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EX-21 - RegenoCELL Therapeutics, Inc. | v188773_ex21.htm |
EX-23.2 - RegenoCELL Therapeutics, Inc. | v188773_ex23-2.htm |
As
filed with the Securities and Exchange Commission on
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Registration
No.__________
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
REGENOCELL
THERAPEUTICS, INC.
(Exact
name of registrant as specified in its charter)
Florida
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2834
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22-3880440
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(State or other jurisdiction of
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(Primary Standard Industrial
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(I.R.S. Employer
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incorporation or organization)
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Classification Code Number)
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Identification No.)
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REGENOCELL
THERAPEUTICS, INC.
Attention: James
Mongiardo
2 Briar
Lane
Natick,
Massachusetts 01760
Telephone
No.: 508-647-4065
(Address
and telephone number of principal executive offices and principal place of
business)
REGENOCELL
THERAPEUTICS, INC.
Attention: James
Mongiardo
2 Briar
Lane
Natick,
Massachusetts 01760
Telephone
No.: 508-647-4065
(Name,
address and telephone number of agent for service)
Copies of
all communications to:
The Law
Officee of James Dodrill II, P.A.
5800
Hamilton Way
Boca
Raton, FL 33496
Phone:
(561) 862-0529
Fax:
(561) 892-7787
Approximate
date of commencement of proposed sale to the public: From time to time after the
effective date of this Registration Statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. þ
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
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 o
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company x
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CALCULATION
OF REGISTRATION FEE
Title of securities to be registered
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Amount to
be
registered
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Proposed
maximum
offering
price per
share (1)(2)
|
Proposed
maximum
aggregate
offering
price
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Amount of
registration
fee
|
|||||||||||
Common
Stock for sale by selling stockholders
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26,637,500
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$
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0.02
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$
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532,750
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$
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37.99
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(1)
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Estimated solely for the purpose
of calculating the registration fee in accordance with Rule 457 under the
Securities Act.
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(2)
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The selling stockholders will
offer their shares at $.02 per share. There is currently no established
trading market in our common stock. The price of $0.02 is a
fixed price at which the selling stockholders may sell their shares until
the Company’s common stock is quoted on the OTC Bulletin Board at which
time the shares may be sold at prevailing market prices or privately
negotiated prices. There can be no assurance that a market maker will
agree to file the necessary documents with FINRA, which operates the OTC
Electronic Bulletin Board, nor can there be any assurance that such an
application for quotation will be approved. We will not receive
proceeds from the sale of shares from the selling
stockholders.
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The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is
not complete and may be changed. The selling stockholders may not sell these
securities until the registration statement is filed with the Securities and
Exchange Commission and becomes effective. This prospectus is not an offer to
sell these securities and is not soliciting an offer to buy these securities in
any state where the sale is not permitted.
Subject
to completion, dated June 22, 2010
REGENOCELL
THERAPEUTICS, INC.
26,637,500 SHARES OF COMMON
STOCK
This
prospectus relates to the sale of up to 26,637,500 shares of our common stock
all of which are held by selling stockholders. This is the initial registration
of shares of our common stock. The resale of these shares is not being
underwritten. We will not receive any of the proceeds from the sale of those
shares being sold by the selling stockholders. The selling stockholders may sell
or distribute the shares, from time to time, depending on market conditions and
other factors, through underwriters, dealers, brokers or other agents, or
directly to one or more purchasers. The selling stockholders will offer their
shares at $.02 per share until our shares are quoted on the OTC Bulletin Board
and, assuming we secure this qualification, thereafter at prevailing market
prices or privately negotiated prices. We are paying all expenses incidental to
registration of the shares.
At the
present time, our common stock is not registered for trading or listed on any
exchange or quotation system.
Our
principal executive offices are located at 2 Briar Lane, Natick, Massachusetts
01760 and our telephone number is 508-647-4065.
Your
investment involves a high degree of risk. See “Risk Factors” starting on page 6
for certain
information
you should consider before you purchase the shares.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
date of this prospectus is June22, 2010.
2
TABLE
OF CONTENTS
Page
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Summary
of Our Offering
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4
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Risk
Factors
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7
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Cautionary
Note Regarding Forward Looking Statements
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18
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Use
of Proceeds
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18
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Determination
of Offering Price
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18
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Dilution
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18
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Selling
Stockholders
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19
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Plan
of Distribution
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20
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Description
of Securities to be Registered
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22
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Interests
of Named Experts and Counsel
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22
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Business
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23
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Description
of Property
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30
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Legal
Proceedings
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30
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Market
Price of and Dividends on Common Equity and Related Stockholder
Matters
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30
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Management's
Discussion and Analysis of Financial Conditions and Results of
Operations
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32
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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35
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Directors,
Executive Officers, Promoters and Control Persons
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36
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Executive
Compensation
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39
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Security
Ownership of Certain Beneficial Owners and Management
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40
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Transactions
with Related Persons, Promoters and Certain Control
Persons
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42
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Board
Committees; Director Independence
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43
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Legal
Matters
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43
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Experts
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43
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Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
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43
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Where
You Can Find More Information
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43
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Financial
Statements
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45
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You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information different from the information
contained in this prospectus. We will not make an offer to sell these securities
in any jurisdiction where offers and sales are not permitted. The information
contained in this prospectus is accurate only as of the date of this prospectus,
regardless of when this prospectus is delivered or when any sale of our common
stock occurs.
3
SUMMARY
OF OUR OFFERING
Prospectus
Summary
The
following summary highlights selected information contained in this prospectus.
This summary does not contain all the information you should consider before
investing in our securities. Before making an investment decision, you should
read the entire prospectus carefully, including the "risk factors" section, the
financial statements and the notes to the financial statements.
RegenoCELL
Therapeutics, Inc. (the “Company”) was incorporated on February 1, 2002 as a
Florida corporation and will be among the first companies to bring stem cell
therapy treatments to the market. The ability to treat disease has been enhanced
in the past two decades through the development of products utilizing techniques
commonly referred to as “biotechnology”. Our ability to treat has also been
enhanced by a better understanding of the human genome. Added to this mix of
advanced new treatments have been products which are tissue engineered, that is
utilizing cells to create tissue which treats the disease or damaged tissue.
Holding great promise for significant new advances in the treatment of disease
and damaged tissue are stem cells.
Stem
cells are cells which have the ability to produce other cells identical to
themselves or to differentiate into specific cell lineages. With these
properties, stem cells play important roles in normal development and in the
regeneration and repair of damaged tissue through the ability to differentiate
into the type of cell needed for growth or repair.
The main
sources of stem cells include (1) embryonic and fetal tissues; (2) umbilical
cord blood; and (3) adult stem cells. Embryonic stem cells are totipotent which
means that they can differentiate into all cell types. Use of embryonic stem
cells has been subject to ethical controversy. Because their proliferation is
difficult to control, they have been linked to the formation of cancers. More
importantly, they possess a genome which is different than the patient’s genome
raising safety issues which will take extensive clinical testing to
resolve.
Umbilical
cord blood stem cells are also capable of significant differentiation. While not
being subject to ethical controversy as embryonic stem cells, they still possess
a genome which is different than the patient’s genome. Many different choices
may get a similarity in genomes but it will never be an identical match to the
one person whose umbilical cord blood is being used to create the stem
cells.
Adult
stem cells are different. They are autologous, meaning that they are derived
from the patient for use in that patient. Typical sources of adult stem cells
include bone marrow or blood. Any tissue of the patient may be used. Adult stem
cells are capable of differentiating into a variety of cell types without a risk
of immunological rejection. Without the safety concerns associated with
embryonic and umbilical cord blood stem cells, it is expected that the first
stem cell products to market will be derived from adult stem cells.
The
mission of the Company is to bring stem cell therapy treatments to the market as
quickly as possible. The Company’s therapy utilizes a process to identify and
process adult stem cells found in a patient’s blood. These adult stem cells are
grown into large numbers in
vitro (outside the body) and then encouraged to differentiate into
angiogenic precursor cells or blood vessel forming cells for the treatment of
congestive heart failure. These adult stem cells can also be used for the
treatment of other conditions such as peripheral artery
disease.
4
Currently
congestive heart failure patients cleared for treatment have one-half pint of
blood drawn which is sent to the Company’s susidiary cell processing facility in
Israel. After the adult stem cells in the patient’s blood have been extracted
and grown into large numbers of angiogenic precursor cells, they are sent for
infusion into the patient in a minimally invasive procedure. The stem cell
therapy is either delivered through a catheter or injected directly into the
myocardium. All patients are private pay.
We
believe that the results to date have been impressive. Over five hundred (500)
congestive heart failure patients with no other options have shown similar
results to a clinical trial conducted with 24 patients. In that trial
statistically significant improvements between baseline and the three month and
six month follow-up were achieved for:
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·
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Improvement
in the six minutes walking test.
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·
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Increase
in metabolic equivalent units (METs) during the stress
test.
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·
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Decrease
in the perfusion defect at a region of the target artery, meaning it has
improved.
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·
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Decrease
in the Canadian Cardiovascular Society (CCS) Grading Scale, meaning the
patient has improved.
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The Company has acquired certain assets
and assumed certain liabilities of Thera Vitae, Ltd. through its wholly owned
Israeli subsidiary, Regenocell Laboratories, Ltd. As a result on February 4,
2010 the Company’s primary asset is Regenocell Laboratories, Ltd. which is
manufacturing and selling stem cell therapy product used to treat congestive
heart failure and peripheral artery disease. Purchases are being made to treat
patients for these indications in several countries. It is anticipated that
purchases will also be made to treat patients in additional
countries.
The primary source of patients being
treated for congestive heart failure is the United States.
The initial stem cell business focus is
to treat patients in Mexico for congestive heart failure and all other
cardiovascular indications. Patients may not be treated in the United States.
However, patients from the United States may be identified, qualified, agree to
the treatment, pay for it in advance and then have their blood drawn for
processing by the Company’s subsidiary in Israel. When the stem cell therapy is
ready for administration, the patient will travel outside the United States to a
hospital in Mexico to receive the treatment. TheraVitae has agreed to sell the
product to the Company in advance of finalizing the license. The market size for
congestive heart failure in the United States is large. Approximately five
million patients have been diagnosed in the United States with congestive heart
failure. Up to seven hundred thousand (700,000) new cases are diagnosed each
year.
There are over 1100 investigation stem
cell clinical trials being conducted in the United States. It will take multiple
years for any product to be approved, especially products derived from embryonic
or umbilical cord blood stem cells. In the interim, patients may benefit from
adult stem cell treatment today through identification and qualification in the
United States and the administration of treatment outside the United
States.
5
The second stem cell business is to
obtain regulatory approval to treat peripheral artery disease (“PAD”) in the
United States and Europe. Over ten million Americans suffer from poor
circulation to their extremities with a similar number in Europe. PAD is
especially prevalent among diabetics. After standard treatments fail, the only
alternative is amputation of the toes, foot or leg, sometimes fingers, hand or
arm. The Company’s stem cell therapy has been shown in pilot clinical trials to
re-establish blood flow to the extremities resulting in saving the limbs from
amputation. The process for treating PAD is very similar to the process for
treating congestive heart failure. After the patient is qualified, a half liter
of blood is drawn and sent to the Company’s subsidiary in Israel for processing.
The adult stems are extracted, grown into large numbers and then encouraged to
become angiogenic precursor cells. This adult stem cell therapy is then injected
in multiple locations in the limb which is experiencing poor
circulation.
The Company intends to obtain an
Investigational New Drug exemption and its equivalent in Europe to initiate
clinical trials designed to obtain regulatory approval to market the product fro
both the Food and Drug Administration and the European Medicines Agency. We
believe that such an approval in the United States and Europe will have block
buster potential, meaning that the market size is so large and flexibility of
pricing so great given the alternative of amputation, that the approved PAD stem
cell therapy product may potentially generate revenues in excess of one billion
dollars per annum. Thus, this second business has substantial long term upside
potential.
As a
development stage company, we have limited capital and limited operating
resources. We have only recently begun to generate revenues and for the quarter
ended March 31, 2010 generated revenues of $291,865. As of March 31, 2010, we
had working capital of approximately $22,692. We will not receive any proceeds
from the sale of our common stock offered through this prospectus by the selling
stockholders. The cash currently on hand in our bank accounts will be sufficient
to maintain operations for only approximately one month from the date of this
prospectus. The Company does anticipate that beginning in July 2010, the sales
of its stem cell therapy product will be close to or above cash flow breakeven
which is eight (8) cell batches per month. However, even if we achieve the
breakeven rate of eight (8) cell batches per month we will need an additional
amount of approximately $140,000 for operations over the next twelve months in
order to continue operations. Additionally, this would not allow us to pay off
our past due liabilities, develop new products, expand our marketing efforts or
begin the clinical trial program to gain approval to treat peripheral artery
disease in the United States and Europe. There can be no assurance of any sales
in any given month. Any investment in our shares is subject to the significant
risk that we will not be able to adequately capitalize our Company and continue
to develop our technology and our business.
Our
principal executive offices are located at 2 Briar Lane, Natick, Massachusetts
01760 and our telephone number is 508-647-4065. Information contained on our
website or any other website does not constitute a part of this
prospectus.
The
Offering
Total
shares of common stock outstanding
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81,637,500
as of June 15, 2010 (of which 21,637,500 shares currently are held by
non-affiliates).
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Common
stock being registered for sale by stockholders
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26,637,500
shares, which includes 21,187,500 originally issued to stockholders
pursuant to private placements of restricted common stock completed in
2002 and 2003. Additionally, we are registering 5,250,000 shares which
were issued in July 2008 pursuant to the Company acquiring the stem cell
opportunity and 200,000 shares which were issued to our legal counsel for
services rendered. All of the shares offered by this prospectus are being
sold by non-affiliate selling stockholders. The shares offered by the
selling stockholders pursuant to this prospectus represent 32.63% of the
total number of shares of common stock outstanding. The selling
stockholders will offer their shares at $0.02 per share until the
Company’s shares are quoted on the OTC Bulletin Board and, assuming we
secure this qualification, thereafter at prevailing market prices or
privately negotiated
prices.
|
Risk
factors
|
The
shares involve a high degree of risk. Investors should carefully consider
the information set forth under “RISK FACTORS” beginning on page
6.
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Use
of proceeds
|
We
will not receive any proceeds from the sale of our common stock offered
through this prospectus by the selling stockholders. All proceeds from the
sale of our common stock sold under this Prospectus will go solely to the
selling
stockholders.
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6
RISK
FACTORS
Our
business is subject to numerous risks. We caution you that the following
important factors, among others, could cause our actual results to differ
materially from those expressed in forward-looking statements made by us or on
our behalf in filings with the SEC, press releases, communications with
investors and oral statements. Any or all of our forward-looking statements in
this and in any other public statements we make may turn out to be wrong. They
can be affected by inaccurate assumptions we might make or by known or unknown
risks and uncertainties. Many factors mentioned in the discussion below will be
important in determining future results. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially from
those anticipated in forward-looking statements. We undertake no obligation to
update any forward-looking statements, whether as a result of new information,
future events or otherwise. You are advised, however, to consult any further
disclosure we make in our reports filed with the SEC.
Risks
Related To Our Operations And Financial Condition
We
are a development stage company and may never generate revenue, which could
cause our business to fails.
We are a
development stage company and we generated only limited revenues as of the date
of this Prospectus. We have incurred losses of $223,526 for the fiscal year
ended December 31, 2009 and cumulative losses of $350,591 from our inception on
February 1, 2002 through December 31, 2009. For the three months ended March 31,
2010 we achieved revenues of $291,865 and incurred a net loss of $362,699. We
expect to operate with net losses within the current fiscal year-ending December
31, 2010 or longer. We cannot predict the extent of these future net losses, or
when we may attain profitability, if at all. If we are unable to generate
significant revenue or attain profitability, we will not be able to sustain
operations and will have to curtail significantly or cease
operations.
We
are a development stage company with significant capital resources deficiencies
and we may not be able to raise adequate capital which could materially and
adversely affect our ability to conduct business.
As a
development stage company, we have limited capital and limited operating
resources. As of March 31, 2010, we had working capital of approximately $22,692
(unaudited). We are not able to meet our current needs for cash from revenues.
We believe our current cash on hand will fund our expenditures only for a very
limited time. We believe that the cash on hand in our bank accounts will
be sufficient to maintain our operations only for approximately one month from
the date of this prospectus. We estimate the total costs and expenses related to
operate our business over the next twelve months will be approximately
$1,700,000. The Company does anticipate that beginning in July 2010, the sales
of its stem cell therapy product will be close to or above cash flow breakeven
which is eight (8) cell batches per month. How3ever, even if we achieve the
breakeven rate of eight (8) cell batches per month we will need an additional
amount of approximately $140,000 for operations over the next twelve months in
order to continue operations. Additionally, this would not allow us to pay off
our past due liabilities, develop new products, expand our marketing efforts or
begin the clinical trial program to gain approval to treat peripheral artery
disease in the United States and Europe. There can be no assurance of any sales
in any given month. Even if we are able to obtain third party financing, the
terms and condition of financing could have a material adverse affect on our
business, results of operations, liquidity and financial condition. Any
investment in our shares is subject to the significant risk that we will not be
able to adequately capitalize our Company to enable us to continue to develop
and implement our business model. Even if we are able to raise adequate capital,
the cost of such capital may be burdensome and may materially impair our ability
to fully implement our business plan.
Risks
Related to our Business
The
new stem cell business is subject to claims by TheraVitae, Inc. that it is
covered by intellectual property owned by it.
As more
fully described on page 26 in Legal Proceedings, our new stem cell business is
subject to claims by TheraVitae, Inc. that it is covered by intellectual
property owned by it. While the Company disputes these claims, there is no
assurance that litigation pending in Canada will be resolved in the Company’s
favor.
7
There
is no assurance that there will be sufficient monthly patient flow for
Regenocell Laboratories, Ltd. to break even.
Patient
flow is dependent upon marketing efforts of other companies and changing
regulatory climates. There is no assurance that there will be sufficient monthly
patient flow for Regenocell Laboratories, Ltd. to break even.
Any
adverse development in our ability to treat patients in Mexico with stem cell
technology could substantially depress our stock price and prevent us from
raising the capital we will need to further develop our stem cell
technology.
Our
ability to progress as a company is significantly dependent on our ability to
treat patients in Mexico with stem cell technology. Any clinical, regulatory or
other development that prevents or delays us from treating patients in Mexico,
or any safety issue or adverse side effect to any patient that occurs during
such treatment, or the failure to enroll patients as anticipated or to show the
results expected by investors, would likely significantly depress our stock
price and could prevent us from raising the substantial additional capital we
will require to further develop stem cell technologies.
Our
financial situation is precarious and, based on currently estimated operating
expenses, our existing capital resources may not be sufficient to fund our
operations beyond the next 6 months.
We have
incurred significant operating losses and negative cash flows from operations
since inception. We have not achieved profitability and may not be able to
realize sufficient revenues to achieve or sustain profitability in the future.
We expect to incur additional and increasing operating losses. We have limited
liquidity and capital resources and must obtain significant additional capital
resources in order to sustain our product development efforts and for
acquisition of technologies and intellectual property rights, preclinical and
clinical testing of our anticipated products, pursuit of regulatory approvals,
acquisition of capital equipment, laboratory and office facilities,
establishment of production capabilities, maintaining and enforcing our
intellectual property portfolio, general and administrative expenses and other
working capital requirements. We rely on sales of our stem cell product, cash
reserves and proceeds from equity offerings to fund our operations. If we are
unable to sell our stem cell product or exhaust our cash reserves and are unable
to realize adequate financing, we may be unable to meet operating obligations
and be required to initiate bankruptcy proceedings. Our existing capital
resources may not be sufficient to fund our operations beyond the next 6 months.
We intend to pursue opportunities to obtain additional financing in the future
through equity and debt financings, corporate alliances, grants and
collaborative research arrangements. The source, timing and availability of any
future financing will depend principally upon market conditions, interest rates
and, more specifically, on our progress in our exploratory, preclinical and
future clinical development programs. Funding may not be available when needed
or on terms acceptable to us. Lack of necessary funds may require us to delay,
scale back or eliminate some or all of our research and product development
programs and/or our capital expenditures or to license our potential products or
technologies to third parties.
Our
product development programs are based on novel technologies and are inherently
risky.
We are
subject to the risks of failure inherent in the development of products based on
new technologies. The novel nature of our therapeutic products creates
significant challenges in regards to product development and optimization,
manufacturing, government regulation, third party reimbursement and market
acceptance. For example, the FDA has relatively little experience with stem
cell-based therapeutics, and the pathway to regulatory approval for our product
candidates may accordingly be more complex and lengthy than the pathway for new
conventional drugs. These challenges may prevent us from developing and
commercializing products on a timely or profitable basis or at all.
Our
technology is at an early stage of development, and we may fail to develop any
commercially acceptable or profitable products.
Before we
may commercially market any product in the United States, we must obtain
regulatory approval from the FDA after conducting extensive preclinical studies
and clinical trials that demonstrate that our product candidates are safe and
effective for each disease for which we seek approval. We expect that none of
our stem cell therapy product candidates will be commercially available for five
years, if at all, in the United States.
8
In the
United States we will have to obtain approval from the FDA to conduct clinical
trials.
There is
no assurance that the FDA will ever grant such approval. Even with approval by
the FDA to conduct Phase I or Phase I/II clinical trials, there can be no
assurance that the clinical investigators will be able to identify suitable
candidates for the trials or of a successful outcome of the trials if candidates
are enrolled. We may fail to obtain regulatory approvals or to commercialize any
products. Any product using stem cell technology may fail to:
|
o
|
provide the intended therapeutic
benefits; or
|
|
o
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achieve therapeutic benefits
equal to or better than the standard of treatment at the time of
testing.
|
In
addition, our products may cause undesirable side effects. Results of
preclinical research may not be indicative of the results that will be obtained
in later stages of preclinical or clinical research. If regulatory authorities
do not approve our products or if we fail to maintain regulatory compliance, we
would be unable to commercialize our products, and our business and results of
operations would be harmed. Furthermore, because stem cells are a new form of
therapy, the marketplace may not accept any products we may develop. If we do
succeed in developing products, we will face many potential obstacles such as
the need to obtain regulatory approvals and to develop or obtain manufacturing,
marketing and distribution capabilities. In addition, we will face substantial
additional risks such as product liability claims.
We
may need but fail to obtain partners to support our stem cell development
efforts and to commercialize our technology.
Equity
and debt financings alone may not be sufficient to fund the cost of developing
our stem cell technologies, and we may need to rely on our ability to reach
partnering arrangements to provide financial support for our stem cell discovery
and development efforts. In addition, in order to successfully develop and
commercialize our technology, we may need to enter into a wide variety of
arrangements with corporate sponsors, pharmaceutical companies, universities,
research groups and others. While we expect to engage in discussions
regarding such arrangements, we have not reached any agreement, and we may fail
to obtain any such agreement on terms acceptable to us. Even if we enter into
these arrangements, we may not be able to satisfy our obligations under them or
renew or replace them after their original terms expire. Furthermore, these
arrangements may require us to grant certain rights to third parties, including
exclusive marketing rights to one or more products, may require us to issue
securities to our collaborators or may contain other terms that are burdensome
to us. If any of our collaborators terminates our relationship with us or fails
to perform our obligations in a timely manner, the development or
commercialization of our technology and potential products may be adversely
affected.
We
have a history of operating losses, and we may fail to obtain revenues or become
profitable.
We expect
to continue to incur substantial operating losses in the future in order to
conduct our research and development activities, and, if those activities are
successful, to fund clinical trials and other expenses. These expenses include
the cost of acquiring technology, product testing, acquiring regulatory
approvals, establishing production, marketing, sales and distribution programs
and administrative expenses. We have not earned any revenues from sales of any
product through December 31, 2009.
9
If
we are unable to protect our patents and proprietary rights, our business,
financial condition and results of operations will be harmed.
Patent
protection for products such as those we propose to develop is highly uncertain
and involves complex and continually evolving factual and legal questions. The
governmental authorities that consider patent applications can deny or
significantly reduce the patent coverage requested in an application before or
after issuing the patent. Consequently, we do not know whether any of our
pending applications will result in the issuance of patents, if any existing or
future patents will provide sufficient protection or significant commercial
advantage or if others will circumvent these patents. We cannot be certain that
we were the first to discover the inventions covered by each of our pending
patent applications or that we were the first to file patent applications for
such inventions because patent applications are secret until they are published,
and because publication of discoveries in the scientific or patent literature
often lags behind actual discoveries. Patents may not issue from our pending or
future patent applications or, if issued, may not be of commercial benefit to
us. In addition, our patents may not afford us adequate protection from
competing products. Third parties may challenge our patents or governmental
authorities may declare them invalid or reduce their scope. In the event that a
third party has also filed a patent application relating to inventions claimed
in our patent applications, we may have to participate in proceedings to
determine priority of invention. Even if a patent issues, a court could decide
that the patent was issued invalidly. Because patents issue for a limited term,
our patents may expire before we utilize them profitably. Procedures of the
European Patent Office, third parties may oppose our issued European patents
during the relevant opposition period. These proceedings and oppositions could
result in substantial uncertainties and cost for us, even if the eventual
outcome is favorable to us, and the outcome might not be favorable to us.
If we learn of third parties who
infringe our patent rights, we may need to initiate legal proceedings to enforce
our patent rights. These proceedings may entail significant costs, and these
third parties may have significantly greater financial resources than us. We may
not prevail in these proceedings.
Proprietary
trade secrets and unpatented know-how are also important to our research and
development activities. We cannot be certain that others will not independently
develop the same or similar technologies on their own or gain access to our
trade secrets or disclose such technology or that we will be able to
meaningfully protect our trade secrets and unpatented know-how. We require our
employees, consultants, and significant scientific collaborators and sponsored
researchers to execute confidentiality agreements upon the commencement of an
employment or consulting relationship with us. These agreements may, however,
fail to provide meaningful protection or adequate remedies for us in the event
of unauthorized use, transfer or disclosure of such information or
technology.
If
others are first to discover and patent the stem cells we are seeking to
discover, we could be blocked from further work on those stem
cells.
Because
the first person or entity to discover and obtain a valid patent to a particular
stem cell may effectively block all others, it will be important for us or our
collaborators to be the first to discover any stem cell and methods that we are
seeking to discover. Failure to be the first could prevent us from
commercializing all of our research and development affected by that
patent.
If
we are unable to obtain necessary licenses to third-party patents and other
rights, we may not be able to commercially develop our expected
products.
A number
of pharmaceutical, biotechnology and other companies, universities and research
institutions have filed patent applications or have received patents relating to
cell therapy, stem cells and other technologies potentially relevant to or
necessary for our expected products. We cannot predict which, if any, of the
applications will issue as patents, and there may be existing patents of which
we are currently unaware which the commercialization of our product candidates
would infringe. If third party patents or patent applications contain valid
claims that our technology infringes upon their technology, we may be prevented
from commercializing that technology unless the third party is willing to grant
a license to us. We may be unable to obtain licenses to the relevant patents at
a reasonable cost, if at all, and may also be unable to develop or obtain
alternative non-infringing technology. If we are unable to obtain such licenses
or develop non-infringing technology at a reasonable cost, our business could be
significantly harmed. Also, any infringement lawsuits commenced against us may
result in significant costs, divert our management's attention and result in an
award against us for substantial damages.
We are
aware of intellectual property rights held by third parties that relate to
products or technologies we are developing. For example, some aspects of our
stem cell product candidates involve the use of growth factors, antibodies and
other reagents that may, in certain cases, be the subject of third party rights.
Before we commercialize any product using these growth factors, antibodies or
reagents, we may need to obtain license rights from third parties or use
alternative growth factors, antibodies and reagents that are not then the
subject of third party patent rights. We currently believe that the
commercialization of our products as currently planned will not infringe these
third party rights, or, alternatively, that we will be able to obtain necessary
licenses or otherwise use alternate non-infringing technology. However, third
parties may nonetheless bring suit against us claiming infringement. If we are
unable to prove that our technology does not infringe their patents, or if we
are unable to obtain necessary licenses or otherwise use alternative
non-infringing technology, we may not be able to commercialize any products.
Also, if we use alternative non-infringing technology, we may need to
demonstrate comparability in subsequent clinical trials.
10
We
compete with companies that have significant advantages over us.
It is
expected that our therapeutic products will have to compete with a variety of
therapeutic products and procedures. Major pharmaceutical companies currently
offer a number of pharmaceutical products to treat congestive heart failure and
peripheral artery disease and other diseases for which our technologies may be
applicable. Many pharmaceutical and biotechnology companies are investigating
new drugs and therapeutic approaches for the same purposes, which may achieve
new efficacy profiles, extend the therapeutic window for such products, alter
the prognosis of these diseases, or prevent their onset. We believe that our
products, when and if successfully developed, will compete with these products
principally on the basis of improved and extended efficacy and safety and their
overall economic benefit to the health care system. The market for therapeutic
products is large, and competition is intense. We expect competition to
increase. We believe that our most significant competitors will be fully
integrated pharmaceutical companies and more established biotechnology
companies. Smaller companies may also be significant competitors, particularly
through collaborative arrangements with large pharmaceutical or biotechnology
companies. Many of these competitors have significant products approved or in
development that could be competitive with our products.
Competition
for any stem cell products that we may develop may be in the form of existing
and new drugs, other forms of cell transplantation, ablative and simulative
procedures, and gene therapy. Some competitors are also trying to develop stem
and progenitor cell-based technologies. These products may compete with our
therapeutic products based on efficacy, safety, cost and intellectual property
positions.
We may
also face competition from companies that have filed patent applications
relating to the use of genetically modified cells to treat disease, disorder or
injury. In the event our therapies should require the use of such genetically
modified cells, it may be required to seek licenses from these competitors in
order to commercialize certain of our proposed products, and such licenses may
not be granted or may be available only on unfavorable terms.
If we
develop products that receive regulatory approval, we would then have to compete
for market acceptance and market share. For certain of our products, an
important success factor will be the timing of market introduction of
competitive products. This is a function of the relative speed with which we and
our competitors can develop products, complete the clinical testing and approval
processes, and supply commercial quantities of a product to market. These
competitive products may also impact the timing of clinical testing and approval
processes by limiting the number of clinical investigators and patients
available to test our products.
While we
believe that the primary competitive factors will be product efficacy, safety,
and the timing and scope of regulatory approvals, other factors include, in
certain instances, obtaining marketing exclusivity under the Orphan Drug Act,
availability of supply, marketing and sales capability, reimbursement coverage,
price, and patent and technology position.
Development
of our technology is subject to and restricted by extensive government
regulation, which could impede our business.
Our
research and development efforts, as well as any future clinical trials, and the
manufacturing and marketing of any products we may develop, will be subject to
and restricted by extensive regulation by governmental authorities in the United
States and other countries. The process of obtaining FDA and other necessary
regulatory approvals is lengthy, expensive and uncertain. We or our
collaborators may fail to obtain the necessary approvals to commence or continue
clinical testing or to manufacture or market our potential products in
reasonable time frames, if at all. In addition, the United States Congress and
other legislative bodies may enact regulatory reforms or restrictions on the
development of new therapies that could adversely affect the regulatory
environment in which we operate or the development of any products we may
develop.
11
We base
our research and development on the use of human stem cells obtained from the
blood of the patient. The federal and state governments and other jurisdictions
impose restrictions on the use of blood. These
regulatory and other constraints could prevent us from obtaining cells and other
components of our products in the quantity or quality needed for their
development or commercialization. These restrictions change from time to time
and may become more onerous. Certain components used to manufacture our stem
cell product candidates may need to be manufactured in compliance with the FDA's
Good Manufacturing Practices, or cGMP. Accordingly, we may need to enter into
supply agreements with companies that manufacture these components to cGMP
standards.
Government
regulation and threatened regulation of embryonic tissue may lead top
researchers to leave the field of stem cell research, or the country, in order
to assure that their careers will not be impeded by restrictions on their work.
Similarly, these factors may induce the best graduate students to choose other
fields less vulnerable to changes in regulatory oversight, thus exacerbating the
risk, discussed below, that we may not be able to attract and retain the
scientific personnel we need in face of the competition among pharmaceutical,
biotechnology and health care companies, universities and research institutions
for what may become a shrinking class of qualified individuals. Moreover, it is
possible that concerns regarding research using embryonic stem cells will
negatively impact our stock price and our ability to attract collaborators and
investors.
We may
apply for status under the Orphan Drug Act for some of our therapies to gain a
seven-year period of marketing exclusivity for those therapies. The United
States Congress in the past has considered, and in the future again may
consider, legislation that would restrict the extent and duration of the market
exclusivity of an orphan drug. If enacted, such legislation could prevent us
from obtaining some or all of the benefits of the existing statute even if we
were to apply for and obtain orphan drug status with respect to a potential
product.
We
are dependent on the services of key personnel.
We are
highly dependent on the principal members of our management and scientific staff
and some of our outside consultants, including our chief executive officer, our
chief medical officer and our chief technology officer. Although we have entered
into employment agreements with some of these individuals, they may terminate
their agreements at any time. In addition, our operations are dependent upon our
ability to attract and retain additional qualified scientific and management
personnel. We may not be able to attract and retain the personnel we need on
acceptable terms given the competition for experienced personnel among
pharmaceutical, biotechnology and health care companies, universities and
research institutions.
Our
activities involve hazardous materials and experimental animal testing; improper
handling of these animals and materials by our employees or agents could expose
us to significant legal and financial penalties.
Our
research and development activities involve the controlled use of hazardous
chemicals and potentially hazardous biological materials such as human tissue
and animals. Their use subjects us to environmental and safety laws and
regulations such as those governing laboratory procedures, exposure to
blood-borne pathogens, use of animals and the handling of bio-hazardous
materials. Compliance with current or future laws and regulations may be
expensive and the cost of compliance could adversely affect us.
Although
we believe that our safety procedures for using, handling, storing and disposing
of hazardous and potentially hazardous materials comply with the standards
prescribed by state and federal regulations, the risk of accidental
contamination or injury from these materials cannot be eliminated. In the event
of such an accident or of any violation of these or future laws and regulations,
state or federal authorities could curtail our use of these materials; we could
be liable for any civil damages that result, the cost of which could be
substantial; and we could be subjected to substantial fines or penalties. In
addition, any failure by us to control the use, disposal, removal or storage, or
to adequately restrict the discharge, or to assist in the cleanup of hazardous
chemicals or hazardous, infectious or toxic substances could subject us to
significant liability. Any such liability could exceed our resources and could
have a material adverse effect on our business, financial condition and results
of operations. Moreover, an accident could damage our research and manufacturing
facilities and operations and result in serious adverse effects on our
business.
12
The
manufacture, development and commercialization of stem cell products expose us
to product liability claims, which could lead to substantial
liability.
By
developing and, ultimately, commercializing medical products, we are exposed to
the risk of product liability claims. Product liability claims against us could
entail substantial litigation costs and damage awards against us. We are not
able to obtain product liability insurance for the treatment of patients in
Mexico and therefore are exposed to product liability claims which could lead to
substantial liability. We intend to obtain liability insurance that covers our
clinical trials in the United States, and we will need to increase our insurance
coverage if and when we begin commercializing products in the United States. We
may not be able to obtain insurance on acceptable terms, if at all, and the
policy limits on our insurance policies may be insufficient to cover our
liability.
Since
health care insurers and other organizations may not pay for our products or may
impose limits on reimbursements, our ability to become profitable could be
reduced.
In both
domestic and foreign markets, sales of potential products are likely to depend
in part upon the availability and amounts of reimbursement from third party
health care payor organizations, including government agencies, private health
care insurers and other health care payors, such as health maintenance
organizations and self-insured employee plans. There is considerable pressure to
reduce the cost of therapeutic products, and government and other third party
payors are increasingly attempting to contain health care costs by limiting both
coverage and the level of reimbursement for new therapeutic products and by
refusing, in some cases, to provide any coverage for uses of approved products
for disease indications for which the FDA has not granted marketing approval.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products or novel therapies such as ours. Even if we obtain
regulatory approval to market our products, we can give no assurance that
reimbursement will be provided by such payors at all or without substantial
delay or, if such reimbursement is provided, that the approved reimbursement
amounts will be sufficient to enable us to sell products we develop on a
profitable basis. Changes in reimbursement policies could also adversely affect
the willingness of pharmaceutical companies to collaborate with us on the
development of our stem cell technology. We also expect that there will continue
to be a number of federal and state proposals to implement government control
over health care costs. Efforts at health care reform are likely to continue in
future legislative sessions. We do not know what legislative proposals federal
or state governments will adopt or what actions federal, state or private payers
for health care goods and services may take in response to health care reform
proposals or legislation. We cannot predict the effect government control and
other health care reforms may have on our business.
We
have limited liquidity and capital resources and may not obtain the significant
capital resources we will need to sustain our research and development
efforts.
We have
limited liquidity and capital resources and must obtain substantial additional
capital to support our research and development programs, for acquisition of
technology and intellectual property rights and, to the extent we decide to
undertake these activities ourselves, for preclinical and clinical testing of
our anticipated products, pursuit of regulatory approvals, establishment of
production capabilities, maintaining and enforcing our intellectually property
portfolio, establishment of marketing and sales capabilities and distribution
channels, and general administrative expenses. If we do not obtain the necessary
capital resources, we may have to delay, reduce or eliminate some or all of our
research and development programs or license our technology or any potential
products to third parties rather than commercialize them ourselves. We intend to
pursue our needed capital resources through equity and debt financings,
corporate alliances, grants and collaborative research arrangements. We may fail
to obtain the necessary capital resources from any such sources when needed or
on terms acceptable to us. Our ability to complete successfully any such
arrangements will depend upon market conditions and, more specifically, on
continued progress in our research and development efforts.
13
Ethical
and other concerns surrounding the use of stem cell therapy may negatively
affect regulatory approval or public perception of our product candidates, which
could reduce demand for our products.
The use
of stem cells for research and therapy has been the subject of debate regarding
related ethical, legal and social issues. Although these concerns have mainly
been directed to the use of embryonic stem cells, which we do not use, the
distinction between embryonic and non-embryonic stem cells is frequently
overlooked. Negative public attitudes toward stem cell therapy could result in
greater governmental regulation of stem cell therapies, which could harm our
business. For example, concerns regarding such possible regulation could impact
our ability to attract collaborators and investors. Government regulation and
threatened regulation of embryonic tissue could also harm our ability to attract
and retain qualified scientific personnel by causing top researchers to leave
the country or the field of stem cell research altogether; and by encouraging
the best graduate students to choose other fields that are less vulnerable to
changes in regulatory oversight.
Risks
Related to the Securities Market
Our
stock price will likely be highly volatile, which may negatively affect our
ability to obtain additional financing in the future.
The
market price of our stock is likely to be highly volatile due to the risks and
uncertainties described in this risk factors section, as well as other factors,
including:
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our ability to develop and test
our technology;
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our ability to patent or obtain
licenses to necessary
technology;
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our ability to find private pay
patients for treatment outside the United
States;
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our ability to treat patients in
Mexico;
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conditions and publicity
regarding the industry in which we operate, as well as the specific areas
our product candidates seek to
address;
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competition in our
industry;
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price and volume fluctuations in
the stock market at large that are unrelated to our operating performance;
and
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comments by securities analysts,
or our failure to meet market
expectations.
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As a
result of this volatility, an investment in our stock is subject to substantial
risk. Furthermore, the volatility of our stock price could negatively impact our
ability to raise capital in the future.
We
are contractually obligated to issue shares in the future, diluting the interest
of current shareholders.
As of
March 31, 2010, there were contractual obligations to issue stock options to
purchase 500,000 shares of our common stock. Moreover, we expect to issue
additional options to purchase shares of our common stock to compensate
employees, consultants and directors, and may issue additional shares to raise
capital, to acquire other companies or technologies, to pay for services or for
other corporate purposes. Any such issuances will have the effect of diluting
the interest of current shareholders.
We
are not able to trade on the OTC Bulletin Board until a new market maker is
approved.
The
shares of the Company have not traded. The market maker who obtained approval to
trade the Company’s shares on the OTC Bulletin Board has gone out of business.
Until a new market maker is identified and approved for trading the Company’s
shares on this market, the Company’s shares may not be traded on the OTC
Bulletin Board. While the Company believes that this issue will be resolved in
the next 90 days, there is no assurance that this will occur.
14
Risks
Related To Our Stock
Our
limited operating history makes evaluation of our business
difficult.
We have
just recently begun operations and, therefore, have limited historical financial
data related to our current business upon which to analyze operating expenses or
forecast accurately our future operating results. Our limited operating history
will make it difficult for investors to evaluate our business and
prospects.
We
will need to raise additional capital. If we are unable to raise additional
capital, our business may fail.
We will
need to raise additional capital to provide cash for our operations. Our current
working capital is not expected to be sufficient to carry out all of our plans
and to fund our operating losses until we are able to generate enough revenues
to sustain our business. Uncertainty regarding our ability to generate
significant revenues may make it difficult for us to find financing on
acceptable terms. If we are unable to obtain adequate funding, we may not be
able to successfully develop and market our services and our business will most
likely fail. To secure additional financing, we may need to borrow money or sell
more securities. Under these circumstances, we may be unable to secure
additional financing on favorable terms or at all.
The
market price of our common stock may be volatile.
The
trading price of our common stock may be highly volatile and could be subject to
wide fluctuations in response to various factors. Some of the factors that may
cause the market price of our common stock to fluctuate include:
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fluctuations in our quarterly
financial results or the quarterly financial results of companies
perceived to be similar to
us;
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changes in estimates of our
financial results or recommendations by securities
analysts;
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failure of our services to
achieve or maintain market
acceptance;
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changes in market valuations of
similar companies;
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significant products, contracts,
acquisitions or strategic alliances of our
competitors;
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success of competing products or
services;
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changes in our capital structure,
such as future issuances of securities or the incurrence of additional
debt;
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regulatory developments in the
United States or foreign
countries;
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litigation involving our company,
our general industry or
both;
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additions or departures of key
personnel;
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investors’ general perception of
us; and
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changes in general economic,
industry and market
conditions.
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In
addition, if the market for technology or mobile lottery service stocks or the
stock market in general experiences a loss of investor confidence, the trading
price of our common stock could decline for reasons unrelated to our business,
financial condition or results of operations. If any of the foregoing occurs, it
could cause our stock price to fall and may expose us to class action lawsuits
that, even if unsuccessful, could be costly to defend and a distraction to
management.
We
do not currently intend to pay dividends on our common stock and, consequently,
the ability to achieve a return on an investment in our common stock will depend
on appreciation in the price of our common stock.
We do not
expect to pay cash dividends on our common stock. Any future dividend payments
are within the absolute discretion of our Board of Directors and will depend on,
among other things, our results of operations, working capital requirements,
capital expenditure requirements, financial condition, contractual restrictions,
business opportunities, anticipated cash needs, provisions of applicable law and
other factors that our Board of Directors may deem relevant. We may not generate
sufficient cash from operations in the future to pay dividends on our common
stock. As a result, the success of an investment in our common stock will depend
on future appreciation in its value. The price of our common stock may not
appreciate in value or even maintain the price at which you purchased our
shares.
15
You
may experience dilution of your ownership interests due to the future issuance
of additional shares of our common stock.
As of
that date of this registration statement, we have 81,637,500 shares of our
common stock issued and outstanding. We are authorized to issue up to
520,000,000 shares of common stock and 80,000,000 shares of preferred stock. Our
Board of Directors may authorize the issuance of additional common or preferred
shares under applicable state law without shareholder approval. We may also
issue additional shares of our common stock or other securities that are
convertible into or exercisable for common stock in connection with the hiring
of personnel, future acquisitions, future private placements of our securities
for capital raising purposes or for other business purposes. Future sales of
substantial amounts of our common stock, or the perception that sales could
occur, could have a material adverse effect on the price of our common stock. If
we need to raise additional capital to expand or continue operations, it may be
necessary for us to issue additional equity or convertible debt securities.
If we issue equity or convertible debt securities, the net tangible book
value per share may decrease, the percentage ownership of our current
stockholders may be diluted and such equity securities may have rights,
preferences or privileges senior or more advantageous to our common
stockholders.
We
anticipate that our common stock will initially be considered to be a "Penny
Stock."
We
anticipate that our common stock will initially be a low-priced security, or a
“penny stock” as defined under rules promulgated under the Exchange Act. A
stock is a "penny stock" if it meets one or more of the definitions in Rules
15g-2 through 15g-6 promulgated under Section 15(g) of the Exchange Act. These
include but are not limited to the following: (i) the stock trades at a price
less than $5.00 per share; (ii) it is not traded on a "recognized" national
exchange; (iii) it is not quoted on The NASDAQ Stock Market, or even if so, has
a price less than $5.00 per share; or (iv) is issued by a company with net
tangible assets less than $2.0 million, if in business more than a continuous
three years, or with average revenues of less than $6.0 million for the past
three years. The principal result or effect of being designated a "penny stock"
is that securities broker-dealers cannot recommend the stock but must trade in
it on an unsolicited basis.
In
accordance with these rules, broker-dealers participating in transactions in
low-priced securities must first deliver a risk disclosure document which
describes the risks associated with such stocks, the broker-dealer’s duties in
selling the stock, the customer’s rights and remedies and certain market and
other information. Furthermore, the broker-dealer must make a suitability
determination approving the customer for low-priced stock transactions based on
the customer’s financial situation, investment experience and objectives.
Broker-dealers must also disclose these restrictions in writing to the customer,
obtain specific written consent from the customer, and provide monthly account
statements to the customer. The effect of these restrictions probably decreases
the willingness of broker-dealers to make a market in our common stock,
decreases liquidity of our common stock and increases transaction costs for
sales and purchases of our common stock as compared to other
securities.
Broker-dealer
requirements may affect trading and liquidity.
Section
15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated there under by the SEC require broker-dealers dealing in penny
stocks to provide potential investors with a document disclosing the risks of
penny stocks and to obtain a manually signed and dated written receipt of the
document before effectuating any transaction in a penny stock for the investor's
account. Moreover, Rule 15g-9 requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for holders of our common stock to
resell their shares to third parties or to otherwise dispose of them in the
market or otherwise.
16
There
is no public trading market for our common stock and there is no assurance that
the common stock will ever trade on a recognized exchange or dealers’ network;
this may adversely affect the ability of our investors to sell their
shares.
Our
common stock is not listed on any exchange or quoted on any quotation service,
and there is currently no public market for our common stock. We can provide no
assurance that our common stock will ever be quoted on any quotation service or
that any market for our common stock will ever develop. Neither we nor our
selling stockholders have engaged an underwriter for this offering, and we
cannot assure you that any brokerage firm will act as a market maker of our
securities. A trading market may not develop in the future, and if one does
develop, it may not be sustained. As a result, stockholders may be unable to
liquidate their investments, or may encounter considerable delay in selling
shares of our common stock.
If
a trading market develops, it may be volatile.
If an
active trading market does develop, the market price of our common stock is
likely to be highly volatile due to, among other things, the nature of our
business and because we are a new public company with a limited operating
history. Furthermore, even if a public market develops, the volume of trading in
our common stock will presumably be limited. The limited volume could make the
price of our common stock subject to manipulation by one or more stockholders as
well as significantly limit the number of shares that one can purchase or sell
in a short period of time.
The
equity markets have recently experienced significant price and volume
fluctuations that have adversely affected the market prices for many companies'
securities. These fluctuations may not be directly attributable to the operating
performance of these companies. Any such fluctuations may adversely affect the
market price of our common stock, regardless of our actual operating
performance. As a result, stockholders may be unable to sell their shares, or
may be forced to sell them at a loss.
Shares
eligible for future sale may adversely affect the market price of our common
stock, as the future sale of a substantial amount of our restricted stock in the
public marketplace could reduce the price of our common stock.
From time
to time, certain of our stockholders may be eligible to sell their shares of
common stock by means of ordinary brokerage transactions in the open market
pursuant to Rule 144 of the Securities Act of 1933, as amended, subject to
certain compliance requirements. In general, under Rule 144, unaffiliated
stockholders (or stockholders whose shares are aggregated) who have satisfied a
six month holding period may sell shares of our common stock, so long as we have
filed all required reports under Section 13 or 15(d) of the Exchange Act during
the applicable period preceding such sale. Generally, once a period of six
months has elapsed since the date the common stock was acquired from us or from
an affiliate of ours, unaffiliated stockholders can freely sell shares of our
common stock so long as the requisite conditions of Rule 144 and other
applicable rules have been satisfied. Also generally, twelve months after
acquiring shares from us or an affiliate, unaffiliated stockholders can freely
sell their shares without any restriction or requirement that we are current in
our SEC filings. Any substantial sales of common stock pursuant to Rule 144 may
have an adverse affect on the market price of our common stock.
Failure
to Achieve and Maintain Internal Controls in Accordance with Sections 302 and
404(a) of the Sarbanes-Oxley Act of 2002 Could Have A Material Adverse Effect on
Our Business and Stock Price.
If we
fail to maintain adequate internal controls or fail to implement required new or
improved controls, as such control standards are modified, supplemented or
amended from time to time, we may not be able to assert that we can conclude on
an ongoing basis that we have effective internal controls over financial
reporting. Effective internal controls are necessary for us to produce reliable
financial reports and are important in the prevention of financial fraud. If we
cannot produce reliable financial reports or prevent fraud, our business and
operating results could be harmed, investors could lose confidence in our
reported financial information, and there could be a material adverse effect on
our stock price.
17
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements
in this prospectus may be “forward-looking statements.” Forward-looking
statements include, but are not limited to, statements that express our
intentions, beliefs, expectations, strategies, predictions or any other
statements relating to our future activities or other future events or
conditions. These statements are based on current expectations, estimates and
projections about our business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may, and are likely to, differ materially
from what is expressed or forecasted in the forward-looking statements due to
numerous factors, including those described above and those risks discussed from
time to time in this prospectus, including the risks described under “Risk
Factors,” “Management’s Discussion and Analysis” and “Our
Business.”
There are
important factors that could cause our actual results to differ materially from
those in the forward-looking statements. These factors, include, without
limitation, the following: our ability to develop our technology platform and
our products; our ability to sell our stem cell product; our ability to protect
our intellectual property; the risk that we will not be able to develop our
technology platform and products in the current projected timeframe; the risk
that our products will not achieve performance standards in clinical trials; the
risk that the clinical trial process will take longer than projected; the risk
that our products will not receive regulatory approval; the risk that the
regulatory review process will take longer than projected; the risk that we will
not be unsuccessful in implementing our strategic, operating and personnel
initiatives; the risk that we will not be able to commercialize our products;
any of which could impact sales, costs and expenses and/or planned strategies.
Additional information regarding factors that could cause results to differ can
be found in this prospectus and in our other filings with the Securities and
Exchange Commission.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of our common stock offered through this
prospectus by the selling stockholders.
DETERMINATION
OF OFFERING PRICE
The
selling stockholders will initially offer their shares at $.02 per share. Our
common stock is not traded on any exchange or quoted for trading on any
quotation system. The price of $.02 is a fixed price at which the selling
stockholders may sell their shares until the Company’s common stock is quoted on
the OTC Bulletin Board at which time the shares may be sold at prevailing market
prices or privately negotiated prices. There can be no assurance that a market
maker will agree to file the necessary documents with FINRA, which operates the
OTC Electronic Bulletin Board, nor can there be any assurance that such an
application for quotation will be approved. We will not receive proceeds from
the sale of shares from the selling stockholders. The selling price has no
relationship to any established criteria of value, such as book value or
earnings per share. The price was chosen arbitrarily. We cannot determine what
the actual value of our common stock will be either now or at the time of sale
other than within the limited period agreed upon by the selling stockholders.
Upon the effectiveness of this registration statement, or pursuant to exemption
from the Securities Act of 1933, as amended, the selling stockholders may sell
all or a portion of their shares from time to time at prices $.02 per share.
After our stock is trading on the OTC Bulletin Board, the selling stockholders
may sell all or a portion of their shares from time to time at prices prevailing
at the time of sale, or related to the market price at the time of sale, or at
other negotiated prices. Consequently, other than the initial $.02 per share
offering price by the selling stockholders, we cannot determine what the actual
value of our common stock will be either now or at the time of
sale.
DILUTION
The
common stock to be sold by the selling stockholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders with respect to the shares offered for sale by the selling
stockholders.
18
SELLING
STOCKHOLDERS
The
common stock which is the subject of this registration statement is being
registered to permit public secondary trading of the shares, and the selling
stockholders, or their pledgees, donees, transferees or other successors-in
interest, may offer all or any portion of the shares for resale from time to
time. None of the selling stockholders is a registered broker-dealer or an
affiliate of a registered broker-dealer.
The table
below lists the selling stockholders and other information regarding the
beneficial ownership of the common stock by each of the selling stockholders.
The second column lists the number of shares of common stock beneficially owned
by each selling stockholder, based on its ownership of the common stock, as of
the date of this prospectus. The fourth column lists the common stock being
offered by this prospectus by the selling stockholders. The fifth column assumes
the sale of all of the shares offered by the selling stockholders pursuant to
this prospectus.
21,187,500
of the shares registered in this prospectus were initially issued by the Company
in private placements of restricted common stock which closed in 2002 and 2003.
Additionally, we are registering 5,250,000 shares which were issued in July 2008
pursuant to the Company acquiring the stem cell opportunity and 200,000 shares
which were issued to our legal counsel for services rendered. The company
offered and issued the securities in reliance upon the exemptions from
registration provided by Section 4(2) of the U.S. Securities Act of 1933, as
amended and Regulation D promulgated thereunder. The table and the other
information contained under the captions “Selling Stockholders” and “Plan of
Distribution” has been prepared based upon information furnished to us by or on
behalf of the selling stockholders.
The named
party beneficially owns and has sole voting and investment power over all shares
or rights to these shares. The percentages are based on 81,637,500 shares of
common stock outstanding on the date of this prospectus. ,
Name of Selling
Shareholder
|
Shares Owned
Prior to this
Offering
|
Total Number of Shares
to be offered for Selling
Stockholders Account
|
Total Shares
Owned Upon
Completion of this
Offering
|
Percent Owned
Upon
Completion of
this Offering
|
||||||||||||
Phillip
Dee
|
200,000
|
200,000
|
0
|
0
|
||||||||||||
Sandra
Dee
|
100,000
|
100,000
|
0
|
0
|
||||||||||||
Brooke
Dodrill
|
100,000
|
100,000
|
0
|
0
|
||||||||||||
Carol
Dodrill
|
100,000
|
100,000
|
0
|
0
|
||||||||||||
Grant
Dodrill
|
100,000
|
100,000
|
0
|
0
|
||||||||||||
James
G. Dodrill II
|
2,700,000
|
2,700,000
|
0
|
0
|
||||||||||||
Brian
Ellis
|
18,750
|
18,750
|
0
|
0
|
||||||||||||
Netta
Gerard
|
500
|
500
|
0
|
0
|
||||||||||||
Global
Advisor Group, Inc.
|
3,500,000
|
3,500,000
|
0
|
0
|
||||||||||||
Greenwood
Consultants
|
300,000
|
300,000
|
0
|
0
|
||||||||||||
Kenneth
Hayes
|
1,000
|
1,000
|
0
|
0
|
||||||||||||
Michael
Hummer
|
600,000
|
600,000
|
0
|
0
|
||||||||||||
ITRM
LLC
|
2,000,000
|
2,000,000
|
0
|
0
|
||||||||||||
Ania
Kowalik
|
37,500
|
37,500
|
0
|
0
|
||||||||||||
Scott
D. Massey
|
1,968,500
|
1,968,500
|
||||||||||||||
Kristy
A. Massey
|
100,000
|
100,000
|
||||||||||||||
Diane
Massey
|
750,000
|
750,000
|
0
|
0
|
||||||||||||
Albert
P. Massey III
|
750,000
|
750,000
|
0
|
0
|
||||||||||||
Domenic
Mazza
|
5,000,000
|
5,000,000
|
0
|
0
|
||||||||||||
Merchant
Marketing Solutions, Inc.
|
3,400,000
|
3,400,000
|
0
|
0
|
||||||||||||
David
Monroe
|
500
|
500
|
0
|
0
|
||||||||||||
Jan
Monroe
|
500
|
500
|
0
|
0
|
||||||||||||
Donald
Trey Murphy III
|
1,500
|
1,500
|
0
|
0
|
||||||||||||
Ralph
Neal
|
500,000
|
500,000
|
0
|
0
|
||||||||||||
Andrew
R. Nixon
|
500
|
500
|
0
|
0
|
||||||||||||
Roger
P. Paterson
|
18,750
|
18,750
|
0
|
0
|
||||||||||||
Douglas
Rice
|
250,000
|
250,000
|
0
|
0
|
||||||||||||
Steve
Rudisch
|
500
|
500
|
0
|
0
|
||||||||||||
Stephen
Schramka
|
500
|
500
|
0
|
0
|
||||||||||||
Gina
Stelluti
|
25,000
|
25,000
|
0
|
0
|
||||||||||||
Dimitrios
Sykokis
|
1,000,000
|
1,000,000
|
0
|
0
|
||||||||||||
Renee
Tischler
|
500
|
500
|
0
|
0
|
||||||||||||
Verlon,
Ltd.
|
3,000,000
|
3,000,000
|
0
|
0
|
||||||||||||
Carl
Wolters
|
500
|
500
|
0
|
0
|
||||||||||||
Moshe
Zackay
|
112,500
|
112,500
|
0
|
0
|
||||||||||||
19
PLAN
OF DISTRIBUTION
The
selling stockholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock being offered under this prospectus on any stock exchange,
market or trading facility on which shares of our common stock are traded or in
private transactions. These sales may be at fixed or negotiated prices. The
selling stockholders may use any one or more of the following methods when
disposing of shares:
|
·
|
ordinary brokerage transactions
and transactions in which the broker-dealer solicits
purchasers;
|
|
·
|
block trades in which the
broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction;
|
|
·
|
purchases by a broker-dealer as
principal and resale’s by the broker-dealer for its
account;
|
|
·
|
an exchange distribution in
accordance with the rules of the applicable
exchange;
|
|
·
|
privately negotiated
transactions;
|
|
·
|
broker-dealers may agree with the
selling stockholders to sell a specified number of such shares at a
stipulated price per share;
|
|
·
|
a combination of any of these
methods of sale; and
|
|
·
|
any other method permitted
pursuant to applicable law.
|
The
shares may also be sold under Rule 144 under the Securities Act of 1933, as
amended (“Securities Act”), if available, rather than under this prospectus. The
selling stockholders have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.
20
The
selling stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a selling security holder defaults on a
margin loan, the broker may, from time to time, offer and sell the pledged
shares at any price.
Broker-dealers
engaged by the selling stockholders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, which
commissions as to a particular broker or dealer may be in excess of customary
commissions to the extent permitted by applicable law.
If sales
of shares offered under this prospectus are made to broker-dealers as
principals, we would be required to file a post-effective amendment to the
registration statement of which this prospectus is a part. In the post-effective
amendment, we would be required to disclose the names of any participating
broker-dealers and the compensation arrangements relating to such
sales.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
sales. Commissions received by these broker-dealers or agents and any profit on
the resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Any broker-dealers or agents
that are deemed to be underwriters may not sell shares offered under this
prospectus unless and until we set forth the names of the underwriters and the
material details of their underwriting arrangements in a supplement to this
prospectus or, if required, in a replacement prospectus included in a
post-effective amendment to the registration statement of which this prospectus
is a part.
The
selling stockholders and any other persons participating in the sale or
distribution of the shares offered under this prospectus will be subject to
applicable provisions of the Exchange Act, and the rules and regulations under
that act, including Regulation M. These provisions may restrict activities of,
and limit the timing of purchases and sales of any of the shares by, the selling
stockholders or any other person. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited from simultaneously
engaging in market making and other activities with respect to those securities
for a specified period of time prior to the commencement of such distributions,
subject to specified exceptions or exemptions. All of these limitations may
affect the marketability of the shares.
If any of
the shares of common stock offered for sale pursuant to this prospectus are
transferred other than pursuant to a sale under this prospectus, then subsequent
holders could not use this prospectus until a post-effective amendment or
prospectus supplement is filed, naming such holders. We offer no assurance as to
whether any of the selling stockholders will sell all or any portion of the
shares offered under this prospectus.
We have
agreed to pay all fees and expenses we incur incident to the registration of the
shares being offered under this prospectus. However, each selling security
holder and purchaser is responsible for paying any discounts, commissions and
similar selling expenses they incur.
We and
the selling stockholders have agreed to indemnify one another against certain
losses, damages and liabilities arising in connection with this prospectus,
including liabilities under the Securities Act.
Penny
Stock
We
anticipate that we will initially be a “penny stock.” The Commission has adopted
Rule 15g-9 which establishes the definition of a "penny stock," for the purposes
relevant to us, as any equity security that has a market price of less than
$5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require:
|
·
|
that a broker or dealer approve a
person's account for transactions in penny stocks;
and
|
|
·
|
the broker or dealer receive from
the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be
purchased.
|
21
In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must
|
·
|
obtain financial information and
investment experience objectives of the person;
and
|
|
·
|
make a reasonable determination
that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny
stocks.
|
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:
|
·
|
sets forth the basis on which the
broker or dealer made the suitability determination;
and
|
|
·
|
that the broker or dealer
received a signed, written agreement from the investor prior to the
transaction.
|
Disclosure
also must be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
DESCRIPTION
OF SECURITIES TO BE REGISTERED
Our
authorized capital stock consists of 520,000,000 shares of common stock at a par
value of $0.0001 per share and 80,000,000 shares of preferred stock at a par
value of $0.0001 per share. As of the date of this prospectus, there were
81,637,500 shares of our common stock issued and outstanding.
Holders
of our common stock are entitled to one vote for each share on all matters
submitted to a stockholder vote. Our CEO, James Mongiardo, owns 15,000,000
shares of our common stock and Yieldex, Ltd owns 40,000,000 shares of our common
stock. Together, these two shareholders control approximately 67.37% of our
outstanding common stock. Holders of our common stock do not have cumulative
voting rights. Therefore, the holders of a majority of our shares can elect all
of the directors. Holders of our common stock representing a majority of the
voting issued and outstanding shares, as represented in person or by proxy, are
necessary to constitute a quorum at any meeting of our stockholders. A vote by
the holders of a majority of our outstanding shares is required to effectuate
certain fundamental corporate changes such as liquidation, merger or an
amendment to our articles of incorporation.
INTERESTS
OF NAMED EXPERTS AND COUNSEL
James
Dodrill, the president of James G. Dodrill II, P.A., which serves as our legal
counsel is the beneficial owner of 2,700,000 shares of our common stock. The
Company issued 200,000 of these shares to Mr. Dodrill for legal services
provided to the Company. Mr. Dodrill acquired the other shares in private
transactions directly from unaffiliated shareholders of the Company. Other than
due to Mr. Dodrill’s beneficial ownership of these shares, no expert or counsel
acting for the company or any of the selling security holders named herein was
employed for such purpose on a contingent basis, or at the time of such
preparation, certification or opinion or at any time thereafter, through the
date of effectiveness of the registration statement had, or is to receive in
connection with the offering, a substantial interest, direct or indirect, in the
Company or any of its parents, subsidiaries or affiliates, or was connected with
the Company or any of its parents, subsidiaries or affiliates as a promoter,
underwriter, voting trustee, director, officer, or employee. The Company has not
engaged any experts, other than the independent accounting firm who audited the
consolidated financial statements, to prepare or certify any part of this
prospectus or any other report or valuation for use in connection with the
registration statement of which this prospectus is a part.
22
BUSINESS
THE
COMPANY – background and summary
Overview
of the Company and its Prior Strategy
We were incorporated in Florida on
February 1, 2002.
Prior
Operations.
We were seeking the proper mix of
product offerings, community identity and unique venue for cafes. We spent time
developing the proper taste we want to offer to our customers in coffee
selection, the right reasons that customers will choose us over many other
choices as well as develop an adequate base of financial support to sustain
operations through the period necessary until cash flow from operations can
sustain us. We did not have any operating locations built, nor any agreements in
place to open any locations. The primary reason we did not opened a location is
the financial requirement necessary to operate at a level necessary to sustain
operations through the first six months. We anticipate that amount to be
$150,000 which we were unable to raise.
Our
Prior Business.
We planned to develop cafes in South
Carolina and then in other states in the South East, featuring gourmet coffee,
pastries and related items. Our objective was to develop cafes that will provide
a forum for rapid service and a strong community identity with the widespread
popularity of coffee and related products. We intended to meet what we believe
is an increasing demand for convenience and community at an affordable
price.
Due to intense competition, we
believed that it was no longer good enough just to open a cafe. We believed that
cafe owners must look for ways to differentiate their cafe from others in order
to achieve and maintain a competitive advantage.
We recognized this need for
differentiation and strongly believed that two features would add to this
competitive advantage. The first concept was to offer a convenient drive through
that would allow the morning commuters rapid access to coffee without having to
find parking and exit their automobile. Secondly, we intended to have an active
program of artistic entertainment and dialog through literature readings and
orchestrated debates.
The
Stem Cell Business Opportunity
On July
16, 2008 the Company changed focus to a new stem cell therapy business
opportunity as set forth in a Letter of Intent dated March 31, 2008 with
TheraVitae, Inc. by completing several actions. These actions included the
filing of Amended Articles of Incorporation which among other matters changed
the name of the corporation to RegenoCELL Therapeutics, Inc. and increased its
authorized capitalization to 600,000,000 shares, approved Amended Bylaws, issued
restricted common shares, par value $.0001 per share, to Douglas T. Rice
(250,000), Domenic Mazza (5,000,000) and James F. Mongiardo (15,000,000),
ratified the March 31 Letter of Intent with TheraVitae, and approved the
Employment Agreement with James F. Mongiardo as President and Chief Executive
Officer.
The
Letter of Intent with TheraVitae provides for a non exclusive license in Mexico
and later the Islands of the Caribbean to commercialize TheraVitae’s stem cell
therapy for cardiovascular indications. The Company may establish clinics to
treat congestive heart failure patients with VesCell, TheraVitae’s stem cell
therapy. It also provides for an exclusive license in the United States, Canada
and Mexico to obtain regulatory approvals and then market VesCell stem cell
therapy for the treatment of peripheral artery disease.
23
Further in connection with this change
in business focus, the Board of Directors accepted the resignations of Scott
Massey and Phillips N. Dee as Directors and Officers of the Company and elected
James F. Mongiardo to fill the vacancy on the Board. Mr. Mongiardo was also
elected to serve as Chief Executive Officer, President, Treasurer and
Secretary.
In 2009 the parties to the Letter of
Intent reached an impasse and the license was not acquired.
Stem
Cell Therapy
The
ability to treat disease has been enhanced in the past two decades through the
development of products utilizing techniques commonly referred to as
“biotechnology”. Our ability to treat has also been enhanced by a better
understanding of the human genome. Added to this mix of advanced new treatments
have been products which are tissue engineered, that is utilizing cells to
create tissue which treats the disease or damaged tissue. Holding great promise
for significant new advances in the treatment of disease and damaged tissue are
stem cells.
Stem
cells are cells which have the ability to produce other cells identical to
themselves or to differentiate into specific cell lineages. With these
properties, stem cells play important roles in normal development and in the
regeneration and repair of damaged tissue through the ability to differentiate
into the type of cell needed for growth or repair.
The main
sources of stem cells include (1) embryonic and fetal tissues; (2) umbilical
cord blood; and (3) adult stem cells. Embryonic stem cells are totipotent which
means that they can differentiate into all cell types. Use of embryonic stem
cells has been subject to ethical controversy. Because their proliferation is
difficult to control, they have been linked to the formation of cancers. More
importantly, they possess a genome which is different than the patient’s genome
raising safety issues which will take extensive clinical testing to
resolve.
Umbilical
cord blood stem cells are also capable of significant differentiation. While not
being subject to ethical controversy as embryonic stem cells, they still possess
a genome which is different than the patient’s genome. Many different choices
may get a similarity in genomes but it will never be an identical match to the
one person whose umbilical cord blood is being used to create the stem
cells.
Adult
stem cells are different. They are autologous, meaning that they are derived
from the patient for use in that patient. Typical sources of adult stem cells
include bone marrow or blood. Any tissue of the patient may be used. Adult stem
cells are capable of differentiating into a variety of cell types without a risk
of immunological rejection. Without the safety concerns of immunological
rejection associated with embryonic and umbilical cord blood stem cells, it is
expected that the first stem cell products to market will be derived from adult
stem cells.
Stem
Cell Business
The new
mission of the Company is to bring stem cell therapy treatments to the market as
quickly as possible. The Company’s therapy utilizes a process to identify and
process adult stem cells found in a patient’s blood. These adult stem cells are
grown into large numbers in
vitro (outside the body) and then encouraged to differentiate into
angiogenic precursor cells or blood vessel forming cells for the treatment of
congestive heart failure. These adult stem cells can also be used for the
treatment of other conditions such as peripheral artery disease.
Currently
congestive heart failure patients cleared for treatment have one-half pint of
blood drawn which is sent to the Company’s subsidiary cell processing facility
in Israel. After the adult stem cells in the patient’s blood have been extracted
and grown into large numbers of angiogenic precursor cells, they are for
infusion into the patient in a minimally invasive procedure. The stem cell
therapy is either delivered through a catheter or injected directly into the
myocardium. All patients are private pay.
The
results to date have been impressive. After an animal trial in nude
rats demonstrated safety and efficacy after myocardial infarction, a clinical
trial was conducted with 24 patients. Statistically significant
improvements between baseline and the three month and six month follow-up were
achieved for:
24
|
·
|
Improvement
in the six minutes walking test.
|
|
·
|
Increase
in metabolic equivalent units (METs) during the stress
test.
|
|
·
|
Decrease
in the perfusion defect at region of the target
artery.
|
|
·
|
Decrease
in the Canadian Cardiovascular Society (CCS) Grading
Scale.
|
Subsequent
to this clinical trial, compassionate use treatment of no option congestive
heart failure patients began. In total over five hundred (500)
patients have been treated with this stem cell therapy. The
compassionate use results are very similar to the initial clinical trial
reported. Many of these compassionate use patients are from the
United States and are still living many months and years after they had been
told they would not survive more than three to six months.
Business
Opportunity
The Company has acquired certain assets
and assumed certain liabilities of Thera Vitae, Ltd. through its wholly owned
Israeli subsidiary, Regenocell Laboratories, Ltd. As a result on
February 4, 2010 the Company’s primary asset is Regenocell Laboratories which is
manufacturing and selling stem cell therapy product used to treat congestive
heart failure and peripheral artery disease. Purchases are being made
to treat patients for these indications in several countries. It is
anticipated that purchases will also be made to treat patients in additional
countries.
The primary source of patients being
treated for congestive heart failure is the United States.
The initial stem cell business focus
is to treat patients in Mexico with adult stem
cell therapy for congestive heart failure and all other cardiovascular
indications. Patients may not be treated in the United
States. However, patients from the United States may be identified,
qualified, agree to the treatment, pay for it in advance and then have their
blood drawn for processing. When the stem cell therapy is ready for
administration, the patient will travel outside the United States to Monterrey,
Mexico where the treatment will be administered in a catherization laboratory at
Christus Muguerza Hospital. The treatment administration will be
pursuant to a protocol approved by the Research and Bioethics Committee of
Christus Muguerza Hospital (equivalent to an Institutional Review Board at a
United States Hospital) and COFEPRIS (Mexican equivalent to the United States
Food and Drug Administration). Christus Muguerza Hospital is Joint
Commission accredited (same accreditation required for United States hospitals).
Approximately five million patients have been diagnosed in the United States
with congestive heart failure. Up to seven hundred thousand (700,000)
new cases are diagnosed each year.
The Company intends to find patients in
the United States through its contacts with physicians and other health care
professionals, a website, recommendations from professionals seeking alternative
healthcare options for patients, public relations, standard marketing and word
of mouth from treated patients. Once a patient expresses interest and
is preliminarily qualified, that patient will travel to Los Angeles and be
screened by the Company’s Chief Medical Officer at the LA Advanced Heart Therapy
Center located at Titan Imaging, 9201 Sunset Boulevard, Suite M-150, West
Hollywood, California 90069. After being approved, the patient will
enter into a Cell Therapy Logistical Services Agreement and pay in
advance for. That payment amount is anticipated to be either $55,000
or $64,500 which will be paid by the patient.
After the Company receives payment, the
patient’s blood will be collected and sent to the Company’s subsidiary cell
processing facility in Israel. The patient will be entered into a
clinical trial and fly to Monterrey, Mexico where the stem cell therapy will be
administered in accordance with the protocol of the clinical trial in a
catherization laboratory at Christus Muguerza Hospital. Upon release,
the patient will fly back to the United States and scheduled for follow-up
evaluation visits at the LA Advanced Heart Therapy Center located at Titan
Imaging at one month, three months and every three months through two years post
treatment.
There are over 1100 investigation stem
cell clinical trials being conducted in the United States. It will
take multiple years for any product to be approved,
especially products derived from embryonic or umbilical cord
blood stem cells. In the interim, patients may benefit from adult
stem cell treatment today through identification and qualification in the United
States and the administration of treatment outside the United
States.
25
The second stem cell business focus is
to obtain regulatory approval to treat peripheral artery disease
(“PAD”) in the United States and Europe. Over ten million Americans
suffer from poor circulation to their extremities and a similar number in
Europe. PAD is especially prevalent among diabetics. After
standard treatments fail, the only alternative is amputation of the toes, foot
or leg, sometimes fingers, hand or arm. The Company’s adult stem cell
therapy has been shown in pilot clinical trials to re-establish blood flow to
the extremities resulting in saving the limbs from amputation. The
process for treating PAD is very similar to the process for treating congestive
heart failure. After the patient is qualified, a half liter of blood
is drawn and sent to the Company’s subsidiary in Israel for
processing. The adult stem cells are extracted, grown into large
numbers and then encouraged to become angiogenic precursor
cells. This adult stem cell therapy is then injected in multiple
locations in the limb which is experiencing poor circulation.
The Company intends
to obtain an Investigational New Drug exemption and its equivalent in
Europe to initiate clinical trials designed to obtain regulatory
approval to market the product from both the Food and Drug Administration and
the European Medicines Agency. Such an approval in the United States
and Europe will have block buster potential, meaning that the market size is so
large and flexibility of pricing so great given the alternative of amputation,
that the approved PAD stem cell therapy product may potentially generate
revenues in excess of one billion dollars per annum. Thus, this
second business has substantial long term upside potential.
Intellectual
Property Matters
Where
appropriate, we will seek patent, trademark and other proprietary rights
protection for the products and brands we develop or introduce. In
other cases, we will seek to license the rights to use the patents, trademarks
and other proprietary rights of others in support of our business strategy.
However, there can be no assurance that patent, trademark and other proprietary
rights will issue for any applications we file or that we will be able to
license such products and rights on terms acceptable to the Company, or at
all. To date, the Company has not filed any applications or
registrations for any patent, trademark and other proprietary
rights.
PROGRESS
TO DATE
After an extended period of due
diligence and meetings with the founder of TheraVitae, Inc., the letter of
intent which forms the basis of the stem cell business of the Company was
executed on March 31, 2008. That letter provided for two
businesses. The first was revenue generating, the treatment of no
option congestive heart failure patients from the United States in
Mexico. The second was longer term, taking the same product through
the regulatory process for the treatment of peripheral artery
disease.
To
implement the business plan, the first step taken was to find a Chief Medical
Officer. Through previous dealings with Americo Simonini, MD, he was
approached and was excited to serve as Chief Medical Officer. Americo
Simonini, MD is a leading cardiac clinician at the Cedars-Sinai Medical Center
in Los Angeles. As part of his diverse interests in leading edge
cardiac technologies, he also serves as Clinical Assistant Professor of Medicine
at the UCLA Medical School.
Dr.
Simonini is a graduate of New York University (BA) and SUNY-Stony Brook, NY
(MD). His postdoctoral training was at multiple institutions
including the New York University-Bellevue Hospital Center, the Cardiovascular
Research Institute at UCSF and a Cardiology Fellowship at the University of
Michigan Medical Center. He was recruited to serve as Director at the
Advanced Heart Failure Program at the Cedars-Sinai Medical Center, Los Angeles
where he continues to practice as a clinician. His abstracts and
manuscripts have included an examination of the causes of heart failure as well
as the role of angiogenic molecules in coronary artery disease.
26
As Chief
Medical Officer for RegenoCELL Therapeutics, Dr. Simonini will provide oversight
to the company’s clinical programs. Among his responsibilities are
the development of data which can be used to support the Company’s stem cell
treatment at scientific and medical meetings. He is responsible for
overview of any clinical trial conducted. He must qualify any patient to be
treated in Mexico and is responsible for the follow-up visits after
treatment. Further, he is a source of patients from the United States
to be treated in Mexico.
The next major step in implementing the
business plan was to find a place suitable in Mexico to treat no option
congestive heart failure patients from the United States. It had to
be conveniently located, be a place where Americans will be comfortable and
offer first class medical facilities and personnel to administer the
treatment. The focus was on Monterrey, Mexico which had all the
requisite characteristics. Two hospitals, both of which are
qualified, were considered and Christus Muguerza Hospital
selected. Christus is 50% owned by a United States hospital
chain. It is Joint Commission accredited meaning it meets all the
standards that hospitals meet in the United States. It has
state-of-the-art catherization laboratories employing GE
equipment. It also is a GE beta testing site for new software for
medical equipment.
More importantly, the cardiologist
administering the treatment in Mexico is Jose Luis Assad Morrell,
MD. Dr. Assad trained at Johns Hopkins, Georgetown and the Mayo
Clinic. He is a Diplomate Mexican Board of Internal Medicine with Certified
Subspecialties of Cardiovascular Disease, a Fellow of the American College of
Cardiology and a Fellow of the Society of Cardiac Angiography and
Interventions. Agreements were reached with both Christus Muguerza
and Dr. Assad for services which they are to provide.
The key part of the business plan,
namely the treatment of no option congestive heart failure patients from the
United States in Mexico, required obtaining approval from COFEPRIS (Mexican FDA)
to conduct a clinical trial in Mexico for an unapproved product. This
is analogous to the United States where the Food and Drug Administration
approves clinical trials for unapproved products.
A clinical trial requires a protocol
which includes the safety and efficacy data supporting the
product. It also requires information about other similar products
and details about the manufacturing process. The Company
put together an extensive Mexican information
package. The process in Mexico required that our clinical
trial first be approved by the Research and Bioethics Committee of Christus
Muguerza Hospital, similar to an Institutional Review Board in the United
States. Since the Company is applying in Mexico, any documents the
Company created had to be translated into Spanish.
The Company obtained the Research and
Bioethics Committee approval to conduct the clinical trial in
March. Before the Company submitted to COFEPRIS, a local Mexico City
firm, Accelerated Clinical Research (“ACR”) was retained to assist with the
application and to follow it through COFEPRIS. A regulatory strategy
was agreed upon and multiple additional documents were created to satisfy what
ACR said COFEPRIS would expect to see. The documents are
so numerous that ACR sent two discs for the the Company’s files.
COFEPRIS does not mail any letters
about action it is taking. Rather all letters are hand delivered and if you miss
a deadline because you did not pick up your letter on time, you start all
over. Through ACR, the Company had someone go to the offices of
COFEPRIS in Mexico City every day
post submission. COFEPRIS responded in early June
requesting three changes to our program. The most significant was
their request that instead of following patients for 6 months, the Company
follow them for 2 years with visits every three months which include measuring
the left ventricular ejection fraction at each visit. The Company
agreed to the three changes but before the Company could resubmit, it had to
obtain approval for these changes from the Research and Bioethics Committee at
Christus Muguerza Hospital. The Company did obtain that approval and
resubmitted to COFEPRIS on June 19 which was on time (within 10 business days of
issuance of the letter). Subsequently COFEPRIS raised another issue
concerning language in the Informed Consent. The Company then engaged
local counsel who negotiated with COFEPRIS revised language to the Informed
Consent.
At the request of COFEPRIS, the entire
application was resubmitted after obtaining approval again from the Research and
Bioethics Committee of Christus Muguerza Hospital for the revised language. The
re-submission was made on October 13, 2009. COFEPRIS approved the
application on November 30, 2009. The final step in this process is
to obtain an import license from another section of COFEPRIS. It
takes an average of 15 (fifteen) business days to obtain a license from the date
the import license application is submitted.
27
Concurrent with the final steps in the
Mexican approval process, the Company was asked to become the staging center for
patients in North America who are to be treated in Bangkok. The
Company will screen and qualify them, draw their blood and ship it to the cell
processing facility in Israel. The patients will fly to Bangkok to
receive the stem cell treatment. It should be noted that both the
shipment of blood and the shipment of stem cells from that blood must be done
under a 48 window under controlled temperature conditions. The
Staging Center Services Agreement was executed by the Company on October 30,
2009 and by TheraVitae Cell Therapy Limited on November 4, 2009.
The
Company also reached agreement with Titan Imaging located in West Hollywood,
California to serve as the staging center for
patients. Patients will be screened, have their blood dawn and
receive all the tests in the subsequent follow-up visits at the LA Advanced
Heart Therapy Center located at Titan Imaging’s facilities which are required by
the protocol submitted to COFEPRIS. Titan has not requested any
up-front payments but rather will be paid as each patient is
processed. The Diagnostic Imaging Services Agreement between the
Company and Cardio Diagnostic Imaging, doing business as Titan Imaging, was
executed on November 19, 2009.
Once approval to treat in Mexico is
obtained, the Company’s patients will be staged at the LA Advanced Heart Therapy
Center located at Titan Imaging and treated in Mexico. Follow-up
visits will be over two years in Los Angeles. Patient flow will be as
follows. A no option congestive heart failure patient (3 to 6 months
to live) decides to have the Company’s stem cell treatment. The
patient is screened by Dr. Simonini at the LA Advanced Heart Therapy Center
located at Titan Imaging and qualified for the treatment. The patient
then enters into a cell therapy logistical services agreement. The
charge will be $55,000 or $64,500. After payment, the patient goes
back to the staging center and has their blood drawn. It is then
under controlled temperature conditions sent to Israel for processing within 48
hours. In Israel, the patient’s stem cells are segregated and grown
over 5 days from tens of thousands into many millions.
The patient then flies to Monterrey,
Mexico. They will be staying at the Safi Royal Luxury Hotel Valley
where we have negotiated a special rate. They will be examined by Dr.
Assad before the Company’s stem cells are received. Upon receipt, the
patient will be admitted to Christus Muguerza Hospital for treatment pursuant to
the approved protocol. Dr. Assad will administer the Company’s stem
cells in one of Christus Muguerza’s catherization laboratories. The
process is very similar to angioplasty except the stem cells are released as
opposed to a balloon/stent removing a blockage. The patient then
recovers from this 45 minute procedure (insure that the artery through which the
catheter was placed has fully healed). Dr. Assad then clears the
patient to fly back to the United States.
Patient follow-up is conducted at the
LA Advanced Heart Therapy Center located at Titan Imaging by Dr.
Simonini. Visits are scheduled for one month, three months and every
three months thereafter until two years from receipt of
treatment. Data gathered through these visits will be used by Drs.
Simonini and Assad to publish papers and present at scientific and medical
meetings.
In addition to the above, the Company
did retain a public relations firm to assist in obtaining general publicity
about this treatment and its success, especially television
media. Over 90% of these no option congestive heart failure patients
who were given 3 to 6 months to live are still alive 2 years after
treatment. TransMedia developed a full scale plan which the Company
put on hold during the collapse of the fourth quarter of 2008. In
advance of implementing the plan, TransMedia has obtained interest from ABC news
to follow a patient through-out this process. The Company will
follow-up with this interest after we are treating patients in
Mexico.
In 2009 the parties to the Letter of
Intent reached an impasse and the license was not acquired.
During
the middle of December, 2009, the founder of TheraVitae approached the Company
to ascertain its interest in acquiring the manufacturing operations in Israel
for the stem cell product to be used in Mexico and now being used to treat
patients in Bangkok and the Dominican Republic. Due diligence was
conducted including a site visit to Israel. Terms were negotiated and
two agreements executed on January 7, 2010.
28
The first
agreement is between TheraVitae Limited, the Israeli corporation manufacturing
the product, and a newly formed Israeli corporation which is a wholly owned
subsidiary of the Company, Regenocell Laboratories, Ltd. Pursuant to
the terms of the agreement, certain assets were acquired and certain liabilities
assumed. These assets include all the manufacturing and office
equipment and the transfer of the lease. At signing $75,000 was paid
toward the reduction of the assumed liabilities. All the employees
have been terminated,offered employment with Regenocell Laboratories, Ltd., and
all accepted and are now employees of the Company’s subsidiary.
The
second agreement is between Yieldex, Ltd. and the Company for the acquisition of
certain rights. This includes clinical data, the non exclusive use of
the CRM System which manages clinical data and input necessary to schedule a
patient for stem cell production, and all rights in patent and patent
applications, if any, in connection with activities of stem cell research,
therapy development and clinical trials under the trade name ”TheraVitae” for
the world except for Asia. Israel is excluded by definition from
being part of Asia. To the best of the Company’s knowledge, Yieldex has no
rights in patent and patent applications. The cash price is
$5,000,000 (five million United States dollars), of which $75,000 was paid to
TheraVitae Limited and $25,000 to Yieldex on January 7. The balance
is due in monthly installments on or before January 4, 2015. Minimum
installments are $5,000 per patient processed in Israel after the first eight
patients during the preceding month. In addition 25% of any equity
raised by the Company will be applied to the outstanding balance.
In
addition there is an equity price, 40,000,000 (forty million) shares
of the Company’s common stock, par value $.0001, were issued when the transfer
of assets in the TheraVitae Limited-Regenocell Laboratories, Ltd. agreement was
complete subject to the following. The 40,000,000 shares are
restricted and subject to a two year Lock-Up period beginning January 4,
2010. These shares are also subject to a corporate governance
restriction. During the Lock-Up period and for any subsequent period
until the shares are sold to the public in the open market, the shareholders
whose shares are locked up will vote as a class for two
directors. The Company’s affiliated shareholders who are not parties
to the Lock-Up agreement will vote as a class for three separate
directors. The Board of Directors will conduct its business in
accordance with the Bylaws of the Company with one additional
provision. Upon any decision by the Board to increase the Company’s
share capital which may result in dilution of more than ten percent (10%), then
such motion can only be approved by unanimous approval of all the directors then
in office or approval of holders of at least a majority of the Company’s
shares.
The
Company has been since January 7, 2010 in control of the manufacturing
operations in Israel. At eight patients during a month, revenues will
exceed $130,000. The combination of the existing business being
serviced by the manufacturing operations, namely patients being treated in
Bangkok and the Dominican Republic, and the addition of patients to be treated
by the Company in Mexico and other locations is expected to keep patient flow
for the manufacturing facility at or above the breakeven of eight
patients. Capacity at the current configuration of the manufacturing
facility is more than double the breakeven. There can be no assurance
of any patient flow for any given month.
The Board
of Directors of the Corporation effective July 22, 2008, instructed the transfer
agent to issue 90,000,000 (ninety million) restricted common shares, par value
$.0001, in the name of TheraVitae, Inc. to be held by the Corporation in escrow
with full control of voting rights until release to TheraVitae upon completion
and execution of the agreements incorporating the terms of the Letter of
Intent. The agreements incorporating the terms of the Letter of
Intent had not been completed and there appeared on December 31, 2009 to be no
possibility of their completion. Effective December 31, 2009, the
Board of Directors instructed the transfer agent to cancel these 90,000,000
(ninety million) restricted common shares, par value $.0001, held in escrow by
the Corporation in the name of TheraVitae, Inc.
The
capitalization of the Company as a result of the cancellation of these shares
was 41,437,500. An additional 40,000,000 restricted shares subject to
a two year Lock-Up period and corporate governance restriction as set forth
above in the Yieldex agreement with the Company was added resulting in a new
capitalization of 81,437,500. On June 15, 2010, an additional 200,000
common shares for services were issued resulting in a capitalization of
81,637,500.
Employees
The
Company currently employs one individual, James F.
Mongiardo. Regenocell Laboratories, Ltd. has thirteen (13)
employees.
29
DESCRIPTION
OF PROPERTY
The
Company does not own any real property or any interest in real property and does
not invest in real property or have any policies with respect thereto as a part
of its operations or otherwise.
The
principal business address of the Company is 2 Briar Lane, Natick, Massachusetts
01760, which is space owned by the President and Chief Executive Officer of the
Company. Rent has not been charged for the office space and it is not expected
that rent will be charged in the near-term.
Regenocell
Laboratories, Ltd. has assumed a lease with Africa-Israel for its manufacturing
operations in Israel. Lease payments converted to dollars are $10,400
plus VAT totaling $12,050 per month. The lease runs through August
31, 2011 with a two year option to renew. There is $135,000 in a
restricted account used by Bank Hapoalim to guarantee payment of the
lease. These funds are to be transferred and accordingly the bank
guarantee transferred from TheraVitae Limited to Regenocell Laboratories,
Ltd.
LEGAL
PROCEEDINGS
On
February 10, 2010, Kwalata Trading Limited, a wholly owned subsidiary of
TheraVitae, Inc., a Canadian corporation, obtained an ex parte order from the
District Court for the Central Region of Israel to seize the intellectual
property alleged owned by Kwalata which is in the possession of either
Theravitae, Ltd. or Regenocell Laboratories Ltd., the wholly owned Israeli
subsidiary corporation of the Company. The Court appointed trustee took files
and computers including computers dedicated solely to equipment
from Regenocell Laboratories facilities at 7, Pinchas St., Ness Ziona
in what the Company considered to be an unlawful attempt to close the
facilities.
Prior to
a scheduled hearing, a settlement agreement was reached which then became the
resolution of the case by the District Court for the Central Region of
Israel. All equipment and files taken are to be returned subject to
copying by the applicants at their expense. Excluded from copying are
attorney-client privileged documents, business documents and private
documents. Regenocell Laboratories and the Company agree not to
disclose the alleged intellectual property to third parties except in the
ordinary course of business, for government filings and when a non disclosure
agreement is obtained. This order remains in effect until a subsequent order by
the Court or the resolution of an arbitration begun in Canada by Kwalata against
TheraVitae, Ltd.
Other
than as described above, we are not aware of any pending or threatened
litigation against us that we expect will have a material adverse effect on our
business, financial condition, liquidity, or operating results. We cannot assure
you that we will not be adversely affected in the future by legal
proceedings.
MARKET
PRICE OF AND DIVDENDS ON THE REGISTRANT’S COMMON EQUITY
AND
RELATED STOCKHOLDER MATTERS
Market
Information
There is
currently no trading market for our common stock. Upon completion of
this offering we intend to take the steps necessary to have our common stock
included for quotation on the Over the Counter Bulletin Board. There
can be no assurance that a market maker will agree to file the necessary
documents with FINRA, which operates the OTC Electronic Bulletin Board, nor can
there be any assurance that such an application for quotation will be
approved.
Holders
As of the
date of this prospectus there are 81,637,500 shares of common stock issued and
outstanding.
As of the
date of this prospectus there are 37 holders of record of our common
stock.
30
Dividend
Policy
We have
not paid any dividends to the holders of our common stock and we do not expect
to pay any such dividends in the foreseeable future as we expect to retain our
future earnings for use in the operation and expansion of our
business.
Securities
Authorized for Issuance Under Equity Compensation Plans
At the
present time, we have no securities authorized for issuance under equity
compensation plans.
31
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
The
following discussion and analysis by our management of our financial condition
and results of operations should be read in conjunction with our consolidated
financial statements and the accompanying notes included in this annual
report.
Cautionary
Statement Regarding Forward-Looking Statements
This
report may contain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act, and we intend that such forward-looking statements be subject to
the safe harbors created thereby. These forward-looking statements are based on
our management’s beliefs and assumptions and on information currently available
to our management. Any such forward-looking statements would be contained
principally in “Management’s Discussion and Analysis or Plan of Operations” and
“Risk Factors.” Forward-looking statements include information concerning our
possible or assumed future results of operations, business strategies, financing
plans, competitive position, industry environment, potential growth
opportunities and the effects of regulation. Forward-looking statements include
all statements that are not historical facts and can be identified by terms such
as “anticipates,” “believes,” “could,” “estimates,” “expects,” “hopes,”
“intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,”
“will,” “would” or similar expressions.
Forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. We discuss many of these risks in
greater detail in “Risk Factors.” Given these uncertainties, you should not
place undue reliance on these forward-looking statements. Also, forward-looking
statements represent our management’s beliefs and assumptions only as of the
date of this report. You should read this report and the documents that we
reference in this report and have filed as exhibits to the report completely and
with the understanding that our actual future results may be materially
different from what we expect. Except as required by law, we assume no
obligation to update these forward-looking statements publicly, or to update the
reasons actual results could differ materially from those anticipated in these
forward-looking statements, even if new information becomes available in the
future.
Overview
The
mission of the Company is to bring stem cell therapy treatments to the market as
quickly as possible. The Company manufactures a product utilizing
adult stem cells for the treatment of congestive heart failure and other
indications. These adult stem cells are grown into large numbers in vitro
(outside the body) and then encouraged to differentiate into angiogenic
precursor cells or blood vessel forming cells for the treatment of congestive
heart failure. These adult stem cells can also be used for the
treatment of other conditions such as peripheral artery disease. The
manufacturing operations for this process are located in Israel.
Currently
congestive heart failure patients cleared for treatment have one-half pint of
blood drawn which is sent to the cell processing facility in Israel. After the
adult stem cells in the patient’s blood have been extracted and grown into large
numbers of angiogenic precursor cells, they are sent to several locations for
infusion into the patient in a minimally invasive procedure. The stem
cell therapy is either delivered through a catheter or injected directly into
the myocardium. All patients are private pay.
The
results to date have been impressive. Over five hundred
(500) congestive heart failure patients with no other options have
shown similar results to a clinical trial of 24 patients. In that
trial, statistically significant improvements between baseline and the three
month and six month follow-up were achieved for:
|
·
|
Improvement
in the six minutes walking test.
|
|
·
|
Increase
in metabolic equivalent units (METs) during the stress
test.
|
32
|
·
|
Decrease
in the perfusion defect region of the target
artery.
|
|
·
|
Decrease
in the Canadian Cardiovascular Society (CCS) Grading
Scale.
|
On
January 7, 2010 the Company entered into two agreements. Closing
occurred on February 4, 2010.
The first
agreement is between TheraVitae Limited, the Israeli corporation manufacturing
the stem cell therapy product, and a newly formed Israeli corporation which is a
wholly owned subsidiary of the Company, Regenocell Laboratories,
Ltd. Pursuant to the terms of the agreement, certain assets were
acquired and certain liabilities assumed. These assets include all
the manufacturing and office equipment and the transfer of the
lease. At signing the Company paid $75,000 toward the reduction of
the assumed liabilities. All the employees were terminated then
offered and accepted employment with Regenocell Laboratories, Ltd.
The
second agreement is between Yieldex, Ltd. and the Company for the acquisition of
certain rights. This includes clinical data, the non exclusive use of
the CRM System which manages clinical data and input necessary to schedule a
patient for stem cell production, and all rights in patent and patent
applications, if any, in connection with activities of stem cell research,
therapy development and clinical trials under the trade name ”TheraVitae” for
the world except for Asia. Israel is excluded by definition from
being part of Asia. The cash price is $5,000,000 (five million United
States dollars), of which $75,000 was paid to TheraVitae Limited and $25,000 to
Yieldex on January 7. The balance is due in monthly installments on
or before January 4, 2015. Minimum installments are $5,000 per
patient processed in Israel after the first eight patients during the preceding
month. In addition 25% of any equity raised by the Company will be
applied to the outstanding balance.
In
addition 40,000,000 (forty million) shares of the Company’s common stock, par
value $.0001, was issued to Yieldex Ltd and its nominees. The
40,000,000 shares are restricted and subject to a two year Lock-Up period
beginning January 4, 2010. These shares are also subject to a voting
agreement. During the Lock-Up period and for any subsequent period
until the shares are sold to the public in the open market, the Board of
Directors will be expanded to five members and the shareholders whose shares are
locked up will vote for a maximum of two directors. The Company’s
affiliated shareholders who are not parties to the Lock-Up agreement will vote
their shares for the same two directors until the aggregate number of Yieldex
shares are 15,000,000 (fifteen million) or less. The Yieldex
shareholders agree to vote the Yieldex shares for a maximum of three directors
designated by James F. Mongiardo. While this voting rights agreement
is in effect, unanimous approval of all the directors then in office or approval
of holders of at least a majority of the shares will be required for: (i) any
proposal to increase capital in a way that would result in dilution of existing
shareholders’ percentages by ten percent (10%) or more; (ii) any proposal to
merge, consolidate or amalgamate with any other corporate entity; (iii) any
proposal to sell all or a material part of the assets; and, (iv) any proposal to
amend the bylaws.
As a
result of the actions described above, on February 4, 2010 the Company’s primary
asset is Regenocell Laboratories Ltd. which is manufacturing and selling stem
cell therapy product used to treat congestive heart failure and peripheral
artery disease. Purchases are being made to treat patients for these
indications in Bangkok, Thailand and the Dominican Republic. It is
anticipated that purchases will also be made to treat patients in other
countries.
The
Company did not generate any revenues from operations or otherwise from its
inception through the formation of Regenocell Laboratories, Ltd. The
Company intended to generate revenue through the development of cafes in South
Carolina and then in other states in the South East, featuring gourmet coffee,
pastries and related items. Through December 31, 2007, the Company had not been
successful in raising capital for the development, marketing or sale of either
these cafes or any products. The Company then adopted a new stem cell therapy
business strategy on July 16, 2008.
Liquidity
and Capital Resources
As of
March 31, 2010, we had total current assets of $106,941, consisting of $22,692
in Cash, $3,290 in Other Receivables and $80,959 in Prepaid Expenses. We had
total current liabilities as of March 31, 2010 of $903,802.
33
In order
to implement our business strategy, the Company will need to raise capital
during the next 12 months: cash on hand was $22,692 as of March 31,
2010 which amount is inadequate to fund the company’s current projected capital
requirements. Net comprehensive loss for the Company for the period
ended March 31, 2010 was equal to $362,699. The Company has funded
operations to date in part through the sale of equity securities and loans,
although such efforts have been insufficient to effectively pursue its business
strategy.
With
respect to Regenocell Laboratories, Ltd., processing eight patients during a
month will result in revenues exceeding $130,000. The combination of
the existing business being serviced by the manufacturing operations and the
addition of patients to be treated in other locations is expected to keep
patient flow for the manufacturing facility at or above the breakeven of eight
patients. Capacity at the current configuration of the manufacturing
facility is more than double the breakeven. There can be no assurance
of any patient flow for any given month.
Our
capital requirements will depend on numerous factors, including but not limited
to the commitments and progress of our research and development efforts, the
progress of clinical trials, the cost of sales and marketing for the congestive
heart failure stem cell therapy business and other products, medical and
business consultants and advisors, the time and cost involved in maintaining
regulatory compliance, and competing technological and market
developments. Future activities, including the establishment of stem
cell therapy for the treatment of peripheral artery disease in the medical
marketplace, will be subject to our ability to raise funds.
We intend
to raise capital primarily through the public or private sale of securities
(equity and/or debt), although there can be no assurance that we will be able to
obtain capital or, if such capital is available, that the terms of any financing
will be acceptable. If the Company succeeds in raising capital, such
funds will be used to facilitate the manufacturing operations of Regenocell
Laboratories Ltd., to find new customers for Regenocell Laboratories Ltd. With
respect to peripheral artery disease, capital will be used for completing the
research and development to submit an IND (and its equivalent in Europe) for
authorization to begin clinical trials in the United States and Europe. This may
include payment for additional animal trials. Payment for clinical trials
includes retaining the services of a clinical research organization, payment to
the clinical research site(s) for patients enrolled in the clinical trials,
payment for the stem cell therapy used in these clinical trials, payment for
costs associated with Institution Review Board Approval, and preparation of
reports to the FDA and EMEA, requests to continue later phase clinical trials
and submission of a BLA to the FDA and its equivalent to the EMEA requesting
marketing approval for the treatment of peripheral artery disease.
The
Company also does not expect to purchase any plant or significant equipment over
the next 12 months. Regenocell Laboratories, Ltd. may purchase
between $100,000-$300,000 in new equipment for its manufacturing
operations.
We do not
have any formal commitments or arrangements for the sales of stock or the
advancement or loan of funds at this time. There can be no assurance that such
additional financing will be available to us on acceptable terms, or at
all. If we are unsuccessful at raising sufficient capital to fund our
operations, for whatever reason, we may be forced to seek opportunities outside
of our new corporate focus or to seek a buyer for our business or another entity
with which we could partner. Ultimately, if all of these alternatives
fail, we may be required to cease operations and seek protection from creditors
under applicable bankruptcy laws.
Our
Ability To Continue as a Going Concern
Our
independent registered public accounting firm has issued its report dated April
30, 2010 in connection with the audit of our financial statements as of
December 31, 2009 that included an explanatory paragraph describing the
existence of conditions that raise substantial doubt about our ability to
continue as a going concern. Our consolidated financial statements as of
December 31, 2009 have been prepared under the assumption that we will
continue as a going concern. If we are not able to continue as a going concern,
it is likely that holders of our common stock will lose all of their investment.
Our financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
34
Results
of Operations for the Three Months Ended March 31, 2010 and 2009, and Period
from December 19, 2008 (Inception) to March 31, 2010
During
the three months ended March 31, 2010 we generated $291,865 in revenue compared
to no revenue during the three months ended March 31, 2009.
We
incurred $659,322 in operating expenses for three months ended March 31, 2010,
as compared with $10,199 in operating expenses for the same period ended
2009. Our operating expenses for the three months ended March 31, 2010
include cost of sales in the amount of $184,841, administrative expenses of
$145,622, professional fees of $288,881 and occupancy costs of
$39,979. Our operating expenses for the three months ended March 31,
2009 of $10,199 consisted solely of administrative expenses. The
increased operating expenses are a direct result of the commencement of our
operations.
We,
therefore, recorded a net loss of $362,699 for the three months ended March 31,
2010, as compared with a net loss of $10,199 for the same period ended March 31,
2009.
We
anticipate our operating expenses will increase as we continue to implement our
business plan. The increase will be attributable to expenses to implement our
business plan, and the professional fees to be incurred in connection with the
filing of a registration statement with the Securities Exchange Commission under
the Securities Act of 1933. We anticipate our ongoing operating expenses will
also increase once we become a reporting company under the Securities Exchange
Act of 1934.
Results
of Operations for the Years Ended December 31, 2009 and 2008, and for the Period
from February 1, 2002 (Inception) to December 31, 2009
We
generated no revenue for the period from February 1, 2002 (Date of Inception)
through December 31, 2009.
We
incurred $223,526 in operating expenses for the year ended December 31, 2009 and
$41,429 in operating expenses during the year ended December 31,
2008. Our operating expenses for the period from February 1, 2002
(Date of Inception) until December 31, 2009 were $350,591, and consisted of
administrative expenses and development costs.
We
recorded a net loss of $228,663 for the year ended December 31, 2009, $48,532
for the year ended December 31, 2008 and $362,831 for the period from
February 1, 2002 (Date of Inception) until December 31, 2009.
Management
does not believe that inflation or changing prices have impacted the Company’s
revenues in any way.
Off
Balance Sheet Arrangements
As of
March 31, 2010, there were no off balance sheet arrangements.
CHANGES
IN AND DISAGREEMENTS WITH
ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have
not had any changes in or disagreements with our accountants regarding
accounting and financial disclosure.
35
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The
following table presents information with respect to our officers, directors and
significant employees as of June 15, 2010.
NAME
|
AGE
|
POSITION
|
James
F. Mongiardo
|
64
|
President,
Chief Executive Officer and Chief Financial Officer
|
Americo
Simonini
|
48
|
Chief
Medical Officer
|
James
F. Mongiardo, President, CEO and CFO
James F.
Mongiardo has extensive experience in building companies and in the investment
banking business. He has served as Chief Executive Officer for public
biotechnology and healthcare services companies and as head of United States
Marketing for Schering-Plough Corporation. He has raised capital for clients
through institutional private placements, directed business start-ups from
concept to marketing, completed a successful turn-around, designed operative
business plans, raised venture and public equity financing, created marketing
and promotional plans for new products, directed acquisitions and divestitures,
developed and administered sales budgets over $ 300 million and managed
corporate and legal services.
Among the
companies Mr. Mongiardo has headed are Epigen, Inc., an oncology company which
he brought public and raised additional capital through PIPEs (private
investment in a public company). Epigen is developing treatments and
diagnostic tests for the early detection of carcinomas. He served as
Chief Executive Officer of Medivix, Inc., a public health care services company
for which he completed a secondary offering and raised capital through a debt
placement. Medivix provided mail order prescription services for
employers and unions.
In
addition, Mr. Mongiardo served as Chief Executive Officer of CardioBioMedical
Corporation, a medical device company which non-invasively determines whether a
patient has coronary artery disease. He raised capital and obtained
510 (k) clearance from the Food and Drug Administration (FDA) to market this
device. Mr. Mongiardo also served as President and Chief Operating
Officer of Photec Diagnostics, a venture capital financed diagnostic
company. Mr. Mongiardo completed additional rounds of financing for
Photec and within 18 months from concept received 510(k) clearance from the FDA
to market the company’s first product.
Mr.
Mongiardo also served as Chief Operating Officer of Total ReCord, Inc., a
regenerative medicine tissue engineering company with a product to treat spinal
cord injury. He completed a six million dollar financial
restructuring of the company and finalized an agreement to raise capital on the
AIM market with a major AIM Nomad/broker. He also served as Vice President of
Corporate Development for Organogenesis where he completed a $ 4.5 million PIPE
and obtained favorable tax free status for building a new corporate facility in
Massachusetts. While head of United States marketing for the
pharmaceutical division of Schering-Plough, he introduced 12 new
over-the-counter and prescription products.
For five
years, he served as Managing Director of LBC Capital Corporation and in 2000
formed the Homewood Capital Group, LLC, an investment advisory firm specializing
in institutional private placements for emerging companies. Mr.
Mongiardo is a graduate of Johns Hopkins University (B.A.), Harvard Law School
(J.D.) and the Columbia University Executive Program in Business
Administration.
36
Americo
Simonini, MD, Chief Medical Officer
Americo
Simonini, MD is a leading cardiac clinician at the Cedars-Sinai Medical Center
in Los Angeles. As part of his diverse interests in leading edge
cardiac technologies, he also serves as Clinical Assistant Professor of Medicine
at the UCLA Medical School.
Dr.
Simonini is a graduate of New York University (BA) and SUNY-Stony Brook, NY
(MD). His postdoctoral training was at multiple institutions
including the New York University-Bellevue Hospital Center, the Cardiovascular
Research Institute at UCSF and a Cardiology Fellowship at the University of
Michigan Medical Center. He was recruited to serve as Director at the
Advanced Heart Failure Program at the Cedars-Sinai Medical Center, Los Angeles
where he continues to practice as a clinician. His abstracts and
manuscripts have included an examination of the causes of heart failure as well
as the role of angiogenic molecules in coronary artery disease.
As Chief
Medical Officer for RegenoCELL Therapeutics, Dr. Simonini will provide oversight
to the company’s clinical programs. In addition he will be reviewing
the progress of each patient treated with its adult stem cell
therapy. When appropriate, he will present data on the company’s
clinical programs and the progress of patients treated with its adult stem
therapy at international meetings of cardiologists.
Employment
Agreements:
On July
16, 2008 the Company entered into an employment agreement with Mr. Mongiardo, as
Chief Executive Officer and President, for a term of five years at an annual
salary of $250,000, payable at the annual rate of $150,000 upon the Company
raising in aggregate in equity or gross revenues $500,000, and at the annual
rate of $250,000 upon the Company raising in aggregate in equity or gross
revenues $1,000,000 with additional annual increases of $50,000 every July 1
over the life of the agreement. The agreement also calls for the
officer to receive fringe benefits and participate in all Company employment
benefits as approved by the Board of Directors. As of this date, the
Company has not raised the aggregate minimum equity capital or gross revenues
and no salary has been accrued or paid to Mr. Mongiardo.
Board of Directors’
Compensation: Directors of the Company
do not receive cash compensation for their services at this time, but will be
reimbursed for reasonable travel expenses incurred while attending Board
meetings. The Board of Directors and the Company’s management may
elect to compensate its participants for consulting services in the
future.
Term
of Office
All of
our directors are appointed for a one-year term to hold office until the next
annual meeting of stockholders and until their successors are elected and
qualified, or until their earlier death, retirement, resignation or removal.
Executive officers serve at the discretion of the Board of Directors, and are
elected or appointed to serve until the next Board of Directors meeting
following the annual meeting of stockholders. Our executive officers
are appointed by our Board of Directors and hold office until removed by the
Board.
Pursuant
to the terms of the Assignment of Rights agreement between Yieldex, Ltd. and the
Company, 40,000,000 (forty million) shares of the Company’s common
stock, par value $.0001, were issued subject to the following. The
40,000,000 shares are restricted and subject to a two year Lock-Up period
beginning January 4, 2010. These shares are also subject to a voting
agreement. During the Lock-Up period and for any subsequent period
until the shares are sold to the public in the open market, the
shareholders whose shares are locked up will vote for a maximum of two
directors. The Company’s affiliated shareholders who are not parties
to the Lock-Up agreement will vote their shares for the same two directors until
the aggregate number of Yieldex shares are 15,000,000 (fifteen million) or less.
The Yieldex shareholders agree to vote the Yieldex shares for a maximum of three
directors designated by James F. Mongiardo. While this voting rights
agreement is in effect, unanimous approval of all the directors then in office
or approval of holders of at least a majority of the shares will be required
for: (i) any proposal to increase capital in a way that would result in dilution
of existing shareholders’ percentages by ten percent (10%) or more; (ii) any
proposal to merge, consolidate or amalgamate with any other corporate entity;
(iii) any proposal to sell all or a material part of the assets; and, (iv) any
proposal to amend the bylaws.
37
Significant
Employees
At the
present time, we have no key employees other than our officers and directors and
the Chief Technical Officer of our wholly owned subsidiary, Regenocell
Laboratories, Ltd.
Family
Relationships
There are
no family relationships between or among the directors, executive officers or
persons nominated or chosen by us to become directors or executive
officers.
Involvement
in Certain Legal Proceedings
To the
best of our knowledge, during the past five years, none of the following
occurred with respect to a present director, person nominated to become
director, executive officer, or control person: (1) any bankruptcy petition
filed by or against any business of which such person was a general partner or
executive officer either at the time of the bankruptcy or within two years prior
to that time; (2) any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses); (3) being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his or her involvement in any type of business, securities or banking
activities; and (4) being found by a court of competent jurisdiction (in a civil
action), the SEC or the Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
38
EXECUTIVE
COMPENSATION
Summary
Compensation Table
During
the fiscal years ended December 31, 2008 and 2009, the Company has not paid any
cash compensation to our Chief Executive Officer.
The
Company had no executive officers whose total annual salary and bonus exceeded
$100,000.
Director
Compensation
Since
inception no compensation has been paid to the directors.
Employment
Agreements
On July
16, 2008 the Company entered into an employment agreement with Mr. Mongiardo, as
Chief Executive Officer and President, for a term of five years at an annual
salary of $250,000, payable at the annual rate of $150,000 upon the Company
raising in aggregate in equity or gross revenues $500,000, and at the annual
rate of $250,000 upon the Company raising in aggregate in equity or gross
revenues $1,000,000 with additional annual increases of $50,000 every July 1
over the life of the agreement. The agreement also calls for the
officer to receive fringe benefits and participate in all Company employment
benefits as approved by the Board of Directors. As of this date, the
Company has not raised the aggregate minimum equity capital or gross revenues
and no salary has been accrued or paid to Mr. Mongiardo.
Outstanding
Equity Awards at Fiscal Year-End
The
Company has not paid any stock, options or other equity awards to any officer,
director or employee to date.
39
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the number of shares of common stock beneficially
owned as of June 15, 2010 by (i) those persons or groups known to us to
beneficially own more than 5% of our common stock; (ii) each director; (iii)
each executive officer; and (iv) all directors and executive officers as a
group. Except as indicated below, each of the stockholders listed below
possesses sole voting and investment power with respect to their
shares. The percentage of ownership set forth below reflects each
holder’s ownership interest in the 81,637,500 shares of RegenoCELL’s common
stock issued and outstanding as of June 15, 2010.
Name of Beneficial Owner
|
Common Stock
Beneficially Owned
|
Percentage of
Common Stock
|
||||||
James
Mongiardo(1)
|
15,000,000
|
18.37
|
%
|
|||||
Yieldex
Ltd.(2)
|
40,000,000
|
49.00
|
%
|
|||||
Basement
Kwong Long Tai Bldg
|
||||||||
1016
Tai Nam West Street
|
||||||||
Hong
Kong, Hong Kong
|
||||||||
Domenic
Mazza
|
5,000,000
|
6.12
|
% | |||||
3700
Galt Ocean Drive
Fort
Lauderdale, FL 33306
|
||||||||
All
officers and directors as a group (1 persons) (1)
|
18.37
|
%
|
(1)
Mr. Mongiardo’s address is c/o RegenoCELL Therapeutics, Inc.
(2) As part of the
transaction between Yieldex, Ltd. and the Company, 40,000,000 (forty million)
shares of the Company’s common stock, par value $.0001, was issued to Yieldex
Ltd and its nominees. The 40,000,000 shares are restricted and
subject to a two year Lock-Up period beginning January 4, 2010. These
shares are also subject to a voting agreement. During the Lock-Up
period and for any subsequent period until the shares are sold to the public in
the open market, the Board of Directors will be expanded to five members and the
shareholders whose shares are locked up will vote for a maximum of two
directors. The Company’s affiliated shareholders who are not parties
to the Lock-Up agreement will vote their shares for the same two directors until
the aggregate number of Yieldex shares are 15,000,000 (fifteen million) or less.
The Yieldex shareholders agree to vote the Yieldex shares for a maximum of three
directors designated by James F. Mongiardo. While this voting rights
agreement is in effect, unanimous approval of all the directors then in office
or approval of holders of at least a majority of the shares will be required
for: (i) any proposal to increase capital in a way that would result in dilution
of existing shareholders’ percentages by ten percent (10%) or more; (ii) any
proposal to merge, consolidate or amalgamate with any other corporate entity;
(iii) any proposal to sell all or a material part of the assets; and, (iv) any
proposal to amend the bylaws.
Changes
in Control
At the
present time, there are no arrangements known to the Company, including any
pledge by any person of securities of the Company, the operation of which may at
a subsequent date result in a change in control of the
Company,.
40
STOCK
OPTION PLAN INFORMATION
Effective
November 23, 2009, the Company created the 2009 Stock Option and Incentive Plan
(the “Plan”) to provide stock options and other equity interests in the
Corporation to employees, officers, directors, consultants and advisors of the
Corporation and its Subsidiaries, all of whom are eligible to receive Awards
under the Plan. The Plan has up to six million (6,000,000) shares of
Corporation’s common stock, par value $.0001, available for
Awards. Said awards will vest over four years, one quarter after one
year and the balance at one forty-eighth (1/48) of the total Award over the next
three years.
On
November 23, 2009, the Company approved the issuance of an Award of five hundred
thousand (500,000) shares to Americo Simonini, MD, to serve as Chief Medical
Officer of the Corporation effective the first trading day of the Corporation’s
common stock or the date that the fair market value for the common stock can be
determined, whichever is earlier.
41
TRANSACTIONS WITH RELATED PERSONS,
PROMOTERS AND CERTAIN CONTROL PERSONS
On July
16, 2008, RegenoCELL Therapeutics, Inc., formerly Good Buddy’s Coffee Express,
Inc., a Florida corporation completed actions necessary to change its
business strategy from opening drive through coffee cafes to a new stem cell
therapy business opportunity. These actions included the filing of
Amended Articles of Incorporation which among other matters changed the name of
the corporation to RegenoCELL Therapeutics, Inc. and increased its authorized
capitalization to 600,000,000 shares, approved Amended Bylaws, issued restricted
common shares, par value $.0001 per share, to Douglas T. Rice (250,000), Domenic
Mazza (5,000,000) and James F. Mongiardo (15,000,000), ratified the March 31
Letter of Intent with TheraVitae, and approved the Employment Agreement with
James F. Mongiardo as President and Chief Executive Officer.
During
the past five years, none of the following occurred with respect to any founder,
promoter or control person: (1) any bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time; (2) any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses); (3) being
subject to any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his or her involvement in
any type of business, securities or banking activities; and (4) being found by a
court of competent jurisdiction (in a civil action), the SEC or the Commodities
Futures Trading Commission to have violated a federal or state securities or
commodities law, and the judgment has not been reversed, suspended or
vacated.
42
BOARD
COMMITTEES; DIRECTOR INDEPENDENCE
Currently,
all actions that would otherwise be performed by standing committees of the
Board of Directors are performed by its sole director, including the hiring of
our independent public accountants and the oversight of the independent auditor
relationship, the review of our significant accounting policies and our internal
controls.
The Board
of Directors has analyzed the independence of its sole director and has
determined that RegenoCELL’s sole current director, James Mongiardo is not
independent under the specific criteria of Section 4200(a)(15) of the NASDAQ
Manual.
LEGAL
MATTERS
The
validity of the shares of common stock offered hereby will be passed upon for us
by The Law Office of James G. Dodrill II, P.A.. The firm’s mailing
address is 5800 Hamilton Way, Boca Raton, FL 33496.
EXPERTS
Our
financial statements as of December 31, 2009 and for the years ended December
31, 2009 and 2008 have been included herein in reliance upon the report of
Sadler, Gibb & Associates, LLC. independent registered public accounting
firm, appearing elsewhere herein, and upon authority of said firm as experts in
accounting and auditing.
DISCLOSURE
OF COMMISSION POSITION ON
INDEMNIFICATION
FOR
SECURITIES ACT LIABILITIES
We have a
provision in our by-laws providing for indemnification of our officers and
directors.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have
filed with the Commission a registration statement on this Form S-1 under the
Securities Act, with respect to the common stock offered by this prospectus.
This prospectus, filed as part of the registration statement, does not contain
all of the information set forth in the registration statement and its exhibits
and schedules. For further information regarding us and the shares offered
hereby, please refer to the registration statement. You may inspect a copy of
the registration statement without charge at the Commission's principal offices,
and you may obtain copies of all or any part of the registration statement from
such office upon payment of the fees prescribed by the Commission.
In
addition to this registration statement, we are also required to file periodic
reports and other information with the Securities and Exchange Commission,
including quarterly reports and annual reports which include our audited
financial statements. You may read and copy any reports, statements
or other information we file at the Commission’s public reference facility
maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549, on
official business days during the hours of 10:00am to 3:00pm. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
Commission. Please call the Commission at 1-800-SEC-0330 for further information
on the operation of the public reference room. Our SEC filings are also
available to the public through the Commission Internet site at http\\www.sec.gov.
These filings may be inspected and copied (at prescribed rates) at the
Commission's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549.
You may
also request a copy of our filings at no cost, by writing of telephoning us
at:
43
REGENOCELL
THERAPEUTICS, INC.
Attention: James
Mongiardo, CEO
2 Briar
Lane
Natick,
Massachusetts 01760
Telephone
No.: 508-647-4065
44
REGENOCELL
THERAPEUTICS, INC.
AUDIT
REPORT OF INDEPENDENT ACCOUNTANTS
AND
FINANCIAL
STATEMENTS
December
31, 2009 and 2008
45
REGENOCELL
THERAPEUTICS, INC.
TABLE
OF CONTENTS
Page
|
|
Audit
Report of Independent Accountants
|
1
|
Balance
Sheets – December 31, 2009 and 2008
|
2
|
Statements
of Operations for the Years Ended December 31, 2009 and
2008
|
3
|
Statements
of Stockholder’s Equity for the Years Ended December 31, 2009 and
2008
|
4
|
Statements
of Cash Flows for the Years Ended December 31, 2009 and
2008
|
5
|
Notes
to Financial Statements
|
6
|
46
SADLER, GIBB & ASSOCIATES,
L.L.C.
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
RegenoCELL
Therapeutics, Inc.
(A
Development Stage Company)
We have
audited the accompanying balance sheets of RegenoCELL Therapeutics, Inc. (A
Development Stage Company) as of December 31, 2009, and the related statements
of operations, stockholders’ equity (deficit) and cash flows for the year then
ended. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audit. The financial statements of RegenoCELL
Therapeutics, Inc. as of December 31, 2008, were audited by other auditors
whose report dated March 27, 2009, expressed an unqualified opinion on those
statements.
We
conduct our audit in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of RegenoCELL Therapeutics,
Inc. (A Development Stage Company) as of December 31, 2009, and the related
consolidated statements of operations, stockholders’ equity (deficit) and cash
flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has not yet established an ongoing source of
revenue sufficient to cover its operating costs which raises substantial doubt
about its ability to continue as a going concern. Management’s plans concerning
these matters are also described in Note 2. The consolidated financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
SADLER,
GIBB AND ASSOCIATES,
LLC
|
Salt Lake
City, UT
April 30,
2010
1
REGENOCELL
THERAPEUTICS, INC.
(FKA
GOOD BUDDY’S COFFEE EXPRESS, INC.)
(A
Development Stage Company)
BALANCE
SHEETS
December 31,
2009
|
December 31,
2008
|
|||||||
Assets
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 102,079 | $ | - | ||||
Total
Current Assets
|
102,079 | - | ||||||
Net
Fixed Assets
|
2,893 | - | ||||||
Net
Intangible Development Costs
|
- | 9,000 | ||||||
Total
Assets
|
$ | 104,972 | $ | 9,000 | ||||
Liabilities and
Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Current
Liabilities
|
||||||||
Accounts
Payable
|
$ | 64,982 | $ | - | ||||
Accrued
Interest
|
110,597 | 3,457 | ||||||
Accrued
Expenses
|
750 | 3,000 | ||||||
Notes
Payable - Related Party
|
81,018 | - | ||||||
Notes
Payable - Current
|
201,400 | - | ||||||
Total
Current Liabilities
|
458,747 | 6,457 | ||||||
Notes
Payable - Long-term
|
- | 118,653 | ||||||
Total
Liabilities
|
458,747 | 125,110 | ||||||
Stockholders' Equity
|
||||||||
Preferred
Stock $.0001 par value, 80,000,000 shares authorized, no shares
issued and outstanding as of December 31, 2009 and 2008
respectively
|
- | - | ||||||
Common
Stock, $.0001 par value, 520,000,000 shares authorized, 41,437,500 and
131,437,500 shares issued and outstanding as of December 31, 2009 and 2008
respectively
|
4,143 | 13,144 | ||||||
Additional
Paid in Capital
|
4,913 | 4,913 | ||||||
Accumulated
Deficit during the development stage
|
(362,831 | ) | (134,168 | ) | ||||
Total
Stockholders' Equity
|
(353,775 | ) | (116,111 | ) | ||||
Total
Liabilities and Stockholders' Equity
|
$ | 104,972 | $ | 9,000 |
The
accompanying notes are an integral part of these financial
statements.
2
REGENOCELL
THERAPEUTICS, INC.
(FKA
GOOD BUDDY’S COFFEE EXPRESS, INC.)
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
From February 1,
|
||||||||||||
2002 (Inception)
|
||||||||||||
For the Years Ended
|
Through
|
|||||||||||
December 31,
|
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Revenues
|
$ | - | $ | - | $ | - | ||||||
Administrative
Expenses
|
176,612 | 41,429 | 303,677 | |||||||||
Development
Costs
|
46,914 | - | 46,914 | |||||||||
Net
(Loss) from development stage operations
|
(223,526 | ) | (41,429 | ) | (350,591 | ) | ||||||
Interest
expense
|
(5,137 | ) | (5,228 | ) | (10,365 | ) | ||||||
Loss
on abandonment of assets
|
- | (1,875 | ) | (1,875 | ) | |||||||
Net
(Loss)
|
$ | (228,663 | ) | $ | (48,532 | ) | $ | (362,831 | ) | |||
Basic
net loss per common share
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
Average of Common Shares Outstanding
|
131,190,925 | 96,187,500 |
The
accompanying notes are an integral part of these financial
statements.
3
REGENOCELL
THERAPEUTICS, INC.
(FKA
GOOD BUDDY’S COFFEE EXPRESS, INC.)
(A
Development Stage Company)
STATEMENTS
OF STOCKHOLDERS’ EQUITY (DEFICIT)
Additional
|
||||||||||||||||||||
Common Stock
|
Paid-In
|
Accumulated
|
||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
||||||||||||||||
December
31, 2007 - Balance
|
2,343,750 | 234 | 2,216 | (81,055 | ) | (78,605 | ) | |||||||||||||
March
31, 2008 - additional shares issued resulting from a 3 for 1 common stock
split
|
7,031,250 | 703 | (703 | ) | - | - | ||||||||||||||
June
13, 2008 - additional shares issued resulting from a 10 for 1 common stock
split
|
70,312,500 | 7,031 | (2,450 | ) | (4,581 | ) | - | |||||||||||||
July
7, 2008 - Restricted common stock issued in lieu of
employee compensation
|
15,000,000 | 1,500 | 1,500 | |||||||||||||||||
July
7, 2008 - Restricted common stock issued for contracted
services
|
5,250,000 | 525 | 525 | |||||||||||||||||
July
22, 2008 - Issuance of restricted common stock to Thera Vitae,
Inc. per the terms of the letter of intent dated July 22,
2008
|
90,000,000 | 9,000 | 9,000 | |||||||||||||||||
July
23, 2008 - Cancellation of common stock
|
(58,500,000 | ) | (5,850 | ) | 5,850 | - | ||||||||||||||
December
31, 2008 - Net (Loss)
|
(48,532 | ) | (48,532 | ) | ||||||||||||||||
December
31, 2008 - Balance
|
131,437,500 | 13,143 | 4,913 | (134,168 | ) | (116,111 | ) | |||||||||||||
December
30, 2009 - Cancellation of restrictd common stock issued to Thera Vitae,
Inc., on July 22, 2008
|
(90,000,000 | ) | (9,000 | ) | (9,000 | ) | ||||||||||||||
December
31, 2009 - Net (Loss)
|
(228,663 | ) | (228,663 | ) | ||||||||||||||||
December
31, 2009 - Balance
|
41,437,500 | $ | 4,143 | $ | 4,913 | $ | (362,831 | ) | $ | (353,774 | ) |
The
accompanying notes are an integral part of these financial
statements.
4
From February 1,
|
||||||||||||
2002 (Inception)
|
||||||||||||
For the Years Ended
|
Through
|
|||||||||||
December 31,
|
December 31,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Operating
Activities:
|
||||||||||||
Net
Loss from Development Stage Activities
|
(228,663 | ) | (48,532 | ) | (362,831 | ) | ||||||
Non
cash activities:
|
||||||||||||
Depreciation
|
207 | - | 2,932 | |||||||||
Accrual
of Interest Expense
|
107,137 | - | 107,137 | |||||||||
Abandonment
of Assets
|
- | 1,875 | 1,875 | |||||||||
Write
off uncollected other receivable
|
- | 250 | - | |||||||||
Cancellation
of licensing agreeement
|
(9,000 | ) | - | (9,000 | ) | |||||||
Stock
issued in lieu of compensation
|
- | 11,025 | 11,025 | |||||||||
Reconciliation
Adjustments
|
- | |||||||||||
Accounts
Payable
|
64,982 | (2,200 | ) | 64,982 | ||||||||
Accrued
Expenses
|
(2,250 | ) | (4,180 | ) | (3,949 | ) | ||||||
Accrued
Interest
|
- | 500 | 8,140 | |||||||||
Net
cash (used in) operating activities
|
(67,587 | ) | (41,262 | ) | (179,689 | ) | ||||||
Investing
Activities:
|
||||||||||||
Purchase
of equipment
|
(3,099 | ) | - | (3,099 | ) | |||||||
Investment
in production activites
|
9,000 | (9,000 | ) | - | ||||||||
Net
cash provided by (used in) investing activities
|
5,901 | (9,000 | ) | (3,099 | ) | |||||||
Financing
Activities:
|
||||||||||||
Proceeds
from note payable - related party
|
81,018 | - | 81,018 | |||||||||
Proceeds
from note payable
|
82,747 | 78,418 | 229,164 | |||||||||
Repayment
of notes payable
|
- | (27,765 | ) | (27,765 | ) | |||||||
Sale
of common stock
|
- | - | 11,200 | |||||||||
Repurchase
of common stock
|
- | - | (8,750 | ) | ||||||||
Net
cash provided by financing activities
|
163,765 | 50,653 | 284,867 | |||||||||
Net
Change in Cash
|
||||||||||||
Net
Increase (Decrease) in Cash
|
102,079 | 391 | 102,079 | |||||||||
Cash
Beginning of Period
|
- | (390 | ) | - | ||||||||
Cash
End of Period
|
102,079 | - | 102,079 | |||||||||
Supplemental
Cash Flow Disclosure:
|
||||||||||||
Cash
Paid For:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
taxes
|
$ | - | $ | - | $ | - |
The
accompanying notes are an integral part of these financial
statements.
5
NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
and Business Operations
RegenoCELL
Therapeutics, Inc. (formerly Good Buddy's Coffee Express, Inc.) (The "Company")
was incorporated in the State of Florida on February 1, 2002. The Company’s main
office was located in South Carolina and planned to develop a national chain of
drive through, high quality coffee outlets. In July 2008 the main office was
relocated to Massachusetts and the corporate mission was amended to develop a
stem cell therapy business for the treatment of congestive heart failure and
peripheral artery disease in lieu of its original goals. On July 7, 2008, the
Company amended its Articles of Incorporation changing the name of the
corporation to RegenoCELL Therapeutics, Inc. In addition the Company
approved an employment agreement with James F. Mongiardo as President and Chief
Executive Officer. In addition, Scott Massey, the former President, Chief
Executive Officer and Director of the Company, and Phillips N. Dee, the former
Director of the Company resigned from their positions as officers and directors
of the Company and James F. Mongiardo was elected as Chief Executive Officer,
President, Treasurer, Secretary and sole Director of the Company.
The
mission of the Company is to bring stem cell therapy treatments to the market as
quickly as possible.
The Company’s therapy will utilize a process to identify and process adult stem
cells found in a patient’s blood. These adult stem cells are grown into large
numbers in vitro (outside the body) and then encouraged to differentiate into
angiogenic precursor cells or blood vessel forming cells for the treatment of
congestive heart failure. These adult stem cells can also be used for the
treatment of other conditions such as peripheral artery disease.
At the
current time the Company is still in the development stage and as such reports
its financial statements as a Development Stage Enterprise.
Accounting
Method
The
Company’s financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31
year-end.
Concentration
of Credit Risk
The
Company's financial instruments that are exposed to concentration of credit risk
are cash. Additionally, the Company maintains cash balances in bank
deposit accounts which, at times, may exceed federally insured
limits.
Cash
Equivalents
For
purposes of cash flows, the Company considers all highly liquid instruments
purchased with a maturity of three months or less to be cash equivalents to the
extent the funds are not being held for investment purposes. The
Company at times may maintain a cash balance in excess of insured
limits.
The
accompanying notes are an integral part of these financial
statements.
6
NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Fair
Value of Financial Instruments
Financial
instruments, including cash, receivables, accounts payable, and notes payable
are carried at amounts which reasonably approximate their fair value due to the
short term nature of these amounts or due to variable rates of interest which
are consistent with market rates. At present, the Company does not have any
material accounts receivables or accounts payable.
Fixed
Assets
Fixed
assets are stated at cost. Major additions and improvements are
capitalized in the month following the month in which the assets or improvement
are deemed to be placed in service. Maintenance and repairs are expensed as
incurred. Upon disposition, the net book value is eliminated from the accounts,
with the resultant gain or loss reflected in operations. Depreciation expense is
computed on a straight-line basis over the estimate useful lives of the assets
as follows:
Machinery
and equipment:
|
10-15
years
|
Furniture
and fixtures & transportation equipment:
|
3-7
years
|
The
Company periodically assesses the recoverability of property, plant and
equipment and evaluates such assets for impairment whenever events or changes in
circumstances indicate that the net carrying amount of an asset may not be
recoverable. Asset impairment is determined to exist if estimated future cash
flows, undiscounted and without interest charges, are less than the net carrying
amount.
Intangible
Assets
In 2008,
the Company had completed a Letter of Intent to acquire a non-exclusive license
to market TheraVitae Inc.’s stem cell technology in Mexico and the
Caribbean. The cost of implementing this business was recorded as an
intangible asset and would have been amortized at the time when the company
began recognizing revenue over the life of the agreement. However, in 2009
the parties to the Letter of Intent reached an impasse and the license was not
acquired.
Provision
for Taxes
The
Company applies ASC 740, which requires the asset and liability method of
accounting for income taxes. This method requires that the current or
deferred tax consequences of all events recognized in the financial statements
be measured by applying the provisions of enacted tax laws to determine the
amount of taxes payable or refundable currently or in future years. Deferred tax
assets are reviewed for recoverability and the Company records a valuation
allowance to reduce its deferred tax assets when it is more likely than not that
all or some portion of the deferred tax assets will not be
recovered.
The
accompanying notes are an integral part of these financial
statements.
7
NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Earnings
(Loss) Per Share
The
Company presents "basic" earnings (loss) per share and, if applicable, "diluted"
earnings per share pursuant to the provisions of ASC 740. Basic earnings (loss)
per share are calculated by dividing net income or loss by the weighted average
number of shares outstanding during each period. The calculation of diluted
earnings (loss) per share is the same as the basic earnings (loss) per
share.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Recent
Accounting Pronouncements
In
January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation
(Topic 810): Accounting and Reporting for Decreases in Ownership of a
Subsidiary. This amendment to Topic 810 clarifies, but does not change, the
scope of current US GAAP. It clarifies the decrease in ownership provisions of
Subtopic 810-10 and removes the potential conflict between guidance in that
Subtopic and asset de-recognition and gain or loss recognition guidance that may
exist in other US GAAP. An entity will be required to follow the amended
guidance beginning in the period that it first adopts FAS 160 (now included in
Subtopic 810-10). For those entities that have already adopted FAS 160, the
amendments are effective at the beginning of the first interim or annual
reporting period ending on or after December 15, 2009. The amendments should be
applied retrospectively to the first period that an entity adopted FAS 160. The
Company does not expect the provisions of ASU 2010-02 to have a material effect
on the financial position, results of operations or cash flows of the
Company.
In
January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic
505): Accounting for Distributions to Shareholders with Components of Stock and
Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to
Topic 505 clarifies the stock portion of a distribution to shareholders that
allows them to elect to receive cash or stock with a limit on the amount of cash
that will be distributed is not a stock dividend for purposes of applying Topics
505 and 260. Effective for interim and annual periods ending on or after
December 15, 2009, and would be applied on a retrospective basis. The Company
does not expect the provisions of ASU 2010-01 to have a material effect on the
financial position, results of operations or cash flows of the
Company.
The
accompanying notes are an integral part of these financial
statements.
8
NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent
Accounting Pronouncements (Continued)
In
December 2009, the FASB issued Accounting Standards Update 2009-17,
Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises
Involved with Variable Interest Entities. This Accounting Standards Update
amends the FASB Accounting Standards Codification for Statement 167. The Company
does not expect the provisions of ASU 2009-17 to have a material effect on the
financial position, results of operations or cash flows of the
Company.
In
December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers
and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This
Accounting Standards Update amends the FASB Accounting Standards Codification
for Statement 166. The Company does not expect the provisions of ASU 2009-16 to
have a material effect on the financial position, results of operations or cash
flows of the Company.
In
October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting
for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance
or Other Financing. This Accounting Standards Update amends the FASB Accounting
Standard Codification for EITF 09-1. The Company does not expect the provisions
of ASU 2009-15 to have a material effect on the financial position, results of
operations or cash flows of the Company.
In
October 2009, the FASB issued Accounting Standards Update 2009-14, Software
(Topic 985): Certain Revenue Arrangements That Include Software Elements. This
update changed the accounting model for revenue arrangements that include both
tangible products and software elements. Effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or
after June 15, 2010. Early adoption is permitted. The Company does not expect
the provisions of ASU 2009-14 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In
October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue
Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update
addressed the accounting for multiple-deliverable arrangements to enable vendors
to account for products or services (deliverables) separately rather than a
combined unit and will be separated in more circumstances that under existing US
GAAP. This amendment has eliminated that residual method of allocation.
Effective prospectively for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010. Early adoption is
permitted. The Company does not expect the provisions of ASU 2009-13 to have a
material effect on the financial position, results of operations or cash flows
of the Company.
The
accompanying notes are an integral part of these financial
statements.
9
NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent
Accounting Pronouncements (Continued)
In
September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value
Measurements and Disclosures (Topic 820): Investments in Certain Entities That
Calculate Net Asset Value per Share (or Its Equivalent). This update provides
amendments to Topic 820 for the fair value measurement of investments in certain
entities that calculate net asset value per share (or its equivalent). It is
effective for interim and annual periods ending after December 15, 2009. Early
application is permitted in financial statements for earlier interim and annual
periods that have not been issued. The Company does not expect the provisions of
ASU 2009-12 to have a material effect on the financial position, results of
operations or cash flows of the Company.
In July
2009, the FASB ratified the consensus reached by EITF (Emerging Issues Task
Force) issued EITF No. 09-1, (ASC Topic 470) "Accounting for Own-Share Lending
Arrangements in Contemplation of Convertible Debt Issuance" ("EITF 09-1"). The
provisions of EITF 09-1, clarifies the accounting treatment and disclosure of
share-lending arrangements that are classified as equity in the financial
statements of the share lender. An example of a share-lending arrangement is an
agreement between the Company (share lender) and an investment bank (share
borrower) which allows the investment bank to use the loaned shares to enter
into equity derivative contracts with investors. EITF 09-1 is effective for
fiscal years that beginning on or after December 15, 2009 and requires
retrospective application for all arrangements outstanding as of the beginning
of fiscal years beginning on or after December 15, 2009. Share-lending
arrangements that have been terminated as a result of counterparty default prior
to December 15, 2009, but for which the entity has not reached a final
settlement as of December 15, 2009 are within the scope. Effective for
share-lending arrangements entered into on or after the beginning of the first
reporting period that begins on or after June 15, 2009. The Company does not
expect the provisions of EITF 09-1 to have a material effect on the financial
position, results of operations or cash flows of the Company.
NOTE
2 - GOING CONCERN ASSUMPTION
The
Company’s financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company does not have
significant cash or other current assets, nor does it have an established source
of revenues sufficient to cover its operating costs and to allow it to continue
as a going concern which raises substantial doubt regarding its ability to
continue as a going concern.
In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plan is to obtain such resources for
the Company by obtaining capital from management and significant shareholders
sufficient to meet its minimal operating expenses and seeking equity and/or debt
financing. However management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
The
accompanying notes are an integral part of these financial
statements.
10
NOTE
2 – GOING CONCERN ASSUMPTION (CONTINUED)
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations. The accompanying
financial statements do not include any adjustments that may be necessary if the
Company is unable to continue as a going concern.
NOTE
3 – PROPERTY AND EQUIPMENT
Property
and equipment are stated at cost. Depreciation is computed over the
estimated life of the assets. Depreciation expense for the years ended December
31, 2009 and 2008 amounted to $207 and $-0-,
respectively. Gains from losses on sales and disposals are included
in the statements of operations. Maintenance and repairs are charged
to expense as incurred. As of December 31, 2009 and 2008 property and
equipment consisted of the following:
December 31,
2009
|
December 31,
2008
|
Estimated
Useful Life
|
|||||||
Equipment
|
$ | 3,100 | $ | - |
5 years
|
||||
3,100 | - | ||||||||
Accumulated depreciation
|
(207 | ) | - | ||||||
Total
property and equipment
|
$ | 2,893 | $ | - |
NOTE
4 – RELATED PARTY TRANSACTIONS
During
the year ended December 31, 2009, the Company has borrowed $81,018 from a
related party to fund continuing operations. This note bears no
interest, is due on demand and is uncollateralized.
NOTE
5 – NOTES PAYABLE
The
Company has issued various unsecured demand promissory notes to a major
shareholder and other unrelated individuals as of December 31,
2009. This major shareholder has personally guaranteed the principal
of one demand note and in return has been granted first lien on the assets of
the corporation. Subsequent to year end, one of the notes payable
outstanding went into default which meant that the default terms of the note
went into effect. Please see Note 8 for description of default terms
of this note. The detail of the Company debt as of December 31, 2009,
is as follows:
The
accompanying notes are an integral part of these financial
statements.
11
NOTE
5 – NOTES PAYABLE (CONTINUED)
Principle
2009
|
Principle
2008
|
|||||||
February
5, 2005 - Demand Note, 5% per annum.
|
$ | 47,822 | $ | 47,822 | ||||
June
26, 2008 – Convertible Demand Note 5% per annum, convertible to common
stock at $1.00 per share
|
39,164 | 39,164 | ||||||
September
30, 2008 – Demand Notes, 0% per annum.
|
12,408 | 12,408 | ||||||
October
1, 2008 – Demand Notes, 5% per annum.
|
10,000 | 10,000 | ||||||
December
31, 2008 – Demand notes, 0% per annum.
|
9,257 | 9,257 | ||||||
March
31, 2009 – Demand notes, 0% per annum.
|
8,960 | - | ||||||
June
30, 2009 - Demand notes, 0% per annum.
|
6,782 | - | ||||||
September
1, 2008 – Demand Notes, 5% per annum.
|
2,500 | - | ||||||
September
30, 2009-Demand Notes, 0% per annum.
|
17,196 | - | ||||||
December
24, 2009- Loan Payable, Principal amount of $160,000, 0% per annum.,
payable March 30, 2010
|
102,000 | - | ||||||
Total
Debt
|
256,092 | 118,653 | ||||||
Less
Current Portion
|
256,092 | 118,653 | ||||||
Long
Term Debt
|
$ | - | $ | - | ||||
Interest
expense for the year ending December 31, 2009 and 2008
|
$ | 5,137 | $ | 5,228 |
NOTE
6 – STOCKHOLDERS’ EQUITY
On May
29, 2008 the Board of Directors unanimously voted to increase the authorized
shares of both the preferred stock and common stock from 5,000,000 to 10,000,000
shares and from 20,000,000 to 200,000,000 shares respectively.
On May
29, 2008, the Board of Directors unanimously voted for a 10 for 1 forward stock
split of the common shares effective for stockholders of record on June 13,
2008. The number of outstanding shares of common stock was adjusted from
approximately 7,031,250 to 70,312,500 shares, resulting from the
split.
On July
7, 2008, the Company amended its articles of incorporation and increased the
number of authorized common stock to 520,000,000 shares at a par value of $.0001
per share. The Company also issued 250,000 restricted common shares in lieu of
payment for business consulting services, 5,000,000 restricted common shares for
marketing consultation services and 15,000,000 restricted common shares for
employee compensation.
The
accompanying notes are an integral part of these financial
statements.
12
NOTE
6 – STOCKHOLDERS’ EQUITY (CONTINUED)
On July
22, 2008, in accordance with a letter of intent between TheraVitae, Inc and the
Company to secure licensing rights from Thera Vitae, Inc., the Board of
Directors placed 90,000,000 restricted common shares at par value of $0.0001.in
escrow. These shares will be released upon completion and execution of the
agreements incorporating the terms of the Letter of Intent. The Letter of Intent
with TheraVitae provides for a non exclusive license in Mexico and later the
Islands of the Caribbean to commercialize TheraVitae’s stem cell therapy for
cardiovascular indications. It also provides for an exclusive license
in the United States, Canada and Mexico to obtain regulatory approvals and then
market VesCell stem cell therapy for the treatment of peripheral artery disease.
On December 30, 2009, the agreement was cancelled and the shares were returned
to the company.
On July
23, 2008, the Board authorized the cancellation from certain shareholders of
58,500,000 restricted common shares, par value $0.0001. Said shares
were returned to the transfer agent for cancellation.
On
November 16, 2009 the Company issued a private placement memorandum expiring on
March 31, 2010 to raise $ 500,000. The terms of the offering consists of 1 share
of common stock and one five year warrant exercisable at $.75. Each unit costs
$.50, and there are 1,000,000 units available. The minimum subscription is
100,000 units. As of December 31, 2009 no shares have been issued in
connection with the private placement memorandum.
NOTE
7 – INCOME TAXES
The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse. The Company’s predecessor
operated as entity exempt from Federal and State income taxes.
SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.
The
provision for income taxes differs from the amounts which would be provided by
applying the statutory federal income tax rate of 39% to net the loss before
provision for income taxes for the following reasons:
December 31,
2009
|
December 31,
2008
|
|||||||
Income
tax expense at statutory rate
|
$ | (89,179 | ) | $ | (18,927 | ) | ||
Common
stock issued for services
|
- | 4,300 | ||||||
Valuation
allowance
|
89,179 | 14,627 | ||||||
Income
tax expense per books
|
$ | - | $ | - |
The
accompanying notes are an integral part of these financial
statements.
13
NOTE
7 – INCOME TAXES (CONTINUED)
Net
deferred tax assets consist of the following components as of:
December 31,
2009
|
December 31,
2008
|
|||||||
NOL
carryover
|
$ | 141,504 | $ | 52,326 | ||||
Valuation
allowance
|
(141,504 | ) | (52,326 | ) | ||||
Net
deferred tax asset
|
$ | - | $ | - |
Due to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry forwards of $141,504 for federal income tax reporting purposes are
subject to annual limitations. When a change in ownership occurs, net operating
loss carry forwards may be limited as to use in future years.
NOTE
8 – SUBSEQUENT EVENTS
In early
January 2010 the Company created a wholly owned foreign subsidiary in Israel for
the purpose of developing and operating the laboratory facilities associated
with its products. The name of the subsidiary is Regenocell Laboratories
Ltd.
On
January 7th 2010,
the Companies foreign subsidiary Regenocell Laboratories Ltd. consummated an
asset purchase agreement with TheraVitae Limited. Under the terms of the
agreement the Company will acquire certain assets of TheraVitae Limited,
approximate net book value of $346,000, in exchange for assuming certain
liabilities of approximately $334,000 and $75,000 in cash (all currency is in US
dollars).
In early
January 2010 the Company signed an Assignment of Rights agreement with Yieldex
LTD a Hong Kong corporation. Under the agreement the Company
purchased the right to use outside of Asia the patents and patent applications
related to Yieldex LTD’s stem cell research, therapy development and clinical
trials. In addition the Company obtained the rights to all the clinical trial
results, endorsements, files and other pertinent information. Under
the terms of the agreement the Company will pay Yieldex LTD $5,000,000 (US) in
cash over a period of 5 years. In addition the Company will also irrevocably
issue 40,000,000 shares of Common stock to Yieldex LTD.
On
February 10, 2010, Kwalata Trading Ltd., a wholly owned subsidiary of
TheraVitae, Inc., a Canadian corporation, obtained an ex parte order to seize
alleged intellectual property owned by it in the possession of the Company’s
wholly owned Israeli corporation, Regenocell Laboratories, Ltd. A
response was filed on February 24 and the Court scheduled a hearing for March
3. A settlement was negotiated through suggestions from the Judge.
All equipment and files taken are to be returned subject to copying by the
applicants at their expense. Excluded from copying are attorney-client
privileged documents, business documents and private documents. Regenocell
Laboratories and the Company agree not to disclose the alleged intellectual
property to third parties except in the ordinary course of business, for
government filings and when a non disclosure agreement is obtained.
The
accompanying notes are an integral part of these financial
statements.
14
NOTE
8 – SUBSEQUENT EVENTS (CONTINUED)
On March
30, 2010, a note payable representing 36 percent of total notes payable
outstanding went into default which meant that the default terms of the note
went into effect. According to the terms of the agreement, in the
event of default, the borrower is to pay an interest rate of 18 percent per
annum on all outstanding amounts owing to the lender until all amounts including
interest are paid in full. The interest began to accrue from the date of breach
and will extend up to the date all amounts owing are repaid in full by the
Company to the lender.
The
accompanying notes are an integral part of these financial
statements.
15
REGENOCELL
THERAPEUTICS, INC.
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
March
31, 2010 and December 31, 2009
1
REGENOCELL
THERAPEUTICS, INC.
TABLE
OF CONTENTS
Page
|
||
Condensed
Consolidated Balance Sheets – March 31, 2010 and December 31,
2009
|
1
|
|
Condensed
Consolidated Statements of Operations for the Three Months Ended March 31,
2010 and 2009
|
2
|
|
Condensed
Consolidated Statement of Stockholder’s Equity for the Three Months Ended
March 31, 2010 and 2009
|
3
|
|
Condensed
Consolidated Statements of Cash Flows for the Three Months Ended March 31,
2010 and 2009
|
4
|
|
Notes
to Condensed Consolidated Financial Statements
|
5-13
|
2
REGENOCELL
THERAPEUTICS, INC.
CONSOLIDATED
BALANCE SHEETS
March 31,
2010
(unaudited)
|
December 31,
2009
|
|||||||
Assets
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 22,692 | $ | 102,078 | ||||
Other
Receivable
|
3,290 | - | ||||||
Prepaid
Expenses
|
80,959 | |||||||
Loans
Receivables - Related Parties
|
- | |||||||
Total
Current Assets
|
106,941 | 102,078 | ||||||
Net
Fixed Assets
|
198,918 | 2,893 | ||||||
Security
Deposits
|
137,072 | |||||||
Net
Intangible Licensing Costs
|
4,904,000 | |||||||
Goodwill
|
49,338 | |||||||
Total
Assets
|
$ | 5,396,269 | $ | 104,971 | ||||
Liabilities
and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Current
Liabilities
|
||||||||
Accounts
Payable
|
$ | 64,982 | $ | 64,982 | ||||
Customer
Deposits
|
15,000 | |||||||
Accrued
Interest
|
161,422 | 110,597 | ||||||
Accrued
Expenses
|
662,397 | 750 | ||||||
Total
Current Liabilities
|
903,802 | 176,329 | ||||||
Long
Term Debt
|
||||||||
Note
Payable
|
3,908,201 | 162,323 | ||||||
Note
Payable Related Party
|
172,376 | 120,094 | ||||||
Total
Other Liabilities
|
4,080,577 | 282,417 | ||||||
Other
Liabilities
|
||||||||
Unamortized
Discount Rate
|
1,129,122 | - | ||||||
Total
Liabilities
|
6,113,501 | 458,746 | ||||||
Stockholders'
Equity
|
||||||||
Preferred
Stock $.0001 par value, 80,000,000 shares authorized, no shares issued and
outstanding as of March 31, 2010 and December 31, 2009
respectively
|
- | - | ||||||
Common
Stock, $.0001 par value, 520,000,000 shares authorized, 81,437,500 shares
issued and outstanding as of March 31, 2010 and 41,437,500 issued and
outstanding as of December 31, 2009 respectively
|
8,143 | 4,143 | ||||||
Additional
Paid in Capital
|
4,913 | 4,913 | ||||||
Accumulated
Deficit during the development stage
|
(725,530 | ) | (362,831 | ) | ||||
Translation
Adjustment
|
(4,758 | ) | - | |||||
Total
Stockholders' Equity
|
(717,232 | ) | (353,775 | ) | ||||
Total
Liabilities and Stockholders' Equity
|
$ | 5,396,269 | $ | 104,971 |
The
accompanying notes are an integral part of these financial
statements.
3
REGENOCELL
THERAPEUTICS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Three
|
For the Three
|
|||||||
Months Ended
|
Months Ended
|
|||||||
March 31, 2010
|
March 31, 2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Revenues
|
$ | 291,865 | $ | - | ||||
Cost
of Sales
|
184,841 | - | ||||||
Administrative
Expenses
|
145,622 | 10,199 | ||||||
Professional
Fees
|
288,881 | - | ||||||
Development
Costs
|
- | - | ||||||
Occupancy
Costs
|
39,979 | - | ||||||
Total
Operating Expenses
|
659,322 | 10,199 | ||||||
Loss
before other income (expenses) and discontinued operations
|
(367,457 | ) | (10,199 | ) | ||||
Other
income (expenses)
|
||||||||
Loss
on abandonment of assets
|
- | - | ||||||
Loss
before comprehensive income (expenses)
|
(367,457 | ) | (10,199 | ) | ||||
Comprehensive
income (expenses)
|
||||||||
Translation
loss from exchange of foreign currency
|
4,758 | - | ||||||
Net
Comprehensive Loss
|
$ | (362,699 | ) | $ | (10,199 | ) | ||
Basic
net loss per common share
|
$ | (0.01 | ) | $ | (0.00 | ) | ||
Weighted
Average of Common Shares Outstanding
|
61,078,125 | 96,187,500 |
The
accompanying notes are an integral part of these financial
statements.
4
REGENOCELL
THERAPEUTICS, INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
Common Stock
|
||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||
Additional
|
Other
|
|||||||||||||||||||||||
Paid
in
|
Accumulated
|
Comprehensive
|
||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Deficit
|
Total
|
|||||||||||||||||||
December
31, 2008 - Balance
|
131,437,500 | 13,143 | 4,913 | (134,168 | ) |
-
|
(116,112 | ) | ||||||||||||||||
December
30, 2009 - Cancellation of restrictd common stock issued to Thera Vitae,
Inc., on July 22, 2008
|
(90,000,000 | ) | (9,000 | ) |
-
|
-
|
-
|
(9,000 | ) | |||||||||||||||
December
31, 2009 - Net (Loss)
|
(228,663 | ) | (228,663 | ) | ||||||||||||||||||||
December
31, 2009 - Balance
|
41,437,500 | 4,143 | 4,913 | (362,831 | ) | - | (353,775 | ) | ||||||||||||||||
January
1, 2010- Issuance of restricted common stock to Yieldx, LTD. per the terms
of the Assignment of Rights dated December 31, 2009
(unaudited)
|
40,000,000 | 4,000 |
-
|
-
|
-
|
4,000 | ||||||||||||||||||
Translation
Adjustment (unaudited)
|
(4,758 | ) | (4,758 | ) | ||||||||||||||||||||
March
31, 2010 - Net (Loss) (unaudited)
|
(362,699 | ) | - | (362,699 | ) | |||||||||||||||||||
March
31, 2010 - Balance (unaudited)
|
81,437,500 | $ | 8,143 | $ | 4,913 | $ | (725,530 | ) | $ | (4,758 | ) | $ | (717,232 | ) |
The
accompanying notes are an integral part of these financial
statements.
5
REGENOCELL
THERAPEUTICS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Three
|
For the Three
|
|||||||
Months Ended
|
Months Ended
|
|||||||
March 31, 2010
|
March 31, 2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Cash
Flows From Operating Activities:
|
||||||||
Cash
collected from sales
|
303,575 | |||||||
Cash
paid to suppliers
|
$ | (134,305 | ) | $ | (8,960 | ) | ||
Net
cash provided by (used in) operating activities
|
169,269 | (8,960 | ) | |||||
Cash
Flows From Investing Activities
|
||||||||
(Purchase)
of equipment
|
(221,842 | ) | - | |||||
Goodwill
associated with Asset Purchase
|
(49,338 | ) | ||||||
Investment
in production activites
|
(4,904,000 | ) | - | |||||
Net
cash used in investing activities
|
(5,175,180 | ) | - | |||||
Cash
Flows From Financing Activities:
|
||||||||
Proceeds
from note payable
|
3,798,160 | 8,960 | ||||||
Unamorized
Discount
|
1,129,123 | |||||||
Sale
of common stock
|
3,999 | - | ||||||
Net
cash provided by (used in) financing activities
|
4,931,282 | 8,960 | ||||||
Effects
of Exchange Rates on Change in Cash
|
(4,758 | ) | - | |||||
Net
Increase (Decrease) in Cash
|
(79,387 | ) | - | |||||
Cash
Beginning of Period
|
102,079 | - | ||||||
Cash
End of Period
|
$ | 22,692 | $ | - | ||||
Reconciliation
of Income in Net Assets to Net Cash Provided by Operating
Activities:
|
||||||||
Net
Loss
|
$ | (362,699 | ) | $ | (8,960 | ) | ||
Non
cash activities:
|
||||||||
Depreciation
|
25,817 | - | ||||||
Accrual
of Interest Expense
|
50,826 | |||||||
Reconciliation
Adjustments
|
||||||||
(Increase)
in Other Receivables
|
(3,290 | ) | - | |||||
(Increase)
in Prepaid Expenses
|
(80,959 | ) | - | |||||
(Increase)
in Security Deposits
|
(137,072 | ) | - | |||||
(Decrease)
in Accounts Payable
|
- | - | ||||||
(Decrease)
in Accrued Expenses
|
661,647 | - | ||||||
Increase
in Customer Deposits
|
15,000 | - | ||||||
(Decrease)
in Accrued Interest
|
- | |||||||
Net
cash provided by (used in) operating activites
|
$ | 169,270 | $ | (8,960 | ) |
The
accompanying notes are an integral part of these financial
statements.
6
NOTE
1 – CONDENSED FINANCIAL STATEMENTS
The
accompanying financial statements have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations, and cash flows at March 31, 2010, and for all
periods presented herein, have been made.
Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted. It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's December
31, 2009 audited financial statements. The results of operations for
the period ended March 31, 2010 is not necessarily indicative of the operating
results for the full year.
NOTE
2 - GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting
principles in the United States of America applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has not yet established an ongoing source
of revenues sufficient to cover its operating costs and allow it to continue as
a going concern. The ability of the Company to continue as a going concern is
dependent on the Company obtaining adequate capital to fund operating losses
until it becomes profitable. If the Company is unable to obtain adequate
capital, it could be forced to cease operations.
In order
to continue as a going concern, the Company will need, among other things,
additional capital resources. Management's plan is to obtain such resources for
the Company by obtaining capital from management and significant shareholders
sufficient to meet its minimal operating expenses and seeking equity and/or debt
financing. However management cannot provide any assurances that the Company
will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
7
NOTE
3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting
Pronouncements
Below is
a listing of the most recent accounting pronouncements issued since the December
31, 2009 audited financial statements of the Company were released and through
June 8, 2010. The Company has evaluated these pronouncements and does not expect
their adoption to have a material impact on the Company’s financial position, or
statements.
|
§
|
Accounting
Standards Update 2010-17 Revenue Recognition- Milestone Method (Topic
605): Milestone Method of Revenue Recognition – a consensus of the FASB
emerging issues task force. Effective for fiscal years on or after June
15, 2010.
|
|
§
|
Accounting
Standards Update 2010-12 Income Taxes (Topic 740): Accounting for Certain
Tax Effects of the 2010 Health Care Reform Acts (SEC Update). Effective
July 1, 2010.
|
|
§
|
Accounting
Standards Update 2010-11Derivatives and Hedging (Topic 815): Scope
Exception Related to Embedded Credit Derivatives. Effective July 1,
2010.
|
|
§
|
Accounting
Standards Update 2010-09 Subsequent Events (topic 855): Amendments to
Certain Recognition and Disclosure Requirements. Effective July 1,
2010.
|
|
§
|
Accounting
Standards Update 2010-06 Fair Value Measurements and Disclosures (Topic
820): Improving Disclosures about Fair Value Measurements. Effective July
1, 2010.
|
|
§
|
Accounting
Standards Update 2010-05 Compensation-Stock Compensation (Topic718):
Escrowed share arrangements and the Presumption of Compensation (SEC
Update). Effective July 1, 2010.
|
|
§
|
Accounting
Standards Update 2010-04 (ASU 2010-04), Accounting for Various
Topics-Technical Corrections to SEC Paragraphs. Effective July 1,
2010.
|
NOTE
4 – ASSET ACQUISITION
In early
January 2010 the Company created a wholly owned foreign subsidiary in Israel for
the purpose of developing and operating the laboratory facilities associated
with its products. The name of the subsidiary is Regenocell Laboratories
Ltd. On January 7th 2010, the Companies foreign subsidiary Regenocell
Laboratories Ltd. consummated an asset purchase agreement with TheraVitae
Limited. Under the terms of the agreement the Company acquired certain assets of
TheraVitae Limited at a book value of approximately $360,000, in exchange for
assuming certain liabilities of approximately $334,000 and $75,000 in cash (all
currency is in US dollars).
Purchase
Price
|
||||||||
Cash
Paid
|
$ | 75,000 | ||||||
Liabilites
Assumed
|
334,266 | |||||||
Total
Purchase Price
|
$ | 409,266 | ||||||
Assets
received
|
||||||||
Computer
|
173,058 | |||||||
Prepaid
Exp
|
26,676 | |||||||
Security
Deposit
|
137,072 | |||||||
Furniture
|
23,122 | |||||||
Net
Value of Assets Purchased
|
359,928 | |||||||
Goodwill
|
$ | 49,338 |
During
the quarter, Company entered into an agreement which became effective on January
7, 2010 to purchase the intangible assets of a company incorporated in Hong Kong
and operating in Israel, Yieldex. Per the agreement, the Company
purchased the rights to patents and patent applications in connection with its
activities of stem cell research, therapy development, and clinical trials under
the trade name "TheraVitae." The agreement also assigned rights to
testing procedures, testing results, and full copy data from clinical trials
conducted by the seller over its operating and research history. This
also includes all other related procedures, software files, etc. The
assets were acquired in exchange for 40,000,000 shares of the Company’s common
stock, $100,000 cash, and a note payable in the amount of
$5,000,000. Per terms of the agreement, repayment of the note
will be made out of proceeds of revenues relating to the assigned intangible
assets and out of capital raised by management. The maturity date of
the note is January 4, 2015.
NOTE
5 – RELATED PARTY NOTES PAYABLE
During
the year ended December 31, 2009, the Company has borrowed $171,373 from a
related party to fund continuing operations. This note bears no
interest, is due on demand and is uncollateralized.
8
NOTE
6 – NOTES PAYABLE
On March
30, 2010, a note payable representing 36 percent of total notes payable
outstanding went into default which meant that the default terms of the note
went into effect. According to the terms of the agreement, in the
event of default, the borrower is to pay an interest rate of 18 percent per
annum on all outstanding amounts owing to the lender until all amounts including
interest are paid in full. The interest began to accrue from the date of breach
and will extend up to the date all amounts owing are repaid in full by the
Company to the lender.
NOTE
7 – SUBSEQUENT EVENTS
In
accordance with SFAS 165 (ASC 855-10) Company management reviewed all material
events through the date of this report and there are no material subsequent
events to report.
9
[OUTSIDE
BACK COVER OF PROSPECTUS]
DEALER
PROSPECTUS DELIVERY OBLIGATION
Until
_______________, all dealers that effect transactions in these securities,
whether or not participating in this offering,
may be required to deliver a prospectus. This is in addition to the dealers’
obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and
Distribution
The
following table sets forth the estimated costs and expenses to be incurred in
connection with the issuance and distribution of the securities registered under
this registration statement. All amounts are estimates except the Commission
registration fee. The following estimated expenses will be borne solely by
us.
Commission
registration fee
|
$ | 37.99 | ||
Legal
fees and expenses
|
$ | 50,000.00 | ||
Accounting
fees and expenses
|
$ | 5,000.00 | ||
Miscellaneous
expenses
|
$ | 5,000.00 | ||
Total
|
$ | 60,037.99 |
We have
agreed to bear expenses related to the registration of the shares of common
stock covered by this registration statement.
Item
14. Indemnification of Directors and
Officers
Our
Articles of Incorporation, as well as our By-Laws provide for the
indemnification of directors, officers, employees and agents of the corporation
to the fullest extent provided by the Corporate Law of the State of Florida, as
well as is described in the Articles of Incorporation and the
By-Laws. These sections generally provide that the Company may
indemnify any person who was or is a party to any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative or
investigative except for an action by or in right of the corporation by reason
of the fact that he or she is or was a director, officer, employee or agent of
the corporation. Generally, no indemnification may be made where the
person has been determined to be negligent or guilty of misconduct in the
performance of his or her duties to the Company.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers or controlling persons, pursuant to the
foregoing provisions, or otherwise, we have been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933, and is, therefore,
unenforceable.
Item
15. Recent Sales of Unregistered
Securities
The
following information is furnished with regard to all securities issued by the
Company within the past three years that were not registered under the
Securities Act. The issuances described hereunder were made in
reliance upon the exemptions from registration set forth in Section 4(2) of the
Securities Act or Regulation D, Rule 506 of the Securities Act. None
of the foregoing transactions involved a distribution or public
offering.
Date
|
Name
|
# of Shares
|
Total Price
|
|||||||
July
16, 2008
|
James
Mongiardo
|
15,000,000 | (1) | |||||||
July
16, 2008
|
Domenic
Mazza
|
5,000,000 | (1) | |||||||
July
16, 2008
|
Douglas
Rice
|
250,000 | (1) | |||||||
January
4, 2010
|
Yieldex
Ltd.
|
40,000,000 | (2) | |||||||
January
18, 2010
|
James
Dodrill
|
200,000 | (3) |
(1)
|
Issued
pursuant to acquisition by the Company of the Stem Cell
business.
|
(2)
|
Issued for the
acquisition of certain rights, including clinical data and a non exclusive
license to use Yieldex’s CRM System which manages clinical data and input
necessary to schedule a patient for stem cell production and all rights
in patent and patent applications, if any, in connection with activities
of stem cell research, therapy development and clinical trials under the
trade name “TheraVitae” for the world except for
Asia.
|
(3)
|
Issued
as payment for legal services
rendered.
|
47
Item
16. Exhibits and Financial Statement
Schedules.
EXHIBITS
The
following exhibits are included as part of this registration
statement.
Exhibit No.
|
|
Description of Exhibits
|
Exhibit
3.1
|
Articles
of Incorporation of the Company. (1)
|
|
Exhibit
3.2
|
Bylaws
of the Company. (1)
|
|
Exhibit
5.1
|
Opinion
of The Law Office of James G. Dodrill II, P.A.(to be filed by
amendment).
|
|
Exhibit
10.1
|
Assignment
of Rights between Yieldex Ltd. as Assignor and RegenoCELL Therapeutics,
Inc. as Assignee. (2)
|
|
Exhibit
21
|
List
of Subsidiaries.
|
|
Exhibit
23.1
|
Consent
of The Law Office of James G. Dodrill II, P.A. (included in Exhibit
5.1).
|
|
Exhibit
23.2
|
Consent
of Sadler, Gibb & Associates, LLC. independent registered public
accounting firm.
|
(1)
|
Incorporated
by reference from Form 8K filed by the Company on July 17,
2008.
|
(2)
|
Incorporated
by reference from Form 8K filed by the Company on April 12,
2010.
|
Item
17. Undertakings
The
undersigned Company hereby undertakes to:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement,
and
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
48
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The
undersigned registrant hereby undertakes:
That, for
the purpose of determining liability under the Securities Act of 1933 to any
purchaser, each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
That, for
the purpose of determining liability of the registrant under the Securities Act
of 1933 to any purchaser in the initial distribution of the
securities:
The
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
49
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Natick, Massachusetts, on
the 22nd day of June 2010.
REGENOCELL
THERAPEUTICS, INC.
|
|||
By:
|
/s/ James F.
Mongiardo
|
||
James
F. Mongiardo
|
|||
President,
Chief Executive Officer
and
Chief Financial Officer
|
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
Signature
|
Title
|
Date
|
||
/s/ James F. Mongiardo
|
Chief
Executive Officer, President
and
Chief Financial Officer
|
June
22, 2010
|
||
James
F. Mongiardo
|
(Principal
executive officer,
Principal
Financial Officer and
Principal
Accounting Officer)
|
50