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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, 2024

 

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, Suite 605, Needham Heights, MA   02494-2863
(Address of principal executive offices)   (Zip Code)

 

617-454-1199

(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
Common Stock   BIXT   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. 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. ☐

 

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 85,782,908.

 

 

 

 
 

 

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, 2024, and December 31, 2023, (Unaudited) 1
       
    Statements of Operations for the three and nine months ended September 30, 2024, and 2023, (Unaudited) 2
       
    Statements of Changes in Stockholders’ Deficit for the three and nine months ended September 30, 2024, and 2023, (Unaudited) 3
       
    Statements of Cash Flows for the nine months ended September 30, 2024, and 2023, (Unaudited) 5
       
    Notes to Unaudited Condensed Consolidated Financial Statements 6
       
  Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21
       
  Item 3. Quantitative and Qualitative Disclosures About Market Risk 26
       
  Item 4. Controls and Procedures 26
       
PART II - OTHER INFORMATION
 
  Item 1. Legal Proceedings 28
       
  Item 1A. Risk Factors 28
       
  Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 28
       
  Item 3. Defaults Upon Senior Securities 28
       
  Item 4. Mine Safety Disclosures 28
       
  Item 5. Other Information 28
       
  Item 6. Exhibits 29
       
SIGNATURES 30

 

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  $34,672   $26,086 
Total current assets   34,672    26,086 
           
Capitalized patent costs, net   124,336    111,552 
Total fixed assets   124,336    111,552 
           
Total assets  $159,008   $137,638 
           
LIABILITIES AND STOCKHOLDERS’ DEFICIT          
Current liabilities:          
Accounts payable and accrued operative expenses  $98,426   $72,553 
Accounts payable affiliate   35,084    2,000 
Accrued interest   123,352    223,759 
Accrued interest affiliate   2,934     
Un-issued shares liability   10,194    510,284 
Un-issued shares liability affiliate   40,000    515,904 
Short term loan   38,000     
Short term loan affiliate   140,588    25,000 
Convertible notes payable, net of premium and discount   755,000    1,900,000 
Total current liabilities   1,243,578    3,249,500 
           
Total liabilities   1,243,578    3,249,500 
           
Commitments and contingencies        
           
Stockholders’ deficit:          
Preferred stock, $0.001 par value; 50,000,000 shares authorized, 28,893,618 and nil issued and outstanding as at September 30, 2024, and December 31, 2023.   28,894     
Common stock, $0.001 par value; 300,000,000 shares authorized; 82,238,648 and 145,642,333 issued and outstanding as at September 30, 2024, and December 31, 2023   82,239    145,642 
Additional paid-in capital Common Stock   17,103,158    13,012,670 
Non-controlling interest       (680,886)
Accumulated deficit   (18,298,861)   (15,589,288)
Total stockholders’ deficit   (1,084,570)   (3,111,862)
           
Total liabilities and stockholders’ deficit  $159,008   $137,638 

 

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)

 

   September 30, 2024   September 30, 2023   September 30, 2024   September 30, 2023 
   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  $51,000   $316,129   $78,000   $604,771 
General and administrative   153,886    232,778    768,050    893,217 
General and administrative affiliate   102,447    298,000    488,523    1,138,130 
Compensation Expense   8,416    81,318    187,517    82,528 
Compensation Expense affiliate   30,455    57,240    217,290    74,740 
Total operating expenses   346,204    985,465    1,739,380    2,793,386 
                     
Loss from operations   (346,204)   (985,465)   (1,739,380)   (2,793,386)
                     
Other expenses:                    
Interest expense   (17,845)   (48,701)   (63,950)   (155,399)
Interest expense affiliate   (1,809)       (4,324)    
Loss on issuance       

(91,686

)       

(91,686

)
Amortization of IP   (1,516)   (1,803)   (5,083)   (4,505)
Debt discount amortization and issuance of warrants   (25,000)       (55,000)   (348,637)
Total other income (expenses)   (46,170)   (142,190)   (128,357)   (600,227)
                     
Net loss before provision for income taxes   (392,374)   (1,127,655)   (1,867,737)   (3,393,613)
                     
Provision for income taxes                
NET LOSS   (392,374)   (1,127,655)   (1,867,737)   (3,393,613)
                     
Net loss attributable to the non-controlling interest       34,777    13,324    68,435 
                     
NET LOSS ATTRIBUTABLE TO BIOXYTRAN  $(392,374)  $(1,092,878)  $(1,854,413)  $(3,325,178)
                     
Loss per Common share, basic and diluted  $(0.00)  $(0.01)  $(0.01)  $(0.03)
                     
Weighted average number of Common shares out-standing, basic and diluted   126,391,176    136,443,056    153,821,016    129,441,332 

 

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)

 

   Shares   Amount   Shares   Amount   in Capital   Deficit  

Int.

   Equity 
   Common Stock   Preferred Stock   Add. Paid   Accumul.  

Non-

contr.

   Total 
   Shares   Amount   Shares   Amount   in Capital   Deficit  

Int.

   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 attr to the non-contr int.                                 (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 
Issuance stock plan affiliate   110,000    110              50,090              50,200 
Issuance stock plan other   4,000    4              1,786              1,790 
Conversion of debt affiliate   6,763,562    6,764              2,157,576              2,164,340 
Conversion of debt other   137,656    138              43,912              44,050 
Convertible note   1,325,430    1,325              170,981              172,306 
Issuance of warrants                       348,637              348,637 
Net loss attr to the non-contr int.                                 (764)   (764)
Net loss             -    -         (1,447,218)        (1,447,218)
June 30, 2023   132,035,294   $132,035       $   $11,279,970   $(13,449,901)  $(624,286)  $(2,662,182)
                                         
Stock transactions   3,188,459    3,188              387,173              390,361 
Issuance stock plan affiliate   120,000    120              17,820              17,940 
Issuance stock plan other   477,000    477              70,835              71,312 
Conversion of debt affiliate   5,824,741    5,825              824,201              830,026 
Conversion of debt other   1,600,000    1,600              190,400              192,000 
Convertible note   1,109,861    1,110              143,172              144,282 
Net loss attr to the non-contr int.             -    -              (34,777)   (34,777)
Net loss             -    -         (1,092,878)        (1,092,878)
September 30, 2023 (restated)   144,355,355   $144,355       $   $12,913,571   $(14,542,779)  $(659,063)  $(2,143,916)

 

3
 

 

   Common Stock   Preferred Stock   Add. Paid   Accumul.  

Non-

contr.

   Total 
   Shares   Amount   Shares   Amount   in Capital   Deficit  

Int.

   Equity 
January 1, 2024   145,642,333   $145,642       $   $13,012,670   $(15,589,288)  $(680,886)  $(3,111,862)
Stock transactions   (1,000,000)   (1,000)             1,000               
Stock subscription   333,333    333              (333)              
Issuance stock plan affiliate   1,190,460    1,191              130,645              131,836 
Issuance stock plan other   1,643,231    1,643              166,805              168,448 
Conversion of debt affiliate   3,599,289    3,599              482,305              485,904 
Conversion of debt other   7,409,512    7,410              877,994              885,404 
Exercise of warrants   4,356,778    4,357              (4,357)        -     
Convertible note   9,857,092    9,857              1,253,705              1,263,562 
Net loss attr to the non-contr int.                                 (13,324)   (13,324)
Net loss             -    -         (800,329)   -    (800,329)
March 31, 2024   173,032,028   $173,032       $   $15,920,434   $(16,389,617)  $(694,210)  $(990,361)
                                         
Stock transactions   580,396    580              62,420         -    63,000 
Issuance stock plan affiliate   241,938    242              29,758              30,000 
Issuance stock plan other   36,246    36              10,659              10,695 
Conversion of debt   2,277,397    2,277              283,848              286,125 
Convertible note   1,248,423    1,249              161,046              162,295 
Net loss             -    -         (661,710)   -    (661,710)
June 30, 2024   177,416,428   $177,416       $   $16,468,165   $(17,051,327)  $(694,210)  $(1,099,956)
                                         
Issuance stock plan affiliate   454,546    455    -    -    45,000              45,455 
Issuance stock plan other   84,646    85              8,380              8,465 
Conversion to Pref Stock affiliate   (95,716,972)   (95,717)   19,143,396    19,144    76,573               
Conversion of debt affiliate             776,817    777    353,063              353,840 
Exercise of warrants             8,973,405    8,973    151,977         (160,950)    
Elimination non-contr int.                            (855,160)   855,160     
Net loss             -    -         (392,374)        (392,374)
September 30, 2024   82,238,648   $82,239    28,893,618   $28,894   $17,103,158   $(18,298,861)  $   $(1,084,570)

 

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)

 

   September 30, 2024   September 30, 2023 
   Nine months Ended 
   September 30, 2024   September 30, 2023 
      

(restated)

 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(1,867,737)  $(3,393,613)
Adjustments to reconcile net loss to net cash used in operating activities:          
Debt discount amortization, incl. issuance of warrants   55,000    348,637 
Amortization of IP   5,083    4,505 
Stock-based compensation   187,517    82,528 
Stock-based compensation affiliate   217,290    74,740 
Loss on issuance       

91,686

 
Interest paid for note conversion   164,357    51,588 
Changes in operating assets and liabilities:          
Accounts payable and accrued expenses   565,789    (208,773)
Accounts payable affiliate   574,654    2,265,953 
Net cash used in operating activities   (98,047)   (682,749)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Investment in intangibles   (17,867)   (37,740)
Net cash used in investing activities   (17,867)   (37,740)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from stock sales   63,000    505,361 
Proceeds from issuance of convertible notes payable   61,500     
Net cash provided by financing activities   124,500    505,361 
           
Net increase (decrease) in cash   8,586    (215,128)
Cash, beginning of period   26,086    295,401 
Cash, end of period  $34,672   $80,273 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION          
Interest paid  $   $52,425 
Income taxes paid        
NON-CASH INVESTING & FINANCING ACTIVITIES          
Issuance of warrants       348,637 
Debt discount on convertible note   55,000     
Common shares issued for the conversion of principal and accrued interest   1,425,857    316,588 
Common shares issued for the conversion of accounts payable   1,171,529     
Common shares issued for the conversion of accounts payable affiliate  $839,744   $ 

 

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 95,000,000 authorized shares of Common Stock with a par value of $0.0001, and 5,000,000 shares of Preferred Stock with a par value of $0.0001. 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 300,000,000 authorized shares of Common Stock with a par value of $0.001, and 50,000,000 shares of Preferred Stock with a par value of $0.001. As at September 30, 2024, there are 82,238,648 shares of Common Stock issued and outstanding, while there are 28,893,618 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 95,000,000 authorized shares of Common Stock with a par value of $0.0001, and 5,000,000 shares of Preferred Stock with a par value of $0.0001. 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 15,000,000 shares of Common Stock issued and outstanding; 14,410,000 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 50,000 authorized and outstanding shares of Common Stock with a par value of $1.00. The Company holds 100% of the shares in the Subsidiary.

 

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 50,000 authorized shares of Common Stock with a par value of $0.12 (₹10). There are currently 41,020 outstanding shares of Common Stock of which 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 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.

 

   As Previously
Reported
   Restatement
Adjustment
   As Restated 
Balance Sheet  As of September 30, 2023 
   As Previously
Reported
   Restatement
Adjustment
   As Restated 
Assets               
Total assets  $189,043   $   $189,043 
Liabilities and stockholders’ equity               
Total liabilities   2,332,959        2,332,959 
Stockholders’ equity               
Preferred stock, $0.001 par value            
Common stock, $0.001 par value   144,355        144,355 
Additional paid-in capital   12,821,885    91,686    12,913,571 
Non-controlling interest   (659,063)       (659,063)
Accumulated deficit   (14,451,093)   (91,686)   (14,542,779)
Total stockholders’ equity   (2,143,916)       (2,143,916)
Total liabilities and stockholders’ equity  $189,043   $   $189,043 

 

   As Previously
Reported
   Restatement
Adjustment
   As Restated 
Statement of Operations  As of September 30, 2023 
   As Previously
Reported
   Restatement
Adjustment
   As Restated 
Loss from operations  $(2,793,386)  $  $(2,793,386)
Loss of issuance       (91,686)   (91,686)
Total other (expense) income   (508,541)   (91,686)   (600,227)
Net loss  $(3,301,927)  $(91,686)  $(3,393,613)
Net loss attributable to the non-controlling interest   68,435        68,435 
NET LOSS ATTRIBUTABLE TO BIOXYTRAN   (3,233,492)   (91,686)   (3,325,178)
                
Loss per Common share, basic and diluted   (0.02)   (0.01)   (0.03)
                
Weighted average number of Common shares out-standing, basic and diluted   129,441,332        129,441,332 

 

7
 

 

   As Previously
Reported
   Restatement
Adjustment
   As Restated 
Statement of Cash Flows  As of September 30, 2023 
   As Previously
Reported
   Restatement
Adjustment
   As Restated 
Net loss  $(3,301,927)  $(91,686)  $(3,393,613)
Adjustment to reconcile net loss to net cash used in operating activities       91,686    91,686 
Net cash used in operating activities   (682,749)       (682,749)
Net cash used in investing activities   (37,740)       (37,740)
Net cash provided by financing activities   505,361        505,361 
Net change in cash  $(215,128)  $   $(215,128)

 

   As Previously
Reported
   Restatement
Adjustment
   As Restated 
Balance Sheet  As of December 31, 2023 
   As Previously
Reported
   Restatement
Adjustment
   As Restated 
Assets               
Total assets  $137,638   $   $137,638 
Liabilities and stockholders’ equity               
Total liabilities   3,249,500        3,249,500 
Stockholders’ equity               
Preferred stock, $0.001 par value            
Common stock, $0.001 par value   145,642        145,642 
Additional paid-in capital   12,920,984    91,686    13,012,670 
Non-controlling interest   (680,886)       (680,886)
Accumulated deficit   (15,497,602)   (91,686)   (15,589,288)
Total stockholders’ equity   (3,111,862)       (3,111,862)
Total liabilities and stockholders’ equity  $137,638   $   $137,638 

 

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 $91,686 increase to the Loss of issuance line item on September 30, 2023 and offsetting to the Additional Paid in Capital (“APIC”). There is no change to total stockholders’ equity at any reported balance sheet date

 

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.

 

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.

 

As explained further below, at September 30, 2024, we would, based on the market price of $0.11/share, be obligated to issue approximately 11,604,400 shares of Common Stock upon conversion of the currently outstanding 2021 convertible note (the “2021 Note”), based on $928,352 in outstanding principal and interest. The 2021 Note carry an interest rate of 10% and is convertible at a fixed exercise price of $0.08/share. Upon exercise of outstanding warrants 1,292,030 shares could be issued, along with an additional 1,130,114 shares for warrants with dilutive exercise. As explained further below, the 2021 stock plan has 26,712,247 stock or options to purchase or receive grants of shares of Common Stock available for grant, and currently there are no stock options outstanding.

 

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 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 $78,000 in research and development expenses, while during the nine months ended September 30, 2023, the Company incurred $604,771.

 

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 25% discount to the market price at the date of issuance based on the Company’s elevated volatility, and to the illiquidity of the large amount of shares generally issued in these transactions.

 

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.

 

10
 

 

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 $34,672 and a negative working capital of ($1,207,907). The Company has not yet generated any revenues, and has incurred cumulative net losses of $18,298,861. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

During the nine months ended September 30, 2024, the Company raised a net of $63,000 in cash proceeds from equity and $61,500 in cash proceeds from the issuance of convertible notes. During the same period in 2023, the Company raised a net of $505,361 in cash proceeds from equity. The Company is aware that its current cash on hand will not be sufficient to fund its projected operating requirements through the month of September 2024, 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 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 $5,000 per year. During the nine months ended September 30, 2024, and in 2023, there were $10,000 in transactions with affiliates for license maintenance.

 

The Company had at September 30, 2024, loan agreements calling for an 8% interest with two of its affiliates for a total value of $140,588 with an accrued interest of $2,934. As at December 31, 2023, there was a loan for $25,000 while there was no interest due.

 

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. No impairment charges were recorded for the nine months ended September 30, 2024, and the year ended December 31, 2023.

 

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.

 

SCHEDULE OF INTANGIBLES

   Estimated End-of-Life (year)   September 30, 2024   December 31, 2023 
Capitalized patent costs   2041   $141,348   $123,480 
Accumulated amortization        (17,012)   (11,928)
Intangible assets, net       $124,336   $111,552 

 

11
 

 

NOTE 7 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

On September 30, 2024, there was $2,934 in interest due and $140,588 of principal and interest on loans from affiliates, and $40,000 of liability related to un-issued shares due to an affiliate. On December 31, 2023, there were $2,000 in accounts payable and $25,000 of principal and interest on loans from affiliates, and $515,904 in liability related to un-issued shares due to an affiliate.

 

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  $35,084   $2,000 
Professional fees      75,469    70,895 
Payroll Tax      4,332     
401K      18,625     
Interest affiliate  b   2,934     
Interest      123,352    223,759 
Other          1,658 
Un-issued share liability affiliate  c   40,000    515,904 
Un-issued share liability      10,194    510,284 
Short term loan affiliate  b   140,588    25,000 
Short term loan      38,000     
Debt discount      (50,000)    
Convertible note payable      805,000    1,900,000 
Total current liabilities     $1,243,578   $3,249,500 

 

a As at September 30, 2024, there are $35,084 of accounts payable owed to an affiliate. Accumulated payroll for the month of September 2024 is $32,084, $11,667 for each the CEO and CFO and $8,750 for the CCO, each person also has $1,000 of reimbursable expense claims. On December 31, 2023, there was $2,000 due to the CFO for reimbursable expenses.
   
b On September 30, 2024, the Company has a loan of $140,588 due to affiliates, the interest is 8% and currently $2,934 is owed in accrued interest. On December 31, 2023, the loan had a balance of $25,000 with no interest due.
   
c On September 30, 2024, there are 82,476 shares of Preferred Stock awarded but not issued to four (4) Board Members in the second quarter of 2024. The total fair market value at the time of the award was $40,000. On December 31, 2023, there were 211,269 shares awarded to three (3) Board Members and 3,599,289 shares approved for conversion of debt. The total fair market value at the time of the award was $515,904.

 

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 $2,165,000 with 6% interest.

 

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. The “Conversion Price” will be the lesser of (i) $.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. As at September 30, 2024, there is only one note remaining.

 

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 10%, a prepayment of 120% was included, and the remaining note was extended until April 30, 2024. The conversion price was adjusted to the lower of (i) a fixed price of $0.13, or (ii) if the VWAP at the date of conversion is below $0.13, the conversion price will be reduced with 120% of the difference between fixed price and VWAP.

 

On May 1, 2024, the 2021 Note was extended until December 1, 2024, in exchange for a $105,000 debt discount, and the conversion price was adjusted to the lower of (i) a fixed price of $0.08, or (ii) if the VWAP at the date of conversion is below $0.08, the conversion price will be reduced with 120% of the difference between fixed price and VWAP.

 

12
 

 

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  $900,000   $   $63,814   $963,814 
2021 Note issued in exchange for prior Notes  b   1,000,000        159,945    1,159,945 
      $1,900,000   $   $223,759   $2,123,759 

 

        September 30, 2024  
Private Placement, 2021 Note   c   $ 805,000     $ (50,000 )   $ 123,352     $ 878,352  

 

a Net cash received from these notes was $1,045,150, after a Debt Discount of $119,850 was paid to the sole Placement Agent: WallachBeth Capital, LLC (Member FINRA / SIPC). In the first nine months of 2024, a total of $200,000 was converted into 1,675,849 shares of Common Stock.
   
b All earlier issued Notes were paid off and assumed by a different entity/company. Portions of the balance was forgiven and a new note of $1,000,000 was issued to a third party. In the first nine months of 2024, a total of $1,163,562 (whereof $163,562 in interest) was converted into 8,950,474 shares of Common Stock.
   
c On May 1, 2024, the 2021 Note with an interest of 10% was extended for seven months, or until December 1, 2024, in exchange for (i) reduction of conversion price to $0.08, and (ii) a debt discount of $105,000. At September 30, 2024, $50,000 of the debt discount remains to be amortized.

 

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 $61,500 with 8% interest (the “2024 Note”) to the holders of the 2024 Note (the “2024 Holder”).

 

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 $0.13 per share.

 

On April 15, 2024, the entire outstanding balance of principal and interest owed on the 2024 Note was converted into 479,192 shares of Common Stock. The interest owed pursuant to the note was $795.

 

NOTE 9 – 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

 

Each share of Preferred Stock has the voting power of ten (10) shares of Common Stock, and can at any time be converted into five (5), shares of Common Stock. The number of shares of Preferred Stock issued and outstanding during the reporting period(s):

 

Issuances in the period January 1 and September 30, 2024

 

Date     # Shares   Amount   Price/Share   Type  Notice
1/01/2024         $   $       
8/19/2024  g   19,221,026    4,139,126    0.215   conversion Common Stock  affiliate
8/19/2024  d   8,973,405    160,950    0.018   exercise of warrant  affiliate
8/19/2024  c   776,817    353,840    0.455   debt conversion  affiliate
8/28/2024  g   22,370    14,820    0.662   conversion Common Stock  affiliate
8/28/2024  g   (100,000)   (500)   0.005   conversion Common Stock  affiliate
9/30/2024      28,893,618   $4,668,236   $0.162       

 

13
 

 

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      123,252,235   $8,515,682   $0.069       
1/04/2023  a   93,750    30,000    0.320   private placement   
1/04/2023  -       (30,000)      subscription   
2/10/2023  a   156,250    50,000    0.320   private placement   
4/14/2023  c   137,656    44,050    0.320   debt conversion   
4/14/2023  c   6,763,562    2,164,340    0.320   debt conversion  affiliate
4/18/2023  a   78,125    25,000    0.320   private placement   
5/10/2023  e       348,637       warrants   
5/15/2023  a   114,286    40,000    0.350   private placement   
5/17/2023  b   522,138    67,878    0.130   convertible note   
6/26/2023  b   803,292    104,428    0.130   convertible note   
7/26/2023  a   500,000    100,000    0.200   private placement   
8/21/2023  f   1,612,903    145,161    0.090   public offering   
8/21/2023  c   1,600,000    193,000    0.120   debt conversion   
8/25/2023  a   505,186    68,200    0.135   private placement   
8/30/2023  b   1,109,861    144,282    0.130   convertible note   
9/14/2023  c   5,824,741    830,026    0.143   debt conversion  affiliate
9/19/2023  a   200,000    27,000    0.135   private placement   
9/19/2023  a   370,370    50,000    0.135   private placement   
see Note 10  d   230,000    67,690    0.294   2021 Stock Plan  affiliate
see Note 10  d   481,000    73,102    0.152   2021 Stock Plan   
9/30/2023      144,355,355   $13,058,476   $0.090       

 

Issuances in the period January 1 and September 30, 2024

 

Date     # Shares   Amount   Price/Share   Type  Notice
1/01/2024      145,642,333   $13,158,312   $0.090       
1/17/2024  a   333,333    45,000    0.135   private placement   
1/17/2024  -       (45,000)      subscription   
1/18/2024  c   3,703,704    500,000    0.135   debt conversion   
1/18/2024  c   3,599,289    485,904    0.135   debt conversion  affiliate
1/19/2024  a   (1,000,000)          return to treasury   
1/22/2024  c   4,356,778           exercise of warrant  cashless
1/22/2024  b   8,950,474    1,163,562    0.130   convertible note   
3/20/2024  b   906,618    100,000    0.110   convertible note   
3/27/2024  c   3,705,808    385,404    0.104   debt conversion   
4/04/2024  c   1,000,000    104,000    0.104   debt conversion   
4/15/2024  b   479,192    62,295    0.130   convertible note   
4/15/2024  a   173,077    18,000    0.104   private placement   
4/19/2024  c   250,000    32,125    0.129   debt conversion   
4/22/2024  a   194,553    25,000    0.128   private placement   
5/16/2024  b   769,231    100,000    0.130   convertible note   
5/20/2024  c   1,027,397    150,000    0.146   debt conversion   
6/27/2024  a   212,766    20,000    0.094   private placement   
8/19/2024  g   (96,105,125)   (4,139,126)   0.043   conversion Preferred Stock  affiliate
8/28/2024  g   (111,847)   (14,820)   0.133   conversion Preferred Stock  affiliate
8/28/2024  g   500,000    500    0.001   conversion Preferred Stock  affiliate
see Note 10  d   1,886,944    207,289    0.110   2021 Stock Plan  affiliate
see Note 10  d   1,764,123    187,607    0.106   2021 Stock Plan   
9/30/2024      82,238,648   $12,546,052   $0.151       

 

14
 

 

a The Company claims an exemption from the registration requirements of 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.
   
b The Common Stock underlying the Convertible Note(s) are currently eligible for resale under Rule 144. At the time of sale of the promissory note, the Company claimed an exemption from the registration requirements of the Securities Act for these securities pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act.
   
c The Company claims an exemption from the registration requirements of the Securities Act pursuant to the Exchange Exemption in Rule 3(a)(9) of the Securities Act.
   
d The Company claims an exemption from the registration requirements of the Securities Act for the Compensatory Benefit Plan pursuant to Rule 701 of the Securities Act.
   
e The Company claims an exemption from the registration requirements of the Securities Act pursuant to the Exchange Exemption in section 12(a) of the Securities Act.
   
f The shares were issued after the Company filed a registration statement with the SEC, on Form S-1
   
g The Company claims an exemption from the registration requirements of the Securities Act pursuant to the Exchange Exemption under Rule 145 of the Securities Act.
   
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 800,000 5-year warrants exercisable at $0.20/share, in connection with the refinancing of convertible notes, valued at $0.436/share, based on Black and Scholes Option Pricing Model, for a total value of $348,637.

 

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      542,030   $0.42   $4.1 
Granted  a   800,000    0.20    5.0 
Exercised               
Forfeited/Cancelled               
Outstanding as at September 30, 2023      1,342,030   $0.29   $4.1 
                   
Outstanding as at January 1, 2024      1,342,030   $0.29   $3.5 
Granted  a            
Exercised               
Forfeited/Cancelled               
Outstanding as at September 30, 2024      1,342,030   $0.29   $3.0 

 

a The Company claims an exemption from the registration requirements of 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.
   
  A warrant agreement issued in 2019 for a total of 50,000 warrants includes provisions for dilutive issuance and cash-less exercise. If exercised at December 31, 2023, the provisions would have resulted in an issuance of 1,130,114 shares at an average conversion price of $0.11, or 221,023 shares in a cash-less exercise. The warrant should have been cancelled on May 3, 2021 in connection with the issuance of a restructuring note issued in exchange for notes issued in 2019 and a reservation is held against the purchaser of the 2021 Note. The warrant is expected to forfeit on October 22, 2024.

 

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 
 1,342,030   $0.29    3.0   $ 

 

The weighted-average remaining contractual life for warrants exercisable at September 30, 2024, is 3.0 years. The aggregate intrinsic value for fully vested, exercisable warrants was $0 at September 30, 2024.

 

15
 

 

NOTE 10 – STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

 

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 15% of the then fully diluted number of shares of the Company’s Common Stock, automatically adjusted on January 1 each year. On January 1, 2024, the 2021 Plan was reset in accordance with its stipulations. After the reset on January 15, 2024, there were 30,028,314 shares of Common Stock awards available for grant.

 

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 5,288,687 shares issued valued at a fair historic market value of $99,910 at the time of award and at September 30, 2024, there were 8,939,754 shares issued valued at a fair historic market value of $494,806 at the time of award. As at January 1, 2023, there were 4,290,709 shares issued valued at a fair historic market value of negative ($97,272) (historically awarded “expensive” stock were returned to treasury in 2021) at the time of award, and at September 30, 2023, there were 5,001,709 shares issued valued at a fair historic market value of $43,520 at the time of award.

 

The following table summarizes the Company’s granted and issued stock awards in the nine months ended September 30, 2024, and 2023:

 

SCHEDULE OF GRANTED AND ISSUED STOCK AWARDS 

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