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 six months ended December 31, 2021 and 2020. This MD&A should be read in
conjunction with our audited financial statements as of June 30, 2021 and 2020.
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 $50,000 just to
maintain our existence as a public company for the remainder of the current
calendar 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 since
inception to December 31, 2021, and the receipt of $146,750, net of financing
costs, from a debt issuance in January 2022, 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 Nexien BioPharma will generate revenues
from its research and development activities related to its drug development
projects in the near future, due to the protracted revenue model of pursuing
pharmaceutical drug development in accordance with the pathway set forth by the
FDA. The Company had to cease research and development activities due to the
lack of sufficient working capital. In January 2022 the Company received a
funding commitment from a third-party lender and will be recommencing research
and development activities on its myotonic dystrophy project. 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 December 31, 2021 as compared
to December 31, 2020
Net loss for the three months ended December 31, 2021 was $220,194, a decrease
of $607,837 from the net loss of $828,031 for the three months ended December
31, 2020.
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General and administrative costs of $202,056 incurred for the three months ended
December 31, 2021 includes non-cash charges of $163,255 for the fair value of
the shares issued for the acquisition of CRX Bio Holdings LLC and $35,000 as the
value of non-cash stock-based compensation costs for common shares issued to
officers. In comparison, general and administrative costs for the three months
ended December 31, 2020 include a non-cash charge of $521,051 for the fair value
of the shares issued for the acquisition of CRX Bio Holdings LLC, as well as
non-cash stock-based compensation costs for the period of $33,972 for the fair
value of options granted and $252,104 for the fair value of warrants issued in
conjunction with convertible debt financing during the 2020 period. General and
administrative expenses, exclusive of non-cash stock-based compensation costs,
were consistent during the 2021 and 2020 periods, consisting predominately of
costs and expenses associated the Company's maintaining its public company
status.
During the three months ended December 31, 2021 and 2020, the Company incurred
$6,698 and $1,833, respectively, for interest and amortization of discount
related to the convertible debt financings.
There were no research and development costs for the periods ended December 31,
2021 and 2020 due to the Company's limited financial resources and availability
of research personnel.
Professional fees of $11,440 for the three months ended December 31, 2021
increased by $4,040 from $7,400 for the period ended December 31, 2020. Fees for
the 2021 and 2020 periods consisted of legal fees for securities related matters
and fees for auditor quarterly review and other required tax and regulatory
filings.
Results of Operations for the six months ended December 31, 2021 as compared to
December 31, 2020
Net loss for the six months ended December 31, 2021 was $341,905, a decrease of
$1,547,546 from the net loss of $1,889,451 for the six months ended December 31,
2020.
During the six months ended December 31, 2021, the Company had limited financial
resources and substantially all available funds were utilized for maintaining
corporate operations as a public company. In January 2022, the Company completed
a debt financing agreement resulting in the receipt of $146,750. These funds
will be utilized for maintaining corporate operations and continuance of the
Company's research for myotonic dystrophy and myotonia.
General and administrative costs of $310,955 incurred for the six months ended
December 31, 2021 includes non-cash charges of $223,255 for the fair value of
the shares issued for the acquisition of CRX Bio Holdings LLC and $70,000 as the
value of non-cash stock-based compensation costs for common shares issued to
officers. In comparison, general and administrative costs for the six months
ended December 31, 2020 include a non-cash charge of $1,308,049 for the fair
value of the shares issued for the acquisition of CRX Bio Holdings LLC, as well
as non-cash stock-based compensation costs for the period of $282,116 for the
fair value of options granted and $252,104 for the fair value of warrants issued
in conjunction with convertible debt financing during the 2020 period. General
and administrative expenses, exclusive of non-cash stock-based compensation
costs, were consistent during the 2021 and 2020 periods, consisting
predominately of costs and expenses associated the Company's maintaining its
public company status.
During the six months ended December 31, 2021 and 2020, the Company incurred
$13,470 and $1,961, respectively, for interest and amortization of discount
related to the convertible debt financings.
During the six months ended December 31, 2020, the Board of Directors granted
options to purchase a total of 5,000,000 shares of common stock to officers of
the Company, exercisable for a period of seven years at an exercise price of
$0.08 per share. No additional options have been granted through December 31,
2021.
Professional fees of $17,480 for the six months ended December 31, 2021
decreased by $5,510 from $22,990 for the six months ended December 31, 2020.
Fees for both the 2021 and 2020 periods consisted of legal fees for securities
related matters and fees for annual audit and other required regulatory filings.
There were no research and development costs for the periods ended December 31,
2021 and 2020 due to the Company's limited financial resources and availability
of research personnel.
During the six months ended December 31, 2021, the Company issued 500,000 shares
of common stock to each of two officers for services rendered to the Company.
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Liquidity and Capital Resources
At December 31, 2021, we had a working capital deficit of $62,425 and cash of
$2,942, as compared to a working capital deficit of $13,775 and cash of $18,041
at June 30, 2021. The decrease in both working capital and cash was due
primarily to available funds being utilized for maintaining corporate operations
as a public company. We used $30,099 of cash for operating activities, and
received a $15,000 advance from one of our officers during the six months ended
December 31, 2021.
While management of the Company believes that the Company will be successful in
its current and planned activities, there can be no assurance that the Company
will be successful in its drug development activities, and raise sufficient
equity, debt capital or strategic relationships to sustain the operations of the
Company.
Our ability to create sufficient working capital to sustain us over the next
twelve-month period, and beyond, is dependent on our raising additional equity
or debt capital, or entering into strategic arrangements with one or more third
parties.
There can be no assurance that sufficient capital will be available to us. We
currently have no agreements, arrangements or understandings with any person to
obtain funds through bank loans, lines of credit or any other sources.
Availability of Additional Capital
Notwithstanding our success in raising gross proceeds of $2.1 million from the
private sale of equity securities through December 31, 2021, and the completion
of a debt financing agreement resulting in the receipt of $146,750 in January
2022, 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 $50,000 just to maintain our
existence as a public company for the remainder of the current calendar 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
To date, we raised approximately $2.1 million, in equity capital (including
exercised warrants) and $146,750 in debt financings, and we may be expected to
require a minimum of $50,000 in capital during the remainder of the current
calendar 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.
Our revenues are expected to come from our drug development projects. 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.
Going Concern Consideration
Our registered independent auditors have issued an opinion on our financial
statements as of June 30, 2021 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.
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Off-Balance Sheet Arrangements
At December 31, 2021 and June 30, 2021, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated
under the Securities Act of 1934.
Contractual Obligations and Commitments
On February 28, 2018, we obtained a worldwide exclusive license with respect to
a proprietary delivery system for cannabinoid-based medications. Upon execution
of the agreement, as amended September 18, 2018, $35,000 was paid to the
licensor. An additional $10,000 was paid on November 1, 2018, $20,000 was paid
on February 28, 2019 and a final payment, in cash or stock at the option of the
Company, of $35,000, due August 31, 2019, was paid in shares of our common
stock. We are required to pay milestone payments upon obtaining regulatory
approval of pharmaceutical licensed products and royalties based upon sales of
licensed products. We may grant sublicenses under the terms of the agreement.
Critical Accounting Policies
Our significant accounting policies are described in the notes to our financial
statements as of December 31, 2021 and are included elsewhere in this report.
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