UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Securities registered pursuant to Section 12(b) of the Act: None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
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| Smaller reporting company | ||
| Emerging growth company |
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TABLE OF CONTENTS
| Item | Description | Page | ||
| PART I - FINANCIAL INFORMATION | ||||
| ITEM 1. | FINANCIAL STATEMENTS. | 3 | ||
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. | 15 | ||
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | 18 | ||
| ITEM 4. | CONTROLS AND PROCEDURES. | 18 | ||
| PART II - OTHER INFORMATION | ||||
| ITEM 1. | LEGAL PROCEEDINGS. | 19 | ||
| ITEM 1A. | RISK FACTORS. | 19 | ||
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. | 19 | ||
| ITEM 3. | DEFAULT UPON SENIOR SECURITIES. | 19 | ||
| ITEM 4. | MINE SAFETY DISCLOSURES. | 19 | ||
| ITEM 5. | OTHER INFORMATION. | 19 | ||
| ITEM 6. | EXHIBITS. | 20 |
| 2 |
PART 1 - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Nexien BioPharma, Inc.
Consolidated Balance Sheets
| March 31, 2025 | June 30, 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Total Current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ (Deficit) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Due to officer | ||||||||
| Convertible note payable - related party | ||||||||
| Convertible note payable - net of discount of $ (March 31, 2025) and $ (June 30, 2024) | ||||||||
| Total Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ (Deficit) | ||||||||
| Preferred stock - $ par value; authorized; issued | ||||||||
| Common stock - $ par value; shares authorized; (March 31, 2025) and (June 30, 2024) shares issued and outstanding | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ (Deficit) | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ (Deficit) | $ | $ | ||||||
See accompanying notes to these consolidated financial statements.
| 3 |
Nexien BioPharma, Inc.
Consolidated Statements of Operations
Three and Nine Months Ended March 31, 2025 and 2024
(Unaudited)
| Three months ended | Nine months ended | |||||||||||||||
| March 31, | March 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Operating expenses | ||||||||||||||||
| Professional fees | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of discount on convertible notes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding - basic and diluted | ||||||||||||||||
See accompanying notes to these consolidated financial statements.
| 4 |
Nexien BioPharma, Inc.
Consolidated Statements of Stockholders’ (Deficit)
Nine Months Ended March 31, 2025 and 2024
(Unaudited)
| Shares | Common Stock | Additional Paid in Capital | Stock Payable | Accumulated Deficit | Total Stockholders’ | |||||||||||||||||||
| Nine Months Ended March 31, 2025 | ||||||||||||||||||||||||
| Balance, June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Imputed interest on related party advance | - | |||||||||||||||||||||||
| Net (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Common stock issued for loan consideration | ||||||||||||||||||||||||
| Imputed interest on related party advance | - | |||||||||||||||||||||||
| Net (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Imputed interest on related party advance | - | |||||||||||||||||||||||
| Net (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Nine Months Ended March 31, 2024 | ||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
| Common stock issued to officers | ( | ) | ||||||||||||||||||||||
| Common stock to be issued to officers | - | |||||||||||||||||||||||
| Imputed interest on related party advance | - | |||||||||||||||||||||||
| Net (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Common stock issued to officers | ( | ) | ||||||||||||||||||||||
| Imputed interest on related party advance | - | |||||||||||||||||||||||
| Net (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, December 31, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Common stock issued as loan consideration | ||||||||||||||||||||||||
| Discount on convertible debt | - | |||||||||||||||||||||||
| Imputed interest on related party advance | - | |||||||||||||||||||||||
| Beneficial conversion feature - related party debt | - | |||||||||||||||||||||||
| Net (loss) | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
See accompanying notes to these consolidated financial statements.
| 5 |
Nexien BioPharma, Inc.
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2025 and 2024
(Unaudited)
| 2025 | 2024 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Imputed interest on related party advances | ||||||||
| Stock issued to officers and director | ||||||||
| Benefical convertible feature-related party debt | ||||||||
| Amortization of discount on convertible debt - related | ||||||||
| Amortization of discount on convertible debt | ||||||||
| Changes is assets and liabilities | ||||||||
| (Increase) decrease in prepaids | ||||||||
| Increase in accounts payable and accrued expenses | ||||||||
| Cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Cash used in investing activities | ||||||||
| Cash flows from financing activities | ||||||||
| Cash proceeds from related party advance | ||||||||
| Cash proceeds from related party note | ||||||||
| Cash proceeds from convertible note | ||||||||
| Cash provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||
| Shares issued for loan consideration | $ | $ | ||||||
| Shares issued to officers for services from stock payable | $ | $ | ||||||
| Debt discount on convertible debt | $ | $ | ||||||
| Supplemental cash flow items | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for income taxes (net) | $ | $ | ||||||
See accompanying notes to these consolidated financial statements.
| 6 |
NEXIEN BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Nature of Business and Basis of Presentation
Nexien BioPharma, Inc. (the “Company” or “Nexien”) was incorporated in the State of Michigan on November 10, 1952 as Gantos, Inc., and reincorporated in the State of Delaware in 2008, changing its name to Kinder Holding Corp. In October 2017, the Company completed a reverse acquisition of Intiva BioPharma Inc., a Colorado corporation (“BioPharma”), incorporated on March 27, 2017, through an exchange of shares (the “Share Exchange Transaction”) and changed its name to Intiva BioPharma Inc. In September 2018, the Company changed its name to Nexien BioPharma, Inc.
As a result of the Share Exchange Transaction, BioPharma became a wholly-owned subsidiary of the Company. Since this transaction resulted in the existing shareholders of BioPharma acquiring control of the Company, for financial reporting purposes, the business combination has been accounted for as an additional capitalization of the Company (a reverse acquisition with BioPharma as the accounting acquirer). The operations of BioPharma were the only continuing operations of the Company.
BioPharma was incorporated to pursue pre-clinical and drug development activities, in accordance with U.S. Food and Drug Administration (“FDA”) protocols, for certain pharmaceutical formulations that include cannabinoids. It is pursuing the formulation and development of drugs containing cannabinoids for the treatment of various diseases, disorders and medical conditions, and owns a license covering certain intellectual property, including certain patent applications, and has filed three of its own provisional patent applications for other drugs that include cannabinoids and other substances, including terpenes, that are intended to be developed with the objective of treating certain medical conditions and disorders. It was formed as a corporate subsidiary of the Colorado corporation Kanativa USA Inc. (“Kanativa USA”), which is a subsidiary of the Ontario, Canada corporation, Kanativa Inc.
Principles of Consolidation
The accompanying consolidated financial statements include BioPharma and its wholly owned subsidiaries: Intiva BioPharma Inc. (a Colorado corporation), NexN Inc. (“NexN”) and NexDM Inc. (collectively the “Company”), and were prepared from the accounts of the Company in accordance with accounting principles generally accepted in the United States of America (US GAAP). All significant intercompany transactions and balances have been eliminated on consolidation.
Note 2 - Going Concern Uncertainty
The accompanying financial statements have been prepared
in conformity with US GAAP, which contemplates the continuation of the Company as a going concern. The Company has not established any
source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception of $
| 7 |
NEXIEN BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.
Cash and Cash Equivalents
For financial statement presentation purposes, the
Company considers those short-term, highly liquid investments with original maturities of three months or less to be cash or cash equivalents.
There were
Valuation of Long-Lived Assets
The Company reviews the recoverability of its long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on the Company’s ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. The Company’s primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.
Fair Value of Financial Instruments
FASB ASC 825, “Financial Instruments,” requires entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC 825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. At March 31, 2025, the carrying value of certain financial instruments (cash and cash equivalents, accounts payable and accrued expenses) approximates fair value due to the short-term nature of the instruments or interest rates, which are comparable with current rates.
Fair Value Measurements
The Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of inputs which prioritize the inputs used in measuring fair value are:
Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2: Inputs to the valuation methodology include:
| ● | Quoted prices for similar assets or liabilities in active markets; | |
| ● | Quoted prices for identical or similar assets or liabilities in inactive markets; | |
| ● | Inputs other than quoted prices that are observable for the asset or liability; | |
| ● | Inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
| 8 |
NEXIEN BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 – Summary of Significant Accounting Policies (continued)
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The assets or liabilities fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
When the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy based on the new inputs used. The Company recognizes these transfers at the end of the reporting period when the transfers occur. For the periods ended March 31, 2025 and June 30, 2024, there were no significant transfers of financial assets or financial liabilities between the hierarchy levels.
At March 31, 2025 and June 30, 2024,
The Company computes net income (loss) per share in accordance with ASC 260, Earning per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At March 31, 2025, there were potentially dilutive securities convertible into shares of common stock comprised of (i) stock options – convertible into shares, (ii) warrants – convertible into shares and (iii) promissory notes – convertible into shares.
Income Taxes
The Company has adopted ASC 740, Accounting for Income Taxes. Pursuant to ASC 740, the Company is required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
Revenue Recognition
The Company has adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied.
Research and Development Expenses
Research and development expenses are charged to operations
as incurred. There were
| 9 |
NEXIEN BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 – Summary of Significant Accounting Policies (continued)
Advertising Expenses
Advertising expenses are charged to operations as incurred. There were
Stock-based compensation
Pursuant to FASB ASC 718, all share-based payments to employees, including grants of employee stock options, are recognized in the statement of operations based on their fair values.
The Company accounts for the issuance of equity instruments to acquire goods and/or services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably determinable. The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of the standards issued by the FASB. The measurement date for the fair value of the equity instruments issued is determined as the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
Reclassifications
Certain amounts in the consolidated financial statements for prior year periods have been reclassified to conform with the current period presentation.
Recent Accounting Pronouncements
Although there are several other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these accounting pronouncements has had or will have a material impact on its consolidated financial position or results of operations. Management has evaluated accounting standards and interpretations issued but not yet effective as of March 31, 2025, and does not expect such pronouncements to have a material impact on the Company’s financial position, operations, or cash flows.
Note 4 – License Agreements
Accu-Break License Agreement
In February 2018, the Company obtained a worldwide
exclusive license with respect to a proprietary delivery system for cannabinoid-based medications from Accu-Break Pharmaceuticals Inc
(Accu-Break), whose President was an affiliate of the Company as of the date of the agreement. The Company paid $
| 10 |
NEXIEN BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5– Stockholders’ Equity
Common stock
During the nine months ended March 31, 2025, the Company issued shares of its common stock as follows:
| ● | shares to a non-related lender as consideration for a loan to the Company (See note 6). The shares were valued at $ |
During the nine months ended March 31, 2024, the Company issued shares of its common stock as follows:
| ● | shares ( to each of the Company’s Chief Executive Officer and Chief Financial Officer and to the Company’s Chief Operating Officer) as consideration for their services to the Company during the nine months ended March 31, 2024. The shares were valued at $ | |
| ● | shares to Quick Capital, LLC (“Quick Capital”) as consideration for entering into a convertible loan agreement. The shares were valued at $ |
Options
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Outstanding and exercisable – June 30, 2024 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Expired/Canceled | ||||||||||||
| Outstanding and exercisable -March 31, 2025 | $ | |||||||||||
Warrants
A summary of warrant activity during the nine months ended March 31, 2025 is presented below:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life (Years) | ||||||||||
| Outstanding and exercisable – June 30, 2024 | $ | |||||||||||
| Granted | ||||||||||||
| Exercised | ||||||||||||
| Expired/Canceled | ( | ) | ||||||||||
| Outstanding and exercisable – March 31, 2025 | $ | |||||||||||
| 11 |
NEXIEN BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6 – Convertible Notes Payable
Convertible note purchase agreement
(i) On January 18, 2022,
the Company entered into a note purchase agreement with Quick Capital pursuant to which the Company issued Quick Capital a twelve-month
convertible promissory note, due January 18, 2023, in the principal amount of $
There is
In May 2023, the Company and Quick Capital entered
into an Amendment and Extension of the Note Purchase Agreement extending the maturity of the Note to
(ii) On February 14, 2024, the Company entered into
a note purchase agreement with Quick Capital pursuant to which the Company issued Quick Capital a six-month convertible promissory note,
due August 14, 2024, in the principal amount of $
(iii) On October 3, 2024, the Company entered into
a note purchase agreement with Quick Capital pursuant to which the Company issued Quick Capital a convertible promissory note, due six
months after the date of issue, in the principal amount of $
| 12 |
NEXIEN BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6 – Convertible Notes Payable (continued)
Convertible notes payable - related
(i) On November 24, 2020, the Company entered into
financing agreements with two individuals, its CEO and a shareholder. Under the agreements, the Company issued unsecured convertible promissory
notes due in () with accrued interest at the rate of % per annum, compounded annually. The notes and accrued
interest are convertible at the option of the holders at any time into restricted shares of the Company’s common stock at a price
of $, being the volume-weighted average price of the common stock over the trading days immediately preceding the date the
notes were funded. The CEO was issued a note in the principal amount of $
The Company had recorded the conversion feature as a Beneficial Conversion Feature. The $ fair value of the notes was fully discounted at the date of issuance based on the fair value warrants and beneficial conversion feature, and the expense portion of the notes was amortized over the term of the notes. As the warrants exceeded the value of the notes themselves, the discount is the entire amount of the notes. This fair value has been determined based on the current trading prices of the Company’s common stock. Management has determined that this treatment is appropriate given the uncertain nature of the value of the Company and its stock, and there will be no revaluations until the note is paid or redeemed for stock. The note holders have agreed not to convert the loans unless sufficient shares of common stock are available for conversion.
At March 31, 2025 and June 30, 2024, $
In November 2024, the noteholders agreed to extend
the due date of the loans through December 31, 2024 under the same terms and conditions as the original note and in April 2025 have agreed
to further extend the notes through June 30, 2025. The Company has accrued interest on the notes at the default interest rate of
(ii) In November 2024, the Company entered into a financing agreement with a shareholder. Under the agreement, the Company issued an unsecured convertible promissory note in the amount of $, due six months from date of issuance with accrued interest at the rate of % per annum, compounded annually. The note and accrued interest are convertible at the option of the holder at any time into restricted shares of the Company’s common stock at a fixed conversion price of $ per share. At March 31, 2025, the Company recorded accrued interest of $ on the outstanding principal balance of $.
Note 7 – Related Party Transactions
The Company’s Chief Executive Officer has advanced
$
| 13 |
NEXIEN BIOPHARMA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7 – Related Party Transactions (continued)
The Board of Directors authorized the issuance of
a total of shares of common stock of the Company to each of its Chief Executive Officer and Chief Financial Officer, with
of such shares to be issued to each of them every quarter beginning July 1, 2021 and continuing every three months through October 1,
2023. In June 2022, the Board of Directors authorized the issuance of a total of shares of common stock to its Chief Operating
Officer with of such shares to be issued to him every quarter beginning July 1, 2022 and continuing every three months through
July 1, 2023. At June 30, 2023, the Company has included as stock payable the $
As discussed in Note 6, in November 2020, the Company
entered into convertible debt financing agreements with two individuals, its CEO and a shareholder, for aggregate borrowings of $;
and in October 2024, entered into a convertible debt financing agreement with the shareholder, for borrowing of $
BioPharma was formed as a subsidiary of Kanativa USA,
which is a subsidiary of Kanativa Inc. Kanativa USA was issued shares of BioPharma’s common stock as consideration for
its contribution of
The members of the Company’s Board of Directors, its Chief Executive Office and its Chief Financial Officer are also directors and officers of Kanativa Inc., and other subsidiaries and affiliated entities of Kanativa Inc.
Note 8- Commitments and Contingencies
At March 31, 2025 there were no legal proceedings against the Company.
Note 9 – Subsequent Events
The Company has analyzed its operations subsequent to March 31, 2025, through the date these financial statements were issued, and has determined that it does not have any additional material subsequent events to disclose.
| 14 |
MANAGEMENT’S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
Forward-Looking Statements
The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Certain statements that the Company may make from time to time, including all statements contained in this report that are not statements of historical fact, constitute “forward-looking statements”. Forward-looking statements may be identified by words such as “plans,” “expects,” “believes,” “anticipates,” “estimates,” “projects,” “will,” “should,” and other words of similar meaning used in conjunction with, among other things, discussions of future operations, financial performance, product development and new product launches, market position and expenditures. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand our historical results of operations during the periods presented and our financial condition for the nine and three months ended March 31, 2025 and 2024. This MD&A should be read in conjunction with our audited financial statements as of June 30, 2024.
Overview
We are engaged in pursuing pre-clinical and drug development activities for certain pharmaceutical formulations that include cannabinoids. We have filed three provisional patent applications, and acquired a license covering certain intellectual property related to a drug delivery system.
As a relatively new business engaged in start-up operations and activities, we will require substantial additional funding to successfully complete any of our drug development programs. At present, we cannot estimate the substantial capital requirements needed to secure regulatory approvals for our drug candidates. We estimate that we will need to raise at a minimum $40,000 just to maintain our existence as a public company for the remainder of the current fiscal year.
We are a start-up company with no revenues from operations. Notwithstanding our successful raise of $2,076,158, net of offering costs, in equity capital and the receipt of $246,750, net of financing costs, from debt issuances during the period from inception to March 31, 2025 there is substantial doubt that we can continue as an on-going business for the next twelve months without a significant infusion of capital or entering into a business combination transaction. We do not anticipate that we will generate revenues from our research and development activities related to our drug development projects in the near future, due to the protracted revenue model of pursuing pharmaceutical drug development in accordance with the pathway set forth by the FDA. The Company had to cease research and development activities due to the lack of sufficient working capital. While management continues its efforts to raise additional capital for the Company, it is also seeking merger or other business combination or restructuring opportunities.
Results of Operations for the three months ended March 31, 2025 as compared to March 31, 2024
Net loss for the three months ended March 31, 2025 was $30,092, a decrease in loss of $23,071 from the net loss of $53,163 reported for the three months ended March 31, 2024.
General and administrative expenses decreased by $4,322 in 2025 as compared to the comparable 2024 period and consisted predominately of costs and expenses associated with the Company’s maintaining its public company status.
During the three months ended March 31, 2025 and 2024, the Company incurred $4,363 and $26,978, respectively, for discount related to the convertible debt financings. The amount for the 2024 period included the recognition of $20,800 for the Beneficial Conversion Feature of the repriced conversion rate for related party convertible debt during the 2024 period. Interest expense for the three months ended March 31, 2025 was $11,429, and included imputed interest for non-interest bearing advances from an officer of the Company of $2,267. Interest expense for the three months ended March 31, 2024 was $10,238, and included imputed interest for non-interest bearing advances from an officer of the Company of $1,265.
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There were no research and development costs for the periods ended March 31, 2025 and 2024 due to the Company’s limited financial resources and availability of research personnel.
Professional fees of $9,340 for the three months ended March 31, 2025 increased by $2,675 from $6,665 for the period ended March 31, 2024. Fees for the 2025 and 2024 periods consisted of legal fees for securities related matters and fees for auditor quarterly review and other required tax and regulatory.
During the three months ended March 31, 2024, the Company issued 2,200,000 shares of common stock (valued at $13,485) to a non-related lender as consideration for a convertible loan in the face amount of $24,444.
At March 31, 2025 and June 30, 2024, the Company had outstanding convertible notes in the principal amounts of $70,000 and $65,000, respectively, to its CEO and a shareholder; and convertible notes to Quick Capital in the face amounts of $207,120 and $194,898, respectively.
Results of Operations for the nine months ended March 31, 2025 as compared to March 31, 2024
Net loss for the nine months ended March 31, 2025 was $101,568, a decrease in loss of $51,031 from the net loss of $152,599 reported for the nine months ended March 31, 2024.
General and administrative costs were $15,997 for the nine months ended March 31, 2025, consisting solely of operating expenses to maintain the Company’s status as a public reporting entity. In comparison, general and administrative costs of $63,548 for the nine months ended March 31, 2024 includes $35,000 as the value of non-cash stock-based compensation costs for common shares issued to the Company’s officers.
General and administrative expenses, exclusive of non-cash compensation costs, were consistent during the 2025 and 2024 periods, and consisted predominately of costs and expenses associated with the Company’s maintaining its public company status.
During the nine months ended March 31, 2025 and 2024, the Company incurred $14,721 and $35,941, respectively, for discount related to the convertible debt financings. The amount for the 2024 period included the recognition of $20,800 for the Beneficial Conversion Feature of the repriced conversion rate for related party convertible debt during the 2024 period. Interest expense for the nine months ended March 31, 2025 was $32,810, and included imputed interest for non-interest bearing advances from an officer of the Company of $5,701. Interest expense for the nine months ended March 31, 2024 was $25,280, and included imputed interest for non-interest bearing advances from an officer of the Company of $3,515.
There were no research and development costs for the periods ended March 31, 2025 and 2024 due to the Company’s limited financial resources and availability of research personnel.
Professional fees of $38,040 for the nine months ended March 31, 2025 increased by $10,210 from $27,830 for the comparable 2024 period. Fees for the 2025 and 2024 periods consisted of legal fees for securities related matters and fees for annual audit and quarterly auditor reviews and other required tax and regulatory.
During the nine months ended March 31, 2025, the Company issued 300,000 shares of common stock (valued at $6,600) to a non-related lender as consideration for a convertible loan in the face amount of $12,222. During the nine months ended March 31, 2024, the Company issued 1,250,000 shares of common stock to three officers for services rendered to the Company; and issued 2,200,000 shares of common stock (valued at $13,485) to a non-related lender as consideration for a convertible loan in the face amount of $24,444.
At March 31, 2025 and June 30, 2024, the Company had outstanding convertible notes in the principal amounts of $70,000 and $65,000, respectively, to its CEO and a shareholder; and convertible notes to Quick Capital in the face amounts of $207,120 and $194,898, respectively.
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Liquidity and Capital Resources
At March 31, 2025 we had a working capital deficit of $450,516 and cash of $8,285, as compared to a working capital deficit of $361,249 and cash of $4,183 at June 30, 2024. The decrease in working capital was due primarily to the utilization of existing cash for operating activities during the nine months ended March 31, 2025. Substantially all available funds were being utilized solely for maintaining corporate operations as a public company. We used $50,898 of cash for operating activities during the nine months ended March 31, 2025, and received cash from financing activities of $55,000 during the period.
The Company had to cease research and development activities due to the lack of sufficient working capital. While management continues its efforts to raise additional capital for the Company, it is also seeking merger or other business combination or restructuring opportunities.
Our ability to create sufficient working capital to sustain us over the next twelve-month period, and beyond, is dependent on our raising additional equity or debt capital or entering into strategic arrangements with one or more third parties.
There can be no assurance that sufficient capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
During the nine months ended March 31, 2025, the Company’s Chief Executive Officer advanced $40,000 to the Company for working capital and operating purposes. The advance is non-interest bearing and is repayable upon demand.
Availability of Additional Capital
Notwithstanding our success in raising gross proceeds of $2.1 million from the private sale of equity securities through March 31, 2025, and the completion of a debt financing agreement resulting in the receipt of $246,750 net proceeds, there can be no assurance that we will continue to be successful in raising additional funds through equity capital and/or debt financings and have adequate capital resources to fund our operations or that any additional funds will be available to us on favorable terms or in amounts required by us. We estimate that we will require at a minimum $40,000 just to maintain our existence as a public company for the remainder of the current fiscal year.
Any additional equity financing may be dilutive to our stockholders, new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of Common Stock. Debt or equity financing may subject us to restrictive covenants and significant interest costs.
Capital Expenditure Plan During the Next Twelve Months
Through March 31, 2025, we raised approximately $2.1 million in equity capital (including exercised warrants) and $246,750, net, in debt financings, and we may be expected to require a minimum of $40,000 in capital during the remainder of the current fiscal year to continue our existence as a public company. There can be no assurance that we will continue to be successful in raising capital in sufficient amounts and/or at terms and conditions satisfactory to the Company. Any revenues are expected to come from our drug development projects, which will take several years if successful. As a result, we will continue to incur operating losses unless and until we have obtained regulatory approval with respect to one of our drug development projects and commence to generate sufficient cash flow to meet our operating expenses. There can be no assurance that we will obtain regulatory approval and the market will adopt our future drugs. In the event that we are not able to successfully: (i) raise equity capital and/or debt financing; or (ii) market our drugs after obtaining regulatory approval, our financial condition and results of operations will be materially and adversely affected. Accordingly, while management continues its efforts to raise additional capital for the Company, it is also seeking a merger or other business combination or restructuring opportunities.
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Going Concern Consideration
Our registered independent auditors have issued an opinion on our financial statements as of June 30, 2024 which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing any drugs that we successfully develop. Accordingly, we must raise capital from sources other than the actual sale from any drugs that we develop. We must raise capital to continue our drug development activities and stay in business.
Off-Balance Sheet Arrangements
At March 31, 2025 and June 30, 2024, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.
Contractual Obligations and Commitments
In February 2018, we obtained a worldwide exclusive license with respect to a proprietary delivery system for cannabinoid-based medications. We paid $65,000 in cash to the licensor pursuant to the terms of the agreement and issued shares of our common stock, valued at $35,000, as final payment due in August 2019. We are required to pay milestone payments upon obtaining regulatory approval of pharmaceutical licensed products and royalties based upon sales of licensed products. We may grant sublicenses under the terms of the agreement.
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial statements as of March 31, 2025 and are included elsewhere in this report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures.
As of March 31, 2025, the Company’s chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures as provided under the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013), our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report. We did not establish a formal written policy for the approval, identification, and authorization of related party transactions.
Changes in internal controls.
During the quarterly period covered by this report, no changes occurred in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Risk Factors in our Form 10-K as filed with the SEC on October 22, 2024, which could materially affect our business, financial condition or future results. The risks described in our Form 10-K are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS
| (1) | Filed as an exhibit to the registration statement on Form 10 filed November 14, 2014. |
| (2) | Filed as an exhibit to the Quarterly Report on Form 10-Q filed May 15, 2018. |
| (3) | Filed as an exhibit to the Annual Report on Form 10-K filed September 28, 2018. |
| (4) | Filed as an exhibit to the Annual Report on Form 10-K filed September 28, 2020. |
| (5) | Filed as an exhibit to the Quarterly Report on Form 10-Q filed February 11, 2021. |
| (6) | Filed as an exhibit to the Current Report on Form 8-K filed January 21, 2022. |
| (7) | Filed as an exhibit to the Annual Report on Form 10-K filed September 28, 2023. |
| (8) | Filed as an exhibit to the Quarterly Report on Form 10-Q filed May 15, 2024. |
| (9) | Filed as an exhibit to the Annual Report on Form 10-K filed October 22, 2024. |
| (10) | Filed as an exhibit to the Quarterly Report on Form 10-Q filed February 14, 2025. |
| (11) | In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NEXIEN BIOPHARMA, INC. | ||
| Dated: May 14, 2025 | By: | /s/ Richard Greenberg |
| Richard Greenberg, Chief Executive Officer | ||
| By: | /s/ Evan L. Wasoff | |
| Evan L. Wasoff, Chief Financial Officer | ||
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