31, 2021. The Note was convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) t the price of the next equity financing, which raises at least US$1,000,000. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.
On April 16, 2020, we entered into an asset purchase agreement with Tiziana pursuant to which we agreed to sell all of the intellectual property relating to a nanoparticle-based formulation of Act D to Tiziana in exchange for an upfront payment of $120,000 and milestone payments of up to an aggregate $630,000.
Capital Resources
The following table summarizes total current assets, liabilities and working capital deficiency as of the periods indicated:
June 30, 2021 (Unaudited) | September 30, 2020 | Change | ||||||||||
Current assets | $ | 94,656 | $ | 32,630 | $ | 62,026 | ||||||
Current liabilities | 3,016,344 | 2,707,632 | 308,711 | |||||||||
Working capital deficit | $ | (2,921,688 | ) | $ | (2,675,002 | ) | $ | (246,686 | ) |
December 31, 2017 (Unaudited) | September 30, 2017 | Change | |||||||||
Current assets | $ | 1,479,455 | $ | 2,695,699 | $ | (1,216,244 | ) | ||||
Current liabilities | $ | 1,319,157 | $ | 1,537,364 | $ | (218,207 | ) | ||||
Working capital | $ | 160,298 | $ | 1,158,335 | $ | (998,037 | ) |
We had a cash balance of $1,286,048$50,840 and $2,537,611$14,241 at December 31, 2017June 30, 2021 and September 30, 2017,2020, respectively.
Liquidity
The following table sets forth a summary of our cash flows for the periods indicated:
For the Nine months ended June 30, | ||||||||||||
2021 | 2020 | Increase/ (Decrease) | ||||||||||
Net cash used in operating activities | $ | (253,401 | ) | $ | (193,919 | ) | $ | 59,482 | ||||
Net cash used in investing activities | $ | — | $ | — | $ | — | ||||||
Net cash provided by financing activities | $ | 290,000 | $ | 180,500 | $ | 109,500 |
For the Three Months Ended December 31, | |||||||||||
2017 | 2016 | Increase/(Decrease) | |||||||||
Net cash used in operating activities | $ | (1,255,239 | ) | $ | (761,633 | ) | $ | (493,606 | ) | ||
Net cash provided by investing activities | $ | — | $ | — | $ | — | |||||
Net cash provided by financing activities | $ | — | $ | 2,007,500 | $ | (2,007,500 | ) |
Net Cash Used in Operating Activities
Net cash used in operating activities consists of net loss adjusted for the effect of changes in operating assets and liabilities.
Net cash used in operating activities was $1,255,239$253,401 for the threeNine months ended December 31, 2017June 30, 2021 compared to $761,633$193,919 for the threeNine months ended December 31, 2016.June 30, 2020. The change is principally attributable to net loss of $2,003,451 excluding$561,812 for the Nine months ended June 30, 2021 was partially offset primarily by non-cash items such as share basedshare-based compensation of $224,982 , consultancy expense for warrants issued$41,094, interest accrued on the Convertible Loan Notes and the loan from Tiziana of $779,422$54,209, other expenses related to the convertible notes of $191,900 and changes in operating assets and liabilities of $258,067.$20,894. The net loss of $3,056,195 for the nine months ended June 30, 2020 was partially offset primarily by non-cash share based compensation of $114,375, a good will impairment charge of $2,722,985, interest accrued on the Convertible Loan Notes of $28,345 and changes in operating assets and liabilities of $4,655.
Net Cash Provided by Financing Activities
Net cash provided by financing activities consists of proceeds received from the saleissuance of sharesconvertible notes of common stock issued in a private placement to accredited investors. This was $0$190,000 for the threeNine months ended December 31, 2017June 30, 2021 compared to $2,007,500proceeds from the issuance of a convertible note of $108,500 and a related party loan payable of $72,000 for the threeNine months ended December 31, 2016.June 30, 2020.
ITEM 4.3. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within the required time periods. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and
As of the end of the period covered by this Report, the Company’s Chief Executive Officer, and Chief Financial Officer (the “Certifying Officers”), evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation, eachthe Chief Executive officer concluded that, as of the date of the evaluation, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed in the Company’s periodic filings under the Securities Exchange Act of 1934 is accumulated and communicated to management to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-KT10-K as of and for the six monthsyear ended September 30, 2017.2020, filed with the SEC on February 15, 2021.
ITEM 6. EXHIBITS
Inline XBRL Instance | ||
Inline XBRL Taxonomy Extension Schema | ||
Inline XBRL Taxonomy Extension Calculation Linkbase | ||
Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
Inline XBRL Taxonomy Extension Presentation Linkbase | ||
Cover Page Interactive Data File (formatted as Inline XBRL |
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Rasna Therapeutics, Inc. | |||
August 16, 2021 | By: | ||
/s/ | |||
Name: | Keeren Shah | ||
Title: | |||
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