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ABTI Alterola Biotech

Filed: 19 Aug 21, 12:00pm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
 For the quarterly period ended June 30, 2021
  
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
  
 For the transition period from __________  to __________
  
 Commission File Number: 333-156091

 

Alterola Biotech, Inc.

(Exact name of Registrant as specified in its charter)

 

Nevada82-1317032
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

 

47 Hamilton Square Birkenhead Merseyside

CH41 5AR United Kingdom

(Address of principal executive offices)

 

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

 

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

[ ] Yes [X] No

 

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

 

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

 

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

 

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

 

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

[ ] Yes [X] No

 

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 754,280,000 shares as of August 13, 2021.

 

  


 

 

TABLE OF CONTENTS

 

Page

 

PART I – FINANCIAL INFORMATION

 

Item 1:Financial Statements3
Item 2:Management’s Discussion and Analysis of Financial Condition and Results of Operations4
Item 3:Quantitative and Qualitative Disclosures About Market Risk8
Item 4:Controls and Procedures8

 

PART II – OTHER INFORMATION

 

Item 1:Legal Proceedings9
Item 1A:Risk Factors9
Item 2:Unregistered Sales of Equity Securities and Use of Proceeds9
Item 3:Defaults Upon Senior Securities9
Item 4:Mine Safety Disclosure9
Item 5:Other Information9
Item 6:Exhibits10

 

 2 

 

PART I - FINANCIAL INFORMATION

 

Item 1.     Financial Statements

 

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

 

F-1  Consolidated Balance Sheets as of June 30, 2021 and March 31, 2021 (unaudited);

 

F-2  

Consolidated Statements of Operations for the three a months ended June 30, 2021 and 2020 (unaudited);

 

F-3Consolidated Statement of Stockholders’ Deficit for the period from January 1, 2021 to June 30, 2021 (unaudited);

 

F-4  Consolidated Statements of Cash Flow for the three months ended June 30, 2021 and 2020 (unaudited);

 

F-5  Notes to Consolidated Financial Statements.

 

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the Securities Exchange Commission (“SEC”) instructions to Form 10-Q.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  Operating results for the interim period ended June 30, 2021 are not necessarily indicative of the results that can be expected for the full year.

 

 3 

 

ALTEROLA BIOTECH, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2021 AND MARCH 31, 2021 

 

  June 30, 2021 March 31, 2021
ASSETS       
Current Assets       
Bank $387  $519
Funds in attorney trust account  12,773    
Prepaid  2,067     
Total Current Assets  15,227   519
        
TOTAL ASSETS $15,227  $519
        
LIABILITIES AND STOCKHOLDERS’ DEFICIT       
        
Current Liabilities       
Accounts payable $337,281  $98,379
Accrued expenses  164,346   20,244
Accrued expenses- related party  330,000   562,665
Advances from related party  79,096   78,350
Total Current Liabilities  910,723   seam,759,638
        
Total Liabilities  910,723   759,638
        
Stockholders’ Equity (Deficit)       
Preferred Stock, $.001 par value, 10,000,000 shares authorized, -0- shares issued and outstanding         
Common Stock, $.001 par value, 2,000,000,000 shares authorized, 754,280,000 and 754,280,000 shares issued and outstanding, respectively  754,280   754,280
Foreign currency translation adjustment  160   (14,023)
Additional paid-in capital       0
Accumulated deficit  (1,649,936)  (1,499,376)
Total Stockholders’ Equity (Deficit)  (895,496)  (759,119)
        
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT $15,227  $519

 

See accompanying notes to financial statements.

 

 F-1 

 


ALTEROLA BIOTECH, INC.

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED JUNE 30, 2021

 

    
  Three Months Ended June 30, 2021
    
REVENUES $  
    
OPERATING EXPENSES   
Accounting and audit fees  8,392
Research and development  136,291
Legal fees  719
Directors fees    
General and administrative expenses  5,158
TOTAL OPERATING EXPENSES  150,560
    
LOSS FROM OPERATIONS  (150,560)
    
OTHER INCOME (EXPENSE)   
Miscellaneous sale    
TOTAL OTHER INCOME (EXPENSE)    
    
PROVISION FOR INCOME TAXES    
    
NET LOSS $(150,560)
    
NET LOSS PER SHARE: BASIC AND DILUTED $(0.00)
    
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED  754,280,000

 

See accompanying notes to financial statements.

 

 F-2 

 

ALTEROLA BIOTECH, INC.

UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)

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

                        
   Common stock                
   Shares   Amount   Additional paid in capital   Accumulated other comprehensive income ( loss)   Deficit   Total
Balance, January 7, 2021(inception)  100  $136      $0  $0  $136
Related party interest forgiven          1,544           1,544
Recapitalization on reverse merger  754,279,900   754,144   (1,544)      (1,156,343)  (403,743)
Change in foreign currency              (14,023)      (14,023)
Net loss                   (343,033)  (343,033)
Balance, March 31, 2021  754,280,000  $754,280      $(14,023) $(1,499,376) $(759,119)
Change in foreign currency              14,183       14,183
Net loss                  (150,560)  (150,560)
Balance, June 30, 2021  754,280,000  $754,280   0  $160  $(1,649,936) $(895,496)

 

See accompanying notes to financial statements.

  

 F-3 

 

ALTEROLA BIOTECH, INC.

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THREE MONTHS ENDED JUNE 30, 2021  

    
  Three Months Ended June 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES   
Net loss for the period $(150,560)
Changes in assets and liabilities:   

Increase (decrease) in prepaid assets

  (2,067)
Increase (decrease) in accrued expenses -related party  (232,832)
Increase (decrease) in accrued expenses  144,590
Increase (decrease) in accounts payable  240,151
Net Cash Used by Operating Activities  (718)
    
CASH FLOWS FROM INVESTING ACTIVITIES   
Net Cash Used by Investing Activities  0
    
CASH FLOWS FROM FINANCING ACTIVITIES   
Due from related parties  746
Net Cash Provided by Financing Activities  746
    
Effect of exchange rate adjustments on cash  (160)
    
Net Increase (Decrease) in Cash and Cash Equivalents  (132)
    
Cash and cash equivalents, beginning of period  519
Cash and cash equivalents, end of period $387
    
SUPPLEMENTAL CASH FLOW INFORMATION   
Interest paid $  
Income taxes paid $  
    
NON-CASH INVESTING AND FINANCING INFORMATION   

  

See accompanying notes to financial statements.

 

 F-4 

  

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

NOTE 1 – NATURE OF BUSINESS

 

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

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

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

 

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

 

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

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

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

 

 F-5 

 

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOLIDATEDEDFINANCIAL STATEMENTS

JUNE 30, 2021

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

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

 

Use of Estimates

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

 

Cash and Equivalents

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

 

Funds in attorney trust account

The company does not have its own bank account. Amounts due from attorney represents fund held on behalf of the Company in trust by its legal counsel.

 

Fair Value of Financial Instruments

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

 

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

 

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

 

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

 

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

 

 F-6 


 

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Fair Value of Financial Instruments (continued)

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

 

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

 

Income Taxes

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

 

Foreign Currency Translation

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

 

Revenue Recognition

On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. As of and for the year ended June 30, 2021, the financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605.

 

Loss Per Common Share

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

 

 F-7 

 

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Stock-Based Compensation

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

 

Risks and Uncertainties

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

 

Recent Accounting Pronouncements

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

 

NOTE 3 – ACCRUED EXPENSES

 

Accrued expenses consisted of the following at June 30, 2021 and March 31, 2021:

 

  June 30, 2021 March 31, 2021
Audit fees $17,687  $   
Accounting  5,600   5,600 
Research and development  126,415      
Legal fees and transfer agent  14,644   15,644 
Total Accrued Expenses $164,346  $20,244 

 

NOTE 4 – CAPITAL STOCK

 

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

 

The Company has 754,280,000 and 754,280,000 shares of common stock issued and outstanding as of June 30, 2021 and March 31, 2021, respectively. There are 0 shares of preferred stock issued and outstanding as of June 30, 2021 and March 31, 2021.

 

 F-8 

 

ALTEROLA BIOTECH, INC.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2021

 

NOTE 5 – RELATED PARTY TRANSACTIONS

 

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

 

During the period ended June 30, 2021, a shareholder made advances to the company to fund operating expenses in the amount of $79,096. These advances are non – interest bearing and have no specified terms of repayment.

 

During the period ended June 30, 2021, the Company accrued director’s fees payable of $330,000.

 

NOTE 6 – LIQUIDITY & GOING CONCERN

 

Alterola has negative working capital of $895,496, has incurred losses since inception of $1,649,936, and has not received revenues from sales of products or services. These factors create substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if the Company is unable to continue as a going concern.

 

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

 

NOTE 7 – SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855-10, the Company analyzed its operations subsequent to June 30, 2021 to the date these financial statements were issued, and determined it does not have any material subsequent events to disclose in these financial statements.

 

 F-9 

 

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

 

Forward-Looking Statements

 

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

 

Overview

 

The business plan of the company is focused on activities involved in the development of cannabinoid, cannabinoid-like, and non-cannabinoid pharmaceutical active pharmaceutical ingredients (APIs), pharmaceutical medicines made from cannabinoid, cannabinoid-like, and non- cannabinoid APIs and the development of ingredients and products with the aim of achieving European novel food approval of cannabinoid-based, cannabinoid-like and non-cannabinoid ingredients and products .In addition, the company plans to develop such bulk ingredients for supply into the cosmetic sector.

 

The business plan of the company is for the company’s operations to be repositioned as a fully regulatory- compliant pharmaceutical company specializing in the development of the following:

 

 cannabinoid, cannabinoid-like and non-cannabinoid pharmaceutical active pharmaceutical ingredients (APIs) globally;
   
 pharmaceutical medicines made from cannabinoid, cannabinoid-like and non-cannabinoid APIs globally;

 

 cannabinoid, cannabinoid-like and non-cannabinoid food-grade ingredients with the aim of achieving European novel food approval of such ingredients;
   
 • non-pharmaceutical (nutraceutical / dietary supplement) products containing cannabinoids, cannabinoid-like and non-cannabinoid food-grade ingredients with the aim of achieving European novel food approval of such products; and
   
 • Supply of cosmetic ingredients to potential customers who may develop products containing cannabinoids, cannabinoid-like and non-cannabinoid ingredients

 

 4 

 

The controlled drugs / cannabinoid pharmaceutical market worldwide has experienced exponential growth over the past few years in the development of cannabinoid medicines. It is Alterola’s intention to develop ingredients and products on a global basis, fully compliant with the appropriate international laws and regulations and also compliant with the relevant national laws and regulations on a territory-by-territory basis.

 

In December 2020, the company retained new management and board members that have experience in the finance, capital markets, pharmaceutical, botanical and nutraceutical industries. Further to this objective, the company is also interested in recruiting key executives and personnel that have experience in the controlled drugs / cannabinoid medicines industry. The focus will be on recruiting outstanding talents that have contributed or can contribute more in the future with the company’s expansion plans.

 

The company also has interest in licensing / acquiring other IP from companies that have IP pertinent to the aforementioned products the company plans to develop. Under consideration are companies that have existing pharmaceutical research and/or development or manufacturing capability or associated IP. Some of these companies have IP which is available to integrate into our company strategy. These acquisition or in-licensing opportunities are expected to facilitate the company to develop API and medicines globally and food-grade ingredients and products for the food and beverage industry in Europe.

 

Acquisition of ABTI Pharma

 

On January 19, 2021, we entered into an Stock Transfer Agreement (the “Agreement”) with ABTI Pharma Limited, a company registered in England and Wales (“ABTI Pharma”), pursuant to which the Company will acquire all of the outstanding shares of capital stock of ABTI Pharma from its shareholders in exchange for 600,000,000 shares of the Company pro rata to the ABTI Pharma shareholders.

 

On May 24, 2021, we and the shareholders of ABTI Pharma memorialized a new closing date in an amendment to the Agreement (the “Amendment”). We have already issued the 600,000,000 shares in anticipation of the closing and the transaction closed on May 28, 2021, upon the filing of our December 31, 2020 quarterly report on Form 10-Q with the Securities and Exchange Commission.

  

Pursuant to the Agreement, from the date of execution, the Company will provide funding to ABTI Pharma to pay for operating expenses including salaries, office expenses and additional expenses or projects in the amount of US$500,000 within fifteen (15) days from closing the Agreement and shall fund an additional US $200,000 every 30 days thereafter until a total funding of US $1,100,000 has been delivered. The Company will receive $100,000 net funding in July and expects a further $400,000 to be deposited week ending August 20, 2021. It was previously noted that these funds will be available post the completion date, but may exceed the 15 day deadline before this is available to the Company.

 

Further under the Agreement, Alterola will endeavor to raise a total of at least $75,000,000 with $70,000,000 in net proceeds and Alterola will arrange an underwriting commitment of the first ($25,000,000 USD) to be funded at a price of not less than $1.00 per share within 45 days of execution of the closing of the Agreement. The Company also expects that these funds will be available in the month of September 2021, but may exceed the 45 day deadline before this is available to the Company.

 

As part of the Agreement, Amsterdam Café Holdings Limited cancelled and returned to us 200,000,000 shares it holds and we issued Bulls Run Investments Limited 19,100,000 shares of common stock. Another 2,000,000 shares were also issued for services rendered.

 

 5 

 

Operations of ABTI Pharma

 

ABTI Pharma Ltd is a UK-based pharmaceutical company developing cannabinoid, cannabinoid-like, and non- cannabinoid pharmaceutical active pharmaceutical ingredients (APIs), pharmaceutical medicines made from cannabinoid, cannabinoid-like, and non-cannabinoid APIs and targeting European novel food approval of cannabinoid-based, cannabinoid-like and non-cannabinoid ingredients and products. In addition, the company is seeking to develop such bulk ingredients for supply into the cosmetic sector.

 

ABTI Pharma Ltd is a UK-based pharma company working with cannabinoid and cannabinoid like molecules. It has three areas of focus:

 

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

 

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

 

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

 

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

 

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

 

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

 

Additionally, in principle agreements have been reached to bring a number of other IP-protected technologies into Alterola via the deal with ABTI Pharma.

 

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

 

Results of Operations for the Three Months Ended June 30, 2021 and 2020

 

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

 

We incurred operating expenses of $150,560 for the three months ended June 30, 2021, consisting mainly of research and development of $136,291.

 

 6 

 

We expect that our operation expenses will increase significantly for the balance of the fiscal year ended March 31, 2022. This would be the result of increased research and development expenses associated with our product candidates, the regulatory process of approval of those products, as well as the expenses associated with our reporting obligations with the Securities and Exchange Commission.

 

We recorded a net loss of $150,560 for the three months ended June 30, 2021.

 

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

 

Liquidity and Capital Resources

 

As of June 30, 2021, we had $15,227 in current assets and currently liabilities of $910,723. We had a working capital deficit of $895,496 as of June 30, 2021.

 

We had insignificant operating, investing or financing cash flows to report for the three months ended June 30, 2021 and 2020.

 

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

 

Subsequent to the reporting period, we received $100,000 in funding in July and we entered into an equity line financing for up to $125,000,000. The terms of this financing are set forth below in this quarterly report. The company is hopeful that this financing may assist the company to raise the funds needed to implement its business plan. The financing, however, is conditional on filing a registration statement with the Securities and Exchange Commission and other factors set forth in the definitive agreements. If we are unable to use the equity line, or we are limited in the amounts of funds we are able to draw from such line, we may not realize the funds necessary to implement our business plan exclusively from this equity line financing.

 

Off Balance Sheet Arrangements

 

As of June 30, 2021, we had no off balance sheet arrangements.

 

Going Concern

 

Our financial statements were prepared assuming we will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have negative working capital of $895,496 and have incurred losses since inception of $1,649,936. We expect to incur further losses in the development of our business and have been dependent on funding operations from inception. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans include continuing to finance operations through the private or public placement of debt and/or equity securities and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives. The financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

 

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Item 3.     Quantitative and Qualitative Disclosures About Market Risk

 

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

 

Item 4.     Controls and Procedures

 

Disclosure Controls and Procedures

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2021. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2021, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of June 30, 2021, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

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

 

Our company plans to take steps to enhance and improve the design of internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending March 31, 2022: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the three months ended June 30, 2021 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting.

 

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PART II – OTHER INFORMATION

 

Item 1.     Legal Proceedings

 

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

 

Item 1A:  Risk Factors

 

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

 

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

 

None

 

Item 3.     Defaults upon Senior Securities

 

None

 

Item 4.     Mine Safety Disclosures

 

Not applicable.

 

Item 5.     Other Information

 

On July 2, 2021 ABTI Pharma receieved the first payment of one hundred thousand dollars ($100,000) as part of the Company agreement to provide contracted funding up to One million one hundred thousand dollars ($1,100,000)

 

On August 11, 2021, we entered into a Common Stock Purchase Agreement and a Registration Rights Agreement with EMC2 Capital, LLC (the “Buyer”) pursuant to which the Buyer agreed to invest up to One Hundred Million Dollars ($125,000,000) to purchase the Company’s common stock, par value $0.001 per share, at a purchase price as defined in the Common Stock Purchase Agreement. The Registration Rights Agreement was an inducement to the Buyer to execute and deliver the Common Stock Purchase Agreement, whereby the Company agreed to provide certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, and applicable state securities laws, with respect to the shares of common stock issuable for Investor’s investment pursuant to the Common Stock Purchase Agreement.

 

In addition, the Company entered into a Common Stock Purchase Warrant with the Buyer to subscribe for a purchase from the Company up to Fifteen Million (15,000,000) shares of the Company’s Common Stock, par value $0.001. The foregoing description of the Common Stock Purchase Agreement, Registration Rights Agreement, Common Stock Purchase Warrant and the Common Stock Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of those documents, copies of which are attached as Exhibits 10.1, 10.2 and 4.1, respectively, to this Quarterly Report on Form 10-Q, and of which are incorporated herein by reference.

 

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Item 6.      Exhibits

 

Exhibit NumberDescription of Exhibit
4.1**Common Stock Purchase Warrant, dated August 11, 2021
10.1**Common Stock Purchase Agreement, dated August 11, 2021
10.2**Registration Rights Agreement, dated August 11, 2021
31.1**Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2**Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101**The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021 formatted in Extensible Business Reporting Language (XBRL).
**Provided herewith 

 

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SIGNATURES

 

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

 

 Alterola Biotech, Inc.
  
Date:August 19, 2021
  
 

By: /s/ Seamus McAuley

Seamus McAuley

Title:   Chief Executive Officer and Director

 

Date:August 19, 2021
  
 

By: /s/ Larson Elmore

Larson Elmore

Title:    Interim Chief Financial Officer, Vice Chairman, Secretary and Director

 

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