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Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
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12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, or a non-accelerated filer, a smaller reporting company, or an emerging growth
company. See definition of “large accelerated filer,” and large “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company, indicate
by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report
on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s
classes of Common Stock, as at the latest practicable date.
As at June 30, 2021, the aggregate market
value of the registrant’s voting stock held by non-affiliates based upon the per share closing price of $0.0002 as reported
on the OTC Expert Market and was approximately $2,215 (based on the assumption, solely for purposes of this computation, that all
directors and officers of the registrant were affiliates of the registrant).
This Annual Report
on Form 10-K contains a number of “forward-looking statements”. Specifically, all statements other than statements
of historical facts included in this Annual Report on Form 10-K regarding our financial position, business strategy and plans and
objectives of management for future operations are forward-looking statements. These forward-looking statements are based on the
beliefs of management at the time these statements were made, as well as assumptions made by and information currently available
to management. When used in this Annual Report on Form 10-K and the documents incorporated by reference herein, the words “anticipate,”
“believe,” “estimate,” “expect,” “may,” “will,” “continue”
and “intend,” and words or phrases of similar import, as they relate to our financial position, business strategy and
plans, or objectives of management, are intended to identify forward-looking statements. These statements reflect our current view
with respect to future events and are subject to risks, uncertainties and assumptions related to various factors.
You should understand
that the following important factors, in addition to those discussed in our periodic reports to be filed with the SEC under the
Exchange Act, could affect our future results and could cause those results to differ materially from those expressed in such forward-looking
statements:
Although we believe
that our expectations (including those on which our forward-looking statements are based) are reasonable, we cannot assure you
that those expectations will prove to be correct. Should any one or more of these risks or uncertainties materialize, or should
any underlying assumptions prove incorrect, actual results may vary materially from those described in our forward-looking statements
as anticipated, believed, estimated, expected or intended.
Except for our ongoing
obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of new information, future events or any other reason. All subsequent
forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to herein. In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this Annual Report on Form 10-K and the documents incorporated by reference herein might not occur.
PART I
Item 1. Business.
GENERAL ORGANIZATION AND BUSINESS
Bioxytran, Inc. (“we”,
“us”, or the “Company”) is a clinical stage pharmaceutical company focused on the development, manufacture
and commercialization of therapeutic drugs designed to address hypoxia in humans, which is a lack of oxygen to tissues. Hypoxia,
needs to be addressed quickly, otherwise it results in necrosis, which is the death of cells comprising body tissue. Necrosis cannot
be reversed. Our lead drug candidate, code named BXT-25, is an oxygen-carrying small molecule consisting of bovine hemoglobin stabilized
with a co-polymer with an intended application that includes the treatment of hypoxic conditions in the brain resulting from stroke.
We believe that our approach is novel when applied to hypoxic conditions in humans. Our drug development efforts are guided by
specialists who work on co-polymer chemistry and other disciplines. We intend to supplement our efforts with input from a scientific
and medical advisory board whose members are leading physicians.
The Company was organized
on June 9, 2008, as a Nevada corporation.
Our subsidiary, Pharmalectin
Inc. (“Pharmalectin” or the “Subsidiary”), of which we currently have 85% ownership, is focused on the
development, manufacturing and commercialization of therapeutic drugs designed to address viral diseases in humans. Pharmalectin
has developed a novel method designed to reduce the viral load and modulate the immune system using a galectin inhibitor. Our lead
drug candidate, named ProLectin-Rx, is 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 proteins. Galectins have a broad range of functions, including regulation of cell survival
and adhesion, promotion of cell-to-cell interactions, growth of blood vessels, regulation of the immune response and inflammation.
During viral infections galectins are upregulated and downregulated based on the type of virus.
In the past, pectin
has been used as a fibrosis drug and a cancer drug. It is currently being reformulated to treat viral infections. We believe that
we have a novel approach in treating viral infections in humans. Our drug development efforts are guided by specialists on carbohydrate
chemistry and other disciplines, and we intend to supplement our efforts with input from a scientific and medical advisory board
whose members are leading physicians.
We plan to file a pre-investigational
new drug application for ProLectin-Rx 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 ProLectin-Rx
or any of our future drug candidates.
Pharmalectin was organized
on October 5, 2017, as a Delaware corporation.
Our foreign subsidiary,
Pharmalectin (BVI), Inc. (“Pharmalectin BVI” or the “Foreign Subsidiary”) is the owner and custodian of
the Company’s Copyrights, Trade Marks and Patents.
The
Foreign Subsidiary was organized on March 17, 2021 as a British Virgin Islands (BVI) Business Corporation.
Company Overview
We are a clinical stage
pharmaceutical company founded on June 9, 2008 as America’s Driving Ranges, Inc.. On September 21, 2018, the Company was
reorganized into Bioxytran through a reverse merger to focus on the development, manufacturing and commercialization of therapeutic
drugs designed to address hypoxia in humans, which is a lack of oxygen in tissues. Our initial focus is the treatment of hypoxic
conditions in the brain resulting from stroke and through our subsidiary, Pharmalectin in the treatment of viral diseases, notably
Covid-19.
Currently, the Company’s
lead pharmaceutical drug candidate is code named BXT-25 and is planned to be an oxygen-carrying small molecule consisting of bovine
hemoglobin stabilized with a co-polymer. This modified hemoglobin will be designed to be an injectable intravenous drug and we
plan to begin pre-clinical studies and apply to the Food and Drug Administration for approval to use BXT-25 to prevent necrosis,
or cell death, by carrying oxygen to human tissue with blood flow to the brain. If we successfully complete Phase I testing with
the FDA we plan to explore the use of additional drug candidates using chemical structures that are a sub-class of BXT-25 that
share the same physical properties to treat wound healing due to hypoxia, cardiovascular ischemia, anemia, cancer conditions and
trauma, subject to FDA approval. However, we will need to raise additional funds in excess of the $10,000,000 in order to expand
the use of BXT-25.
BXT-25 is a novel unproven
technology. Although we have not conducted research applying our co-polymer technology and related chemistry to the treatment of
hypoxic conditions, we know from Dr. Platt’s prior research that our technology enables the creation of molecules that are
5,000 times smaller than human red blood cells and we believe that our proprietary technology will enable these molecules to carry
oxygen for delivery to tissue through the bloodstream. We also believe that the small size of these molecules will more effectively
enable their delivery to hypoxic tissues which red blood cells cannot reach under the clinical conditions we intend to address.
We may be unsuccessful in developing these technologies into drugs which the United States Food and Drug Administration (FDA) ultimately
will approve.
Stroke
Stroke,
also known as cerebrovascular accident (CVA), or brain attack, occurs when poor blood-flow to the brain results in necrosis and
cell death. Strokes can be classified into two major categories: ischemic and hemorrhagic. Ischemic strokes are caused by interruption
of the blood supply to the brain; hemorrhagic strokes result from the rupture of a blood vessel or an abnormal vascular structure.
According to the Center for Disease Control, approximately 87% of all strokes are ischemic strokes. An ischemic stroke may be thrombotic,
which occurs when diseased or damaged cerebral arteries become blocked by the formation of a blood clot within the brain, or embolic,
which occurs when a clot formed originally somewhere in the body outside the brain - typically in the heart - travels in a cerebral
artery. Whether thrombotic or embolic, an ischemic stroke restricts the flow of blood to the brain and results in near-immediate
physical and neurological deficits.
According to the Center
for Disease Control, there are about 795,000 new or recurrent cases of stroke in the United States each year, of which 610,000
are new cases and 185,000 recurrent cases. One hundred thirty thousand (130,000) Americans are killed by stroke each year, or one
every four minutes. Stroke is a leading cause of serious long-term disability and costs the United States an estimated $34 Billion
each year, according to the Center for Disease Control, a figure which includes the cost of health care services, medications to
treat the stroke, and missed days of work.
Hemoglobin and Complex Co-Polymer
Science
Oxygen therapeutics
describe generally a class of agents that will be administered intravenously to enhance the oxygen delivery capability of blood.
These oxygen transporting agents may be perfluorocarbon (PFC) emulsions or modified hemoglobin solutions. Our technology involves
the development of hemoglobin-based oxygen carriers. To produce BXT-25, we will take red blood cells (RBCs) from bovine sources,
isolate hemoglobin from the RBCs and, by applying our proprietary co-polymer chemistry, stabilize and modify the hemoglobin. Our
novel, complex co-polymer molecules can be produced at specific molecular weights and with other pharmaceutical properties for
various hypoxic diseases; and in the production of BXT-25.
The BXT-25 co-polymer
hemoglobin molecule will be designed to be 5,000 times smaller than an RBC, which we believe will enable that small molecule to
reach hypoxic tissue more effectively than RBCs. BXT-25 will be designed to be administered as an injectable IV drug that will
circulate in the blood collecting oxygen from the lungs and releasing the oxygen molecules where tissue has developed ischemia,
or lack of oxygen. BXT-25 will be designed to have oxygen affinity that mimics RBCs, minimize adverse effects, and be compatible
with all blood types. BXT will be designed to have a shelf life of two years at room temperature.
With regard to compatibility
with all blood types, we believe that the differences between a BXT-25 molecule and a red blood cell will not be limited to differences
in size. Surfaces of red blood cells include different antigens which determine the blood type as A, B, AB or O. We believe that
BXT-25 will be found to be compatible with all blood types because it is a single, modified hemoglobin molecule stabilized with
a co-polymer which, unlike a red blood cell, has neither antigens nor a Rh factor.
Certain regulatory issues relating
to our use of bovine hemoglobin as a raw material
Our products include
a commercially available raw material, bovine hemoglobin, that has been purified, chemically modified and cross-linked for stability.
It is sourced from controlled herds of U.S. cattle raised for beef production. Those herds are subject to and meet the requirements
of a herd management program that assures the origin, health, feed and quality of the cattle used as a raw material source. Our
suppliers will contract to maintain traceable records on animal origin, health, feed and care as part of our effort to assure the
use of known, healthy animals in compliance with applicable laws and regulations.
Bovine whole blood
will be collected in individual pre-sanitized containers. The containers will be shipped to a separation facility. Prior to the
collection of blood, the animals undergo live inspection. Then, following blood collection, the animal carcass undergoes U.S. Department
of Agriculture (USDA) inspection for use as beef for human consumption. If an animal carcass is retained for further inspection
for final disposition by the USDA veterinarian, we reject the corresponding container of whole blood. We have validated and tested
the processes described below for removal of potential pathogens in our raw material. Potential pathogens include bacteria, viruses
such as those leading to hepatitis and AIDS, and the transmissible spongiform encephalopathies that cause rare neurological disorders
such as “mad cow disease” and its human equivalent. The validation of a process means that it has been tested and documented
and that it performs adequately. Health and regulatory authorities have given guidance directed at three factors to control these
diseases: source of animals, the nature of tissue used and manufacturing process. We will comply with, and believe we will exceed,
all current guidelines regarding such risks for human pharmaceutical products.
There will be four
major steps in the manufacture of BXT-25: (1) hemoglobin separation; (2) hemoglobin purification; (3) polymerization/size selection
and (4) synthesizing with our co-polymer. More specifically, bovine blood will be collected in an aseptic fashion and processed
to first remove plasma and then to remove at high concentration the hemoglobin protein from red blood cells. The hemoglobin will
be purified of other red cell proteins by anion exchange chromatography. The purified hemoglobin will be stabilized by the addition
of a cross-linking agent to form hemoglobin polymers. There is an additional sizing step to remove the higher hemoglobin molecules.
The final step, co-polymer synthesis, will take place on the stabilized hemoglobin. The combination polymers will be filled with
a solution suitable for infusion. The product will be run through sterilizing filters into sterile product bags.
Pharmalectin
The Subsidiary was
organized on October 5, 2017 as a Delaware corporation under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2020,
the name was changed to Pharmalectin. Through the Subsidiary, we are not a party to any long-term agreement with any of our suppliers
and, accordingly, we have our products manufactured on a purchase-order basis from one of two primary well-known and established
pharmaceutical suppliers that meet FDA requirements. Due to an overwhelming amount of research on galectins we do not plan on conducting
any further research into new molecules. Instead, we intend to apply our knowledge of galectin science and drug development to
create new therapies for the treatment of viruses.
Covid-19
We are currently working
on an end-to-end solution for Covid-19 mild to severe cases and treatment for organ damage caused by the virus or by commonly used
treatment methods.
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ProLectin-M, a chewable polysaccharide tablet for mild to moderate cases of Covid-19. |
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ProLectin-I, an IV treatment for more severe cases of Covid-19. |
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ProLectin-F, an IV treatment of lung-fibrosis as a result of the use of ventilators used for treatment of Covid-19. |
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ProLectin-A, an IV treatment of ARDS as a result of Covid-19. |
Using our issued patents
and proprietary technology coupled with the scientific knowledge and expertise of Dr. David Platt, we intend to develop and manufacture
ProLectin-M (oral) for treatment of mild cases and ProLectin-I (intravenous) for treatment of more severe cases of Covid-19. These
treatments may also be used for the treatment of other types of viral infections, such as influenza.
A significant problem
related to the Covid-19 pandemic is that an increasing number of patients are developing life-threatening complications, such as
ARDS, shock (i.e., a potentially fatal drop in blood pressure), kidney failure, acute cardiac injury and secondary bacterial infections.
The underlying cause for these complications is often a cytokine storm that results in a massive, systemic inflammatory response,
leading to the damage of vital organs such as the lungs, heart, and kidneys, and ultimately multiple organ failure and death in
many cases. For this purpose, we are developing ProLectin-A that aim to deliver oxygen to damaged organs and at the same time fight
infection.
The fourth drug in
this series, ProLectin-F, is being developed to treat patients developing lung fibrosis as a result of the use of ventilator in
Covid-19 treatment. An increasing evidence from experimental and clinical studies suggests that mechanical ventilation, which is
necessary for life support in patients with acute respiratory distress syndrome, can cause lung fibrosis, which may significantly
contribute to morbidity and mortality. According to a review of medical records of 22,350 admissions showed that the cost of treating
patients who were put on a ventilator was four times higher than for those treated without a ventilator and also that the death
rate of pulmonary fibrosis patients who were put on a hospital ventilator was seven times higher than those treated without a ventilator,
according to a review of thousands of medical records.
Strategic Objectives
It is our intention
to develop the drug to the point whereby the Company would be in a position to license the drug to large pharmaceuticals capable
of conducting clinical trials and managing the distribution of the product. The Company does not plan to create a sales and marketing
staff to commercialize the pharmaceutical products it produces. The Company would be dependent on third parties such as licensees,
collaborators, joint venture partners or independent distributors to market and sell those products.
The FDC Act and other
federal and state statutes and regulations govern the testing, manufacture, safety, effectiveness, labeling, storage, record keeping,
approval, advertising and promotion of our products. As a result of these laws and regulations, product development and product
approval processes are very expensive and time-consuming. Our goal is to advance our leading drug candidate, BXT-25, and our Subsidiary’s
leading drug candidate, ProLectin-Rx, through regulatory submissions for Investigational New Drug (IND) status in the United States,
is subject to expensive and time-consuming approval processes.
Management
Our management team
and advisors include most notably our CEO and Chairman David Platt, Ph.D., who has played a leading role in the development of
complex co-polymer therapeutics for a variety of applications to address a variety of unmet medical needs. Our CFO Ola Soderquist,
CPA, CMA is a seasoned financial officer with than 30 years of senior international entrepreneurial management experience within
many industries, both in public and private companies. Our VP of Business Development (“VPBD”) Mike Sheikh is a US
Air Force Academy graduate and a long-time Biotech Consultant with expertise in public and private biotech companies with disruptive
technologies.
Dr. Platt, Mr. Sheikh
and Mr. Soderquist are our only employees and each of them is committed on a full-time basis. David Platt and Ola Soderquist currently
have a monthly salary of $35,000 and Mike Sheik a monthly salary of $17,500, as well as the participation in a Safe Harbor 401K
plan at 25% of gross salary up to the federal limit, currently $58,000 per year.
Business Development
BXT-25
Bioxytran intends to
develop and, through third party contracts, manufacture oxygen therapeutics. Our oxygen therapeutics are a new class of pharmaceuticals
that are administered intravenously to transport oxygen to the body’s tissues. Currently there are four drug candidates to
treat a stroke. Abciximab from Eli Lilly is a platelet aggregation inhibitor. Clinical trials show little advantage over placebos
and could lead to dangerous side effects, including more bleeding in patients. Cerovive from AstraZeneca is a Nitrone-based neuro
protectant currently in phase III clinical trials which shows no significant benefit over placebos with respect to changes in neurological
impairment as measured by the national institute of health stroke scale. Candesartan, from AstraZeneca, is an angiotensin receptor
blocker which was used to control blood pressure. Its efficacy in stroke patients still must be proven. Ancod from Knoll Pharmaceuticals
is an anti-coagulant that acts by breaking down the fibrinogen. It increases the risk of hemorrhage similar to those associated
with tPA.
Using our issued patents
and proprietary technology, we intend to develop and manufacture BXT-25 and similar drugs for applications including treatment
of stroke conditions. Our patent position consists of 2 parts: a patent related to our co-polymer technology issued in 2009 by
the United States Patent and Trademark Office expiring in February 2029 (method patent for producing modified pectins consisting
of neutral sugar sequences ) and assigned to us outright by David Platt; various methods to stabilize a single hemoglobin molecule
that are in the public domain; Dr. Platt did not receive any compensation from the Company in consideration of his assignment of
the patent.
Additionally, Bioxytran,
Inc. has an exclusive license for an FDA approved technology monitoring NADH (OxySense), the control marker in the body’s
conversion of Oxygen to Energy, or the energy generating chain. The technology provides a clinical end-point for measuring oxygen
supply to the brain in real-time. OxySense, developed by MDX LifeSciences, Inc., provide us with a rapid, cost-effective and validated
development of safe new molecules that address unmet medical needs in disease indications resulting from hypoxia. MDX LifeSciences
has licensed a patent (Tissue Metabolic Score for Patient Monitoring) to Bioxytran for clinical monitoring of oxygen delivery through
oxygen carriers.
ProLectin-Rx
Pharmalectin is focusing
on the development, manufacturing and commercialization of therapeutic drugs designed to address viral diseases in humans. Pharmalectin
has developed a novel method designed to reduce the viral load and modulate the immune system using a galectin inhibitor.
To our knowledge, Pharmalectin
is the only company planning to develop a viable end-to-end solution for Covid-19. We are also the only company using a Galectin
Inhibitor to combat the virus, SARS-CoV-2. The technology is built on the life-time work by the founder of the Company, David Platt,
PhD, who discovered, and named, the Human Galectin-3 protein coded by a single gene, LGALS3, located on chromosome 14, and published
in his groundbreaking article Structure-Function Relationship of a Recombinant Human Galactoside-Binding Protein, Biochemistry
1993. Galectin inhibitors block the binding of galectins to carbohydrate structures, present in numerous diseases, reducing their
capability to replicate. Dr. Platt has over the years used this knowledge to create a significant number of sustainable therapeutic
solutions.
David Platt has filed
an initial Provisional Patent (Galactomannans for Treatment of SARS-CoV-2/Covid-19) which has been assigned to Pharmalectin. We
intend to apply for two additional provisional patents for use and composition of matter for moderate Covid-19 and long-hauler
Covid-19 after the first production run of the intravenous (“IV”) drugs
The Company is capitalizing
on 30 years of research in Galectins and recent peer reviewed articles on Galectins and Covid-19. The founder of the Company also
has an impressive body of patents in this field which gives him an advantage with respect to filing new patents based on his prior
work of art. We will rely on a combination of patent applications, patent, trade secrets, proprietary know-how and trademarks to
protect our proprietary rights. We believe that to have a competitive advantage, we must develop and maintain the proprietary aspects
of our technologies. Because the drug can be taken by mouth, treatment can be started early for a potentially three-fold benefit:
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inhibit patients’ progress to severe disease |
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shorten the infectious phase to ease the emotional and socioeconomic toll of prolonged patient isolation, and |
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rapidly silence local outbreaks |
A Proof of Concept
trial approved by the IRB at Mazumdar Shaw Medical Center, Narayana Health in Bangalore, India was finalized in October 2020.
The results of the trial are described in our peer-reviewed article Galectin antagonist use in mild cases of SARS-CoV-2; pilot
feasibility randomized, open label, controlled trial, published in Journal of Vaccines & Vaccination on December 30, 2020
after pre-print in medRxiv on December 9, 2020.
The study will continue
by the filing of an Emergency IND with the FDA which has already been filed with the CDSCO, the equivalent agency in India. An
initial IND was submitted to the FDA in on March 8. 2022. In parallel the Subsidiary is initiating an additional IND with the CDSCO
for an IV treatment of SARS-CoV-2 in moderate (Hospitalized patients) Covid-19 infections (ProLectin-I) and of treatment of lung-fibrosis
as a result of use of ventilator in treatment of Covid-19 (ProLectin-F), respectively.
FDA Approval Process
In the United States,
pharmaceutical products, including biologics like BXT-25, are subject to extensive regulation by the FDA. The FDC Act and other
federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage,
recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and
import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety
of administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications, or NDAs, warning letters,
product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties,
and criminal prosecution.
Pharmaceutical product
development in the United States typically involves preclinical laboratory and animal tests, the submission to the FDA/EMA of an
IND application, which must become effective before clinical testing may commence, and adequate and well-controlled clinical trials
to establish the safety and effectiveness of the drug or biologic for each indication for which FDA/EMA approval is sought. Satisfaction
of FDA/EMA pre-market approval requirements typically take many years (typically between 5-7 years post an IND submission) and
the actual time required may vary substantially based upon the type, complexity and novelty of the product or disease.
Preclinical tests include
laboratory evaluation as well as animal trials to assess the characteristics and potential pharmacology and toxicity of the product.
The conduct of the preclinical tests must comply with federal regulations and requirements including good laboratory practices.
The results of preclinical testing are submitted to the FDA as part of an IND along with other information, including information
about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long term preclinical tests, such
as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.
A 30-day waiting period
after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has not objected
to the IND within this 30-day period, the clinical trial proposed in the IND may begin.
Clinical trials involve
the administration of the investigational drug to healthy volunteers or patients under the supervision of a qualified investigator.
Clinical trials must be conducted in compliance with federal regulations and good clinical practices, or GCP, as well as under
protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria
to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA
as part of the IND.
The FDA may order the
temporary or permanent discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical
trial is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients.
The clinical trial protocol and informed consent information for patients in clinical trials must also be submitted to an institutional
review board, or IRB, for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or
permanently, for failure to comply with the IRB’s requirements, or may impose other conditions.
Clinical trials to
support New Drug Applications (NDAs) are typically conducted in three sequential Phases, but the Phases may overlap. In Phase 1,
the initial introduction of the investigational drug candidate into healthy human subjects or patients, the investigational drug
is tested to assess metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses and, if
possible, early evidence on effectiveness. Phase 2 usually involves trials in a limited patient population, to determine the effectiveness
of the investigational drug for a particular indication or indications, dosage tolerance and optimum dosage, and identify common
adverse effects and safety risks. In the case of product candidates for severe or life-threatening diseases such as pneumonia,
the initial human testing is often conducted in patients rather than in healthy volunteers.
If an investigational
drug demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 clinical trials are
undertaken to obtain additional information about clinical efficacy and safety in a larger number of patients, typically at geographically
dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the investigational drug
and to provide adequate information for its labeling.
After completion of
the required clinical testing, an NDA, is prepared and submitted to the FDA. FDA approval of the marketing application is required
before marketing of the product may begin in the United States. The marketing application must include the results of all preclinical,
clinical and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and
controls.
The FDA has 60 days
from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold
determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA
begins an in-depth review. The FDA has agreed to certain performance goals in the review of marketing applications. Most such applications
for non-priority drug products are reviewed within ten months. The review process may be extended by the FDA for three additional
months to consider new information submitted during the review or clarification regarding information already provided in the submission.
The FDA may also refer applications for novel drug products or drug products that present difficult questions of safety or efficacy
to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation
as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally
follows such recommendations. Before approving a marketing application, the FDA will typically inspect one or more clinical sites
to assure compliance with GCP.
Additionally, the FDA
will inspect the facility or the facilities at which the drug product is manufactured. The FDA will not approve the NDA unless
compliance with cGMP is satisfactory and the marketing application contains data that provide substantial evidence that the product
is safe and effective in the indication studied. Manufacturers of biologics also must comply with FDA’s general biological
product standards.
After the FDA evaluates
the NDA and the manufacturing facilities, it issues an approval letter or a complete response letter. A complete response letter
outlines the deficiencies in the submission and may require substantial additional testing or information in order for the FDA
to reconsider the application. If and when those deficiencies have been addressed in a resubmission of the marketing application,
the FDA will re-initiate review. If the FDA is satisfied that the deficiencies have been addressed, the agency will issue an approval
letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.
It is not unusual for the FDA to issue a complete response letter because it believes that the drug product is not safe enough
or effective enough or because it does not believe that the data submitted are reliable or conclusive.
An approval letter
authorizes commercial marketing of the drug product with specific prescribing information for specific indications. As a condition
of approval of the marketing application, the FDA may require substantial post-approval testing and surveillance to monitor the
drug product’s safety or efficacy and may impose other conditions, including labeling restrictions, which can materially
affect the product’s potential market and profitability. Once granted, product approvals may be withdrawn if compliance with
regulatory standards is not maintained or problems are identified following initial marketing.
Once an NDA is approved,
a product will be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-approval marketing
and promotion of therapeutic products, including standards and regulations for direct-to-consumer advertising, off-label promotion,
industry-sponsored scientific and educational activities and promotional activities involving the internet.
BXT-25
Currently, Bioxytran’s
lead pharmaceutical drug candidate, code-name BXT-25, is an oxygen-carrying small molecule consisting of bovine hemoglobin stabilized
with a co-polymer. This modified hemoglobin will be designed to be an injectable intravenous drug and we plan to begin pre-clinical
studies and apply to the Food and Drug Administration for approval to use BXT-25 to prevent necrosis, or cell death, by carrying
oxygen to human tissue when blood flow to the brain.
The only FDA approved
treatment for ischemic strokes is tissue plasminogen activator tPA, also known as IV rtPA, given through an IV in the arm. tPA
works by dissolving the clot and improving blood flow to the part of the brain being deprived of blood flow. If administered within
3 hours and up to 4.5 hours in certain eligible patients, tPA may improve the chances of recovering from a stroke. Another treatment
option is an endovascular procedure called mechanical thrombectomy in which a blood clot is removed by threading a wired-caged
device called a stent retriever through an artery in the groin up to the blocked artery in the brain. The stent opens and grabs
the clot, enabling the removal of the stent with the trapped clot.
Hypoxia is a condition
in which cells lack sufficient oxygen supply to support metabolic function. The BXT-25 co-polymer hemoglobin molecule will be designed
to contain an oxygen rechargeable iron which picks up oxygen in the lungs, is expected to be 5,000 times smaller than an RBC, and
we believe can reach hypoxic tissue more effectively than RBCs. Products similar to BXT-25 are stable at room temperature and have
no blood type matching requirement. We plan to introduce BXT-25 in clinical trials for hypoxic medical conditions as stroke.
For the production
of BXT-25, we intend to utilize third party manufacturing facilities that we believe are fully compliant with Good Manufacturing
Practices (GMP) only, as required by the regulatory authorities in Europe or the United States, in order to produce a sufficient
quantity of BXT-25 for animal toxicity and pre-clinical trials for animals. We have not conducted any clinical trials on animals
or humans to confirm the efficacy of, or filed any applications with the FDA with respect to, BXT-25. We are in the process of
developing BXT-25 for pre-clinical studies for human use, in order to conduct clinical trials and to file applications with the
FDA as applicable. An IND application has been filed with the FDA in March 2022, trials are expected to proceed provided we obtain
adequate funding.
This product is being
developed and as an early intervention in an out-of-hospital setting for the treatment of patients with ischemia of the brain resulting
from a stroke or the blockage of the blood vessels to the brain. We plan to initially conduct pre-clinical trials and to seek approval
of BXT-25 for the treatment of adults at early stages of stroke.
ProLectin-Rx
There is an unmet medical
need in Covid-19 to find a therapeutic that reduces the mortality of the disease. There are no FDA approved treatments for Covid-19
only repurposed therapeutics. If given early enough in the disease we believe that ProLectin-Rx will block viral entry and act
as an antiviral by eliminating the virus from the blood stream after a couple of treatments. At a later stage in the disease pathology,
ProLectin-Rx could restore adaptive immune function to help eradicate the virus from the body. In severe Covid-19 patients the
drug could reduce the trafficking of macrophages responsible for the cytokine storm and restore immune homeostasis.
The cytokine
storm is a severe immune reaction in which the body overproduces too many pro-inflammatory
cytokines into the blood leading to a surge of more immune cells to the site of infection. This translates into an inflammatory
cycle that is not easily brought back to homeostasis. Cytokines play an important role in normal immune responses, but having a
large amount of them released in the body all at once can be harmful. A cytokine storm can occur as a result of an infection, autoimmune
condition, or other disease. It may also occur after treatment with some types of immunotherapy. Signs and symptoms include high
fever, inflammation (redness and swelling), and severe fatigue and nausea. Sometimes, a cytokine storm may be severe or life threatening
and lead to acute respiratory distress syndrome (ARDS), and multiple organ failure.
For the production
of ProLectin-Rx, we intend to utilize third party manufacturing facilities that we believe are fully compliant with Good Manufacturing
Practices (GMP) only, as required by the regulatory authorities in Europe or the United States, in order to produce a sufficient
quantity of ProLectin-Rx for animal toxicity, pre-clinical trials for animals, and human trials. We have not conducted any clinical
trials on animals or humans to confirm the efficacy of any applications with the FDA with respect to ProLectin-Rx. We are in the
process of developing ProLectin-Rx for pre-clinical studies for human use, in order to conduct clinical trials and to file applications
with the FDA as applicable. We expect to file an IND application with the FDA in January 2022, provided we obtain adequate funding.
This product is being
developed as a treatment for mild to moderate Covid-19 patients.
PART II
Item 5. Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our Common Stock is
quoted under the symbol “BIXT” on the OTC Pink Current tier expert market operated by OTC Markets Group, Inc. Only
a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed,
that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.
The following tables
set forth the range of high and low bid prices for our Common Stock for the each of the periods indicated as reported by the OTC
Pink Current Information tier expert market. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
Quarter Ended |
|
High |
|
|
Low |
|
December 31, 2021 |
|
$ |
0.40 |
|
|
$ |
0.00 |
|
September 30, 2021 |
|
$ |
0.01 |
|
|
$ |
0.00 |
|
June 30, 2021 |
|
$ |
0.18 |
|
|
$ |
0.00 |
|
March 31, 2021 |
|
$ |
0.24 |
|
|
$ |
0.01 |
|
Quarter Ended |
|
High |
|
|
Low |
|
December 31, 2020 |
|
$ |
0.29 |
|
|
$ |
0.03 |
|
September 30, 2020 |
|
$ |
0.21 |
|
|
$ |
0.00 |
|
June 30, 2020 |
|
$ |
0.31 |
|
|
$ |
0.00 |
|
March 31, 2020 |
|
$ |
0.85 |
|
|
$ |
0.14 |
|
On
April 8, 2022, the last reported sale price of our Common Stock as reported on the OTC Pink Current Information tier was $0.173
per share.
Our Common Shares are issued
in registered form. The registrar and transfer agent for our shares is:
Action
Stock Transfer, LLC
2469
E. Fort Union Blvd, Suite 214
Salt
Lake City, UT 84121
Phone:
801-274-1088
Fax:
801-274-1099
Penny Stock
The
SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges
or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities
is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock,
to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level
of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker’s
or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation of
such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in
the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size
and format, as the SEC shall require by rule or regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares
to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such
stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer’s account.
In
addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the
broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive
the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions
involving penny stocks, and a signed and dated copy of a written suitability statement.
These
disclosure requirements may have the effect of reducing the trading activity for our Common Stock. Therefore, stockholders may
have difficulty selling our securities.
Holders of Common Stock
As at the date of this
Annual Report on Form 10-K, we have approximately 351 holders of record and at least 654 holders in street names, totaling an estimated
1,005 holders of Common Stock, with others holding shares in street name.
Dividends
There have been no
cash dividends declared on our Common Stock since our company was formed. Dividends are declared at the sole discretion of our
Board of Directors. Our intention is not to declare cash dividends, but to retain all cash for our operations.
Equity Compensation
Plan Information
Securities Authorized for Issuance
under Equity Compensation Plans
On January 19, 2021,
the Company established a 2021 Employee, Director and Consultant Stock Plan (the “2021 Plan”). The 2021
Plan was approved by the Company’s board of directors and by the consent of the shareholders owning a majority of the outstanding
shares. The material features of the 2021 Plan are described below.
Administration
A designated Administrator,
or in the absence of such, our Board of Directors’ Compensation Committee or both, in the sole discretion of our Board, administers
the 2021 Plan, which was approved by the Company’s Board of Directors on January 19, 2021. The Board, subject to the provisions
of the 2021 Plan, has the authority to determine and designate officers, employees, directors and consultants to whom awards shall
be made and the terms, conditions and restrictions applicable to each award (including, but not limited to, the option price, any
restriction or limitation, any vesting schedule or acceleration thereof, and any forfeiture restrictions). The Board may, in its
sole discretion, accelerate the vesting of awards. The Board of Directors must approve all grants of Options and Stock Awards issued
to our officers or directors.
Types of Awards
The 2021 Plan is designed
to enable us to offer certain officers, employees, directors and consultants of us and our subsidiaries equity interests in us
and other incentive awards in order to attract, retain and reward such individuals and to strengthen the mutuality of interests
between such individuals and our stockholders. In furtherance of this purpose, the 2021 Plan contains provisions
for granting incentive and non-statutory stock options, stock wards and stock appreciation rights.
Stock Options.
A “stock option” is a contractual right to purchase a number of shares of Common Stock at a price determined on the
date the option is granted. The option price per share of Common Stock purchasable upon exercise of a stock option and the time
or times at which such options shall be exercisable shall be determined by the Board at the time of grant. Such option price shall
not be less than 110% of the fair market value of the Common Stock on the date of grant. The option price must be paid in cash,
money order, check or Common Stock of the Company. The Options may also contain at the time of grant, at the discretion
of the Board, certain other cashless exercise provisions.
Options shall be exercisable
at the times and subject to the conditions determined by the Board at the date of grant, but no option may be exercisable more
than ten years after the date it is granted. If the Optionee ceases to be an employee of our company for any reason other than
death, any option granted as an Incentive Stock Option exercisable on the date of the termination of employment may be exercised
for a period of thirty days or until the expiration of the stated term of the option, whichever period is shorter. In the event
of the Optionee’s death, any granted Incentive Stock Option exercisable at the date of death may be exercised by the legal
heirs of the Optionee from the date of death until the expiration of the stated term of the option or six months from the date
of death, whichever event first occurs. In the event of disability of the Optionee, any granted Incentive Stock Options
shall expire on the stated date that the Option would otherwise have expired or 12 months from the date of disability, whichever
event first occurs. The termination and other provisions of a non-statutory stock option shall be fixed by the Board
of Directors at the date of grant of each respective option.
Common Stock Award.
“Common Stock Award” is shares of Common Stock that will be issued to a recipient at the end of a restriction period,
if any, specified by the Board if he or she continues to be an employee, director or consultant of us. If the recipient remains
an employee, director or consultant at the end of the restriction period, the applicable restrictions will lapse and we will issue
a stock certificate representing such shares of Common Stock to the participant. If the recipient ceases to be an employee, director
or consultant of us for any reason (including death, disability or retirement) before the end of the restriction period unless
otherwise determined by the Board, the restricted stock award will be terminated.
Eligibility
The Company’s
officers, employees, directors and consultants of Bioxytran, Inc. are eligible to be granted stock options, and Common Stock Awards. Eligibility
shall be determined by the Board; however, all Options and Stock Awards granted to officers and directors must be approved by the
Board.
Termination or Amendment of the 2021
Plan
The Board may at any
time amend, discontinue, or terminate all or any part of the 2021 Plan, provided, however, that unless otherwise required by law,
the rights of a participant may not be impaired without his or her consent, and provided that we will seek the approval of our
stockholders for any amendment if such approval is necessary to comply with any applicable federal or state securities laws or
rules or regulations.
Awards
In 2021, there was
in total 7,704,909 shares issued and 135,000 stock options awarded and issued from the 2010 and 2021 Stock Plans, In 2020, there
was in total 9,875,000 shares issued and 192,000 stock options awarded and issued from the 2010 Stock Plan. See Note 9 in the financial
statements for more details.
Shares Subject to the 2021 Plan
Subject to adjustment,
the aggregate number of shares of Stock which may be delivered under the 2021 Plan shall not exceed a number equal to 15% of the
total number of shares of Stock outstanding immediately following the Effective Time, assuming for this purpose the conversion
into Stock of all outstanding securities that are convertible by their terms (directly or indirectly) into Stock; provided,
however, that, as of January 1 of each calendar year, commencing with the year 2011, the maximum number of shares of Stock
which may be delivered under the 2021 Plan shall automatically increase by a number sufficient to cause the number of shares of
Stock covered by the 2021 Plan to equal 15% of the total number of shares of Stock then outstanding, assuming for this purpose
the conversion into Stock of all outstanding securities that are convertible by their terms (directly or indirectly) into Stock.
On December 31, 2021
there are an additional 34,101,909 shares or stock options available to be issued from the 2021 Plan. On December 31, 2020 there
were 3,189,296 shares or stock options available to be issued from the 2010 Plan.
Federal Tax Consequences
The Federal income
tax discussion set forth below is intended for general information only. State and local income tax consequences are not discussed,
and may vary from locality to locality.
Incentive Stock
Options. Incentive stock options granted under the 2021 Plan are designed to qualify for the special tax treatment
for incentive stock options provided for in the Internal Revenue Code (the “Code”). Under the provisions
of the Code, an optionee who at all times from the date of grant until three months before the date of exercise is an employee
of the Company, and who holds the shares of Common Stock obtained upon exercise of his incentive stock option for two years after
the date of grant and one year after exercise, will recognize no taxable income on either the grant or exercise of such option
and will recognize capital gain or loss on the sale of the shares. If such shares are held by the optionee for the required
holding period, the Company will not be entitled to any tax deduction with respect to the grant or exercise of the option. If
such shares are sold by the optionee prior to the expiration of the holding periods described above, the optionee will recognize
ordinary income upon such disposition. Upon the exercise of an incentive stock option, the optionee will incur an item
of tax preference equal to the excess of the fair market value of the shares at the time of exercise over the exercise price, which
may subject the optionee to the alternative minimum tax.
Non-Qualified Options.
Under present Treasury regulations, an optionee who is granted a non-qualified option will not realize taxable income at the time
the option is granted. In general, an optionee will be subject to tax for the year of exercise on an amount of ordinary income
equal to the excess of the fair market value of the shares on the date of exercise over the option price, and the Company will
receive a corresponding deduction. Income tax withholding requirements apply upon exercise. The optionee’s basis in the shares
so acquired will be equal to the option price plus the amount of ordinary income upon which he is taxed. Upon subsequent disposition
of the shares, the optionee will realize capital gain or loss, long-term or short-term, depending upon the length of time the shares
are held after the option is exercised.
Common Stock Awards. Recipients
of shares of restricted Common Stock that are not “transferable” and are subject to “substantial risk of forfeiture”
at the time of grant will not be subject to Federal income taxes until lapse or release of the restrictions on the shares. The
recipient’s income and the Company’s deduction will be equal to the fair market value of the shares on the date of
lapse or release of such restrictions. It has been the Company’s policy to value the cost of the issuance of said unregistered
shares at the then bid price of the stock when issued.
The issuance of any
of our common or preferred stock is within the discretion of our Board of Directors, which has the power to issue any or all of
our authorized but unissued shares without stockholder approval.
Recent Sales of
Unregistered Securities; Use of Proceeds from Registered Securities
On June 4, 2021, 930,864 shares
of Common Stock were issued to two consultants as a result of conversion of accrued interest and principal for two convertible
notes for a total of $121,042.
On June 4, 2021, 7,591,261 shares
of Common Stock were issued to management as a result of conversion of accrued interest and principal for three convertible notes
for a total of $986,864. To avoid dilution of the Company stock, the shares were returned to treasury on November 20, 2021, and
the original debt consisting of accrued salary was cancelled.
On December 3, 2021
a company affiliate converted their holdings in the Subsidiary into 4,754,552 shares, or 0.2945/share in accordance with a joint
venture agreement.
All funds received
though these equity transactions were used in the development of the ProLectin-M, and for operating expenses.
Purchase of Equity
Securities by the Issuer and Affiliated Purchasers
We did not purchase
any of our shares of Common Stock or other securities during our fourth quarter of our fiscal year ended December 31, 2021.
Item 6. Selected Financial Data.
Item 6 is not applicable
to us because we are a smaller reporting company.
Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations
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 develop
our business over the next approximately 15 months. At funding raised that is significantly less than $3,700,000, we can likely
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 plans to
file a pre-investigational new drug application for ProLectin 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 ProLectin 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 7 of the financial statements, the Company currently has convertible loans outstanding
at a total face value of $2,165,000. As shown in the accompanying consolidated financial statements, the Company had an accumulated
deficit of $8,753,668 as at December 31, 2021. The accumulated deficit as at December 31, 2020 was $4,721,923.
The future of the Company
is dependent upon its ability to obtain financing to develop its new business opportunities and support the cost of the drug development
including clinical trials and regulatory submission to the FDA.
Covid-19 Effects
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 the World, and, on March 12, 2020, the World Health Organization declared Covid-19 to be a pandemic.
In an effort to contain and mitigate the spread of Covid-19, many countries, including the United States, Canada and China, have
imposed unprecedented restrictions on travel, and there have been business closures and a substantial reduction in economic activity
in countries that have had significant outbreaks of Covid-19. Covid-19 may have a future material impact on our results of operation
with respect to product development and clinical trials. However, significant uncertainty remains as to the potential impact of
the Covid-19 pandemic on our operations, and on the global economy as a whole. It is currently not possible to predict how long
the pandemic will last or the time that it will take for economic activity to return to prior levels. We do not yet know the full
extent of any impact on our business or our operations, however, we will continue to monitor the Covid-19 situation closely, and
we intend to follow health and safety guidelines as they evolve.
Management plans to
seek additional capital through private placements and public offerings of its Common Stock. There can be no assurance that the
Company will be successful in accomplishing its objectives. Without such additional capital or the establishment of strategic relationships
with established pharmaceutical companies, the Company may be required to cease operations. These conditions raise substantial
doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that
might be necessary in the event the Company cannot continue operations.
Results of Operations
We are a clinical-stage
pharmaceutical company. Historically, Bioxytran was engaged in formation, fund raising and identifying and consulting with the
scientific community regarding the development, formulation and testing of its products.
Operating Expenses
Research and Development
(R&D) expenses for the year ended December 31, 2021 were $2,013,762, while for the year ended December 31, 2020, they were
$544,519. Our operations only started in the 4th quarter of 2020.
General and administrative
(G&A) expenses for the year ended December 31, 2021 were $1,617,810, while for the year ended December 31, 2020, they were
$476,315. The components of G&A expenses are as follows:
|
● |
Payroll and related expenses for the year ended December 31, 2021 were $1,391,379, including payroll taxes and 401K benefits, as compared to $192,000 for the year ended December 31, 2020. The difference was due the increase of the management’s salaries to a market-based level. |
|
|
|
|
● |
Costs for legal, accounting and other professional services for the year ended December 31, 2021 were $89,180, as compared to $102,232 for the year ended December 31, 2020. The decrease was due to reduced use of external corporate counsel. |
|
|
|
|
● |
Sales and marketing expense for the year ended December 31, 2021 were $5,500, as compared to $34,027 for the year ended December 31, 2020. The decrease was due to limiting these expenditures in the current year as we’re waiting for a go-ahead from FINRA to re-enter the OTC-QB. |
|
|
|
|
● |
The remaining miscellaneous G&A expenses totaled $131,751 for the year ended December 31, 2021, as compared to $148,056 for the year ended December 31, 2020. |
Stock-based compensation mounted to $582,862
for the year ended December 31, 2021. The stock-based compensation for the year ended December 31, 2020 was $247,867. The increase
was due to the liquidation of the 2010 Stock Plan in the 1st quarter of 2021, in order to energize all collaborators
in the development and the regulatory pathway of the Company’s initial drug candidate.
Interest Expense and Amortization
of Debt Discount and Premium
During the year ended
December 31, 2021, the Company recorded $77,031 in amortization of debt discount, as compared to, $961,128 of premium accretion
to additional paid-in capital, and $259,057 in amortization of debt discount (including $145,438 in warrant amortization) for the
year ended December 31, 2020. The interest on convertible notes amounted to $236,467 (whereof $85,685 accrued for New Notes, $6,110
for converted notes and $144,782 for the extinct Old Notes), as compared to $1,014,769 (including a pre-pay fee of $91,362 for
the early payment of a convertible note and the default penalty of $673,956) for the year ended December 31, 2020. The significant
reduction of cost is due to the fact that defaulted debt was re-negotiated and repurchased at face value.
Net Loss
The Company generated
a net loss for the year ended December 31, 2021 of $4,528,042. In comparison, for the year ended December 31, 2020, the Company
generated a net loss of $2,542,527. The increased loss is mainly linked to the increased spending in Research and development,
and that Managements salary was increased to a market-based level. As counter balance the interest and amortizations were radically
reduced as described in the preceding paragraph.
Cash-Flows
Net cash used in operating
activities was $1,697,399 and $1,098,992 for the years ended December 31, 2021 and 2020, respectively. The increase was due to
Research and Development expenses starting in the 4th quarter of 2020, but reduced by the conversion of debt to
management converted to equity.
As at December 31,
2021 the Company is in the process of filing a patent, and $36,931 has been spent in patent filing and legal fees during 2021.
During the year ended December 31, 2020 the Company spent $10,000 in patent filing and legal fees.
Cash flows from financing
activities were $1,765,000 and $981,052 for the years ended December 31, 2021 and 2020, respectively. The significant
change was due to convertible loans taken up in connection with the S-1 filing in late spring 2021.
Available cash was
$72,358 and $41,688 at December 31, 2021 and December 31, 2020, respectively.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31,
2021, our assets consisted of was $72,358 in cash, and $46,932 in intangible assets in form of capitalized patent expenses. We
had total liabilities of $3,277,497, which were all current liabilities, and which consisted of $1,155,316 in accounts payable
and accrued expenses (of which $531,000 was payable to related parties), and $2,122,181 in convertible loans . The equivalent numbers
at December 31, 2020 were $41,688 in cash, $274,715 in pre-paid expenses and $10,000 in intangible assets in form of capitalized
patent expenses. We had total liabilities of $2,267,659, which were all current liabilities, and which consisted of $655,303 in
accounts payable and accrued expenses (of which $307,176 was payable to related parties), and $1,612,356 in convertible loans.
As a result of defaulting on the notes, the debt premium as well as the debt discounts were fully amortized in 2020.
At December 31, 2021,
we had total working capital of negative $3,205,139 and an accumulated deficit of $8,753,668. Comparatively, on December 31, 2020,
we had total working capital of negative $1,951,256 and an accumulated deficit of $4,721,923. We believe that we must raise not
less than $3,700,000 in addition to current cash on hand to be able to continue our business operations for approximately the next
15 months.
Future Financing
We currently have an
effective S-1, dated July 26, 2021, in which we intend to raise an amount of $5,300,000. 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 convertible notes, with a face value of $2,165,000 and of accrued interest for these notes mounting to $85,685, described
under Note 7 to the Financial Statements.
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 grant date fair-value method and recording of such expense in the consolidated
financial statements over the requisite service period. The fair value concepts have not changed significantly in ASC 718; however,
in adopting this standard, companies must choose among alternative valuation models and amortization assumptions. After assessing
alternative valuation models and amortization assumptions, the Company will continue using both the Black-Scholes valuation model
and straight-line amortization of compensation expense over the requisite service period for each separately vesting portion of
the grant.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
Item 7A is not applicable
to us because we are a smaller reporting company.
Item 8. Financial Statements and Supplementary Data.
The financial statements
listed in Item 15(a) are incorporated herein by reference and are filed under this Item 8 as a part of this report and follow the
signature pages to this Annual Report on Form 10-K on page F-1.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls
and Procedures
Our Chief Executive
Officer (principal executive officer) and Chief Financial Officer (principal financial officer) reviewed the effectiveness of our
disclosure controls and procedures as at the end of the period covered by this report and concluded that as at December 31, 2021,
(i) the Company’s disclosure controls and procedures were not effective to ensure that material information relating to the
Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities
and Exchange Commission (the “Commission”), and (ii) the Company’s controls and procedures have not been designed
to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities
Exchange Act of 1934, as amended, is accumulated and communicated to the Company’s management, including its principal executive
and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required
disclosure.
Based on this evaluation,
our principal executive officer and principal financial officer concluded as at the evaluation date that our disclosure controls
and procedures were not effective due primarily to a material weakness in the segregation of duties in the Company’s internal
controls.
Management’s
Report on Internal Control Over Financial Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities
Exchange Act of 1934, as amended. Our management assessed the effectiveness of our internal control over financial reporting as
of December 31, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that
a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As disclosed in our
previous filings, there are material weaknesses in the Company’s internal control over financial reporting due to the fact
that the Company does not have an adequate process established to ensure appropriate levels of review of accounting and financial
reporting matters, which resulted in our closing process not identifying all required adjustments and disclosures in a timely fashion.
The Company’s CEO/CFO has identified control deficiencies regarding the lack of segregation of duties and the need for a
stronger internal control environment. The small size of the Company’s accounting staff may prevent adequate controls in
the future, such as segregation of duties, due to the cost/benefit of such remediation.
Although the Company
has hired a consultant to assist with SEC reporting and accounting matters, we expect that the Company will need to hire accounting
personnel with the requisite knowledge to improve the levels of review of accounting and financial reporting matters. The Company
may experience delays in doing so and any such additional employees would require time and training to learn the Company’s
business and operating processes and procedures. For the near-term future, until such personnel are in place, this will continue
to constitute a material weakness in the Company’s internal control over financial reporting that could result in material
misstatements in the Company’s financial statements not being prevented or detected.
Because of the above
material weakness, management has concluded that we did not maintain effective internal control over financial reporting as of
December 31, 2021, based on the criteria established in “Internal Control-Integrated Framework” issued by the COSO.
No Attestation
Report by Independent Registered Accountant
The effectiveness of
our internal control over financial reporting as of December 31, 2021 has not been audited by our independent registered public
accounting firm by virtue of our exemption from such requirement as a smaller reporting company.
Changes in Internal Controls Over
Financial Reporting
There was no change
in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal year ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
Inherent Limitations on Effectiveness
of Controls
The Company’s
management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect
all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute,
assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there
are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or
fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent
limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple
error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people,
or management override of the controls. The design of any system of controls is based in part on certain assumptions about the
likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over
time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies
or procedures.
Item 9 B. Other Information
On September 21, 2021
the Company appointed Robert J. Burnett from Witherspoon Bracich McPhee, PLLC of Spokane, Washington, as its Corporate Legal Counsel.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT DECEMBER 31, 2021 AND 2020
NOTE 1 – BACKGROUND AND ORGANIZATION
Business Operations
Bioxytran, Inc. (the “Company”)
is a clinical-stage pharmaceutical company focused on the development, manufacture and commercialization of therapeutic drugs designed
to address hypoxia in humans, which is a lack of oxygen to tissues, in a safe and efficient manner. If it is not addressed, lack
of oxygen to tissues, or hypoxia, results in necrosis, which is the death of cells comprising body tissue. Necrosis cannot be reversed.
Our lead drug candidate, code named BXT-25, is an oxygen-carrying small molecule consisting of bovine hemoglobin stabilized with
a co-polymer with intended applications to include treatment of hypoxic conditions in the brain resulting from stroke, and hypoxic
conditions in wounds to prevent necrosis and to promote healing. The Company’s initial focus is the treatment of hypoxic
conditions in the brain resulting from stroke, and hypoxic conditions in wounds to prevent necrosis and to promote healing. The
Company’s approach potentially will result in the creation of safe drug alternatives to existing therapies for effectively
addressing hypoxic conditions in humans. Our drug development efforts are guided by specialists in co-polymer chemistry and other
disciplines, and we intend to supplement our efforts with input from a scientific and medical advisory board whose members are
leading physicians.
Our Subsidiary, Pharmalectin, Inc. (“Pharmalectin”
or the “Subsidiary”) is pursuing their work with a candidate named, ProLectin, 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 se. 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.
Our Foreign Subsidiary, Pharmalectin (BVI),
Inc. (“Pharmalectin BVI” or the “Foreign Subsidiary”) is the owner and custodian of the Company’s
Copyrights, Trade Marks and Patents.
Organization
Bioxytran, Inc. was organized on October
5, 2017 as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000
authorized common shares with a par value of $0.0001, and 5,000,000 Preferred shares with a par value of $0.0001. On September
21, 2018, the Company went under a reorganization in the form of a reverse merger and is currently registered as a Nevada corporation
with a taxing structure for U.S. federal and state income tax as a C-Corporation with 300,000,000 authorized common shares with
a par value of $0.001, and 50,000,000 Preferred shares with a par value of $0.001.
Pharmalectin was organized on October 5,
2017 as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with 95,000,000
authorized Common shares with a par value of $0.0001, and 5,000,000 Preferred shares with a par value of $0.0001. The Subsidiary
was founded under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2020, the name was changed to Pharmalectin,
Inc. There are currently 30,000,000 issued and 19,650,000 outstanding shares; 15,000,000 Common shares are held by Bioxytran and
4,650,000 Common shares are held by an affiliate. An additional 4,500,000 options are also held by an affiliate. The option agreement
includes provisions for dilutive issuance and cash-less exercise. The beneficial ownership of the affiliate are Mike Sheikh, Ola
Soderquist and David Platt.
Pharmalectin BVI was organized on March
17, 2021 as a British Virgin Islands (BVI) Business Corporation with a BVI corporate taxing structure with 50,000 authorized shares
with a par value of $1.00. There are currently 50,000 outstanding shares held by the Company.
Basis of Presentation
The summary of significant accounting policies
presented below is designed to assist in understanding the Company’s consolidated financial statements. Such financial statements
and accompanying notes are the representations of the Company’s management, who are responsible for their integrity and objectivity.
These accounting policies conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”)
in all material respects and have been consistently applied in preparing the accompanying consolidated financial statements. The
Company has not earned any revenue from operations since inception. The Company chose December 31st as its fiscal
year end.
Principles of Consolidation
The accompanying consolidated financial
statements include the accounts of Bioxytran, Inc. a Nevada Corporation, its majority owned subsidiary, Pharmalectin, Inc. of Delaware
(collectively, the “Company”), as well as its wholly owned subsidiary, Pharmalectin (BVI), Inc of British Virgin Islands.
All intercompany accounts have been eliminated upon consolidation.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A summary of the significant accounting
policies applied in the preparation of the accompanying financial statements follows.
Cash
For purposes of the Statement of Cash Flows,
the Company considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements
in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during
the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation and the
valuation allowance related to deferred tax assets. Actual results may differ from these estimates.
Net Loss per Common Share, basic and
diluted
The Company computes earnings (loss) per
share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common
share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the year. Diluted
earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially
dilutive securities into Common Stock using the “treasury stock” and/or “if converted” methods as applicable.
At December 31, 2021, we would, based on
the market price of $0.40/share, be obligated to issue approximately 17,312,961 shares of Common Stock upon conversion of the currently
outstanding convertible notes (the “New Notes”) and 272,000 shares upon exercise of the warrants. For the New Notes,
the shares total is based on $2,250,685 of currently outstanding principal, default penalty and unpaid interest. At December 31,
2020, we would, based on market price of $0.24/share, be obligated to issue approximately 11,974,301 shares of Common Stock upon
conversion of the then outstanding convertible notes (the “Old Notes”) and 272,000 shares upon exercise of the warrants.
For the Old Notes, the shares total was based on $1,867,991 of currently outstanding principal, default penalty and unpaid interest
The 2021 1-year notes (the “New Notes”),
have an interest rate of 6% and are convertible at the lower of (i) a fixed price of $0.13, or (ii) 85% of the closing price of
any Qualified Financing, which consist of any fundraising receiving gross proceeds of not less than $500,000. The New Notes are
limited to converting no more than 4.99% of our issued an outstanding Common Stock.
Stock Based Compensation
The Company measures the cost of services
received from employees and non-employees in exchange for an award of equity instruments based on the fair value of the award on
the grant date pursuant ASC 718. Stock-based compensation expense is recorded by the Company over the requisite service period,
or vesting period, in the same expense classifications in the statements of operations, as if such amounts were paid in cash.
Accounting for subsidiary stock transactions
The Company accounts for subsidiary stock
transactions in accordance with Opinions of the Accounting Principles Board 09 (APBO No. 9). In paragraph 28, this pronouncement
excluded all adjustments form transactions in a company’s own stock “. . . from the determination of net income or
the results of operations under all circumstances.” During the years ended December 31, 2021 and 2020, the Company sold 9%
and 15%, respectively, of its subsidiary Pharmalectin for a total amount of $600,000 and $950,000, respectively. During the years
ended December 31, 2021 the Subsidiary also issued 4,500,000 stock options to its management. Accordingly, APIC has been adjusted
with this amount for the year ended December 31, 2021 and 2020.
Income Taxes
The Company accounts for income taxes under
the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or be settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely
than not that some portion of the gross deferred tax asset will not be realized. The Company records interest and penalties related
to income taxes as a component of provision for income taxes. The Company did not recognize any interest and penalty expense for
the years ended December 31, 2021 and 2020.
On December 22, 2017, the Tax Cuts and
Jobs Act (TCJA) was signed into law by the President of the United States. TCJA is a tax reform act that among other things, reduced
corporate tax rates to 21 percent effective January 1, 2018. FASB ASC 740, Income Taxes, requires deferred tax assets and liabilities
to be adjusted for the effect of a change in tax laws or rates in the year of enactment, which is the year in which the change
was signed into law. Accordingly, the Company adjusted its deferred tax assets and liabilities at December 31, 2017, using the
new corporate tax rate of 21 percent. See Note 10.
Research and Development
The Company accounts for research and development
costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”).
Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and
development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has
been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research
and development costs related to both present and future products are expensed in the period incurred. During the year ended December
31, 2021 the Company incurred $2,013,762 in research and development expenses, while during the year ended December 31, 2020 the
Company incurred $544,519.
Intangibles – Goodwill and Other
Valuation of intangibles are in accordance
with ASC 350. Costs associated with the application and award of patents in the U.S. and various other countries are capitalized
and amortized on a straight-line basis over the term of the patents as determined at award date, which varies depending on the
pendency period of the application, generally approximating seventeen years. Capitalized patent costs, also referred to as patent
prosecution costs, include internal legal labor, professional legal fees, government filing fees and translation fees related to
expanding the Company’s patent portfolio. Costs associated with the maintenance and annuity fees of patents are accounted
for as prepaid assets at the time of payment and amortized over the shorter of the maintenance period or remaining life of the
related patent.
Accrued Expenses
As part of the process of preparing our
consolidated financial statements, we are required to estimate accrued expenses. This process involves identifying services that
third parties have performed on our behalf and estimating the level of service performed and the associated cost incurred on these
services as at each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses include
professional service fees, such as those arising from the services of attorneys and accountants and accrued payroll expenses. In
connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided
relative to the actual services incurred by the service providers. In the event that we do not identify certain costs that have
been incurred or we under- or over-estimate the level of services or costs of such services, our reported expenses for a reporting
period could be understated or overstated. The date on which certain services commence, the level of services performed on or before
a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances
known to us in accordance with accounting principles generally accepted in the U.S.
Warrants
The Company has issued Common Stock warrants
in connection with the execution of certain equity and debt financings. The fair value of warrants is determined using the Black-Scholes
option-pricing model using assumptions regarding volatility of our common share price, remaining life of the warrant, and risk-free
interest rates at each period end.
Fair Value
Accounting Standards Codification subtopic
825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments.
The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected
in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial
assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements
together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit
risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise
only available information pertinent to fair value has been disclosed.
The Company follows Accounting Standards
Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification
subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments
and certain other items at fair value.
Recent Accounting Pronouncements
There were various updates recently issued,
most of which represented technical corrections to the accounting literature or application to specific industries and are not
expected to a have a material impact on the Company’s financial position, results of operations or cash flows.
NOTE 3 – GOING CONCERN AND MANAGEMENT’S
LIQUIDITY PLANS
As at December
31, 2021, the Company had cash of $72,358 and a negative working capital of $3,205,139. As at December 31, 2021, the Company has
not yet generated any revenues, and has incurred cumulative net losses of $8,753,668. These conditions raise substantial doubt
about the Company’s ability to continue as a going concern.
During the year
ended December 31, 2021, the Company raised $1,165,000 from issuance of convertible notes, and exchanged an additional note of
$1,000,000 against the defaulted convertible loans and accrued interest that mounted to $2,020,323. Another 1. The Company also
raised $600,000 in cash proceeds from the issuance of Common Stock in our Subsidiary. During the year ended December 31, 2020,
the Company raised $264,000 from issuance of convertible notes, and paid back $232,948. The Company also raised $950,000 in cash
proceeds from the issuance of Common Stock in our Subsidiary. The Company is aware that its current cash on hand will not be sufficient
to fund its projected operating requirements through the month of May 2022 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.
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 financial statements do not necessarily purport to represent realizable
or settlement values. The consolidated financial statements do not include any adjustment that might result from the outcome of
this uncertainty.
NOTE 4 – PRE-PAID EXPENSES AND
OTHER CURRENT ASSETS
On December 31, 2021, there were no
Pre-paid Expenses. At December 31, 2020 there were $274,715 in Pre-paid Expenses.
NOTE 5 - INTANGIBLES
Intangible assets are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No
impairment charges were recorded for the years ended December 31, 2021 and 2020.
Amortization of capitalized patent
costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized
on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency
period of the application, generally approximating seventeen years. The current patent application is still in process, and is
therefore not yet amortized.
Schedule of intangible
| |
| | |
| | |
| |
| |
Estimated Remaining Life (years) | | |
December 31, 2021 | | |
December 31, 2020 | |
Capitalized patent costs | |
| 19 | | |
$ | 46,932 | | |
$ | 10,000 | |
Accumulated amortization | |
| | | |
| — | | |
| — | |
| |
| | | |
| | | |
| | |
Intangible assets, net | |
| | | |
$ | 46,932 | | |
$ | 10,000 | |
NOTE 6 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND
OTHER CURRENT LIABILITIES
On December 31, 2021, there was $531,000
in Accounts Payables to related parties in form of payroll and advanced expenses. On December 31, 2020 there was $307,176 in Accounts
Payables to related parties.
The following table represents the major
components of accounts payables and accrued expenses and other current liabilities at December 31, 2021 and December 31, 2020:
Schedule of accounts payables and accrued expenses and other current liabilities
| |
December 31, 2021 | | |
December 31, 2020 | |
Accounts payable related party (1) | |
$ | 531,000 | | |
$ | 307,176 | |
Professional fees | |
| 375,371 | | |
| 84,325 | |
Interest | |
| 85,685 | | |
| 263,135 | |
Payroll taxes | |
| 32,010 | | |
| — | |
Pension/401K | |
| 131,250 | | |
| — | |
Other accounts payable | |
| — | | |
| 667 | |
Default penalty | |
| — | | |
| 673,956 | |
Convertible note payable | |
| 2,122,181 | | |
| 938,400 | |
Total | |
$ | 3,277,497 | | |
$ | 2,267,659 | |
| (1) | $210,000
to each the CFO and the CEO for 6 months of salary for the period July through December 2021, and $111,000 to the VP for salary
and expenses for the same period, while there was $120,000 to each the CFO and the CEO at and $67,176 for the VP at December 31,
2020. |
NOTE 7 – CONVERTIBLE NOTES PAYABLE
Between October 23, 2019 and March 18,
2020, the Company issued senior convertible debentures for an aggregate of $938,400 (the “Convertible Debentures”)
in exchange for an aggregate net cash proceeds of $836,000, net of financing costs. The Convertible Debentures have a stated interest
rate of 4-8% per annum payable quarterly beginning October 23, 2020 and were due one year from the date of issuance, the latest
due March 18, 2021 and were convertible into shares of the Company’s Common Stock at the option of the holder at a conversion
price to the lesser of: (i) the lowest trading price for the twenty-day period prior to the date of the Convertible Debentures
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.
Additionally, the variable conversion rate
component requires that the Convertible Debentures 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 Convertible Debentures.
Along with the issuance of the Convertible
Debentures, the Company issued an aggregate of 272,000 warrants to purchase the Company’s Common Stock at $2.00 per share,
expiring five years from the date of issuance, the latest being March 18, 2020. These warrants contain a cashless exercise and
certain anti-dilutive (reset) provisions. The Company determined that the Warrants were exempt from derivative accounting and were
valued at $97,279 on the Date of Inception using the Black Scholes Options Pricing Model. As the warrants were exercisable immediately,
this debt discount was amortized in its entirety to interest expense on the date of issuance.
In connection
with the Debt Restructuring, described here below, the outstanding warrants were transferred to the Company’s management
(issued in the name of NDPD, Inc.) in lieu of interest on amounts due as at May 31, 2021.
Debt Restructuring
On April 16, 2020, SEC ordered, pursuant
to Section 12(k) of the Securities Exchange Act of 1934, that trading of BIXT be suspended for the period April 16 through April
29, 2020.
As a result of the SEC ordered suspension
the Company defaulted on the outstanding Convertible Debentures; 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. 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 accreted to additional paid-in capital.
On May 2 and 3, 2021, Bioxytran, Inc. (the
“Company”) entered into nine note agreements for a total amount of $3,266,846 in 1-year notes (the “New Notes”),
with an interest rate of 6% convertible at the lower of (i) a fixed price of $0.13, or (ii) 85% of the closing price of any Qualified
Financing, which consist of any fundraising receiving gross proceeds of not less than $500,000. The New Notes required the Company
to prepare and file a Registration Statement on Form S-1 within a period of 60 days from issuance of the New Notes. A Form S-1
was filed with the SEC on June 24, 2021 and was declared effective by SEC on July 23, 2021, wherein the New Notes have a 180-day
lock-up period.
On November 20, 2021, management forgave
the Company their part of the loan for an amount of $986,864 originating from accrued salaries recorded as additional paid-in capital.
See details under Note 8.
The transactions set forth below were approved
by the Company’s Board of Directors on June 4, 2021.
Name | |
| |
Principal due December 31, 2021 | | |
Accrued interest December 31, 2021 | | |
Total amount due December 31, 2021 | |
Notes sold in exchange for cash | |
(1 | ) |
$ | 1,165,000 | | |
$ | 46,108 | | |
| 1,211,108 | |
Note issued in exchange for defaulted notes | |
(2 | ) |
| 1,000,000 | | |
| 39,577 | | |
| 1,039,577 | |
| |
| |
$ | 2,165,000 | | |
$ | 85,685 | | |
| 2,250,685 | |
| (1) | Net
cash received for these notes were $1,045,150, after a Debt Discount of $119,850 was paid to the sole Placement Agent: WallachBeth
Capital, LLC (Member FINRA / SIPC). |
| (2) | The
“Old Notes” were paid off and assumed by a different entity/company. Portions of the balance was forgiven and a new
note of $1,000,000 was issued. |
The defaulted notes were returned to the
Company on May 26, 2021. The debt forgiveness of $1,020,323 was recorded as additional paid-in capital.
CONVERTIBLE NOTES PAYABLE
Name |
|
Due at
May 26, 2019 |
|
|
Principal
Amount |
|
|
Default Penalty |
|
|
Warrants Issued |
|
|
Term |
|
|
Exercise
Price |
|
|
Amortization
of Warrants |
|
|
Accrued Interest |
|
Old Notes |
|
|
Defaulted |
|
|
$ |
938,400 |
|
|
$ |
673,956 |
|
|
|
272,000 |
|
|
|
5 |
|
|
|
2.00 |
|
|
$ |
97,279 |
|
|
$ |
407,967 |
|
As part of the
pay-off, the debt originating from a January 20, 2021 summary judgement by the Supreme Court of the State of New York, County of
Nassau, awarding Power Up damages in the amount of $420,750 for Breach of Contact was agreed to be dismissed by prejudice. As a
result, the damages recorded in the first quarter of 2021 was reversed in the Statement of operations.
As described in
the above, the outstanding warrants were transferred to the Company’s management (issued in the name of NDPD, Inc.) in lieu
of interest on amounts due as at May 31, 2021.
Convertible notes
payable consists of the following at December 31, 2021 and December 31, 2020:
| |
December 31, 2021 | | |
December 31, 2020 | |
Principal balance | |
$ | 1,165,000 | | |
$ | 938,400 | |
Principal balance, related party | |
| 1,000,000 | | |
| — | |
Default penalty | |
| — | | |
| 673,956 | |
Unamortized debt discount | |
| (42,819 | ) | |
| — | |
Outstanding, net of debt discount and premium | |
$ | 2,122,181 | | |
$ | 1,612,356 | |
NOTE 8 – STOCKHOLDERS’ EQUITY
Preferred stock
As at December 31, 2021 and 2020, no preferred
shares have been designated or issued.
Common stock
On January 3, 2020, 100,000 shares of Common
Stock were issued as a result of conversion of accrued interest and principal on the Auctus Note #2 for a total of $12,000.
On February 18, 2020, 250,000 shares of
Common Stock were issued as a result of conversion of accrued interest and principal on the Auctus Note #2 for a total of $22,132.
On March 12, 2020, 750,000 of Common Stock
were issued in exchange for 416,666 warrants with cashless exercise, originating from Auctus Notes #1 and #2.
On June 4, 2021, 930,864 shares
of Common Stock were issued to two consultants as a result of conversion of accrued interest and principal for two convertible
notes for a total of $121,042.
On June 4, 2021, 7,591,261 shares
of Common Stock were issued to management as a result of conversion of accrued interest and principal for three convertible notes
for a total of $986,864. To avoid dilution of the Company stock, the shares were returned to treasury and cancelled on November
20, 2021, and the original debt consisting of accrued salary was forgiven.
On December 3, 2021 a company affiliate
converted their holdings in the Subsidiary into 4,754,552 shares, or 0.2945/share in accordance with a joint venture agreement.
For the year ended December 31, 2021, a
net of 7,704,909 shares of Common Stock were awarded at an average cost per share of $0.07, under the 2010 and the 2016 Stock Plans
for a total value of $557,422. For the year ended December 31, 2020, 9,875,000 shares of Common Stock were awarded at an average
cost per share of $0.01, under the 2010 Stock Plan for a total value of $228,407. For details, see Shares Awarded and Issued under
Note 9.
As at December 31, 2021, the Company has
110,840,998 shares of Common Stock issued and outstanding. At December 31, 2020 there were 97,450,673 shares of Common Stock issued
and outstanding.
Common Stock Warrants
The fair value of stock warrants granted
for the year ended December 31, 2021 was calculated with the following assumptions:
Schedule of stock warrants granted
|
|
2021 |
|
|
2020 |
|
Risk-free interest rate |
|
|
0.16 - 1.00 |
% |
|
|
0.46 - 1.67 |
% |
Expected dividend yield |
|
|
0 |
% |
|
|
0 |
% |
Volatility factor (monthly) |
|
|
175.34 |
% |
|
|
158.22 |
% |
Expected life of warrant |
|
|
5 years |
|
|
|
5 years |
|
For the year ended December 31, 2021 the
Company awarded 405,334 warrants, valued at $145,438, and 750,000 shares of Common Stock were issued in a cashless exercise. For
the year ended December 31, 2020 the Company issued 408,333 warrants to purchase Common Stock as part of a convertible note agreements.
The warrants total value allocated to debt discount was $129,929. For details, see Convertible Note Payable under Note 7.
The following table summarizes the Company’s Common
Stock warrant activity for the year ended December 31, 2021 and 2020:
Schedule of company's common stock warrants activity
|
|
Number of Warrants |
|
|
Weighted Average Exercise Price |
|
|
Weighted- Average Remaining Expected Term |
|
Outstanding as at January 1, 2020 |
|
|
616,666 |
|
|
$ |
0.60 |
|
|
|
4.8 |
|
Granted |
|
|
405,334 |
|
|
|
1.29 |
|
|
|
5.0 |
|
Exercised |
|
|
(750,000 |
) |
|
|
— |
|
|
|
— |
|
Forfeited/Canceled |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding as at December 31, 2020 |
|
|
272,000 |
|
|
$ |
2.00 |
|
|
|
3.9 |
|
Granted |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Forfeited/Canceled |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding as at December 31, 2021 |
|
|
272,000 |
|
|
$ |
2.00 |
|
|
|
2.9 |
|
The following table summarizes information
about stock warrants that are vested or expected to vest at December 31, 2021:
Schedule of stock warrants
|
|
|
|
|
Warrants Outstanding |
|
|
|
|
|
|
|
|
|
Exercisable Warrants |
|
|
|
Exercise Price |
|
|
|
Number of Warrants |
|
|
|
Weighted
Average
Exercise
Price
Per Share |
|
|
|
Weighted Average Remaining Contractual Life (Years) |
|
|
|
Aggregate Intrinsic Value |
|
|
|
Number of Warrants |
|
|
|
Weighted Average Exercise Price Per Share |
|
|
|
Weighted Average Remaining Contractual Life (Years) |
|
|
|
Aggregate Intrinsic
Value |
|
$ |
2.00 |
|
|
|
272,000 |
|
|
$ |
2.00 |
|
|
|
2.90 |
|
|
$ |
— |
|
|
|
272,000 |
|
|
$ |
2.00 |
|
|
|
2.90 |
|
|
$ |
— |
|
$ |
2.00 |
|
|
|
272,000 |
|
|
$ |
2.00 |
|
|
|
2.90 |
|
|
$ |
— |
|
|
|
272,000 |
|
|
$ |
2.00 |
|
|
|
2.90 |
|
|
$ |
— |
|
The 272,000 warrants are held by an affiliate.
The warrant agreement includes provisions for dilutive issuance and cash-less exercise and are held by an affiliate (beneficially
owned by Michael Sheikh, Ola Soderquist and David Platt).
The following table sets forth the status
of the Company’s non-vested warrants as at December 31, 2021 and December 31, 2020:
Schedule of non-vested warrants
|
|
Number of Warrants |
|
|
Weighted- Average Grant-Date Fair Value |
|
Non-vested as at December 31, 2019 |
|
|
— |
|
|
$ |
— |
|
Granted |
|
|
405,334 |
|
|
|
0.13 |
|
Forfeited |
|
|
— |
|
|
|
— |
|
Vested |
|
|
(405,334 |
) |
|
|
0.13 |
|
Non-vested as at December 31, 2020 |
|
|
— |
|
|
$ |
— |
|
Granted |
|
|
— |
|
|
|
— |
|
Forfeited |
|
|
— |
|
|
|
— |
|
Vested |
|
|
— |
|
|
|
— |
|
Non-vested as at December 31, 2021 |
|
|
— |
|
|
$ |
— |
|
The weighted-average remaining contractual
life for warrants exercisable at December 31, 2021 is 2.90 years.
The aggregate intrinsic value for fully
vested, exercisable warrants was $0 at December 31, 2021 and 2020 was $0.
Common Stock Options
For the year ended December 31, 2021 there
were 135,000 options awarded under the 2021 Stock Option Plan. The options total fair value at the time of award was $14,490. For
the year ended December 31, 2020 there were 192,000 options awarded under the 2010 Stock Option Plan. The options total fair value
at the time of award was $18,460. For details, see Stock options granted and vested under note 9.
Sales of Shares in Subsidiary
During the years ended December 31, 2021
and 2020, the Company sold 9% and 15%, respectively, of its subsidiary Pharmalectin for a total amount of $600,000 and $950,000,
respectively. The external ownership interest is 24% and are currently held by an affiliate (beneficially owned by Michael Sheikh,
Ola Soderquist and David Platt).
NOTE 9 – STOCK OPTION PLAN AND
STOCK-BASED COMPENSATION
During the year ended January 15, 2021,
the Company adopted a stock option plan entitled “The 2021 Stock Plan” (2021 Plan) under which the Company may grant
Options to Purchase Stock, Stock Awards or Stock Appreciation Rights up to 15% of the then fully diluted number of shares of the
Company’s Common Stock, automatically adjusted on January 1 each year. As at December 31, 2021, there were 668,000 outstanding
stock options valued at historic fair market value of $367,400 and 1,669,000 shares issued valued at a fair historic market value
of $43,919 at the time of award. As at December 31, 2020, there was “The 2010 Stock Plan” under this plan there were
533,000 outstanding stock options with a fair historic market value of $275,603 and 11,002,000 shares issued with a fair historic
market value of $1,075,358 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 2010 Plan:
On January 1, 2020 the Company granted
250,000 shares with a fair market value of $0.285/share at the time of award, to a consultant for assistance with the Companies
PR work, for a total of $71,250.
On January 31, 2020 the Company granted
two subcontractors a total of 200,000 shares with a fair market value of $0.14/share at the time of award, as compensation for
their work with the Company’s marketing efforts, for a total of $28,000.
On 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 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 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 $0.003/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 $26,400.
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.
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 November 13, 2020, the Company granted
63,000 shares with a fair market value of $0.18/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 $11,580.
On November 13, 2020, the Company granted
200,000 shares with a fair market value of $0.19/share to two Medical Consultants for their efforts in validating the Company’s
science and potential clinical pathways, for a total of $37,500.
On January 1, 2021 the Company granted
10,000 shares, with a fair market value of $0.24/share at the time of award, to a Medical Advisory Board Member for her contribution
in the Company’s Advisory Board, for a total of $2,400.
On January 15, 2021 the Company granted
3,189,200 shares of Common Stock valued at $0.24/share, equally divided to 227,800 shares/each to fourteen of the Company’s
Managers, Board- and Medical Advisory Board members, as well as to indispensable Consultants currently working on the clinical
trial submissions with the FDA, for a total value of $765,408. On November 20, 2021, the Management returned 1,083,400 of these
shares to the Plan in order to avoid dilution of the Company stock, the shares were cancelled upon return. The shares market value
at the time of issuance were $260,016, or $0.24/share.
Shares Awarded and Issued 2021 Plan:
On April 1, 2021 the Company granted 10,000
shares, with a fair market value of $0.17/share at the time of award, to a Medical Advisory Board Member for her contribution in
the Company’s Advisory Board, for a total of $1,700.
On April 1, 2021 the Company granted 90,000
shares with a fair market value of $0.17/share to three members of the Audit Committee as compensation for their contribution in
the Audit Committee, for a total of $15,300.
On April 22, 2021 the Company granted 150,000
shares with a fair market value of $0.17/share at the time of award, to a consultant for assistance with the Companies PR work,
for a total of $25,500.
On June 15, 2021 the Company granted 450,000
shares with a fair market value of $0.001/share at the time of award, to a consultant for assistance with the Companies PR work,
for a total of $450.
On July 1, 2021 the Company granted 10,000
shares to a Medical Advisory Board Member for her contribution to the Company during the second quarter of 2021. The total fair
market value at the time of the award was $10, or $0.001/share.
On July 1, 2021 the Company granted 90,000
shares to three Board Members in reward of their attendance at Board and Committee meetings during the second quarter of 2021.
The total fair market value at the time of the award was $90, or $0.001/share.
On August 2, 2021 the Company granted 699,000
shares to our Investment Banker as per outlined in the PPM for a total value of $699, or $0.001/share.
On October 1, 2021 the Company granted
170,000 shares to four Board members in reward of their attendance at Board and Committee meetings during the third quarter of
2021. The total fair market value at the time of the award was $170, or $0.001/share.
On November 20, 2021 the Company granted
3,597,529 shares to an affiliate for their development and regulatory work with the Company’s first indication. The total
fair market value at the time of the award was $7,594, or 0.0021/share.
On December 3, 2021 the Company granted
322,580 shares to an affiliate as compensation for Management Fee and Legal Expenses for a total value of $95,000, or 0.2945/share
as per written agreement.
|
|
Number of Shares |
|
|
Fair Value per Share |
|
|
Weighted Average Market Value per Share |
|
Shares Granted as at December 31, 2020 from the 2010 Plan |
|
|
11,002,000 |
|
|
$ |
0.003 - 1.49 |
|
|
$ |
0.10 |
|
Shares Granted in 2021 from the 2010 Plan |
|
|
3,199,200 |
|
|
|
0.24 |
|
|
|
0.24 |
|
Shares Granted as at December 31, 2021 from the 2021 Plan |
|
|
4,505,709 |
|
|
$ |
0.001 – 0.29 |
|
|
$ |
0.07 |
|
For the year ended December 31, 2021, the
Company recorded stock-based compensation expense of $557,422 in connection with share-based payment awards. For the year ended
December 31, 2020, the Company recorded stock-based compensation expense of $228,407 in connection with share-based payment awards.
Stock options granted and vested 2010
Plan:
On January 1, 2020 the Company granted
3,000 three-year vested 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 vested 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 vested 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 vested 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 vested 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 vested 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.
On October 1, 2020 the Company granted
3,000 three-year vested 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 vested 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.
Stock options granted and vested 2021
Plan:
On February 1, 2021 the Company granted
45,000 three-year options immediately vested at an exercise price of $0.20 to an Advisory Board Member for his contribution in
the Company’s Advisory Board. The options total fair value at the time of award was $6,750.
On May 1, 2021 the Company granted 45,000
three-year options immediately vested at an exercise price of $0.19 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 $7,650.
On August 1, 2021 the Company granted 45,000
3-year options immediately vested 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 award was $45.
|
|
2021 |
|
|
|
2020 |
|
Risk-free interest rate |
|
|
0.16 - 1.00 |
% |
|
|
0.10 - 1.61 |
% |
Expected dividend yield |
|
|
0 |
% |
|
|
0 |
% |
Volatility factor (monthly) |
|
|
175.34 |
% |
|
|
158.22 |
% |
Expected life of option |
|
|
3 years |
|
|
|
3 years |
|
For the year ended December 31, 2021, the
Company recorded compensation expense of $18,460 in connection with awarded stock options. The Company recorded $257,143 in awarded
option valuation as compensation expense during 2020. As at December 31, 2021, there was no unrecognized compensation expense related
to non-vested stock option awards.
The following table summarizes the Company’s
stock option activity during the year ended at December 31, 2021:
|
|
Number of Shares |
|
|
Exercise Price per Share |
|
|
Weighted Average Exercise Price per Share |
|
Outstanding as at December 31, 2020 |
|
|
533,000 |
|
|
$ |
0.001 - 1.21 |
|
|
$ |
0.73 |
|
Granted |
|
|
135,000 |
|
|
|
0.001 - 0.32 |
|
|
|
0.13 |
|
Exercised |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Options forfeited/cancelled |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Outstanding as at December 31, 2021 |
|
|
668,000 |
|
|
$ |
0.001 - 1.21 |
|
|
$ |
0.55 |
|
The following table summarizes information
about stock options that are vested or expected to vest at December 31, 2021:
| | |
| | |
Options Outstanding | | |
| | |
| | |
Exercisable Options | | |
| |
Exercise Price | | |
Number of Options | | |
Weighted Average Exercise Price Per Share | | |
Weighted Average Remaining Contractual Life (Years) | | |
Aggregate Intrinsic Value | | |
Number of Options | | |
Weighted Average Exercise Price Per Share | | |
Weighted Average Remaining Contractual Life (Years) | | |
Aggregate Intrinsic Value | |
$ | 0.001 | | |
| 90,000 | | |
$ | 0.001 | | |
| 1.95 | | |
$ | — | | |
| 90,000 | | |
$ | 0.001 | | |
| 1.95 | | |
$ | — | |
| 0.05 | | |
| 3,000 | | |
| 0.05 | | |
| 1.75 | | |
| — | | |
| 3,000 | | |
| 0.05 | | |
| 1.75 | | |
| — | |
| 0.15 | | |
| 90,000 | | |
| 0.15 | | |
| 1.33 | | |
| — | | |
| 90,000 | | |
| 0.15 | | |
| 1.33 | | |
| — | |
| 0.18 | | |
| 45,000 | | |
| 0.18 | | |
| 1.83 | | |
| — | | |
| 45,000 | | |
| 0.18 | | |
| 1.83 | | |
| — | |
| 0.19 | | |
| 45,000 | | |
| 0.19 | | |
| 2.33 | | |
| — | | |
| 45,000 | | |
| 0.19 | | |
| 2.33 | | |
| — | |
| 0.20 | | |
| 48,000 | | |
| 0.20 | | |
| 2.04 | | |
| — | | |
| 48,000 | | |
| 0.20 | | |
| 2.04 | | |
| — | |
| 0.31 | | |
| 3,000 | | |
| 0.31 | | |
| 1.00 | | |
| — | | |
| 3,000 | | |
| 0.31 | | |
| 1.00 | | |
| — | |
| 0.32 | | |
| 3,000 | | |
| 0.32 | | |
| 1.25 | | |
| — | | |
| 3,000 | | |
| 0.32 | | |
| 1.25 | | |
| — | |
| 0.73 | | |
| 3,000 | | |
| 0.73 | | |
| 0.83 | | |
| — | | |
| 3,000 | | |
| 0.73 | | |
| 0.83 | | |
| — | |
| 0.61 | | |
| 45,000 | | |
| 0.61 | | |
| 0.75 | | |
| — | | |
| 45,000 | | |
| 0.61 | | |
| 0.75 | | |
| — | |
| 0.95 | | |
| 200,000 | | |
| 0.95 | | |
| 0.70 | | |
| — | | |
| 200,000 | | |
| 0.95 | | |
| 0.70 | | |
| — | |
| 1.09 | | |
| 3,000 | | |
| 1.09 | | |
| 0.50 | | |
| — | | |
| 3,000 | | |
| 1.09 | | |
| 0.50 | | |
| — | |
| 1.10 | | |
| 45,000 | | |
| 1.10 | | |
| 0.58 | | |
| — | | |
| 45,000 | | |
| 1.10 | | |
| 0.58 | | |
| — | |
| 1.21 | | |
| 45,000 | | |
| 1.21 | | |
| 0.33 | | |
| — | | |
| 45,000 | | |
| 1.21 | | |
| 0.33 | | |
| — | |
$ | 0.001-1.21 | | |
| 668,000 | | |
$ | 0.55 | | |
| 1.22 | | |
$ | — | | |
| 668,000 | | |
$ | 0.55 | | |
| 1.22 | | |
$ | — | |
The following table sets forth the status
of the Company’s non-vested stock options as at December 31, 2021 and December 31, 2020:
| | |
Number of Options | | |
Weighted- Average Grant-Date Fair Value | |
Non-vested as at December 31, 2020 | | |
| — | | |
$ | — | |
Granted | | |
| 135,000 | | |
| 0.13 | |
Forfeited | | |
| — | | |
| — | |
Vested | | |
| (135,000 | ) | |
| 0.13 | |
Non-vested as at December 31, 2021 | | |
| — | | |
$ | — | |
The weighted-average remaining contractual
life for options exercisable at December 31, 2021 is 1.22 years.
The aggregate intrinsic value for fully
vested, exercisable options was $0 at December 31, 2021. The aggregate intrinsic value of options exercised for the year ended
at December 31, 2020 was $0. The actual tax benefit realized from stock option exercises for the year ended at December 31, 2021
and 2020 was $0 as no options were exercised.
At December 31, 2021 the Company has 34,181,909
options or stock awards available for grant under the 2021 Plan.
Issuance of Options in Subsidiary
During the years ended December 31, 2021
the Subsidiary also issued 4,500,000 stock options to an affiliate (beneficially owned by Michael Sheikh, Ola Soderquist and David
Platt) under its 2017 Stock Plan. There was no such issuance at the year ended December 31, 2020. The option agreement includes
provisions for dilutive issuance and cash-less exercise.
At December 31, 2021 the Company has no
additional options or stock awards available for grant under the subsidiary’s 2017 Plan.
NOTE 10 – PROVISION FOR INCOME
TAXES
Provision
for Income Taxes
During the year ended December 31, 2021
and December 31, 2020, no provision for income taxes was recorded as the Company generated net operating losses.
The tax effects of temporary differences
that give rise to deferred tax assets are presented below:
Schedule of deferred tax assets
| |
2021 | | |
2020 | |
Deferred Tax Assets: | |
| | | |
| | |
Net operating loss carryforward | |
$ | 6,670,000 | | |
$ | 3,225,628 | |
| |
| | | |
| | |
Total deferred tax assets | |
| 1,400,000 | | |
| 677,382 | |
| |
| | | |
| | |
Valuation allowance | |
| (1,400,000 | ) | |
| (677,382 | ) |
| |
| | | |
| | |
Deferred tax asset, net of valuation allowance | |
$ | — | | |
$ | — | |
A reconciliation of the statutory federal
income tax rate to the Company’s effective tax rate is as follows:
Schedule of effective tax rate
Tax benefit at federal statutory rate | |
| (21.0 | )% | |
| (21.0 | )% |
The Company assesses the likelihood that
deferred tax assets will be realized. To the extent that realization is not likely, a valuation allowance is established. Based
upon the Company’s history of losses since inception, management believes that it is more likely than not that future benefits
of deferred tax assets will not be realized.
At December 31, 2021, the Company had approximately
$6,670,000 of federal net operating losses that may be available to offset future taxable income, At December 31, 2020, the Company
had approximately $3,225,628 of federal net operating losses that may be available to offset future taxable income. $2,870 of the
net operating loss carry forwards (NOL), if not utilized, will expire in 2037 for federal purposes, the remaining amount of NOL
can be carried forward indefinitely. As at the fiscal year 2021, a deduction for issued warrants and stock options and restricted
shares awarded from the 2010 Stock Plan for a total of $2,030,000 has not yet been made, for the fiscal year 2020 this total was
$1,448,240. The market value less exercise price for these awards will be deducted if and when the warrants and stock options are
exercised, while the restricted shares will be deducted at market value at the date they were awarded, once the restriction is
removed.
Pursuant to the Internal Revenue Code Section
382 (“Section 382”), certain ownership changes may subject the net operating loss carryforwards (“carryforwards”)
and research and development tax credit carryforwards to annual limitations which could reduce or defer the carryforwards. Section
382 imposes limitations on a corporation’s ability to utilize carryforwards if it experiences an ownership change. An ownership
change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than
50 percentage points over a three-year period. In the event of an ownership change, utilization of the carryforwards would be subject
to an annual limitation under Section 382 determined by multiplying the value of its stock at the time of the ownership change
by the applicable long-term tax-exempt rate. Any unused annual limitation may be carried over to later years. The imposition of
this limitation on its ability to use the carryforwards to offset future taxable income could cause the Company to pay U.S. federal
income taxes earlier than if such limitation were not in effect and could cause such carryforwards to expire unused, reducing or
eliminating the benefit of such carryforwards. The Company has not completed a Section 382 study to determine if there have been
one or more ownership changes due to the costs associated with such a study. Until a study is completed and the extent of the limitations,
if any, is able to be determined, no additional amounts have been written off or are being presented as an uncertain tax position.
On December 22, 2017, the U.S. government
enacted comprehensive tax legislation commonly referred to as the Tax Cut and Jobs Act (the “Tax Act”). The Tax Act
establishes new tax laws that affects 2019 and future years, including a reduction in the U.S. federal corporate income tax rate
to 21%, effective January 1, 2019.
The Company applies the provisions of ASC
740-10, Income Taxes. The Company has not recognized any liability for unrecognized tax benefits and does not believe there is
any uncertainty with respect to its tax position. The Company’s policy with respect to unrecognized tax benefits is to recognize
interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.
The Company files tax returns as prescribed
by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination
by federal and state jurisdictions, where applicable. There are currently no pending income tax examinations. Earlier years may
be examined to the extent that tax credit or net operating loss carryforwards are used in future periods. The Company’s policy
is to record interest and penalties related to income taxes as part of its income tax provision.
NOTE 11 – 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. On January 20, 2021 the Supreme Court of the State of New York, County of Nassau, granted
Power Up a summary judgement against the Company for Breach of Contact, awarding Power Up damages in the amount of $420,750.
The underlying convertible note was, per
agreement of the parties, cancelled on June 4, 2021, with Power Up agreeing to a stipulation of discontinuance with prejudice and
forfeiture of on-going lawsuit and forfeiture of the mentioned awarded damages.
At present, there is no other pending litigation
or proceeding involving any of our directors, officers or employees as to which indemnification is sought, nor are we aware of
any threatened litigation or proceeding that may result in claims for indemnification.
NOTE 12 – SUBSEQUENT EVENTS
The Company has evaluated events from December
31, 2021 through the date the financial statements were issued. The events requiring disclosure for this period are as follows:
Note Financing
On December 31,
2021, the Company issued a Private Placement Memorandum in form of convertible Notes, “the Notes”, offered exclusively
to accredited investors for an amount of up to $1,500,000, “the PPM”, to be closed no later than January 10, 2022.
A summary of the Notes issued under the
PPM is as follows:
Convertible Loan | |
| |
Date of Issuance | | |
Principal Amount | |
Interest | |
1-year convertible notes with 6% interest convertible at $0.25/share | |
(1) | |
|
1/12/2022 | | |
| 1,467,000 | |
|
6 | % |
(1) Net cash received for these notes were $1,380,960, after a Debt Discount of $86,040 was paid to the sole Placement Agent: WallachBeth Capital, LLC (Member FINRA / SIPC). WallachBeth also received 264,060 5-year warrants exercisable at $0.25/share, valued at $0.16, based on Black and Schools Option Pricing Model, for a total value of $42,250.
Terms for
the Notes
Between January
5, 2022 and January 12, 2022, we entered into thirty-four (34) Securities Purchase Agreements, or “the SPA’s”,
with accredited investors, under which we agreed to sell the Notes, in an aggregate principal amount of $1,467,000 with 6% interest
to the Holders of the Notes, “the Holders”.
At any time after
the issue date of the Notes, “the Holders”, have the option to convert all or any part of the outstanding and unpaid
principal amount and accrued and unpaid interest of the Notes into shares of our Common Stock at the Conversion Price. The “Conversion
Price” is set to $0.25 per share.
The Holders are limited to holding a total
of 4.99% of our issued and outstanding Common Stock. The Common Stock underlying the Notes, when issued, bear a restrictive legend
are currently eligible for resale under Rule 144.
If the Notes are converted prior to us
paying off such note, it would lead to dilution to our shareholders as a result of the conversion discounted for the Notes. There
can be no assurance that there will be any funds available to pay of the Notes, or if available, on terms that will be acceptable
to us or our shareholders. If we fail to obtain such additional financing on a timely basis, the Holders may convert the Notes
and sell the underlying shares, which may result in dilution to shareholders due to the conversion discount, as well as a decrease
in our stock price.
Common stock
Shares awarded, but not yet
issued, under the 2021 Stock Plan:
On January 10, 2022 the Company granted
40,000 shares of Common Stock to four Board Members in reward of their attendance at Board and Committee meetings during the fourth
quarter of 2021. The total fair market value at the time of the award was $6,400, or $0.16/share.
On February 18, 2022 the Company granted
100,000 shares of Common Stock to two Consultants in reward of their assistance in the filings of the IND to the US FDA and the
CT-4 to the Indian CDCSO for the ProLectin-M, an oral chewable tablet for the treatment of mild to moderate cases of Covid-19.