(EDGAR Online via COMTEX) -- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to:
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 the development of ingredients and products with the aim of achieving 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.
Because the IP relating to the development of a chewing gum with nutraceutical/functional ingredients is not relevant to the pharmaceutical development that the company plans to undertake, the IP surrounding the chewing gum may no longer benefit the company's operations going forward. While company has not yet decided on the proper disposition of the IP at present, the company will likely divest ownership in the near future.
The new business plan of the company is for the company's operations to be repositioned as a fully regulatory- compliant pharmaceutical company specializing in the development of the following:
cannabinoid, cannabinoid-like and non-cannabinoid pharmaceutical active pharmaceutical ingredients (APIs) globally;
pharmaceutical medicines made from cannabinoid, cannabinoid-like and non-cannabinoid APIs globally;
cannabinoid, cannabinoid-like and non-cannabinoid food-grade ingredients with the aim of achieving European novel food approval of such ingredients;
non-pharmaceutical (nutraceutical / dietary supplement) products containing cannabinoids, cannabinoid-like and non-cannabinoid food-grade ingredients with the aim of achieving European novel food approval of such products; and
Supply of cosmetic ingredients to potential customers who may develop products containing cannabinoids, cannabinoid-like and non-cannabinoid ingredients
The controlled drugs / cannabinoid pharmaceutical market worldwide has experienced exponential growth over the past few years in the development of cannabinoid medicines. It is Alterola's intention to develop ingredients and products on a global basis, fully compliant with the appropriate international laws and regulations and also compliant with the relevant national laws and regulations on a territory-by-territory basis.
In December 2020, the company retained new management and board members that have experience in the pharmaceutical, botanical and nutraceutical industries. Further to this objective, the company is also interested in recruiting key executives and personnel that have experience in the controlled drugs / cannabinoid medicines industry. The focus will be on recruiting outstanding talents that have contributed or can contribute more in the future with the company's expansion plans.
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The company also has interest in licensing / acquiring other IP from companies that have IP pertinent to the aforementioned products the company plans to develop. Under consideration are companies that have existing pharmaceutical research and/or development or manufacturing capability or associated IP. Some of these companies have IP which is available to integrate into our company strategy. These acquisition or in-licensing opportunities are expected to facilitate the company to develop API and medicines globally and food-grade ingredients and products for the food and beverage industry in Europe.
Acquisition of ABTI Pharma
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. 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 is expected to occur upon the filing by the company of its annual report and Form 10-K for 2020, and its quarterly report for the three months ended March 31, 2021.
Pursuant to the Agreement, from the date of execution, 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.
Further under the Agreement, Alterola will endeavor to raise a total of at least $50,000,000 with $45,000,000 in net proceeds and Alterola will arrange an underwriting commitment of the first ($25,000,000 USD) to be funded at a price of not less than $1.00 per share within 45 days of execution of the Agreement.
As part of the Agreement, Amsterdam Cafe Holdings Limited has agreed to cancel and return to the Company 200,000,000 shares it holds and Bulls Run Investments Limited will be issued 19,100,000 shares of common stock.
Results of Operations for the Three and Nine Months Ended June 30, 2020 and 2019
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 products.
We incurred operating expenses of $30,250 for the three months ended June 30, 2020, compared with $30,250 for the three months ended June 30, 2019. We incurred operating expenses of $169,261 for the nine months ended June 30, 2020, compared with $122,001 for the nine months ended June 30, 2019.
Our operating expenses for the nine months ended June 30, 2020 mainly consisted of $90,000 in director fees, $60,000 in consulting fees, and $10,750 in accounting and audit fees. Our operating expenses for the nine months ended June 30, 2019 mainly consisted of $90,000 in Directors fees and $36,000 in stock based compensation.
We recorded other expense of $0 for the three months ended June 30, 2020, as compared with $0 in interest expense for the three months ended June 30, 2019. We recorded other income of $79,000 for the nine months ended June 30, 2020, as compared with $249 in interest expense for the nine months ended June 30, 2019.
We recorded a net loss of $30,250 for the three months ended June 30, 2020, compared with a net loss of $30,250 for the three months ended June 30, 2019. We recorded a net loss of $90,261 for the nine months ended June 30, 2020, compared with a net loss of $122,250 for the nine months ended June 30, 2019.
Liquidity and Capital Resources
As of June 30, 2020, we had $15,274 in current assets and currently liabilities of $308,245. We had a working capital deficit of $292,971 as of June 30, 2020.
We had no operating, investing or financing cash flows to report for the three and nine months ended June 30, 2020 and 2019.
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.
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Off Balance Sheet Arrangements
As of June 30, 2020, we had no off balance sheet arrangements.
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 incurred cumulative losses of $1,061,538 for the period July 21, 2008 (inception date) through June 30, 2020, expect to incur further losses in the development of our business and have been dependent on funding operations through the issuance of convertible debt and private sale of equity securities. 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.
May 14, 2021
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