UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from_____________ to _____________
Commission
file number:
(Exact name of registrant as specified in its charter)
2834 | ||||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
617-494-1199
(Former Telephone Number, if Changed Since the Last Report)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
OTCQB |
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.
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).
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 | ☐ |
☒ | 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. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The amount of registered shares of the registrant’s Common Stock as of October 25, 2024, was .
BIOXYTRAN, INC.
FORM 10-Q
TABLE OF CONTENTS
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, 2024
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2024, AND DECEMBER 31, 2023
September 30, 2024 | December 31, 2023 | |||||||
(unaudited) | (restated) | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | $ | ||||||
Total current assets | ||||||||
Capitalized patent costs, net | ||||||||
Total fixed assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued operative expenses | $ | $ | ||||||
Accounts payable affiliate | ||||||||
Accrued interest | ||||||||
Accrued interest affiliate | ||||||||
Un-issued shares liability | ||||||||
Un-issued shares liability affiliate | ||||||||
Short term loan | ||||||||
Short term loan affiliate | ||||||||
Convertible notes payable, net of premium and discount | ||||||||
Total current liabilities | ||||||||
Total liabilities | ||||||||
Commitments and contingencies | ||||||||
Stockholders’ deficit: | ||||||||
Preferred stock, $ | par value; shares authorized, and issued and outstanding as at September 30, 2024, and December 31, 2023.||||||||
Common stock, $ | par value; shares authorized; and issued and outstanding as at September 30, 2024, and December 31, 2023||||||||
Additional paid-in capital Common Stock | ||||||||
Non-controlling interest | ( | ) | ||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total stockholders’ deficit | ( | ) | ( | ) | ||||
Total liabilities and stockholders’ deficit | $ | $ |
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, 2024, AND 2023
(UNAUDITED)
Three months ended | Nine months ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
(restated) | (restated) | |||||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | $ | $ | $ | $ | ||||||||||||
General and administrative | ||||||||||||||||
General and administrative affiliate | ||||||||||||||||
Compensation Expense | ||||||||||||||||
Compensation Expense affiliate | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other expenses: | ||||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Interest expense affiliate | ( | ) | ( | ) | ||||||||||||
Loss on issuance | ( | ) | ( | ) | ||||||||||||
Amortization of IP | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Debt discount amortization and issuance of warrants | ( | ) | ( | ) | ( | ) | ||||||||||
Total other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Provision for income taxes | ||||||||||||||||
NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net loss attributable to the non-controlling interest | ||||||||||||||||
NET LOSS ATTRIBUTABLE TO BIOXYTRAN | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Loss per Common share, basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
Weighted average number of Common shares out-standing, basic and diluted |
See the accompanying notes to these unaudited condensed consolidated financial statements
2 |
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024, AND 2023
(UNAUDITED)
Common Stock | Preferred Stock | Add. Paid | Accumul. | Non- contr. | Total | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | in Capital | Deficit | Int. | Equity | |||||||||||||||||||||||||
January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
Stock transactions | ||||||||||||||||||||||||||||||||
Stock subscription | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Net loss attr to the non-contr int. | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
Stock transactions | ||||||||||||||||||||||||||||||||
Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
Issuance stock plan other | ||||||||||||||||||||||||||||||||
Conversion of debt affiliate | ||||||||||||||||||||||||||||||||
Conversion of debt other | ||||||||||||||||||||||||||||||||
Convertible note | ||||||||||||||||||||||||||||||||
Issuance of warrants | ||||||||||||||||||||||||||||||||
Net loss attr to the non-contr int. | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
Stock transactions | ||||||||||||||||||||||||||||||||
Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
Issuance stock plan other | ||||||||||||||||||||||||||||||||
Conversion of debt affiliate | ||||||||||||||||||||||||||||||||
Conversion of debt other | ||||||||||||||||||||||||||||||||
Convertible note | ||||||||||||||||||||||||||||||||
Net loss attr to the non-contr int. | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
September 30, 2023 (restated) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
3 |
Common Stock | Preferred Stock | Add. Paid | Accumul. | Non- contr. | Total | |||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | in Capital | Deficit |
Int. | Equity | |||||||||||||||||||||||||
January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
Stock transactions | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Stock subscription | ( | ) | ||||||||||||||||||||||||||||||
Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
Issuance stock plan other | ||||||||||||||||||||||||||||||||
Conversion of debt affiliate | ||||||||||||||||||||||||||||||||
Conversion of debt other | ||||||||||||||||||||||||||||||||
Exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||
Convertible note | ||||||||||||||||||||||||||||||||
Net loss attr to the non-contr int. | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
Stock transactions | ||||||||||||||||||||||||||||||||
Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
Issuance stock plan other | ||||||||||||||||||||||||||||||||
Conversion of debt | ||||||||||||||||||||||||||||||||
Convertible note | ||||||||||||||||||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
Issuance stock plan other | ||||||||||||||||||||||||||||||||
Conversion to Pref Stock affiliate | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Conversion of debt affiliate | ||||||||||||||||||||||||||||||||
Exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||
Elimination non-contr int. | ( | ) | ||||||||||||||||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) |
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, 2024, AND 2023
(UNAUDITED)
Nine months Ended | ||||||||
September 30, 2024 | September 30, 2023 | |||||||
(restated) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Debt discount amortization, incl. issuance of warrants | ||||||||
Amortization of IP | ||||||||
Stock-based compensation | ||||||||
Stock-based compensation affiliate | ||||||||
Loss on issuance | ||||||||
Interest paid for note conversion | ||||||||
Changes in operating assets and liabilities: | ||||||||
Accounts payable and accrued expenses | ( | ) | ||||||
Accounts payable affiliate | ||||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Investment in intangibles | ( | ) | ( | ) | ||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from stock sales | ||||||||
Proceeds from issuance of convertible notes payable | ||||||||
Net cash provided by financing activities | ||||||||
Net increase (decrease) in cash | ( | ) | ||||||
Cash, beginning of period | ||||||||
Cash, end of period | $ | $ | ||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
Interest paid | $ | $ | ||||||
Income taxes paid | ||||||||
NON-CASH INVESTING & FINANCING ACTIVITIES | ||||||||
Issuance of warrants | ||||||||
Debt discount on convertible note | ||||||||
Common shares issued for the conversion of principal and accrued interest | ||||||||
Common shares issued for the conversion of accounts payable | ||||||||
Common shares issued for the conversion of accounts payable affiliate | $ | $ |
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, 2024, AND 2023
(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 (a lack of oxygen to tissues) in humans in a safe and efficient manner.
Pharmalectin, Inc. (“Pharmalectin”) is a subsidiary focused on the development, manufacture and commercialization of therapeutic drugs designed to address conditions related to viral diseases.
Pharmalectin (BVI), Inc. (“Pharmalectin BVI”) is a subsidiary serving as custodian of the Company’s Copyrights, Trademarks and Patents.
Pharmalectin India Pvt Ltd. (“Pharmalectin India”) is a subsidiary 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 authorized shares of Common Stock with a par value of $ , and shares of Preferred Stock with a par value of $ . On September 21, 2018, the Company underwent 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 authorized shares of Common Stock with a par value of $ , and shares of Preferred Stock with a par value of $ . As at September 30, 2024, there are shares of Common Stock issued and outstanding, while there are shares of Preferred Stock outstanding that are beneficially held by insiders, or their affiliates.
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 authorized shares of Common Stock with a par value of $ , and shares of Preferred Stock with a par value of $ . Pharmalectin was originally formed under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2020, the name was changed to Pharmalectin, Inc. As at September 30, 2024, there are shares of Common Stock issued and outstanding; shares had earlier been cancelled after an option to convert the shares into Bioxytran stock was exercised by an affiliate, the beneficial ownership of which includes the Company’s officers. The non-controlling interest was eliminated directly against accumulated deficit.
Pharmalectin
BVI was organized on March 17, 2021, as a British Virgin Islands (“BVI”) Business Corporation with a BVI corporate taxing
structure and
Pharmalectin
India was organized on August 30, 2023, as an Indian Business Corporation with its principal place of business in Hyderabad, Telangana,
India. Pharmalectin India has
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 generally accepted accounting principles in the United States of America (“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.
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 U.S. 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 prepared in accordance with U.S. GAAP. These financial statements should be read in conjunction with the Company’s December 31, 2023, audited financial statements and notes.
6 |
Reclassification
Statements of Operations: By request from our shareholders, general and administrative expenses, as well as interest expenses, have been separated into affiliate and third party (others), in comparison with earlier periods.
Statements of Cash Flows: By request from our shareholders, stock-based compensation has been separated into affiliate and third party (others), in comparison with earlier periods.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of Bioxytran, including its majority owned subsidiary, Pharmalectin, as well as its wholly owned subsidiaries, Pharmalectin BVI and Pharmalectin India (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
Note 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In September 2024, the Company concluded that for shares issued pursuant to the Exchange Exemption in Rule 3(a)(9), the company historically valued these shares at the same price as an ongoing capital raise pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act. In retrospect this approximation of Fair value based on the recommendations with ASC 820 - Fair Value Measurement, was not concluded to be precise enough, and that we would need to define a more precise value based on market price at the time of issuance. In accordance with the guidance of ASC 820 concerning for Lack of Registration Premium, shares that are restricted for six months under SEC Rule 144 generally see a 20%–30% discount on market price. The Company has opted for a 25% discount to the market price at the date of issuance based on the Company’s elevated volatility, and to the illiquidity of the high amount of shares issued in these transactions.
Therefore, the Company, in consultation with its Audit Committee, concluded that its previously issued Financial Statements for the quarter ended September 30, 2023 and for the year ended December 31, 2023 (the “Affected Periods”) should be restated because of a misapplication in the guidance around the valuation for certain of our outstanding shares of Common Stock (the “Shares”) and should no longer be relied upon.
Impact of the Restatement
The impact of the restatement on the balance sheets, statements of operations and statements of cash flows for the Affected Periods is presented below. The restatement had no net impact on net cash flows from operating, investing or financing activities.
Balance Sheet | As of September 30, 2023 | |||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Assets | ||||||||||||
Total assets | $ | $ | $ | |||||||||
Liabilities and stockholders’ equity | ||||||||||||
Total liabilities | ||||||||||||
Stockholders’ equity | ||||||||||||
Preferred stock, $ | par value||||||||||||
Common stock, $ | par value||||||||||||
Additional paid-in capital | ||||||||||||
Non-controlling interest | ( | ) | ( | ) | ||||||||
Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
Total stockholders’ equity | ( | ) | ( | ) | ||||||||
Total liabilities and stockholders’ equity | $ | $ | $ |
Statement of Operations | As of September 30, 2023 | |||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Loss from operations | $ | ( | ) | $ | $ | ( | ) | |||||
Loss of issuance | ( | ) | ( | ) | ||||||||
Total other (expense) income | ( | ) | ( | ) | ( | ) | ||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Net loss attributable to the non-controlling interest | ||||||||||||
NET LOSS ATTRIBUTABLE TO BIOXYTRAN | ( | ) | ( | ) | ( | ) | ||||||
Loss per Common share, basic and diluted | ) | ) | ) | |||||||||
Weighted average number of Common shares out-standing, basic and diluted |
7 |
Statement of Cash Flows | As of September 30, 2023 | |||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Adjustment to reconcile net loss to net cash used in operating activities | ||||||||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||||||
Net cash used in investing activities | ( | ) | ( | ) | ||||||||
Net cash provided by financing activities | ||||||||||||
Net change in cash | $ | ( | ) | $ | $ | ( | ) |
Balance Sheet | As of December 31, 2023 | |||||||||||
As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
Assets | ||||||||||||
Total assets | $ | $ | $ | |||||||||
Liabilities and stockholders’ equity | ||||||||||||
Total liabilities | ||||||||||||
Stockholders’ equity | ||||||||||||
Preferred stock, $ | par value||||||||||||
Common stock, $ | par value||||||||||||
Additional paid-in capital | ||||||||||||
Non-controlling interest | ( | ) | ( | ) | ||||||||
Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
Total stockholders’ equity | ( | ) | ( | ) | ||||||||
Total liabilities and stockholders’ equity | $ | $ | $ |
The
impact to the balance sheet dated September 30, 2023, filed on Form 10-Q on November 3, 2023, the valuation of for shares issued
pursuant to the Exchange Exemption in Rule 3(a)(9), resulted in a $
NOTE 3 - 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.
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.
As
explained further below, at September 30, 2024, we would, based on the market price of $
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 to 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.
Accounting for subsidiary stock transactions
The Company accounts for subsidiary stock transactions in accordance with Opinions of the Accounting Principles Board 09 (APBO No. 9). In paragraph 28, this pronouncement excluded all adjustments from transactions in a company’s own stock “…from the determination of net income or the results of operations under all circumstances.”
8 |
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. In the nine months ended
September 30, 2024, the Company incurred $
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.
9 |
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.
The valuation of shares issued under an exemption from registration, such as under Rule 3(a)(9) of the Securities Act, typically relates to ASC 820 (Fair Value Measurement) under U.S. Generally Accepted Accounting Principles (GAAP). This accounting standard provides guidance on how to measure fair value when required for financial reporting purposes. Among other notable considerations the Company highlights;
● | When valuing shares in an exchange under Rule 3(a)(9), the conversion terms and the value of the securities being exchanged (debt, other equity, etc.) must be considered. If the company is offering a premium or discount as part of the exchange, this would impact the fair value measurement; |
Based on Empirical Evidence and Studies, for restricted stock in public companies, the liquidity discount averages around 20%–30%, based on, but not limited to, the following data;
○ | Liquidity of the Security: |
■ | If the company has low trading volumes and investors may find it difficult to sell shares, the discount could be on the higher end of the range (e.g., 30%–40%). | |
■ | Conversely, for OTC companies with higher trading volumes, the discount might be lower (e.g., 10%–20%). |
○ | Holding Period: |
■ | The longer the restriction period on the newly issued shares, the higher the discount. If the shares are subject to extended holding periods, investors will require greater compensation for their inability to sell the shares in the short term. | |
■ | For example, shares that are restricted for six months under SEC Rule 144 could see a 20%–30% discount. If the holding period extends beyond that or other limitations apply, the discount might increase. |
○ | Company Fundamentals and Risk |
■ | Investors consider the financial health, stability, and growth prospects of the issuing company. A riskier OTC company with volatile financials or uncertain growth prospects might see a larger liquidity discount (e.g., closer to 40%). | |
■ | Companies with strong fundamentals might experience a lower discount (e.g., 10%–20%), even in the OTC market. |
In
accordance with the guidance of ASC 820 concerning for Lack of Registration Premium, shares that are restricted for six months under
SEC Rule 144 generally see a 20%–30% discount on market price. The Company has opted for a
In contrary, shares issued under the registration requirements of the Securities Act for the Compensatory Benefit Plan pursuant to Rule 701 of the Securities Act where ASC 718 (Compensation—Stock Compensation), are valued at market price at the grant date, based on the limited amount of shares awarded, and its predictable repetitiveness. Under ASC 718, the grant date is typically the measurement date for share-based compensation. This is the date when both parties (employer and employee) have a mutual understanding of the terms of the award, and it is used to determine the fair value of the stock-based award for accounting purposes. The fair value measured at the grant date is not adjusted for subsequent changes in stock price.
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.
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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, 2020, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2022. The Company adopted ASU 2020-06 effective 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 4 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As
at September 30, 2024, the Company had cash of $
During
the nine months ended September 30, 2024, the Company raised a net of $
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 5 - AFFILIATE TRANSACTIONS
The
Company holds License Agreements (the “License(s)”) for a medical device (license obtained in 2019) and a compound (license
obtained in 2021), with two affiliated companies of which the beneficial ownership includes the Company’s officers. The products
were developed prior to the establishment of Bioxytran. The yearly maintenance fees for each license amount to $
The
Company had at September 30, 2024, loan agreements calling for an
NOTE 6 - 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.
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 End-of-Life (year) | September 30, 2024 | December 31, 2023 | ||||||||||
Capitalized patent costs | $ | $ | ||||||||||
Accumulated amortization | ( | ) | ( | ) | ||||||||
Intangible assets, net | $ | $ |
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NOTE 7 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
On
September 30, 2024, there was $
The following table represents the major components of accounts payables and accrued expenses and other current liabilities at September 30, 2024, and at December 31, 2023:
September 30,2024 | December 31, 2023 | |||||||||
Accounts payable affiliate | a | $ | $ | |||||||
Professional fees | ||||||||||
Payroll Tax | ||||||||||
401K | ||||||||||
Interest affiliate | b | |||||||||
Interest | ||||||||||
Other | ||||||||||
Un-issued share liability affiliate | c | |||||||||
Un-issued share liability | ||||||||||
Short term loan affiliate | b | |||||||||
Short term loan | ||||||||||
Debt discount | ( | ) | ||||||||
Convertible note payable | ||||||||||
Total current liabilities | $ | $ |
a | |
b | |
c |
NOTE 8 – CONVERTIBLE NOTES PAYABLE
On
or about May 3, 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 $
At
any time after the issue date of the Notes, the Holders of the 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.
If the 2021 Notes are converted prior to us paying off such note, it would lead to substantial dilution to our shareholders as a result of the conversion discounted applicable to the 2021 Notes. 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.
On
May 5, 2023, three (3) of the Notes were renegotiated; the interest was set to
On
May 1, 2024, the 2021 Note was extended until
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For the Notes issued the Company claims an exemption from the registration requirements of the Securities Act of 1933 (the “Securities Act”) for the private placement of these securities pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act. The Common Stock underlying the Note(s), when issued, bear a restrictive legend and are currently eligible for resale under Rule 144.
At September 30, 2024, and December 31, 2023, the outstanding convertible notes were as follows:
Name | Principal due | Debt discount | Accrued interest | Total amount due | ||||||||||||||
December 31, 2023 | ||||||||||||||||||
Private Placement, 2021 Note | a | $ | $ | $ | $ | |||||||||||||
2021 Note issued in exchange for prior Notes | b | |||||||||||||||||
$ | $ | $ | $ |
September 30, 2024 | ||||||||||||||||||
Private Placement, 2021 Note | c | $ | $ | ( |
) | $ | $ |
a | |
b | |
c |
Private Placement, 2024
On
March 15, 2024, we entered into a Security Purchase Agreement (the “2024 SPA”), with an accredited investor, under which
we agreed to sell a Note, in a principal amount of $
At
any time after the issue date of the 2024 Note, the 2024 Holder has the option to convert any part of the outstanding and unpaid principal
amount and accrued and unpaid interest of the Note into shares of our Common Stock at the Conversion Price. The “Conversion Price”
is set to $
On
April 15, 2024, the entire outstanding balance of principal and interest owed on the 2024 Note was converted into
NOTE 9 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue shares of Common Stock, and shares of Preferred Stock.
Preferred Stock
Issuances in the period January 1 and September 30, 2024
Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||
1/01/2024 | $ | $ | — | |||||||||||||||
8/19/2024 | g | conversion Common Stock | affiliate | |||||||||||||||
8/19/2024 | d | exercise of warrant | affiliate | |||||||||||||||
8/19/2024 | c | debt conversion | affiliate | |||||||||||||||
8/28/2024 | g | conversion Common Stock | affiliate | |||||||||||||||
8/28/2024 | g | ( | ) | ( | ) | conversion Common Stock | affiliate | |||||||||||
9/30/2024 | $ | $ |
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Common Stock
Number of shares of Common Stock issued and outstanding during the reporting period(s):
Issuances in the period January 1 and September 30, 2023 (restated)
Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||
1/01/2023 | $ | $ | ||||||||||||||||
1/04/2023 | a | private placement | ||||||||||||||||
1/04/2023 | - | ( | ) | subscription | ||||||||||||||
2/10/2023 | a | private placement | ||||||||||||||||
4/14/2023 | c | debt conversion | ||||||||||||||||
4/14/2023 | c | debt conversion | affiliate | |||||||||||||||
4/18/2023 | a | private placement | ||||||||||||||||
5/10/2023 | e | warrants | ||||||||||||||||
5/15/2023 | a | private placement | ||||||||||||||||
5/17/2023 | b | convertible note | ||||||||||||||||
6/26/2023 | b | convertible note | ||||||||||||||||
7/26/2023 | a | private placement | ||||||||||||||||
8/21/2023 | f | public offering | ||||||||||||||||
8/21/2023 | c | debt conversion | ||||||||||||||||
8/25/2023 | a | private placement | ||||||||||||||||
8/30/2023 | b | convertible note | ||||||||||||||||
9/14/2023 | c | debt conversion | affiliate | |||||||||||||||
9/19/2023 | a | private placement | ||||||||||||||||
9/19/2023 | a | private placement | ||||||||||||||||
see Note 10 | d | 2021 Stock Plan | affiliate | |||||||||||||||
see Note 10 | d | 2021 Stock Plan | ||||||||||||||||
9/30/2023 | $ | $ |
Issuances in the period January 1 and September 30, 2024
Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||
1/01/2024 | $ | $ | ||||||||||||||||
1/17/2024 | a | private placement | ||||||||||||||||
1/17/2024 | - | ( | ) | — | subscription | |||||||||||||
1/18/2024 | c | debt conversion | ||||||||||||||||
1/18/2024 | c | debt conversion | affiliate | |||||||||||||||
1/19/2024 | a | ( | ) | return to treasury | ||||||||||||||
1/22/2024 | c | exercise of warrant | cashless | |||||||||||||||
1/22/2024 | b | convertible note | ||||||||||||||||
3/20/2024 | b | convertible note | ||||||||||||||||
3/27/2024 | c | debt conversion | ||||||||||||||||
4/04/2024 | c | debt conversion | ||||||||||||||||
4/15/2024 | b | convertible note | ||||||||||||||||
4/15/2024 | a | private placement | ||||||||||||||||
4/19/2024 | c | debt conversion | ||||||||||||||||
4/22/2024 | a | private placement | ||||||||||||||||
5/16/2024 | b | convertible note | ||||||||||||||||
5/20/2024 | c | debt conversion | ||||||||||||||||
6/27/2024 | a | private placement | ||||||||||||||||
8/19/2024 | g | ( | ) | ( | ) | conversion Preferred Stock | affiliate | |||||||||||
8/28/2024 | g | ( | ) | ( | ) | conversion Preferred Stock | affiliate | |||||||||||
8/28/2024 | g | conversion Preferred Stock | affiliate | |||||||||||||||
see Note 10 | d | 2021 Stock Plan | affiliate | |||||||||||||||
see Note 10 | d | 2021 Stock Plan | ||||||||||||||||
9/30/2024 | $ | $ |
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a | |
b | |
c | |
d | |
e | |
f | |
g | |
h | The Company claims an exemption from the registration requirements of the Securities Act pursuant to the Exchange Exemption under Rule 144 of the Securities Act. |
Common Stock Warrants
In
the nine months ended September 30, 2024, the Company did not issue any Warrants. In the nine months ended September 30, 2023, the Company
issued
The following table summarizes the Company’s Common Stock warrant activity in the nine months ended September 30, 2024, and 2023:
Number of Warrants | Weighted Average Exercise Price | Weighted- Average Remaining Expected Term | ||||||||||||
Outstanding as at January 1, 2023 | $ | $ | ||||||||||||
Granted | a | |||||||||||||
Exercised | — | |||||||||||||
Forfeited/Cancelled | — | |||||||||||||
Outstanding as at September 30, 2023 | $ | $ | ||||||||||||
Outstanding as at January 1, 2024 | $ | $ | ||||||||||||
Granted | a | — | ||||||||||||
Exercised | — | |||||||||||||
Forfeited/Cancelled | — | |||||||||||||
Outstanding as at September 30, 2024 | $ | $ |
a | |
A
warrant agreement issued in 2019 for a total of |
The following table summarizes information about stock warrants that are vested or expected to vest at September 30, 2024:
Warrants Outstanding and Exercisable | ||||||||||||||
Number of Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||
$ | $ |
The weighted-average remaining contractual life for warrants exercisable at September 30, 2024, is years. The aggregate intrinsic value for fully vested, exercisable warrants was $ at September 30, 2024.
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On
January 15, 2021, the Company adopted a stock option plan entitled “The 2021 Employee, Director and Consultant Stock Plan”
(the “2021 Plan”) under which the Company may grant Options to Purchase Stock, Stock Awards or Stock Appreciation Rights
up to
Under the terms of the 2021 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, which are fully and immediately vested upon issuance, may be directly issued under the Plan (without any intervening options).
Shares of Common Stock granted and vested under the 2021 Plan
As at January 1, 2024, there were shares issued valued at a fair historic market value of $ at the time of award and at September 30, 2024, there were shares issued valued at a fair historic market value of $ at the time of award. As at January 1, 2023, there were shares issued valued at a fair historic market value of negative ($ ) (historically awarded “expensive” stock were returned to treasury in 2021) at the time of award, and at September 30, 2023, there were shares issued valued at a fair historic market value of $ at the time of award.
Issuances under the 2021 Stock Plan in the period January 1 and September 30, 2023 | ||||||||||||||||||||||
Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||||||
1/01/2023 |