The following discussion and analysis are intended to help you understand our financial condition and results of operations for the three-month period ended March 31, 2020. You should read the following discussion and analysis together with our audited consolidated financial statements and the notes to the consolidated financial statements included under Part I, Item 1 in this report. Statements in the following discussion that are not historical in nature are forward looking statements, and inherently subject to risk. Our future financial condition and results of operations will vary from our historical financial condition and results of operations described below based on a variety of factors. You should carefully review the risks described under Part II, Item 1A and elsewhere in this report, which identify certain important factors that could cause our future financial condition and results of operations to vary from our historical operations and from our current expectations of future results.





Overview

We are a clinical stage biotechnology company focused on the clinical and commercialization of angiogenic gene therapy biotherapeutics for strategic niche markets, primarily for the treatment of cardiovascular disease. Our technology platform is designed to biologically activate the human body's innate angiogenic healing process to stimulate the growth of microvascular networks for patients with ischemic cardiovascular, cerebral, and other medical conditions and diseases, as well as for advanced tissue engineering applications. Historically we have developed FDA registered and sold various medical devices, products and product candidates.

In May 2020, after the period covered by this report, we entered into a Preferred Stock Purchase Agreement with Nostrum Pharmaceuticals, LLC ("Nostrum"), selling Nostrum 1,700,000 shares of our newly authorized Series B Convertible Preferred Stock in exchange for $1.7 million. In addition, to further support the operations of the Company for the period May 2021 through June 2021, subsequent to this reporting period, Nostrum invested an additional $292,000, and the Company will issue and additional $292,00 of Series B Preferred Stock. Nostrum is the parent company of Nostrum Laboratories, Inc., a privately held pharmaceutical company engaged in the formulation, commercialization. Marketing and sale of specialty pharmaceutical products and controlled release, orally administered, branded and generic drug products. We will use the proceeds from the sale of the Series B Convertible Preferred Stock to fund working capital requirements in preparation for conducting the U.S. FDA-approved Phase 3 clinical trial for our Generx product candidate. We believe that Nostrum's assets and experience in the formulation and commercialization of pharmaceutical products will facilitate the administration and completion of the Phase 3 clinical trial for Generx on a cost-effective basis.

Our lead product candidate, Generx, is a first in class, single dose, angiogenic gene therapy product candidate that is designed to improve blood flow and to increase the supply of oxygenated blood in patients with refractory angina and myocardial ischemia due to advanced coronary artery disease. Generx has been designed to improve perfusion by promoting the formation of functional coronary collateral blood vessels within the heart through enlargement of existing arterioles (arteriogenesis) and formation on new capillary vessels (angiogenesis). This process, termed "medical revascularization," represents a fundamentally new mechanism of action that involves the stimulation of the formation of new biological structures in the heart, as opposed to currently available pharmacologic therapies, which only address the symptoms of angina, or mechanical intervention. Results from prior clinical studies demonstrate perfusion improvements with Generx similar to that achieved with coronary artery bypass surgery or stents, but in a significantly less costly and less invasive procedure.

Our current business is focused exclusively on the development of Generx, a gene therapy product candidate targeted at men and women with advanced ischemic heart disease and refractory angina. We have received FDA approval and Fast Track status for a Phase 3 clinical trial. We do not currently have any other products or other product candidates and have not generated any revenues from operations for the three-month period ended March 31, 2020. Our operations currently comprise one segment for financial reporting purposes.





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Critical Accounting Policies and Estimates

Our condensed consolidated financial statements included in this report and in our Annual Report on Form 10-K have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The preparation of our financial statements in accordance with U.S. GAAP requires that we make estimates and assumptions that affect the amounts reported in our financial statements and their accompanying notes.

Accounting estimates or assumptions are inherently subject to change, and certain estimates or assumptions are difficult to measure or value. We base our estimates on our historical experience, industry standards, and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions. If results differ materially from our estimates, we will make adjustments to our financial statements prospectively as we become aware of the necessity for an adjustment.

We believe that the following accounting policies involve the most complex judgments concerning assumptions and estimates with the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see the notes to our consolidated financial statements included in the Annual Report on Form 10-K of 2019.





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Results of Operations

For the Three Months Ended March 31, 2020, compared to the Three Months Ended March 31, 2019

The following tables sets forth our results of operations for the three-month period ended March 31, 2020, and 2019, and the relative dollar and percentage change between the two periods.





                                            Period Ended                     Change
                                              March 31,                  (2020 to 2019)
                                         2020           2019           ($)             %
Operating Expenses:
Research and development              $   46,605     $   63,379        (16,774 )        (26.5 )%

Selling, general and administrative 106,278 179,599 (73,321 ) (40.8 )% Total Operating Expenses

                 152,883        242,978        (90,095 )        (37.1 )%
Income (Loss) from Operations           (152,883 )     (242,978 )       90,095          (37.1 )%
Other Income (Expense):
Interest Expense                         (15,931 )      (10,129 )       (5,802 )         57.3 %
Total Other Income (Expense)             (15,931 )      (10,129 )       (5,802 )         57.3 %
Net Income (Loss)                       (168,814 )     (253,107 )       84,293          (33.3 )%
Net (Loss) attributable to the
non-controlling interest                 (19,051 )      (26,738 )        7,686          (28.7 )%
Net Income (Loss) attributable to
the controlling interest                (149,763 )     (226,369 )       76,607          (33.8 )%

Research and development expenses, for the three-month period ended March 31, 2020 compared to 2019, decreased by $16,774 or 26.5% mainly due to a reduction in employee salary and benefits expense of $4,274 as the Company discontinued payment of benefits. In addition, the collaboration for research activities with New York University was terminated decreasing research and development fees by $12,500 per quarter. The reduction in expenses is consistent with the Company's restructuring plan to focus on the development of Generx, the sale of non-core products and an overall reduction in expenses while management focused company resources on raising capital to provide the resources to advance the development and commercialization of Generx.

Selling, general and administrative expenses decreased, for the period ended March 31, 2020 by $73,321 or 40.8% compared to 2019 mainly due to a reduction in employee salary and benefits of $56,875. In addition, there was a decrease in the office expenses of $14,899 mainly due to a reduction in depreciation expense as assets became fully depreciated and an overall reduction of $1,547 in other miscellaneous expenses as the company focused time and resources on raising capital.

Interest expenses increased for the period ended March 31, 2020 by $5,802 compared to 2019 primarily as a result of an increase in the total notes payable of $240,000 received from Nostrum in September 2019 and January 2020, which bears interest at 6% per annum.

Liquidity and Capital Resources





The following table summarizes our liquidity and working capital position at
March 31, 2020 and 2019:



                                      March 31,
                                2020             2019
Cash and Cash Equivalents   $      2,926     $      4,405
Other Current Assets             111,988           13,660
Accounts Payable               1,040,045        1,866,814
Other Current Liabilities      3,862,466        4,078,121
Working Capital               (4,787,597 )     (5,926,870 )




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Following the period covered by this report:





  ? The Company entered into a number of agreements with vendors to restructure
    amounts payable, reducing the outstanding balance of accounts payable.

  ? In May 2020, the Company secured $1.7 million financing from the sale of our
    newly authorized Series B Convertible Preferred Stock to Nostrum. We will use
    the proceeds from the sale of the Series B Convertible Preferred Stock to fund
    working capital requirements in preparation for conducting a Phase 3 clinical
    trial in the U.S. for our Generx product candidate.

The following table summarizes our operating, investing, and financing activities for the three-month period ended March 31, 2020, and 2019:





                                                           Period ended March 31,
                                                             2020            2019

Net cash generated from (used in) operating activities $ (93,857 ) $ (40,344 ) Net cash used in investing activities

                               -              -

Net cash generated from/(used in) financing activities 96,383 (37,366 ) Net increase/(decrease) in cash and cash equivalents

            2,526        (77,710 )

The increase of $53,513 in net cash used in operating activities was primarily due to legal costs paid in connection with May 2020 Nostrum financing. These legal costs were capitalized as a prepaid asset until closing.

We had no net cash used in investing activities for the three months ended March 31, 2020, and 2019. On March 31, 2020 we did not have any significant capital expenditure requirements.

The increase of $133,749 in net cash provided by financing activities was primarily due to the Nostrum financing in January 2020 of $120,000 and accrued and unpaid interest on notes payable of approximately $15,931, which was offset by the payments made to loans from officer of approximately $35,375.

The Company anticipates that negative cash flows from operations will continue for the foreseeable future. We have yet to generate positive cash flows from operations and we are essentially dependent on external funding sources to support the Company's research, development and commercialization activities. We do not have any unused credit facilities. We intend to pursue sources of working capital from non-dilutive funding channels to support the Company's operations that could include, but not be limited to, (1) up to $3.350 million from potential royalties from commercial sales of Excellagen® from certain geographic regions, including the United States; (2) Federal government sponsored research grants; (3) agreements and arrangements covering distributor and strategic partnerships and drug royalty agreements based on the commercial sale of Generx following the successful completion of the planned FDA-cleared, Phase 3 AFFIRM clinical study and FDA registration in the U.S., and additional registrations to market and sell Generx in other countries internationally. At an appropriate time, with favorable market conditions, and an appropriate enterprise value reflective of the Company's clinical status and the Generx [Ad5FGF-4] economic potential, we could also consider the sale of equity and debt securities in a variety privately negotiated structured transactions or public capital market offerings.

Off-Balance Sheet Arrangements

As of March 31, 2020, the Company did not have any significant off-balance sheet debt nor did we have any transactions, arrangements, obligations (including contingent obligations) or other relationships with any unconsolidated entities or other persons that have or are reasonably likely to have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenue or expenses material to investors.

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