OVERVIEW
The Company was incorporated in the State of Nevada on April 18, 2013 and
established a fiscal year end of March 31.
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Merger with GSL Healthcare
On May 28, 2020, we entered into a Share Exchange Agreement (the "Share Exchange
Agreement"), by and among the Company, and GSL Healthcare, Inc., a Nevada
corporation ("GSL Healthcare"), and the holders of common stock of GSL
Healthcare, which consisted of two stockholders. The closing date occurred on
June 1, 2020.
Under the terms and conditions of the Share Exchange Agreement, we offered and
sold 27,932,271 shares of our common stock of the Company in consideration for
all of the issued and outstanding shares of common stock of GSL Healthcare. The
effect of the issuance is that former two GSL Healthcare shareholders hold
approximately 88.0% of the then issued shares of common stock of the Company,
and GSL Healthcare is now a wholly-owned subsidiary of the Company.
The merger between the Company and GSL Healthcare was treated as a reverse
capitalization for financial statement reporting purposes with GSL Healthcare
deemed the accounting acquirer and the Company deemed the accounting acquiree.
Accordingly, GSL Healthcare' assets, liabilities and results of operations
became our historical financial statements. Prior to the Share Exchange, we had
3,806,613 shares of outstanding common stock which remained outstanding as part
of the merger.
Merger with Applied Biopharma
In July 2021, we entered into and completed an Agreement and Plan of Merger (the
"Merger Agreement"), by and among our Company, AB Merger LLC, a Nevada limited
liability company and our wholly-owned subsidiary ("AB Merger"), and Applied
Biopharma, pursuant to which Applied BioPharma merged into AB Merger and the
effect of which is that, upon and assuming consummation of the Merger Agreement,
Applied Biopharma became a wholly-owned subsidiary of our Company.
We paid one share of our common stock for the acquisition of Applied Biopharma
under the terms and conditions of the Merger Agreement. The acquisition of
Applied Biopharma was considered immaterial, as Applied Biopharma had minimal
activity and had no assets or liabilities as of the date of acquisition. As
such, we have included the activity of Applied Biopharma for the period
following the completion of the Merger Agreement.
COVID-19
We continue to evaluate the impact of the COVID-19 pandemic on the industry and
our Company and have concluded that while it is reasonably possible that the
virus could have a negative effect on our financial position and results of our
operations, the specific impact is not readily determinable as of the date of
this filing. Our financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
CRITICAL ACCOUNTING POLICIES
The discussion and analysis of our financial condition and results of operations
are based on our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States
("US GAAP"). The preparation of these consolidated financial statements requires
us to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, we evaluate our estimates based on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We have identified the
policies below as critical to our business operations and to the understanding
of our financial results:
Deferred Tax Assets and Income Tax Provision
We account for income taxes under Section 740-10-30 of the FASB Accounting
Standards Codification. Deferred income tax assets and liabilities are
determined based upon differences between the financial reporting and tax bases
of assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Deferred
tax assets are reduced by a valuation allowance to the extent we conclude it is
more likely than not that the assets will not be realized. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in the statements of operations in the period
that includes the enactment date.
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We adopted section 740-10-25 of the FASB Accounting Standards Codification
("Section 740-10-25"). Section 740-10-25 addresses the determination of whether
tax benefits claimed or expected to be claimed on a tax return should be
recorded in the financial statements. Under Section 740-10-25, we may recognize
the tax benefit from an uncertain tax position only if it is more likely than
not that the tax position will be sustained on examination by the taxing
authorities, based on the technical merits of the position. The tax benefits
recognized in the financial statements from such a position should be measured
based on the largest benefit that has a greater than fifty percent (50%)
likelihood of being realized upon ultimate settlement. Section 740-10-25 also
provides guidance on de-recognition, classification, interest and penalties on
income taxes, accounting in interim periods and requires increased disclosures.
Recent Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to
have a significant impact on its results of operations, financial position or
cash flow.
RESULTS OF OPERATIONS
Seven Months Ended March 31, 2022 as compared to Seven Months Ended March 31,
2021:
We recorded no revenues during the seven months ended March 31, 2022 and 2021.
For the seven months ended March 31, 2022, we incurred total professional fees
of $2,010,442 as compared to $738,382 for the seven months ended March 31, 2021.
The increase was mainly related to $1,770,000 non-cash stock compensation
related to our issuance of our common stock in exchange for services as compared
to $381,150 for the seven months ended March 31, 2021.
For the seven months ended March 31, 2022, we incurred total research and
development expenses of $141,000 as compared to $226,220 for the seven months
ended March 31, 2021. The decrease of $85,220 primarily related to availability
of funds.
For the seven months ended March 31, 2022, we recorded $49,439 related to a
provision for excess inventory that we deemed not sellable. We did not incur a
similar provision for excess inventory during our seven months ended March 31,
2021.
For the seven months ended March 31, 2022, general and administrative expenses
were $90,382 as compared to $40,382 for the seven months ended March 31, 2021.
The increase was related to royalties we paid for a license.
For the seven months ended March 31, 2022, cash used from our operations was
$1,623 of cash as compared to a use of cash of $397,401 during the seven months
ended March 31, 2021. The decrease in cash used in our operations related
primarily to obtaining funding from our related parties to pay operating
expenses as compared to prior year in which we had a higher cash balance that
was available to pay operating costs. In addition, we received $180,000 from the
proceeds of our sale of common stock during the seven months ended March 31,
2021, which did not occur during the seven months ended March 31, 2022. Further,
we did not incur or obtain cash from investing activities during the seven
months ended March 31, 2022 and 2021, respectively.
Year ended August 31, 2021 and for the period from inception (April 15, 2020) to
August 31, 2020
GSL Healthcare, our now principal business and historical financial statements
of our company, began operations on April 15, 2020. Thus, a comparable full 12
month period does not exist. The following are our results for the year ended
August 31, 2021 and for the period from inception (April 15, 2020) to August 31,
2020:
We recorded minimal revenues of $1,240 since our inception on April 15, 2020.
For the year ended August 31, 2021, we incurred total operating expenses of
$1,341,031, consisting of professional fees of $909,483, which included $381,150
of non-cash common stock expense related to shares we issued for services,
research and development expenses of $365,132, and general and administrative
expenses of $66,416. We also incurred interest income of $5 during the year
ended August 31, 2021.
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For the period from inception (April 15, 2020) to August 31, 2020, we incurred
total operating expenses of $344,389, consisting of professional fees of
$227,055, research and development expenses of $94,100, and general and
administrative expenses of $23,234. We also incurred interest income of $31
during the period from inception (April 15, 2020) to August 31, 2020.
For the year ended August 31, 2021, we used $420,982 of cash in our operations
and did not incur or obtain cash from investing and obtained $180,000 from
financing activities related to our issuance of common stock for cash.
For the period from inception (April 15, 2020) to August 31, 2020, we used
$368,774 of cash in our operations, $17 in cash from an acquisition, and
received $611,507 from the issuance of our common stock.
Liquidity and Capital Resources
Our consolidated financial statements have been prepared assuming that we will
continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of
business. As reflected in our consolidated financial statements for the seven
months ended March 31, 2022, we had an accumulated deficit, we did not incur any
revenue and we had a net loss along with no cash generated from our operations.
In addition, we owe our vendors and related parties $1,092,876 as of March 31,
2022. These factors raise substantial doubt about our ability to continue as a
going concern.
We are attempting to commence operations and generate sufficient revenue;
however, our cash position is not sufficient to support our daily operations. As
such, we will need to raise funds to complete our plan of operation and fund our
ongoing operational expenses for the next 12 months. Additional funding will
likely come from equity financing from the sale of our common stock or debt
financing. If we are successful in completing an equity financing, existing
shareholders will experience dilution of their interest in our Company and if we
obtain debt financing, the terms of any such debt financing may not be favorable
to existing shareholders. We cannot provide investors with any assurance that we
will be able to raise sufficient funding from the sale of our common stock or
obtaining debt to fund our development activities and ongoing operational
expenses. In the absence of such financing, our business will likely fail. There
are no assurances that we will be able to achieve further sales of our common
stock or any other form of additional financing. If we are unable to achieve the
financing necessary to continue our plan of operations, then we will not be able
to continue our development to complete our plan of operation and our business
will fail.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on the financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to stockholders
Subsequent Events
In accordance with ASC 855, we have analyzed our operations subsequent to March
31, 2022 through the date these financial statements were issued, and have
determined that we don't have any other material subsequent events to disclose
in these financial statements.
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