UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(Exact name of registrant as specified in its charter)
| 2834 | ||||
|
(State or other jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive office)
Spring Valley Solutions, LLC
4955 S. Durango Rd. Ste. 165
Las Vegas, NV 89113
(702) 982-5686
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Scott Doney
The Doney Law Firm
4955 S. Durango Rd. Ste. 165
Las Vegas, NV 89113
(702) 982-5686
Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging Growth Company | |||
If an emerging growth company, indicate by 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 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
|
Title of each class of securities to be registered |
Amount to be Registered(1) |
Proposed Maximum Offering Price per Share(2) |
Proposed Maximum Aggregate Offering Price |
Amount of Registration Fee | ||||
| Common Stock, par value $0.001 per share | 40,520,000 | $0.21 | $8,509,200 | $788.80 |
| (1) | Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”), the shares being registered hereunder include such indeterminate number of shares of our Common Stock as may be issuable with respect to the shares being registered hereunder to prevent dilution by reason of any stock dividend, stock split, recapitalization or other similar transaction. |
| (2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act based upon the closing price per share of our Common Stock as reported on OTC Markets, on April 6, 2022. |
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
With copies to:
Scott Doney, Esq.
The Doney Law Firm
4955 S. Durango Rd. Ste 165
Las Vegas, NV 89113
Telephone: (702) 982-5686
The information in this prospectus is not complete and may be changed. This prospectus is included in a registration statement that we filed with the Securities and Exchange Commission. The Selling Shareholders cannot sell these securities under this registration statement until this registration statement becomes effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion, dated April 7, 2022
PROSPECTUS
ALTEROLA BIOTECH, INC.
40,520,000 Shares of Common Stock
This prospectus relates to the resale by the Selling Shareholders of up to 40,520,000 shares of our Common Stock, par value $0.001 per share (the “Common Stock”).
The Selling Shareholders may offer and sell or otherwise dispose of the shares described in this prospectus from time to time at a fixed price of $0.21 per share or, if we are quoted on the OTCQB, at prevailing market prices, at prices related to such prevailing market prices, at varying prices determined at the time of sale, at negotiated prices, or at fixed prices. See “Plan of Distribution” beginning on page 20 for more information.
We will not receive any of the proceeds from the Common Stock sold by the Selling Shareholders.
We have agreed to pay certain expenses in connection with this registration statement and to indemnify the Selling Shareholders against certain liabilities. The Selling Shareholders will pay all underwriting discounts and selling commissions, if any, in connection with the sale of the shares of Common Stock.
Our Common Stock is traded on the OTC Markets under the symbol “ABTI.” On April 6, 2022, the last reported sale price of our Common Stock was $0.21 per share.
Investing in our common stock involves risks. See "Risk Factors" beginning on page 4.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus April 7, 2022
Table of Contents
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the Securities and Exchange Commission, or the SEC. Under this registration process, the selling shareholders may, from time to time, offer and sell up to 40,520,000 shares of our common stock, as described in this prospectus, in one or more offerings. This prospectus provides you with a general description of the securities the selling shareholders may offer. You should read this prospectus carefully before making an investment decision.
You may only rely on the information contained in this prospectus or that we have referred you to. We have not authorized anyone to provide you with additional or different information. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities other than the shares of our common stock offered by this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any common stock in any circumstances or any jurisdiction in which such offer or solicitation is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the front cover of this prospectus regardless of the time of delivery of this prospectus or any sale of our common stock. The rules of the SEC may require us to update this prospectus in the future.
As used in this prospectus, unless the context requires otherwise, the terms “we”, “us”, “our”, or “the Company” refer to Alterola Biotech, Inc. and its subsidiaries on a consolidated basis. References to “Selling Shareholders” refer to those shareholders listed herein under “Selling Shareholders” and their successors, assignees and permitted transferees.
ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), about the Company and its subsidiaries. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, and can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”, “projects”, “plans”, “goal”, “targets”, “potential”, “estimates”, “pro forma”, “seeks”, “intends”, or “anticipates” or the negative thereof or comparable terminology. Forward-looking statements include discussions of strategy, financial projections, guidance and estimates (including their underlying assumptions), statements regarding plans, objectives, expectations or consequences of various transactions, and statements about the future performance, operations, products and services of the Company and its subsidiaries. We caution our shareholders and other readers not to place undue reliance on such statements.
Our businesses and operations are and will be subject to a variety of risks, uncertainties and other factors. Consequently, actual results and experience may materially differ from those contained in any forward-looking statements. Such risks, uncertainties and other factors that could cause actual results and experience to differ from those projected include, but are not limited to, the risk factors set forth in the section entitled “Risk Factors” beginning on page 4 of this prospectus.
All written or oral forward-looking statements attributable to us or any person acting on our behalf made after the date of this prospectus are expressly qualified in their entirety by the risk factors and cautionary statements contained in and incorporated by reference into this prospectus. Unless legally required, we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date of this prospectus or to reflect the occurrence of unanticipated events.
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SUMMARY
The following summary highlights selected information contained elsewhere in this prospectus and in the documents incorporated by reference in this prospectus and does not contain all the information you will need in making your investment decision. You should read carefully this entire prospectus and the documents incorporated by reference in this prospectus before making an investment decision, especially the information presented under the heading “Risk Factors.”
Business Summary
Our goal is to provide better medicines for patients across the globe. We believe in harnessing the therapeutic potential of cannabinoids and cannabinoid- like compounds, which can bring valuable treatments to seriously ill patients. Rather than just focusing on one method of identifying, researching and developing such medicines, we are interested in developing new medicines from all sources including botanical, traditional chemical synthesis and biosynthetic methodologies.
On May 28, 2021, we acquired ABTI Pharma Limited, a company registered in England and Wales (“ABTI Pharma”), with the purchase of all of its capital stock in exchange for 600,000,000 shares of our common stock pro rata to the ABTI Pharma shareholders.
As a result of the acquisition, we are a pharmaceutical company working with cannabinoid and cannabinoid like molecules. We have three areas of focus:
1) Development of regulated pharmaceuticals (human and animal health) and regulated food products. This has been achieved via the strategic acquisition of Phytotherapeutix Ltd;
2) Production of low cost of goods Active Pharmaceutical Ingredient (API) and food-grade ingredients (supported by the strategic acquisition of Ferven Ltd); and
3) Formulation, and drug delivery, providing improved bioavailability, solubility and stability (supported by the exclusive licensing of IP and technology from Nano4M Ltd).
Phytotherapeutix Ltd, a subsidiary of ABTI Pharma, has generated a number of molecules with patents pending, some of which have demonstrable pharmacological activity, similar to that of CBD. This means that some of these molecules are anticipated to have a similar market potential to CBD across a range of therapeutic areas.
Ferven Ltd, another subsidiary of ABTI Pharma, is looking to produce cannabinoids by fermentation. The exclusively licensed organism has the potential to be genetically modified to produce multiple cannabinoids at a very low cost of goods. It is anticipated that the selected genetically modified organisms will grow very quickly, which in turn, reduces the cost of production.
Nano4M Ltd is a company which has exclusively licensed its nano-formulation patents and know-how to ABTI Pharma Ltd.
Recently, on December 2, 2021, we closed an Asset Purchase Agreement (the “Purchase Agreement”) with C2 Wellness Corp., a Wyoming corporation, and Dr. G. Sridhar Prasad (together, the “Seller”).
On the Closing Date, pursuant to the Purchase Agreement, the Company acquired certain IP assets (the “Assets”) from Seller, which include:
• Novel cannabinoid molecules and their associated intellectual property;
• Novel cannabinoid pro-drugs, and their associated intellectual property;
• Novel proprietary cannabinoid formulations, designed to target lymphatic delivery, and their associated intellectual property;
• Novel proprietary nano-encapsulated cannabinoid formulations, in self dissolving polymers, and their associated intellectual property; and
• Cannabinoids and cannabinoid pro-drug formulations for topical ocular delivery, and their associated intellectual property.
In exchange for the Assets, the Company issued to Seller twenty four million (24,000,000) shares of common stock.
As a result of the Purchase Agreement and the acquisition of the Assets, and following further research and development, the Company may wish to use the technology platforms and associated intellectual property in the development of its medicines containing cannabinoids and cannabinoid-like compounds or ratios / combinations thereof, which assuming the necessary quality, safety and efficacy can be successfully demonstrated in nonclinical and clinical studies, may bring valuable treatments to seriously ill patients in due course.
Additionally, we may consider entering into Joint Venture Partnerships, Acquisition of Companies with complimentary portfolios or Licencing Agreements to enhance the product portfolio. These are strategies the Company may implement and any such opportunities will be assessed on a case by case basis and on their merit at the time.
ABTI Pharma management has extensive proven experience, know-how and connections in the cannabinoid medicines sector, and is looking to utilize this knowledge and experience for the development of such medicines from existing cannabinoids and cannabinoid-like molecules.
Our address is 47 Hamilton Square Birkenhead Merseyside CH41 5AR United Kingdom. Our telephone number is +44 151 601 9477. Our website is www.alterolabio.com.
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The Offering
| Common stock offered by the Selling Shareholders | 40,520,000 shares of common stock |
| Selling Shareholders | See “Selling Shareholders” beginning on page 18. |
| Common stock outstanding | 802,633,333 shares of common stock as of March 31, 2022. |
| Use of proceeds | We will not receive any proceeds from the sale or other disposition of the shares of common stock covered by this prospectus. See “Use of Proceeds” on page 17. |
| OTC Bulletin Board Symbol | Our Common Stock is quoted on the OTC Markets under the ticker symbol “ABTI”. |
| Risk Factors | You should consider the matters set forth under “Risk Factors” beginning on page 4, as well as other cautionary statements throughout or incorporated by reference in this prospectus, before deciding to invest in shares of our common stock. |
Summary Financial Information
| Balance Sheet Data | December 31, 2021 | March 31, 2021 | September 30, 2020 | |||||||||
| Cash | $ | 40,109 | $ | 519 | $ | 15,273 | ||||||
| Total Assets | $ | 12,090,705 | $ | 519 | $ | 15,273 | ||||||
| Liabilities | $ | 1,386,849 | $ | 759,638 | $ | 338,494 | ||||||
| Total Stockholders’ Equity (Deficit) | $ | 10,703,856 | $ | (759,119 | ) | $ | (323,221 | ) | ||||
| Statement of Operations | Nine Months Ended December 31, 2021 | Six Months Ended March 31, 2021 | Year Ended September 30, 2020 | |||||||||
| Revenue | $ | 0 | $ | 0 | 0 | |||||||
| Income (Loss) for the Period | $ | (3,213,315 | ) | $ | (309,500 | ) | (250,511 | ) | ||||
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RISK FACTORS
Readers and prospective investors in our common stock should carefully consider the following risk factors as well as the other information contained or incorporated by reference in this prospectus.
If any of the following risks actually occurs, our financial condition, results of operations and liquidity could be materially adversely affected. If this were to happen, the value of our common stock could decline, and if you invest in our common stock, you could lose all or part of your investment.
The discussion below highlights some important risks we have identified related to our business and operations and an investment in shares of our common stock, but these should not be assumed to be the only factors that could affect our future performance and condition, financial and otherwise. We do not have a policy of updating or revising forward-looking statements except as otherwise required by law, and silence by management over time should not be construed to mean that actual events are occurring as estimated in such forward-looking statements.
Risk Related to Covid 19
Our business and future operations may be adversely affected by epidemics and pandemics, such as the recent COVID-19 outbreak.
We may face risks related to health epidemics and/or pandemics and/or other outbreaks of communicable diseases, which could result in a widespread health crisis that could adversely affect general commercial activity and the economies and financial markets of the world as a whole. For example, the outbreak of COVID-19, which began in China, has been declared by the World Health Organization to be a “pandemic,” has spread across the globe, including the United States of America. A health epidemic or pandemic or other outbreak of communicable diseases, such as the current COVID-19 pandemic, poses the risk that we, or potential business partners may be disrupted or prevented from conducting business activities for certain periods of time, the durations of which are uncertain, and may otherwise experience significant impairments of business activities, including due to, among other things, operational shutdowns or suspensions that may be requested or mandated by national or local governmental authorities or self-imposed by us, our users or other business partners. For example, due to COVID-19, we have been unable to travel across the relevant jurisdictions pertaining to our business and foresee this as an ongoing issue. While it is not possible at this time to estimate the full impact that COVID-19 could have on our business, potential users or other potential business partners, the continued spread of COVID-19, the measures taken by the local and federal government, actions taken to protect employees, and the impact of the pandemic on various business activities could adversely affect our results of operations and financial condition.
Risks Relating to Our Financial Condition
There are doubts about our ability to continue as a going concern.
We have generated no revenue, and have an accumulated deficit of $4,712,691 through December 31, 2021. These factors raise substantial doubt about our ability to continue as a going concern.
There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources, such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations, or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on our existing stockholders.
We seek to overcome the circumstances that impact our ability to remain a going concern through a combination of the growth of revenues, with interim cash flow deficiencies being addressed through additional equity and debt financing. We anticipate raising additional funds through public or private financing, strategic relationships or other arrangements in the near future to support its business operations; however, we may not have commitments from third parties for a sufficient
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amount of additional capital. We cannot be certain that any such financing will be available on acceptable terms, or at all, and our failure to raise capital when needed could limit our ability to continue operations. Our ability to obtain additional funding will determine the Company’s ability to continue as a going concern. Failure to secure additional financing in a timely manner and on favorable terms would have a material adverse effect on our financial performance, results of operations and stock price and require us to curtail or cease operations, sell off our assets, seek protection from our creditors through bankruptcy proceedings, or otherwise. Furthermore, additional equity financing may be dilutive to the holders of our common stock, and debt financing, if available, may involve restrictive covenants, and strategic relationships, if necessary, to raise additional funds, and may require that we relinquish valuable rights.
Because we have a limited operating history, you may not be able to accurately evaluate our operations.
We have had limited operations to date. Therefore, we have a limited operating history upon which to evaluate the merits of investing in our company. Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business, and additional costs and expenses that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
We are dependent on outside financing for continuation of our operations.
Because we have generated no revenues and currently operate at a loss, we are completely dependent on the continued availability of financing in order to continue our business operations. There can be no assurance that financing sufficient to enable us to continue our operations will be available to us in the future.
We will need additional funds to complete further development of our business plan to achieve a sustainable level where ongoing operations can be funded out of revenues. We anticipate that we must raise $25,000,000 for our operations for the next 12 months, and $81,000,000 for our initial clinical development program for each of the molecules and therapeutic indications. We will require further funding to fully implement our business plan to its fullest potential and achieve our growth plans. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us.
Our failure to obtain future financing or to produce levels of revenue to meet our financial needs could result in our inability to continue as a going concern and, as a result, our investors could lose their entire investment.
Our operating results may fluctuate, which could have a negative impact on our ability to grow our client base, establish sustainable revenues and succeed overall.
Our results of operations may fluctuate as a result of a number of factors, some of which are beyond our control including but not limited to:
| • | general economic conditions in the geographies and industries where we sell our services and conduct operations; legislative policies where we sell our services and conduct operations; |
| • | the budgetary constraints of our customers; seasonality; |
| • | success of our strategic growth initiatives; |
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| • | costs associated with the launching or integration of new or acquired businesses; timing of new product introductions by us, our suppliers and our competitors; product and service mix, availability, utilization and pricing; |
| • | the mix, by state and country, of our revenues, personnel and assets; movements in interest rates or tax rates; and |
| • | changes in, and application of, accounting rules; changes in the regulations applicable to us; and litigation matters. |
As a result of these factors, we may not succeed in our business and we could go out of business.
As a growing company, we have yet to achieve a profit and may not achieve a profit in the near future, if at all.
We have not yet produced any revenues or profit and may not in the near future, if at all. We cannot be certain that we will be able to realize sufficient revenue to achieve profitability. Further, many of our competitors have a significantly larger industry presence and revenue stream but have yet to achieve profitability. Our ability to continue as a going concern is dependent upon raising capital from financing transactions, increasing revenue and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.
Risks Related with Management and Control Persons
We are dependent on the continued services of our key staff and if we fail to keep them or fail to attract and retain qualified senior executive and key technical personnel, our business will not be able to expand.
We are dependent on the continued availability of Timothy Rogers (Executive Chairman), Seamus McAuley (Chief Executive Officer, CEO), Colin Stott (Chief Operating Officer, COO), Dominic Schiller (Chief IP Officer), Hunter Land (VP Translational Research, USA) and Guy Webber (Preclinical Development Director), and the availability of new employees to implement our business plans. The market for skilled employees is highly competitive, especially for employees in our industry. Although we expect that our planned compensation programs will be intended to attract and retain the employees required for us to be successful, there can be no assurance that we will be able to retain the services of all our key employees or a sufficient number to execute our plans, nor can there be any assurance we will be able to continue to attract new employees as required.
Our lack of adequate D&O insurance may also make it difficult for us to retain and attract talented and skilled directors and officers.
In the future we may be subject to additional litigation, including potential class action and stockholder derivative actions. Risks associated with legal liability are difficult to assess and quantify, and their existence and magnitude can remain unknown for significant periods of time. To date, we have not obtained directors and officers liability (“D&O”) insurance. Without adequate D&O insurance, the amounts we would pay to indemnify our officers and directors should they be subject to legal action based on their service to the Company could have a material adverse effect on our financial condition, results of operations and liquidity. Furthermore, our lack of adequate D&O insurance may make it difficult for us to retain and attract talented and skilled directors and officers, which could adversely affect our business.
Our personnel may voluntarily terminate their relationship with us at any time, and competition for qualified personnel is intense. The process of locating additional personnel with the combination of skills and attributes required to carry out our strategy could be lengthy, costly and disruptive.
If we lose the services of key personnel or fail to replace the services of key personnel who depart, we could experience a severe negative effect on our financial results and stock price. The loss of the services of any key personnel, marketing or other personnel or our failure to attract, integrate, motivate and retain additional key employees could have a material adverse effect on our business, operating and financial results and stock price.
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Our officers and directors have substantial control over us and our policies and will be able to influence corporate matters.
Our officers and directors presently beneficially own more than 70% of our common stock. They are able to exercise significant influence over all matters requiring approval by our stockholders, including the election of directors, the approval of significant corporate transactions, and any change of control of our company. They could prevent transactions, which would be in the best interests of the other shareholders. Our officers and directors’ interests may not necessarily be in the best interests of the shareholders in general.
The elimination of monetary liability against our directors, officers and employees under our Articles of Incorporation and the existence of indemnification rights to our directors, officers and employees may result in substantial expenditures by our Company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contain provisions that eliminate the liability of our directors for monetary damages to our Company and shareholders. Our bylaws also require us to indemnify our officers and directors. We may also have contractual indemnification obligations under our agreements with our directors, officers and employees. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors, officers and employees that we may be unable to recoup. These provisions and resulting costs may also discourage our company from bringing a lawsuit against directors, officers and employees for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors, officers and employees even though such actions, if successful, might otherwise benefit our Company and shareholders.
Our officers and directors have limited experience managing a public company.
Our officers and directors have limited managing a public company. Consequently, we may not be able to raise any funds or run our public company successfully. Our executive’s officers’ and directors’ lack of experience of managing a public company could cause you to lose some or all of your investment.
Risks Relating to our Common Stock and Offering
We will likely conduct further offerings of our equity securities in the future, in which case your proportionate interest may become diluted.
We will likely be required to conduct equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If our common stock shares are issued in return for additional funds, the price per share could be lower than that paid by our current shareholders. We anticipate continuing to rely on equity sales of our common stock shares in order to fund our business operations. If we issue additional common stock shares or securities convertible into shares of our common stock, your percentage interest in us could become diluted.
Our common stock price may be volatile and could fluctuate widely in price, which could result in substantial losses for investors.
Our common stock is quoted on the OTC Markets under the symbol, “ABTI.” The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:
| ▪ | government regulation of our products and services; |
| ▪ | the establishment of partnerships with pharmaceutical, food, cosmetic research and development (R & D) and / or manufacturing companies; |
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| ▪ | intellectual property disputes; |
| ▪ | additions or departures of key personnel; |
| ▪ | sales of our common stock |
| ▪ | our ability to integrate operations, technology, products and services; |
| ▪ | our ability to execute our business plan; |
| ▪ | operating results below expectations; |
| ▪ | loss of any strategic relationship; |
| ▪ | industry developments; |
| ▪ | economic and other external factors; and |
| ▪ | period-to-period fluctuations in our financial results. |
Because we have no revenues to date, you should consider any one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above.
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
Our existing stockholders may experience significant dilution from the sale of our common stock pursuant to the EMC2 Purchase Agreement.
The sale of our common stock to EMC2 in accordance with the Purchase Agreement may have a dilutive impact on our shareholders. As a result, the market price of our common stock could decline. In addition, the lower our stock price is at the time we exercise our put options, the more shares of our common stock we will have to issue to EMC2 in order to exercise a put under the Purchase Agreement. If our stock price decreases, then our existing shareholders would experience greater dilution for any given dollar amount raised through the offering.
The perceived risk of dilution may cause our stockholders to sell their shares, which may cause a decline in the price of our common stock. Moreover, the perceived risk of dilution and the resulting downward pressure on our stock price could encourage investors to engage in short sales of our common stock. By increasing the number of shares offered for sale, material amounts of short selling could further contribute to progressive price declines in our common stock.
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The issuance of shares pursuant to the EMC2 Purchase Agreement may have significant dilutive effect.
Depending on the number of shares we issue pursuant to the EMC2 Purchase Agreement, it could have a significant dilutive effect upon our existing shareholders. Although the number of shares that we may issue pursuant to the Purchase Agreement will vary based on our stock price (the higher our stock price, the less shares we have to issue), there may be a potential dilutive effect to our shareholders, based on different potential future stock prices, if the full amount of the Purchase Agreement is realized. Dilution is based upon common stock put to EMC2 and the stock price discounted to 91% of the lowest sales price on the purchase date.
EMC2 will pay less than the then-prevailing market price of our common stock which could cause the price of our common stock to decline.
Our common stock to be issued under the EMC2 Purchase Agreement will be purchased at 91% of the lowest sales price on the purchase date. EMC2 has a financial incentive to sell our shares immediately upon receiving them to realize the profit between the discounted price and the market price. If EMC2 sells our shares, the price of our common stock may decrease. If our stock price decreases, EMC2 may have further incentive to sell such shares. Accordingly, the discounted sales price in the Purchase Agreement may cause the price of our common stock to decline.
We have never declared or paid any cash dividends or distributions on our capital stock. And we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
We have never declared or paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings, if any, to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
The declaration, payment and amount of any future dividends will be made at the discretion of the board of directors, and will depend upon, among other things, the results of our operations, cash flows and financial condition, operating and capital requirements, and other factors as the board of directors considers relevant. There is no assurance that future dividends will be paid, and, if dividends are paid, there is no assurance with respect to the amount of any such dividend.
We may become involved in securities class action litigation that could divert management’s attention and harm our business.
The stock market in general, and the shares of early-stage companies in particular, have experienced extreme price and volume fluctuations. These fluctuations have often been unrelated or disproportionate to the operating performance of the companies involved. If these fluctuations occur in the future, the market price of our shares could fall regardless of our operating performance. In the past, following periods of volatility in the market price of a particular company’s securities, securities class action litigation has often been brought against that company. If the market price or volume of our shares suffers extreme fluctuations, then we may become involved in this type of litigation, which would be expensive and divert management’s attention and resources from managing our business.
As a public company, we may also from time to time make forward-looking statements about future operating results and provide some financial guidance to the public markets. Projections may not be made timely or set at expected performance levels and could materially affect the price of our shares. Any failure to meet published forward-looking statements that adversely affect the stock price could result in losses to investors, stockholder lawsuits or other litigation, sanctions or restrictions issued by the SEC.
Our common stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares.
Our common stock is currently deemed a “penny stock,” which makes it more difficult for our investors to sell their shares. The SEC has adopted rule 3a51-1 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:
• that a broker or dealer approve a person’s account for transactions in penny stocks, and
• the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
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In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
• obtain financial information and investment experience objectives of the person, and
• make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
• sets forth the basis on which the broker or dealer made the suitability determination and
• that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.
Risks Relating to Our Company and Industry
Our future success will largely depend on the success of our drug candidates, which development will require significant capital resources and years of preclinical and clinical development effort.
We currently have no drug products on the market, and none of our drug development projects / pipeline drug candidates has reached preclinical study or clinical trial status. Our business depends almost entirely on the successful clinical development, regulatory approval and commercialization of our pipeline drug candidates. Investors need to be aware that substantial additional investments including preclinical and clinical development and regulatory approval efforts will be required before we are permitted to market and commercialize our pipeline drug candidates, if ever. It may be several years before we can commence clinical trials, if ever. Any clinical trial will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States, the European Union, and other jurisdictions where we intend, if approved, to market our pipeline drug candidates. Before obtaining regulatory approvals for any of our pipeline drug candidates, we must demonstrate through preclinical testing and clinical trials that the pipeline drug candidate is safe and effective for its specific application. This process can take many years and may include post- marketing studies and surveillance, which would require the expenditure of substantial resources. Of the large number of drugs in development for approval in the United States, European Union (and the rest of the world), only a small percentage will successfully complete the FDA regulatory approval process or be granted authorization to be marketed in the European Commission or the other competent authorities in the European Union (“EU”) Member States, or the rest of the world. Accordingly, even if we obtain the sufficient financing to fund our planned research, development and clinical programs, we cannot assure you that any of our pipeline drug candidates will be successfully developed or commercialized.
We may be unable to formulate or scale-up any or all of our pipeline drug candidates. There is no guarantee that any of the pipeline drug candidates will be or are able to be manufactured or produced in a manner to meet the FDA’s criteria for product stability, content uniformity and all other criteria necessary for product approval in the United States and other markets. Any of our pipeline drug candidates may fail to achieve their specified endpoints in clinical trials.
Furthermore, pipeline drug candidates may not be approved even if they achieve their specified endpoints in clinical trials. The FDA may disagree with our trial design and our interpretation of data from clinical trials, or may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials. The FDA may also approve a drug for fewer or more limited indications than we request, or may grant approval contingent on the performance of costly post-approval clinical trials (i.e., Phase IV trials). In addition, the FDA may not approve the labeling claims that we believe are necessary or desirable for the successful commercialization of our pipeline drug candidates.
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If we are unable to expand our pipeline and obtain regulatory approval for our pipeline drug candidates within the timelines we anticipate, we will not be able to execute our business strategy effectively and our ability to substantially grow our revenues will be limited, which would have a material adverse impact on our long-term business, results of operations, financial condition, and prospects.
Our drug development projects, if approved, may be unable to achieve the expected market acceptance and, consequently, limit our ability to generate revenue
Even when drug development is successful and regulatory approval has been obtained, our ability to generate significant revenue depends on the acceptance of our (then) approved medicines by physicians, prescribers and patients. We cannot assure you that any of our pipeline drug candidates will achieve the expected market acceptance and revenue, if and when we obtain the regulatory approvals. The market acceptance of any drug depends on a number of factors, including the indication statement and warnings approved by regulatory authorities for the drug label, continued demonstration of efficacy and safety in commercial use, physicians’ / prescribers willingness to prescribe the drug, reimbursement from third-party payers such as government health care systems and insurance companies, the price of the drug, the nature of any post-approval risk management plans mandated by regulatory authorities, competition, and marketing and distribution support. Any factors preventing or limiting the market acceptance of our drugs could have a material adverse effect on our business, results of operations and financial condition.
Results of preclinical studies and earlier clinical trials are not necessarily predictive indicators of future results.
Any positive results from future preclinical testing of our pipeline drug candidates and potential future clinical trials may not necessarily be predictive of the results from Phase 1, Phase 2 or Phase 3 clinical trials. In addition, our interpretation of results derived from clinical data or our conclusions based on our preclinical data may prove inaccurate. Frequently, pharmaceutical and biotechnology companies have suffered significant setbacks in clinical trials after achieving positive results in preclinical testing and early phase clinical trials, and we cannot be certain that we will not face similar setbacks. These setbacks may be caused by the fact that preclinical and clinical data can be susceptible to varying interpretations and analyses. Furthermore, certain pipeline drug candidates may perform satisfactorily in preclinical studies and clinical trials, but nonetheless fail to obtain FDA approval, a marketing authorization granted by the European Commission, or appropriate approvals by the appropriate medicines regulatory authorities in other countries. If we fail to produce positive results in our clinical trials for our pipeline drug candidates, the development timeline and regulatory approval and commercialization prospects for them and as a result our business and financial prospects, would be materially adversely affected.
The regulatory approval processes with the FDA, the EMA and other comparable foreign regulatory authorities is lengthy and inherently unpredictable.
We are not permitted to market our drug candidates as medicines in the United States or the European Union or other countries until we receive approval of a New Drug Application (“NDA”) from the FDA or a Marketing Authorization Application (“MAA”) from the European Commission, respectively, or in any foreign countries until we receive the approval from the regulatory authorities of such countries. Prior to submitting an NDA to the FDA or an MAA to the EMA for approval of our drug candidates we will need to have completed our preclinical studies and clinical trials. Successfully completing any clinical program and obtaining approval of an NDA or MAA is a complex, lengthy, expensive and uncertain process, and the FDA or EMA (or other country medicines regulatory body) may delay, limit or deny approval of pipeline drug candidates for many reasons, including, among others, because:
| • | an inability to demonstrate that our pipeline drug candidates are safe and effective in treating patients to the satisfaction of the FDA or EMA (or any other country’s medicine regulatory body); |
| • | results of clinical trials that may not meet the level of statistical or clinical significance required by the FDA or EMA (or any other country’s medicine regulatory body); |
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| • | disagreements with the FDA or EMA (or any other country’s medicine regulatory body) with respect to the number, design, size, conduct or implementation of clinical trials; |
| • | requirements by the FDA and EMA (or any other country’s medicine regulatory body) to conduct additional clinical trials; |
| • | disapproval by the FDA or EMA or other applicable foreign regulatory authorities of certain formulations, labeling or specifications of pipeline drug candidates; |
| • | findings by the FDA or EMA (or any other country’s medicine regulatory body) that the data from preclinical studies and clinical trials are insufficient; |
| • | the FDA or EMA (or any other country’s medicine regulatory body) may disagree with the interpretation of data from preclinical studies and clinical trials; and |
| • | the FDA, European Commission or other applicable foreign regulatory agencies may change their approval policies or adopt new regulations. |
Any of these factors, many of which are beyond our control, could increase development time and / or costs or jeopardize our ability to obtain regulatory approval for our drug candidates.
We may apply for orphan drug status granted by the FDA and / or EMA for some of our drug candidates for the treatment of rare diseases.
Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs. The FDA may grant Orphan Drug Designation (ODD) to drugs intended to treat a rare disease or condition that affects fewer than 200,000 individuals annually in the United States. In the European Union, the EMA’s Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of drugs that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions affecting not more than 5 in 10,000 persons in the European Union. Additionally, such designation is granted for drugs intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug.
In the USA, orphan drug designation entitles a party to financial incentives, such as opportunities for grant funding towards clinical trial costs, tax credits for certain research and user fee waivers under certain circumstances. In addition, if a drug receives the first FDA approval for the drug and indication for which it has orphan drug designation, the drug is entitled to seven years of market exclusivity, which means the FDA may not approve any other application for the same drug for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the drug with orphan drug exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition.
In the European Union, orphan drug designation also entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity following drug approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the drug is sufficiently profitable so that market exclusivity is no longer justified.
Whilst the company may wish to apply for ODDs for some or all of its pipeline drug candidates, there is no guarantee that FDA or EMA (or any other international regulatory body) will grant an ODD for any of the company’s pipeline drug candidates.
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Our drug candidates may become subject to controlled substance laws and regulations in the U.S.
While cannabis and some cannabinoids are controlled substances under the CSA in the United States, we plan to initially focus our drug development projects using cannabinoids and other molecules that are produced from a variety of sources: (1) produced via chemical synthesis and / or (2) produced biosynthetically and / or (3) produced via botanical means.
A number of cannabinoid-containing medicines, such as Marinol® or Syndros® (containing dronabinol), or Epidiolex® (containing botanically-derived cannabidiol) or Cesamet® (containing nabilone) have been approved by the FDA for various indications.
In the USA, while plant-derived cannabinoids – during development - are categorized as Schedule I substances under the CSA, the scheduling changes once a medicine has been approved by the FDA.
Marinol®, a capsule formulation which contains synthetic tetrahydrocannabinol, or THC when formulated is a Schedule III medicine. Syndros® (which also contains synthetic THC, dronabinol) is a liquid formulation as is classified as Schedule II.
Epidiolex® was initially a Schedule V medicine when it was introduced in 2018, but was descheduled by the DEA in 2020.
It is our intention to produce pipeline drug candidates via synthetic, and / or biosynthetic and / or botanical means, which may produce complex mixtures and /or extracts or purified drug substance as API.
Depending upon the content of our selected API(s), and their subsequent controlled drug status in the USA, and if the company conducts preclinical studies or clinical trials in the United States, we will become subject to the Controlled Substances Act (CSA) laws and regulation in addition to FDA regulations. If the Company decides to proceed with APIs which are controlled drugs, it will evaluate where it is best to conduct its research and preclinical and clinical trials. This may or may not be the USA.
Nevertheless, our finished drug products may contain controlled substances as defined in the CSA. Pipeline drug candidates which contain controlled substances are subject to a high degree of regulation under the CSA, which establishes, among other things, certain registration, manufacturing quotas, security, recordkeeping, reporting, import, export and other requirements administered by the Drug Enforcement Agency (DEA). The DEA classifies controlled substances into five schedules: Schedule I, II, III, IV or V substances. Schedule I substances, by definition, have a high potential for abuse, have no currently “accepted medical use” in the United States, lack accepted safety for use under medical supervision, and may not be prescribed, marketed or sold in the United States. Pharmaceutical products approved for use in the United States may be listed as Schedule II, III, IV or V, with Schedule II substances considered to present the highest potential for abuse or dependence and Schedule V substances the lowest relative risk of abuse among such substances. Schedule I and II drugs are subject to the strictest controls under the CSA, including manufacturing and procurement quotas, security requirements and criteria for importation. In addition, dispensing of Schedule II drugs is further restricted. For example, they may not be refilled without a new prescription.
While cannabis and certain of its derivatives and certain cannabinoids are Schedule I controlled substances, drugs approved for medical use in the United States that contain cannabis, cannabis extracts or certain cannabinoids must be placed in Schedules II - V, since approval by the FDA satisfies the “accepted medical use” requirement. If, and when any of our pipeline drug candidates receive FDA approval, for those that are considered controlled substances under the CSA, the DEA will make a scheduling determination and place it in a schedule other than Schedule I for it to be prescribed for patients in the United States. If approved by the FDA, depending upon the products potential for abuse amongst other factors, we expect the finished dosage forms of any of our pipeline drug candidates to be listed by the DEA as a Schedule II-V controlled substance. Consequently, their manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use will be subject to a significant degree of regulation by the DEA (in the USA) and the corresponding competent authorities around the world.
The scheduling process may take one or more years beyond FDA approval in the USA, thereby significantly delaying the launch of our drugs / medicines. However, the DEA must issue a temporary order scheduling the drug within 90 days after the FDA approves the drug and the DEA receives a scientific and medical evaluation and scheduling recommendation from the Department of Health and Human Services. Furthermore, if the FDA, DEA or any foreign regulatory authority determines that any of our drugs may have potential for abuse, it may require us to generate more clinical data than that which is currently anticipated, which could increase the cost and/or delay the launch of our drugs / medicines or APIs (or food or cosmetic ingredients outside of the USA).
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Clinical trials of cannabinoid-based drug candidates are novel with very limited or non-existing history; we face a significant risk that the trials will not result in commercially viable drugs and treatments.
At present, there is only a very limited documented clinical trial history from which we can derive any scientific conclusions for our drug pipeline candidates, or prove that our present assumptions for the current and planned research are scientifically compelling. The API content of the Investigational Medicinal Products (IMPs) can vary from one IMP to another – hence it is not necessarily possible to extrapolate results from studies with one product and predict efficacy of safety with another product containing a similar API a different source. Whilst the principal cannabinoid component may be similar, the APIs may differ in terms of minor cannabinoid content, impurity profiles or degradant profiles. While we are encouraged by the results of clinical trials by others (where they exist), there can be no assurance that any preclinical study or clinical trial will result in producing results which will lead to commercially viable drugs or treatments.
Clinical trials are expensive, time consuming and difficult to design and implement. We, as well as the regulatory authorities may suspend, delay or terminate our clinical trials at any time, may require us, for various reasons, to conduct additional clinical trials, or may require a particular clinical trial to continue for a longer duration than originally planned, including, among others:
| • | lack of effectiveness of any API, formulation or delivery system during clinical trials; |
| • | discovery of serious or unexpected toxicities or side effects experienced by trial participants or other safety issues; |
| • | slower than expected rates of subject recruitment and enrollment rates in clinical trials; |
| • | delays or inability in manufacturing or obtaining sufficient quantities of GMP-grade materials for use in clinical trials due to regulatory and manufacturing constraints; |
| • | delays in obtaining regulatory authorization to commence a trial, including Institutional Review Board (“IRB”) approvals or DEA approvals, licenses required for obtaining and using cannabis , cannabis-derived cannabinoid or cannabinoid-like substances for research, either before or after a trial is commenced; |
| • | unfavorable results from ongoing pre-clinical studies and clinical trials; |
| • | patients or investigators failing to comply with clinical trial protocols; |
| • | patients failing to return for post-treatment follow-up at the expected rate; |
| • | sites participating in an ongoing clinical trial withdraw, requiring us to engage new sites; |
| • | third-party clinical investigators decline to participate in our clinical trials, do not perform the clinical trials on the anticipated schedule, or act in ways inconsistent with the established investigator agreement, clinical trial protocol, good clinical practices, and other IRB requirements; |
| • | third-party entities do not perform data collection and analysis in a timely or accurate manner or at all; or |
| • | regulatory inspections of our clinical trials require us to undertake corrective action or suspend or terminate our clinical trials. |
Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.
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The FDA has not approved any complex botanically-derived cannabinoid drug as a safe and effective drug for any indication.
To date, the FDA has not approved any complex botanical cannabinoid medicine as safe and effective for any indication. It has however approved a cannabinoid medicine containing a highly purified cannabinoid (CBD) medicine (Epidiolex®) for a limited number of indications. However, the FDA is aware that there is considerable interest in the use of complex botanical medicines (e.g. Sativex® - which is not approved in the USA, but is approved in some other countries) or purified cannabinoids (e.g. Epidiolex®) or synthesized cannabinoid medicines (e.g. Marinol®) to attempt to treat a number of medical conditions.
Before conducting testing in humans of a drug that has not been approved by the FDA, we will need to submit an investigational new drug (“IND”) application to the FDA (or a Clinical Trial Authorisation (CTA) to the EMA). Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending NDAs, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution. Failure to comply with similarly applicable regulatory requirements in other countries may also subject a company to a variety of administrative or judicial sanctions within their country.
We face a potentially highly competitive market.
Demand for cannabinoid-containing or cannabis-based medicines will likely be dependent on a number of social, political and economic factors that are beyond our control. While we believe that there will be a demand for such drugs, and that the demand will grow, there is no assurance that such demand will happen, that we will benefit from any demand or that our business, in fact, will ever generate revenues from our drug development programs or become profitable.
The emerging markets for cannabinoid-containing or cannabis-derived medicines and medical research and development is and will likely remain competitive. The development and commercialization of drugs / medicines is highly competitive. We compete with a variety of multinational pharmaceutical companies and specialized biotechnology companies, as well as products and processes being developed by universities and other research institutions. Many of our competitors have developed, are developing, or will develop drugs and processes which may be competitive with our drug candidates. Competitive therapeutic treatments include those that have already been approved by medicines regulators and accepted by the medical community and any new treatments that may enter the market. For some of our drug development programs / areas of therapeutic interest, other treatment options are currently available, under development, and may become commercially available in the future. If any of our pipeline drug candidates is approved for the diseases and conditions we are currently pursuing, they may compete with a range of medicines / therapeutic treatments that are either in development, will be developed in the future or currently marketed.
We are aware of many companies that are engaged in cannabinoid-derived drug development activities. In addition, other U.S.-based and foreign-based companies are in early stage discovery and preclinical development utilizing the cannabinoids CBD and/or THC.
Established companies may have a competitive advantage over us due to their size and experiences, financial resources, and institutional networks. Many of our competitors may have significantly greater financial, technical and human resources than we do. Due to these factors, our competitors may have an advantage in marketing their approved drugs and may obtain regulatory approval of their drug candidates before we are able to, which may limit our ability to develop or commercialize our drug candidates. Our competitors may also develop ingredients and / or drugs / medicines that are safer, more effective, more widely used and less expensive than ours. These advantages could materially impact our ability to develop and, if approved, commercialize our pipeline drug candidates successfully. Furthermore, some of these competitors may make acquisitions or establish collaborative relationships among themselves or with third parties to increase their ability to rapidly gain market share.
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Our pipeline drug candidates may compete with other cannabinoid or cannabis-based drugs, in addition to competing with state-licensed medical and recreational marijuana, in markets where the recreational and/or medical use of marijuana is legal. There is continuing support in the USA for further state legalization of marijuana. In markets where recreational and/or medical marijuana is not legal, our pipeline drug candidates, once approved by regulators, may compete with marijuana or marijuana-based products purchased in the illegal drug market. This may or may not affect the commercial price that we may be able to achieve for our cannabinoid-containing or other non-cannabinoid-containing regulatory-approved medicines, should they be approved by the FDA.
Moreover, as generic versions of drug products enter the market, the price for such medicines may be expected to decline rapidly and substantially. Even if we are the first to obtain FDA approval of one of our pipeline drug candidates, the future potential approval of generics could adversely affect the price we are able to charge and the profitability of our product(s) will likely decline.
Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.
These companies may compete with us in recruiting and retaining qualified scientific, management and commercial personnel, utilizing contract manufacturing facilities or contract research organizations (CROs), or establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to our research projects.
Our failure to comply with existing and potential future laws and regulations relating to drug development could harm our plan of operations.
Our business is, and will be, subject to wide-ranging existing federal and state laws and regulations and other governmental bodies in each of the countries we may develop and/or market our pipeline drug candidates. We must comply with all regulatory requirements if we expect to be successful.
If any of our cannabinoid-containing or cannabis-based or cannabinoid-like-containing pipeline drug candidates are controlled substances and are approved in the United States, they will be subject to ongoing regulatory requirements including federal and state requirements. As a result, we and our collaborators and/or joint venture partners must continue to expend time, money and effort in all areas of regulatory compliance, including, if applicable, manufacturing, production, quality control and assurance, preclinical research and development and, of upmost importance, clinical trials. We will also be required to report certain adverse reactions and production problems, if any and applicable, to the FDA, and to comply with advertising and promotion requirements for our cannabinoid-containing and or cannabinoid-like-containing drug candidates.
Any failure to comply with ongoing regulatory or controlled drug requirements may significantly and adversely affect our ability to conduct clinical trials which are prerequisites to our ability to commercialize our cannabinoid-based and or cannabinoid-like drugs and related treatments. If regulatory sanctions are applied or if regulatory approval, once obtained, is for any reason suspended or withdrawn, the value of our business and our operating results could be materially adversely affected.
Our failure to be able to out-licence some or all of our pipeline drug candidates could harm our plan of operations.
The cost of drug development is high and the attrition rate of new drug pipeline candidates is also high during the drug development process. In order to help fund the development of some of our pipeline drug candidates, the company may wish / need to out-licence some of its assets to other (big) pharmaceutical or biotechnology companies. The aim of such out-licensing would be generate funds for the company which may take the form of up-front payments and / or milestone payments and / or royalties. Such decisions will be taken on a case-by-case basis, as the opportunity arises or is required.
There is no guarantee that the company will generate pipeline drug candidates which are suitable for out-licensing. In addition, even if the company does produce pipeline drug candidates that are suitable for out-licensing there is no guarantee that the company will be successful in being able to identify potential licencees and successfully negotiate such out-licensing agreements, on agreeable terms if and when required. Any failure to secure such out-licensing agreements may materially affect our ability to finance or develop and / or commercialize one or more of our pipeline drug candidates. Any such failure may materially adversely affect our business.
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Our failure to be able to enter Research and Development (R & D) Collaboration Agreements or Joint Venture (JV) Agreements for some or all of our pipeline drug candidates could harm our plan of operations
As mentioned above, the cost of drug development and manufacturing is high. In order to help fund the development of some of our ingredients and pipeline drug candidates, the company may wish to enter into Research and Development Collaboration Agreements or Joint Venture Agreements with other (big) pharmaceutical or biotechnology companies to help research and develop some of its assets and for those companies pay for some or all of the associated R & D costs. The aim of such Collaboration or JV agreements would be to offset some of the company’s R & D costs. Depending upon the outcome of such R & D or JV Agreements, it may lead to the opportunity to outlicence one or more of the assets investigated under the Collaboration Agreement to the same other (big) pharmaceutical or biotechnology company who may be our R &D Collaboration / JV partner. If successful, this may generate funds for the company which may take the form of up-front payments and / or milestone payments and / or royalties. Such decisions will be taken on a case-by-case basis, as the opportunity arises or is required.
There is no guarantee that the company will generate pipeline drug candidates which are suitable for R & D Collaborations or JV Agreements. In addition, even if the company does produce pipeline drug candidates that are suitable for such collaborations or JVs, there is no guarantee that the company will be successful in being able to identify potential R & D collaboration partners or JV partners and successfully negotiate such collaboration or JV agreements, on agreeable terms if and when required. Depending upon the financial status of the company, any failure to secure such collaboration or JV agreements agreements may materially affect our ability to finance or develop and / or commercialize one or more of our pipeline drug candidates. Any such failure may materially adversely affect our business.
The introduction of new businesses, products, services, and technologies, our activities in certain jurisdictions, or other actions we take may subject us to additional laws and regulations. The costs of compliance with these laws and regulations are high and are likely to increase in the future. Any failure on our part to comply with laws and regulations can result in negative publicity and diversion of management time and effort and may subject us to significant liabilities and other penalties.
We could be subject to litigation, allegations or other legal claims.
Our assets or our business activities may be subject to disputes that may result in litigation or other legal claims. We may be subject to allegations through press, social media, the courts or other mediums that may or may not be founded. We may be required to respond to or defend against these claims and/or allegations, which will divert resources away from our principal business. There can be no assurance that our defense of such claims and/or allegations would be successful, and we may be required to make material settlements. This could have a material adverse effect on our business prospects, results of operations, cash flows, financial condition and corporate reputation.
DILUTION
Not applicable. The shares registered under this registration statement are not being offered for purchase by the Company. The shares are being registered on behalf of the Selling Shareholders. There are no shares being offered for sale by the Company.
USE OF PROCEEDS
All of the shares of common stock covered by this prospectus are being sold by the Selling Shareholders. See “Selling Shareholders” below. We will not receive any proceeds from these sales of shares of our common stock.
The Selling Shareholders will pay any underwriting discounts and commissions and expenses incurred by the Selling Shareholders for brokerage, accounting, tax, or legal services or any other expenses incurred by the Selling Shareholders in disposing of the shares. We will bear all other costs, fees, and expenses incurred in effecting the registration of the shares covered by this prospectus, including, without limitation, all registration and filing fees, and fees and expenses of our counsel and our accountants.
DETERMINATION OF OFFERING PRICE
The Selling Shareholders will determine at what price they may sell the offered shares, and such sales may be made at prevailing market prices, or at privately negotiated prices.
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SELLING SHAREHOLDERS
We have prepared this prospectus to allow the Selling Shareholders or their successors, assignees or other permitted transferees to sell or otherwise dispose of, from time to time, up to 40,520,000 shares of our Common Stock. Of the shares of Common Stock being offered under this prospectus: 24,000,000 shares were issued in December of 2021 to acquire certain IP rights from C2 Wellness Corp.; 16,000,000 shares were issued to various providers for services rendered in 2022; 400,000 shares were issued in conversion of convertible notes in December of 2021 and 120,000 shares were issued as equity following investment in December 2021. All 40,520,000 shares are part of this registration statement.
The table below presents information regarding the Selling Shareholders and the shares of our Common Stock that they may sell or otherwise dispose of from time to time under this prospectus. Percentages of beneficial ownership are based upon 802,633,333 shares of Common Stock issued and outstanding as of April 01, 2022. Beneficial ownership is determined under Section 13(d) of the Exchange Act and generally includes voting or investment power with respect to securities and including any securities that grant the Selling Shareholders the right to acquire Common Stock within 60 days of April 01, 2022. Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable.
We do not know when or in what amounts the Selling Shareholders may sell or otherwise dispose of the shares covered hereby. We currently have no agreements, arrangements or understandings with the Selling Shareholders regarding the sale of any of the shares by them. The Selling Shareholders might not sell any or all of the shares covered by this prospectus or may sell or dispose of some or all of the shares other than pursuant to this prospectus. Because the Selling Shareholders may not sell or otherwise dispose of some or all of the shares covered by this prospectus and because there are currently no agreements, arrangements or understandings with respect to the sale or other disposition of any of the shares, we cannot estimate the number of the shares that will be held by the Selling Shareholders after completion of the offering.
Each Selling Shareholder has indicated to us that neither it nor any of its affiliates has held any position or office or had any other material relationship with us in the past three years except as described in the footnotes to the table.
The shares of common stock being offered under this prospectus may be offered for sale from time to time during the period the registration statement of which this prospectus is a part remains effective, by or for the accounts of the Selling Shareholders named below.
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| Shares of Common Stock | ||||||||||||
|
Name of Selling Shareholder |
Beneficially Owned Prior to the Sale of all Shares covered by this Prospectus |
Covered by this Prospectus |
Beneficially Owned After the Sale of all Shares covered by this Prospectus |
As a Percent of Total Outstanding After the Sale of Shares covered by this Prospectus |
||||||||
| Alain Walter Speechaert | 369,750 | 369,750 | 0 | 0 | ||||||||
| Alequtian Equity Holdings LLC(1) | 2,586,090 | 2,586,090 | 0 | 0 | ||||||||
| Patrick Georges Vanherck | 128,660 | 128,660 | 0 | 0 | ||||||||
| Thomas W. Capellini | 1,530,000 | 1,530,000 | 0 | 0 | ||||||||
| Screven Watson | 51,000 | 51,000 | 0 | 0 | ||||||||
| Peter Weprin | 51,000 | 51,000 | 0 | 0 | ||||||||
| Herve Thieren | 85,170 | 85,170 | 0 | 0 | ||||||||
| The Final Frontier Inc. (2) | 1,657,500 | 1,657,500 | 0 | 0 | ||||||||
| Societe D’Equipment General International S.A (3) | 127,500 | 127,500 | 0 | 0 | ||||||||
| Whitney K. Connor | 127,500 | 127,500 | 0 | 0 | ||||||||
| Hemlock Holdings LLC (4) | 2,331,490 | 2,331,490 | 0 | 0 | ||||||||
| John Stanley | 127,500 | 127,500 | 0 | 0 | ||||||||
| Philippe De Cock Rameyen | 315,000 | 315,000 | 0 | 0 | ||||||||
| Antoine De Sejournet De Rameignies | 510,000 | 510,000 | 0 | 0 | ||||||||
| Philippe Millares | 51,000 | 51,000 | 0 | 0 | ||||||||
| Thierry De Landtsheer | 68,340 | 68,340 | 0 | 0 | ||||||||
| Erik Jakob Engstrom | 63,750 | 63,750 | 0 | 0 | ||||||||
| Wellmore Trading Ltd (5) | 510,000 | 510,000 | 0 | 0 | ||||||||
| Robert Osselaer | 285,750 | 285,750 | 0 | 0 | ||||||||
| Gabriel Fysh | 178,500 | 178,500 | 0 | 0 | ||||||||
| G Sridhar Prasad | 12,000,000 | 12,000,000 | 0 | 0 | ||||||||
| Raf Thienpont | 127,500 | 127,500 | 0 | 0 | ||||||||
| Christopher Charles Le Jeune | 502,000 | 502,000 | 0 | 0 | ||||||||
| Jacques Emsens | 735,000 | 735,000 | 0 | 0 | ||||||||
| C2 Holdings LLC (6) | 4,000,000 | 4,000,000 | 0 | 0 | ||||||||
| REB Consultancy LLC (7) | 12,000,000 | 12,000,000 | 0 | 0 | ||||||||
| TOTAL | 40,520,000 | 40,520,000 | 0 | 0 | ||||||||
| (1) | Roger Bendelac has voting and disposition control over the shares. |
| (2) | Marc Schultz has voting and disposition control over the shares. |
| (3) | Jean-Marc Beaujolin has voting and disposition control over the shares. |
| (4) | Philip R.H. Connor III has voting and disposition control over the shares. |
| (5) | Olivier Bassou has voting and disposition control over the shares. |
| (6) | Roger Bendelac has voting and disposition control over the shares. |
| (7) | Roger Bendelac has voting and disposition control over the shares. |
Roger Bendelac has provided consultancy services to the company: identifying potential targets for acquisitions and providing negotiations services between January 02 2022 and March 03, 2023.
The Selling Shareholders, or their partners, pledgees, donees, transferees or other successors that receive the shares and their corresponding registration, may sell up to all of the shares of our common stock shown in the table above pursuant to this Prospectus in one or more transactions from time to time as described below under “Plan of Distribution.” However, the Selling Shareholders are not obligated to sell any of the shares of our common stock offered by this prospectus.
Information about the Selling Shareholders may change from time to time. Any changed information with respect to which we are given notice will be included in prospectus supplements.
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PLAN OF DISTRIBUTION
We are registering the shares of Common Stock to permit the resale of these shares of Common Stock by the Selling Shareholders and any of their transferees, pledgees, assignees, donees, and successors-in-interest from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the Selling Shareholders of the shares of Common Stock. We are registering these shares in response to an undertaking by our company to register an amount of shares, such that our public float increases to at least 10% of our outstanding shares. We plan to upgrade to the OTCQB tier of OTC Markets, but we currently have a 5.6% public float and short of the 10% float needed to upgrade to OTCQB. We are registering these shares as part of our letter of intent to OTC Markets that certain shares would be registered to increase the overall float to 10% of our outstanding shares.
Each Selling Shareholder (the “Selling Shareholders”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby at a fixed price of $0.21 per share or, if on the OTCQB or a national exchange, at prevailing market prices, at prices related to such prevailing market prices, at varying prices determined at the time of sale, at negotiated prices, or at fixed prices.. A Selling Shareholder may use any one or more of the following methods when selling securities:
| § | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| § | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| § | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| § | an exchange distribution in accordance with the rules of the applicable exchange; |
| § | privately negotiated transactions; |
| § | settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; |
| § | in transactions through broker-dealers that agree with the Selling Shareholders to sell a specified number of such securities at a stipulated price per security; |
| § | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| § | a combination of any such methods of sale; or |
| § | any other method permitted pursuant to applicable law. |
The Selling Shareholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Shareholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Shareholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
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The Selling Shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Shareholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
Because Selling Shareholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Shareholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Shareholders.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of securities of the common stock by the Selling Shareholders or any other person. We will make copies of this prospectus available to the Selling Shareholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
LEGAL PROCEEDINGS
From time to time, we may become party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operation if determined adversely to us.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following information sets forth the names, ages, and positions of our current directors and executive officers.
| Name | Age | Positions and Offices Held | ||||
| Timothy Rogers | 58 | Chairman, CFO and Director | ||||
| Seamus McAuley | 46 | Chief Executive Officer, Secretary and Director | ||||
| Colin Stott | 56 | Chief Operating Officer and Director | ||||
| Hunter Land | 38 | Vice President of Translational Research and Director | ||||
| Dominic Schiller | 58 | Chief Intellectual Property Officer and Director | ||||
| Daniel Reshef | 70 | Director | ||||
| Ning Qu | 54 | Director | ||||
Set forth below is a brief description of the background and business experience of each of our current executive officers and directors.
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Timothy Paul Rogers – CFO - Director - Chairman Age 58
Timothy. Rogers is an international business leader with 35 years’ experience in global sales and marketing, specifically launching products from an intellectual property platform. Mr. Rogers is multi-lingual, and has been involved with start-ups in Singapore, South East Asia, Africa, Australia, the United States, Canada and Europe in the pharmaceutical, agriculture, essential oil, biocide, oil and gas and cosmetic sectors. He has gained success from a number of industry disturbing products and services, leading in particular, to being part of the team taking control of Alterola. Trained as an accountant, he is known for his finance connections, his complex business interests across the globe and specifically in Africa, ranging from mining, agriculture and controlled substances and linking them all to a focused coffee based social equity program for economic empowerment of African agricultural workers. He is known for his closeness to a number of African politicians and business leaders, and his co-operation with these 21st century African entrepreneurs is with the aim to establish a new foreign investment policy in Africa to use the vast resource of that continent to benefit the most disadvantaged in society. Tim has lived and worked in UK, Ireland, France, Australia, U.S.A and Thailand for the past 40 years and has conducted business in over 40 countries across the world physically visiting each one personally.
He currently serves as a Director of Novagean International Limited. a medical device and therapeutic diagnostic manufacturer and clinical research company based in China and Galway Ireland.
In recent years, Mr. Rogers has focused his time building a multi-sector agro-pharma drug development business in Africa which includes controlled substances.
Mr. Rogers earned diplomas including Business Studies from Birkenhead Technical College, and Animation at the Fisher School of English in Paris, France
Seamus McAuley – Director – Chief Executive Officer- Age 46
Seamus McAuley is a proven Senior Commercial Executive with extensive experience in bringing products to market in the pharmaceutical, biotech, diagnostic and device sectors. He is the founder and CEO of Opes Medical Holdings Ltd., a consultancy offering strategic executive services for the development of new and innovative medical technologies and in- vitro diagnostics, accessing funding sources and commercial launch of products. Related services include corporate due diligence, market projection assessment, down-stream value strategies, implementing customized distribution strategies and deal negotiations. Opes has interests in multiple technologies and innovations which hold great commercial promise and has led investment rounds and grant applications for product development through vehicles including Horizon 2020 and the Disruptive Technology Innovation Fund.
Before founding OPES, Mr. McAuley held several senior level sales and commercialization positions, most recently as European Corporate Development Manager for Diploma PLC, an international group of businesses supplying specialized technical products and services to the Life Sciences sector, where he was responsible for identifying, targeting, assessing and closing company acquisitions in strategically identified geographic zones and market sectors. Prior to that, he was Sales and Commercial Director (UK & Ireland) for Technopath Distribution Ltd, an international manufacturer and distributor of clinical diagnostic products, where he more than doubled sales.
Mr. McAuley began his life sciences career as a nurse practitioner in ICU, surgical and trauma wards, before transitioning to the corporate side with GlaxoSmithKline. He quickly gained recognition for his sales capabilities - consistently ranking in the top 2% of GSK sales executives during his tenure - and for developing and executing record setting campaigns for a number of high-profile products, including the UK rollout of the Papilloma virus vaccine, neurological therapies for Parkinson's, smoking cessation, diabetes, depression, urology and erectile dysfunction products. Mr. McAuley earned Diplomas in Counselling and Nursing from the University of Ulster.
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Dominic Schiller – Director – IP Counsel Age 58
Mr. Schiller is a Chartered and European Patent Attorney with over 30 years of experience, largely in the pharmaceutical, botanical and nutraceutical industries. He is the founder and CEO of Equipped 4 Holdings Limited, the parent company of Equipped 4 (IP) Limited, an Intellectual Property law practice, specializing in building patent portfolios for biotech companies, most notably GW Pharmaceuticals and Compass Pathways.
A pioneer in innovative pharmaceutical sectors, Mr. Schiller successfully secured some of the earliest and most prominent cannabinoid related patents for GW Pharma, helping them establish an IP portfolio comprising claims directed to plants, plant extracts, extraction technology, pharmaceutical formulations, drug delivery and the therapeutic uses of cannabinoids, as well as plant variety rights. He was also the patent attorney behind Compass Pathways, a mental health care company, where he drafted and prosecuted to grant, patents relating to a psilocybin polymorph, formulations and their medical use to treat drug resistant depression. For Phynova, a natural products company, he has secured patents for Chinese herbal products, products with Food Approvals and products with MHRA approvals under the Traditional Herbal Medicinal Product (THMP) directive.
Mr. Schiller serves as a director and/or advisor to other life sciences companies, including The Life Sciences Division (an investment bank) and Atai Life Sciences (a leading mental health company), and plays an active management role for a number of companies which he helped found. He is also an inventor on two key GW Pharmaceutical patents relating to “The use of cannabinoids in the treatment of epilepsy” and “The use of cannabinoids in the treatment of mental disorders.”
Mr. Schiller holds a combined honors degree in Biochemistry and Genetics from Leeds University and earned his MBA from Liverpool University.
Colin Stott – Chief Operating Officer and Director - Age 56
Mr Stott is an experienced preclinical and clinical research profession with more than 30 years experience in the experience in preclinical & clinical development with specific expertise in the development of botanical medicines, particularly cannabinoid / cannabis-based medicines He is a veteran of the cannabis / cannabinoid medicines industry, with more than 20 years in the sector. He was Director of Research and Development Operations at GW Pharmaceuticals (now Jazz Pharmaceuticals) from 2001 until May 2017, and was closely involved in the development and approval of Sativex®, GW’s first licensed cannabis-based product, and the more recently NDA-approved cannabinoid (CBD) medicine for treatment-resistant epilepsy, Epidiolex®. He was also a key individual in the development of GW’s discovery and development pipeline, until 2017. As Scientific Affairs Director, he was part of the Medical Affairs team responsible for the preparation for launch of Epidyolex® in the international region (ex-US). Colin has a BSc (Hons) in Medicinal and Pharmaceutical Chemistry (Loughborough University of Technology) and a Diploma in Clinical Science (University of Wales).
From November 2020 – present, Mr. Stott has been Founder and Chief Executive Officer of Phytotherapeutix Holdings Ltd. From April 2019 – present, Mr. Stott has been Founder and Chief Executive Officer of Phytotherapeutix Ltd. From July 1, 2019 – December 1, 2020, he served as Chief Operating Officer for Alinova Biosciences Ltd. From June 1, 2017 – May 31, 2019, he served as Scientific Affairs Director, International Division for GW Pharmaceuticals plc. From January 2001 – May 31, 2017, he was R & D Operations Director for GW Pharmaceuticals plc.
Hunter Land – Age 38
Hunter Land has over 20 years of R&D expertise across 15 different indications, as well as 10 years of cannabinoid-focused research. As an expert in the field of cannabinoid science, he has developed a pipeline of discovery work on over 20 novel cannabinoids and terpenes. Previously, Hunter acted as the Sr. Scientific Director, Director of Cannabinoid Research, and scientific spokesperson at Canopy Growth Corporation. Most notably, Hunter co-established R&D for GW Pharmaceuticals within the US, where he authored multiple protocols in refractory epilepsy (Dravet Syndrome and Lennox-Gastaut Syndrome), Multiple Sclerosis, pain, and led the clinical development of Epidiolex® (FDA approved prescription CBD). Hunter acts as the Sr. Scientific Advisor for the National Hockey League Alumni Association in conjunction with NEEKA Brain Health, a board member of Veterinary Cannabis Society, and lectures at the University of Wisconsin. He has been a featured speaker at over 50 scientific conferences, a named inventor on 6 patent applications, and has over 20 publications.
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Dr. Daniel Reshef - Director – Age 70
Dr. Daniel Reshef is an Executive Director with substantial clinical experience and demonstrated history of strategic work in the pharmaceuticals industry. Skilled in Immuno-Oncology, Oncology, Biomarkers, Epidemiology, Vaccines, Ophthalmology, and Clinical Pharmacology, he is Board certified in Ophthalmology. Dan has extensive experience in clinical, industry, and public health settings, technical skills, project management and data quality.
Dr. Reshef worked at Roche, Genentech and served as Therapeutic Area Lead – Immuno- Oncology at a leading pharmaceutical company. Dan has also been successfully involved in numerous entrepreneurial ventures in the past 20 years. He has been active in diverse areas such as the hotel industry, technology start- ups, Customer Relations Management (CRM), innovative novel energy sources, blockchain, cryptocurrencies and Forex. Dr. Reshef earned his MPH & PhD in Epidemiology from Johns Hopkins University.
Prof. Dr. Ning Qu – Age 54
Ning Qu was born in China in 1968. He finished his Medical School in China Medical University in 1991 (Cum Laude). He received his medical specialist training in Cardiothoracic Surgery in Shanghai Chest Hospital and University Medical Center Groningen (UMCG). He is a registered clinical practitioner both in the Netherlands and China. His strong clinical interest in cardiac surgery is Organ Transplantation (Lung) and open heart surgical intervention on Atrial Fibrillation. He got his PhD from Groningen University in Lung Transplantation Immunology, and is currently holding two professor (visiting) positions in Cardiac Surgery and Translational Medicine. He is also one of the four founding professors of Medical Academy in 2018 of Tianjin University, China.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Family Relationships
There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.
Advisory Board
We currently do not have an advisory board, but we intend to establish one at a later date.
Involvement in Certain Legal Proceedings
During the past 10 years, none of our current directors, nominees for directors or current executive officers has been involved in any legal proceeding identified in Item 401(f) of Regulation S-K, including:
1. Any petition under the Federal bankruptcy laws or any state insolvency law filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he or she was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing;
2. Any conviction in a criminal proceeding or being named a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him or her from, or otherwise limiting, the following activities:
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i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
4. Being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any type of business regulated by the Commodity Futures Trading Commission, securities, investment, insurance or banking activities, or to be associated with persons engaged in any such activity;
5. Being found by a court of competent jurisdiction in a civil action or by the SEC to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6. Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7. Being subject to, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i. Any Federal or State securities or commodities law or regulation; or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Being subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Committees of the Board
Our company currently does not have nominating or compensation committees performing similar functions nor does our company have a written nominating or compensation committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the board of directors.
We do have an Audit and Compliance Committee, with Ning Qu as Chairperson. We also have Brendan McAleer and Duncan Boxwell on the Committee. The Committee will be responsible for our accounting and financial reporting processes and the audit of our financial statements.
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Our company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our CEO and director Seamus McAuley, at the address at our address indicated in this Prospectus.
Code of Ethics
We have not adopted a Code of Ethics that applies our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 01, 2022, certain information as to shares of our common stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group:
| Name and Address of Beneficial Owners of Common Stock | Title of Class | Amount and Nature of Beneficial Ownership 1 | % of Common Stock 2 | ||||
| Timothy Rogers(3) | Common Stock | 180,000,000 shares | 22.4% | ||||
| Seamus McAuley(4) | Common Stock | 30,000,000 shares | 3.7% | ||||
| Dominic Schiller(5) | Common Stock | 180,000,000 shares | 22.4% | ||||
| Daniel Reshef | - | 4,400,000 shares | Less than 1% | ||||
| Ning Qu(7) | Common Stock | 30,000,000 shares | 3.7% | ||||
| Colin Stott (8) | Common Stock | 180,000,000 | 22.4% | ||||
| Hunter Land | Common Stock | - | - | ||||
| Officers and Directors as a Group (8 persons) | Common Stock | ______ | 76.8% | ||||
| 5% SHAREHOLDERS | |||||||
| NONE | |||||||
| 1. | As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date. | |
| 2. | The percentage shown is based on denominator of 802,633,333 shares of common stock issued and outstanding for the company as of April 01, 2022. | |
| 3. | All shares are held in TPR Holdings Limited, in which Mr. Rogers has voting and investment control over the shares. | |
| 4. | All shares are held in Opesmedical Holdings Ltd., in which Mr. McAuley has voting and investment control over the shares. | |
| 5. | All shares are held in Equipped 4 Holdings, in which Mr. Schiller has voting and investment control over the shares. | |
| 6. | All shares are held in Partner Investments B.V. in which Mr. Qu has voting and investment control over the shares. | |
| 7. | All shares are held in Phytotherapeutix Holdings Ltd in which Mr. Stott has voting and investment control over the shares. | |
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DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 2,000,000,000 shares of common stock and 10,000,000 shares of preferred stock, par value $0.001 per share. As of April 01, 2022, there were 802,633,333 shares of our common stock issued and outstanding (not including the Commitment Shares) and 0 shares of our preferred stock issued and outstanding.
Common Stock
Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors.
Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available therefore.
Subject to any preferential rights of any outstanding series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.
In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.
Preferred Stock
Our board of directors may become authorized to authorize preferred shares of stock and to divide the authorized shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock including, but not limited to, the following:
| (1) | The number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter or title; |
| (2) | The dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series; |
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| (3) | Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; |
| (4) | Whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines; |
| (5) | Whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; |
| (6) | Whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; |
| (7) | The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; and |
| (8) | Any other relative rights, preferences and limitations of that series. |
Series A Preferred Stock
On December 7, 2020, we filed a Certificate of Designation with the Nevada Secretary of State to designate a class of Series A Preferred Stock. The Series A Preferred Stock features are summarized below:
1) Consists of 8,000,000 shares;
2) Super voting rights of 10 votes of common stock per share;
3) Liquidation preference of $1.00 per share; and
4) Conversion rights into common on a 1:10 basis with adjustments.
There are no outstanding shares of Series A Preferred Stock as of the date of this prospectus
Provisions in Our Articles of Incorporation and By-Laws That Would Delay, Defer or Prevent a Change in Control
Our articles of incorporation authorize our board of directors to issue a class of preferred stock commonly known as a “blank check” preferred stock. Specifically, the preferred stock may be issued from time to time by the board of directors as shares of one (1) or more classes or series. Our board of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to adopt resolutions; to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and to provide for or change the following: the voting powers; designations; preferences; and relative, participating, optional or other special rights, qualifications, limitations or restrictions, including the following: dividend rights, including whether dividends are cumulative; dividend rates; terms of redemption, including sinking fund provisions; redemption prices; conversion rights and liquidation preferences of the shares constituting any class or series of the preferred stock.
In each such case, we will not need any further action or vote by our shareholders. One of the effects of undesignated preferred stock may be to enable the board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the board of director’s authority described above may adversely affect the rights of holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a premium or may otherwise adversely affect the market price of the common stock.
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Share Purchase Warrants
We have no outstanding warrants to purchase our securities, aside from the Commitment Warrants associated with .the Purchase Agreement with EMC2 of 11 August 2021. Pursuant to the terms of the Purchase Agreement, at the time we signed the Purchase Agreement and the Registration Rights Agreement, we issued 7,500,000 shares of our common stock and 15,000,000 warrants to EMC2 as consideration for its commitment to purchase shares of our common stock under the Purchase Agreement, which we refer to in this prospectus as the Commitment Shares and Commitment Warrants.
The exercise price per share of the Common Stock under this Warrant shall be $0.64, Subject to adjustment. In the event that the Bid Price drops below the Exercise Price at anytime, the Exercise Price will decrease (for detail see Common Stock Purchase Warrant, dated August 11, 2021).
Options
We have no outstanding options to purchase our securities, aside from the Commitment Warrants.
Convertible Securities
On November 10, 2021 we issued a convertible loan note to Christopher Le Jeune for $100,000 US Dollars. This loan note was converted into 400,000 shares of restricted stock on December 20, 2021.
We do not have outstanding any securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.
Certain Anti-Takeover Provisions
Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company.
INTERESTS OF NAMED EXPERTS
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
The Doney Law Firm, our independent legal counsel, has provided an opinion on the validity of our common stock.
AJ Robbins CPA, LLC and Gries & Associates, LLC have audited our financial statements included in this prospectus and registration statement to the extent and for the periods set forth in their audit reports. AJ Robbins CPA, LLC and Gries & Associates, LLC have presented their reports with respect to our audited financial statements. The reports of AJ Robbins CPA, LLC and Gries & Associates, LLC is included in reliance upon their authority as experts in accounting and auditing.
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DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the following provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the shares being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
DESCRIPTION OF BUSINESS
Overview
Our goal is to provide better medicines for patients across the globe. We believe in harnessing the therapeutic potential of cannabinoids and cannabinoid- like compounds, which can bring valuable treatments to seriously ill patients. Rather than just focussing on one method of identifying, researching and developing such medicines, we are interested in developing new medicines from all sources including botanical, traditional chemical synthesis and biosynthetic methodologies.
On May 28, 2021, we acquired ABTI Pharma Limited, a company registered in England and Wales (“ABTI Pharma”), with the purchase of all of its capital stock in exchange for 600,000,000 shares of our common stock pro rata to the ABTI Pharma shareholders.
As a result of the acquisition, we are a pharmacuetical company working with cannabinoid and cannabinoid like molecules. We have three areas of focus:
1) Development of regulated pharmaceuticals (human and animal health) and regulated food products. This has been achieved via the strategic acquisition of Phytotherapeutix Ltd.
2) Production of low cost of goods Active Pharmaceutical Ingredient (API) and food-grade ingredients (supported by the strategic acquisition of Ferven Ltd), and
3) Formulation, and drug delivery, providing improved bioavailability, solubility and stability (supported by the exclusive licensing of IP and technology from Nano4M Ltd).
Phytotherapeutix Ltd, a subsidiary of ABTI Pharma, has generated a number of molecules with patents pending, some of which have demonstrable pharmacological activity, similar to that of CBD. This means that some of these molecules are anticipated to have a similar market potential to CBD across a range of therapeutic areas.
Ferven Ltd, another subsidiary of ABTI Pharma, is looking to produce cannabinoids by fermentation. The exclusively licensed organism has the potential to be genetically modified to produce multiple cannabinoids at a very low cost of goods. It is anticipated that the selected genetically modified organisms will grow very quickly, which in turn, reduces the cost of production.
Nano4M Ltd is a company which has exclusively licensed its nano-formulation patents and know-how to ABTI Pharma Ltd.
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As a result of the acquisition of assets and intellectual property from C2 Wellness Corp. on December 02, 2021, Alterola now has the following assets and intellectual property:
| · | Novel cannabinoid molecules and their associated intellectual property; | |
| · | Novel cannabinoid pro-drugs, and their associated intellectual property; | |
| · | Novel proprietary cannabinoid formulations, designed to target lymphatic delivery, and their associated intellectual property; | |
| · | Novel proprietary nano-encapsulated cannabinoid formulations, in self dissolving polymers, and their associated intellectual property; and | |
| · | Cannabinoids and cannabinoid pro-drug formulations for topical ocular delivery, and their associated intellectual property. |
Additionally, we may consider entering into Joint Venture Partnerships, Acquisition of Companies with complimentary portfolios or Licencing Agreements to enhance the product portfolio. These are strategies the Company may implement and any such opportunities will be assessed on a case by case basis and on their merit at the time.
Alterola and ABTI Pharma management has extensive proven experience, know-how and connections in the cannabinoid medicines sector, and is looking to utilize this knowledge and experience for the development of such medicines from existing cannabinoids and cannabinoid-like molecules.
Our address is 47 Hamilton Square Birkenhead Merseyside CH41 5AR United Kingdom. Our telephone number is +44 151 601 9477. Our website is www.alterolabio.com.
The company has a fully operational US$ and a £ sterling bank account in the United Kingdom with the HSBC Group.
We do not incorporate the information on or accessible through our websites into this Registration Statement, and you should not consider any information on, or that can be accessed through, our websites a part of this Registration Statement.
Competition
Pharmaceutical Sector
The cannabinoid-based and cannabinoid-like pharmaceutical medicine research and development sector is and will likely remain competitive. In general, the biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition, and a strong emphasis on proprietary drugs / medicines.
We expect that Alterola will be required to compete with a variety of multinational pharmaceutical companies and specialized biotechnology companies, as well as drugs and processes being developed at universities and other research institutions. Our competitors may develop or may already have developed drugs comparable or competitive with our pipeline drug candidates. Competitive therapeutic treatments for diseases, disorders and medical conditions that are included in our pipeline development projects have already been approved by the pharmaceutical regulatory bodies around the world (e.g. FDA, EMA etc.) and used / prescribed by the medical community and any new treatments that may enter the market would face fierce competition.
We are aware of a number of companies that are engaged in cannabinoid-based drug development. In addition, several other U.S.-based companies are in early stage discovery and preclinical development utilizing synthetic and/or plant- derived cannabinoids such as CBD and/or THC.
Non-Pharmaceutical Sector
Due to Federal regulation, it is not currently possible to develop THC or CBD-containing products for non- pharmaceutical use (e.g. as food ingredients or dietary supplements) in the USA. However, it is possible to develop cannabinoid- containing ingredients and products in the food sector in Europe through the Novel Food Approvals route.
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Again this sector is and will likely remain competitive in territories where it is legal to develop and sell such products. Further it is also possible to develop cannabinoid-containing ingredients in the cosmetics sector.
For both pharmaceutical and non-pharmaceutical markets, established companies may have a competitive advantage due to their size and experiences, positive cash flows and institutional networks. Many of our pharma and non-pharma competitors may have significantly greater financial, technical and human resources than we do. Due to these factors, our competitors may have a range of competitive advantages and may obtain regulatory approval of their active pharmaceutical ingredient (API), or medicines; or food ingredients or food products or cosmetic ingredients before we are able to develop or commercialize our pharma or non pharma active ingredients or products. Our competitors may also develop ingredients or products that are safer, more effective, more widely used and less expensive than ours.
Furthermore, some of these competitors may make acquisitions or establish collaborative relationships among themselves or with third parties to increase their ability to rapidly gain market share and/or increase their ingredient or product lines.
Mergers and acquisitions in the pharmaceutical and biotechnology and non-pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors. Smaller and other early-stage companies, such as ours, may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. We aim to compete with large and small companies in recruiting and retaining qualified scientific, management and commercial personnel, and using our management knowhow and expertise in the sector to develop ingredients and products in a compliant manner, as well as in acquiring technologies complementary to our development programs.
Intellectual Property:
Through the acquisition of ABTI Pharma, Alterola has acquired ABTI Pharma’s IP portfolio, which includes:
| 1) | IP including patent applications pertaining to novel compounds for development of pharmaceutical drug candidates and their therapeutic use; |
| 2) | IP (including organisms, protocols and knowhow) pertaining to low cost of goods production of Active Pharmaceutical Ingredient (API) and food-grade ingredients; and |
| 3) | IP including granted patents pertaining to particle engineering technology, formulation, and drug delivery technologies, which will provide improved drug performance. |
Through the acquisition of assets and intellectual property from C2 Wellness Corp. on December 02, 2021, Alterola now has the following assets and intellectual property:
| · | Novel cannabinoid molecules and their associated intellectual property; |
| · | Novel cannabinoid pro-drugs, and their associated intellectual property; |
| · | Novel proprietary cannabinoid formulations, designed to target lymphatic delivery, and their associated intellectual property; |
| · | Novel proprietary nano-encapsulated cannabinoid formulations, in self dissolving polymers, and their associated intellectual property; and |
| · | Cannabinoids and cannabinoid pro-drug formulations for topical ocular delivery, and their associated intellectual property. |
In addition, ABTI Pharma have in principle agreements to bring in additional complimentary technologies with incumbent IP.
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Regulatory Matters Pharmaceuticals USA
As a development stage company that intends to have its pipeline drug candidates approved in the U.S., we are subject to extensive regulation by regulatory agencies. The U.S. Food, Drug, and Cosmetic Act and its implementing regulations set forth, among other things, requirements for the research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and promotion of our drugs (medicines). Generally, our activities in other countries will be subject to regulations that are similar in nature and scope as those in the United States, although there can be important differences. Additionally, some significant aspects of regulation in the European Union are addressed in a centralized way through the European Medicines Agency (“EMA”) and the European Commission, but country- specific regulation remains essential in many respects. The process of obtaining regulatory marketing approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be successful.
Given that the active ingredients present in our APIs, food ingredients and cosmetic ingredients are in some cases considered to be controlled substances, in certain jurisdictions / territories, there are additional regulations which are applicable to the research, development, import, receipt, possession, storage, preparation, extraction, synthesis, biosynthesis, manufacture, processing, analysis, release, formulation, dispensing, packaging and labelling, import/export, transport, commercialization, advertising and supply / distribution of Controlled Substances. This means that Alterola needs to be compliant with competent authorities such as the DEA (USA), The Home Office (UK) and the corresponding authorities in each country.
We intend to conduct some of our research and development relating to our drug candidates in the United States, at which time, our research and development, future manufacturing, distribution and sale of our drugs will become subject to the United States Federal Controlled Substances Act of 1970 and regulations promulgated thereunder.
While cannabis is a Schedule I controlled substance, drugs approved for medical use in the United States that contain cannabis or cannabis extracts must be placed in Schedules II-V, since approval by the FDA satisfies the “accepted medical use” requirement. If any of our pipeline drug candidates will receive approval by the FDA, it must be listed by the DEA as an appropriately scheduled controlled substance to be allowed for commercialization.
Consequently, the manufacture, importation, exportation, domestic distribution, storage, sale and legitimate use of our future ingredients and / or drugs will be subject to a significant degree of regulation by the DEA. In addition, individual states in the United States have also established controlled substance laws and regulations. Though state-controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule our ingredients and / or drugs.
Europe
It is the company’s intention have its ingredients and pipeline drug candidates approved in countries in addition to the USA and hence we are subject to extensive regulation by other international regulatory agencies, and the applicable local laws and regulations.
Similarly to the U.S. Food, Drug, and Cosmetic Act in the USA and its implementing regulations, there are similar laws and regulations in Europe for the research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and promotion of our drugs (medicines). Again, our activities in Europe will be subject to regulations that are similar in nature and scope as those in the United States, although there can be important differences.
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Our pipeline candidates may be developed or approved through the Centralized Procedure or Decentralized Procedure through the or through the Mutual Recognition Procedure (MRP) through the European Medicines Agency (“EMA”) and the European Commission; however it should be noted that country-specific regulation remains essential in many respects. The process of obtaining regulatory marketing approvals and the subsequent compliance with the appropriate national, federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be successful.
Again, given that the active ingredients present in our APIs, food ingredients and cosmetic ingredients are in some countries are considered to be controlled substances in certain European jurisdictions / territories, there are additional regulations which are applicable to the research, development, import, receipt, possession, storage, preparation, extraction, synthesis, biosynthesis, manufacture, processing, analysis, release, formulation, dispensing, packaging and labelling, import/export, transport, commercialisation, advertising and supply / distribution of Controlled Substances. This means that Alterola needs to be compliant with each competent authority in each European country as applicable.
Japan
It is the company’s intention have its pipeline drug candidates in due course approved in Japan and hence we are subject to extensive regulation by the pharmaceutical regulatory authority of Japan: the Pharmaceutical and Food Safety Bureau (PFSB) of the Japanese Ministry of Health, Labor and Welfare (MHLW), and the Japanese applicable local laws and regulations.
Japan has its own laws and regulations for the research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and promotion of our drugs (medicines).
Again, given that the active ingredients present in our APIs, food ingredients and cosmetic ingredients are in some countries are considered to be controlled substances in Japan, there are additional regulations which are applicable to the research, development, import, receipt, possession, storage, preparation, extraction, synthesis, biosynthesis, manufacture, processing, analysis, release, formulation, dispensing, packaging and labelling, import/export, transport, commercialization, advertising and supply / distribution of Controlled Substances. This means that Alterola needs to be compliant with the Japanese competent authority requirements.
The process of obtaining regulatory marketing approvals and the subsequent compliance with the appropriate national and local statutes and regulations of Japan require the expenditure of substantial time and financial resources and we may not be successful.
Rest of the World
It is the company’s intention have its pipeline drug candidates in due course approved in other countries around the world (Rest of World) and hence we are subject to extensive regulation by the various national pharmaceutical regulatory authorities which govern the various countries, and the applicable local laws and regulations.
Different countries have different laws and regulations for the research, testing, development, manufacture, quality control, safety, effectiveness, approval, labeling, storage, record keeping, reporting, distribution, import, export, advertising and promotion of our drugs (medicines).
Again, given that the active ingredients present in our APIs, food ingredients and cosmetic ingredients are in some countries are considered to be controlled substances in some countries, there are additional regulations which are applicable to the research, development, import, receipt, possession, storage, preparation, extraction, synthesis, biosynthesis, manufacture, processing, analysis, release, formulation, dispensing, packaging and labelling, import/export, transport, commercialization, advertising and supply / distribution of Controlled Substances. This means that Alterola needs to be compliant with each competent authority in each country as applicable.
The process of obtaining regulatory marketing approvals and the subsequent compliance with the appropriate national, federal, state, local and foreign statutes and regulations of other countries (ex-US, Europe and Japan) require the expenditure of substantial time and financial resources and we may not be successful.
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The Regulatory Process for the approval of New Medicines
The Company operates in a highly controlled new drugs / medicines regulatory environment. Strict regulations establish requirements relating to demonstration of quality, safety and efficacy of a medicine. Regulations also cover preclinical and clinical research and development, manufacturing and reporting procedures, both pre- and post- approval. Failure to comply with regulations can result in stringent sanctions, including product recalls, withdrawal of approvals, seizure of products and criminal prosecution. Further, many countries have stringent regulations relating to the possession and use of cannabis or cannabinoid or cannabis-based medicines or medicines containing cannabinoid-like compounds.
Before obtaining regulatory approvals for the commercial sale of our future drug candidates, we must demonstrate that the proposed medicine demonstrates quality, safety and efficacy. From a quality perspective this is done through demonstrating appropriate chemistry and manufacturing controls (CMC), and from a safety and efficacy perspective, this is done through demonstrating that our drug candidates are safe and effective in preclinical studies and clinical trials. Historically, the results from preclinical studies and early clinical trials often have not accurately predicted results of later clinical trials. In addition, many pharmaceuticals have shown promising results in clinical trials but subsequently failed to establish sufficient safety and efficacy results to obtain necessary regulatory approvals.
We expect to incur substantial expense for, and devote a significant amount of time to, the development of quality ingredients and products as well as preclinical studies and clinical trials. Many factors can delay the commencement and rate of completion of clinical trials, including the inability to recruit patients at the expected rate, the inability to follow patients adequately after treatment, the failure to manufacture sufficient quantities of materials used for clinical trials, and the emergence of unforeseen safety issues and governmental and regulatory delays. If a drug candidate fails to demonstrate safety and efficacy in clinical trials, this failure may delay development of other drug candidates and hinder our ability to develop and / or conduct related preclinical studies and clinical trials. Additionally, if we have pipeline candidate failures, we may also be expected to experience challenges, delays or even the inability to obtain additional financing at acceptable terms and conditions to develop these or other drug candidates.
Governmental authorities in all major markets require that a new drug be approved or exempted from approval by the appropriate regulatory authorities before it is marketed, and have established high standards for technical appraisal, which can result in an expensive and lengthy approval process. The time to obtain approval of a new medicine or indication varies by country and some drugs are never approved. The lengthy process of conducting new product or formulation development, preclinical studies and clinical trials, seeking approval and the subsequent compliance with applicable statutes and regulations, if approval is obtained, are very costly and require the expenditure of substantial resources.
United States
In the United States, the Public Health Service Act and the Federal Food, Drug, and Cosmetic Act, as amended, and the regulations promulgated thereunder, and other federal and state statutes and regulations govern, among other things, the safety and effectiveness standards for our drugs and the raw materials and components used in the production of, testing, manufacture, labeling, storage, record keeping, approval, distribution, advertising and promotion of drug candidates on a product-by-product basis.
Preclinical tests include in vitro and in vivo evaluation of the drug candidate, including animal studies to assess potential safety and efficacy. Certain preclinical tests must be conducted in compliance with good laboratory practice regulations. Violations of these regulations can, in some cases, lead to invalidation of the studies, requiring them to be replicated. In addition, non-clinical studies (Chemistry and Manufacturing Controls, CMC) are undertaken to evaluate a new drug’s chemistry, and to determine, amongst other things, the active ingredients’ and finished product formulation’s stability and batch-to-batch reproducibility.
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After laboratory analysis and preclinical testing, a Sponsor files an Investigational New Drug Application, or IND, to begin clinical development (clinical trials in humans). Typically, a manufacturer conducts a three-phase human clinical development program which itself is subject to numerous laws and regulatory requirements, including adequate monitoring, reporting, record keeping and informed consent. In Phase I, small clinical trials are conducted to determine the safety and tolerability of drug candidates. In Phase II, clinical trials are conducted to assess safety and gain preliminary evidence of the efficacy of drug candidates, and to determine appropriate dose ranges in patients with the target indication. In Phase III, clinical trials are conducted in appropriate patient populations to provide sufficient data for the statistically valid evidence of safety and efficacy. The time and expense that will be required for us to perform this clinical development can vary and is substantial. We cannot be certain that we will successfully complete Phase I, Phase II or Phase III clinical trials within any specific period, if at all. Furthermore, the FDA, the IRB are responsible for approving and monitoring the clinical trials at a given site, the Data Safety Monitoring Board, where one is used, or we may suspend the clinical trials at any time on various grounds, including a finding that subjects or patients are exposed to unacceptable health risk. Given that a number of our clinical trials are likely to be performed using drug candidates containing controlled substances, there is the added requirement for compliance with DEA regulations (or equivalent competent authority in ex-US countries where the preclinical studies and clinical trials may be conducted). DEA requirements for State and Federal DEA Registration for receipt, storage and dispensing of controlled substances vary from state to state and the DEA Registration process can be lengthy and requirement multiple site visits by DEA personnel. This is further complicated if the controlled substance needs temperature regulation as well as controlled access / storage. Failure to gain or delay to gaining the necessary DEA registrations at one or more non-clinical (CMC), laboratory or manufacturing or packaging or labelling sites, preclinical study sites, analytical laboratories or clinical trial sites may delay the delivery of materials to key stakeholders. For example, delay of delivery of investigational product to a clinical trial site, may ultimately delay the initiation, conduct or completion of clinical trials critical for the approval of the product. These failures or delays may delay also the development of other drug candidates and hinder our ability to develop and / or conduct related preclinical studies and clinical trials. Additionally, if we have failures or delays in DEA registrations in pivotal or critical programs, we may also be expected to experience challenges, delays or even the inability to obtain additional financing at acceptable terms and conditions to develop these or other drug candidates.
If the clinical data from these clinical trials (Phases I, II and III) are deemed to support the safety and effectiveness of the drug candidate for its intended use, and the preclinical and quality data are also acceptable, then we may proceed to seek to file with the FDA, a New Drug Application, or NDA, with the US FDA seeking approval to market a new drug for one or more specified intended uses. We have not completed our non-clinical (CMC) studies or preclinical studies or clinical trials for any candidate drug for any intended use and therefore, we cannot ascertain whether the clinical data will support and justify filing an NDA. Nevertheless, if and when we are able to ascertain that the clinical data supports and justifies filing an NDA, we intend to make such appropriate filing.
The purpose of the NDA is to provide the FDA with sufficient information so that it can assess whether the candidate drug has a positive benefit / risk profile and whether it should approve the drug candidate for marketing for specific intended uses.
The fact that the FDA has previously granted a candidate drug an IND, or designated a drug as an orphan drug for a specific intended use, or granted it Breakthrough status, or fast track status or an expedited review does not mean that the drug has been approved for marketing. Only after an NDA has been approved by the FDA is marketing allowed. A request for orphan drug status (orphan drug designation) must be filed before the NDA is filed. The orphan drug designation, though, provides certain benefits, including a seven-year period of market exclusivity subject to certain exceptions.
The NDA normally includes, but is not limited to, sections describing the quality safety and efficacy of the medicine. The quality section describes the chemistry, manufacturing, and controls, the preclinical (non-clinical) section describes the non-clinical pharmacology, safety pharmacology, drug metabolism and pharmacokinetics (DMPK) and toxicology, human pharmacokinetics and bioavailability, and the clinical section describes the efficacy and safety results of the clinical trials, and the proposed labeling which contains, among other things, the intended uses of the candidate drug. Importantly for drug candidates containing controlled substances, studies investigating the medicine’s potential for abuse are also undertaken and reported.
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We cannot take any action to market any new drug or biologic drug in the United States until our appropriate marketing application has been approved by the FDA. The FDA has substantial discretion over the approval process and may disagree with our interpretation of the data submitted. The process may be significantly extended by requests for additional information or clarification regarding information already provided. As part of this review, the FDA may refer the application to an appropriate advisory committee, typically a panel of clinicians. Satisfaction of these and other regulatory requirements typically takes several years, and the actual time required may vary substantially based upon the type, complexity and novelty of the drug. Government regulation may delay or prevent marketing of potential drugs for a considerable period and impose costly procedures on our activities. We cannot be certain that the FDA or other regulatory agencies will approve any of our drugs on a timely basis, if at all. Success in preclinical or early stage clinical trials does not assure success in later-stage clinical trials. Even if a drug receives regulatory approval, the approval may be significantly limited to specific indications or uses and these limitations may adversely affect the commercial viability of the drug / medicine. Delays in obtaining, or failures to obtain regulatory approvals, would have a material adverse effect on our business.
Even after we obtain FDA approval, we may be required to conduct further studies which may be additional preclinical studies or clinical trials (e.g. Phase IV trials) and provide additional data on safety and effectiveness. We are also required to gain separate approval for the use of an approved drug as a treatment for indications other than those initially approved. In addition, side effects or adverse events that are reported during clinical trials can delay, impede or prevent marketing approval. Similarly, adverse events that are reported after marketing approval can result in additional limitations being placed on the drug’s use and, potentially, withdrawal of the drug from the market. Any adverse event, either before or after marketing approval, can result in product liability claims against the company.
As an alternate path for FDA approval of new indications or new formulations of previously-approved drugs, a company may file a Section 505(b)(2) NDA, instead of a “stand-alone” or “full” NDA. Section 505(b)(2) of the Food, Drug, and Cosmetic Act was enacted as part of the Drug Price Competition and Patent Term Restoration Act of 1984, otherwise known as the Hatch-Waxman Amendments. Section 505(b)(2) permits the submission of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Some examples of drugs that may be allowed to follow a 505(b)(2) path to approval are drugs that have a new dosage form, strength, route of administration, formulation or indication. The Hatch-Waxman Amendments permit the applicant to rely upon certain published nonclinical or clinical studies conducted for an approved drug or the FDA’s conclusions from prior review of such studies. The FDA may require companies to perform additional studies or measurements to support any changes from the approved drug. The FDA may then approve the new drug for all or some of the labeled indications for which the referenced listed drug has been approved, as well as for any new indication supported by the NDA. While references to nonclinical and clinical data not generated by the applicant or for which the applicant does not have a right of reference are allowed, all development, process, stability, qualification and validation data related to the manufacturing and quality of the new drug must be included in an NDA submitted under Section 505(b)(2).
To the extent that the Section 505(b)(2) applicant is relying on the FDA’s conclusions regarding studies conducted for an already approved drug, the applicant is required to certify to the FDA concerning any patents listed for the approved drug in the FDA’s “Orange Book” publication. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new drug. The Section 505(b)(2) application also will not be approved until any non-patent exclusivity, such as exclusivity for obtaining approval of a new chemical entity, listed in the Orange Book for the reference drug has expired. Thus, the Section 505(b)(2) applicant may invest a significant amount of time and expense in the development of its drugs only to be subject to significant delay and patent litigation before its drugs may be commercialized.
In addition to regulating and auditing human clinical trials, the FDA regulates and inspects equipment, facilities, laboratories and processes used in the manufacturing and testing of such drugs prior to providing approval to market a drug.
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Orphan Drug Designation in the U.S.
Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States. If the disease or condition affects more than 200,000 individuals in the United States, orphan drug designation may nevertheless be available if there is no reasonable expectation that the cost of developing and making the drug would be recovered from sales in the United States. In the United States, a drug that has received orphan drug designation is eligible for financial incentives, such as opportunities for grant funding towards clinical trial costs, tax credits for certain research and user fee waivers under certain circumstances. The Orphan Drug Act provides that, if a designated drug is approved for the rare disease or condition for which it was designated, the approved drug will be granted seven years of orphan drug exclusivity, which means the FDA generally will not approve any other application for a drug containing the same active moiety for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority over the drug with orphan drug exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition.
Orphan drug designation must be requested before submission of an application for marketing approval. Products that qualify for orphan designation may also qualify for other FDA programs that are intended to expedite the development and approval process and, as a practical matter, clinical trials for orphan products may be smaller, simply because of the smaller patient population. Nonetheless, the same approval standards apply to orphan- designated products as for other drugs. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
Europe
The drug development process in Europe is essentially the same as that required to develop drugs in an acceptable manner in the USA, in that a drug must meet the requirements for quality safety and efficacy. The international regulators (including the FDA) have a system which allows them to mutually recognize the standards of drug development. This is called the ICH standard (international Conference on Harmonization). This avoids the need for pharmaceutical companies to repeat their costly drug development programs for different jurisidctions / international territories. There are nuances between the requirements of the USA, Europe and Japan – but the standards to which development programs must be conducted are essentially the same.
There are essentially three mechanisms for obtaining a marketing authorization (MA) in Europe
| 1) | the Centralized Procedure |
| 2) | the De-Centralized Procedure |
| 3) | the Mutual Recognition Procedure |
Centralized Procedure (CP)
The advantage of the centralized procedure is that it requires a single application which, if successful, results in a single marketing authorization with the same product information available in all EU languages and valid in all EU member states / countries, as well as Iceland, Liechtenstein, and Norway. The scientific assessment of the marketing authorization application is carried out by the Committee on Human Medicinal Products (CHMP). The scientific review process consists of alternating periods of active evaluation and periods during which the clock is stopped in order to give the applicant time to resolve any issues identified during the evaluation. In total, the duration of the process is up to 210 ‘active’ days before an opinion is issued by the CHMP. Once an opinion has been given, it is forwarded to the European Commission which then has 67 days to issue a legally binding decision on the marketing authorization.
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Once a marketing authorization has been granted, the applicant can start to market the medicine in any EU Member State of its choice. However, in practice before a medicine is marketed, it will be subject to pricing negotiations and a review of its cost-effectiveness. This is carried out at national level by Member States to determine reimbursement criteria. Initially, the centralized procedure was mandatory only for biotechnology medicines, as was the case with the previous concertation procedure. Over time, however, the mandatory scope of the centralized procedure has been gradually expanded and by 2005, it included orphan medicines (medicines for rare diseases) as well as human medicines that contain a new active substance (not previously authorized in the Union before 20 November 2005) and that are intended for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and other immune dysfunctions, and viral diseases. In 2009, the centralized procedure also became mandatory for advanced therapy medicines. The centralized procedure is also optional for other medicines that contain a new active substance not authorized in the Union before 20 November 2005, and for products which are considered to be a significant therapeutic, scientific, or technical innovation, or for which an EU-wide authorization is considered to be in the interests of public health.
The Decentralized Procedure (DCP)
In the decentralized procedure, the applicant chooses one country as the reference Member State when making its application for marketing authorization. The chosen reference Member State then prepares a draft assessment report that is submitted to the other Member States where approval is sought for their simultaneous consideration and approval. In allowing the other Member States access to this assessment at an early stage, any issues and concerns can be dealt with quickly without delay, which sometimes is known to occur with the mutual recognition procedure (MRP, see below). Compared with the MRP, the decentralized procedure has the advantage that the marketing authorization in all chosen Member States is received simultaneously, enabling simultaneous marketing of the medicine and reducing the administrative and regulatory burden.
The Mutual Recognition Procedure (MRP)
The mutual recognition procedure has been in place since 1995 and evolved from the multi-state licensing procedure. The applicant must initially receive national approval in one EU Member State, referred to as the “Reference Member State” (RMS) and then seek approval for the medicine in other, so-called ‘Concerned Member States’ in a second step based on the assessment done in the RMS. This process has significant differences from the former multi-state licensing procedure, notably the requirement that disagreements between Member States must now be resolved at EU level. Disagreements are handled by the Co-ordination Group for Mutual Recognition and Decentralized Procedures – Human (CMDh), a body representing Member States, which is responsible for any questions in two or more Member States relating to the Marketing Authorization (MA) of a medicinal product approved through the mutual recognition or the decentralized procedure. If there is a disagreement between Member States on grounds of a potential serious risk to public health, the CMDh considers the matter in order to reach an agreement within 60 days. If resolution is not possible by the CMDh, the procedure is referred to the CHMP in a procedure called a referral. The CHMP will then carry out a scientific assessment of the relevant medicine on behalf of the EU. In contrast to the previous (multi-state) procedure, the outcome of the CHMP is binding on the Member States involved once it has been adopted by the European Commission. The timelines for assessment by CHMP is 60 days. Since the introduction of the decentralized procedure, the mutual recognition procedure is used for extending existing marketing authorizations to other countries.
There are other nuances to Marketing Authorization approval of medicines in Europe compared with the FDA. For example, a Pediatric Investigation Plan (PIP) is a development plan aimed at ensuring that the necessary data are obtained through studies in children, to support the authorization of a medicine for children. All applications for marketing authorization for new medicines have to include the results of studies as described in an agreed PIP, unless the medicine is exempt because of a deferral or waiver.
Orphan Drug Designation in Europe
In the European Union, it is also possible to obtain an orphan drug designation for a pipeline drug candidate. This also entitles a company to financial incentives such as a reduction of fees or fee waivers and ten years of market exclusivity following drug approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the drug is sufficiently profitable not to justify maintenance of market exclusivity. The definition of what qualifies as a rare disease in Europe is slightly different to the USA definition.
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To qualify for orphan designation in Europe, a medicine must meet a number of criteria:
| • | it must be intended for the treatment, prevention or diagnosis of a disease that is life-threatening or chronically debilitating; |
| • | the prevalence of the condition in the EU must not be more than 5 in 10,000 or it must be unlikely that marketing of the medicine would generate sufficient returns to justify the investment needed for its development; |
| • | no satisfactory method of diagnosis, prevention or treatment of the condition concerned can be authorized, or, if such a method exists, the medicine must be of significant benefit to those affected by the condition. |
As with the USA, European Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.
In the same way that there is no guarantee than any medicines developed by Alterola will be approved in the USA, there is similarly no guarantee that any of Alterola’s medicines will be approved in Europe.
Non-Pharmaceuticals
Food, Drinks & Dietary Supplements
USA
According to the FDA, it is currently illegal to market THC or CBD by adding it to a food or labeling it as a dietary supplement. Based on available evidence, FDA has concluded that THC and CBD products are excluded from the dietary supplement definition under section 201(ff)(3)(B) of the FD&C Act [21 U.S.C. § 321(ff)(3)(B)]. Under that provision, if a substance (such as THC or CBD) is an active ingredient in a drug product that has been approved under section 505 of the FD&C Act [21 U.S.C. § 355], or has been authorized for investigation as a new drug for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public, then products containing that substance are excluded from the definition of a dietary supplement. FDA considers a substance to be "authorized for investigation as a new drug" if it is the subject of an Investigational New Drug application (IND) that has gone into effect. Under FDA’s regulations (21 CFR 312.2), unless a clinical investigation meets the limited criteria in that regulation, an IND is required for all clinical investigations of products that are subject to section 505 of the FD&C Act.
There is an exception to section 201(ff)(3)(B) if the substance was "marketed as" a dietary supplement or as a conventional food before the drug was approved or before the new drug investigations were authorized, as applicable. However, based on available evidence, FDA has concluded that this is not the case for THC or CBD. FDA is not aware of any evidence that would call into question its current conclusions that THC and CBD products are excluded from the dietary supplement definition under section 201(ff)(3)(B) of the FD&C Act. FDA continues to review information that is submitted to FDA on this issue, but to date this has not caused FDA to change their conclusions.
Given the legal / regulatory situation at present in the USA, at this time, Alterola will not be looking to commercialize cannabinoid-containing ingredients or products in the food, drinks or dietary supplements sector in the USA.
Europe - Novel Food Application (Europe)
Under EU regulations, any food that was not consumed “significantly” prior to May 1997 is considered to be a “Novel Food”. The category covers new foods, food from new sources, new substances used in food as well as new ways and technologies for producing food. There is a specific procedure for gaining a Novel Food Approval in Europe.
The novel food status of CBD extracts was confirmed in January 2019. This means that applicants need to apply for authorisation of CBD extracts and isolates using the procedure for full applications (rather than a traditional food) outlined in the European Food Standards Agency (EFSA) guidance.
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In general, the process is as follows: (1) The applicant submits a Novel Food application; (2) the application is reviewed and if compliant validated by the European Commission to see if it falls within the scope of Novel Food Regulation (EU) 2015 / 2283 (EC validity check); (3) the European Food Standards Agency (EFSA) undertakes a suitability check to see if the application fulfils the requirements of article 10(2) of (EU) 2015 / 2283; (4) EFSA reviews and performs a risk assessment and gives an opinion within 9 months of receipt of a valid application (5) the EC drafts an implementing act authorizing the placement on the market of a Novel Food and updating the EU list, within 7 months of the EFSA opinion. This process can take approximately 18 months from receipt of a valid application, although it can take longer in some cases.
Given the legal and regulated process in Europe, Alterola intends to submit Novel Food applications for cannabinoid-containing ingredients and / or products in the food, drinks or dietary supplements sector in Europe, where it is legal to do so. It may be several years before we can obtain approval and commence commercialization of such ingredients, if ever.
Rest of The World (RoW)
Given the varying legal and regulated processes for regulatory approval of for cannabinoid-containing ingredients and / or products in the food, drinks or dietary supplements sector in countries outside of the USA and Europe, Alterola will consider gaining such approval in countries / territories where it is legal to do so. These will be considered on a case-by-case basis as appropriate. It may be several years before we can obtain approval and commence commercialization of such ingredients, if ever.
Cosmetics
USA
A cosmetic is defined in the Food, Drug and Cosmetics Act 201(i) as "(1) articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body or any part thereof for cleansing, beautifying, promoting attractiveness, or altering the appearance, and (2) articles intended for use as a component of any such articles; except that such term shall not include soap."
Under the FD&C Act, cosmetic products and ingredients are not subject to premarket approval by FDA, except for most color additives. Certain cosmetic ingredients are prohibited or restricted by regulation, but currently that is not the case for any cannabis or cannabis-derived ingredients. Ingredients not specifically addressed by regulation must nonetheless comply with all applicable requirements, and no ingredient – including a cannabis or cannabis-derived ingredient – cannot be used in a cosmetic if it causes the product to be adulterated or misbranded in any way. A cosmetic generally is adulterated if it bears or contains any poisonous or deleterious substance which may render it injurious to users under the conditions of use prescribed in the labeling, or under such conditions of use as are customary or usual (section 601(a) of the FD&C Act [21 U.S.C. § 361(a)]).
Alterola may choose to supply active ingredient(s) to cosmetic companies within the USA where it is legal to do so. However, although the company is focussed upon producing low cost of goods ingredients, there is no guarantee that the company will be able to produce cosmetic ingredients at the purity required of at a cost of goods which will enable the company to compete within other suppliers of cosmetic ingredients to cosmetic companies. Alterola has no intention in producing its own cosmetic products. It may be several years before we can obtain approval and commence commercialization of such ingredients, if ever.
Europe
The use of CBD in cosmetics is harmonised within the European Cosmetic Regulation 1223/2009, under entry 306 ‘Narcotics, natural and synthetic’ of Annex II, and has been for some time. The regulation prohibits use of cannabis and cannabis extracts in cosmetics, as they are controlled substances in Schedule I of the 1961 Single Convention on Narcotic Drugs. However, CBD specifically is not referenced in this convention. At the beginning of 2019, the European Commission (EC) added two entries to its database of cosmetics ingredients for CBD to differentiate between: CBD “derived from extract or tincture or resin of cannabis” and CBD “synthetically produced”. Both entries contain the same text: “Cannabidiol (CBD) as such, irrespective of its source, is not listed in the Schedules of the 1961 Single Convention on Narcotic Drugs. However, it shall be prohibited from use in cosmetic products (II/306) if it is prepared as an extract or tincture or resin of Cannabis in accordance with the Single Convention. Please note that national legislations on controlled substances may also apply.” Essentially, use of naturally-derived CBD from cannabis plants is prohibited in the EU but use of hemp-derived or synthetically-produced CBD is allowed. However, the Single Convention’s banned ingredients list does not include cannabis seeds or leaves without tops, meaning use of CBD derived from these parts of the cannabis plant is not currently prohibited.
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It is Alterola’s intention to supply active ingredient(s) to cosmetic companies within the EU where it is legal to do so. However, although the company is focussed upon producing low cost of goods ingredients, there is no guarantee that the company will be able to produce cosmetic ingredients at the purity required of at a cost of goods which will enable the company to compete within other suppliers of cosmetic ingredients to cosmetic companies. Alterola has no intention in producing its own cosmetic products. It may be several years before we can obtain approval and commence commercialization of such ingredients, if ever.
Rest of the World
Given the varying legal and regulated processes for regulatory approval of for cannabinoid-containing ingredients and / or products in the cosmetic sector in countries outside of the USA and Europe, Alterola will consider gaining such approval in countries / territories where it is legal to do so. These will be considered on a case-by-case basis as appropriate.
Employees
At present, there is one active employee other than our officers and directors. The officers, directors and senior managers oversee all responsibilities in corporate administration, business development and research and development. If finances permit, however, we intend to expand our current management to retain skilled directors, officers and employees with experience relevant to our business focus.
Property
We do not own any real property. We maintain our corporate offices at 47 Hamilton Square Birkenhead Merseyside CH41 5AR United Kingdom. One of the company directors has a beneficial ownership in the property, which is leased on “arms length” terms.
Legal Proceedings
From time to time, we may become party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. We are not currently a party, as plaintiff or defendant, to any legal proceedings that we believe to be material or which, individually or in the aggregate, would be expected to have a material effect on our business, financial condition or results of operation if determined adversely to us.
Smaller Reporting Company
The Company is a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. There are certain exemptions available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years. As long as we maintain our status as a “smaller reporting company”, these exemptions will continue to be available to us.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations for the Three and Nine Months Ended December 31, 2021 and 2020
We have generated no revenues since inception and we do not anticipate earning revenues until such time that we are able to market and sell our ingredients and / or products.
We incurred operating expenses of $2,800,677 and $3,213,315 for the three and nine months ended December 31, 2021, respectively. Our operating expenses for the nine months ended December 31, 2021 were mainly the result of $2,545,963 in consulting fees, $322,324 in research and development, $92,525 in accounting and audit fees and $91,083 in salaries and wages.
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We expect that our operation expenses will increase significantly for the balance of the fiscal year ended March 31, 2022 and beyond. This would be the result of increased research and development expenses associated with our product candidates, the regulatory process of approval of those products, as well as the expenses associated with our reporting obligations with the Securities and Exchange Commission.
We recorded a net loss of $2,800,677 and $3,213,315 for the three and nine months ended December 31, 2021, respectively.
As a relatively newly formed pharmaceutical company, the company has limited operations to date, and expects to have reoccurring losses, as is typical with companies in the pharmaceutical industry, for the foreseeable future. As explained above, the company intends to raise capital and ramp up its efforts to bring its product candidates to market. This will require significant capital, product development to continue and complete and momentum on those product candidates through the regulatory process. There are no assurances that we will be able to generate revenues and achieve profitable operations.
Results of Operations for Six Months Ended March 31, 2021 and 2020
We have generated no revenues since inception and we do not anticipate earning revenues until such time that we are able to market and sell our ingredients and / or products.
We incurred operating expenses of $309,500 for the six months ended March 31, 2021, compared with $139,001 for the six months ended March 31, 2020.
Our operating expenses for the six months ended March 31, 2021, mainly consisted of $243,000 in professional fees, $30,000 in director fees, and $26,500 in accounting and audit fees. Our operating expenses for the six months ended March 31, 2020, mainly consisted of $60,000 in director fees, $60,000 in consulting fees, and $10,500 in audit fees.
We recorded other expense of zero for the six months ended March 31, 2021, as compared with other income of $79,000 for the six months ended March 31, 2020. Our other income for March 31, 2020, consisted of third-party consideration to the company for effecting a change in stock symbol.
We recorded a net loss of $309,500 for the six months ended March 31, 2021, compared with a net loss of $60,001 for the six months ended March 31, 2020.
Results of Operations for the Year Ended September 30, 2020 and 2019
We generated no revenue for the period from July 21, 2008 (Date of Inception) until September 30, 2020. We do not anticipate earning revenues until such time that we are able to market and sell our products.
We had operating expenses of $329,511 for the year ended September 30, 2020, as compared with operating expenses of $258,453 for the year ended September 30, 2019. Our operating expenses for the year ended September 30, 2020, consisted of director fees of $120,000, stock-based compensation of $130,000, consulting fees of $60,000 and accounting and audit fees of $11,000. Our operating expenses for the year ended September 30, 2019, consisted of director fees of $120,000, stock-based compensation of $126,000, and accounting and audit fees of $11,000.
We anticipate our operating expenses will increase as we implement our business plan.
We had other income $79,000 for the year ended September 30, 2020, which consisted of third-party consideration to the company for effecting a change in stock symbol, as compared with other expenses of $249 for the year ended September 30, 2019, which consisted of interest expense.
We recorded a net loss of $250,511 for the year ended September 30, 2020, as compared with a net loss of $258,702 for the year ended September 30, 2019.
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Liquidity and Capital Resources
As of December 31, 2021, we had $90,705 in current assets and currently liabilities of $1,217,811. We had a working capital deficit of $1,127,106 as of December 31, 2021.
We used cash in operating activities of $2,596,081 for the nine months ended December 31, 2021, mainly a result of our net loss of $3,213,315 offset by an increase in accounts payable of $476,324.
We used cash in investing activities of $12,000,000 for the nine months ended December 31, 2021 in connection with the acquisition of assets and intellectual property with C2 Wellness.
We had cash provided for financing activities of $14,625,352 for the nine months ended December 31, 2021 from share issuances and convertible notes payable offset by payments of $209,657 to related parties.
Based upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next 12 months. We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements. We plan to seek additional financing in a private equity offering to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. If we are not able to secure additional funding, the implementation of our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms or at all.
We received US $100,000 in funding in July 2021 and we entered into an equity line financing in August 2021 for up to US $125,000,000. A further £100,000 Sterling (US $137,627) was invested in September 2021 and a further US $130,000 was invested into the company in November and December 2021.
The company is hopeful that this financing may assist the company to raise the funds needed to implement its business plan. The financing, however, is conditional on filing a registration statement with the Securities and Exchange Commission, which was filed in October and was declared effective by the Securities and Exchange Commission on October 29, 2021, and other factors set forth in the definitive agreements. If we are unable to use the equity line, or we are limited in the amounts of funds we are able to draw from such line, we may not realize the funds necessary to implement our business plan exclusively from this equity line financing.
Off Balance Sheet Arrangements
As of December 31, 2021, we had no off balance sheet arrangements.
Going Concern
Our financial statements were prepared assuming we will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have negative working capital of $1,127,106, and have incurred losses since inception of $4,712,691. We expect to incur further losses in the development of our business and have been dependent on funding operations from inception. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans include continuing to finance operations through the private or public placement of debt and/or equity securities and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives. The financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Recently Issued Accounting Pronouncements
We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operation, financial position or cash flow.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than described below or the transactions described under the heading “Executive Compensation” (or with respect to which such information is omitted in accordance with SEC regulations), there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest.
On January 19, 2021, we entered into an Stock Transfer Agreement (the “Agreement”) with ABTI Pharma Limited, a company registered in England and Wales (“ABTI Pharma”), pursuant to which the Company will acquire all of the outstanding shares of capital stock of ABTI Pharma from its shareholders in exchange for 600,000,000 shares of the Company pro rata to the ABTI Pharma shareholders.
On May 24, 2021, we and the shareholders of ABTI Pharma memorialized a new closing date in an amendment to the Agreement (the “Amendment”). We have already issued the 600,000,000 shares in anticipation of the closing and the transaction closed on May 26, 2021, upon the filing of our December 31, 2020 quarterly report on Form 10-Q with the Securities and Exchange Commission.
Timothy Rogers, Colin Stott and Dominic Schiller received the majority of the 600,000,000 shares in the transaction.
During the period ended March 31, 2021, the Company accrued director’s fees payable of $330,000 to Peter Maddocks.
During the period ended March 31, 2021, Bull Run Limited made advances to the company to fund operating expenses in the amount of $50,000. These advances are non – interest bearing and have no specified terms of repayment.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our common stock is quoted under the symbol “ABTI” on the OTC Markets.
There is currently no active trading market for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his / her securities in our company.
Penny Stock
The Securities Exchange Commission (“SEC”) has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;(b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;(d) contains a toll-free telephone number for inquiries on disciplinary actions;(e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and;(f) contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.
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The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with; (a) bid and offer quotations for the penny stock;(b) the compensation of the broker-dealer and its salesperson in the transaction;(c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock if it becomes subject to these penny stock rules. Therefore, because our common stock is subject to the penny stock rules, stockholders may have difficulty selling those securities.
Holders of Our Common Stock
Currently, we have approximately 166 holders of record of our common stock.
Stock Option Grants
To date, we have not granted any stock options.
Dividends
There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:
| 1. | we would not be able to pay our debts as they become due in the usual course of business, or; |
| 2. |
our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution. |
We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.
Recent Sales of Unregistered Securities
During the year ended September 30, 2020, the Company issued 13,000,000 shares of common stock to individuals for services rendered with a deemed value of services provided of $130,000.
During the period ended March 31, 2021, the Company issued 3,200,000 shares of common stock for services rendered with a deemed value of services provided of $32,000.
We issued 600,000,000 shares of common stock to the shareholders of ABTI Pharma Limited in connection with a Stock Transfer Agreement dated January 19, 2021. As part of the transaction, the 200,000,000 shares to Amsterdam Café Holdings Ltd. have been cancelled and Bulls Run Investments Limited was issued 19,100,000 shares of common stock. Also, 2,000,000 shares of common stock were issued for services rendered, and with the above transactions, amounts to acquisition with a deemed value of $ 621,100.
During the three months ended September 30, 2021, the company issued 280,000 shares in exchange for cash of $137,627.
On December 21, 2021, the company issued 520,000 shares of stock in exchange for $130,000 of cash consideration.
On October 29, 2021, the Company issued 7,500,000 shares of stock in exchange for services provided by EMC2 Capital. The shares were issued at fair value of the date of exchange, or $2,399,250.
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As pursuant to the asset purchase agreement dated November 9, 2021, the Company acquired certain intellectual property rights of C2 Wellness Corp. In exchanges for the assets acquired, the Company issued 24,000,000 shares of common stock valued at $0.50 per share. The intellectual property rights acquired are recorded as intangible assets as of December 31, 2021 for $12,000,000.
On or about March 3, 2022, the Company issued 16,000,000 shares of stock for services under a consulting agreement.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder for US investors and Regulation S for non-US investors. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to our executive officer for all services rendered in all capacities to us for the periods ended March 31, 2022 and 2021.
| SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||
| Name and principal position | Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
|||||||||||||||||
|
Timothy Rogers Chairman |
2021 2022 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Seamus McAuley Chief Executive Officer |
2021 2022 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Colin Stott Chief Operating Officer |
2021 2022 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Dominic Schiller Chief IP Officer |
2021 2022 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Larson Elmore, Former officer |
2021 2022 |
0 0 |
0 0 |
5,720,000 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Rene Lauritsen, Former officer |
2021 2022 |
0 0 |
0 0 |
320,000 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Peter Maddocks Former officer |
2021 2022 |
0 0 |
0 0 |
310,000 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Aubrey Oliver Former officer |
2021 2022 |
0 0 |
0 0 |
310,000 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Dheeraj Jain Former officer |
2021 2022 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
|
Lalit Kumar Former officer |
2021 2022 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
|||||||||||||||||
| 47 |
Narrative to Summery Compensation Table
Compensation was issued to four executive officers on their appointment to the Board on 20 July 2020 (Larson Elmore, former Executive Officer, Peter Maddocks former Chief Financial Officer, Rene Lauritsen, former Chief Operating Officer), and Aubrey Oliver (former Chief Medical Officer) for the year ended March 31, 2020. Larson Elmore was issued 7 million of restricted common stock, of which the total fair value equivalent on the date of issue was $5,720,000. The other three former officers and directors, were each issued 1 million of restricted common stock of which the total fair value of the stock on the date on which it was issued was $320,000 for rene Lauritsen, and $310,000 for each of Peter Maddocks and Aubrey Oliver.
.
We have not compensated our executive officers through the date of this Prospectus, and which will include for the year ended March 31, 2022. We expect to enter into employment agreements with executive officers for their services at some point in fiscal year ended 2023.
On March 28, 2021, we entered into an employment agreement with Larson Elmore. The three-year agreement provides an annual salary to Mr. Elmore of $160,000 and he shall be entitled to receive a onetime bonus equaling (10%) of salary with the financial close of financing for each plant location obtained by the company. Mr. Elmore will be entitled to an additional equity interest in the Company in the amount of (4,000,000) four million restricted shares subject to financing and vesting. Mr. Elmore is entitled to paid sick and vacation and may participate in any benefit programs we make available.
On September 28, 2021, our board and shareholders removed Mr. Elmore and the employment agreement terminated.
Outstanding Equity Awards at Fiscal Year-End
We had no outstanding equity awards at fiscal year-end.
Director Compensation
We did not pay our directors for their services to us in for the year ended March 31, 2021. We will not pay our Executive Directors for their services to us in for the year ended March 31, 2022. We will pay our Non-Executive Directors for the year ended March 31, 2022 – however such payment will be by the way of stock compensation 400,000 shares of restricted common stock for the 12 month period to March 31, 2022, or pro rata thereof.
| 48 |
FINANCIAL STATEMENTS
Index to Financial Statements Required by Article 8 of Regulation S-X:
| Unaudited Financial Statements: | |
| F-1 | Consolidated Balance Sheets as of December 31, 2021 and March 31, 2021; |
| F-3 | Consolidated Statements of Operations for three and nine months ended December 31, 2021; |
| F-4 | Consolidated Statement of Stockholders’ Equity as of December 31, 2021 |
| F-5 | Consolidated Statements of Cash Flows for nine months ended December 31, 2021;; and |
| F-6 | Notes to Consolidated Financial Statements. |
| Audited Financial Statements: | |
| F-10 | Reports of Independent Registered Public Accounting Firms |
| F-11 | Balance Sheets as of March 31, 2021, September 30, 2020 and September 30, 2019; |
| F-12 | Statements of Operations for the six months ended March 31, 2021 and 2020 and the years ended September 30, 2020 and 2019; |
| F-13 | Statement of Stockholders’ Deficit for the six months ended March 31, 2021 and 2020 and the years ended September 30, 2020 and 2019 |
| F-14 | Statements of Cash Flows for the six months ended March 31, 2021 and 2020 and the years ended September 30, 2020 and 2019; |
| F-15 | Notes to Financial Statements |
| F-21 | Report of Independent Registered Public Accounting Firm |
| F-22 | Consolidated Balance Sheet of ABTI Pharma Limited as of March 31, 2021 and March 31, 2020 |
| F-23 | Consolidated Statements of Operations of ABTI Pharma Limited for the years ended March 31, 2021 and March 31, 2020 |
| F-24 | Consolidated Statement of Shareholders’ Deficit of ABTI Pharma Limited for March 31, 2021 and March 31, 2020 |
| F-25 | Consolidated Statements of Cash Flows of ABTI Pharma Limited for the years ended March 31, 2021 and March 31, 2020 |
| F-26 | Notes to Consolidated Financial Statements |
| F-30 | Pro Forma Financial Information (unaudited) |
| 49 |
ALTEROLA BIOTECH, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2021 AND MARCH 31, 2021
| December 31, 2021 | March 31, 2021 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Bank | $ | $ | ||||||
| Funds in attorney trust account | ||||||||
| VAT receivable | ||||||||
| Prepaid | ||||||||
| — | ||||||||
| Total current assets | ||||||||
| Intangible assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued expenses- related party | ||||||||
| Advances from related party | ||||||||
| Total Current Liabilities | ||||||||
| Convertible Note Payable | 169,038 | — | ||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preferred Stock, par value, shares authorized, -- shares issued and outstanding | ||||||||
| Common Stock, par value, shares authorized, and shares issued and outstanding, respectively | ||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
See accompanying notes to financial statements.
| F-1 |
ALTEROLA BIOTECH, INC.
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 2021
| Three Months Ended December 31, 2021 | Nine Months Ended December 31, 2021 | |||||||
| REVENUES | $ | $ | ||||||
| OPERATING EXPENSES | ||||||||
| Accounting and audit fees | ||||||||
| Research and development | ||||||||
| Legal fees | ||||||||
| Directors fees and expenses | ||||||||
| Consulting fees | ||||||||
| Salaries and wages | ||||||||
| General and administrative expenses | ||||||||
| TOTAL OPERATING EXPENSES | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Miscellaneous sale | ||||||||
| TOTAL OTHER INCOME (EXPENSE) | ||||||||
| PROVISION FOR INCOME TAXES | ||||||||
| NET LOSS | $ | ( | ) | ( | ) | |||
| NET LOSS PER SHARE: BASIC AND DILUTED | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED | ||||||||
See accompanying notes to financial statements.
| F-2 |
ALTEROLA BIOTECH, INC.
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE PERIOD FROM JANUARY 7, 2021 (INCEPTION) TO MARCH 31 2021 AND DECEMBER 31, 2021
| Common stock | ||||||||||||||||||||||||
| Shares | Amount | Additional paid in capital | Accumulated other comprehensive income ( loss) | Deficit | Total | |||||||||||||||||||
| Balance, January 7, 2021(inception) | $ | $ | $ | $ | $ | |||||||||||||||||||
| Related party interest forgiven | ||||||||||||||||||||||||
| Recapitalization on reverse merger | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Change in foreign currency | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Shares issued for cash | ||||||||||||||||||||||||
| Shares issued for C2 Wellness acquisition | ||||||||||||||||||||||||
| Shares issued for services related to S-1 Registration | ||||||||||||||||||||||||
| Change in foreign currency | ||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||
| Balance, December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
See accompanying notes to financial statements.
| F-3 |
ALTEROLA BIOTECH, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR NINE MONTHS ENDED DECEMBER 31, 2021
| Nine Months Ended December 31, 2021 | ||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||
| Net loss for the period | $ | ( | ) | |
| Increase in prepaid assets | ( | ) | ||
| Increase in funds in attorney trust account | ( | ) | ||
| Increase in receivables | ( | ) | ||
| Increase in accrued expenses | ||||
| Increase in accounts payable | ||||
| Net Cash Used by Operating Activities | ( | ) | ||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||
| Acquisition of assets and intellectual property | ( | ) | ||
| Net Cash Used by Investing Activities | ( | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||
| Proceeds from share issuance | ||||
| Convertible note payable | ||||
| Shares issued for services related to S-1 registration | ||||
| Shares issued for C-2 Acquisition | ||||
| Net proceeds to related parties | ( | ) | ||
| Net Cash Provided by Financing Activities | ||||
| Effect of exchange rate adjustments on cash | ||||
| Net Increase (Decrease) in Cash and Cash Equivalents | ||||
| Cash and cash equivalents, beginning of period | ||||
| Cash and cash equivalents, end of period | $ | |||
| SUPPLEMENTAL CASH FLOW INFORMATION | ||||
| Interest paid | $ | |||
| Income taxes paid | $ | |||
| NON-CASH INVESTING AND FINANCING INFORMATION | ||||
| Shares issued for services for s-1 Registration | $ | |||
| Shares issued for C-2 Acquisition | $ | |||
See accompanying notes to financial statements.
| F-4 |
ALTEROLA BIOTECH, INC.
NOTES TO THE UNAUDITED CONSOIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021
NOTE 1 – NATURE OF BUSINESS
After formation, the Company was in the business of mineral exploration. On May 3, 2010, the Company sold its mineral exploration business and entered into an Intellectual Property Assignment Agreement (“IP Agreement”) with Soren Nielsen pursuant to which Mr. Nielsen transferred his right, title and interest in all intellectual property relating to certain chewing gum compositions having appetite suppressant activity (the “IP”) to the Company for the issuance of shares of the Company’s common stock.
Following the acquisition of the IP the Company changed its business direction to pursue the development of chewing gums for the delivery of Nutraceutical/functional ingredients for applications such as appetite suppressant, cholesterol suppressant, vitamin delivery, antioxidant delivery and motion sickness suppressant.
On January 19, 2021, the Company entered into an Stock Purchase Agreement (the “Agreement”) with ABTI Pharma Limited, a company registered in England and Wales (“ABTI Pharma”), pursuant to which the Company agreed to acquire all of the outstanding shares of capital stock of ABTI Pharma from its shareholders in exchange for shares of the Company pro rata to the ABTI Pharma shareholders. The shares were issued on January 29, 2021 in anticipation of the closing and the parties to the transaction agreed in a March 24, 2021 amendment to close upon the ABTI Pharma Limited Shares being transferred to the Company, which was to occur upon the filing by the Company of its outstanding December 31, 2020 quarterly report on Form 10-Q, which was filed on May 28, 2021 with the Securities and Exchange Commission. The transaction closed on May 28, 2021.
The business plan of the company is no longer focused on a chewing gum delivery system but it has re-focused its activities to the development of cannabinoid, cannabinoid-like, and non-cannabinoid pharmaceutical active pharmaceutical ingredients (APIs), pharmaceutical medicines made from cannabinoid, cannabinoid-like, and non-cannabinoid APIs and European novel food approval of cannabinoid-based, cannabinoid-like and non-cannabinoid ingredients and products .In addition, the company plans to develop such bulk ingredients for supply into the cosmetic sector.
The
transaction is being accounted for as a reverse acquisition and recapitalization. ABTI Pharma is the acquirer for accounting purposes
and the Company is the issuer. The historical financial statements presented are the financial statements of ABTI. The Agreement was
treated as a recapitalization and not as a business combination; at the date of the acquisition, the net liabilities of the legal acquirer,
Alterola, were $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United State of America (GAAP accounting) and include the accounts of Alterola and its wholly owned subsidiaries ABTI Pharma, Phytotherapeutix Ltd, Ferven Ltd., and Nano4M Ltd. All material intercompany transactions and balances have been eliminated.
The Company had a September 30 fiscal year end. Subsequent to the Agreement with ABTI Pharma, the Company has changed its year end from September 30 to March 31.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
| F-5 |
ALTEROLA BIOTECH, INC.
NOTES TO THE UNAUDITED CONSOLIDATEDEDFINANCIAL STATEMENTS
DECEMBER 31, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Funds in attorney trust account
The company does not have its own bank account. Amounts due from attorney represents fund held on behalf of the Company in trust by its legal counsel.
Fair Value of Financial Instruments
Alterola’s financial instruments consist of cash and equivalents, accrued expenses, accrued interest and notes payable. The carrying amount of these financial instruments approximates fair value (“FV”) due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
FV is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The FV should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the FV of liabilities should include consideration of non-performance risk including our own credit risk.
In addition to defining FV, the disclosure requirements around FV establish a FV hierarchy for valuation inputs which is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring FV are observable in the market. Each FV measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the FV measurement in its entirety. These levels are:
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The FV are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The carrying value of the Company’s financial assets and liabilities which consist of cash, accounts payable and accrued liabilities, and notes payable are valued using level 1 inputs. The Company believes that the recorded values approximate their FV due to the short maturity of such instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.
| F-6 |
ALTEROLA BIOTECH, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Foreign Currency Translation
The financial statements are presented in US Dollars. Transactions with foreign subsidiaries where US dollars are not the functional currency will be recorded in accordance with Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830 Foreign Currency Transaction. According to Topic 830, all assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with ASC Topic 220, Comprehensive Income . Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss )
Revenue Recognition
On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. As of and for the year ended December 31, 2021, the financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605.
Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments.
Stock-based compensation is accounted for at FV in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options
Risks and Uncertainties
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and business. The Coronavirus and actions taken to mitigate it have had and are expected to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plans to operate.”
Recent Accounting Pronouncements
Alterola does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
| F-7 |
ALTEROLA BIOTECH, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021
NOTE 3 – ACCRUED EXPENSES
Accrued expenses consisted of the following at December 31, 2021 and March 31, 2021:
| December 31, 2021 | March 31, 2021 | ||||||
| Audit fees | $ | $ | |||||
| Accounting | |||||||
| Research and development | |||||||
| Legal fees and transfer agent | |||||||
| Total Accrued Expenses | $ | $ | |||||
NOTE 4 – CAPITAL STOCK
The Company has shares of par value common stock authorized and shares of par value preferred stock authorized.
On
September 6, 2021, the Company raised $
On
December 21, 2021, the company issued shares of stock in exchange for $
On October 29, 2021, the Company issued
shares of stock in exchange for services provided by EMC2 Capital, the selling stockholder. The shares were issued at fair value of the
date of exchange, or $
As
pursuant to the asset purchase agreement dated November 9, 2021, the Company acquired certain intellectual property rights of C2 Wellness
Corp. In exchanges for the assets acquired, the Company issued shares of common stock valued at per share.
The intellectual property rights acquired are recorded as intangible assets as of December 31, 2021 for $
The Company has and shares of common stock issued and outstanding as of December 31, 2021 and March 31, 2021, respectively. There are shares of preferred stock issued and outstanding as of December 31, 2021 and March 31, 2021.
NOTE 5 – RELATED PARTY TRANSACTIONS
Alterola neither owns nor leases any real or personal property. An officer has provided office space without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
During the period ended December 31, 2021, a shareholder made advances to the company to fund operating expenses in the amount of . These advances are non – interest bearing and have no specified terms of repayment.
During
the period ended December 31, 2021, the Company accrued director’s fees payable of $
| F-8 |
ALTEROLA BIOTECH, INC.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2021
NOTE 6 – LIQUIDITY & GOING CONCERN
Alterola
has negative working capital of $
The ability of Alterola to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.
NOTE 7 – SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the Company analyzed its operations subsequent to December 31, 2021 to the date these financial statements were issued, and determined it does not have any material subsequent events to disclose in these financial statements.
| F-9 |
Gries & Associates, LLC
Certified Public Accountants
400 South Colorado Blvd, Ste 870
Denver, Colorado 80246
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders Alterola Biotech, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Alterola Biotech, Inc. (the Company) as of March 31, 2021 and the related statement of operations, stockholders’ deficit and cash flows for the period then ended and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2021, and the results of its operations and its cash flows for each of the period then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion
.
Going Concern Uncertainty
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 7 to the financial statements, the Company has negative working capital of $389,521, has incurred losses since inception of $1,531,288, and has not received any revenues These factors create an uncertainty as to the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Emphasis of Matters-Risks and Uncertainties
The Company is not able to predict the ultimate impact that COVID -19 will have on its business. However, if the current economic conditions continue, the pandemic could have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plans to operate.
/s/ Gries & Associates, LLC
We have served as the Company’s auditor since 2021. Denver, Colorado
June 4, 2021
blaze@griesandassociates.com
400 South Colorado Blvd, Suite 870, Denver, Colorado 80246 (O)720-464-2875 (M)773-255-5631 (F)720-222-5846
 |
AJ Robbins CPA, LLC Certified Public Accountants
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Alterola Biotech, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Alterola Biotech, Inc. (the Company) as of September 30, 2020 and 2019 and the related statements of operations, stockholders’ deficit and cash flows for each of the years then ended and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2020 and 2019, and the results of its operations and its cash flows for each of the years then ended in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion
.
Going Concern Uncertainty
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 7 to the financial statements, the Company has negative working capital of $323,221, has incurred losses since inception of $1,221,788, and has not received any revenues These factors create an uncertainty as to the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 7. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Emphasis of Matters-Risks and Uncertainties
The Company is not able to predict the ultimate impact that COVID -19 will have on its business. However, if the current economic conditions continue, the pandemic could have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plans to operate.
|
/s/AJ Robbins CPA LLC
|
|
| We have served as the Company’s auditor since 2019. | |
|
Denver, Colorado March 23, 2021 | |
aj@ajrobbins.com
400 South Colorado Blvd, Suite 870, Denver, Colorado 80246
(B)303-537-5898 (M)720-339-5566 (F)303-586-6261
| F-10 |
ALTEROLA BIOTECH, INC.
BALANCE SHEETS
AS OF MARCH 31, 2021, SEPTEMBER 30, 2020 AND SEPTEMBER 30, 2019
(AUDITED)
| March 31, 2021 | September 30, 2020 | September 30, 2019 | |||||||||
| ASSETS | |||||||||||
| Current Assets | |||||||||||
| Funds in attorney trust account | $ | $ | $ | ||||||||
| Total Current Assets | |||||||||||
| TOTAL ASSETS | $ | $ | $ | ||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||
| Current Liabilities | |||||||||||
| Accrued expenses | $ | $ | $ | ||||||||
| Accrued directors’ fees | |||||||||||
| Advances from related party | |||||||||||
| Total Current Liabilities | |||||||||||
| Total Liabilities | |||||||||||
| Stockholders’ Deficit | |||||||||||
| Preferred Stock, par value, shares authorized, -- shares issued and outstanding | |||||||||||
| Common Stock, par value, shares authorized, and shares issued and outstanding, respectively | |||||||||||
| Additional paid-in capital | |||||||||||
| Common stock held in trust | ( | ) | |||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ||||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ( | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | $ | ||||||||
See accompanying notes to financial statements.
| F-11 |
ALTEROLA BIOTECH, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2021 AND 2020 AND THE YEARS ENDED SEPTEMBER 30, 2020 AND 2019
(AUDITED)
| Six Months Ended March 31, 2021 | Six Months Ended March 31, 2020 | Year Ended September 30, 2020, | Year Ended September 30, 2019 | ||||||||||||
| REVENUES | |
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| OPERATING EXPENSES | |||||||||||||||
| Accounting and audit fees | |||||||||||||||
| Professional fees | |||||||||||||||
| Consulting fees | |||||||||||||||
| Legal fees | |||||||||||||||
| Directors fees | |||||||||||||||
| General and administrative expenses | |||||||||||||||
| TOTAL OPERATING EXPENSES | |||||||||||||||
| LOSS FROM OPERATIONS | ( | ) | ( |
) | ( | ) | ( | ||||||||
| OTHER INCOME (EXPENSE) | |||||||||||||||
| Miscellaneous sale | |||||||||||||||
| Interest expense | ( | ||||||||||||||
| TOTAL OTHER INCOME (EXPENSE) | ( | ||||||||||||||
| PROVISION FOR INCOME TAXES | |||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( |
) | $ | ( | ) | $ | ( | ||||
| NET LOSS PER SHARE: BASIC AND DILUTED | $ | ( | ) | $ | ( |
$ | ( | ) | $ | ( | |||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED | |||||||||||||||
See accompanying notes to financial statements.
| F-12 |
ALTEROLA BIOTECH, INC.
STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE PERIOD ENDED MARCH 31, 2021 AND THE YEAR ENDED SEPTEMBER 30, 2020
(AUDITED)
| Common stock | |||||||||||||||||||||||
| Shares | Amount | Additional paid-in Capital | Shares held in trust | Accumulated Deficit | Total | ||||||||||||||||||
| Balance, September 30, 2019 | $ | $ | $ | ( | ) | $ | ( | ||||||||||||||||
| Common stock issued for services | |||||||||||||||||||||||
| Net loss for the year ended September 30, 2020 | ( | ) | ( | ||||||||||||||||||||
| Balance, September 30, 2020 | $ | $ | $ | ( | ) | $ | ( | ||||||||||||||||
| Common stock issued for services | |||||||||||||||||||||||
| Common stock issued for acquisition | ( | ) | |||||||||||||||||||||
| Net loss for the period ended March 31, 2021 | ( | ) | ( | ||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ||||||||||||||
See accompanying notes to financial statements.
| F-13 |
ALTEROLA BIOTECH, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2021 AND 2020, AND YEARS ENDED SEPTEMBER 30, 2020 AND 2019
(AUDITED)
| Six months ended March 31, 2021 | Six months ended March 31, 2020 | Twelve months ended September 30, 2020 | Twelve months ended September 30, 2019 | ||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | $ | ( |
) | $ | ( | ||||
| Non-cash items related to operations | |||||||||||||||
Stock based compensation | | ||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||
| Increase (decrease) in accrued expenses | |||||||||||||||
| Increase (decrease) in accrued interest | |||||||||||||||
| Increase (decrease) in advance from related party | |||||||||||||||
| Increase (decrease) in due from attorney | ( | ) | ( |
) | |||||||||||
| Net Cash Used by Operating Activities | ( | ) | |||||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||
| Acquisition of intellectual property | | ||||||||||||||
| Website development | | ||||||||||||||
| Net Cash Used by Investing Activities | |
| |||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||
| Due from related parties | |
| |||||||||||||
| Proceeds from notes payable | |
| |||||||||||||
| Net Cash Provided by Financing Activities | |
| |||||||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | |
| |||||||||||||
| Cash and cash equivalents, beginning of period | |
| |||||||||||||
| Cash and cash equivalents, end of period | $ | $ | $ | |
$ | | |||||||||
| SUPPLEMENTAL CASH FLOW INFORMATION | |||||||||||||||
| Interest paid | $ | $ | |
| |||||||||||
| Income taxes paid | $ | $ | $ | |
$ | | |||||||||
| NON-CASH INVESTING AND FINANCING INFORMATION | |||||||||||||||
| Common stock to be issued for acquisition | $ | $ | $ | |
$ | ||||||||||
| Common stock issued for services | $ | $ | $ | |
$ | ||||||||||
See accompanying notes to financial statements.
| F-14 |
ALTEROLA BIOTECH, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 – NATURE OF BUSINESS
After formation, the Company was in the business of mineral exploration. On May 3, 2010, the Company sold its mineral exploration business and entered into an Intellectual Property Assignment Agreement (“IP Agreement”) with Soren Nielsen pursuant to which Mr. Nielsen transferred his right, title and interest in all intellectual property relating to certain chewing gum compositions having appetite suppressant activity (the “IP”) to the Company for the issuance of shares of the Company’s common stock.
Following the acquisition of the IP the Company changed its business direction to pursue the development of chewing gums for the delivery of Nutraceutical/functional ingredients for applications such as appetite suppressant, cholesterol suppressant, vitamin delivery, antioxidant delivery and motion sickness suppressant.
The business plan of the company will no longer be focused on a chewing gum delivery system but it will re-focus its activities to the development of cannabinoid, cannabinoid-like, and non-cannabinoid pharmaceutical active pharmaceutical ingredients (APIs), pharmaceutical medicines made from cannabinoid, cannabinoid-like, and non-cannabinoid APIs and European novel food approval of cannabinoid-based, cannabinoid-like and non-cannabinoid ingredients and products .In addition, the company plans to develop such bulk ingredients for supply into the cosmetic sector.
On
January 19, 2021, the Company entered into an Stock Transfer Agreement (the “Agreement”) with ABTI Pharma Limited, a company
registered in England and Wales (“ABTI Pharma”), pursuant to which the Company will acquire all of the outstanding shares
of capital stock of ABTI Pharma from its shareholders in exchange for shares of the Company pro rata to the ABTI Pharma shareholders.
The shares have been issued in anticipation of the closing and the transaction will close upon the ABTI Pharma Limited Shares being transferred
to the Company which will occur upon the filing by the Company of its outstanding annual report and form 10-K for 2019, and its quarterly
reports for 2020, which were filed on May 28, 2021. The shares were issued January 29, 2021 in anticipation of a closing. The transaction
will be accounted for as a reverse acquisition upon closing. As of March 31, 2021, the shares have been recorded at $
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has a September 30 fiscal year end. Subsequent to the Agreement with ABTI Pharma Limited, the Company has changed its year end from September 30 to March 31.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
| F-15 |
ALTEROLA BIOTECH, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Funds in attorney trust account
The company does not have its own bank account. Amounts due from attorney represents fund held on behalf of the Company in trust by its legal counsel.
Fair Value of Financial Instruments
Alterola’s financial instruments consist of cash and equivalents, accrued expenses, accrued interest and notes payable. The carrying amount of these financial instruments approximates fair value (“FV”) due either to length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements.
FV is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The FV should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the FV of liabilities should include consideration of non-performance risk including our own credit risk.
In addition to defining FV, the disclosure requirements around FV establish a FV hierarchy for valuation inputs which is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring FV are observable in the market. Each FV measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the FV measurement in its entirety. These levels are:
Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The FV are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The carrying value of the Company’s financial assets and liabilities which consist of cash, accounts payable and accrued liabilities, and notes payable are valued using level 1 inputs. The Company believes that the recorded values approximate their FV due to the short maturity of such instruments. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.
| F-16 |
ALTEROLA BIOTECH, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
Foreign Currency Translation
The financial statements are presented in US Dollars. Transactions with foreign subsidiaries where US dollars are not the functional currency will be recorded in accordance with Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 830 Foreign Currency Transaction. According to Topic 830, all assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with ASC Topic 220, Comprehensive Income . Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss )
Revenue Recognition
On January 1, 2018, the Company adopted ASC Topic 606, Revenue from Contracts with Customers ("ASC 606"), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC 605. As of and for the year ended March 31, 2021, the financial statements were not materially impacted as a result of the application of Topic 606 compared to Topic 605.
Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments.
Stock-based compensation is accounted for at FV in accordance with ASC Topic 718. To date, the Company has not adopted a stock option plan and has not granted any stock options
Risks and Uncertainties
On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and business. The Coronavirus and actions taken to mitigate it have had and are expected to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company plans to operate.”
Recent Accounting Pronouncements
Alterola does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
| F-17 |
ALTEROLA BIOTECH, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 3 – ACCRUED EXPENSES
Accrued expenses consisted of the following at March 31, 2021 and September 30, 2020:
| March 31, 2021 | September 30, 2020 | ||||||
| Audit fees | $ | $ | |||||
| Accounting | |||||||
| Legal fees and transfer agent | |||||||
| Total Accrued Expenses | $ | $ | |||||
NOTE 4 – CAPITAL STOCK
The Company has shares of par value common stock authorized and shares of par value preferred stock authorized.
During
the year ended September 30, 2019, the Company issued shares of common stock to an officer for services rendered with a deemed
value of services provided of $
During the year ended September 30, 2020, the
Company issued shares of common stock to individuals for services rendered with a deemed value of services provided
of $
During
the period ended March 31, 2021, the Company issued shares of common stock for services rendered with a deemed value of services
provided of $
On
January 29, 2021, the Company issued shares of common stock for an acquisition with a deemed value of $
The Company has and shares of common stock issued and outstanding as of March 31, 2021 and September 30, 2020 respectively. There are shares of preferred stock issued and outstanding as of March 31, 2021 and September 30, 2020.
| F-18 |
ALTEROLA BIOTECH, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 5 – INCOME TAX
Due to uncertainties surrounding the Company’s ability to generate future taxable income to realize these assets, a full valuation allowance has been established to offset the net deferred tax asset. The income tax effects of the Tax Cuts and Jobs Act have been completed in accordance with FASB ASC 740.
The provision for income tax consists of the following components at March 31, 2021 and September 30, 2020:
| 2021 | 2020 | |||||||
| Current: | ||||||||
| Federal income taxes (benefit) | ( | ) | $ | ( | ) | |||
| State income taxes | ||||||||
| Deferred Benefit from net operating loss | ||||||||
| $ | ( | ) | $ | ( | ) | |||
The following reconciles income taxes reported in the financial statements to taxes that would be obtained by applying regular tax rates to income before taxes:
| 2021 | 2020 | |||||||
| Expected tax expense (benefit) using regular rates | $ | $ | ||||||
| State minimum tax valuation allowance | ( | ) | ( | ) | ||||
| Tax Provision | $ | $ | ||||||
The
Company has loss carry forwards totaling $
At March 31, 2021 and September 30, 2020, the significant components of the deferred tax assets are summarized below:
| March 31, 2021 | September 30, 2020 | ||||||
| Deferred income tax asset | |||||||
| Net operation loss carryforwards | |||||||
| Total deferred income tax asset | |||||||
| Less: valuation allowance | ( | ) | ( | ||||
| Total deferred income tax asset | $ | $ | |||||
The federal income tax returns of the Company for 2021 and 2020 are subject to examination by the IRS, generally for three years after they were filed.
| F-19 |
ALTEROLA BIOTECH, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 6 – RELATED PARTY TRANSACTIONS
Alterola neither owns nor leases any real or personal property. An officer has provided office space without charge. There is no obligation for the officer to continue this arrangement. Such costs are immaterial to the financial statements and accordingly are not reflected herein. The officers and directors are involved in other business activities and most likely will become involved in other business activities in the future.
During
the period ended March 31, 2021, a shareholder made advances to the company to fund operating expenses in the amount of $
During
the period ended March 31, 2021, the Company accrued director’s fees payable of $
NOTE 7 – LIQUIDITY & GOING CONCERN
Alterola
has negative working capital of $
The ability of Alterola to continue as a going concern is dependent on the Company generating cash from the sale of its common stock and/or obtaining debt financing and attaining future profitable operations. Management’s plans include selling its equity securities and obtaining debt financing to fund its capital requirement and ongoing operations; however, there can be no assurance the Company will be successful in these efforts.
NOTE 8 – OTHER INCOME
The
Company recognized other income of $
NOTE 9 – SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the Company analyzed its operations subsequent to March 31, 2021 to the date these financial statements were issued.
On May 24, 2021, the Company and the shareholders of ABTI Pharma memorialized a new closing date in an amendment to the Agreement. The Company issued the shares in anticipation of the closing and the transaction will close upon the ABTI Pharma shares being transferred to the Company, which will occur upon the filing of the Company’s December 31, 2020 quarterly form on Form 10-Q With the Securities and Exchange Commission (”SEC”). The December 31, 2020 Form 10-Q was filed with the SEC on May 28, 2021.
Pursuant to the Agreement, the Company will provide funding to ABTI Pharma to pay for operating expenses including salaries, office expenses and additional expenses or projects in the amount of US$500,000 within fifteen (15) days from closing the Agreement and shall fund an additional US $200,000 every 30 days thereafter until a total funding of US $1,100,000 has been delivered.
| F-20 |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of ABTI Pharma Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of ABTI Pharma Limited (the "Company") as of March 31, 2021 and 2020, the related consolidated statement of operations, stockholders' equity, and cash flows for the years ended March 31, 2021 and 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 31, 2021 and 2020, and the results of its operations and its cash flows for the years ended through March 31, 2021 and 2020, in conformity with accounting principles generally accepted in the United States.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s significant operating losses raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ BF Borgers CPA PC
BF Borgers CPA PC
Served as Auditor since 2021
Lakewood, CO
June 16, 2021
| F-21 |
ABTI Pharma Limited
Consolidated Balance Sheets
| March 31, 2021 | March 31, 2020 | ||||||
| ASSETS | |||||||
| Current Assets | |||||||
| Cash | $ | $ | |||||
| Total Current Assets | |||||||
| Total Assets | $ | $ | |||||
| Liabilities and Shareholders' Equity (Deficit) | |||||||
| Current Liabilities | |||||||
| Accounts payable and accrued liabilities | $ | $ | |||||
| Accounts payable – related party | |||||||
| Loan payable - related party | |||||||
| Total Current Liabilities | |||||||
| Total Liabilities | |||||||
| Shareholders' Deficit | |||||||
| Ordinary shares: GBP £1.00 () par value shares issued and outstanding | |||||||
| Additional paid in capital | |||||||
| Accumulated deficit | ( | ) | |||||
| Accumulated other comprehensive loss | ( | ) | ( | ||||
| Total Shareholders' Equity (Deficit) | ( | ) | |||||
| Total Liabilities and Shareholders' Equity (Deficit) | $ | $ | |||||
The accompanying notes are an integral part of these audited financial statements.
| F-22 |
ABTI Pharma Limited
Consolidated Statements of Comprehensive Loss
| Year Ended March 31, | |||||||
| 2021 | 2020 | ||||||
| Revenue | $ | $ | |||||
| Operating Expenses: | |||||||
| General and administrative | |||||||
| Professional fees | |||||||
| Research and development – related party | |||||||
| Total operating expenses | |||||||
| Operating loss | ( | ) | |||||
| Other income (expense) | |||||||
| Interest expense | ( | ) | |||||
| Total other expense | ( | ) | |||||
| Net loss before taxes | ( | ) | |||||
| Income tax benefit | |||||||
| Net Loss | $ | ( | ) | $ | |||
| Other comprehensive income (loss) | |||||||
| Foreign currency translation adjustment | ( | ) | |||||
| Comprehensive Loss | $ | ( | ) | $ | |||
| Net loss per ordinary share, basic and diluted | $ | ( | ) | $ | |||
| Basic and diluted weighted average ordinary shares outstanding | |||||||
The accompanying notes are an integral part of these audited financial statements.
| F-23 |
ABTI Pharma Limited
Consolidated Statement of Shareholders’ Deficit
For the Years Ended March 31, 2021 and 2020
| Number of Shares | Share Capital | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Shareholders' Equity (Deficit ) | ||||||||||||||||||
| Balance - March 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
| Net loss | |||||||||||||||||||||||
| Balance - March 31, 2020 | ( | ) | |||||||||||||||||||||
| Issuance of ordinary shares | |||||||||||||||||||||||
| Related party interest forgiven | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ||||||||||||||||||||
| Net loss | ( | ) | ( | ||||||||||||||||||||
| Balance - March 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | |||||||||||||
The accompanying notes are an integral part of these audited financial statements.
| F-24 |
ABTI Pharma Limited
Consolidated Statements of Cash Flows
| Year Ended March 31, | |||||||
| 2021 | 2020 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net loss | $ | ( | ) | $ | |||
| Changes in current assets and liabilities: | |||||||
| Accounts payable – related party | |||||||
| Accounts payable and accrued liabilities | |||||||
| Net cash used in operating activities | ( | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Proceeds from issuance of ordinary shares | |||||||
| Proceeds from related party loans | |||||||
| Net cash provided by financing activities | |||||||
| Effect of exchange rate in cash | |||||||
| Net change in cash for the period | |||||||
| Cash at beginning of period | |||||||
| Cash at end of period | $ | $ | |||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||
| Cash paid for income taxes | $ | $ | |||||
| Cash paid for interest | $ | $ | |||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | |||||||
| Forgiveness of related party accrued interest | $ | $ | |||||
The accompanying notes are an integral part of these audited financial statements.
| F-25 |
ABTI Pharma Limited
Notes to the Consolidated Financial Statements
March 31, 2021 and 2020
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
ABTI Pharma Limited (the “Company”) was incorporated in the United Kingdom on January 7, 2021. The Company is a UK based pharmaceutical company developing cannabinoid, cannabinoid-like, and non-cannabinoid pharmaceutical active pharmaceutical ingredients (APIs), pharmaceutical medicines made from cannabinoid, cannabinoid-like, and non-cannabinoid APIs and targeting European novel food approval of cannabinoid-based, cannabinoid-like and non-cannabinoid ingredients and products .In addition, the company is seeking to develop such bulk ingredients for supply into the cosmetic sector. To date, the Company’s activities have been limited to its formation and the raising of equity capital. The Company’s fiscal year end is March 31.
Subsidiaries
On January 27, 2021, the Company acquired 100% of Ferven Limited and Phytotherapeutix Ltd. The Companies were under common control before the acquisition and are consolidated in accordance to ASC-805-50, in which the assets and liabilities of Ferven Limited and Phytotherapeutix Ltd. have been presented at their carrying values at the date of common control.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Ferven Limited (United Kingdom) and Phytotherapeutix Ltd (United Kingdom). All significant intercompany transactions and balances have been eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents consist of cash and short-term
investments with original maturities of less than 90 days. Cash equivalents are placed with high credit quality financial institutions
and are primarily in money market funds. The carrying value of those investments approximates fair value. The Company had $
Foreign Currency Translations
The Company’s functional currency is in British pound sterling (“GBP”). All transactions are translated into U.S. dollars in accordance with ASC 830-30, “Translation of Financial Statements,” as follows:
| 1) | Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date. |
| 2) | Equity at historical rates. |
| 3) | Revenue and expense items at the average rate of exchange prevailing during the period. |
| F-26 |
Adjustments arising from such translations are deferred until realization and are included as a separate component of stockholders’ equity as a component of comprehensive income or loss. Therefore, translation adjustments are not included in determining net income (loss) but reported as other comprehensive income (loss). Gains and losses from foreign currency transactions are included in earnings in the period of settlement.
Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) establishes a framework for all fair value measurements and expands disclosures related to fair value measurement and developments. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
The carrying amounts of cash, accounts payable and accrued liabilities, and due to related parties approximate fair value because of the short-term nature of these items.
Concentrations of Credit Risks
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and related party payables it will likely incur in the near future. The Company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash with a particular financial institution may exceed any applicable government insurance limits. The Company’s management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
As of March 31, 2021, and 2020, the Company did not have any amounts recorded pertaining to uncertain tax positions.
The Company has adopted ASC 260, “Earnings Per Share,” (“EPS”) which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures, and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic loss per share is computed by dividing net loss by the weighted average number of shares of ordinary stock outstanding during the period.
The Company has no potentially dilutive securities currently issued and outstanding.
Recent Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of its financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
| F-27 |
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared
on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
The Company has not generated any revenues since inception. The Company has a net loss of $
The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing, shareholder loans and to commence profitable operations in the future and repay its liabilities arising from normal business operations as they become due. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for future periods.
NOTE 4 - INCOME TAXES
The Company follows ASC 740. Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry-forwards. No net provision for refundable income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry-forward has been recognized, as it is not deemed likely to be realized.
The provisions for income tax, consist of the following:
| March 31, 2021 | |||
| Net Operating Loss carryforward | $ | ||
| Valuation allowance | ( | ||
| Net deferred tax asset | $ | ||
The tax effects of temporary differences that give rise to the Company’s net deferred tax assets are as follows:
| March 31, 2021 | March 31, 2020 | ||||||
| Net Operating Profit | $ | ( | ) | $ | |||
| Effective tax rate | |||||||
| Income Tax expense | ( | ) | |||||
| Less: valuation allowance | |||||||
| Income Tax Expense | $ | $ | |||||
A valuation allowance has been established for our tax assets as their use is dependent on the generation of sufficient future taxable income, which cannot be predicted at this time. As of March 31, 2021, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. No interest and penalties have been recognized by us to date. Our net operating loss carryforwards are subject to review and possible adjustment by HM Revenue & Customs. Tax returns for the years ended 2019 through 2021 are subject to review.
| F-28 |
NOTE 5 - RELATED PARTIES TRANSACTIONS
In support of the Company’s efforts and cash requirements, it may rely on advances from related parties until such time that the company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. There is no formal written commitment for continued support by shareholders or directors. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances were considered temporary in nature and were not formalized by a promissory note.
During the year ended March 31, 2021, the subsidiary’s
director advanced to the Company an amount of $
During the year ended March 31, 2021, research and
development services of $
NOTE 6 - EQUITY
The Company has ordinary shares with a par value of GBP per share.
During the year ended March 31, 2021, ordinary
shares were issued for GBP 100 ($
As of March 31, 2021 and 2020, there were and ordinary shares issued and outstanding, respectively.
NOTE 7 - SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure.
| F-29 |
ALTEROLA BIOTECH INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of March 31, 2021
| Alterola Biotech Inc. | ABTI Pharma Limtied | Proforma Adjustments | Notes | Proforma As Adjusted | |||||||||||||||
| Assets | |||||||||||||||||||
| Current Assets | |||||||||||||||||||
| Cash | $ | $ | $ | $ | |||||||||||||||
| Total Current assets | |||||||||||||||||||
| Total Assets | $ | $ | $ | $ | |||||||||||||||
| Liabilities and Shareholders' Deficit | |||||||||||||||||||
| Current Liabilities | |||||||||||||||||||
| Accounts payable and accrued liabilities | $ | $ | $ | $ | |||||||||||||||
| Accounts payable - related party | |||||||||||||||||||
| Loans payable - related parties | |||||||||||||||||||
| Total Current Liabilities | |||||||||||||||||||
| Total Liabilities | |||||||||||||||||||
| Stockholders’ Deficit | |||||||||||||||||||
| Preferred Stock, par value, shares authorized, -- shares issued and outstanding | |||||||||||||||||||
| Common stock: authorized; par value shares issued and outstanding | |||||||||||||||||||
| Ordinary shares: GBP £1.00 () par value shares issued and outstanding | ( | ) | 4(a) | ||||||||||||||||
| Additional paid in capital | ( | ) | |||||||||||||||||
| Common stock held in trust | ( | ) | |||||||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ||||||||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ||||||||||||||||
| Total Stockholder’s Deficit | ( | ) | ( | ) | ( | ||||||||||||||
| Total Liabilities and Stockholders' Deficit | $ | $ | $ | $ | |||||||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
| F-30 |
ALTEROLA BIOTECH INC.
Unaudited Pro Forma Condensed Combined Statement of Operations
Year Ended March 31, 2021
| Alterola Biotech Inc. | ABTI Pharma Limited | Proforma Adjustments | Notes | Proforma As Adjusted | |||||||||||||
| Revenue | $ | $ | $ | $ | |||||||||||||
| Operating Expenses | — | ||||||||||||||||
| Research and development | |||||||||||||||||
| Accounting and audit fees | |||||||||||||||||
| Professional fees | |||||||||||||||||
| Legal fees | |||||||||||||||||
| Directors fees | |||||||||||||||||
| General and administrative expenses | |||||||||||||||||
| Total operating expenses | |||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ||||||||||||
| Other Income (Expense) | — | ||||||||||||||||
| Interest expense | ( | ) | ( | ||||||||||||||
| Total other expense | ( | ) | ( | ||||||||||||||
| Net loss before provision for income taxes | ( | ) | ( | ) | ( | ||||||||||||
| Income taxes | |||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | $ | ( | ||||||||
| Other comprehensive loss | |||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ||||||||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | $ | $ | ( | ||||||||
| Basic and dilutive loss per common share | $ | ( | ) | $ | ( | ) | |||||||||||
| Weighted average number of common shares outstanding | |||||||||||||||||
See accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Statements.
| F-31 |
ALTEROLA BIOTECH INC.
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
On January 19, 2021, Alterola Biotech Inc. (the “Company”, “Alterola”) entered into a Stock Purchase Agreement (the “Agreement”) with ABTI Pharma Limited, a company registered in England and Wales (“ABTI Pharma”, “ABTI”), pursuant to which the Company will acquire all of the outstanding shares of capital stock of ABTI Pharma from its shareholders in exchange for shares of the Company issued pro rata to the ABTI Pharma shareholders.
On May 24, 2021, the Company and the shareholders of ABTI Pharma memorialized a new closing date in an amendment to the Agreement (the “Amendment”). The Company has already issued the shares in anticipation of the closing and the transaction will close upon the ABTI Pharma shares being transferred to the Company, which will occur upon the filing of the Company’s December 31, 2020 quarterly report on Form 10-Q with the Securities and Exchange Commission (“SEC”).
On May 28, 2021, having completed all conditions under the Agreement, the Company closed the transaction.
NOTE 1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma condensed combined financial statements are based on the Company’s and ABTI’s historical consolidated financial statements as adjusted to give effect to the acquisition of ABTI and the shares issued as part of the acquisition. The unaudited pro forma combined statements of operations for the year ended March 31, 2021 give effect to the ABTI acquisition as if it had occurred on April 1, 2020. The unaudited proforma combined balance sheet as of March 31, 2021 gives effect to the ABTI acquisition as if it had occurred on March 31, 2021.
Historical financial information has been adjusted in the pro forma balance sheet to pro forma events that are: (1) directly attributable to the Acquisition; (2) factually supportable; and (3) expected to have a continuing impact on the Company’s results of operations. The pro forma adjustments presented in the pro forma combined balance sheet and statement of operations are described in Note 4— Pro Forma Adjustments.
The unaudited pro forma condensed combined financial information is for illustrative purposes only. These companies may have performed differently had they actually been combined for the periods presented. You should not rely on the pro forma combined financial information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that the combined companies will experience after the acquisition.
NOTE 2. ACCOUNTING PERIODS PRESENTED
Certain pro forma adjustments were made to conform ABTI accounting policies to the Company’s accounting policies as noted below.
The unaudited pro forma condensed combined balance sheet as of March 31, 2021 is presented as if the acquisition had occurred on March 31, 2021 and combines the historical balance sheet of the Company at March 31, 2021 and the historical balance sheet of the ABTI at March 31, 2021.
The unaudited pro forma condensed combined statement of operations for the year ended March 31, 2021 has been prepared by combining the Company’s historical consolidated statement of operations for the year ended March 31, 2021, with the historical statement of operations of ABTI for the year ended March 31, 2021.
NOTE 3. PRELIMINARY PURCHASE PRICE ALLOCATION
On May 28, 2021, the Company acquired ABTI for total consideration of shares of Company’s common stock. The unaudited pro forma condensed combined financial statements include various assumptions, including those related to the preliminary purchase price allocation of the assets acquired and liabilities assumed of SwissLink based on management’s best estimates of fair value. The final purchase price allocation may vary based on final appraisals, valuations and analysis of fair value of the acquired assets and assumed liabilities. Accordingly, pro forma adjustments are preliminary and have been made solely for illustrative purposes.
NOTE 4. PRO FORMA ADJUSTMENTS
The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the unaudited pro forma condensed combined financial information:
| a) | To eliminate 600,000,000 shares of common stock held in trust and equity of ABTI. |
| F-32 |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
On May 20, 2021, AJ Robbins CPA, LLC (the “Former Accountant”) resigned as the Company’s independent registered public accounting firm and, on May 20, 2021, the Company engaged Gries & Associates, LLC (the “New Accountant”) as the Company’s independent registered public accounting firm. The engagement of the New Accountant was approved by the Company’s Board of Directors.
AVAILABLE INFORMATION
We file annual, quarterly and current reports, proxy statements and other documents with the SEC. These filings contain important information which does not appear in this prospectus. You may read and copy, at prescribed rates, any documents we have filed with the SEC at its Public Reference Room located at 100 F Street, N.E., Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We also file these documents with the SEC electronically. You can access the electronic versions of these filings on the SEC’s website found at http://www.sec.gov.
We have filed with the Securities and Exchange Commission (“SEC”) a registration statement for the securities on Form S-1 under the Securities Act. This prospectus, which forms part of the registration statement, does not contain all the information contained in the registration statement. Whenever a reference is made in this prospectus to any of our contracts or other documents, the reference may not be complete and, for a copy of the contract or document, you should refer to the exhibits that are part of the registration statement.
You may inspect and copy the registration statement at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549 upon payment of certain prescribed fees. You may obtain information on the operation of the SEC’s public reference facilities by calling the SEC at 1-800-SEC-0330. You may also access the registration statement electronically through the SEC’s Electronic Data Gathering, Analysis and Retrieval, or EDGAR, system at the SEC’s website located at http://www.sec.gov.
Until _______________, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
| 50 |
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
| Item 13. | Other Expenses of Issuance and Distribution |
| SEC Registration Fees | $ | 826.36 |
| Accounting Fees and Expenses* | 5,000 | |
| Legal Fees and Expenses* | 5,000 | |
| Miscellaneous* | 5,000 | |
|
|
| |
| Total | $ | 15,826,36 |
* Estimates
We will bear our fees and expenses incurred in connection with the registration of shares of common stock in connection with this offering. The Selling Shareholders will bear all selling and other expenses that they incur in connection with their sale of shares of common stock pursuant to the prospectus which is part of this registration statement.
| Item 14. | Indemnification of Directors and Officers. |
Our officers and directors are indemnified as provided by the Nevada Revised Statutes and our bylaws.
Under the governing Nevada statutes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company's articles of incorporation. Our articles of incorporation do not contain any limiting language regarding director immunity from liability. Excepted from this immunity are:
| 1. | a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest; |
| 2. | a violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful); |
| 3. | a transaction from which the director derived an improper personal profit; and |
| 4. | willful misconduct. |
Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless:
| 1. | such indemnification is expressly required to be made by law; |
| 2. | the proceeding was authorized by our Board of Directors; |
| 3. | such indemnification is provided by us, in our sole discretion, pursuant to the powers vested us under Nevada law; or; |
| 4. | such indemnification is required to be made pursuant to the bylaws. |
| 51 |
Our bylaws provide that we will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer, of the company, or is or was serving at the request of the company as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under our bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer of the company, except by reason of the fact that such officer is or was a director of the company in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the company.
| Item 15. | Recent Sales of Unregistered Securities. |
During the year ended September 30, 2020, the Company issued 13,000,000 shares of common stock to individuals for services rendered with a deemed value of services provided of $130,000.
During the period ended March 31, 2021, the Company issued 3,200,000 shares of common stock for services rendered with a deemed value of services provided of $32,000.
We issued 600,000,000 shares of common stock to the shareholders of ABTI Pharma Limited in connection with a Stock Transfer Agreement dated January 19, 2021. As part of the transaction, the 200,000,000 shares to Amsterdam Café Holdings Ltd. have been cancelled and Bulls Run Investments Limited was issued 19,100,000 shares of common stock. Also, 2,000,000 shares of common stock were issued for services rendered, and with the above transactions, amounts to acquisition with a deemed value of $ 621,100.
During the three months ended September 30, 2021, the company issued 280,000 shares in exchange for cash of $137,627.
On December 21, 2021, the company issued 520,000 shares of stock in exchange for $130,000 of cash consideration.
On October 29, 2021, the Company issued 7,500,000 shares of stock in exchange for services provided by EMC2 Capital. The shares were issued at fair value of the date of exchange, or $2,399,250.
As pursuant to the asset purchase agreement dated November 9, 2021, the Company acquired certain intellectual property rights of C2 Wellness Corp. In exchanges for the assets acquired, the Company issued 24,000,000 shares of common stock valued at $0.50 per share. The intellectual property rights acquired are recorded as intangible assets as of December 31, 2021 for $12,000,000.
On or about March 3, 2022, the Company issued 16,000,000 shares of stock for services under a consulting agreement.
These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder for US investors and Regulation S for non-US investors. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.
| 52 |
Item 16. Exhibits
* Filed Herewith
| 53 |
| Item 17. | Undertakings. |
The registrant hereby undertakes:
| (a) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) | to include any prospectus required by Section 10(a)(3) of the Securities Act; |
(ii) to reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(d) That, for the purpose of determining liability under the Act to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however , that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(e) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other that the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit of proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
| 54 |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in Birkenhead, Merseyside CH41 5AR, UK on April 07, 2022.
Alterola Biotech, Inc.
By: /s/ Timothy Rogers
Timothy Rogers
Chairman, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Director
By: /s/ Seamus McAuley
Seamus McAuley
Chief Executive Officer, Company Secretary and Director
By: /s/ Colin Stott
Colin Stott
Chief Operating Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: /s/ Timothy Rogers | |
| Timothy Rogers | |
| Chairman, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer and Director, | |
|
Signature:
|
Date: April 07, 2022 |
| By: /s/ Seamus McAuley | |
| Seamus McAuley | |
| Chief Executive Officer, Company Secretary and Director | |
|
Signature:
|
Date: April 07, 2022 |
| By: /s/ Colin Stott | |
| Colin Stott | |
| Chief Operting Officer and Director | |
|
Signature:
|
Date: April 07, 2022 |
| By: /s/ Dominic Schiller | |
| Dominic Schiller Director | |
|
Signature:
|
Date: April 07, 2022 |
| By: /s/ Michael Hunter Land | |
| Michael Hunter Land Director | |
|
Signature:
|
Date: April 07, 2022 |
| By: /s/ Daniel Reshef | |
| Daniel Reshef Director | |
|
Signature:
|
Date: April 07, 2022 |
| By: /s/ Ning Qu | |
| Ning Qu Director | |
|
Signature:
|
Date: April 07, 2022 |
| 55 |