UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
[X]
|
Quarterly
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
For
the quarterly period ended
June 30, 2012
|
|
|
[
]
|
Transition
Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
|
|
|
|
For
the transition period from
to
__________
|
|
|
|
Commission
File Number:
333-146834
|
Regenicin,
Inc.
(Exact name of registrant as specified in its charter)
Nevada
|
27-3083341
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
10
High Court, Little Falls, NJ
|
(Address
of principal executive offices)
|
(646)
403 3581
|
(Registrant’s
telephone number)
|
|
_______________________________________________________________
|
(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 [ ] Yes [X] 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). [ ] Yes [X] No
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company.
[
] Large accelerated filer Accelerated filer
|
[
] Non-accelerated filer
|
[X]
Smaller reporting company
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
State
the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 87,835,647
shares as of August 20, 2012.
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements
Our
financial statements included in this Form 10-Q are as follows:
These
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 June 30, 2012 are not necessarily
indicative of the results that can be expected for the full year.
REGENICIN,
INC.
(A Development
Stage company)
BALANCE
SHEETS
|
|
June
30,
|
|
September
30,
|
|
|
2012
|
|
2011
|
|
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
28,924
|
|
|
$
|
4,396
|
|
Prepaid
expenses and other current assets
|
|
|
13,387
|
|
|
|
73,630
|
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
42,311
|
|
|
|
78,026
|
|
|
|
|
|
|
|
|
|
|
Intangible
assets
|
|
|
3,007,500
|
|
|
|
3,007,500
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
3,049,811
|
|
|
$
|
3,085,526
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
1,688,241
|
|
|
$
|
739,327
|
|
Accrued
expenses
|
|
|
1,037,006
|
|
|
|
658,251
|
|
Note
payable - insurance financing
|
|
|
—
|
|
|
|
60,243
|
|
Bridge
financing (net of discount of $231,430 and -0-)
|
|
|
539,970
|
|
|
|
—
|
|
Loan
payable
|
|
|
68,000
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
3,333,217
|
|
|
|
1,467,821
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
3,333,217
|
|
|
|
1,467,821
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
Series
A 10% Convertible Preferred stock, $0.001 par value, 5,500,000 shares authorized; 1,345,000 issued and outstanding
|
|
|
1,345
|
|
|
|
1,345
|
|
Common
stock, $0.001 par value; 200,000,000 shares authorized; 92,264,007 and 88,236,324 issued, respectively; 83,807,964
and 83,807,964 outstanding, respectively
|
|
|
88,237
|
|
|
|
88,237
|
|
Common stock to be issued;
4,027,683 and -0- shares
|
|
|
207,634
|
|
|
|
—
|
|
Additional
paid-in capital
|
|
|
7,085,809
|
|
|
|
6,573,794
|
|
Deficit
accumulated during development stage
|
|
|
(7,662,003
|
)
|
|
|
(5,041,243
|
)
|
Less:
treasury stock; 4,428,360 shares at par
|
|
|
(4,428
|
)
|
|
|
(4,428
|
)
|
|
|
|
|
|
|
|
|
|
Total
stockholders' equity
|
|
|
(283,406
|
)
|
|
|
1,617,705
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders' equity
|
|
$
|
3,049,811
|
|
|
$
|
3,085,526
|
|
See Notes
to Financial Statements.
REGENICIN,
INC.
(A Development
Stage company)
STATEMENTS
OF OPERATIONS
|
|
|
|
|
|
September
6, 2007
|
|
|
|
|
|
|
Nine
Months
|
|
Nine
Months
|
|
(Inception
Date)
|
|
Three
Months
|
|
Three
Months
|
|
|
Ended
|
|
Ended
|
|
Through
|
|
Ended
|
|
Ended
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2012
|
|
2011
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
964,817
|
|
|
|
—
|
|
|
|
1,483,717
|
|
|
|
94,958
|
|
|
|
—
|
|
General
and administrative
|
|
|
1,172,239
|
|
|
|
2,235,061
|
|
|
|
4,182,962
|
|
|
|
411,254
|
|
|
|
731,206
|
|
Stock
based compensation - general and administrative
|
|
|
—
|
|
|
|
899,314
|
|
|
|
1,248,637
|
|
|
|
—
|
|
|
|
43,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
2,137,056
|
|
|
|
3,134,375
|
|
|
|
6,915,316
|
|
|
|
506,212
|
|
|
|
774,529
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(2,137,056
|
)
|
|
|
(3,134,375
|
)
|
|
|
(6,915,316
|
)
|
|
|
(506,212
|
)
|
|
|
(774,529
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, including amortization of beneficial conversion feature
|
|
|
(483,706
|
)
|
|
|
(32,875
|
)
|
|
|
(746,687
|
)
|
|
|
(243,766
|
)
|
|
|
(28,822
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Expenses
|
|
|
(483,706
|
)
|
|
|
(32,875
|
)
|
|
|
(746,687
|
)
|
|
|
(243,766
|
)
|
|
|
(28,822
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(2,620,762
|
)
|
|
|
(3,167,250
|
)
|
|
|
(7,662,003
|
)
|
|
|
(749,978
|
)
|
|
|
(803,351
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock dividends
|
|
|
(81,013
|
)
|
|
|
(1,332,444
|
)
|
|
|
(1,452,123
|
)
|
|
|
(26,826
|
)
|
|
|
(1,332,444
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attibutable to common stockholders
|
|
$
|
(2,701,775
|
)
|
|
$
|
(4,499,694
|
)
|
|
$
|
(9,114,126
|
)
|
|
$
|
(776,804
|
)
|
|
$
|
(2,135,795
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per share:
|
|
$
|
(0.03
|
)
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
84,846,355
|
|
|
|
85,022,991
|
|
|
|
|
|
|
|
86,934,548
|
|
|
|
83,807,964
|
|
See Notes
to Financial Statements.
REGENICIN,
INC.
(A Development
Stage company)
STATEMENTS
OF CASH FLOWS
|
|
|
|
|
|
September
6, 2007
|
|
|
Nine
Months
|
|
Nine
Months
|
|
(Inception
Date)
|
|
|
Ended
|
|
Ended
|
|
Through
|
|
|
June
30,
|
|
June
30,
|
|
June
30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(2,620,762
|
)
|
|
$
|
(3,167,250
|
)
|
|
$
|
(7,662,003
|
)
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of debt discount
|
|
|
56,250
|
|
|
|
—
|
|
|
|
56,250
|
|
Accrued
interest on notes and loans payable
|
|
|
61,778
|
|
|
|
—
|
|
|
|
61,778
|
|
Amortization
of beneficial conversion feature
|
|
|
353,946
|
|
|
|
—
|
|
|
|
605,160
|
|
Warrants
issued as part of debt conversion
|
|
|
7,653
|
|
|
|
—
|
|
|
|
7,653
|
|
Stock
based compensation
|
|
|
—
|
|
|
|
899,314
|
|
|
|
1,248,637
|
|
Changes
in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Prepaid
expenses and other current assets
|
|
|
60,243
|
|
|
|
(93,018
|
)
|
|
|
46,854
|
|
Accounts
payable
|
|
|
948,914
|
|
|
|
433,446
|
|
|
|
1,688,241
|
|
Accrued
expenses
|
|
|
263,059
|
|
|
|
212,648
|
|
|
|
898,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities
|
|
|
(868,919
|
)
|
|
|
(1,714,860
|
)
|
|
|
(3,048,588
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,007,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash used in investing activities
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,007,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from the sale of common stock
|
|
|
—
|
|
|
|
467,550
|
|
|
|
3,012,575
|
|
Proceeds
from the sale of Series A convertible preferred stock
|
|
|
—
|
|
|
|
1,165,000
|
|
|
|
1,180,000
|
|
Payments
of expenses relating to the sale of common stock
|
|
|
—
|
|
|
|
(75,777
|
)
|
|
|
(444,910
|
)
|
Payment
of expenses relating to the sale of convertible preferred stock
|
|
|
—
|
|
|
|
(9,600
|
)
|
|
|
(9,600
|
)
|
Repayments
of notes payable - insurance financing
|
|
|
(60,243
|
)
|
|
|
—
|
|
|
|
(60,243
|
)
|
Proceeds
from the issuance of notes payable
|
|
|
905,690
|
|
|
|
115,000
|
|
|
|
1,920,690
|
|
Repayments
of notes payable
|
|
|
(10,000
|
)
|
|
|
(235,000
|
)
|
|
|
(245,000
|
)
|
Proceeds
from advances from related party
|
|
|
58,000
|
|
|
|
189,211
|
|
|
|
564,000
|
|
Proceeds
from loans payable
|
|
|
—
|
|
|
|
145,000
|
|
|
|
145,000
|
|
Proceeds
from advances from officer
|
|
|
—
|
|
|
|
—
|
|
|
|
22,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities
|
|
|
893,447
|
|
|
|
1,761,384
|
|
|
|
6,085,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCREASE
IN CASH
|
|
|
24,528
|
|
|
|
46,524
|
|
|
|
28,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
- BEGINNING OF PERIOD
|
|
|
4,396
|
|
|
|
4,564
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
- END OF PERIOD
|
|
$
|
28,924
|
|
|
$
|
51,088
|
|
|
$
|
28,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
2,019
|
|
|
$
|
6,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock dividends
|
|
$
|
81,013
|
|
|
$
|
1,332,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued upon conversion of debt and accrued interest
|
|
$
|
207,634
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of warrants upon conversion of debt
|
|
$
|
7,653
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for the conversion of amounts owed to related party
|
|
$
|
—
|
|
|
$
|
506,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of notes payable into Series A convertible preferred stock
|
|
$
|
—
|
|
|
$
|
165,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury
stock
|
|
$
|
—
|
|
|
$
|
4,428
|
|
|
|
|
|
See
Notes to Financial Statements.
REGENICIN,
INC.
NOTES
TO THE FINANCIAL STATEMENTS
(A
Development Stage Company)
(UNAUDITED)
NOTE
1 - THE COMPANY
Windstar,
Inc. (the “Company”) was incorporated in the state of Nevada on September 6, 2007 and is in the development stage. On July
19, 2010, the Company amended its Articles of Incorporation to change the name of the Company to Regenicin, Inc.
The
Company’s original business was the development of a purification device. Such business was assigned to the Company’s
former management in July 2010.
The
Company has adopted a new business plan and intends to help 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. To this end, the Company has entered into an agreement with
Lonza Walkersville, Inc. (Lonza”) for the exclusive license to use certain proprietary know-how and information necessary
to develop and seek approval by the U.S. Food and Drug Administration (“FDA”) for the commercial sale of a product
known as PermaDerm.
PermaDerm
is a tissue-engineered skin substitute prepared from autologous (patient’s own) skin cells. It is a combination of cultured
epithelium with a collagen-fibroblast implant that produces a skin substitute that contains both epidermal and dermal components.
This model has been shown in preclinical studies to generate a functional skin barrier and in clinical studies to promote closure
and healing of burns. Clinically, the Company believes that self-to-self skin grafts for permanent skin tissue will not be rejected
by the immune system of the patient, unlike with porcine or cadaver grafts in which rejection is an important possibility.
NOTE
2 - BASIS OF PRESENTATION
The
accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles
for interim financial information and with Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating
results for the nine and three months ended June 30, 2012 are not necessarily indicative of the results that may be expected for
the year ending September 30, 2012. These unaudited financial statements should be read in conjunction with the audited financial
statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended September 30, 2011, as
filed with the Securities and Exchange Commission.
Going
Concern:
The
Company’s 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 cumulative
losses of approximately $7.7 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. 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 the Company will be able to achieve these objectives. The 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.
Development
Stage Activities and Operations:
The
Company is in the development stage and has had no revenues. A development stage company is defined as one in which
all efforts are devoted substantially to establishing a new business and even if planned principal operations have commenced,
revenues are insignificant.
Recent
Pronouncements:
Management
does not believe that any of the recently issued, but not yet effective, accounting standards if currently adopted would have
a material effect on the accompanying financial statements.
Certain expenses were reclassified in 2011 to conform to
the 2012 presentation. There was no effect to the net loss for the nine and three months ended June 30, 2011.
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 give 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 securities have been excluded from the calculation
of net loss per share, as their effect would be anti-dilutive:
|
|
Shares of Common Stock
|
|
|
Issuable upon Conversion/Exercise
|
|
|
as
of June 30,
|
|
|
2012
|
|
2011
|
Options
|
|
|
5,542,688
|
|
|
|
5,542,688
|
|
Warrants
|
|
|
1,269,842
|
|
|
|
2,300,067
|
|
Convertible preferred stock
|
|
|
28,554,000
|
|
|
|
13,300,000
|
|
Convertible debentures
|
|
|
12,660,273
|
|
|
|
-0-
|
|
NOTE
4 - INTANGIBLE ASSETS
In
July 2010, the Company entered into an agreement with Lonza for the exclusive license to use certain proprietary know-how and
information necessary to develop and seek approval by the U.S. Food and Drug Administration (FDA”) for the commercial sale
of a product known as PermaDerm.
The
Company paid Lonza $3,000,000 for the exclusive know-how license and assistance to seek approval from the FDA for the commercial
sale of PermaDerm in the U.S., and later for approval in foreign jurisdictions for commercial sale of PermaDerm throughout the
world. In conjunction with Lonza, the Company intends to create and implement a strategy to conduct human clinical trials and
to assemble and present the relevant information and data in order to obtain the necessary approvals for PermaDerm and possible
related products.
In
August 2010, the Company paid $7,500 and obtained the rights to the trademarks PermaDerm® and TempaDerm® from KJR-10 Corp.
Intangible
assets, which include purchased licenses, patents and patent rights, are stated at cost and will be amortized using the straight-line
method over their useful lives based upon the pattern in which the expected benefits will be realized, or on a straight-line basis,
whichever is greater.
Management
reviews intangible assets subject to amortization whenever events or changes in circumstances indicate that the carrying amount
of such an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amount to
the future undiscounted cash flows the assets are expected to generate. If such assets are considered impaired, the impairment
to be recognized is equal to the amount by which the carrying value of the assets exceeds their fair value determined by either
a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. In assessing recoverability,
management must make assumptions regarding estimated future cash flows and discount factors. If these estimates or related assumptions
change in the future, the Company may be required to record impairment charges. The Company did not record any impairment charges
in the nine months ended June 30, 2012 and 2011.
NOTE
5 - NOTES PAYABLE
Insurance
Financing Note:
In
August 2011, the Company financed certain insurance premiums totaling $60,243. The note was payable over a nine-month term. At
June 30, 2012, the note balance was repaid in full in accordance with the original terms.
Promissory
Notes:
On
October 12, 2011, the Company issued a $10,000 secured promissory note (“Note 1”) to NPNC Management LLC, a company
whose principals also represent the Company as securities counsel. Note 1 bore interest at the rate of 5% per annum and was due
on June 14, 2012. Note 1 was secured by the Company’s assets. At June 30, 2012, the Note 1 balance including interest was
repaid in full.
On December 21, 2011, the Company issued a $150,000 promissory
note (“Note 2”) to an individual. Note 2 bore interest so that the Company would repay $175,000 on the maturity date
of June 21, 2012, which correlated to an effective rate of 31.23%. Additional interest of 10% will be charged on any late payments.
At maturity, the Company was supposed to issue one million shares of common stock as additional consideration. As of June 30, 2012,
the shares have not been issued. As such, the shares have been classified as common stock to be issued. For financial reporting
purposes, the Company recorded a discount of $56,250 to reflect the value of these shares. The discount was amortized over the
term of Note 2. Note 2 was not paid at the maturity date. At June 30, 2012, the Note 2 balance is $175,000.
On
January 18, 2012, the Company issued a $165,400 convertible promissory note (“Note 3”) to an individual. Note 3 bears
interest at the rate of 5% per annum and is due on June 18, 2012. Note 3 and accrued interest thereon is convertible into units
at a conversion price of $2.00 per unit. A unit consists of one share of Series A Convertible Preferred Stock (“Series A
Preferred”) and a warrant to purchase one-fourth (1/4), or 25% of one share of common stock. For financial reporting purposes,
the Company recorded a discount of $6,686 to reflect the beneficial conversion feature. The discount is being amortized over the
term of Note 3. At June 30, 2012, the Note 3 balance was $164,739 net of a debt discount of $661.
On January 27, 2012, the Company issued a $149,290 convertible
promissory note (“Note 4”) to an individual. Note 4 bore interest at the rate of 8% per annum and was due on March
31, 2012. Note 4 and accrued interest thereon was convertible into shares of common stock at a rate of $0.05 per share. In addition,
at the date of conversion, the Company was to issue two-year warrants to purchase an additional 500,000 shares of common stock
at $0.10 per share. On March 31, 2012, Note 4 and the accrued interest became due and the Company was supposed to issue 3,027,683
shares of common stock. As such, the shares have been classified as common stock to be issued. In addition, at March 31, 2012,
warrants to purchase 500,000 shares were issued. For financial reporting purposes, the Company recorded a discount of $7,653 to
reflect the value of the warrants and a discount of $149,290 to reflect the value of the beneficial conversion feature.
In
March 2012, the Company issued a series of convertible promissory notes (“Notes 5-9”) totaling $186,000 to four individuals.
Notes 5-9 bear interest at the rate of 33% per annum and are due in August and September 2012. Notes 5-9 and accrued interest
thereon are convertible into shares of common stock at the rate of $0.05 per share and automatically convert on the maturity dates
unless paid sooner by the Company. For financial reporting purposes, the Company recorded discounts of $186,000 to reflect the
beneficial conversion features. The discounts are being amortized over the terms of Notes 5-9. At June 30, 2012, the Note 5-9
balances were $118,563, net of debt discounts of $67,437.
In
April 2012 through June 30, 2012, the Company issued a series of convertible promissory notes (“Notes 10-18”) totaling
$220,000 to nine individuals. Notes 10-18 bear interest at the rate of 33% per annum and are due in October through November 2012.
Notes 10-18 and accrued interest thereon are convertible into shares of common stock at the rate of $0.05 per share and automatically
convert on the maturity dates unless paid sooner by the Company. For financial reporting purposes, the Company recorded discounts
of $215,900 to reflect the beneficial conversion features. The discounts are being amortized over the terms of Notes 10-18. At
June 30, 2012, the Note 10-18 balances were $67,096, net of debt discounts of $148,804.
In
April 2012, the Company issued a convertible promissory notes (“Note 19”) totaling $25,000 to an individual for services
previous rendered. Note 19 bears interest at the rate of 33% per annum and is due in October 2012. Note 13 and accrued interest
thereon is convertible into shares of common stock at the rate of $0.05 per share and automatically converts on the maturity dates
unless paid sooner by the Company.
In
July 2012, the Company issued a series of convertible promissory notes (“Notes 20-22”) totaling $75,000 to two individuals.
Notes 20-22 bear interest at the rate of 10% per annum and are due in January 2013. Notes 20-22 and accrued interest thereon are
convertible into shares of common stock at the rate of $0.10 per share and automatically convert on the maturity dates unless
paid sooner by the Company.
NOTE
6 - LOANS PAYABLE
Loan
Payable:
In
February 2011, an investor advanced the Company $10,000. The loan does not bear interest and is due on demand. At June 30,
2012, the loan balance is $10,000.
Loan
Payable - Related Party:
In
October 2011, Craig Eagle, a director of the Company, advanced the Company $35,000. The loan does not bear interest and is due
on demand. At June 30, 2012, the loan balance was $35,000.
In
February 2012, John Weber, the Company’s Chief Financial Officer, advanced the Company $13,000 and another $10,000 in April
2012. The loan does not bear interest and is due on demand. At June 30, 2012, the loan balance is $23,000.
NOTE
7 - STOCKHOLDERS’ EQUITY
Preferred
Stock:
Series
A
Series
A Preferred pays a dividend of 8% per annum on the stated value and have a liquidation preference equal to the stated value of
the shares. Each share of Preferred Stock has an initial stated value of $1 and was convertible into shares of the Company’s
common stock at the rate of 10 for 1. Series A Preferred contains a full ratchet anti-dilution feature on the shares of common
stock underlying the Series A Preferred for three years on any stock issued below $0.10 per share with the exception of shares
issued in a merger or acquisition. As the Company issued common stock at $0.05 per share for the conversion of debt, the conversion
rate for the Series A Preferred is now 20 to 1.
In June 2011,
the Company issued 1,330,000 shares of Series A Preferred and 665,000 Warrants in a private placement, The Company has accounted
for the value of the Warrants in accordance with ASC Topic 470, whereby the Company separately measured the fair value of the
Series A Preferred and the Warrant and allocated the total proceeds in accordance with their relative fair value at the time of
issuance. The Company valued the warrant at $50,078 and such value of the Warrants was recorded as a deemed dividend.
In addition,
in accordance with the provisions of ASC Topic 470, the Company allocated a portion of the proceeds received to the beneficial
conversion feature, based on the difference between the effective conversion price of the proceeds allocated to the Series A Preferred
and the fair value of the underlying common stock on the date the convertible preferred stock was issued. The discount resulting
from the beneficial conversion feature was recorded as a deemed dividend in the amount of $1,279,922.
The
dividends are cumulative commencing on the issue date whether or not declared. Dividends amounted to $81,013 and $26,826 for the
nine and three months ended June 30, 2012, respectively. Dividends amounted to $2,444 for both the nine and three months ended
June 30, 2011. At June 30, 2012 and September 30, 2011, dividends payable total $107,123 and $26,110, respectively, and are included
in accrued expenses.
For the nine
and three months ended June 30, 2012, dividends and deemed dividends totaled $81,013 and $26,826, respectively. For both the nine
and three months ended June 30, 2011, dividends and deemed dividends totaled $1,332,444.
Series
B
On
January 23, 2012, the Company designated a new class of preferred stock called Series B Convertible Preferred Stock (“Series B
Preferred”). Four million shares 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 Convertible Preferred Stock 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 Convertible Preferred Stock, 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 June 30, 2012 and September 30, 2011, no
shares of Series B Preferred are outstanding.
NOTE
8 - LEGAL PROCEEDINGS
|
·
|
On
April
18,
2012,
a
settlement
was
reached
in
the
case
involving
litigation
between
the
Company’s
Chief
Executive
Officer,
Mr.
Randall
McCoy,
and
the
former
President,
Mr.
Joseph
Connell
in
the
United
States
District
Court
for
the
Southern
District
of
New
York.
|
As
previously reported, on March 11, 2011, Mr. Connell filed a complaint in the Supreme Court of the State of New York (which was
later removed to federal court) against Mr. Randall McCoy, the Company, and the members of the Company’s board of directors.
The Company and members of the board were dismissed earlier from the proceedings and the chronology of the case is set forth in
our previous filings.
As
a final resolution, a Confidential Settlement Agreement and General Release (the “Settlement Agreement”) was signed
by and among Mr. McCoy, Mr. Connell, the Company, and the board of directors. An amendment (the “Amendment”) to the
Settlement Agreement was signed on April 24, 2012. Pursuant to the Settlement Agreement and Amendment, in exchange for dismissal
of the pending lawsuit with prejudice and a mutual release of all claims involving all parties concerned, Mr. McCoy agreed to
issue to Mr. Connell 12,500,000 shares of his common stock in the Company. On April 19, 2012, 10,000,000 of the shares were transferred
to Mr. Connell, with the remaining shares were assigned to his counsel in the case.
As
a result of the Settlement Agreement and Amendment and the transfer of these shares, Mr. Connell is now a greater than 10% stockholder
of the Company.
|
·
|
On
May
17,
2012,
the
Company
received
a
letter
from
Lonza
America
Inc.,
alleging
that
the
Company
has
been
delinquent
in
payments
in
the
amount
of
$783,588
under
the
Know-How
License
and
Stock
Purchase
Agreement
(the
“Agreement”)
with
Lonza
Walkersville,
Inc.
(“Lonza
Walkersville”).
Collectively
Lonza
America
and
Lonza
Walkerville
are
referred
to
herein
as
“Lonza”.
After
extensive
discussions
and
correspondence
with
Lonza
Walkersville,
the
Company
responded
to
the
letter
by
Lonza
America
on
July
20,
2012,
explaining
that
such
payments
are
not
due
and
detailing
the
various
instances
of
breach
committed
by
Lonza
Walkersville
under
the
Agreement.
In
turn,
a
response
was
received
from
Lonza
America
on
July
26,
2012
alleging
that
the
Agreement
has
been
terminated.
|
There
is an ongoing dispute with Lonza about the performance and payment obligations under the Agreement. Management believes that Lonza’s
position, as set forth in the above mentioned letters, is untenable in that, among other things: (1) Lonza’s billings call
for the payment of amounts not currently owing, (2) Lonza has failed to submit to an audit of its charges; and (3) Lonza has refused
to provide an appropriate plan for the processing of the biotechnology through the FDA as required by the Agreement. Additionally,
management believes that Lonza’s response is designed to allow it to retain the Company’s over $3.5 million in payments
along with the biotechnology that the Company was expected to purchase as part of the Agreement. Management further believes that
this action is designed to benefit Lonza in its current lawsuit with other parties related to the original sale of the underlying
biotechnology.
Management
acknowledges the Company’s obligations to make payments that are called for under the Agreement. However, management believes
that meritorious defenses and claims to Lonza’s claim of breach under the Agreement exist, and the Company intends to pursue
these claims and causes of action using all legal means necessary should the issues raised in the above mentioned letters not
be resolved consensually.
Management
cannot predict the likelihood of prevailing in the dispute with Lonza. However, if it is ultimately determined that the defenses
and claims lack merit and the dispute is resolved in favor of Lonza, there is a significant risk that the Agreement will be terminated.
If that happens, the Company would lose its ability to pursue the license and commercialize the technology that forms the basis
of the business plan. If Lonza were to prevail, the Company would also face an award or judgment for all past due payments under
the Agreement, plus interest, legal fees and court costs.
NOTE
9 - RELATED PARTY TRANSACTIONS
The
Company’s principal executive offices are located in Little Falls, New Jersey. Headquarters are 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. No rent is charged.
The
Company also maintains an office in Pennington New Jersey, which is the materials and testing laboratory. This office is owned
by Materials Testing Laboratory. The principal of Materials Testing Laboratory is also an employee of the Company.
No
rent is charged for either premise.
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 affect 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
We
intend 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 certain clinical diagnoses. To this end, we have entered into an agreement
to purchase stock of Cutanogen Corporation (“Cutanogen”) from Lonza Walkersville, Inc. (“Lonza”) and for
the exclusive license to use certain proprietary know-how and information necessary to develop and seek approval by the U.S. Food
and Drug Administration (“FDA”) for the commercial sale of several products. This agreement is known as the Know-How
License and Stock Purchase Agreement (the “Agreement”). These products are aimed at the treatment of burns, chronic
wounds and a variety of plastic and reconstructive surgical procedures. In the United States market alone, the company estimates
the potential markets for severe burns and chronic skin wounds is in excess of $7 billion.
The
first product, PermaDerm® is the only tissue-engineered skin prepared from autologous (patient’s own) skin cells. It
is a combination of cultured epithelium with a collagen-fibroblast implant that produces a skin substitute that contains both
epidermal and dermal components. This model has been shown in preclinical studies to generate a functional skin barrier and in
clinical studies to promote closure and healing of burns. Clinically, we believe self-to-self skin grafts for permanent skin tissue
are not rejected by the immune system of the patient, unlike with porcine or cadaver grafts in which immune system rejection is
an important possibility. PermaDerm® was initially designated as an Orphan Device by the FDA for treatment of burns. We have
applied to the FDA late last year for an Orphan designation as a biologic/drug for PermaDerm® The FDA has recently granted
Orphan Status for the PermaDerm® product. Such a designation has certain benefits to the recipient, but these do not include
the immediate commercialization of the product. We will still need to work with the FDA for the development of the product, now
with the advantages of the Orphan designation. We hope to initiate clinical trials early 2012 with final submission to the FDA
for approval for PermaDerm® anticipated by 2013.
The
second product is anticipated to be, TempaDerm®. TempaDerm® uses cells obtained from human donors to allow the development
of banks of cryopreserved (frozen) cells and cultured skin substitute to provide a continuous supply of non-allogenic skin substitutes.
This product has applications in the treatment of chronic skin wounds such as diabetic ulcers, decubitus ulcers and venous stasis
ulcers. The U.S. markets are estimated to total more than $7 billion annually. This product is in the early development stage
and does not have FDA approval.
We
believe the technology has many different uses beyond the burn indication. The other uses include chronic wounds, reconstructive
surgery and the individual components of the PermaDerm® technology such as tendon wraps made of collagen or temporary coverings
to protect the patients from infections while waiting for PermaDerm®. The collagen technology used for PermaDerm® is a
wide-open field in wound healing and uses such as stem cell grafting substrates. It is important to know that all of these above
are products by themselves regardless of whether PermaDerm® is approved for burns. We could pursue any or all of them independently
if financing permitted. Even if PermaDerm® was not approved for burn treatments it could be approved for chronic wounds or
reconstruction.
On
May 17, 2012, we received a letter from Lonza alleging that we are delinquent in payments in the amount of $783,587.71 under the
Agreement. After extensive discussions and correspondence with Lonza, we responded to the letter July 20, 2012, explaining that
such payments are not due and detailing the various instances of breach committed by Lonza under the Agreement. We in turn received
a response from Lonza on July 26, 2012 alleging that the Agreement has been terminated. We have since ceased communications on
the project with Lonza’s staff while we are working on coming up with a solution to the dispute.
There
is an ongoing dispute with Lonza about the performance and payment obligations under the Agreement. We believe that Lonza’s
position, as set forth in the above letters, is untenable in that, among other things: (1) Lonza’s billings call for the
payment of amounts not currently owing, (2) Lonza has failed to submit to an audit of its charges; and (3) Lonza has refused to
provide an appropriate plan for the processing of the biotechnology through the FDA as required by the Agreement. Additionally,
we believe that Lonza’s response is designed to allow it to retain our over $3.5 million in payments along with the biotechnology
we expected to purchase as part of the Agreement. We further believe that this action is designed to benefit Lonza in its current
lawsuit with other parties related to the original sale of the underlying biotechnology.
We
acknowledge our obligations to make payments that are called for under the Agreement. However, we believe that we have meritorious
defenses and claims to Lonza’s claim of breach under the Agreement, and we intend to pursue these claims and causes of action
using all legal means necessary should the issues raised in the above letters not be resolved consensually.
We
cannot predict the likelihood of prevailing in our dispute with Lonza. However, if it is ultimately determined that our defenses
and claims lack merit and the dispute is resolved in favor of Lonza, there is a significant risk that the Agreement will be terminated.
If that happens, we would lose our ability to pursue the license and commercialize the technology that forms the basis of our
business plan. If Lonza were to prevail, we would also face an award or judgment for all past due payments under the Agreement,
plus interest, legal fees and court costs.
Results
of Operations for the Three and Nine Months Ended June 30, 2012 and 2011
We
have generated no revenues since the inception of the Company. We do not expect to generate revenues until we are able to obtain
FDA approval of
PermaDerm
®
, and thereafter
acquire the license rights to sell products associated with that technology.
We
incurred operating expenses of $506,212 for the three months ended June 30, 2012, compared with operating expenses of $774,529
for the three months ended June 30, 2011. We incurred operating expenses of $2,137,056 for the nine months ended June 30, 2012,
compared with operating expenses of $3,134,375 for the nine months ended June 30, 2011. Our operating expenses in 2012 were reduced
from 2011 as a result of decreases in expenses related to public relations and marketing support, salaries, wages and payroll
taxes, consulting and computer support, and registration penalties and consisted mainly of the following in comparison to our
expenses in 2011:
Operating Expense
|
|
|
Three
Months
Ended
June 30, 2012
|
|
|
|
Three
Months
Ended
June 30, 2011
|
|
|
|
Nine
Months
Ended
June 30, 2012
|
|
|
|
Nine
Months
Ended
June 30, 2011
|
|
Legal and Accounting
|
|
$
|
184,707
|
|
|
$
|
120,057
|
|
|
$
|
420,702
|
|
|
$
|
508,495
|
|
Public Relations
and Marketing Support
|
|
|
(14,760)
|
|
|
|
116,470
|
|
|
|
(14,760)
|
|
|
|
319,412
|
|
Salaries, Wages
and Payroll Taxes
|
|
|
182,817
|
|
|
|
270,742
|
|
|
|
578,162
|
|
|
|
647,417
|
|
Consulting and Computer
Support
|
|
|
10,800
|
|
|
|
70,096
|
|
|
|
32,600
|
|
|
|
969,990
|
|
Office Expenses
and Misc.
|
|
|
8,648
|
|
|
|
3,287
|
|
|
|
25,825
|
|
|
|
25,562
|
|
Travel
|
|
|
3,867
|
|
|
|
10,485
|
|
|
|
22,653
|
|
|
|
78,714
|
|
Insurance
|
|
|
22,454
|
|
|
|
15,420
|
|
|
|
69,008
|
|
|
|
64,911
|
|
Website Expenses
|
|
|
17
|
|
|
|
4,615
|
|
|
|
647
|
|
|
|
4,615
|
|
Research and Development
|
|
|
94,958
|
|
|
|
76,657
|
|
|
|
964,817
|
|
|
|
260,344
|
|
Employee Benefits
|
|
|
12,704
|
|
|
|
11,639
|
|
|
|
37,402
|
|
|
|
29,732
|
|
Registration Penalties
|
|
|
-
|
|
|
|
75,061
|
|
|
|
-
|
|
|
|
225,183
|
|
We
incurred stock based compensation of $0 and $43,323 for the three months ended June 30, 2012 and 2011, respectively, from the
issuance of common stock, warrants and options to our directors and third party consultants. We incurred stock based compensation
of $0 and $899,314 for the nine months ended June 30, 2012 and 2011, respectively, from the issuance of common stock, warrants
and options to our directors and third party consultants. Such amounts are included above under consulting.
We
incurred other expenses of $243,766 for the three months ended June 30, 2012, as compared to $28,222 for the three months ended
June 30, 2011. We incurred other expenses of $483,706 for the nine months ended June 30, 2012, as compared to $32,875 for the
nine months ended June 30, 2011. Our other expenses for both periods consisted of interest expenses. Interest expense included
$201,108 and $410,196 for the three and nine months ended June 30, 2012, respectively, and $26,000 for both the three and nine
months ended June 30, 2011, to reflect the amortization of debt discounts and beneficial conversion features of the various notes
payable issued.
We
incurred a net loss of $749,978 for the three months ended June 30, 2012, as compared with a net loss of $803,351 for the three
months ended June 30, 2011. We incurred a net loss of $2,620,762 for the nine months ended June 30, 2012, as compared with a net
loss of $3,167,250 for the nine months ended June 30, 2011. We incurred a net loss of $7,662,003 for the period from inception
to June 30, 2012.
Liquidity
and Capital Resources
As
of June 30, 2012, we had cash of $28,924 and $4,396 as of September 30, 2011.
Operating
activities used $868,919 in cash for the nine months ended June 30, 2012. The decrease in cash was primarily attributable to funding
the loss for the period.
Financing
activities provided $893,447 for the nine months ended June 30, 2012 and consisted of $905,690 in proceeds from notes payable
and $58,000 in loans from a related party, offset by the repayment of the insurance premium financing of $60,243 and the repayment
of other loans of $10,000.
During
the current reporting period and thereafter, we received funds under the following notes and loans:
-
In
April 2012 through June 30, 2012, we issued a series of convertible promissory notes totaling $220,000 to nine individuals. The
notes bear interest at the rate of 33% per annum and are due in October through November 2012. The notes and accrued interest
thereon are convertible into shares of common stock at the rate of $0.05 per share and automatically convert on the maturity dates
unless paid sooner by us.
-
In
April 2012, we issued a convertible promissory note totaling $25,000 to an individual for services previous rendered. This note
bears interest at the rate of 33% per annum and is due in October 2012. The note and accrued interest thereon is convertible into
shares of common stock at the rate of $.05 per share and automatically converts on the maturity dates unless paid sooner us..
-
In
July 2012, we issued convertible promissory notes totaling $75,000 to two individuals. These notes bear interest at the rate of
10% per annum and are due in January 2013. These notes and accrued interest thereon are convertible into shares of common stock
at the rate of $0.10 per share and automatically convert on the maturity dates unless paid sooner us.
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 sales and 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 offering
to secure funding for operations. There can be no assurance that we will be successful in raising additional funding. 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
June 30, 2012
, there were no off balance sheet arrangements.
Going
Concern
Our
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 cumulative losses of $7.7 million for
the period September 6, 2007 (inception date) through June 30, 2012, 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 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.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
A
smaller reporting company is not required to provide the information required by this Item.
Item
4. Controls and Procedures
Disclosure
Controls and Procedures
We carried
out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2012. This evaluation was carried out under the supervision and with the participation
of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that, as of June 30, 2012, our disclosure controls and procedures were not effective due to the presence
of material weaknesses in internal control over financial reporting.
A material
weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be
prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management
to conclude that, as of June 30, 2012, our disclosure controls and procedures were not effective: (i) inadequate segregation of
duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting
with respect to the requirements and application of both US GAAP and SEC guidelines.
Remediation
Plan to Address the Material Weaknesses in Internal Control over Financial Reporting
Our
company plans to take steps to enhance and improve the design of our internal controls over financial reporting. During the period
covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To
remediate such weaknesses, we plan to implement the following changes during our fiscal year ending September 30, 2012: (i) appoint
additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient
written policies and procedures for accounting and financial reporting. The remediation efforts set out are largely dependent
upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing
such funds, remediation efforts may be adversely affected in a material manner.
We
are unable to remedy our controls related to the inadequate segregation of duties and ineffective risk management until we receive
financing to hire additional employees. In January 2011, we hired an outsourced controller to improve the controls for accounting
and financial reporting.
Changes
in Internal Control over Financial Reporting
There were
no changes in our internal control over financial reporting during the three months ended June 30, 2012 that have materially affected,
or are reasonable likely to materially affect, our internal control over financial reporting.
PART
II – OTHER INFORMATION
Item
1. Legal Proceedings
Aside
from what follows, we are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which
any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material
interest adverse to us.
On
February 28, 2011, our board of directors, Mr. Randall McCoy, and our company (collectively the “Plaintiffs”) filed
an amended complaint in the Eighth Judicial District Court of Nevada (Case No. A-11-634976-C) against Joseph Connell, our former
President. The Plaintiffs in the amended complaint are requesting declaratory relief from certain allegations Mr. Connell has
made in relation to partnership claims with Mr. McCoy, board membership, and stock ownership in our company. Mr. Connell has requested
that the case be removed to federal court in Nevada and has requested that our complaint be dismissed for lack of jurisdiction.
On
March 11, 2011, Mr. Connell filed a complaint in the Supreme Court of the State of New York (Index No. 103007/11) against Mr.
McCoy, Regenicin, Inc., Joseph Rubinfeld, John Weber and Craig Eagle. The complaint alleges, among other things, that Mr. Connell
is entitled to 50% of Mr. McCoy’s stock in our company. The complaint requests an accounting from us and requests that we
be enjoined from transferring title to Mr. McCoy’s shares.
On
June 8, 2011, an agreement was reached (the “Agreement”) to dismiss the members of the Company’s board of directors
(excluding Mr. McCoy) and the Company from the case currently pending in the United States District Court for the Southern District
of New York. As part of this Agreement, the Company also agreed to dismiss its action originally brought against Mr. Connell in
the United States District Court for the District of Nevada. Since then, the dispute continued involving only Mr. Connell and
Mr. McCoy as parties in the action pending in the United States District Court for the Southern District of New York. As part
of the Agreement, Mr. McCoy has agreed to lock-up 25,000,000 of his personal shares pending the outcome of the case.
On
November 17, 2011, there was a formal settlement conference before a Magistrate Judge. On April 18, 2012, a settlement was reached.
As a final resolution, a Confidential Settlement Agreement and General Release (the “Settlement Agreement”) was signed
by and among Mr. McCoy, Mr. Connell, our company, and our board of directors. An amendment (the “Amendment”) to the
Settlement Agreement was signed on April 24, 2012. Pursuant to the Settlement Agreement and Amendment, in exchange for dismissal
of the pending lawsuit with prejudice and a mutual release of all claims involving all parties concerned, Mr. McCoy agreed to
issue to Mr. Connell 12,500,000 shares of his common stock in our company. On April 19, 2012, 10,000,000 of the shares were transferred
to Mr. Connell, with the remaining shares assigned to his counsel in the case.
As
a result of the Settlement Agreement and Amendment and the transfer of these shares, Mr. Connell is now a greater than 10% shareholder
of our company.
Item
1A: Risk Factors
A
smaller reporting company is not required to provide the information required by this Item.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
The
information set forth below relates to our issuances of securities without registration under the Securities Act of 1933 during
the reporting period which were not previously included in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.
During
the current reporting period, certain convertible noteholders converted a total of $151,384 in principal and accrued interest
into 3,027,683 shares of our common stock.
These
securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented
their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given
adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising.
We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted
stock.
Item
3. Defaults upon Senior Securities
None
Item
4. Mine Safety Disclosures
Not
applicable.
Item
5. Other Information
None
Item
6. Exhibits
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.
|
Regenicin,
Inc.
|
|
|
Date:
|
August
20, 2012
|
|
|
By:
|
/s/
Randall McCoy
|
|
Randall
McCoy
|
Title:
|
Chief
Executive Officer and Director
|
Grafico Azioni Regenicin (CE) (USOTC:RGIN)
Storico
Da Mag 2024 a Giu 2024
Grafico Azioni Regenicin (CE) (USOTC:RGIN)
Storico
Da Giu 2023 a Giu 2024