Item
1. Financial Statements
The
consolidated financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 have not been reviewed
by our independent registered public accounting firm. The consolidated balance sheet as September 30, 2021 has not been audited by our
independent registered public accounting firm.
These
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2022 are not necessarily
indicative of the results that can be expected for the full year.
REGENICIN,
INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEETS
(UNREVIEWED
AND UNAUDITED)
|
March
31,
2022 | |
September
30,
2021 |
|
| (Unreviewed) | | |
| (Unaudited) | |
ASSETS |
| | | |
| | |
CURRENT ASSETS |
| | | |
| | |
Cash |
$ | 1,713 | | |
$ | 1,859 | |
Common
stock of Amarantus |
| 1,975 | | |
| 2,750 | |
Total
current and total assets |
$ | 3,688 | | |
$ | 4,609 | |
LIABILITIES AND STOCKHOLDERS'
DEFICIENCY |
| | | |
| | |
CURRENT LIABILITIES |
| | | |
| | |
Accounts payable |
$ | 85,000 | | |
$ | 93,674 | |
Accrued expenses - other (related
party of $55,845 and
$46,713) |
| 255,921 | | |
| 234,894 | |
Accrued salaries - officers |
| 4,321,501 | | |
| 4,031,001 | |
Promissory note payable |
| 175,000 | | |
| 175,000 | |
Convertible promissory note
- officer |
| 335,683 | | |
| 335,683 | |
Loan payable |
| 10,000 | | |
| 10,000 | |
Loans
payable - officer |
| 99,235 | | |
| 82,235 | |
Total
current liabilities |
| 5,282,340 | | |
| 4,962,487 | |
STOCKHOLDERS' DEFICIENCY |
| | | |
| | |
Series A 8% Convertible Preferred
stock, $0.001 par
value, 5,500,000 shares
authorized; 885,000 issued
and outstanding |
| 885 | | |
| 885 | |
Common stock, $0.001
par value; 200,000,000
shares authorized; 157,911,410
issued and 153,483,050
outstanding |
| 157,914 | | |
| 157,914 | |
Additional paid-in capital |
| 10,208,339 | | |
| 10,208,339 | |
Accumulated deficit |
| (15,641,362 | ) | |
| (15,320,588 | ) |
Less:
treasury stock; 4,428,360 shares
at par |
| (4,428 | ) | |
| (4,428 | ) |
Total
stockholders' deficiency |
| (5,278,652 | ) | |
| (4,957,878 | ) |
Total
liabilities and stockholders' deficiency |
$ | 3,688 | | |
$ | 4,609 | |
See
Notes to Consolidated Financial Statements.
REGElNICIN,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNREVIEWED)
|
Six
Months Ended March 31, 2022 | |
Six
Months Ended March 31, 2021 | |
Three
Months Ended March 31, 2022 | |
Three
Months Ended March 31, 2021 |
|
| |
| |
| |
|
Revenues |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Operating expenses |
| | | |
| | | |
| | | |
| | |
General
and administrative |
| 302,045 | | |
| 376,554 | | |
| 155,513 | | |
| 225,736 | |
Total
operating expenses |
| 302,045 | | |
| 376,554 | | |
| 155,513 | | |
| 225,736 | |
Operating loss before other
operating income |
| (302,045 | ) | |
| (376,554 | ) | |
| (155,513 | ) | |
| (225,736 | ) |
Other
operating income - reversal of accounts payable |
| — | | |
| — | | |
| — | | |
| — | |
Loss
from operations |
| (302,045 | ) | |
| (376,554 | ) | |
| (155,513 | ) | |
| (225,736 | ) |
Other income (expenses) |
| | | |
| | | |
| | | |
| | |
Interest
expense (related party of $4,532 and $3,875) |
| (17,954 | ) | |
| (16,703 | ) | |
| (9,011 | ) | |
| (8,418 | ) |
Change
in unrealized gain (loss) on securities |
| (775 | ) | |
| 75 | | |
| (2,125 | ) | |
| 850 | |
Total
other expenses |
| (18,729 | ) | |
| (16,628 | ) | |
| (11,136 | ) | |
| (7,568 | ) |
Net loss |
| (320,774 | ) | |
| (393,182 | ) | |
| (166,649 | ) | |
| (233,304 | ) |
Preferred
stock dividends |
| (35,303 | ) | |
| (35,303 | ) | |
| (17,458 | ) | |
| (17,458 | ) |
Net
loss attributable to common stockholders |
$ | (356,077 | ) | |
$ | (428,485 | ) | |
$ | (184,107 | ) | |
$ | (250,762 | ) |
Loss per share basic |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
Loss per share diluted |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.00 | ) |
Weighted average number
of shares outstanding basic |
| 153,483,050 | | |
| 153,483,050 | | |
| 153,483,050 | | |
| 153,483,050 | |
Weighted average number
of shares outstanding diluted |
| 153,483,050 | | |
| 153,483,050 | | |
| 153,483,050 | | |
| 153,483,050 | |
See
Notes to Consolidated Financial Statements.
REGENICIN,
INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(UREVIEWED)
|
| |
| |
| |
| |
| |
|
|
| |
|
|
| |
| |
| |
| |
Additional | |
|
|
| |
|
|
Convertible
Preferred Stock | |
Common Stock | |
Paid-in | |
Accumulated |
|
Treasury | |
|
|
Shares | |
Amount | |
Shares | |
Amount | |
Capital | |
Deficit |
|
Stock
(1) | |
Total |
|
| |
| |
| |
| |
| |
|
|
| |
|
Balances at October 1, 2021 |
| 885,000 | | |
$ | 885 | | |
| 157,911,410 | | |
$ | 157,914 | | |
$ | 10,208,339 | | |
$ | (15,320,588 | ) |
|
$ | (4,428 | ) | |
| (4,957,878 | ) |
Net Loss |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (154,125 | ) |
|
| — | | |
| (154,125 | ) |
Balances at December 31, 2021 |
| 885,000 | | |
$ | 885 | | |
| 157,911,410 | | |
$ | 157,914 | | |
$ | 10,208,339 | | |
$ | (15,474,713 | ) |
|
$ | (4,428 | ) | |
| (4,287,276 | ) |
Net Loss |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (166,649 | ) |
|
| — | | |
| (166,649 | ) |
Balances at March 31, 2022 |
| 885,000 | | |
$ | 885 | | |
| 157,911,410 | | |
$ | 157,914 | | |
$ | 10,208,339 | | |
$ | (15,641,362 | ) |
|
$ | (4,428 | ) | |
| (5,278,652 | ) |
Balances
at October 1, 2020 |
| 885,000 | | |
$ | 885 | | |
| 157,911,410 | | |
$ | 157,914 | | |
$ | 10,208,339 | | |
$ | (14,649,986 | ) |
|
$ | (4,428 | ) | |
| (4,287,276 | ) |
Net loss |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (159,878 | ) |
|
| — | | |
| (159,878 | ) |
Balances at December 31, 2020 |
| 885,000 | | |
$ | 885 | | |
| 157,911,410 | | |
$ | 157,914 | | |
$ | 10,208,339 | | |
$ | (14,809,864 | ) |
|
$ | (4,428 | ) | |
| (4,447,154 | ) |
Net Loss |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (233,304 | ) |
|
| — | | |
| (233,304 | ) |
Balances at March 31, 2021 |
| 885,000 | | |
$ | 885 | | |
| 157,911,410 | | |
$ | 157,914 | | |
$ | 10,208,339 | | |
$ | (15,208,339 | ) |
|
$ | (4,428 | ) | |
| (4,680,458 | ) |
(1) The number of shares in treasury
stock for all periods presented was 4,428,360.
See
Notes to Consolidated Financial Statements.
REGENICIN,
INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNREVIEWED)
|
Six
Months Ended
March 31, | |
Six
Months Ended
March 31, |
|
2022 | |
2021 |
|
| |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
| | | |
| | |
Net loss |
$ | (320,774 | ) | |
$ | (393,182 | ) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
| | | |
| | |
Unrealized loss on investment |
| 775 | | |
| (75 | ) |
Accrued interest on loans
and notes payable |
| 17,954 | | |
| 16,703 | |
Changes in operating assets
and liabilities |
| | | |
| | |
Accounts payable |
| (8,676 | ) | |
| 13,514 | |
Accrued expenses - other |
| 3,075 | | |
| 60,000 | |
Accrued
salaries - officers |
| 290,500 | | |
| 290,500 | |
Net cash
used in operating activities |
| (17,146 | ) | |
| (12,540 | ) |
CASH FLOWS FROM FINANCING
ACTIVITIES |
| | | |
| | |
Proceeds of loans from officers |
| 17,000 | | |
| 12,500 | |
Net cash
provided by financing activities |
| 17,000 | | |
| 12,500 | |
NET DECREASE IN CASH |
| (146 | ) | |
| (40 | ) |
CASH - BEGINNING OF PERIOD |
| 1,859 | | |
| 1,366 | |
CASH - END OF PERIOD |
$ | 1,713 | | |
$ | 1,326 | |
Supplemental disclosures of
cash flow information: |
| | | |
| | |
Cash
paid for interest |
$ | — | | |
$ | — | |
Cash
paid for taxes |
$ | — | | |
$ | — | |
See
Notes to Consolidated Financial Statements.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED )
NOTE
1 - THE COMPANY
Regenicin,
Inc. ("Regenicin"), formerly known as Windstar, Inc., was incorporated in the state of Nevada on September
6, 2007. On July 19, 2010, the Company amended
its Articles of Incorporation to change the name of the Company to Regenicin, Inc. In September 2013, Regenicin formed a new wholly-owned
subsidiary for the sole purpose of conducting research in the State of Georgia (together, the "Company"). The subsidiary has
no activity since its formation due to the lack of funding. The Company's business plan is to develop and commercialize a potentially
lifesaving technology by the introduction of tissue-engineered skin substitutes to restore the qualities of healthy human skin for use
in the treatment of burns, chronic wounds and a variety of plastic surgery procedures.
NOTE
2 - BASIS OF PRESENTATION
Interim
Financial Statements:
The
accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles
(“U.S. GAAP”) for interim financial information and with Rule 8-03 of Regulation S-X. Accordingly, they do not include all
of the information and note disclosures required by generally accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting only of those of a recurring nature) considered necessary for a fair presentation
have been included. Operating results for the six months ended March 31, 2022, are not necessarily indicative of the results that may
be expected for the year ending September 30, 2022. These unaudited consolidated financial statements should be read in conjunction with
the unaudited consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K/A for the
year ended September 30, 2021, as filed with the Securities and Exchange Commission. The consolidated balance sheet as of September 30,
2021, contained herein has been derived from the unaudited consolidated financial statements as of September 30, 2021, but does not include
all disclosures required by U.S. GAAP.
Going
Concern:
The
Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates
the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred recurring losses
and as of December 31, 2022, has an accumulated deficit of approximately $15.6 million from inception, expects to incur further losses
in the development of its business and has been dependent on funding operations through the issuance of convertible debt and private
sale of equity securities. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Currently
management plans to finance operations through the private or public placement of debt and/or equity securities. However, no assurance
can be given at this time as to whether the Company will be able to obtain such financing. The consolidated financial statements do not
include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
Financial
Instruments and Fair Value Measurement:
As
of October 1, 2018, the Company adopted ASU No. 2016-01, “Financial Instruments-Overall: Recognition and Measurement of Financial
Assets and Financial Liabilities”. The new standard principally affects accounting standards for equity investments, financial
liabilities where the fair value option has been elected, and the presentation and disclosure requirements for financial instruments.
Upon the effective date of the new standards, all equity investments in unconsolidated entities, other than those accounted for using
the equity method of accounting, will generally be measured at fair value through earnings. There no longer is an available-for-sale
classification and therefore, no changes in fair value will be reported in other comprehensive income (loss) for equity securities with
readily determinable fair values. As a result of the adoption, the Company recorded a cumulative effect adjustment of a $950 decrease
to accumulated other comprehensive income, and a corresponding decrease to accumulated deficit, as of October 1, 2018.
Common
stock of Amarantus BioScience Holdings, Inc. (“Amarantus”) is carried at fair value in the accompanying consolidated balance
sheets. Fair value is determined under the guidelines of GAAP which defines fair value, establishes a framework for measuring fair value
and expands disclosures about fair value measurements. Realized gains and losses, determined using the first-in, first-out (FIFO) method,
and unrealized gains and losses are included in other income (expense) on the statement of operations.
The
common stock of Amarantus is valued at the closing price reported on the active market on which the security is traded. This valuation
methodology is considered to be using Level 1 inputs. The total value of Amarantus common stock at March 31, 2022 is $1,975.
The change in unrealized gain (loss) for the six and three months ended March 31, 2022 and 2021 was ($775),
$75,
($2,125)
and $850
net of income taxes, respectively, and was reported
as other income (expense).
Recently
Issued Accounting Pronouncements:
Any
recent pronouncements issued by the FASB or other authoritative standards groups with future effective dates are either not applicable
or are not expected to be significant to the consolidated financial statements of the Company.
NOTE
3 - LOSS PER SHARE
Basic
loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted
loss per share gives effect to dilutive convertible securities, options, warrants and other potential common stock outstanding during
the period; only in periods in which such effect is dilutive.
The
following weighted average securities have been excluded from the calculation even though the exercise price was less than the average
market price of the common shares because the effect of including these potential shares was anti-dilutive due to the net losses incurred
during 2022 and 2021:
|
2022 | |
2021 |
Options |
| 11,771,344 | | |
| 11,771,344 | |
Convertible
Preferred Stock |
| 8,850,000 | | |
| 8,850,000 | |
Convertible
Promissory Note |
| 19,072,770 | | |
| 16,784,150 | |
|
| 39,694,114 | | |
| 37,405,494 | |
NOTE
4 – LOANS PAYABLE
Convertible
Promissory Note – Officer
Through
March 31, 2020, John Weber, the Company's Chief Financial Officer, advanced the Company a total of $335,683.
On March 31, 2020, these advances were converted into a convertible promissory note. Interest on the note is computed at 5%
per annum and accrues from the time of the advances
until the maturity date. The original maturity date was September 30, 2020, at which time all the accrued interest and principal became
due. The note has been extended several times and most recently to September
30, 2022. For the six and three months ended
March 31, 2022 and 2021 interest totaling $9,132, $4,600, $7,997 and $3,874, respectively, as incurred. Accrued interest on the note
was $55,845 and
$46,713 at
March 31, 2022 and September 30, 2021, respectively, which is included in accrued expenses on the accompanying consolidated balance sheets.
The note is convertible at the option of Mr. Weber into shares of the Company's common stock at the prevailing market rate on the date
of conversion.
Loan
Payable
In
February 2011, an investor advanced $10,000. The loan does not bear interest and is due on demand. At both March 31, 2022 and September
30, 2021, the loan payable totaled $10,000.
Loans
Payable - Officer:
Through
September 30, 2020, J. Roy Nelson, the Company’s Chief Science Officer, made net advances to the Company totaling $26,935.
The loans do not bear interest and are due on demand.
In
September 2018, Randall McCoy, the Company’s Chief Executive Officer, advanced to the Company $4,500.
The loan does not bear interest and is due on demand.
From
July 2020 through March 31, 2022, John Weber, the Company’s Chief Financial Officer, advanced to the Company $61,300. The loan
bears interest at 5% per annum and is due on demand.
NOTE
5 - BRIDGE FINANCING
On
December
21, 2011, the Company issued a $150,000
promissory note to an individual. The note bore
interest so that the Company would repay $175,000 on the maturity date of June
21, 2012. Additional interest of 10%
was charged on any late payments. The note was not paid at the maturity date and the Company is incurring additional interest as described
above. At both March 31, 2022 and September 30, 2021, the note balance was $175,000.
Interest expense was $4,411
for both quarters ended March 31, 2022 and 2021.
Accrued interest on the note was $171,260
and $162,438
as of March 31, 2022 and September 30, 2021,
respectively, and is included in Accrued expenses - other in the accompanying consolidated balance sheets.
NOTE
6 - INCOME TAXES
The
Company recorded no income tax expense for the six months ended March 31, 2022 and 2021 because the estimated annual effective tax rate
was zero. As of March 31, 2022, the Company continues to provide a valuation allowance against its net deferred tax assets since the
Company believes it is more likely than not that its deferred tax assets will not be realized.
NOTE
7 – STOCKHOLDERS' DEFICIENCY
Series
A
At
both March 31, 2022 and September 30, 2021, 885,000
shares of Series A Preferred Stock (“Series
A Preferred”) were outstanding.
Series
A Preferred pays a dividend of 8%
per annum on the stated value and has a liquidation
preference equal to the stated value of the shares ($885,000 liquidation preference as of March 31, 2022 and September 30, 2021 plus
dividends in arrears as per below). Each share of Series A Preferred Stock has an initial stated value of $1.00
and is convertible into shares of the Company’s
common stock at the rate of 10 for 1.
The
Series A Preferred Stock was marketed through a private placement memorandum that included a reference to a ratchet provision which would
have allowed the holders of the stock to claim a better conversion rate based on other stock transactions conducted by the Company during
the three-year period following the original issuance of the shares. The Certificate of Designation does not contain a ratchet provision.
Certain of the stock related transactions consummated by the Company during this time period may have triggered this ratchet provision,
and thus created a claim by holders of the Series A Preferred Stock who purchased based on this representation for a greater conversion
rate than initially provided. There have been no new developments related to the remaining Series A holders regarding this claim and
the conversion rate of their Series A Preferred Stock. Changes to the preferred stock conversion ratio may result in modification or
extinguishment accounting. That may result in a deemed preferred stock dividend which would reduce net income available to common stockholders
in the calculation of earnings per share. Certain of the smaller Series A holders have already converted or provided notice of conversion
of their shares. In respect of this claim, the Company and its outside counsel determined that it is not possible to offer an opinion
regarding the outcome. An adverse outcome could materially increase the accumulated deficit.
The
dividends are cumulative commencing on the issue date when and if declared by the Board of Directors. As of March 31, 2022, and September
30, 2021, dividends in arrears were $782,533
($.88 per share) and $747,232
($.84 per share), respectively.
Series
B
Four
million (4,000,000)
shares of Series B Convertible Preferred Stock
(“Series B Preferred”) have been authorized with a liquidation preference of $2.00
per share. Each share of Series B Preferred is
convertible into ten shares of common stock. Holders of Series B Preferred have a right to a dividend (pro-rata to each holder) based
on a percentage of the gross revenue earned by the Company in the United States, if any, and the number of outstanding shares of Series
B Preferred, as follows: Year 1 - Total Dividend to all Series B holders = .03 x Gross Revenue in the U.S. Year 2 - Total Dividend to
all Series B holders = .02 x Gross Revenue in the U.S. Year 3 - Total Dividend to all Series B holders = .01 x Gross Revenue in the U.S.
At March 31, 2022, no shares of Series B Preferred are outstanding.
NOTE
8 - STOCK-BASED COMPENSATION
The
Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance
with FASB ASC 505, “Equity.” Costs are measured at the estimated fair value of the consideration received or the estimated
fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration
other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of
goods or services as defined by ASC 505.
NOTE
9 - RELATED PARTY TRANSACTIONS
The
Company’s principal executive offices are located in Little Falls, New Jersey. The headquarters is located in the offices of McCoy
Enterprises LLC, an entity controlled by Mr. McCoy. The office is attached to his residence but has its own entrances, restroom and kitchen
facilities.
The
Company also maintains an office at Carbon & Polymer Research Inc. ("CPR") in Pennington, New Jersey, which is the Company's
materials and testing laboratory. An officer of the Company is an owner of CPR.
No
rent is charged for either premises.
On
May 16, 2016, the Company entered into an agreement with CPR in which CPR will supply the collagen scaffolds used in the Company's production
of the skin tissue. The contract contains a most favored customer clause guaranteeing the Company prices equal or lower than those charged
to other customers. The Company has not yet made purchases from CPR.
See
Note 4 for loans payable to related parties.
NOTE
10 - SUBSEQUENT EVENTS
Management
has evaluated subsequent events through the date of this filing.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives,
and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,”
“project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,”
“plan,” “may,” “will,” “would,” “will be,” “will continue,” “will
likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions
for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for
purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions
that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements.
Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a
material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic
conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles.
These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed
on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. Further information concerning our business, including additional factors that could materially
affect our financial results, is included herein and in our other filings with the SEC.
Overview
During
the quarter ended, March 31, 2022, the Company continued to position its product, NovaDerm®, to enter clinical trials
to gain FDA product approval. Having secured Orphan Drug Designation as a biologic for NovaDerm®, we complied with all
FDA annual reporting requirements.
As
part of the initial asset purchase agreement of Permaderm®, we granted Amarantus Bioscience Holdings, Inc., a right of first refusal
for the purchase of any engineered skin technology designed for treatment of severe burns in humans that we developed. This right of
first refusal expired during on November 2019. The proceeds of this transaction provided needed working capital to greatly improve
our product, conduct independent research and secure Orphan Status for NovaDerm®.
Recently,
the risk of introducing pathogens when using materials from animals to produce drugs, devices, and biologics has increased awareness
of the safety issues. NovaDerm® and future Regenicin products use animal sourced materials like collagen to produce
the life-saving products. We have worked with our collagen supplier and the FDA to ensure we are meeting the expectations for traceability
and purity of the FDA for NovaDerm® production. We have arranged for sufficient Bovine Closed Herd corium
to produce sufficient collagen scaffolds to meet our needs for the clinical trials, ensuring compliance with FDA requirements.
Our
major objective for 2022 is to secure the required funding to finalize some additional requirements of the IND application and begin
the clinical trials. As previously reported, our goal in obtaining the required funding has been to minimize shareholders’ dilution
as much as possible. Consequently, we are primarily pursuing financing through the issuance of debt instruments, international licensing
agreements, governmental grants and sale of assets. We have completed all the administrative requirements to allow us to apply for grants.
Regenicin is now registered with System For Award Management (“SAM”) which is required to do business with the US Government.
We must have our IND submitted before we can request financial assistance from the US FDA Office of Orphan Products Clinical Trials
Grant. We intend to take full advantage of working with OOPD to develop our clinical protocol according to suggestions from the FDA during
our Pre-IND meeting.
The
Orphan Drug Act created the Orphan Product Grants Program, which is administered by OOPD, to stimulate the development of promising products
for rare diseases and conditions. Orphan product grants are a proven method of fostering and encouraging the development of new safe
and effective medical products for rare diseases and conditions. These grants support new and continuing extramural research projects
that test the safety and efficacy of promising new drugs, biologics, devices, and medical foods through human clinical trials in very
vulnerable populations often with life-threatening conditions.
As
a registered member of SAM we will be investigating numerous government programs to seek developmental funding needed to complete our
IND.
We
estimated that the completion of the IND and the clinical trials would take approximately 12-18 months and cost in the range of $6.9
million once initial funding is in place. It is estimated that the cost to finalize the IND will be approximately 1.9 million, and the
cost to complete Phase 1/2 of the clinical trial will be approximately 5.0 million. In addition to the completion of the IND, the only
other significant gating item to entering the clinical trials is funding for this process.
Two
board positions remain open anticipating requests of Board representation from potential investors.
Importantly,
we are filing this quarterly report without our auditor’s review of our financial information or this report. Our reason for doing
this is simply that we cannot afford at this time to pay our auditor for past due services or prior filings or to pay the costs necessary
for this current filing. Instead, we have provided herein information as typically presented in our 10Q quarterly report, including financial
information, which has not been reviewed or audited by any independent outside source.
We
intend, if and when able, to file an amendment to this 10Q and previously filed 10K with such audited and reviewed information. We are
unaware at this time when, if ever, we will obtain the necessary funding for this amended filing, but we will continue to provide such
information to investors as and when we are able through either this SEC EDGAR filing process and/or through postings on our website
as things change.
Subject
to funding, the initial trials are planned to begin with a total of ten subjects and an Initial Data Safety Monitoring Board, (DSMB),
review of safety on the first three subjects once they have reached 6 months follow-up. We do not intend to interrupt our trial waiting
for the DSMB report. Our management’s approach is to set up the trials so as to allow for a seamless transition into commercial
production upon approval.
Our
first cultured skin substitute product candidate, NovaDerm®, is a multi-layered tissue-engineered living skin prepared
by utilizing autologous (patient’s own) skin cells. It is a graftable cultured epithelium skin substitute containing both epidermal
and dermal components with a collagen base. Clinically, we expect our Cultured Skin substitute self-to-self skin graft product will perform
the same as split thickness allograft skin. Our Autologous cultured skin substitute should not be rejected by the immune system of the
patient, unlike porcine or cadaver cellular grafts. Immune system rejection is a serious concern in Xeno-transplant procedures which
have a cellular component. The use of our cultured skin substitute should not require any specialized physician training because it is
applied the same as in a standard split thickness allograft procedure.
NovaDerm® does
not require the large harvest areas that are required when performing split thickness allograft procedures. NovaDerm® is
designed to need only a small area of harvest material to cover the wound. Where split thickness allograft skin can be stretched 2 to
4 times, NovaDerm® can expand the coverage 100 to 400 times, greatly reducing scarring from harvesting. There are limits to
how much burned area can be covered with the current split thickness allograft procedure. When a patient has more than 50% of their body
with full thickness burns there is not enough harvest area available to cover the area so the same area harvested must be allowed to
grow back the replacement skin before it can be harvested the second or third time, allowing to wound area to open with high risk of
infection and even mortality.
Clinically
speaking, a product designed to treat a life-threatening condition must be available for the patient when needed. Our Culture skin substitute
is being developed to be ready to apply to the patient when the patient is ready for grafting, within the first month of the patient
being admitted to the hospital. Patients with serious burn injuries may not be in a condition to be grafted on a predefined schedule
made more than a month in advance. Therefore, in order to accommodate the patient’s needs, we are striving to ensure that our cultured
skin substitute will have an adequate shelf life and manufacturing schedule to ensure it is available whether the patient needs it the
first month, or any day after, until the patient’s wound is completely covered and closed. We intend to provide the patient enough
NovaDerm® to meet the patients’ needs in a single lot of material with adequate shelf life to be available when the patient
is ready. With our extended shelf life and enough material in the first shipment the physician may perform a second grafting 5 or ten
days post grafting period 1.
We
believe this technology has many different uses beyond the burn indication. The other uses may include chronic wounds, reconstructive
surgery.
We,
as aforementioned, are continuing to work with potential investors in order to secure the necessary funding based on our stated objectives.
It has taken longer to raise the necessary funds than original estimated; however remain confident. For the past several years, officers
and related parties have continued to fund our essential operating costs on a temporary basis, as discussed in the accompanying financial
statements.
On
January 21, 2022, we entered into a non- binding memorandum of terms in which we proposed to sell certain of our prime assets to a newly
formed Limited Liability Company for a combination of an upfront purchase price, and intellectual property, royalty and milestone payments.
The terms of this non binding arrangement are subject to our entering into an actual binding agreement, as well as, upon a number of
conditions, including the Buyer’s due diligence investigation. The arrangement only requires us to cease and desist from any further
discussions for the sale of the proposed assets, other than with the proposed Buyers, during an ‘exclusivity period’ lasting
for between 90-120 days. We have not verified the Buyer’s willingness or ability to proceed on this arrangement and note that such
arrangements are highly speculative and do not require either part to proceed.
Results
of Operations for the Three Months Ended March 31, 2022 and 2021
We
generated no revenues from September 6, 2007 (date of inception) to March 31, 2022. We do not expect to generate revenues until we are
able to obtain FDA approval of our product and thereafter successfully market and sell the product.
We
incurred operating expenses of $155,513 for the three months ended March 31, 2022, compared with operating expenses of $225,736 for the
three months ended March 31, 2021. General and Administrative expenses accounted for all of our operating expenses for the three months
ended March 31, 2022. The significant decrease in operating expenses for the three months ended March 31, 2022 was due to an over accrual
of professional fees as of March 31, 2021, which was adjusted in subsequent filings.
Net
other expense was $11,136 for the three months ended March 31, 2022, as compared to net other expense of $7,568 for the three months
ended March 31, 2021. Other expenses for the three months ended March 31, 2022 consisted of interest expense of $9,011 and an unrealized
loss on securities of $ 2,125. Other income and expense for the same period ended 2021 consisted of interest expense of $8,418, and an
unrealized gain on securities of $850.
After
provision for preferred stock dividends of $17,845, we recorded net loss of $184,107 for the three months ended March 31, 2022. By comparison,
we recorded net loss of $250,762 for the three months ended March 31, 2021. The decrease in net loss for the quarter ended March 31,
2022 was primarily the result of the aforementioned over accrual of professional fees at March 31, 2021, which was adjusted in subsequent
filings.
Liquidity
and Capital Resources
As
of March 31, 2022, we had cash of $1,713 and total current assets of $3,688. As of March 31, 2022, we had current liabilities of $5,282,340.
We therefore had working capital deficit of $5,278,652.
Operating
activities used $17,146 in cash for the three months ended March 31, 2022. This use of cash was primarily attributable to funding the
loss for the period.
There
were no investing activities during the reported period.
Cash
flows from financing activities for the three months ended March 31, 2022 represents net proceeds from a loan from John Weber, the Company’s
Chief Financial Officer of $17,000.
We
have issued various promissory notes to meet our short term demands, the terms of which are provided in the notes to the consolidated
financial statements accompanying this report. While this source of bridge financing has been helpful in the short term to meet our financial
obligations, we will need additional financing to fund our operations, continue with the FDA approval process, and implement our business
plan. Our long term financial needs are estimated at about $8-10 million.
Based
upon our current financial condition, we do not have sufficient cash to operate our business at the current level for the next twelve
months. We intend to fund operations through increased debt and/or equity financing arrangements, which may be insufficient to fund expenditures
or other cash requirements. We plan to seek additional financing in a private equity or debt offering to secure funding for operations.
Alternatively, we have been discussing the possibility of obtaining financing through a merger and/or other arrangements related to combining
with other related companies or going private transactions. There can be no assurance that we will be successful in raising additional
funding or in entering into any of these sorts of arrangements. If we are not able to secure additional funding, the implementation of
our business plan will be impaired. There can be no assurance that such additional financing will be available to us on acceptable terms
or at all.
Off
Balance Sheet Arrangements
As
of March 31, 2022, there were no off-balance sheet arrangements.
Going
Concern
Our
consolidated financial statements have been prepared assuming that we will continue as a going concern which contemplates the realization
of assets and satisfaction of liabilities in the normal course of business. We have incurred operating losses from inception, expect
to incur further losses in the development of our business, and have been dependent on funding operations through the issuance of convertible
debt and private sale of equity securities. These conditions raise substantial doubt about our ability to continue as a going concern.
Management’s plans include continuing to finance operations through the private or public placement of debt and/or equity securities
and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives.
The consolidated financial statements do not include any adjustment relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.