NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – NATURE OF BUSINESS
PharmaCyte Biotech, Inc. (“Company”)
is a biotechnology company focused on developing cellular therapies for cancer and diabetes based upon a proprietary cellulose-based live
cell encapsulation technology known as “Cell-in-a-Box®”. The Cell-in-a-Box® technology is intended
to be used as a platform upon which therapies for several types of cancer, including locally advanced, inoperable, non-metastatic pancreatic
cancer (“LAPC”) will be developed. The current generation of the Company’s product candidate is referred to as “CypCaps™”.
On September 1, 2020, the Company submitted an Investigational New Drug Application (“IND”) to the U.S. Food and Drug Administration
(“FDA”) for a planned Phase 2b clinical trial in LAPC. On October 1, 2020, the Company received notice from the FDA that it
had placed the IND on clinical hold. On October 30, 2020, the FDA sent a letter to the Company setting forth the reasons for the clinical
hold and specific guidance on what the Company must do to have the clinical hold lifted. To lift the clinical hold, the FDA has informed
the Company that it needs to conduct several additional preclinical studies and assays. The FDA also requested additional information
regarding several topics, including DNA sequencing data, manufacturing information and product release specifications. The Company is
also in the process of conducting these studies and assays and gathering additional information to submit to the FDA. See “Our Investigational
New Drug Application and the Clinical Hold” below.
The Cell-in-a-Box® encapsulation
technology potentially enables genetically engineered live human cells to be used as a means to produce various biologically active molecules.
The technology is intended to result in the formation of pinhead sized cellulose-based porous capsules in which genetically modified live
human cells can be encapsulated and maintained. In a laboratory setting, this proprietary live cell encapsulation technology has been
shown to create a micro-environment in which encapsulated cells survive and flourish. They are protected from environmental challenges,
such as the sheer forces associated with bioreactors and passage through catheters and needles, which we believe enables greater growth
and production. The capsules are largely composed of cellulose (cotton) and are bio inert.
The Company is developing therapies for pancreatic
and other solid cancerous tumors by using genetically engineered live human cells that we believe are capable of converting a cancer prodrug
into its cancer-killing form. The Company encapsulate those cells using the Cell-in-a-Box® technology and place those capsules
in the body as close as possible to the tumor. In this way, the Company believes that when a cancer prodrug is administered to a patient
with a particular type of cancer that may be affected by the prodrug, the killing of the patient’s cancerous tumor may be optimized.
In addition, the Company has been exploring ways
to delay the production and accumulation of malignant ascites fluid that results from many types of abdominal cancerous tumors. Malignant
ascites fluid is secreted by abdominal cancerous tumors into the abdomen after the tumors have reached a certain stage of growth. This
fluid contains cancer cells that can seed and form new tumors throughout the abdomen. This fluid accumulates in the abdominal cavity,
causing swelling of the abdomen, severe breathing difficulties and extreme pain.
The Company has also been developing a potential
therapy for Type 1 diabetes and insulin-dependent Type 2 diabetes. The Company’s product candidate for the treatment of diabetes
consists of encapsulated genetically modified insulin-producing cells. The encapsulation will be done using the Cell-in-a-Box® technology.
Implanting these cells in the body is designed to function as a bio-artificial pancreas for purposes of insulin production.
The Company has also been considering ways to
exploit the benefits of the Cell-in-a-Box® technology to develop therapies for cancer that involve prodrugs based
upon certain constituents of the Cannabis plant (“Cannabis Program”); these constituents are of the class
of compounds known as “cannabinoids”.
Until: (i) the FDA allows the Company to commence
a clinical trial in LAPC described in its IND for which the FDA has placed a clinical hold; and (ii) the Company validates its Cell-in-a-Box®
encapsulation technology in its planned Phase 2b clinical trial in LAPC, the Company is not spending any further resources developing
the Cannabis Program.
Clinical Hold
On September 1, 2020, the Company submitted an
IND to the FDA for a planned Phase 2b clinical trial in LAPC. Shortly thereafter, the Company received Information Requests from the FDA
related to the IND. The Company timely responded to all information requests.
On October 1, 2020, the Company received notice
that the FDA had placed the IND on clinical hold.
On October 30, 2020, the FDA sent a letter to
the Company setting forth the reasons for the clinical hold and specific guidance on what the Company must do to have the clinical hold
lifted.
In order to lift the clinical hold, the FDA has
informed the Company that it needs to conduct several additional preclinical studies. The FDA also requested additional information
regarding several topics, including sequencing data, manufacturing information and product release specifications.
In addition, the FDA requested that several items
not related to the clinical hold be addressed through the submission of an IND amendment. Specifically, the FDA requested that the Company
perform qualification studies for the drug substance filling step to ensure that the product remains sterile and stable during the filling
process. The FDA also requested additional information, discussion and clarification on several other topics.
Since October 30, 2020, there has been no further
communication with the FDA regarding the clinical hold.
The Company has assembled a scientific team to
address the FDA requests related to the clinical hold. That team is working through an extensive list of items that the FDA requested.
Among other things, the Company has successfully completed a 9-month product stability study, commenced physical parameter testing for
CypCaps™ and commenced additional studies for the sequence of DNA encoding of its encapsulated cells. The Company has also designed
the biocompatibility tests for cytotoxicity, sensitization, irritation, acute systemic toxicity, material-mediated pyrogenicity, subacute/subchronic
toxicity, genotoxicity and implantation. In addition, the Company has begun a compression and swelling study of CypCaps™, designed
a study to determine if CypCaps™ are adversely affected by contrast medium and designed a study to show the catheters used to implant
CypCaps™ do not adversely impact the encapsulated cells.
Impact of the COVID-19 Pandemic on the Company’s Operations
The coronavirus SARS-Cov2 pandemic (“COVID-19”)
is causing significant, industry-wide delays in clinical trials. Although the Company is not yet in a clinical trial, the Company has
filed an IND with the FDA to commence a clinical trial in LAPC. While the IND has been placed on clinical hold by the FDA, the Company
has assessed the impact of COVID-19 on its operations. Currently, many clinical trials are being delayed due to COVID-19. There are numerous
reasons for these delays. For example, patients have shown a reluctance to enroll or continue in a clinical trial due to fear of exposure
to COVID-19 when they are in a hospital or doctor’s office. There are local, regional and state-wide orders and regulations restricting
usual normal activity by people. These discourage and interfere with patient visits to a doctor’s office if the visit is not COVID-19
related. Healthcare providers and health systems are shifting their resources away from clinical trials toward the care of COVID-19 patients.
The FDA and other healthcare providers are making product candidates for the treatment of COVID-19 a priority over product candidates
unrelated to COVID-19. As of the date of the accompanying condensed consolidated financial statements and related footnotes on Form 10-Q
(“Report”), the COVID-19 pandemic has had an impact upon the Company’s operations, although the Company believes that
impact is not material. The impact primarily relates to delays in tasks associated with the preparation of the Company’s responses
to the clinical hold, including all requested preclinical studies. There may be further delays in generating responses to the requests
from the FDA related to the clinical hold.
As a result of the COVID-19 pandemic, commencement
of the Company’s planned clinical trial to treat LAPC may be delayed beyond the lifting of the clinical hold should that occur.
Also, enrollment may be difficult for the reasons discussed above. In addition, after enrollment in the trial, if patients contract COVID-19
during their participation in the trial or are subject to isolation or shelter in place restrictions, this may cause them to drop out
of our clinical trial, miss scheduled therapy appointments or follow-up visits or otherwise fail to follow the clinical trial protocol.
If patients are unable to follow the clinical trial protocol or if the trial results are otherwise affected by the consequences of the
COVID-19 pandemic on patient participation or actions taken to mitigate COVID-19 spread, the integrity of data from the clinical trial
may be compromised or not be accepted by the FDA. This could further adversely impact or delay the Company’s clinical development
program.
It is highly speculative in projecting the effects
of COVID-19 on the Company’s clinical development program and the Company generally. The effects of COVID-19 quickly and dramatically
change over time. Its evolution is difficult to predict, and no one is able to say with certainty when the pandemic will subside.
Company Background
The Company is a Nevada corporation incorporated
in 1996. In 2013, the Company restructured its operations to focus on biotechnology. The restructuring resulted in the Company focusing
all its efforts upon the development of a novel, effective and safe way to treat cancer and diabetes. In January 2015, the Company changed
its name from Nuvilex, Inc. to PharmaCyte Biotech, Inc. to reflect the nature of its current business.
Increase in Authorized Shares and Reverse Stock
Split
On July 2, 2021, pursuant to stockholder approval
at the Annual Meeting of Stockholders, the Company filed with the Secretary of State of the State of Nevada a Certificate of Amendment
to its Articles of Incorporation, as amended, to increase the number of authorized shares to fifty billion ten million (50,010,000,000)
shares, of which fifty billion (50,000,000,000) shares, with a par value of $0.0001 per share are designated as common stock and of which
ten million (10,000,000) shares, with a par value of $0.0001 per share, are designated as preferred stock.
Effective July 12, 2021, pursuant to the approval
by the Board of Directors, the Company filed with the Secretary of State of Nevada a Certificate of Change to the Articles of Incorporation,
to effect a 1-for-1,500 reverse stock split
of the Company’s common stock. The reverse stock split decreased the number of authorized
shares of common stock from fifty billion (50,000,000,000) shares to thirty-three million three hundred thirty-three thousand three hundred
thirty-four (33,333,334) shares, with a par value of $0.0001 per share. Any fractional shares resulting from the reverse stock split were rounded
up to the next whole share. Except as otherwise indicated, all share and per share information
in the accompanying consolidated financial statements and related footnotes gives effect to the reverse stock split of the Company’s common stock.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include
the accounts of the Company and its wholly owned subsidiaries. The Company operates independently and through four wholly owned subsidiaries:
(i) Bio Blue Bird; (ii) PharmaCyte Biotech Europe Limited; (iii) PharmaCyte Biotech Australia Pty. Ltd.; and (iv) Viridis Biotech, Inc.
and are prepared in accordance with U.S. GAAP and the rules and regulations of the Commission. Upon consolidation, intercompany balances
and transactions are eliminated. The Company’s 14.5% investment in SG Austria is presented on the cost method of accounting.
Use of Estimates in the Preparation of Financial
Statements
The preparation of financial statements in accordance
with U.S. GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities known to exist as of the date the financial statements are published and the reported amounts of revenues
and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation
of the Company’s consolidated financial statements; accordingly, it is possible that the actual results could differ from these
estimates and assumptions, which could have a material effect on the reported amounts of the Company’s consolidated financial position
and results of operations. The severity, magnitude and duration, as well as the economic consequences of the COVID-19 pandemic, are uncertain,
rapidly changing and difficult to predict. Therefore, the Company’s accounting estimates and assumptions may change over time in
response to the COVID-19 pandemic and may change materially in future periods.
Intangible Assets
The Financial Accounting Standards Board (“FASB”)
standard on goodwill and other intangible assets prescribes a two-step process for impairment testing of goodwill and indefinite-lived
intangibles, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment,
while the second step, if necessary, measures the impairment. The Company has elected to perform its annual analysis at the end of its
reporting year.
The Company’s intangible assets are licensing
agreements related to the Cell-in-a-Box® technology for $1,549,427 and diabetes license for $2,000,000 for an aggregate
total of $3,549,427.
These intangible assets have an indefinite life;
therefore, they are not amortizable.
The Company concluded that there was no impairment
of the carrying value of the intangible assets for the three months ended July 31, 2021 and 2020, respectively.
Impairment of Long-Lived Assets
The Company evaluates long-lived assets for
impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable. If
the estimated future cash flows (undiscounted and without interest charges) from the use of an asset are less than carrying value, a
write-down would be recorded to reduce the related asset to its estimated fair value. No impairment was identified or recorded for
three months ended July 31, 2021 and 2020.
Fair Value of Financial Instruments
For certain of the Company’s non-derivative
financial instruments, including cash, accounts payable and accrued expenses, the carrying amount approximates fair value due to the short-term
maturities of these instruments.
Accounting Standards Codification ("ASC")
Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held
by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy
for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported
in the consolidated balance sheets for current liabilities qualify as financial instruments and are a reasonable estimate of their fair
values because of the short period between the origination of such instruments and their expected realization and their current market
rate of interest. The three levels of valuation hierarchy are defined as follows:
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Level 1. Observable inputs such as quoted prices in active markets;
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Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
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Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
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Income Taxes
Deferred taxes are calculated using the liability
method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more-likely-than-not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
A valuation allowance is provided for deferred
income tax assets when, in management’s judgment, based upon currently available information and other factors, it is more likely
than not that all or a portion of such deferred income tax assets will not be realized. The determination of the need for a valuation
allowance is based on an on-going evaluation of current information including, among other things, historical operating results, estimates
of future earnings in different taxing jurisdictions and the expected timing of the reversals of temporary differences. The Company believes
the determination to record a valuation allowance to reduce a deferred income tax asset is a significant accounting estimate because it
is based on, among other things, an estimate of future taxable income in the U.S. and certain other jurisdictions, which is susceptible
to change and may or may not occur, and because the impact of adjusting a valuation allowance may be material. In determining when to
release the valuation allowance established against the Company’s net deferred income tax assets, the Company considers all available
evidence, both positive and negative. Consistent with the Company’s policy, and because of the Company’s history of operating
losses, the Company does not currently recognize the benefit of all its deferred tax assets, including tax loss carry forwards, which
may be used to offset future taxable income. The Company continually assesses its ability to generate sufficient taxable income during
future periods in which deferred tax assets may be realized. When the Company believes it is more likely than not that it will recover
its deferred tax assets, the Company will reverse the valuation allowance as an income tax benefit in the statements of operations.
The U.S. GAAP method of accounting for uncertain
tax positions utilizes a two-step approach to evaluate tax positions. Step one, recognition, requires evaluation of the tax position to
determine if based solely on technical merits it is more likely than not to be sustained upon examination. Step two, measurement, is addressed
only if a position is more likely than not to be sustained. In step two, the tax benefit is measured as the largest amount of benefit,
determined on a cumulative probability basis, which is more likely than not to be realized upon ultimate settlement with tax authorities.
If a position does not meet the more likely than not threshold for recognition in step one, no benefit is recorded until the first subsequent
period in which the more likely than not standard is met, the issue is resolved with the taxing authorities or the statute of limitations
expires. Positions previously recognized are derecognized when the Company subsequently determines the position no longer is more likely
than not to be sustained. Evaluation of tax positions, their technical merits and measurements using cumulative probability are highly
subjective management estimates. Actual results could differ materially from these estimates.
On March 27, 2020, Congress enacted the Coronavirus
Aid, Relief and Economic Security ("CARES") Act to provide certain relief as a result of the Coronavirus Disease 2019 outbreak.
The Company maintains a full valuation allowance on its U.S. net deferred tax assets. Deferred tax asset remeasurement (tax expense) was
offset by a net decrease in valuation allowance, that resulted in no impact on the Company's income tax expense. Therefore, the Company
does not expect the provisions in the CARES Act will impact the Company’s consolidated financial statements.
On March 11, 2021, Congress enacted the American
Rescue Plan Act of 2021. The Company does not expect the provisions of this act will impact the Company’s consolidated financial
statements.
Research and Development
Research and Development (“R&D”)
expenses consist of costs incurred for direct and overhead-related research expenses and are expensed as incurred. Costs to acquire technologies,
including licenses, that are utilized in research and development and that have no alternative future use are expensed when incurred.
Technology developed for use in the Company’s product candidates is expensed as incurred until technological feasibility has been
established.
R&D expenses for the three months ended
July 31, 2021 and 2020 were $143,613 and $270,574, respectively.
Stock-Based Compensation
The Company recognizes stock-based compensation
expense for only those awards ultimately expected to vest on a straight-line basis over the requisite service period of the award. The
Company estimates the fair value of stock options using a Black-Scholes-Merton valuation model. This model requires the input of highly
subjective assumptions, including the option's expected term and stock price volatility. In addition, judgment is also required in estimating
the number of stock-based awards that are expected to be forfeited. Forfeitures are estimated based on historical experience at the time
of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The assumptions used in calculating
the fair value of share-based payment awards represent management's best estimates, but these estimates involve inherent uncertainties
and the application of management's judgment. Thus, if factors change and the Company uses different assumptions, the stock-based compensation
expense could be materially different in the future.
Concentration of Credit Risk
The Company has no significant off-balance-sheet
concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company
maintains most of its cash balance at a financial institution located in California. Accounts at this institution are insured by the Federal
Deposit Insurance Corporation up to $250,000. Uninsured balances aggregated approximately $679,000 at July 31, 2021 and $1,921,000 at
April 30, 2021. The Company has not experienced any losses in such accounts. Management believes it is not exposed to any significant
credit risk on cash. See Note 13 – Subsequent Events.
Foreign Currency Translation
The Company translates the financial statements
of its foreign subsidiaries from the local (functional) currencies to U.S. dollars in accordance with FASB ASC 830, Foreign Currency
Matters. All assets and liabilities of the Company’s foreign subsidiaries are translated at year-end exchange rates, while revenue
and expenses are translated at average exchange rates prevailing during the year. Adjustments for foreign currency translation fluctuations
are excluded from net loss and are included in other comprehensive income (loss). Gains and losses on short-term intercompany foreign
currency transactions are recognized as incurred.
Liquidity
As of July 31, 2021, the Company has an
accumulated deficit of $108,434,913
and incurred a net loss for the period ended July 31, 2021 of $1,025,418.
The Company requires substantial additional capital to finance its planned business operations and expects to incur operating losses
in future periods due to the expenses related to the Company’s core businesses. The Company has not realized any revenue since
it commenced doing business in the biotechnology sector, and there can be no assurance that it will be successful in generating
revenues in the future in this sector. The Company has spent and expects to continue to spend, a substantial amount of funds in
connection with implementing its business strategy.
On August 9, 2021, the Company entered into an
underwriting agreement to offer and sell shares of common stock, pre-funded warrants to purchase common stock and warrants to purchase
common stock in a public offering (“First Offering”). The gross proceeds of the First Offering were $15 million, before deduction
of underwriting discounts, commissions and estimated offering expenses. See Note 13- Subsequent Events.
On August 19, 2021, the Company entered into a
securities purchase agreement (“Purchase Agreement”) with certain institutional investors (“Purchasers”) pursuant
to which the Company agreed to sell in a registered direct offering (“Registered Direct Offering”), shares of the Company’s
common stock and pre-funded warrants to purchase shares of common stock. Further, pursuant to the Purchase Agreement, in a concurrent
private placement (together with the Registered Direct Offering, “Second Offering”), the Company also agreed to issue to the
Purchasers unregistered warrants (“Series A Warrants”) to purchase shares of common stock. The Company received gross proceeds
from the Second Offering, before deducting placement agent fees and other estimated offering expenses payable by the Company, of approximately
$70 million. See Note 13- Subsequent Events.
The Company believes the cash on hand at July
31, 2021 and the proceeds from the First and Second offerings and warrant exercises provide sufficient capital to meet the Company’s
capital requirements through at least one year from the issuance date of these condensed consolidated financial statements.
As of September 13, 2021, the Company had cash
on hand of approximately $88 million.
Recent Accounting Pronouncements
ASU No. 2016-13, Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), was issued in June 2016. Under
ASU 2016-13, existing guidance on reporting credit losses for trade and other receivables and available for sale debt securities will
be replaced with a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances
for losses. The Company’s adoption of ASU 2016-13 during the quarter ended July 31, 2020 did not result in an impact on the Company’s
condensed consolidated financial statements. As part of the Company’s continuing assessment of the adequacy of ASU 2016-13, there
are no factors to be considered at this time since the Company does not have an allowance for credit losses.
ASU No. 2019-12, Simplifying the Accounting
for Income Taxes (“ASU 2019-12”), was issued in December 2019. Under ASU 2019-12, the accounting for income taxes is simplified
by eliminating certain exceptions and implementing additional requirements which result in a more consistent application of ASC 740. The
Company’s adoption of ASU 2019-12 during the quarter ended July 31, 2021 did not result in an impact on the Company’s condensed
consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference
Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) and also
issued subsequent amendments to the initial guidance (collectively, “Topic 848”). Topic 848 is effective for all entities
as of March 12, 2020 through December 31, 2022 and provides optional guidance for contract modifications and certain hedging relationships
associated with the transition from reference rates that are expected to be discontinued. The Company will adopt Topic 848 when relevant
contracts are modified upon transition to alternative reference rates. The Company does not expect the adoption of Topic 848 to have a
material impact on the Company’s condensed consolidated financial statements.
NOTE 3 – ACCRUED EXPENSES
Accrued expenses at July 31, 2021 and April 30,
2021 are summarized below:
Accrued expenses
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July 31, 2021
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April 30, 2021
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Payroll related costs
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$
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509,793
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$
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490,904
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Director and Officer insurance
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12,786
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50,805
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Other
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7,620
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10,808
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Total
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$
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530,199
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$
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552,517
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The Company financed the Director and Officer
insurance policy. The term of the policy is from March 8, 2021 through September 8, 2021. The financing agreement has an interest rate
of 4.85% per annum and requires eight monthly payments of $12,829. The unpaid balances as of July 31, 2021 and April 30, 2021 of $12,786
and $50,805, respectively, are included in accrued expenses.
NOTE 4 – SMALL BUSINESS ADMINISTRATION
– PAYCHECK PROTECTION PROGRAM
On March 27, 2020, the Coronavirus Aid, Relief,
and Economic Security Act (the “CARES Act”) was enacted to provide financial aid to family and businesses impacted by the
COVID-19 pandemic. The Company participated in the CARES Act, and on April 15, 2020, the Company entered into a note payable with
a bank under the Small Business Administration (“SBA”), Paycheck Protection Program (“PPP”) in the amount of $75,200.
This PPP loan matured on April 15, 2022 with a fixed interest rate of 1% per annum with interest deferred for six months. The PPP loan
had an initial term of two years, was unsecured and guaranteed by the SBA. Under the terms of the PPP loan, the Company may apply for
forgiveness of the amount due on the PPP loan. The Company used the proceeds from the PPP loan for qualifying expenses as defined in the
PPP. The Company applied for forgiveness of the PPP loan in accordance with the terms of the CARES Act. The SBA issued a notice of PPP
loan forgiveness with an effective date of April 28, 2021, forgiving the entire principal of $75,200 and the accrued interest of $779.
The Company recognized the forgiveness of the PPP loan and accrued interest as Gain on forgiveness of Paycheck Protection Program loan
in the fiscal year ended April 30, 2021.
NOTE 5 – COMMON STOCK TRANSACTIONS
A summary of the Company’s
compensatory stock activity and related weighted average grant date fair value information for the three months ended July 31, 2021
and 2020 is as follows:
During the year ended April 30, 2020, four
non-employee members of the Board were issued 1,333 shares of common stock pursuant to their respective Director Letter Agreement
(“DLAs”) and relating to their services for the prior year. The shares were fully vested upon issuance. The Company
recorded a non-cash expense of $0 and $7,356 for the three months ended July 31, 2021 and 2020, respectively. There were zero
0 unvested shares of common stock remaining related to these DLAs as of July 31, 2021 and 2020, respectively.
In January 2020, the Company awarded 4,400
shares of common stock to the executive officers of the Company as part of their compensation agreements for 2020. These shares vest
monthly over a twelve-month period and are subject to them continuing service under the agreements. During the three months ended
July 31, 2021 and 2020, the Company recorded a non-cash compensation expense in the amount of $0 and $67,320, respectively. There
were zero 0 and 1,833 unvested shares as of July 31, 2021 and 2020, respectively.
During the
three months ended July 31, 2020, three non-employee members of the Board were issued 1,000
shares of common stock pursuant to their DLAs in respect of their service during that year. The shares were fully vested upon
issuance. The Company recorded a non-cash expense of $3,371
and $7,029
for the three months ended July 31, 2021 and 2020, respectively. There were zero 0 unvested shares remaining related to such DLAs as
of July 31, 2021.
During the three months ended July 31, 2020,
four consultants were issued 667
shares of common stock pursuant to their consulting agreements with the Company. The shares vest monthly over a twelve-month period
and are subject to the consultants continuing to provide services under their consulting agreements. The Company recorded a non-cash
consulting expense in the amount of $0
and $4,199
for the three months ended July 31, 2021 and 2020, respectively. There were zero 0 and 500 unvested shares remaining related to
these consulting agreements as of July 31, 2021 and 2020, respectively.
In September 2020, a consultant was issued 333 shares
of common stock in respect of his services as the Chairman of the Company’s Medical and Scientific Advisory Board with vesting
subject to the consultant continuing to provide services to the Company. The Company recorded a non-cash consulting expense in the
amount of $2,125
and $0
for the three months ended July 31, 2021 and 2020, respectively. There were zero 0 unvested shares remaining related to his
compensation arrangement as of July 31, 2021.
In January 2021, the Company awarded 4,400
shares of common stock to the executive officers of the Company as part of their compensation agreements for 2021. These shares vest
monthly over a twelve-month period and are subject to the executive officers continuing to provide service under their compensation
agreements. During the three months ended July 31, 2021, the Company recorded a non-cash compensation expense in the amount of
$11,055. There were 1,833 unvested shares as of July 31, 2021.
During the three months ended July 31, 2021,
three non-employee members of the Board were issued 1,002 shares of common stock pursuant to their DLAs in respect of their service
during that year. The shares were fully vested upon issuance. The Company recorded a non-cash expense of $4,885 for the three months
ended July 31, 2021. There were zero 0 unvested shares remaining related to such DLAs as of July 31, 2021.
During the three months ended July 31, 2021,
two consultants were issued 334 shares of common stock pursuant to their consulting agreements with the Company. The shares vest
monthly over a twelve-month period and are subject to the consultants continuing to provide services under their consulting
agreements. The Company recorded a non-cash consulting expense in the amount of $1,620 for the three months ended July 31, 2021.
There were 251 unvested shares remaining related to these consulting agreements as of July 31, 2021.
All shares were issued without registration under
the Securities Act in reliance upon the exemption afforded by Section 4(a)(2) of the Securities Act.
On September 28, 2017, a S-3 registration
statement was declared effective by the Commission for the Company to sell from time to time in one or more public offerings of up
to $50 million of its securities on a “shelf offering” basis. During the three months ended July 31, 2021 and 2020, the
Company sold and issued approximately 0
and 156,000 shares
of common stock, respectively, at prices ranging from approximately $15 to $45 per share. Net of underwriting discounts, legal,
accounting and other offering expenses, the Company received proceeds of approximately $0
and $1.9
million from the sale of these shares for the three months ended July 31, 2021 and 2020, respectively. On April 9, 2021, the Third
S-3 (“Third S-3”) was declared effective by the Commission for a public offering of up to $100 million on a “shelf
offering” basis.
A summary of the Company’s non-vested restricted
stock activity and related weighted average grant date fair value information for the three months ended July 31, 2021 are as follows:
Schedule of non-vested restricted stock activity
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|
|
|
Shares
|
|
|
Weighted
Average
Grant Date
Fair Value
|
|
|
|
|
|
|
|
|
Unvested, at April 30, 2021
|
|
|
2,933
|
|
|
|
10.05
|
|
Granted
|
|
|
1,336
|
|
|
|
23.96
|
|
Vested
|
|
|
(2,185
|
)
|
|
|
16.66
|
|
Forfeited
|
|
|
–
|
|
|
|
–
|
|
|
|
|
|
|
|
|
|
|
Unvested, at July 31, 2021
|
|
|
2,084
|
|
|
|
12.03
|
|
NOTE 6 – STOCK OPTIONS AND WARRANTS
Stock Options
As of July 31, 2021, the Company had 42,333 outstanding
stock options to its directors and officers (collectively, “Employee Options”) and consultants (“Non-Employee Options”).
During the three months ended July 31, 2021
and 2020, the Company granted 1,000 and 1,000 Employee Options, respectively.
The fair value of the Employee Options at the
date of grant was estimated using the Black-Scholes-Merton option-pricing model, based on the following weighted average assumptions:
Assumptions
|
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
|
|
2021
|
|
|
2020
|
|
Risk-free interest rate
|
|
|
0.87%
|
|
|
|
0.3%
|
|
Expected volatility
|
|
|
113%
|
|
|
|
91%
|
|
Expected lives (years)
|
|
|
2.5
|
|
|
|
2.5
|
|
Expected dividend yield
|
|
|
0.00%
|
|
|
|
0.00%
|
|
The Company’s computation of expected
volatility is based on the historical daily volatility of its publicly traded stock. For stock option grants issued during the three
months ended July 31, 2021 and 2020, the Company used a calculated volatility for each grant. The Company lacks adequate information
about the exercise behavior now and has determined the expected term assumption under the simplified method provided for under ASC
718, which averages the contractual term of the Company’s stock options of five years with the average vesting term of two and
one-half years for an average of three years. The dividend yield assumption of zero is based upon the fact the Company has never
paid cash dividends and presently has no intention of paying cash dividends. The risk-free interest rate used for each grant is
equal to the U.S. Treasury rates in effect at the time of the grant for instruments with a similar expected life.
During the three months ended July 31, 2021
and 2020, the Company granted no Non-Employee Options.
A summary of the Company’s stock option
activity and related information for the three months ended July 31, 2021 are shown below:
Stock option activity
|
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted
Average
Grant Date
Fair Value
per Share
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, April 30, 2021
|
|
|
41,333
|
|
|
$
|
79.97
|
|
|
$
|
79.97
|
|
Issued
|
|
|
1,000
|
|
|
|
23.10
|
|
|
|
23.10
|
|
Forfeited
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Exercised
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Outstanding, July 31, 2021
|
|
|
42,333
|
|
|
$
|
78.63
|
|
|
$
|
78.63
|
|
Exercisable, July 31, 2021
|
|
|
39,833
|
|
|
$
|
82.93
|
|
|
$
|
–
|
|
Vested and expected to vest
|
|
|
42,333
|
|
|
$
|
78.63
|
|
|
$
|
–
|
|
A summary of the activity for unvested stock
options during the years ended April 30, 2021 and 2020 is as follows:
Unvested stock option activity
|
|
|
|
|
|
|
|
|
Options
|
|
|
Weighted
Average
Grant Date
Fair Value
per Share
|
|
|
|
|
|
|
|
|
Unvested, April 30, 2021
|
|
|
4,000
|
|
|
$
|
10.05
|
|
Granted
|
|
|
1,000
|
|
|
|
23.10
|
|
Vested
|
|
|
(2,500
|
)
|
|
|
–
|
|
Forfeited
|
|
|
–
|
|
|
|
–
|
|
Unvested, July 31, 2021
|
|
|
2,500
|
|
|
$
|
10.05
|
|
The Company recorded $24,144 and $72,317 of
stock-based compensation related to the issuance of Employee Options to certain officers and directors in exchange for services
during the three months ended July 31, 2021 and 2020, respectively. At July 31, 2021, there remained $15,976 of unrecognized
compensation expense related to unvested Employee Options granted to officers and directors, to be recognized as expense over a
weighted-average period of the remaining five months in the calendar year. The unvested options vest at 500 shares per month and
are expected to be fully vested on December 31, 2021.
The Company recorded no stock-based
compensation related to the issuance of Non-Employee Options in exchange for services during the three months ended July 31, 2021
and 2020, respectively.
The following table summarizes the outstanding
stock options by exercise price at July 31, 2021:
Schedule of options by exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise Price
|
|
|
Number of
Options
Outstanding
|
|
|
Weighted
Average
Remaining
Contractual Life
(Years) of
Outstanding
Options
|
|
|
Weighted
Average
Exercisable
Price Per Share
|
|
|
Number of
Options
Exercisable
|
|
|
Weighted Average
Exercise Price
of Exercisable
Options
|
|
$
|
156.00
|
|
|
|
6,967
|
|
|
|
0.39
|
|
|
$
|
156.00
|
|
|
|
6,967
|
|
|
$
|
156.00
|
|
$
|
87.00
|
|
|
|
1,634
|
|
|
|
0.69
|
|
|
$
|
87.00
|
|
|
|
1,634
|
|
|
$
|
87.00
|
|
$
|
110.10
|
|
|
|
800
|
|
|
|
0.75
|
|
|
$
|
110.10
|
|
|
|
800
|
|
|
$
|
110.10
|
|
$
|
109.35
|
|
|
|
1,200
|
|
|
|
0.94
|
|
|
$
|
109.35
|
|
|
|
1,200
|
|
|
$
|
109.35
|
|
$
|
133.50
|
|
|
|
800
|
|
|
|
0.96
|
|
|
$
|
133.50
|
|
|
|
800
|
|
|
$
|
133.50
|
|
$
|
82.95
|
|
|
|
333
|
|
|
|
0.60
|
|
|
$
|
82.95
|
|
|
|
333
|
|
|
$
|
82.95
|
|
$
|
83.70
|
|
|
|
6,000
|
|
|
|
0.85
|
|
|
$
|
83.70
|
|
|
|
6,000
|
|
|
$
|
83.70
|
|
$
|
80.10
|
|
|
|
800
|
|
|
|
2.10
|
|
|
$
|
80.10
|
|
|
|
800
|
|
|
$
|
80.10
|
|
$
|
80.85
|
|
|
|
667
|
|
|
|
0.88
|
|
|
$
|
80.85
|
|
|
|
667
|
|
|
$
|
80.85
|
|
$
|
102.45
|
|
|
|
333
|
|
|
|
0.96
|
|
|
$
|
102.45
|
|
|
|
333
|
|
|
$
|
102.45
|
|
$
|
97.35
|
|
|
|
333
|
|
|
|
1.10
|
|
|
$
|
97.35
|
|
|
|
333
|
|
|
$
|
97.35
|
|
$
|
74.25
|
|
|
|
6,000
|
|
|
|
1.58
|
|
|
$
|
74.25
|
|
|
|
6,000
|
|
|
$
|
74.25
|
|
$
|
57.00
|
|
|
|
800
|
|
|
|
3.15
|
|
|
$
|
57.00
|
|
|
|
800
|
|
|
$
|
57.00
|
|
$
|
60.60
|
|
|
|
667
|
|
|
|
1.38
|
|
|
$
|
60.60
|
|
|
|
667
|
|
|
$
|
60.60
|
|
$
|
55.50
|
|
|
|
333
|
|
|
|
1.46
|
|
|
$
|
55.50
|
|
|
|
333
|
|
|
$
|
55.50
|
|
$
|
51.00
|
|
|
|
333
|
|
|
|
1.6
|
|
|
$
|
51.00
|
|
|
|
333
|
|
|
$
|
51.00
|
|
$
|
61.20
|
|
|
|
6,000
|
|
|
|
2.06
|
|
|
$
|
61.20
|
|
|
|
6,000
|
|
|
$
|
61.20
|
|
$
|
36.00
|
|
|
|
667
|
|
|
|
1.88
|
|
|
$
|
36.00
|
|
|
|
667
|
|
|
$
|
36.00
|
|
$
|
37.05
|
|
|
|
333
|
|
|
|
1.96
|
|
|
$
|
37.05
|
|
|
|
333
|
|
|
$
|
37.05
|
|
$
|
15.75
|
|
|
|
333
|
|
|
|
2.10
|
|
|
$
|
15.70
|
|
|
|
333
|
|
|
$
|
15.70
|
|
$
|
10.05
|
|
|
|
6,000
|
|
|
|
2.65
|
|
|
$
|
10.05
|
|
|
|
3,500
|
|
|
$
|
10.05
|
|
$
|
26.55
|
|
|
|
667
|
|
|
|
2.38
|
|
|
$
|
26.55
|
|
|
|
667
|
|
|
$
|
26.55
|
|
$
|
16.20
|
|
|
|
333
|
|
|
|
2.46
|
|
|
$
|
16.20
|
|
|
|
333
|
|
|
$
|
16.20
|
|
|
Total
|
|
|
|
42,333
|
|
|
|
1.44
|
|
|
$
|
78.63
|
|
|
|
39,833
|
|
|
$
|
82.93
|
|
The aggregate intrinsic value of outstanding options
as of July 31, 2021 was $6,860. This represents options whose exercise price was less than the closing fair market value of the Company’s
common stock on July 31, 2021 of approximately $12.01 per share.
Warrants
The warrants issued by the Company are equity-classified.
The fair value of the warrants was recorded as additional paid-in-capital, and no further adjustments are made.
For stock warrants paid in consideration of services
rendered by non-employees, the Company recognizes consulting expense in accordance with the requirements of ASC 505.
A summary of the Company’s warrant activity
and related information for the three months ended July 31, 2021 are shown below:
Warrant activity
|
|
|
|
|
|
|
|
|
Warrants
|
|
|
Weighted
Average
Exercise Price
Per Share
|
|
Outstanding, April 30, 2021
|
|
|
2,981
|
|
|
$
|
58.70
|
|
Issued
|
|
|
–
|
|
|
|
–
|
|
Exercised
|
|
|
–
|
|
|
|
–
|
|
Expired
|
|
|
–
|
|
|
|
–
|
|
Outstanding, July 31, 2021
|
|
|
2,981
|
|
|
|
–
|
|
Exercisable, July 31, 2021
|
|
|
2,981
|
|
|
$
|
58.70
|
|
The following table summarizes additional information
concerning warrants outstanding and exercisable at July 31, 2021:
Schedule of warrants outstanding and exercisable
|
|
|
|
|
|
|
|
|
|
Exercise Prices
|
|
Number of
Warrant Shares
Exercisable at
July 31, 2021
|
|
|
Weighted
Average
Remaining
Contractual
Life Years
|
|
|
Weighted
Average
Exercise Price
Per Share
|
|
|
|
|
|
|
|
|
|
|
|
$97.50
|
|
|
513
|
|
|
|
0.39
|
|
|
|
|
|
$86.25
|
|
|
580
|
|
|
|
0.68
|
|
|
|
|
|
$37.50
|
|
|
1,333
|
|
|
|
0.99
|
|
|
|
|
|
$45.00
|
|
|
555
|
|
|
|
0.81
|
|
|
|
|
|
|
|
|
2,981
|
|
|
|
0.79
|
|
|
$
|
58.70
|
|
NOTE 7 – LEGAL PROCEEDINGS
There is no material litigation currently pending
against the Company or any of its subsidiaries or to which any of the subsidiaries’ property is subject. To the Company’s
knowledge, there is no material litigation against any of its officers or directors in their capacity as such, and no such litigation
is contemplated by any governmental authorities.
NOTE 8 – RELATED PARTY TRANSACTIONS
The Company had the following related party transactions
during the three months ended July 31, 2021 and 2020, respectively.
The Company owns 14.5% of the equity in SG
Austria Pte. Ltd. (“SG Austria”) and is reported on the cost method of accounting. SG Austria has two subsidiaries: (i)
Austrianova Singapore Pte. Ltd. (“Austrianova”); and (ii) Austrianova Thailand Co., Ltd. The Company purchased products
and services from these companies in the approximate amounts of $58,000 and $64,000 in the three months ended July 31, 2021 and
2020, respectively.
In April 2014, the Company entered a
Consulting Agreement with Vin-de-Bona Trading Company, Pte. Ltd. (“Vin-de Bona”) pursuant to which it agreed to provide
professional consulting services to the Company. Vin-de-Bona is owned by Prof. Walter H. Günzburg (“Prof.
Günzburg”) and Dr. Brian Salmons (“Dr. Salmons”), both of whom are involved in numerous aspects of the
Company’s scientific endeavors relating to cancer and diabetes (Prof. Gunzburg is the Chairman of Austrianova, and Dr. Salmons
is the Chief Executive Officer and President of Austrianova). The term of the agreement is for 12 months, automatically renewable
for successive 12-month terms. After the initial term, either party can terminate the agreement by giving the other party 30
days’ written notice before the effective date of termination. The agreement has been automatically renewed annually. The
amounts incurred for the three months ended July 31, 2021 and 2020 were approximately $32,000 and $23,000, respectively. In
addition, during the three months ended July 31, 2021 and 2020 the Company issued 0 and 167 shares of common stock, respectively, to
Dr. Salmons. The Company recorded a noncash consulting expense of approximately $0 and $8,000 relating to these share issuances for
the three months ended July 31, 2021 and 2020, respectively.
NOTE 9 – COMMITMENTS AND CONTINGENCIES
The Company acquires assets still in development
and enters R&D arrangements with third parties that often require milestone and royalty payments to the third-party contingent upon
the occurrence of certain future events linked to the success of the asset in development. Milestone payments may be required, contingent
upon the successful achievement of an important point in the development lifecycle of the pharmaceutical product (e.g., approval of the
product for marketing by a regulatory agency). If required by the license agreements, the Company may have to make royalty payments based
upon a percentage of the sales of the pharmaceutical products if regulatory approval for marketing is obtained.
Office Lease
In May 2019, the Company entered into a lease
for its office space in California for a one-year lease for the leased premises. The term of the lease expired on August 31, 2020.
On May 28, 2020, the Company entered into an additional
six-month lease of the office space, commencing on September 1, 2020. The term of the new lease expired on February 28, 2021.
On May 24, 2021, the Company entered into an additional
six-month lease of the office space, commencing on September 1, 2021 which expires on February 28, 2022.
Rent expenses for the office for the three
months ended July 31, 2021 and 2020 were $3,738 and $7,152, respectively.
The following table summarizes the Company’s
aggregate future minimum lease payments required under the operating lease as of:
Schedule of future minimum rental payments for operating leases
|
|
|
|
Period Ending April 30, 2022
|
|
Amount
|
|
|
|
$
|
8,673
|
|
|
|
$
|
8,673
|
|
Compensation Agreements
The Company entered into executive compensation
agreements with its three executive officers in March 2015, each of which was amended in December 2015 and March 2017. Each agreement
has a term of two years with annual extensions thereafter unless the Company or the officer provides written notification of termination
at least ninety days prior to the end of the term or subsequent extensions. The Company also entered a compensation agreement with a Board
member in April 2015 which continued in effect until amended in May 2017.
In May 2017, the Company amended the compensation
agreement with the Board members and the terms continue in effect until a member is no longer on the Board.
The Company has four independent directors. Each
director receives the same compensation: (i) $12,500 in cash for each calendar quarter of service on the Board; (ii) 333 fully paid, non-assessable
shares of the Company’s restricted common stock (“Shares”) annually; and (iii) a five-year option to purchase 333 Shares
annually at an exercise price equal to the fair market value of the Shares on the date of grant. The Shares and the option Shares fully
vest on the date of the grants.
NOTE 10 - INCOME TAXES
The Company had no income tax expense for
the three months ended July 31, 2021 and 2020, respectively. During the three months ended July 31, 2021 and 2020, the Company had a
net operating loss (“NOL”) for each period which generated deferred tax assets for NOL carryforwards. The Company
provided valuation allowances against the net deferred tax assets including the deferred tax assets for NOL carryforwards. Valuation
allowances provided for the net deferred tax asset increased by approximately $295,000 and $98,000 for the three months ended July
31, 2021 and 2020, respectively.
There was no material difference between the effective
tax rate and the projected blended statutory tax rate for the three months ended July 31, 2021 and 2020.
Current tax laws limit the amount of loss available
to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. Based on the assessment of all available evidence including, but not limited to, the Company’s limited
operating history in its core business and lack of profitability, uncertainties of the commercial viability of its technology, the impact
of government regulations and healthcare reform initiatives and other risks normally associated with biotechnology companies, the Company
has concluded that is more-likely-than-not that these operating loss carryforwards will not be realized. Accordingly, 100% of the deferred
tax valuation allowance has been recorded against these assets at July 31, 2021.
The Company’s policy is to recognize
any interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of the three months ended
July 31, 2021 and 2020, the Company had no accrued interest or penalties related to uncertain tax positions.
See Note 10 of Notes to the Consolidated Financial
Statements included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2021 for additional information regarding
income taxes.
NOTE 11 – EARNINGS PER SHARE
Basic earnings (loss) per share is computed by
dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Diluted earnings
per share is computed by dividing net income by the weighted average number of shares and potentially dilutive shares of common stock
outstanding during the period increased to include the number of additional shares of common stock that would be outstanding if the potentially
dilutive securities had been issued. Potential shares of common stock outstanding principally include stock options and warrants. During
the periods ended July 31, 2021 and 2020, the Company incurred losses. Accordingly, the effect of any common stock equivalent would be
anti-dilutive during those periods and are not included in the calculation of diluted weighted average number of shares outstanding.
The table below sets forth the basic loss per
share calculations:
Earnings per share calculations
|
|
|
|
|
|
|
|
|
Three months Ended July 31,
|
|
|
|
2021
|
|
|
2020
|
|
Net loss
|
|
$
|
(1,025,418
|
)
|
|
$
|
(883,944
|
)
|
Basic weighted average number of shares outstanding
|
|
|
1,591,306
|
|
|
|
1,119,048
|
|
Diluted weighted average number of shares outstanding
|
|
|
1,591,306
|
|
|
|
1,119,048
|
|
Basic and diluted loss per share
|
|
$
|
(0.64
|
)
|
|
$
|
(0.79
|
)
|
The table below sets forth these potentially
dilutive securities:
Schedule of potentially dilutive securities
|
|
|
|
|
|
|
|
|
Three months Ended July 31,
|
|
|
|
2021
|
|
|
2020
|
|
Excluded options
|
|
|
42,333
|
|
|
|
45,800
|
|
Excluded warrants
|
|
|
2,981
|
|
|
|
39,549
|
|
Total excluded options and warrants
|
|
|
45,314
|
|
|
|
85,349
|
|
NOTE 12 – PREFERRED STOCK
The Company has authorized 10,000,000 shares of
preferred stock, with a par value of $0.0001, of which one share has been designated as "Series A Preferred Stock". The one
share of Series A Preferred Stock was issued on October 30, 2019 and repurchased by the Company on December 3, 2019. As of July 31, 2021,
there are no shares of preferred stock issued and outstanding.
The description of the Series A Preferred Stock
below is qualified in its entirety by reference to the Company’s Articles of Incorporation, as amended.
The Series A Preferred Stock has the following
features:
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There is one share of preferred stock designated as Series A Preferred Stock;
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The Series A Preferred Stock has a number of votes at any time equal to the number of votes then held by all other shareholders of the Company having a right to vote on any matter plus one. The Certificate of Designations that designated the terms of the Series A Preferred Stock cannot be amended without the consent of the holder of the Series A Preferred Stock;
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The Company may redeem the Series A Preferred Stock at any time for a redemption price of $1.00 paid to the holder of the share of Series A Preferred Stock; and
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The Series A Preferred Stock has no rights of transfer, conversion, dividends, preferences upon liquidation or participation in any distributions to shareholders.
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NOTE 13 – SUBSEQUENT EVENTS
Nasdaq Listing
Our common stock began trading on the Nasdaq Capital
Market on August 10, 2021, under the symbol “PMCB.” Prior to that, our common stock was quoted on the OTCQB Market under the
symbol “PMCB,” and following the reverse stock split of our common stock effective as of July 12, 2021, and until August 6,
2021, the OTCQB Market Symbol for our common stock had temporarily been PMCBD.
August 2021 Underwritten Offering
On August 9, 2021, the Company entered into an
underwriting agreement with H.C. Wainwright & Co. LLC (“Wainwright”) with respect to a public offering of 2,630,385 shares
(“Shares”) of common stock, with a par value of $0.0001, 899,027 Pre-funded warrants (“Pre-funded Warrants”) to
purchase common stock and common stock warrants (“Common Warrants”) to purchase 3,529,412 shares of common stock. The total
gross proceeds of the offering before deduction of underwriting discounts, commissions and estimated offering expenses payable by the
Company was approximately $15 million pursuant to the Third S-3. Each share of common stock (or pre-funded warrant in lieu thereof) was
sold together with one warrant to purchase one share of common stock at an effective combined public offering price of $4.25 per share
of common stock and accompanying warrant, less underwriting discounts and commissions. The Common Warrants have an exercise price of $4.25
per share, are exercisable immediately, and will expire five years following the date of issuance. The Pre-funded Warrants have an exercise
price of $0.001 per share, are exercisable immediately, and do not have an expiration date. In addition, the Company granted the Underwriter
a 30-day option to purchase up to 529,411 Shares and/or Common Warrants at the public offering price, less underwriting discounts and
commissions, which the underwriter has partially exercised for Common Warrants to purchase an aggregate of up to 499,116 shares of common
stock.
August 2021 Registered Direct Offering and
Concurrent Private Placement
On August 19, 2021, the Company entered into a
Purchase Agreement with certain institutional investors. Pursuant to the Purchase Agreement, the Company agreed to sell in a Registered
Direct Offering 8,430,000 shares (“Shares”) of the Company’s Common Stock, with a par value of $0.0001, and Pre-funded
warrants to purchase up to 5,570,000 shares of Common Stock. The Pre-Funded Warrants have an exercise price of $0.001 per share and are
immediately exercisable and can be exercised at any time after their original issuance until such Pre-Funded Warrants are exercised in
full. Each Share was sold at an offering price of $5.00 and each Pre-Funded Warrant was sold at an offering price of $4.999 (equal to
the purchase price per Share minus the exercise price of the Pre-Funded Warrant). Pursuant to the Purchase Agreement, in a concurrent
private placement (together with the Registered Direct Offering, the “August 19 Offerings”), the Company also agreed to issue
to the Purchasers unregistered warrants (“Series A Warrants”) to purchase up to 7,000,000 shares of Common Stock. Each Series
A Warrant has an exercise price of $5.00 per share, is exercisable immediately, and will expire five years following the date of issuance.
The Company receives gross proceeds from the August 19 Offerings, before deducting placement agent fees and other estimated offering expenses
payable by the Company, of approximately $70 million.
In addition, the Company issued to Wainwright
or its designees upon closing of the August 19 Offerings warrants (“Placement Agent Warrants”) to purchase 1,050,000 shares
of common stock at an exercise price of $6.25 per share (which represents 125% of the offering price per Share in the August 19 Offerings).
The Placement Agent Warrants will terminate five years after the date of commencement of sales in the Offerings.
August 2021 Warrant Exercises
As of August 18, 2021, all 899,027 of the
Pre-funded Warrants issued in the August 2021 underwritten offering have been exercised.
As of August 31, 2021, 2,522,387 of the Common
Warrants issued in the August 2021 underwritten offering have been exercised, for aggregate gross proceeds to the Company of $10,720,145.
As of August 31, 2021, 4,620,000 of the Pre-funded
Warrants issued in the August 19, 2021 Offerings have been exercised, for aggregate gross proceeds to the Company of $4,620.