Our Management's Discussion and Analysis contains forward-looking statements
relating to future events or our future financial performance. In some cases,
you can identify forward-looking statements by terminology such as "may",
"should", "intends", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential", or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors which may cause our or our
industry's actual results, levels of activity or performance to be materially
different from any future results, levels of activity or performance expressed
or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity or performance. You should not place undue reliance on these
statements, which speak only as of the date of this Annual Report. These
cautionary statements should be considered with any written or oral
forward-looking statements that we may issue in the future. You should read this
Annual Report on Form 10-K with the understanding that our actual future results
may be materially different from what we expect. All forward-looking statements
speak only as of the date on which they are made. We undertake no obligation to
update such statements to reflect events that occur or circumstances that exist
after the date on which they are made, except as required by federal securities
and any other applicable law.
The management's discussion and analysis of our financial condition and results
of operations are based upon our audited financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP").
The following discussion and analysis of financial condition and results of
operations of the Company is based upon, and should be read in conjunction with,
the audited financial statements and related notes elsewhere in this Annual
Report on Form 10-K.
Plan of Operation
We are an innovative biotechnology company dedicated to developing biotech
products, treatments and technologies that create a platform to combat neuronal
diseases. We seek to engage in strategic arrangements with companies and
institutions that are developing breakthrough technologies in the fields of AI,
ML, molecular biology, stem cells and tissue engineering, for deployment in the
fight against neuronal diseases Our search is focused on researchers based in
Israel, a country which is world-renowned for biotech innovations.
12
--------------------------------------------------------------------------------
To date, the Company has collaborated with universities and scientists in the
fields of regenerative medicine, tissue engineering and 3D printable hydrogels
to develop a treatment that integrates proprietary, engineered MSCs, 3D
printable implant, smart materials and a novel delivery system and has two
product candidates for treating penetrating and non-penetrating
(concussion-like) TBIs, both integrating proprietary, anti-brain inflammation
synthetic hydrogel and modified MSCs.
We have not generated any revenue from the sale of products.
Results of Operations
Revenue
We have not generated any revenue since our inception and do not expect to
generate any revenue from the sale of products in the near future.
Operating Expenses
For the years ended December 31, 2020 and 2019 we had the following operating
expenses:
For the Year ended
December 31,
2020 2019
Operating expenses:
Research and development expenses $ 258,620 $ 651,476
Professional fees
47,560 75,677
General and administrative expenses 247,561 789,279
Total operating expenses
$ 553,741 $ 1,516,432
Total operating expenses for the year ended December 31, 2020 were $553,741 as
compared to $1,516,432 for the year ended December 31, 2019. During the year
ended December 31, 2020, the Company incurred $258,620 of research and
development expenses which included payroll of $79,274, service fees related to
certain research and development agreements of $167,548, a rebate of fees
associated with a sponsored research agreement of $26,809, legal and filing fees
related to patents of $6,196, software fees of $6,966, technology licensing fees
of $25,000 and purchases of expendable lab supplies and equipment of $445, as
compared to $651,476 of research and development expenses which included payroll
of $223,766, service fees related to certain research and development agreements
of $292,044, fees associated with a sponsored research agreement of $80,006,
legal and filing fees related to patents of $21,760, software fees of $1,374,
technology licensing fees of $8,333 and purchases of expendable lab supplies and
equipment of $24,193 incurred during the year ended December 31, 2019. The
Company incurred general and administrative expenses of $247,561 for the year
ended December 31, 2020 compared to general and administrative expenses of
$789,279 for the year ended December 31, 2019. The substantial decrease in
general and administrative expense during the 2020 fiscal year was primarily due
to stock-based compensation costs of $213,530 related to the issuance of stock
options to our officers and certain advisors during the year ended December 31,
2019, with $409,495 in stock-based compensation to officers and advisors in the
year ended December 31, 2019. Professional fees were $47,560 for the year ended
December 31, 2020 compared to professional fees of $75,677 incurred during
fiscal 2019. The decrease in professional fees in the year ended December 31,
2020 compared to the year ended December 31, 2019 was due to certain specialized
contract and tax advice costs incurred in the year ended December 31, 2019.
Other expenses were $109,222 in the year ended December 31, 2020, which included
a loss of $57,203 as a result of the change in value of derivative liabilities
and interest expense of $52,019, of which $3,400 relates to financing costs with
respect to the issuance of warrants in the year ended December 31, 2020 in
connection with convertible note financings, accretion of convertible notes of
$35,380 and interest charges on convertible notes of $13,240. Other
expenses were $30,340 in the year ended December 31, 2019, which included a gain
of $12,234 as a result of the change in value of derivative liabilities and
interest expense of $42,574, of which $36,410 relates to financing costs with
respect to the issuance of warrants in the year ended December 31, 2019 in
connection with convertible note financings, accretion of convertible notes of
$945 and interest charges on convertible notes of $5,219.
Net Loss
We had a net loss of $662,963 in the year ended December 31, 2020 compared to a
net loss of $1,546,772 in the year ended December 31, 2019.
13
--------------------------------------------------------------------------------
Statement of Cash Flows
The following table summarizes our cash flows for the period presented:
For the Year ended
December 31,
2020 2019
Net cash provided (used by) operating activities $ (220,393 ) $ (546,837 )
Net cash provided from (used by) investing activities
- -
Net cash provided from financing activities 211,000 470,000
Increase (decrease) in cash and cash equivalents $ (9,393 ) $ (76,837 )
During the year ended December 31, 2020 we used cash of $9,393 as compared to
the year ended December 31, 2019, where we used cash of $76,837.
Cash Used in Operating Activities
Cash used in operating activities for the year ended December 31, 2020 was
$220,393 as compared to $546,837 used in the year ended December 31, 2019.
Cash used in operating activities for the year ended December 31, 2020 was
primarily the result of our net loss, offset by non-cash items including
compensation in the form of stock options for research and development of
$159,839, stock options granted for management and advisory services of
$213,530, warrants granted for financing costs of $3,400 and changes to our
operating assets and liabilities, including a decrease in prepaid expenses of
$56,265 and a decrease to our accounts payable, offset by an increase to
accounts payable-related parties. We also recorded $35,380 as non-cash
accretion of the debt discount related to certain convertible notes compared to
$945 in the year ended December 31, 2019, and an increase in derivative
liabilities of $12,234 in the year ended December 31, 2019 compared to a
decrease of $57,203 in the year ended December 31, 2020.
Cash used in operating activities for the year ended December 31, 2019 was
primarily the result of our net loss, offset by non-cash items including
compensation in the form of stock options for research and development of
$219,095, stock awards for advisory and consulting services of $126,875, stock
options granted for management and advisory services of $409,495, common stock
issued for services of $74,500, warrants granted as financing costs of $36,410
and changes to our operating assets and liabilities including an increase to
prepaid expenses and increases to accounts payable and accounts payable-related
parties.
Cash Provided by Investing Activities
There was no cash provided by investing activities for the years ended December
31, 2020 and 2019.
Cash Provided by Financing Activities
During the year ended December 31, 2020, financing activities provided cash of
$211,000, which was comprised of proceeds from convertible notes of $10,000,
related party advances of $101,000 and proceeds from private offerings of common
stock of $100,000.
During the year ended December 31, 2019, financing activities provided cash of
$470,000, including proceeds from private offerings of common stock of $65,000,
proceeds from convertible notes of $70,000, short term advances from third
parties of $100,000, a demand loan of $50,000 from a company controlled by our
officers and directors and advances from our officers and directors of $185,000.
14
--------------------------------------------------------------------------------
Liquidity and Capital Resources
As of December 31, 2020, we had cash of $57,632. We are in the early stage of
development and have experienced net losses to date and have not generated
revenue from operations which raises substantial doubt about our ability to
continue as a going concern. There are a number of conditions that we must
satisfy before we will be able to commercialize potential products and generate
revenue, including identifying and establishing strategic partners and
technologies for the successful development of product candidates, which
includes clinical trials, FDA approval, demonstration of effectiveness
sufficient to generate commercial orders by customers and licensing or acquiring
intellectual property, as well as effective marketing and sales capabilities
for our product. We do not currently have sufficient resources to accomplish any
of these conditions necessary for us to generate revenue and expect to incur
increasing operating expenses. We will require substantial additional funds for
operations, the service of debt and to fund our business objectives. We will
have to continue to rely on equity and debt financing. There can be no assurance
that financing, whether debt or equity, will always be available to us in the
amount required at any particular time or for any particular period or, if
available, that it can be obtained on terms favorable to us. Additionally, the
continued effect of COVID-19 and uncertain market conditions limit the Company's
ability to access capital. We will continue exploring sources of additional debt
and equity financings as well as available grants. There is substantial doubt
that we can continue as an on-going business unless we obtain additional capital
to pay our expenditures.
Covid-19 Pandemic
The COVID-19 pandemic has had an adverse impact on the research and development
of our product candidates. Research facilities at Dartmouth were subject to
closures as well as laboratories at Ariel in Israel. This resulted in our
discontinuing our research at these Universities and was part of our decision to
adjust our research to be collaborative and to seek aligning with third parties
to advance our expanded goals. We do not currently know the full extent of
potential delays of research in the future as a result of the continuing
pandemic restrictions.
COVID-19 has also caused significant disruptions to the global financial
markets, which severely impacts our ability to raise additional capital. We
terminated our employees in an effort to conserve resources in April 2020 as we
evaluated our business development efforts. The ultimate impact on us and our
research relationships is currently uncertain.
The full impact of the COVID-19 outbreak continues to evolve and is subject to
change. Management is actively monitoring the situation but given the daily
evolution of the COVID-19 outbreak, the Company is not able to fully estimate
the effects of the COVID-19 outbreak on its planned operations or financial
condition in the next 12 months. However, while significant uncertainty remains,
the Company believes it is likely that the COVID-19 outbreak will have a
negative impact on its ability to raise additional financing and will result in
delays as it continues to impact the Company's workforce and its collaborative
development efforts.
Going Concern
Our financial statements have been prepared assuming that we will continue as a
going concern and, accordingly, does not include adjustments relating to the
recoverability and realization of assets and classification of liabilities that
might be necessary should we be unable to continue in operation. Our report from
our independent registered public accounting firm for the fiscal year ended
December 31, 2020 includes an explanatory paragraph stating the Company has
recurring losses and limited operations which raise substantial doubt about its
ability to continue as a going concern. If the Company is unable to obtain
adequate capital due to the continued spread of COVID-19, the Company may be
required to reduce the scope, delay, or eliminate some or all of its planned
operations. These factors, among others, raise substantial doubt about the
Company's ability to continue as a going concern.
15
--------------------------------------------------------------------------------
Off Balance Sheet Arrangements
We currently have no off-balance sheet arrangements.
Critical Accounting Policies
The preparation of our financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On an on-going basis, management evaluates its
estimates and judgments which are based on historical experience and on various
other factors that are believed to be reasonable under the circumstances. The
results of their evaluation form the basis for making judgments about the
carrying values of assets and liabilities. Actual results may differ from these
estimates under different assumptions and circumstances. Our significant
accounting policies are more fully discussed in the Notes to our Financial
Statements.
Research and Development Costs: The Company charges research and development
costs to expense when incurred in accordance with ASC 730, "Research and
Development". Research and development costs were $258,620 for the year ended
December 31, 2020. Research and development costs were $651,476 for the year
ended December 31, 2019.
Stock-Based Compensation and Other Share-Based Payments: The expense
attributable to the Company's directors is recognized over the period in which
the amounts are earned and vested, and the expense attributable to the Company's
non-employees is recognized when vested, as described in Note 11, Stock Plan.
Warrants: The Company accounts for common stock warrants in accordance with
applicable accounting guidance provided in ASC 815 "Derivatives and Hedging", as
either derivative liabilities or as equity instruments depending on the specific
terms of the warrant agreement. For warrants classified as equity instruments
we apply the Black Scholes model. Presently all warrants issued and
outstanding are accounted for using the equity method.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the Financial Accounting Standards
Board ("FASB"), (including its EITF, the AICPA and the SEC), did not or are not
believed by management to have a material effect on the Company's present or
future financial statements.
© Edgar Online, source Glimpses