Forward-looking Statements
The following discussion of our financial condition and results of operations
should be read in conjunction with the consolidated financial statements and the
related notes thereto included elsewhere in this quarterly report. Some of the
information in this quarterly report contains forward-looking statements,
including statements related to anticipated operating results, margins, growth,
financial resources, capital requirements, adequacy of the Company's financial
resources, trends in spending on research and development, the development of
new markets, the development, regulatory approval, manufacture, distribution,
and commercial acceptance of new products, and future product development
efforts. Investors are cautioned that forward-looking statements involve risks
and uncertainties, which may affect our business and prospects, including but
not limited to, the Company's expected need for additional funding and the
uncertainty of receiving the additional funding, changes in economic and market
conditions, acceptance of our products by the health care and reimbursement
communities, new development of competitive products and treatments,
administrative and regulatory approval and related considerations, health care
legislation and regulation, and other factors discussed in our filings with the
Securities and Exchange Commission.
GENERAL
Our mission is the development of novel and proprietary pharmaceutical, medical
and cosmetic products. We develop our products through our German subsidiary,
Sangui GmbH. Currently, we are seeking to market and sell our products through
partnerships with industry partners worldwide.
Our focus has been the development of oxygen carriers capable of providing
oxygen transport in humans in the event of acute and/or chronic lack of oxygen
due to arterial occlusion, anemia or blood loss whether due to surgery, trauma,
or other causes, as well as in the case of chronic wounds. We have thus far
focused our development and commercialization efforts on such artificial oxygen
carriers by reproducing and synthesizing polymers out of native hemoglobin of
defined molecular sizes. In addition, we have developed external applications of
oxygen transporters in the medical and cosmetic fields in the form of sprays for
the healing of chronic wounds and of gels and emulsions for the regeneration of
the skin. A wound dressing that shows outstanding properties in the support of
wound healing, is being distributed by SastoMed GmbH (Sastomed), a former joint
venture company in which we had held a share of 25%, as global licensee under
the Granulox brand name. Effective as of the end of the second quarter of our
fiscal year 2016 we sold this stake to SanderStrohmann GmbH.
Sangui GmbH holds distribution rights for our Chitoskin wound pads for the
European Union and various other countries. Additionally, a European patent has
been granted for the production and use of improved Chitoskin wound pads.
Our current key business focuses are: (a) selling our existing cosmetics and
wound management products by way of licensing through distribution partners, or
by way of direct sale, to end users; (b) identifying additional industrial and
distribution partners for our patents, production techniques, and products; and
(c) obtaining the additional certifications on our products in development.
Artificial Oxygen Carriers
Sangui GmbH develops several products based on polymers of purified natural
porcine hemoglobin with oxygen carrying abilities that are similar to native
hemoglobin. These are (1) oxygen carrying blood additives and (2) oxygen
carrying blood volume substitutes.
According to regulatory requirements, all drugs must complete preclinical and
clinical trials before approval (e.g. Federal Drug Administration approval) and
market launch. The Company's management believes that the European and FDA
approval process will take at a minimum several years to complete.
Our most promising potential product in the area of artificial oxygen carriers,
the blood additive, is still in an early development stage. In the pursuit of
these projects, we will need to obtain substantial additional capital to
continue their development. As the Company has limited financial resources, we
have suspended this project
--------------------------------------------------------------------------------
13
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
temporarily in order to focus our attention on our chronic wound research and
the products developed in conjunction with their treatment.
Nano Formulations for the Regeneration of the Skin
Healthy skin is supplied with oxygen both from the inside as well as through
diffusion from the outside. A lack of oxygen will cause degenerative
alterations, ranging from premature aging, to surface damage, and even as
extensive as causing open wounds. The cause for the lack of oxygen may be a part
of the normal aging process, but it may also be caused by burns, radiation,
trauma, or a medical condition. Impairment of the blood flow, for example caused
by diabetes mellitus or by chronic venous insufficiency, can also lead to
insufficient oxygen supply and the resulting skin damage.
In response, we developed nano-emulsion based cosmetic preparations that in
their design are able to help support regeneration of the skin by improving its
oxygen supply. Our line of cosmetic products was thoroughly tested by an
independent research institute and received top marks for skin moisturizing, and
enhanced skin elasticity, respectively. However, sales of this series remained
at low levels and during the first quarter of the 2016 financial year we decided
to decrease our operations in this particular segment and to abandon the patent
protection for this range of products.
Chitoskin Wound Pads
Usually, normal ("primary") wounds tend to heal over a couple of days without
leaving scars following a certain sequence of phases. Burns and certain diseases
impede the normal wound healing process, resulting in large, hardly healing
("secondary") wounds which only close by growing new tissue from the bottom.
Wound dressings serve to safeguard the wound with its highly sensitive new
granulation tissue from mechanical damage as well as from infection. Using the
natural polymer chitosan, Sangui's Chitoskin wound dressings show outstanding
properties in supporting wound healing. Sangui GmbH holds various distribution
rights for our Chitoskin wound pads, and it is the strategy of the company to
find industry partners ready to acquire or license this product range as a
whole.
Hemospray Wound Spray
Sangui GmbH has developed a novel medical technology supporting the healing of
chronic wounds. Lack of oxygen supply to the cells in the wound ground is the
main reason why those wounds lose their genuine healing power. Based on its
concept of artificial oxygen carriers, the wound spray product we developed
bridges the watery wound surface and permits an enhanced afflux of oxygen to the
wound ground.
Sangui GmbH has granted SastoMed global distribution rights to this product.
Distribution of the wound spray began in the European Union in April 2012 under
the brand name "Granulox."
In December 2012, product distribution was initiated in Mexico by Sastomed and
their local distribution partner Bio-Mac Pharma. International distribution has
been expanded since then through cooperation agreements with local distribution
partners in the Benelux countries and South Eastern Europe.
Since December 2013, international distribution outside Germany in collaboration
with local partners has occurred in more than 40 countries in Europe and Latin
American.
On November 13, 2017, the Company announced that Infirst Healthcare Ltd reported
that the United States Food and Drug Administration had granted Fast Track
designation to Granulox for the treatment of diabetic foot ulcers. It is the
first and only hemoglobin spray to receive the Fast-Track designation - a
process designed to facilitate the development, and expedite the review of, new
therapies to treat serious conditions and fill an unmet medical need.
Despite the positive reviews of our product, Granulox sales have become more
volatile. We remain confident, however, that SastoMed will be able to
considerably increase its sales in conjunction with increased distribution of
the product into more international markets.
--------------------------------------------------------------------------------
14
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
In December 2010, Sangui GmbH established a joint venture company with
SanderStrothmann GmbH of Georgsmarienhuette, Germany, under the name of SastoMed
GmbH. This enterprise was in charge of obtaining the CE mark certification
authorizing the distribution of one of the Company's products in the member
states of the European Union. Effective December 31, 2015, Sangui GmbH sold its
stake in Sastomed GmbH to SanderStrohmann GmbH.
On or about June 18, 2018, Sangui GmbH together with Sastomed GmbH founded
Sangui Know-How- und Patentverwertungsgesellschaft mbH & Co. KG ("Sangui KG").
Sangui KG is a limited partnership. On June 22, 2018, Sangui KG acquired all the
rights in the license agreement made on December 17, 2010, between Sastomed GmbH
and Sangui GmbH.
Pursuant to the contracts dated May 2, 2018 and November 11, 2018 between Sangui
GmbH and Sangui KG, respectively, and a former contractor Sangui KG grants that
contractor a license fee on the license income received by Sangui for his
previous services as a co-inventor. The license fee is 10% similar to the
remuneration regulation of the German Law on Employee Inventions (ArbnErfG).
Given the Company's business strength is primarily in research and product
development, we have decided to partner with established distribution entities
who license our marketable products, or those products that are close to market
entry, for sale to end users. In pursuit of this strategy, we have licensed the
most promising product, a hemoglobin based wound spray technology to Sastomed
GmbH, a former joint venture of SGBI, for distribution in several European,
Latin American and Asian countries. In addition, we are entering the preclinical
testing of hemoglobin based artificial oxygen carriers aiming at the remediation
of ischemic conditions in human patients.
Effective July 27, 2020, Sastomed GmbH was merged with its parent company
Mölnlycke Health Care GmbH, Düsseldorf. As a result of the merger, the license
agreement between Sastomed GmbH and Sangui Know-How und
Patentverwertungsgesellschaft mbH & Co. KG is transferred with all rights and
obligations to the Mölnlycke Health Care GmbH.
FINANCIAL POSITION
During the nine-months ended March 31, 2022, our total assets increased $52,451
from $134,122 on June 30, 2021 to $186,573 on March 31, 2022. An increase in
accounts receivable of $4,985 and an increase in operating lease right-of-use
assets of $ 4,972 and an increase of cash of $ 37,849 from June 30, 2021 to
March 31, 2022 were primarily responsible for the increase in the total assets.
We funded our operations primarily through our existing cash reserves and cash
received from the issuance notes payables from related parties and third
parties. Our stockholders' deficit increased by $16,584 from ($875,325) on June
30, 2021 to ($891,909) on March 31, 2022. The primary factor behind this was net
loss attributable to common stockholders of $51,856.
RESULTS OF OPERATIONS
For the three-month and nine-month periods March 31, 2022 and 2021:
REVENUES - Revenues reported were $17,954 and $21,182 for the three-months ended
March 31, 2022 and 2021 respectively. For the nine-months ended March 31, 2022
and 2021 revenues were $58,686 and $51,754. The decrease of $3,228 and the
increase of $6,932 can be traced back to the development in royalties from the
licensing agreement with Mölnlycke Heath Care GmbH.
RESEARCH AND DEVELOPMENT- Research and development expenses decreased by $81 to
$1,979 from $2,060 for the three-month periods ending March 31, 2022 and 2021.
Research and development expenses decreased $4 to $6,478 in the first
nine-months of our 2022 financial year from $6,482 in the comparable period of
the previous year. The development is mainly attributed to fees for patents.
--------------------------------------------------------------------------------
15
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GENERAL AND ADMINISTRATIVE AND PROFESSIONAL FEES - The combined accumulated
general and administrative expenses and professional fees decreased $3,008 to
$44,233 during the three-months ended March 31, 2022, from $47,241 in the
respective period of the previous year mainly due to lower of costs for cars and
tax advice. Accumulated general and administrative expenses and professional
fees decreased $12,387 to $143,314 in the nine-month period ended March 31,
2022, from $155,701 in the respective period of the previous year mainly due to
lower of costs for tax advice and cars.
DEPRECIATION AND AMORTIZATION - Depreciation and amortization were $192 and $206
for the three-months and $589 and $610 for the nine-months ended March 31, 2022
and 2021 respectively.
GAIN/LOSS ON FOREIGN EXCHANGE - The three-month period ended March 31, 2022
shows gains on foreign exchange of $21,790 compared to gains of $32,167 during
the respective period of the previous year, hence a change of $10,377. The
nine-month period ended March 31, 2022 shows gains on foreign exchange of
$56,376 compared to losses of $27,611 during the respective period of the
previous year, hence a change of $83,987. The change is mainly due to the
revaluation of notes payables denominated in Euros at the end of each period.
INTEREST EXPENSE - Interest expenses for the three-month period ended March 31,
2022 and 2021 decreased by $18 to $4,562 from $4,580. For the nine-months ended
March 31, 2022 and 2021, interest expense increased by $708 to $13,981 from
$13,273. The increase relates to the increase of interest-bearing debt
financing.
LOSS ON SETTLEMENT ON ACCOUNTS PAYABLE - For a liability of $8,435 the company
issued 383,444 shares of its common stock. This resulted in a loss on settlement
of accounts payable of $4,254.
NET LOSS - As a result of the above factors, the net loss attributed to common
shareholders increased to $14,862 compared to a loss of $90 for the three-months
ended March 31, 2022 and 2021 and decreased to $51,856 compared to a loss of
$148,866 for the nine-months ended March 31, 2022 and 2021 respectively. The
loss per share for both periods was $(0.00).
Our consolidated net loss before non-controlling interest was $15,476 or $(0.00)
per common share, for the three-months ended March 31, 2022, compared to $738 or
$(0.00) per common share, during the comparable period in our 2021 financial
year. Our consolidated net loss before non-controlling interest was $53,554 or
$(0.00) per common share, for the nine-months ended March 31, 2022, compared to
$151,923 or $(0.00) per common share, during the comparable period in our 2021
financial year.
LIQUIDITY AND CAPITAL RESOURCES
For the nine-months ended March 31, 2022, net cash used in operating activities
decreased $1,059 to ($103,119), compared to ($104,178) in the corresponding
period of the previous year. This is mainly due to a decreased net loss for the
period partially compensated by effects of foreign currency exchange
transactions.
The Company funded its business in the first nine-months ended March 31, 2022 by
issuing note payables totaling Euros 100,000 ($112,934) and selling 2,616,556
shares of its common stock for $28,345 cash proceeds .
We had a working capital deficit of approximately $861,212 on March 31, 2022, a
decrease of approximately $26,829 from June 30, 2021.
On March 31, 2022 compared to June 30, 2021, we had cash of $67,617 compared to
$29,768, prepaid expenses of $17,649 compared to $12,020 and accounts receivable
of $21,616 compared $16,631. We will need substantial additional funding to
fulfill our business plan and we intend to explore financing sources for our
future development activities. No assurance can be given that these efforts
will be successful.
© Edgar Online, source Glimpses
SANGUI BIOTECH INTERNATIONAL, INC. 
