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BIXT Bioxytran

Filed: 17 May 21, 1:35pm

 

 

 

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 March 31, 2021

 

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 26-2797630
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)

 

233 Needham St., Ste 300, Newton, MA 02464
(Address of principal executive offices) (Zip Code)

 

617-454-1199

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒      No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒      No ☐

 

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

 

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller Reporting Company
  Emerging Growth Company

 

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

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐      No ☒

 

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

 

Class Outstanding at May 13, 2021
Common Stock, $0.001 par value per share 100,899,873 shares

 

 

 

 

 

BIOXYTRAN, INC.
FORM 10-Q

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION 
  
 Item 1.Unaudited Condensed Consolidated Financial Statements1
    
  Balance Sheets as of March 31, 2021 and December 31, 2020 (Unaudited)1
    
  Statements of Operations for the three months ended March 31, 2021 and 2020 (Unaudited)2
    
  Statement of Changes in Stockholders’ Equity (Deficit) for the three months ended March 31, 2021 and 2020 (Unaudited)3
    
  Statements of Cash Flows for the three months ended March 31, 2021 and 2020 (Unaudited)4
    
  Notes to Unaudited Condensed Consolidated Financial Statements5
    
 Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations16
    
 Item 3.Quantitative and Qualitative Disclosures About Market Risk19
    
 Item 4.Controls and Procedures19
    
PART II - OTHER INFORMATION
 
 Item 1.Legal Proceedings21
    
 Item 1A.Risk Factors21
    
 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds21
    
 Item 3.Defaults Upon Senior Securities21
    
 Item 4.Mine Safety Disclosures21
    
 Item 5.Other Information21
    
 Item 6.Exhibits22
    
SIGNATURES23

 

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.

 

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Unaudited Condensed Consolidated Financial Statements: BIOXYTRAN, Inc., March 31, 2021

 

BIOXYTRAN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

(UNAUDITED)

 

  March 31,
2021
  December 31,
2020
 
ASSETS        
Current assets:        
Cash $91,635  $41,688 
Pre-paid expenses  274,715   274,715 
Total current assets  366,350   316,403 
         
Intangibles, net  18,953   10,000 
         
Total assets $385,303  $326,403 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)        
Current liabilities:        
Accounts payable and accrued expenses $476,849  $348,127 
Accounts payable related party  368,367   307,176 
Convertible notes payable, net of premium and discount  1,612,356   1,612,356 
Other short-term debt  420,750    
Total current liabilities  2,878,322   2,267,659 
         
Total liabilities  2,878,322   2,267,659 
         
Commitments and contingencies      
         
Stockholders’ equity (deficit):        
Preferred stock, $0.001 par value; 50,000,000 shares authorized, nil issued and outstanding      
Common stock, $0.001 par value; 300,000,000 shares authorized; 100,649,873 issued and outstanding as at March 31, 2021 and 97,450,673 as at December 31, 2020  100,650   97,451 
Additional paid-in capital  2,566,484   1,795,125 
Non-controlling interest  1,183,477   888,091 
Accumulated deficit  (6,343,630)  (4,721,923)
Total stockholders’ equity (deficit)  (2,493,019)  (1,941,256)
         
Total liabilities and stockholders’ equity (deficit) $385,303  $326,403 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

1

 

 

BIOXYTRAN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(UNAUDITED)

 

  3-Months Ended 
  March 31,
2021
  March 31,
2020
 
Operating expenses:        
Research and development $347,033  $ 
General and administrative  567,320   110,542 
Compensation expense  774,558   155,501 
Total operating expenses  1,688,911   266,043 
         
Loss from operations  (1,688,911)  (266,043)
         
Other (expense):        
Interest expense  (87,410)  (107,730)
Debt discount amortization     (166,722)
Total other (expenses) income  (87,410)  (274,452)
         
Net loss before provision for income taxes  (1,776,321)  (540,495)
         
Provision for income taxes      
Net loss  (1,776,321)  (540,495)
         
Net loss attributable to the non-controlling interest  154,614    
         
NET LOSS ATTRIBUTABLE TO BIOXYTRAN $(1,621,707) $(540,495)
         
Loss per common share, basic and diluted $(0.02) $(0.01)
         
Weighted average number of common shares outstanding, basic and diluted  100,118,229   87,256,959 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

2

 

 

BIOXYTRAN, INC.

CONDENSED CONSOLIDATED CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(UNAUDITED)

 

  Common Stock  Preferred Stock  Additional Paid in Capital          
  Shares  Amount  Shares  Amount  Common  Preferred  Accumulated Deficit  Non-controlling Interest  Total Equity 
December 31, 2019  86,475,673  $86,476     $  $1,355,542  $  $(2,241,305) $  $(799,287)
Issuance of warrants                  145,438               145,438 
Conversion of warrants  750,000   750           (750)              - 
Options issued and vested - 2010 Plan                  5,004               5,004 
Shares issued to BoD & Mgmnt - 2010 Plan  6,000   6           2,241               2,247 
Shares issued to Consultants - 2010 Plan  650,000   650           147,600               148,250 
Debt premium on convertible note                  (937,007)              (937,007)
Debt premium accretion                  104,568               104,658 
Shares issued for conversion of principal and accrued interest  350,000   350           33,782               34,132 
Net loss                          (540,495)      (540,495)
March 31, 2020  88,231,673  $88,232     $  $856,418  $  $(2,781,800) $  $(1,837,150)
                                     
December 31, 2020  97,450,673  $97,451        $1,795,125  $  $(4,721,923) $888,091  $(1,941,256)
Options issued and vested - 2021 Plan                  6,750               6,750 
Shares issued to BoD & Mgmnt - 2010 Plan  1,366,800   1,367           326,665               328,032 
Shares issued to Consultants - 2010 Plan  1,832,400   1,832           437,944               439,776 
Subsidiary stock transactions                              450,000   450,000 
Net loss attributable to the non-controlling interest                              (154,614)  (154,614)
Net loss                          (1,621,707)      (1,621,707)
March 31, 2021  100,649,873  $100,650        $2,566,484  $  $(6,343,630) $1,183,477  $(2,493,019)

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

3

 

 

BIOXYTRAN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(UNAUDITED)

 

  3-Months Ended 
  March 31,
2021
  March 31,
2020
 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss $(1,776,321) $(540,495)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:        
Amortization of debt discount, incl. issuance of warrants     166,722 
Default fee convertible notes      
Stock-based compensation expense  774,558   155,501 
Changes in operating assets and liabilities:        
Pre-paid expenses      
Other receivable     50,000 
Accounts payable and accrued expenses  169,673   (8,517)
Accounts payable related party  20,240   20,000 
Other short-term debt  420,750    
Net cash used in operating activities  (391,100)  (156,789)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Investment in intangibles  (8,953)   
Net cash used in investing activities  (8,953)   
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from subsidiary stock transactions  450,000    
Proceeds from issuance of convertible notes payable     264,000 
Repayment of convertible notes payable     (232,948)
Net cash provided by financing activities  450,000   31,052 
         
Net increase (decrease) in cash  49,947   (125,737)
Cash, beginning of period  41,688   169,628 
Cash, end of period $91,635  $43,891 
         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:        
Interest paid $  $91,362 
Income taxes paid $  $ 
NON-CASH INVESTING & FINANCING ACTIVITIES:        
Issuance of warrants $  $145,438 
Debt discount on convertible note $  $76,265
Debt premium on convertible note $  $937,007
Accretion of debt premium to additional paid-in capital $  $104,568 
Common shares issued for the conversion of principal and accrued interest $  $34,132 

 

See the accompanying notes to these unaudited condensed consolidated financial statements

 

4

 

 

BIOXYTRAN, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(UNAUDITED)

 

NOTE 1 – BACKGROUND AND ORGANIZATION

 

Business Operations

 

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

 

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

 

Organization

 

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

 

The Subsidiary was organized on October 5, 2017 as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000 authorized common shares with a par value of $0.0001, and 5,000,000 preferred shares with a par value of $0.0001. The Subsidiary was founded under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2020, the name was changed to Pharmalectin, Inc. There are currently 17,600,000 outstanding shares; 15,000,000 shares are held by Bioxytran and 2,600,000 shares by Pharmalectin Partners, LLC (the “Investor”). Pharmalectin Partners, LLC has agreed to buy an additional 12,400,000 shares for a total of $4,100,000, a total ownership of 50% of Pharmalectin, Inc. After full execution the shares are convertible to 17.5% of the shares in Bioxytran, Inc.

 

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 

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Bioxytran, Inc. a Nevada Corporation and its wholly owned subsidiary, Pharmalectin, Inc. of Delaware (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.

 

 NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

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

 

Cash

 

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

 

5

 

 

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 and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.

 

Net Loss per Common Share, basic and diluted

 

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

 

At March 31, 2021, we would, based on current market price of $0.17/share, be obligated to issue approximately 20,618,708 shares of common stock upon conversion of the currently outstanding Convertible Notes and 272,000 shares upon exercise of the warrants. For the Notes, the shares total is based on $1,962,901 of currently outstanding principal, default penalty and unpaid interest. At March 31, 2020, we would, based on the market price of $0.33/share, be obligated to issue approximately 5,161,511 shares of common stock upon conversion of the outstanding Convertible Note and 272,000 shares upon exercise of the warrants. For the Notes, the shares total was based on $1,048,800 of outstanding principal and unpaid interest at March 31, 2020.

 

The conversion is priced to equal to the lesser of (i) the lowest trading price for the twenty-day period prior to the date of the Note or (ii) 65% of the lowest trading price during the twenty days prior to a conversion notice on the applicable trading market or the closing bid price on the applicable trading market. The Convertible Notes are limited to converting no more than 4.99% of our issued an outstanding common stock.

 

Stock Based Compensation

 

The Company measures the cost of services received from employees and non-employees in exchange for an award of equity instruments based on the fair value of the award on the grant date pursuant ASC 718. Stock-based compensation expense is recorded by the Company 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.” During the 3 months ended March 31, 2021, the Company sold 9% of its subsidiary Pharmalectin for a total amount of $450,000. Accordingly, APIC has been adjusted with this amount for the 3 months ended March 31, 2021, no such transaction took place during the 3 months ended March 31, 2020.

 

Income Taxes

 

The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or be settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion of the gross deferred tax asset will not be realized. The Company records interest and penalties related to income taxes as a component of provision for income taxes. The Company did not recognize any interest and penalty expense for the 3 months ended March 31, 2021 and 2020.

 

On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was signed into law by the President of the United States. TCJA is a tax reform act that among other things, reduced corporate tax rates to 21 percent effective January 1, 2018. FASB ASC 740, Income Taxes, requires deferred tax assets and liabilities to be adjusted for the effect of a change in tax laws or rates in the year of enactment, which is the year in which the change was signed into law. Accordingly, the Company adjusted its deferred tax assets and liabilities at December 31, 2020, using the new corporate tax rate of 21 percent.

 

6

 

 

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. During the 3 months ended March 31, 2021 the Company incurred $347,033 in research and development expenses, while during the 3 months ended March 31, 2020 the Company did not incur any such expenses.

 

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

 

Warrants

 

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

 

Fair Value

 

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

 

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

 

Recent Accounting Pronouncements

 

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company’s financial position, results of operations or cash flows.

 

7

 

 

NOTE 3 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS

 

As at March 31, 2021, the Company had cash of $91,635 and a negative working capital of $2,511,972. The Company has not yet generated any revenues, and has incurred cumulative net losses of $6,343,630. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

During the three months ended March 31, 2021, the Company raised $450,000 in cash proceeds from the issuance of common stock in our Subsidiary. During the same period in 2020, the Company raised $264,000 from the issuance of convertible notes, and paid back $242,938. The Company is aware that its current cash on hand will not be sufficient to fund its projected operating requirements through the month of June 2021 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.

 

The Company’s management do not foresee that COVID-19 has any impact for the Company and its ability to carry out their plans.

 

Accordingly, the accompanying 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 consolidated financial statements do not necessarily purport to represent realizable or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

 

NOTE 4 – PRE-PAID EXPENSES AND OTHER CURRENT ASSETS

 

On March 31, 2021 and December 31, 2020, there were $274,715 in Pre-paid Expenses for a Contract Research Organization (CRO) for services planned for the second quarter of 2021.

 

NOTE 5 - INTANGIBLES

 

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment charges were recorded for the 3 months ended March 31, 2021 and the year ended December 31, 2020.

 

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. The current patent applications are still on-going, and are therefore not yet subject to amortization.

 

          
  Estimated Life (years)  March 31, 2021  December 31, 2020 
Capitalized patent costs  20  $18,953  $10,000 
Accumulated amortization          
             
Intangible assets, net     $18,953  $10,000 

 

8

 

 

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

 

On March 31, 2021, there was $368,367 in accounts payable to related parties in form of payroll and accrued expenses. On December 31, 2020 there was $307,176 in Accounts payable to related parties.

 

The following table represents the major components of accounts payables and accrued expenses and other current liabilities at March 31, 2021 and at December 31, 2020:

 

  March 31,
2021
  December 31,
2020
 
Accounts payable related party (1) $368,367  $307,176 
Professional fees  125,468   84,325 
Interest  350,545   263,135 
Other accounts payable  836   667 
Other short-term debt (2)  420,750    
Default Penalty  673,956   673,956 
Convertible notes payable  938,400   938,400 
Total $2,878,322  $2,267,659 

 

(1)$138,000 to each the CFO and the CEO for 23 months of salary for the period May 1, 2019, through March 31, 2021 and $92,367 to the VPBD for salary and expenses for a period of 11 months, May 1, 2020, through March 31, 2021. At December 31, 2020 there was $120,000 to each the CFO and the CEO for 20 months of salary for the period May 2019 through December 2020, and $67,176 to the VPBD for salary and expenses for the period May through December 2020.
(2)On January 20, 2021 the Supreme Court of the State of New York, County of Nassau, granted Power Up a summary judgement against the Company for Breach of Contact, awarding Power Up damages in the amount of $420,750.

 

NOTE 7 – CONVERTIBLE NOTES PAYABLE

 

As long as the following convertible notes remain outstanding, the Company is restricted from incurring any indebtedness or liens, except as permitted (as defined), and cannot amend its charter in any matter that materially effects rights of noteholders, repay or repurchase more than de minimis number of shares of common stock other than conversion or warrant shares, repay or repurchase all or any portion of any indebtedness, or pay cash dividends.

 

A Convertible Note to Auctus issued on February 25, 2019, was paid off on February 20, 2020, at an amount of $325,000, including $91,362 in accrued interest and $690 in fees, and 750,000 cashless warrants were exercised on March 12, 2020.

 

Current convertible notes

 

In the period January 1 to March 18, 2020 the Company entered into five contracts totaling $356,100 Senior Secured Promissory Note (“the Notes”), at an interest rate of 4-8% per annum, maturing in one year from issuance (the “Maturity Date”). Issuance fees totaling $50,100 were recorded as a debt discount, resulting in net proceeds of $314,000. The Notes are convertible into common stock of the Company, par value $.001 per share (the “Common Stock”) at any time after the earlier of: (i) 180 days from the date of the Notes or (ii) upon effective date of a new registration statement. The conversion price of the Notes is equal to the lesser of: (i) the lowest trading price for the twenty-day period prior to the date of the Notes or (ii) 65% of the average of the three lowest trading prices during the twenty days prior to a conversion notice on the applicable trading market or the closing bid price on the applicable trading market. The Company may prepay the Notes at any time at a rate of 120% of outstanding principal and interest during the first 90 days it is outstanding and 130% of outstanding principal and interest for the next 90 days thereafter. Thereafter the prepayment amount increases 5% for each thirty-day period until 270 days from the issue date at which time it is fixed at 150% of the outstanding principal and interest on the Notes.

 

The Company also issued five-year warrants with cashless exercise provisions to purchase shares of Common Stock of the Company at an exercise price of $2.00 per share with cashless exercise provisions. For the three months ended at March 31, 2020, the Company issued 72,000 warrants, resulting in an amortized debt discount of $12,711.

 

9

 

 

Default on Convertible Notes

 

On April 16, 2020, SEC ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading of BIXT was suspended for the period April 16 through April 29, 2020.

 

As a result of the SEC ordered suspension the Company defaulted on outstanding Convertible Notes; resulting in an increase of the interest to ranges between 15% and 24% and the principal to increase to 168% of principal loan amount. The convertible debt increased by $673,956 to $1,612,356 while the interest accrual increased to approximately $28,711/month, amounting to $350,545 at March 31, 2021. At the default date, April 16, 2020, remaining debt discount of $76,265 was amortized to interest expense and the remaining debt premium of $856,560 was accredited to additional paid-in capital.

 

 A summary of the outstanding notes at March 31, 2021, are as follows:

 

Debtor Date of
Issuance
  Default
Date
 Principal
Amount
  Default Penalty  Default Interest  Warrants Issued  Term  Exercise
Price
  Amortization
of Warrants
  Accrued Interest 
GS Capital 10/30/2019  4/16/2020 $125,000  $65,808   24%  50,000   5  $2.00  $23,867  $45,992 
Power Up #1 10/24/2019  4/16/2020  106,000   114,224   22%              50,438 
Peak One 10/23/2019  4/16/2020  120,000   36,000   18%  50,000   5   2.00   21,606   26,849 
Tangiers 10/23/2019  4/16/2020  106,300   48.261   18%  50,000   5   2.00   21,116   30,702 
FirstFire 11/20/2019  4/16/2020  125,000   65,541   24%  50,000   5   2.00   17,979   45,753 
Power Up #2 12/30/2019  4/16/2020  54,600   57,185   22%              24,807 
EMA Financial 01/10/2020  4/16/2020  125,000   135,158   24%  50,000   5   2.00   5,948   61,030 
Crown Bridge 02/20/2020  4/16/2020  55,000   28,015   15%  22,000   5   2.00   6,763   12,250 
Power Up #3 02/19/2020  4/16/2020  56,600   58,039   22%              24,835 
Power Up #4 03/18/2020  4/16/2020  64,900   65,725   22%              27,890 
       $938,400  $673,956       272,000          $97,279  $350,545 

 

Convertible notes payable consists of the following at March 31, 2021 and December 31, 2020:

 

  March 31,
2021
  December 31,
2020
 
Principal balance $938,400  $938,400 
Default Penalty  673,956   673,056 
Unamortized debt discount  -   - 
Unamortized debt premium  -   - 
Outstanding, net of debt discount and premium $1,612,356  $1,612,356 

 

NOTE 8 – STOCKHOLDERS’ EQUITY

 

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

 

Preferred stock

 

As of March 31, 2021, no preferred shares have been designated nor issued.

 

Common stock

 

On January 3, 2020, 100,000 shares of common stock were issued as a result of conversion of accrued interest and principal on the Auctus Note #2 for a total of $12,000.

 

On February 18, 2020, 250,000 shares of common stock were issued as a result of conversion of accrued interest and principal on the Auctus Note #2 for a total of $22,132.

 

On March 12, 2020, 750,000 of common stock were issued in exchange for 416,666 warrants with cashless exercise, originating from Auctus Notes #1 and #2.

 

For the 3 months ending March 31, 2020, 656,000 shares were awarded under the 2010 Stock Plan for a total value of $150,497.

 

For the 3 months ending March 31, 2021, 3,199,200 shares were awarded under the 2010 Stock Plan for a total value of $767,808.

 

10

 

 

As at March 31, 2021, the Company has 100,649,873 shares of common stock issued and outstanding. At December 31, 2020 there were 97,450,673 shares of common stock issued and outstanding.

 

Common Stock Warrants

 

For the 3 months ended March 31, 2021 the Company did not issue any warrants. For the 3 months ended March 31, 2020 the Company issued 408,333 Warrants as part of convertible note agreements. The warrants total value allocated to debt discount was $129,929. For details, see Convertible Note Payable under Note 7.

 

The fair value of stock warrants granted for the 3 months ended March 31, 2021 was calculated with the following assumptions:

 

     March 31, 2020 
Risk-free interest rate      0.46 - 1.67%
Expected dividend yield      0%
Volatility factor (monthly)      158.22%
Expected life of warrant      5 years 

 

The following table summarizes the Company’s common stock warrant activity for the 3 months ended March 31, 2021 and 2020:

 

  Number of Warrants  Weighted Average Exercise Price  Weighted- Average Remaining Expected Term 
Outstanding as at January 1, 2020  616,666  $1.06   4.2 
Granted  405,334   0.36   0.9 
Exercised  (750,000)      
Forfeited/Canceled         
Outstanding as at December 31, 2020  272,000  $2.00   3.9 
Granted         
Exercised         
Forfeited/Canceled         
Outstanding as at March 31, 2021  272,000  $2.00   3.7 

 

The following table summarizes information about stock warrants that are vested or expected to vest at March 31, 2021:

 

      Warrants Outstanding        Exercisable Warrants    
Exercise Price  Number of Warrants  Weighted
Average
Exercise
Price
Per Share
  Weighted Average Remaining Contractual Life (Years)  Aggregate Intrinsic Value  Number of Warrants  Weighted Average Exercise Price Per Share  Weighted Average Remaining Contractual Life (Years)  Aggregate Intrinsic
Value
 
$2.00   272,000  $2.00   3.65  $   272,000  $2.00   3.65  $ 

 

The following table sets forth the status of the Company’s non-vested warrants as at March 31, 2021 and March 31, 2020:

 

  Number of Warrants  Weighted- Average Grant-Date Fair Value 
Non-vested as at March 31, 2020    $ 
Granted  405,334   0.13 
Forfeited      
Vested  405,334   0.13 
Non-vested as at March 31, 2021    $ 

 

The weighted-average remaining contractual life for warrants exercisable at March 31, 2021 is 3.65 years. The aggregate intrinsic value for fully vested, exercisable warrants was $0 at March 31, 2021 and at December 31, 2020 was $0.

 

11

 

 

Sales of Shares in Subsidiary

 

For the 3 months ended March 31, 2021 there were 1,350,000 shares sold in the Company’s Subsidiary, Pharmalectin, Inc. for a total of $450,000. For the 3 months ended March 31, 2020 there were no such transaction.

 

NOTE 9 – STOCK OPTION PLAN AND STOCK-BASED COMPENSATION

 

On January 19, 2010, the Company adopted a stock option plan entitled “The 2010 Stock Plan” (2010 Plan) under which the Company may grant Options to Purchase Stock, Stock Awards or Stock Appreciation Rights up to 15% of common stock, automatically adjusted on January 1 each year. Under the terms of the stock plans, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically immediate and the options typically expire in five years. Stock Awards may be directly issued under the Plan (without any intervening options). Stock Awards may be issued which are fully and immediately vested upon issuance.

 

As at January 18, 2021, the plan was retired and depleted. On January 19, 2021, the 2010 Plan was replaced with “The 2021 Stock Plan” (2021 Plan) with the same terms as the 2010 Plan, as at March 31, 2021, 45,000 options and 100,000 shares have been awarded from the 2021 Plan.

 

Shares Awarded and Issued 2010 Plan:

 

On January 1, 2020 the Company granted 250,000 shares with a fair market value of $0.285/share at the time of award, to a consultant for assistance with the Companies PR work, for a total of $71,250.

 

On January 31, 2020 the Company granted two subcontractors a total of 200,000 shares with a fair market value of $0.14/share at the time of award, as compensation for their work with the Company’s marketing efforts, for a total of $28,000.

 

On March 18, 2020 the Company granted 200,000 shares with a fair market value of $0.245/share at the time of award, to a consultant for assistance with the Companies PR work, for a total of $49,000.

 

On February 21, 2020 the Company granted 3,000 shares with a fair market value of $0.439/share to three members of the Audit Committee as compensation for their contribution in the Audit Committee, for a total of $1,317.

 

On January 1, 2021 the Company granted 10,000 shares, with a fair market value of $0.24/share at the time of award, to a Medical Advisory Board Member for her contribution in the Company’s Advisory Board, for a total of $2,400.

 

On January 15, 2021 the Company granted 3,189,200 shares of Common Stock valued at $0.24/share, equally divided to 227,800 shares/each to fourteen of the Company’s Managers, Board- and Medical Advisory Board members, as well as to indispensable Consultants currently working on the clinical trial submissions with the FDA, for a total value of $765,408.

 

  

Number of

Shares

  Fair Value
per Share
  Weighted
Average
Market
Value
per Share
 
Shares Issued as of December 31, 2019  471,000  $0.27 – 1.49  $0.77 
Shares Issued  656,000   0.14 – 0.44   0.22 
Shares Issued as of March 31, 2020  1,127,000  $0.14 – 1.49  $0.57 
             
Shares Issued as of December 31, 2020  11,002,000  $0.003 – 1.49  $0.10 
Shares Issued  3,199,200   0.24   0.24 
Shares Issued as of March 31, 2021  14,201,200  $0.003 – 1.49  $0.13 

 

For the three months ended March 31, 2021, the Company recorded stock-based compensation expense of $150,497 in connection with share-based payment awards. The Company did not record any recorded stock-based compensation expense in the three first months of 2020.

 

12

 

 

Stock options granted and vested 2010 Plan:

 

On January 1, 2020 the Company granted 3,000 three-year options immediately vested at an exercise price of $0.31 a Medical Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at the time of award was $603.

 

On February 1, 2020 the Company granted 45,000 three-year options immediately vested at an exercise price of $0.15 a Medical Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at the time of award was $4,401.

 

Stock options granted and vested 2021 Plan:

 

On February 1, 2021 the Company granted 45,000 three-year options immediately vested at an exercise price of $0.20 to a Medical Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at the time of award was $6,750.

 

The fair value of stock options granted and revaluation of non-employee consultant options for the three months ended March 31, 2021 and 2020 was calculated with the following assumptions:

 

  March 31, 2021  March 31, 2020 
Risk-free interest rate  0.17%  1.32 - 1.69%
Expected dividend yield  0%  0%
Volatility factor (monthly)  161.18%  126.37%
Expected life of options  3 years   3 years 

 

For the three months ended March 31, 2021, the Company recorded compensation expense of $6,750 in connection with awarded stock options. For the three months ended March 31, 2020 the amount was $5,004. As at March 31, 2021, there was no unrecognized compensation expense related to non-vested stock option awards.

 

The following table summarizes the Company’s stock option activity for the three months ended March 31, 2021, and 2020:

 

  Number of Options  Exercise
Price per
Share
  Weighted
Average
Exercise
Price
per Share
 
Outstanding as of December 31, 2019  341,000  $0.61 - 1.21  $0.96 
Granted  48,000   0.15 - 0.31   0.16 
Exercised  -   -   - 
Options forfeited/cancelled  -   -   - 
Outstanding as of March 31, 2020  389,000  $0.15 - 1.21  $0.76 
             
Outstanding as of December 31, 2020  533,000  $0.001 - 1.21  $0.73 
Granted  45,000   0.20   0.20 
Exercised  -   -   - 
Options forfeited/cancelled  -   -   - 
Outstanding as of March 31, 2021  578,000  $0.001 - 1.21  $0.72 

 

13

 

 

The following table summarizes information about stock options that are vested or expected to vest at March 31, 2021:

 

      Options Outstanding        Exercisable Options    
Exercise Price  Number of Options  Weighted Average Exercise Price Per Share  Weighted Average Remaining Contractual Life (Years)  Aggregate Intrinsic Value  Number of Options  Weighted Average Exercise Price Per Share  Weighted Average Remaining Contractual Life (Years)  Aggregate Intrinsic Value 
$0.001   45,000  $0.001   2.08  $   45,000  $0.001   2.08  $ 
 0.05   3,000   0.05   2.50      3,000   0.05   2.50    
 0.15   90,000   0.15   2.08      90,000   0.15   2.08    
 0.18   45,000   0.18   2.58      45,000   0.18   2.58    
 0.20   48,000   0.20   2.80      48,000   0.20   2.80    
 0.31   3,000   0.31   1.75      3,000   0.31   1.75    
 0.32   3,000   0.32   2.00      3,000   0.32   2.00    
 0.73   3,000   0.73   1.50      3,000   0.73   1.50    
 0.61   45,000   0.61   1.59      45,000   0.61   1.59    
 0.95   200,000   0.95   1.45      200,000   0.95   1.45    
 1.09   3,000   1.09   1.25      3,000   1.09   1.25    
 1.10   45,000   1.10   1.33      45,000   1.10   1.33    
 1.21   45,000   1.21   1.08      45,000   1.21   1.08    
$0.001-1.21   578,000  $0.62   1.78  $   578,000  $0.62   1.78  $ 

 

The following table sets forth the status of the Company’s non-vested stock options as of March 31, 2021 and December 31, 2020:

 

  Number of
Options
  Weighted-
Average
Grant-Date
Fair Value
 
Non-vested as of December 31, 2020  -  $- 
Granted  45,000   0.18 
Forfeited  -   - 
Vested  45,000   0.18 
Non-vested as of March 31, 2021  -  $- 

 

The weighted-average remaining estimated life for options exercisable at March 31, 2021 is 1.78 years.

 

The aggregate intrinsic value for fully vested, exercisable options was $0 at March 31, 2021. The aggregate intrinsic value of options exercised for the three months ended at March 31, 2021 was $0 as no options were exercised. The actual tax benefit realized from stock option exercises for the three months ended at December 31, 2020 was no options available for exercise.

 

As at March 31, 2021 the Company has 17,546,430 options or stock awards available for grant under the 2021 Plan.

 

NOTE 10 – COMMITMENTS AND CONTINGENCIES

 

Employment contracts

 

The Company’s executive officers have entered employment contracts and confidentiality, non-disclosure and assignment of invention agreements. The employment agreements provide for the payment of $100,000 in severance upon termination of employment without cause and make no provisions for any payment upon a change of control.

 

Litigation

 

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

 

14

 

 

On June 5, 2020 the Supreme Court of the State of New York, County of Nassau, issued a commencement of Action based on behalf of Power Up Lending Group, Ltd (“Power Up” or the “Claimant”). The Claimant request that due to the default of their note requesting a judgment for an amount of not less than $420,750. Among other claims Power Up asserts that the Company willfully failed to maintain the trading status, and manipulated its stock in its efforts to defraud the public and its investors by making false press statements and the like. The Company is denying any wrong-doing. However, the full requested amount has been included in the default calculation of the convertible debt. On January 20, 2021 the Supreme Court of the State of New York, County of Nassau, granted Power Up a summary judgement against the Company for Breach of Contact, awarding Power Up damages in the amount of $420,750.

 

Subsidiary commitments

 

The Company has signed an agreement with Pharmalectin Partners, LLC for them to acquire 50% of the Company’s Subsidiary for a total value of $5,050,000. The single use of this investment is to develop ProLectin-I for SARS-CoV-2 treatment. At the date of March 31, 2021, $1,400,000 has been invested in the research and development of this drug. If the outlined milestones are met, the remainder of the investment will be disbursed during the second quarter of 2021. If the outcome is successful, the shares can during a limited time, prior to commercialization, be converted into 17.5% of the Company’s outstanding common stock.

 

NOTE 11 – SUBSEQUENT EVENTS

 

The Company has evaluated events from March 31, 2021 through the date the financial statements were issued. The events requiring disclosure for this period are as follows;

 

Common stock

 

Stock Options Awarded and Issued under the 2021 Stock Plan:

 

On May 1, 2021 the Company granted 45,000 three-year options at an exercise price of $0.19 a Medical Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at the time of award was $7,650.

 

Shares Awarded and Issued under the 2021 Stock Plan:

 

On April 1, 2021 the Company granted 10,000 shares to a Medical Advisory Board Member for her contribution to the Company during the first quarter of 2021. The total fair market value at the time of the award was $1,700, or $0.17/share.

 

On April 1, 2021 the Company granted 90,000 shares to three Board Members in reward of their attendance at Board and Committee meetings during the first quarter of 2021. The total fair market value at the time of the award was $15,300, or $0.17/share.

 

On April 22, 2021 the Company granted 150,000 shares to a Consultant to resolve issues with OTC and FINRA as a result of the SEC suspension. The total fair market value at the time of the award was $25,500, or $0.17/share.

 

Sales of Shares in Subsidiary, Convertible Notes and Conversion to Common Stock

 

On April 16, 2021, the Subsidiaries JV raised an initial $150,000 (450,000 shares) of a $3,500,000 (10,500,000 shares) Private Placement Offering to finance the ongoing clinical trials with ProLectin for treatment of COVID-19. The shares are convertible to Bioxytran common stock in a 1 for 1 exchange.

 

Issuance of Convertible Notes Payable

 

On May 3, 2021, the Company issued four 1-year convertible promissory notes (the “Notes”) with a face value of $1,265,000, maturing on May 2, 2022, and a stated interest of 6% to third-party investors. The Notes is convertible into common stock of the Company, par value $.001 per share (the “Common Stock”) from time to time, or at any time. Within 45 days of the Original Issuance Date, the company should prepare and file with the SEC a Registration Statement on Form S-1, shall include the Registrable Securities in the Registration Statement and use its best efforts to cause the Registration Statement to become effective and remain effective. The conversion price of the Notes is equal to $0.13 or 85% of the closing price of any Qualified Financing, whichever is less. The Notes was funded on May 10, 2021, when the Company received proceeds of $1,265,000, with disbursements for the fees and commissions which in aggregate resulted in a total discount of $128,850 to be amortized to interest expense over the life of the Notes.

 

15

 

 

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

 

The following discussion and analysis is based on, and should be read in conjunction with, the audited financial statements and the notes thereto for the two years ended December 31, 2020 included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 9, 2021. This discussion contains forward-looking statements. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so, except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

 

Overview

 

We do not currently have sufficient capital resources to fund operations. To stay in business and to continue the development of our products, we will need to raise additional capital through public or private sales of our securities, debt financing or short-term bank loans, or a combination of the foregoing. We believe that if we can raise $3,700,000, we will have sufficient working capital to repay the ten convertible notes and develop our business over the next approximately 15 months. At funding raised that is significantly less than $3,700,000, we can likely repay the ten convertible notes and continue to develop our business over the same 15-month period, but funding at that level will delay the development of our technology and business.

 

Bioxytran, Inc. is headquartered in Newton, Massachusetts. The Company’s initial product pipeline is focused on developing and commercializing therapeutic molecules for stroke. BXT-25 will be designed to be an injectable anti-necrosis drug specifically designed to treat a person immediately after that person suffers an ischemic stroke. The drug is designed to be injected intravenously to travel to the lungs to pick up oxygen molecules to carry to the brain. Like a red blood cell, the drug will cross the blood brain barrier, which is a protective semi-permeable membrane allowing some material to cross but preventing others from crossing. BXT-25 will be designed to diffuse oxygen into the brain tissues. We expect the BXT-25 molecule to be 5,000 times smaller than a red blood cell.

 

Our Subsidiary is continuing our clinical trials with a candidate named, ProLectin a complex polysaccharide derived from galactomannan and pectin respectively, that binds to, and blocks the activity of galectin-1 and -3, a type of galectin. Galectins are a member of a family of proteins in the body called lectins. These proteins interact with carbohydrate sugars located in, on the surface of, and in between cells. This interaction causes the cells to change behavior, including cell movement, multiplication, and other cellular functions. The interactions between lectins and their target carbohydrate sugars occur via a carbohydrate recognition domain, or CRD, within the lectin. Galectins are a subfamily of lectins that have a CRD that bind specifically to ß-galactoside proteins. Galectins have a broad range of functions, including regulation of cell survival and adhesion, promotion of cell-to-cell interactions, growth of blood vessels, regulation of the immune response and inflammation. During viral infections galectins are upregulated and downregulated based on the type of virus.

 

ProLectin-M’s clinical data shows non-toxicity and efficacy for treatment of mild to moderate COVID-19. In our initial Phase I/II clinical trial are published as a peer-reviewed scientific report in the Journal of Vaccines & Vaccinations: https://www.longdom.org/open-access/galectin-antagonist-use-in-mild-cases-of-sarscov2-pilot-feasibility-randomised-open-label-controlled-trial-61087.html  The Company is currently working on a Phase III clinical trial with the CDCSO in India, and is preparing its IND for a Phase III clinical trial with the FDA, soon to be followed by a Phase III submission with the EMEA. The clinical trials are expected to take place in May through July, 2021. Further, the Company is also preparing an IND for a second drug candidate ProLectin-I with similar galactin blocking capabilities as the oral drug, ProLectin-M, but IV-injectable for severe cases of COVID-19. The initial Phase I/II clinical trial is planned for April through June, 2021. The described clinical trials are subject to additional funding.

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited resources and operating history. As described in Note 7 of the financial statements, the Company has currently ten convertible loans outstanding at a total face value of $938,400. As a result of the ten-day SEC suspension of April 16. 2020, the notes entered into default and the principal owed is currently $1,612,356, including default penalties. As shown in the accompanying consolidated financial statements, the Company had an accumulated deficit of $6,343,630 as at March 31, 2021. The accumulated deficit as at December 31, 2020 was $4,721,923.

 

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

 

16

 

 

Potential Impact of the Covid-19 Pandemic in December 2019, a strain of novel coronavirus (now commonly known as Covid-19) was reported to have surfaced in Wuhan, China. Covid-19 has since spread rapidly throughout many countries, and, on March 12, 2020, the World Health Organization declared Covid-19 to be a pandemic. In an effort to contain and mitigate the spread of Covid-19, many countries, including the United States, Canada and China, have imposed unprecedented restrictions on travel, and there have been business closures and a substantial reduction in economic activity in countries that have had significant outbreaks of Covid-19. Covid-19 may have a future material impact on our results of operation with respect to product development and clinical trials. However, significant uncertainty remains as to the potential impact of the Covid-19 pandemic on our operations, and on the global economy as a whole. It is currently not possible to predict how long the pandemic will last or the time that it will take for economic activity to return to prior levels. We do not yet know the full extent of any impact on our business or our operations, however, we will continue to monitor the Covid-19 situation closely, and we intend to follow health and safety guidelines as they evolve.

 

Management plans to seek additional capital through private placements and public offerings of its common stock. There can be no assurance that the Company will be successful in accomplishing its objectives. Without such additional capital or the establishment of strategic relationships with established pharmaceutical companies, the Company may be required to cease operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue operations.

 

Results of Operations

 

We are a start-up company. Historically, Bioxytran was engaged in formation, fund raising and identifying and consulting with the scientific community regarding the development, formulation and testing of its products.

 

Operating Expenses

 

Research and Development (R&D) expenses for the 3-months ended March 31, 2021 were $347,033, while there were no such expenses at 3 months ended March 31, 2020.

 

General and administrative (G&A) expenses for the three months ended March 31, 2021 were $567,320, while for the three months ended March 31, 2020, they were $110,542. The components of G&A expenses are as follows:

 

Payroll and related expenses for the three months ended March 31, 2021 were $54,000, as compared to $36,000 for the three months ended March 31, 2020. The difference was due to the hire of Mike Sheik on May 1, 2020.

 

Costs for legal, accounting and other professional services for the three months ended March 31, 2021 were $39,123, as compared to $22,574 for the three months ended March 31, 2020. The increase was due to contracting of a Project Manager for the ongoing clinical trials.

 

Sales and marketing expense for the three months ended March 31, 2021 were $3,500, as compared to $9,489 for the three months ended March 31, 2020. The decrease was due reduced PR efforts.

 

The remaining miscellaneous G&A expenses totaled $470,697, including a $420,750 summary judgement against the Company, for the three months ended March 31, 2021, as compared to $42,479 for the three months ended March 31, 2020. The decrease was due to attendance at the JP Morgan Investment Conference in 2019.

 

Stock-based Compensation

 

Stock-based compensation mounted to $774,558 for the three months ended March 31, 2021. The stock-based compensation for the three months ended March 31, 2020 was $155,501. The increase was due to the liquidation of the 2010 Stock Plan.

 

Interest Expense and Amortization of Debt Discount and Premium

 

During the three months ended March 31, 2021, the Company didn’t record any premium accretion to additional paid-in capital, and in amortization of debt discount, as compared to, $104,458 of premium accretion and a debt discount amortization of $166,722 (including warrant amortization of $145,438) for the three months ended March 31, 2020. The interest for the convertible notes outstanding amounted to $87,410, as compared to $107,730 for the three months ended March 31, 2020.

 

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Non-Controlling Interest

 

For the three months ending March 31, 2021 there was a non-controlling interest attribution of $154,614. No attribution was made as at March 31, 2020.

 

Net Loss

 

The Company generated a net loss for the three months ended March 31, 2021 of $1,621,707. In comparison, for the three months ended March 31, 2020, the Company generated a net loss of $540,495. The increased loss is a result of the summary judgement against the Company, the commencement of Research & Development as well as the liquidation of the 2010 Stock Plan.

 

Cash-Flows

 

Net cash used in operating activities was $391,100 and $156,789 for the three months ended March 31, 2021 and 2020, respectively. The increase was due to Research and Development starting in the 4th quarter of 2020.

 

In the three months ended March 31, 2021 the Company is in the process of filing a patent, and $8,953 was spent in legal fees. In the three months ended March 31, 2021 there was no investment activities.

 

Cash flows from financing activities were $450,000 and $43,891 for the three months ended March 31, 2021 and 2020, respectively. The significant change was a $450,000 investment by our JV partner in the Company’s subsidiary, Pharmalectin.

 

Available cash was $91,635 and $43,891 at March 31, 2021 and March 31, 2020, respectively.

 

LIQUIDITY AND CAPITAL RESOURCES

 

As at December 31, 2020, our assets consisted of was $91,635 in cash, $274,715 in pre-paid expenses and $18,953 in intangible assets in form of capitalized patent expenses. We had total liabilities of $2,878,322, which were all current liabilities, and which consisted of $845,216 in accounts payable and accrued expenses (of which $368,367 was payable to related parties), and $1,612,356 in the form of ten convertible loans currently in default. As a result of defaulting on the notes, the debt premium as well as the debt discounts are fully amortized. On January 20, 2021 the Supreme Court of the State of New York, County of Nassau, granted Power Up a summary judgement against the Company for Breach of Contact, awarding Power Up damages in the amount of $420,750, in the balance sheet classed as other short-term debt. The equivalent numbers As at December 31, 2020, our assets consisted of was $41,688 in cash, $274,715 in pre-paid expenses and $10,000 in intangible assets in form of capitalized patent expenses. We had total liabilities of $2,267,659, which were all current liabilities, and which consisted of $655,303 in accounts payable and accrued expenses (of which $307,176 was payable to related parties), and $1,612,356 in the form of ten convertible loans currently in default. As a result of defaulting on the notes, the debt premium as well as the debt discounts are fully amortized.

 

At March 31, 2021, we have total working capital of negative $2,511,972 and an accumulated deficit of $6,343,630. Comparatively, at December 31, 2020, we had total working capital of negative $1,951,256 and an accumulated deficit of $4,721,923. We believe that we must raise not less than $3,700,000 in addition to current cash on hand to be able to continue our business operations for approximately the next 15 months and repay the ten convertible notes.

 

Future Financing

 

We have a commitment from our JV partner to invest a total of $5 million in the Company’s subsidiary, at March 31, 2021 $1,400,000 has been released, and at December 31, 2020 $950,000 had been released. If we are unable to raise additional capital from conventional sources and/or additional sales of stock in the future, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the failure to obtain financing could have a substantial adverse effect on our business and financial results. In the future, we may be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.

 

We have no current commitment from our officers and directors or any of our shareholders, to supplement our operations or provide us with financing in the future. If we are unable to raise additional capital from conventional sources and/or additional sales of stock in the future, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the failure to obtain financing could have a substantial adverse effect on our business and financial results. In the future, we may be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.

 

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Contractual Obligations

 

As at March 31, 2021, our contractual obligations include ten convertible notes, with a face value of $938,400 and of accrued interest for these notes mounting to $350,545, described under Note 7 to the Financial Statements. As a result of the ten-day SEC suspension of April 16, 2020, the notes entered into default resulting in a default penalty of $673,956, increasing the principal owed to $1,612,356.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.

 

CRITICAL ACCOUNTING POLICIES

 

In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our businesses operate in environments where we pay a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.

 

Stock Based Compensation

 

The Company has share-based compensation plans under which non-employees, consultants and suppliers may be granted restricted stock, as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date, based on the fair value of the award over the requisite service period.

 

The Company applies ASC 718 for options, common stock and other equity-based grants to its employees and directors. ASC 718 requires measurement of all employee equity-based payment awards using a fair-value method and recording of such expense in the consolidated financial statements over the requisite service period. The fair value concepts have not changed significantly in ASC 718; however, in adopting this standard, companies must choose among alternative valuation models and amortization assumptions. After assessing alternative valuation models and amortization assumptions, the Company will continue using both the Black-Scholes valuation model and straight-line amortization of compensation expense over the requisite service period for each separately vesting portion of the grant.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Item 3 is not applicable to us because we are a smaller reporting company.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) reviewed the effectiveness of our disclosure controls and procedures as at the end of the period covered by this report and concluded that as at March 31, 2021, (i) the Company’s disclosure controls and procedures were not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii) the Company’s controls and procedures have not been designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Based on this evaluation, our principal executive officer and principal financial officer concluded as at the evaluation date that our disclosure controls and procedures were not effective due primarily to a material weakness in the segregation of duties in the Company’s internal controls.

 

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Management’s Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of March 31, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). 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 our annual or interim financial statements will not be prevented or detected on a timely basis.

 

As disclosed in our previous filings, there are material weaknesses in the Company’s internal control over financial reporting due to the fact that the Company does not have an adequate process established to ensure appropriate levels of review of accounting and financial reporting matters, which resulted in our closing process not identifying all required adjustments and disclosures in a timely fashion. The Company’s CEO/CFO has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.

 

Although the Company has hired a consultant to assist with SEC reporting and accounting matters, we expect that the Company will need to hire accounting personnel with the requisite knowledge to improve the levels of review of accounting and financial reporting matters. The Company may experience delays in doing so and any such additional employees would require time and training to learn the Company’s business and operating processes and procedures. For the near-term future, until such personnel are in place, this will continue to constitute a material weakness in the Company’s internal control over financial reporting that could result in material misstatements in the Company’s financial statements not being prevented or detected.

 

Because of the above material weakness, management has concluded that we did not maintain effective internal control over financial reporting as of March 31, 2021, based on the criteria established in “Internal Control-Integrated Framework” issued by the COSO.

 

No Attestation Report by Independent Registered Accountant

 

The effectiveness of our internal control over financial reporting as of March 31, 2021 has not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a smaller reporting company.

 

Changes in Internal Controls Over Financial Reporting

 

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the 3 months ended March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Inherent Limitations on Effectiveness of Controls

 

The Company’s management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

 

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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

The Company may become involved in certain legal proceedings and claims which arise in the normal course of business.

 

On June 5, 2020 the Supreme Court of the State of New York, County of Nassau, issued a commencement of Action based on behalf of Power Up Lending Group, Ltd (“Power Up” or the “Claimant”). The Claimant request that due to the default of their note requesting a judgment for an amount of not less than $420,750. Among other claims Power Up asserts that the Company willfully failed to maintain the trading status, and manipulated its stock in its efforts to defraud the public and its investors by making false press statements and the like. The Company is denying any wrong-doing. However, the full requested amount has been included in the default calculation of the convertible debt. On January 20, 2021 the Supreme Court of the State of New York, County of Nassau, granted Power Up a summary judgement against the Company for Breach of Contact, awarding Power Up damages in the amount of $420,750.

 

Item 1A. Risk Factors

 

The company is a smaller reporting company and is not required to provide this information.

 

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

 

There were no sales of equity securities sold during the period covered by this Report that were not previously included in a Current Report on Form 8-K.

 

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.

 

Item 3. Defaults Upon Senior Securities

 

On April 16, 2020, SEC ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading of BIXT was suspended for the period April 16 through April 29, 2020.

 

As a result of the SEC ordered suspension the Company defaulted on outstanding Convertible Notes; resulting in an increase of the interest to ranges between 15% and 24% and the principal to increase to 168% of principal loan amount. The convertible debt increased by $673,956 to $1,612,356 while the interest accrual increased to approximately $28,563/month, amounting to $263,135 at March 31, 2021. At the default date, April 16, 2020, remaining debt discount of $76,265 was amortized to interest expense and the remaining debt premium of $856,560 was accredited to additional paid-in capital. 

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None. 

 

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Item 6. Exhibits

 

Exhibit No. Title of Document
   
31.1 Certification of Principal Executive and Financial Officers pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. *
   
32.1 Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Executive and Financial Officer). **
   
100 The following financial statements from the Quarterly Report on Form 10-Q of BIOXYTRAN, Inc. for the quarter ended March 31, 2021 formatted in XBRL: (i) Condensed Balance Sheets (unaudited), (ii) Condensed Statements of Operations (unaudited), (iii) Condensed Statements of Cash Flows (unaudited), and (iv) Notes to Condensed Financial Statements (unaudited), tagged as blocks of text. *

 

*Filed as an exhibit hereto.

 

**These certificates are furnished to, but shall not be deemed to be filed with, the Securities and Exchange Commission.

 

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SIGNATURES

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

 

 BIOXYTRAN, INC.
  
Date: May 14, 2021 By: /s/ David Platt
  David Platt
  Chief Executive Officer
   
  /s/ Ola Soderquist
  Ola Soderquist
  Chief Financial Officer

 

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