UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended December 31, 2020

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

000-55320

(Commission file number)

 

NEXIEN BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   26-2049376

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

4340 E Kentucky Ave., Suite 206, Glendale, CO 80246

(Address of principal executive offices) (Zip Code)

 

(303) 495-7583

(Registrant’s telephone number, including area code)

 

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

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
         

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

  Large accelerated filer [  ] Accelerated filer [  ]
  Non-accelerated filer [  ]

Smaller reporting company [X]

Emerging growth company [X]

 

If an emerging growth company, indicate by the check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 55,931,196 shares as of February 11, 2021.

 

 

 

 
 

 

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.   17
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.   20
ITEM 4.   CONTROLS AND PROCEDURES.   21
         
    PART II - OTHER INFORMATION    
         
ITEM 1.   LEGAL PROCEEDINGS.   22
ITEM 1A.   RISK FACTORS.   22
ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.   22
ITEM 3.   DEFAULT UPON SENIOR SECURITIES.   22
ITEM 4.   MINE SAFETY DISCLOSURES.   22
ITEM 5.   OTHER INFORMATION.   22
ITEM 6.   EXHIBITS.   23

 

2
 

 

PART 1 - FINANCIAL INFORMATION

 

ITEM 1 - FINANCIAL STATEMENTS

 

Nexien BioPharma, Inc.

Consolidated Balance Sheets

 

    December 31, 2020     June 30, 2020  
    (Unaudited)     (Audited)  
             
Assets                
                 
Current Assets                
Cash   $ 48,134     $ 10,786  
Prepaid expenses     6,000       12,000  
                 
Total current assets     54,134       22,786  
                 
Total Assets   $ 54,134     $ 22,786  
                 
Liabilities and Stockholders’ Deficit                
                 
Current Liabilities                
Accounts payable and accrued expenses   $ 2,714     $ 17,151  
Convertible note payable - related     -       12,000  
                 
Total current liabilities     2,714       29,151  
                 
Convertible Notes Payable - related, net of discount of $37,332     27,668       -  
                 
Total liabilites     30,382       29,151  
                 
Commitments and Contingencies                
                 
Stockholders’ Deficit                
Preferred stock, $.0001 par value; 10,000,000 authorized; none issued     -       -  
Common stock-$.0001 par value; 200,000,000 shares authorized; 55,931,196 shares issued and outstanding -December 31, 2020; 53,984,004 shares issued and outstanding -June 30, 2020;     5,593       5,398  
Additional paid in capital     12,194,483       11,583,159  
Common stock subject to forfeiture     (1,839,714 )     (3,147,763 )
Accumulated deficit     (10,336,610 )     (8,447,159 )
                 
Total Stockholders’ Deficit     23,752       (6,365 )
                 
Total Liabilities and Stockholders’ Deficit   $ 54,134     $ 22,786  

 

See accompanying notes to consolidated financial statements.

 

3
 

 

Nexien BioPharma, Inc.

Consolidated Statements of Operations

For the Three and Six Months Ended December 31, 2020 and 2019

(Unaudited)

 

    Three months ended     Six months ended  
    December 31,     December 31,  
    2020     2019     2020     2019  
                         
Revenue   $ -     $ -     $ -     $ -  
                                 
Operating expenses                                
Professional fees     7,400       9,065       22,990       33,001  
General and administrative     818,798       687,209       1,864,500       1,370,175  
Impairment of license fee     -       -       -       35,000  
                                 
Total operating expenses     826,198       696,274       1,887,490       1,438,176  
                                 
Other expense                                
Interest expense-related     527       -       655       -  
Amortization of discount on convertible notes     1,306       -       1,306       -  
                                 
Total other expense     1,833       -       1,961       -  
                                 
Net loss   $ (828,031 )   $ (696,274 )   $ (1,889,451 )   $ (1,438,176 )
                                 
Loss per share - basic and diluted   $ (0.01 )   $ (0.01 )   $ (0.03 )   $ (0.03 )
                                 
Weighted average shares outstanding - basic and diluted     55,784,493       53,984,004       55,370,365       53,842,089  

 

See accompanying notes to consolidated financial statements.

 

4
 

 

Nexien BioPharma, Inc.

Consolidated Statement of Stockholders’ Equity

For the Six months ended December 31, 2020 and 2019

(Unaudited)

 

    Shares     Common Stock     Additional Paid in Capital     Comon Stock Subject to Forfeiture     Accumulated Deficit    

Total

Stockholders’

Equity

 
                                     
Balance, June 30, 2020     53,984,004     $ 5,398     $ 11,583,159     $        (3,147,763 )   $ (8,447,159 )   $ (6,365 )
                                                 
Issuance of stock for conversion of related party note payable and interest at $0.014 per share     1,797,192       180       24,981       -       -       25,161  
Issuance of stock for accounts payable at $0.09 per share     150,000       15       13,485       -       -       13,500  
Amortization of CRx shares     -       -       -       1,308,049       -       1,308,049  
Fair value of options granted     -       -       282,116       -       -       282,116  
Fair value of warrants issued     -       -       252,104       -       -       252,104  
Discount on convertible debt     -       -       38,638       -       -       38,638  
Net loss     -       -       -       -       (1,889,451 )     (1,889,451 )
                                                 
Balance, December 31, 2020     55,931,196     $ 5,593     $ 12,194,483     $ (1,839,714 )   $ (10,336,610 )   $ 23,752  
                                                 
Balance, June 30, 2019     53,510,718     $ 5,351     $ 11,505,819     $ (5,469,708 )   $ (5,775,542 )   $ 265,920  
                                                 
Issuance of stock for accounts payable at $0.09 per share     16,667       1       1,499       -       -       1,500  
Issuance of stock for license at $0.09 per share     381,619       38       34,962       -       -       35,000  
Issuance of stock for services at $0.10 per share     75,000       8       7,492       -       -       7,500  
Vesting of management shares subject to forfeiture     -       -       -       18,750       -       18,750  
Amortization of CRx shares     -       -       -       1,204,459       -       1,204,459  
Fair value of options and warrants issued for services     -       -       33,387       -       -       33,387  
Net loss     -       -       -       -       (1,438,176 )     (1,438,176 )
                                                 
Balance, December 31, 2019     53,984,004     $ 5,398     $ 11,583,159     $ (4,246,499 )   $ (7,213,718 )   $ 128,340  

 

See accompanying notes to consolidated financial statements.

 

5
 

 

Nexien BioPharma, Inc.

Consolidated Statements of Cash Flows

For the Six Months Ended December 31, 2020 and 2019

(Unaudited)

 

    2020     2019  
             
Cash flows from operating activities                
Net loss   $ (1,889,451 )   $ (1,438,176 )
Adjustments to reconcile net loss to net cash used in operating activities                
Stock based compensation     534,220       52,137  
  Fair value of shares issued for CRx Acquistion     1,308,049       1,204,459  
Stock issued for services and license fee     13,500       42,500  
Discount on convertible debt     1,306       -  
Changes is assets and liabilities                
Decrease in prepaids     6,000       66,002  
(Decrease) in accounts payable and accrued expenses     (14,276 )     (24,751 )
Cash used in operating activities     (40,652 )     (97,829 )
                 
Cash flows from investing activities                
Cash used in investing activities     -       -  
                 
Cash flows from financing activities                
Cash proceeds from convertible notes-related     78,000       -  
Cash provided by financing activities     78,000       -  
                 
Net increase in cash and cash equivalents     37,348       (97,829 )
Cash and cash equivalents, beginning of period     10,786       146,356  
                 
Cash and cash equivalents, end of period   $ 48,134     $ 48,527  
                 
Supplemental disclosure of non-cash investing and                
financing activities                
Shares issued for settlement of accounts payable   $ 13,500     $ 1,500  
Shares issued for conversion of related party note and interest   $ 25,161     $ -  

 

See accompanying notes to consolidated financial statements.

 

6
 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 1 – Nature of Business and Basis of Presentation

 

The Company was incorporated on November 10, 1952 in Michigan as Gantos, Inc. On July 21, 2008, the Company completed its change in domicile to Delaware and subsequently changed its name to Kinder Holding Corp. (the “Company”). As of October 13, 2017, the Company completed a reverse acquisition of Intiva BioPharma Inc., a Colorado corporation (“BioPharma”) through an exchange of shares (the “Share Exchange Transaction”). In connection with the Share Exchange Transaction, the Company changed its name to Intiva BioPharma Inc. on November 8, 2017 and, in September 2018, the Company changed its name to Nexien BioPharma, Inc.

 

As further described in Note 4, 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. The accompanying financial statements as of December 31, 2020 and for the three and six months then ended, and June 30, 2020, and year then ended, present the historical financial information of BioPharma.

 

BioPharma was incorporated under the laws of the State of Colorado on March 27, 2017 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.

 

All share and per share amounts have been adjusted in the footnotes and accompanying financial statements to give effect to the Share Exchange Transaction. (See Note 4).

 

Note 2 - Going Concern Uncertainty

 

The accompanying financial statements have been prepared in conformity with US GAAP, which contemplates 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 $10,336,610. The development of pharmaceuticals with the objective of obtaining approval by the FDA and other international regulatory authorities is not a short-term endeavor for any specific drug candidate. It also requires extremely significant amounts of capital funding for clinical trials and other matters. At December 31, 2020, the Company had working capital $51,420. The Company will require significant additional capital to fund the implementation and execution of its business plan. This capital, which likely will be millions of dollars for a single drug candidate, will be required for research, regulatory applications, and clinical trials. At the present time, the Company does not have any commitments or known sources for this level of funding. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

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 no cash equivalents at December 31, 2020 and June 30, 2020.

 

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

 

Financial Accounting Standards Board (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 December 31, 2020 and June 30, 2020, 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 asset’s or liability’s 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 that the transfers occur. For the periods ended December 31, 2020 and June 30, 2020, there were no significant transfers of financial assets or financial liabilities between the hierarchy levels.

 

As at December 31, 2020 and June 30, 2020, no assets or liabilities were required to be measured at fair value on a recurring basis.

 

Earnings per Common Share

 

The Company computes net income (loss) per share in accordance with ASC 260, Earnings 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.

 

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.

 

9
 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 3 – Summary of Significant Accounting Policies (continued)

 

Concentrations of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. Cash and cash equivalents are deposited with major banks in the United States of America. Management believes that such financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments. The Company does not have any significant off-balance-sheet concentration of credit risk.

 

Stock-based compensation

 

Pursuant to ASC 718, Compensation – Stock Compensation, all share-based payments to employees, including grants of employee stock options, are recognized in the statement of operations based on their fair values.

 

Issuance of shares for non-cash consideration

 

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 December 31, 2020 and does not expect such pronouncements to have a material impact on the Company’s financial position, operations, or cash flows.

 

Note 4 – Share Exchange Agreement

 

On August 8, 2017, the Company entered into a Share Exchange Agreement, as amended and restated on October 13, 2017 (the “Agreement”), with BioPharma. Pursuant to the terms of the Agreement, the Company agreed to issue to the shareholders of BioPharma 42,642,712 post-reverse stock-split shares of the Company’s common stock, par value $0.0001 (“Common Stock”), in exchange for all of the issued and outstanding shares of BioPharma capital stock, thereby making BioPharma a wholly-owned subsidiary of the Company. As part of the Closing of the Agreement, the 20,000,000 pre-reverse split shares of the Company’s Common Stock previously purchased by Kanativa USA, effective on June 26, 2017 in a change in control transaction from the Company’s control shareholders, were canceled. 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).

 

10
 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 5 – License Agreements

 

Kotzker License Agreement

 

In March 2017, the Company licensed certain intellectual property from Kotzker Consulting LLC (“Kotzker Consulting”), an unrelated entity. The licensed intellectual property included patent applications relating to the use of cannabinoid receptor modulators and terpenes in the acute treatment during exposure to organophosphorus nerve agents and/or organophosphorus insecticides. Under terms of the agreement, the Company was required to use its commercially reasonable efforts to develop and commercialize the licensed products, and, in particular, was to be responsible for the design, manufacturing, preclinical, clinical, and regulatory development activities of the licensed products and shall bear the costs of such activities. As consideration for entering into the agreement, the Company agreed to: (i) pay Kotzker Consulting $180,000, (ii) pay patent prosecution costs incurred as of the date of the agreement of $15,000 and (iii) issue to Kotzker Consulting 31,550 shares of Kanativa Inc.’s common stock valued at $78,875 ($2.50 per share based on a private placement to third parties of Kanativa Inc.’s common stock at that time). The Company also capitalized legal fees of $29,040 incurred in conjunction with acquiring the license agreement. The license agreement was to terminate, on a country by country basis, upon the expiration of the licensed patent for the licensed intellectual property, or when a competitor generic product utilizing the licensed technology was marketed in the particular country.

 

The Company was to be responsible for development milestone payments for (i) licensed products for use as a preventative and therapeutic neuroprotective against nerve agents and pesticides and (ii) licensed products for treatment of diseases. Milestone payments for each of the foregoing was to be due in two payments, the first payment no later than thirty (30) days from acceptance of submission of the regulatory filing of the first licensed product and the second payment no later than thirty (30) days from approval of the first licensed product. Royalties were to be due beginning with first commercial sale of developed products. The Company had completed and submitted a Pre-Investigational New Drug meeting request and amendment thereto with the FDA.

 

In September 2017, the Company entered into a contract with a contract manufacturing organization to develop an injectable formulation of a drug product to be submitted to the FDA. It was anticipated that the product would be developed utilizing the new drug application 505(b) (2) regulatory pathway for use in the treatment during and immediately following exposure to organophosphorous nerve agents. The drug product was to consist of a synthetic cannabinoid and a blend of terpenes in an injectable vehicle.

 

The Company previously estimated that it may not be able to recover the $302,915 carrying value of costs capitalized under the Kotzker License Agreement and recognized an impairment of the $302,915 at June 30, 2019. In December 2020, the Company elected to terminate this agreement, assigned the licensed intellectual property back to Kotzker and issued 150,000 restricted shares of common stock, valued at $13,500 ($0.09 per share) as a final payment for consulting fees owed.

 

Accu-Break License Agreement

 

On February 28, 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). Upon execution of the agreement, as amended September 18, 2018, $35,000 was paid to the licensor; an additional $30,000 was paid in cash during the year ended June 30, 2019; and a final payment of $35,000 was paid in common stock of the Company during the year ended June 30, 2020. The Company is required to pay milestone payments upon obtaining regulatory approval of pharmaceutical licensed products and royalties based upon sales of licensed products. The Company may grant sublicenses under the terms of the agreement.

 

The Company has previously estimated that it may not be able to recover the $65,000 of costs capitalized under the Accu-Break License Agreement, and recognized an impairment of $65,000 for the license at June 30, 2019. The $35,000 value of common stock issued in the year ended June 30, 2020 was charged to operations. Although the Company has recognized an impairment under Generally Accepted Accounting Principles, it retains its rights under the Accu-Break license agreement.

 

11
 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 6– Stockholders’ Equity

 

Common stock

 

During the year ended June 30, 2020, the Company issued 473,286 shares of its common stock as follows:

 

  16,667 shares, valued at $1,500 ($0.09 per share), as consideration for consulting services rendered.
  75,000 shares, valued at $7,500 ($0.10 per share), as partial consideration for entering into an investor relations contract.
  381,619 shares, valued at $35,000 ($0.092 per share), for final payment on the license agreement with respect to a proprietary delivery system for cannabinoid-based medications (See Note 5).

 

During the six months ended December 31, 2020, the Company issued shares of its common stock as follows:

 

  1,797,192 shares, at $0.014 per share, to its CEO for conversion of a note payable in the principal amount of $25,000 and accrued interest of $161.
  150,000 shares valued at $13,500, $0.09 per share, as consideration for consulting services under the Kotzker License Agreement (Note5).

 

CRX Limited Liability Company Interest Purchase Agreement

 

On October 26, 2018, Company entered into a Limited Liability Company Interest Purchase Agreement (the “Purchase Agreement”) with the members of CRX Bio Holdings LLC, a Delaware limited liability company (“CRX”), to acquire all of the membership interest in CRX in exchange for 11,000,000 restricted shares of the Company’s common stock (the “Acquisition”), valued at $0.76 per share. The transaction has been accounted for as an asset acquisition, and not a business combination, and has been valued at the fair value of the common stock issued by the Company, as CRX’s cost basis was $0 in the assets. CRX is engaged in the research and development of advanced cannabinoid formulations and drug delivery systems with a focus on bioavailability and related pharmacokinetics and pharmacodynamics (PK/PD) enhancement. The Acquisition transaction was consummated on October 26, 2018. By acquiring CRX as a wholly-owned subsidiary, the Company acquired all of its assets, which consist primarily of three U.S. provisional patent applications relating to cannabinoid formulations to treat convulsive disorders, chronic traumatic encephalopathy, and neuropathic pain. At the closing, the Company issued to the six members of CRX (the “Sellers”) 1,100,000 shares not subject to any forfeiture restrictions and 9,900,000 shares which shall be released from forfeiture restrictions according to the following vesting schedule:

 

  30% shall be fully vested 12 months following the Closing (October 26, 2019);
  30% shall be fully vested 24 months following the Closing (October 26, 2020);
  30% shall be fully vested 36 months following the Closing (October 26, 2021).

 

Any Seller who is not then providing services to the Company or any of its subsidiaries on any vesting date, whether through voluntary termination or termination “for cause,” will forfeit his unvested shares, which will be cancelled.

 

The transaction has been valued at $8,360,000, based on the fair value of the 11,000,000 shares issued of $0.76 per share, as per the closing market price of the Company’s common stock on the date of the agreement. The $836,000 fair value of the 1,100,000 shares issued not subject to any forfeiture restrictions was charged to operations during the six months ended December 31, 2018. The $7,524,000 fair value of the 9,900,000 shares subject to forfeiture has been charged to stockholders’ equity as a contra equity account, and is being amortized over the vesting periods. The net amount charged to stockholder’s equity was $0 on the date of the acquisition. As at December 31, 2020 and June 30, 2020, an aggregate $5,095,286 and $3,787,237, respectively, has been charged to operations for the value of vested shares issued and the amortization of the unvested CRX shares. For the three months ended December 31, 2020 and 2019, $521,051 and $625,513, respectively, has been charged to operations for the amortization of unvested CRX shares during each of the periods.

 

12
 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 6 – Stockholders’ Equity (continued)

 

2017 Stock Incentive Plan

 

On August 10, 2017, the Company adopted the “2017 Stock Incentive Plan” and granted an aggregate of 6,400,000 shares of Common Stock to five officers and directors of the Company, valued at $800,000 ($0.125 per share). In March 2018, 1,166,667 unvested shares (valued at $145,833) previously issued to the Company’s former Chief Executive Officer were canceled. On July 25, 2018, the Company accelerated the vesting of 1,083,342 unvested shares of Common Stock previously granted to its former Chief Executive Officer and Chief Financial Officer. As of June 30, 2020, all 5,233,333 shares issued (valued at $654,167) have been vested, of which 150,000 shares, valued at $18,750, were vested during the year ended June 30, 2020.

 

2018 Equity Incentive Plan

 

(i) On March 30, 2018, the Company’s board of directors approved and recommended for adoption by the stockholders of the Company a 2018 Equity Incentive Plan and has reserved 8,000,000 shares of Common Stock for issuance under the terms of that Plan.

 

In July 2018, the Board of Directors granted options to purchase a total of 1,810,000 shares of Common Stock, exercisable for a period of seven years, to officers/directors/consultants of the Company at an exercise price of $0.54 per share.

 

In August 2018, the Board of Directors granted options to purchase a total of 150,000 shares of Common Stock, exercisable for a period of seven years, to two individuals, (i) a director and (ii) a consultant of the Company, at an exercise price of $0.38 per share.

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

 

Average risk-free interest rates     2.3% - 2.8 %
Average expected life (in years)     4.0 to 7.0  
Volatility     160% to 296 %

 

The fair value of the options granted at June 30, 2020 is $867,715, including $33,307 for the fair value of options vested in 2020. All options granted have been fully vested as of June 30, 2020.

 

(ii) On October 17, 2018, the Board of Directors granted options to purchase an aggregate 800,000 shares of Common Stock, exercisable for a period of seven years, to officers/directors of the Company at an exercise price of $0.655 per share and confirmed a grant of options made as of October 1, 2018, to purchase 500,000 shares of Common Stock, exercisable for a period of seven years, to an officer and director of the Company at an exercise price $0.48. All of the options were fully vested as of the date of grant.

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

 

Average risk-free interest rates     2.88% - 2.93 %
Average expected life (in years)     4.0  
Volatility     171% to 172 %

 

The fair value of the fully vested options granted of $803,997 was charged to operations during the year ended June 30, 2019.

 

13
 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 6 – Stockholders’ Equity (continued)

 

(iii) On August 19, 2020, the Board of Directors authorized the issuance of an aggregate 5,000,000 options to three officers of the Company, exercisable at $0.08 per share for a seven-year period from the date of grant. As of the date of grant, 3,333,334 options were fully vested and the balance of 1,666,666 options will vest quarterly over the next four calendar quarters beginning September 30, 2020.

 

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

 

Average risk-free interest rates     .23 %
Average expected life (in years)     4.0  
Volatility     152 %

 

The fair value of the vested options granted of $282,116 was charged to operations during the six months ended December 31, 2020.

 

A summary of option activity during the six months ended December 31, 2020 is presented below:

 

    Shares    

Weighted Average

Exercise

Price

   

Weighted Average Remaining Contractual

Life (Years)

 
                   
Outstanding and exercisable – June 30, 2020     2,995,000     $ 0.55          
Granted     5,000,000     $ 0.08          
Exercised     -                  
Expired/Canceled     -                  
Outstanding– December 31, 2020     7,995,000     $ 0.26       5.0  
Exercisable – December 31, 2020     7,161,667     $ 0.29       5.0  

 

Warrants

 

On November 24, 2020, the Company issued warrants for the acquisition of common shares as partial consideration for the issuance of convertible notes (Note 7(b)).

 

The following table summarizes information about warrants outstanding at December 31, 2020:

 

    Number     Exercise Price     Expires
 Class A     1,727,299     $ 0.040265     November 24, 2025
 Class B     1,727,299     $ 0.043276     November 24, 2025
 Class C     1,727,299     $ 0.045157     November 24, 2025

 

The fair value of the warrants granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:

 

Average risk-free interest rates     .39 %
Average expected life (in years)     2.5  
Volatility     153 %

 

The relative fair value of the warrants granted of $252,104 was charged to operations at the date of grant.

 

14
 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 7 – Convertible Notes Payable

 

(a) On June 11, 2020, the Company entered into a financing arrangement with its CEO under which he agreed to lend the Company up to $25,000. The note bears interest at 5% per annum and is due upon demand. At the option of the lender, the unpaid principal and interest may be converted, in whole or in part, into shares of the Company’s common stock at the lesser of (i) $0.014, being the closing price of the Company’s common stock as of the date of the note, or (ii) the volume-weighted average price (VWAP) of the Company’s common stock over the ten trading days immediately preceding the Company’s receipt of Notice of Conversion from the lender. As the market price of the Company’s common stock and the VWAP were the same as of the date of the note, no discount for beneficial conversion feature has been recorded. As of June 30, 2020, the lender had advanced $12,000 under the arrangement; and accrued interest of $33 is included in accounts payable and accrued expenses at June 30, 2020. On July 10, 2020, the Company’s CEO loaned the Company an additional $13,000 pursuant to the financing arrangement. On August 12, 2020, the CEO sent notice to the Company that he was electing to convert the outstanding principal of $25,000 and accrued interest of $161 to 1,797,192 shares of common stock at the contractual conversion price of $0.014 per share. No gain or loss was recognized on conversion as the conversion was made under the terms of the note agreement.

 

(b) 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 three years (November 24, 2023) with accrued interest at the rate of 8% 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 $0.037631, being the volume-weighted average price of the common stock over the 10 trading days immediately preceding the date the notes were funded. The CEO was issued a note in the principal amount of $40,000, which included a $15,000 advance made in October 2020 and an additional loan of $25,000. A stockholder of the Company loaned $25,000 on these terms. Both lenders were also issued three types of warrants, exercisable for a five-year period, at prices of $0.040265, $0.043276, and $0.045157, to purchase a total of 5,181,897 shares (Note 6).

 

The Company has recorded the conversion feature as a Beneficial Conversion Feature. The fair value of $38,638 for the expense portion of the notes is being amortized over the term 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. During the three months ended December 31, 2020, $1,306 was charged to operations for amortization during the period of the Beneficial Conversion Feature.

 

Note 8 – Related Party Transactions

 

BioPharma was formed as a subsidiary of Kanativa USA, which is a subsidiary of Kanativa Inc. Kanativa USA was issued 24,000,000 shares of BioPharma’s common stock as consideration for its contribution of 100% of the ownership of NexN, and costs and expenses incurred on behalf of BioPharma and NexN in the amount of $201,228. Included in the consideration for the issuance of the common stock is $172,915 of capitalized license agreement costs comprised of (i) the value of Kanativa Inc. common stock issued to Kotzker Consulting of $78,875 and (ii) payments to Kotzker Consulting and legal costs in the aggregate of $94,040 (See Note 5).

 

At June 30, 2017, BioPharma was owed $141,329 from Kanativa USA for advances made by BioPharma on behalf of Kanativa USA in conjunction with the Share Exchange Agreement (See Note 4). As of June 30, 2020, an aggregate $50,662 was repaid by Kanativa USA, including $15,000 and $9,000 during the years ended June 30, 2019 and June 30, 2020, respectively. The remaining balance of $90,667 was due on March 1, 2020. On May 1, 2020, BioPharma and Kanativa USA entered into an agreement extending the due date for payment of the remaining balance to June 30, 2020. Effective June 30, 2020, Kanativa USA determined that it would be unable to pay the remaining balance of the advance. Accordingly, the Company wrote-off the remaining balance of $90,667 as a charge to operations during the period ended June 30, 2020.

 

 

15
 

 

NEXIEN BIOPHARMA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited

 

Note 8 – Related Party Transactions (continued)

 

On August 10, 2017, the Company granted an aggregate of 6,400,000 shares of Common Stock to five officers and directors of the Company, valued at $800,000 ($0.125 per share), under the Company’s 2017 Stock Incentive Plan. One-third of each grant vested as of the initial date of grant (August 10, 2017), and 8-1/3% upon the end of each calendar quarter beginning December 31, 2017. In March 2018, the Company cancelled 1,166,667 unvested shares previously issued to its former CEO. As of June 30, 2020, all granted shares, valued at $654,167, were fully vested.

 

In February 2018, the Company entered into an exclusive license agreement with Accu-Break whose President was an affiliate of the Company at the time of the agreement (See Note 5).

 

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.

 

In June and November 2020, the Company issued convertible notes payable with its Chief Executive Officer and a shareholder of the Company (See Note 7).

 

Note 9- Commitments and Contingencies

 

At December 31, 2020, there were no legal proceedings against the Company.

 

Note 10 – Subsequent Event

 

On February 3, 2021, the Company entered into an agreement with an investor relations firm to provide services for shareholder information and relations.  The agreement is for an initial one-year period.   Under the terms of the agreement, the Company shall pay a retainer of $2,500 per month for the first three months and $10,000 per month thereafter. The agreement may be terminated by the Company after the initial three months, at which time the Company would be obligated to pay an additional one month’s retainer.

 

The Company has analyzed its operations subsequent to December 31, 2020 through the date these financial statements were issued, and has determined that it does not have any other additional material subsequent events to disclose.

 

16
 

 

ITEM 2. 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 six months ended December 31, 2020 and 2019. This MD&A should be read in conjunction with our audited financial statements as of June 30, 2020 and 2019.

 

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. In October 2018, we acquired all of the membership interest in CRx Bio Holdings LLC, which also engaged in the research and development of advanced cannabinoid formulations and drug delivery systems, by issuing 11,000,000 shares of our common stock. As part of the CRx acquisition, we also acquired three additional patent applications. CRx had an agreement with a major university to perform pre-clinical research related to the parenteral administration of cannabinoid formulations. As this research was common to both the CRx programs and the Nexien programs, we consolidated this research for the purposes of the Nexien capital expenditure budget.

 

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 $60,000 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, 2020, 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 has had to cease research and development activities due to the lack of sufficient working capital. While management continues its efforts to raise capital for the Company, it is also seeking merger or other business combination or restructuring opportunities.

 

17
 

 

Results of Operations for the three months ended December 31, 2020 as compared to December 31, 2019

 

Net loss for the three months ended December 31, 2020 was $828,031, an increase of $131,757 from the net loss of $696,274 for the three months ended December 31, 2019.

 

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. In comparison, general and administrative costs of $687,209 incurred during the three months ended December 31, 2019 includes a non-cash charge of $625,513 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 $15,539. General and administrative expenses, exclusive of non-cash stock-based compensation costs, were consistent during the 2020 and 2019 periods, consisting predominately of costs and expenses associated the Company’s maintaining its public company status.

 

During the three months ended December 31, 2020, the Company incurred $1,833 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, 2020 and 2019.

 

Professional fees of $7,400 for the three months ended December 31, 2020 decreased by $1,665 from $9,065 for the period ended December 31, 2019. Fees for the 2020 and 2019 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, 2020 as compared to December 31, 2019

 

Net loss for the six months ended December 31, 2020 was $1,889,451, an increase of $451,275 from the net loss of $1,438,176 for the six months ended December 31, 2019.

 

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. In comparison, general and administrative costs of $1,370,175 incurred during the six months ended December 31, 2019 includes a non-cash charge of $1,204,459 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 $52,137. General and administrative expenses, exclusive of non-cash stock-based compensation costs, were consistent during the 2020 and 2019 periods, consisting predominately of costs and expenses associated the Company’s maintaining its public company status.

 

During the six months ended December 31, 2020, the Company incurred $1,961 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.

 

Professional fees of $22,990 for the six months ended December 31, 2020 decreased by $10,101 from $33,001 for the six months ended December 31, 2019. Fees for both the 2020 and 2019 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, 2020 and 2019.

 

During the six months ended December 31, 2019, the Company paid $35,000 in shares of our Common Stock with respect to a proprietary delivery system for cannabinoid-based medications.

 

18
 

 

Liquidity and Capital Resources

 

At December 31, 2020, we had a working capital of $51,420 and cash of $48,134, as compared to a working capital deficit of $6,365 and cash of $10,786 at June 30, 2020. The increase in both working capital and cash was due primarily to funds received from the Company’s issuance of convertible notes. We used $40,652 of cash for operating activities, and had an increase in liquidity from financing of $78,000 from issuances of convertible debt during the six months ended December 31, 2020.

 

The unsecured convertible promissory notes are due in three years (November 24, 2023) and accrue interest at the rate of 8% 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 $0.037631, being the volume-weighted average price of the common stock over the 10 trading days immediately preceding the date the Note was funded. The CEO was issued a note in the principal amount of $40,000, which included a $15,000 advance made in October 2020 and an additional loan of $25,000. A stockholder of the Company loaned $25,000 on these terms. Both lenders were also issued three types of warrants, exercisable for a five-year period, at prices of $0.040265, $0.043276, and $0.045157, to purchase a total of 5,181,897 shares.

 

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, 2020, there can be no assurance that we will continue to be successful in raising equity capital 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 need to raise at a minimum $60,000 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 we may be expected to require a minimum of $60,000 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.

 

19
 

 

Going Concern Consideration

 

Our registered independent auditors have issued an opinion on our financial statements as of June 30, 2020 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 December 31, 2020 and June 30, 2020, 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 September 19, 2017, we entered into an agreement with a contract manufacturer with significant expertise in pre-clinical and clinical trial development and regulatory approvals to develop an injectable formulation for our drug candidate in the Kotzker Development Project with the objective of applying for FDA approval. It was anticipated that the drug candidate would be developed utilizing the new drug application 505(b)(2) regulatory pathway for use in the treatment during and immediately following exposure to organophosphorus nerve agents. The formulation of the drug candidate was to be based on one or more synthetic cannabinoids. We paid $75,000 to the contract manufacturer upon signing the contract, which further provided that we pay an additional $20,000 upon completion of the drug formulation and $20,000 upon completion of Phase 1 development. No payment schedule had been agreed to upon completion of Phase 2 and Phase 3 development stage and the contract may be terminated by either party. In December 2020, we elected to terminate this agreement and issued 150,000 restricted shares of our common stock as a final payment for consulting fees owed.

 

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, 2020 and are included elsewhere in this report.

 

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not applicable.

 

20
 

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of disclosure controls and procedures.

 

As of December 31, 2020, 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.

 

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.

 

21
 

 

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 September 28, 2020, 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

 

During the quarter ended December 31, 2020 we issued and sold the unregistered securities set forth in the table below.

 

Date   Persons or Class of Persons   Securities   Consideration
December 2020   Kotzker Consulting LLC   150,000 shares of Common Stock   Consulting fees of $13,500

 

We relied upon the exemption from registration contained in Section 4(a)(2) under the Securities Act, as the securities were sold only to investors, sophisticated as to the business of the Company, without the use of general solicitation or advertising. No underwriters or placement agents were used and no commissions were paid in the above stock transactions. A restrictive legend was placed on the certificates evidencing the securities issued in the above transactions.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

 

22
 

 

ITEM 6. EXHIBITS

 

Regulation

S-K Number

  Document
2.1   Limited Liability Company Interest Purchase Agreement by and among the Members of CRX Bio Holdings LLC and Nexien BioPharma, Inc. dated October 26, 2018 (1)
3.1   Certificate of Incorporation (2)
3.2   Certificate of Merger (2)
3.3   Certificate of Amendment to Certificate of Incorporation (2)
3.4   Certificate of Amendment to Certificate of Incorporation (3)
3.5   Certificate of Amendment to Certificate of Incorporation (4)
3.6   Bylaws (2)
10.1   2017 Stock Incentive Plan (3)
10.2   Licensing Agreement between the Company and Kotzker Consulting LLC (3)
10.3   Exclusive License Agreement between the Company and Accu-Break Pharmaceuticals, Inc. (3)
10.4   2018 Equity Incentive Plan (4)
10.5   First Amendment to Exclusive License Agreement between the Company and Accu-Break Pharmaceuticals, Inc. dated September 18, 2018 (4)
10.6   Demand Convertible Promissory Note dated June 11, 2020 to Richard Greenberg (5)
10.7   Convertible Promissory Note and Warrants dated November 24, 2020 to Richard Greenberg
31.1   Rule 13a-14(a) Certification of Richard Greenberg
31.2   Rule 13a-14(a) Certification of Evan L. Wasoff
32.1   Certification of Richard Greenberg Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2   Certification of Evan L. Wasoff Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101   Financial statements from the Quarterly Report on Form 10-Q of Nexien BioPharma, Inc. for the quarterly period ended December 31, 2020, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Operations; (iii) the Statements of Cash Flows; and (iv) the Notes to Financial Statements (6)

 

  (1) Filed as an exhibit to the Current Report on Form 8-K filed October 30, 2018.
  (2) Filed as an exhibit to the registration statement on Form 10 filed November 14, 2014.
  (3) Filed as an exhibit to the Quarterly Report on Form 10-Q filed May 15, 2018.
  (4) Filed as an exhibit to the Annual Report on Form 10-K filed September 28, 2018.
  (5) Filed as an exhibit to the Annual Report on Form 10-K filed September 28, 2020
  (6) 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.

 

23
 

 

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: February 11, 2021 By: /s/ Richard Greenberg
    Richard Greenberg, Chief Executive Officer
     
  By: /s/ Evan L. Wasoff
    Evan L. Wasoff, Chief Financial Officer

 

24

 

 

Exhibit 10.7

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO NEXIEN BIOPHARMA, INC.

 

CONVERTIBLE PROMISSORY NOTE

 

$40,000.00

Denver, Colorado

November 24 , 2020

 

FOR VALUE RECEIVED, the undersigned, Nexien BioPharma, Inc., a Delaware corporation (the “Maker”), promises to pay to the order of Richard Greenberg, an individual residing in Colorado (“Payee”), on or before three (3) years from the date hereof (the “Maturity Date”), the amount of Forty Thousand Dollars ($40,000.00), together with interest accruing in arrears on the unpaid principal balance from the date Payee has disbursed such funds to Maker, at the rate of eight percent (8%) per annum. Interest shall be computed hereunder on the basis of a 365-day year for the actual number of days elapsed and compounded annually. All amounts payable hereunder are payable in lawful money of the United States of America in immediately available funds. All payments shall be applied first to interest and then to the principal indebtedness owed to Payee.

 

Conversion. At any time, Payee shall have the option to convert all or any part of the unpaid principal balance and accrued interest of this promissory note (the “Note”) into unregistered shares of Maker’s common stock (the “Shares”) on the terms and conditions set forth below (the “Conversion Option”).

 

(a) Upon conversion, the number of Shares that shall be issued by Maker shall equal the number derived by dividing: (i) the sum of the Note principal and accrued interest to be converted by $0.037631 (the “Conversion Price”), being the volume-weighted average price of Maker’s common stock over the ten (10) trading days immediately preceding the date of this Note.

 

(b) To exercise the Conversion Option, Payee shall surrender this Note to the Maker, accompanied by written notice of Payee’s intention to exercise the Conversion Option (the “Notice of Conversion”). Within ten (10) business days of Maker’s receipt of the Notice of Conversion and Payee’s surrender of this Note, the Maker shall deliver an electronic or physical certificate representing the Shares to Payee, registered in the name of Payee or Payee’s designee. Interest shall cease to accrue under this Note upon Maker’s receipt of such Notice of Conversion. When delivered, the Shares shall be duly authorized, validly issued, fully paid, and nonassessable. Maker shall take all action necessary to maintain the required authority to issue the Shares to Payee in the event Payee exercises the Conversion Option.

 

1

 

 

Adjustment to Conversion Price. If Maker, at any time while the Note is outstanding, shall, other than in an Exempt Issuance transaction, issue shares of its Common Stock or rights, options or warrants with respect to its Common Stock at a price per share that is lower than the Conversion Price, then the Conversion Price shall be reduced to an amount equal to such consideration per share. Such adjustment shall be made whenever such shares, rights or warrants are issued, and shall become effective immediately after the issuance of the shares or the record date for the determination of stockholders entitled to receive such rights, options or warrants, as the case may be.

 

Exempt Issuance. An “Exempt Issuance” shall mean issuance of (a) shares of Common Stock or options to employees, officers or directors of Maker pursuant to any stock or option plan duly adopted for such purpose by a majority of the members of the Board of Directors of Maker or a majority of the members of a committee of directors established for such purpose by the Board of Directors of Maker; (b) securities upon the exercise or exchange of or conversion of any securities issued under Maker’s offering of convertible promissory notes and warrants of which this Note is a part and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Note, provided that such securities have not been amended since the date of this Note to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities; and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of Maker, provided that any such issuance shall not include a transaction in which Maker is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

 

Default. If Maker shall fail to perform any of the terms, agreements, covenants, or conditions contained in this Note for a period of ten (10) days after the giving of written notice from Payee to Maker, the entire unpaid balance of this Note, including principal and accrued interest, shall, at the election of Payee, and without further notice of such election, become immediately due and payable; and the entire principal balance and accrued interest, in the event of acceleration, shall bear interest thereafter at the rate of eighteen percent (18%) per annum until paid in full. In addition, Payee shall have the right to specifically enforce its right to exercise the Option to convert this Note to Shares as set forth above. Notwithstanding anything hereinabove to the contrary, if the interest payable as provided hereinabove at any time shall exceed the maximum lawful rate of interest under the laws of the State of Colorado, the excess shall be applied to and considered as payment of principal.

 

Attorneys’ Fees. Maker agrees to reimburse Payee for all reasonable costs and expenses, including attorneys’ fees and court costs, incurred to enforce this Note.

 

Waiver. Maker, and all others now or hereafter obligated hereon, whether primarily or secondarily, hereby waive presentment, demand for payment, protest for nonpayment, notice of dishonor, diligence in collection, and all other indulgences.

 

2

 

 

Prepayment Right. Maker shall have the right to pre-pay this Note at any time, without penalty.

 

Colorado Law. This Note shall be governed by and interpreted in accordance with the laws of the State of Colorado.

 

General Provisions. This Note may not be amended, modified, or changed, nor shall any waiver of any provision hereof be effective, except only by an instrument in writing and signed by the party against whom enforcement of any waiver, amendment, change, modification, or discharge is sought.

 

Severability. If any provision of this Note shall be deemed invalid or unenforceable by a court of competent jurisdiction, it shall be modified by said court to the extent necessary to make it valid and enforceable, and shall be valid and enforceable to the extent so modified.

 

Assignment. This Note, and the rights and obligations hereunder, may be assignable by Payee, subject to compliance with applicable securities laws, but are not assignable by Maker without the prior written consent of Payee.

 

Successors. Whenever used herein, the words “Maker” and “Payee” shall be deemed to include their respective successors and permitted assigns.

 

    Nexien BioPharma, Inc.
    a Delaware corporation:
       
    By: /s/ Evan Wasoff
      Evan Wasoff, Chief Financial Officer

 

3

 

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

CLASS A PURCHASE WARRANT

 

NEXIEN BIOPHARMA, INC.

 

Issue Date: November 24, 2020

Warrant No. A-001

 

THIS CLASS A PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Richard Greenberg (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issue Date (the “Initial Exercise Date”) and on or prior to 5:00 p.m. Mountain Time on November 24, 2025 (the “Termination Date”) but not thereafter, to subscribe for and purchase from NEXIEN BIOPHARMA, INC., a Delaware corporation (the “Company”), up to 1,062,953 shares of Common Stock (the “Warrant Shares”) at a price equal to the lesser of (i) $0.040265 per share and (ii) 107% of the Conversion Price of that certain Convertible Promissory Note made and delivered as of the Issue Date of this Warrant to the Holder in effect as of the date of exercise (the “Exercise Price”).

 

Section 1. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a facsimile or scanned copy of the duly executed Notice of Exercise Form annexed hereto; and, within 3 Business Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. The Holder shall not be required to physically surrender this Warrant to the Company upon exercise. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within 2 Business Days of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

 

 

 

(b) Mechanics of Exercise.

 

i. Delivery of Certificates Upon Exercise. Certificates for Warrant Shares purchased hereunder shall be delivered to the address specified by the Holder in the Notice of Exercise within the first 10 Business Days of the month following the month in which the Notice of Exercise Form and payment of the aggregate Exercise Price is delivered to the Company (the “Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 1(b)(v) prior to the issuance of such securities, have been paid.

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Company fails to deliver to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 1(b)(i) by the Delivery Date, then, the Holder will have the right to rescind such exercise.

 

iv. No Fractional Shares or Scrip. No fractional Shares or scrip representing fractional Warrant Shares shall be issued upon the exercise of this Warrant. As to any fraction of a Share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole Share.

 

v. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, the Holder shall deliver to the Company the Assignment Form attached hereto duly executed by the Holder, and follow the requirements set forth in Section 3(d). The Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 2

 

 

vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

(c) Cashless Exercise. This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

  (A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;
     
  (B) = the Exercise Price of this Warrant, as adjusted hereunder; and
     
  (X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 1(c).

 

Section 2. Certain Adjustments.

 

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 2(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 3

 

 

b) Calculations. All calculations under this Section 2 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 2, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

c) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 2, the Company shall promptly mail/e-mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed/emailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 5 Business Days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.

 

The Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.

 

Section 3. Transfer of Warrant.

 

a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 3(c) hereof, this Warrant and all rights hereunder are transferable, in whole only, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant in the name of the assignee, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 4

 

 

b) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

c) Transfer Restrictions. Any requested transfer of this Warrant, in whole only, shall be made by delivering to the Company the Assignment Form and a Certificate of Accredited Investor Status completed by the proposed transferee(s). If the requested transfer is approved by the Company in its sole discretion, a new Warrant shall be issued to the transferee(s).

 

Section 4. Miscellaneous.

 

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1(b)(i).

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d) Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 5

 

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the corporate laws of the State of Delaware.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.

 

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered to the Holder at his/her/its last known address appearing in the Warrant Register of the Company.

 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 6

 

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and Holders holding at least a majority of the outstanding Class A Warrants.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follow)

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 7

 

 

IN WITNESS WHEREOF, the Company has caused this Class A Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  NEXIEN BIOPHARMA, INC.
   
  By: /s/ Evan Wasoff
    Evan Wasoff, Chief Financial Officer

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 8

 

 

NOTICE OF EXERCISE

 

TO: NEXIDEN BIOPHARMA INC.

 

(1) The undersigned hereby elects to purchase ________ shares of Common Stock of the Company (the “Warrant Shares”) pursuant to the terms of the attached Class A Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
   
(2) Please issue a certificate or certificates representing said Warrant Shares [  ] in the name of the undersigned or [  ] in such other name as is specified below:

 

 
 

 

(3) The undersigned acknowledges that the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the “1933 Act”). Accordingly, the undersigned acknowledges, represents, warrants and agrees as follows:
     
  a) The Warrant Shares are being acquired for the undersigned’s own account for investment purposes only and with no view to their resale or other distribution of any kind, and no other person (except the spouse of the undersigned, if married) will own any interest therein.
     
  b) The undersigned will not sell or dispose of the Warrant Shares in violation of the 1933 Act, or any other applicable federal or state securities laws.
     
  c) The undersigned agrees that the Company may, without liability for its good faith actions, place legend restrictions upon the Warrant Shares and issue “stop transfer” instructions requiring compliance with applicable securities laws and the terms of the Class A Warrant.
     
  d) The undersigned represents, warrants and agrees, as of the date of this Notice of Exercise, that the undersigned continues to be an “accredited investor” as defined in the rules and regulations promulgated under the 1933 Act.

 

     
Name of Holder (Printed)   Signature
     
     
Name of Holder’s Spouse (if name appears on this Warrant)   Title (if applicable)
     
     
Date  

Address

 

 

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 9

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [____] all of or [_______] Warrants of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

________________________________________________________________________________ whose address is

 

_______________________________________________________________________________________________

 

_______________________________________________________________________________________________ 

 

     
Name of Holder (Printed)   Signature
 

 

   

 

Name of Holder’s Spouse (if name appears on this Warrant)

 

 

 

Title (if applicable)

 

 

Date  

Address

 

 

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 10

 

 

CERTIFICATE OF ACCREDITED INVESTOR STATUS

 

Except as may be indicated by the undersigned below, the undersigned is an individual “accredited investor,” as that term is defined in Regulation D under the Securities Act of 1933, as amended (the “Act”). The undersigned has checked the box below indicating the basis on which it is representing its status as an “accredited investor”:

 

[  ] a bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(a)(13) of the Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that act; a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are “accredited investors”;
   
[  ] a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
   
[  ] an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
   
[  ] a natural person whose individual net worth, or joint net worth with the undersigned’s spouse, excluding the “net value” of his or her primary residence, at the time of this purchase exceeds $1,000,000 and having no reason to believe that net worth will not remain in excess of $1,000,000 for the foreseeable future, with “net value” for such purposes being the fair value of the residence less any mortgage indebtedness or other obligation secured by the residence, but subtracting such indebtedness or obligation only if it is a liability already considered in calculating net worth;
   
[  ] a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with the undersigned’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
   
[  ] a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment; or
   
[  ] an entity in which all of the equity holders are “accredited investors” by virtue of their meeting one or more of the above standards.
   
[  ] an individual who is a director or executive officer of Intiva BioPharma Inc.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited Investor Status effective as of __________________, 20__.

 

Date:      
      Subscriber Name (Printed)
                   
      By:  
         
      Name:  
         
      Title:  

 

Nexien BioPharma, Inc. Class A Purchase Warrant – page 11

 

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

CLASS B PURCHASE WARRANT

 

NEXIEN BIOPHARMA, INC.

 

Issue Date: November 24, 2020

Warrant No. B-001

 

THIS CLASS B PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Richard Greenberg (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issue Date (the “Initial Exercise Date”) and on or prior to 5:00 p.m. Mountain Time on November 24, 2025 (the “Termination Date”) but not thereafter, to subscribe for and purchase from NEXIEN BIOPHARMA, INC., a Delaware corporation (the “Company”), up to 1,062,953 shares of Common Stock (the “Warrant Shares”) at a price equal to the lesser of (i) $0.043276 per share and (ii) 115% of the Conversion Price of that certain Convertible Promissory Note made and delivered as of the Issue Date of this Warrant to the Holder in effect as of the date of exercise (the “Exercise Price”).

 

Section 1. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a facsimile or scanned copy of the duly executed Notice of Exercise Form annexed hereto; and, within 3 Business Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. The Holder shall not be required to physically surrender this Warrant to the Company upon exercise. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within 2 Business Days of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

 

 

 

(b) Mechanics of Exercise.

 

i. Delivery of Certificates Upon Exercise. Certificates for Warrant Shares purchased hereunder shall be delivered to the address specified by the Holder in the Notice of Exercise within the first 10 Business Days of the month following the month in which the Notice of Exercise Form and payment of the aggregate Exercise Price is delivered to the Company (the “Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 1(b)(v) prior to the issuance of such securities, have been paid.

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Company fails to deliver to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 1(b)(i) by the Delivery Date, then, the Holder will have the right to rescind such exercise.

 

iv. No Fractional Shares or Scrip. No fractional Shares or scrip representing fractional Warrant Shares shall be issued upon the exercise of this Warrant. As to any fraction of a Share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole Share.

 

v. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, the Holder shall deliver to the Company the Assignment Form attached hereto duly executed by the Holder, and follow the requirements set forth in Section 3(d). The Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 2

 

 

vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

(c) Cashless Exercise. This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

  (A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;
     
  (B) = the Exercise Price of this Warrant, as adjusted hereunder; and
     
  (X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 1(c).

 

Section 2. Certain Adjustments.

 

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 2(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 3

 

 

b) Calculations. All calculations under this Section 2 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 2, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

c) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 2, the Company shall promptly mail/e-mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed/emailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 5 Business Days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.

 

The Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.

 

Section 3. Transfer of Warrant.

 

a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 3(c) hereof, this Warrant and all rights hereunder are transferable, in whole only, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant in the name of the assignee, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 4

 

 

b) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

c) Transfer Restrictions. Any requested transfer of this Warrant, in whole only, shall be made by delivering to the Company the Assignment Form and a Certificate of Accredited Investor Status completed by the proposed transferee(s). If the requested transfer is approved by the Company in its sole discretion, a new Warrant shall be issued to the transferee(s).

 

Section 4. Miscellaneous.

 

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1(b)(i).

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d) Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 5

 

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the corporate laws of the State of Delaware.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.

 

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered to the Holder at his/her/its last known address appearing in the Warrant Register of the Company.

 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 6

 

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and Holders holding at least a majority of the outstanding Class B Warrants.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follow)

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 7

 

 

IN WITNESS WHEREOF, the Company has caused this Class B Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

  NEXIEN BIOPHARMA, INC.
     
  By:  /s/ Evan Wasoff
     Evan Wasoff, Chief Financial Officer

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 8

 

 

NOTICE OF EXERCISE

 

TO: NEXIDEN BIOPHARMA INC.

 

(1) The undersigned hereby elects to purchase ________ shares of Common Stock of the Company (the “Warrant Shares”) pursuant to the terms of the attached Class B Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
   
(2)  Please issue a certificate or certificates representing said Warrant Shares [  ] in the name of the undersigned or [  ] in such other name as is specified below:

 

 
 

 

(3) The undersigned acknowledges that the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the “1933 Act”). Accordingly, the undersigned acknowledges, represents, warrants and agrees as follows:
     
  a) The Warrant Shares are being acquired for the undersigned’s own account for investment purposes only and with no view to their resale or other distribution of any kind, and no other person (except the spouse of the undersigned, if married) will own any interest therein.
     
  b) The undersigned will not sell or dispose of the Warrant Shares in violation of the 1933 Act, or any other applicable federal or state securities laws.
     
  c) The undersigned agrees that the Company may, without liability for its good faith actions, place legend restrictions upon the Warrant Shares and issue “stop transfer” instructions requiring compliance with applicable securities laws and the terms of the Class B Warrant.
     
  d) The undersigned represents, warrants and agrees, as of the date of this Notice of Exercise, that the undersigned continues to be an “accredited investor” as defined in the rules and regulations promulgated under the 1933 Act.

 

     
Name of Holder (Printed)   Signature

 

 

 

 

 

Name of Holder’s Spouse (if name appears on this Warrant)

 

 

 

Title (if applicable)

 

 

Date  

Address

 

 

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 9

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [____] all of or [_______] Warrants of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

__________________________________________________________________________________ whose address is

 

________________________________________________________________________________________________

 

________________________________________________________________________________________________

 

     
Name of Holder (Printed)   Signature

 

 

 

 

 

Name of Holder’s Spouse (if name appears on this Warrant)

 

 

 

Title (if applicable)

 

 

Date  

Address

 

 

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 10

 

 

CERTIFICATE OF ACCREDITED INVESTOR STATUS

 

Except as may be indicated by the undersigned below, the undersigned is an individual “accredited investor,” as that term is defined in Regulation D under the Securities Act of 1933, as amended (the “Act”). The undersigned has checked the box below indicating the basis on which it is representing its status as an “accredited investor”:

 

[  ] a bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(a)(13) of the Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that act; a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are “accredited investors”;
   
[  ] a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
   
[  ] an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
   
[  ] a natural person whose individual net worth, or joint net worth with the undersigned’s spouse, excluding the “net value” of his or her primary residence, at the time of this purchase exceeds $1,000,000 and having no reason to believe that net worth will not remain in excess of $1,000,000 for the foreseeable future, with “net value” for such purposes being the fair value of the residence less any mortgage indebtedness or other obligation secured by the residence, but subtracting such indebtedness or obligation only if it is a liability already considered in calculating net worth;
   
[  ] a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with the undersigned’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
   
[  ] a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment; or
   
[  ] an entity in which all of the equity holders are “accredited investors” by virtue of their meeting one or more of the above standards.
   
[  ] an individual who is a director or executive officer of Intiva BioPharma Inc.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited Investor Status effective as of __________________, 20__.

 

Date:      
      Subscriber Name (Printed)
                      
      By:  
         
      Name:  
         
      Title:  

 

Nexien BioPharma, Inc. Class B Purchase Warrant – page 11

 

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

CLASS C PURCHASE WARRANT

 

NEXIEN BIOPHARMA, INC.

 

Issue Date: November 24, 2020

Warrant No. C-001

 

THIS CLASS C PURCHASE WARRANT (the “Warrant”) certifies that, for value received, Richard Greenberg (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the Issue Date (the “Initial Exercise Date”) and on or prior to 5:00 p.m. Mountain Time on November 24, 2025 (the “Termination Date”) but not thereafter, to subscribe for and purchase from NEXIEN BIOPHARMA, INC., a Delaware corporation (the “Company”), up to 1,062,953 shares of Common Stock (the “Warrant Shares”) at a price equal to the lesser of (i) $0.045157 per share and (ii) 120% of the Conversion Price of that certain Convertible Promissory Note made and delivered as of the Issue Date of this Warrant to the Holder in effect as of the date of exercise (the “Exercise Price”).

 

Section 1. Exercise.

 

a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date, by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a facsimile or scanned copy of the duly executed Notice of Exercise Form annexed hereto; and, within 3 Business Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank. The Holder shall not be required to physically surrender this Warrant to the Company upon exercise. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within 2 Business Days of receipt of such notice. In the event of any dispute or discrepancy, the records of the Company shall be controlling and determinative in the absence of manifest error. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

 
 

 

(b) Mechanics of Exercise.

 

i. Delivery of Certificates Upon Exercise. Certificates for Warrant Shares purchased hereunder shall be delivered to the address specified by the Holder in the Notice of Exercise within the first 10 Business Days of the month following the month in which the Notice of Exercise Form and payment of the aggregate Exercise Price is delivered to the Company (the “Delivery Date”). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 1(b)(v) prior to the issuance of such securities, have been paid.

 

ii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii. Rescission Rights. If the Company fails to deliver to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 1(b)(i) by the Delivery Date, then, the Holder will have the right to rescind such exercise.

 

iv. No Fractional Shares or Scrip. No fractional Shares or scrip representing fractional Warrant Shares shall be issued upon the exercise of this Warrant. As to any fraction of a Share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole Share.

 

v. Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, the Holder shall deliver to the Company the Assignment Form attached hereto duly executed by the Holder, and follow the requirements set forth in Section 3(d). The Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 2

 

 

vi. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

(c) Cashless Exercise. This Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

(A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

 

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised, and the holding period of the Warrants being exercised may be tacked on to the holding period of the Warrant Shares. The Company agrees not to take any position contrary to this Section 1(c).

 

Section 2. Certain Adjustments.

 

a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 2(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 3

 

 

b) Calculations. All calculations under this Section 2 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 2, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

c) Notice to Holder.

 

i. Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 2, the Company shall promptly mail/e-mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

ii. Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, of any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed/emailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 5 Business Days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.

 

The Holder is entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice.

 

Section 3. Transfer of Warrant.

 

a) Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 3(c) hereof, this Warrant and all rights hereunder are transferable, in whole only, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant in the name of the assignee, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 4

 

 

b) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

c) Transfer Restrictions. Any requested transfer of this Warrant, in whole only, shall be made by delivering to the Company the Assignment Form and a Certificate of Accredited Investor Status completed by the proposed transferee(s). If the requested transfer is approved by the Company in its sole discretion, a new Warrant shall be issued to the transferee(s).

 

Section 4. Miscellaneous.

 

a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 1(b)(i).

 

b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d) Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 5

 

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the corporate laws of the State of Delaware.

 

f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g) Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date.

 

h) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered to the Holder at his/her/its last known address appearing in the Warrant Register of the Company.

 

i) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 6

 

 

j) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and Holders holding at least a majority of the outstanding Class C Warrants.

 

m) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

********************

 

(Signature Page Follow)

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 7

 

 

IN WITNESS WHEREOF, the Company has caused this Class C Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

    NEXIEN BIOPHARMA, INC.
       
    By: /s/ Evan Wasoff
      Evan Wasoff, Chief Financial Officer

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 8

 

 

NOTICE OF EXERCISE

 

TO: NEXIDEN BIOPHARMA INC.

 

(1) The undersigned hereby elects to purchase ________ shares of Common Stock of the Company (the “Warrant Shares”) pursuant to the terms of the attached Class C Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
   
(2) Please issue a certificate or certificates representing said Warrant Shares [  ] in the name of the undersigned or [  ] in such other name as is specified below:
   
   
   
   
(3) The undersigned acknowledges that the Warrant Shares have not been registered under the Securities Act of 1933, as amended (the “1933 Act”). Accordingly, the undersigned acknowledges, represents, warrants and agrees as follows:

 

  a) The Warrant Shares are being acquired for the undersigned’s own account for investment purposes only and with no view to their resale or other distribution of any kind, and no other person (except the spouse of the undersigned, if married) will own any interest therein.
     
  b) The undersigned will not sell or dispose of the Warrant Shares in violation of the 1933 Act, or any other applicable federal or state securities laws.
     
  c) The undersigned agrees that the Company may, without liability for its good faith actions, place legend restrictions upon the Warrant Shares and issue “stop transfer” instructions requiring compliance with applicable securities laws and the terms of the Class C Warrant.
     
  d) The undersigned represents, warrants and agrees, as of the date of this Notice of Exercise, that the undersigned continues to be an “accredited investor” as defined in the rules and regulations promulgated under the 1933 Act.

 

     
Name of Holder (Printed)   Signature
     
     

Name of Holder’s Spouse (if name appears on this Warrant)

 

 

 

Title (if applicable)

 

 

Date   Address
     

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 9

 

 

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, [____] all of or [_______] Warrants of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

__________________________________________________________________________________whose address is

 

_______________________________________________________________________________________________

 

_______________________________________________________________________________________________ 

 

  

     
Name of Holder (Printed)   Signature

 

 

 

 

 

Name of Holder’s Spouse (if name appears on this Warrant)

 

 

 

Title (if applicable)

 

 

Date  

Address

 

 

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 10

 

 

CERTIFICATE OF ACCREDITED INVESTOR STATUS

 

Except as may be indicated by the undersigned below, the undersigned is an individual “accredited investor,” as that term is defined in Regulation D under the Securities Act of 1933, as amended (the “Act”). The undersigned has checked the box below indicating the basis on which it is representing its status as an “accredited investor”:

 

[  ] a bank as defined in Section 3(a)(2) of the Act, or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(a)(13) of the Act; an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that act; a small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are “accredited investors”;
   
[  ] a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
   
[  ] an organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
   
[  ] a natural person whose individual net worth, or joint net worth with the undersigned’s spouse, excluding the “net value” of his or her primary residence, at the time of this purchase exceeds $1,000,000 and having no reason to believe that net worth will not remain in excess of $1,000,000 for the foreseeable future, with “net value” for such purposes being the fair value of the residence less any mortgage indebtedness or other obligation secured by the residence, but subtracting such indebtedness or obligation only if it is a liability already considered in calculating net worth;
   
[  ] a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with the undersigned’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
   
[  ] a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment; or
   
[  ] an entity in which all of the equity holders are “accredited investors” by virtue of their meeting one or more of the above standards.
   
[  ] an individual who is a director or executive officer of Intiva BioPharma Inc.

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited Investor Status effective as of __________________, 20__.

 

Date:      
      Subscriber Name (Printed)
         
      By:  
         
      Name:  
         
      Title:  

 

Nexien BioPharma, Inc. Class C Purchase Warrant – page 11

 

 

 

Exhibit 31.1

 

RULE 13a-14(a) CERTIFICATION

 

I, Richard Greenberg, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Nexien BioPharma, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
     
  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: February 11, 2021 /s/ Richard Greenberg
  Richard Greenberg
  Chief Executive Officer
  (principal executive officer)

 

 

 

 

Exhibit 31.2

 

RULE 13a-14(a) CERTIFICATION

 

I, Evan L. Wasoff, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Nexien BioPharma, Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
     
  b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

 

  a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Dated: February 11, 2021 /s/ Evan L. Wasoff
  Evan L. Wasoff
  Chief Financial Officer
  (principal financial officer)

 

 

 

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Nexien BioPharma, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard Greenberg, Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: February 11, 2021 /s/ Richard Greenberg
  Richard Greenberg
  Chief Executive Officer
  (principal executive officer)

 

 

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Nexien BioPharma, Inc. (the “Company”) on Form 10-Q for the period ended December 31, 2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Evan L. Wasoff, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: February 11, 2021 /s/ Evan L. Wasoff
  Evan L. Wasoff
  Chief Financial Officer
  (principal financial officer)