QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
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: 000-55299
NASCENT BIOTECH INC
(Exact Name of Registrant as Specified in Its Charter)
Nevada
46-5001940
(State of Incorporation)
(IRS Employer Identification No.)
6330 Nancy Ridge Dr. Suite 105, San Diego CA
92121
(Address of Principal Executive Offices)
(Zip Code)
(612) 961-5656
(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 (or for such shorter period that the Registrant was required to file such reports), and (2) 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 the definitions of “large accelerated fi ler,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filed
☐
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 ☒
As of August 7, 2020 the Registrant had 64,556,136 shares of common stock and 540,000 shares of Series A convertible preferred shares issued and outstanding.
Nascent Biotech, Inc. (“Nascent” or the “Company”) was incorporated on March 3, 2014 under the laws of the State of Nevada. The Company is actively developing its primary asset Pritumumab for the treatment of brain cancer and pancreatic cancer. Nascent is also actively researching other cancers that have a high probability of benefiting from the therapeutic effects of Pritumumab because they share a common target. Pritumumab has shown to be very effective at low doses in previous clinical studies in Japan. Nascent is a pre-clinical stage biopharmaceutical company that focuses on biologic drug candidates that are preparing for initial clinical testing for the treatment of brain and pancreatic cancer.
On March 31, 2017, the Company filed its IND submission with the United States Food and Drug Administration (FDA) for clearance to begin Phase I clinical trials. On December 7, 2018, the Company received a letter from the FDA allowing it to use a specific lot of drug substance to begin phase 1 clinical trials. The FDA also requested additional data to remove the partial clinical hold. The Company is responding to additional data requests from the FDA requiring additional testing of the product and additional materials to answer specific questions from the FDA.
The Company has an open clinical trial to begin clinical trials on brain cancer patients this fall.
NOTE 2- BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles. The Company has elected a fiscal year ending on March 31.
The accompanying unaudited interim consolidated financial statements of the Company for the three months ended June 30, 2020 and 2019 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information in accordance with Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended March 31, 2020. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position and the results of operations for the interim periods presented herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for any subsequent quarters or for an entire year.
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases. The main provisions of ASU No. 2016-02 require management to recognize lease assets and lease liabilities for all leases. ASU 2016-02 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous release’s guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous U.S. GAAP. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.
The Company computes net loss per share in accordance with ASC 260, Earnings per Share, which requires presentation of both basic and diluted loss per share (“EPS”) on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options and warrants, using the treasury stock method, convertible preferred stock, and convertible debt, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive common shares if their effect is antidilutive.
We have identified the conversion features of certain of our convertible notes payable as derivatives. We estimate the fair value of the derivatives using the Black-Scholes pricing model. We estimate the fair value of the derivative liabilities at the inception of the financial instruments, at the date of conversions to equity and at each reporting date, recording a derivative liability, debt discount, and a gain or loss on change in derivative liabilities as applicable. These estimates are based on multiple inputs, including the market price of our stock, interest rates, our stock price volatility and variable conversion prices based on market prices as defined in the respective agreements. These inputs are subject to significant changes from period to period and to management’s judgment; therefore, the estimated fair value of the derivative liabilities will fluctuate from period to period, and the fluctuation may be material.
The Company accounts for stock-based compensation to employees and consultants in accordance with FASB ASC 718. Stock-based compensation to employees is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with FASB ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments and is recognized as expense over the service period. The Company estimates the fair value of stock-based payments using the Black Scholes option-pricing model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts payable and accrued expenses and shareholder loans. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
Financial assets and liabilities recorded at fair value in our condensed consolidated balance sheets are categorized based upon a fair value hierarchy established by GAAP, which prioritizes the inputs used to measure fair value into the following levels:
Level 1– Quoted market prices in active markets for identical assets or liabilities at the measurement date.
Level 2– Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable and can be corroborated by observable market data.
Level 3– Inputs reflecting management’s best estimates and assumptions of what market participants would use in pricing assets or liabilities at the measurement date. The inputs are unobservable in the market and significant to the valuation of the instruments.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following table summarizes the change in the fair value of the derivative liabilities during the three months ended June 30, 2020:
Fair value as of March 31, 2020
$
603,836
Additions at fair value
--
Transfers in (out) of Level 3
--
Change in fair value
(438,567
)
Fair value as of June 30, 2020
$
165,269,
NOTE 3 - GOING CONCERN
The Company’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern that contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a working capital deficit and has incurred losses from operations. The Company has no revenue to cover its operating costs and the Company will incur additional expenses in the future developing their product. These factors raise substantial doubt about the company’s ability to continue as a going concern. The Company engages in research and development activities that must be satisfied in cash secured through outside funding. The Company may offer noncash consideration and seek equity lines as a means of financing its operations. If the Company is unable to obtain revenue producing contracts or financing or if the revenue or financing it does obtain is insufficient to cover any operating losses it may incur, it may substantially curtail or terminate its operations or seek other business opportunities through strategic alliances, acquisitions or other arrangements that may dilute the interests of existing stockholders. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
On September 1, 2015, the Company entered five-year employment contracts with three of its officers and directors. Under the terms of the agreements the Company issued shares of common stock to the officers and directors equaling 11% of the outstanding shares of the Company as of the date of the contracts. As additional future shares are issued, the officers and directors are entitled to additional shares so their aggregate ownership percentage remains at 11% of the outstanding shares of the Company. The following table sets forth the shares earned under these contracts as of June 30, 2020:
Officer and Director
Initial Share Awards Under
the Contracts
Additional Shares Earned to Maintain Ownership Percentage
Total
Shares
Earned
President
1,028,910
2,107,084
3,135,994
Chief Financial Officer
617,346
1,267,553
1,884,899
Executive Vice President
617,346
1,267,553
1,884,899
Total
2,263,602
4,642,190
6,905,792
During the year ended March 31, 2020 the Board of Directors amended the compensation plan so that the total amount per the officer agreements allow for the accrual of the full amount due each officer per their contract. The table below sets forth the annual amounts per the contracts:
Officer and Director
Fiscal Year Annualized Compensation Being Paid
President
$
250,000
Chief Financial Officer
$
180,000
Executive Vice President
$
140,000
Total
$
570,000
On June 5, 2019, two officers and directors of the Company converted $99,000 of accrued fees into 639,536 shares of common stock at $0.1548 per share.
On June 28, 2019, the Company issued 137,872 shares of common stock to three officers and a director for service with a value of $25,721.
During the three month period ended June 30, 2019 the Company paid a related party (officer and director) $6,000 of consulting fees in cash and accrued $15,000 of the consulting fees for a total of $21,000.
During the three months period ended June 30, 2019, Company paid a related party and Chairman of the Scientific Board $4,000 of consulting fees in cash and accrued $2,000 of the fees with a total outstanding accrual of $9,000. On December 30, 2019, the accrued fees were converted into 90,000 shares of common stock of the Company.
During the three months ended June 30, 2020 three officers and directors were issued 2,007,000 shares of common stock with a value of $190,915 for service.
During the three months period ended June 30, 2020 three officers of the Company converted $1,387,872 of accrued compensation into 13,831,101 shares of common stock of the Company.
On July 25, 2019, the Company issued 110,000 shares of series A convertible preferred to one entity with a value of $110,000 for cash. Each share of series A preferred is convertible after 180 days to four shares of common stock or at the lowest of: (i) the fixed conversion price; (ii) the equitant of 70% of the lowest closing price for the 20 days prior to the conversion of the preferred shares.
During the three months ended June 30, 2020 the Company issued 1,352,529 shares of common stock for the conversion of 60,000 shares of preferred stock. AS of June 30, 2020 the number of preferred shares outstanding was zero.
Common
On June 5, 2019, two officers and directors of the Company converted $99,000 of accrued fees into 639,536 shares of common stock at $0.1548 per share.
During June 2019, two warrant holders exercised 21,427 warrants for common stock at $0.05 per share for cash of $1,071.
On June 14, 2019, the Company issued 50,000 share of common stock to one individual with a value of $9,550 for service.
On June 28, 2019, the Company issued 137,872 shares of common stock to three officers and a director for service with a value of $25,721.
During the three months ended June 30, 2020 the Company issued 35,715 shares of common stock with a value of $5,000 for settlement of accounts payable.
During the three months ended June 30, 2020 the Company issued 677,000 shares of common stock with a value of $85,440 for service
During the three months ended June 30, 2020 the Company issued 1,352,529 shares of common stock for the conversion of 60,000 shares of preferred stock.
During the three months ended June 30, 2020 three officers and directors were issued 2,007,000 shares of common stock with a value of $190,915 for service
During the three months period ended June 30, 2020 three officers of the Company converted $1,387,872of accrued compensation into 13,831,101 shares of common stock of the Company.
NOTE 6– OPTIONS
As of June 30, 2019 there was no option expenses recognized by the Company and the balance of unrecognized option expense was zero.
The following sets forth the options granted and outstanding during the three months ended June 30, 2020:
Options
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contract
Life
Number of
Options
Exercisable
Intrinsic
Value
Outstanding at March 31, 2020
1,405,000
$
0.34
5.80
1,405,000
$
--
Granted
--
--
--
--
--
Exercised
--
--
--
--
--
Outstanding at June 30, 2020
1,405,000
$
0.34
5.55
1,405,000
$
--
The weighted average remaining life and intrinsic value of the options as of June 30, 2020, was 5.55 years and zero, respectively.
During the three months ended June 30, 2019 two individuals exercised 21,427 warrants into 21,427 shares of common stock for cash of $1,071.
As of June 30, 2020 and 2019 the Company had zero and 109,276 warrants outstanding, respectively.
Weighted
Weighted
Average
Average
Remaining
Exercise
Contract
Intrinsic
Warrants
Price
Life
Value
Outstanding at March 31, 2019
237,747
$
0.20
0.25
$
18,470
Granted
--
--
--
--
Exercised
(21,427
)
0.05
--
--
Expired
(107,044
)
(0.05
)
--
--
Outstanding at June 30, 2019
109,276
0.05
0.25
---
Outstanding at March 31, 2020
--
--
--
--
Granted
--
--
--
--
Exercised
--
--
--
--
Expired
--
--
--
--
Outstanding at June 30, 2020
--
$
--
0.00
$
--
NOTE 8 - CONVERTIBLE DEBT
On December 31, 2019, the Company signed a guaranteed interest rate of 7% Convertible note for $161,250 with an OID of $11,250. The note was funded on January 3, 2020 . The note is convertible into common stock of the Company after 180 days at the rate of 60% of the lowest trading price for twenty days prior to conversion or $0.078 whichever is lower. The note may be repaid to the issuer within 180 days from issuance at variable premium rates of 115% to 135% above face value calculated on the outstanding face value of the note plus guaranteed interest .
On May 7, 2020, The Company issued an 8% $50,000 one year convertible note. The note is convertible into common stock at the lesser of $0.20 per share or 80% of the lowest closing bid five days prior to conversion.
NOTE 9 - FAIR VALUE MEASUREMENTS AND DERIVATIVE LIABILITIES
As defined in (Financial Accounting Standards Board ASC 820), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilized the market data of similar entities in its industry or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. FASB ASC 820 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).
The three levels of the fair value hierarchy are as follows:
Level 1
–
Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities, and listed equities.
Level 2
–
Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date and includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity swaps, interest rate swaps, options, and collars.
Level 3
–
Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value
As June 30, 2020, the Company believes the amounts reported for cash, payables, accrued liabilities and amounts due to related parties approximate their fair values due to the nature or duration of these instruments.
The following table represents the change in the fair value of the derivative liabilities during the quarter ended June 30, 2020:
Level 1
Level 2
Level 3
Fair value of derivative liability as of March 31, 2020
$
--
$
--
$
603,836
Change in fair value of the derivative
--
--
(438,567
)
--
--
Balance at June 30, 2020
$
--
$
--
$
165,369
The estimated fair value of the derivative liabilities at June 30, 2020 was calculated using the Binomial Lattice pricing model with the following assumptions:
Risk-free interest rate
.16
%
Expected life in years
0.25-0.85
Dividend yield
0
%
Expected volatility
211.00
%
NOTE 10 - NOTE PAYABLE
On March 25, 2020, the Company issued a secured note with face value of $50,000. The note matures on July 24, 2020 and bears interest at 7% per annum. In the event of a default the obligation increase to 150% of the outstanding balance and the interest rate increases to 12%.
NOTE 11 –COMMITMENTS AND CONTINGENCIES
On September 30, 2016, the Company entered a cell line sales agreement with the product manufacturer. Under the terms of the agreement the Company is obligated to make future payments based on the milestones of its achievements. These future payments may be as followed;
1.
$100,000 upon the initiation (first dose/first patient) of the first Phase I clinical trial (or equivalent) of a Product;
2.
$225,000 upon the initiation (first dose/first patient) of the first Phase III clinical trial (or equivalent) of a Product
3.
$225,000 payable upon the first Biologics License Application approval (or equivalent) of a product.
4.
Annual maintenance fee upon completion of phase I manufacturing or the transfer of the cell line from Catalent’s control of $50,000;
5.
A contingent sales fee upon first commercial sale of a product of 1% of sales or $150,000 whichever is greater payable quarterly.
As of June 30, 2020 $128,000 was due for the annual maintenance fee plus interest.
On July 1, 2020 the Company issued 150,000 Shares A convertible preferred shares for the conversion of $100,000 of notes payable plus $50,000 of cash. The interest on the notes was forgiven as part of the transaction.
On July 7, 2020, the Company issued 75,000 shares of common stock to one individual with a value of $7,500 for accounts payable.
On July 13, 2020, the Company issued 778,816 shares of common stock for the conversion of $50,000 of convertible debt
On July 14, 2020, the Company issued 190,000 shares of Series A convertible preferred with a value of $190,000 for cash.
On July 15, 2020, the Company issued 25,000 shares of common stock with a value of $2,500 for service.
On July 17, 2020, the Company issued 200,000 shares of Series A convertible preferred with a value of $200,000 for cash.
On July 20, 2020, the Company issued 63,000 shares of common stock with a value of $6,300 for Accounts Payable.
On July 28, 2020, the Company issued 770,713 shares of common stock with a value of $50,000 for the conversion of debt.
On July 31, 2020, the Company issued 50,000 shares of common stock with a value of $5,000 for service.
In July 2020, the Company increased its authorized common shares from 100,000,000 to 500,000,000 and its preferred shares from 10,000,000 to 50,000,000.
The Company has evaluated subsequent events to determine events occurring after June 30, 2020 through August 7, 2020 that would have a material impact on the Company’s financial results or require disclosure and have determined none exist other than those noted above in this footnote.
This report contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The Company’s actual results could differ materially from those set forth on the forward-looking statements because of the risks set forth in our filings with the Securities and Exchange Commission, general economic conditions, and changes in the assumptions used in making such forward looking statements.
Nascent Biotech, Inc (“Nascent” or the “Company”) was incorporated on March 3, 2014 under the laws of the State of Nevada. The Company is actively developing its primary asset Pritumumab for the treatment of brain cancer and pancreatic cancer. Nascent is also actively researching other cancers that have a high probability of benefiting from the therapeutic effects of Pritumumab because they share a common target. Pritumumab has shown to be very effective at low doses in previous clinical studies in Japan.
Nascent is a pre-clinical stage biopharmaceutical company that develops monoclonal antibodies for the treatment of various forms of cancer. The Company focuses on biologic drug candidates that are undergoing or have already completed initial clinical testing for the treatment of cancer and then seek to further develop those drug candidates for commercial use. Nascent currently is developing for the treatment of brain cancer and pancreatic cancer both of which we hold orphan drug status granted by the FDA.
In addition, very recently, Nascent has begun, in collaboration with academic and corporate partners, to assess the potential for pritumumab to be involved as both a treatment and a vaccine for the SARS-CoV-2 virus (responsible for COVID-19).
Overview
The Company is focused on developing pritumumab for the treatment of patients with brain cancer malignancies such as gliomas and astrocytomas. Current therapeutic strategies for brain cancer include the use of the chemotherapy, surgical intervention or radiation therapy. Because these treatments have marginal outcomes there exists a need to develop safer, more effective drugs. Temodar-the most commonly used Chemotherapeutic drug used to treat brain cancer, is attributed to only median rates of survival and many brain tumors are eligible for surgery. Moreover, even when removed, most brain tumors come back within one year post-operation. Today, with current standards of care, less than 60% of all brain cancer patients will live past the first year after diagnosis, and less than 35% of patients will live to five years. Glioblastoma, a particularly aggressive form of brain cancer that constitutes 42% of ALL brain and other nervous system cancers, has survival rates of 36.5% at 1 year and 5% at 5 years. (SEER Registry Data, September 15th, 2016 (Central Brain Tumor Registry of the United States).
On March 31, 2017, the Company filed its IND submission with the United States Food and Drug Administration (FDA) for clearance to begin Phase I clinical trials. On December 7, 2018, the Company received a letter from the FDA allowing it to use a specific lot of drug substance to begin phase 1 clinical trials. The FDA also requested additional data to remove the partial clinical hold. The Company is in the process of responding to additional data requests from the FDA requiring additional testing of the product and additional materials to answer specific questions from the FDA. The Company has an arrangement with a major oncology hospital to commence human clinical trials, first for brain cancer, both primary and metastatic.
In May of 2020, Nascent announced a research collaboration to study, both in vitro and in vivo (mouse models), the ability of pritumumab to block the SARS-Cov-2 virus from infecting cells. This notion has been raised by a published article in the scientific literature (Yu et al. Journal of Biomedical Science (2016) 23:14 DOI 10.1186/s12929-016-0234-7), which specifically mentioned cell surface vimentin (the protein to which pritumumab binds selectively) as a potential target in the treatment of conditions related to coronaviruses. These preliminary studies are on-going. Further, in May of 2020, Nascent announced a joint collaboration with Manhattan BioSolutions, Inc (NY, NY) to employ Manhattan’s platform, based on the recombinant Mycobacterium bovis Bacillus Calmette-Guerin (BCG) vaccine, but engineered to target SARS-CoV-2. BCG is a live non-pathogenic bacterium that stimulates diverse innate and adaptive immune responses and is well-known for its long safety track record as a tuberculosis vaccine. Thus, with these collaborations, Nascent is investigating the potential utility of pritumumab as both a treatment for COVID-19 and a preventive vaccine for COVID-19.
The Company recorded zero of revenue during the three month periods ended June 30, 2020 and 2019, respectively.
General and administrative expenses for the three month periods ended June 30, 2019 was $118,681 compared to $57,781 in 2020. Consulting expense for the three months periods ending June 30,2020 was $359,815 compared to $126,270 for the same period in 2019. This increase in expenses for the three months ended June 30, 2020 over the same period in 2019 was due to higher consulting fees and research and development in 2020 over 2019.
Research and development expenses for the three month periods ended June 30, 2019 was $28,792 compared to $133,752 in the same period in 2020. This increase in expenses for the three months ended June 30, 2020 over the same period in 2019 reflected increased testing required in the filing of the IND with the FDA.
Total other income incurred in the three month periods ended June 30, 2019 was $5, compared to other income of $347,377 in the same periods in 2020. Other income in 2020 consisted of a gain on the change of fair value of $438,567 offset by interest expense of $88,190 and finance costs of $3,000.
For the three month periods ended June 30, 2019, our net loss was $273,738 compared to a net loss of $203,971 for the same periods in 2020. The difference between the periods relates to higher general and administrative cost offset by the change in fair value in 2020 over 2019.
Liquidity and Capital Resources
The Company’s liquidity and capital is dependent on the capital it can raise to continue the Company’s testing and clinical trials of its product. The Company projects it must raise approximately $10-15 million to complete its Phase I and Phase II clinical studies.
There are no agreements or understandings about future loans by or with the officers, directors, principals, affiliates, or shareholders of the Company. The Company will continue to raise outside capital through loans, equity sales and possible licensing agreements. These factors raise substantial doubt about the company’s ability to continue as a going concern.
At June 30, 2020, the Company’s negative working capital of $1,397,437. Current assets consist of cash of $432 and current liabilities $1,397,869 consisting of accounts payable of $943,090 , convertible notes of $211,250 and notes payable of $50,000 plus derivative liability of $165,269.
Net cash used in operating activities in the three months period ended June 30, 2019 was $127,165 compared to net cash used of $52,786 in the same period in 2020. The variance between the same periods in 2019 and 2018 relates mainly to a lower loss in the three months period ending June 30, 2020 over the same period in 2018.
Net cash provided by financing activities for the three months period ended June 30, 2019 was $1,071 compared to $50,000 in the same period in 2020. Cash provided was a result of a note payable of $50,000 in 2020 and the conversion of warrants in 2019.
As of June 30, 2019, the Company had total assets of $432 and total liabilities of $1,397,869. Stockholders’ deficit as of June 30, 2020 was $1,397,437. This compares to a stockholders’ deficit of $2,875,704 as of March 31, 2020. Liabilities decreased in 2020 mainly to the conversion of related party accrued compensation into common stock plus lower derivative liability verses March 31, 2020.
NEED FOR ADDITIONAL FINANCING:
Our current capital needs are estimated to be approximately $10-15 million. This will take us through Phase I/II clinical trials which are scheduled to begin in the third calendar quarter of 2020.
Under the supervision and the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of June 30, 2020, of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of June 30, 2020 Such conclusion reflects the identification of material weakness as follows: (1) lack of accounting proficiency of our chief executive officer who is our sole officer and our principal accounting officer which has resulted in a reliance on part-time outside consultants to perform substantially all of our accounting functions, (2) a lack of adequate segregation of duties and necessary corporate accounting resources in our financial reporting process and accounting function, and (3) lack of control procedures that include multiple levels of review. Until we can remedy these material weaknesses, we have engaged third party consultants and accounting firm to assist with financial reporting.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
During the three months ended June 30, 2020 the Company issued 35,715 shares of common stock with a value of $5,000 for settlement of accounts payable.
During the three months ended June 30, 2020 the Company issued 677,000 shares of common stock with a value of $85,440 for service.
During the three months ended June 30, 2020 the Company issued 1,352,529 shares of common stock for the conversion of 60,000 shares of preferred stock. AS of June 30, 2020 the number of preferred shares outstanding was zero.
During the three months ended June 30, 2020 three officers and directors were issued 2,007,000 shares of common stock with a value of $190,915 for service
During the three months period ended June 30, 2020 three officers of the Company converted $1,387,872 of accrued compensation into 13,831,101 shares of common stoc.k of the Company.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NASCENT BIOTECH, INC.
Dated: August 7, 2020
By:
/s/ Sean Carrick
Sean Carrick
Principal Executive Officer
19
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