NEWG Newgen BioPharma Corporation (CE)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.

OVERVIEW

We were incorporated under the name Greenwind NRG Inc. in the State of Nevada on February 25, 2010. Our Articles of Incorporation initially authorized us to issue up to 75,000,000 shares of common stock, par value $0.001 per share. On September 19, 2016, we effected a 4-for-1 forward stock split of all our issued and outstanding common stock, which increased the number of issued and outstanding shares of common stock from 11,900,000 to 47,600,000. On November 18, 2016, upon approval by our Board of Directors and majority stockholders, we filed a Certificate of Amendment to our Articles of Incorporation with the Nevada Secretary of State increasing the number of authorized shares of common stock from 75,000,000 shares to 300,000,000 shares. In connection with the amendment to our Articles of Incorporation, our Board of Directors and majority stockholders also approved and adopted the Amended and Restated Bylaws of the Company on November 16, 2016. Effective November 18, 2016, we changed the name of our Company from Greenwind NRG Inc. to NewGen BioPharma Corp.

We are a development-stage company. We have generated no revenues to date and have incurred losses since inception. Our limited operations to date have consisted of the formation of the Company, the raising of capital, maintaining our public company reporting requirements. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months because we have not generated any revenues to date, and no revenues are anticipated until we implement our business plan.

To date, we have been unable to raise sufficient funds to fully implement our operations, and we do not believe that we currently have sufficient resources to do so without additional funding. As a result of the current difficult economic environment and our lack of funding to implement our business plan, our Board of Directors began to analyze strategic alternatives available to our Company to continue as a going concern. Such alternatives include raising additional debt or equity financing or consummating a merger or acquisition with a partner that may involve a change in our business plan.

Although our Board of Directors’ preference would be to obtain additional funding to implement our business plan, the Board believes that it must consider all viable strategic alternatives that are in the best interests of our shareholders. Such strategic alternatives include a merger, acquisition, share exchange, asset purchase, or similar transaction in which our present management will no longer be in control of our Company and our business operations will be replaced by that of our transaction partner. We believe we would be an attractive candidate for such a business combination due to the perceived benefits of being a publicly registered company, thereby providing a transaction partner access to the public marketplace to raise capital. Any such business combination and the selection of a partner for such a business combination involves certain risks, including analyzing and selecting a compatible business partner that is able to engage in a transaction with us and that has business operations which are or will likely prove to be profitable. If we are unable to locate a suitable partner for a business combination, and are otherwise unable to raise additional funding, we will likely be forced to cease business operations.

On October 27, 2016, we entered into a Binding Letter of Intent (the “LOI”) with NewGen BioPharma Corporation, a New Jersey corporation (“NewGen New Jersey”), in connection with a proposed reverse acquisition transaction between the Company and NewGen New Jersey, whereby the Company and NewGen New Jersey will enter into a reverse triangular merger (the “Merger”). NewGen New Jersey operates as a pharmaceutical company that develops and commercializes enhanced pharmaceuticals and cosmaceuticals through reformulating approved active pharmaceutical ingredients using proprietary nanotechnology platforms. NewGen New Jersey’s platforms and formulations are developed to create improvements in bioavailability, safety, efficacy, dosage reductions, and elimination of fed-fast variability.

Pursuant to the LOI, we made an advance in the amount of $100,000 to NewGen New Jersey under the terms of a promissory note issued on October 27, 2016. If the closing of the Merger does not occur, the principal amount of the LOI advance, together with accrued interest at the rate of five percent (5%) per annum, shall become due and payable upon the earlier of (i) receipt by NewGen New Jersey of proceeds from a financing in an amount not less than $1,000,000, (ii) an event of default, or (iii) a change in control of NewGen New Jersey. If the closing of the Merger occurs, the promissory note shall be cancelled as an intercompany loan in connection with the transaction.

In accordance with the terms of the LOI, on January 10, 2017, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with NewGen New Jersey and NewGen Merger Sub Inc., a New Jersey corporation and our wholly-owned subsidiary (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will merge with and into NewGen New Jersey, with NewGen New Jersey being the surviving corporation and a wholly-owned subsidiary of the Company.

As set forth in the Merger Agreement, we will acquire all of the issued and outstanding capital stock of NewGen New Jersey in exchange for the issuance to the current holders thereof of 40,000,000 shares of our common stock. Immediately following the closing date, there will be no more than 52,000,000 shares of our common stock issued and outstanding, which shall consist of (i) 10,000,000 shares of common stock issued and outstanding immediately prior to the closing date, (ii) an aggregate of 40,000,000 shares of common stock issued to the current stockholders of NewGen New Jersey as provided in the Merger Agreement, and (iii) 2,000,000 shares of common stock which may be issued and outstanding pursuant to a private placement by the Company (as described in further detail below), and excluding any shares of common stock issuable under outstanding warrants and options.

The Merger is expected to be completed after the closing conditions set forth in the Merger Agreement have either been satisfied or waived by the appropriate party or parties thereto. The Merger Agreement contains certain closing conditions typically found in an agreement of such nature, and the closing of the Merger is conditioned upon the approval by the stockholders of NewGen New Jersey. If we are able to close the Merger transaction as contemplated by the Merger Agreement, NewGen New Jersey will become our wholly-owned subsidiary, and we will report such event on a Current Report on Form 8-K to be filed with the SEC.

RESULTS OF OPERATIONS

Comparison of Three Months Ended January 31, 2017 and 2016

We are still in our initial development stage and have generated no revenues to date.

During the three month period ended January 31, 2017, the Company incurred $154,826 in operating expenses, compared to $11,288 in operating expenses during the three month period January 31, 2016. The increase in operating expenses was due primarily to an increase in professional fees incurred, including legal fees relating to the negotiation and execution of the Merger Agreement and compliance with regulatory reporting requirements associated therewith.

The Company incurred a net loss of $153,470 during the three month period ended January 31, 2017, compared to a net loss of $11,288 for the three month period ended January 31, 2016. The increase in net loss was due to the increase in operating expenses described above.

LIQUIDITY AND CAPITAL RESOURCES

Balance Sheets

As of January 31, 2017, the Company had $0 in cash and total assets of $201,356, compared to $0 in cash and $0 in total assets as of October 31, 2016. The increase in total assets was due to a loan receivable issued to NewGen New Jersey in connection with the pending Merger.

As of January 31, 2017, the Company had total liabilities of $230,002, compared to total liabilities of $125,176 as of October 31, 2016. The increase in total liabilities was due to an increase in accounts payable and accrued liabilities, as the Company had limited cash flows to repay outstanding obligations as they became due, and an increase in the amounts owing to a related party for loans received to support the Company’s day-to-day activities and working capital purposes.

Financing Arrangements

On March 14, 2013, a Registration Statement on Form S-1 was declared effective by the SEC, registering a total of 10,000,000 shares of our common stock (the “Registered Shares”) in an initial public offering. As of October 31, 2013, the Company issued 2,900,000 Registered Shares for a total of $29,000 in proceeds and the offering was completed.

In connection with the Merger Agreement, we are obligated to conduct an offering of up to $2,000,000 in Units at a price of $1.00 per Unit, with each “Unit” consisting of one share of our common stock and a warrant to purchase one share of our common stock at an exercise price of $1.00 per share, exercisable over a 12-month period (the “Offering”). The proceeds of the Offering will be used to fund the ongoing business and operations of NewGen New Jersey following the closing of the Merger.

During the three month period ended January 31, 2017, we entered into securities purchase agreements and sold 250,000 Units pursuant to the Offering, for aggregate proceeds of $250,000.

Subsequent to our fiscal quarter ended January 31, 2017, on February 15, 2017, we entered into a securities purchase agreement and sold 50,000 Units pursuant to the Offering, for aggregate proceeds of $50,000.

We currently do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months. We plan to complete private placement sales of our common stock in order to raise the funds necessary to pursue our plan of operation and to fund our working capital deficit in order to enable us to pay our accounts payable and accrued liabilities.

Any future sale of additional equity and debt securities will result in dilution to current stockholders. We may also seek additional loans where the incurrence of indebtedness would result in increased debt service obligations and could require the Company to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand business operations and could harm our overall business prospects.

Cash Flows from Operating Activities

During the three month period ended January 31, 2017, the Company used $11,076 in cash for operating activities, compared to $10,582 in cash used for operating activities during the three month period ended January 31, 2016. The slight increase in the cash used for operating activities was attributed to the fact that the Company had to pay more accounts payables that were coming due for outstanding operating activities.

Cash Flows from Investing Activities

During the three month periods ended January 31, 2017 and 2016, the Company used $0 in cash for investing activities. In connection with the Merger Agreement, the Company made advances in the amount of $200,000 to NewGen New Jersey from the sale of 200,000 Units pursuant to the Offering. The proceeds of such sales were wired directly to NewGen New Jersey from two investors.

Cash Flows from Financing Activities

During the three month period ended January 31, 2017, the Company received $11,076 from financing activities, compared to its receipt of $10,582 from financing activities during the three month period ended January 31, 2016. The proceeds received from financing activities were funds provided by our former sole director and principal executive officer to support the Company’s day-to-day activities.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.