NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2022 AND 2021
(UNAUDITED)
NOTE
1 – BACKGROUND AND ORGANIZATION
Business
Operations
Bioxytran,
Inc. (the “Company”) is a clinical stage pharmaceutical company focused on the development, manufacture and commercialization
of therapeutic drugs designed to address hypoxia in humans, which is a lack of oxygen to tissues, in a safe and efficient manner.
Our
Subsidiary, Pharmalectin, Inc. (the “Subsidiary”) is a clinical stage pharmaceutical company focused on the development,
manufacture and commercialization of therapeutic drugs designed to address conditions related to Covid-19.
Our
Foreign Subsidiary, Pharmalectin (BVI), Inc. (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. There are currently 110,840,998 outstanding shares. Collectively,
our officers, our directors and one other stockholder own or exercise voting and investment control of 85,823,272 (77.4%) of our outstanding
Common Stock.
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 of the Subsidiary’s Common Stock; 15,000,000 Common
shares (76.3%) are held by Bioxytran and 4,650,000 Common shares are held by an affiliate. The beneficial ownership of the affiliate
includes the Company’s management.
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
accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation
S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted
accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements
pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive
financial statements and should be read in conjunction with our audited consolidated financial statements.
While
the information presented in the accompanying financial statements is unaudited, it includes all adjustments which are, in the opinion
of the management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented
in accordance with the accounting principles generally accepted in the United States of America (“US GAAP”). In the opinion
of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have
been included and all such adjustments are statements prepared in accordance with US GAAP have been condensed or omitted. These financial
statements should be read in conjunction with the Company’s December 31, 2021 audited financial statements and notes that can be
expected for the year ending December 31, 2022.
Principles
of Consolidation
The
accompanying unaudited condensed consolidated financial statements include the accounts of Bioxytran, Inc. a Nevada Corporation, its
majority owned subsidiary, Pharmalectin, Inc. of Delaware, as well as its wholly owned subsidiary, Pharmalectin (BVI), Inc of British
Virgin Islands (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A
summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
Cash
For
purposes of the Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with an original 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, valuation of warrants, valuations in connection with convertible notes 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
June 30, 2022, we would, based on the market price of $0.32/share, be obligated to issue approximately 23,745,998 shares of Common Stock
upon conversion of the currently outstanding convertible notes (the “New Notes”) and 6,253,088 shares upon exercise of outstanding
warrants and 620,000 shares upon exercise of outstanding options. For the New Notes, the shares total is based on $3,769,720 of currently
outstanding principal, and unpaid interest.
The
2021 1-year notes (the “2021 Notes” and collectively with the 2022 Notes (the “New Notes”), extended through
October 31, 2022, 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 whereby the Company receives gross proceeds of not less than $500,000.
The
2022 1-year notes (the “2022 Notes” and collectively with the 2021 Notes (the “New Notes”), have an interest
rate of 6% and are convertible at a fixed price of $0.25. The New Notes contain a conversion limitation which prevents the holder(s)
of the New Notes from converting if doing so would result in the holder beneficially owning more than 4.99% of our issued and 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 from transactions in a company’s own stock “. . . from the determination
of net income or the results of operations under all circumstances.” During the six months ended June 30 2021, the Company sold
shares in its subsidiary Pharmalectin for a total amount of $600,000. Accordingly, APIC was adjusted with this amount for the six months
ended June 30, 2021, no such transactions took place during the six months ended June 30, 2022.
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.
For
the six months ended June 30, 2022 the Company incurred $283,266 in research and development expenses, while during the six months ended
June 30, 2021 the Company incurred $1,065,685.
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 labour, 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 condensed 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
In
August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06,
Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s
Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies
the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard
also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for
all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis,
with early adoption permitted beginning on January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company’s
financial statements.
Management
does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect
on the Company’s unaudited condensed interim financial statements.
NOTE
3 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As
at June 30, 2022, the Company had cash of $500,677 and a negative working capital of $4,828,198. The Company has not yet generated any
revenues from operations and has incurred cumulative net losses of $10,288,287. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern.
During
the six months ended June 30, 2022, the Company raised a net of $1,380,960 in cash proceeds from the issuance of convertible notes. During
the same period in 2021, the Company raised a net of $1,165,000 in cash proceeds from the issuance of convertible notes and $600,000
from the issuance of Common Stock of 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 September 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.
The
Company’s management does not know the full extent or foresee the impact COVID-19 has had on our business or our operations or
its ability to carry out our plans. We will continue to monitor and follow this situation closely.
Accordingly,
the accompanying unaudited condensed 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 unaudited condensed consolidated financial statements do not
necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include
any adjustment that might result from the outcome of this uncertainty.
NOTE
4 - 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 six months ended June 30, 2022 and the year ended December 31, 2021.
Amortization
of capitalized patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized
and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency
period of the application, generally approximating twenty years. The current patent applications are still on-going, and are therefore
not yet subject to amortization.
SCHEDULE
OF INTANGIBLES
| |
Estimated
Life (years) | | |
June
30, 2022 | | |
December
31, 2021 | |
Capitalized patent costs | |
| 20 | | |
$ | 69,370 | | |
$ | 46,932 | |
Accumulated amortization | |
| | | |
| (1,822 | ) | |
| — | |
| |
| | | |
| | | |
| | |
Intangible assets, net | |
| | | |
$ | 67,548 | | |
$ | 46,932 | |
NOTE
5 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
On
June 30, 2022, there was $1,062,000 in accounts payable to related parties in the form of payroll and accrued expenses and $56,240 in
un-issued shares liability related party. On December 31, 2021 there was $531,000 in accounts payable to related parties.
The
following table represents the major components of accounts payables and accrued expenses and other current liabilities at June 30, 2022
and at December 31, 2021:
SCHEDULE
OF ACCOUNTS
PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| |
June
30, 2022 | | |
December
31, 2021 | |
Accounts
payable related party (1) | |
$ | 1,062,000 | | |
$ | 531,000 | |
Professional fees | |
| 121,893 | | |
| 375,371 | |
Other | |
| 2,310 | | |
| — | |
Interest | |
| 122,300 | | |
| 85,685 | |
Payroll taxes | |
| 47,832 | | |
| 32,010 | |
Pension/401K | |
| 262,500 | | |
| 131,250 | |
Un-issued share liability,
consultant | |
| 60,150 | | |
| — | |
Un-issued
share liability, related party (2) | |
| 56,240 | | |
| — | |
Convertible
note payable | |
| 3,593,650 | | |
| 2,122,181 | |
Total | |
$ | 5,328,875 | | |
$ | 3,277,497 | |
(1) |
$420,000
to each the CFO and the CEO of accrued salary and $222,000 to the VPBD for salary and expenses due. At December 31, 2021 there was
$210,000 to each the CFO and the CEO $111,000 to the VPBD for salary and expenses due. |
(2) |
There
are currently 120,000 shares of Common Stock awarded but not issued to four Board Members in the first six months of 2022. The total
fair market value at the time of the award was $56,240. |
NOTE
6 – CONVERTIBLE NOTES PAYABLE
Private
Placement, 2021 Notes
Around
May 3, 2021, we entered into four (4) Securities Purchase Agreements (the “2021 SPA’s”), under which we agreed to sell
convertible promissory notes (the “2021 Notes”), in an aggregate principal amount of $2,165,000 with 6% interest.
At
any time after the issue date of the Notes, The Holders of the Notes, (the “2021 Holders”), have the option to convert all
or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the 2021 Notes into shares of our Common
Stock at the Conversion Price. The “Conversion Price” will be the lesser of (i) $.13 per share or (ii) 85% of the closing
price of Any Qualified Financing, which consists of any fundraising whereby the Company receives gross proceeds of not less than $500,000.
The
2021 Holders are limited to holding a total of 4.99% of our issued and outstanding Common Stock at any one time.
The
Common Stock underlying the Notes, when issued, bear a restrictive legend and has a 180-day lock-up period. They are currently eligible
for resale under Rule 144.
If
the 2021 Notes are converted prior to us paying off such note, it would lead to substantial dilution to our shareholders as a result
of the conversion discounted for the 2021 Notes. There can be no assurance that there will be any funds available to pay off the 2021
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 2021 Holders may convert the 2021 Notes and sell the underlying shares, which may result in significant dilution
to shareholders due to the conversion discount, as well as a significant decrease in our stock price.
Private
Placement, 2022 Notes
In
January, 2022, we entered into thirty-four (34) Securities Purchase Agreements (the “2022 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 (the “2022
Notes”) to the holders of the 2022 Notes (the “2022 Holders”).
At
any time after the issue date of the 2022 Notes the 2022 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
2022 Holders are limited to holding a total of 4.99% of our issued and outstanding Common Stock at any one time. The Common Stock underlying
the 2022 Notes, when issued, bear a restrictive legend and are currently eligible for resale under Rule 144.
If
the 2022 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 2022 Notes. There can be no assurance that there will be any funds available to pay of the 2022 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 2022
Holders may convert the 2022 Notes and sell the underlying shares, which may result in dilution if converted, as well as a decrease in
our stock price.
SCHEDULE
OF OUTSTANDING CONVERTIBLE NOTES
Name | |
| | |
Principal
due
June
30, 2022 | | |
Accrued
interest
June
30, 2022 | | |
Total
amount due June
30, 2022 | |
Private Placement, 2021 Notes | |
| (1) | | |
$ | 2,165,000 | | |
$ | 81,063 | | |
| 2,246,063 | |
Private Placement, 2022
Notes | |
| (2) | | |
| 1,467,000 | | |
| 41,237 | | |
| 1,508,237 | |
| |
| | | |
$ | 3,632,000 | | |
$ | 122,300 | | |
| 3,754,300 | |
|
(1) |
$1,000,000
of this amount was used to extinguish the Old Notes. 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) |
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). |
At
December 31, 2021 the outstanding convertible notes were as follows:
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 Old 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. A new note
of $1,000,000 was issued to a third party. |
Convertible
notes payable consists of the following at June 30, 2022 and December 31, 2021:
SCHEDULE
OF CONVERTIBLE NOTES PAYABLE
| |
June
30, 2022 | |
December
31, 2021 |
Principal balance | |
$ | 3,632,000 | | |
$ | 2,165,000 | |
Unamortized debt discount | |
| (38,350 | ) | |
| (42,819 | ) |
Outstanding, net of debt
discount and premium | |
$ | 3,593,650 | | |
$ | 2,122,181 | |
NOTE
7 – STOCKHOLDERS’ EQUITY
The
Company is authorized to issue 300,000,000 shares of Common Stock, and 50,000,000 shares of Preferred Stock.
Preferred
stock
As
of June 30, 2022 and at December 31, 2021, no Preferred shares have been designated or issued.
Common
Stock
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, or $0.13/share, in reliance on an exemption under Section 4(2)(a).
On
June 4, 2021, 930,864 shares of Common Stock were issued to management as a result of conversion of accrued interest and principal for
two convertible notes for a total of $121,042, or $0.13/share, in reliance on an exemption under Section 4(2)(a).
For
the six months ending June 30, 2021, 3,899,200 shares were awarded under the 2010 and the 2021 Stock Plans for a total value of $810,758,
or an average price of $0.13/share.
No
shares have been issued in six months ended June 30, 2022.
As
at June 30, 2022, and at December 31, 2021 the Company has 110,840,998 shares of Common Stock issued and outstanding.
Common
Stock Warrants
For
the six months ended June 30, 2022, in connection with the issuance of the convertible notes, the Company issued 264,060
5-year warrants exercisable at $0.25/share, with a fair value of $0.16, based on Black and Scholes Option Pricing Model, for a
total of $42,250. The warrant agreements include provisions for cash-less exercise.
For
the six months ended June 30, 2021 the Company issued no warrants.
The
fair value of stock warrants granted for the six months ended June 30, 2022 was calculated with the following assumptions:
SCHEDULE OF STOCK WARRANTS VALUATION ASSUMPTIONS
| |
| | |
| |
June
30, 2022 |
Risk-free interest rate | |
| 1.53 | % |
Expected dividend yield | |
| 0 | % |
Volatility factor (monthly) | |
| 169.27 | % |
Expected life of warrant | |
| 5
years | |
The
following table summarizes the Company’s Common Stock warrant activity for the six months ended June 30, 2022 and 2021:
SCHEDULE OF WARRANT ACTIVITY
| |
Number
of Warrants * | |
Weighted
Average
Exercise
Price | |
Weighted-
Average
Remaining
Expected
Term |
Outstanding as
at December 31, 2021 | | |
| 272,000 | | |
$ | 2.00 | | |
| 3.9 | |
Granted | | |
| — | | |
| — | | |
| — | |
Exercised | | |
| — | | |
| — | | |
| — | |
Forfeited/Cancelled | | |
| — | | |
| — | | |
| — | |
Outstanding
as at June 30, 2021 | | |
| 272,000 | | |
| 2.00 | | |
| 3.7 | |
| | |
| | | |
| | | |
| | |
Outstanding as at December 31, 2022 | | |
| 272,000 | | |
$ | 2.00 | | |
| 2.9 | |
Granted | | |
| 264,060 | | |
| 0.25 | | |
| 5.0 | |
Exercised | | |
| — | | |
| — | | |
| — | |
Forfeited/Cancelled | | |
| — | | |
| — | | |
| — | |
Outstanding
as at June 30, 2022 | | |
| 536,060 | | |
$ | 1.14 | | |
| 3.4 | |
* | | The
warrant agreements issued in 2019 and in 2020 for a total of 272,000 warrants include provisions for dilutive issuance and cash-less
exercise. If exercised at June 30, 2022 the provisions would have resulted in an issuance of 5,989,028
shares at an average conversion-price of $0.09, or 5,335,789 shares in a cash-less exercise. |
The
following table summarizes information about stock warrants that are vested or expected to vest at June 30, 2022 with a market price
of $0.32 at June 30, 2022:
SCHEDULE OF WARRANT OUTSTANDING AND EXERCISABLE WARRANTS
| |
Warrants
Outstanding | |
| |
| |
Exercisable
Warrants | |
|
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 |
| 264,060 | | |
| 0.25 | | |
| 4.5 | | |
$ | 18,484 | | |
| 264,060 | | |
| 0.25 | | |
| 4.5 | | |
$ | 18,484 | |
| 272,000 | | |
$ | 2.00 | | |
| 2.4 | | |
$ | — | | |
| 272,000 | | |
$ | 2.00 | | |
| 2.4 | | |
$ | — | |
| 536,060 | | |
$ | 1.14 | | |
| 3.5 | | |
$ | 18,484 | | |
| 536,060 | | |
$ | 1.14 | | |
| 3.5 | | |
$ | 18,484 | |
The
following table sets forth the status of the Company’s non-vested warrants as at June 30, 2022, there were no warrants issued for
the three months ended at June 30, 2021.
SCHEDULE
OF NONVESTED WARRANTS
| |
Number
of
Warrants | |
Weighted-
Average
Grant-Date
Fair
Value |
Non-vested as at December
31, 2021 | | |
| — | | |
$ | — | |
Granted | | |
| 264,060 | | |
| 0.25 | |
Forfeited | | |
| — | | |
| — | |
Vested | | |
| 264,060 | | |
| 0.25 | |
Non-vested
as at June 30, 2022 | | |
| — | | |
$ | — | |
The
weighted-average remaining contractual life for warrants exercisable at June 30, 2022 is 3.5 years. The aggregate intrinsic value for
fully vested, exercisable warrants was $18,484 at June 30, 2022.
Sales
of Shares in Subsidiary
For
the six months ended June 30, 2022 there were no shares sold in the Company’s Subsidiary, Pharmalectin, Inc.. For the six months
ended June 30, 2021 there were 1,800,000 shares sold in the Company’s Subsidiary, Pharmalectin, Inc. for a total of $600,000.
NOTE
8 – STOCK OPTION PLAN AND STOCK-BASED COMPENSATION
On
January 19, 2010, the Company adopted a stock option plan entitled the “2010 Stock Plan” (the “:2010 Plan”) under
which the Company may grant Options to Purchase Stock, Stock Awards or Stock Appreciation Rights in an amount up to 15% of the number
of issued and outstanding shares of the Company’s Common Stock, automatically adjusted on January 1 each year. Under the terms
of the 2010 Stock Plan, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant
date. Vesting of the options is typically immediate and the options typically expire in five years. Stock Awards may be directly issued
under the Plan (without any intervening options). Stock Awards may be issued which are fully and immediately vested upon issuance.
As
at January 18, 2021, the 2010 Stock Plan was depleted and retired. On January 19, 2021, the Board of Directors adopted the “2021
Stock Plan” (the “2021 Plan”) with the same terms as the 2010 Plan. As at June 30, 2022, 90,000 options and 700,000
shares have been awarded from the 2021 Plan.
Shares
Awarded and Issued under the 2010 Plan:
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.
Shares
Awarded and Issued under the 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 Company’s 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 Company’s PR work, for a total of $450.
SCHEDULE
OF FAIR MARKET VALUE
| |
Number
of Shares | |
Fair
Value
per
Share | |
Weighted
Average Market
Value
per Share |
Shares Issued as of December 31, 2020 | |
| 11,002,000 | | |
| $
0.003 – 1.49 | | |
$ | 0.10 | |
Shares Issued | |
| 3,899,200 | | |
| 0.001
– 0.24 | | |
| 0.21 | |
Shares Issued as of June 30, 2021 | |
| 15,001,200 | | |
| $
0.001 – 1.49 | | |
$ | 0.13 | |
| |
| | | |
| | | |
| | |
Shares Issued as of December 31, 2021 | |
| 18,706,909 | | |
| $
0.001 – 1.49 | | |
$ | 0.088 | |
Shares Issued | |
| — | | |
| — | | |
| — | |
Shares Issued as of June 30, 2022 | |
| 18,706,909 | | |
| $
0.001 – 1.49 | | |
$ | 0.088 | |
For
the six months ended June 30, 2022, the Company recorded stock-based compensation expense of $159,297 in connection with share-based
payment awards. For the six months ended June 30, 2021, the Company has not issued any shares.
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 for the product
development and our clinical trials in India. The total fair market value at the time of the award was $16,000, or $0.16/share.
On
April 1, 2022 the Company granted 10,000 shares to a Medical Advisory Board Member for her contribution to the Company during the first
quarter of 2022. The total fair market value at the time of the award was $1,730, or $0.173/share.
On
April 1, 2022 the Company granted 70,000 shares to four Board Members in reward of their attendance at Board and Committee meetings during
the first quarter of 2022. The total fair market value at the time of the award was $12,110, or $0.173/share.
On
April 11, 2022 the Company granted 250,000 shares to three Consultants for the management of our clinical trials in India. The total
fair market value at the time of the award was $43,250, or $0.173/share.
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.
There
were no stock options issued in the six months ended June 30, 2022.
The
fair value of stock options granted and revaluation of non-employee consultant options for the six months ended June 30, 2021 was calculated
with the following assumptions, there were no options issued for the six months ended June 30, 2022:
SCHEDULE OF STOCK OPTIONS VALUATION ASSUMPTIONS
| |
June
30, 2022 |
Risk-free interest rate | |
| 0.17
– 0.35 % | |
Expected dividend yield | |
| 0 | % |
Volatility factor (monthly) | |
| 161.18 | % |
Expected life of options | |
| 3
years | |
For
the six months ended June 30, 2022 there were no stock options awarded. However, 48,000 were forfeited through expiration. For the six
months ended June 30, 2021, the Company recorded compensation expense of $14,400 in connection with awarded stock options. As at June
30, 2022, there was no unrecognized compensation expense related to non-vested stock option awards.
The
following table summarizes the Company’s stock option activity for the six months ended June 30, 2022, and 2021:
SCHEDULE
OF STOCK OPTIONS ACTIVITY
| |
Number
of
Options | |
Exercise
Price
per
Share | |
Weighted
Average
Exercise
Price per Share |
Outstanding as of December 31, 2020 | |
| 533,000 | | |
| $
0.001 - 1.21 | | |
$ | 0.71 | |
Granted | |
| 90,000 | | |
| 0.19
- 0.20 | | |
| 0.20 | |
Exercised | |
| — | | |
| — | | |
| — | |
Options
forfeited/cancelled | |
| — | | |
| — | | |
| — | |
Outstanding as of June 30, 2021 | |
| 623,000 | | |
| $
0.001 - 1.21 | | |
$ | 0.59 | |
| |
| | | |
| | | |
| | |
Outstanding as of December 31, 2021 | |
| 668,000 | | |
| $
0.001 - 1.21 | | |
$ | 0.55 | |
Granted | |
| — | | |
| — | | |
| — | |
Exercised | |
| — | | |
| — | | |
| — | |
Options
forfeited/cancelled | |
| 48,000 | | |
| 1.09
– 1.21 | | |
| 1.20 | |
Outstanding as of June 30, 2022 | |
| 620,000 | | |
| $
0.001 - 1.10 | | |
$ | 0.50 | |
The
following table summarizes information about stock options that are vested or expected to vest at June 30, 2022. The market price was
$0.32 as at June 30, 2022:
SCHEDULE
OF STOCK OPTION VESTED
| |
| |
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 | | |
| 1.45 | | |
$ | 28,710 | | |
| 90,000 | | |
$ | 0.001 | | |
| 1.45 | | |
$ | 28,710 | |
| 0.05 | | |
| 3,000 | | |
| 0.05 | | |
| 1.25 | | |
| 810 | | |
| 3,000 | | |
| 0.05 | | |
| 1.25 | | |
| 810 | |
| 0.15 | | |
| 90,000 | | |
| 0.15 | | |
| 0.83 | | |
| 15,300 | | |
| 90,000 | | |
| 0.15 | | |
| 0.83 | | |
| 15,300 | |
| 0.18 | | |
| 45,000 | | |
| 0.18 | | |
| 1.33 | | |
| 6,300 | | |
| 45,000 | | |
| 0.18 | | |
| 1.33 | | |
| 6,300 | |
| 0.19 | | |
| 45,000 | | |
| 0.19 | | |
| 2.83 | | |
| 5,850 | | |
| 45,000 | | |
| 0.19 | | |
| 2.83 | | |
| 5,850 | |
| 0.20 | | |
| 48,000 | | |
| 0.20 | | |
| 1.54 | | |
| 5,760 | | |
| 48,000 | | |
| 0.20 | | |
| 1.54 | | |
| 5,760 | |
| 0.31 | | |
| 3,000 | | |
| 0.31 | | |
| 0.50 | | |
| 30 | | |
| 3,000 | | |
| 0.31 | | |
| 0.50 | | |
| 30 | |
| 0.32 | | |
| 3,000 | | |
| 0.32 | | |
| 0.75 | | |
| — | | |
| 3,000 | | |
| 0.32 | | |
| 0.75 | | |
| — | |
| 0.61 | | |
| 45,000 | | |
| 0.61 | | |
| 0.25 | | |
| — | | |
| 45,000 | | |
| 0.61 | | |
| 0.25 | | |
| — | |
| 0.73 | | |
| 3,000 | | |
| 0.73 | | |
| 0.33 | | |
| — | | |
| 3,000 | | |
| 0.73 | | |
| 0.33 | | |
| — | |
| 0.95 | | |
| 200,000 | | |
| 0.95 | | |
| 0.20 | | |
| — | | |
| 200,000 | | |
| 0.95 | | |
| 0.20 | | |
| — | |
| 1.10 | | |
| 45,000 | | |
| 1.10 | | |
| 0.08 | | |
| — | | |
| 45,000 | | |
| 1.10 | | |
| 0.08 | | |
| — | |
| $
0.001-1.10 | | |
| 620,000 | | |
$ | 0.50 | | |
| 0.79 | | |
$ | 62,760 | | |
| 620,000 | | |
$ | 0.50 | | |
| 0.79 | | |
$ | 62,760 | |
There
were no granted options granted, nor issued, between June 30, 2022 and December 31, 2021.
The
weighted-average remaining estimated life for options exercisable at June 30, 2022 is 0.79 years.
The
aggregate intrinsic value for fully vested, exercisable options was $62,760 at June 30, 2022. The actual tax benefit realized from stock
option exercises for the three months ended at June 30, 2022 and 2021 was $0 as no options were exercised.
As
at June 30, 2022 the Company has 18,879,292 options or stock awards available for grant under the 2021 Plan.
NOTE
9 – NON-CONTROLLING INTEREST
SCHEDULE
OF NON CONTROLLING INTEREST
| |
June
30, 2022 | |
December
31, 2021 |
Net loss Subsidiary | |
| (265,560 | ) | |
| (2,089,253 | ) |
Net loss attributable
to the non-controlling interest | |
| 62,807 | | |
| 496,297 | |
Net loss affecting Bioxytran | |
| (202,753 | ) | |
| (1,592,956 | ) |
| |
| | | |
| | |
Accumulated losses | |
| (3,045,565 | ) | |
| (2,777,135 | ) |
Accumulated losses attributable
to the non-controlling interest | |
| 621,014 | | |
| 558,206 | |
Accumulated losses affecting Bioxytran | |
| (2,424,551 | ) | |
| (2,218,929 | ) |
| |
| | | |
| | |
Net deficit non-controlling interest | |
| (460,063 | ) | |
| (397,256 | ) |
As
at June 30, 2022 and at December 31, 2021 there are 30,000,000 issued and 19,650,000 outstanding shares; 15,000,000 Common shares (76%)
are held by Bioxytran and 4,650,000 Common shares are held by an affiliate. Further, an additional 4,500,000 options exercisable at $0.33
are held by an affiliate. The option agreements include provisions for dilutive issuance and cash-less exercise. If exercised at June
30, 2022 the provisions would have resulted in an issuance of 11,423,077 shares at an average conversion-price of $0.13, or 10,347,000
shares in a cash-less exercise.
NOTE
10 – COMMITMENTS AND CONTINGENCIES
Employment
contracts
The
Company’s executive officers have entered employment contracts and confidentiality, non-disclosure and assignment of invention
agreements. The employment agreements provide for the payment of $100,000 in severance upon termination of employment without cause and
make no provisions for any payment upon a change of control.
Litigation
In
the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course
of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters
are expensed as incurred and we accrue for adverse outcomes as they become probable and estimable.
NOTE
11 – SUBSEQUENT EVENTS
The
Company has evaluated events from June 30, 2022 through the date the financial statements were issued. and did not, other than what is
disclosed in the below, identify any further subsequent events requiring disclosure.
General
and Administrative Expenses
Forfeited
salaries and benefits
On
August 1, 2022 the Company’s Management forfeited the majority of its accrued salaries and benefits for a total value of $1,273,000.
Stockholder’s
Equity
Conversion
of Notes into Common Stock
In
August, 2022 the principal of $25,000
and accrued interest of $792 was
converted into 103,168
shares of Common Stock from a 2022 Notes holder.
Shares
awarded, but not yet issued, under the 2021 Stock Plan:
On
July 1, 2022 the Company granted 2,000 shares to a Medical Advisory Board Member for his contribution to the Company during the second
quarter of 2022. The total fair market value at the time of the award was $640, or $0.32/share.
On
July 1, 2022 the Company granted 80,000 shares to four Board Members in reward of their attendance at Board and Committee meetings during
the second quarter of 2022. The total fair market value at the time of the award was $25,600, or $0.32/share.
Shares
issued, but earlier awarded, under the 2021 Stock Plan:
On
August 3, 2022 the Company issued 352,000 shares, already accounted for as un-issued share liability, to consultants and to members of
the Scientific and Medical Advisory Board Members awarded by the Company during 2022. The total fair market value at the time of the
award was $85,920, or an average price of $0.24/share.
On
August 3, 2022 the Company issued 200,000 shares, already accounted for as un-issued share liability, to four Board Members awarded by
the Company during 2022. The total fair market value at the time of the award was $45,840, or an average price of $0.23/share.
Warrants
issued:
On
July 7, 2022 in connection with an analyst agreement dated April 9, 2022, the Company issued 200,000
5-year warrants exercisable at $0.25/share, with a fair value of $0.30/share, based on Black and Scholes Option Pricing Model,
for a total of $60,600. The warrant agreement includes provisions for cash-less exercise.
Stock
options forfeited under the 2021 Stock Plan:
On
August 1, 2022, 45,000 options for a total value of $39,731 were forfeited through expiration and return to the stock plan.