NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 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 underwent 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 123,013,985 outstanding Common shares
and zero Preferred shares. Collectively, our Officers, and Directors own or exercise voting and investment control of 77,970,972 (63.4%)
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 our Officers.
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
September 30, 2022, we would, based on the market price of $0.693/share, be obligated to issue approximately 17,653,077 shares of Common
Stock upon conversion of the currently outstanding convertible notes and 1,622,144 shares upon exercise of outstanding warrants and 572,000
shares upon exercise of outstanding options. For the New Notes, the shares total value is based on $2,165,000 of currently outstanding
principal, and $113,210 in unpaid interest.
All
of our currently outstanding 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 whereby the Company receives gross proceeds of
not less than $500,000. 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 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 from transactions in a company’s own stock “. . . from the determination
of net income or the results of operations under all circumstances.” During the nine months ended September 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 nine
months ended September 30, 2021, no such transactions took place during the nine months ended September 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 nine months ended September 30, 2022 the Company incurred $759,138 in research and development expenses, while during the nine months
ended September 30, 2021 the Company incurred $1,247,647.
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 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 September 30, 2022, the Company had cash of $374,190 and a negative working capital of $2,623,458. The Company has not yet generated
any revenues from operations and has incurred cumulative net losses of $10,411,929. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern.
During
the nine months ended September 30, 2022, the Company raised a net of $1,380,960 in cash proceeds from the issuance of convertible notes
that subsequently was converted to equity, and $600,000 from the issuance of Common Stock. 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
the 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 December 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 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 nine months ended September 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.
SCHEDULE OF INTANGIBLES
| | |
Estimated Life (years) | |
September 30, 2022 | | |
December 31, 2021 | |
| Capitalized patent costs | |
20 | |
$ | 77,082 | | |
$ | 46,932 | |
| Accumulated amortization | |
| |
| (2,733 | ) | |
| — | |
| | |
| |
| | | |
| | |
| Intangible assets, net | |
| |
$ | 74,349 | | |
$ | 46,932 | |
NOTE
5 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
On
September 30, 2022, there was $461,727 in accounts payable to related parties in form of payroll and accrued expenses, in addition to
$36,000 in unissued shares owed to related parties. 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 September
30, 2022 and at December 31, 2021:
SCHEDULE OF ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| | |
September 30, 2022 | | |
December 31, 2021 | |
| Accounts payable related party (1) | |
$ | 461,727 | | |
$ | 531,000 | |
| Professional fees | |
| 80,951 | | |
| 375,371 | |
| Interest | |
| 113,210 | | |
| 85,685 | |
| Pension cost | |
| 114,932 | | |
| 131,250 | |
| Payroll Taxes | |
| 32,057 | | |
| 32,010 | |
| Other accounts payable | |
| 361 | | |
| — | |
| Un-issued shares related party (2) | |
| 36,000 | | |
| — | |
| Un-issued shares | |
| 900 | | |
| — | |
| Convertible notes payable, net of premium and discount | |
| 2,157,510 | | |
| 2,122,181 | |
| Total | |
$ | 2,997,648 | | |
$ | 3,277,497 | |
| (1) | At September 30,
2022 there was $181,900 owed to each the CFO and the CEO and $97,927 owed to the CMO for 5 months of salary and expenses. At December
31, 2021 there was $210,000 to each the CFO and the CEO for 6 months of salary for the period July through December 2021, and $111,000
owed to the CMO for salary and expenses for the same period. |
| (2) | At September 30,
2022 the Company has not yet issued 80,000 shares to four Board Members in reward of their attendance at Board and Committee meetings
during the third quarter of 2022. The total fair market value at the time of the award was $36,000, or $0.45/share. There was no such
accrual at December 31, 2021. |
NOTE
6 – CONVERTIBLE NOTES PAYABLE
Private
Placement, 2021 Notes currently outstanding
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 2021 Notes, when issued, will bear a restrictive legend and have a 180-day lock-up period.
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 applicable to the 2021 Notes. There can be no assurance that there will be any funds available to pay of
the 2021 Notes. 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.
Convertible
notes payable consists of the following at September 30, 2022 and December 31, 2021:
SCHEDULE OF CONVERTIBLE NOTES PAYABLE
| | |
September
30, 2022 | | |
December
31, 2021 | |
| Principal
balance | |
$ | 2,165,000 | | |
$ | 2,165,000 | |
| Unamortized
debt discount | |
| (7,490 | ) | |
| (42,819 | ) |
| Outstanding,
net of debt discount and premium | |
$ | 2,157,510 | | |
$ | 2,122,181 | |
At
September 30, 2022 and at December 31, 2021 the outstanding convertible notes were as follows:
SCHEDULE OF OUTSTANDING CONVERTIBLE NOTES
| Name | |
| |
Principal due | | |
Accrued interest | | |
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 | |
| | |
| |
September 30, 2022 | |
| Notes sold in exchange for cash | |
(1) | |
$ | 1,165,000 | | |
$ | 29,125 | | |
$ | 1,194,125 | |
| Note issued in exchange for defaulted Old Notes | |
(2) | |
| 1,000,000 | | |
| 84,085 | | |
| 1,084,085 | |
| | |
| |
$ | 2,165,000 | | |
$ | 113,210 | | |
$ | 2,278,210 | |
| (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) | All earlier issued
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 to a third party. |
Private
Placement, 2021 Notes converted into Common Stock
As
part of the earlier mentioned 2021 Notes, five (5) Notes were issued on May 3, 2021 to our three Officers, $981,466 in accrued salaries,
and to two consultants, $120,380 in accounts payables, or a total amount of $1,101,846.
On
June 4, 2021, 7,591,261 shares of Common Stock were issued to our three Officers as a result of conversion of accrued interest and principal
for three convertible notes for a total of $986,864, or $0.13/share. To avoid dilution of the company’s stock, the Officers
returned the shares to treasury on November 20, 2021, while the original debt consisting of accrued salary was forfeited.
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, or $0.13/share.
SCHEDULE OF CONVERTIBLE CONVERSION OF ACCRUED INTEREST AND PRINCIPAL
| Name | |
| |
Principal Converted | | |
Accrued interest converted | | |
No. of shares
issued | |
| Private Placement, 2021 Notes issued to Officers | |
(1) | |
$ | 981,466 | | |
$ | 5,398 | | |
| 7,591,261 | |
| Private Placement, 2021 Notes issued to consultants | |
(2) | |
| 120,380 | | |
| 662 | | |
| 930,864 | |
| | |
| |
$ | 1,101,846 | | |
$ | 6,060 | | |
| 8,522,125 | |
| (1) | The notes were
exchanged in exchange for $981,466 of accrued salaries due to our three Officers, the notes were converted into equity on June 4, 2021
at $0.13/share. To avoid dilution of the company’s stock, the Officers returned the shares to treasury on November 20, 2021,
while the original debt consisting of accrued salary was forfeited. |
| (2) | The notes were
exchanged in exchange for $120,380 of accounts payables due to two consultants, the notes were converted into equity on June 4, 2021
at $0.13/share. |
Private
Placement, 2022 Notes converted into Common Stock
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.
The
notes principal and accrued interest were fully converted into 6,081,484 shares of Common Stock on August 31, 2022.
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 September 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 our three Officers 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 two consultants 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 nine months ending September 30, 2021, 3,899,200 shares were issued under the 2010 and the 2021 Stock Plans for a total value of
$810,758.
On
August 15, 2022 1,400,000 shares were sold in a private placement for an amount of $600,000, or $0.43/share.
On
August 31, 2022, 6,081,484 shares of Common Stock were issued against convertible notes with a principal of $1,467,000 and an accrued
interest of $53,371, or $0.25/share.
On
September 8, 2022, 4,139,503 shares of Common Stock were issued in exchange against four outstanding warrants including provisions for
dilutive issuance and cashless exercise.
For
the nine months ending September 30, 2022, 552,000 shares were issued under the 2021 Stock Plans for a total value of $105,730.
As
at September 30, 2022, the Company has 123,013,985 shares of Common Stock issued and outstanding, at December 31, 2021 the Company had
110,840,998 shares of Common Stock issued and outstanding.
Common
Stock Warrants
For
the nine months ended September 30, 2022, in connection with the issuance of convertible notes, the Company issued 464,030
5-year warrants exercisable at $0.25/share, and 28,000 warrants exercisable at $0.47/share with an average fair value of $0.39,
based on Black and Scholes Option Pricing Model, for a total of $190,334. The warrant agreements
include provisions for cash-less exercise.
For
the nine months ended September 30, 2021 the Company issued no warrants.
The
fair value of stock warrants granted for the nine months ended September 30, 2022 was calculated with the following assumptions:
SCHEDULE OF STOCK WARRANTS VALUATION ASSUMPTIONS
| | |
September
30, 2022 | |
| Risk-free
interest rate | |
| 1.53-3.20 | % |
| Expected
dividend yield | |
| 0 | % |
| Volatility
factor (monthly) | |
| 160.06 | % |
| Expected
life of warrant | |
| 5
years | |
There
were no warrants issued in the nine months ended September 30, 2021.
The
following table summarizes the Company’s Common Stock warrant activity for the nine months ended September 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, 2020 | |
| 272,000 | | |
$ | 2.00 | | |
| 3.9 | |
| Granted | |
| — | | |
| — | | |
| — | |
| Exercised | |
| — | | |
| — | | |
| — | |
| Forfeited/Cancelled | |
| — | | |
| — | | |
| — | |
| Outstanding as at
September 30, 2021 | |
| 272,000 | | |
| 2.00 | | |
| 3.7 | |
| | |
| | | |
| | | |
| | |
| Outstanding as at
December 31, 2021 | |
| 272,000 | | |
$ | 2.00 | | |
| 2.9 | |
| Granted | |
| 492,030 | | |
| 0.26 | | |
| 5.0 | |
| Exercised | |
| (200,000 | ) | |
| 2.00 | | |
| — | |
| Forfeited/Cancelled | |
| (22,000 | ) | |
| 2.00 | | |
| — | |
| Outstanding
as at September 30, 2022 | |
| 542,030 | | |
$ | 0.42 | | |
| 4.3 | |
| * | The
warrant agreements issued in 2019 for a total of 50,000 warrants include provisions for dilutive issuance and cash-less exercise. If
exercised at September 30, 2022 the provisions would have resulted in an issuance of 1,130,114
shares at an average conversion price of $0.09, or 1,050,114 shares in a cash-less exercise. In
order to mitigate the Company’s risk an administrative hold has been placed on one shareholder’s stock in the event of future
exercise. |
The
following table summarizes information about stock warrants that are vested or expected to vest at September 30, 2022 with a market price
of $0.693 at September 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 | |
| | 492,030 | | |
| 0.26 | | |
| 4.6 | | |
$ | 211,809 | | |
| 492,030 | | |
| 0.26 | | |
| 4.6 | | |
$ | 211,809 | |
| | 50,000 | | |
$ | 2.00 | | |
| 2.1 | | |
$ | — | | |
| 50,000 | | |
$ | 2.07 | | |
| 2.1 | | |
$ | — | |
| | 542,030 | | |
$ | 1.14 | | |
| 4.3 | | |
$ | 18,484 | | |
| 542,030 | | |
$ | 0.42 | | |
| 4.3 | | |
$ | 211,809 | |
The
weighted-average remaining contractual life for warrants exercisable at September 30, 2022 is 4.3 years. The aggregate intrinsic value
for fully vested, exercisable warrants was $211,809 at September 30, 2022.
The
following table sets forth the status of the Company’s non-vested warrants as at September 30, 2022, there were no warrants issued
for the nine months ended at September 30, 2021.
SCHEDULE OF NONVESTED WARRANTS
| | |
Number
of Warrants | | |
Weighted-
Average Grant-Date Fair Value per share | |
| Non-vested as at
December 31, 2021 | |
| — | | |
$ | — | |
| Granted | |
| 492,030 | | |
| 0.26 | |
| Forfeited/Cancelled | |
| — | | |
| — | |
| Vested | |
| 492,030 | | |
| 0.26 | |
| Non-vested
as at September 30, 2022 | |
| — | | |
$ | — | |
Sales
of Shares in Subsidiary
For
the nine months ended September 30, 2022 there were no shares sold in the Company’s Subsidiary, Pharmalectin, Inc.. For the nine
months ended September 30, 2021 there were 1,800,000 shares of Common Stock 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 September 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 executives, 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.
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. The shares
were issued on August 1, 2022
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. The shares
were issued on August 1, 2022
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. The shares were issued on August 1,
2022
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. The shares were issued
on August 1, 2022.
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. The shares were issued on August 1, 2022.
On
August 1, 2022 the Company issued 82,000 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 $26,240, or $0.32/share.
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 September
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 | | |
$ | 0.09 | |
| Shares
Issued | |
| 552,000 | | |
| 0.16
– 0.32 | | |
| 0.19 | |
| Shares Issued as of September
30, 2022 | |
| 19,258,909 | | |
$ | 0.001
– 1.49 | | |
$ | 0.09 | |
For
the nine months ended September 30, 2022, the Company recorded stock-based compensation expense of $106,024 in connection with the issuance
of 552,000 Common share-based payment awards. For the nine months ended September 30, 2021, the Company had issued 4,698,200 shares at
a stock-based compensation expense of $811,557.
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 three-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.
There
were no stock options issued in the nine months ended September 30, 2022.
The
fair value of stock options granted and revaluation of non-employee consultant options for the nine months ended September 30, 2021 was
calculated with the following assumptions, there were no options issued for the nine months ended September 30, 2022:
SCHEDULE OF STOCK OPTIONS VALUATION ASSUMPTIONS
| | |
September
30, 2021 | |
| Risk-free
interest rate | |
| 0.17
– 0.35 | % |
| Expected
dividend yield | |
| 0 | % |
| Volatility
factor (monthly) | |
| 161.18 | % |
| Expected
life of options | |
| 3
years | |
There
were no options issued in the nine months ended September 30, 2022, although 96,000 options were cancelled by expiration and returned
to the stock plan. For the nine months ended September 30, 2021, the Company recorded compensation expense of $14,445 in connection with
awarded stock options.
As
at September 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 nine months ended September 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 | |
| 135,000 | | |
| 0.001
- 0.20 | | |
| 0.20 | |
| Exercised | |
| — | | |
| — | | |
| — | |
| Options forfeited/cancelled | |
| — | | |
| — | | |
| — | |
| Outstanding as of September 30, 2021 | |
| 668,000 | | |
$ | 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 | |
| (96,000 | ) | |
| 1.09
– 1.21 | | |
| 0.92 | |
| Outstanding as of September 30, 2022 | |
| 572,000 | | |
$ | 0.001
– 0.95 | | |
$ | 0.45 | |
The
following table summarizes information about stock options that are vested or expected to vest at September 30, 2022. The market price
was $0.32 as at September 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 | | |
| 1.21 | | |
$ | 62,280 | | |
| 90,000 | | |
$ | 0.001 | | |
| 1.21 | | |
$ | 62,280 | |
| | 0.05 | | |
| 3,000 | | |
| 0.05 | | |
| 1.00 | | |
| 1,931 | | |
| 3,000 | | |
| 0.05 | | |
| 1.00 | | |
| 1,931 | |
| | 0.15 | | |
| 90,000 | | |
| 0.15 | | |
| 0.58 | | |
| 48,510 | | |
| 90,000 | | |
| 0.15 | | |
| 0.58 | | |
| 48,510 | |
| | 0.18 | | |
| 45,000 | | |
| 0.18 | | |
| 1.08 | | |
| 23,265 | | |
| 45,000 | | |
| 0.18 | | |
| 1.08 | | |
| 23,265 | |
| | 0.19 | | |
| 45,000 | | |
| 0.19 | | |
| 1.58 | | |
| 22,770 | | |
| 45,000 | | |
| 0.19 | | |
| 1.58 | | |
| 22,770 | |
| | 0.20 | | |
| 48,000 | | |
| 0.20 | | |
| 1.30 | | |
| 23,670 | | |
| 48,000 | | |
| 0.20 | | |
| 1.30 | | |
| 23,670 | |
| | 0.31 | | |
| 3,000 | | |
| 0.31 | | |
| 0.25 | | |
| 1,139 | | |
| 3,000 | | |
| 0.31 | | |
| 0.25 | | |
| 1,139 | |
| | 0.32 | | |
| 3,000 | | |
| 0.32 | | |
| 0.50 | | |
| 1,106 | | |
| 3,000 | | |
| 0.32 | | |
| 0.50 | | |
| 1,106 | |
| | 0.61 | | |
| 45,000 | | |
| 0.61 | | |
| 0.08 | | |
| 3,960 | | |
| 45,000 | | |
| 0.61 | | |
| 0.08 | | |
| 3,960 | |
| | 0.95 | | |
| 200,000 | | |
| 0.95 | | |
| 1.51 | | |
| — | | |
| 200,000 | | |
| 0.95 | | |
| 1.51 | | |
| — | |
| $ | 0.001-0.95 | | |
| 572,000 | | |
$ | 0.45 | | |
| 1.14 | | |
$ | 188,630 | | |
| 572,000 | | |
$ | 0.45 | | |
| 1.14 | | |
$ | 188,630 | |
There
were no granted options granted, nor issued, between December 31, 2021 and September 30, 2022.
The
weighted-average remaining estimated life for options exercisable at September 30, 2022 is 1.14 years.
The
aggregate intrinsic value for fully vested, exercisable options was $188,630 at September 30, 2022. The actual tax benefit realized from
stock option exercises for the nine months ended at September 30, 2022 and 2021 was $0 as no options were exercised.
As
at September 30, 2022 the Company has 18,375,292 options or stock awards available for grant under the 2021 Plan.
NOTE
9 – NON-CONTROLLING INTEREST
SCHEDULE
OF NON CONTROLLING INTEREST
| | |
September 30, 2022 | | |
December 31, 2021 | |
| Net loss Subsidiary | |
| (601,392 | ) | |
| (2,089,253 | ) |
| Net loss attributable to the non-controlling interest | |
| 142,314 | | |
| 496,297 | |
| Net loss affecting Bioxytran | |
| (459,078 | ) | |
| (1,592,956 | ) |
| | |
| | | |
| | |
| Accumulated losses | |
| (3,349,844 | ) | |
| (2,777,135 | ) |
| Accumulated losses attributable to the non-controlling interest | |
| 700,521 | | |
| 558,206 | |
| Accumulated losses affecting Bioxytran | |
| (2,649,323 | ) | |
| (2,218,929 | ) |
| | |
| | | |
| | |
| Net equity non-controlling interest | |
| (539,570 | ) | |
| (397,256 | ) |
As
at September 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 September 30, 2022 the provisions would have resulted in an issuance of 16,782,189 shares at an average conversion price of $0.08849,
or 15,594,189 shares in a cash-less exercise.
NOTE
10 – COMMITMENTS AND CONTINGENCIES
Employment
contracts
The
Company’s three 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 September 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.
Stockholder’s
Equity
Shares
awarded, but not yet issued, under the 2021 Stock Plan:
On
October 28, 2022 the Company granted 2,000 shares to a Scientific 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 $812, or $0.406/share.
On
October 28, 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 $32,480, or $0.406/share.
Stock
options cancelled under the 2021 Stock Plan:
On
October 31, 2022, 45,000 options were cancelled by expiration and returned to the stock plan.