ACTAVIA LIFE SCIENCES, INC. Forward-Looking Statements
This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the Company's Annual Report on Form 10-K/A filed onJune 10, 2022 under the heading "Risk Factors," which are incorporated herein by reference. We assume no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Unless expressly indicated or the context requires otherwise, the terms
"Rasna,"," the "Company," "we," "us," and "our" refer to
Company Background To date, we have devoted substantially all of our resources to research and development efforts relating to our therapeutic candidates, including conducting clinical trials and developing manufacturing capabilities, in-licensing related intellectual property, protecting our intellectual property and providing general and administrative support for these operations. Since our inception, we have funded our operations primarily through the issuance of equity securities and convertible notes.
We anticipate that our expenses will increase substantially if and as we:
? initiate new clinical trials;
? seek to identify, assess, acquire and develop other products, therapeutic
candidates and technologies;
? seek regulatory and marketing approvals in multiple jurisdictions for our
therapeutic candidates that successfully complete clinical studies;
? establish collaborations with third parties for the development and
commercialization of our products and therapeutic candidates;
? make milestone or other payments under our agreements pursuant to which we
have licensed or acquired rights to intellectual property and technology;
? seek to maintain, protect, and expand our intellectual property portfolio;
? seek to attract and retain skilled personnel;
? incur the administrative costs associated with being a public company and
related costs of compliance;
? create additional infrastructure to support our operations as a commercial
stage public company and our planned future commercialization efforts; and
? experience any delays or encounter issues with any of the above.
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We expect to continue to incur significant expenses and increasing losses for at
least the next several years. Accordingly, we anticipate that we will need to
raise additional capital in addition to the net proceeds from this offering in
order to obtain regulatory approval for, and the commercialization of our
therapeutic candidates. Until such time that we can generate meaningful revenue
from product sales, if ever, we expect to finance our operating activities
through public or private equity or debt financings, government or other
third-party funding, marketing and distribution arrangements and other
collaborations, strategic alliances and licensing arrangements or a combination
of these approaches. If we are unable to obtain funding on a timely basis, we
may be required to significantly curtail, delay or discontinue one or more of
our research or development programs or the commercialization of any approved
therapies or products or be unable to expand our operations or otherwise
capitalize on our business opportunities, as desired, which could materially
adversely affect our business, financial condition and results of operations.
We only have one segment of activity, which is that of a biotechnology company
focused on targeted drugs to treat diseases in oncology and immunology, mainly
focusing on the treatment of leukemia and lymphoma.
The Company is currently looking into raising funds to progress its R&D pipeline.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles inthe United States of America , or US GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. In accordance with US GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Basis of preparation
The accompanying financial statements have been prepared in conformity with US
GAAP. Any reference in these notes to applicable guidance is meant to refer to
US GAAP as found in the Accounting Standards Codification ("ASC") and Accounting
Standards Updates ("ASU") of the Financial Accounting Standards Board ("the
FASB").
Liquidity and Going Concern
We are subject to a number of risks similar to those of other pre-commercial stage companies, including our dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with research, development, testing, and obtaining related regulatory approvals of its pipeline products, suppliers and collaborators, successful protection of intellectual property, competition with larger, better-capitalized companies, successful completion of our development programs and, ultimately, the attainment of profitable operations are dependent on future events, including obtaining adequate financing to fulfill our development activities and generating a level of revenues adequate to support our cost structure.
We have no present revenue and have experienced net losses and significant cash outflows from cash used in operating activities since inception, and atJune 30, 2022 , had a working capital deficit of$1,785,749 . 13 We expect to continue to incur net losses and have significant cash outflows for at least the next twelve months and will require significant additional cash resources to launch new development phases of existing products in its pipeline. In the event that the Company is unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about our ability to continue as a going concern one year from the date of this filing. The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern one year from the date of this filing. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure. Results of Operations
The following paragraphs set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.
Results of Operations for the Three months ended
The following table sets forth the summary statements of operations for the
periods indicated:
For the
Three Months Ended
June 30,
2022 2021
(Unaudited) (Unaudited)
Revenue $ - $ -
Cost of revenue - -
Gross profit - -
Operating (income)/expenses:
General and administrative 110,830 64,573
Research and development 17,030 -Gain on settlement of accounts payable - - Gain on settlement of related party payable - - Total operating (income)/ expenses 127,860
64,573
Income/ (loss) from operations (127,860 ) (64,573 ) Other expense: Accretion of debt discount (589,868 ) (40,909 ) Interest expense (2,264 ) (18,108 ) Gain on derivative liability 73,569 - Other expense (518,563 ) (59,017 ) Net loss$ (646,423 ) $ (123,590 ) Revenues
There were no revenues for the three months ended
Operating Income/(Expenses) Operating expenses, consisting of research and development costs, consultancy fees, legal and professional fees and general and administrative expenses, for the three months endedJune 30, 2022 increased to an operating expense of$127,860 from an operating expense of$64,573 for the three months endedJune 30, 2021 , an increase of$63,287 . Other expense During the three months endedJune 30, 2022 , other expense increased to$518,563 from other expenses of$59,017 for the three months endedJune 30, 2021 . This is predominantly due to additional accretion of debt discount of$589,868 offset by a gain on the adjustment of a derivative liability of$73,569 . 14 Net loss
Net loss for the three months ended
Results of Operations for the Nine months ended
The following table sets forth the summary statements of operations for the
periods indicated:
For the Nine Months Ended June 30,
2022 2021
(Unaudited) (Unaudited)
Revenue $ - $ -
Cost of revenue - -
Gross profit - -
Operating (income)/expenses:
General and administrative 309,527 268,397
Research and development 43,389 44,739
Gain on settlement of accounts payable (150,000 ) -
Gain on settlement of related party payable (375,000 ) -
Total operating (income)/ expenses (172,084 ) 313,136
Income/ (loss) from operations 172,084 (313,136 )
Other expense:
Accretion of debt discount (870,421 ) (68,182 )
Expenses in connection with modification and extinguishment of convertible promissory notes
- (123,718 )
Interest expense (41,265 ) (56,824 )
Gain on derivative liability 112,538 -
Foreign currency transaction (loss)/gain - 48 Other expense (799,148 ) (248,676 ) Net loss$ (627,064 ) $ (561,812 ) Revenues
There were no revenues for the nine months ended
Operating Income/(Expenses) Operating expenses, consisting of research and development costs, consultancy fees, legal and professional fees and general and administrative expenses, for the nine months endedJune 30, 2022 decreased to an operating income of$172,084 from an operating loss of$313,136 for nine months endedJune 30, 2021 , a decrease of$485,220 . The decrease is predominantly due to a$150,000 and$375,000 gain on the settlement of accounts payable and related party payable, respectively, due to the release of payment obligations to TES Pharma S.R.L and Eurema Consulting S.R.L (and their affiliates) as all intellectual property rights and assignments relating to NPM1 were returned to them by the Company, offset by increased general and administrative expenses of$41,130 and decreased research and development patent expenses of$1,350 . Other expense During the nine months endedJune 30, 2022 , other expense increased to$799,148 from$248,676 for the nine months endedJune 30, 2021 . This is predominantly due to additional accretion of debt discount by$802,239 offset by a gain on the adjustment of a derivative liability of$112,538 , decrease in interest expense of$15,559 and a saving of expenses in connection with modification and extinguishment of convertible promissory notes incurred in 2021 of$123,718 . 15 Net loss
Net loss for the nine months endedJune 30, 2022 increased to$627,064 from a net loss of$561,812 for the nine months endedJune 30, 2021 , a movement of$65,252 . This is predominantly due to$150,000 and$375,000 gain on the settlement of accounts payable and related party payable, respectively, due to the release of payment obligations due to TES Pharma S.R.L and Eurema Consulting S.R.L (and their affiliates) as all intellectual property rights and assignments relating to NPM1 were returned to them by the Company, offset by increased general and administrative expenses of$41,130 and decreased research and development patent expenses of$1,350 . There was additional accretion of debt discount by$802,239 offset by a gain on the adjustment of a derivative liability of$112,538 , decrease in interest expense of$15,559 and a saving of expenses in connection with modification and extinguishment of convertible promissory notes incurred in 2021 of$123,718 .
Liquidity and Capital Resources
We believe we will require significant additional cash resources to continue to launch new development phases of existing products in the Company's pipeline. In the event that we are unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience significant dilution. Any debt financing, if available, may (i) involve restrictive covenants that impact our ability to conduct, delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize its self on unfavorable terms. OnNovember 18, 2021 , the Company entered into an eleventh 12% Convertible Promissory Note withPanetta Partners Ltd. (the "Holder") with a maturity date ofDecember 31, 2023 . The Holder provided the Company with$30,000 in cash. The Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company's common stock at a conversion price equal to the lower of (i)$0.01 per share or (ii) the price of the next equity financing, which raises at least US$1,000,000 , subject to adjustments noted within the Agreement. The number of shares issuable upon a conversion shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of the Note to be converted by (y) the Conversion Price. The Note requires the Company to reserve and keep available out of its authorized and unissued shares of common stock the amount of shares that would be issued upon conversion of the Note, which includes the outstanding principal amount of the Note and interest accrued and to be accrued through the date of maturity. OnNovember 29, 2021 , the Company entered into another 12% Convertible Promissory Note again withPanetta Partners Ltd. (the "Holder") pursuant to which the Company issued a Convertible Promissory Note to the Holder. The Holder provided the Company with$55,000 in cash. All other terms were the same as
the note before. OnFebruary 8, 2022 , the Company entered into the thirteenth 16% Convertible Promissory Note again withPanetta Partners Ltd. (the "Holder") pursuant to which the Company issued a Convertible Promissory Note to the Holder. The Holder provided the Company with$30,000 in cash. The Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company's common stock at a conversion price equal to the lower of (i)$0.005 per share or (ii) the price of the next equity financing, which raises at least US$1,000,000 , subject to adjustments noted within the Agreement. The number of shares issuable upon a conversion shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of the Note to be converted by (y) the Conversion Price. The Note requires the Company to reserve and keep available out of its authorized and unissued shares of common stock the amount of shares that would be issued upon conversion of the Note, which includes the outstanding principal amount of the Note and interest accrued and to be accrued through the date
of
maturity.
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On March 2, 2022 , the Company entered into the fourteenth 16% Convertible
Promissory Note again with Panetta Partners Ltd. (the "Holder") pursuant to
which the Company issued a Convertible Promissory Note to the Holder. The Holder
provided the Company with $45,000 in cash. All other terms were the same asthe thirteenth note. OnMay 13, 2022 , all outstanding notes with a principal value of$828,500 and accrued interest of$170,150 were converted into 111,071,358 ordinary shares with a par value of$0.01 . Capital Resources
The following table summarizes total current assets, liabilities and working capital deficiency as of the periods indicated:
June 30, September 30,
2022 (Unaudited) 2021 (unaudited) Change
Current assets $ 71,869 $ 44,577 $ 27,292
Current liabilities 1,857,618 2,798,389 940,771
Working capital deficit $ (1,785,749 ) $ (2,753,812 ) $ 968,063 We had a cash balance of
Liquidity
The following table sets forth a summary of our cash flows for the periods
indicated:
For the Nine months ended
June 30,
Increase/
2022 2021 (Decrease)
Net cash used in operating activities
(131,262 ) Net cash used in investing activities $ - -
-
Net cash provided by financing activities
(168,193 )
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$122,139 for the nine months endedJune 30, 2022 compared to$253,401 for the nine months endedJune 30, 2021 . The net loss of$627,064 for nine months endedJune 30, 2022 was partially offset primarily by a gain on derivative liability of$112,538 , gain on the settlement of accounts payable of$150,000 and a gain on the settlement of a related party payable of$375,000 adjusted for accretion of debt discount of$870,421 , interest expense of$41,266 and changes in operating assets and liabilities of$230,766 . 17
Net Cash Provided by Financing Activities
Net cash provided by financing activities consists of proceeds from the issuance of convertible notes of$160,000 offset by payments for on a note payable of$38,193 for the nine months endedJune 30, 2022 compared to proceeds from the issuance of convertible notes of$290,000 for the nine months endedJune 30, 2021 .
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