ACTAVIA LIFE SCIENCES, INC. Forward-Looking Statements
This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance and the Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the Company's Annual Report on Form 10-K filed onJanuary 15, 2021 under the heading "Risk Factors," which are incorporated herein by reference. We assume no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
Unless expressly indicated or the context requires otherwise, the terms
"Rasna,"," the "Company," "we," "us," and "our" refer to
Company Background To date, we have devoted substantially all of our resources to research and development efforts relating to our therapeutic candidates, including conducting clinical trials and developing manufacturing capabilities, in-licensing related intellectual property, protecting our intellectual property and providing general and administrative support for these operations. Since our inception, we have funded our operations primarily through the issuance of equity securities and convertible notes.
We anticipate that our expenses will increase substantially if and as we:
• initiate new clinical trials;
• seek to identify, assess, acquire and develop other products, therapeutic
candidates and technologies;
• seek regulatory and marketing approvals in multiple jurisdictions for our
therapeutic candidates that successfully complete clinical studies;
• establish collaborations with third parties for the development and
commercialization of our products and therapeutic candidates;
• make milestone or other payments under our agreements pursuant to which we have
licensed or acquired rights to intellectual property and technology;
• seek to maintain, protect, and expand our intellectual property portfolio;
• seek to attract and retain skilled personnel;
• incur the administrative costs associated with being a public
company and related costs of compliance;
• create additional infrastructure to support our operations as a commercial
stage public company and our planned future commercialization efforts; and
• experience any delays or encounter issues with any of the above.
We expect to continue to incur significant expenses and increasing losses for at least the next several years. Accordingly, we anticipate that we will need to raise additional capital in addition to the net proceeds from this offering in order to obtain regulatory approval for, and the commercialization of our therapeutic candidates. Until such time that we can generate meaningful revenue from product sales, if ever, we expect to finance our operating activities through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any approved therapies or products or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially adversely affect our business, financial condition and results of operations. 14
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We only have one segment of activity, which is that of a biotechnology company focused on targeted drugs to treat diseases in oncology and immunology, mainly focusing on the treatment of leukemia and lymphoma.
The Company is currently looking into raising funds to progress its R&D pipeline.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles inthe United States of America , or US GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. In accordance with US GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
The Company has determined that it was not subject to any new accounting
pronouncements that became effective during the three months ended
Basis of preparation
The accompanying financial statements have been prepared in conformity with US
GAAP. Any reference in these notes to applicable guidance is meant to refer to
US GAAP as found in the Accounting Standards Codification ("ASC") and Accounting
Standards Updates ("ASU") of the Financial Accounting Standards Board ("the
FASB").
Liquidity and Going Concern
We are subject to a number of risks similar to those of other pre-commercial stage companies, including our dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with research, development, testing, and obtaining related regulatory approvals of its pipeline products, suppliers and collaborators, successful protection of intellectual property, competition with larger, better-capitalized companies, successful completion of our development programs and, ultimately, the attainment of profitable operations are dependent on future events, including obtaining adequate financing to fulfill our development activities and generating a level of revenues adequate to support our cost structure. We have no present revenue and have experienced net losses and significant cash outflows from cash used in operating activities since inception, and atDecember 31, 2020 , had an accumulated deficit of$22,830,343 , a net loss for the three months endedDecember 31, 2020 of$154,941 and net cash used in operating activities of$50,890 for the three months endedDecember 31, 2020 . We expect to continue to incur net losses and have significant cash outflows for at least the next twelve months and will require significant additional cash resources to launch new development phases of existing products in its pipeline. In the event that the Company is unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about our ability to continue as a going concern one year from the date of this filing. The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern one year from the date of this filing. This basis of accounting contemplates the recovery of our assets and the satisfaction of liabilities in the normal course of business. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure.
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Results of Operations
The following paragraphs set forth our results of operations for the periods presented. The period-to-period comparison of financial results is not necessarily indicative of future results.
Results of Operations for the three months ended
The following table sets forth the summary statements of operations for the
periods indicated:
For the Three Months Ended December 31,
2020 2019
(Unaudited) (Unaudited)
Revenue $ - $ -
Cost of revenue - -
Gross profit - -
Operating expenses:
General and administrative 154,941 149,281
Consultancy fees - -
Legal and professional fees - -
Total operating expenses 154,941 149,281
Loss from operations (154,941) (149,281 )
Other expense:
Interest on convertible notes payable (17,077) (8,761 )
Foreign currency transaction gain 156 -
Other expense (16,921) (8,761 )
Net loss $ (171,862) $ (158,042 )
Revenues
There were no revenues for the three months ended
Operating Expenses Operating expenses consisting of research and development costs, consultancy fees, legal and professional fees and general and administrative expenses for the three months endedDecember 31, 2020 increased to$154,941 from$149,281 for the three months endedDecember 31, 2019 , an increase of$5,660 . The increase is primarily attributable to a reduction in general and administrative costs, reflecting the decreased activity in the Company (approximately$27,000 ), a reduction in consultancy fees of ($16,250 ) due to the departure of the CFO, offset by an increase in legal and professional fees$50,000 , which is due to the reversal of unpaid bonus accruals in 2019. The decreased activity is a result of the Company having insufficient cash resources to fund its operations. Net Loss Net loss for the three months endedDecember 31, 2020 increased to$171,862 from$158,042 for the three months endedDecember 31, 2019 , an increase of$13,820 . The increase is primarily attributable a reduction in general and administrative costs, reflecting the decreased activity in the Company (approximately$27,000 ), a reduction in consultancy fees of ($16,250 ) due to the departure of the CFO, offset by an increase in legal and professional fees$50,000 , which is due to the reversal of unpaid bonus accruals in 2019. In addition there was an increase of approximately$8,000 for additional interest charged for promissory notes. The decreased activity is a result of the Company having insufficient cash resources to fund its operations. 16
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Liquidity and Capital Resources
We believe we will require significant additional cash resources to continue to launch new development phases of existing products in the Company's pipeline. In the event that we are unable to secure the necessary additional cash resources needed, we may slow current development phases or halt new development phases in order to mitigate the effects of the costs of development. These conditions, among others, raise substantial doubt about our ability to continue as a going concern. A successful transition to attaining profitable operations is dependent upon achieving a level of positive cash flows adequate to support our cost structure. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience significant dilution. Any debt financing, if available, may (i) involve restrictive covenants that impact our ability to conduct, delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize its self on unfavorable terms. OnNovember 12, 2019 , we issued a 12% convertible promissory note (the "Note") to an investor, in the principal amount of$57,500 with a maturity date ofNovember 12, 2020 . The Note is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i)$0.65 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. OnFebruary 07, 2020 , we issued a 12% convertible promissory note (the "Note") to an investor, in the principal amount of$31,000 with a maturity date ofFebruary 07, 2021 . The Note is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i)$0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. OnMarch 20, 2020 , we issued a 12% convertible promissory note (the "Note") to an investor, in the principal amount of$20,000 with a maturity date ofMarch 20, 2021 . The Note is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i)$0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. OnSeptember 22, 2020 , we issued a 12% convertible promissory note (the "Note") to an investor, in the principal amount of$35,000 with a maturity date ofSeptember 22, 2021 . The Note is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i)$0.20 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. OnOctober 21, 2020 , we issued a 12% convertible promissory note (the "Note") to an investor, in the principal amount of$40,000 with a maturity date ofOctober 21, 2021 . The Note is convertible by the holder at any time into shares of our common stock at a conversion price equal to the lower of (i)$0.05 per share or (ii) the price of the next financing during the 180 days after the date of the Note. If the holder has not converted the Note into common stock by the maturity date, we must repay the outstanding principal amount plus accrued interest. All notes contain an anti-dilution provision, which adjusts the conversion price in the event of an issuance by us of common stock below the then effective conversion price. All of these notes were amended and restated inFebruary 2021 . The mayurity date of the notes were extended toDecember 31 , 20201 and the conversion price amended to$0.01 per share. OnApril 16, 2020 , we entered into an asset purchase agreement with Tiziana pursuant to which we agreed to sell all of the intellectual property relating to a nanoparticle-based formulation of Act D to Tiziana in exchange for an upfront payment of$120,000 and milestone payments of up to an aggregate$630,000 . Capital Resources
The following table summarizes total current assets, liabilities and working capital deficiency as of the periods indicated:
December 31, 2020 September 30, 2020 Change
(Unaudited)
Current assets $ 3,351 $ 32,630 $ (29,279 )
Current liabilities 2,831,709 2,707,632 124,077
Working capital deficit $ (2,828,358) $ (2,675,002 ) $ (153,356) We had a cash balance of
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Liquidity
The following table sets forth a summary of our cash flows for the periods indicated:
For the
three months ended
2020 2019 Increase/(Decrease)
Net cash used in operating activities $ (50,890) $ (79,432 ) $ 28,542
Net cash used in investing activities $ - $ - $ -
Net cash provided by financing activities $ 40,000 $ 57,500 $ (17,500 )
Net cash used in operating activities consists of net loss adjusted for the effect of changes in operating assets and liabilities.
Net cash used in operating activities was$50,890 for the three months endedDecember 31, 2020 compared to$79,432 for the three months endedDecember 31, 2019 . The net loss of$171,862 for the three months endedDecember 31, 2020 was partially offset primarily by non-cash share based compensation of$18,192 , interest accrued on the Convertible Loan Notes of$1,440 , interest accrued on convertible loan notes of$16,132 , depreciation expense of$314 and changes in operating assets and liabilities of$84,894 . The net loss of$158,042 for the three months endedDecember 31, 2019 , was partially offset by non-cash items such as share based compensation of$47,173 , depreciation expense of$409 and changes in operating assets and liabilities of$16,365 .
Net Cash Provided by Financing Activities
Net cash provided by financing activities consists of proceeds from the issuance of a convertible note of$40,000 in the three months endedDecember 31, 2020 compared to$57,500 of proceeds from the issuance of a convertible note during the three months endedDecember 31, 2019 .
Off-Balance Sheet Arrangements
We consolidate variable interest entities ("VIE") in which we hold a controlling
financial interest as evidenced by the power to direct the activities of a VIE
that most significantly impact its economic performance and the obligation to
absorb losses of, or the right to receive benefits from, the VIE that could
potentially be significant to the VIE and therefore are deemed to be the primary
beneficiary. We take into account our entire involvement in a VIE (explicit or
implicit) in identifying variable interests that individually or in the
aggregate could be significant enough to warrant our designation as the primary
beneficiary and hence require us to consolidate the VIE or otherwise require us
to make appropriate disclosures.
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