BIOXYTRAN, INC Management’s Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

Overview

We do not currently have sufficient capital resources to fund operations. To
stay in business and to continue the development of our products, we will need
to raise additional capital through public or private sales of our securities,
debt financing or short-term bank loans, or a combination of the foregoing. We
believe that if we can raise $3,700,000, we will have sufficient working capital
to develop our business over the next approximately 15 months. At funding raised
that is significantly less than $3,700,000, we can likely continue to develop
our business over the same 15-month period, but funding at that level will delay
the development of our technology and business.

Bioxytran, Inc. is headquartered in Newton, Massachusetts. The Company’s initial
product pipeline is focused on developing and commercializing therapeutic
molecules for stroke. BXT-25 will be designed to be an injectable anti-necrosis
drug specifically designed to treat a person immediately after that person
suffers an ischemic stroke. The drug is designed to be injected intravenously to
travel to the lungs to pick up oxygen molecules to carry to the brain. Like a
red blood cell, the drug will cross the blood brain barrier, which is a
protective semi-permeable membrane allowing some material to cross but
preventing others from crossing. BXT-25 will be designed to diffuse oxygen into
the brain tissues. We expect the BXT-25 molecule to be 5,000 times smaller than
a red blood cell.

The Company plans to file a pre-investigational new drug application for
ProLectin for the treatment of mild to moderate Covid-19 patients. However, we
cannot provide any assurance that we will successfully initiate or complete
those planned trials and be able to initiate any other clinical trials for
ProLectin or any of our future drug candidates.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The Company has limited resources
and operating history. As described in Note 7 of the financial statements, the
Company currently has convertible loans outstanding at a total face value of
$2,165,000. As shown in the accompanying consolidated financial statements, the
Company had an accumulated deficit of $8,753,668 as at December 31, 2021. The
accumulated deficit as at December 31, 2020 was $4,721,923.

The future of the Company is dependent upon its ability to obtain financing to
develop its new business opportunities and support the cost of the drug
development including clinical trials and regulatory submission to the FDA.

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                                Covid-19 Effects

In December 2019, a strain of novel coronavirus (now commonly known as Covid-19)
was reported to have surfaced in Wuhan, China. Covid-19 has since spread rapidly
throughout the World, and, on March 12, 2020, the World Health Organization
declared Covid-19 to be a pandemic. In an effort to contain and mitigate the
spread of Covid-19, many countries, including the United States, Canada and
China, have imposed unprecedented restrictions on travel, and there have been
business closures and a substantial reduction in economic activity in countries
that have had significant outbreaks of Covid-19. Covid-19 may have a future
material impact on our results of operation with respect to product development
and clinical trials. However, significant uncertainty remains as to the
potential impact of the Covid-19 pandemic on our operations, and on the global
economy as a whole. It is currently not possible to predict how long the
pandemic will last or the time that it will take for economic activity to return
to prior levels. We do not yet know the full extent of any impact on our
business or our operations, however, we will continue to monitor the Covid-19
situation closely, and we intend to follow health and safety guidelines as they
evolve.

Management plans to seek additional capital through private placements and
public offerings of its Common Stock. There can be no assurance that the Company
will be successful in accomplishing its objectives. Without such additional
capital or the establishment of strategic relationships with established
pharmaceutical companies, the Company may be required to cease operations. These
conditions raise substantial doubt about the Company’s ability to continue as a
going concern. The financial statements do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts of
and classification of liabilities that might be necessary in the event the
Company cannot continue operations.

                             Results of Operations

We are a clinical-stage pharmaceutical company. Historically, Bioxytran was
engaged in formation, fund raising and identifying and consulting with the
scientific community regarding the development, formulation and testing of its
products.

                               Operating Expenses

Research and Development (R&D) expenses for the year ended December 31, 2021
were $2,013,762, while for the year ended December 31, 2020, they were $544,519.
Our operations only started in the 4th quarter of 2020.

General and administrative (G&A) expenses for the year ended December 31, 2021
were $1,617,810, while for the year ended December 31, 2020, they were $476,315.
The components of G&A expenses are as follows:

  ? Payroll and related expenses for the year ended December 31, 2021 were
    $1,391,379, including payroll taxes and 401K benefits, as compared to $192,000
    for the year ended December 31, 2020. The difference was due the increase of
    the management's salaries to a market-based level.

  ? Costs for legal, accounting and other professional services for the year ended
    December 31, 2021 were $89,180, as compared to $102,232 for the year ended
    December 31, 2020. The decrease was due to reduced use of external corporate
    counsel.

  ? Sales and marketing expense for the year ended December 31, 2021 were $5,500,
    as compared to $34,027 for the year ended December 31, 2020. The decrease was
    due to limiting these expenditures in the current year as we're waiting for a
    go-ahead from FINRA to re-enter the OTC-QB.

  ? The remaining miscellaneous G&A expenses totaled $131,751 for the year ended
    December 31, 2021, as compared to $148,056 for the year ended December 31,
    2020.

Stock-based compensation mounted to $582,862 for the year ended December 31,
2021. The stock-based compensation for the year ended December 31, 2020 was
$247,867. The increase was due to the liquidation of the 2010 Stock Plan in the
1st quarter of 2021, in order to energize all collaborators in the development
and the regulatory pathway of the Company’s initial drug candidate.

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         Interest Expense and Amortization of Debt Discount and Premium

During the year ended December 31, 2021, the Company recorded $77,031 in
amortization of debt discount, as compared to, $961,128 of premium accretion to
additional paid-in capital, and $259,057 in amortization of debt discount
(including $145,438 in warrant amortization) for the year ended December 31,
2020. The interest on convertible notes amounted to $236,467 (whereof $85,685
accrued for New Notes, $6,110 for converted notes and $144,782 for the extinct
Old Notes), as compared to $1,014,769 (including a pre-pay fee of $91,362 for
the early payment of a convertible note and the default penalty of $673,956) for
the year ended December 31, 2020. The significant reduction of cost is due to
the fact that defaulted debt was re-negotiated and repurchased at face value.

                                    Net Loss

The Company generated a net loss for the year ended December 31, 2021 of
$4,528,042. In comparison, for the year ended December 31, 2020, the Company
generated a net loss of $2,542,527. The increased loss is mainly linked to the
increased spending in Research and development, and that Managements salary was
increased to a market-based level. As counter balance the interest and
amortizations were radically reduced as described in the preceding paragraph.

                                   Cash-Flows

Net cash used in operating activities was $1,697,399 and $1,098,992 for the
years ended December 31, 2021 and 2020, respectively. The increase was due to
Research and Development expenses starting in the 4th quarter of 2020, but
reduced by the conversion of debt to management converted to equity.

As at December 31, 2021 the Company is in the process of filing a patent, and
$36,931 has been spent in patent filing and legal fees during 2021. During the
year ended December 31, 2020 the Company spent $10,000 in patent filing and
legal fees.

Cash flows from financing activities were $1,765,000 and $981,052 for the years
ended December 31, 2021 and 2020, respectively. The significant change was due
to convertible loans taken up in connection with the S-1 filing in late spring
2021.

Available cash was $72,358 and $41,688 at December 31, 2021 and December 31,
2020, respectively.

                        LIQUIDITY AND CAPITAL RESOURCES

As at December 31, 2021, our assets consisted of was $72,358 in cash, and
$46,932 in intangible assets in form of capitalized patent expenses. We had
total liabilities of $3,277,497, which were all current liabilities, and which
consisted of $1,155,316 in accounts payable and accrued expenses (of which
$531,000 was payable to related parties), and $2,122,181 in convertible loans .
The equivalent numbers at December 31, 2020 were $41,688 in cash, $274,715 in
pre-paid expenses and $10,000 in intangible assets in form of capitalized patent
expenses. We had total liabilities of $2,267,659, which were all current
liabilities, and which consisted of $655,303 in accounts payable and accrued
expenses (of which $307,176 was payable to related parties), and $1,612,356 in
convertible loans. As a result of defaulting on the notes, the debt premium as
well as the debt discounts were fully amortized in 2020.

At December 31, 2021, we had total working capital of negative $3,205,139 and an
accumulated deficit of $8,753,668. Comparatively, on December 31, 2020, we had
total working capital of negative $1,951,256 and an accumulated deficit of
$4,721,923. We believe that we must raise not less than $3,700,000 in addition
to current cash on hand to be able to continue our business operations for
approximately the next 15 months.

                                Future Financing

We currently have an effective S-1, dated July 26, 2021, in which we intend to
raise an amount of $5,300,000. If we are unable to raise additional capital from
conventional sources and/or additional sales of stock in the future, we may be
forced to curtail or cease our operations. Even if we are able to continue our
operations, the failure to obtain financing could have a substantial adverse
effect on our business and financial results. In the future, we may be required
to seek additional capital by selling debt or equity securities, selling assets,
or otherwise be required to bring cash flows in balance when we approach a
condition of cash insufficiency. The sale of additional equity or debt
securities, if accomplished, may result in dilution to our then shareholders. We
provide no assurance that financing will be available in amounts or on terms
acceptable to us, or at all.

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                            Contractual obligations

Our contractual obligations include convertible notes, with a face value of
$2,165,000 and of accrued interest for these notes mounting to $85,685,
described under Note 7 to the Financial Statements.

                         Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have, or are reasonably
likely to have, a current or future material effect on our consolidated
financial condition, results of operations, liquidity, capital expenditures or
capital resources.

                          CRITICAL ACCOUNTING POLICIES

In presenting our financial statements in conformity with generally accepted
accounting principles, we are required to make estimates and assumptions that
affect the amounts reported therein. Several of the estimates and assumptions we
are required to make relate to matters that are inherently uncertain as they
pertain to future events. However, events that are outside of our control cannot
be predicted and, as such, they cannot be contemplated in evaluating such
estimates and assumptions. If there is a significant unfavorable change to
current conditions, it could result in a material adverse impact to our results
of operations, financial position and liquidity. We believe that the estimates
and assumptions we used when preparing our financial statements were the most
appropriate at that time. Presented below are those accounting policies that we
believe require subjective and complex judgments that could potentially affect
reported results. However, the majority of our businesses operate in
environments where we pay a fee for a service performed, and therefore the
results of the majority of our recurring operations are recorded in our
financial statements using accounting policies that are not particularly
subjective, nor complex.

                            Stock Based Compensation

The Company has share-based compensation plans under which non-employees,
consultants and suppliers may be granted restricted stock, as well as options to
purchase shares of Company Common Stock at the fair market value at the time of
grant. Stock-based compensation cost is measured by the Company at the grant
date, based on the fair value of the award over the requisite service period.

The Company applies ASC 718 for options, Common Stock and other equity-based
grants to its employees and directors. ASC 718 requires measurement of all
employee equity-based payment awards using a grant date fair-value method and
recording of such expense in the consolidated financial statements over the
requisite service period. The fair value concepts have not changed significantly
in ASC 718; however, in adopting this standard, companies must choose among
alternative valuation models and amortization assumptions. After assessing
alternative valuation models and amortization assumptions, the Company will
continue using both the Black-Scholes valuation model and straight-line
amortization of compensation expense over the requisite service period for each
separately vesting portion of the grant.

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