UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2020

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

000-55320

(Commission file number)

 

NEXIEN BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   26-2049376

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

4340 E Kentucky Ave., Suite 206, Glendale, CO 80246

(Address of principal executive offices) (Zip Code)

 

(303) 495-7583

(Registrant’s telephone number, including area code)

 

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act: None

 

Title of each class  

Trading

Symbol(s)

  Name of each exchange on which registered
         

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [X] 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer [  ] Accelerated filer [  ]
  Non-accelerated filer [  ]

Smaller reporting company [X]

Emerging growth company [X]

 

If an emerging growth company, indicate by the 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 53,984,004 shares as of May 14, 2020.

 

 

 

 

 

 

TABLE OF CONTENTS

 

Item   Description Page
    PART I - FINANCIAL INFORMATION  
       
ITEM 1.   FINANCIAL STATEMENTS. 3
ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 15
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 19
ITEM 4.   CONTROLS AND PROCEDURES. 19
       
    PART II - OTHER INFORMATION  
       
ITEM 1.   LEGAL PROCEEDINGS. 20
ITEM 1A.   RISK FACTORS. 20
ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. 20
ITEM 3.   DEFAULT UPON SENIOR SECURITIES. 20
ITEM 4.   MINE SAFETY DISCLOSURES. 20
ITEM 5.   OTHER INFORMATION. 20
ITEM 6.   EXHIBITS. 21

 

2

 

 

PART 1 - FINANCIAL INFORMATION

 

ITEM 1 - FINANCIAL STATEMENTS

 

Nexien BioPharma, Inc.

Consolidated Balance Sheets

 

    March 31, 2020     June 30, 2019  
    (Unaudited)        
             
Assets                
                 
Current Assets                
Cash   $ 22,045     $ 146,356  
Prepaids-related     90,667       99,667  
other     4,371       64,647  
                 
Total current assets     117,083       310,670  
                 
Total Assets   $ 117,083     $ 310,670  
                 
Liabilities and Stockholders’ Equity                
                 
Current Liabilities                
Accounts payable and accrued expenses   $ 22,330     $ 44,750  
                 
Total current liabilities     22,330       44,750  
                 
Commitments and Contingencies                
                 
Stockholders’ Equity                
Preferred stock, $.0001 par value; 10,000,000 authorized; none issued     -       -  
Common stock-$.0001 par value; 200,000,000 shares authorized;
53,984,004 shares issued and outstanding -March 31, 2020; and
53,510,718 shares- June 30, 2019
    5,398       5,351  
Additional paid in capital     11,583,159       11,505,819  
Common stock subject to forfeiture     (3,720,416 )     (5,469,708 )
Accumulated deficit     (7,773,388 )     (5,775,542 )
                 
Total Stockholders’ Equity     94,753       265,920  
                 
Total Liabilities and Stockholders’ Equity   $ 117,083     $ 310,670  

 

See accompanying notes to consolidated financial statements.

 

3

 

 

Nexien BioPharma, Inc.

Consolidated Statements of Operations

For the Three and Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

    Three months ended     Nine months ended  
    March 31,     March 31,  
    2020     2019     2020     2019  
                         
Revenue   $ -     $ -     $ -     $ -  
                                 
Operating expenses                                
Professional fees     13,150       24,472       46,151       167,299  
Research and development     -       2,711       -       48,689  
General and administrative     546,520       457,627       1,916,695       3,025,550  
License fee     -       -       35,000       -  
                                 
Total operating expenses     559,670       484,810       1,997,846       3,241,538  
                                 
Net loss   $ (559,670 )   $ (484,810 )   $ (1,997,846 )   $ (3,241,538 )
                                 
Loss per share - basic and diluted   $ (0.01 )   $ (0.01 )   $ (0.04 )   $ (0.06 )
                                 

Weighted average shares outstanding -

basic and diluted

    53,984,004       53,715,996       53,889,221       50,163,056  

 

 

See accompanying notes to consolidated financial statements.

 

4

 

 

Nexien BioPharma, Inc.

Consolidated Statement of Stockholders’ Equity

For the Nine months ended March 31, 2020 and 2019

(Unaudited)

 

    Shares     Common Stock     Additional Paid in Capital     Comon Stock Subject to Forfeiture     Accumulated Deficit    

Total

Stockholders’ Equity

 
                                     
Balance, June 30, 2019     53,510,718     $ 5,351     $ 11,505,819     $ (5,469,708 )   $ (5,775,542 )   $ 265,920  
                                                 
Issuance of stock for accounts payable at $0.09 per share     16,667       1       1,499       -       -       1,500  
Issuance of stock for license at $0.09 per share     381,619       38       34,962       -       -       35,000  
Issuance of stock for services at $0.10 per share     75,000       8       7,492       -       -       7,500  
Vesting of management shares subject to forfeiture     -       -       -       18,750       -       18,750  
Amortization of CRx shares     -       -       -       1,730,542       -       1,730,542  
Fair value of options and warrants issued for services     -       -       33,387       -       -       33,387  
Net loss     -       -       -       -       (1,997,846 )     (1,997,846 )
                                                 
Balance, March 31, 2020     53,984,004     $ 5,398     $ 11,583,159     $ (3,720,416 )   $ (7,773,388 )   $ 94,753  
                                                 
Balance, June 30, 2018     44,448,496     $ 4,445     $ 2,882,888     $ (229,168 )   $ (1,474,629 )   $ 1,183,536  
Issuance of shares for acquisition of CRx at $0.76 per share     11,000,000       1,100       8,358,900       (7,524,000 )     -       836,000  
Vesting of management shares subject to forfeiture     -       -       -       191,668       -       191,668  
Fair value of options and warrants issued for services     -       -       1,456,350       -       -       1,456,350  
Fair value of warrants issued     -       -       155,934       -       -       155,934  
Vesting of CRx shares     -       -       -       166,514       -       166,514  
Cancellation of CRx shares     (1,732,500 )     (173 )     (1,316,527 )     1,316,700       -       -  
Net loss     -       -       -       -       (3,241,538 )     (3,241,538 )
                                                 
Balance, March 31, 2019     53,715,996     $ 5,372     $ 11,537,545     $ (6,078,286 )   $ (4,716,167 )   $ 748,464  

 

See accompanying notes to consolidated financial statements.

 

5

 

 

Nexien BioPharma, Inc.

Consolidated Statements of Cash Flows

For the Nine Months Ended March 31, 2020 and 2019

(Unaudited)

 

    2020     2019  
             
Cash flows from operating activities                
Net loss   $ (1,997,846 )   $ (3,241,538 )
Adjustments to reconcile net loss to net cash used in operating activities                
Stock based compensation     52,137       1,803,952  
Fair value of shares issued for CRx Acquistion     1,730,542       1,002,514  
Stock issued for services and license fee     42,500       -  
Changes is assets and liabilities                
Decrease (increase) in prepaids     69,276       (46,080 )
Decrease in due from related party     -       7,500  
(Decrease) in accounts payable and accrued expenses     (20,920 )     (80,935 )
Cash used in operating activities     (124,311 )     (554,587 )
                 
Cash flows from investing activities                
Cash paid for license     -       (30,000 )
Cash used in investing activities     -       (30,000 )
                 
Cash flows from financing activities                
Cash provided by financing activities     -       -  
                 
Net increase in cash and cash equivalents     (124,311 )     (584,587 )
Cash and cash equivalents, beginning of period     146,356       819,739  
                 
Cash and cash equivalents, end of period   $ 22,045     $ 235,152  
                 
Supplemental disclosure of non-cash investing and                
financing activities                
Shares issued for settlement of accounts payable   $ 1,500     $ -  
Cancellation of CRx shares   $ -     $ 173  

 

See accompanying notes to consolidated financial statements.

 

6

 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 1 – Nature of Business and Basis of Presentation

 

The Company was incorporated on November 10, 1952 in Michigan as Gantos, Inc. On July 21, 2008, the Company completed its change in domicile to Delaware and subsequently changed its name to Kinder Holding Corp. (the “Company”). As of October 13, 2017, the Company completed a reverse acquisition of Intiva BioPharma Inc., a Colorado corporation (“BioPharma”) through an exchange of shares (the “Share Exchange Transaction”). In connection with the Share Exchange Transaction, the Company changed its name to Intiva BioPharma Inc. on November 8, 2017 and, in September 2018, the Company changed its name to Nexien BioPharma, Inc.

 

As further described in Note 3, BioPharma became a wholly-owned subsidiary of the Company. Since this transaction resulted in the existing shareholders of BioPharma acquiring control of the Company, for financial reporting purposes, the business combination has been accounted for as an additional capitalization of the Company (a reverse acquisition with BioPharma as the accounting acquirer). The operations of BioPharma were the only continuing operations of the Company. The accompanying financial statements as of March 31, 2020 and June 30, 2019 and for the three- and nine- month periods ended March 31, 2020 and 2019 present the historical financial information of BioPharma.

 

BioPharma was incorporated under the laws of the State of Colorado on March 27, 2017 to pursue pre-clinical and drug development activities, in accordance with U.S. Food and Drug Administration (“FDA”) protocols, for certain pharmaceutical formulations that include cannabinoids. It is pursuing the formulation and development of cannabinoid-based drugs for medical conditions and disorders, and owns a license covering certain intellectual property, including certain patent applications, and has filed five of its own provisional patent applications for other drugs that include cannabinoids and other substances, including terpenes, that are intended to be developed with the objective of treating certain medical conditions and disorders. It was formed as a corporate subsidiary of the Colorado corporation Kanativa USA Inc. (“Kanativa USA”), which is a subsidiary of the Ontario, Canada corporation, Kanativa Inc.

 

All share and per share amounts have been adjusted in the footnotes and accompanying financial statements to give effect to the Share Exchange Transaction.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include BioPharma and its wholly owned subsidiaries: Intiva BioPharma Inc. (a Colorado corporation), NexN Inc. (“NexN”) and NexDM Inc., and were prepared from the accounts of the Company in accordance with accounting principles generally accepted in the United States of America (US GAAP). All significant intercompany transactions and balances have been eliminated on consolidation.

 

Basis of Presentation/Going Concern Uncertainty

 

The Financial Statements presented herein have been prepared in accordance with the accounting policies described in the June 30, 2019 audited financial statements and should be read in conjunction with the notes to financial statements which appear as part of those financial statements.

 

The preparation of these financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to intangible assets, income taxes, insurance obligations and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other resources. Actual results may differ from these estimates under different assumptions or conditions.

 

7

 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 1 – Nature of Business and Basis of Presentation (continued)

 

The accompanying financial statements have been prepared in conformity with US GAAP, which contemplates continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception of $7,773,388. The development of pharmaceuticals with the objective of obtaining approval by the FDA and other international regulatory authorities is not a short-term endeavor for any specific drug candidate. It also requires significant amounts of capital funding for clinical trials, formulation and other matters. At March 31, 2020, the Company had working capital of $94,753. The Company will require significant additional capital to fund the implementation and execution of its business plan. This capital, which likely will be millions of dollars for a single drug candidate, will be required for research, formulation, regulatory applications, and clinical trials. At the present time, the Company does not have any commitments or known sources for this level of funding. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

In the opinion of Management, the information furnished in these interim financial statements reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of March 31, 2020 and for the three- and nine-month periods ended March 31, 2020 and 2019. All such adjustments are of a normal recurring nature.

 

Note 2 – Summary of Significant Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

 

Valuation of Long-Lived Assets

 

The Company reviews the recoverability of its long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The Company’s primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

 

Fair Value of Financial Instruments

 

FASB ASC 825, “Financial Instruments,” requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At March 31, 2020 and June 30, 2019, the carrying value of certain financial instruments (cash and cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments or interest rates, which are comparable with current rates.

 

8

 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 2 – Summary of Significant Accounting Policies (continued)

 

Fair Value Measurements

 

The Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of inputs which prioritize the inputs used in measuring fair value are:

 

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

 

Level 2: Inputs to the valuation methodology include:

 

  Quoted prices for similar assets or liabilities in active markets;

 

  Quoted prices for identical or similar assets or liabilities in inactive markets;

 

Inputs other than quoted prices that are observable for the asset or liability;

 

  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 

If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.

 

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

 

When the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur. For the periods ended March 31, 2020 and June 30, 2019, there were no significant transfers of financial assets or financial liabilities between the hierarchy levels.

 

Earnings per Common Share

 

The Company computes net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

 

9

 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 2 – Summary of Significant Accounting Policies (continued)

 

Revenue Recognition

 

Effective July 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.

 

Research and Development Expenses

 

Research and development expenses are charged to operations as incurred.

 

Concentrations of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are deposited with major banks in the United States of America. Management believes that such financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments. The Company does not have any significant off-balance-sheet concentration of credit risk.

 

Stock-based compensation

 

Pursuant to FASB ASC 718, all share-based payments to employees, including grants of employee stock options, are recognized in the statement of operations based on their fair values.

 

Issuance of shares for non-cash consideration

 

The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably determinable. The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of the standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined as the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

 

Reclassifications

 

Certain amounts in the consolidated financial statements for prior year periods have been reclassified to conform with the current year periods presentation.

 

Recent Accounting Pronouncements

 

In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-13, “Fair Value Measurement (Topic 820).” The amendments in this Update modify certain disclosure requirements of fair value measurements and are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently unable to determine the impact on its consolidated financial statements of the adoption of this new accounting pronouncement.

 

Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its consolidated financial position or results of operations.

 

10

 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 3 – Share Exchange Agreement

 

On August 8, 2017, the Company entered into a Share Exchange Agreement, as amended and restated on October 13, 2017, (the “Agreement”), with BioPharma. Pursuant to the terms of the Agreement, the Company agreed to issue to the shareholders of BioPharma 42,642,712 post-reverse stock-split shares of the Company’s common stock, par value $0.0001 (“Common Stock”), in exchange for all of the issued and outstanding shares of BioPharma capital stock, thereby making BioPharma a wholly-owned subsidiary of the Company. As part of the Closing of the Agreement, the 20,000,000 pre-reverse split shares of the Company’s Common Stock previously purchased by Kanativa USA, effective on June 26, 2017 in a change in control transaction from the Company’s control shareholders, were canceled. Since this transaction resulted in the existing shareholders of BioPharma acquiring control of the Company, for financial reporting purposes, the business combination has been accounted for as an additional capitalization of the Company (a reverse acquisition with BioPharma as the accounting acquirer).

 

Note 4- Prepaid Expenses

 

Prepaid expenses at March 31, 2020 consist of:

 

Kanativa USA (Note 7)   $ 90,667  
Insurance and other     4,371  
    $ 95,038  

 

Note 5 – License Agreements

 

Kotzker License Agreement

 

In March 2017, NexN licensed certain intellectual property from Kotzker Consulting LLC (“Kotzker Consulting”), an unrelated entity. The licensed intellectual property includes patent applications relating to the use of cannabinoid receptor modulators and terpenes in the acute treatment during exposure to organophosphorus nerve agents and/or organophosphorus insecticides. Under terms of the agreement, NexN shall use its commercially reasonable efforts to develop and commercialize the licensed products, and, in particular, will be responsible for the design, manufacturing, preclinical, clinical, and regulatory development activities of the licensed products and shall bear the costs of such activities. As consideration for entering into the agreement, NexN agreed to: (i) pay Kotzker Consulting $180,000, (ii) pay patent prosecution costs incurred as of the date of the agreement of $15,000 and (iii) issue to Kotzker Consulting 31,550 shares of Kanativa Inc.’s common stock valued at $78,875 ($2.50 per share based on recent private placement to third parties of Kanativa Inc.’s common stock). The Company has capitalized legal fees of $29,040 incurred in conjunction with acquiring the license agreement, As of June 30, 2017, $65,000 was due under the license agreement, which amount was paid in August 2017. The license agreement terminates, on a country by country basis, upon the expiration of the licensed patent for the licensed intellectual property, or when a competitor generic product utilizing the licensed technology is marketed in the particular country.

 

NexN shall be responsible for development milestone payments for (i) licensed products for use as a preventative and therapeutic neuroprotective against nerve agents and pesticides and (ii) licensed products for treatment of diseases. Milestone payments for each of the foregoing will each be due in two payments, the first payment no later than thirty (30) days from acceptance of submission of the regulatory filing of the first licensed product and the second payment no later than thirty (30) days from approval of the first licensed product. Royalties will be due beginning with first commercial sale of developed products. The Company has completed and submitted a Pre-Investigational New Drug meeting request and amendment thereto with the FDA.

 

11

 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 5 – License Agreements (continued)

 

In September 2017, BioPharma entered into a contract with a contract manufacturing organization to develop an injectible formulation of a drug product to be submitted to the FDA. It is anticipated that the product will be developed utilizing the new drug application 505(b) (2) regulatory pathway for use in the treatment during and immediately following exposure to organophosphorous nerve agents. The drug product is to consist of a synthetic cannabinoid and a blend of terpenes in an injectible vehicle.

 

Accu-Break License Agreement

 

On February 28, 2018, the Company obtained a worldwide exclusive license with respect to a proprietary delivery system for cannabinoid-based medications from Accu-Break Pharmaceuticals Inc (Accu-Break). Upon execution of the agreement, as amended September 18, 2018, $35,000 was paid to the licensor. An additional $10,000 was paid on November 1, 2018, $20,000 was paid on February 28, 2019. The final payment of $35,000 was paid effective August 31, 2019 in common stock of the Company, valued using the weighted average for the five trading days immediately preceding the due date of the payment and was charged to operations during the period. The Company is required to pay milestone payments upon obtaining regulatory approval of pharmaceutical licensed products and royalties based upon sales of licensed products. The Company may grant sublicenses under the terms of the agreement.

 

At June 30, 2019, the Company has estimated that it may not be able to recover the $302,915 carrying value of costs capitalized under the Kotzker License Agreement, nor the $65,000 of costs capitalized under the Accu-Break License Agreement, and recognized an impairment of $367,915 for both licenses at June 30, 2019. Although the Company has recognized an impairment under Generally Accepted Accounting Principles, it retains its rights under both of these license agreements. The Company will charge to operations all future payments due under the license agreements.

 

Note 6 – Stockholders’ Equity

 

Common Stock

 

During the nine months ended March 31, 2020, the Company issued shares of its common stock as follows:

 

  16,667 shares, valued at $1,500 ($0.09 per share), as settlement for accounts payable.
  75,000 shares, valued at $7,500 ($0.10 per share), for marketing services rendered to the Company.
  381,619 shares, valued at $35,000 ($0.09 per share), as consideration for amounts due under the Company’s license agreement with Accu-Break (Note 5).

 

CRX Limited Liability Company Interest Purchase Agreement

 

On October 26, 2018, Company entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with the members of CRX Bio Holdings LLC, a Delaware limited liability company (“CRX”), to acquire all of the membership interest in CRX in exchange for 11,000,000 restricted shares of the Company’s common stock (the “Acquisition”), valued at $0.76 per share. The transaction has been accounted for as an asset acquisition, and not a business combination, and has been valued at the fair value of the common stock issued by the Company, as CRX’s cost basis was $0 in the assets. CRX is engaged in the research and development of advanced cannabinoid formulations and drug delivery systems with a focus on bioavailability and related pharmacokinetics and pharmacodynamics (PK/PD) enhancement. The Acquisition transaction was consummated on October 26, 2018. By acquiring CRX as a wholly-owned subsidiary, the Company acquired all of its assets, which consist primarily of three U.S. provisional patent applications relating to cannabinoid formulations to treat convulsive disorders, chronic traumatic encephalopathy, and neuropathic pain. At the closing, the Company issued to the six members of CRX (the “Sellers”) 1,100,000 shares not subject to any forfeiture restrictions and 9,900,000 shares which shall be released from forfeiture restrictions according to the following vesting schedule:

 

  30% shall be fully vested 12 months following the Closing (October 26, 2019);
  30% shall be fully vested 24 months following the Closing (October 26, 2020);
  30% shall be fully vested 36 months following the Closing (October 26, 2021).

 

12

 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 6 – Stockholders’ Equity (continued)

 

Any Seller who is not then providing services to the Company or any of its subsidiaries on any vesting date, whether through voluntary termination or termination “for cause,” will forfeit his unvested shares, which will be cancelled.

 

The transaction has been valued at $8,360,000, based on the fair value of the 11,000,000 shares issued of $0.76 per share, as per the closing market price of the Company’s common stock on the date of the agreement. The $836,000 fair value of the 1,100,000 shares issued not subject to any forfeiture restrictions was charged to operations during the six months ended December 31, 2018. The $7,524,000 fair value of the 9,900,000 shares subject to forfeiture has been charged to stockholders’ equity as a contra equity account, and is being amortized over the vesting periods. The net amount charged to stockholder’s equity was $0 on the date of the acquisition. During the year ended June 30, 2019 and nine-month period ended March 31, 2020, $1,484,042 and $1,730,542, respectively, has been charged to operations for the value of vested shares issued and the amortization of the unvested CRX shares.

 

2017 Stock Incentive Plan

 

On August 10, 2017, BioPharma adopted the “2017 Stock Incentive Plan” and granted an aggregate of 6,400,000 shares of Common Stock to five officers and directors of the Company, valued at $800,000 ($0.125 per share). On July 25, 2018, the Company accelerated the vesting of 1,083,342 unvested shares of Common Stock previously granted to its’ former Chief Executive Officer and Chief Financial Officer. As of March 31, 2020, all shares issued under the 2017 Stock Incentive Plan have been fully vested.

 

2018 Equity Incentive Plan

 

(i) On March 30, 2018, the Company’s board of directors approved and recommended for adoption by the stockholders of the Company a 2018 Equity Incentive Plan and has reserved 8,000,000 shares of Common Stock for issuance under the terms of that Plan.

 

In July 2018, the Board of Directors granted options to purchase a total of 1,810,000 shares of Common Stock, exercisable for a period of seven years, to officers/directors/consultants of the Company at an exercise price of $0.54 per share.

 

In August 2018, the Board of Directors granted options to purchase a total of 150,000 shares of Common Stock, exercisable for a period of seven years, to two individuals, (i) a director and (ii) a consultant of the Company, at an exercise price of $0.38 per share.

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

 

Average risk-free interest rates     2.3% - 2.8 %
Average expected life (in years)     4.0 to 7.0  
Volatility     160% to 296 %

 

The fair value of the fully vested options granted of $635,101 was charged to operations as of March 31, 2020.

 

(ii) On October 17, 2018, the Board of Directors granted options to purchase an aggregate 800,000 shares of Common Stock, exercisable for a period of seven years, to officers/directors of the Company at an exercise price of $0.655 per share and confirmed a grant of options made as of October 1, 2018, to purchase 500,000 shares of Common Stock, exercisable for a period of seven years, to an officer and director of the Company at an exercise price $0.48. All of the options were fully vested as of the date of grant

 

13

 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 6 – Stockholders’ Equity (continued)

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

 

Average risk-free interest rates     2.88% - 2.93 %
Average expected life (in years)     4.0  
Volatility     171% to 172 %

 

The fair value of the fully vested options granted of $803,997 was charged to operations during the year ended June 30, 2019.

 

A summary of option activity during the nine months ended March 31, 2020 is presented below:

 

    Shares     Weighted Average Exercise Price     Weighted Average Remaining Contractual Life (Years)  
                   
Outstanding -June 30, 2019     3,032,500     $ 0.56       6.2  
Granted     -                  
Exercised     -                  
Expired (Canceled)     (37,500 )                
Outstanding March 31, 2020     2,995,000     $ 0.55       5.4  
Exercisable March 31, 2020     2,995,000     $ 0.55       5.4  

 

Note 7 – Related Party Transactions

 

BioPharma was formed as a subsidiary of Kanativa USA, which is a subsidiary of Kanativa Inc.

 

At March 31, 2020, BioPharma was owed $90,667 from Kanativa USA for advances made by BioPharma on behalf of Kanativa USA in conjunction with the Share Exchange Agreement (See Note 3). The balance due from Kanativa USA was being repaid at $1,500 per month for 18 months commencing September 1, 2018 with the remaining balance due on March 1, 2020. BioPharma extended the due date for payment of the remaining balance to June 30, 2020.

 

On August 10, 2017, the Board of Directors granted an aggregate of 6,400,000 shares of Common Stock to five officers and directors of the Company, valued at $800,000 ($0.125 per share), under the Company’s 2017 Stock Incentive Plan. One-third of each grant vested as of the initial date of grant (August 10, 2017), and 8-1/3% upon the end of each calendar quarter beginning December 31, 2017. In March 2018, the Company cancelled 1,166,667 unvested shares previously issued to its former CEO. During the nine months ended March 31, 2020, $18,750 was charged to operations for the vesting of management shares issued subject to forfeiture. All shares granted have been fully vested.

 

Certain Officers and Directors of the Company are also officers and directors of Kanativa Inc., and other subsidiaries and affiliated entities of Kanativa Inc.

 

Note 8 – Subsequent Events

 

The Company has analyzed its operations subsequent to March 31, 2020 through the date these financial statements were issued, and has determined that it does not have any material sub subsequent events to disclose.

 

14

 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION

 

Forward-Looking Statements

 

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Certain statements that the Company may make from time to time, including all statements contained in this report that are not statements of historical fact, constitute “forward-looking statements”. Forward-looking statements may be identified by words such as “plans,” “expects,” “believes,” “anticipates,” “estimates,” “projects,” “will,” “should,” and other words of similar meaning used in conjunction with, among other things, discussions of future operations, financial performance, product development and new product launches, market position and expenditures. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

 

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand our historical results of operations during the periods presented and our financial condition for the nine months ended March 31, 2020 and 2019. This MD&A should be read in conjunction with our audited financial statements as of June 30, 2019 and 2018. See section entitled “Forward-Looking Statements” above.

 

Overview

 

We are engaged in pursuing pre-clinical and drug development activities for certain pharmaceutical formulations that include cannabinoids. Since March 2017, we have filed five of our own provisional patent applications, and acquired a license covering certain intellectual property related to a drug delivery system. In October 2018, we acquired all of the membership interest in CRx Bio Holdings LLC, which also engaged in the research and development of advanced cannabinoid formulations and drug delivery systems, by issuing 11,000,000 shares of our common stock. As part of the CRx acquisition, we also acquired three additional patent applications. CRx had an agreement with a major university to perform pre-clinical research related to the parenteral administration of cannabinoid formulations. As this research is common to both the CRx programs and the Nexien programs, we will be able to consolidate this research and maintain the original Nexien capital expenditure budget.

 

As a relatively new business engaged in start-up operations and activities, we will require substantial additional funding to successfully complete any of our drug development programs. At present, we cannot estimate the substantial capital requirements needed to secure regulatory approvals for our drug candidates. Nevertheless, we estimate that we will need to raise at a minimum $1.5 million during the next 12 months to continue our drug development and pre-clinical research programs and fund the operating costs related to being a public company. Determining a budget is subject to a number of factors. In general, this estimate may be higher if our research efforts prove to be successful, or lower if the research efforts produce results that warrant a decision to cease ongoing research and development efforts. Failure to obtain this necessary capital at acceptable terms, if at all, when needed, may force us to delay, limit, or terminate our drug development efforts to secure regulatory approvals and would adversely impact our planned research and development efforts in connection with the Company’s future drugs, which may make it more difficult for us to attain profitability.

 

We are a start-up company with no revenues from operations. We do not anticipate that Nexien BioPharma will generate revenues from its research and development activities related to its drug development projects in the near future, due to the protracted revenue model of pursuing pharmaceutical drug development in accordance with the pathway set forth by the FDA. Notwithstanding our successful raise of $2,076,158, net of offering costs, in equity capital since inception to March 31, 2020, there is substantial doubt that we can continue as an on-going business for the remainder of the current fiscal year without a significant and immediate infusion of capital. The Company has had to cease research and development activities due to the lack of sufficient working capital. While management continues its efforts to raise capital for the Company, it is also seeking merger or other business combination or restructuring opportunities.

 

15

 

 

Results of Operations for the three months ended March 31, 2020 as compared to March 31, 2019

 

Net loss for the three months ended March 31, 2020 was $559,670, an increase of $74,860 from the net loss of $484,810 for the three months ended March 31, 2019. As explained below, most of the loss is attributable to significant stock-based compensation costs and the fair value of common stock issued for the CRx acquisition.

 

General and administrative costs of $546,520 incurred during the three months ended March 31, 2020 includes a non-cash charge of $526,084 for the fair value of the shares issued for the acquisition of CRX Bio Holdings LLC. General and administrative expenses of $457,627 for the three months ended March 31, 2019 includes non-cash stock-based compensation costs of $388,144 for (i) the vesting of common shares previously issued to management, valued at $18,750, (ii) the fair value of vested stock options granted of $202,880, and (iii) amortization of shares subject to forfeiture issued to CRx of $166,514. Exclusive of stock-based compensation costs, general and administrative costs for the three months ended March 31, 2020 were $20,437, a decrease of $49,046 from comparable costs for the 2019 period of $69,483.

 

There were no research and development costs for the period ended March 31, 2020 as compared to $2,711 for the period ended March 31, 2019. Research and development costs for the 2019 period were predominately for continuation of activities under our agreement with the contract manufacturer.

 

Professional fees of $13,150 for the three months ended March 31, 2020 decreased by $11,322 from $24,472 for the period ended March 31, 2019. Fees for the 2020 period consisted of legal fees for securities related matters and fees for auditor quarterly review and other required tax and regulatory filings. The decrease is due, in part, to a reduction in legal fees to external counsel for patent and FDA related regulatory matters subsequent to the CRx transaction wherein external counsel expenditures were now being performed by in-house counsel.

 

Results of Operations for the nine months ended March 31, 2020 as compared to March 31, 2019

 

Net loss for the nine months ended March 31, 2020 was $1,997,846, a decrease of $1,243,692 from the net loss of $3,241,538 for the nine months ended March 31, 2019. As with the three-month period loss, most of the loss for the nine months ended March 31, 2020 and 2019 is attributable to significant stock-based compensation costs.

 

General and administrative costs of $1,916,695 incurred during the nine months ended March 31, 2020 includes a non-cash charge of $1,730,542 for the fair value of the shares issued for the acquisition of CRX Bio Holdings LLC, as well as non-cash stock-based compensation costs for the period of $52,137. In comparison, general and administrative costs of $3,025,550 incurred during the nine months ended March 31, 2019 includes $1,803,952 of non-cash stock-based compensation costs for: vesting of common shares previously issued to management valued at $191,668; the fair value of vested stock options granted of $1,456,350; and the fair value of warrants issued of $155,934. Also included in general and administrative expenses for the 2019 period is a non-cash charge of $1,002,514 for (i) the $836,000 fair value of the 1,100,000 vested shares issued for the acquisition of CRX Bio Holdings LLC and (ii) $166,514 for the vesting of shares issued to CRx subject to forfeiture. Exclusive of stock-based compensation costs, general and administrative costs for the nine months ended March 31, 2020 was $134,017, a decrease of $85,067 from comparable costs for the 2019 period of $219,084.

 

During the nine months ended March 31, 2019, the Board of Directors granted options to purchase a total of 1,810,000 shares of Common Stock, exercisable for a period of seven years, to officers/directors/consultants of the Company at an exercise price of $0.54 per share; options to purchase a total of 150,000 shares of Common Stock, exercisable for a period of seven years, to two individuals, (i) a director and (ii) a consultant of the Company, at an exercise price of $0.38 per share; options to purchase 500,000 shares of Common Stock to an officer/director at an exercise price of $0.48 per share for a period of seven years; and options to purchase 800,000 shares of Common Stock to three officers/directors at an exercise price of $0.655 per share for a period of seven years.

 

There were no research and development costs for the period ended March 31, 2020 as compared to $48,689 for the period ended March 31, 2019. Research and development costs for the 2019 period were predominately for continuation of activities under our agreement with the contract manufacturer.

 

16

 

 

Professional fees of $46,151 for the nine months ended March 31, 2020 decreased by $121,148 from $167,299 for the period ended March 31, 2019. Fees for the 2019 period consisted of legal fees for securities related matters and fees for annual audit and other required regulatory filings. The decrease is due, in part, to a reduction in legal fees to external counsel for patent and FDA related regulatory matters subsequent to the CRx transaction wherein external counsel expenditures were now being performed by in-house counsel.

 

We also paid $35,000 in shares of our Common Stock with respect to a proprietary delivery system for cannabinoid-based medications during the nine months ended March 31, 2020.

 

Liquidity and Capital Resources

 

At March 31, 2020, we had working capital of $94,753 and cash of $22,045, as compared to working capital of $265,920, and cash of $146,356 at June 30, 2019. The decrease in both working capital and cash was due primarily to the Company’s utilization of existing funds for operating activities. We used $124,311 of cash for operating activities, with no increase in liquidity from financing activities during the nine months ended March 31, 2020. In comparison, operating activities used cash of $554,587 and investing activities used $30,000 during the comparable 2019 period, with no cash provided by financing activities.

 

While management of the Company believes that the Company will be successful in its current and planned activities, there can be no assurance that the Company will be successful in its drug development activities, and raise sufficient equity, debt capital or strategic relationships to sustain the operations of the Company.

 

Our ability to create sufficient working capital to sustain us and continue as an operating entity over the next twelve-month period, and beyond, is dependent on our raising additional equity or debt capital, or entering into strategic arrangements with one or more third parties.

 

There can be no assurance that sufficient capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

 

Availability of Additional Capital

 

Notwithstanding our success in raising gross proceeds of $2.1 million from the private sale of equity securities through March 31, 2020 there is substantial doubt that we can continue as an on-going business for the remainder of the current fiscal year without a significant and immediate infusion of capital. We estimate we will need to raise at a minimum $1.5 million during the next 12 months to commence our drug development projects and fund the operating costs related to being a public company. Thus far, we have had to cease research and development activities due to the lack of sufficient working capital. All of management’s efforts are focused on sourcing capital, as well as seeking merger or other business combination or restructuring opportunities.

 

Any additional equity financing may be dilutive to our stockholders, new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of Common Stock. Debt or equity financing may subject us to restrictive covenants and significant interest costs. Any business combination or restructuring of the Company will also significantly impact our stockholders.

 

Capital Expenditure Plan During the Next Twelve Months

 

As the result of the acquisition of CRx Bio (“CRx”), we were able to eliminate the salary of one officer of the Company. All other officers, including the new management team from CRx, are not being paid any cash compensation. In addition, by bringing on an in-house legal counsel with extensive patent experience, we were able to bring all Intellectual Property (“IP”) legal expenses in house. This has substantially reduced most legal expenses, which is a significant percentage of cash expenses. Finally, as CRx had been exploring similar research for alternative delivery systems as Nexien, we will be able to consolidate this research and maintain the original Nexien capital expenditure budget.

 

17

 

 

As of the date of this report, there is substantial doubt that we can continue as an on-going business for the remainder of the current fiscal year without a significant and immediate infusion of capital. Thus far, we have had to cease research and development activities due to the lack of sufficient working capital. All of management’s efforts are focused on sourcing capital, as well as seeking merger or other business combination or restructuring opportunities.

 

Going Concern Consideration

 

Our registered independent auditors have issued an opinion on our financial statements as of June 30, 2019 which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing any drugs that we successfully develop. Accordingly, we must raise capital from sources other than the actual sale from any drugs that we develop. We must raise capital to continue our drug development activities and stay in business.

 

Off-Balance Sheet Arrangements

 

As of June 30, 2019 and March 31, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.

 

Contractual Obligations and Commitments

 

On September 19, 2017, we entered into an agreement with a contract manufacturer with significant expertise in pre-clinical and clinical trial development and regulatory approvals to develop an injectable formulation for our drug candidate in the Kotzker Development Project with the objective of applying for FDA approval. It is anticipated that the drug candidate will be developed utilizing the new drug application 505(b)(2) regulatory pathway for use in the treatment during and immediately following exposure to organophosphorus nerve agents. The formulation of the drug candidate will be based on one or more synthetic cannabinoids. We paid $75,000 to the contract manufacturer upon signing the contract, which further provides that we pay an additional $20,000 upon completion of the drug formulation and $20,000 upon completion of Phase 1 development. No payment schedule has yet been agreed to upon completion of Phase 2 and Phase 3 development stage and the contract may be terminated by either party.

 

On February 28, 2018, we obtained a worldwide exclusive license with respect to a proprietary delivery system for cannabinoid-based medications. Upon execution of the agreement, as amended September 18, 2018, $35,000 was paid to the licensor. An additional $10,000 was paid on November 1, 2018, $20,000 was paid on February 28, 2019 and a final payment, of $35,000, due August 31, 2019, was paid in shares of our common stock. We are required to pay milestone payments upon obtaining regulatory approval of pharmaceutical licensed products and royalties based upon sales of licensed products. We may grant sublicenses under the terms of the agreement.

 

On October 26, 2018, we entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with the members of CRx Bio Holdings LLC, a Delaware limited liability company (“CRx”), to acquire all of the membership interest in CRx in exchange for 11,000,000 restricted shares of our common stock (the “Acquisition”). CRx is engaged in the research and development of advanced cannabinoid formulations and drug delivery systems with a focus on bioavailability and related pharmacokinetics and pharmacodynamics (PK/PD) enhancement. The Acquisition transaction was consummated on October 26, 2018. By acquiring CRx as a wholly-owned subsidiary, we acquired all of its assets, which consist primarily of three U.S. provisional patent applications relating to cannabinoid formulations to treat convulsive disorders, chronic traumatic encephalopathy, and neuropathic pain. At the closing, we issued to the six members of CRx (the “Sellers”) 1,100,000 shares not subject to any forfeiture restrictions and 9,900,000 shares which shall be released from forfeiture restrictions according to the following vesting schedule:

 

  30% shall be fully vested 12 months following the Closing (October 26, 2019);
  30% shall be fully vested 24 months following the Closing (October 26, 2020); and
  30% shall be fully vested 36 months following the Closing (October 26, 2021).

 

18

 

 

Any Seller who is not then providing services to us or any of our subsidiaries on any vesting date, whether through voluntary termination or termination “for cause,” will forfeit his unvested shares, which will be cancelled.

 

Effective December 31, 2018, one of the Sellers resigned from the Company and forfeited 1,732,500 unvested shares previously issued. In May 2019, the Seller who resigned returned to the Company an additional 142,500 vested shares issued in accordance with the Purchase Agreement.

 

Immediately after closing, Alex Wasyl, the CEO of CRx, was elected to serve as a director and our CEO. Alain Bankier, who had been serving as our interim CEO, was elected to serve as our Executive Chairman of the Board of Directors and Chief Strategy Officer. Richard Greenberg resigned his position as Chairman of the Board, but continues to serve on the Board. As of April 1, 2019, Mr. Bankier resigned as an officer and director of the Company. Effective October 21, 2019, Courtney Clark resigned as a director of the Company. Effective March 31, 2020, Alex Wasyl resigned as CEO and as a director of the Company, and Richard Greenberg was elected to serve as our CEO.

 

Critical Accounting Policies

 

Our significant accounting policies are described in the notes to our financial statements as of March 31, 2020 and are included elsewhere in this report.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures.

 

As of March 31, 2020, the Company’s chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures as provided under the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013), our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report.

 

Changes in internal controls.

 

During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

19

 

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None.

 

ITEM 1A. RISK FACTORS

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Risk Factors in our Form 10-K as filed with the SEC on September 30, 2019, which could materially affect our business, financial condition or future results. The risks described in our Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

During the quarter ended March 31, 2020, we did not issue or sell any unregistered securities.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

20

 

 

ITEM 6. EXHIBITS

 

Regulation

S-K Number

  Document
2.1   Limited Liability Company Interest Purchase Agreement by and among the Members of CRX Bio Holdings LLC and Nexien BioPharma, Inc. dated October 26, 2018 (1)
3.1   Certificate of Incorporation (2)
3.2   Certificate of Merger (2)
3.3   Certificate of Amendment to Certificate of Incorporation (2)
3.4   Certificate of Amendment to Certificate of Incorporation (3)
3.5   Certificate of Amendment to Certificate of Incorporation (4)
3.6   Bylaws (2)
10.1   2017 Stock Incentive Plan (3)
10.2   Licensing Agreement between the Company and Kotzker Consulting LLC (3)
10.3   Exclusive License Agreement between the Company and Accu-Break Pharmaceuticals, Inc. (3)
10.4   2018 Equity Incentive Plan (4)
10.5   First Amendment to Exclusive License Agreement between the Company and Accu-Break Pharmaceuticals, Inc. dated September 18, 2018 (4)
31.1   Rule 13a-14(a) Certification of Richard Greenberg
31.2   Rule 13a-14(a) Certification of Evan L. Wasoff
32.1   Certification of Richard Greenberg Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2   Certification of Evan L. Wasoff Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101   Financial statements from the Quarterly Report on Form 10-Q of Nexien BioPharma, Inc. for the quarterly period ended March 31, 2020, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Operations; (iii) the Statements of Cash Flows; and (iv) the Notes to Financial Statements (5)

 

  (1) Filed as an exhibit to the Current Report on Form 8-K filed October 30, 2018.
  (2) Filed as an exhibit to the registration statement on Form 10 filed November 14, 2014.
  (3) Filed as an exhibit to the Quarterly Report on Form 10-Q filed May 15, 2018.
  (4) Filed as an exhibit to the Annual Report on Form 10-K filed September 28, 2018.
  (5) In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  NEXIEN BIOPHARMA, INC.
     
Dated: May 14, 2020 By: /s/ Richard Greenberg
    Richard Greenberg, Chief Executive Officer
     
  By: /s/ Evan L. Wasoff
    Evan L. Wasoff, Chief Financial Officer

 

22

 

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