Forward-Looking Statements

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Certain statements that the Company may make from time to time, including all statements contained in this report that are not statements of historical fact, constitute "forward-looking statements". Forward-looking statements may be identified by words such as "plans," "expects," "believes," "anticipates," "estimates," "projects," "will," "should," and other words of similar meaning used in conjunction with, among other things, discussions of future operations, financial performance, product development and new product launches, market position and expenditures. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to help you understand our historical results of operations during the periods presented and our financial condition for the years ended June 30, 2022 and 2021. This MD&A should be read in conjunction with our financial statements as of June 30, 2022 and 2021. See section entitled "Forward-Looking Statements" above.





Overview

We are engaged in pursuing pre-clinical and drug development activities for certain pharmaceutical formulations that include cannabinoids. We have filed three provisional patent applications and acquired a license covering certain intellectual property related to a drug delivery system.

As a relatively new business engaged in start-up operations and activities, we will require substantial additional funding to successfully complete any of our drug development programs. At present, we cannot estimate the substantial capital requirements needed to secure regulatory approvals for our drug candidates. We estimate that we have sufficient capital to maintain our existence as a public company for the remainder of the current calendar year.





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We are a start-up company with no revenues from operations. Notwithstanding our successful raise of $2,076,158, net of offering costs, in equity capital since inception to June 30, 2022, and the receipt of $146,750, net of financing costs, from a debt issuance in January 2022, there is substantial doubt that we can continue as an on-going business for the next twelve months without a significant infusion of capital or entering into a business combination transaction. We do not anticipate that Nexien BioPharma will generate revenues from its research and development activities related to its drug development projects in the near future, due to the protracted revenue model of pursuing pharmaceutical drug development in accordance with the pathway set forth by the FDA. The Company had to cease research and development activities due to the lack of sufficient working capital and intends to recommence research and development activities on its myotonic dystrophy project from the proceeds of its funding in January 2022. While management continues its efforts to raise additional capital for the Company, it is also seeking merger or other business combination or restructuring opportunities.





Results of Operations

Net loss for the year ended June 30, 2022 was $626,357 as compared to the net loss of $1,859,942 for the year ended June 30, 2021, a decrease of $1,233,185. As explained below, most of the loss is attributable to significant stock-based compensation costs, the fair value of common stock issued for the CRx acquisition, and the fair value of warrants issued in conjunction with convertible debt financings.

The Company incurred professional fees of $33,230 for the year ended June 30, 2022, a decrease of $10,480 from $43,710 for the year ended June 30, 2021. Fees for 2022 and 2021 were for SEC regulatory and statutory filings and annual audit and quarterly review fees to our auditor.

General and administrative costs for the year ended June 30, 2022 of $530,762 includes $155,750 of non-cash stock-based compensation costs for common shares issued to officers of the Company, $223,255 for the vesting of shares issued to CRx subject to forfeiture and the fair value of warrants issued in conjunction with our 2022 third-party convertible debt financing of $110,264. General and administrative costs of $1,800,057 for the year ended June 30, 2021 includes $306,250 of non-cash stock-based compensation costs for common shares issued to officers and directors and the fair value of vested stock options granted of $348,953. Also included in general and administrative expenses for 2021 is a non-cash charge of $1,093,667 for the vesting of shares issued to CRx subject to forfeiture.

Exclusive of stock-based compensation costs, general and administrative costs for the year ended June 30, 2022 were $41,492 a decrease of $53,403 from the June 30, 2021 comparable costs of $94,895. The decrease was attributable to cost containment efforts instituted by the Company to preserve capital.

During the year ended June 30, 2021, the Board of Directors granted options to purchase a total of 5,000,000 shares of common stock to officers of the Company, exercisable for a period of seven years at an exercise price of $0.08 per share.

There were no research and development costs incurred for the years ended June 30, 2022 and 2021, due to the Company's limited financial resources and availability of research personnel.

The Company incurred interest expense of $17,945 and $3,234, respectively, during the years ended June 30, 2022 and 2021 for interest on debt offerings during the periods, including $3,625 of imputed interest on advances from the Company's CEO. At June 30, 2022 and 2021, the Company had outstanding convertible notes in the principal amounts of $65,000 to its CEO and a shareholder, and $170,454 to a third party.

During the years ended June 30, 2022 and 2021, the Company incurred $44,420 and $12,941, respectively, for interest and amortization of discount related to the convertible debt financings.

Liquidity and Capital Resources

At June 30, 2022, we had a working capital deficit of $117,605 and cash of $116,898 as compared to a working capital deficit of $13,775 and cash of $18,041 at June 30, 2021. The increase in both working capital and cash was due primarily to $146,750 in funding from a convertible debt financing received in January 2022. Substantially all available funds were being utilized solely for maintaining corporate operations as a public company. During the year ended June 30, 2022, we used $75,143 of cash for operating activities and were provided cash from financing activities of $174,000. In addition to the receipt of $146,750 from the convertible debt financing, we also received a non-interest-bearing advance from our CEO for working capital in the amount of $25,000, and $2,250 from an exercise of warrants from a third party. During the year ended June 30, 2021, we used $90,745 of cash for operating activities, and had increase in liquidity from financing of $98,000 from a convertible debt loan from our CEO and a major shareholder and a $20,000 advance for operating activities from our CEO.





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In November 2020, we issued unsecured convertible promissory notes to our CEO and a shareholder of the Company in the amounts of $40,000 and $25,000, respectively, for cash loans made to the Company. The notes are due three years from issuance and accrue interest at the rate of 8% per annum, compounded annually. The notes and accrued interest are convertible at the option of the holders at any time into restricted shares of the Company's common stock at a price of $0.037631, being the volume-weighted average price of the common stock over the 10 trading days immediately preceding the date the note was funded. Both lenders were issued three types of warrants, exercisable for a five-year period, at prices of $0.040265, $0.043276, and $0.045157, to purchase a total of 5,181,897 shares.

As of June 2022, the Company's Chief Executive Officer has advanced an aggregate $45,000 to the Company for working capital and operating purposes. The advance is non-interest bearing and is repayable on demand.

While management of the Company believes that the Company will be successful in its current and planned activities, there can be no assurance that the Company will be successful in its drug development activities, and raise sufficient equity, debt capital or strategic relationships to sustain the operations of the Company.

Our ability to create sufficient working capital to sustain us over the next twelve-month period, and beyond, is dependent on our raising additional equity or debt capital or entering into strategic arrangements with one or more third parties.

There can be no assurance that sufficient capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

Availability of Additional Capital

Notwithstanding our success in raising gross proceeds of $2.1 million from the private sale of equity securities through June 30, 2022, and the completion of a debt financing agreement resulting in the receipt of $146,750 in January 2022, there can be no assurance that we will continue to be successful in raising equity capital and/or debt financings and have adequate capital resources to fund our operations or that any additional funds will be available to us on favorable terms or in amounts required by us. We estimate that we have sufficient capital resources to maintain our existence as a public company for the remainder of the current calendar year.

Any additional equity financing may be dilutive to our stockholders, new equity securities may have rights, preferences or privileges senior to those of existing holders of our shares of Common Stock. Debt or equity financing may subject us to restrictive covenants and significant interest costs.

Capital Expenditure Plan During the Next Twelve Months

To date, we raised approximately $2.1 million, in equity capital (including exercised warrants) and $146,750 in debt financings. There can be no assurance that we will continue to be successful in raising capital in sufficient amounts and/or at terms and conditions satisfactory to the Company. Our revenues are expected to come from our drug development projects. As a result, we will continue to incur operating losses unless and until we have obtained regulatory approval with respect to one of our drug development projects and commence to generate sufficient cash flow to meet our operating expenses. There can be no assurance that we will obtain regulatory approval and the market will adopt our future drugs. In the event that we are not able to successfully: (i) raise equity capital and/or debt financing; or (ii) market our drugs after obtaining regulatory approval, our financial condition and results of operations will be materially and adversely affected.





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Going Concern Consideration

Our registered independent auditors have issued an opinion on our financial statements as of June 30, 2022 which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing any drugs that we successfully develop. Accordingly, we must raise capital from sources other than the actual sale from any drugs that we develop. We must raise capital to continue our drug development activities and stay in business.

Off-Balance Sheet Arrangements

At June 30, 2022 and 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Act of 1934.

Contractual Obligations and Commitments

In February 2018, we obtained a worldwide exclusive license with respect to a proprietary delivery system for cannabinoid-based medications. Under the terms of the license agreement, we paid $65,000 in cash and issued common stock of the Company, valued at $35,000, to the licensor. We are required to pay milestone payments upon obtaining regulatory approval of pharmaceutical licensed products and royalties based upon sales of licensed products. We may grant sublicenses under the terms of the agreement. We previously estimated that we may not be able to recover the costs capitalized under the license agreement and recognized an impairment of the amounts paid. Although we have recognized an impairment under Generally Accepted Accounting Principles, we retain our rights under the license agreement.





Critical Accounting Policies

Our significant accounting policies are described in the notes to our financial statements as of June 30, 2022 and 2021 and are included elsewhere in this report.

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