NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
1 – Nature of Business and Basis of Presentation
The
Company was incorporated on November 10, 1952 in Michigan as Gantos, Inc. On July 21, 2008, the Company completed its change in
domicile to Delaware and subsequently changed its name to Kinder Holding Corp. (the “Company”). As of October 13,
2017, the Company completed a reverse acquisition of Intiva BioPharma Inc., a Colorado corporation (“BioPharma”) through
an exchange of shares (the “Share Exchange Transaction”). In connection with the Share Exchange Transaction, the Company
changed its name to Intiva BioPharma Inc. on November 8, 2017 and, in September 2018, the Company changed its name to Nexien BioPharma,
Inc.
As
further described in Note 3, BioPharma became a wholly-owned subsidiary of the Company. Since this transaction resulted in the
existing shareholders of BioPharma acquiring control of the Company, for financial reporting purposes, the business combination
has been accounted for as an additional capitalization of the Company (a reverse acquisition with BioPharma as the accounting
acquirer). The operations of BioPharma were the only continuing operations of the Company. The accompanying financial statements
as of March 31, 2019 and June 30, 2018 and for the nine and three-month periods ended March 31, 2019 and 2018 present the historical
financial information of BioPharma.
BioPharma
was incorporated under the laws of the State of Colorado on March 27, 2017 to pursue pre-clinical and drug development activities,
in accordance with U.S. Food and Drug Administration (“FDA”) protocols, for certain pharmaceutical formulations that
include cannabinoids. It is pursuing the formulation and development of cannabinoid-based drugs for medical conditions and disorders,
and owns a license covering certain intellectual property, including certain patent applications, and has filed five of its own
provisional patent applications for other drugs that include cannabinoids and other substances, including terpenes, that are intended
to be developed with the objective of treating certain medical conditions and disorders. It was formed as a corporate subsidiary
of the Colorado corporation Kanativa USA Inc. (formerly Intiva USA Inc.) (“Kanativa USA”), which is a subsidiary of
the Ontario, Canada corporation, Kanativa Inc.
All
share and per share amounts have been adjusted in the footnotes and accompanying financial statements to give effect to the Share
Exchange Transaction.
Principles
of Consolidation
The
accompanying consolidated financial statements include the Company and its wholly owned subsidiaries: Intiva BioPharma Inc. (a
Colorado corporation), NexN Inc. (formerly Intiva Kotzker Pharmaceuticals Inc.) (“NexN”), NexDM Inc. (formerly Intiva
Sharir Inc.), and CRX Bio Holdings LLC, a Delaware limited liability company (“CRX”), and were prepared from the accounts
of the Company in accordance with accounting principles generally accepted in the United States of America (US GAAP). All significant
intercompany transactions and balances have been eliminated on consolidation.
Basis
of Presentation/Going Concern Uncertainty
The
Financial Statements presented herein have been prepared in accordance with the accounting policies described in the June 30,
2018 audited financial statements and should be read in conjunction with the notes to financial statements which appear as part
of those financial statements.
The
preparation of these financial statements in conformity with US GAAP requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On
an ongoing basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations
and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed
to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under
different assumptions or conditions.
NEXIEN
BIOPHARMA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
1 – Nature of Business and Basis of Presentation (continued)
The
accompanying financial statements have been prepared in conformity with US GAAP, which contemplates continuation of the Company
as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred
an operating loss since inception of $4,716,167. The development of pharmaceuticals with the objective of obtaining approval by
the FDA and other international regulatory authorities is not a short-term endeavor for any specific drug candidate. It also requires
significant amounts of capital funding for clinical trials, formulation and other matters. At March 31, 2019, the Company had
working capital of $292,882. The Company will require significant additional capital to fund the implementation and execution
of its business plan. This capital, which likely will be millions of dollars for a single drug candidate, will be required for
research, formulation, regulatory applications, and clinical trials. At the present time, the Company does not have any commitments
or known sources for this level of funding. These and other factors raise substantial doubt about the Company’s ability
to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from
the possible inability of the Company to continue as a going concern.
In
the opinion of management, the information furnished in these interim financial statements reflects all adjustments necessary
for a fair statement of the financial position and results of operations and cash flows as of March 31, 2019 and for the nine
and three-month periods ended March 31, 2019 and 2018. All such adjustments are of a normal recurring nature.
Note
2 – Summary of Significant Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from the estimates.
Valuation
of Long-Lived Assets
The
Company reviews the recoverability of its long-lived assets including equipment, goodwill and other intangible assets, when events
or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of
possible impairment is based on the Company’s ability to recover the carrying value of the asset from the expected future
pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the
carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value.
The Company’s primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management
to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.
Fair
Value of Financial Instruments
FASB
ASC 825, “Financial Instruments,” requires entities to disclose the fair value of financial instruments, both assets
and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC
825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction
between willing parties. At March 31, 2019 and June 30, 2018, the carrying value of certain financial instruments (cash and cash
equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments or
interest rates, which are comparable with current rates.
NEXIEN
BIOPHARMA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
2 – Summary of Significant Accounting Policies (continued)
Fair
Value Measurements
The
Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three
levels of inputs which prioritize the inputs used in measuring fair value are:
Level
1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that
the Company has the ability to access.
Level
2: Inputs to the valuation methodology include:
|
●
|
Quoted
prices for similar assets or liabilities in active markets;
|
|
|
|
|
●
|
Quoted
prices for identical or similar assets or liabilities in inactive markets;
|
|
|
|
|
●
|
Inputs
other than quoted prices that are observable for the asset or liability;
|
|
|
|
|
●
|
Inputs
that are derived principally from or corroborated by observable market data by correlation or other means.
|
If
the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term
of the asset or liability.
Level
3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The
asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest
level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable
inputs and minimize the use of unobservable inputs.
When
the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in
current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy
based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur.
For the periods ended March 31, 2019 and June 30, 2018, there were no significant transfers of financial assets or financial liabilities
between the hierarchy levels.
Earnings
per Common Share
The
Company computes net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method
and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period
is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS
excludes all dilutive potential shares if their effect is anti-dilutive.
Research
and Development Expenses
Research
and development expenses are charged to operations as incurred.
NEXIEN
BIOPHARMA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
2 – Summary of Significant Accounting Policies (continued)
Concentrations
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents.
Cash and cash equivalents are deposited with major banks in the United States of America. Management believes that such financial
institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments. The
Company does not have any significant off-balance-sheet concentration of credit risk.
Stock-based
compensation
Pursuant
to FASB ASC 718, all share-based payments to employees, including grants of employee stock options, are recognized in the statement
of operations based on their fair values.
Issuance
of shares for non-cash consideration
The
Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods
and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably determinable. The
Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services
follows the provisions of the standards issued by the FASB. The measurement date for the fair value of the equity instruments
issued is determined as the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached
or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to
consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
Recent
Accounting Pronouncements
In
August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820).”
The amendments in this Update modify certain disclosure requirements of fair value measurements and are effective for all entities
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted.
The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting
pronouncement.
Although
there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt,
as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its
consolidated financial position or results of operations.
Note
3 – Share Exchange Agreement
On
August 8, 2017, the Company entered into a Share Exchange Agreement, as amended and restated on October 13, 2017 (the “Agreement”),
with BioPharma. Pursuant to the terms of the Agreement, the Company agreed to issue to the shareholders of BioPharma 42,642,712
post-reverse stock-split shares of the Company’s common stock, par value $0.0001 (“Common Stock”), in exchange
for all of the issued and outstanding shares of BioPharma capital stock, thereby making BioPharma a wholly-owned subsidiary of
the Company. As part of the Closing of the Agreement, the 20,000,000 pre-reverse split shares of the Company’s Common Stock
previously purchased by Kanativa USA, effective on June 26, 2017 in a change of control transaction from the Company’s control
shareholders, were canceled. Since this transaction resulted in the existing shareholders of BioPharma acquiring control of the
Company, for financial reporting purposes, the business combination has been accounted for as an additional capitalization of
the Company (a reverse acquisition with BioPharma as the accounting acquirer).
NEXIEN
BIOPHARMA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
4 – License Agreements
In
March 2017, NexN licensed certain intellectual property from Kotzker Consulting LLC (“Kotzker Consulting”), an unrelated
entity. The licensed intellectual property includes patent applications relating to the use of cannabinoid receptor modulators
and terpenes in the acute treatment during exposure to organophosphorus nerve agents and/or organophosphorus insecticides. Under
terms of the agreement, NexN shall use its commercially reasonable efforts to develop and commercialize the licensed products,
and, in particular, will be responsible for the design, manufacturing, preclinical, clinical, and regulatory development activities
of the licensed products and shall bear the costs of such activities. As consideration for entering into the agreement, NexN agreed
to: (i) pay Kotzker Consulting $180,000, (ii) pay patent prosecution costs incurred as of the date of the agreement of $15,000
and (iii) issue to Kotzker Consulting 31,550 shares of Kanativa Inc.’s common stock valued at $78,875 ($2.50 per share based
on a contemporaneous private placement to third parties of Kanativa Inc.’s common stock). The Company has capitalized legal
fees of $29,040 incurred in conjunction with acquiring the license agreement, As of June 30, 2017, $65,000 was due under the license
agreement, which amount was paid in August 2017. The total value ascribed to the License Agreement with Kotzker Consulting is
$302,915 at March 31, 2019. The license agreement terminates, on a country by country basis, upon the expiration of the licensed
patent for the licensed intellectual property, or when a competitor generic product utilizing the licensed technology is marketed
in the particular country.
NexN
shall be responsible for development milestone payments for (i) licensed products for use as a preventative and therapeutic neuroprotective
against nerve agents and pesticides and (ii) licensed products for treatment of diseases. Milestone payments for each of the foregoing
will each be due in two payments, the first payment no later than thirty (30) days from acceptance of submission of the regulatory
filing of the first licensed product and the second payment no later than thirty (30) days from approval of the first licensed
product. Royalties will be due beginning with first commercial sale of developed products. The Company has completed and submitted
a Pre-Investigational New Drug meeting request and amendment thereto with the FDA.
In
September 2017, BioPharma entered into a contract with a contract manufacturing organization to develop an injectible formulation
of a drug product to be submitted to the FDA. It is anticipated that the product will be developed utilizing the new drug application
505(b)(2) regulatory pathway for use in the treatment during and immediately following exposure to organophosphorous nerve agents.
The drug product is to consist of a synthetic cannabinoid and a blend of terpenes in an injectible vehicle.
On
February 28, 2018, the Company obtained a worldwide exclusive license with respect to a proprietary delivery system for cannabinoid-based
medications. Upon execution of the agreement, as amended September 18, 2018, $35,000 was paid to the licensor. An additional $10,000
was paid on November 1, 2018, $20,000 was paid on February 28, 2019 and a final payment, in cash or stock at the option of the
Company, of $35,000 is due August 31, 2019. The Company is required to pay milestone payments upon obtaining regulatory approval
of pharmaceutical licensed products and royalties based upon sales of licensed products. The Company may grant sublicenses under
the terms of the agreement. As of March 31, 2019, the Company capitalized $65,000 under the license agreement.
NEXIEN
BIOPHARMA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
5 – Stockholders’ Equity
CRX
Limited Liability Company Interest Purchase Agreement
On
October 26, 2018, Company entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”)
with the members of CRX Bio Holdings LLC, a Delaware limited liability company (“CRX”), to acquire all of the membership
interest in CRX in exchange for 11,000,000 restricted shares of the Company’s Common Stock (the “Acquisition”),
valued at $0.76 per share. The transaction has been accounted for as an asset acquisition, and not a business combination, and
has been valued at the fair value of the Common Stock issued by the Company, as CRX’s cost basis was $0 in the assets. CRX
is engaged in the research and development of advanced cannabinoid formulations and drug delivery systems with a focus on bioavailability
and related pharmacokinetics and pharmacodynamics (PK/PD) enhancement. The Acquisition transaction was consummated on October
26, 2018. By acquiring CRX as a wholly-owned subsidiary, the Company acquired all of its assets, which consist primarily of three
U.S. provisional patent applications relating to cannabinoid formulations to treat convulsive disorders, chronic traumatic encephalopathy,
and neuropathic pain. At the closing, the Company issued to the six members of CRX (the “Sellers”) 1,100,000 shares
not subject to any forfeiture restrictions and 9,900,000 shares which shall be released from forfeiture restrictions according
to the following vesting schedule:
|
●
|
30%
shall be fully vested 12 months following the Closing (October 26, 2019);
|
|
|
|
|
●
|
30%
shall be fully vested 24 months following the Closing (October 26, 2020);
|
|
|
|
|
●
|
30%
shall be fully vested 36 months following the Closing (October 26, 2021).
|
Any
Seller who is not then providing services to the Company or any of its subsidiaries on any vesting date, whether through voluntary
termination or termination “for cause,” will forfeit his unvested shares, which will be cancelled.
The
transaction has been valued at $8,360,000, based on the fair value of the 11,000,000 shares issued of $0.76 per share, as per
the closing market price of the Company’s Common Stock on the date of the Purchase Agreement. The $836,000 fair value of
the 1,100,000 shares issued not subject to any forfeiture restrictions was charged to operations during the six months ended December
31, 2018. The $7,524,000 fair value of the 9,900,000 shares subject to forfeiture has been charged to stockholders’ equity
as a contra equity account, and will be amortized over the vesting periods. The net amount charged to stockholder’s equity
was $0 on the date of the acquisition. Effective December 31, 2018, one seller resigned from the Company and forfeited 1,732,500
unvested shares, valued at $1,316,699 ($0.76 per share). Amortization of the fair value of the shares subject to forfeiture was
$166,514 for the period ended March 31, 2019.
Warrants
The
Company had issued warrants to investors in a series of subscription agreements in equity financings.
On
July 27, 2018, Company extended the expiration date of its Class C Warrants, from July 27, 2018, to August 8, 2018, and also offered
holders of the Class C Warrants who did not wish to exercise their warrants the opportunity to exchange their Class C Warrants
for new warrants. Each new warrant, denominated as Class D, was exercisable through November 30, 2018 to purchase one unit for
$1.00, each unit consisting of one share of Common Stock and a warrant to purchase one share of Common Stock at a price of $2.00
per share through January 31, 2019. Holders of 944,400 Class C warrants were issued Class D warrants. All of the Class D warrants
expired unexercised.
On
September 12, 2018, the Company authorized the issuance of 94,000 Class E warrants to those shareholders who exercised their Class
C warrants and did not exchange them for Class D warrants. Each Class E warrant was exercisable to purchase one share of
common stock at a price of $2.00 per share through January 31, 2019. All of the Class E warrants expired unexercised.
NEXIEN
BIOPHARMA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
5 – Stockholders’ Equity (continued)
The
relative fair value of each warrant issuance was estimated on the date of grant using the Black-Scholes option pricing model with
the following weighted-average assumptions used for grants under the fixed option plan:
Average risk-free interest rates
|
|
|
2.0% - 2.16
|
%
|
Average expected life (in years)
|
|
|
.35 to .39
|
|
Volatility
|
|
|
175%
to 296
|
%
|
The
relative fair value attached to the Class D warrants is $151,467 and the relative fair value attached to the Class E warrants
is $4,467 as of the grant date.
A
summary of warrant activity during the nine months ended March 31, 2019 is presented below:
|
|
Shares
|
|
Weighted Average
Exercise Price
|
|
Weighted Average
Remaining
Contractual
Life (Years)
|
|
|
|
|
|
|
|
Outstanding and exercisable – June 30, 2018
|
|
|
1,034,400
|
|
|
$
|
.53
|
|
|
|
.1
|
|
Granted
|
|
|
1,038,400
|
|
|
$
|
1.09
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(2,072,800
|
)
|
|
$
|
.75
|
|
|
|
|
|
Outstanding and exercisable – March 31, 2019
|
|
|
—
|
|
|
|
|
|
|
|
|
|
2017
Stock Incentive Plan
On
August 10, 2017, BioPharma adopted the “2017 Stock Incentive Plan” and granted an aggregate of 6,400,000 shares of
Common Stock to five officers and directors of the Company, valued at $800,000 ($0.125 per share). On July 25, 2018, the Company
accelerated the vesting of 1,083,342 unvested shares of Common Stock previously granted to its former Chief Executive Officer
and Chief Financial Officer. As of March 31, 2019, 300,000 of the shares issued (valued at $37,500) are subject to forfeiture
until vesting occurs.
2018
Equity Incentive Plan
(i)
On March 30, 2018, the Company’s board of directors approved and recommended for adoption by the stockholders of the Company
a 2018 Equity Incentive Plan and has reserved 8,000,000 shares of Common Stock for issuance under the terms of that Plan. Stockholder
approval was
obtained on March 29, 2019.
In
July 2018, the Board of Directors granted options to purchase a total of 1,810,000 shares of Common Stock, exercisable for a period
of seven years, to officers/directors/consultants of the Company at an exercise price of $0.54 per share.
In
August 2018, the Board of Directors granted options to purchase a total of 150,000 shares of Common Stock, exercisable for a period
of seven years, to two individuals, (i) a director and (ii) a consultant of the Company, at an exercise price of $0.38 per share.
N
EXIEN
BIOPHARMA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
5 – Stockholders’ Equity (continued)
The
fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants under the fixed option plan:
Average risk-free interest rates
|
|
|
2.3% - 2.8
|
%
|
Average expected life (in years)
|
|
|
4.0 to 7.0
|
|
Volatility
|
|
|
160%
to 296
|
%
|
The
fair value of the options granted as of March 31, 2019 is $870,204. Amortization of the vested portion of the options charged
to operations was $652,352 during the nine months ended March 31, 2019, and $217,852 is unamortized at March 31, 2019.
(ii)
On October 17, 2018, the Board of Directors granted options to purchase an aggregate 800,000 shares of Common Stock, exercisable
for a period of seven years, to officers/directors of the Company at an exercise price of $0.655 per share and confirmed a grant
of options made as of October 1, 2018, to purchase 500,000 shares of Common Stock, exercisable for a period of seven years, to
an officer and director of the Company at an exercise price $0.48. All of the options were fully vested as of the date of grant
The
fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants under the fixed option plan:
Average risk-free interest rates
|
|
2.88% - 2.93%
|
Average expected life (in years)
|
|
|
4.0
|
|
Volatility
|
|
|
171% to 172
|
%
|
The
fair value of the fully vested options granted of $803,997 was charged to operations in the period ended March 31, 2019.
A
summary of option activity during the nine months ended March 31, 2019 is presented below:
|
|
Shares
|
|
Weighted Average Exercise Price
|
|
Weighted Average Remaining Contractual Life (Years)
|
|
|
|
|
|
|
|
Outstanding and exercisable – June 30, 2018
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
3,260,000
|
|
|
$
|
0.55
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Expired (Canceled)
|
|
|
(50,000
|
)
|
|
$
|
0.38
|
|
|
|
|
|
Outstanding– March 31, 2019
|
|
|
3,210,000
|
|
|
$
|
0.55
|
|
|
|
6.4
|
|
Exercisable – March 31, 2019
|
|
|
2,638,750
|
|
|
|
|
|
|
|
|
|
N
EXIEN
BIOPHARMA, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
Note
6 – Related Party Transactions
BioPharma
was formed as a subsidiary of Kanativa USA, which is a subsidiary of Kanativa Inc.
At
March 31, 2019, BioPharma was owed $107,167 from Kanativa USA for advances made by BioPharma on behalf of Kanativa USA in conjunction
with the Share Exchange Agreement (See Note 3). The balance due from Kanativa USA is being repaid at $1,500 per month for 18 months
commencing September 1, 2018 with the remaining balance due on March 1, 2020. During the nine months ended March 31, 2019, $7,500
was repaid to the Company pursuant to the agreement with Kanativa USA.
On
August 10, 2017, the Board of Directors granted an aggregate of 6,400,000 shares of Common Stock to five officers and directors
of the Company, valued at $800,000 ($0.125 per share), under the Company’s 2017 Stock Incentive Plan. One-third of each
grant vested as of the initial date of grant (August 10, 2017), and 8-1/3% upon the end of each calendar quarter beginning December
31, 2017. In March 2018, the Company cancelled 1,166,667 unvested shares previously issued to its former CEO. As of March 31,
2019, 300,000 of the shares issued (valued at $37,500) are subject to forfeiture until vesting occurs.
Certain
Directors and the Chief Financial Officer of the Company are also directors and officers of Kanativa Inc., and other subsidiaries
and affiliated entities of Kanativa Inc.
Note
7 – Subsequent Events
The
Company has analyzed its operations subsequent to March 31, 2019 through the date these financial statements were issued, and
has determined that it does not have any material subsequent events to disclose.