GENE BIOTHERAPEUTICS, INC. The following discussion and analysis are intended to help you understand our financial condition and results of operations for the last three years endedDecember 31, 2019 . 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 Item 8 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 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 pre-clinical, 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 and sold various medical devices, product candidates and products. We operated throughout the period covered by this report, with severely limited financial resources. During 2015 and 2016, prior to the period covered in this report, we took significant actions to reduce our operating expenses, including headcount reductions, downsizing offices, and suspending some operations while we sought capital to continue our business operations. In 2016 we contributed our assets related to our Generx product candidate into ourAngionetics, Inc. subsidiary. We then sold a 15% preferred equity ownership interest inAngionetics, Inc. to Huapont in exchange for$3.0 million . After the filing of our quarterly report for the period endedMarch 31, 2017 , we suspended filing our periodic reports with theSEC because we lacked the financial resources to continue the financial statement review and audits. This report covers our results of operations for the years endedDecember 31, 2019 , 2018 and 2017. Our current business is focused exclusively on the development of Generx, a gene therapy product candidate targeted for men and women with advanced ischemic heart disease and refractory angina. We have received FDA clearance and FAST Track designation covering our conduct of the AFFIRM Phase 3 clinical trial. We do not currently have any other products or other product candidates under clinical study, and have not generated any revenues from operations for the years endedDecember 31, 2019 , 2018 and 2017. Our operations currently comprise one segment for financial reporting purposes. Significant Developments
During the period covered by this report we entered into the following significant transactions:
? In
efforts to sell our Excellagen product and assist with the strategic
partnering for the development of Generx. In lieu of an initial cash
engagement fee of
along with a minority equity investment in Healthy Brands to Landmark,
effectively exiting those businesses. We recorded this initial engagement fee
as a consulting cost and the transfer of the assets, which had a net book
value of zero, as a gain on transfer of assets and licenses in other income in
the statement of operations. In connection with this agreement, and in
exchange for business advice and marketing of the business for the purposes of
raising financing, we issued Landmark a ten-year warrant to purchase up to 2.0
million shares of our Common Stock at a price of
value of the warrants was determined, using the Black-Scholes-Merton model, to
be
services in selling, general and administrative expenses the period in which
the services were rendered.
? On
business and scientific consulting services. The fair value of these warrants
was determined to be
as consulting services in selling, general and administrative expenses in the
period in which the services were rendered.
? In
consideration of up to
outside of
periods that Olaregen reports sales that are subject to royalty and collection
is reasonably assured. To date no royalty payments have been received.
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? During 2019, we took a number of measures to restructure our accounts payable
to third party vendors, including negotiated settlements with vendors that
resulted in forgiveness of a portion of the accounts payable. For the year
ended
re-negotiation includes
payable when and if the Company receives FDA approval or when the Company
commercializes. For amounts that are payable contingent upon FDA approval or
commercialization, the Company has recognized included the amount in the gain
on forgiveness and disclosed the contingent payable since the timing and
ultimate payment is not determinable. As of December 31, 2019 , we had
outstanding trade payable and accrued liabilities of $3,763,816 .
Subsequent Events
The following significant events took place after the period covered by this report:
? On
Nostrum a promissory note in exchange for cash of
annum and mature 24 months from the date of issuance. The cash funding related
to the
balance sheet in
? As of
salaries and benefits for current and former employees totaling
compensation, less applicable tax withholdings, upon the earliest to occur of
(a) the
EMA approval of Generx for marketing and sale in the
aggregate value equal to or greater than
strategic partnership that would facilitate a capital contribution equal to or
greater than
commercial development of Generx; (e) our successful completion of a public or
private equity offering for the issuance of its common stock equal to
that we have the financial ability to make such payments without jeopardizing
our ability to operate as a going concern.
? On
connection with the Ratification Agreement, we terminated all prior agreements
with
a mutual release of claims.
? On
License Agreement, granting
Generx product candidate. The distribution and license rights commence only
after we obtain
manufacture Generx products in
sell Generx products in
municipality other than mainland
is the common language, the
payment of
equity subscription, and a royalty ranging from 5% up to 10% based on the
level of annual net sales of the Generx product sold by
territory.
? On
the Shanxi Assignment Agreement pursuant to which we transferred all of our
license rights to manufacture, use, market and sell Excellagen to
also assigned to
result, we no longer have an interest in Excellagen, other than the right to
the royalty payments from Olaregen.
? In
Nostrum, selling Nostrum 1,700,000 shares of our newly authorized Series B
Convertible Preferred Stock in exchange for
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
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.
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? The Series B Convertible Preferred Stock financing resulted in a reset of the
conversion price of our outstanding Series A Convertible Preferred Stock, such
that each Series A Convertible Preferred Stock is convertible into Common
Stock at a conversion rate of 88,496. In a separate but concurrent
transaction, when Nostrum acquired the 1,700,000 shares of Series B
Convertible Preferred Stock, it also acquired 220 shares of Series A
Convertible Preferred Stock from the current holder Sabby Healthcare Master
Stock. Nostrum also agreed to purchase the remaining up to 570 shares of
Series A Convertible Preferred Stock from
within one year of the initial acquisition.
retains the right prior to any such sale, to convert the Series A Convertible
Preferred Stock prior to the anniversary. Since
2021 a total of 397 shares of Series A Convertible Preferred Stock have been
converted into 35,132,755 shares of Common Stock. As of
are 393 shares of Series A Convertible Preferred Stock outstanding including
220 held by Nostrum (convertible into 19,469,026 shares of Common Stock) and
173 shares held by
15,309,735 shares of Common Stock).
? During 2020, we entered into additional settlement agreements with third party
vendors resulting in additional gains on vendor payables of
accounts payable.
? In
Biotechnologies ("FDB") to manufacture the Generx [Ad5FGF-4] angiogenic gene
therapy product candidate for Phase 3 clinical evaluation for the treatment of
refractory angina due to late-stage coronary artery disease. Manufacturing
operations will be conducted at FDB's facilities in
where FDB will perform technology transfer and process development activities
for Phase 3 clinical and commercial-scale GMP manufacturing of Generx.
Critical Accounting Policies and Estimates
Our consolidated financial statements included in this report have been prepared in accordance with accounting principles generally accepted inthe United States ("U.S. GAAP"). The preparation of our financial statements in accordance withU.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. Our estimates are based on 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. 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 this report.
The preparation of financial statements in conformity with accounting principles
generally accepted in
While our estimates are based on assumptions that we consider reasonable at the time they were made, actual results may differ from our estimates, perhaps significantly. If results differ materially from our estimates, we will adjust our financial statements prospectively as we become aware of the necessity
for an adjustment. We believe it is important for you to understand our most critical accounting policies. These are our policies that require us to make our most significant judgments and, as a result, could have the greatest impact on our future financial results. Preferred Stock
The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Shares that are subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as temporary equity. At all other times, preferred shares are classified as stockholders' equity. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income(loss) in the years in which those temporary differences are expected to be recovered or settled. Due to the Company's history of losses, a full valuation allowance has been recognized against the deferred tax assets. -39- The Company has adopted the provisions of ASC 740-10, which clarifies the accounting for uncertain tax positions. ASC 740-10 requires that the Company recognize the impact of a tax position in its financial statements if the position is more likely than not to be sustained upon examination base on the technical merits of the position. For the year endedDecember 31, 2019 , the Company had no material unrecognized tax benefits, and based on the information currently available, no significant changes in unrecognized tax benefits are expected in the next twelve months. The Company's policy is to recognize interest and penalties related to income tax matters in income tax expense. For the years endedDecember 31, 2019 , 2018 and 2017, the Company has not recorded any interest or penalties related to income tax matters. The Company does not foresee any material changes in unrecognized tax benefits within the next twelve months. When tax returns are filed, there may be uncertainty about the merits of positions taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold is measured at the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefit associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for uncertain tax benefits in the accompanying balance sheet along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes our tax positions are all more likely than not to be upheld upon examination. As such, the Company has not recorded a liability for uncertain tax benefits. Warrants Warrants issued to third parties in connection with consulting and other services do not trade in an active securities market, and as such, we estimate the fair value of these warrants using an option pricing model. Following the authoritative accounting guidance, warrants with variable exercise price features or with potential cash settlement outside of our control are accounted for as liabilities, with changes in the fair value included in operating expenses, otherwise warrants determined to be equity classified are fair valued at the date of issuance, with no change in the fair value recorded in subsequent periods. We estimated the fair value of the warrants using the Black Scholes option pricing model. The Black Scholes model requires that our management make certain estimates regarding the expected stock volatility, the risk-free interest rate, the warrant's expected life, and the expected forfeiture rate, to derive an estimated fair market value. Results of Operations
Fiscal 2019 Compared to Fiscal 2018
The following tables sets forth our results of operations for the years endedDecember 31, 2019 and 2018, and the relative dollar and percentage change between the two years. Year Ended Change December 31, (2019 to 2018) 2019 2018 ($) % Operating Expenses: Research and development$ 243,453 $ 255,394 (11,941 ) (4.7 )% Selling, general and administrative 593,549 907,836 (314,287 ) (34.6 )% Total Operating Expenses 837,002 1,163,230 (326,228 ) (28.0 )% Gain on sale of assets and technology - (650,000 ) 650,000 100 %
Income (Loss) from Operations (837,002 ) (513,230 ) 323,772
63.1 %
Other Income (Expense):
Gain on forgiveness of account
payables 1,659,917 - 1,659,917 100 %
Interest Expense (43,787 ) (39,514 ) (4,273 ) 10.8 %
Total Other Income (Expense) 1,616,130 (39,514 ) 1,655,644 (4,190.0 )%
Net Income (Loss) 779,128 (552,744 ) 1,331,872 241.0 %
Net (Loss) attributable to the
non-controlling interest (87,547 ) (117,863 ) 30,316 (25.7 )%
Net Income (Loss) attributable
to the controlling interest 866,675 (434,881 ) 1,301,556 (299.3 )%
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Research and development decreased in 2019 compared to 2018 by
Selling, general and administrative expenses decreased in 2019 by$314,287 or 34.6% compared to 2018 mainly due to a reduction in employee salary costs of$152,852 resulting from a headcount reduction of two employees on a permanent basis and one employee on a temporary basis during 2019. In addition, the Company incurred consulting costs of approximately$80,000 in relation to raising capital funds for the Company in 2018 compared with $nil in 2019, and an overall reduction in legal and regulatory professional fees of$61,851 , in addition to a decrease in office supplies as the Company focused time and resources on raising capital resources and putting on hold regulatory filing matters therefore reducing the selling, general and administrative expenses in 2019 when compared to 2018. In addition, the depreciation expense in 2019 was lower due to Company property and equipment becoming fully depreciated. During the year endedDecember 31, 2018 , the company recognized a gain on sale of Excellagen® product to Olaregen in the amount of$650,000 which also represented the cash proceeds on the sale of the technological asset. The sale of Excellagen® was consistent with management restructuring of the company's operations in order to focus efforts on development and sale of Generx. Other expenses for the year endedDecember 31, 2019 included a gain on debt forgiveness in the amount of$1,659,917 . The debt forgiveness is the result of settlement agreements reached with certain vendors as part of the pre-financing restructuring efforts of the Company. Of these amounts,$172,449 becomes due and payable upon FDA approval of Generx, and when total cumulative net sales of Generx reach$100 million , an additional amount totaling$225,000 will be due and payable. Interest expense increased in 2019 compared to 2018 by$4,273 primarily as result of an increase in the notes payable in the third quarter ended 2019 of approximately$120,000 bearing interest at 6% per annum on advances received from Nostrum.
Fiscal 2018 Compared to Fiscal 2017
The following tables sets forth our results of operations for the years endedDecember 31, 2018 and 2017, and the relative dollar and percentage change between the two years. Year Ended Change December 31, (2018 to 2017) 2018 2017 ($) % Operating Expenses: Research and development$ 255,394 $ 344,976 (89,582 ) (26.0 )% Selling, general and administrative 907,836 1,781,309 (873,473 ) (49.0 )% Total Operating Expenses 1,163,230 2,126,285 (963,055 ) (45.3 )% Gain on sale of assets and technology (650,000 ) (50,000 ) 600,000 1,200 % Income (Loss) from Operations (513,230 ) (2,076,285 ) 1,563,055 (75.3 )% Other Income (Expense): Interest Expense (39,514 ) (20,219 ) (11,339 ) 56.1 % Total Other Income (Expense) (39,514 ) (20,219 ) (11,339 ) 56.1 % Net Loss (552,744 ) (2,096,504 ) (1,543,760 ) (73.6 )% Net Loss attributable to the non-controlling interest (117,863 ) (202,362 ) (84,499 ) (41.8 )% Net Loss attributable to the controlling interest (434,881 ) (1,894,142 ) (1,459,262 ) (77.0 )% Research and development decreased in 2018 compared to 2017 by$89,582 or 26 %. The decrease in spending is primarily due to the Company's continued cash constrained position in 2018 resulting in management focusing Company resources on raising capital to provide the resources to advance the development and commercialization of Generx. The Company also discontinued further development of other product lines and focused actively on selling intellectual property developed not related to the Generx product line. Selling, general and administrative expenses decreased by$873,473 or 49.0% in 2018 compared to 2017 as a result of a concentrated effort to contain costs, reduction in salary expense due to a reduction in headcount, reduced legal and other professional fees as a result of the Company's decision to suspendSEC filings beginning in 2017. During the year endedDecember 31, 2018 , the Company recognized a gain on the sale of Excellagen® product to Olaregen in the amount of$650,000 . This compares to a gain on the sale of assets in 2017 of$50,000 related to the transfer of the Company's residual investment in LifeAgain along with a minority equity investment in Healthy Brands in exchange for strategic financing consulting
services. -41- Other expense for the year endedDecember 31, 2018 and 2017 also included interest expense related to interest on notes payable with unrelated parties. The total interest expense in 2018 was$31,558 compared with$20,219 in 2017, as a result of the note payable in the principal amount of$208,500 , being outstanding for the full year in 2018 compared to an increase in the note through the 2017 year.
Fiscal 2017 Compared to Fiscal 2016
The following tables sets forth our results of operations for the years endedDecember 31, 2017 and 2016, and the relative dollar and percentage change between the two years. Year Ended Change December 31, (2017 to 2016) 2017 2016 ($) % Operating Expenses: Research and development$ 344,976 $ 641,572 (296,596 ) (46.2 )% Selling, general and administrative 1,781,309 2,199,412 (418,103 ) (19.0 )% Total Operating Expenses 2,126,285 2,840,984 (714,699 ) (25.2 )% Gain on sale of assets and technology (50,000 ) - (50,000 ) 100.0 % Income (Loss) from Operations (2,076,285 ) (2,840,984 ) 764,699 (26.9 )% Other Income (Expense): Interest Expense (20,219 ) (172,825 ) 152,606 (88.3 )% Total Other Income (Expense) (20,219 ) (172,825 ) 152,606 (88.3 )% Net Loss (2,096,504 ) (3,013,809 ) 917,305 (30.4 )% Net Loss attributable to the non-controlling interest (202,362 ) (95,581 ) (106,781 ) 111.7 % Net Loss attributable to the controlling interest (1,894,142 ) (2,918,228 ) (1,024,086 ) (35.1 )% Research and development expense decreased in 2017 compared to 2016 by$296,596 0r 46.2% as a result of the Company reducing all discretionary expenses in 2017 in order to conserve cash and focus on raising capital to be used for the Company's efforts to continue the development of their core technologies and due to a decrease in employee salary expenses as a result of a reduction in headcount.
Selling, general and administrative expenses decreased in 2017 compared to 2016
by
The Company recognized a gain on sale of assets in the amount of$50,000 in the year endedDecember 31, 2017 . InOctober 2017 , the Company entered into an agreement with Landmark to assist with the Company's efforts to sell the Excellagen product and assist with the strategic partnering for the development of Generx. In lieu of an initial cash engagement fee of$50,000 , the Company assigned our residual investment in LifeAgain along with a minority equity investment in Healthy Brands to Landmark, effectively exiting the development and commercialization of the product lines. The Company determined the fair value of the non-monetary exchange to be$50,000 , since this was the negotiated third-party initial cost negotiated between two independent third parties and the transfer of the assets settled the initial fee in full. Other income/expense includes interest expense which decreased by$152,606 in 2017 compared with 2016. In 2016$146,996 in interest charges on unpaid license fees were expensed that were not charged in 2017. The remaining interest charges in each of 2016 and 2017 related to interest on advances and notes payable.
Liquidity and Capital Resources
The following table summarizes our liquidity and working capital position on
Year Ended December 31,
2019 2018 2017
Cash $ 400 $ 82,115 $ 48,989
Other Current Assets 32,395 18,965 25,000
Accounts Payable 967,126 1,857,951 1,870,215
Other Current Liabilities 3,795,863 3,932,835 3,485,440
Working Capital (Deficiency) (4,730,194 ) (5,689,706 ) (5,281,666 )
Following the period covered by this report:
? We entered into several agreements with employees, former employees, and
vendors to restructure claims reducing the amount of our accounts payable and
our other current liabilities and/or extending the payment terms until after
commercialization and Generx products sales commence.
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? In May 2020 we secured $1,700,000 financing from the sale of our newlyauthorized 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 cash flows from (used in) operating,
investing, and financing activities for the years ended December 31, 2019 , 2018
and 2017:
Year Ended December 31,
2019 2018 2017
Net cash generated from (used in)
operating activities $ (137,162 ) $ (451,503 ) $ (1,062,388 )
Net cash generated from investing
activities - 650,000 -
Net cash generated from (used in)
financing activities 55,447 (165,371 ) 180,980
Net increase (decrease) in cash and cash equivalents (81,715 ) 33,126 (881,408 )
The Company has not generated cash from operating activities. We did not generate revenue in any of the years covered by this report, and generally record operating losses in each of the years.
In 2018, the Company sold Excellagen for cash proceeds of
Net cash provided by financing activities in 2019 compared to cash used by financing activities in 2018 is primarily due to Nostrum providing$120,000 in cash in exchange for a note payable, due in 24 months, bearing interest at 6%, offset by an increase in the notes payable resulting from interest accruals and payments made on the loan from officer of approximately$99,000 . OnDecember 31, 2019 , we did not have any significant requirements for capital expenditures.
After the period covered by this report, we secured the
We anticipate that negative cash flows from operations will continue for the foreseeable future. We do not have any unused credit facilities. Our cash position, even after the Series B Convertible Preferred Stock financing with Nostrum, will not be sufficient to sustain our operations for more than twelve months. We intend to secure additional working capital to support our continued operations through sales of additional equity and debt securities. As long as any shares of our Preferred Stock are outstanding, we have agreed that we will not, without the consent of the holders of two-thirds of the Series A Convertible Preferred Stock, incur indebtedness other than specified "Permitted Indebtedness", or incur any liens other than specified "Permitted Liens". Our principal business objective is to advance or Generx product candidate through the AFFIRM Phase 3 clinical trial and to begin commercialization of Generx inthe United States . We expect that support from Nostrum will decrease the overall costs of the trial, but we estimate that we will still need$12.0 to$15.0 million in additional capital to complete manufacturing of Generx clinical supplies for the conduct of the planned Phase 3 AFFIRM clinical study, and administrative and operating expenses that include the costs associated with Gene Biotherapeutics remaining a public company. We plan to secure that capital through the sale of additional equity or debt securities or through other transactions that could include strategic partnering and distribution agreements. There are no agreements or arrangement for any additional financing in place at this time. Our history of recurring losses and uncertainties as to whether our operations will become profitable raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments related to the recoverability of assets or classifications of liabilities that might be necessary should we be unable to continue as a going concern.
Off-Balance Sheet Arrangements
As ofDecember 31, 2019 , we 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.
Recent Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements included elsewhere in this report for disclosure and discussion of new accounting standards.
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Quarterly Results of Operations
As described in the Explanatory Note, we are presenting our quarterly results of operations for each of the periods endedSeptember 30 ,June 30 , andMarch 31 for 2019, 2018 and 2017, respectively, herein, in lieu of filing separate Quarterly Reports on Form 10-Q for such periods.
For the Three Months Ended
The following tables sets forth our results of operations for the three-month period endedMarch 31, 2019 and 2018, and the relative dollar and percentage change between the two periods. Three Months Change March 31, (2019 to 2018) 2019 2018 ($) % Operating Expenses: Research and development$ 63,379 $ 62,767 612 1.0 % Selling, general and administrative 179,599 234,630 (55,031 ) (23.5 )% Total Operating Expenses 242,978 297,397 (54,419 ) (18.3 )% Loss from Operations (242,978 ) (297,397 ) 54,419 (18.3 )% Other Income (Expense): Interest Expense (10,129 ) (7,927 ) (2,202 ) 27.8 % Total Other Income (Expense) (10,129 ) (7,927 ) (2,202 ) 27.8 % Net Loss (253,107 ) (305,324 ) 52,217 (17.1 )% Net Loss attributable to the non-controlling interest (26,738 ) (29,351 ) 2,614 (8.9 )% Net Loss attributable to the controlling interest (226,369 ) (275,973 ) 49,603 (18.0 )% Selling, general and administrative expenses decreased, for the three months endedMarch 31 , in 2019 by$55,031 compared to 2018 mainly due to a reduction in employees' salary cost of approximately$24,000 resulting from two employees shifting from full-time to part-time in 2019. In addition, the company incurred consulting cost of$25,000 in relation to raising capital funds for the company in 2018 compared with nil in 2019. Other expense increased$2,202 during the three-month period endedMarch 31, 2019 compared withMarch 31, 2018 primarily as a result of increase in the interest rate and due to the compounded interest rate impact on the note payable in 2019.
For the Three Months and Six Months Ended
The following tables sets forth our results of operations for the three-month period and six-month endedJune 30, 2019 and 2018, and the relative dollar and percentage change between the two periods. Three Months Change Six Months Change June 30, (2019 to 2018) June 30, (2019 to 2018) 2019 2018 ($) % 2019 2018 ($) % Operating Expenses: Research and development$ 60,355 $ 63,049 (2,694 )
(4.3 )%
180,473 267,629 (87,156 ) (32.6 )% 360,072 502,259 (142,187 ) (28.3 )% Total Operating Expenses 240,828 330,678 (89,850 ) (27.2 )% 483,806 628,075 (144,269 ) (23.0 )% Loss from Operations
(240,828 ) (330,678 ) 89,850 (27.2 )% (483,806 ) (628,075 ) 144,269 (23.0 )% Other Income (Expense): Interest Expense
(10,504 ) (9,097 ) (1,406 ) 15.5 % (20,633 ) (17,025 ) (3,608 ) 21.2 % Total Other Income (Expense)
(10,504 ) (9,097 ) (1,406 ) 15.5 % (20,633 ) (17,025 ) (3,608 ) 21.2 %
Net Loss (251,332 ) (339,775 ) 88,442 (26.0 )% (504,440 ) (645,099 ) 140,659 (21.8 )%
Net Loss attributable to
the non-controlling
interest (24,963 ) (27,568 ) 2,604 (9.4 )% (51,701 ) (56,919 ) 5,218 (9.2 )% Net Loss attributable to the controlling interest (226,369 ) (312,207 ) 85,838 (27.5 )% (452,739 ) (588,180 ) 135,441 (23.0 )%
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Research and development expense for the three-month and six-month periods ended
Selling, general and administrative expenses decreased for the three-month period endedJune 30, 2019 compared to the three-month period endedJune 30, 2018 by$87,156 or 32.6% primarily as a result of$80,000 in consulting costs in relation to raising capital funds for the Company during the three-month period endedJune 30, 2018 compared with $nil for the three-month period endedJune 30, 2019 . The Company's employee salary costs also decreased by$18,958 as result of two employees transitioning from full-time to part-time on a temporary basis, these decreased were offset by increases in miscellaneous office expenses. Selling, general and administrative expenses decreased for the six-month period endedJune 30, 2019 compared to the six-month period endedJune 30, 2018 by$142,187 or 28.3% primarily as a result of$105,000 in consulting costs in relation to raising capital funds for the Company during the six-month period endedJune 30, 2018 compared with $nil in the six-month period endedJune 30, 2019 . In addition, salaries and benefits decreased by$44,374 resulting from two employees shifting from full-time to part-time in 2019 on a temporary basis, offset by increases in miscellaneous office expenses. Other income/expense increased for the three-month period endedJune 30, 2019 compared to the three-month period endedJune 30, 2018 by$1,406 or 15.5% primarily as a result of an increase in the interest rate on the notes payable effective May, 2018 and due to the compounded interest impact on the note. Other income/expense increased for the six-month period endedJune 30, 2019 compared to the six-month period endedJune 30, 2018 by$3,608 or 21.2% primarily as a result of an increase in the interest rate on the outstanding notes payable effectiveMay 2018 and due to the compounded interest impact
on the note.
For the Three Months and Nine Months Ended
The following tables sets forth our results of operations for the three-month period and Nine-month endedSeptember 30, 2019 and 2018, and the relative dollar and percentage change between the two periods. Three Months Change Nine Months Change September 30, (2019 to 2018) September 30, (2019 to 2018) 2019 2018 ($) % 2019 2018 ($) % Operating Expenses:
Research and development$ 61,443 $ 66,442 (4,999
) (7.5 )%$ 185,177 $ 192,258 (7,081 ) (3.7 )% Selling, general and administrative 114,047 207,279 (93,232
) (45.0 )% 474,119 709,538 (235,419 ) (33.3 )% Total Operating Expenses
175,490 273,721 (134,216 ) (35.9 )% 659,296 901,796 (242,500 ) (26.9 )%
Gain on sale of assets and
technology - (650,000 ) 650,000 (100.0 )% - (650,000 ) 650,000 (100.0 )%Income (Loss)from Operations (175,490 ) 376,279 (515,784 ) (146.6 )% (659,296 ) (251,796 ) (407,500 ) 161.8 % Other Income (Expense): Gain on account payable forgiveness 35,985 - - 100.0 % 35,985 - 35,985 100.0 % Interest Expense (10,952 ) (12,603 ) (1,651
) (13.1 )% (31,585 ) (29,628 ) (1,957 ) 6.6 % Total Other Income (Expense) 25,033 (12,603 ) 37,636
(298.6 )% (4,400 ) (29,628 ) 34,028 (114.9 )%
Net Loss (150,457 ) 363,676 (514,132 ) (141.4 )% (654,896 ) (281,423 ) (373,473 ) 132.7 %
Net Loss attributable to the
non-controlling interest (19,790 ) (31,675 ) 11,886 (37.5 )% (71,490 ) (88,594 ) 17,104 (19.3 )%
Net Loss attributable to the
controlling interest (130,667 ) 395,351 (526,018) (133.1 )% (583,406 ) (192,829 ) (390,577 ) 202.6 %
Research and development expense decreased for the three-month period ended
Research and development expense decreased for the nine-month period ended
-45-
Selling, general and administrative expenses decreased for the three-months
period ended
Selling, general and administrative expenses decreased for the nine-month period endedSeptember 30, 2019 compared to the nine-month period endedSeptember 30, 2018 by$235,419 or 33.2% mainly due to a reduction in employee salary and benefit expenses of$101,250 resulting from a reduction in headcount and two employees moving from full-time to part-time on a temporary basis. In addition, the company incurred consulting costs of approximately$130,000 in relation to raising capital funds in 2018 compared with $nil in 2019, and an overall reduction in other miscellaneous expenses as the company focused time and resources on raising capital. During the three-month period and nine-month period endedSeptember 2018 , the company recognized a gain on sale of Excellagen technology to Olaregen in the amount of$650,000 , which also represented the cash proceeds on the sale. Other income/expense increased for the three-month period endedSeptember 30, 2019 compared to the three-month period endedSeptember 30, 2018 by$37,363 or 298.6% primarily as a result of accounts payable forgiveness settlement agreements totaling$35,985 , with certain vendors as a part of the pre-financing restructuring efforts of the company. The increase in other income was offset by an increase in interest expense for the nine-month period endedSeptember 30, 2019 compared to the nine-month period endedSeptember 30, 2018 by$1,651 primarily as a result of an increase in the notes payable of$120,000 received from Nostrum inSeptember 2019 , which bears an interest at 6% per annum.
For the Three Months Ended
The following tables sets forth our results of operations for the three-month period endedMarch 31, 2018 and 2017, and the relative dollar and percentage change between the two periods. Three Months Change March 31, (2018 to 2017) 2018 2017 ($) % Operating Expenses: Research and development$ 62,767 $ 130,762 (67,995 ) (52.0 )% Selling, general and administrative 234,630 522,565 (287,935 ) (55.1 )% Total Operating Expenses 297,397 653,327 (355,930 ) (54.5 )% Loss from Operations (297,397 ) (653,327 ) 355,930 (54.5 )% Other Income (Expense): Interest Expense (7,927 ) (1,956 ) (5,970 ) 305.1 % Total Other Income (Expense) (7,927 ) (1,956 ) (5,970 ) 305.1 % Net Loss (305,324 ) (655,283 ) 349,959 (53.4 )% Net Loss attributable to the non-controlling interest (29,351 ) (75,160 ) 45,809 (60.9 )% Net Loss attributable to the controlling interest (275,973 ) (580,123 ) 304,150 (52.4 )%
Research and development expense decreased for the three-month period endedMarch 31, 2018 compared to three-month period endedMarch 31, 2017 by$67,995 or 52.0% primarily due to a decrease in clinical trial expenses as a result of the Company focusing available resources and time on raising capital for the ongoing development of the Generx product and restructuring the business to sell all other assets and technology that the Company restructured as non-core products. Selling, general and administrative expenses decreased for the three-month period endedMarch 31, 2018 compared to the three-month period endedMarch 31, 2017 by$287,935 or 55.1% due to a decrease in employee salaries and benefits of approximately$72,280 as a result of a decrease in headcount and reduced legal and other professional fees as a result of the Company's decision to suspendSEC filings beginning in 2017 of approximately$145,000 and a decrease in general office expenses, insurances costs and travel costs of approximately$66,000 . Other income/expense increased for the three-month period endedMarch 31, 2018 compared to the three-month period endedMarch 31, 2017 by$5,970 or 305.1% primarily as a result of an increase in the notes payable during the third and fourth quarter of 2017, resulting in an increase in interest expense. -46-
For the Three Months and Six Months Ended
The following tables sets forth our results of operations for the three-month period and six-month endedJune 30, 2018 and 2017, and the relative dollar and percentage change between the two periods. Three Months Change Six Months Change June 30, (2018 to 2017) June 30, (2018 to 2017) 2018 2017 ($) % 2018 2017 ($) % Operating Expenses: Research and development$ 63,049 $ 66,182 (3,133
) (4.7 )%$ 125,816 $ 196,944 (71,128 ) (36.1 )% Selling, general and administrative 267,629 389,387 (121,758 ) (31.3 )% 502,259 911,952 (409,693 ) (44.9 )%
Total Operating Expenses 330,678 455,569 (124,891 ) (27.4 )% 628,075 1,108,896 (480,821 ) (43.4 )% Loss from Operations
(330,678 ) (455,569 ) (124,891 ) (27.4 )% (628,075 ) (1,108,896 ) 480,821 (43.4 )%
Other Income (Expense):
Interest Expense (9,097 ) (4,709 ) (4,389 ) 93.2 % (17,025 ) (6,666 ) (10,359 ) 155.4 %
Total Other Income (Expense) (9,097 ) (4,709 ) (4,389) 93.2 % (17,025 ) (6,666 ) (10,359 ) 155.4 % Net Loss (339,775 ) (460,278 ) 120,503 (26.2 )% (645,099 ) (1,115,561 ) 470,462 (42.2 )% Net Loss attributable to the non-controlling interest (27,568 ) (42,785 ) 15,217 (35.6 )% (56,919 ) (117,945 ) 61,026 (51.7 )% Net Loss attributable to the controlling interest (312,207 ) (417,493 ) 105,286
(25.2 )% (588,180 ) (997,616 ) 409,436 (41.0 )%
Research and development expense for the three months ended June 30, 2018
compared with the three months ended June 30, 2017 remained consistent and for
the six months ended June 30, 2018 compared to the six months ended June 30,
2017 decreased $71,128 or 36.1%. The decrease is primarily related to a decrease
in clinical trial expenses of $63,028 , decrease in employee salaries and
benefits of approximately $6,357 and a decrease in other miscellaneous expenses
such as travel and supplies.
Selling, general and administrative expenses for the three months ended June 30,
2018 compared with the three months ended June 30, 2017 decreased $121,758 or
31.3%. The decrease is related to a decrease in employee salaries and benefits
of $58,941 due to a decrease in employer taxes and employee benefits due the
Company reducing costs in 2018 and deferring the payment of salaries and wages
in order to preserve cash and resources to raise additional capital for the
Company. The Company also reduced legal and other professional fees as a result
of the Company's decision to suspend SEC filings beginning in 2017 of
approximately $103,000 . The decrease in expense was offset by an increase in
consulting costs of approximately $80,000 related to raising capital funds for
the ongoing operations of the Company.
Selling, general and administrative expenses for the six-month period ended June
30, 2018 compared with the three- month period ended June 30, 2017 decreased
$409,693 or 44.9%. The decrease is related to a reduction in employee salaries
and benefits of $129,687 due to a decrease in headcount, employer related
payroll taxes and health benefit costs and a decrease of $383,144 related to
reduced legal and other professional fees as a result of the Company's decision
to suspend SEC filings and other legal costs related to the development of
non-core products, decrease in sales and marketing expenses, insurance costs and
other general office expenses as the Company reduced all discretionary spending.
These decreases were offset by an increase in consulting costs of approximately
$105,435 to raise capital funds for the ongoing operations and developmentof Generx.
Interest expense increased for the three-month period endedMarch 31, 2018 compared to the three-month period endedMarch 31, 2017 by$4,389 or 93.2% and by$10,359 or 155.4% for the six-month period endedJune 30, 2018 compared to the six-month period endedJune 30, 2017 due to an increase in the note payable during the third and fourth quarter of 2017 of approximately$155,000 . -47-
For the Three Months and Nine Months Ended
The following tables sets forth our results of operations for the three-month period and Nine-month endedSeptember 30, 2018 and 2017, and the relative dollar and percentage change between the two periods. Three Months Change Nine Months Change September 30, (2018 to 2017) September 30, (2018 to 2017) 2018 2017 ($) % 2018 2017 ($) % Operating Expenses:
Research and development$ 66,442 $ 61,271 5,171
8.4 % $ 192,258 $ 258,215 (65,957 ) (25.5 )%
Selling, general and
administrative 207,279 351,173 (143,894) (41.0 )% 709,538 1,263,125 (553,587 ) (43.8 )% Total Operating Expenses
273,721 412,444 (138,723 ) (33.6 )% 901,796 1,521,340 (619,545 ) (40.7 )%
Gain on sale of assets and
technology (650,000 ) - 650,000 100.0 % (650,000 ) - (650,000 ) 100.0 %
Income (Loss)from Operations (376,279 ) (412,444 ) 36,165 (8.8 )% (251,796 ) (1,521,340 ) 1,269,545 (83.4 )%
Other Income (Expense):
Interest Expense (12,603 ) (6,414 ) (6,189 ) 96.5 % (29,627 ) (13,080 ) (16,548 ) 126.5 %
Total Other Income (Expense) (12,603 ) (6,414 ) (6,189) 96.5 % (29,627 ) (13,080 ) (16,548 ) 126.5 % Net income(Loss) 363,676 (418,858 ) 782,534 (186.8 )% (281,423 ) (1,534,420 ) 1,252,997 (81.7 )% Net Loss attributable to the non-controlling interest (31,675 ) (43,536 ) 11,861 (27.2 )% (88,594 ) (161,482 ) 72,888 (45.1 )% Net Loss attributable to the controlling interest 395,351 (375,322 ) 770,673
(205.3 )% (192,829 ) (1,372,938 ) 1,180,109 (86.0 )%
Research and development expenses for the three-month period ended September 30,
2018 compared to the three- month period ended September 30, 2017 increased by
$5,171 or 8.4% which is primarily related to an increase in the cost of Generx
product storage and other clinical supplies of $3,525 and an increase in other
miscellaneous expenses of $1,218 .
Research and development expenses for the nine-month period ended September 30,
2018 compared to the nine-month period ended September 30, 2017 decreased
$65,957 or 25.5% to a decrease in employee benefit costs as the employer portion
of health benefits was reduced by $7,464 and a reduction of clinical trial
expenses of $57,302 as the Company stopped research and development activity on
non-core technology product and re-directed resources to the development of
Generx and capital funding for the Company's ongoing operations.
Selling, general and administrative expenses for the three-month period ended
September 30, 2018 compared to the three-month period ended September 30, 2017
decreased $143,894 or 41% due to a decrease in salary and benefit costs as the
two of the Company's employees moved from full-time to part-time on a temporary
basis and there was a reduction in headcount by one employee.
Selling, general and administrative expenses for the nine-month period ended
September 30, 2018 compared to the nine-month period ended September 30, 2017
decreased $553,587 or 43.8% due to a decrease in salary and benefit costs of
$173,400 as the Company's overall headcount was reduced by one employee and two
employees who moved from full-time employees to part-time employees, reduction
of legal and professional fees of approximately $460,000 as a result of the
Company's decision to suspend SEC filings, decrease in sales and marketing
expenses, insurance costs and other general office expenses as the Company
reduced all discretionary spending. These decreases were offset by an increase
in consulting costs of approximately $80,000 to raise capital funds for the
ongoing operations and development of Generx.
During the three-month period and nine-month period ended September 2018 , the
company recognized a gain on sale of Excellagen technology to Olaregen in the
amount of $650,000 , which also represented the cash proceeds on the sale.
Interest expense increased $6,189 or 96.5% for the three-month period ended
September 30, 2018 compared to the three-month period ended September 30, 2017
and $16,548 or 126.5% for the six-month period ended September 30, 2018 compared
to the six-month period ended September 30, 2017 as a result of an increase of
$130,000 in the note payable in the fourth quarter of 2017, thereby increasing
the interest expense.
-48-
For the Three Months and Six Months Ended
The following tables sets forth our results of operations for the three-month period and six-month endedJune 30, 2017 and 2016, and the relative dollar and percentage change between the two periods. Three Months Change Six Months Change June 30, (2017 to 2016) June 30, (2017 to 2016) 2017 2016 ($) % 2017 2016 ($) % Operating Expenses: Research and development$ 66,182 $ 78,863 (12,681 )
(16.1 )%
389,387 531,464 (142,077 ) (26.7 )% 911,952 872,133 39,819 2.0 % Total Operating Expenses
455,569 610,327 (154,758 ) (25.4 )% 1,108,896 1,034,330 74,566 7.2 % Loss from Operations
(455,569 ) (610,327 ) 154,758 (25.4 )% (1,108,896 ) (1,034,330 ) (74,566 ) 7.2 %
Other Income (Expense):
Interest Expense (4,709 ) (2,893 ) 1,816 62.8 % (6,665 ) (5,466 ) 1,200 22.0 %
Total Other Income
(Expense) (4,709 ) (2,893 ) 1,816 62.8 % (6,665 ) (5,466 ) 1,200 22.0 %
Net Loss (460,278 ) (613,220 ) 152,942 (24.9 )% (1,115,561 ) (1,039,796 ) (75,765 ) 7.3 % Net Loss attributable to the non-controlling interest
(42,785 ) - (42,785 ) (100.0 )% (117,945 ) - (117,945 ) (100.0 )%
Net Loss attributable to the
controlling interest (417,493 ) - (417,493 ) (100.0 )% (997,616 ) - (997,616 ) (100.0 )% Research and development expense decreased by$12,681 or 16.1% for the three-month period endedJune 30, 2017 compared to the three-month period endedJune 30, 2016 as the Company started to reduce discretionary spending in 2017 in order to conserve cash and focus on capital funding for the ongoing operations of the Company and to re-focus research and development efforts on the development of Generx, while selling products being developed by the Company. Selling, general and administrative expenses decreased for the three-month period endedJune 30, 2017 compared to the three-month period endedJune 30, 2016 by$142,077 or 26.7% as a result of the Company decision to suspendSEC filings, therefore reducing legal and professional costs and reducing discretionary spending, therefore reducing sales and marketing expenses and insurance costs. Interest expense increased$1,816 or 62.8% for the three-month period endedJune 30, 2017 compared toJune 30, 2016 and by$1,200 for the six-month period endedJune 30, 2018 compared toJune 30, 2017 as a result of an increase in the note payable in 2017, therefore increasing the accrued interest each month on the note payable.
For the Three Months and Nine Months Ended
The following tables sets forth our results of operations for the three-month period and Nine-month endedSeptember 30, 2017 and 2016, and the relative dollar and percentage change between the two periods. Three Months Change Nine Months Change September 30, (2017 to 2016) September 30, (2017 to 2016) 2017 2016 ($) % 2017 2016 ($) % Operating Expenses:
Research and development$ 61,271 $ 128,698 (67,427 ) (52.4 )%$ 258,215 $ 290,895 (32,680 ) (11.2 )% Selling, general and administrative 351,173 887,241 (536,068
) (60.4 )% 1,263,125 1,762,375 (499,250 ) (28.3 )% Total Operating Expenses
412,444 1,015,939 (603,495 ) (59.4 )% 1,521,340 2,053,270 (531,929 ) (25.9 )% Loss from Operations
(412,444 ) (1,015,939 ) 603,495 (59.4 )% (1,521,340 ) (2,053,270 ) 531,929 (25.9 )%
Other Income (Expense):
Interest Expense (6,414 ) (7,413 ) 999(13.5 )% (13,080 ) (9,878 ) 3,202 32.4 % Total Other Income (Expense) (6,414 ) (7,413 )
999 (13.5 )% (13,080 ) (9,878 ) 3,202 32.4 %
Net Loss (418,858 ) (1,023,352 ) 604,494 (59.1 )% (1,534,420 ) (2,063,148 ) 528,728 (25.6 )%
Net Loss attributable to the
non-controlling interest (43,536 ) (19,460 ) (24,076 ) 100.0 % (161,482 ) (19,460 ) (161,482 ) 100.0 %
Net Loss attributable to the
controlling interest (375,322 ) (1,003,892 ) (375,322 ) 100.0 % (1,372,938 ) (2,043,688 ) (1,372,938 ) 100.0 %
Deemed dividend on preferred
stock - 782,879 (782,879 ) (100.0 )% - 782,879 (782,879 ) (100.0 )%
Net loss applicable to
common stockholders - (1,806,231 ) 1,806,231 (100.0 )% - (2,846,027 ) 2,846,027 (100.0 )%
Research and development expense decreased for the three-month period endedSeptember 30, 2017 compared toSeptember 30, 2016 by$67,427 or 52.4% and decreased for the nine-month period endedSeptember 30, 2017 compared to the nine-month period endedSeptember 30, 2016 by$32,680 or 11.2% as a result of a reduction in clinical trial expenses, supplies and other related discretionary expenses as the Company started to focus resources to raising capital for the Company's on-going operations and restructure research and development activities away from non-core products to Generx, the Company's core product. Selling, general and administrative expenses decreased$536,068 or 60.4% for the three-month period endedSeptember 30, 2017 compared to the three-month period endedSeptember 30, 2016 and decreased$499,250 or 28.3% for the nine-month period endedSeptember 30, 2017 compared to the nine-month period endedSeptember 30, 2016 , due to a decrease in legal and professional expenses due to the Company's decision to suspendSEC filings, while the Company focused efforts on raising capital for the ongoing operations of the Company and due to a decrease in all discretionary spending in 2017. Interest expense decreased$999 or 13.5% for the three-month period endedSeptember 30, 2017 compared to the three-month period endedSeptember 30, 2016 as a result of a lower interest rate on the outstanding interest-bearing payables of the Company and increased by$3,202 for the nine-month period endedSeptember 30, 2017 compared toSeptember 30, 2016 as a result of an increase in the note payable in 2017, therefore increasing the accrued interest each month on the note payable. -49-
GENE BIOTHERAPEUTICS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, 2019 June 30, 2019 March 31, 2019
Assets
Current assets:
Cash $ 37,258 $ 319 $ 4,405
Prepaid expenses and other assets 16,763 12,542 13,660
Total current assets 54,021 12,861 18,065
Property and equipment, net 12,988 28,930 44,873
Total other assets 12,988 28,930 44,873
Total assets $ 67,009 $ 41,791 $ 62,938
Liabilities and Stockholders'
Deficit
Current liabilities:
Accounts payable $ 1,864,149 $ 1,897,165 $ 1,866,814
Accrued liabilities 3,349,698 3,237,398 3,042,009
Advances from officer 749,025 778,625 779,684
Notes payable-Current 265,430 257,113 248,885
Deferred rent 2,098 4,820 7,543
Total current liabilities 6,230,400 6,175,121 5,944,935
Notes payable-Long term 120,395 -
Deferred rent - - -
Total liabilities 6,350,796 6,175,121 5,944,935
Commitments and contingencies - -
Stockholders' deficit:
Series A Convertible Preferred
stock, $0.0001 par value;
40,000,000 shares authorized;
issued and outstanding 790 on
September 30, 2019 , June 30, 2019 ,
and March 31, 2019 , with
liquidation preferences of $790,000 - - -
Common stock, $0.0001 par value;
200,000,000 shares authorized;
issued and outstanding 14,489,399
on September 30, 2019 , June 30,
2019, and on March 31, 2019. 1,449 1,449 1,444
Common stock issuable 600,000 600,000 600,000
Additional paid-in capital 114,020,581 114,020,581 114,020,586
Accumulated deficit (120,362,371 ) (120,231,704 ) (120,005,335 )
Total controlling interest (5,740,341 ) (5,609,674 ) (5,383,304 )
Non-controlling interest (543,446 ) (523,657 ) (498,693 )
Total stockholders' deficit (6,283,787 ) (6,133,331 ) (5,881,998 )
Total liabilities and stockholders'
deficit $ 67,009 $ 41,791 $ 62,938
-50-
GENE BIOTHERAPEUTICS, INC.
Condensed Statements of Operations
(unaudited)
Three Months Ended
March 31,
2019 2018
Operating expensesResearch and development$ 63,379 $ 62,767 Selling, general and administrative 179,599
234,630
Total operating expenses 242,978 297,397
Loss from operations (242,978 ) (297,397 )
Other expenses:
Interest expense (10,129 ) (7,927 )
Net loss $ (253,107 ) $ (305,324 ) Net loss attributable to the non-controlling interest (26,738 ) (29,351 ) Net loss attributable to the controlling interest$ (226,369 )
(0.02 ) (0.02 )
Weighted average common shares outstanding 14,473,967 14,393,822
-51-
GENE BIOTHERAPEUTICS, INC.
Condensed Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Operating expenses
Research and development $ 60,355 $ 63,049 $ 123,734 $ 125,816
Selling, general and
administrative 180,473 267,629 360,072 502,259
Total operating expenses 240,828 330,678 483,806 628,075
Loss from operations (240,828 ) (330,678 ) (483,806 ) (628,075 )
Other expenses:
Interest expense (10,504 ) (9,097 ) (20,633 ) (17,024 )
Net loss $ (251,332 ) $ (339,775 ) $ (504,440 ) $ (645,099 )
Net loss (income) attributable
to the non-controlling interest (24,963 ) (27,568 ) (51,701 ) (56,919 )
Net loss (income) attributable
to the controlling interest $ (226,369 ) $ (312,207 ) (452,739 ) (588,180 )
Net loss attributable to
controlling interest per share:
Basic and diluted (0.02 ) (0.02 ) (0.03 ) (0.04 )
Weighted average common shares
outstanding 14,489,399 14,399,320 14,481,726 14,414,138
-52-
GENE BIOTHERAPEUTICS, INC.
Condensed Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Operating expenses
Research and development $ 61,443 $ 66,442 $ 185,177 $ 192,258
Selling, general and
administrative 114,047 207,279 474,119 709,538
Total operating expenses 175,490 273,721 659,296 901,796
Gain on sale of assets and
technology - (650,000 ) - (650,000 )
Income (loss) from operations (175,490 ) 376,279 (659,296 ) (251,796 )
Other income (expenses):
Gain on account payable
forgiveness 35,985 35,985
Interest expense (10,952 ) (12,603 ) (31,585 ) (29,628 )
Net loss $ (150,457 ) $ (363,676 ) $ (654,896 ) $ (281,423 )
Net loss (income) attributable
to the non-controlling interest (19,789 ) (31,675 ) (71,490 ) (88,594 )
Net loss (income) attributable
to the controlling interest $ (130,667 ) $ 395,351 (583,406 ) (192,829 )
Net loss per share - Basic and
diluted
Net loss per share - Basic and
diluted $ (0.01 ) $ (0.03 ) $ (0.04 ) $ (0.01 )
Weighted average common shares
outstanding 14,489,399 14,433,843 14,484,311 14,428,246
-53-
GENE BIOTHERAPEUTICS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, 2018 June 30, 2018 March 31, 2018
Assets
Current assets:
Cash $ 166,505 $ 24,873 $ 809
Prepaid expenses and other assets 33,213 23,475 11,898
Total current assets 199,718 48,348 12,708
Property and equipment, net 76,757 92,133 108,075
Total other assets 76,757 92,133 108,075
Total assets $ 276,475 $ 140,481 $ 120,783
Liabilities and Stockholders'
Deficit
Current liabilities:
Accounts payable $ 1,828,431 $ 1,860,818 $ 1,883,765
Accrued liabilities 2,677,259 2,817,884 2,459,309
Advances from officer 882,937 943,627 1,004,343
Notes payable-current 232,431 224,113 217,253
Deferred rent 12,987 15,285 17,583
Total current liabilities 5,634,045 5,861,727 5,582,253
Notes payable-long term - - -
Deferred rent - - -
Total liabilities 5,634,045 5,861,727 5,582,253
Commitments and contingencies - - -
Stockholders' deficit:
Series A Convertible Preferred
stock, $0.0001 par value;
40,000,000 shares authorized;
issued and outstanding 800 on
September 30, 2018 , and June 30,
2018 , and 806 on March 31, 2018 ,
with liquidation preferences of
$800,000 , $800,000 , and $806,000
respectively - - -
Common stock, $0.0001 par value;
200,000,000 shares authorized;
issued and outstanding 14,433,843
on September 30, 2018 , and June 30,
2018 , and 14,398,544 on March 31,
2018 1,443 1,443 1,439
Common stock issuable 600,000 600,000 600,000
Additional paid-in capital 114,020,587 114,020,587 113,940,591
Accumulated deficit (119,536,913 ) (119,932,264 ) (119,620,056 )
Total controlling interest (4,914,883 ) (5,310,233 ) (5,078,026 )
Non-controlling interest (442,688 ) (411,013 ) (383,445 )
Total stockholders' deficit (5,357,570 ) (5,721,246 ) (5,461,470 )
Total liabilities and stockholders'
deficit $ 276,475 $ 140,481 $ 120,783
-54-
GENE BIOTHERAPEUTICS, INC.
Condensed Statements of Operations
(unaudited)
Three Months Ended
March 31,
2018 2017
Operating expensesResearch and development$ 62,767 $ 130,762 Selling, general and administrative 234,630
522,565
Total operating expenses 297,397 653,327
Loss from operations (297,397 ) (653,327 )
Other expenses:
Interest expense (7,927 ) (1,956 )
Net loss $ (305,324 ) $ (655,283 ) Net loss attributable to the non-controlling interest (29,351 ) (75,160 ) Net loss attributable to the controlling interest$ (275,973 )
(0.02 ) (0.05 )
Weighted average common shares outstanding 14,393,822 14,053,266
-55-
GENE BIOTHERAPEUTICS, INC.
Condensed Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
Operating expenses
Research and development $ 63,049 $ 66,182 $ 125,816 $ 196,944
Selling, general and
administrative 267,629 389,387 502,259 911,952
Total operating expenses 330,678 455,569 628,075 1,108,896
Loss from operations (330,678 ) (455,569 ) (628,075 ) (1,108,896 )
Other income (expenses):
Interest expense (9,097 ) (4,709 ) (17,024 ) (6,665 )
Total other income (expenses) (9,097 ) (4,709 ) (17,024 ) (6,665 )
Net loss $ (339,775 ) $ (460,278 ) $ (645,099 ) $ (1,115,561 )
Net loss (income) attributable
to the non-controlling interest (27,568 ) (42,785 ) (56,919 ) (117,945 )
Net loss (income) attributable
to the controlling interest $ (312,207 ) $ (417,493 ) (588,180 ) (997,616 )
Net loss attributable to
controlling interest per share:
Basic and diluted (0.02 ) (0.02 ) (0.04 (0.02 )
Weighted average common shares
outstanding 14,399,320 14,355,962 14,414,138 14,314,980
-56-
GENE BIOTHERAPEUTICS, INC.
Condensed Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
Operating expenses
Research and development $ 66,442 $ 61,271 $ 192,258 $ 258,215
Selling, general and
administrative 207,279 351,173 709,538 1,263,125
Total operating expenses 273,721 412,444 901,796 1,521,340
Gain on sale of assets and
technology (650,000 ) - (650,000 ) -
Income (Loss) from operations 376,279 (412,444 ) (251,796 ) (1,521,340 )
Other expenses:
Interest expense (12,603 ) (6,414 ) (29,628 ) (13,080 )
Net income (loss) $ 363,676 $ (418,858 ) $ (281,423 ) $ (1,534,420 )
Net income (loss) attributable
to the non-controlling interest 31,675 (43,536 ) (88,594 ) (161,482 )
Net loss attributable to the
controlling interest 395,351 (375,322 ) (192,829 ) (1,372,938 )
Net loss per share - Basic and
diluted
Net loss per share - Basic and
diluted $ (0.03 ) $ (0.03 ) $ (0.01 ) $ (0.03 )
Weighted average common shares
outstanding 14,433,843 14,373,544 14,428,246 14,283,709
-57-
GENE BIOTHERAPEUTICS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30, 2017 June 30, 2017
Assets
Current assets:
Cash $ 3,135 $ 14,970
Prepaid expenses and other assets 15,530
37,721
Total current assets 18,664 52,691
Property and equipment, net 139,960 155,902
Other long-term assets 11,766 11,766
Total other assets 151,726 167,668
Total assets $ 170,390 $ 220,359
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 1,817,662 $ 1,719,070
Accrued liabilities 2,017,017 1,789,517
Advances from officer 1,061,196 1,044,545
Notes payable-Current 76,387 47,515
Deferred rent - -
Total current liabilities 4,972,262 4,600,648
Notes payable-Long term - -
Deferred rent 21,413 24,137
Total liabilities 4,993,675 4,624,785Commitments and contingencies -
-
Stockholders' deficit: Series A Convertible Preferred stock,$0.0001 par value; 40,000,000 shares authorized; issued and outstanding 811 onSeptember 30, 2017 , andJune 30, 2017 , with liquidation preferences of$811,000 -
-
Common stock,$0.0001 par value; 200,000,000 shares authorized; issued and outstanding 14,373,544, on September 30, 2017, and on June 30, 2017 1,437 1,437 Common stock issuable 600,000 600,000 Additional paid-in capital 113,398,158 113,441,695 Accumulated deficit (118,509,667 ) (118,177,882 ) Total controlling interest (4,510,072 ) (4,134,750 ) Non-controlling interest (313,213 ) (269,676 ) Total stockholders' deficit (4,823,285 ) (4,404,426 ) Total liabilities and stockholders' deficit $ 170,390 $ 220,359 -58- GENE BIOTHERAPEUTICS, INC. Condensed Statements of Operations (unaudited) Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Operating expenses Research and development$ 66,182 $ 78,863 $ 196,944 $ 162,197 Selling, general and administrative 389,387 531,464 911,952 872,133 Total operating expenses 455,569 610,327 1,108,896 1,034,330 Loss from operations (455,569 ) (610,327 ) (1,108,896 ) (1,034,330 ) Other income (expenses): Interest expense (4,709 ) (2,893 ) (6,665 ) (5,466 ) Gain on sale of assets and technology Total (4,709 ) (2,893 ) (6,665 ) (5,466 ) Net loss$ (460,278 ) $ (613,220 ) $ (1,115,561 ) $ (1,039,796 ) Net loss (income) attributable to the non-controlling interest (42,785 ) - (117,945 ) -
Net loss (income) attributable
to the controlling interest
-
Net loss attributable to
controlling interest per share:
Basic and diluted (0.02 ) (0.05 ) (0.02 ) (0.08 )
Weighted average common shares
outstanding 14,355,962 13,191,725 14,314,980 13,191,725
-59-
GENE BIOTHERAPEUTICS, INC.
Condensed Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
Operating expenses
Research and development $ 61,271 $ 128,698 $ 258,215 $ 290,895
Selling, general and
administrative 351,173 887,241 1,263,125 1,762,375
Total operating expenses 412,444 1,015,939 1,521,340 2,053,270
Loss from operations (412,444 ) (1,015,939 ) (1,521,340 ) (2,053,270 )
Other income (expenses):
Interest expense (6,414 ) (7,413 ) (13,080 ) (9,878 )
Net loss $ (418,858 ) $ (1,023,352 ) $ (1,534,420 ) $ (2,063,148 )
Net loss (income) attributable
to the non-controlling interest (43,536 ) (19,460 ) (161,482 ) (19,460 )
Net loss (income) attributable
to the controlling interest $ (375,322 ) $ (1,003,892 ) $ (1,372,938 ) $ (2,043,688 )
Deemed dividend on preferred
stock - 782,879 - 782,879
Net loss applicable to common
stockholders - (1,806,231 ) - (2,846,027 )
Net loss per share - Basic and
diluted
Net loss per share - Basic and
diluted $ (0.01 ) $ (0.14 ) $ (0.03 ) $ (0.21 )
Weighted average common shares
outstanding 14,373,544 13,312,777 14,283,709 13,232,422
-60-© Edgar Online, source
