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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the quarterly period ended June 30, 2022
   
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
  For the transition period from __________  to __________
   
  Commission File Number: 333-156091

 

Alterola Biotech, Inc.

(Exact name of Registrant as specified in its charter)

 

Nevada 82-1317032
(State or other jurisdiction of incorporation or organization)  (IRS Employer Identification No.)

 

47 Hamilton Square Birkenhead Merseyside

CH41 5AR United Kingdom

(Address of principal executive offices)

 

+44 151 601 9477
(Registrant’s telephone number)
 
 _______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days

[X] Yes [ ] No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] Yes [ ] No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.

 

Large accelerated Filer Accelerated Filer
Non-accelerated Filer Smaller reporting company
  Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

[ ] Yes [X] No

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 807,047,948 shares as of August 10, 2022 .

 

  

 

 

 

TABLE OF CONTENTS

 

Page

 

PART I – FINANCIAL INFORMATION

 

Item 1: Financial Statements 3
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
Item 3: Quantitative and Qualitative Disclosures About Market Risk 7
Item 4: Controls and Procedures 7

 

PART II – OTHER INFORMATION

 

Item 1: Legal Proceedings 8
Item 1A: Risk Factors 8
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 8
Item 3: Defaults Upon Senior Securities 8
Item 4: Mine Safety Disclosure 8
Item 5: Other Information 8
Item 6: Exhibits 9

 

 2 

 

PART I - FINANCIAL INFORMATION

 

Item 1.     Financial Statements

 

Our consolidated financial statements included in this Form 10-Q are as follows:

 

F-1   Consolidated Balance Sheets as of June 30, 2022 (unaudited) and March 31, 2022;

 

F-2   Consolidated Statements of Operations for the three months ended June 30, 2022 and 2021 (unaudited);
   
F-3 Consolidated Statement of Stockholders’ Deficit for the three months ended June 30, 2022 and 2021 (unaudited)

 

F-4   Consolidated Statements of Cash Flow for the three months ended June 30, 2022 (unaudited);

 

F-5   Notes to Consolidated Financial Statements.

 

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the Securities Exchange Commission (“SEC”) instructions to Form 10-Q.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  Operating results for the interim period ended June 30, 2022 are not necessarily indicative of the results that can be expected for the full year.

 

 3 

 

ALTEROLA BIOTECH, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2022 AND MARCH 31, 2022

 

   June 30, 2022  March 31, 2022
ASSETS          
Current Assets          
Bank  $61,542   $63,816 
Funds in attorney trust account         12,409 
VAT Receivable   12,819    50,686 
Inventory   969    1,050 
Deferred Tax Asset   44,030       
Total current assets   119,360    127,691 
           
Intangible Assets   12,000,000    12,000,000 
           
TOTAL ASSETS  $12,119,360   $12,127,961 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
           
Current Liabilities          
Accounts payable  $570,509   $542,510 
Accrued liabilities   406,318    396,486 
Accrued liabilities, related party            
Loans payable, related party   99,570    98,470 
Total Current Liabilities   1,076,397    1,039,465 
Long-term Liabilities          
Convertible Note Payable   151,613    164,220 
           
Total Liabilities   1,228,010    1,201,685 
           
Stockholders’ Equity (Deficit)          
Preferred Stock, $.001 par value, 10,000,000 shares authorized, -0- shares issued and outstanding            
Common Stock, $.001 par value, 2,000,000,000 shares authorized, 802,633,333 and 802,633,333 shares issued and outstanding, respectively   802,633    802,633 
Foreign currency translation adjustment   189,673    14,599 
Additional paid-in capital   18,079,554    18,079,554 
Accumulated deficit   (8,180,510)   (7,970,510)
Total Stockholders’ Equity (Deficit)   10,891,350    10,926,276 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT  $12,119,360   $12,127,961 

 

See accompanying notes to financial statements.

 

 F-1 

 

ALTEROLA BIOTECH, INC.

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

                 
   June 30, 2022  June 30, 2021
       
REVENUES  $     $   
           
OPERATING EXPENSES          
Accounting and audit fees   34,917    8,392 
Professional fees   2,396       
Research and development   18,472    136,291 
Legal fees   2,611    719 
Directors fees and expenses   15,287    0 
Consulting fees   6,231    0 
Salaries and wages   97,428    0 
General and administrative expenses   32,658    5,158 
TOTAL OPERATING EXPENSES   210,000    150,560 
           
LOSS FROM OPERATIONS   (210,000)   (150,560)
           
OTHER INCOME (EXPENSE)          
    —      —   
TOTAL OTHER INCOME (EXPENSE)            
           
PROVISION FOR INCOME TAXES            
           
NET LOSS  $(210,000)   (150,560)
           
NET LOSS PER SHARE: BASIC AND DILUTED  $(0.00)  $(0.00)
           
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED   802,633,333    754,280,000 

  

 

See accompanying notes to financial statements.

 

 F-2 

 

ALTEROLA BIOTECH, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD FROM JANUARY 7, 2021 (INCEPTION) TO MARCH 31 2022 AND JUNE 30, 2022

 

                                                 
    Common stock                     
    Shares    Amount    Additional paid in capital    Accumulated other comprehensive income ( loss)    Deficit    Total 
Balance, January 7, 2021(inception)   100   $136         $0   $0   $136 
Related party interest forgiven               1,544                1,544 
Recapitalization on reverse merger   754,279,900    754,144    (1,544)         (1,156,343)   (403,743)
                               
Change in foreign currency                     (14,023)         (14,023)
                               
Net loss for the period ended June 30, 2021                           (343,033)   (343,033)
Balance, June 30, 2021   754,280,000   $754,280         $(14,023)  $(1,499,376)  $(759,119)
Change in foreign currency                     28,622          368,657 
Shares issued for cash   853,333    853    367,804                266,721 
C2 Wellness acquisition   24,000,000    24,000    11,976,000                12,000,000 
Shares issued related to S-1 Registration   7,500,000    7,500    2,391,750                2,399,250 
Shares issued for services REB Consulting   16,000,000    16,000    3,344,000                3,360,000 
Net loss for the period ended March 31, 2022                           (6,471,134)   (6,471,134)
Balance, March 31, 2022   802,633,333   $802,633   $18,079,054   $14,599   $(7,970,510)  $10,926,276 
Change in foreign currency                     175,074         175,074
Net loss for the period ended June 30, 2022                           (210,000)   (210,000)
Balance, June 30, 2022   802,633,333   $802,633   $18,079,054   $189,673  $(8,180,510)  $10,891,350 

 

 

See accompanying notes to financial statements.

 

 F-3 

  

ALTEROLA BIOTECH, INC.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

                 
   June 30, 2022  June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES      
Net loss for the period  $(210,000)   (150,560)
Adjustments to reconcile net loss to net cash          
Shares issued for services          
Changes in assets and liabilities:          
Prepaids         (2,067)
Funds in attorney trust 12,409 0
VAT Receivable   37,867    0 
Deferred tax asset (44,030) 0
Accruals- related party         (232,832)
Accruals   9,832    144,590 
Accounts payable   27,999    240,151 
Net Cash Used by Operating Activities   (165,923)   (718)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Net Cash Used by Investing Activities         0 
           
           
CASH FLOWS FROM FINANCING ACTIVITIES          
           
Net from related parties   1,100    746 
Net Cash Provided by Financing Activities   1,100    746 
           
Effect of exchange rate adjustments on cash   162,548    160 
           
Net Increase (Decrease) in Cash and Cash Equivalents   (2,274)   (132)
           
Cash and cash equivalents, beginning of period   63,816    519 
Cash and cash equivalents, end of period  $61,542    387 
           
SUPPLEMENTAL CASH FLOW INFORMATION          
Interest paid  $         
Income taxes paid  $         
           
NON-CASH INVESTING AND FINANCING INFORMATION          

 

See accompanying notes to financial statements.

 

 F-4 

 

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

 

NOTE 1 – NATURE OF BUSINESS

 

After formation, the Company was in the business of mineral exploration. On May 3, 2010, the Company sold its mineral exploration business and entered into an Intellectual Property Assignment Agreement (“IP Agreement”) with Soren Nielsen pursuant to which Mr. Nielsen transferred his right, title and interest in all intellectual property relating to certain chewing gum compositions having appetite suppressant activity (the “IP”) to the Company for the issuance of 55,000,000 shares of the Company’s common stock.

 

Following the acquisition of the IP the Company changed its business direction to pursue the development of chewing gums for the delivery of Nutraceutical/functional ingredients for applications such as appetite suppressant, cholesterol suppressant, vitamin delivery, antioxidant delivery and motion sickness suppressant.

 

The business plan of the company will no longer be focused on a chewing gum delivery system but it will re-focus its activities to the development of cannabinoid, cannabinoid-like, and non-cannabinoid pharmaceutical active pharmaceutical ingredients (APIs), pharmaceutical medicines made from cannabinoid, cannabinoid-like, and non-cannabinoid APIs and European novel food approval of cannabinoid-based, cannabinoid-like and non-cannabinoid ingredients and products .In addition, the company plans to develop such bulk ingredients for supply into the cosmetic sector.

 

On January 19, 2021, the Company entered into an Stock Purchase Agreement (the “Agreement”) with ABTI Pharma Limited, a company registered in England and Wales (“ABTI Pharma”), pursuant to which the Company agreed to acquire all of the outstanding shares of capital stock of ABTI Pharma from its shareholders in exchange for 600,000,000 shares of the Company pro rata to the ABTI Pharma shareholders. The shares were issued on January 29, 2021 in anticipation of the closing and the parties to the transaction agreed in a March 24, 2021 amendment to close upon the ABTI Pharma Limited Shares being transferred to the Company, which was to occur upon the filing by the Company of its outstanding December 31, 2020 quarterly report on Form 10-Q, which was filed on May 28, 2021 with the Securities and Exchange Commission. The transaction closed on May 28, 2021.

 

The transaction is being accounted for as a reverse acquisition and recapitalization. ABTI Pharma is the acquirer for accounting purposes and the Company is the issuer. The historical financial statements presented are the financial statements of ABTI. The Agreement was treated as a recapitalization and not as a business combination; at the date of the acquisition, the net liabilities of the legal acquirer, Alterola, were $389,721.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United State of America (GAAP accounting) and include the accounts of Alterola and its wholly owned subsidiaries ABTI Pharma, Phytotherapeutix Ltd, Ferven Ltd., and Nano4M Ltd. All material intercompany transactions and balances have been eliminated.

 

The Company had a September 30 fiscal year end. Subsequent to the Agreement with ABTI Pharma, the Company has changed its year end from September 30 to March 31.

 

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Equivalents

For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.

 

 F-5 

  

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOLIDATEDEDFINANCIAL STATEMENTS

JUNE 30, 2022

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Fair Value of Financial Instruments

Alterola’s financial instruments consist of cash and equivalents, accrued expenses, accrued interest and notes payable. The carrying amount of these financial instruments approximates fair value (“FV”) due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.

 

FV is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The FV should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the FV of liabilities should include consideration of non-performance risk including our own credit risk.

 

In addition to defining FV, the disclosure requirements around FV establish a FV hierarchy for valuation inputs which is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring FV are observable in the market. Each FV measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the FV measurement in its entirety. These levels are:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. 

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The FV are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

The carrying value of the Company’s financial assets and liabilities which consist of cash, accounts payable and accrued liabilities, and notes payable are valued using level 1 inputs. The Company believes that the recorded values approximate their FV due to the short maturity of such instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.

 

Income Taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 

 F-6 

 

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Foreign Currency Translation

The financial statements are presented in US Dollars. Transactions with foreign subsidiaries where US dollars are not the functional currency will be recorded in accordance with Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830 Foreign Currency Transaction. According to Topic 830, all assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with ASC Topic 220, Comprehensive Income . Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss )

 

Revenue Recognition

On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. As of and for the year ended June 30, 2022, the financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605.

 

Loss Per Common Share

Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments.

 

Stock-Based Compensation

Stock-based compensation is accounted for at FV in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options

 

Risks and Uncertainties

On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic.  Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and business.  The Coronavirus and actions taken to mitigate it have had and are expected to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plans to operate.”

 

Recent Accounting Pronouncements

Alterola does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

 F-7 

 

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2022

 

NOTE 3 – CAPITAL STOCK

 

The Company has 2,000,000,000 shares of $.001 par value common stock authorized and 10,000,000 shares of $.001 par value preferred stock authorized.

 

The Company has 802,633,333 and 802,633,333 shares of common stock issued and outstanding as of June 30, 2022 and June 30, 2021, respectively. There are no shares of preferred stock issued and outstanding as of June 30, 2022 and June 30, 2021.

  

NOTE 4 – ACQUISITION

 

On November 9, 2021, the Company entered into an agreement with C2 Wellness Corporation for acquisition of patents, molecules, and a research and development team. The transaction was closed by providing 24,000,000 million shares of the company to the prior owners of C2 Wellness Corporation, who stayed on and are working as consultants for the company. At the date of acquisition, the price per share of the company shares was $0.50, and the value of the intangible asset identified was $12,000,000. As part of annual impairment procedures performed, the Company did not find sufficient evidence to write down the asset, and as such the value at June 30, 2022 is $12,000,000.

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

Alterola neither owns nor leases any real or personal property. An officer has provided office space without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.

 

During the period ended June 30, 2022, a shareholder made advances to the company to fund operating expenses in the amount of $99,570. These advances are non – interest bearing and have no specified terms of repayment.

 

NOTE 6 – LIQUIDITY & GOING CONCERN

 

Alterola has negative working capital of $957,037, has incurred losses since inception of $8,180,510, and has not received revenues from sales of products or services. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

 

The ability of Alterola to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.

 

NOTE 7 – SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855-10, the Company analyzed its operations subsequent to June 30, 2022 to the date these financial statements were issued, and determined it does not have any material subsequent events to disclose in these financial statements.

 

 F-8 

 

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.   These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

 

Overview

 

Our goal is to provide better medicines for patients across the globe. We believe in harnessing the therapeutic potential of cannabinoids and cannabinoid- like compounds, which can bring valuable treatments to seriously ill patients. Rather than just focusing on one method of identifying, researching and developing such medicines, we are interested in developing new medicines from all sources including botanical, traditional chemical synthesis and biosynthetic methodologies.

 

On May 28, 2021, we acquired ABTI Pharma Limited, a company registered in England and Wales (“ABTI Pharma”), with the purchase of all of its capital stock in exchange for 600,000,000 shares of our common stock pro rata to the ABTI Pharma shareholders.

 

As a result of the acquisition, we are a pharmaceutical company working with cannabinoid and cannabinoid like molecules. We have three areas of focus:

 

1)Development of regulated pharmaceuticals (human and animal health) and regulated food products. This has been achieved via the strategic acquisition of Phytotherapeutix Ltd.;

 

2)Production of low cost of goods Active Pharmaceutical Ingredient (API) and food-grade ingredients (supported by the strategic acquisition of Ferven Ltd); and

 

3)Formulation, and drug delivery, providing improved bioavailability, solubility and stability (supported by the exclusive licensing of IP and technology from Nano4M Ltd).

 

Phytotherapeutix Ltd, a subsidiary of ABTI Pharma, has generated a number of molecules with patents pending, some of which have demonstrable pharmacological activity, similar to that of CBD. This means that some of these molecules are anticipated to have a similar market potential to CBD across a range of therapeutic areas.

 

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Ferven Ltd, another subsidiary of ABTI Pharma, is looking to produce cannabinoids by fermentation. The exclusively licensed organism has the potential to be genetically modified to produce multiple cannabinoids at an anticipated very low cost of goods. It is anticipated that the selected genetically modified organisms will grow very quickly, which in turn, reduces the cost of production.

 

Nano4M Ltd is a company which has exclusively licensed its nano-formulation patents and know-how to ABTI Pharma Ltd.

 

As a result of the acquisition of assets and intellectual property from C2 Wellness Corp. on December 02, 2021, Alterola now has the following assets and intellectual property:

 

  • Novel cannabinoid molecules and their associated intellectual property;
  • Novel cannabinoid pro-drugs, and their associated intellectual property;
  • Novel proprietary cannabinoid formulations, designed to target lymphatic delivery, and their associated intellectual property;
  • Novel proprietary nano-encapsulated cannabinoid formulations, in self-dissolving polymers, and their associated intellectual property; and
  • Cannabinoids and cannabinoid pro-drug formulations for topical ocular delivery, and their associated intellectual property.

 

Additionally, we may consider entering into Joint Venture Partnerships, or acquire companies with complimentary portfolios or enter into Licensing Agreements to enhance the product portfolio. These are strategies the Company may implement and any such opportunities will be assessed on a case by case basis and on their merit at the time.

 

Alterola and ABTI Pharma management has extensive proven experience, know-how and connections in the cannabinoid medicines sector, and is looking to utilize this knowledge and experience for the development of such medicines from existing cannabinoids and cannabinoid-like molecules.

 

Our address is 47 Hamilton Square Birkenhead Merseyside CH41 5AR United Kingdom. Our telephone number is +44 151 601 9477. Our website is www.alterolabio.com. The company has a fully operational US$ and a £ sterling bank account in the United Kingdom with the HSBC Group.

 

We do not incorporate the information on or accessible through our websites into this Quarterly Report, and you should not consider any information on, or that can be accessed through, our websites a part of this Quarterly Report.

 

Results of Operations for the Three Months Ended June 30, 2022 and 2021

 

We have generated no revenues since inception and we do not anticipate earning revenues until such time that we are able to market and sell our ingredients and / or products / medicines.

 

We incurred operating expenses of $210,000 for the three months ended June 30, 2022, as compared with $150,560 for the same period ended 2021. Our operating expenses in 2022 increased as a result of human resource expenditures for employees, consultants and directors. With more staff and the lack of financing, we have not been able to ramp up research and development activities this quarter with only $18,432 spent as compared to $136,291 spent for the same period in 2021.

 

If we are able to obtain financing, we expect that our operational expenses will increase significantly for the balance of the fiscal year ended March 31, 2023 and beyond. This would be the result of increased research and development expenses associated with our product candidates, the regulatory process of approval of those products, increased payroll as we take on more help, as well as the expenses associated with our reporting obligations with the Securities and Exchange Commission.

 

We recorded a net loss of $210,000 for the three months ended June 30, 2022, as compared with $150,560 for the same period ended 2021.

 

As a newly formed pharmaceutical company, the company has limited operations to date, and expects to have reoccurring losses, as is typical with companies in the pharmaceutical industry, for the foreseeable future. As explained above, the company intends to raise capital and ramp up its efforts to bring its product candidates to market. This will require significant capital, product development to continue and complete and momentum on those product candidates through the regulatory process. There are no assurances that we will be able to generate revenues and achieve profitable operations.

 

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Liquidity and Capital Resources

 

As of June 30, 2022, we had $119,360 in current assets and current liabilities of $1,076,397. We had a working capital deficit of $957,037 as of June 30, 2022.

 

We used cash for operating activities of $165,923 for the three months ended June 30, 2022, as compared with cash used of $718 for the same period ended 2021. Our negative operating cash flow for 2022 was mainly the result of a net change in operating assets and liabilities of $44,077 and our net loss of $210,000. The significant change in operating assets and liabilities was an increase in accruals and accounts payable. Our negative operating cash flow for 2021 was also the result of a net change in operating assets and liabilities and net loss.

 

We used no cash in investing activities for the three months ended June 30, 2022, as well as for the same period ended 2021.

 

Financing activities provided $1,100 for the three months ended June 30, 2022, as a result of related party notes, as compared with $746 provided for the same period ended 2021, as a result of $746 advanced from related parties.  

 

We received US $100,000 in funding in July 2021 and we entered into an equity line financing in August 2021 for up to US $125,000,000. A further £100,000 Sterling (US $137,627) was invested in September 2021 and a further US $130,000 was invested into the company in November and December 2021.

 

We have had little access to capital since that time.  Without additional financing, we may not be able to pay staff, conduct our research and otherwise implement our business plan.

 

Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next 12 months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.

 

Off Balance Sheet Arrangements

 

As of June 30, 2022, we had no off balance sheet arrangements.

 

Going Concern

 

Our financial statements were prepared assuming we will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have negative working capital of $957,037 and have incurred losses since inception of $8,180,510. We expect to incur further losses in the development of our business and have been dependent on funding operations from inception. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans include continuing to finance operations through the private or public placement of debt and/or equity securities and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives. The financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

 

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Item 3.     Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 4.     Controls and Procedures

 

Disclosure Controls and Procedures

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2022. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of June 30, 2022, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

Remediation Plan to Address the Material Weaknesses in Internal Control over Financial Reporting

 

Our company plans to take steps to enhance and improve the design of internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending March 31, 2023: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the three months ended June 30, 2022 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1.     Legal Proceedings

 

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

 

Item 1A:  Risk Factors

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

 

None

 

Item 3.     Defaults upon Senior Securities

 

None

 

Item 4.     Mine Safety Disclosures

 

Not applicable.

 

Item 5.     Other Information

 

None

 

Item 6.      Exhibits

 

Exhibit Number Description of Exhibit
31.1** Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2** Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1** Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101** The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 formatted in Extensible Business Reporting Language (XBRL).
**Provided herewith  

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  Alterola Biotech, Inc.
   
Date: August 18, 2022
   
 

By: /s/ Seamus McAuley

Seamus McAuley

Title:   Chief Executive Officer (Principal Executive Officer) and Director

 

Date: August 18, 2022
   
 

By: /s/ Timothy Rogers

Timothy Rogers

Title:    Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), Chairman, and Director

 

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