UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K/A

 

[X]	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended September 30, 2017
[  ]	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
	For the period from ___________ to ________________
	Commission file number: 333-146834

 

Regenicin, Inc.

(Exact name of registrant as specified in its charter)

 

Nevada	27-3083341
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10 High Court, Little Falls, NJ	07424
(Address of principal executive offices)	(Zip Code)
Registrant’s telephone number: 973 557 8914

 

 

Securities registered under Section 12(b) of the Exchange Act
Title of each class	Name of each exchange on which registered
None	not applicable
Securities registered under Section 12(g) of the Exchange Act:
Title of each class
None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [X] No [ ]

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ] 

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

 

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

 

[ ] Large accelerated filer [ ] Non-accelerated filer

[ ] Accelerated filer [X] Smaller reporting company [ ] Emerging growth company

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: Approximately $19,952,796 as of March 31, 2017

 

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 153,483,050 shares as of December 31, 2017.

 

EXPLANATORY NOTE

 

This Amendment No. 1 (the “Amendment”) hereby amends our Annual Report on Form 10-K for the year ended September 30, 2017, which was originally filed with the Securities and Exchange Commission on January 16, 2018 (the “Original 10-K”). This Amendment is being filed solely to include the properly dated audit report.

 

Except as described above, the Company has not modified or updated disclosures presented in this Amendment No. 1. Accordingly, this Amendment No. 1 does not reflect events occurring after the Original 10-K or modify or update those disclosures affected by subsequent events, except as specifically referenced herein. All other information contained in the Original 10-K is unchanged and reflects the disclosures made at the time of filing of the Original 10-K.

 

This Amendment has been signed as of a current date and all certifications of the Company’s Chief Executive Officer/Principal Executive Officer and Chief Financial Officer/Principal Accounting and Financial Officer are given as of a current date. Accordingly, this Amendment should be read in conjunction with the Company’s filings with the Securities and Exchange Commission subsequent to the filing of the Original 10-K, including any amendments to those filings.

 

 

Item 8. Financial Statements and Supplementary Data

 

Index to Financial Statements Required by Article 8 of Regulation S-X:

 

Audited Financial Statements:
F-1	Report of Independent Registered Public Accounting Firm
F-2	Consolidated Balance Sheets as of September 30, 2017 and 2016
F-3	Consolidated Statements of Operations for the years ended September 30, 2017 and September 30, 2016
F-4	Consolidated Statements of Comprehensive Loss for the years ended September 30, 2017 and 2016
F-5	Consolidated Statements of Changes in Stockholders’ Deficiency for the years ended September 30, 2017 and September 30, 2016
F-6	Consolidated Statements of Cash Flows for the years ended September 30, 2017 and September 30, 2016
F-7	Notes to the Consolidated Financial Statements

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the Board of Directors and Stockholders of

Regenicin, Inc.

 

We have audited the accompanying consolidated balance sheets of Regenicin, Inc. and Subsidiary (the “Company”) as of September 30, 2017 and 2016 and the related consolidated statements of operations, changes in stockholders’ deficiency and cash flows for the years then ended.  The consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.    

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). These standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated 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 audits provide 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 the Company as of September 30, 2017 and 2016 and the results of its operations and its cash flows for the years 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 B to the consolidated financial statements, the Company has incurred recurring losses, expects to incur further losses in the development of its business and has been dependent on funding operations through the issuance of convertible debt and private sale of equity securities and sales of its intangible assets.   This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans concerning these matters are also described in Note B. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ ROTENBERG MERIL SOLOMON BERTIGER & GUTTILLA, P.C.

 

ROTENBERG MERIL SOLOMON BERTIGER & GUTTILLA, P.C.

Saddle Brook, New Jersey

January 16, 2018

  

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

 

	September 30,				September 30,
	2017				2016
ASSETS
CURRENT ASSETS
Cash	$	19,201			$	218,847
Prepaid expenses and other current assets		60,592				66,218
Common stock of Amarantus Corporation		8,000				7,500
Total current assets		87,793				292,565
Due from related party		—				67,268
Total assets	$	87,793			$	359,833
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
CURRENT LIABILITIES
Accounts payable	$	280,961			$	262,934
Accrued expenses - other		298,476				230,897
Accrued salaries - officers		1,707,001				1,136,001
Note payable - insurance financing		37,800				—
Bridge financing		175,000				175,000
Loan payable		10,000				10,000
Loans payable - officer		20,000				13,009
Total current and total liabilities		2,529,238				1,827,841
STOCKHOLDERS' DEFICIENCY
Series A 10% Convertible Preferred stock, $0.001 par value, 5,500,000 shares authorized; 885,000 issued and outstanding		885				885
Common stock, $0.001 par value; 200,000,000 shares authorized;157,911,410 issued and 153,483,050 outstanding		157,914				157,914
Additional paid-in capital		10,177,515				10,177,515
Accumulated deficit		(12,773,831	)			(11,799,894	)
Accumulated other comprehensive income		500				—
Less: treasury stock; 4,428,360 shares at par		(4,428	)			(4,428	)
Total stockholders' deficiency		(2,441,445	)			(1,468,008	)
Total liabilities and stockholders' deficiency	$	87,793			$	359,833

 

See Notes to Consolidated Financial Statements.

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

 

	Year				Year
	Ended				Ended
	September 30,				September 30,
	2017				2016
Revenues	$	—			$	—
Operating expenses
Research and development		5,284				1,445
General and administrative		970,824				1,126,577
Stock based compensation - general and administrative		—				67,895
Total operating expenses		976,108				1,195,917
Operating loss before other operating income		(976,108	)			(1,195,917	)
Other operating income - reversal of accounts payable		15,000				416,063
Loss from operations		(961,108	)			(779,854	)
Other income (expenses)
Interest expense		(17,499	)			(17,548	)
Interest income		4,670				—
Loss on other than temporary decline in fair value of investment		—				(292,500	)
Total other income (expenses)		(12,829	)			(310,048	)
Net loss		(973,937	)			(1,089,902	)
Preferred stock dividends		(70,800	)			(70,994	)
Net loss available to common stockholders	$	(1,044,737	)		$	(1,160,896	)
Loss per share:
Basic	$	(0.01	)		$	(0.01	)
Diluted	$	(0.01	)		$	(0.01	)
Weighted average number of shares outstanding
Basic		153,483,050				153,483,050
Diluted		153,483,050				153,483,050

 

See Notes to Consolidated Financial Statements.

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

 

	Year				Year
	Ended				Ended
	September 30,				September 30,
	2017				2016
Net loss	$	(973,937	)		$	(1,089,902	)
Other comprehensive income (loss):
Change in unrealized gain (loss) on available-for-sale securities, net of income taxes		500				—
Comprehensive loss	$	(973,437	)		$	(1,089,902	)

  

See Notes to Consolidated Financial Statements.

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY

 

																									Accumulated
																	Additional								Other
	Convertible Preferred Stock								Common Stock								Paid-in				Accumulated				Comprehensive				Treasury
	Shares				Amount				Shares				Amount				Capital				Deficit				Income				Stock				Total
Balances at October 1, 2015		885,000			$	885				157,911,410			$	157,914			$	10,109,620			$	(10,709,992	)		$	—			$	(4,428	)			(446,001	)
Stock compensation expense		—				—				—				—				67,895				—				—				—				67,895
Net loss		—				—				—				—				—				(1,089,902	)			—				—				(1,089,902	)
Balances at September 30,  2016		885,000				885				157,911,410				157,914				10,177,515				(11,799,894	)			—				(4,428	)			(1,468,008	)
Other comprehensive income		—				—				—				—				—				—				500				—				500
Net loss		—				—				—				—				—				(973,937	)			—				—				(973,937	)
Balances at September 30,  2017		885,000			$	885				157,911,410			$	157,914			$	10,177,515			$	(12,773,831	)		$	500			$	(4,428	)		$	(2,441,445	)

 

See Notes to Consolidated Financial Statements.

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS 

 

	Year				Year
	Ended				Ended
	September 30,				September 30,
	2017				2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(973,937	)		$	(1,089,902	)
Adjustments to reconcile net loss to net cash used in operating activities:
Unrealized loss on investment		—				292,500
Accrued interest on notes and loans payable		17,499				17,548
Stock based compensation - general and administrative		—				67,895
Reversal of accounts payable		(15,000	)			(416,063	)
Changes in operating assets and liabilities
Prepaid expenses and other current assets		5,626				53,018
Accounts payable		33,027				318,768
Accrued expenses		50,080				(271,286	)
Accrued salaries - officers		571,000				334,250
Net cash used in operating activities		(311,705	)			(693,272	)
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of loans from related party		67,268				—
Advances to related parties		—				(67,268	)
Net cash provided by (used) in investing activities		67,268				(67,268	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans from related parties		20,000				—
Repayments of loans from related party		—				(107,490	)
Proceeds of loans from officers		37,800				25,500
Repayment of loans from officers		(13,009	)			—
Net cash provided (used) in financing activities		44,791				(81,990	)
NET DECREASE IN CASH		(199,646	)			(842,530	)
CASH - BEGINNING OF PERIOD		218,847				1,061,377
CASH - END OF PERIOD	$	19,201			$	218,847
Supplemental disclosures of cash flow information:
Cash paid for interest	$	—			$	—
Cash paid for taxes	$	7,986			$	—

 

See Notes to Consolidated Financial Statements.

REGENICIN, INC. AND SUBSIDIARY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE A - THE COMPANY

 

Windstar, Inc. was incorporated in the state of Nevada on September 6, 2007. On July 19, 2010, the Company amended its Articles of Incorporation to change the name of the Company to Regenicin, Inc. (“Regenicin”). In September 2013, Regenicin formed a new wholly-owned subsidiary for the sole purpose of conducting research in the State of Georgia (together, the “Company”). The subsidiary has no activity since its formation due to the lack of funding. The Company’s original business was the development of a purification device. Such business was assigned to the Company’s former management in July 2010. The Company adopted a new business plan and intended to develop and commercialize a potentially lifesaving technology by the introduction of tissue-engineered skin substitutes to restore the qualities of healthy human skin for use in the treatment of burns, chronic wounds and a variety of plastic surgery procedures.

 

The Company entered into a Know-How License and Stock Purchase Agreement (the “Know-How SPA”) with Lonza Walkersville, Inc. (“Lonza Walkersville”) on July 21, 2010. Pursuant to the terms of the Know-How SPA, the Company paid Lonza Walkersville $3,000,000 and, in exchange, the Company was to receive an exclusive license to use certain proprietary know-how and information necessary to develop and seek approval by the U.S. Food and Drug Administration (“FDA”) for the commercial sale of technology held by the Cutanogen Corporation (“Cutanogen”), a subsidiary of Lonza Walkersville. Additionally, pursuant to the terms of the Know-How SPA, the Company was entitled to receive certain related assistance and support from Lonza Walkersville upon payment of the $3,000,000. Under the Know-How SPA, once FDA approval was secured for the commercial sale of the technology, the Company would be entitled to acquire Cutanogen, Lonza Walkersville’s subsidiary, for $2,000,000 in cash. After prolonged attempts to negotiate disputes with Lonza Walkersville failed, on September 30, 2013, the Company filed a lawsuit against Lonza Walkersville, Lonza Group Ltd. and Lonza America, Inc. (“Lonza America”) in Fulton County Superior Court in the State of Georgia.

 

On November 7, 2014, the Company entered into an Asset Sale Agreement (the “Sale Agreement”) with Amarantus Bioscience Holdings, Inc., (“Amarantus”). Under the Sale Agreement, the Company agreed to sell to Amarantus all of its rights and claims in the litigation currently pending in the United States District Court for the District of New Jersey against Lonza Walkersville and Lonza America, Inc. (the “Lonza Litigation”). This includes all of the Cutanogen intellectual property rights and any Lonza manufacturing know-how technology. In addition, the Company agreed to sell the PermaDerm® trademark and related intellectual property rights associated with it. The purchase price paid by Amarantus was: (i) $3,600,000 in cash, and (ii) shares of common stock in Amarantus having a value of $3,000,000 at the date of the transaction.

 

The Company used the net proceeds of the transaction to fund development of cultured cell technology and to pursue approval of the products through the FDA as well as for general and administrative expenses. The Company has been developing its own unique cultured skin substitute since the Company received Lonza’s termination notice.

 

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation:

 

The accompanying consolidated financial statements include the accounts of Regenicin and its wholly-owned subsidiary. All significant inter-company balances and transactions have been eliminated.

 

Going Concern:

 

The Company's consolidated financial statements have been prepared assuming that the Company will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has incurred cumulative losses and has an accumulated deficit of approximately $12.8 million from inception, expects to incur further losses in the development of its business and has been dependent on funding operations through the issuance of convertible debt, private sale of equity securities, and the proceeds from the Sale Agreement. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company used the proceeds from the Sale Agreement to fund operations. Currently management plans to finance operations through the private or public placement of debt and/or equity securities. However, no assurance can be given at this time as to whether the Company will be able to obtain such financing. The consolidated financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

 

Research and development: 

 

Research and development costs are charged to expense as incurred.

 

Income per share:

 

Basic income per share is computed by dividing the net income by the weighted average number of common shares outstanding during the period. Diluted loss per share give effect to dilutive convertible securities, options, warrants and other potential common stock outstanding during the period, only in periods in which such effect is dilutive. The following table summarizes the components of the income per common share calculation:

 

	Year Ended September 30,
	2017				2016
Income Per Common Share - Basic:
Net income (loss) available to common stockholders	$	(1,044,737	)		$	(1,160,896	)
Weighted-average common shares outstanding		153,483,050				153,483,050
Basic income (loss) per share	$	(0.01	)		$	(0.01	)
Income Per Common Share - Diluted:
Net income (loss)	$	(1,044,737	)		$	(1,160,896	)
Weighted-average common shares outstanding		153,483,050				153,483,050
Convertible preferred stock		-----				-----
Stock options		-----				-----
Weighted-average common shares outstanding and common share equivalents		153,483,050				153,483,050
Diluted income (loss) per share	$	(0.01	)		$	(0.01	)

  

The following weighted average securities have been excluded from the calculation as the exercise price was greater than the average market price of the common shares:

 

	2017				2016
Options		—				3,542,688
Warrants		722,500				722,500

 

The following weighted average securities have been excluded from the calculation even though the exercise price was less than the average market price of the common shares because the effect of including these potential shares was anti-dilutive due to the net loss incurred during 2017:

 

	2017				2016
Options		10,224,603				2,203,330
Convertible Preferred Stock		8,850,000				8,850,000

 

 

Financial Instruments and Fair Value Measurement:

 

The Company measures fair value of its financial assets on a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

 

•	Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
•	Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable or inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•	Level 3 - Unobservable inputs which are supported by little or no market activity.

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

 

The carrying value of cash, prepaid expenses and other current assets, accounts payable, accrued expenses and all loans and notes payable in the Company’s consolidated balance sheets approximated their values as of and September 30, 2017 and 2016 due to their short-term nature.

 

Common stock of Amarantus represents equity investments in common stock that the Company classifies as available for sale. Such investments are carried at fair value in the accompanying consolidated balance sheets. Fair value is determined under the guidelines of GAAP which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Realized gains and losses, determined using the first-in, first-out (FIFO) method, are included in net income. Unrealized gains and losses considered to be temporary are reported as other comprehensive income (loss) and are included in equity. Other than temporary declines in the fair value of investment is included in other income (expense) on the statement of operations.

 

The common stock of Amarantus is valued at the closing price reported on the active market on which the security is traded. This valuation methodology is considered to be using Level 1 inputs. The total value of Amarantus common stock at September 30, 2017 and 2016 is $8,000 and $7,500, respectively. The unrealized gain for the year ended September 30, 2017 was $500 net of income taxes, and was reported as a component of comprehensive loss. The unrealized loss for the year ended September 30, 2016 was $292,500 and considered to be an other than temporary decline in fair value. As such, the loss has been reported on the statement of operations for the year ended September 30, 2016.

 

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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Such estimation includes the selection of assumptions underlying the calculation of the fair value of options. Actual results could differ from those estimates. 

 

 

Stock-Based Compensation:

 

The Company accounts for stock-based compensation in accordance with FASB ASC 718, “Compensation - Stock Compensation.” Under the fair value recognition provision of the ASC, stock-based compensation cost is estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option pricing model.

 

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 505, “Equity.” Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services as defined by ASC 505.

 

Income Taxes:

 

The Company accounts for income taxes in accordance with accounting guidance FASB ASC 740, "Income Taxes," which requires that the Company recognize deferred tax liabilities and assets based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities, using enacted tax rates in effect in the years the differences are expected to reverse. Deferred income tax benefit (expense) results from the change in net deferred tax assets or deferred tax liabilities. A valuation allowance is recorded when it is more likely than not that some or all deferred tax assets will not be realized.

 

The Company has adopted the provisions of FASB ASC 740-10-05 "Accounting for Uncertainty in Income Taxes." The ASC clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements.  The ASC prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  The ASC provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

 

Recently Issued Accounting Pronouncements:

 

In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities”. The new standard principally affects accounting standards for equity investments, financial liabilities where the fair value option has been elected, and the presentation and disclosure requirements for financial instruments. Upon the effective date of the new standards, all equity investments in unconsolidated entities, other than those accounted for using the equity method of accounting, will generally be measured at fair value through earnings. There will no longer be an available-for-sale classification and therefore, no changes in fair value will be reported in other comprehensive income (loss) for equity securities with readily determinable fair values. The new guidance on the classification and measurement will be effective for public business entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, and early adoption is permitted. We will early adopt this guidance effective for the fiscal year beginning October 1, 2017.

 

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which is intended to simplify the accounting and reporting for employee share-based payment transactions. The pronouncement is effective for interim and annual periods beginning after December 31, 2016 with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

 

In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”), which requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. The ASU simplifies the current guidance in ASC Topic 740, Income Taxes, which requires entities to separately present deferred tax assets and liabilities as current and noncurrent in a classified balance sheet. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. We do not expect the impact of ASU 2015-17 to be material to our consolidated financial statements.

 

On May 10, 2017, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) 2017-09 “Compensation --Stock Compensation (Topic 718): Scope of Modification Accounting”, which provides guidance to clarify when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The guidance is effective prospectively for all companies for annual periods beginning on or after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. 

All other recent pronouncements issued by the FASB or other authoritative standards groups with future effective dates are either not applicable or are not expected to be significant to the consolidated financial statements of the Company.

 

 

NOTE C – SALE OF ASSET

 

On November 7, 2014, the Company entered into a Sale Agreement, as amended on January 30, 2015, with Amarantus. See Note A. Under the Sale Agreement, the Company agreed to sell to Amarantus all of its rights and claims in the Lonza Litigation. These include all of the Cutanogen intellectual property rights and any Lonza manufacturing know-how technology. In addition, the Company had agreed to sell its PermaDerm® trademark and related intellectual property rights associated with it. The Company also granted to Amarantus an exclusive five (5) year option to license any engineered skin designed for the treatment of patients designated as severely burned by the FDA developed by the Company. Amarantus can exercise this option at a cost of $10,000,000 plus a royalty of 5% on gross revenues in excess of $150 million. As of September 30, 2017, the option has not been exercised.

 

NOTE D – DUE FROM RELATED PARTY

 

The Company expects to purchase “Closed Herd” collagen from Pure Med Farma, LLC (“PureMed”), a development stage company in which the company’s CEO and CFO are member - owners. The Company and Pure Med entered into a three year supply agreement on October 16, 2016 naming Pure Med as the exclusive provider of collagen to the Company. The Company has agreed to assist PureMed by providing consultants to work on certain tasks in order to gain FDA approval. Such consultants’ costs would be reimbursed by PureMed. For the year ended September 30, 2016, the Company paid consultants on behalf of PureMed in the amount of $64,622. Interest on these advances has been accrued at 8% and amounted to $2,646 at September 30, 2016.

 

On December 15, 2016, PureMed issued a note in the amount of $64,622 representing the advances for consultants through that date. Under the terms of the note, interest accrued at 8% per annum and was payable on or before December 15, 2017. The balance of the note plus accrued interest of $7,308 was repaid in full in May 2017.

 

NOTE E - ACCRUED EXPENSES

 

Accrued expenses consisted of the following:

 

	2017				2016
Professional fees	$	206,087			$	156,007
Interest		92,389				74,890
	$	298,476			$	230,897

  

In Fiscal 2017 and 2016, management determined that certain accruals on the balance sheet for over six years totaling $15,000 and $416,063, respectively, were no longer due and payable. These amounts have been reversed and are included in operating expenses as an item of income.

 

 

NOTE F - LOANS PAYABLE

 

Loan Payable:

 

In February 2011, an investor advanced $10,000. The loan does not bear interest and is due on demand. At both September 30, 2017 and 2016, the loan payable totaled $10,000.

 

Loans Payable - Officer:

 

The Chief Executive Officer in fiscal year 2015 submitted for reimbursement Company expenses paid personally by him. At September 30, 2016, the balance owed to him was $13,009 and during the quarter ended December 31, 2016 that balance was repaid in full. The loan did not bear interest.

 

In September 2017, John Weber, the Company’s Chief Financial Officer, made an advance to the Company of $10,000. The loan does not bear interest and is due on demand.

 

In September 2017, J. Roy Nelson, the Company’s Chief Science Officer, made an advance to the Company of $10,000. The loan does not bear interest and is due on demand.

 

NOTE G - NOTES PAYABLE 

 

Bridge Financing:

 

On December 21, 2011, the Company issued a $150,000 promissory note to an individual. The note bore interest so that the Company would repay $175,000 on the maturity date of June 21, 2012, which correlated to an effective rate of 31.23%. Additional interest of 10% was charged on any late payments. The note was not paid at the maturity date and the Company is incurring additional interest as described above. At both September 30, 2017 and 2016, the note balance was $175,000. Accrued interest was $92,839 and $74,890 at September 30, 2017 and 2016, respectively, which is included in accrued expenses on the accompanying consolidated balance sheets. 

 

NOTE H - RELATED PARTY TRANSACTIONS

 

The Company’s principal executive offices are located in Little Falls, New Jersey. The headquarters is located in the offices of McCoy Enterprises LLC, an entity controlled by Mr. McCoy. The office is attached to his residence but has its own entrances, restroom and kitchen facilities.

 

The Company also maintains an office at Carbon & Polymer Research Inc. ("CPR") in Pennington, New Jersey, which is the Company's materials and testing laboratory. An officer of the Company is an owner of CPR.  No rent is charged for either premise.

 

See Note D regarding amounts due from related party and Note F for loans payable to related parties. 

 

NOTE I - INCOME TAXES

 

The Company did not incur current tax expense for the year ended September 30, 2017 or 2016.

 

At September 30, 2017, the Company had available approximately $4.45 million of net operating loss carry forwards which expire in the years 2029 through 2036. However, the use of the net operating loss carryforwards generated prior to September 30, 2011 totaling $0.7 million is limited under Section 382 of the Internal Revenue Code. Section 382 of the Internal Revenue Code of 1986, as amended (the Code), imposes an annual limitation on the amount of taxable income that may be offset by a corporation’s NOLs if the corporation experiences an “ownership change” as defined in Section 382 of the Code.

 

Significant components of the Company’s deferred tax assets at September 30, 2017 and 2016 are as follows:

 

	2017				2016
Net operating loss carry forwards	$	1,780,508			$	1,630,872
Unrealized loss		1,197,000				1,197,000
Stock based compensation		40,104				40,104
Accrued expenses		686,800				424,544
Total deferred tax assets		3,704,412				3,292,520
Valuation allowance		(3,704,412	)			(3,292,520	)
Net deferred tax assets	$	—			$	—

 

Due to the uncertainty of their realization, a valuation allowance has been established for all of the income tax benefit for these deferred tax assets.

 

The following is a reconciliation of the Company’s income tax rate using the federal statutory rate to the actual income tax rate as of September 30, 2017 and 2016:

 

	2017				2016
Federal tax rate		(34)	%			(34)	%
Effect of state taxes		(6)	%			(6)	%
Change in valuation allowance		40	%			40	%
Total		0	%			0	%

 

At September 30, 2017 and 2016, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense. As of September 30, 2017 and 2016 the Company has not recorded any provisions for accrued interest and penalties related to uncertain tax positions.

 

The Company files its federal income tax returns under a statute of limitations. The 2014 through 2017 tax years generally remain subject to examination by federal tax authorities. 

 

On December 22, 2017, new tax legislation came into effect. The provisions are generally effective for years beginning on or after January 1, 2018. The most impactful item to the Company in the new law is the change in tax rate from 34% to 21%. This will reduce the gross deferred tax assets prior to existing full valuation allowance from an effective rate of 40% to an effective rate of 27%. The current provision and disclosures do not reflect the new tax legislation. Had this legislation passed prior to our September 30 fiscal year-end, the effect would have been a reduction in deferred tax assets, and the corresponding valuation allowance, of approximately $1,200,000, as of September 30, 2017. Given the full valuation allowance, the change is not expected to have a significant impact on the financial statements.

 

  

NOTE J - STOCKHOLDERS’ DEFICIENCY

 

Preferred Stock:

 

Series A

 

Series A Preferred pays a dividend of 8% per annum on the stated value and has a liquidation preference equal to the stated value of the shares ($885,000 liquidation preference as of September 30, 2017 and 2016 plus dividends in arrears as per below). Each share of Preferred Stock has an initial stated value of $1 and is convertible into shares of the Company’s common stock at the rate of 10 for 1.

 

The Series A Preferred Stock was marketed through a private placement memorandum that included a reference to a ratchet provision which would have allowed the holders of the stock to claim a better conversion rate based on other stock transactions conducted by the Company during the three year period following the original issuance of the shares. The Certificate of Designation does not contain a ratchet provision. Certain of the stock related transactions consummated by the Company during this time period may have triggered this ratchet provision, and thus created a claim by holders of the Series A Preferred Stock who purchased based on this representation for a greater conversion rate than initially provided. The Company is currently negotiating with some of the remaining Series A holders regarding this claim and their conversation rate of their Series A Preferred Stock. Changes to the preferred stock conversion ratio may result in modification or extinguishment accounting. That may result in a deemed preferred stock dividend which would reduce net income available to common stockholders in the calculation of earnings per share. Certain of the smaller Series A holders have already converted or provided notice of conversion of their shares. In respect of this claim, the Company and its outside counsel determined that it is not possible to offer an opinion regarding the outcome. An adverse outcome could materially increase the accumulated deficit.

 

The dividends are cumulative commencing on the issue date when and if declared by the Board of Directors. As of September 30, 2017 and 2016, dividends in arrears were $463,837 ($.52 per share) and $393,037 ($.44 per share), respectively. 

 

At both September 30, 2017 and 2016, 885,000 shares of Series A Preferred were outstanding.

 

Series B

 

On January 23, 2012, the Company designated a new class of preferred stock called Series B Convertible Preferred Stock (“Series B Preferred”). Four million shares have been authorized with a liquidation preference of $2.00 per share. Each share of Series B Preferred is convertible into ten shares of common stock. Holders of Series B Preferred have a right to a dividend (pro-rata to each holder) based on a percentage of the gross revenue earned by the Company in the United States, if any, and the number of outstanding shares of Series B Convertible Preferred Stock, as follows: Year 1 - Total Dividend to all Series B holders = .03 x Gross Revenue in the U.S. Year 2 - Total Dividend to all Series B holders = .02 x Gross Revenue in the U.S. Year 3 - Total Dividend to all Series B holders = .01 x Gross Revenue in the U.S. At September 30, 2017, and 2016 no shares of Series B Preferred are outstanding. 

 

2010 Incentive Plan:

 

On December 15, 2010, the board of directors approved the Regenicin, Inc. 2010 Incentive Plan (the “Plan”). The Plan provides for the granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, stock units, performance shares and performance units to the Company’s employees, officers, directors and consultants. The Plan provides for the issuance of up to 4,428,360 shares of the Company’s common stock.

 

On January 6, 2011, the Company approved the issuance of 885,672 options to each of the four members of the board of directors at an exercise price of $0.035, as amended on December 10, 2013 from $0.62 per share, that were to expire on December 22, 2015. Effective as of the expiration date, the Company extended the term of those options to December 31, 2018. All other contractual terms of the options remained the same. The option exercise price was compared to the fair market value of the Company’s shares on the date when the extension was authorized by the Company, resulting in the immediate recognition of $67,895 in compensation expense. There is no deferred compensation expense associated with this transaction, since all extended options had previously been fully vested. The extended options were valued utilizing the Black-Scholes option pricing model with the following assumptions: Exercise price of $0.035, expected volatility of 208%, risk free rate of 1.31% and expected term of 3.03 years.

 

On January 15, 2015, the Company entered into a stock option agreement with an officer of the Company. The agreement grants the Officer an option to purchase 10 million shares of common stock at $0.02 per share. The agreement expires on January 15, 2019. The options were valued utilizing the Black-Scholes option pricing model with the following assumptions: exercise price: $0.02; expected volatility: 22.16%; risk-free rate: .75%; expected term: 3 years. The grant date fair value per share was $0.003 and the options vest immediately.

 

In November of 2010, the Company approved the issuance of 2,000,000 options to a consultant at an exercise price of $0.46 per share. The options vested immediately and expired in November 2015. 

 

Expected life is determined using the “simplified method” permitted by Staff Accounting Bulletin No. 107. The stock volatility factor is based on the Nasdaq Biotechnology Index. The Company did not use the volatility rate for Company’s common stock as the Company’s common stock had not been trading for the sufficient length of time to accurately compute its volatility when these options were issued.

 

Stock based compensation amounted to $-0- and $67,895 for the years ended September 30, 2017 and 2016, respectively.

 

 

Option activity for 2016 and 2017 is summarized as follows:

 

								Weighted
								Average
				Options				Exercise Price
	Options outstanding, October 1, 2016				15,542,688			$	0.08
	Granted							$
	Forfeited				2,000,000			$	.46
	Options outstanding, September 30, 2016				13,542,688			$	0.02
	Granted
	Forfeited
	Options outstanding, September 30, 2017				13,542,688			$	0.02
	Aggregate intrinsic value			$	488,567

 

The aggregate intrinsic value was calculated based on the positive difference between the closing market price of the Company’s Common Stock and the exercise price of the underlying options.

  

The following table summarizes information regarding stock options outstanding at September 30, 2017:

 

								Weighted Average Remaining								Options Exercisable Weighted Average
Ranges of prices				Number  Outstanding				Contractual  Life				Exercise  Price				Number  Exercisable				Exercise  Price
$	0.020				10,000,000				1.29			$	0.020				10,000,000			$	0.020
$	0.035				3,542,688				1.22			$	0.035				3,542,688			$	0.035
	$0.020-$0.035				13,542,688				1.27			$	0.024				13,542,688			$	0.024

 

As of September 30, 2017, there was no unrecognized compensation cost related to non-vested options granted.

 

Warrants:

  

A summary of the warrants outstanding at September 30, 2017 and 2016 is as follows:

 

				Weighted Average				Expiration
Warrants				Exercise Price				Date
	50,000				Varies				2018
	672,500			$	0.15				2018
	722,500			$	0.142

  

No warrants were issued or exercised during the years ended September 30, 2017 and 2016.

 

NOTE K - SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through the date of this filing.  

 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Regenicin, Inc.

 

By:	/s/ Randall McCoy
	Randall McCoy President, Chief Executive Officer, Principal Executive Officer, and Director
	January 22, 2018

 

In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

 

By:	/s/ Randall McCoy
	Randall McCoy President, Chief Executive Officer, Principal Executive Officer, and Director
	January 22, 2018

 

By:	/s/ John J. Weber
	John J. Weber Chief Financial Officer, Principal Financial and Accounting Officer, and Director
	January 22, 2018