UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the quarterly period ended
OR
For the transition period from_____________ to _____________
Commission
file number:
(Exact name of registrant as specified in its charter)
| 2834 | ||||
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
617-494-1199
(Former Telephone Number, if Changed Since the Last Report)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| OTCQB |
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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
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 definition 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 | ☐ |
| ☒ | 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. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The amount of registered shares of the registrant’s Common Stock as of October 25, 2024, was .
BIOXYTRAN, INC.
FORM 10-Q
TABLE OF CONTENTS
Except as otherwise required by the context, all references in this report to “we”, “us”, “our” or “Company” refer to the consolidated operations of BIOXYTRAN, Inc.
| i |
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements: BIOXYTRAN, Inc., September 30, 2024
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2024, AND DECEMBER 31, 2023
| September 30, 2024 | December 31, 2023 | |||||||
| (unaudited) | (restated) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Total current assets | ||||||||
| Capitalized patent costs, net | ||||||||
| Total fixed assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued operative expenses | $ | $ | ||||||
| Accounts payable affiliate | ||||||||
| Accrued interest | ||||||||
| Accrued interest affiliate | ||||||||
| Un-issued shares liability | ||||||||
| Un-issued shares liability affiliate | ||||||||
| Short term loan | ||||||||
| Short term loan affiliate | ||||||||
| Convertible notes payable, net of premium and discount | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock, $ par value; shares authorized, and issued and outstanding as at September 30, 2024, and December 31, 2023. | ||||||||
| Common stock, $ par value; shares authorized; and issued and outstanding as at September 30, 2024, and December 31, 2023 | ||||||||
| Additional paid-in capital Common Stock | ||||||||
| Non-controlling interest | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and stockholders’ deficit | $ | $ | ||||||
See the accompanying notes to these unaudited condensed consolidated financial statements
| 1 |
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024, AND 2023
(UNAUDITED)
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| (restated) | (restated) | |||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| General and administrative affiliate | ||||||||||||||||
| Compensation Expense | ||||||||||||||||
| Compensation Expense affiliate | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other expenses: | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense affiliate | ( | ) | ( | ) | ||||||||||||
| Loss on issuance | ( | ) | ( | ) | ||||||||||||
| Amortization of IP | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Debt discount amortization and issuance of warrants | ( | ) | ( | ) | ( | ) | ||||||||||
| Total other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income taxes | ||||||||||||||||
| NET LOSS | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to the non-controlling interest | ||||||||||||||||
| NET LOSS ATTRIBUTABLE TO BIOXYTRAN | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per Common share, basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average number of Common shares out-standing, basic and diluted | ||||||||||||||||
See the accompanying notes to these unaudited condensed consolidated financial statements
| 2 |
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024, AND 2023
(UNAUDITED)
| Common Stock | Preferred Stock | Add. Paid | Accumul. | Non- contr. | Total | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | in Capital | Deficit | Int. | Equity | |||||||||||||||||||||||||
| January 1, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock transactions | ||||||||||||||||||||||||||||||||
| Stock subscription | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss attr to the non-contr int. | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| March 31, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock transactions | ||||||||||||||||||||||||||||||||
| Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
| Issuance stock plan other | ||||||||||||||||||||||||||||||||
| Conversion of debt affiliate | ||||||||||||||||||||||||||||||||
| Conversion of debt other | ||||||||||||||||||||||||||||||||
| Convertible note | ||||||||||||||||||||||||||||||||
| Issuance of warrants | ||||||||||||||||||||||||||||||||
| Net loss attr to the non-contr int. | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock transactions | ||||||||||||||||||||||||||||||||
| Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
| Issuance stock plan other | ||||||||||||||||||||||||||||||||
| Conversion of debt affiliate | ||||||||||||||||||||||||||||||||
| Conversion of debt other | ||||||||||||||||||||||||||||||||
| Convertible note | ||||||||||||||||||||||||||||||||
| Net loss attr to the non-contr int. | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| September 30, 2023 (restated) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| 3 |
| Common Stock | Preferred Stock | Add. Paid | Accumul. | Non- contr. | Total | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | in Capital | Deficit |
Int. | Equity | |||||||||||||||||||||||||
| January 1, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock transactions | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock subscription | ( | ) | ||||||||||||||||||||||||||||||
| Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
| Issuance stock plan other | ||||||||||||||||||||||||||||||||
| Conversion of debt affiliate | ||||||||||||||||||||||||||||||||
| Conversion of debt other | ||||||||||||||||||||||||||||||||
| Exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||
| Convertible note | ||||||||||||||||||||||||||||||||
| Net loss attr to the non-contr int. | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock transactions | ||||||||||||||||||||||||||||||||
| Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
| Issuance stock plan other | ||||||||||||||||||||||||||||||||
| Conversion of debt | ||||||||||||||||||||||||||||||||
| Convertible note | ||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Issuance stock plan affiliate | ||||||||||||||||||||||||||||||||
| Issuance stock plan other | ||||||||||||||||||||||||||||||||
| Conversion to Pref Stock affiliate | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Conversion of debt affiliate | ||||||||||||||||||||||||||||||||
| Exercise of warrants | ( | ) | ||||||||||||||||||||||||||||||
| Elimination non-contr int. | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||||
See the accompanying notes to these unaudited condensed consolidated financial statements
| 4 |
BIOXYTRAN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024, AND 2023
(UNAUDITED)
| Nine months Ended | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
(restated) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Debt discount amortization, incl. issuance of warrants | ||||||||
| Amortization of IP | ||||||||
| Stock-based compensation | ||||||||
| Stock-based compensation affiliate | ||||||||
| Loss on issuance | ||||||||
| Interest paid for note conversion | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Accounts payable affiliate | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in intangibles | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from stock sales | ||||||||
| Proceeds from issuance of convertible notes payable | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | ||||||||
| NON-CASH INVESTING & FINANCING ACTIVITIES | ||||||||
| Issuance of warrants | ||||||||
| Debt discount on convertible note | ||||||||
| Common shares issued for the conversion of principal and accrued interest | ||||||||
| Common shares issued for the conversion of accounts payable | ||||||||
| Common shares issued for the conversion of accounts payable affiliate | $ | $ | ||||||
See the accompanying notes to these unaudited condensed consolidated financial statements
| 5 |
BIOXYTRAN, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024, AND 2023
(UNAUDITED)
NOTE 1 – BACKGROUND AND ORGANIZATION
Business Operations
Bioxytran, Inc. (the “Company”) is a clinical stage pharmaceutical company focused on the development, manufacture and commercialization of therapeutic drugs designed to address hypoxia (a lack of oxygen to tissues) in humans in a safe and efficient manner.
Pharmalectin, Inc. (“Pharmalectin”) is a subsidiary focused on the development, manufacture and commercialization of therapeutic drugs designed to address conditions related to viral diseases.
Pharmalectin (BVI), Inc. (“Pharmalectin BVI”) is a subsidiary serving as custodian of the Company’s Copyrights, Trademarks and Patents.
Pharmalectin India Pvt Ltd. (“Pharmalectin India”) is a subsidiary managing the Company’s local clinical research and trials, and holds the local rights to commercialization.
Organization
Bioxytran, Inc. was organized on October 5, 2017, as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with authorized shares of Common Stock with a par value of $, and shares of Preferred Stock with a par value of $. On September 21, 2018, the Company underwent a reorganization in the form of a reverse merger and is currently registered as a Nevada corporation with a taxing structure for U.S. federal and state income tax as a C-Corporation with authorized shares of Common Stock with a par value of $, and shares of Preferred Stock with a par value of $. As at September 30, 2024, there are shares of Common Stock issued and outstanding, while there are shares of Preferred Stock outstanding that are beneficially held by insiders, or their affiliates.
Pharmalectin was organized on October 5, 2017, as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with authorized shares of Common Stock with a par value of $, and shares of Preferred Stock with a par value of $. Pharmalectin was originally formed under the name of Bioxytran “Bioxytran (DE)”. On April 29, 2020, the name was changed to Pharmalectin, Inc. As at September 30, 2024, there are shares of Common Stock issued and outstanding; shares had earlier been cancelled after an option to convert the shares into Bioxytran stock was exercised by an affiliate, the beneficial ownership of which includes the Company’s officers. The non-controlling interest was eliminated directly against accumulated deficit.
Pharmalectin
BVI was organized on March 17, 2021, as a British Virgin Islands (“BVI”) Business Corporation with a BVI corporate taxing
structure and authorized and outstanding shares of Common Stock with a par value of $. The Company holds
Pharmalectin
India was organized on August 30, 2023, as an Indian Business Corporation with its principal place of business in Hyderabad, Telangana,
India. Pharmalectin India has authorized shares of Common Stock with a par value of $ (₹). There are currently
outstanding shares of Common Stock of which (
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Regulation S-X. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”), have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, they do not include all the information and notes necessary for comprehensive financial statements and should be read in conjunction with our audited consolidated financial statements.
While the information presented in the accompanying financial statements is unaudited, it includes all adjustments which are, in the opinion of the management, necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the U.S. GAAP. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and prepared in accordance with U.S. GAAP. These financial statements should be read in conjunction with the Company’s December 31, 2023, audited financial statements and notes.
| 6 |
Reclassification
Statements of Operations: By request from our shareholders, general and administrative expenses, as well as interest expenses, have been separated into affiliate and third party (others), in comparison with earlier periods.
Statements of Cash Flows: By request from our shareholders, stock-based compensation has been separated into affiliate and third party (others), in comparison with earlier periods.
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of Bioxytran, including its majority owned subsidiary, Pharmalectin, as well as its wholly owned subsidiaries, Pharmalectin BVI and Pharmalectin India (collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
Note 2 — RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In September 2024, the Company concluded that for shares issued pursuant to the Exchange Exemption in Rule 3(a)(9), the company historically valued these shares at the same price as an ongoing capital raise pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act. In retrospect this approximation of Fair value based on the recommendations with ASC 820 - Fair Value Measurement, was not concluded to be precise enough, and that we would need to define a more precise value based on market price at the time of issuance. In accordance with the guidance of ASC 820 concerning for Lack of Registration Premium, shares that are restricted for six months under SEC Rule 144 generally see a 20%–30% discount on market price. The Company has opted for a 25% discount to the market price at the date of issuance based on the Company’s elevated volatility, and to the illiquidity of the high amount of shares issued in these transactions.
Therefore, the Company, in consultation with its Audit Committee, concluded that its previously issued Financial Statements for the quarter ended September 30, 2023 and for the year ended December 31, 2023 (the “Affected Periods”) should be restated because of a misapplication in the guidance around the valuation for certain of our outstanding shares of Common Stock (the “Shares”) and should no longer be relied upon.
Impact of the Restatement
The impact of the restatement on the balance sheets, statements of operations and statements of cash flows for the Affected Periods is presented below. The restatement had no net impact on net cash flows from operating, investing or financing activities.
| Balance Sheet | As of September 30, 2023 | |||||||||||
| As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
| Assets | ||||||||||||
| Total assets | $ | $ | $ | |||||||||
| Liabilities and stockholders’ equity | ||||||||||||
| Total liabilities | ||||||||||||
| Stockholders’ equity | ||||||||||||
| Preferred stock, $ par value | ||||||||||||
| Common stock, $ par value | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Total stockholders’ equity | ( | ) | ( | ) | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | $ | |||||||||
| Statement of Operations | As of September 30, 2023 | |||||||||||
| As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
| Loss from operations | $ | ( | ) | $ | $ | ( | ) | |||||
| Loss of issuance | ( | ) | ( | ) | ||||||||
| Total other (expense) income | ( | ) | ( | ) | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss attributable to the non-controlling interest | ||||||||||||
| NET LOSS ATTRIBUTABLE TO BIOXYTRAN | ( | ) | ( | ) | ( | ) | ||||||
| Loss per Common share, basic and diluted | ) | ) | ) | |||||||||
| Weighted average number of Common shares out-standing, basic and diluted | ||||||||||||
| 7 |
| Statement of Cash Flows | As of September 30, 2023 | |||||||||||
| As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Adjustment to reconcile net loss to net cash used in operating activities | ||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||||||
| Net cash provided by financing activities | ||||||||||||
| Net change in cash | $ | ( | ) | $ | $ | ( | ) | |||||
| Balance Sheet | As of December 31, 2023 | |||||||||||
| As Previously Reported | Restatement Adjustment | As Restated | ||||||||||
| Assets | ||||||||||||
| Total assets | $ | $ | $ | |||||||||
| Liabilities and stockholders’ equity | ||||||||||||
| Total liabilities | ||||||||||||
| Stockholders’ equity | ||||||||||||
| Preferred stock, $ par value | ||||||||||||
| Common stock, $ par value | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Total stockholders’ equity | ( | ) | ( | ) | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | $ | |||||||||
The
impact to the balance sheet dated September 30, 2023, filed on Form 10-Q on November 3, 2023, the valuation of for shares issued
pursuant to the Exchange Exemption in Rule 3(a)(9), resulted in a $
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
Cash
For purposes of the Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with an original maturity date of three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting period. Significant estimates include the fair value of the Company’s stock, stock-based compensation, valuation of warrants, valuations in connection with convertible notes and the valuation allowance related to deferred tax assets. Actual results may differ from these estimates.
The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net loss per common share is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the year. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into Common Stock using the “treasury stock” and/or “if converted” methods as applicable.
As
explained further below, at September 30, 2024, we would, based on the market price of $/share, be obligated to issue approximately
shares of Common Stock upon conversion of the currently outstanding 2021 convertible note (the “2021 Note”), based
on $ in outstanding principal and interest.
The Company measures the cost of services received from employees and non-employees in exchange for an award of equity instruments based on the fair value of the award on the grant date pursuant to ASC 718. Stock-based compensation expense is recorded by the Company over the requisite service period, or vesting period, in the same expense classifications in the statements of operations, as if such amounts were paid in cash.
Accounting for subsidiary stock transactions
The Company accounts for subsidiary stock transactions in accordance with Opinions of the Accounting Principles Board 09 (APBO No. 9). In paragraph 28, this pronouncement excluded all adjustments from transactions in a company’s own stock “…from the determination of net income or the results of operations under all circumstances.”
| 8 |
Research and Development
The
Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and
Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred.
Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed
when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored
research and development costs related to both present and future products are expensed in the period incurred. In the nine months ended
September 30, 2024, the Company incurred $
Intangibles – Goodwill and Other
Valuation of intangibles are in accordance with ASC 350. Costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at award date, which varies depending on the pendency period of the application, generally approximating seventeen years. Capitalized patent costs, also referred to as patent prosecution costs, include internal legal labor, professional legal fees, government filing fees and translation fees related to expanding the Company’s patent portfolio. Costs associated with the maintenance and annuity fees of patents are accounted for as prepaid assets at the time of payment and amortized over the shorter of the maintenance period or remaining life of the related patent.
Accrued Expenses
As part of the process of preparing our condensed consolidated financial statements, we are required to estimate accrued expenses. This process involves identifying services that third parties have performed on our behalf and estimating the level of service performed and the associated cost incurred on these services as at each balance sheet date in our consolidated financial statements. Examples of estimated accrued expenses include professional service fees, such as those arising from the services of attorneys and accountants and accrued payroll expenses. In connection with these service fees, our estimates are most affected by our understanding of the status and timing of services provided relative to the actual services incurred by the service providers. In the event that we do not identify certain costs that have been incurred or we under, or over, estimate the level of services or costs of such services, our reported expenses for a reporting period could be understated or overstated. The date on which certain services commence, the level of services performed on or before a given date, and the cost of services are often subject to our judgment. We make these judgments based upon the facts and circumstances known to us in accordance with accounting principles generally accepted in the U.S.
Warrants
The Company has issued Common Stock warrants in connection with the execution of certain equity and debt financings. The fair value of warrants is determined using the Black-Scholes option-pricing model using assumptions regarding volatility of our common share price, remaining life of the warrant, and risk-free interest rates at each period end.
Fair Value
Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.
| 9 |
The Company follows Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”) and Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”), which permits entities to choose to measure many financial instruments and certain other items at fair value.
The valuation of shares issued under an exemption from registration, such as under Rule 3(a)(9) of the Securities Act, typically relates to ASC 820 (Fair Value Measurement) under U.S. Generally Accepted Accounting Principles (GAAP). This accounting standard provides guidance on how to measure fair value when required for financial reporting purposes. Among other notable considerations the Company highlights;
| ● | When valuing shares in an exchange under Rule 3(a)(9), the conversion terms and the value of the securities being exchanged (debt, other equity, etc.) must be considered. If the company is offering a premium or discount as part of the exchange, this would impact the fair value measurement; |
Based on Empirical Evidence and Studies, for restricted stock in public companies, the liquidity discount averages around 20%–30%, based on, but not limited to, the following data;
| ○ | Liquidity of the Security: |
| ■ | If the company has low trading volumes and investors may find it difficult to sell shares, the discount could be on the higher end of the range (e.g., 30%–40%). | |
| ■ | Conversely, for OTC companies with higher trading volumes, the discount might be lower (e.g., 10%–20%). |
| ○ | Holding Period: |
| ■ | The longer the restriction period on the newly issued shares, the higher the discount. If the shares are subject to extended holding periods, investors will require greater compensation for their inability to sell the shares in the short term. | |
| ■ | For example, shares that are restricted for six months under SEC Rule 144 could see a 20%–30% discount. If the holding period extends beyond that or other limitations apply, the discount might increase. |
| ○ | Company Fundamentals and Risk |
| ■ | Investors consider the financial health, stability, and growth prospects of the issuing company. A riskier OTC company with volatile financials or uncertain growth prospects might see a larger liquidity discount (e.g., closer to 40%). | |
| ■ | Companies with strong fundamentals might experience a lower discount (e.g., 10%–20%), even in the OTC market. |
In
accordance with the guidance of ASC 820 concerning for Lack of Registration Premium, shares that are restricted for six months under
SEC Rule 144 generally see a 20%–30% discount on market price. The Company has opted for a
In contrary, shares issued under the registration requirements of the Securities Act for the Compensatory Benefit Plan pursuant to Rule 701 of the Securities Act where ASC 718 (Compensation—Stock Compensation), are valued at market price at the grant date, based on the limited amount of shares awarded, and its predictable repetitiveness. Under ASC 718, the grant date is typically the measurement date for share-based compensation. This is the date when both parties (employer and employee) have a mutual understanding of the terms of the award, and it is used to determine the fair value of the stock-based award for accounting purposes. The fair value measured at the grant date is not adjusted for subsequent changes in stock price.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.
| 10 |
The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2020, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2022. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company’s financial statements.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed interim financial statements.
NOTE 4 – GOING CONCERN AND MANAGEMENT’S LIQUIDITY PLANS
As
at September 30, 2024, the Company had cash of $
During
the nine months ended September 30, 2024, the Company raised a net of $
The Company intends to raise additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
Accordingly, the accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplates continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the unaudited condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values. The unaudited condensed consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.
NOTE 5 - AFFILIATE TRANSACTIONS
The
Company holds License Agreements (the “License(s)”) for a medical device (license obtained in 2019) and a compound (license
obtained in 2021), with two affiliated companies of which the beneficial ownership includes the Company’s officers. The products
were developed prior to the establishment of Bioxytran. The yearly maintenance fees for each license amount to $
The
Company had at September 30, 2024, loan agreements calling for an
NOTE 6 - INTANGIBLES
Intangible
assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.
Amortization of capitalized patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, generally approximating twenty years.
| Estimated End-of-Life (year) | September 30, 2024 | December 31, 2023 | ||||||||||
| Capitalized patent costs | $ | $ | ||||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||||||
| Intangible assets, net | $ | $ | ||||||||||
| 11 |
NOTE 7 – ACCOUNTS PAYABLES AND ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
On
September 30, 2024, there was $
The following table represents the major components of accounts payables and accrued expenses and other current liabilities at September 30, 2024, and at December 31, 2023:
| September 30,2024 | December 31, 2023 | |||||||||
| Accounts payable affiliate | a | $ | $ | |||||||
| Professional fees | ||||||||||
| Payroll Tax | ||||||||||
| 401K | ||||||||||
| Interest affiliate | b | |||||||||
| Interest | ||||||||||
| Other | ||||||||||
| Un-issued share liability affiliate | c | |||||||||
| Un-issued share liability | ||||||||||
| Short term loan affiliate | b | |||||||||
| Short term loan | ||||||||||
| Debt discount | ( | ) | ||||||||
| Convertible note payable | ||||||||||
| Total current liabilities | $ | $ | ||||||||
| a | |
| b | |
| c |
NOTE 8 – CONVERTIBLE NOTES PAYABLE
On
or about May 3, 2021, we entered into four (4) Securities Purchase Agreements (the “2021 SPA’s”), under which we agreed
to sell convertible promissory notes (the “2021 Notes”), in an aggregate principal amount of $
At
any time after the issue date of the Notes, the Holders of the Notes, (the “2021 Holders”), have the option to convert all
or any part of the outstanding and unpaid principal amount and accrued and unpaid interest of the 2021 Notes into shares of our Common
Stock at the Conversion Price.
If the 2021 Notes are converted prior to us paying off such note, it would lead to substantial dilution to our shareholders as a result of the conversion discounted applicable to the 2021 Notes. There can be no assurance that there will be any funds available to pay of the 2021 Notes. If we fail to obtain such additional financing on a timely basis, the 2021 Holders may convert the 2021 Notes and sell the underlying shares, which may result in significant dilution to shareholders due to the conversion discount, as well as a significant decrease in our stock price.
On
May 5, 2023, three (3) of the Notes were renegotiated; the interest was set to
On
May 1, 2024, the 2021 Note was extended until
| 12 |
For the Notes issued the Company claims an exemption from the registration requirements of the Securities Act of 1933 (the “Securities Act”) for the private placement of these securities pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act. The Common Stock underlying the Note(s), when issued, bear a restrictive legend and are currently eligible for resale under Rule 144.
At September 30, 2024, and December 31, 2023, the outstanding convertible notes were as follows:
| Name | Principal due | Debt discount | Accrued interest | Total amount due | ||||||||||||||
| December 31, 2023 | ||||||||||||||||||
| Private Placement, 2021 Note | a | $ | $ | $ | $ | |||||||||||||
| 2021 Note issued in exchange for prior Notes | b | |||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| September 30, 2024 | ||||||||||||||||||
| Private Placement, 2021 Note | c | $ | $ | ( |
) | $ | $ | |||||||||||
| a | |
| b | |
| c |
Private Placement, 2024
On
March 15, 2024, we entered into a Security Purchase Agreement (the “2024 SPA”), with an accredited investor, under which
we agreed to sell a Note, in a principal amount of $
At
any time after the issue date of the 2024 Note, the 2024 Holder has the option to convert any part of the outstanding and unpaid principal
amount and accrued and unpaid interest of the Note into shares of our Common Stock at the Conversion Price. The “Conversion Price”
is set to $
On
April 15, 2024, the entire outstanding balance of principal and interest owed on the 2024 Note was converted into shares of Common
Stock. The interest owed pursuant to the note was $
NOTE 9 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue shares of Common Stock, and shares of Preferred Stock.
Preferred Stock
Issuances in the period January 1 and September 30, 2024
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||
| 1/01/2024 | $ | $ | — | |||||||||||||||
| 8/19/2024 | g | conversion Common Stock | affiliate | |||||||||||||||
| 8/19/2024 | d | exercise of warrant | affiliate | |||||||||||||||
| 8/19/2024 | c | debt conversion | affiliate | |||||||||||||||
| 8/28/2024 | g | conversion Common Stock | affiliate | |||||||||||||||
| 8/28/2024 | g | ( | ) | ( | ) | conversion Common Stock | affiliate | |||||||||||
| 9/30/2024 | $ | $ | ||||||||||||||||
| 13 |
Common Stock
Number of shares of Common Stock issued and outstanding during the reporting period(s):
Issuances in the period January 1 and September 30, 2023 (restated)
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||
| 1/01/2023 | $ | $ | ||||||||||||||||
| 1/04/2023 | a | private placement | ||||||||||||||||
| 1/04/2023 | - | ( | ) | subscription | ||||||||||||||
| 2/10/2023 | a | private placement | ||||||||||||||||
| 4/14/2023 | c | debt conversion | ||||||||||||||||
| 4/14/2023 | c | debt conversion | affiliate | |||||||||||||||
| 4/18/2023 | a | private placement | ||||||||||||||||
| 5/10/2023 | e | warrants | ||||||||||||||||
| 5/15/2023 | a | private placement | ||||||||||||||||
| 5/17/2023 | b | convertible note | ||||||||||||||||
| 6/26/2023 | b | convertible note | ||||||||||||||||
| 7/26/2023 | a | private placement | ||||||||||||||||
| 8/21/2023 | f | public offering | ||||||||||||||||
| 8/21/2023 | c | debt conversion | ||||||||||||||||
| 8/25/2023 | a | private placement | ||||||||||||||||
| 8/30/2023 | b | convertible note | ||||||||||||||||
| 9/14/2023 | c | debt conversion | affiliate | |||||||||||||||
| 9/19/2023 | a | private placement | ||||||||||||||||
| 9/19/2023 | a | private placement | ||||||||||||||||
| see Note 10 | d | 2021 Stock Plan | affiliate | |||||||||||||||
| see Note 10 | d | 2021 Stock Plan | ||||||||||||||||
| 9/30/2023 | $ | $ | ||||||||||||||||
Issuances in the period January 1 and September 30, 2024
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||
| 1/01/2024 | $ | $ | ||||||||||||||||
| 1/17/2024 | a | private placement | ||||||||||||||||
| 1/17/2024 | - | ( | ) | — | subscription | |||||||||||||
| 1/18/2024 | c | debt conversion | ||||||||||||||||
| 1/18/2024 | c | debt conversion | affiliate | |||||||||||||||
| 1/19/2024 | a | ( | ) | return to treasury | ||||||||||||||
| 1/22/2024 | c | exercise of warrant | cashless | |||||||||||||||
| 1/22/2024 | b | convertible note | ||||||||||||||||
| 3/20/2024 | b | convertible note | ||||||||||||||||
| 3/27/2024 | c | debt conversion | ||||||||||||||||
| 4/04/2024 | c | debt conversion | ||||||||||||||||
| 4/15/2024 | b | convertible note | ||||||||||||||||
| 4/15/2024 | a | private placement | ||||||||||||||||
| 4/19/2024 | c | debt conversion | ||||||||||||||||
| 4/22/2024 | a | private placement | ||||||||||||||||
| 5/16/2024 | b | convertible note | ||||||||||||||||
| 5/20/2024 | c | debt conversion | ||||||||||||||||
| 6/27/2024 | a | private placement | ||||||||||||||||
| 8/19/2024 | g | ( | ) | ( | ) | conversion Preferred Stock | affiliate | |||||||||||
| 8/28/2024 | g | ( | ) | ( | ) | conversion Preferred Stock | affiliate | |||||||||||
| 8/28/2024 | g | conversion Preferred Stock | affiliate | |||||||||||||||
| see Note 10 | d | 2021 Stock Plan | affiliate | |||||||||||||||
| see Note 10 | d | 2021 Stock Plan | ||||||||||||||||
| 9/30/2024 | $ | $ | ||||||||||||||||
| 14 |
| a | |
| b | |
| c | |
| d | |
| e | |
| f | |
| g | |
| h | The Company claims an exemption from the registration requirements of the Securities Act pursuant to the Exchange Exemption under Rule 144 of the Securities Act. |
Common Stock Warrants
In
the nine months ended September 30, 2024, the Company did not issue any Warrants. In the nine months ended September 30, 2023, the Company
issued
The following table summarizes the Company’s Common Stock warrant activity in the nine months ended September 30, 2024, and 2023:
| Number of Warrants | Weighted Average Exercise Price | Weighted- Average Remaining Expected Term | ||||||||||||
| Outstanding as at January 1, 2023 | $ | $ | ||||||||||||
| Granted | a | |||||||||||||
| Exercised | — | |||||||||||||
| Forfeited/Cancelled | — | |||||||||||||
| Outstanding as at September 30, 2023 | $ | $ | ||||||||||||
| Outstanding as at January 1, 2024 | $ | $ | ||||||||||||
| Granted | a | — | ||||||||||||
| Exercised | — | |||||||||||||
| Forfeited/Cancelled | — | |||||||||||||
| Outstanding as at September 30, 2024 | $ | $ | ||||||||||||
| a | |
| A
warrant agreement issued in 2019 for a total of |
The following table summarizes information about stock warrants that are vested or expected to vest at September 30, 2024:
| Warrants Outstanding and Exercisable | ||||||||||||||
| Number of Warrants | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Life (Years) | Aggregate Intrinsic Value | |||||||||||
| $ | $ | |||||||||||||
The weighted-average remaining contractual life for warrants exercisable at September 30, 2024, is years. The aggregate intrinsic value for fully vested, exercisable warrants was $ at September 30, 2024.
| 15 |
On
January 15, 2021, the Company adopted a stock option plan entitled “The 2021 Employee, Director and Consultant Stock Plan”
(the “2021 Plan”) under which the Company may grant Options to Purchase Stock, Stock Awards or Stock Appreciation Rights
up to
Under the terms of the 2021 Plan, the Board of Directors shall specify the exercise price and vesting period of each stock option on the grant date. Vesting of the options is typically immediate and the options typically expire in five years. Stock Awards, which are fully and immediately vested upon issuance, may be directly issued under the Plan (without any intervening options).
Shares of Common Stock granted and vested under the 2021 Plan
As at January 1, 2024, there were shares issued valued at a fair historic market value of $ at the time of award and at September 30, 2024, there were shares issued valued at a fair historic market value of $ at the time of award. As at January 1, 2023, there were shares issued valued at a fair historic market value of negative ($) (historically awarded “expensive” stock were returned to treasury in 2021) at the time of award, and at September 30, 2023, there were shares issued valued at a fair historic market value of $ at the time of award.
| Issuances under the 2021 Stock Plan in the period January 1 and September 30, 2023 | ||||||||||||||||||||||
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||||||
| 1/01/2023 | $ | ( | ) | ( | ) | |||||||||||||||||
| 4/19/2023 | * | $ | stipend | affiliate | ||||||||||||||||||
| 4/19/2023 | stipend | |||||||||||||||||||||
| 8/04/2023 | * | stipend | affiliate | |||||||||||||||||||
| 8/04/2023 | stipend | |||||||||||||||||||||
| 9/30/2023 | $ | $ | ||||||||||||||||||||
| Issuances under the 2021 Stock Plan in the period January 1 and September 30, 2024 | ||||||||||||||||||||||
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||||||
| 1/01/2024 | $ | |||||||||||||||||||||
| 3/27/2024 | * | $ | stipend | affiliate | ||||||||||||||||||
| 3/27/2024 | stipend | |||||||||||||||||||||
| 3/27/2024 | * | bonus | affiliate | |||||||||||||||||||
| 3/27/2024 | bonus | |||||||||||||||||||||
| 3/27/2024 | ( | ) | — | — | return to treasury | |||||||||||||||||
| 4/19/2024 | * | stipend | affiliate | |||||||||||||||||||
| 4/19/2024 | stipend | |||||||||||||||||||||
| 8/14/2024 | * | stipend | affiliate | |||||||||||||||||||
| 8/14/2024 | stipend | |||||||||||||||||||||
| 9/30/2024 | $ | $ | ||||||||||||||||||||
| The Company claims an exemption from the registration requirements of the Securities Act for the Compensatory Benefit Plan pursuant to Rule 701 of the Securities Act. | |
| * |
In the nine months ended September 30, 2024, and 2023, the Company recorded stock-based compensation expense of $ and $, respectively, in connection with share-based payment awards.
| 16 |
Stock options granted and vested 2021 Plan
As at January 1, 2024, there were outstanding stock options valued at historic fair market value of $. There were options were forfeited in the nine months ended September 30, 2024, and stock options were granted. At September 30, 2024, there are longer any outstanding stock options. As at January 1, 2023, there were outstanding stock options valued at historic fair market value of $. There were options forfeited in the nine months ended September 30, 2023, and additional stock options were granted. At September 30, 2023, there were outstanding stock options with a fair historic market value of $.
Number of Options | Exercise Price per Share | Weighted Average Exercise Price per Share | ||||||||||
| Outstanding as of January 1, 2023 | $ | – | $ | |||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Options forfeited/cancelled | ( | ) | – | |||||||||
| Outstanding as of September 30, 2023 | $ | $ – | $ | |||||||||
| Outstanding as of January 1, 2024 | $ | – | $ | |||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Options forfeited/cancelled | ( | ) | – | |||||||||
| Outstanding as of September 30, 2024 | $ | $ | ||||||||||
In the nine months ended September 30, 2024, and 2023, $ and $, respectively, of Company stock-option awards were forfeited.
As at September 30, 2024, the Company has options or stock awards available for grant under the 2021 Plan.
NOTE 11 – NON-CONTROLLING INTEREST
| September 30, 2024 | December 31, 2023 | |||||||
| Net loss Subsidiary | $ | n/a | $ | ( | ) | |||
| Net loss attributable to the non-controlling interest | n/a | |||||||
| Net loss affecting Bioxytran | n/a | ( | ) | |||||
| Accumulated losses | n/a | ( | ) | |||||
| Accumulated losses attributable to the non-controlling interest | n/a | |||||||
| Accumulated losses affecting Bioxytran | n/a | ( | ) | |||||
| Net equity non-controlling interest | $ | n/a | $ | ( | ) | |||
As per the exchange terms in the Joint Venture Agreement dated November 15, 2020, an affiliate, of which the beneficial ownership includes the Company’s officers, had the option to convert up to shares of Pharmalectin into a maximum % ownership in the Company. On August 19, 2024, the affiliate exercised the option and exchanged shares (%) of Pharmalectin into shares of Preferred Stock of Bioxytran.
NOTE 12 – COMMITMENTS AND CONTINGENCIES
Employment contracts
Our Executive Officers have entered into employment contracts and confidentiality, non-disclosure and assignment of invention agreements. The most substantial provisions include:
| ● | Compensation of three (3) times the employee’s annual salary upon the Termination Date and any target bonus earned, or if termination occurs within 12 months of a change in control, then the terminated employee shall receive two (2) times the employee’s annual salary, and any target bonus earned. | |
| ● | Continued coverage under any health, medical, dental or vision program or policy, in which they were eligible to participate at the time of employment termination, for 12 months. | |
| ● | Provide
outplacement services through one or more outside firms of the employee’s choosing up to an aggregate of $ |
There are no other arrangements or plans in which we provide pension, retirement or similar benefits for any of Executive Officers or Directors.
Litigation
In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Legal fees for such matters are expensed as incurred and we accrue for adverse outcomes as they become probable and estimable.
| 17 |
NOTE 13 – SUBSEQUENT EVENTS
The Company has evaluated events from September 30, 2024, through the date the financial statements were issued and did not, other than what is disclosed in the below, identify any further subsequent events requiring disclosure.
Business Combination
Acquisition of NDPD Pharma, Inc.
Overview
On
October 25, 2024, the Company’s Board of Directors unanimously voted to acquire
NDPD was organized on October 5, 2017, as a Delaware corporation, with a taxing structure for U.S. federal and state income tax as a C-Corporation with authorized shares of Common Stock with a par value of $, and shares of Preferred Stock with a par value of $. At the time of the acquisition NDPD had shares of Common Stock outstanding.
At
the time of acquisition, NDPD held shares of Bioxytran Preferred Stock with a fair market value of $
| WO2022099052A1 | Polysaccharides for Use in Treating Sars-Cov-2 Infections |
| WO2023178228A1 | Lectin-Binding Carbohydrates for Treating Viral Infections |
The
right of use, limited to the COVID-19 indication, for the patents were transferred to Bioxytran as per the License Agreement between
Pharmalectin, Inc. and NDPD Pharma, Inc. dated May 2, 2021 (“the “License Agreement”), wherein NDPD was to receive
a
The following table summarizes the fair market value of assets acquired and liabilities assumed as of the acquisition date:
| October 25, 2024 | ||||
| Consideration Paid | ||||
| Common Stock – shares @ $ | $ | |||
| Preferred Stock – shares @ $ | ||||
| Preferred
Stock returned to Treasury - | ( | ) | ||
| Total consideration | $ | |||
| 18 |
| Assets acquired and liabilities assumed: | ||||
| Cash | $ | |||
| Assumed Expenses | ||||
| Intangible assets – amortized over 17 years | ||||
| Goodwill | ||||
| Deferred taxes (21%) | ( | ) | ||
| Loan from affiliate | ( | ) | ||
| Assumed value | $ |
The Company applies ASC 805, “Business Combinations”. ASC 805 requires recognition of assets acquired, liabilities assumed, and non-controlling interest in the acquired entity at the acquisition date, measured at their fair values as of that date. This ASC also requires the fair value of acquired in-process research and development (“IPR&D”) to be recorded as intangibles with indefinite lives, contingent consideration to be recorded on the acquisition date, and restructuring and acquisition-related deal costs to be expensed as incurred. Any excess of the fair value of net assets acquired over purchase price and any subsequent changes in estimated contingencies are to be recorded in earnings. In addition, changes in valuation allowance related to acquired deferred tax assets and in acquired income tax position are to be recognized in earnings.
Intangible assets relate to the two patents WO2022099052A1 and WO2023178228A1 and to the License Agreement. The acquired definite-lived intangible assets are being amortized over a weighted-average estimated useful life, currently eighteen years, on a straight-line basis. The fair value of the intangible assets was determined by using the “income approach,” which is a valuation technique that provides the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product (including revenues and EBITDA), the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk, and competitive trends impacting the asset and each cash flow stream, as well as other factors.
Goodwill, which is derived from the enhanced scientific expertise, and our ability to provide broader service solutions through a comprehensive portfolio, is recorded based on the amount by which the purchase price exceeds the fair value of the net assets acquired and is not deductible for tax purposes. In accordance with ASC 805-740, the Company established a deferred tax liability with an offset to goodwill in connection with the accounting for the opening balance sheet of the NDPD acquisition as a result of book-to-tax differences primarily related to the intangible assets. Goodwill is not amortized but ASC 350 require instead that companies test goodwill for impairment at least annually. Goodwill impairment testing involves comparing the carrying amount of goodwill (the amount at which it is recorded on the balance sheet) to its fair value. If the carrying amount exceeds the fair value, an impairment loss is recognized.
Stockholder’s Equity
| Issuance of Preferred Stock | ||||||||||||||||||||
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||||
| 10/25/2024 | c | ( | ) | $ | ( | ) | $ | return to treasury | affiliate | |||||||||||
| 10/25/2024 | a | subsidiary acquisition | affiliate | |||||||||||||||||
| 10/25/2024 | b | ( | ) | $ | ( | ) | $ | see 2021 stock plan | affiliate | |||||||||||
| Issuance of Common Stock | ||||||||||||||||||||
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||||
| 10/25/2024 | a | $ | $ | subsidiary acquisition | ||||||||||||||||
| 10/25/2024 | b | $ | $ | see 2021 stock plan | ||||||||||||||||
| Warrants (forfeited) | ||||||||||||||||||||
| Date | # Warrants | APIC Amount | Price/Share | Type | Notice | |||||||||||||||
| 10/22/2024 | d | ( | ) | $ | ( | ) | $ | forfeiture | ||||||||||||
| 19 |
| Shares awarded (forfeited) under the 2021 Stock Plan | ||||||||||||||||||||
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||||
| 10/25/2024 | b* | $ | $ | stipend | affiliate | |||||||||||||||
| 10/25/2024 | b | stipend | ||||||||||||||||||
| 10/25/2024 | c* | ( | ) | $ | ( | ) | $ | return to treasury | affiliate | |||||||||||
| a | |
| b | |
| c | |
| d | |
| * |
Management sees no further subsequent events requiring disclosure.
| 20 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis is based on, and should be read in conjunction with, the audited financial statements and the notes thereto for the two years ended December 31, 2023, included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 22, 2024. This discussion contains forward-looking statements. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so, except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
Overview
We do not currently have sufficient capital resources to fund operations into the future. To stay in business and to continue the development of our products, we will need to raise additional capital through public or private sales of our securities, debt financing or short-term bank loans, or a combination of the foregoing. We believe that if we can raise $3,700,000, we will have sufficient working capital to develop our business over the next approximately 15 months. At funding raised that is significantly less than $3,700,000, we can likely continue to develop our business over the same 15-month period, but funding at that level will delay the development of our technology and business.
Bioxytran, Inc. is headquartered in Needham, Massachusetts. The Company’s initial product pipeline is focused on developing and commercializing therapeutic molecules for stroke. The Acellular Oxygen Carrier (“AOC” or “BXT-25”) will be designed to be an injectable anti-necrosis drug specifically designed to treat a person immediately after they have suffered an ischemic stroke. The drug is designed to be injected intravenously to travel to the lungs to pick up oxygen molecules to carry to the brain. Like a red blood cell, we expect that the drug will cross the blood brain barrier, which is a protective semi-permeable membrane allowing some material to cross but preventing others from crossing. BXT-25 will be designed to diffuse oxygen into the brain tissues. We expect the BXT-25 molecule to be 5,000 times smaller than a red blood cell.
On December 2, 2022, India’s Central Drugs Standard Control Organisation (CDSCO) issued an Investigational New Drug (an “IND”) with permission to conduct: “A Phase 1b/2a Randomized, Blinded, placebo-controlled Study in Participants with Mild to Moderate COVID-19 to Evaluate the Safety, Efficacy, and Pharmacokinetics of Orally Administered ProLectin-M”. The study will continue by filing an Emergency IND with the FDA in the fourth quarter of 2024, provided we obtain adequate funding. An IND is currently under preparation to be filed with the FDA in the third quarter of 2024.
On January 27, 2023, an additional IND with the CDSCO was issued for ProLectin-I for an IV treatment of SARS-CoV-2 in hospitalized patients with moderate Covid-19 infections and for Long Covid, and for ProLectin-F for treatment of lung-fibrosis as a result of use of ventilator in treatment.
On April 19, 2023, the Company announced that its long-awaited Acellular Oxygen Carrier, has been successfully tested in animals. The initial results are very encouraging because they show the non-toxicity of the experimental drug, along with the corresponding full recovery in Swiss Albino mice, in an experiment carried out in a joint venture with NDPD Pharma, Inc. As a next step, the Company intends to proceed with a 28-day repeated dose toxicity study using New Zealand Rabbits and Wistar Rats as funding permits.
On August 19, 2024, a Company affiliate exercised an option dated November 11, 2021 and exchanged 14,410,000 shares (49%) in Pharmalectin for 8,973,405 shares of Preferred Stock in Bioxytran. This exchange resulted in the Company owning 100% of the issued and outstanding shares of Common stock of Pharmalectin.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has limited resources and operating history. The Company currently has convertible loans outstanding at a total face value of $805,000. As shown in the accompanying consolidated financial statements, the Company had an accumulated deficit of $18,298,861 as at September 30, 2024. The accumulated deficit as at December 31, 2023, was $15,589,288.
The future of the Company is dependent upon its ability to obtain financing to develop its new business opportunities and support the cost of the drug development including clinical trials and regulatory submission to the FDA.
Management plans to seek additional capital through private placements and public offerings of its equity and/or debt securities. There can be no assurance that the Company will be successful in accomplishing its objectives. Without such additional capital or the establishment of strategic relationships with established pharmaceutical companies, the Company may be required to cease operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue operations.
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RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2024, AND 2023
We are a clinical stage company. Historically, Bioxytran was engaged in formation, fund raising and identifying and consulting with the scientific community regarding the development, formulation and testing of its products. As of the fourth quarter of 2021, the Company has engaged in research and development activities through its Subsidiary, Pharmalectin, Inc., developing the Company’s anti-viral therapeutic ProLectin. In the second quarter, the Company also started the development of our hypoxia platform technology AOC.
| OPERATING EXPENSES (restated) | ||||||||||||||||
| Research and development | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Process development | $ | — | $ | 150,000 | $ | — | $ | 275,440 | ||||||||
| Product development | 50,500 | — | 50,500 | 19,938 | ||||||||||||
| Regulatory | 500 | 35,129 | 500 | 94,643 | ||||||||||||
| Clinical trials | — | 145,000 | — | 206,750 | ||||||||||||
| Project management | — | (14,000 | ) | 27,000 | 8,000 | |||||||||||
| Total research and development | $ | 51,000 | $ | 316,129 | $ | 78,000 | $ | 604,771 | ||||||||
| During the three months ended September 30, 2024, the Company recorded $51,000 in R&D expenses. During the three months ended September 30, 2023, the Company recorded $316,129 in R&D expenses. During the nine months ended September 30, 2024, the Company recorded $78,000 in R&D expenses. During the nine months ended September 30, 2023, the Company recorded $604,771 in R&D expenses. |
| General and Administrative | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Payroll and related expenses | $ | 161,967 | $ | 375,588 | $ | 702,120 | $ | 1,128,259 | ||||||||
| Costs for legal, accounting and other professional services | 21,901 | 17,455 | 90,248 | 137,626 | ||||||||||||
| Promotional expenses | 28,000 | 66,500 | 336,125 | 595,449 | ||||||||||||
| Miscellaneous expenses | 44,465 | 71,235 | 128,080 | 170,014 | ||||||||||||
| Total general and administrative | $ | 256,333 | $ | 530,778 | $ | 1,256,573 | $ | 2,031,348 | ||||||||
| Payroll and related expenses were $161,967 for the three months ended September 30, 2024, and $702,120 for the nine months ended September 30, 2024. For the same periods in 2023, the amount was $375,588 and $1,128,259, respectively. The reduced cost is a result of the management teams 67% compensation cut for the remainder of 2024, or until the Company is listed on a major national stock exchange, whichever comes first. | |
| The Costs for legal, accounting and other professional services for the three and nine months ended September 30, 2024, were $21,901 and $90,248 respectively, as compared to $17,455 and $137,626 for the three and nine months ended September 30, 2023. A total amount of $81,110 in investment services was expensed in the second quarter of 2023. | |
| Promotional expenses for the three and nine months ended September 30, 2024, were $28,000 and $336,125 respectively, as compared to $66,500 and $595,449 for the three and nine months ended September 30, 2023. A 2-year promotional contract in 2023, was fully expensed as no claw-back was defined. | |
| Miscellaneous G&A expenses during the three and nine months ended September 30, 2024, was $44,465 and $128,079, respectively. During the three and nine months ended September 30, 2023, was $71,235 and $170,015. The decrease is based on a maintenance contract expensed in the 2nd quarter of 2023. |
| 22 |
| Stock-based Compensation & Loss on issuance (restated) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Compensation expense affiliates | $ | 30,455 | $ | 57,240 | $ | 217,290 | $ | 74,740 | ||||||||
| Compensation expense others | 8,416 | 81,318 | 187,517 | 82,528 | ||||||||||||
| Total compensation expense | $ | 38,871 | $ | 138,558 | $ | 404,807 | $ | 157,268 | ||||||||
| Stock-based compensation amounted to $38,871 (of which $30,455 was payable to affiliates) for the three months ended September 30, 2024. The stock-based compensation for the three months ended September 30, 2023, was $138,558 (of which $57,240 was payable to affiliates). Stock-based compensation amounted to $404,8070 (of which $217,290 was payable to affiliates) for the nine months ended September 30, 2024. Stock-based compensation amounted to $157,268 (of which $74,740 was payable to affiliates) for the nine months ended September 30, 2023. |
| Other expenses | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Interest expense | $ | 17,845 | $ | 48,701 | $ | 63,950 | $ | 155,399 | ||||||||
| Interest expense, affiliate | 1,809 | — | 4,324 | — | ||||||||||||
| Loss on Issuance | — | 91,868 | — | 91,686 | ||||||||||||
| Amortization of IP | 1,516 | 1,803 | 5,083 | 4,505 | ||||||||||||
| Debt discount amort & warrant issuance | 25,000 | — | 55,000 | 348,637 | ||||||||||||
| Total other income (expenses) | $ | 46,170 | $ | 142,190 | $ | 128,357 | $ | 600,227 | ||||||||
| During the three months ended September 30, 2024, the interest expense was $19,654 (of which $1,809 was payable to affiliates), $1,516 was amortized from the Company’s IP and $25,000 was amortized in debt discount. During the three months ended September 30, 2023, the Company’s interest expense was $48,701 and $1,803 was amortized from the Company’s IP. | |
During the nine months ended September 30, 2024, the Company amortized $5,083 from the Company’s IP and $55,000 in amortization of debt discount, as compared to, $4,505 from the Company’s IP and $348,637 of warrant amortization of for the nine months ended September 30, 2023. The interest expense for the nine months ended September 30, 2024, was $68,274 (of which $4,324 was payable to affiliates), as compared to $155,399 for the nine months ended September 30, 2023. On July 25, 2024, the Company agreed to pay a debt discount of $105,000 for an extension of the note, with a new maturity date of December 1, 2024. The debt discount is amortized over the remaining duration. | |
| The loss on issuance in September 2023 was due to a valuation difference of $91,686 leading to a restatement of Additional Paid In Capital (“APIC”) corrected in September 2024. |
| Net Loss (restated) | ||||||||||||||||
| Three months ended | Nine months ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Net loss attributable to Bioxytran | $ | (392,374 | ) | $ | (1,092,878 | ) | $ | (1,854,413 | ) | $ | (3,325,178 | ) | ||||
| Loss per Common share, basic and diluted | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | ||||
| Weighted average number of Common shares outstanding, basic | 126,391,176 | 136,443,056 | 153,821,016 | 129,441,332 | ||||||||||||
| The Company generated a net loss for the three months ended September 30, 2024, of $392,374. In comparison, for the three months ended September 30, 2023, the Company generated a net loss of $1,092,878. The Company generated a net loss for the nine months ended September 30, 2024, of $1,854,413. In comparison, for the nine months ended September 30, 2023, the Company generated a net loss of $3,325,178. The significant difference is directly related to the Company’s R&D activities due to lack of capital in 2023, and to the temporary reduction in salary by the Company’s management. |
| 23 |
| CASH-FLOWS (restated) | ||||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Net cash used in operating activities | $ | (98,047 | ) | $ | (682,749 | ) | ||
| Net cash used in investing activities | (17,867 | ) | (37,740 | ) | ||||
| Net cash provided by financing activities | 124,500 | 505,361 | ||||||
| Net increase (decrease) in cash | 8,586 | (215,128 | ) | |||||
| Cash, beginning of period | 26,086 | 295,401 | ||||||
| Cash, end of period | $ | 34,672 | $ | 80,273 | ||||
| Net cash used in operating activities was $98,047 and $682,749 for the nine months ended September 30, 2024, and 2023, respectively. The decrease was due to a reduction of the research and development activities due to lack of funding. | |
| In the nine months ended September 30, 2024, the Company is in the process of filing a patent, and $17,867 was spent in legal fees. In the nine months ended September 30, 2023, the amount was $37,740. | |
| During the nine months ending September 30, 2024, the Company had raised $124,500 through issuance of Common shares. In the same period ended September 30, 2023, the Company had raised $505,361. | |
| The available cash was $34,672 and $80,273 in the end of the nine months ended September 30, 2024, and 2023, respectively. |
LIQUIDITY AND CAPITAL RESOURCES
| Cash and Cash Equivalents | ||||||||
September 30, 2024 | December 31, 2023 | |||||||
| Cash | $ | 34,672 | $ | 26,086 | ||||
| Total current assets | $ | 34,672 | $ | 26,086 |
| As of September 30, 2024, our current assets consisted of $34,672 of cash at December 31, 2023, we had $26,086 of cash. |
| Fixed Assets | ||||||||||
Estimated End-of- Life (year) | September 30, 2024 | December 31, 2023 | ||||||||
| Capitalized patent costs | 2041 | $ | 141,348 | $ | 123,480 | |||||
| Accumulated amortization | (17,012 | ) | (11,928 | ) | ||||||
| Intangible assets, net | $ | 124,336 | $ | 111,552 | ||||||
| At September 30, 2024, there was $141,348 in capitalized patent costs and the accumulated amortization was $17,012. Amortization is made on a straight-line basis based on the remaining useful life. At December 31, 2023, there was $123,480 in capitalized patent costs and the accumulated amortization was $11,928. |
| Current Liabilities | ||||||||
September 30, 2024 | December 31, 2023 | |||||||
| Accounts payable and accrued operative expenses, ex-interest | $ | 101,360 | $ | 72,553 | ||||
| Accounts payable affiliate | 32,150 | 2,000 | ||||||
| Accrued interest | 123,352 | 223,759 | ||||||
| Accrued interest affiliate | 2,934 | — | ||||||
| Un-issued shares liability | 10,194 | 510,284 | ||||||
| Un-issued shares liability affiliate | 40,000 | 515,904 | ||||||
| Short term loan | 38,000 | — | ||||||
| Short term loan affiliate | 140,588 | 25,000 | ||||||
| Convertible notes payable, net of discount | 755,000 | 1,900,000 | ||||||
| Total current liabilities | $ | 1,243,578 | $ | 3,249,500 | ||||
| At September 30, 2024, we had total liabilities of $1,243,579, which consisted of $132,510 in accounts payable and accrued operative expenses (of which $32,150 was payable to affiliates), $126,286 in accrued interest (of which $2,934 was payable to affiliates), $50,194 in un-issued shares (of which $40,000 was payable to affiliates), $178,588 in short term loans (of which $140,588 was payable to affiliates) and $755,000 in a convertible loan. At December 31, 2023, total liabilities were $3,249,500, consisting of $74,553 in accounts payable and accrued operative expenses (of which $2,000 was payable to affiliates), $223,759 in accrued interest, $1,026,188 in un-issued shares (of which $515,904 was payable to affiliates), $25,000 in loans from affiliates and $1,900,000 in the form of two convertible loans net of discount. Accounts due of $385,404 was converted into Company stock, and a $500,000 license fee for the MDX viewer were un-issued at 2023 year-end. |
| 24 |
| Net Working Capital and Accumulated Deficit (restated) | ||||||||
September 30, 2024 | December 31, 2023 | |||||||
| Net working capital | $ | (1,208,907 | ) | $ | (3,223,414 | ) | ||
| Accumulated deficit | $ | (18,298,861 | ) | $ | (15,589,288 | ) | ||
| At September 30, 2024, the net working capital was negative ($1,208,907) and the accumulated deficit of $18,298,861. Comparatively, on December 31, 2023, we had net working capital of negative ($3,223,414) and an accumulated deficit of $15,589,288. We believe that we must raise an additional $3,700,000 to be able to continue our business operations for the next 15 months. |
NON-CONTROLLING INTEREST
| Three months ended | Nine months ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Net loss attributable to non-controlling interest | $ | n/a | $ | 34,777 | $ | 13,324 | $ | 68,435 | ||||||||
September 30, 2024 | December 31, 2023 | |||||||
| Net equity non-controlling interest | $ | n/a | $ | (680,886 | ) | |||
| The non-controlling interest was eliminated directly against accumulated deficit. | |
| As per the exchange terms in the Joint Venture Agreement dated November 15, 2020, an affiliate, of which the beneficial ownership includes the Company’s officers, had the option to convert up to 15,000,000 shares in the Subsidiary into a 17.5%, or a pro-rated quantity thereof, ownership in the Company. On August 19, 2024, the affiliate exercised the option and exchanged 14,410,000 shares (49%) in the subsidiary against 8,973,405 shares of Preferred Stock in Bioxytran. |
Upcoming Financing Activities
The Company still struggles with a deflated stock price on OTC Markets which makes it very difficult to raise funds without heavily discounting the price and diluting the shareholders. The Company is actively working on finding financing alternatives in order to continue its regulatory approval activities.
There can be no assurance that these funds will be available on terms acceptable to the Company, or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful.
COMMITMENTS
We have no current commitment from our officers and Directors or any of our shareholders, to supplement our operations or provide us with financing in the future. If we are unable to raise additional capital from conventional sources and/or additional sales of stock in the future, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the failure to obtain financing could have a substantial adverse effect on our business and financial results. In the future, we may be required to seek additional capital by selling debt or equity securities, selling assets, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.
| 25 |
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING POLICIES
In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our businesses operate in environments where we pay a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.
Stock Based Compensation
The Company has share-based compensation plans under which non-employees, consultants and suppliers may be granted restricted stock, as well as options to purchase shares of Company common stock at the fair market value at the time of grant. Stock-based compensation cost is measured by the Company at the grant date, based on the fair value of the award over the requisite service period.
The Company applies ASC 718 for options, common stock and other equity-based grants to its employees and directors. ASC 718 requires measurement of all employee equity-based payment awards using a fair-value method and recording of such expense in the consolidated financial statements over the requisite service period. The fair value concepts have not changed significantly in ASC 718; however, in adopting this standard, companies must choose among alternative valuation models and amortization assumptions. After assessing alternative valuation models and amortization assumptions, the Company will continue using both the Black-Scholes valuation model and straight-line amortization of compensation expense over the requisite service period for each separately vesting portion of the grant.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022, and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of AASU 2020-06 did not have an impact on the Company’s financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3 is not applicable because we are a smaller reporting company, as defined by § 229.10(f)(1).
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer) reviewed the effectiveness of our disclosure controls and procedures as at the end of the period covered by this report and concluded that as at September 30, 2024, (i) the Company’s disclosure controls and procedures were not effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (the “Commission”), and (ii) the Company’s controls and procedures have not been designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
| 26 |
Based on this evaluation, our principal executive officer and principal financial officer concluded as at the evaluation date that our disclosure controls and procedures were not effective due primarily to a material weakness in the segregation of duties in the Company’s internal controls.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As disclosed in our previous filings, there are material weaknesses in the Company’s internal control over financial reporting due to the fact that the Company does not have an adequate process established to ensure appropriate levels of review of accounting and financial reporting matters, which resulted in our closing process not identifying all required adjustments and disclosures in a timely fashion. The Company’s CEO/CFO has identified control deficiencies regarding the lack of segregation of duties and the need for a stronger internal control environment. The small size of the Company’s accounting staff may prevent adequate controls in the future, such as segregation of duties, due to the cost/benefit of such remediation.
Although the Company has hired a consultant to assist with SEC reporting and accounting matters, we expect that the Company will need to hire accounting personnel with the requisite knowledge to improve the levels of review of accounting and financial reporting matters. The Company may experience delays in doing so and any such additional employees would require time and training to learn the Company’s business and operating processes and procedures. For the near-term future, until such personnel are in place, this will continue to constitute a material weakness in the Company’s internal control over financial reporting that could result in material misstatements in the Company’s financial statements not being prevented or detected.
Because of the above material weakness, management has concluded that we did not maintain effective internal control over financial reporting as of September 30, 2024, based on the criteria established in “Internal Control-Integrated Framework” issued by the COSO revised in May 2013.
No Attestation Report by Independent Registered Accountant
The effectiveness of our internal control over financial reporting as of September 30, 2024, has not been audited by our independent registered public accounting firm by virtue of our exemption from such requirement as a smaller reporting company.
Changes in Internal Controls Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the nine months ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations on Effectiveness of Controls
The Company’s management does not expect that its disclosure controls or its internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
| 27 |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company may become involved in certain legal proceedings and claims which arise in the normal course of business.
Item 1A. Risk Factors
Smaller reporting companies are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered sales of Preferred Stock issued during the reporting period:
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||||
| 8/19/2024 | b | 776,817 | $ | 353,840 | $ | 0.456 | debt conversion | affiliate | ||||||||||||
Unregistered sales of Common Stock issued during the reporting period:
| Date | # Shares | Amount | Price/Share | Type | Notice | |||||||||||||||
| 1/17/2024 | a | 333,333 | $ | 45,000 | $ | 0.135 | private placement | |||||||||||||
| 1/18/2024 | b | 3,703,704 | 500,000 | 0.135 | debt conversion | |||||||||||||||
| 1/18/2024 | b | 3,599,289 | 485,904 | 0.135 | debt conversion | affiliate | ||||||||||||||
| 3/27/2024 | b | 3,705,808 | 385,404 | 0.104 | debt conversion | |||||||||||||||
| 4/04/2024 | b | 1,000,000 | 104,000 | 0.104 | debt conversion | |||||||||||||||
| 4/15/2024 | a | 173,077 | 18,000 | 0.104 | private placement | |||||||||||||||
| 4/19/2024 | b | 250,000 | 32,125 | 0.129 | debt conversion | |||||||||||||||
| 4/22/2024 | a | 194,553 | 25,000 | 0.128 | private placement | |||||||||||||||
| 5/20/2024 | b | 1,027,397 | 150,000 | 0.146 | debt conversion | |||||||||||||||
| a | The Company claims an exemption from the registration requirements of the Securities Act of 1933 (the “Securities Act”) for the private placement of these securities pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated under the Securities Act. |
| b | The Company claims an exemption from the registration requirements of the Securities Act pursuant to the Exchange Exemption in Rule 3(a)(9) of the Securities Act. |
| c | The Company claims an exemption from the registration requirements of the Securities Act pursuant to the Exchange Exemption under Rule 145 of the Securities Act. |
All funds received though these equity transactions have been used for general working capital expenses.
Item 3. Defaults Upon Senior Securities
There are currently no defaults upon Senior Securities.
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None
| 28 |
Item 6. Exhibits
| Exhibit No. | Title of Document | |
| 31.1 | * | Certification of Principal Executive and Financial Officers pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. |
| 32.1 | ** | Certification pursuant to Section 906 of Sarbanes Oxley Act of 2002 (Chief Executive and Financial Officer). |
| 100 | * | The following financial statements from the Quarterly Report on Form 10-Q of BIOXYTRAN, Inc. for the quarter ended September 30, 2024, formatted in XBRL: (i) Condensed Balance Sheets (unaudited), (ii) Condensed Statements of Operations (unaudited), (iii) Condensed Statements of Cash Flows (unaudited), and (iv) Notes to Condensed Financial Statements (unaudited), tagged as blocks of text. |
| 101.INS | * | Inline XBRL Instance Document |
| 101.SCH | * | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | * | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | * | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | * | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | * | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104 | * | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed as an exhibit hereto. |
| ** | These certificates are furnished to, but shall not be deemed to be filed with, the Securities and Exchange Commission. |
| 29 |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.
| BIOXYTRAN, INC. | ||
| Date: October 28, 2024 | By: | /s/ David Platt |
| David Platt | ||
| Chief Executive Officer | ||
| /s/ Ola Soderquist | ||
| Ola Soderquist | ||
| Chief Financial Officer | ||
| 30 |