Bioxytran (BIXT) Risk Analysis
Risk Overview Q3, 2020
Source: the company's latest filing for the period ended Sep 30, 2020, filed Nov 13, 2020
Risk Change Over Time
No filing history is available.
- Share Price & Shareholder Rights - Risk 1The price of the Common Stock we are selling under our currently effective public offering is significantly higher than the conversion price of the Auctus Convertible Notes and warrant and the price of our common stock would likely drop to or below the conversion price of the Auctus Notes upon conversion by Auctus. conversion.
In the event that the Notes converts into common stock, the conversion price is significantly lower than the price at which we are selling our common stock in our currently effective public offering. As a result, the sale by the Note Holders of our common stock could drive the market price down to the conversion price as determined at the date of conversion or lower. This could result in the purchaser of our common stock in our currently effective public offering to immediately loose a substantial portion of his or her investment.
- Debt & Financing - Risk 2We will require additional financing to implement our business plan, which may not be available on favorable favourable terms or at all, and we may have to accept financing terms that would place restrictions on us.
We believe that we must raise not less than $2,700,000 in addition to current cash on hand to be able to continue our business operations for approximately the next 15 months and repay the convertible notes in the aggregate principal amount of $886,000 (the "Convertible Notes") outstanding on the date hereof; however, funding at any level lower than $10,000,000 will delay the development of our technology and business. In addition, one of our convertible notes, which was subsequently paid off, in the principal amount of $250,000 must be paid by February 25, 2020 or it will be in default. We are attempting to refinance that convertible note. We will need to continue to conduct significant research, development, testing and regulatory compliance activities for BXT-25, together with projected general and administrative expenses, we expect will result in operating losses for the foreseeable future. We may not be able to obtain equity or debt financing on acceptable terms or at all to implement our growth strategy. As a result, adequate capital may not be available to finance our current development plan, take advantage of business opportunities or respond to competitive pressures. If we are unable to raise additional funds, we may be forced to curtail or even abandon our business plan. Until such time, if ever, as we can generate substantial product income, we expect to finance our cash needs through a combination of equity offerings, debt financings and license and collaboration agreements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. In addition, the terms of any future financings may impose restrictions on our right to declare dividends or on the manner in which we conduct our business. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, or making acquisitions or significant asset sales. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates or grant licenses on terms that may not be favorable to us and/or that may reduce the value of our common stock.
Risk Highlights Q3, 2020
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 52
- Share Price & Shareholder Rights - Risk 1Prior to our currently effective public offering, we had a limited public market for our shares of common stock, and you may not be able to resell our shares at or above the price you paid, or at all.
Prior to our currently effective public offering, there was a limited public market for our common stock in the OTCQB market. We intend to apply for quotation on the NASDAQ through a market maker; however, there can be no assurance that our common stock will ever be quoted on any Major Equity Exchange. In order to be eligible for trading on the NASDAQ we must a market maker file an application with NASDAQ to have our common stock quoted on the NASDAQ exchange and remain current in our filings with the Securities and Exchange Commission. In order to be eligible for the NASDAQ we must have a Stockholders' Equity of $5 million, a minimum bid price of $3.00, have at least 300 unrestricted round lot stockholders, each owning at least 100 shares, have a freely traded public float of at least $15 million and pay initial listing fees. We cannot assure you that an active public market for our common stock will develop or that the market price of our shares will not decline below the public offering price. The public offering price of our shares may not be indicative of prices that will prevail in the trading market following our currently effective public offering.
- Share Price & Shareholder Rights - Risk 2Because we are subject to the "Penny Stock" rules, the level of trading activity in our stock may be reduced.
The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any listed, trading equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules which may increase the difficulty Purchasers may experience in attempting to liquidate such securities.
- Share Price & Shareholder Rights - Risk 3Provisions in the Nevada Revised Statutes and our Bylaws could make it very difficult for an investor to bring any legal actions against our directors or officers for violations of their fiduciary duties or could require us to pay any amounts incurred by our directors or officers in any such actions.
Members of our board of directors and our officers will have no liability for breaches of their fiduciary duty of care as a director or officer, except in limited circumstances, pursuant to provisions in the Nevada Revised Statutes and our Bylaws as authorized by the Nevada Revised Statutes. Specifically, Section 78.138 of the Nevada Revised Statutes provides that a director or officer is not individually liable to the company or its shareholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that (1) the director's or officer's act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and (2) his or her breach of those duties involved intentional misconduct, fraud or a knowing violation of law. This provision is intended to afford directors and officers protection against and to limit their potential liability for monetary damages resulting from suits alleging a breach of the duty of care by a director or officer. Accordingly, you may be unable to prevail in a legal action against our directors or officers even if they have breached their fiduciary duty of care. In addition, our Bylaws allow us to indemnify our directors and officers from and against any and all costs, charges and expenses resulting from their acting in such capacities with us. This means that if you were able to enforce an action against our directors or officers, in all likelihood, we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required to pay. Accordingly, our indemnification obligations could divert needed financial resources and may adversely affect our business, financial condition, results of operations and cash flows, and adversely affect prevailing market prices for our common stock.
- Share Price & Shareholder Rights - Risk 4Future sales of substantial amounts of the shares of common stock by existing shareholders could adversely affect the price of our common stock.
If our existing shareholders sell substantial amounts of the shares following our currently effective public offering, the market price of our common stock could fall. Such sales by our existing shareholders might make it more difficult for us to issue new equity or equity-related securities in the future at a time and place we deem appropriate. The shares of common stock offered in our currently effective public offering will be eligible for immediate resale in the public market without restrictions. All remaining shares, which are currently held by our existing shareholders, may be sold in the public market in the future subject to the lock-up agreements and the restrictions contained in Rule 144 under the Securities Act. If any existing shareholders sell a substantial amount of shares, the prevailing market price for our shares could be adversely affected.
- Share Price & Shareholder Rights - Risk 5The market price of our Common Stock may be subject to fluctuation and you could lose all or part of your investment.
Our currently effective public offering price has been arbitrarily determined by us and may not be indicative of prices that will prevail in the trading market. The price of our shares may decline following our currently effective public offering. The stock market in general has been, and the market price of our ordinary shares in particular will likely be, subject to fluctuation, whether due to, or irrespective of, our operating results and financial condition. The market price of our shares may fluctuate as a result of a number of factors, some of which are beyond our control, including, but not limited to: - actual or anticipated variations in our and our competitors' results of operations and financial condition; - market acceptance of our products; - the mix of products that we sell and related services that we provide; - changes in earnings estimates or recommendations by securities analysts, if our shares are covered by analysts; - development of technological innovations or new competitive products by others; - announcements of technological innovations or new products by us; - failure by us to achieve a publicly announced milestone;- delays between our expenditures to develop and market new or enhanced products and the generation of sales from those products; - developments concerning intellectual property rights, including our involvement in litigation; - regulatory developments and the decisions of regulatory authorities as to the approval or rejection of new or modified products;- changes in the amounts that we spend to develop, acquire or license new products, technologies or businesses;- changes in our expenditures to promote our products; - our sale or proposed sale, or the sale by our significant shareholders, of our shares or other securities in the future; - changes in key personnel; - success or failure of our research and development projects or those of our competitors; - the trading volume of our Shares; and - general economic and market conditions and other factors, including factors unrelated to our operating performance. These factors and any corresponding price fluctuations may materially and adversely affect the market price of our shares and result in substantial losses being incurred by our investors. In the past, following periods of market volatility, public company shareholders have often instituted securities class action litigation. If we were involved in securities litigation, it could impose a substantial cost upon us and divert the resources and attention of our management from our business.
- Share Price & Shareholder Rights - Risk 6Our Certificate of Incorporation permits "blank check" preferred stock, which can be designated by our Board of Directors without stockholder approval.
We have 50,000,000 authorized shares of preferred stock. The shares of our preferred stock may be issued from time to time in one or more series, each of which shall have a distinctive designation or title as is determined by our Board of Directors prior to the issuance of any shares thereof. The preferred stock may have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as adopted by the Board of Directors. Because the Board of Directors is able to designate the powers and preferences of the preferred stock without the vote of a majority of our stockholders, stockholders will have no control over what designations and preferences our preferred stock will have. If preferred stock is designated and issued, then depending upon the designation and preferences, the holders of the preferred stock may exercise voting control over us. As a result, our stockholders will have no control over the designations and preferences of the preferred stock and as a result the operations of our company.]
- Share Price & Shareholder Rights - Risk 7Our management collectively owns a substantial majority of our common stock.
Collectively, our officers, our directors and 5 other stockholders own or exercise voting and investment control of approximately 98% of our outstanding common stock. As a result, investors may be prevented from affecting matters involving our company, including: - the composition of our Board of Directors and, through it, any determination with respect to our business direction and policies, including the appointment and removal of officers; - any determinations with respect to mergers or other business combinations; - our acquisition or disposition of assets; and - our corporate financing activities. Furthermore, this concentration of voting power could have the effect of delaying, deterring or preventing a change of control or other business combination that might otherwise be beneficial to our stockholders. This significant concentration of share ownership may also adversely affect the trading price for our common stock because investors may perceive disadvantages in owning stock in a company that is controlled by a small number of stockholders.
- Share Price & Shareholder Rights - Risk 8If securities or industry analysts do not publish research or reports about us, our business or our market, or if they make and then change their recommendations regarding our common stock adversely, the price of our common stock and trading volume could decline.
The trading market for our common stock, should it develop, may be influenced by the research and reports that securities or industry analysts may publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding our common stock adversely, or provide more favourable relative recommendations about our competitors, the price of our common stock would likely decline. If any analyst who may cover us was to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price of our common stock or trading volume to decline.
- Share Price & Shareholder Rights - Risk 9Common Stock that we issue upon conversion of the promissory note will dilute our existing stockholders and depress the market price of our common stock.
As of the date of this Annual Report on Form 10-K, we are, based on current market price of $0.285/share, obligated to issue approximately 5,628,000 shares of common stock upon conversion of the currently outstanding Convertible Notes and 2,140,473 shares upon exercise of the warrants. For the Notes, the shares total is based on $901,274 of currently outstanding principal and unpaid interest and based upon a conversion price equal to the lesser of (i) the lowest trading price for the twenty-day period prior to the date of the Note or (ii) 65% of the lowest trading price during the twenty days prior to a conversion notice on the applicable trading market or the closing bid price on the applicable trading market. The Convertible Notes are limited to converting no more than 4.99% of our issued an outstanding common stock. The total potential issuable shares increase with the inclusion of additional interest and any decrease in our stock price. As of the date of this Annual Report on Form 10-K, 225,000 shares have been issued pursuant to conversion of the Convertible Notes. The issuance of shares upon conversion of the notes will dilute our existing shareholders. The number of common shares issuable by us upon conversion of the notes is dependent on the trading price of our common shares during the twenty days prior to conversion. If the price of our stock declines in value, we will be obligated to issue more shares to the note holders which would have a further dilutive effect on our stock which could depress the market price of our common stock.
- Share Price & Shareholder Rights - Risk 10The holders of the notes convertible into our common stock will pay less than the then- prevailing market price for our common stock.
The notes are convertible at the lesser of (i) the lowest trading price for the twenty-day period prior to the date of the Note or (ii) 65% of the lowest trading price during the twenty days prior to a conversion notice on the applicable trading market or the closing bid price on the applicable trading market. As such, the note holders have a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If the noteholders sell shares, the price of our common stock will likely decrease. If our stock price decreases, the noteholders may have a further incentive to sell the shares of our common stock that they hold. These sales may put further downward pressure on our stock price and reduce the value of your common shares.
- Share Price & Shareholder Rights - Risk 11The price of the Common Stock we are selling under our currently effective public offering is significantly higher than the conversion price of the Convertible Notes and warrant and the price of our common stock would likely drop to or below the conversion price of the Notes upon conversion.
In the event that the Notes converts into common stock, the conversion price is significantly lower than the price at which we are selling our common stock in our currently effective public offering. As a result, the sale by the Note Holders of our common stock could drive the market price down to the conversion price as determined at the date of conversion or lower. This could result in the purchaser of our common stock in our currently effective public offering to immediately loose a substantial portion of his or her investment.
- Share Price & Shareholder Rights - Risk 12If our stock price materially declines, the convertible note holders will have the right to a large number of shares of common stock upon exchange of amounts due under the notes, which may result in significant dilution.
The notes have a conversion feature which is based upon 65% of the lowest trading price during the twenty days prior to a conversion notice on the applicable trading market or the closing bid price on the applicable trading market. If our common stock price materially declines, we will be obligated to issue a large number of shares upon conversion. This will likely materially dilute existing shareholders. The potential for such dilutive issuances upon conversion of outstanding notes may depress the price of common stock regardless of our business performance, and could encourage short selling by market participants, especially if the trading price of our common stock begins to decrease.
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