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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

 

FORM 10-Q

 

 

 

 


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


 

For the Quarterly Period Ended December 31, 2020

 

OR

 

 


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


 

For the Transition Period from ___ to ___

 

Commission file number

333-191083

 

RASNA THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Nevada

39-2080103

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

  

420 Lexington Ave, Suite 2525, New York, NY 10170

(Address of principal executive offices)   (Zip Code)

 

Telephone: (646) 396-4087

(Registrant’s telephone number)

 

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 and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒   No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ☒   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

Large accelerated filer  ☐

Accelerated filer  

Non-accelerated filer

Smaller reporting company 


Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒


1



 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes ☐    No ☒


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

  

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 68,908,003  shares of common stock were issued and outstanding as of March 4, 2021.



2




TABLE OF CONTENTS




PAGE

PART 1
FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS 4

Condensed Consolidated Balance Sheets - December 31,2020 (unaudited) and September 30, 2020 4

Unaudited Condensed Consolidated Statements of Operations for the Three Months Ended December 31,2020 and 2019 5

Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended December 31, 2020 and 2019 6

Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2020 and 2019 7

Notes to the unaudited Condensed Consolidated Financial Statements 8
ITEM 2. Management’s discussion and analysis of financial condition and results of operations 14
ITEM 3. Controls and Procedures 18



PART II OTHER INFORMATION



ITEM 1A Risk factors 19
ITEM 6. Exhibits 19
SIGNATURES
20

 

3


PART I – FINANCIAL INFORMATION

 

 

RASNA THERAPEUTICS, INC.


 


December 31, 2020 

 

September 30, 2020



(Unaudited)


 



ASSETS


  

 

 

 

 

Current assets:


 

 

 

 

 

Cash


$

3,351

 

 

$

14,241

 

Prepayments


 

 

17,641

 

Related party receivable


 

 

748

 

Total current assets


3,351

 

 

32,630

 

 


 



 

 



Property and equipment, net


 

 

314

 

Total non-current assets


 

 

314

 

 


 



 

 



Total assets


$

3,351

 

 

$

32,944

 

 


 



 

 



LIABILITIES AND SHAREHOLDERS' EQUITY


 

 

 

 

 

 


 



 

 



Liabilities:


 

 

 

 

 

Current liabilities:


 

 

 

 

 

Accounts payable and accrued expenses


$

1,701,361

 

 

$

1,635,788

 

Related party payables

550,932

 

 

550,000

 

Loan payable - related party
76,320

74,880
      Convertible notes payable - related party
133,310

89,768


Convertible notes payable
369,786

357,196


Total current liabilities


2,831,709

 

 

2,707,632

 








Total liabilities


2,831,709

 

 

2,707,632

 

 







Commitments and contingencies (Note 7)


 

 

 

 

 

 


 



 

 



Shareholders' equity


 

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized; 68,908,003 shares issued and outstanding


68,909

 

 

68,909

 

Additional paid-in capital


19,933,076

 

 

19,914,884

 

Accumulated deficit


(22,830,343)

 

(22,658,481

)

Total shareholders' deficit


(2,828,358)

 

(2,674,688

)

Total liabilities and shareholders' deficit


$

3,351

 

 

$

32,944

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 

 

4


RASNA THERAPEUTICS, INC.

 

(UNAUDITED)

   

For the Three Months Ended

December 31,

 


2020


2019

Revenue

$

$

Cost of revenue






Gross profit






 








Operating expenses:








General and administrative


154,941


149,281

Research and development






Consultancy fees 






Legal and professional fees




Total operating expenses


154,941


149,281

 








Loss from operations


(154,941)

(149,281 )

 








Other expense:








Interest on convertible notes payable
(17,077)

(8,761 )
Impairment of goodwill



Gain on sale of asset




Foreign currency transaction loss


156


Total other expense


(16,921)

(8,761 )

 








Loss from operations before income taxes


(171,862)

(158,042 )

 








Income tax provision






 








Net loss

$ (171,862)
$ (158,042 )

 








Basic and diluted net loss per share attributable to common shareholders

$ (0.00)
$ (0.00 )

 








Basic and diluted weighted average common shares outstanding


68,908,003


68,908,003


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 

 

5



RASNA THERAPEUTICS, INC.

 

(UNAUDITED)

 


Three Months Ended December 31, 2020


Common Stock


Additional Paid-In


Accumulated

Total Shareholders’


Shares
Amount


Capital


Deficit


Deficit

Balance at October 1, 2020

68,908,003

 

$

68,909

 


$

  19,914,884

 


$

(22,658,481

)

$

(2,674,688)

 

 

 


 




 




 




 



Share based compensation

 


 


  18,192

 


 


  18,192

 

Net loss

 


 


 


(171,862

)

(171,862)

 

 


 




 




 




 



Balance at December 31, 2020

68,908,003

 

$

68,909

 


$

19,933,076

 


$

(22,830,343

)

$

(2,828,358)

 

    


Three Months Ended December 31, 2019


Common Stock


Additional Paid-In


Accumulated
Total Shareholders’


Shares
Amount


Capital


Deficit


Equity

Balance at October 1, 2019

68,908,003

 

$

68,909


 

$

19,780,252

 


$

(17,311,809

)

$

2,537,352

 

 

 


 




 




 




 



Share based compensation

 



 

47,173

 


 


47,173

 

Net loss

 



 

 


(158,042

)

(158,042

)

 

 


 




 




 




 



Balance at December 31, 2019

68,908,003

 

$

68,909


 

$

19,827,425

 


$

(17,469,851

)

$

2,426,483

 

   


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

6


 

RASNA THERAPEUTICS, INC.

 

(UNAUDITED)

 

 

For the Three Months Ended December 31,


 

2020


 

2019


CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net loss

$

(171,862)

 

$

(158,042

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Share based compensation

18,192

 

 

47,173

 

Depreciation

314

 

 

409

 

Interest accrued

1,440
Goodwill impairment




Other non-cash items 16,132

8,761

Changes in operating assets and liabilities:

 



 

 



Accounts payable and accrued expenses
65,573

2,643
Related party payable 932

5,902

Prepayments and other receivables

17,641

 

(613

)

Related party receivable

748

 

14,335

Net cash used in operating activities

(50,890)

 

(79,432

)






CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

Proceeds from issuance of loan payable - related party


Proceeds from issuance of convertible note payable 40,000

57,500

Net cash provided by financing activities

40,000

 

 

57,500


 

 



 

 



Effect of foreign exchange rate

 

 

 



 

 



Net change in cash

(10,890)

 

(21,932

)

 

 



 

 



Cash, beginning of period

14,241

 

 

50,068

 

 

 



 

 



Cash, end of period

$

3,351

 

 

$

28,136


 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

7



 RASNA THERAPEUTICS, INC.

(UNAUDITED)

  

1.    GENERAL INFORMATION


Rasna Therapeutics, Inc. (“Rasna DE", "Rasna Inc.” or the "Company"), is a biotechnology company incorporated in the State of Delaware on March 28, 2016. The Company is engaged in modulating the molecular targets NPM1 and LSD1, which are implicated in the disease progression of leukemia and lymphoma. 

  

These unaudited condensed consolidated financial statements are presented in United States dollars (“USD”) which is also the functional currency of the primary economic environment in which the Company operates. See Note 2, foreign currency policy. 

  

Risks and Uncertainties 

  

Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or ability to secure additional cash resources, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

  

2.    ACCOUNTING POLICIES

 

The principal accounting policies applied in the preparation of these unaudited condensed consolidated financial statements are set out below. These policies have been applied consistently to all the periods presented unless otherwise stated.

 

Basis of preparation 

 

These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (the "SEC”) and United States generally accepted accounting principles (“US GAAP”) for interim reporting. The principles for condensed interim financial information do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements as of and for the year ended September 30, 2020 and notes thereto included in the Company's Annual Report on Form 10-K filed with the SEC on January 15, 2021.  The accompanying unaudited condensed consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (United States), but in the opinion of management, such financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s interim financial information.


The results of the operations for the three months ended December 31, 2021 may not be indicative of the results that may be expected for the year ending September 30, 2021. 


Principles of Consolidation

 

The consolidated financial statements include the financial statements of the Compnay and its wholly owned subsidiary, Rasna DE, and Rsasna DE's subsidiary, Arna Therapeutics Limited. All significant intercompany accounts and transactions have been eliminates in the preparation of the accompanying consolidated financial statements.


Use of  Estimates


The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates its estimates on an ongoing basis, including those related to the fair values of share based awards, income taxes and contingent liabilities, among others. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates and such differences could be material to the Company's consolidated financial position and results of operations.

 

8


Net Loss per Share

 

Basic net loss per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share includes potentially dilutive securities such as outstanding options, warrants and convertible loan notes, using various methods such as the treasury stock, modified treasury stock, and if converted methods in the determination of dilutive shares outstanding during each reporting period.


The following table sets forth potential common shares issuable upon the exercise of outstanding options and the exercise of warrants and convertible loan notes, all of which have been excluded from the computation of diluted weighted average shares outstanding as they would be anti-dilutive: 


 

December 31, 2020


 

December 31, 2019


Stock options

 

3,648,675

 

 

 

3,973,675

 

Warrants

 

1,926,501

 

 

 

1,926,501

 

Convertible notes & associated fees
2,382,692


2,145,000

Total shares issuable upon exercise or conversion

 

7,957,868

 

 

 

8,045,176

 

           

The following is the computation of net loss per share for the following periods:

 

 Recent Accounting Pronouncements 

 

In  December 2019,  the  FASB  issued  ASU 2019-12,  Income  Taxes  -  Simplifying  the  Accounting  for  Income  Taxes  (“ASU 2019-12”).  Among other items, the amendments in ASU 2019-12 simplify the accounting treatment of tax law changes and year-to-date losses in interim periods. An entity generally recognizes the effects of a change in tax law in the period of enactment; however, there is an exception for tax laws with delayed effective dates. Under current guidance, an entity may not adjust its annual effective tax rate for a tax law change until the period in which the law is effective. This exception was removed under ASU 2019-12, thereby providing that all effects of a tax law change are recognized in the period of enactment, including adjustment of the estimated annual effective tax rate. Regarding year-to-date losses in interim periods, an entity is required to estimate its annual effective tax rate for the full fiscal year at the end of each interim period and use that rate to calculate its income taxes on a year-to-date basis. However, current guidance provides an exception that when a loss in an interim period exceeds the anticipated loss for the year, the income tax benefit is limited to the amount that would be recognized if the year-to-date loss were the anticipated loss for the full year. ASU 2019-12 removes this exception and provides that, in this situation, an entity would compute its income tax benefit at each interim period based on its estimated annual effective tax rate. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those annual periods. Early adoption is permitted. The Company has not yet evaluated the effect that this update will have on its financial statements and related disclosures. 

The Company has determined that all other recently issued accounting pronouncements will not have a material impact on its consolidated financial position, results of operations and cash flows, or do not apply to its operations.

 

 3.    LIQUIDITY AND GOING CONCERN

 

The Company has no present revenue and has experienced net losses and significant cash outflows from cash used in operating activities since inception. 

 

The Company expects to continue to incur net losses and have significant cash outflows for at least the next 12 months and will require significant additional cash resources to launch new development phases of existing products in its pipeline. 

 

In the event that the Company is unable to secure the additional cash resources needed, the Company may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern for a period of one year from the date of this filing. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern one year from the date of this filing. This basis of accounting contemplates the recovery of the Company's assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support the Company's cost structure.

 

9


4.    SHARE-BASED COMPENSATION

For the three months ended December 31, 2020  and December 31, 2019, $18,192 and $47,143 related to share based compensation to directors and employees respectively, has been included within the general and administrative expense category in the accompanying unaudited condensed consolidated interim financial statements. No costs related to non-employees have been included within the consultancy fees expense category in the unaudited condensed consolidated interim financial statements in the three months ended December 31, 2020  and the three months ended December 31, 2019

As of December 31, 2020, there was $24,482 of total unrecognized compensation cost related to stock options. The cost is expected to be recognized over a weighted average period of 0.64 years.


  

5.    CONVERTIBLE NOTES

 

Convertible note issued on August 8, 2018

On August 8, 2018, the Company entered into a 12% Convertible Promissory Note with High Octane Bioresearch Ltd. (the “Holder”) pursuant to which the Company issued a Convertible Promissory Note to the Holder. The Holder provided the Company with $135,000 in cash, which was received by the Company during the year ended September 30, 2020. The Company promised to pay the principal amount, together with guaranteed interest at the annual rate of 12%, with principal and accrued interest on the Note due and payable on August 9, 2019 (unless converted under terms and provisions as set forth within the Agreement). The Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.65 per share or (ii) the price of the next financing during the 180 days after the date of the Agreement, subject to adjustments noted within the Agreement. The number of shares issuable upon a conversion shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of the Note to be converted by (y) the Conversion Price. The Note requires the Company to reserve and keep available out of its authorized and unissued shares of common stock the amount of shares that would be issued upon conversion of the Note, which includes the outstanding principal amount of the Note and interest accrued and to be accrued through the date of maturity.   

  

In relation to the Convertible Promissory Note, the Company has also entered into an agreement with Garcer Bioventures, a broker who introduced the Holder to the Company. Under the terms of this agreement, should the Holder convert its principal amount into common stock of the Company, the Company will issue to Garcer Bioventures the number of shares equal to 10% of the number of shares of common stock issued to High Octane upon such conversion. 

  

In July 2019, the Company extended the maturity date of the Convertible Promissory Note from August 8, 2019  to August 8, 2020  All other terms of the Convertible Promissory Notes remained the same. The Amended Convertible Promissory Notes were accounted for as a modification of the original Convertible Promissory Notes as the change in the fair value of the embedded conversion option featured in the Convertible Promissory Notes immediately before and after the amendment did not exceed 10% of the carrying amount of the Convertible Promissory Notes.

  

On August 8, 2020, the maturity date of the 12% Convertible Promissory Note with High Octane Bioresearch Ltd. entered into on August 8, 2018, was further extended until 8 September 2020. All other terms of the Convertible Promissory Notes remained the same.  The Amended Convertible Promissory Notes were accounted for as a modification of the original Convertible Promissory Notes as the change in the fair value of the embedded conversion option featured in the Convertible Promissory Notes immediately before and after the amendment did not exceed 10% of the carrying amount of the Convertible Promissory Notes.

  

As at December 31, 2020, and through to the date of this filing, this note payable is past due and is classified as a current liability on the consolidated balance sheet as of December 31, 2020. The note continues to accrue interest and all relevant penalties have been accrued as of December 31, 2020. The Company has issued an amended and restated  Convertible Promissory Note (see Note 7). 


10



Convertible note issued on October 19, 2018

 On October 19, 2018, the Company entered into a second 12% Convertible Promissory Note with the Holder with a maturity date of October 19, 2019. The Holder provided the Company with $100,000 in cash, which was received by the Company during the three months ended December 31, 2018, under the same terms as the first Note. 

  

The Company has also entered into another agreement with Garcer Bioventures in lieu of fees, under the same terms as the earlier agreement.

  

In July 2019, the Company extended the maturity date of the Convertible Promissory Note from October 19, 2019 to October 19, 2020, respectively. All other terms of the Convertible Promissory Notes remained the same.  The Amended Convertible Promissory Notes were accounted for as a modification of the original Convertible Promissory Notes as the change in the fair value of the embedded conversion option featured in the Convertible Promissory Notes immediately before and after the amendment did not exceed 10% of the carrying amount of the Convertible Promissory Notes.

  

As at the date of this filing, this note payable is past due. The note continues to accrue interest and all relevant penalties.  The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).


Convertible note issued on November 12, 2019

On November 12, 2019, the Company entered into a third 12% Convertible Promissory Note with the Holder with a maturity date of November 12, 2020. The Holder provided the Company with $57,500 in cash, which was received by the Company during the three months ended December 31, 2019 under the same terms as the Note above. As at the date of this filing, this note payable is past due. The note continues to accrue interest and all relevant penalties.  The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).

  

Convertible note issued on February 7, 2020

In February 2020, the Company entered into a fourth 12% Convertible Promissory Note with the Holder with a maturity date of February 7, 2021. The Holder provided the Company with 31,000 in cash, which was received by the Company during the three months ended March 31, 2020. The Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next equity financing, subject to adjustments noted within the Agreement. The number of shares issuable upon a conversion shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of the Note to be converted by (y) the Conversion Price. The Note requires the Company to reserve and keep available out of its authorized and unissued shares of common stock the amount of shares that would be issued upon conversion of the Note, which includes the outstanding principal amount of the Note and interest accrued and to be accrued through the date of maturity. As at the date of this filing, this note payable is past due. The note continues to accrue interest and all relevant penalties.  The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).

  

Convertible note issued on March 20, 2020

In March 2020, the Company entered into a fifth 12% Convertible Promissory Note with the Holder with a maturity date of March 20, 2021. The Holder provided the Company with $20,000 in cash, which was received by the Company during the three months ended March 31, 2020, under the same terms as the fourth Note.  The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).

  

Convertible note issued on September 22, 2020

In September 2020, the Company entered into a sixth 12% Convertible Promissory Note with the Holder with a maturity date of September 22, 2021. The Holder provided the Company with $35,000 in cash, which was received by the Company during the three months ended September 30, 2020, under the same terms as the fourth Note.  The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).

  

Convertible note issued on October 21, 2020

In October 2020, the Company entered into a seventh 12% Convertible Promissory Note with the Holder with a maturity date of October 21, 2021. The Holder provided the Company with $40,000 in cash, which was received by the Company during the three months ended December 31, 2020.  The Note provides the Holder with the right to convert, at any time, all or any part of the outstanding principal and accrued but unpaid interest into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.05 per share or (ii) the price of the next equity financing, subject to adjustments noted within the Agreement. The number of shares issuable upon a conversion shall be determined by the quotient obtained by dividing (x) the outstanding principal amount of the Note to be converted by (y) the Conversion Price. The Note requires the Company to reserve and keep available out of its authorized and unissued shares of common stock the amount of shares that would be issued upon conversion of the Note, which includes the outstanding principal amount of the Note and interest accrued and to be accrued through the date of maturity.  The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).

  

At December 31, 2020, there were 2,346,538 shares reserved for the conversion of the Notes and 36,154 shares were reserved in lieu of fees due to Garcer Bioventures

Interest expense, including penalty interest, associated with the convertible notes was $16,132 and $8,761 for the three months ended December 31, 2020 and 2019 respectively.  

11


6   RELATED PARTY TRANSACTIONS


The following is a summary of the related party transactions for the periods presented.


Eurema Consulting

 

Eurema Consulting S.r.l. is a significant shareholder of the Company. During the three months ended December 31, 2020 and December 31, 2019  Eurema Consulting did not supply the Company with consulting services. As of December 31, 2020, and September 30, 2020, the balance due to Eurema Consulting S.r.l. was $200,000 for past consultancy services.

  

Gabriele Cerrone

 

Gabriele Cerrone is the majority shareholder of Panetta Partners, one of the Company's principal shareholders. As of December 31, 2020, and September 30, 2020, the balance due to Gabriele Cerrone was $175,000 for past consultancy services. In March 2020, the Company entered into  a 12% Convertible Promissory Note with Gabriele Cerrone  for $20,000 with a maturity date of March 20, 2021. The amount due for this note at December 31, 2020, with respect to the principal and accrued interest, is $21,873.  The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).

 

Roberto Pellicciari and TES Pharma 

 

Roberto Pellicciari is the majority shareholder of TES Pharma Srl, one of the Company's principal shareholders. During the three months ended December 31, 2020 and December 31, 2019 Roberto Pellicciari did not supply the Company with consulting services. As of December 31, 2020, and September 30, 2020, the balance due to Roberto Pellicciari was $175,000 for past consultancy services. At December 31, 2020 and September 30, 2020, TES Pharma was owed $75,000 

 

Tiziana Life Sciences Plc ("Tiziana") 


The Company is party to a Shared Services Agreement with Tiziana, whereby the Company is charged for shared services and rent. Tiziana had previously agreed to waive all charges for shared services from October 2018 onwards, until further notice since the amounts due for such services are de minimis. Notice was given and recharges from October 1, 2020 were resumed . Keeren Shah the Company's Finance Director, is also Finance Director of Tiziana, and the Company's directors, Willy Simon and John Brancaccio are also non executive directors of Tiziana.


As of December 31, 2020 , $982 was due to Tiziana under services charged under the shared services agreement. This is recorded as a related party payable in the accompanying condensed consolidated balance sheets. As of  September 30, 2020, the Company made payments on behalf of Tiziana of $748, which are recorded as a related party receivable in the accompanying condensed consolidated balance sheets. 


On March 31, 2020, Tiziana extended a loan facility to Rasna of $65,000. The loan is repayable within 18 months and is incurring an interest charge of 8% per annum. In April 2020, the loan facility was extended by a further $7,000, so the loan facility totals $72,000. As of December 31, 2020, the amounts due to Tiziana under this loan facility were $76,320. 

 

Panetta Partners

 

Panetta Partners Limited, a shareholder of Rasna, is a company in which Gabriele Cerrone is a major shareholder and also serves as a director. In February 2020, the Company entered into a 12 % Convertible Promissory Note with Panetta Partners for $31,000 with a maturity date of February 07, 2021. The amount due for this note at December 31, 2020, with respect to the principal and accrued interest, is $34,348. The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).


In February 2020, September 2020 and October 2020 the Company entered into  12% Convertible Promissory Notes with Panetta Partners for $31,000,  $35,000 and $40,000 with  maturity dates of February 07, 202122 September, 2020 and 21 October, 2021, respectively. The amount due for these notes at December 31, 2020, with respect to the principal and accrued interest is $34,438, $36,155 and $40,933 respectively. The Company has issued an amended and restated  Convertible Promissory Note (see Note 7).  


12


7.    SUBSEQUENT EVENTS


On February 5, 2021, the Company issued amended and restated Convertible Promissory Notes to all Note holders with an extended maturity date of December 31, 2021 and conversion terms amended to the lower of (i) $0.01 or (ii) the price of the next equity financing, which raises at least US$1,000,000.


On January 14, 2021 the Company issued a 12% convertible promissory note (the “Note”) in the principal amount of $60,000. The Note has a maturity date of  December 31, 2021 and is convertible by the holder at any time into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) the price of the next equity financing, which raises at least US$1,000,000. If the holder has not converted the Note into common stock by the maturity date, the Company must repay the outstanding principal amount plus accrued interest. The Holder provided us with $60,000 in cash, which we received in January 2021. The Note contains an anti-dilution provision which adjusts the conversion price in the event of an issuance by the Company of common stock below the then effective conversion price. 


On February 10, 2021 the Company issued a 12% convertible promissory note (the “Note”) in the principal amount of $90,000. The Note has a maturity date of  December 31, 2021 and is convertible by the holder at any time into shares of the Company’s common stock at a conversion price equal to the lower of (i) $0.01 per share or (ii) the price of the next equity financing, which raises at least US$1,000,000. If the holder has not converted the Note into common stock by the maturity date, the Company must repay the outstanding principal amount plus accrued interest. The Holder provided us with $90,000 in cash, which we received in February 2021. The Note contains an anti-dilution provision which adjusts the conversion price in the event of an issuance by the Company of common stock below the then effective conversion price.  


13


 

Forward-Looking Statements 

 

This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and the Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the Company’s Annual Report on Form 10-K filed on January 15, 2021 under the heading “Risk Factors,” which are incorporated herein by reference.

 

We assume no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

Unless expressly indicated or the context requires otherwise, the terms "Rasna,",” the “Company,” “we,” “us,” and “our” refer to Rasna Therapeutics, Inc., a Nevada corporation, and, where appropriate, its wholly owned subsidiaries.

 

Company Background

 

To date, we have devoted substantially all of our resources to research and development efforts relating to our therapeutic candidates, including conducting clinical trials and developing manufacturing capabilities, in-licensing related intellectual property, protecting our intellectual property and providing general and administrative support for these operations. Since our inception, we have funded our operations primarily through the issuance of equity securities and convertible notes.

 

We anticipate that our expenses will increase substantially if and as we:

 

 

initiate new clinical trials;

 

 

seek to identify, assess, acquire and develop other products, therapeutic candidates and technologies;

 

 

seek regulatory and marketing approvals in multiple jurisdictions for our therapeutic candidates that successfully complete clinical studies;

 

 

establish collaborations with third parties for the development and commercialization of our products and therapeutic candidates;

 

 

make milestone or other payments under our agreements pursuant to which we have licensed or acquired rights to intellectual property and technology;

 

 

seek to maintain, protect, and expand our intellectual property portfolio;

 

 

seek to attract and retain skilled personnel;

 

 

incur the administrative costs associated with being a public company and related costs of compliance;

 

 

create additional infrastructure to support our operations as a commercial stage public company and our planned future commercialization efforts; and 

 

 

experience any delays or encounter issues with any of the above.

 

We expect to continue to incur significant expenses and increasing losses for at least the next several years. Accordingly, we anticipate that we will need to raise additional capital in addition to the net proceeds from this offering in order to obtain regulatory approval for, and the commercialization of our therapeutic candidates. Until such time that we can generate meaningful revenue from product sales, if ever, we expect to finance our operating activities through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any approved therapies or products or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially adversely affect our business, financial condition and results of operations.


14


  

We only have one segment of activity, which is that of a biotechnology company focused on targeted drugs to treat diseases in oncology and immunology, mainly focusing on the treatment of leukemia and lymphoma.


The Company is currently looking into raising funds to progress its R&D pipeline.

 

Critical Accounting Policies and Estimates

 

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or US GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. In accordance with US GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

 

The Company has determined that it was not subject to any new accounting pronouncements that became effective during the three months ended December 31, 2020.

 

Basis of preparation 

 

The accompanying financial statements have been prepared in conformity with US GAAP. Any reference in these notes to applicable guidance is meant to refer to US GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“the FASB”).

 

Liquidity and Going Concern

 

We are subject to a number of risks similar to those of other pre-commercial stage companies, including our dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with research, development, testing, and obtaining related regulatory approvals of its pipeline products, suppliers and collaborators, successful protection of intellectual property, competition with larger, better-capitalized companies, successful completion of our development programs and, ultimately, the attainment of profitable operations are dependent on future events, including obtaining adequate financing to fulfill our development activities and generating a level of revenues adequate to support our cost structure.  

 

We have no present revenue and have experienced net losses and significant cash outflows from cash used in operating activities since inception, and at December 31, 2020, had an accumulated deficit of $22,830,343, a net loss for the three months ended December 31, 2020 of $154,941 and net cash used in operating activities of $50,890 for the three months ended December 31, 2020.

 

We expect to continue to incur net losses and have significant cash outflows for at least the next twelve months and will require significant additional cash resources to launch new development phases of existing products in its pipeline. In the event that the Company is unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about our ability to continue as a going concern one year from the date of this filing. The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern one year from the date of this filing. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure.


15



Results of Operations

 

The following paragraphs set forth our results of operations for the periods presented.  The period-to-period comparison of financial results is not necessarily indicative of future results.

 

Results of Operations for the three months ended December 31, 2020 and 2019

 

The following table sets forth the summary statements of operations for the periods indicated:

 

For the Three Months Ended December 31,


 

2020 


  

2019 


 

(Unaudited) 


  

 (Unaudited)


Revenue

$

 

  

$

  

Cost of revenue

 

  

  

Gross profit

 

  

  

 

 



  




Operating expenses:

 

 

  

 

  

General and administrative

154,941

 

  

149,281

  

Consultancy fees 

  

Legal and professional fees


  

  

Total operating expenses

154,941


  

149,281

  

 

 



  




Loss from operations

(154,941)

  

(149,281

)

 

 



  




Other expense:

 

 

  

 

  

Interest on convertible notes payable (17,077)
(8,761 )

Foreign currency transaction gain

156

  

Other expense

(16,921)

  

(8,761

)

 

 



  




Net loss

$

(171,862)

  

$

(158,042

)

 

Revenues

 

There were no revenues for the three months ended December 31, 2020 and 2019 because the Company does not have any commercial biopharmaceutical products.

 

Operating Expenses

 

Operating expenses consisting of research and development costs, consultancy fees, legal and professional fees and general and administrative expenses for the three months ended December 31, 2020 increased to $154,941 from $149,281 for the three months ended December 31, 2019, an increase of $5,660. The increase is primarily attributable to a reduction in general and administrative costs, reflecting the decreased activity in the Company (approximately $27,000), a reduction in consultancy fees of ($16,250) due to the departure of the CFO,  offset by an increase in legal and professional fees $50,000, which is due to the reversal of unpaid bonus accruals in 2019. The decreased activity is a result of the Company having insufficient cash resources to fund its operations.

 

Net Loss

 

Net loss for the three months ended December 31, 2020 increased to $171,862 from $158,042 for the three months ended December 31, 2019, an increase of $13,820. The increase is primarily attributable a  reduction in general and administrative costs, reflecting the decreased activity in the Company (approximately $27,000), a reduction in consultancy fees of ($16,250) due to the departure of the CFO,  offset by an increase in legal and professional fees $50,000, which is due to the reversal of unpaid bonus accruals in 2019.  In addition there was an increase of approximately $8,000 for additional interest charged for promissory notes. The decreased activity is a result of the Company having insufficient cash resources to fund its operations.

 

16


 

Liquidity and Capital Resources 

 

We believe we will require significant additional cash resources to continue to launch new development phases of existing products in the Company's pipeline. In the event that we are unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience significant dilution. Any debt financing, if available, may (i) involve restrictive covenants that impact our ability to conduct, delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize its self on unfavorable terms.  

 

On November 12, 2019, we issued  a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $57,500 with a maturity date of November 12, 2020. The Note  is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.65 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.  


On February 07, 2020, we issued  a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $31,000 with a maturity date of February 07, 2021. The Note  is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.  


On March 20, 2020, we issued  a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $20,000 with a maturity date of March 20, 2021. The Note  is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest.  


On September 22, 2020, we issued  a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $35,000 with a maturity date of September 22, 2021. The Note  is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. 


On October 21, 2020, we issued  a 12% convertible promissory note (the “Note”) to an investor, in the principal amount of $40,000 with a maturity date of October 21, 2021. The Note  is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i) $0.05 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. 


All notes contain an anti-dilution provision, which adjusts the conversion price in the event of an issuance by us of common stock below the then effective conversion price. All of these notes were amended and restated in February 2021. The mayurity date of the notes were extended to December 31, 20201 and the conversion price amended to $0.01 per share.


On April 16, 2020, we entered into an asset purchase agreement with Tiziana pursuant to which we agreed to sell all of the intellectual property relating to a nanoparticle-based formulation of Act D to Tiziana in exchange for an upfront payment of $120,000 and milestone payments of up to an aggregate $630,000.


Capital Resources

 

The following table summarizes total current assets, liabilities and working capital deficiency as of the periods indicated: 


 

December 31, 2020 


 

September 30, 2020


 

Change


 

(Unaudited) 


 

 


 

  


Current assets

$

3,351

 

 

$

32,630

 

 

$

(29,279

)

Current liabilities


2,831,709

 

 


2,707,632

 

 


124,077

Working capital deficit

$

(2,828,358)

 

$

(2,675,002

)

 

$

(153,356)

 

We had a cash balance of $3,351 and $14,241 at December 31, 2020 and September 30, 2020, respectively. 

 

17


Liquidity

 

The following table sets forth a summary of our cash flows for the periods indicated:


 

For the three months ended December 31,

 

2020



2019



Increase/(Decrease)


Net cash used in operating activities

$

(50,890)


$

(79,432

)


$

28,542

Net cash used in investing activities

$


$


$

 

Net cash provided by financing activities

$

40,000



$

57,500



$

(17,500

)

 

 

Net Cash Used in Operating Activities

 

Net cash used in operating activities consists of net loss adjusted for the effect of changes in operating assets and liabilities.

 

Net cash used in operating activities was $50,890 for the three months ended December 31, 2020 compared to $79,432 for the three months ended December 31, 2019. The net loss of $171,862 for the three months ended December 31, 2020 was partially offset primarily by non-cash share based compensation of $18,192, interest accrued on the Convertible Loan Notes of $1,440, interest accrued on convertible loan notes of $16,132, depreciation expense of $314 and changes in operating assets and liabilities of $84,894. The net loss of $158,042 for the three months ended December 31, 2019, was partially offset by non-cash items such as share based compensation of  $47,173, depreciation expense of $409 and changes in operating assets and liabilities of $16,365.


Net Cash Provided by Financing Activities

Net cash provided by financing activities consists of proceeds from the issuance of a convertible note of  $40,000  in the three months ended December 31, 2020 compared to $57,500 of proceeds from the issuance of a convertible note during the three months ended December 31, 2019.

Off-Balance Sheet Arrangements

We consolidate variable interest entities (“VIE”) in which we hold a controlling financial interest as evidenced by the power to direct the activities of a VIE that most significantly impact its economic performance and the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE and therefore are deemed to be the primary beneficiary. We take into account our entire involvement in a VIE (explicit or implicit) in identifying variable interests that individually or in the aggregate could be significant enough to warrant our designation as the primary beneficiary and hence require us to consolidate the VIE or otherwise require us to make appropriate disclosures.  

 

 

Evaluation of Disclosure Controls and Procedures

 

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized, and reported within the required time periods. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

As of the end of the period covered by this Report, the Company’s Chief Executive Officer, evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on that evaluation,  the Chief Executive officer concluded that, as of the date of the evaluation, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that the information required to be disclosed in the Company’s periodic filings under the Securities Exchange Act of 1934 is accumulated and communicated to management to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 


18


PART II – OTHER INFORMATION

 

 

There have been no material changes from the risk factors disclosed in our  Annual Report on Form 10-K as of and for the year ended September 30, 2020, filed with the SEC on February 15, 2021. 


  

 

31.1

 

Certification of Principal Executive Officer and Principal Financial and Accounting Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

32.1

 

Certification of Principal Executive Officer and Principal Financial Officer Pursuant to Section 906 of Sarbanes-Oxley Act of 2002.

101.INS

 

XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

101.SCH

 

XBRL Taxonomy Schema Document

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase

 

19


 

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

 

Rasna Therapeutics, Inc.

  

 

 

 

 

 

April 5, 2021 

By:

/s/ Keeren Shah

 

 

Name: Keeren Shah

Title: Finance Director, (Principal Executive Officer and Principal Financial and Accounting Officer)

 

 

20