BIOXYTRAN, INC. The following discussion and analysis is based on, and should be read in conjunction with, the audited financial statements and the notes thereto for the two years endedDecember 31, 2020 included in our Annual Report on Form 10-K as filed with theSecurities and Exchange Commission onApril 9, 2021 . This discussion contains forward-looking statements. These statements are often identified by the use of words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate," or "continue," and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so, except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q. Overview We do not currently have sufficient capital resources to fund operations. To stay in business and to continue the development of our products, we will need to raise additional capital through public or private sales of our securities, debt financing or short-term bank loans, or a combination of the foregoing. We believe that if we can raise$3,700,000 , we will have sufficient working capital to repay the ten convertible notes and develop our business over the next approximately 15 months. At funding raised that is significantly less than$3,700,000 , we can likely repay the ten convertible notes and continue to develop our business over the same 15-month period, but funding at that level will delay the development of our technology and business.Bioxytran, Inc. is headquartered inNeedham, Massachusetts . The Company's initial product pipeline is focused on developing and commercializing therapeutic molecules for stroke. BXT-25 will be designed to be an injectable anti-necrosis drug specifically designed to treat a person immediately after that person suffers an ischemic stroke. The drug is designed to be injected intravenously to travel to the lungs to pick up oxygen molecules to carry to the brain. Like a red blood cell, the drug will cross the blood brain barrier, which is a protective semi-permeable membrane allowing some material to cross but preventing others from crossing. BXT-25 will be designed to diffuse oxygen into the brain tissues. We expect the BXT-25 molecule to be 5,000 times smaller than a red blood cell. Our Subsidiary is continuing our clinical trials with a candidate named, ProLectin-Rx a complex polysaccharide derived from galactomannan and pectin respectively, that binds to, and blocks the activity of galectin-1 and -3, a type of galectin. Galectins are a member of a family of proteins in the body called lectins. These proteins interact with carbohydrate sugars located in, on the surface of, and in between cells. This interaction causes the cells to change behavior, including cell movement, multiplication, and other cellular functions. The interactions between lectins and their target carbohydrate sugars occur via a carbohydrate recognition domain, or CRD, within the lectin. Galectins are a subfamily of lectins that have a CRD that bind specifically to ß-galactoside proteins. Galectins have a broad range of functions, including regulation of cell survival and adhesion, promotion of cell-to-cell interactions, growth of blood vessels, regulation of the immune response and inflammation. During viral infections galectins are upregulated and downregulated based on the type of virus. ProLectin-M's clinical data shows non-toxicity and efficacy for treatment of mild to moderate COVID-19. In our initial Phase I/II clinical trial are published as a peer-reviewed scientific report in theJournal of Vaccines & Vaccinations : https://www.longdom.org/open-access/galectin-antagonist-use-in-mild-cases-of-sarscov2-pilot-feasibility-randomised-open-label-controlled-trial-61087.html. The Company is currently working on a Phase III clinical trial with the CDCSO inIndia , and is preparing its IND for a Phase III clinical trial with the FDA, soon to be followed by a Phase III submission with the EMEA. The clinical trials are expected to take place in July through August, 2021. Further, the Company is also preparing an IND for a second drug candidate ProLectin-I with similar galactin blocking capabilities as the oral drug, ProLectin-M, but IV-injectable for severe cases of COVID-19. The initial Phase I/II clinical trial is planned for August through October, 2021. The described clinical trials are subject to additional funding. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited resources and operating history. As described in Note 7 of the financial statements, the Company has currently four convertible loans outstanding at a total face value of$2,165,000 .
The future of the Company is dependent upon its ability to obtain financing to develop its new business opportunities and support the cost of the drug development including clinical trials and regulatory submission to the FDA.
17
Potential Impact of the Covid-19 Pandemic in December 2019 , a strain of novel
coronavirus (now commonly known as Covid-19) was reported to have surfaced in
Wuhan, China . Covid-19 has since spread rapidly throughout many countries, and,
on March 12, 2020 , the World Health Organization declared Covid-19 to be a
pandemic. In an effort to contain and mitigate the spread of Covid-19, many
countries, including the United States , Canada and China , have imposed
unprecedented restrictions on travel, and there have been business closures and
a substantial reduction in economic activity in countries that have had
significant outbreaks of Covid-19. Covid-19 may have a future material impact on
our results of operation with respect to product development and clinical
trials. However, significant uncertainty remains as to the potential impact of
the Covid-19 pandemic on our operations, and on the global economy as a whole.
It is currently not possible to predict how long the pandemic will last or the
time that it will take for economic activity to return to prior levels. We do
not yet know the full extent of any impact on our business or our operations,
however, we will continue to monitor the Covid-19 situation closely, and we
intend to follow health and safety guidelines as they evolve.
Management plans to seek additional capital through private placements and
public offerings of its common stock. There can be no assurance that the Company
will be successful in accomplishing its objectives. Without such additional
capital or the establishment of strategic relationships with established
pharmaceutical companies, the Company may be required to cease operations. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts of
and classification of liabilities that might be necessary in the event the
Company cannot continue operations.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021
We are a clinical stage company. Historically, Bioxytran was engaged in
formation, fund raising and identifying and consulting with the scientific
community regarding the development, formulation and testing of its products as
of the fourth quarter of 2020 the Company has engaged in research and
development activities through its Subsidiary, Pharmalectin, Inc. , developing
the ProLectin-Rx.
Research and Development
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2021 2020 2021 2020Research and development: Process development$ 166,800 $ -$ 339,000 $ - Product development 109,000 - 221,600 - Regulatory 39,956 - 59,189 - Clinical trials 274,715 - 308,715 - Project management 128,181 - 137,181 - Total research and development$ 718,652 $ -$ 1,065,685 $ -
As a result of the development of two drugs in the fourth quarter of 2020, we
are rapidly expanding our research and development (R&D) expenses, the trend
is intended to be maintained over the upcoming periods.
General and Administrative
Three months ended Six months ended
June 30, June 30, June 30, June 30,
2021 2020 2021 2020General and administrative expenses:
Payroll and related expenses
Costs for legal, accounting and other professional services 35,991 20,788 95,114 43,361 Marketing expense - 124 3,500 9,613 Miscellaneous expenses 41,086 33,506
493,810 75,986
Total general and administrative
The significant increase in Payroll and related expenses for the three and
six months ended
salaries for the Company's management.
The Costs for legal, accounting and other professional services for the three
and six months ended
lawsuit, and an uptake in contract review related to our drug development.
Sales and marketing expense for the six months endedJune 30, 2021 were$3,500 , as compared to$9,613 for the six months endedJune 30, 2020 . 18
The significant increase in miscellaneous G&A expenses during the six months
ended
the Company for Breach of Contact, awarding the plaintif damages in the amount of$420,750 . Stock-based Compensation Three months ended Six months ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020
Compensation expense to BoD and Management
$ 343,782 $ 11,047 Compensation expense to consultants 35,300 691 481,826 153,945 Total compensation expense$ 51,050 $ 9,491 $ 825,608 $ 164,992
Stock-based compensation mounted to
2021. The stock-based compensation for the three months ended
was
ended June, 2021. The stock-based compensation for the six months endedJune 30, 2020 was$165,992 . Other expenses Three months ended Six months ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Other (expenses): Interest expense (84,217 ) (740,424 ) (171,627 ) (848,154 ) Debt discount amortization (17,103 ) (76,265 ) (17,103 ) (242,987 ) Total other income (expenses)$ (101,320 ) $ (816,689 ) $ (188,730 ) $ (1,091,141 )
During the three months ended
amortization of debt discount and the interest expense was 84,217. During the
three months ended
amortization of debt discount while the interest expense was
interest for the convertible notes outstanding amounted to
During the six months ended
amortization of debt discount, as compared to,
amortization of for the six months ended
convertible notes amounted to
pre-pay fee of
default penalty of$666,456 ) for the six months endedJune 30, 2020 . 19 Non-Controlling Interest Three months ended Six months ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Net loss attributable to the non-controlling interest$ 246,935 $ -$ 401,549 $ -
For the three months ended
attribution of
six months endedJune 30, 2021 there was a non-controlling interest attribution of$401,549 . No attribution was made as atJune 30, 2020 . Net Loss Three months ended Six months ended June 30, June 30, June 30, June 30, 2021 2020 2021 2020 Net loss attributable to Bioxytran$ (896,701 ) $ (928,598 ) $ (2,518,408 ) $ (1,469,093 ) Loss per common share, basic and diluted$ (0.01 ) $ (0.01 ) $ (0.02 ) $ (0.01 ) Weighted average number of common shares outstanding, basic 103,371,579 97,031,673 101,753,891 92,144,316 diluted 119,868,472
The Company generated a net loss for the three months ended
Company generated a net loss of
for the six months ended
six months endedJune 30, 2020 , the Company generated a net loss of$1,469,093 . CASH-FLOWS Six months endedJune 30 ,June 30, 2021 2020
Net cash used in operating activities
Net cash used in investing activities (8,954 ) -
Net cash provided by financing activities 1,765,000 31,052
Cash, beginning of period 41,688 169,628 Cash, end of period 388,043 4,246 Net increase (decrease) in cash$ 346,355 $ (165,382 )
Net cash used in operating activities was
months ended
research and development activities the company started engaging in during
the fourth quarter on 2020.
In the six months ended
filing a patent, and
Cash flows from financing activities were
months ended
investments in the Company's Subsidiary, and 1,165,000 through the issuance
of a convertible note, exercisable at
The available cash was
June 30, 2021 and 2020, respectively. 20 LIQUIDITY AND CAPITAL RESOURCES Current Assets June 30, December 31, 2021 2020 Current assets: Cash$ 388,043 $ 41,688 Pre-paid expenses 499,300 274,715 Total current assets$ 887,343 $ 316,403
As of
Research Organization (CRO) for the upcoming clinical trials. Current Liabilities June 30, December 31, 2021 2020 Current liabilities: Accounts payable and accrued expenses$ 151,400 $
348,127
Accounts payable related party -
307,176
Convertible notes payable, net of premium and discount, related party 1,000,000
-
Convertible notes payable, net of premium and discount 1,062,253 1,612,356 Other short-term debt - - Total current liabilities$ 2,213,673 $ 2,267,659 We had total liabilities of$2,213,673 , which were all current, which consisted of$151,420 in accounts payable and accrued expenses, and
total liabilities were
and accrued expenses (of which
$1,612,356 in the form of ten defaulted convertible loans.
June 30 ,December 31, 2021 2020
Net working capital
Accumulated deficit
At
accumulated deficit of
had net working capital of negative
to continue our business operations for the next 15 months.
Cash Proceeds from Financing Activities
Six months ended
June 30 , June 30,
2021 2020Cash proceeds from financing activities
Proceeds from Subsidiary stock transactions$ 600,000 $
-
Proceeds from issuance of convertible notes payable 1,165,000 264,000
Repayment of convertible notes payable - (232,948 ) Net cash provided by financing activities$ 1,765,000 $ 31,052
During the six months ending
in cash proceeds from the issuance of common stock in our Subsidiary and
cash proceeds of
raised
sufficient to fund its projected operating requirements through the month ofSeptember 2021 . 21 Upcoming Financing Activities
Title of each class of security Amount to be Proposed offering
Proposed aggregate
being registered registered price offering price
Common Stock, $0.001 par value 5,300,000 $ 1.00 $ 5,300,000
Common Stock, $0.001 par value 17,653,077 $ 0.13 2,294,900
Total 22,953,077 $ 7,594,900 On
for an amount of
aiming to raise a net of 4,823,000.
The Company also issued a selling shareholder prospectus for up to 17,653,077
shares through conversion of outstanding convertible notes at
a total of$2,165,000 plus accrued interest. There can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. Debt Restructuring
On
As a result of theSEC ordered suspension the Company defaulted on ten outstanding Convertible Notes; resulting in an increase of the interest to 21% and the principal to increase to 168% of principal loan amount. The convertible debt increased by$666,456 to$1,604,856 while the interest accrual increased to approximately$28,563 /month. At the default date,April 16, 2020 , remaining debt discount of$76,265 was amortized to interest expense and the remaining debt premium of$856,560 was accreted to additional paid-in capital. OnMay 2 and 3, 2021,Bioxytran, Inc. (the "Company") entered into nine Note Agreements for a total amount of$3,266,846 in 1-year notes (the "New Notes"), with an interest rate of 6% convertible at the lower of (i) a fixed price of$0.13 , or (ii) 85% of the closing price of any Qualified Financing, which consist of any fundraising receiving gross proceeds of not less than$500,000 . The Notes require the Company prepare and file a Registration Statement on Form S-1 within a period of 60 days from issuance of the New Notes. A Form S-1 was filed with theSEC onJune 24, 2021 and was declared effective bySEC onJuly 23, 2021 , wherein the notes have a 180-day lock-up period. The transactions set forth below were approved by the Company's Board of Directors onJune 4, 2021 . Accrued interest Stock issued Amount due June 30, Interest due at Converted for Note Name June 30, 2021 2021 Converted notes conversion price conversion Notes sold in exchange (1)$ 1,165,000 $ 10,270 $ $ $ - - for cash Notes issued in exchange for accounts (2) 981,466 5,398 0.13 7,591,261 payable related party Notes issued in exchange for accounts (2) 120,380 662 0.13 930,864 payable consultant Note issued in exchange (3) 1,000,000 10,105 - - for defaulted notes$ 2,165,000 $ 20,375 $ 1,101,846 $ 6,060 8,522,125
(1) Net cash received for these notes were
(Member FINRA /
to three officers and two consultants, the notes were converted into equity
on
that is considered a related party. Portions of the balance was forgiven
and a new note of $1,000,000 was issued.
22
The defaulted notes were returned to the Company on
Name Due at Principal Default Warrants Term Exercise Amortization Accrued
May 26, 2019 Amount Penalty Issued Price of Warrants Interest
Old Notes Defaulted
5 2.00 $ 97,279 $ 407,967
As part of the pay-off, the debt originating from a January 20, 2021 summary
judgement by the Supreme Court of the State of New York , County of Nassau ,
awarding Power Up damages in the amount of $420,750 for Breach of Contact was
agreed to be dismissed by prejudice. and as a result, the damages recorded in
the first quarter of 2021 was reversed in the Statement of operations.
The outstanding warrants were transferred to the Company's officers in lieu of
interest on amounts due as at
Subsidiary Equity Transactions
# of shares
# of options
4,500,000$ 1,550,000 $ 950,000 Bioxytran non-dilutive equity 15,000,000 1,500 1,500 Bioxytran dilutive equity 6,000,000 2,000,000 - Issued stock options @$0.33 4,500,000 450 - 25,500,000 4,500,000$ 3,551,950 $ 951,500 Net loss Subsidiary$ (2,063,754 ) $ (687,883 ) Net loss attributable to the non-controlling interest 401,549 61,909 Net loss affecting Bioxytran (1,662,205 ) (625,974 ) Accumulated losses (2,751,637 ) (687,883 ) Accumulated losses attributable to the non-controlling interest 463,459 61,909 Accumulated losses Bioxytran (2,288,178 ) (625,974 ) Net equity non-controlling interest$ 1,086,992 $ 888,091
In the Subsidiary 4,500,000 shares (18%) is held by outside investors, while 21,000,000 (82%)
is held by the Company. 4,500,000 options exercisable at
Subsidiary's management in accordance with the 2017 Stock Plan. 50% the Subsidiary's
outstanding shares belonging to the Company are non-dilutive, assuming for this purpose the
conversion into Stock of all outstanding securities that are convertible by their terms
(directly or indirectly) into Stock.
At June, 30, 2021 6-month losses were
whereof for the 6-months ending
non-controlling interest, the cumulative amount attributable to non-controlling interest were
attributable to the non-controlling interest. During the six months ended
compensation expense to the management of the Subsidiary.
Commitments
We have no current commitment from our officers and directors or any of our
shareholders, to supplement our operations or provide us with financing in the
future. If we are unable to raise additional capital from conventional sources
and/or additional sales of stock in the future, we may be forced to curtail or
cease our operations. Even if we are able to continue our operations, the
failure to obtain financing could have a substantial adverse effect on our
business and financial results. In the future, we may be required to seek
additional capital by selling debt or equity securities, selling assets, or
otherwise be required to bring cash flows in balance when we approach a
condition of cash insufficiency. The sale of additional equity or debt
securities, if accomplished, may result in dilution to our then shareholders. We
provide no assurance that financing will be available in amounts or on terms
acceptable to us, or at all.
23
Contractual Obligations
June 30, December 31,
2021 2020
Interest on notes payable $ 20,735 $ 263,135
Default penalty - 673,956
Convertible notes payable 2,165,000 938,400
Total $ 2,185,735 $ 1,875,491 Our contractual obligations include four convertible notes, for a total of
for a$1,000,000 note. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources. CRITICAL ACCOUNTING POLICIES In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our businesses operate in environments where we pay a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex. Stock Based Compensation The Company has share-based compensation plans under which non-employees, consultants and suppliers may be granted restricted stock, as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date, based on the fair value of the award over the requisite service period. The Company applies ASC 718 for options, common stock and other equity-based grants to its employees and directors. ASC 718 requires measurement of all employee equity-based payment awards using a fair-value method and recording of such expense in the consolidated financial statements over the requisite service period. The fair value concepts have not changed significantly in ASC 718; however, in adopting this standard, companies must choose among alternative valuation models and amortization assumptions. After assessing alternative valuation models and amortization assumptions, the Company will continue using both the Black-Scholes valuation model and straight-line amortization of compensation expense over the requisite service period for each separately vesting portion of the grant.
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