10-Q 1 form10-q.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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 September 30, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from_____________ to _____________

 

Commission file number: 001-35027

 

BIOXYTRAN, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   2834   26-2797630

(State or other jurisdiction of

incorporation or organization)

  (Primary Standard Industrial
Classification Code Number)
 

(I.R.S. Employer

Identification No.)

 

75 2nd Avenue, Ste 605, Needham, MA   02494
(Address of principal executive offices)   (Zip Code)

 

617-454-1199

(Registrant’s telephone number, including area code)

 

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. 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  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 ☐ No

 

Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock, as of the latest practicable date.

 

Class   Outstanding at November 1, 2023
Common Stock, $0.001 par value per share   144,642,333 shares

 

 

 

 

 

 

BIOXYTRAN, INC.

FORM 10-Q

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION  
       
  Item 1. Unaudited Condensed Consolidated Financial Statements 1
       
    Balance Sheets as of September 30, 2023 and December 31, 2022 (Unaudited) 1
       
    Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited) 2
       
    Statement of Changes in Stockholders’ Deficit for the Nine Months Ended September 30, 2023 and 2022 (Unaudited) 3
       
    Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (Unaudited) 5
       
    Notes to Unaudited Condensed Consolidated Financial Statements 6
       
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18
     
  Item 3. Quantitative and Qualitative Disclosures about Market Risk 25
       
  Item 4. Controls and Procedures 25
       
PART II - OTHER INFORMATION  
       
  Item 1. Legal Proceedings 27
       
  Item 1A. Risk Factors 27
       
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 27
       
  Item 3. Defaults upon Senior Securities 27
       
  Item 4. Mine Safety Disclosures 27
       
  Item 5. Other Information 27
       
  Item 6. Exhibits 28
       
SIGNATURES 29

 

Except as otherwise required by the context, all references in this report to “we”, “us”, “our” or “Company” refer to the consolidated operations of BIOXYTRAN, Inc.

 

i

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Unaudited Condensed Consolidated Financial Statements: BIOXYTRAN, Inc., September 30, 2023

 

BIOXYTRAN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

(UNAUDITED)

 

  

September 30, 2023

  

December 31, 2022

 
ASSETS          
Current assets:          
Cash  $80,273   $295,401 
Total current assets   80,273    295,401 
          
Intangibles, net   108,770    75,535 
           
Total assets  $189,043   $370,936 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payable and accrued expenses  $352,572   $749,395 
Accounts payable, related party       709,727 
Un-issued shares liability   10,386    960 
Un-issued shares liability, related party   45,000    38,400 
Loan from related party   25,000     
Convertible notes payable, net of premium and discount   1,900,000    2,165,000 
Total current liabilities   2,332,958    3,663,482 
           
Total liabilities   2,332,958    3,663,482 
           
Commitments and contingencies        
           
Stockholders’ deficit:          
Preferred stock, $0.001 par value; 50,000,000 shares authorized, nil issued and outstanding        
Common stock, $0.001 par value; 300,000,000 shares authorized; 144,355,355 issued and outstanding as at September 30, 2023 and 123,252,235 as at December 31, 2022   144,355    123,252 
Additional paid-in capital   12,821,885    8,392,430 
Non-controlling interest   (659,063)   (590,628)
Accumulated deficit   (14,451,092)   (11,217,600)
Total stockholders’ deficit   (2,143,915)   (3,292,546)
           
Total liabilities and stockholders’ deficit  $189,043   $370,936 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

1

 

 

BIOXYTRAN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

 

  

September 30,

2023

  

September 30,

2022

  

September 30,

2023

  

September 30,

2022

 
   Three months ended   Nine months ended 
  

September 30,

2023

  

September 30,

2022

  

September 30,

2023

  

September 30,

2022

 
Operating expenses:                    
Research and development  $316,129   $475,872   $604,771   $759,138 
General and administrative   530,777    (563,604)   2,031,347    440,336 
Compensation expense   138,558    73,507    157,268    142,630 
Total net operating expenses   985,464    (14,225)   2,793,386    1,342,104 
                     
Net loss from operations   (985,464)   14,225    (2,793,386)   (1,342,104)
                     
Other expenses:                    
Interest expense   (48,701)   (44,281)   (155,399)   (150,796)
Amortization of IP   (1,803)   (911)   (4,505)   (2,733)
Debt discount amortization and issuance of warrants       (172,182)   (348,637)   (304,941)
Total other expenses   (50,504)   (217,374)   (508,541)   (458,470)
                     
Net loss before provision for income taxes   (1,035,968)   (203,149)   (3,301,927)   (1,800,574)
                     
Provision for income taxes                
NET LOSS   (1,035,968)   (203,149)   (3,301,927)   (1,800,574)
                     
Net loss attributable to the non-controlling interest   34,777    79,507    68,435    142,314 
                     
NET LOSS ATTRIBUTABLE TO BIOXYTRAN  $(1,001,191)  $(123,642)  $(3,233,492)  $(1,658,260)
                     
Loss per common share, basic and diluted  $(0.01)  $(0.00)  $(0.02)  $(0.01)
                     
Weighted average number of common shares outstanding, basic and diluted   136,443,056    116,393,899    129,441,332    112,712,305 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

2

 

 

BIOXYTRAN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

 

                                     
   Common Stock   Preferred Stock   Additional Paid in Capital   Accumulated   Non-controlling   Total 
   Shares   Amount   Shares   Amount   Common   Preferred   Deficit   Interest   Equity 
January 1, 2022   110,840,998   $110,841           $5,881,876   $   $(8,753,668)  $(397,256)  $(3,158,207)
Issuance of Warrants        -         -    42,250                   42,250 
Net loss attributable to the non-controlling interest        -         -    -    -         (51,116)   (51,116)
Net loss                                 (912,270)        (912,270)
March 31, 2022   110,840,998   $110,841           $5,924,126   $   $(9,665,938)  $(448,372)  $(4,079,343)
                                              
Cancellation of Stock Options – 2021 Plan                       (47,267)                  (47,267)
Net loss attributable to the non-controlling interest                                      (11,691)   (11,691)
Net loss        -         -    -    -    (622,349)        (622,349)
June 30, 2022   110,840,998   $110,841           $5,876,859   $   $(10,288,287)  $(460,063)  $(4,760,650)
                                              
Correction for Stock Options – 2021 Plan                       47,267                   47,267 
Forfeiture of Warrants                       (6,763)                  (6,763)
Issuance stock-plan BoD   200,000    200    -    -    45,430                   45,630 
Issuance stock-plan Consultants   352,000    352              59,748                   60,100 
Issuance of warrants                       148,085                   148,085 
Sales of Shares   1,400,000    1,400              598,600                   600,000 
Conversion of warrants   4,139,503    4,140              (4,140)                   
Conversion of Loan and accrued interest   6,081,484    6,081              1,514,290                   1,520,371 
Net loss attributable to the non-controlling interest                                      (79,507)   (79,507)
Net loss       -         -    -    -    (123,642)        (123,642)
September 30, 2022   123,013,985   $123,014           $8,279,376       $(10,411,929)  $(539,570)  $(2,549,109)

 

3

 

 

   Common Stock   Preferred Stock   Additional Paid in Capital   Accumulated   Non-controlling   Total 
   Shares   Amount   Shares   Amount   Common   Preferred   Deficit   Interest   Equity 
January 1, 2023   123,252,235   $123,252           $8,392,430   $   $(11,217,600)  $(590,628)  $(3,292,546)
Stock transactions   250,000    250    -    -    79,750                   80,000 
Stock subscription                       (30,000)                  (30,000)
Net loss attributable to the non-controlling interest                                      (32,894)   (32,894)
Net loss        -         -    -    -    (785,083)        (785,083)
March 31, 2023   123,502,235   $123,502           $8,442,180   $   $(12,002,683)  $(623,522)  $(4,060,523)
                                              
Stock transactions   192,411    192    -    -    64,808                   65,000 
Shares issued to BoD & Mgmnt - 2021 Plan   110,000    110              50,090                   50,200 
Shares issued to Consultants - 2021 Plan   4,000    4              1,786                   1,790 
Shares issued to BoD & Mgmnt for conversion of debt   6,763,562    6,764              2,157,576                   2,164,340 
Shares issued to Consultants for conversion of debt   137,656    138              43,912                   44,050 
Conversion of debt   1,325,430    1,325              170,981                   172,306 
Issuance of Warrants                       348,637                   348,637 
Net loss attributable to the non-controlling interest                                      (764)   (764)
Net loss        -         -    -    -    (1,411,218)        (1,411,218)
June 30, 2023   132,035,294   $132,035       $   $11,279,970   $   $(13,413,901)  $(624,286)  $(2,626,182)
                                              
Stock transactions   3,188,459    3,188    -    -    387,173                   390,361 
Shares issued to BoD & Mgmnt - 2021 Plan   120,000    120              17,820                   17,940 
Shares issued to Consultants - 2021 Plan   477,000    477              70,835                   71,312 
Shares issued to BoD & Mgmnt for conversion of debt   5,824,741    5,825              780,515                   786,340 
Shares issued to Consultants for conversion of debt   1,600,000    1,600              142,400                   144,000 
Conversion of debt   1,109,861    1,110              143,172                   144,282 
Net loss attributable to the non-controlling interest                                      (34,777)   (34,777)
Net loss        -         -    -    -    (1,001,191)        (1,001,191)
September 30, 2023   144,355,355   $144,355           $12,821,885       $(14,451,092)  $(659,063)  $(2,143,915)

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

4

 

 

BIOXYTRAN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

 

         
   Nine months Ended 
  

September 30, 2023

  

September 30, 2022

 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(3,301,927)  $(1,800,574)
Adjustments to reconcile net loss to net cash used in operating activities:          
Debt discount amortization, incl. issuance of warrants   348,637    304,941 
Amortization of IP   4,505    2,733 
Stock-based compensation   157,268    142,630 
Interest paid with note conversion   51,588    53,371 
Changes in operating assets and liabilities:          
Accounts payable and accrued expenses   (208,773)   (282,805)
Accounts payable, related party   2,265,953    (69,273)
Net cash used in operating activities   (682,749)   (1,648,977)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Investment in intangibles   (37,740)   (30,151)
Net cash used in investing activities   (37,740)   (30,151)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from subsidiary stock transactions       600,000 
Proceeds from stock sales   505,361     
Proceeds from issuance of convertible notes payable       1,380,960 
Net cash provided by financing activities   505,361    1,980,960 
           
Net increase in cash   (215,128)   301,832 
Cash, beginning of period   295,401    72,358 
Cash, end of period  $80,273   $374,190 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
Interest paid  $52,425   $69,900 
Income taxes paid        
NON-CASH INVESTING & FINANCING ACTIVITIES          
Issuance of warrants   348,637    190,335 
Forfeiture of warrants       (6,763)
Debt discount on convertible note       121,369 
Common shares issued for the conversion of notes payable (principal and accrued interest)   316,588    1,520,371 
Common shares issued for the exercise of warrants  $   $68,910 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

5

 

 

BIOXYTRAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(UNAUDITED)

 

NOTE 1 – BACKGROUND AND ORGANIZATION

 

Business Operations

 

Bioxytran, Inc. (the “Company”) is a clinical stage pharmaceutical company focused on the development, manufacture and commercialization of therapeutic drugs designed to address hypoxia in humans, which is a lack of oxygen to tissues, in a safe and efficient manner.

 

Our Subsidiary, Pharmalectin, Inc. (the “Subsidiary”) is a clinical stage pharmaceutical company focused on the development, manufacture and commercialization of therapeutic drugs designed to address conditions related to Covid-19.

 

Our Foreign Subsidiary, Pharmalectin (BVI), Inc. (the “Foreign Subsidiary”) is the owner and custodian of the Company’s Copyrights, Trade Marks and Patents.

 

Our subsidiary, Pharmalectin India Pvt Ltd. (“Pharmalectin India”) is managing the Company’s local clinical research and trials, and holds the local rights to commercialization.

 

Organization

 

Bioxytran, Inc. was organized on October 5, 2017 as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000 authorized Common shares with a par value of $0.0001, and 5,000,000 Preferred shares with a par value of $0.0001. On September 21, 2018, the Company went under a reorganization in the form of a reverse merger and is currently registered as a Nevada corporation with a taxing structure for U.S. federal and state income tax as a C-Corporation with 300,000,000 authorized Common shares with a par value of $0.001, and 50,000,000 Preferred shares with a par value of $0.001.

 

Pharmalectin was organized on October 5, 2017 as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000 authorized Common shares with a par value of $0.0001, and 5,000,000 Preferred shares with a par value of $0.0001. The Subsidiary was founded under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2020, the name was changed to Pharmalectin, Inc. There are currently 19,650,000 issued and outstanding shares; 15,000,000 Common shares are held by Bioxytran and 4,650,000 Common shares are held by NDPD Parma, Inc (the “affiliate”). An additional 4,500,000 options are also held by the affiliate. The option agreement includes provisions for dilutive issuance and cash-less exercise. The beneficial ownership of the affiliate are Mike Sheikh, Ola Soderquist and David Platt.

 

Pharmalectin BVI was organized on March 17, 2021 as a British Virgin Islands (BVI) Business Corporation with a BVI corporate taxing structure with 50,000 authorized shares with a par value of $1.00. There are currently 50,000 outstanding shares held by the Company.

 

Pharmalectin India Pvt Ltd. (“Pharmalectin India”) was organized on August 30, 2022 as an Indian Business Corporation with its principal place of business in Hyderabad, Telangana, India, with 50,000 authorized shares with a par value of $0.12 (₹10). There are currently 41,020 outstanding shares whereof 41,000 (99.95%) are held by the Company.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited consolidated financial statements.

 

6

 

 

While the information presented in the accompanying financial statements is unaudited, it includes all adjustments which are, in the opinion of the management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are statements prepared in accordance with US GAAP have been condensed or omitted. These financial statements should be read in conjunction with the Company’s December 31, 2022 audited financial statements and notes.

 

Principles of Consolidation

 

The accompanying unaudited condensed consolidated financial statements include the accounts of Bioxytran, Inc. a Nevada Corporation, its majority owned subsidiary, Pharmalectin, Inc. of Delaware, as well as its wholly owned subsidiaries, Pharmalectin (BVI), Inc of British Virgin Islands and Pharmalectin India Pvt Ltd. (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.

 

Cash

 

For purposes of the Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with an original maturity date of three months or less to be cash equivalents.

 

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, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation, valuation of warrants, valuations in connection with convertible notes and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

 

Net Loss per Common Share, basic and diluted

 

The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per Common share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into Common Stock using the “treasury stock” and/or “if converted” methods as applicable.

 

At September 30, 2023, we would, based on the market price of $0.17/share, be obligated to issue approximately 16,045,900 shares of Common Stock upon conversion of currently outstanding convertible notes and 2,422,144 shares upon exercise of outstanding warrants and 380,000 shares upon exercise of outstanding options. For these Promissory notes, the shares total value is based on $1,900,000 of currently outstanding principal, and $185,967 in unpaid interest.

 

All of our currently outstanding notes have an interest rate of 6% and are convertible at the lower of (i) a fixed price of $0.13, or (ii) 85% of the closing price of any Qualified Financing, which consist of any fundraising whereby the Company receives gross proceeds of not less than $500,000. The notes contain a conversion limitation which prevents the holder(s) of the notes from converting if doing so would result in the holder beneficially owning more than 4.99% of our issued an outstanding Common Stock.

 

Stock Based Compensation

 

The Company measures the cost of services received from employees and non-employees in exchange for an award of equity instruments based on the fair value of the award on the grant date pursuant ASC 718. Stock-based compensation expense is recorded by the Company over the requisite service period, or vesting period, in the same expense classifications in the statements of operations, as if such amounts were paid in cash.

 

7

 

 

Research and Development

 

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred.

 

For the nine months ended September 30, 2023 the Company incurred $604,771 in research and development expenses, while during the nine months ended September 30, 2022 the Company incurred $759,138.

 

Intangibles – Goodwill and Other

 

Valuation of intangibles are in accordance with ASC 350. Costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at award date, which varies depending on the pendency period of the application, generally approximating seventeen years. Capitalized patent costs, also referred to as patent prosecution costs, include internal legal labor, professional legal fees, government filing fees and translation fees related to expanding the Company’s patent portfolio. Costs associated with the maintenance and annuity fees of patents are accounted for as prepaid assets at the time of payment and amortized over the shorter of the maintenance period or remaining life of the related patent.

 

Accrued Expenses

 

As part of the process of preparing our condensed consolidated financial statements, we are required to estimate accrued expenses. This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the associated cost incurred on these services as at each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers. In the event that we do not identify certain costs that have been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated. The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance with accounting principles generally accepted in the U.S.

 

Warrants

 

The Company has issued Common Stock warrants in connection with the execution of certain equity and debt financings. The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price, remaining life of the warrant, and risk-free interest rates at each period end.

 

Fair Value

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

 

The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.

 

8

 

 

Recent Accounting Pronouncements

 

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.

 

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed interim financial statements.

 

NOTE 3 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

 

As at September 30, 2023, the Company had cash of $80,273 and a negative working capital of $2,252,685. The Company has not yet generated any revenues from operations and has incurred cumulative net losses of $14,451,092. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

During the nine months ended September 30, 2023, the Company raised a net of $505,361 in cash proceeds from the issuance of Common Stock. During the same period in 2022, the Company raised a net of $1,380,960 in cash proceeds from the issuance of convertible notes and $600,000 from the issuance of Common Stock of the Subsidiary. The Company is aware that its current cash on hand will not be sufficient to fund its projected operating requirements through the month of December 2023 and is pursuing alternative opportunities to funding.

 

The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.

 

Accordingly, the accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

 

NOTE 4 - RELATED PARTY TRANSACTIONS

 

The Company hold License Agreements (the “License/s” or “Agreement/s”) for a medical device (license obtained in 2019) and a compound (license obtained in 2021), with two affiliated companies where in the officers of the Company hold a majority interest. The products were developed prior to the establishment of Bioxytran. The yearly maintenance fee for each license amount to $5,000. During the nine months ended September 30, 2023 the affiliates were paid $5,000 each. During the same period in 2022, there was $25,720 in transactions with affiliates as the Company also reimbursed the affiliates for the legal and administrative costs surrounding the establishment of the Licenses.

 

In the three months leading up to the financial close, the affiliate has advanced $25,000 on behalf of the Company to pay necessary invoices from service providers, due to lack of funds.

 

NOTE 5 - INTANGIBLES

 

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment charges were recorded for the nine months ended September 30, 2023, or 2022.

 

9

 

 

Amortization of capitalized patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, generally approximating twenty years.

 

   Estimated Life (years)   September 30, 2023   December 31, 2022 
Capitalized patent costs   20   $116,919   $79,179 
Accumulated amortization        (8,149)   (3,644)
                
Intangible assets, net       $108,770   $75,535 

 

NOTE 6 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

On September 30, 2023, there was $25,000 in a non-interest loan from a related party, in addition to $45,000 in unissued shares owed to related parties. On December 31, 2022 there was $709,727 in accounts payable to related parties and $38,400 in unissued shares owed to related parties.

 

The following table represents the major components of accounts payables and accrued expenses and other current liabilities at September 30, 2023 and at December 31, 2022:

 

  

September 30, 2023

  

December 31, 2022

 
Accounts payable related party (1)  $   $709,727 
Professional fees   162,000    393,085 
Interest   185,967    134,581 
Payroll taxes       40,182 
Pension/401K       180,557 
Other   4,605    990 
Un-issued share liability, related party (2)   45,000    38,400 
Un-issued share liability, consultant   10,386    960 
Loan from related party   25,000     
Convertible note payable   1,900,000    2,165,000 
Total  $2,332,958   $3,663,482 

 

(1) At September 30, 2023 there were no accounts payables due to related parties. At December 31, 2022 there was $286,900 owed to the CEO, $269,400 to the CFO and $153,427 and the CCO in salary and expenses.
(2) At September 30, 2023 the Company has not yet issued 233,163 shares to four Board Members in reward of their attendance at Board and Committee meetings during the third quarter of 2023. The total fair market value at the time of the award was $45,000, or $0.193/share.

 

NOTE 7 – CONVERTIBLE NOTES PAYABLE

 

Private Placement, 2021 Notes

 

Around April 29, 2021, we entered into four (4) Securities Purchase Agreements (the “2021 SPA’s”), under which we agreed to sell convertible promissory notes (the “2021 Notes”), in an aggregate principal amount of $1,165,000 with 6% interest, whereof $1,000,000 were contributed in form of cancellation of third-party notes.

 

At any time after the issue date of the 2021 Notes, the Holders of the 2021 Notes, (the “2021 Holders”), have the option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the 2021 Notes into shares of our Common Stock at the Conversion Price. The “Conversion Price” will be the lesser of (i) $0.13 per share or (ii) 85% of the closing price of Any Qualified Financing, which consists of any fundraising whereby the Company receives gross proceeds of not less than $500,000.

 

The variable conversion rate component requires that the 2021 Notes to be valued at its stock redemption value (i.e., “if-converted” value) pursuant to ASC 480, Distinguishing Liabilities from Equity, with the excess over the undiscounted face value being deemed a premium to be added to the principal balance and accreted to additional paid-in capital over the life of the 2021 Notes. No such recording of a premium was required as the discounted “if-converted” rate of $0.13 per share, was identical to fair market value of the Company’s stock on the 2021 Notes date of issuance.

 

10

 

 

The 2021 Holders are limited to holding a total of 4.99% of our issued and outstanding Common Stock at any one time.

 

The maturity on one note was negotiated to August 31, 2023, while the maturity of the three remaining notes were negotiated to April 30, 2024, and an increase of the interest rate to 10%. The principal and interest for two of these latter notes were extinguished and one partially converted into 2,435,291 shares of Common Stock on May 17, on June 26 and on August 30, 2023 for a total value of $316,588.

 

Name  Principal Converted   Accrued interest converted   No. of shares issued 
Private Placement, 2021 Notes issued to Officers (1)  $265,000   $51,588    2,435,291 

 

(1) Net cash received for these notes were $1,380,960, after a Debt Discount of $86,040 was paid to the sole Placement Agent: WallachBeth Capital, LLC (Member FINRA / SIPC).

  

Convertible notes payable and interest payable consist of the following at September 30, 2023, and December 31, 2022:

   September 30, 2023   December 31, 2022 
Principal balance (1), (2)  $1,900,000   $2,165,000 
Interest Payable   185,967    134,581 
Outstanding, net of debt discount and premium  $2,085,967   $2,299,581 

 

(1) Net cash received for these notes were $1,045,150, after a Debt Discount of $119,850 was paid to the sole Placement Agent: WallachBeth Capital, LLC (Member FINRA / SIPC). $265,000 of the outstanding principal was converted into shares of Common Stock on May 17, June 26 and on August 30, 2023.
(2) $2 million of principal, accrued interest and default penalties for notes issued prior to 2021, where settled by a third party in exchange for us issuing to them a note in the amount of $1 million.

 

There can be no assurance that there will be any funds available to pay of the 2021 Notes. If we fail to obtain such additional financing on a timely basis, the 2021 Holders may convert the 2021 Notes and sell the underlying shares, which may result in significant dilution to shareholders due to the conversion discount, as well as a significant decrease in our stock price.

 

Private Placement, 2022 Notes converted into Common Stock

 

In January, 2022, we entered into thirty-four (34) Securities Purchase Agreements (the “2022 SPA’s”), with accredited investors, under which we agreed to sell the Notes, in an aggregate principal amount of $1,467,000 with 6% interest (the “2022 Notes”) to the holders of the 2022 Notes (the “2022 Holders”).

 

At any time after the issue date of the 2022 Notes the 2022 Holders have the option to convert all or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the Notes into shares of our Common Stock at the Conversion Price. The “Conversion Price” is set to $0.25 per share.

 

The 2022 Holders are limited to holding a total of 4.99% of our issued and outstanding Common Stock at any one time. The Common Stock underlying the 2022 Notes, when issued, bear a restrictive legend and are currently eligible for resale under Rule 144.

 

The notes principal and accrued interest were fully converted into 6,081,484 shares of Common Stock on August 31, 2022.

 

Name  Principal Converted   Accrued interest converted   No. of shares issued 
Private Placement, 2022 Notes (1)  $1,467,000   $53,371    6,081,484 
   $1,467,000   $53,371    6,081,484 

 

(1) Net cash received for these notes were $1,380,960, after a Debt Discount of $86,040 was paid to the sole Placement Agent: WallachBeth Capital, LLC (Member FINRA / SIPC).

 

11

 

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

The Company is authorized to issue 300,000,000 shares of Common Stock, and 50,000,000 shares of Preferred Stock.

 

Preferred stock

 

As of September 30, 2023 and at December 31, 2022, no Preferred shares have been designated or issued.

 

Common Stock

 

On August 15, 2022 1,400,000 shares of Common Stock were sold in a private placement for an amount of $600,000, or $0.43/share.

 

On August 31, 2022, 6,081,484 shares of Common Stock were issued against convertible notes with a principal of $1,467,000 and an accrued interest of $53,371, or $0.25/share.

 

On September 8, 2022, 4,139,503 shares of Common Stock were issued in exchange against four outstanding warrants including provisions for dilutive issuance and cashless exercise.

 

For the nine months ending September 30, 2022, 552,000 shares of Common Stock were issued under the 2021 Stock Plans for a total value of $105,730.

 

On January 4, 2023 the Company issued 93,750 shares of Common Stock against $30,000, or $0.32/share, shown as stock subscription in the December 31, 2022 stockholders’ equity statement.

 

On February 10, 2023 the Company issued 156,250 shares of Common Stock against $50,000, or $0.32/share.

 

On April 14, 2023 the Company issued 137,656 shares of Common Stock were against third-party supplier invoices amounting to $44,050, or $0.32/share.

 

On April 14, 2023 the Company issued 6,763,562 shares of Common Stock to offset the affiliate against invoices paid on behalf of the Company and accrued salaries to our Officers, for a total value of $2,164,340., or $0.32/share.

 

On April 18, 2023 the Company issued 78,125 shares of Common Stock against $25,000, or $0.32/share.

 

On May 15, 2023 the Company issued 114,286 shares of Common Stock against $40,000, or $0.32/share.

 

On May 17, 2023 the Company issued 522,138 shares of Common Stock in a conversion of a note for a value of $67,878 in principal and interest, or $0.13/share.

 

On June 26, 2023 the Company issued 803,292 shares of Common Stock in a conversion of a note for a value of $104,428 in principal and interest, or $0.13/share.

 

On July 26, 2023 the Company issued 500,000 shares of Common Stock against $100,000, or $0.20/share.

 

On August 21, 2023, 1,612,903 shares of Common Stock were sold on an S-1 for the amount of $145,161, or $0.09/share.

 

On August 21, 2023, 1,600,000 shares of Common Stock were exchanged for invoices in the amount of $145,000, or $0.09/share.

 

On August 25, 2023, 505,186 shares of Common Stock were sold in a private placement for the amount of $68,200, or $0.135/share.

 

On August 30, 2023 the Company issued 1,109,861 shares of Common Stock in a conversion of a note for a value of $144,282 in principal and interest, or $0.13/share.

 

On September 14, 2023, 5,824,741 shares of Common Stock were exchanged by the Company’s officers for invoices and salary past due in the amount of $786,340, or $0.135/share.

 

On September 19, 2023, the Company issued 200,000 shares of Common Stock against $27,000, or $0.135/share.

 

On September 19, 2023, the Company issued 370,370 shares of Common Stock against $50,000, or $0.135/share.

 

12

 

 

For the nine months ended September 30, 2023, a net of 711,000 shares of Common Stock were awarded under the 2021 Stock Plan for a total value of $141,796, or at an average cost of $0.20 per share.

 

As at September 30, 2023, the Company has 144,355,355 shares of Common Stock issued and outstanding, at December 31, 2022 the Company had 123,252,235 shares of Common Stock issued and outstanding.

 

Common Stock Warrants

 

For the nine months ended September 30, 2023 the Company issued 800,000 5-year warrants exercisable at $0.20/share, in connection with the refinancing of the 2021 Notes, valued at $0.436, based on Black and Scholes Option Pricing Model, for a total value of $348,637. For the nine months ended September 30, 2022, the Company issued 264,060 5-year warrants exercisable at $0.25/share, valued at $0.16, based on Black and Scholes Option Pricing Model, for a total value of $42,250.

 

The fair value of stock warrants granted for the 9 months ended September 30, 2023 was calculated with the following assumptions:

 

   September 30, 2023   September 30, 2022 
Risk-free interest rate   3.97%   1.53%
Expected dividend yield   0%   0%
Volatility factor (monthly)   147.58%   169.27%
Expected life of warrant   5 years    5 years 

 

The following table summarizes the Company’s common stock warrant activity for the 9 months ended September 30, 2023 and 2022:

 

   Number of Warrants*   Weighted Average Exercise Price   Weighted- Average Remaining Expected Term 
Outstanding as at January 1, 2022   272,000   $2.00    2.9 
Granted   264,030    0.26    5.0 
Exercised            
Forfeited/Canceled            
Outstanding as at September 30, 2022   536,030    1.14    3.5 
                
Outstanding as at January 1, 2023   542,030   $0.42    4.1 
Granted   800,000    0.20    5.0 
Exercised            
Forfeited/Canceled            
Outstanding as at September 30, 2023   1,342,030   $0.29    4.1 

 

* The warrant agreements issued in 2019 for a total of 50,000 warrants include provisions for dilutive issuance and cash-less exercise. If exercised at September 30, 2023 the provisions would have resulted in an issuance of 1,130,114 shares at an average conversion price of $0.09, or 873,704 shares in a cash-less exercise. In order to mitigate the Company’s risk an administrative hold has been placed on one shareholder’s stock in the event of future exercise.

 

The following table summarizes information about stock warrants that are vested or expected to vest at September 30, 2023:

 

    Warrants Outstanding           Exercisable Warrants     
Number of Warrants  

Weighted

Average

Exercise

Price

Per Share

   Weighted Average Remaining Contractual Life (Years)   Aggregate Intrinsic Value   Number of Warrants   Weighted Average Exercise Price Per Share   Weighted Average Remaining Contractual Life (Years)  

Aggregate Intrinsic

Value

 
 800,000   $0.20    4.6   $    800,000   $0.20    4.6   $ 
 492,030    0.26    3.5        492,030    0.26    3.5     
 50,000    2.00    1.1        50,000    2.00    1.1     
 1,342,030   $0.29    4.1   $    1,342,030   $0.29    4.1   $ 

 

13

 

 

The following table sets forth the status of the Company’s non-vested warrants as at September 30, 2023 and 2022:

 

   Number of Warrants  

Weighted-Average

Grant-Date Fair Value

 
Non-vested as at January 1, 2022        
Granted   264,030    0.25 
Forfeited        
Vested        
Non-vested as at September 30, 2022      $ 
           
Non-vested as at January 1, 2023      $ 
Granted   800,000    0.20 
Forfeited        
Vested        
Non-vested as at September 30, 2023      $ 

 

Sales of Shares in Subsidiary

 

For the nine months ended September 30, 2023 there were no shares sold in the Company’s Subsidiary, Pharmalectin, Inc.. For the nine months ended September 30, 2022 there were 1,800,000 shares of Common Stock sold in the Company’s Subsidiary, Pharmalectin, Inc. for a total of $600,000.

 

NOTE 9 – STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

 

On January 19, 2021, the Board of Directors adopted the “2021 Stock Plan” (the “2021 Plan”) under which the Company may grant Options to Purchase Stock, Stock Awards or Stock Appreciation Rights in an amount up to 15% of the number of issued and outstanding shares of the Company’s Common Stock, automatically adjusted on January 1 each year. Under the terms of the 2021 Stock Plan, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically immediate and the options typically expire in five years. Stock Awards may be directly issued under the Plan (without any intervening options). Stock Awards may be issued which are fully and immediately vested upon issuance. As at September 30, 2023, 90,000 options and 5,001,709 shares have been awarded from the 2021 Plan.

 

Shares Awarded and Issued under the 2021 Plan:

 

On January 10, 2022, the Company granted 40,000 shares of Common Stock to four Board Members in reward of their attendance at Board and Committee meetings during the fourth quarter of 2021. The total fair market value at the time of the award was $6,400, or $0.16/share. The shares were issued on August 1, 2022

 

On February 18, 2022, the Company granted 100,000 shares of Common Stock to two Consultants in reward of their assistance for the product development and our clinical trials in India. The total fair market value at the time of the award was $16,000, or $0.16/share. The shares were issued on August 1, 2022

 

On April 1, 2022, the Company granted 10,000 shares to a Medical Advisory Board Member for her contribution to the Company during the first quarter of 2022. The total fair market value at the time of the award was $1,730, or $0.173/share. The shares were issued on August 1, 2022

 

On April 1, 2022, the Company granted 70,000 shares to four Board Members in reward of their attendance at Board and Committee meetings during the first quarter of 2022. The total fair market value at the time of the award was $12,110, or $0.173/share. The shares were issued on August 1, 2022.

 

On April 11, 2022, the Company granted 250,000 shares to three Consultants for the management of our clinical trials in India. The total fair market value at the time of the award was $43,250, or $0.173/share. The shares were issued on August 1, 2022.

 

On August 1, 2022, the Company issued 82,000 shares to four Board Members in reward of their attendance at Board and Committee meetings during the second quarter of 2022. The total fair market value at the time of the award was $26,240, or $0.32/share.

 

14

 

 

On April 19, 2023, the Company issued 110,000 shares, with an average fair market value of $0.46/share at the time of award, to four members of the Board of Directors as compensation for their participations of Board and Committee meetings in the fourth quarter of 2022 and in the first quarter of 2023, for a total of $50,200.

 

On April 19, 2023, the Company granted 4,000 shares with an average fair market value of $0.45/share to a Scientific Advisory Board Member for his contribution in the fourth quarter of 2022 and in the first quarter of 2023, for a total of $1,790.

 

On August 4, 2023, the Company issued 120,000 shares, with an average fair market value of $0.15/share at the time of award, to three members of the Board of Directors as compensation for their participations of Board and Committee meetings in the second quarter of 2023, for a total of $17,940.

 

On August 4, 2023, the Company granted 477,000 shares with an average fair market value of $0.15/share to a Scientific Advisory Board Members and consultants for their contribution in the second quarter of 2022 and in the first quarter of 2023, for a total of $71,312.

 

  

Number of

Shares

  

Fair Value

per Share

   Weighted Average Market Value per Share 
Shares Issued as of January 1, 2022   3,656,709   $0.001   $0.00 
Shares Issued   552,000    0.160.32    0.22 
Shares Issued as of September 30, 2022   4,208,709   $0.0010.32   $0.00 
                
Shares Issued as of January 1, 2023   4,290,709   $0.0010.41   $0.00 
Shares Issued   711,000    0.150.48    0.20 
Shares Issued as of September 30, 2023   5,001,709   $0.0010.48   $0.01 

 

For the nine months ended September 30, 2023, the Company recorded stock-based compensation expense of $157,268 in connection with the issuance of 711,000 Common share-based payment awards. For the nine months ended September 30, 2022, the Company had issued 552,000 shares at a stock-based compensation expense of $142,630.

 

Stock options granted and vested 2021 Plan:

 

There were no stock options granted the nine months ended September 30, 2023 and 2022. But, 144,000 stock options was forfeited in the nine months ended September 30, 2023, and 96,000 stock options was forfeited in the nine months ended September 30, 2022.

 

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2023, and 2022:

 

   Number of Options   Exercise Price per Share   Weighted Average Exercise Price per Share 
Outstanding as of January 1, 2022   668,000   $0.0011.21   $0.55 
Granted            
Exercised            
Options forfeited/cancelled   (96,000)   1.091.21    0.92 
Outstanding as of September 30, 2022   572,000   $0.0011.21   $0.45 
                
Outstanding as of January 1, 2023   524,000   $0.0010.95   $0.44 
Granted            
Exercised            
Options forfeited/cancelled   (144,000)   0.0010.32    0.11 
Outstanding as of September 30, 2023   380,000   $0.0010.95   $0.48 

 

15

 

 

The following table summarizes information about stock options that are vested or expected to vest at September 30, 2023:

 

        Options Outstanding           Exercisable Options     
Exercise Price   Number of Options   Weighted Average Exercise Price Per Share   Weighted Average Remaining Contractual Life (Years)   Aggregate Intrinsic Value   Number of Options   Weighted Average Exercise Price Per Share   Weighted Average Remaining Contractual Life (Years)   Aggregate Intrinsic Value 
$0.001    45,000   $0.001    0.83   $7,650    45,000   $0.001    0.83   $7,650 
 0.18    45,000    0.18    0.08        45,000    0.18    0.08     
 0.19    45,000    0.19    0.58        45,000    0.19    0.58     
 0.20    45,000    0.20    0.34        45,000    0.20    0.34     
 0.95    200,000    0.95    0.51        200,000    0.95    0.51     
$0.0010.95    380,000   $0.48    0.57   $7,650    380,000   $0.48    0.57   $7,650 

 

The weighted-average remaining estimated life for options exercisable at September 30, 2023 is 0.48 years.

 

The aggregate intrinsic value for fully vested, exercisable options was $7,650 at September 30, 2023. The actual tax benefit realized from stock option exercises for the nine months ended at September 30, 2023 and 2022 was $0 as no options were exercised.

 

As at September 30, 2023 the Company has 20,875,870 options or stock awards available for grant under the 2021 Plan.

 

NOTE 10 – NON-CONTROLLING INTEREST

 

   September 30, 2023   December 31, 2022 
Net loss Subsidiary  $(289,191)  $(817,151)
Net loss attributable to the non-controlling interest   68,435    193,372 
Net loss affecting Bioxytran   (220,756)   (623,780)
           
Accumulated losses   (3,861,549)   (3,594,287)
Accumulated losses attributable to the non-controlling interest   820,013    751,578 
Accumulated losses Bioxytran   (3,041,536)   (2,842,709)
           
Net equity non-controlling interest  $(659,063)  $(590,628)

 

As at September 30, 2023 and at December 31, 2022 there are 19,650,000 issued and outstanding shares of Common Stock; 15,000,000 Common shares are held by Bioxytran and 4,650,000 Common shares are held by the affiliate. An additional 4,500,000 options are also held by the affiliate. The option agreement includes a provision for dilutive issuance and cash-less exercise.

 

NOTE 11 – COMMITMENTS AND CONTINGENCIES

 

Employment contracts

 

Our Executive Officers have entered into employment contracts and confidentiality, non-disclosure and assignment of invention agreements. The most substantial provisions include;

 

  Compensation of three (3) times the employee’s annual salary upon the Termination Date and any target bonus earned, or if termination occurs within 12 months of a change in control, then the terminated employee shall receive two (2) times the employee’s annual salary and any target bonus earned.
     
  Continued coverage under any health, medical, dental or vision program or policy, in which they were eligible to participate at the time of employment termination, for 12 months.
     
  Provide outplacement services through one or more outside firms of the employee’s choosing up to an aggregate of $50,000.

 

There are no other arrangements or plans in which we provide pension, retirement or similar benefits for any of Executive Officers or Directors.

 

16

 

 

Litigation

 

In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters are expensed as incurred and we accrue for adverse outcomes as they become probable and estimable.

 

NOTE 12 – SUBSEQUENT EVENTS

 

The Company has evaluated events from September 30, 2023 through the date the financial statements were issued. and did not, other than what is disclosed in the below, identify any further subsequent events requiring disclosure.

 

Shares awarded under the 2021 Stock Plan:

 

On October 27, 2023, the Company granted 53,815 shares to three Scientific Advisory Board Members for their contribution to the Company during the third quarter of 2023. The total fair market value at the time of the award was $10,386, or $0.193/share.

 

On October 27, 2023, the Company granted 233,163 shares to four Board Members in reward of their contribution and their attendance at Board and Committee meetings during the third quarter of 2023. The total fair market value at the time of the award was $45,000, or $0.193/share.

 

Stock options forfeited under the 2021 Stock Plan:

 

On October 30, 2023, 45,000 options were forfeited by expiration and returned to the 2021 stock plan.

 

17

 

 

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

 

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, 2022, included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 31, 2023. 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 $5,300,000, we will have sufficient working capital to repay the outstanding convertible notes and develop our business over the next approximately 15 months. At funding raised that is less than $5,300,000, we can likely repay the four 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 trial data shows non-toxicity and efficacy for treatment of mild to moderate COVID-19. The results of the trial are described in our three peer-reviewed articles Galectin antagonist use in mild cases of SARS-CoV-2; pilot feasibility randomised, open label, controlled trial, published in Journal of Vaccines & Vaccination on December 30, 2020, Carbohydrate ProLectin-M, a Galectin-3 Antagonist, Blocks SARS-CoV-2 Activity published in the International Journal of Health Sciences on July 31, 2022 and PLG-007 and Its Active Component Galactomannan-α Competitively Inhibit Enzymes That Hydrolyze Glucose Polymers published in the International Journal of Molecular Science on July 13, 2022.

 

Results from our latest Phase 2 trial on COVID-19 patients conducted at ESIS Medical College and Hospital, Sanath Nagar, Hyderabad, India were published in in the peer-reviewed journal Virus: An Oral Galectin Antagonist in COVID-19—A Phase II Randomized Controlled Trial on February 23, 2023, show positive results of its randomized, placebo-controlled Phase 2 clinical trial in thirty-four (34) patients with mild-to-moderate COVID-19. During the seven (7) days of treatment, an orally administered Galectin Antagonist in the form of a chewable tablet was administered eight (8) times per day on an hourly basis. The endpoint was a statistically significant reduction in viral load measured by the number of patients reaching a below threshold PCR value (Ct value ≥ 29) by day 7. The trial met its endpoint with a one hundred percent (100%) response rate by day 7 versus six percent (6%) in placebo, which was statistically significant (p-value = .001). Our analysis also revealed an 82% response rate by day 3, which was statistically significant (p-value = .001). There were no drug-related serious adverse events (SAE’s) in the patient population or viral rebounds by day fourteen (14) in the patient population.

 

18

 

 

On April 19, 2023, the Company announced that its long awaited Acellular Oxygen Carrier (“AOC”) BXT-25 had been successfully tested in animals. The initial results are very encouraging because they show the non-toxicity of the experimental drug, along with the corresponding full recovery in Swiss Albino mice, in an experiment carried out in a joint venture with NDPD Pharma, Inc. As a next step, the Company intends to proceed with a 14-day repeated dose toxicity study using New Zealand Rabbits and Wistar Rats as funding permits.

 

On August 31, 2023 the Company published a pre-print of a future article named: Evaluation of Complex Carbohydrates Showing Broad-Spectrum Antiviral Activity against SARS-CoV-2, Influenza-a (H1N1) and Human Respiratory Syncytial Virus (hRSV) Strain A2 in ‘In Vitro’ Setting. With a conclusion that both ProLectin-I and ProLectin-M have been reported to exhibit broad-spectrum antiviral activity in ‘in-vitro’ setting. ProLectin-M reducing influenza-A virus by 95% and hRSC strain A2 by 65%. To better understand broad spectrum antiviral activity of ProLectin-I and ProLectin-M, further pre-clinical research is warranted.

 

On August 21, 2023, the US Food and Drug Administration (“FDA”) approved the Company’s IND #153742, filed under the title “PROTECT: ProLectin-M, a nucleocapsid TErminal GaleCTin antagonist for COVID-19 (PROTECT), a Randomized, Double-blinded Clinical Trial to Evaluate the Efficacy and Safety in Non-Hospitalized Adult Participants with COVID-19”. The trial is expected to start early 2024, provided we obtain adequate funding.

 

On December 2, 2022, India’s Central Drugs Standard Control Organisation (CDSCO) issued an IND with permission to conduct: “A Phase 1b/2a Randomized, Blinded, placebo-controlled Study in Participants with Mild to Moderate COVID-19 to Evaluate the Safety, Efficacy, and Pharmacokinetics of Orally Administered ProLectin-M”. The Company is currently recruiting patients for the trial and initial dosage of patients is planned to start on, or around, October 1, 2023.

 

On January 27, 2023, an additional IND with the CDSCO was issued for ProLectin-I for an “IV treatment of SARS-CoV-2 in hospitalized patients with moderate Covid-19 infections and for Long Covid”, and for ProLectin-F for “treatment of lung-fibrosis resulting from an earlier Covid infection”.

 

The future of the Company is dependent upon its ability to obtain financing to develop its new business opportunities and support the cost of the drug development including clinical trials and regulatory submission to the FDA.

 

Management plans to seek additional capital through the issuance of its debt and/or equity securities. 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.

 

The accompanying unaudited condensed 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 6 of the financial statements, the Company has currently two (2) convertible loans outstanding at a total face value of $1,900,000. As shown in the accompanying unaudited condensed consolidated financial statements, the Company had an accumulated deficit of $14,451,092 as at September 30, 2023. The accumulated deficit as at December 31, 2022 was $11,217,600.

 

RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

 

We are a clinical stage company. Historically, Bioxytran was engaged in formation, fund raising and identifying and consulting with the scientific community regarding the development, formulation and testing of its products as of the fourth quarter of 2021 the Company has engaged in research and development activities through its Subsidiary, Pharmalectin, Inc., developing the Company’s anti-viral therapeutic ProLectin. Additionally, during the first half of 2023, the Company successfully developed a GLP facility and initiated preliminary animal testing of our hypoxia platform technology: Acellular Oxygen Carrier (“AOC”), with an expected start date in early 2024 for pre-clinical testing and studies.

 

19

 

 

Research and Development

 

   Three months ended   Nine months ended 
  

September 30, 2023

  

September 30, 2022

  

September 30, 2023

  

September 30, 2022

 
Research and development:                    
Process development  $150,000   $   $275,439   $ 
Product development       23,857    19,938    123,580 
Regulatory   35,129    76,222    94,643    223,506 
Clinical trials   145,000    353,650    206,750    387,500 
Project management   (14,000)   21,000    8,000    23,410 
Total research and development  $316,129   $474,729   $604,771   $757,995 

 

  During the three months ended September 30, 2023, the Company recorded $316,129 in R&D expenses. During the three months ended September 30, 2023, the Company recorded $474,729 in R&D expenses. During the nine months ended September 30, 2023, the Company recorded $604,771 in R&D expenses. During the nine months ended September 30, 2023, the Company recorded $757,995 in R&D expenses. During the nine months ending in September, 2023, $264,393 was invested in, ProLectin, while 340,377 was invested in the AOC. All prior development was focused on ProLectin, only.

 

General and Administrative

 

   Three months ended   Nine months ended 
  

September 30,

2023

  

September 30,

2022

  

September 30,

2023

  

September 30,

2022

 
General and administrative expenses:                    
Payroll and related expenses  $375,459   $(724,818)  $1,128,130   $9,792 
Costs for legal, accounting and other professional services   17,455    56,863    137,626    87,683 
Promotional expenses   66,500    53,000    595,449    201,700 
Miscellaneous expenses   71,362    51,351    170,142    143,448 
Total general and administrative  $530,777   $(563,604)  $2,031,347   $442,623 

 

  Payroll and related expenses for the three months ended September 30, 2022 were $375,459 for the 3 months ended September 30, 2023 and $1,128,130 for the nine months ended September 30, 2023. The amount was negative $724,818 for the three months ended September 30, 2022 while the nine months ended up in $9,792, as the company management forfeited their accrued salary.
   
  The Costs for legal, accounting and other professional services for the three and nine months ended September 30, 2023 were $17,455 and $137,626 respectively, as compared to $56,863 and $87,683 for the three and nine months ended September 30, 2022. The increased costs are for contracted investments services for an amount of $50,000 in the second quarter of 2023.
   
  Promotional expenses for the three and nine months ended September 30, 2023 were $66,500 and $595,449 respectively, as compared to $53,000 and $201,700 for the three and nine months ended September 30, 2022. The increase costs stock promotion incurred by the Company’s return to being listed on OTCQB. The Company has currently a non-reimbursable advance paid Public Relations Agreement running through July 31, 2024.
   
  Miscellaneous G&A expenses during the three and nine months ended September 30, 2023 was $71,362 and $170,142, respectively. During the three and nine months ended September 30, 2022 was $51,351 and $143,448.

 

20

 

 

Stock-based Compensation

 

   Three months ended   Nine months ended 
  

September 30, 2023

  

September 30, 2022

  

September 30, 2023

  

September 30, 2022

 
Compensation expense to BoD and Management  $52,940   $25,600   $74,740   $82,740 
Compensation expense to consultants   85,618    47,907    82,528    59,890 
Total compensation expense  $138,558   $73,507   $157,268   $142,630 

 

  Stock-based compensation amounted to $138,558 for the three months ended September, 2023. The stock-based compensation for the three months ended September 30, 2022 was $73,507. Stock-based compensation amounted to $157,268 for the nine months ended September, 2023. Stock-based compensation amounted to $142,630 for the nine months ended September, 2022.

 

Other expenses

 

   Three months ended   Nine months ended 
  

September 30, 2023

  

September 30, 2022

  

September 30, 2023

  

September 30, 2022

 
Other (expenses):                    
Interest expense  $48,701   $44,281   $155,399   $150,796 
Debt discount amortization       30,860        121,369 
Amortization of warrants       141,322    348,637    304,941 
Amortization of IP   1,803    911    4,505    2,733 
Total other income (expenses)  $50,504   $217,374   $508,541   $458,470 

 

 

During the three months ended September 30, 2023, the Company recorded $48,701 in interest expense, $1,803 was amortized from the Company’s IP. During the three months ended September 30, 2022, the Company recorded $30,860 in amortization of debt discount while the interest expense was $44,281, $911 was amortized from the Company’s IP while the amortization of warrants amounted to 141,322.

 

During the nine months ended September 30, 2023, the Company amortized $4,505 from the Company’s IP and $348,637 in amortization of warrants, as compared to, $2,733 in IP amortization and $304,941 of warrant amortization of for the nine months ended September 30, 2022. The interest for the nine months ended September 30, 2023 for the convertible notes amounted to $155,399, as compared to $150,796 for the nine months ended September 30, 2022, were also $121,369 was recorded as amortization of debt discount for this latter period.

 

Non-Controlling Interest

 

   Three months ended   Nine months ended 
  

September 30, 2023

  

September 30, 2022

  

September 30, 2023

  

September 30, 2022

 
Net loss attributable to the non-controlling interest  $34,777   $79,506   $68,435   $142,314 

 

  For the three months ended September 30, 2023 and 2022 there was a non-controlling interest attribution of $34,777 and 79,506 respectively. For the nine months ended September 30, 2023 and 2022 there was a non-controlling interest attribution of $68,435 and $142,314 respectively. The significant difference is directly related to the Company’s R&D activities due to lack of capital.

 

21

 

 

   # of shares   # of options *  

September 30, 2023

   December 31, 2022 
Minority owners cash investment   4,650,000        $160,035   $160,035 
Bioxytran invested equity   15,000,000         1,500    1,500 
Issued stock options @ $0.33        4,500,000    450    450 
Total outstanding   19,650,000    4,500,000   $162,435   $162,435 

 

 

As at September 30, 2023 and at December 31, 2022 there are 19,650,000 issued and outstanding shares; 15,000,000 shares (76%) of Common Stock are held by Bioxytran and 4,650,000 shares of Common Stock are held by the affiliate. Further, an additional 4,500,000 options to purchase shares of Common Stock exercisable at $0.33 are held by the affiliate.

 

* The option agreement is held by the affiliate and includes a provision for dilutive issuance and cash-less exercise. If exercised at September 30, 2023 the provisions would result in an issuance of 16,782,316 shares at an average conversion-price of $0.0885. The beneficial ownership of the affiliate includes the Company’s management. If external ownership would exceed 49% of the Subsidiary, the remaining options can be converted into shares in Bioxytran (BIXT) at a fixed conversion rate of 1.18864 shares per option share.

 

Net Loss

 

   Three months ended   Nine months ended 
  

September 30, 2023

  

September 30, 2022

  

September 30, 2023

  

September 30, 2022

 
Net loss attributable to Bioxytran  $(1,000,795)  $(75,233)  $(3,233,096)  $(1,706,671)
                     
Loss per Common share, basic and diluted  $(0.01)  $(0.00)  $(0.02)  $(0.01)
                     
Weighted average number of Common shares outstanding, basic   136,443,056    116,393,899    129,441,332    112,712,305 

 

  The Company generated a net loss for the three months ended September 30, 2023 of $1,000,795. In comparison, for the three months ended September 30, 2022, the Company generated a net loss of $75,233. The Company generated a net loss for the nine months ended September 30, 2023 of $3,233,096. In comparison, for the nine months ended September 30, 2022, the Company generated a net loss of $1,706,671. The significant difference is directly related to the management’s forfeiture of their accrued salary in the third quarter of 2022.

 

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