UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

~~X .~~ ☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November~~May 3031, ~~2016~~2017

. ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ____________ to ____________

Commission file number: 000-53207

NEXUS BIOPHARMA, INC.

(Exact name of small business issuer as specified in its charter)

Nevada

75-3267338

(State or other jurisdiction of

incorporation or organization)

(IRS Employer

Identification No.)

8 Hillside Ave, Suite 108, Montclair, NJ 07042

(Address of principal executive offices)

(973) 524-6100

(Registrants telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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. X .☒ Yes . ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). ~~X .~~ ☒ Yes . ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or aan emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company;,” asand ~~defined~~“emerging ~~within~~growth company” in Rule 12b-2 of the Exchange Act.

.☐ Large accelerated filer .☐ Accelerated filer .☐ Non-accelerated filer X☒ . Smaller reporting company (Do not check if a smaller reporting company) ☐ Emerging growth company

~~Indicate~~If an emerging growth company, indicate by check mark ~~whether~~if the registrant ishas aelected ~~shell~~not ~~company~~to ~~(as~~use ~~defined~~the inextended ~~Rule~~transition ~~12b-2~~period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act). ~~.Yes X .No~~ ☐

~~The~~Indicate by ~~number~~check ofmark ~~shares~~whether ~~outstanding of each of~~ the ~~issuer's~~registrant ~~classes~~is ofa ~~common~~shell ~~equity~~company (as ofdefined ~~April~~in 6,Rule ~~2017:~~12b-2 ~~64,300,000 shares~~ of ~~common~~the ~~stock~~Exchange Act). ☐ Yes ☒ No

The number of shares outstanding of each of the issuer's classes of common equity as of October 27, 2017: 64,300,000 shares of common stock.

Contents

		Page
		Number
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements	31
	Consolidated Balance Sheets as of November 30, 2016 (unaudited) and February 29, 2016	3
	Consolidated Balance Sheets as of May 31, 2017 (unaudited) and February 28, 2017	1
	Consolidated Statements of Operations for the Three and Nine Months Ended November 30, 2016 and 2015 (unaudited)	4
	Consolidated Statements of Operations for the Three and Nine Months Ended May 31, 2017 and 2016 (unaudited)	2
	Consolidated Statement of Stockholder's Equity at November 30, 2016 (unaudited)	5
	Consolidated Statement of Stockholder's Equity at May 31, 2017 (unaudited)	3
	Consolidated Statements of Cash Flows for the Nine Months Ended November 30, 2016 and 2015 (unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended May 31, 2017 and 2016 (unaudited)	4
	Notes to Consolidated Financial Statements (unaudited)	75
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	1110
Item 3	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4	Controls and Procedures	14
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	15
Item 1A	Risk Factors	15
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3	Defaults Upon Senior Securities	15
Item 4	Mine Safety Disclosures	15
Item 5	Other Information	15
Item 6	Exhibits	15
SIGNATURES		16

PART I - FINANCIAL INFORMATION

Item 1 – Financial Statements

NEXUS BIOPHARMA, INC.

Consolidated Balance Sheets ~~as of November 30, 2016 (unaudited) and February 29, 2016~~

			November 30		February 29
		May 31				February 28
			2016		2016
		2017				2017
		(Unaudited)	~~(Unaudited)~~			(Unaudited)
ASSETS
CURRENT ASSETS
Cash	~~Cash~~	$	~~302~~8,427	$	~~9,925~~	$	77
	Sub-lease receivable		8,991		-
Prepaid rent			1,500				1,000
Total Current Assets	~~Total Current Assets~~		9,~~293~~927		~~9,925~~		1,077
	Furniture and equipment, net		1,632		-
Property and equipment, net			1,508				1,575
	Intangible asset, net		7,323		-
Intangible Asset, net			6,465				6,875
TOTAL ASSETS	~~TOTAL ASSETS~~	$	1817,~~248~~900	$	~~9,925~~	$	9,527
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Accounts payable and accrued expenses	~~Accounts payable and accrued expenses~~	$	~~824~~925,~~261~~273	$	~~735,606~~	$	835,514
	Stock payable		200,000		-
Account payable - related parties			91,424				87,547
	Note payable		292,500		-
Stock payable			200,000				200,000
	Total Current Liabilities		1,316,761		735,606
Derivative liabilities			282,881				-
	Convertible notes payable - net of unamortized debt discount of $13,888 and 18,889		46,112		41,111
Convertible debt - short term, net of unamortized debt discount of $85,540 and $0			25,571				-
	Total Long Term Liabilities		46,112		41,111
Note payable - short term			292,500				292,500
	TOTAL LIABILITIES		1,362,873		776,717
Total Current Liabilities			1,817,649				1,415,561
STOCKHOLDERS' DEFICIT
Convertible notes payable - net of unamortized debt discount of $10,554 and $12,221			49,446				47,779
	Common stock, $.001 par value; 750,000,000 shares authorized; 64,309,655 and 31,552,524 shares issued and outstanding, respectively		64,310		31,553
Total Long Term Liabilities			49,446				47,779
	Additional paid-in-capital		1,776,324		1,810,002
TOTAL LIABILITIES			1,867,095				1,463,340
	Accumulated stockholders' deficit		(3,185,259)		(2,608,347)
STOCKHOLDERS' DEFICIT
	Total Stockholders' Deficit		(1,344,625)		(766,792)
Common stock, $.001 par value; 750,000,000 shares authorized; 64,309,656 and 64,309,656 shares issued and outstanding, respectively			64,310				64,310
	TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	18,248	$	9,925
Additional paid-in-capital			1,771,141				1,776,324
Accumulated stockholders' deficit			(3,684,646	)			(3,294,447	)
Total Stockholders' Deficit			(1,849,195	)			(1,453,813	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT		$	17,900			$	9,527

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NEXUS BIOPHARMA, INC.

Consolidated Statements of Operations

For the three months ended

(Unaudited)

	May 31, 2017			May 31, 2016

OPERATING EXPENSES
General and administrative	$	157,445		$	248,014
Research and development		7,525			7,500

Total Operating Expenses		164,970			255,514

OTHER EXPENSE
Loss on derivative liabilities		(189,698	)		-
Interest expense		(35,531	)		(4,144	)
		(225,229	)		(4,144	)

NET LOSS	$	(390,199	)	$	(259,658	)

BASIS AND DILUTED NET LOSS PER SHARE	$	(0.01	)	$	(0.04	)

WEIGHTED AVERAGE SHARES OUTSTANDING - BASIS AND DILUTED		64,309,656			6,933,014

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NEXUS BIOPHARMA, INC.

Consolidated Statements of Stockholders' Deficit

For the three months ended May 31, 2017

(Unaudited)

					Additional						Total
	Common Stock				Paid-in			Accumulated			Stockholders'
	Shares		Amount		Capital			Deficit			Deficit
Balance at February 28, 2017		64,309,656	$	64,310	$	1,776,324		$	(3,294,447	)	$	(1,453,813	)

Warrants reclassed to derivative liabilities		-		-		(5,183	)		-			(5,183	)

Net loss		-		-		-			(390,199	)		(390,199	)

Balance at May 31, 2017 (unaudited)		64,309,656	$	64,310	$	1,771,141		$	(3,684,646	)	$	(1,849,195	)

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NEXUS BIOPHARMA, INC.

Consolidated Statements of ~~Operations~~Cash ~~for the Three and Six Months Ended November 30, 2016 and 2015~~Flows

~~(unaudited)~~ For the three months ended

			Three months ended				None months ended
			November 30, 2016		November 30, 2015		November 30, 2016		November 30, 2015
OPERATING EXPENSES
	General and administrative	$	121,459	$	51,247	$	530,875	$	854,520
	Research and development		7,500		107,935		23,904		218,835
	Total Operating Expenses		128,959		159,182		554,779		1,073,355
OTHER INCOME (EXPENSE)
	Interest expense, net		(8,956)		-		(22,133)		-
NET LOSS		$	(137,915)	$	(159,182)	$	(576,912)	$	(1,073,355)
BASIS AND DILUTED NET LOSS PER SHARE		$	0.00	$	(0.06)	$	(0.01)	$	(0.42)
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIS AND DILUTED			64,309,656		2,606,524		53,132,560		2,550,426

(Unaudited)

	May 31, 2017			May 31, 2016


CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(390,199	)	$	(259,658	)
Adjustments to reconcile net loss to net cash used by operating activities
Amortization of debt discount		27,238			1,667
Depreciation and Amortization expense		477			137
Stock based compensation		-			91,800
Loss on derivative liabilities		189,698			-
Change in operating assets and liabilities Prepaid rent		(500	)		-
Accounts payable - related parties		3,877			-
Accounts payable and accrued expenses		77,759			(2,312	)
NET CASH USED IN OPERATING ACTIVITIES		(91,650	)		(168,366	)

CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for website development costs		-			(8,250	)
NET CASH USED IN INVESTING ACTIVITIES		-			(8,250	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable		-			292,500
Proceeds from convertible debt		100,000			-
NET CASH PROVIDED BY FINANCING ACTIVITIES		100,000			292,500

NET INCREASE IN CASH		8,350			115,884

Cash at the beginning of the period		77			9,925

Cash at the end of the period	$	8,427		$	125,809

SUPPLEMENTAL DISCLOSURES:
Interest paid	$	-		$	-
Income taxes paid	$	-		$	-

NON CASH TRANSACTIONS
Debt discount from derivative liabilities	$	88,000		$	-
Debt discount from one-time interest	$	12,000		$	-
Warrants reclassified to derivative liabilities	$	5,183		$	-

The accompanying notes are an integral part of these unaudited consolidated financial statements.

NEXUS BIOPHARMA, INC.

Consolidated Statement of Stockholder's Equity at November 30, 2016

(unaudited)

	Common Stock				Additional				Total
					Paid-in		Accumulated		Stockholders'
	Shares		Amount		Capital		Deficit		Deficit
Balance at February 29, 2016	31,552,524	$	31,553	$	1,810,002	$	(2,608,347)	$	(766,792)
Issuance of common stock for services	4,457,132		4,457		87,343		-		91,800
Cancellation of shares	(35,500,000)		(35,500)		35,500		-		-
Adjustment due to the reverse merger	63,800,000		63,800		(156,521)		-		(92,721)
Net loss	-		-		-		(576,912)		(576,912)
Balance at November 30, 2016 (unaudited)	64,309,656	$	64,310	$	1,776,324	$	(3,185,259)	$	(1,344,625)

NEXUS BIOPHARMA, INC.

Consolidated Statements of Cash Flows for the Six Months Ended November 30, 2016 and 2015

(unaudited)

			November 30, 2016		November 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
	Net loss	$	(576,912)	$	(1,073,355)
	Adjustments to reconcile net loss to net cash used by operating activities
	Amortization of debt discount		5,001		-
	Depreciation and Amortization expense		984		-
	Stock based compensation		91,800		625,000
	Change in operating assets and liabilities
	Sub-lease receivable		(8,991)		-
	Accounts payable and accrued expenses		(4,066)		426,303
NET CASH USED IN OPERATING ACTIVITIES			(492,184)		(22,052)
CASH FLOWS FROM INVESTING ACTIVITIES
	Cash paid for furniture and equipment		(1,689)		-
	Cash paid for website development costs		(8,250)		-
NET CASH USED IN INVESTING ACTIVITIES			(9,939)		-
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from notes payable		292,500		-
	Proceeds from equity line of credit		200,000		-
NET CASH PROVIDED BY FINANCING ACTIVITIES			492,500		-
NET DECREASE IN CASH			(9,623)		(22,052)
Cash at the beginning of the period			9,925		22,052
Cash at the end of the period		$	302	$	-
SUPPLEMENTAL DISCLOSURES:
	Interest paid	$	-	$	-
	Income taxes paid	$	-	$	-
NON CASH TRANSACTIONS
	Cancellation of shares	$	35,500	$	-
	Adjustment due to the reverse merger	$	92,721	$	-

NEXUS BIOPHARMA, INC.

Notes to Consolidated Financial Statements

~~November 30~~May 31, ~~2016~~2017 and ~~2015~~2016

(Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND GOING CONCERN

Nexus BioPharma, Inc. (”we”, “our”, “NBP”, “the Company”) was incorporated in Delaware on April 17, 2013. During this time the Company devoted substantially all of its efforts to activities such as financial planning and raising capital. The Company did not have any transactions from incorporation date through the period ended February 28, 2014.

NBP is a life science company focused on the development and commercialization of a pharmaceutical preparation to treat obesity and the symptoms of type 2 diabetes.

On February 1, 2016, the Company effected a 1 for 13.5 reverse stock split of its common stock. All share information in the financial statements for fiscal years ~~2016~~2017 and ~~2015~~2016 reflect the impact of the reverse stock split.

Reverse merger

On May 17, 2016 the Company entered into an Agreement and Plan of Reorganization (“Merger Agreement”) by and among Nexus Bio Pharma, Inc. a Nevada corporation (“Nexus”), the Company and Nexus Acquisition Corp. (“Acquisition Corp.”), a Delaware corporation and wholly owned subsidiary of Nexus. The Merger Agreement closed on June 9, 2016 and resulted in the following:

Acquisition Corp. merged with the Company with the latter as the surviving company in the merger. The Company shall continue its corporate existence under the name “Nexus ~~Biopharma~~BioPharma, Inc.”

Each share of common stock of the Company prior to the merger converted into 4.8552632 shares of common stock, par value $0.001 per share, of Nexus. Nexus then cancelled 35,500,000 shares of its common stock that were outstanding prior to the merger.

The Company’s stockholders shall receive convertible promissory notes corresponding to their proportional ownership interest of NBP common stock which shall be convertible into newly created shares of preferred stock of Nexus. The Nexus preferred shares shall be convertible into 36,000,000 shares of Nexus common stock. The convertible notes will be issued once Nexus has the preferred shares in place. As of June 21, 2017 the preferred shares are not available.

The transaction is accounted for as a reverse acquisition and the Company is considered the accounting acquirer for financial reporting purposes. The historical consolidated financial statements include the operations of the accounting acquirer for all periods presented.

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements. Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. The balance sheet as of February 29, 2016 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm, but does not include all of the information and footnotes required for complete annual financial statements. The financial statements included in this Quarterly Report should be read in conjunction with the financial statements and the notes thereto included in the Company’s Report on Form 8-K filed on June 15, 2016.

Going Concern

~~These~~The consolidated financial statements have been prepared on a going concern basis. The Company has incurred losses since inception and has a working capital deficit, which raises substantial doubt about ~~The~~the Company’s ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the Company’s ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has plans to seek additional capital through a private placement and public offering of its common stock. The consolidated 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 in existence.

7NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited interim financial statements been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements. Accordingly, such interim financial statements do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete annual financial statements. The information furnished reflects all adjustments, consisting only of normal recurring items which are, in the opinion of management, necessary in order to make the financial statements not misleading. Operating results for the three months ended May 31, 2017 are not necessarily indicative of the results that may be expected for the year ending February 28, 2018. The balance sheet as of February 28, 2017 has been derived from the Company’s annual financial statements that were audited by an independent registered public accounting firm, but does not include all of the information and footnotes required for complete annual financial statements. . The financial statements included in this Quarterly Report should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K filed on July 5, 2017.

NEXUS BIOPHARMA, INC.

Notes to Consolidated Financial Statements

~~November 30~~May 31, ~~2016~~2017 and ~~2015~~2016

(Unaudited)

~~NOTE~~Principles of ~~2 – LICENSE AGREEMENT AND COMMITMENTS~~Consolidation

The accompanying ~~Company~~consolidated ~~entered~~financial instatements toinclude ~~a Patent and Technology License Agreement with~~ the ~~Albert~~accounts ~~Einstein College~~ of ~~Medicine (Licensors) in March 2014. The agreement grants~~ the Company ~~a world-wide exclusive license to materials~~ and ~~methods~~its ~~for~~wholly-owned ~~use in the diagnosis and treatment of cancers~~subsidiary, ~~obesity~~Nexus ~~and diabetes with inhibitors of Fyn kinase~~Acquisition Corp. InSignificant ~~return~~intercompany ~~the~~transactions ~~Company~~and ~~has~~balances ~~agreed~~have abeen ~~license~~eliminated ~~fee~~in to Licensors, to reimburse licensors patent expenses thus far incurred, to pay all future patent expenses, pay a royalty on any sales of product using licensed technology, as well as certain minimum royalties and milestone paymentsconsolidation.

Use of Estimates

To prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, we are required to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In addition, significant estimates were made in projecting future cash flows to quantify deferred tax assets, the costs associated with fulfilling our warranty obligations for the instruments that we sell, and the estimates employed in our calculation of fair value of stock options awarded and warrant derivative liability. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from the estimates and assumptions used.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for accounts payable, accrued expenses and debt are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and, if applicable, the stated rate of interest is equivalent to rates currently available.

ASC 820 Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The Company utilizes a three-level valuation hierarchy for disclosures of fair value measurements, defined as follows:

Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets

Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

The following table presents the derivative financial instruments, the Company’s only financial liabilities measured and recorded at fair value on the Company’s consolidated balance sheets on a recurring basis, and their level within the fair value hierarchy as of May 31, 2017:

	Amount		Level 1		Level 2		Level 3
Embedded conversion derivative liability	$	170,787	$	-	$	-	$	170,787
Warrant derivative liabilities	$	112,094	$	-	$	-	$	112,094
Total	$	282,881	$	-	$	-	$	282,881

NEXUS BIOPHARMA, INC.

Notes to Consolidated Financial Statements

May 31, 2017 and 2016

(Unaudited)

The following table provides a summary of the changes in fair value, including net transfers in and/or out, of the derivative financial instruments, measured at fair value on a recurring basis using significant unobservable inputs:

Balance at February 28, 2017	$	-
Fair value of liabilities recorded as “day1” derivative loss		201,752
Fair value of derivative liabilities reclassified from additional paid in capital		5,183
Fair value of derivative liabilities recorded as a debt discount		88,000
Unrealized derivative gain included in other expense		(12,054	)
Balance at May 31, 2017	$	282,881

Level 3: inputs to the valuation methodology are unobservable and significant to the fair value

The fair value of the derivative liabilities are calculated at the time of issuance and the Company records a derivative liability for the calculated value. Changes in the fair value of the derivative liabilities are included in other expense in the consolidated statements of operations.

Related party transactions

A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Recently Issued Accounting Pronouncements

We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations. Financial position or cash flows.

NOTE 3 – LICENSE AGREEMENT AND COMMENTMENTS

The Company entered in to a Patent and Technology License Agreement with the Albert Einstein College of Medicine (Licensors) in March 2014. The agreement grants the Company a world-wide exclusive license to materials and methods for use in the diagnosis and treatment of cancers, obesity and diabetes with inhibitors of Fyn kinase. In return the Company has agreed to pay a license fee to Licensors, to reimburse licensors patent expenses thus far incurred, to pay all future patent expenses, pay a royalty on any sales of product using licensed technology, as well as certain minimum royalties and milestone payments.

Pursuant to the License Agreement, we are also obligated to make the following royalties and payments to the Licensors:

·● Royalty payment equivalent to 3% of net sales. ● Royalty payment of a minimum of a specified percentage of net sales in case the Company pays royalties to unaffiliated third parties for patent rights. ● Pay 20% of any net proceeds that the Company will receive pursuant to a sublicense agreement that the Company will enter into with other parties. ● Issue 30% of the Company outstanding common stock to the Licensors calculated on a fully diluted, as converted basis. Accordingly, in fiscal year 2015, we issued 616,541 common shares valued at $857,143 which was charged to research and development expense. ● Non-refundable license fee of $25,000 upon execution of the License Agreement. ● License maintenance fee of $30,000 on each of the first, second, third and fourth anniversary of the License Agreement. The payment may be credited against royalties made during the twelve month period. ● License maintenance fee of $50,000, and $75,000 on the fifth and sixth anniversaries of the License Agreement, respectively. Each payment may be credited against royalties made during each such twelve month period.

Royalty payment equivalent to 3% of net sales.

	●	License maintenance fee of $100,000 on the seventh and each subsequent anniversary of the License Agreement. Each payment may be credited against royalties made during each such twelve month period.

	●	Milestone payments ranging from $100,000 to $750,000 if certain milestones are achieved.

·7

Royalty payment of minimum of a specified percentage of net sales in case the Company pays royalties to unaffiliated third parties for patent rights.

Pay 20% of any net proceeds that the Company will receive pursuant to a sublicense agreement that the Company will enter into with other parties.

Issue 30% of the Company outstanding common stock to the Licensors calculated on a fully diluted, as converted basis. Accordingly, we issued 126,984 common shares valued at $857,143 which was charged to research and development expense in the statements of operations.

Non-refundable license fee of $25,000 upon execution of License Agreement.

License maintenance fee of $30,000 on each of the first, second, third and fourth anniversary of the License Agreement. The payment may be credited against royalties made during the twelve month period.

License maintenance fee of $50,000, and $75,000 on the fifth and sixth anniversaries of the License Agreement, respectively. Each payment may be credited against royalties made during each such twelve month period.

License maintenance fee of $100,000 on the seventh and each subsequent anniversary of the License Agreement. Each payment may be credited against royalties made during each such twelve month period.

Milestone payments ranging from $100,000 to $750,000 if certain milestones are achieved.

Additionally, under the license agreement the Company is obligated to offer new shares to the licensors on a fully diluted basis for all new stock issues with the sale terms offered under the new issue. The License Agreement will terminate upon expiration of the patent. The initial payment of $30,000, due March 3, 2015 was not made and the second annual payment, due March 3, 2016 was not made. As of the date of this filing the Company has not received any demand for payment or notice of default from Albert Einstein College of Medicine. The Company plans to pay these minimum royalty payments as soon as adequate funds are available.

NOTE 3—RELATED PARTY TRANSACTIONS

The Company has an employment agreement with the principal officer and stockholder providing for a base salary of $43,750 and $131,250 in the three and nine months ended November 30, 2016, respectively and $36,250 and $108,750 in the three months and nine ended November 30, 2015, respectively. The base salary shall be increased at the end of each year to reflect the change in the consumer price index and the board of directors may award increases in the base salary greater than those provided above.

If the officer continues active employment after 2016, compensation will be negotiated. The Company’s obligation under the employment agreement accrues only as the service is rendered. As of November 30, 2016 and February 29, 2016, unpaid salaries to the CEO amounted to $181,472 and $193,915, respectively.

On March 1, 2014, the Company entered into a consulting agreement with a principal stockholder providing monthly payments of $5,000 plus reimbursable travel expenses for a period of six months, after which, the agreement shall automatically renew for an additional three month term unless terminated by either party with 15 day prior notice. On June 1, 2014, the Company entered into a new agreement with the principal stockholder with the same terms as the previous one except that the monthly fee was increased to $7,500. Total consulting fees incurred for the three months and nine months ended November 30, 2016 amounted to $22,500 and $52,500 respectively. For the three months and nine months ended November 30, 2015 no services were rendered under the agreement; and therefore, no consulting fee expense was recorded.

NEXUS BIOPHARMA, INC.

Notes to Consolidated Financial Statements

~~November 30~~May 31, ~~2016~~2017 and ~~2015~~2016

(Unaudited)

~~NOTE~~Additionally, under 4the –license ~~SHORT~~agreement ~~TERM~~the ~~DEBT~~Company is obligated to offer new shares to the licensors on a fully diluted basis for all new stock issues with the sale terms offered under the new issue. The License Agreement will terminate upon expiration of the patent. The initial payment of $30,000, due March 3, 2015 was not made and the second and third annual payments, due March 3, 2016 and 2017 were not made. As of the date of this filing the Company has not received any demand for payment or notice of default from Albert Einstein College of Medicine. The Company plans to pay these minimum royalty payments as soon as adequate funds are available. The total amount due to Albert Einstein College of Medicine as of May 31, 2017 amounted to $68,904.

~~Short~~NOTE 4—RELATED ~~term~~PARTY ~~notes payable consist of an unsecured note payable of $292,500 with an interest rate of 10% and is due in April 2017.~~TRANSACTIONS

~~NOTE~~The Company 5has –an ~~CONVERTIBLE~~employment ~~NOTES~~agreement ~~PAYABLE~~with the principal officer and stockholder providing for a base salary of $43,750 for the three months ended May 31, 2017 and 2016. The base salary shall be increased at the end of each year to reflect the change in the consumer price index and the board of directors may award increases in the base salary greater than those provided above.

~~Convertible~~If the ~~notes~~officer ~~were~~continues ~~issued~~active ~~during~~employment ~~December~~after ~~2015 and January 2016 with principal amounts totaling to $60~~2017,~~000.~~ ~~The~~compensation ~~notes~~will ~~are~~be ~~non-interest bearing and have a term of three years~~negotiated. The ~~notes were contemplated to automatically convert into the~~ Company’s ~~planned~~obligation ~~units~~under ~~offering~~the employment ~~with~~agreement ~~each~~accrues ~~unit~~only ~~consisting~~as ofthe ~~two~~service ~~shares~~is ~~of common stock and one warrant at a price of $1 per unit~~rendered. AnAs ~~aggregate~~ of 60May 31,~~000~~ ~~warrants~~2017 ~~were issued with the notes. These warrants have an exercise price of $1.50 per share~~ and a2016, ~~term~~unpaid ofsalaries 3to ~~years. The relative fair value of~~ the ~~warrants~~CEO ~~amounting~~ amounted to $20247,~~000~~098 ~~was recognized as a debt discount~~ and ~~amortized~~$213,773, ~~over~~respectively ~~the~~which ~~term~~are ofincluded ~~the~~in ~~notes.~~accounts ~~Amortization~~payable ~~expense for the three~~ and ~~nine~~accrued ~~months~~expenses ~~ended~~in ~~November~~the ~~30,~~consolidated ~~2016 was $1,667 and $5,001, respectively~~balance sheets.

~~NOTE~~On March 61, 2014, the Company entered into a consulting agreement with a principal stockholder providing monthly payments of $5,000 plus reimbursable travel expenses for a period of six months, after which, the agreement shall automatically renew for an additional three month term unless terminated by either party with 15 day prior notice. On June 1, 2014, the Company entered into a new agreement with the principal stockholder with the same terms as the previous one except that the monthly fee was increased to $7,500. On May 1, 2016, the Company renewed the consulting agreement for a period of six months with monthly fees amounted to $7,500. The agreement was terminated on November 12, 2016 with an effective date of August 1, 2016. Total consulting fees incurred for the three months ended May 31, 2017 and 2016 amounted to $0 and $15,000 respectively. The total amount payable due to the related party as of May 31, 2017 and 2016 amounted to $20,000 and $15,000, respectively, which is reported in accounts payable – related ~~EQUITY~~parties in the consolidated balance sheets.

~~Shares~~NOTE 5 ~~for~~– ~~service~~SHORT TERM DEBT

~~Subsequent~~Short term tonotes ~~February~~payable ~~29,~~consist ~~2016,~~of ~~the~~an ~~Company~~unsecured ~~issued~~note 4payable of $292,~~457,132~~500 ~~(post-merger)~~with ~~shares~~an interest rate of ~~common~~10% ~~stock~~and ~~for~~is ~~consulting~~due ~~services~~in ~~with~~April a2017. ~~fair~~The note ~~value~~is ofcurrently ~~$91,800~~past due.

~~Equity~~NOTE 6 ~~Line~~– ofCONVERTIBLE ~~Credit~~NOTES PAYABLE

~~The~~Convertible notes ~~Company~~were ~~entered~~issued ~~into~~during anDecember ~~Equity~~2015 ~~Line~~and ofJanuary ~~Credit~~2016 ~~Agreement (the “ELOC”)~~ with ~~Corelli~~principal ~~Capital~~amounts ~~A.G.~~totaling ~~(“CCAG”)~~to ~~on June 14~~$60, ~~2016~~000. The ~~terms~~notes ofare ~~the~~non-interest bearing ~~agreement~~and ~~provide~~have ~~that~~a ~~the~~term ~~Company~~of ~~shall~~three ~~issue~~years. ~~and~~The ~~sell~~notes towere ~~CCAG~~contemplated up to ~~$2,250,000~~automatically ofconvert into the Company’s ~~common~~planned units ~~stock.~~offering ~~The~~with ~~Company~~each ~~can~~unit ~~request~~consisting ~~in separate transactions a maximum advance amount~~ of ~~$200,000~~two inshares ~~exchange for the issuance~~ of ~~the equivalent amount of~~ common stock ~~valued~~and atone ~~the~~warrant ~~current~~at ~~market~~a price. ~~The~~of ~~first advance amount will be calculated at~~ $~~0.20~~1 per ~~share~~unit. ~~The~~An ~~agreement~~aggregate of ~~will expire~~60,000 ~~either~~warrants ~~seven~~were ~~months~~issued ~~from~~with the ~~agreement~~notes. ~~date~~These ~~or,~~warrants ~~when the investor shall~~ have ~~made~~an ~~the~~exercise ~~payment~~price of ~~advances totaling~~ $~~2,250,000,~~1.50 ~~whichever~~per ~~comes~~share ~~first.~~and ~~The~~a ~~Company~~term ~~requested~~of an3 ~~advance~~years. The ~~for~~relative ~~$200,000~~fair onvalue ~~June~~of ~~22,~~the ~~2016~~warrants ofamounting ~~which~~to $~~100~~20,000 was ~~received~~recognized as ofa ~~August~~debt ~~31,~~discount ~~2016~~ and ~~the~~amortized ~~remaining~~over ~~$100,000 was received on September 7, 2016. Under~~ the ~~terms~~term of the ~~ELOC~~notes. ~~the~~Amortization ~~Company~~expense ~~will issue 1,000,000 shares in return~~ for the ~~first~~three ~~funding~~months ofended ~~$200~~May 31,~~000,~~ ~~but~~2017 asand of2016 ~~November~~was 30$27,238 ~~2016~~and ~~the~~ $1,~~000~~667,~~000~~ ~~share~~respectively. ~~have~~The ~~not~~unamortized debt ~~been~~discount ~~issued.~~at AsMay ~~of January 14~~31, 2017 ~~the~~and ~~equity~~2016 ~~line~~is of$85,540 ~~credit~~and ~~agreement~~$0, ~~has expired~~respectively.

~~Warrants~~8

As of November 30, 2016, the Company has an aggregate of 60,000 warrants outstanding and exercisable with a weighted average exercise price of $1.50 and a weighted average remaining term of 2.15 years.

NOTE 7 –LEASES

The Company leases its New Jersey facilities under an operating lease. This lease, which terminates on July 31 2017, requires monthly payments of $6,491. The lease can be terminated with notice given at least ninety days prior to the intended date of termination. The Company is also obligated to pay additional rent to cover the lessee’s share of taxes and operating costs in excess of specified base amounts. Rent expense for the three and nine months ended November 30, 2016 were $17,873 and $24,447, respectively.

Additionally, the Company has sub-leased a portion of its office space under two agreements. The first sub-lease, which terminates on July 31 2017, requires monthly payments of $2,164. The lease can be terminated with notice given at least sixty days prior to the intended date of termination. The second sub-lease, which terminates on July 31 2017, requires monthly payments of $2,500. The lease can be terminated with notice given at least ninety days prior to the intended date of termination. The Company has recorded the rent collected or accrued under the sub-leases as a reduction of rent expense. Rent expense and sublease rentals for both the three and nine months ended November 30, 2016 amounted to $24,447 and $18,655, respectively.

NEXUS BIOPHARMA, INC.

Notes to Consolidated Financial Statements

~~November 30~~May 31, ~~2016~~2017 and ~~2015~~2016

(Unaudited)

The Company entered into an agreement to issue convertible notes with a principal sum up to $500,000 plus accrued and unpaid interest and any other fees and net of an original issue discount (OID) of $50,000. The investor paid $100,000 on March 8, 2017 net of the original issue discount of $11,111. The investor may pay additional amounts to the Company in such amounts and at such dates as the investor may choose, however, the Company has the right to reject any of those payments within 24 hours of receipt of such payments. The maturity date is twelve months after the receipt of each payment and is the date upon which the principal sum of the note, as well as any unpaid interest and other fees, shall be due and payable. The investor may extend any maturity date in its sole discretion in increments of up to six months at any time before or after any maturity date. The maturity date shall automatically be deemed extended unless the investor provides notice to the Company that it is not or has not extended the maturity date, which notice the investor may provide at any time before or after the maturity date. A one-time interest charge of l2% was recognized as a debt discount to the note. The interest is in addition to the OID, and that OID remains payable regardless of time and manner of payment by the Company. The Company may repay up to 98% (such that the investor may retain 2%) of the note at any time on or before 90 days after its maturity date in an amount equal to 120% of the principal sum being repaid plus all accrued and unpaid interest, OID, liquidated damages, fees and other amounts due on such principal sum, or at 140% if repaid at any time on or before 180 days after its maturity date. The Company may not repay any payment after 180 days after its maturity date without written approval from the Investor. The investor has the right, at any time after the maturity date, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest and any other fees into shares of fully paid and non-assessable shares of common stock of the Company at a price equivalent to the lesser of $0.14 or 60% of the lowest trade price in the 25 trading days prior to conversion. In connection with this note, the Company also issued 793,650 warrants to the investor. See Notes 7 and 8.

NOTE 7: DERIVATIVE LIABILITIES

During the three months ended May 31, 2017, the convertible notes issued by the Company qualified as derivative liabilities under Accounting Standards Codification 815, Derivatives (ASC 815). In addition, the common stock warrants issued with the note and other outstanding warrants are tainted and required to be accounted for as derivative liabilities under ASC 815.

As of May 31, 2017 the aggregate fair value of the outstanding derivative liabilities was $282,881. For the three months ended May 31, 2017 the net loss on the change of fair value was $189,698.

The Company estimated the fair value of the derivative liabilities using the Black-Scholes option pricing model using the following key assumptions during the three months ended May 31, 2017

	Initial Valuation			May 31, 2017
Market value of common stock on measurement date	$	0.17		$	0.14
Exercise price	$	0.09-$1.50		$	0.08-$1.50
Risk free interest rate		1.03-2.08	%		1.17-1.75	%
Expected term in years		1-4			0.80-4.80
Expected volatility		153-168	%		171-213	%
Expected dividend yields		0	%		0	%

NOTE 8 – Warrants

As disclosed in Note 6, the Company issued 793,650 common stock warrants with the convertible note. The warrants have a term of 5 years and an exercise price equivalent to the lesser of $0.14 or the lowest trade price in the 10 trading days prior to exercise. These warrants were tainted and were accounted for as derivative instruments under ASC 815. See Note 7.

As of May 31, 2017, the Company has an aggregate of 853,650 warrants outstanding and exercisable with a weighted average exercise price of $0.24 and a weighted average remaining term of 4.55 years and the intrinsic value of $2,381.

NOTE 9 – LEASES

The Company leases its New Jersey facility under an operating lease. The one year lease, which terminated on July 31 2017, requires monthly payments of $6,491. The lease can be terminated with notice given at least ninety days prior to the intended date of termination. The Company is also obligated to pay additional rent to cover their share of taxes and operating costs in excess of specified base amounts. Rent expense for the three months ended May 31, 2017 was $19,474.

Additionally, the Company has sub-leased a portion of its office space. The sub-lease, which terminates on July 31 2017, requires monthly payments of $4,664. The lease can be terminated with notice given at least ninety days prior to the intended date of termination. The Company has recorded the rent collected from the sub-lessees for the three months ended May 31, 2017 in the amount of $13,992 as a reduction of rent expense.

The Company has executed a new operating lease on November 18, 2016 for facilities in Houston, Texas to begin February 1, 2017. This lease, which terminates on December 31, 2017, requires monthly payments of $500.

~~Future minimum lease payments and sublease rentals under the aforementioned operating leases are as follows:~~9

Year ended February 28,		Rent		Sublease rentals
2017	$	19,974	$	13,991
2018	$	37,457	$	23,319

Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes to the consolidated financial statements included elsewhere in this Form 10-Q. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expect,” “anticipate,” “intend,” “believe,” or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading “Risk Factors” in the reports we file with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements.

Business Overview

We are a life science company focused on the development and commercialization of a pharmaceutical preparation to treat obesity and the symptoms of type 2 diabetes. We believe that a drug that will step up the body’s metabolism of fat will address the biggest health problem in the world, obesity. Obesity is also implicated as a causative and an additive to a host of other conditions, the most important of which are Type 2 diabetes, cardiovascular disease and cancer. Type II diabetes, which now consumes roughly one sixth of every health care dollar in America, is a direct result of obesity.

For our first product opportunity we have engaged Charles River Laboratories for the discovery of a small molecule drug that activates metabolic pathways to increase energy expenditure. In completed animal trials our proprietary approach to the pharmaceutical activation of this LKB-1 AMPK (Adenosine Monophosphate dependent Protein Kinase) pathway resulted in increased energy expenditure, decreased fat mass and resulting weight loss, lower blood glucose, improved insulin sensitivity, lower cholesterol, and lower blood triglyceride levels.

Unlike most other FDA approved weight loss drugs, our strategy does not depend on a pharmaco-neurological manipulation of the higher-brain centers for appetite and/or satiety. Rather, our proprietary drug approach targets the master energy regulatory pathway that has been proven to exist not only in higher mammals, but also in all living cells that possess a nucleus. Because an intensive aerobic and resistance strength-training regime is the natural way to activate these pathway effects, we believe that our drug will help obese patients mimic the effect of a ~~more~~healthier ~~healthy~~ lifestyle and lose weight.

On November 16, ~~2017~~2016, we were selected to become a resident company at the Johnson & Johnson Innovation, JLABS facility at the Texas Medical Center in Houston, (JLABS @ TMCx). The Company has therefor relocated its headquarters to Houston, Texas as of February 1, ~~2016~~2017. The Company will begin by occupying office space and will later expand its physical operations to take advantage of the availability of laboratory facilities and equipment and especially the access to expertise and mentoring that make this a compelling opportunity for the Company.

Financial Operations Overview

Upon commercialization of the Company’s obesity therapeutic, we will begin working with third-party payors to establish reimbursement coverage policies. Where policies are not in place, we will pursue case-by-case reimbursement. We believe that as much as 20% of our future revenues may be derived from product(s) billed to Medicare. We will begin working with many payors, including Medicare, to establish policy-level reimbursement, which, if in place, will allow us to recognize revenues upon submitting an invoice. We do not expect to recognize the majority of revenues in this manner until calendar 2022, at the earliest.

Since our inception, we have generated significant net losses. As of ~~November~~May 3031, ~~2016~~2017, we had an accumulated deficit of $3,~~185~~684,~~259~~646. We incurred net losses of $~~137~~390,~~915~~199 ~~and $159,182~~ in the three months ended ~~November~~May 3031, ~~2016 and 2015, respectively and $576,912 and $1,073,355 for the nine months ended November 30, 2016 and 2015, respectively~~2017. We expect our net losses to continue for at least the next several years. We anticipate that a substantial portion of our capital resources and efforts will be focused on research and development, both to develop our initial obesity therapeutic and to develop additional products for obesity and type 2 diabetes, scale up our commercial organization, and other general corporate purposes. Our financial results will be limited by a number of factors, including establishment of coverage policies by third-party insurers and government payors, our ability in the short term to collect from payors often requiring a case-by-case manual appeals process, and our ability to recognize revenues other than from cash collections on therapeutics billed until such time as reimbursement policies or contracts are in effect. Until we receive routine reimbursement and are able to record revenues as therapeutics are prescribed and delivered, we are likely to continue reporting net losses.

Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as revenues and expenses during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from those estimates under different assumptions or conditions.

We believe the following critical accounting policies reflect our more significant estimates and assumptions used in the preparation of our financial statements.

Revenue Recognition

We have generated no revenues since our inception. Product revenues for our first product, our therapeutic for the treatment of obesity, are expected to be generated from the projected commercial launch in 2022, and are expected to be recognized on a cash basis because we will have limited collection experience and a limited number of contracts. In accordance with our policy, revenues for tests therapeutic prescribed will be recognized on an accrual basis when the related costs are incurred, provided there is a contract or coverage policy in place and the following criteria are met:

·● persuasive evidence that an arrangement exists;

~~persuasive~~● ~~evidence~~delivery ~~that~~has anoccurred ~~arrangement~~or ~~exists~~services rendered;

·● the fee is fixed and determinable; and

~~delivery~~● ~~has~~collectability ~~occurred~~is orreasonably ~~services rendered;~~assured.

·11

the fee is fixed and determinable; and

collectability is reasonably assured.

Determination of the last two criteria will be based on management’s judgment regarding the nature of the fee charged for products or services delivered and the collectability of those fees.

We expect to generally bill third-party payors for our obesity therapeutic upon the filling of a patient prescription. Accordingly, we take assignment of benefits and the risk of collection with the third-party payor. We usually bill the patient directly for amounts owed after multiple requests for payment have been denied or only partially paid by the insurance carrier. As a new drug, our obesity therapeutic may be considered investigational by payors and not covered under their reimbursement policies. Consequently, we expect to pursue case-by-case reimbursement where policies are not in place or payment history has not been established.

Contract revenues are expected to be derived from studies conducted with biopharmaceutical and pharmaceutical companies and will be recognized on a contract specific basis. Under certain contracts, our input, measured in terms of full-time equivalent level of effort or running a set of assays through our laboratory under a contractual protocol, will trigger payment obligations and revenues will be recognized as costs are incurred or assays are processed. Certain contracts May have payment obligations that are triggered as milestones are complete, such as completion of a successful set of experiments. In these cases, revenues are recognized when the milestones are achieved.

Clinical Collaborator Costs

We expect to enter into collaboration and clinical trial agreements with clinical collaborators and record these costs as research and development expenses. We plan to record accruals for estimated study costs comprised of work performed by our collaborators under contract terms. All clinical collaborators will be expected to enter into agreements with us, which specify work content and payment terms.

Results of Operations

Comparison of the Three ~~and Nine~~ Months Ended ~~November~~May 3031, ~~2016~~2017 and ~~November~~May 3031, ~~2015~~2016

Revenues. There were no revenues for the three ~~and nine~~ months ended ~~November~~May 3031, ~~2016~~2017 and ~~November~~May 3031, ~~2015~~2016, respectively, because we have not yet commercialized our obesity therapeutic.

Cost of Product Revenues. No cost of product revenues were recorded in the three months ended May 31, 2017 and May 31, 2016, respectively, because we have not yet commercialized our obesity therapeutic.

General and Administrative Expenses. General and administrative expenses totaled $157,445 for the three months ended May 31, 2017 as compared to $248,014 for the three months ended May 31, 2016. This represents a decrease of $90,569 for the three months ended May 31, 2017. This decrease for the three-month period was due in part to decreased costs for legal, accounting and other professional costs in the 2017 period.

Research and Development Expenses. Research and development expenses were $7,525 for the three months ended May 31, 2017 as compared to $7,500 for the three months ended May 31, 2016. This represents an increase of $25 for the three months ended May 31, 2017 over the three months ended May 31, 2016.

Interest Expense, Net. We recorded $35,531 of interest expense during the three months ended May 31, 2017 and $4,144 during the three months ended May 31, 2016. This represents an increase of $31,387 for the three months ended May 31, 2017 over the three months ended May 31, 2016. This increase for the three-month period was due to increased borrowing activities.

~~Cost~~Net Loss. As a result of ~~Product~~the ~~Revenues.~~fact Nothat ~~cost~~we ofremain a development stage company with no product revenues ~~were~~as ~~recorded~~well inas the ~~three~~other ~~months~~factors described ~~and~~above, ~~nine~~we had a net loss of $390,199 for the three months ended ~~November~~May 3031, ~~2016~~2017 ~~and~~as ~~November~~compared 30to $259,658 ~~2015~~for the three months ended May 31, ~~respectively~~2016. This increase for the three-month period was due in part to decreased costs for legal, ~~because~~accounting weand ~~have~~other professional ~~not~~costs ~~yet~~offset ~~commercialized~~by ~~our~~the ~~obesity~~a ~~therapeutic.~~loss on derivative liabilities in the 2017 period.

General and Administrative Expenses. General and administrative expenses totaled $121,459 for the three months ended November 30, 2016 as compared to $51,247 for the three months ended November 30, 2015. General and administrative expenses totaled $530,875 for the nine months ended November 30, 2016 as compared to $854,520 for the nine months ended November 30, 2015. This represents an increase of $70,212 for the three months and a decrease of $323,645 for the nine months ended November 30, 2016. This increase for the three-month period was due in part to increased costs for legal, accounting and other professional costs in the 2016 period. The decrease for the nine-month period was due to a significant charge due to $625,000 of stock-based compensation in the 2015 period.

Research and Development Expenses. Research and development expenses were $7,500 for the three months ended November 30, 2016 as compared to $107,935 for the three months ended November 30, 2015. Research and development expenses were $23,904 for the nine months ended November 30, 2016 as compared to $218,835 for the nine months ended November 30, 2015. This represents a decrease of $100,435 for the three months ended November 30, 2016 over the three months ended November 30, 2015 versus a decrease of 194,931 over the nine-month period. This three-month and nine month decrease was primarily as a result of decreased R&D activities.

Interest Expense, Net. We recorded $3 of interest income during the three months ended November 30, 2016 and $0 during the three months ended November 30, 2015. We recorded $8,959 of interest expense during the three months ended November 30, 2016 and $0 during the nine months ended November 30, 2015. We recorded $22,150 of interest expense during the nine months ended November 30, 2016 and $0 during the nine months ended November 30, 2015.

Net Loss. As a result of the fact that we remain a development stage company with no product revenues as well as the other factors described above, we had a net loss of $137,915 for the three months ended November 30, 2016 as compared to $159,182 for the three months ended November 30, 2015 and we had a net loss of $576,912 for the nine months ended November 30, 2016 as compared to $1,073,355 for the nine months ended November 30, 2015.

Liquidity and Capital Resources

Since our inception, we have incurred significant losses and, as of ~~November~~May 3031, ~~2016~~2017, we had an accumulated deficit of $3,~~185~~684,~~259~~646. We have not yet achieved profitability and anticipate that we will continue to incur net losses for the foreseeable future. We expect that our research and development, general and administrative and selling and marketing expenses will continue to grow and, as a result, we will need to generate significant product revenues to achieve profitability. We may never achieve profitability.

Sources of Liquidity

Since our inception, our operations have been financed through the sale of our common stock and issuance of debt. Through ~~November~~May 3031, ~~2016~~2017, we had received net proceeds of approximately $~~310~~962,~~801~~500 through the sale of our common stock and issuance of debt to investors. In December of 2015 and January of 2016 we entered into a Convertible Note Agreement with two investors for a total of $60,000. On April 20, 2016 we entered into an unsecured promissory note with Corelli Capital A.G. for the sum of $292,500. We entered into an Equity Line of Credit Agreement with Corelli Capital A.G. on July 12, 2016 from which we realized a total of $200,000. On March 8, 2017 the Company entered into a Convertible Promissory Note with JMJ Financial for up to $500,000. As of ~~November~~May 3031, ~~2016~~2017 the Company has drawn down a total of $100,000. As of May 31, 2017, we had cash and cash equivalents of $~~302~~8,427.

Cash Flows

As of ~~November~~May 3031, ~~2016~~2017, we had $~~302~~8,427 in cash and cash equivalents, compared to $0125,809 on ~~November~~May 3031, ~~2015~~2016.

Net cash used in operating activities was $~~492~~91,~~184~~650 for the ~~nine~~three months ended ~~November~~May 3031, ~~2016~~2017, compared to $22168,~~052~~366 for the ~~nine~~three months ended ~~November~~May 3031, ~~2015~~2016. The ~~increase~~decrease in cash used was primarily due to ~~increased~~decreased operating expenses.

Net cash used in investing activities was $~~9,939~~0 for the ~~nine~~three months ended ~~November~~May 3031, ~~2016~~2017, compared to $08,250 for the ~~six~~three months ended May ~~November 30~~31, ~~2015~~2016. We expect amounts used in investing activities to increase in fiscal year ~~2017~~2018 and beyond as we expand research and development activities and establish our proposed commercial laboratory.

Net cash provided by financing activities during the ~~six~~three months ended ~~November~~May 3031, ~~2016~~2017 was $~~492~~100,~~500~~000, compared to $0292,500 for the ~~six~~ three months ended ~~November~~May 3031, ~~2015~~2016. This is mainly due to proceeds received from ~~notes payable and~~ the ~~equity~~Convertible ~~line~~Promissory ofNote ~~credit~~ with ~~Corelli~~JMJ ~~Capital A~~Financial.G.

Contractual Obligations

As of ~~November~~May 3031, ~~2016~~2017, we had the following contractual commitments:

We are required to make a series of annual minimum royalty payments under the License Agreement with Albert Einstein College of Medicine beginning on the first anniversary date, or March 3, 2015. The initial payment of $30,000, due March 3, 2015 was not made and the second annual payment, due March 3, 2016 was not made. As of the date of this filing the Company has received an advice that payment is due but no formal notice of default from Albert Einstein College of Medicine. The Company plans to pay these minimum royalty payments as soon as adequate funds are available.

For a period of seven years on each anniversary of the first payment, we are required to make additional payments in amounts that gradually increase beginning in year five. We are required to make additional payments of $30,000 in each of 2017 and 2018 and $50,000 in 2019, $75,000 in 2020, and $100,000 in 2021 and every year the License is in effect thereafter.

We currently lease administrative and office space from JLABS @ TMCx at 2450 Holcombe Boulevard, Houston, Texas 77021 on a twelve month lease for an annual cost of $6,000.

We had previously reported that beginning in the second half of calendar 2017, we had intended to enter into arrangements for the acquisition of laboratory equipment, computer hardware and software, leasehold improvements and office equipment. Because of our residence with JLABS @ TMCx, we will have access at a nominal increased lease cost to laboratory facilities and equipment and accordingly will no longer enter into separate arrangements for such equipment.

Item 3 – Quantitative and Qualitative Disclosures About Market Risk

The Company is a smaller reporting Company as defined by Rule 12b-2 of the Securities Act of 1934 and is not required to provide the information under this item.

Item 4 - Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s Principal Executive Officer and Principal Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are not effective in ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the periods specified in the Commission’s rules and forms, and (2) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) no segregation of duties in incompatible functions; and (ii) lack of controls over the financial process, specifically, there are no multiple levels of review. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

Changes in Internal Control over Financial Reporting

We have not made a change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended ~~November~~May 3031, ~~2016~~2017 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

To the best of our knowledge, we are not a party to any legal proceedings that, individually or in the aggregate, are deemed to be material to our financial condition or results of operations.

Item 1A - Risk Factors

Not applicable

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3 - Defaults Upon Senior Securities

No disclosure required.

Item 4 - Mine Safety Disclosures

No disclosure required.

Item 5 - Other Information

No disclosure required.

Item 6 - Exhibits

Index to Exhibits

Exhibit No.		Description

31.1*		Certification of Principal Executive Officer and Principal Financial and Accounting Officer, pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
32.1*		Certification of Principal Executive Officer and Principal Financial and Accounting Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**		XBRL Instance Document.
101.SCH**		XBRL Taxonomy Extension Schema Document.
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF**		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document.

*	Filed herewith
**	Furnished herewith

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.

	Nexus BioPharma, Inc.
Date: April 10, 2017	By:	/s/ Warren Lau
Date: October 27, 2017	By:	/s/ Warren Lau
		Warren Lau, Chief Executive Officer
		(Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer)

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