NOTE
2 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As
of September 30, 2020, the Company had cash of $633 and a negative working capital of $2,092,530. As of September 30, 2020, the
Company has not yet generated any revenues, and has incurred cumulative net losses of $3,912,439. These conditions raise substantial
doubt about the Company’s ability to continue as a going concern.
The
Company is aware that its current cash on hand will not be sufficient to fund its projected operating requirements through the
month of December 2020, 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 is supplementing its disclosure previously disclosed in the Company's annual report on Form 10-K for the year ended December
31, 2019 and its subsequent quarterly reports on Form 10-Q with the following disclosure: 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.
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
3 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
On
September 30, 2020, there was $259,135 in accounts payable to related parties in the form of payroll and accrued expenses. On
December 31, 2019 there was $96,000 in accounts payable to related parties.
The
following table represents the major components of accounts payables and accrued expenses and other current liabilities at September
30, 2020 and December 31, 2019:
|
|
September
30,
2020
|
|
|
December 31,
2019
|
|
Accounts payable related
party (1)
|
|
$
|
259,135
|
|
|
$
|
96,000
|
|
Professional fees
|
|
|
45,261
|
|
|
|
42,963
|
|
Interest
|
|
|
175,543
|
|
|
|
14,374
|
|
Payroll taxes
|
|
|
—
|
|
|
|
7,344
|
|
Other accounts payable
|
|
|
253
|
|
|
|
7,251
|
|
ASC 480 debt premium
|
|
|
—
|
|
|
|
24,121
|
|
Loan payable (2)
|
|
|
8,115
|
|
|
|
—
|
|
Convertible notes
payable
|
|
|
1,604,856
|
|
|
|
826,862
|
|
Total
|
|
$
|
2,093,163
|
|
|
$
|
1,018,915
|
|
|
|
(1)
|
$108,575 to each
the CFO and the CEO for 17 months of salary and $41,985 to the Executive VP for 5 months of salary and advanced expenses for
the period ending September 30 2020, while for the period ending December 31, 2019 there was $48,000 to each the CFO and the
CEO for 8 months of salary.
|
(2)
|
A non-interest loan
of $8,115 was given by a potential investor.
|
NOTE
4 – 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.
Auctus
Note #1
On
October 24, 2019 (the “Date of Issuance”) the Company issued a convertible promissory note (the “Auctus
Note #1”) with a face value of $250,000, maturing on October 23, 2020, and a stated interest of 8% to a third-party investor.
The Auctus Note #1 is 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 Auctus Note #1, or (ii) upon effective date of a registration
statement. The conversion price of the Auctus Note #1 is equal to the lesser of : (i) the lowest trading price for the twenty-day
period prior to the date of the Auctus Note #1 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 Auctus Note #1 was funded on October 29, 2019, when the Company received proceeds of $222,205, after disbursements for the
lender’s transaction costs, fees and expenses which in aggregate resulted in a total discount of $27,795 to be amortized
to interest expense over the life of the Auctus Note #1.
Additionally,
the variable conversion rate component requires that the Auctus Note #1 be valued at its stock redemption value (i.e., “if-converted” value)
pursuant to ASC 480, Distinguishing Liabilities from Equity, with the excess over the undiscounted face value being
deemed a premium to be added to the principal balance and amortized to additional paid-in capital over the life of the Auctus
Note #1. As such, the Company recorded a premium of $343,796 as a reduction to additional paid-in capital based on a discounted “if-converted” rate
of $0.21 per share (65% of the average of the three lowest trading prices during the 20 days preceding the note’s issuance),
which computed to 1,211,828 shares of ‘if-converted’ common stock with a redemption value of $593,796 due to $0.49
per share fair market value of the Company’s stock on the Auctus Note #1’s date of issuance. Debt discount amortization
is recorded as interest expense, while debt premium amortization is recorded as an increase to additional paid-in capital.
Along
with the Auctus Note #1, on the Date of Issuance the Company issued 208,333 Common Stock Purchase Warrants (the “Warrants”),
exercisable immediately at a fixed exercise price of $0.60 with an expiration date of October 23, 2023. The Company has
determined that the Warrants are exempt from derivative accounting and were valued at $101,937 on the Date of Inception using
the Black Scholes Options Pricing Model. Assumptions used for the Black Scholes Options Pricing Model include (1) stock
price of $0.49 per share, (2) exercise price of $0.60 per share, (3) term of 5 years, (4) expected volatility of 251% and (5)
risk free interest rate of 2.51%. The note proceeds of $250,000 were then allocated between the fair value of the Auctus
Note #1 ($250,000) and the Warrants ($101,937), resulting in a debt discount of $72,412. As the warrants were exercisable immediately,
this debt discount was amortized in its entirety to interest expense on the Date of Issuance. Upon cashless conversion on March
12, 2020 an additional 166,667 warrants were issued for a market value of $66,363.
The
Auctus Note #1 was paid off on October 24, 2019, and the warrants were exercised on March 12,2020
Auctus
Note #2
On
February 25, 2019, the Company entered into a $250,000 Senior Secured Promissory Note (“the Auctus Note #2”), dated
February 25, 2019 at an interest rate of 8% per annum, maturing on February 24, 2020 (the “Maturity Date”). Issuance
fees totaling $27,750 were recorded as a debt discount, resulting in net proceeds of $222,250. The Auctus Note #2 is 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 Auctus Note #2 or (ii) upon effective date of a new registration statement. The conversion price
of the Auctus Note #2 is equal to the lesser of : (i) the lowest trading price for the twenty-day period prior to the date of
the Auctus Note #2 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
Auctus Note #2 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 Auctus Note #2.
Additionally,
the variable conversion rate component requires that the Auctus Note #2 be valued at its stock redemption value (i.e., “if-converted”
value) pursuant to ASC 480, Distinguishing Liabilities from Equity, with the excess over the undiscounted face value being deemed
a premium to be added to the principal balance and accreted to additional paid-in capital over the life of the Auctus Note #2.
As such, the Company recorded a premium of $82,500 as a reduction to additional paid-in capital based on a discounted “if-converted”
rate of $0.20 per share (lowest trading price during the 20 days preceding the note’s issuance), which computed to 1,250,000
shares of ‘if-converted’ common stock with a redemption value of $332,500 due to $0.266 per share fair market value
of the Company’s stock on the Auctus Note #2’s date of issuance. Debt discount amortization is recorded as interest
expense, while debt premium accretion is recorded as an increase to additional paid-in capital. For the nine months ending at
September 30, 2020, the Company amortized $4,647 debt discount to operations as interest expense, and accreted $24,121 of premium
to additional paid-in capital.
Along
with the the Auctus Note #2, on the Date of Issuance the Company issued 208,333 Common Stock Purchase Warrants (the “Warrants”),
exercisable immediately at a fixed exercise price of $0.60 with an expiration date of February 24, 2024. The Company has
determined that the Warrants are exempt from derivative accounting and were valued at $55,417 on the Date of Inception using the
Black Scholes Options Pricing Model. Assumptions used for the Black Scholes Options Pricing Model include (1) stock price
of $0.27 per share, (2) exercise price of $0.60 per share, (3) term of 5 years, (4) expected volatility of 323% and (5) risk free
interest rate of 2.56%. The Auctus Note #2 proceeds of $250,000 were then allocated between the fair value of the Auctus
Note #2 ($250,000) and the Warrants ($55,417), resulting in a debt discount of $45,361. As the warrants are exercisable immediately,
this debt discount was amortized in its entirety to interest expense on the Date of Issuance. Upon cashless conversion on March
12, 2020 an additional 166,667 warrants were issued for a market value of $66,364.
The
Auctus Note #2 was paid off on February 20, 2020, and the warrants were exercised on March 12,2020.
Current
notes convertible
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 $306,000. 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 nine months ending at September 30, 2020, the
Company issued 72,000 warrants, resulting in an amortized debt discount of $12,711. There were no warrants issued in the three-month
period ending at September 30, 2020.
Default
on notes convertible
On
April 16, 2020, SEC ordered, pursuant to Section 12(k) of the Securities Exchange Act of 1934, that trading of BIXT is 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 21% and the principal to increase to 168% of principal loan amount. The convertible debt increased by $666,456 to
$1,604,856 while the interest accrual increased to approximately $28,563/month, amounting to $175,543 at date of September 30,
2020. 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 September 30, 2020, 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
|
|
|
$
|
23,158
|
|
Power Up #1
|
|
10/24/2019
|
|
4/16/2020
|
|
|
106,000
|
|
|
|
114,224
|
|
|
|
22
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
26,279
|
|
Peak One
|
|
10/23/2019
|
|
4/16/2020
|
|
|
120,000
|
|
|
|
36,000
|
|
|
|
18
|
%
|
|
|
50,000
|
|
|
|
5
|
|
|
|
2.00
|
|
|
|
21,606
|
|
|
|
12,848
|
|
Tangiers
|
|
10/23/2019
|
|
4/16/2020
|
|
|
106,300
|
|
|
|
48.261
|
|
|
|
18
|
%
|
|
|
50,000
|
|
|
|
5
|
|
|
|
2.00
|
|
|
|
21,116
|
|
|
|
16,830
|
|
FirstFire
|
|
11/20/2019
|
|
4/16/2020
|
|
|
125,000
|
|
|
|
65,541
|
|
|
|
24
|
%
|
|
|
50,000
|
|
|
|
5
|
|
|
|
2.00
|
|
|
|
17,979
|
|
|
|
22,950
|
|
Power Up #2
|
|
12/30/2019
|
|
4/16/2020
|
|
|
54,600
|
|
|
|
57,185
|
|
|
|
22
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,544
|
|
EMA Financial
|
|
01/10/2020
|
|
4/16/2020
|
|
|
125,000
|
|
|
|
127,658
|
|
|
|
24
|
%
|
|
|
50,000
|
|
|
|
5
|
|
|
|
2.00
|
|
|
|
5,948
|
|
|
|
29,073
|
|
Crown Bridge
|
|
02/20/2020
|
|
4/16/2020
|
|
|
55,000
|
|
|
|
28,015
|
|
|
|
15
|
%
|
|
|
22,000
|
|
|
|
5
|
|
|
|
2.00
|
|
|
|
6,763
|
|
|
|
6,041
|
|
Power Up #3
|
|
02/19/2020
|
|
4/16/2020
|
|
|
56,600
|
|
|
|
58,039
|
|
|
|
22
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,259
|
|
Power Up #4
|
|
03/18/2020
|
|
4/16/2020
|
|
|
64,900
|
|
|
|
65,725
|
|
|
|
22
|
%
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,651
|
|
|
|
|
|
|
|
$
|
938,400
|
|
|
$
|
666,456
|
|
|
|
|
|
|
|
272,000
|
|
|
|
|
|
|
|
|
|
|
$
|
97,279
|
|
|
$
|
175,543
|
|
Convertible
notes payable consists of the following at September 30, 2020 and December 31, 2019:
|
|
September
30,
2020
|
|
|
December 31,
2019
|
|
Principal balance
|
|
$
|
938,400
|
|
|
$
|
886,900
|
|
Default penalty
|
|
|
666,456
|
|
|
|
—
|
|
Unamortized debt discount
|
|
|
—
|
|
|
|
(60,038
|
)
|
Unamortized debt premium
|
|
|
—
|
|
|
|
24,121
|
|
Outstanding, net of debt discount and premium
|
|
$
|
1,604,856
|
|
|
$
|
850,983
|
|
NOTE
5 – STOCKHOLDERS’ EQUITY
At
a Board of Director’s Meeting on July 30, 2019, the Company authorized a reverse stock split that resulted in a reduction
of the number of outstanding and issued shares of both common and preferred stock so that after the split became effective on
August 13, 2019, the shares of both common and preferred stock were reduced to 1 share for each 30 shares currently issued and
outstanding. The effect on the Balance Sheet is a transfer of value from stock value at par to Additional Paid-in Capital. As
a result of the one (1) for thirty (30) reverse stock split, the Company will continue to be authorized to issue 300,000,000 shares
of Common Stock, and 50,000,000 shares of Preferred Stock. The reverse split has been retroactively applied to all periods presented.
Preferred
stock
As
of September 30, 2020, and December 31, 2019, no preferred shares have been designated or issued.
Common
stock
On
May 30, 2019, 25,000 shares of common stock were issued as a result of conversion of accrued interest on the Auctus Note #1 at
$0.20 per share for a total of $5,000.
On
July 18, 2019, 25,000 shares of common stock were issued as a result of conversion of accrued interest on the Auctus Note #1 at
$0.20 per share for a total of $5,000.
On
August 20, 2019, 20,000 shares of common stock were sold and issued from the active S-1 at $1 per share for a total of $20,000.
On
August 22, 2019, 25,000 shares of common stock were issued as a result of conversion of accrued interest on the Auctus Note #1
at $0.20 per share for a total of $5,000.
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 nine months ending September 30, 2020, 9,609,000 shares were awarded with an average cost per share of $0.01, under the 2010
Stock Plan for a total value of $161,667. The Company recorded $34,600 in stock-based compensation for 108,000 issued shares in
the nine months ended September 30, 2019. For details, see Shares Awarded and Issued under Note 6.
At
September 30, 2020, the Company had 97,184,673 shares of common stock issued and outstanding. At December 31, 2019 there were
86,475,673 shares of common stock issued and outstanding.
Common
Stock Warrants
During
the nine months ending September 30, 2020 the Company awarded 405,334 warrants, valued at $145,438, and 750,000 shares of common
stock were issued in a cashless exercise. During the nine months ending September 30, 2019 the Company awarded 208,333 warrants
valued at $45,361.
The
following table summarizes the Company’s common stock warrant activity for the nine months ended September 30, 2020 and
September 30, 2019:
|
|
|
|
|
Weighted
Average
|
|
|
Weighted-
Average Remaining
|
|
|
|
Warrants
|
|
|
Exercise
Price
|
|
|
Expected
Term
|
|
Outstanding as of January
1, 2019
|
|
|
208,333
|
|
|
$
|
0.60
|
|
|
|
4.6
|
|
Granted
|
|
|
208,333
|
|
|
|
0.60
|
|
|
|
4.9
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Forfeited/Canceled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding as of September 30, 2019
|
|
|
416,666
|
|
|
$
|
0.60
|
|
|
|
4.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding as of January 1, 2020
|
|
|
616,666
|
|
|
$
|
1.05
|
|
|
|
4.0
|
|
Granted
|
|
|
405,334
|
|
|
|
0.36
|
|
|
|
0.9
|
|
Exercised
|
|
|
(750,000
|
)
|
|
|
—
|
|
|
|
—
|
|
Forfeited/Canceled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding as of September 30, 2020
|
|
|
272,000
|
|
|
$
|
2.00
|
|
|
|
4.2
|
|
During
the nine months ending September 30, 2020, the Company awarded 144,000 options under the 2010 Stock Plan, with a fair market value
of $12,533. The Company recorded a compensation expense of $228,058 for 293,000 options issued during the nine months ended September
30, 2019.
NOTE
6 – STOCK OPTION PLAN AND STOCK-BASED COMPENSATION
During
the year ended December 31, 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. As of January 1, 2019, there were no outstanding awards under the 2010 Plan. As
of January 1, 2020, there were 341,000 outstanding stock options with a fair market value of $257,143 and 1,127,000 shares issued
with a fair market value of $864,551 at the time of award.
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.
Shares
Awarded and Issued:
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
March 25, 2020, the Company granted 3,000 shares with a fair market value of $0.31/share to three members of the Company Board
as compensation for their contribution in the Company’s Board of Directors, for a total of $930.
On
May 1, 2020 the Company appointed Mr. Mike Sheikh as EVP of Business Development. Mr. Sheikh was issued 8,800,000 shares with
a fair market value of $0.001/share to be equally vested over a period of 3 years, but fully vested upon a change of control.
The shares total fair value at the time of the award was $8,800.
On
July 1, 2020, the Company granted 3,000 shares with a fair market value of $0.19/share to three members of the Company Board as
compensation for their contribution in the Board and Committee contribution during the previous quarter, for a total of $570.
On
August 3, 2020, the Company granted a total of 100,000 shares, to two Medical Consultants for their efforts in validating the
Company’s science and potential clinical pathways. The shares total fair value at the time of award was $300.
On
September 17, 2020, the Company granted a total of 50,000 shares, to a Medical Consultants for his efforts in validating the Company’s
science and potential clinical pathways. The shares total fair value at the time of award was $1,500.
|
|
Number
of
Shares
|
|
|
Fair
Value
per Share
|
|
|
Weighted
Average
Market
Value
per Share
|
|
Shares
Issued as of December 31, 2019
|
|
|
1,127,000
|
|
|
$
|
0.27 -
1.49
|
|
|
$
|
0.77
|
|
Shares Issued
|
|
|
9,609,000
|
|
|
|
0.001 – 0.44
|
|
|
|
0.02
|
|
Shares Issued as
of September 30, 2020
|
|
|
10,736,000
|
|
|
$
|
0.001 - 1.49
|
|
|
$
|
0.10
|
|
Stock
options granted and vested:
On
January 1, 2020 the Company granted 3,000 three-year options at an exercise price of $0.31 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 $603.
On
February 1, 2020 the Company granted 45,000 three-year options at an exercise price of $0.15 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 $4,401.
On
April 1, 2020 the Company granted 3,000 three-year options at an exercise price of $0.32 to a Medical Advisory Board Member for
his contribution in the Company’s Advisory Board. The options total fair value at the time of the award was $646.
On
May 1, 2020 the Company granted 45,000 three-year options at an exercise price of $0.001 to a Medical Advisory Board Member for
his contribution in the Company’s Advisory Board. The options total fair value at the time of the award was $45.
On
July 1, 2020 the Company granted 3,000 three-year options at an exercise price of $0.18/share to a Medical Advisory Board Member
for his contribution in the Company’s Advisory Board. The options total fair value at the time of the award was $538.
On
August 1, 2020 the Company granted 45,000 three-year options at an exercise price of $0.14/share to a Medical Advisory Board Member
for his contribution in the Company’s Advisory Board. The options total fair value at the time of the award was $6,300.
The
fair value of stock options granted and revaluation of non-employee consultant options for the nine months ended September 30,
2020 was calculated with the following assumptions:
|
|
2020
|
|
Risk-free interest rate
|
|
|
0.36 – 1.69
|
%
|
Expected dividend yield
|
|
|
0
|
%
|
Volatility factor (weekly)
|
|
|
340.42
|
%
|
Expected life of option
|
|
|
3 years
|
|
For
the nine months ended September 30, 2020, the Company recorded compensation expense of $12,533 in connection with awarded stock
options. The Company recorded a compensation expense of $228,058 for 293,000 options issued during the nine months ended September
30, 2019. As at September 30, 2020, 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 nine months ended September 30, 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
|
|
|
144,000
|
|
|
|
0.001 - 0.31
|
|
|
|
0.11
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Options forfeited/cancelled
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Outstanding as of September 30, 2020
|
|
|
485,000
|
|
|
$
|
0.001
- 1.21
|
|
|
$
|
0.71
|
|
The
following table summarizes information about stock options that are vested or expected to vest at September 30, 2020:
|
|
|
|
|
|
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
|
|
|
|
2.58
|
|
|
$
|
—
|
|
|
|
45,000
|
|
|
$
|
0.001
|
|
|
|
2.58
|
|
|
$
|
—
|
|
|
0.15
|
|
|
|
90,000
|
|
|
|
0.15
|
|
|
|
2.33
|
|
|
|
—
|
|
|
|
90,000
|
|
|
|
0.15
|
|
|
|
2.33
|
|
|
|
—
|
|
|
0.20
|
|
|
|
3,000
|
|
|
|
0.20
|
|
|
|
2.75
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
0.20
|
|
|
|
2.75
|
|
|
|
—
|
|
|
0.31
|
|
|
|
3,000
|
|
|
|
0.31
|
|
|
|
2.25
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
0.31
|
|
|
|
2.25
|
|
|
|
—
|
|
|
0.32
|
|
|
|
3,000
|
|
|
|
0.32
|
|
|
|
2.50
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
0.32
|
|
|
|
2.50
|
|
|
|
—
|
|
|
0.73
|
|
|
|
3,000
|
|
|
|
0.73
|
|
|
|
2.00
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
0.73
|
|
|
|
2.00
|
|
|
|
—
|
|
|
0.61
|
|
|
|
45,000
|
|
|
|
0.61
|
|
|
|
2.08
|
|
|
|
—
|
|
|
|
45,000
|
|
|
|
0.61
|
|
|
|
2.08
|
|
|
|
—
|
|
|
0.95
|
|
|
|
200,000
|
|
|
|
0.95
|
|
|
|
1.95
|
|
|
|
—
|
|
|
|
200,000
|
|
|
|
0.95
|
|
|
|
1.95
|
|
|
|
—
|
|
|
1.09
|
|
|
|
3,000
|
|
|
|
1.09
|
|
|
|
1.75
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
1.09
|
|
|
|
1.75
|
|
|
|
—
|
|
|
1.10
|
|
|
|
45,000
|
|
|
|
1.10
|
|
|
|
1.83
|
|
|
|
—
|
|
|
|
45,000
|
|
|
|
1.10
|
|
|
|
1.83
|
|
|
|
—
|
|
|
1.21
|
|
|
|
45,000
|
|
|
|
1.21
|
|
|
|
1.58
|
|
|
|
—
|
|
|
|
45,000
|
|
|
|
1.21
|
|
|
|
1.58
|
|
|
|
—
|
|
$
|
0.001-1.21
|
|
|
|
485,000
|
|
|
$
|
0.71
|
|
|
|
2.10
|
|
|
$
|
—
|
|
|
|
485,000
|
|
|
$
|
0.71
|
|
|
|
2.10
|
|
|
$
|
—
|
|
The
following table sets forth the status of the Company’s non-vested stock options as of September 30, 2020 and December 31,
2019:
|
|
|
Number
of
Options
|
|
|
Weighted-
Average
Grant-Date
Fair Value
|
|
Non-vested as of December 31, 2019
|
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
|
|
144,000
|
|
|
|
0.11
|
|
Forfeited
|
|
|
|
—
|
|
|
|
—
|
|
Vested
|
|
|
|
(144,000
|
)
|
|
|
0.11
|
|
Non-vested as of September 30, 2020
|
|
|
|
—
|
|
|
$
|
—
|
|
The
weighted-average remaining estimated life for options exercisable at September 30, 2020 is 2.10 years.
The
aggregate intrinsic value for fully vested, exercisable options was $0 at September 30, 2020 and 2019. The aggregate intrinsic
value of options exercised for the nine months ended at September 30, 2020 and 2019 was $0 as no options were exercised.
At
September 30, 2020 the Company has 1,530,151 options or stock awards available for grant under the 2010 Plan.
NOTE
7 – 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 do not provide for the payment of any compensation to our executive officers but 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.
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.
NOTE
8 – SUBSEQUENT EVENTS
Stock
options and shares granted under the 2010 Stock Plan:
On
October 1, 2020, the Company granted 3,000 shares with a fair market value of $0.02/share to three members of the Company Board
as compensation for their contribution in the Board and Committee contribution during the previous quarter, for a total of $60.
On
October 1, 2020 the Company granted 3,000 three-year options at an exercise price of $0.05/share to a Medical Advisory Board Member
for his contribution in the Company’s Advisory Board. The options total fair value at the time of the award was $135.
On
November 1, 2020 the Company granted 45,000 three-year options at an exercise price of $0.18/share
to a Medical Advisory Board Member for his contribution in the Company’s Advisory Board. The options total fair value at
the time of the award was $5,792.
The
Company’s management has evaluated events occurring after September 30, 2020 through the date the financial statements were
issued and did not identify any further subsequent events requiring disclosure.
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, 2019 included in our Annual Report on Form 10-K as filed with the Securities
and Exchange Commission on March 18, 2020. 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.
The
Company is also pursuing their work with a second drug candidate, BXT-10, a complex polysaccharide derived from pectin that binds
to, and blocks the activity of galectin-1, 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 sugar molecules. 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.
The
Company plans to file a pre-investigational new drug application for BXT-10 for the treatment of mild to moderate COVID-19 patients.
However, we cannot provide any assurance that we will successfully initiate or complete those planned trials and be able to initiate
any other clinical trials for BXT-10 or any of our future drug candidates.
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 4 of the financial statements, the Company has currently ten
convertible loans outstanding at a total value of $938,400 maturing between 10/22/2020 and 3/18/2021, in order to finance the
Company until we start raising equity. As a result of the ten-day SEC suspension of April 16. 2020, the notes entered into default
and the principal owed is currently $1,604,856, including default penalties. As shown in the accompanying consolidated financial
statements, the Company had an accumulated deficit of $3,912,439 as of September 30, 2020. The accumulated deficit as of December
31, 2019 was $2,241,305.
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.
The
Company is supplementing its disclosure previously disclosed in the Company’s annual report on Form 10-K for the year ended
December 31, 2019 and its subsequent quarterly reports on Form 10-Q with the following disclosure: 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 FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020
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.
General
and Administrative
General
and administrative (G&A) expenses for the three months ended September 30, 2020 were $114,448, while for the three months
ended September 30, 2019, they were $850,319. The components of G&A expenses are as follows:
|
-
|
Payroll and related
expenses for the three months ended September 30, 2020 were $54,000, while there was no payroll recorded for the three months
ended September 30, 2019.
|
|
-
|
Costs for legal,
accounting and other professional services for the three months ended September 30, 2020 were $18,780, while they were $22,441
for the three months ended September 30, 2019. The decrease was due to reduced use of external corporate counsel.
|
|
-
|
There was no Marketing
expense for the three months ended September 30, 2020, while there were $8,989 for the three months ended September
30, 2019. The decrease was due to reduction of promotional activities in the third quarter of 2020.
|
|
-
|
Stock-based compensation
mounted to $9,208 for the three months ended September 30, 2020. The stock-based compensation for the three months ended September
30, 2019 was $795,076. The decrease was due to a declining stock value as we have not yet returned to OTC:BB.
|
|
-
|
The remaining miscellaneous
G&A expenses totaled $32,460 for the three months ended September 30, 2020, as compared to $23,812 for the three months
ended September 30, 2019. The increase was due to the corporate pension plan.
|
Interest
Expense and Amortization of Debt Discount and Premium
During
the three months ended September 30, 2020, the Company recorded $1,000 in amortization of debt discount to interest expense. The
interest for the convertible notes outstanding amounted to $86,593. During the three months ended September 30, 2019, the Company
recorded $140,225 of premium accretion to additional paid-in capital, and $13,794 in amortization of debt discount to interest
expense. The interest for the convertible notes outstanding amounted to $10,002. The increased costs are due to the default of
outstanding notes on April 16,2020, as a result of the 10-day trading suspension imposed by the SEC.
Net
Loss
The
Company generated a net loss for the three months ended September 30, 2020 of $202,041. In comparison, for the three months ended
September 30, 2019, the Company generated a net loss of $874,115. The increased loss is mainly linked to current quarter costs
for legal, accounting and other professional services for documentation that were filed with the SEC, as well as the amortization
of debt discounts applied to warrants issued in connection with convertible debt and the related loan fees.
RESULTS
OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020
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.
General
and Administrative
General
and administrative (G&A) expenses for the nine months ended September 30, 2020 were $492,399, while for the nine months ended
September 30, 2019, they were $1,131,803. The components of G&A expenses are as follows:
|
-
|
Payroll and related
expenses for the nine months ended September 30, 2020 were $138,000, as compared to $48,000 for the nine months ended September
30, 2019. The difference was due to the hire of an additional manager on May 1, 2020.
|
|
-
|
Costs for legal,
accounting and other professional services for the nine months ended September 30, 2020 were $37,728, as compared to $125,884
for the nine months ended September 30, 2019. The decrease was due to reduced use of external corporate counsel.
|
|
-
|
Sales and marketing
expense for the nine months ended September 30, 2020 were $34,027, as compared to $54,958 for the nine months ended September
30, 2019. The decrease was due to the web-site build-up in 2019.
|
|
-
|
Stock-based compensation
mounted to $174,200 for the nine months ended September 30, 2020. The stock-based compensation for the nine months ended September
30, 2019 was $795,076. The decrease was due to a declining stock value as we have not yet returned to OTC:BB.
|
|
-
|
The remaining miscellaneous
G&A expenses totaled $107,444 for the nine months ended September 30, 2020, as compared to $107,885 for the nine months
ended September 30, 2019.
|
Interest
Expense and Amortization of Debt Discount and Premium
During
the nine months ended September 30, 2020, the Company recorded $961,128 of premium accretion to additional paid-in capital, and
$259,057 in amortization of debt discount (including $145,438 in warrant amortization), as compared to, $323,769 of premium accretion
and a debt discount amortization of $82,485 (including warrant amortization of $45,361) for the nine months ended September 30,
2019. The interest for the convertible notes outstanding amounted to $919,677 (including a pre-pay fee of $91,362 for the early
payment of a convertible note and the default penalty of $666,456), as compared to $26,891 for the nine months ended September
30, 2019. The increased costs are mainly linked to current quarter costs for legal, accounting and other professional services,
as well as the amortization of debt discounts applied to warrants issued in connection with convertible debt and the related loan
fees.
Net
Loss
The
Company generated a net loss for the nine months ended September 30, 2020 of $1,671,133. In comparison, for the nine months ended
September 30, 2019, the Company generated a net loss of $1,195,818. The increased loss is mainly linked to current quarter costs
for legal, accounting and other professional services, as well as the amortization of debt discounts applied to warrants issued
in connection with convertible debt and the related loan fees.
CASH-FLOWS
Net
cash used in operating activities was $208,161 and $245,435 for the nine months ended September 30, 2020 and 2019, respectively.
The decrease was due to reduced use of professional services.
The
Company did not engage in any investing activities during the nine months ended September 30, 2020 or 2019.
Cash
flows from financing activities were $39,166 and $242,250 for the nine months ended September 30, 2020 and 2019, respectively.
The significant change was due to repayment of an outstanding convertible note on February 20, 2020.
The
cash available was $633 and $33,226 in the end of the nine months ended September 30, 2020 and 2019, respectively.
LIQUIDITY
AND CAPITAL RESOURCES
As
of September 30, 2020, our assets consisted of was $633 in cash. We had total liabilities of $2,093,163, which were all current
liabilities, and which consisted of $480,192 in accounts payable and accrued expenses (of which $259,135 was payable to related
parties), a short term no-interest loan of $8,115 and $1,604,856 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. The equivalent numbers
at December 31, 2019, were $169,628 in cash and total liabilities of $1,018,915, which were all current liabilities, and which
consisted of $167,932 in accounts payable and accrued expenses (of which $96,000 was payable to related parties), and $850,983
(which includes unamortized debt premium of $24,121, and which has been netted with unamortized debt discounts totaling $60,038)
in the form of seven convertible loans, maturing between February 25, 2020 and 12/30/2020.
At
September 30, 2020, we had total working capital of negative $2,092,530 and an accumulated deficit of $3.912,439. Comparatively,
on December 31, 2019, we had total working capital of negative $799,287 and an accumulated deficit of $2,241,305. 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.
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.
Contractual
Obligations
Our
contractual obligations include ten convertible notes, for a total of $938,400 and of accrued interest for these notes mounting
to $175,543, described under Note 4 to the Financial Statements. As a result of the ten-day SEC suspension of April 16. 2020,
the notes entered into default and the principal owed is currently $1,604,856, including default penalties.
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.