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 ended
December 31, 2020included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commissionon April 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 in Newton, 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 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 the Journal 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 in India, 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 May through July, 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 April through June, 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 ten convertible loans outstanding at a total face value of $938,400. As a result of the ten-day SECsuspension of April 16. 2020, the notes entered into default and the principal owed is currently $1,612,356, including default penalties. As shown in the accompanying consolidated financial statements, the Company had an accumulated deficit of $6,343,630as at March 31, 2021. The accumulated deficit as at December 31, 2020was $4,721,923.
The company’s future depends on its ability to secure financing to expand its new business opportunities and bear the cost of drug development, including clinical trials and regulatory submission to the FDA.
16 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 Organizationdeclared Covid-19 to be a pandemic. In an effort to contain and mitigate the spread of Covid-19, many countries, including the United States, Canadaand 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
We are a start-up. Historically,
Operating Expenses Research and Development (R&D) expenses for the 3-months ended
March 31, 2021were $347,033, while there were no such expenses at 3 months ended March 31, 2020. General and administrative (G&A) expenses for the three months ended March 31, 2021were $567,320, while for the three months ended March 31, 2020, they were $110,542. The components of G&A expenses are as follows:
? Payroll and related expenses for the three months ended
the difference was due to the hiring of
? Costs of legal, accounting and other professional services for the three
Responsible for ongoing clinical trials.
? Sales and marketing costs for the three months ended
the decrease was due to a reduction in PR efforts.
? The remaining general and administrative expenses total
summary judgment against the Company, for the three months ended
2021, compared to
the decrease was due to participation in the
Stock-based Compensation Stock-based compensation mounted to
$774,558for the three months ended March 31, 2021. The stock-based compensation for the three months ended March 31, 2020was $155,501. The increase was due to the liquidation of the 2010 Stock Plan.
Interest expense and amortization of the debt discount and premium
During the three months ended
March 31, 2021, the Company didn't record any premium accretion to additional paid-in capital, and in amortization of debt discount, as compared to, $104,458of premium accretion and a debt discount amortization of $166,722(including warrant amortization of $145,438) for the three months ended March 31, 2020. The interest for the convertible notes outstanding amounted to $87,410, as compared to $107,730for the three months ended March 31, 2020. 17 Non-Controlling Interest
For the three months ending
Net Loss The Company generated a net loss for the three months ended
March 31, 2021of $1,621,707. In comparison, for the three months ended March 31, 2020, the Company generated a net loss of $540,495. The increased loss is a result of the summary judgement against the Company, the commencement of Research & Development as well as the liquidation of the 2010 Stock Plan. Cash-Flows
Net cash used in operating activities was
In the three months ended
March 31, 2021the Company is in the process of filing a patent, and $8,953was spent in legal fees. In the three months ended March 31, 2021there was no investment activities. Cash flows from financing activities were $450,000and $43,891for the three months ended March 31, 2021and 2020, respectively. The significant change was a $450,000investment by our JV partner in the Company's subsidiary, Pharmalectin.
The money available was
LIQUIDITY AND CAPITAL RESOURCES
December 31, 2020, our assets consisted of was $91,635in cash, $274,715in pre-paid expenses and $18,953in intangible assets in form of capitalized patent expenses. We had total liabilities of $2,878,322, which were all current liabilities, and which consisted of $845,216in accounts payable and accrued expenses (of which $368,367was payable to related parties), and $1,612,356in the form of ten convertible loans currently in default. As a result of defaulting on the notes, the debt premium as well as the debt discounts are fully amortized. On January 20, 2021the Supreme Court of the State of New York, County of Nassau, granted Power Up a summary judgement against the Company for Breach of Contact, awarding Power Up damages in the amount of $420,750, in the balance sheet classed as other short-term debt. The equivalent numbers As at December 31, 2020, our assets consisted of was $41,688in cash, $274,715in pre-paid expenses and $10,000in intangible assets in form of capitalized patent expenses. We had total liabilities of $2,267,659, which were all current liabilities, and which consisted of $655,303in accounts payable and accrued expenses (of which $307,176was payable to related parties), and $1,612,356in the form of ten convertible loans currently in default. As a result of defaulting on the notes, the debt premium as well as the debt discounts are fully amortized. At March 31, 2021, we have total working capital of negative $2,511,972and an accumulated deficit of $6,343,630. Comparatively, at December 31, 2020, we had total working capital of negative $1,951,256and an accumulated deficit of $4,721,923. We believe that we must raise not less than $3,700,000in addition to current cash on hand to be able to continue our business operations for approximately the next 15 months and repay the ten convertible notes. Future Financing We have a commitment from our JV partner to invest a total of $5 millionin the Company's subsidiary, at March 31, 2021 $1,400,000has been released, and at December 31, 2020 $950,000had been released. 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. 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. 18 Contractual Obligations As at March 31, 2021, our contractual obligations include ten convertible notes, with a face value of $938,400and of accrued interest for these notes mounting to $350,545, described under Note 7 to the Financial Statements. As a result of the ten-day SECsuspension of April 16, 2020, the notes entered into default resulting in a default penalty of $673,956, increasing the principal owed to $1,612,356.
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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