SANGUI BIOTECH INTERNATIONAL INC - Quarter Report: 2020 December (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 2020
Commission file number: 0-21271
SANGUI BIOTECH INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Colorado (CO) | 84-1330732 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Bleichenbrücke 9, 20354 Hamburg, Germany
(Address of principal executive offices)
011-49-40-46093120
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol | Name of exchange on which registered |
None | N/A | N/A |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer [ ] | Accelerated Filer [ ] |
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Non-Accelerated Filer [X]
| Smaller Reporting Company ☒
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Emerging Growth Company ☐ |
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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 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No [X]
As of February 9, 2021, there were 203,355,598 shares of the issuer's Common Stock, no par value, issued and 203,301,842 shares outstanding.
SANGUI BIOTECH INTERNATIONAL, INC.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended December 31, 2020
INDEX
PART I – FINANCIAL INFORMATION
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Item 1 | Financial Statements .............................................................................................................................. | 1 |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations ................ | 13 |
Item 3. | Quantitative and Qualitative Disclosure About Market Risk ................................................................ | 17 |
Item 4. | Controls and Procedures ........................................................................................................................ | 17 |
PART II – OTHER INFORMATION
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Item 1. | Legal Proceedings................................................................................................................................. | 18 |
Item 1A. | Risk Factors........................................................................................................................................... | 18 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds .............................................................. | 18 |
Item 3. | Defaults Upon Senior Securities ........................................................................................................... | 18 |
Item 5. | Other Information.................................................................................................................................. | 18 |
Item 6. | Exhibits.................................................................................................................................................. | 18 |
ii
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission and, therefore, do not include all information and footnotes necessary for a complete presentation of our financial position, results of operations, cash flows, and stockholders' deficit in conformity with generally accepted accounting principles in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the consolidated results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
Our unaudited condensed consolidated balance sheet as of December 31, 2020 and the audited consolidated balance sheet as of June 30, 2020, our unaudited condensed consolidated statements of operations and comprehensive loss for the three- and six-month period ended December 31, 2020, and 2019, our condensed consolidated statements of stockholders’ deficit for the three - and six-month periods ended December 31, 2020, and 2019 and our unaudited condensed consolidated statements of cash flows for the six-month period ended December 31, 2020, and 2019 are attached hereto.
1
SANGUI BIOTECH INTERNATIONAL, INC. | ||||||||
Consolidated Balance Sheets | ||||||||
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| December 31, |
| June 30, | ||
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| 2020 |
| 2020 | ||||
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| (unaudited) |
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ASSETS |
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CURRENT ASSETS |
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| Cash | $ | 8,841 |
| $ | 15,282 | ||
| Prepaid expenses and other assets |
| 14,480 |
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| 13,361 | ||
| Tax refunds receivable |
| 1,831 |
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| 3,317 | ||
| Accounts receivable, net |
| 13,095 |
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| 9,858 | ||
| Note receivable, related party |
| 2,385 |
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| 6,878 | ||
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| Total Current Assets |
| 40,632 |
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| 48,696 | |
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| Property and Equipment, Net |
| 1,671 |
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| 1,922 | ||
| Operating lease right-of-use asset |
| 78,868 |
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| 74,710 | ||
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| TOTAL ASSETS | $ | 121,171 |
| $ | 125,328 | |
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LIABILITIES AND STOCKHOLDERS' DEFICIT |
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LIABILITIES |
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| Accounts payable and accrued expenses | $ | 129,260 |
| $ | 119,246 | ||
| Accrued interest - related party |
| 55,019 |
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| 42,359 | ||
| Notes payable - related party |
| 739,550 |
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| 618,568 | ||
| Current portion of operating lease liability |
| 16,615 |
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| 11,312 | ||
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| Total Current Liabilities |
| 940,444 |
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| 791,485 | |
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| Operating lease liability, net of current portion |
| 62,956 |
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| 63,721 | ||
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| Total Liabilities |
| 1,003,400 |
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| 855,206 | |
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STOCKHOLDERS' DEFICIT |
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| Preferred stock, no par value; 10,000,000 shares authorized, -0- shares issued and outstanding |
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| Common stock, no par value; 250,000,000 shares authorized 203,355,598 and 203,355,598 shares issued and 203,301,842 and 203,301,842 shares outstanding respectively |
| 33,027,676 |
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| 33,027,676 | ||
| Additional paid-in capital |
| 4,513,328 |
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| 4,513,328 | ||
| Treasury stock, at cost |
| (19,387) |
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| (19,387) | ||
| Accumulated other comprehensive income |
| 90,741 |
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| 91,907 | ||
| Accumulated deficit |
| (37,845,201) |
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| (37,696,425) | ||
| Total Sangui Biotech International, Inc's stockholders' defict |
| (232,843) |
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| (82,901) | ||
| Non-controlling interest |
| (649,386) |
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| (646,977) | ||
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| Total Stockholders' Deficit |
| (882,229) |
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| (729,878) | |
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| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ | 121,171 |
| $ | 125,328 | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||
2
SANGUI BIOTECH INTERNATIONAL, INC. | ||||||||||||
Condensed Consolidated Statements of Operations and Comprehensive Loss | ||||||||||||
(unaudited) | ||||||||||||
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| For the Three Months Ended |
| For the Six Months Ended | ||||||||
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| December 31, |
| December 31, | ||||||||
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| 2020 |
| 2019 |
| 2020 |
| 2019 | ||||
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REVENUES |
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| License revenues | $ | 10,692 |
| $ | 11,683 |
| $ | 30,572 |
| $ | 11,965 |
GROSS MARGIN |
| 10,692 |
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| 11,683 |
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| 30,572 |
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| 11,965 | |
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OPERATING EXPENSES |
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| Research and development |
| 1,995 |
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| 2,650 |
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| 4,422 |
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| 4,886 |
| Professional fees |
| 34,925 |
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| 37,666 |
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| 84,839 |
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| 79,418 |
| General and administrative |
| 11,872 |
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| 7,900 |
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| 23,621 |
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| 20,092 |
| Depreciation and amortization |
| 204 |
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| - |
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| 404 |
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| - |
Total Operating Expenses |
| 48,996 |
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| 48,216 |
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| 113,286 |
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| 104,396 | |
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OPERATING LOSS |
| (38,304) |
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| (36,533) |
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| (82,714) |
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| (92,431) | |
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OTHER INCOME (EXPENSE) |
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| Loss on out of court settlement |
| - |
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| - |
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| (6,714) |
| Gain (Loss) on foreign exchange |
| (32,397) |
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| (15,111) |
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| (59,778) |
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| 6,709 |
| Interest expense |
| (4,495) |
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| (3,477) |
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| (8,693) |
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| (6,690) |
Total other income (expense) |
| (36,892) |
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| (18,588) |
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| (68,471) |
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| (6,695) | |
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LOSS BEFORE INCOME TAXES AND NON-CONTROLLING INTEREST |
| (75,196) |
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| (55,121) |
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| (151,185) |
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| (99,126) | |
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| Provision for income taxes |
| - |
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| - |
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| - |
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NET LOSS BEFORE NON-CONTROLLING INTEREST |
| (75,196) |
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| (55,121) |
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| (151,185) |
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| (99,126) | |
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| Less: Net loss attributable to non-controlling interest |
| 1,308 |
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| 1,138 |
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| 2,409 |
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| 2,394 |
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NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (73,888) |
| $ | (53,983) |
| $ | (148,776) |
| $ | (96,732) | |
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OTHER COMPREHENSIVE LOSS |
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| Foreign currency translation adjustments |
| (733) |
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| (2,255) |
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| (1,166) |
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| 765 |
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COMPREHENSIVE LOSS | $ | (75,929) |
| $ | (57,376) |
| $ | (152,351) |
| $ | (98,361) | |
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| BASIC AND DILUTED LOSS PER SHARE | $ | (0.00) |
| $ | (0.00) |
| $ | (0.00) |
| $ | (0.00) |
| BASIC AND DILUTED WEIGHTED AVERAGE |
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| NUMBER OF SHARES OUTSTANDING |
| 203,355,598 |
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| 201,533,598 |
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| 203,355,598 |
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| 200,819,827 |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||||||
3
SANGUI BIOTECH INTERNATIONAL, INC. | ||||||||||||||||||||||
Condensed Consolidated Statements of Stockholders' Deficit | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
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| Three-Month Period Ended December 31, 2020 | |||||||||||||||||||||
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| Accumulated |
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| Additional |
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| Other |
| Non- |
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| Common Stock |
| Paid-In |
| Treasury |
| Comprehensive |
| controlling |
| Accumulated |
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| Shares |
| Amount |
| Capital |
| Stock |
| Income (Loss) |
| Interest |
| Deficit |
| Total | |||||||
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Balance, October 1, 2020 | 203,355,598 |
| $ | 33,027,676 |
| $ | 4,513,328 |
| $ | (19,387) |
| $ | 91,474 |
| $ | (648,078) |
| $ | (37,771,313) |
| $ | (806,300) |
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Currency translation adjustment | - |
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| - |
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| - |
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| - |
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| (733) |
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| - |
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| - |
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| (733) |
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Net loss | - |
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| - |
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| - |
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| - |
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| - |
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| (1,308) |
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| (73,888) |
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| (75,196) |
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Balance, December 31, 2020 | 203,355,598 |
| $ | 33,027,676 |
| $ | 4,513,328 |
| $ | (19,387) |
| $ | 90,741 |
| $ | (649,386) |
| $ | (37,845,201) |
| $ | (882,229) |
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SANGUI BIOTECH INTERNATIONAL, INC. | ||||||||||||||||||||||
Condensed Consolidated Statements of Stockholders' Deficit | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
| Six-Month Period Ended December 31, 2020 | |||||||||||||||||||||
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| Accumulated |
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| Additional |
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| Other |
| Non- |
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| Common Stock |
| Paid-In |
| Treasury |
| Comprehensive |
| controlling |
| Accumulated |
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| Shares |
| Amount |
| Capital |
| Stock |
| Income |
| Interest |
| Deficit |
| Total | |||||||
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Balance, July 1, 2020 | 203,355,598 |
| $ | 33,027,676 |
| $ | 4,513,328 |
| $ | (19,387) |
| $ | 91,907 |
| $ | (646,977) |
| $ | (37,696,425) |
| $ | (729,878) |
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Currency translation adjustment | - |
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| - |
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| - |
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| - |
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| (1,166) |
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| - |
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| - |
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| (1,166) |
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Net loss | - |
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| - |
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| - |
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| - |
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| - |
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| (2,409) |
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| (148,776) |
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| (151,185) |
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Balance, December 31, 2020 | 203,355,598 |
| $ | 33,027,676 |
| $ | 4,513,328 |
| $ | (19,387) |
| $ | 90,741 |
| $ | (649,386) |
| $ | (37,845,201) |
| $ | (882,229) |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||||||||||||||||
4
SANGUI BIOTECH INTERNATIONAL, INC. | ||||||||||||||||||||||
Condensed Consolidated Statements of Stockholders' Deficit | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
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| Three-Month Period Ended December 31, 2019 | |||||||||||||||||||||
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| Accumulated |
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| Additional |
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| Other |
| Non- |
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| Common Stock |
| Paid-In |
| Treasury |
| Comprehensive |
| controlling |
| Accumulated |
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| Shares |
| Amount |
| Capital |
| Stock |
| Income (Loss) |
| Interest |
| Deficit |
| Total | |||||||
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Balance, Ocotober 1, 2019 | 201,533,598 |
| $ | 33,012,261 |
| $ | 4,513,328 |
| $ | (19,387) |
| $ | 94,467 |
| $ | (642,448) |
| $ | (37,546,433) |
| $ | (588,212) |
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Currency translation adjustment | - |
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| - |
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| - |
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| - |
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| (2,256) |
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| - |
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| - |
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| (2,256) |
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Net loss | - |
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| - |
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| - |
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| - |
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| - |
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| (1,138) |
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| (53,982) |
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| (55,121) |
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Balance, December 31, 2019 | 201,533,598 |
| $ | 33,012,261 |
| $ | 4,513,328 |
| $ | (19,387) |
| $ | 92,212 |
| $ | (643,586) |
| $ | (37,600,416) |
| $ | (645,588) |
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SANGUI BIOTECH INTERNATIONAL, INC. | ||||||||||||||||||||||
Condensed Consolidated Statements of Stockholders' Deficit | ||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||
| Six-Month Period Ended December 31, 2019 | |||||||||||||||||||||
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| Accumulated |
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| |
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| Additional |
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| Other |
| Non- |
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| |||
| Common Stock |
| Paid-In |
| Treasury |
| Comprehensive |
| controlling |
| Accumulated |
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| |||||||||
| Shares |
| Amount |
| Capital |
| Stock |
| Income |
| Interest |
| Deficit |
| Total | |||||||
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Balance, July 1, 2019 | 199,295,503 |
| $ | 32,967,499 |
| $ | 4,513,328 |
| $ | (19,387) |
| $ | 91,447 |
| $ | (641,192) |
| $ | (37,503,684) |
| $ | (591,989) |
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Common stock issued out of court settlement | 2,238,095 |
|
| 44,762 |
|
| - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| 44,762 |
|
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Currency translation adjustment | - |
|
| - |
|
| - |
|
| - |
|
| 765 |
|
| - |
|
| - |
|
| 765 |
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|
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|
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|
|
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|
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Net loss | - |
|
| - |
|
| - |
|
| - |
|
| - |
|
| (2,394) |
|
| (96,732) |
|
| (99,126) |
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Balance, December 31, 2019 | 201,533,598 |
| $ | 33,012,261 |
| $ | 4,513,328 |
| $ | (19,387) |
| $ | 92,212 |
| $ | (643,586) |
| $ | (37,600,416) |
| $ | (645,588) |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||||||||||||||||
5
SANGUI BIOTECH INTERNATIONAL, INC. | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(unaudited) | ||||||||
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| For the Six Months Ended | ||||
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|
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| December 31, | ||||
| 2020 |
| 2019 | |||||
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CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
| |||
| Net loss | $ | (151,185) |
| $ | (99,126) | ||
| Adjustments to reconcile net loss to net cash |
|
|
|
|
| ||
| used by operating activities: |
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|
|
|
| ||
|
| Depreciation and amortization |
| 404 |
|
| - | |
|
| Common stock issued for out of court settlement |
| - |
|
| 6,714 | |
|
| Foreign currency exchange transactions |
| 59,778 |
|
| (6,709) | |
|
| Amortization of right to use asset |
| (11,299) |
|
| (3,532) | |
| Changes in operating assets and liabilities |
|
|
|
|
| ||
|
| Trade accounts receivable |
| (2,784) |
|
| 14,418 | |
|
| Prepaid expenses and other current assets |
| (4,459) |
|
| (11,781) | |
|
| Tax refunds receivable |
| 5,588 |
|
| 1,002 | |
|
| Accounts payable and accrued expenses |
| 6,418 |
|
| 4,386 | |
|
| Related party advances |
| 5,400 |
|
| 5,527 | |
|
| Related party accounts payable |
| 8,673 |
|
| 6,693 | |
|
| Operating lease liability |
| 11,639 |
|
| 3,532 | |
|
|
| Net Cash Used in Operating Activities |
| (71,827) |
|
| (78,876) |
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|
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|
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CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
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| |||
|
| Proceeds from related party note payable |
| 65,192 |
|
| 66,342 | |
|
|
| Net Cash Provided by Financing Activities |
| 65,192 |
|
| 66,342 |
|
|
|
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|
EFFECTS OF EXCHANGE RATES ON CASH |
| 194 |
|
| 476 | |||
|
|
|
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|
|
|
|
|
| NET CHANGES IN CASH |
| (6,441) |
|
| (12,058) | ||
| CASH AT BEGINNING OF PERIOD |
| 15,282 |
|
| 27,453 | ||
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| CASH AT END OF PERIOD | $ | 8,841 |
| $ | 15,395 | ||
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| CASH FLOW INFORMATION |
|
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| ||
| NON - CASH INVESTING AND FINANCING ACTIVITIES |
|
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| ||
|
| Right of use operating lease assets obtained in exchange for lease liabilities | $ | - |
| $ | 6,504 | |
|
| Common Stock issued in settlement of liability | $ | - |
| $ | 44,762 | |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. | ||||||||
6
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been prepared without audit in accordance with accounting principles generally accepted in the United States of America and rules of the Securities Exchange Commission for interim financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. The unaudited condensed consolidated financial statements and notes should, therefore, be read in conjunction with the consolidated financial statements and notes thereto in the Company's Form 10-K for the year ended June 30, 2020. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair presentation, have been included. The results of operations for the three- and six-month period ended December 31, 2020 are not necessarily indicative of the results that may be expected for the full fiscal year ending June 30, 2021.
In December 2019, COVID-19 emerged and has subsequently spread worldwide. The World Health Organization has declared COVID-19 a pandemic resulting in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories and quarantining of people who may have been exposed to the virus. At the present time, it is not clear how long this crisis will last and what extent it will take. The highest priority for the Company is the health of employees and business partners. The Company is affected by the restrictions currently in place in private and public life around the world to the extent that, the distribution of Granulox wound spray will also be affected. At least for the duration of the restrictions sales activities were not possible due to the worldwide lock downs. In this respect, the company assumes that the license revenue cannot be received at the planned level. The company is in good contact with its licensee. The company and the licensee assume that the desired growth course will be resumed after the pandemic has been overcome. Before the pandemic, the company had essentially been financed through the sale of shares or loans from related parties. These financing options are still available during the COVID-19 - crisis.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Sangui Biotech International, Inc., (Sangui or the Company) was incorporated in Colorado in 1995 and conducts business through its 90% owned subsidiary, Sangui BioTech GmbH (Sangui GmbH) and its 99.8% owned subsidiary Sangui Know-how und Patentverwertungsgesellschaft mbH & Co. KG (Sangui KG). Sangui GmbH, which is headquartered in Hamburg, Germany, is engaged in the development of artificial oxygen carriers (external applications of hemoglobin, blood substitutes and blood additives) as well as in the development, marketing and sales of cosmetics and wound management products. Sangui KG is a limited partnership that holds the license rights under the various agreements that the Company enters into from time to time.
Consolidation
The consolidated financial statements include the accounts of Sangui BioTech International, Inc. and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Foreign Currency Translation
Assets and liabilities of the Company's foreign operations are translated into U.S. dollars at period-end exchange rates. Net exchange gains or losses resulting from such translation are excluded from net loss but are included in comprehensive loss and accumulated in a separate component of stockholders' equity (deficit). Income and expenses are translated at average exchange rates for the period.
7
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
Exchanges rates used for the preparation of the consolidated balance sheet as of December 31, 2020 and June 30, 2020 and our unaudited consolidated statements of operations for the three- month period ended December 31, 2020 and 2019, were calculated as follows:
as of December 31, 2020 | 0.818065 |
as of December 31, 2019 | 0.891600 |
July 1, 2020 through December 31, 2020 | 0.847054 |
July 1, 2019 through December 31, 2019 | 0.900817 |
The Company accounts for the transactions denominated in foreign currencies in the Parent Company’s books as transaction gains (losses) recognized in Other income.
Going Concern
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has accumulated deficit of $37,845,201 as of December 31, 2020. The Company incurred a net loss before non-controlling interest of $151,185 for the six-months ended December 31, 2020 and used cash in operating activities of $71,827 during the six-months ended December 31, 2020. These conditions raise substantial doubt about the Company's ability to continue as a going concern for a period of one year from issuance of the financial statements. The Company expects to continue to incur significant capital expenses in pursuing its business plan to market its products and expand its product line, while obtaining additional financing through stock offerings or other feasible financing alternatives. In order for the Company to continue its operations at its existing levels, the Company will require significant additional funds over the next twelve months. Therefore, the Company is dependent on funds raised through equity or debt offerings. Additional financing may not be available on terms favorable to the Company, or at all. If these funds are not available, the Company may not be able to execute its business plan or take advantage of business opportunities. The ability of the Company to obtain such additional financing and to achieve its operating goals is uncertain. In the event that the Company does not obtain additional capital, is not able to collect its outstanding receivables, or is not able to increase cash flow through the increase of sales, there is a substantial doubt of its being able to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Cash and Cash Equivalents
The Company maintains its cash in bank accounts in Germany. Cash and cash equivalents include time deposits for which the Company has no requirements for compensating balances. The Company has not experienced any losses in its uninsured bank accounts.
Research and Development
Research and development costs are charged to operations as they are incurred. Legal fees and other direct costs incurred in obtaining and protecting patents are expensed as incurred.
Revenue Recognition
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
8
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
The Company recognizes revenue based on the five criteria for revenue recognition established under Topic 606: 1) identify the contract, 2) identify separate performance obligations, 3) determine the transaction price, 4) allocate the transaction price among the performance obligations, and 5) recognize revenue as the performance obligations are satisfied.
Type of Revenue
The Company derives revenue primarily from licensing fees on sales of its wound spray product.
The Company recognizes revenue based on the five criteria for revenue recognition established under Topic ASC 606 set forth below.
The Company’s licenses provide a right to use and create performance obligations satisfied at a point in time. The Company recognizes revenue from the license when the performance obligation is satisfied through the transfer of the license. The Company will recognize royalty revenue a) when the licensee makes the subsequent sales or use that trigger the royalty, or (b) the performance obligation to which some or all of the sales-based or usage-based royalties has been allocated has been satisfied.
Basic and Diluted Earnings (Loss) Per Common Share
Basic earnings (loss) per common share are computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period of computation. Diluted earnings (loss) per share give effect to all potential dilutive common shares outstanding during the period of compensation. The computation of diluted earnings (loss) per share does not assume conversion, exercise or contingent exercise of securities that would have an antidilutive effect on earnings. As of December 31, 2020, the Company had no potentially dilutive securities that would affect the loss per share if they were to be dilutive.
Comprehensive Loss
Total comprehensive loss represents the net change in stockholders' equity (deficit) during a period from sources other than transactions with stockholders and as such, includes net earnings (loss). For the Company, the components of other comprehensive loss are limited to the changes in the cumulative foreign currency translation adjustments, which is recorded as components of stockholders' equity (deficit).
Recent Accounting Pronouncements
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), ("ASC 842"). The objective of the guidance in ASC 842 is to increase transparency and comparability among organizations by recognizing lease assets and liabilities in the balance sheet and disclosing key information. ASC 842 amends previous lease guidance to require a lessee to recognize a lease liability and a right-of-use asset on the entity’s balance sheet for all leases with terms that exceed one year. ASC 842 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. ASC 842 provides that lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. The Company elected a policy of not recording leases on its condensed balance sheets when the leases have term of 12 months or less and the Company is not reasonably certain to elect an option to purchase the leased asset. The Company recognizes payments on these leases within selling, administrative and other expenses on a straight-line basis over the lease term. The standard did not materially impact consolidated net income or liquidity.
Management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying consolidated financial statements.
9
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
NOTE 3 - COMMITMENTS AND CONTINGENCIES
Litigation
The Company may, from time to time, be involved in various legal disputes resulting from the ordinary course of operating its business. Management is currently not able to predict the outcome of any such cases. However, management believes that the amount of ultimate liability, if any, with respect to such actions will not have a
material effect on the Company's financial position or results of operations.
At the time of reporting, no litigation is pending.
Indemnities and Guarantees
During the normal course of business, the Company has made certain indemnities and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities include certain agreements with the Company's officers, under which the Company may be required to indemnify such person for liabilities arising out of their employment relationship. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. The majority of these indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make significant payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheet.
Leases
Effective June 30, 2019, the Company has closed the site in Witten and relocated its headquarters to Hamburg. The Company leases office facilities from an unrelated third party at 1,110 Euros per month, which includes 177 Euros for sales tax. The office lease contract is beginning in January 2020 and expires June 2026.
The Company also leases an automobile under an operating lease. The lease provides for a lease payment of 538 Euros per month beginning June 2018 expiring May 2020. The company has extended the expired contract until May 2021. The monthly leasing rate is 670 Euros for the period June 2020 to May 2021.
The following table reconciles future minimum operating lease payments to the discounted lease liability as of December 31, 2020:
Minimum Lease Payments Under Operating Leases | ||||||
|
| Office |
| Automotive |
| Total |
Year ending June 30, |
|
|
|
|
|
|
2021 | $ | 6,969 | $ | 4,093 | $ | 11,062 |
2022 |
| 14,063 |
| - |
| 14,063 |
2023 |
| 14,316 |
| - |
| 14,316 |
2024 |
| 14,573 |
| - |
| 14,573 |
Thereafter |
| 29,939 |
| - |
| 29,939 |
|
|
|
|
|
|
|
Total Operating Lease Obligations | $ | 79,860 | $ | 4,093 | $ | 83,953 |
|
|
|
|
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|
|
Less: Amount representing imputed interest | $ | (4,362) | $ | (20) | $ | (4,382) |
Present Value of minimum lease payments | $ | 75,498 | $ | 4,073 | $ | 79,571 |
|
|
|
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|
Weighted average discount rate |
| 2% |
|
|
|
|
10
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
Weighted average remaining term |
| 5.24 | years |
|
|
|
License Agreement
Pursuant to the contracts dated May 2, 2018 and November 11, 2018 between Sangui GmbH respectively Sangui KG and a former contractor, Sangui KG grants that contractor a license fee on the license income received by Sangui for his previous services as a co-inventor. The license fee is 10% analogously to the remuneration regulation of the German Law on Employee Inventions (ArbnErfG).
NOTE 4 – DEBT
Notes Payable Related Parties
As of December 31, 2020, the Company had outstanding the following loans payable due to a Company Director:
Date | Loan amount in EURO | Loan amount converted into USD | Interest rate | Interest in USD | Due |
March 06, 2015 | 100,000 | 122,240 | 5% | 34,522 | June 30, 2020 |
December 12, 2017 | 25,000 | 30,560 | 2% | 1,867 | on demand |
January 19, 2018 | 25,000 | 30,560 | 2% | 1,803 | on demand |
March 13, 2018 | 25,000 | 30,560 | 2% | 1,715 | on demand |
July 16, 2018 | 25,000 | 30,560 | 2% | 1,505 | on demand |
September 10, 2018 | 25,000 | 30,560 | 2% | 1,412 | on demand |
October 04, 2018 | 25,000 | 30,560 | 2% | 1,371 | on demand |
December 27, 2018 | 25,000 | 30,560 | 2% | 1,231 | on demand |
January 21, 2019 | 15,000 | 18,336 | 2% | 713 | on demand |
February 26, 2019 | 25,000 | 30,560 | 2% | 1,129 | on demand |
March 20, 2019 | 25,000 | 30,560 | 2% | 1,092 | on demand |
April 08, 2019 | 20,000 | 24,448 | 2% | 848 | on demand |
May 09, 2019 | 30,000 | 36,672 | 2% | 1,210 | on demand |
June 21, 2019 | 30,000 | 36,672 | 2% | 1,123 | on demand |
September 17, 2019 | 20,000 | 24,448 | 2% | 631 | on demand |
October 04, 2019 | 20,000 | 24,448 | 2% | 608 | on demand |
October 30, 2019 | 20,000 | 24,448 | 2% | 573 | on demand |
January 08, 2020 | 10,000 | 12,224 | 2% | 240 | on demand |
February 20, 2020 | 10,000 | 12,224 | 2% | 211 | on demand |
March 06, 2020 | 15,000 | 18,336 | 2% | 301 | on demand |
April 01, 2020 | 10,000 | 12,224 | 2% | 184 | on demand |
May 05, 2020 | 15,000 | 18,336 | 2% | 241 | on demand |
June 10, 2020 | 10,000 | 12,224 | 2% | 137 | on demand |
July 27, 2020 | 10,000 | 12,224 | 2% | 105 | on demand |
September 07, 2020 | 10,000 | 12,224 | 2% | 77 | on demand |
September 21, 2020 | 10,000 | 12,224 | 2% | 68 | on demand |
October 09, 2020 | 15,000 | 18,336 | 2% | 83 | on demand |
December 03, 2020 | 10,000 | 12,224 | 2% | 19 | on demand |
|
|
|
|
|
|
Total | 605,000 | 739,550 |
| 55,019 |
|
On July 27, 2020, September 07, 2020, September 21, 2020, October 09,2020 and on December 03,2020 a Company
11
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
Director advanced amounts totaling 55,000 Euros ($65,192 as of December 31, 2020) to the Company. The loans are due on demand, accrue interest annually at 2% and are unsecured.
As of December 31, 2020, all notes issued have total interest accrued of $55,019.
Interest expense for the six-month period ended December 31, 2020 and 2019 was $8,693 and $6,690, respectively
NOTE 5 – STOCKHOLDERS’ DEFICT
Preferred Stock – The Company is authorized to issue 10,000,000 shares of preferred stock. No preferred stock has been issued to date. The authorized preferred shares are non-voting and the Board of Directors has not designated any liquidation value or dividend rates.
Common Stock – The Company is authorized to issue 250,000,000 shares of no - par value common stock. The holders of the Company's common stock are entitled to one vote for each share held of record on all matters to be voted on by those stockholders. As of December 31, 2020, and June 30, 2020, the Company had 203,355,598 shares and 203,355,598 shares of common stock issued and 203,301,842 and 203,301,842 shares outstanding, respectively.
Treasury Stock - The Company holds 53,756 of its common stock as treasury stock, which is valued at cost of $19,387 as of December 31, 2020.
NOTE 6 – SUBSEQUENT EVENTS
Subsequent to December 31, 2020, a Company Director advanced 10,000 Euros ($12,294) to the Company. The loans are due on demand, accrues interest annually at 2% and are unsecured.
In accordance with ASC 855-10, the Company’s management has reviewed all material events and there are no additional material subsequent events to report.
12
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-looking Statements
The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes thereto included elsewhere in this quarterly report. Some of the information in this quarterly report contains forward-looking statements, including statements related to anticipated operating results, margins, growth, financial resources, capital requirements, adequacy of the Company's financial resources, trends in spending on research and development, the development of new markets, the development, regulatory approval, manufacture, distribution, and commercial acceptance of new products, and future product development efforts. Investors are cautioned that forward-looking statements involve risks and uncertainties, which may affect our business and prospects, including but not limited to, the Company's expected need for additional funding and the uncertainty of receiving the additional funding, changes in economic and market conditions, acceptance of our products by the health care and reimbursement communities, new development of competitive products and treatments, administrative and regulatory approval and related considerations, health care legislation and regulation, and other factors discussed in our filings with the Securities and Exchange Commission.
GENERAL
Our mission is the development of novel and proprietary pharmaceutical, medical and cosmetic products. We develop our products through our German subsidiary, Sangui GmbH. Currently, we are seeking to market and sell our products through partnerships with industry partners worldwide.
Our focus has been the development of oxygen carriers capable of providing oxygen transport in humans in the event of acute and/or chronic lack of oxygen due to arterial occlusion, anemia or blood loss whether due to surgery, trauma, or other causes, as well as in the case of chronic wounds. We have thus far focused our development and commercialization efforts on such artificial oxygen carriers by reproducing and synthesizing polymers out of native hemoglobin of defined molecular sizes. In addition, we have developed external applications of oxygen transporters in the medical and cosmetic fields in the form of sprays for the healing of chronic wounds and of gels and emulsions for the regeneration of the skin. A wound dressing that shows outstanding properties in the support of wound healing, is being distributed by SastoMed GmbH (Sastomed), a former joint venture company in which we had held a share of 25%, as global licensee under the Granulox brand name. Effective as of the end of the second quarter of our fiscal year 2016 we sold this stake to SanderStrohmann GmbH.
Sangui GmbH holds distribution rights for our Chitoskin wound pads for the European Union and various other countries. Additionally, a European patent has been granted for the production and use of improved Chitoskin wound pads.
Our current key business focuses are: (a) selling our existing cosmetics and wound management products by way of licensing through distribution partners, or by way of direct sale, to end users; (b) identifying additional industrial and distribution partners for our patents, production techniques, and products; and (c) obtaining the additional certifications on our products in development.
Artificial Oxygen Carriers
Sangui GmbH develops several products based on polymers of purified natural porcine hemoglobin with oxygen carrying abilities that are similar to native hemoglobin. These are (1) oxygen carrying blood additives and (2) oxygen carrying blood volume substitutes.
According to regulatory requirements, all drugs must complete preclinical and clinical trials before approval (e.g. Federal Drug Administration approval) and market launch. The Company’s management believes that the European and FDA approval process will take at a minimum several years to complete.
13
SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
Our most promising potential product in the area of artificial oxygen carriers, the blood additive, is still in an early development stage. In the pursuit of these projects we will need to obtain substantial additional capital to continue their development. As the Company has limited financial resources, we have suspended this project temporarily in order to focus our attention on our chronic wound research and the products developed in conjunction with their treatment.
Nano Formulations for the Regeneration of the Skin
Healthy skin is supplied with oxygen both from the inside as well as through diffusion from the outside. A lack of oxygen will cause degenerative alterations, ranging from premature aging, to surface damage, and even as extensive as causing open wounds. The cause for the lack of oxygen may be a part of the normal aging process, but it may also be caused by burns, radiation, trauma, or a medical condition. Impairment of the blood flow, for example caused by diabetes mellitus or by chronic venous insufficiency, can also lead to insufficient oxygen supply and the resulting skin damage.
In response, we developed nano-emulsion based cosmetic preparations that in their design are able to help support regeneration of the skin by improving its oxygen supply. Our line of cosmetic products was thoroughly tested by an independent research institute and received top marks for skin moisturizing, and enhanced skin elasticity, respectively. However, sales of this series remained at low levels and during the first quarter of the 2016 financial year we decided to decrease our operations in this particular segment and to abandon the patent protection for this range of products.
Chitoskin Wound Pads
Usually, normal (“primary”) wounds tend to heal over a couple of days without leaving scars following a certain sequence of phases. Burns and certain diseases impede the normal wound healing process, resulting in large, hardly healing (“secondary”) wounds which only close by growing new tissue from the bottom. Wound dressings serve to safeguard the wound with its highly sensitive new granulation tissue from mechanical damage as well as from infection. Using the natural polymer chitosan, Sangui’s Chitoskin wound dressings show outstanding properties in supporting wound healing. Sangui GmbH holds various distribution rights for our Chitoskin wound pads, and it is the strategy of the company to find industry partners ready to acquire or license this product range as a whole.
Hemospray Wound Spray
Sangui GmbH has developed a novel medical technology supporting the healing of chronic wounds. Lack of oxygen supply to the cells in the wound ground is the main reason why those wounds lose their genuine healing power. Based on its concept of artificial oxygen carriers, the wound spray product we developed bridges the watery wound surface and permits an enhanced afflux of oxygen to the wound ground.
Sangui GmbH has granted SastoMed global distribution rights to this product. Distribution of the wound spray began in the European Union in April 2012 under the brand name “Granulox.”
In December 2012, product distribution was initiated in Mexico by Sastomed and their local distribution partner Bio-Mac Pharma. International distribution has been expanded since then through cooperation agreements with local distribution partners in the Benelux countries and South Eastern Europe.
Since December 2013, international distribution outside Germany in collaboration with local partners has occurred in more than 40 countries in Europe and Latin American.
On November 13, 2017, the Company announced that Infirst Healthcare Ltd has announced that the United States (US) Food and Drug Administration had granted Fast Track designation to Granulox for the treatment of diabetic foot ulcers. It is the first and only hemoglobin spray to receive the Fast Track designation - a process
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SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
designed to facilitate the development, and expedite the review of, new therapies to treat serious conditions and fill an unmet medical need.
Despite the positive reviews of our product, Granulox sales have become more volatile. We remain confident, however, that SastoMed will be able to considerably increase its sales in conjunction with increased distribution of the product into more international markets.
In December 2010, Sangui GmbH established a joint venture company with SanderStrothmann GmbH of Georgsmarienhuette, Germany, under the name of SastoMed GmbH. This enterprise was in charge of obtaining the CE mark certification authorizing the distribution of one of SGBI’s products in the member states of the European Union. Effective December 31, 2015, Sangui GmbH sold its stake in Sastomed GmbH to SanderStrohmann GmbH.
On or about June 18, 2018, Sangui GmbH together with Sastomed GmbH founded Sangui Know-How- und Patentverwertungsgesellschaft mbH & Co. KG (“Sangui KG”). Sangui KG is a limited partnership. On June 22, 2018, Sangui KG acquired all the rights in the license agreement made on December 17, 2010, between Sastomed GmbH and Sangui GmbH.
Pursuant to the contracts dated May 2, 2018 and November 11, 2018 between Sangui GmbH respectively Sangui KG and a former contractor Sangui KG grants that contractor a license fee on the license income received by Sangui for his previous services as a co-inventor. The license fee is 10% analogously to the remuneration regulation of the German Law on Employee Inventions (ArbnErfG).
Given the Company’s business strength is primarily in research and product development, we have decided to partner with established distribution entities who license our marketable products, or those products that are close to market entry, for sale to end users. In pursuit of this strategy, we have licensed the most promising product, a hemoglobin based wound spray technology to Sastomed GmbH, a former joint venture of SGBI, for distribution in several European, Latin American and Asian countries. In addition, we are entering the preclinical testing of hemoglobin based artificial oxygen carriers aiming at the remediation of ischemic conditions in human patients.
Effective July 27, 2020, Sastomed GmbH was merged with its parent company Mölnlycke Health Care GmbH, Düsseldorf. As a result of the merger, the license agreement between Sastomed GmbH and Sangui Know-How und Patentverwertungsgesellschaft mbH & Co. KG is transferred with all rights and obligations to the receiving Mölnlycke Health Care GmbH.
FINANCIAL POSITION
During the six-months ended December 31, 2020, our total assets decreased $4,157 from $125,328 on June 30, 2020 to $121,171 on December 31, 2020. Decreases of cash of $6,441, of tax refunds receivable of $1,486 and note receivable, related party of $4,493 partially offset by an increase of operating lease right-of-use assets of $4,158 from June 30, 2020 to December 31, 2020 were primarily responsible for the decrease in the total assets.
We funded our operations primarily through our existing cash reserves and cash received from the issuance notes payables from related parties. Our stockholders’ deficit increased by $152,351 from ($729,878) on June 30, 2020 to ($882,229) on December 31, 2020. The primary factor behind this was net loss attributable to common stockholders of $148,776.
RESULTS OF OPERATIONS
For the three-month and six-month period December 31, 2020 and 2019:
REVENUES – Revenues reported were $10,692 and $11,683 for the three-months ended December 31, 2020 and 2019 respectively. For the six-months ended December 31, 2020 and 2019 revenues were $30,572 and $11,965. The decrease of $ 991 and the increase of $18,607 can be traced back to the development in royalties from the licensing agreement with Mölnlycke Heath Care GmbH.
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SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
RESEARCH AND DEVELOPMENT– Research and development expenses decreased by $655 to $1,995 from $2,650 for the three-month periods ending December 31, 2020 and 2019. Research and development expenses decreased $464 to $4,422 in the first half-year of our 2021financial year from $4,886 in the comparable period of the previous year. This decrease is mainly attributed to lower fees for patents.
GENERAL AND ADMINISTRATIVE and PROFESSIONAL FEES – The combined accumulated general and administrative expenses and professional fees increased $1,231 to $46,797 during the three-months ended December 31, 2020, from $45,566 in the respective period of the previous year mainly due to higher of costs for cars and rent offset by lower costs for legal advice. Accumulated general and administrative expenses and professional fees increased $8,950 to $108,460 in the half-year ended December 31, 2020, from $99,510 in the respective period of the previous year mainly due to higher of costs for tax advice, cars and rent.
DEPRECIATION AND AMORTIZATION - Depreciation and amortization were $204 and $0 for the three-months and 404 and $0 for the six-months ended December 31, 2020 and 2019 respectively.
GAIN/LOSS ON FOREIGN EXCHANGE – The three-month period ended December 31, 2020 shows losses on foreign exchange of $ 32,397 compared to losses of $ 15,111 during the respective period of the previous year, hence a change of $17,286. The six-month period ended December 31, 2020 shows losses on foreign exchange of $59,778 compared to gains of $6,709 during the respective period of the previous year, hence a change of $66,487. The change is mainly due to the revaluation of notes payables denominated in Euros at the end of each period.
INTEREST EXPENSE - Interest expenses for the three-month period ended December 31, 2020 and 2019 increased by $1,018 to $4,495 from $3,477. For the six-months ended December 31, 2020 and 2019, interest expense increased by $2,003 to $8,693 from $6,690. The increase relates to the increase of interest - bearing debt financing.
NET LOSS - As a result of the above factors, the net loss attributed to common shareholders increased to $73,888 compared to a loss of $53,983 for the three-months ended December 31, 2020 and 2019 and increased to $148,776 compared to a loss of $96,732 for the six-months ended December 31, 2020 and 2019 respectively. The loss per share for both periods was $(0.00).
Our consolidated net loss before non-controlling interest was $75,196 or $(0.00) per common share, for the three-months ended December 31, 2020, compared to $55,121 or $(0.00) per common share, during the comparable period in our 2019 financial year. Our consolidated net loss before non-controlling interest was $151,185 or $(0.00) per common share, for the six-months ended December 31, 2020, compared to $99,126 or $(0.00) per common share, during the comparable period in our 2019 financial year.
LIQUIDITY AND CAPITAL RESOURCES
For the six-months ended December 31, 2020, net cash used in operating activities increased $7,049 to ($71,827), compared to ($78,876) in the corresponding period of the previous year. This is mainly due to an increase of the accounts payables and accrued expenses of $6,418 and an increase of related party advances of $8,673.
The Company funded its business in the first six-months ended December 31, 2020 by issuing note payables totaling 55,000 Euros ($65,192).
We had a working capital deficit of approximately $899,812 on December 31, 2020, an increase of approximately $157,023 from June 30, 2020.
On December 31, 2020 compared to June 30, 2020, we had cash of $8,841 compared to $15,282, prepaid expenses of $14,480 compared to $13,361 and accounts receivable of $13,095 compared $9,858. We will need substantial additional funding to fulfill our business plan and we intend to explore financing sources for our future development activities. No assurance can be given that these efforts will be successful.
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SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by §229.10(f)(1) and are not required to provide the information under this item.
Item 4 - Controls and Procedures
Disclosure Controls and Procedures
As of the date of the end of the period covered by this report, our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
(a)Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;
(b)Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and
(c)Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company is not aware of pending claims or assessments, which may have a material adverse impact on the Company’s financial position or results of operations.
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SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
Item 1a - Risk Factors
We are a smaller reporting company as defined by §229,10(f)(1) and are not required to provide the information under this item.
Item 2 - Unregistered Sales of Equity Securities and Use Of Proceeds
None.
Item 3 - Defaults Upon Senior Securities
None.
Item 5 - Other Information
None.
Item 6 – Exhibits
1. Financial Statements. The unaudited condensed consolidated Balance Sheet of Sangui Biotech International, Inc. as of December 31, 2020 and the audited balance sheet as of June 30, 2020, the unaudited condensed consolidated Statements of Operations for the six - month periods ended December 31, 2020 and 2019, the condensed unaudited Statements of Stockholder’s Deficit as of December 31, 2020 and 2019, and the unaudited condensed consolidated Statements of Cash Flows for the six-month period ended December 31, 2020 and 2019, together with the notes thereto, are included in this Quarterly Report on Form 10-Q.
2. Exhibits. The following exhibits are either filed as a part hereof or are incorporated by reference. Exhibit numbers correspond to the numbering system in Item 601 of Regulation S-K.
Exhibit
Number Description of Exhibit
31.01 | Certification of CEO Pursuant to Rule 13a-14(a) and 15d-14(a), filed herewith |
31.02 | Certification of principal financial officer Pursuant to Rule 13a-14(a) and 15d-14(a), filed herewith |
32.01 | Certification Pursuant to Section 1350 of Title 18 of the United States Code, filed herewith |
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SANGUI BIOTECH INTERNATIONAL, INC.
Notes to the Condensed Consolidated Financial Statements
December 31, 2020 and June 30, 2020
(Unaudited)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SANGUI BIOTECH INTERNATIONAL, INC.
Dated: February 9, 2021/s/ Thomas Striepe
By: Thomas Striepe
Chief Executive Officer and Principal Financial Officer
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