UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K

 

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
  For the fiscal year ended September 30, 2016
   
[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
   
  For the transition period from _________ to ________
   
  Commission file number: 333-146834

 

Regenicin, Inc.
(Exact name of registrant as specified in its charter)

 

Nevada 27-3083341
(State or other jurisdiction of incorporation or organization) (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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]

 

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   $3,684,000 as of March 31, 2016

 

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 as of December 31, 2016.

 

     

 

TABLE OF CONTENTS

 

    Page  

PART I

 

Item 1. Business 3
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 6
Item 2. Properties 6
Item 3. Legal Proceedings 6
Item 4. Mine Safety Disclosures 6

 

PART II

 

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities 7 
Item 6. Selected Financial Data 10
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 10
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 13 
Item 8. Financial Statements and Supplementary Data 13
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 14
Item 9A. Controls and Procedures 14
Item 9B. Other Information 15 

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance 15
Item 11. Executive Compensation 17 
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 19
Item 13. Certain Relationships and Related Transactions, and Director Independence 20 
Item 14. Principal Accountant Fees and Services 20 
 

 

PART IV

 

 
Item 15. Exhibits, Financial Statement Schedules 21 

 

  2  

 

PART I

Item 1. Business

 

Overview of key events of the year ended 2016

 

During 2016, the Company continued to pursue its goal of obtaining FDA approval for it’s product NovaDerm ® . If approved, NovaDerm will be the first and only autologous, cultured skin substitute product allowed for medical use on burns requiring grafting. We started the year with a comprehensive set of objectives to achieve this goal. The following is a review of the major milestones achieved during the year:

 

1. Our contract laboratory completed the laboratory portion of their analytical research services and we received their final report. This was a lengthy process in which we identified certain potential product improvements that we continue to evaluate internally. The final research report was a crucial part of our FDA submissions for an Orphan Designation and Pre-IND (Investigational New Drug).

 

2. We finalized and executed two key contracts. The first contract was for the fabrication of a collagen scaffold with Bovine Collagen Products LLC (BCP). A collagen scaffold is a platform on which skin cells are grown. BCPs novel approach in the production of the scaffolds led to some potential product improvements. The second contract was for our needed supply of Closed Herd collagen with Pure Med Farma LLC, a related company. Collagen is a bovine derived product which is an essential part of the scaffold, and in order to be compliant with current FDA guidance documents on the use of animal source materials in humans, we are required to use such Closed Herd collagen in our Novaderm product. As far as we are aware, Pure Med Farma is the only company to file a Closed Herd Quality System as a Master File with the FDA, and thus is the only supplier of such Closed Herd bovine collagen. Our regulatory consultants worked closely with Pure Med Farma to ensure the acceptance of their products for inclusion in the manufacturing process of NovaDerm. Under the terms of our arrangement with Pure Med Farma, the expenses we incurred for such consultants related to the filing of the Pure Med Farma Master File were added into a secured convertible promissory note issued to us by Pure Med Farma (PMF Note). In addition to other rights and remedies, the PMF Note grants Regenicin the right to convert part of the principal balance into equity in Pure Med Farma. As previously reported, two officers of the Company are principals in Pure Med Farma.

 

3. We received notice from the Patent and Trademark Office that we are now the owner of the registered trademark NovaDerm ® .

 

4. We applied for and in August secured an Orphan Designation, as a biologic, from the Office of Orphan Products Development of the FDA for the treatment of burns requiring skin grafting with NovaDerm®. The Orphan Designation granted was thus broader than the proposed indication of “treatment of patients with deep-partial or full-thickness thermal burns greater than or equal to 30% total body surface area”. The FDA's Orphan designation is granted to promote the development of unmet clinical needs with new therapies for rare diseases and disorders. Orphan Product terminology is applied to Orphan designated products proven safe and effective, and the approved Orphan Product entitles the product, up to seven years of US market exclusivity. In addition, there are other financial benefits along with the FDA’s support during the approval process.

 

5. We submitted a pre-IND meeting request in September of 2016, and then our representatives met telephonically with FDA officials at the end of October 2016. The Agency addressed our questions and provided guidance on our planned NovaDerm ® development pathway going forward. It was agreed that Pure Med Farma would perform American Society of Testing and Materials   testing to fulfill current ASTM requirements. We are working closely with Pure Med Farma to ensure this testing can be completely promptly.

 

6. We selected a well-known and respected global Clinical Research Organization (CRO) that will assist us with our final Investigational New Drug (IND) application submission and the clinical trial process, including site selection, documentation, physician training, patient recruitment and a final clinical report on the results of the trials. An IND application is the document filed with the FDA to request permission to proceed with clinical trials. This application includes the candidate product's research, chemistry, manufacturing controls and processes, pre-clinical safety, clinical trial protocols, and more.

 

  3  

 

Our Business Moving Forward In 2017

 

First and foremost, we must raise additional funds to finalize the IND application, and begin the clinical trials. It is estimated that the cost to finalize the IND will be approximately 1.5 million dollars, and the cost to complete Phase1 of the clinical trial will be approximately 2 million dollars. Our major focus in obtaining this funding has been to minimize shareholders' dilution as much as possible, and consequently we are primarily pursuing financing through the issuance of a debt instrument, as well as international licensing agreements.

 

We have begun the preliminary planning for the clinical trials to the extent we are able, based on funding constraints. As mentioned above, we have chosen a CRO to assist in our IND submission and conducting the trials. Clinical site selection and patient recruitment should be somewhat simpler than other clinical trials, as we are limited in site selection to the 150 burn centers qualified to treat catastrophic burns. In addition, the surgical protocol will be similar to the grafting procedures currently in use at those facilities. NovaDerm ® should thus require minimal physician training.

 

The initial trials are planned to begin with ten subjects with an Initial Data Safety Monitoring Board (DSMB) review of safety on the first three subjects once they have reached 6 months follow-up. We do not intend to interrupt our trial waiting for the DSMB report.

 

Our management is considering various possibilities and approaches to obtaining clinical trial materials and manufcturing. While no final decision has been made, management’s approach is to set up the trials so as to allow for a seamless transition into commercial production upon approval. 

 

In summary, as we move forward in 2017 we hope to accomplish the following milestones:

 

• Secure interim financing to finalize product development needed to support the IND;

• Complete a second round of financing in order to conduct 10 patient clinical trials with NovaDerm ® and finalize required manufacturing engineering runs and validations;

• Work with Pure Med Farma to finalize Collagen Scaffold Testing Specifications for NovaDerm ® ;

• Finalize contracts with the CRO and select the NovaDerm® clinical trial material manufacturer;

• Retain a Principal lead investigator, medical advisor, surgical trainer and dermopathologist;

• Select and execute contracts with two clinical study sites; and

• Perform a successful graft of NovaDerm onto a clinical trial subject.

 

Our Proposed New Product:

 

We expect our first cultured skin substitute product, NovaDerm™, to be a multi-layered tissue-engineered skin prepared by utilizing autologous (patient’s own) skin cells. It is expected to be a graftable collagen based cultured epithelium implant that produces a skin substitute containing both epidermal and dermal components with a collagen base. Clinically, we expect our Cultured Skin substitute self-to-self skin graft product will behave the same as split thickness allograft skin. Our Autologous cultured skin substitute should not be rejected by the immune system of the patient, unlike with porcine or cadaver celluar grafts. Immune system rejection is a serious concern in Xeno-transplant procedures which may have a cellular component. The use of our cultured skin substitute should not require any specialized physician training because it is applied the same as in a standard allograft procedure.

 

Clinically speaking, a product designed to treat a life threatening condition must be available for the patient when needed. Our Culture skin substitute is being developed to be ready to apply to the patient when the patient is ready for grafting, within the first month of the patient being admitted to the hospital. Patients with serious burn injuries may not be in a condition to be grafted on a predefined schedule made more than a month in advance. Therefore, in order to accommodate the patient’s needs, we are striving to ensure that our cultured skin substitute will be designed with an adequate shelf life and manufacturing schedule to ensure it is available whether the patient needs it the first month, or any day after, until the patient’s wound is completely covered and closed.

  4  

 

Our second product is anticipated to be TempaDerm®. TempaDerm® uses cells obtained from human donors to develop banks of cryo-preserved (frozen) cells and cultured skin substitute to provide a continuous supply of non-allogenic skin substitutes to treat much smaller wound areas on patients, such as ulcers. This product is expected to have applications in the treatment of chronic skin wounds such as diabetic ulcers, decubitus ulcers and venous stasis ulcers. This product is also expected to be similar to our burn indication product, except for the indications, and it will not depend totally on autologous cells. In fact, it may be possible to use the excess cultured skin that was originally produced for use on the patient that donated the cells used to grow the skin. Hopefully, TempaDerm® will be able to take this original cultured skin and use it on someone other than the original donor. As currently planned, TempaDerm® has the possibility of using banked cells, or even frozen cultured skin substitutes, to carry inventory to satisfy unknown needs or large volumes to meet the demands created in large scale disasters. Because of our focus to date on NovaDerm ® , we have taken only limited steps toward the development of TempaDerm®.

   

We believe this technology has many different uses beyond the burn indication. The other uses may include chronic wounds, reconstructive surgery, other complex organs and tissues. Some of the individual components of our planned cultured skin substitute technology is expected to be developed for devices, such as tendon wraps made of collagen or collagen temporary coverings of large area wounds to protect the patients from infections while waiting for the permanent skin substitute. The collagen technology used for cultured skin substitutes, as designed, is expected to be used for many different applications in wound healing and stem cell technology and even drug delivery systems.

 

We could pursue any or all of the indications simultaneously if financing permitted, but for now we will seek approval for burns first as an Orphan Biologic Product to establish significant safety data and then Biological License Approval.

 

Competition  

 

Several companies have developed or are developing products that propose to approach the markets described above. These companies include:

 

Amarantus Biosciences, Inc.

    Smith & Nephew Wound Management

    Genzyme Biosurgery

    Integra Life Sciences Corporation

    LifeCell Corporation/Kinetic Concepts

    Organogenesis Inc

    Intercytex

    Genzyme

    Advanced Biohealing/ Shire

    Cy Ttera/ NovoCell/ViaCyte

    Biomimetic Therapeutics Inc.

   

RTI Biologics

 

Each of these companies has a proprietary approach to these markets, but none has yet penetrated the cell therapy markets fully. Four companies (Smith and Nephew, Genzyme. Organogenesis, Integra and Advanced Biohealing) have products that are FDA approved for use in burn patients.

 

We believe our products are believed to be superior in design and function and, thus, provide significant advantages over the competitors listed above. The advantages of our cultured skin substitute include simultaneous delivery of Autologus epidermal keratinocytes and fibroblasts organized with a unique collagen base.

Clinical skin replacements and grafts are in high demand for the treatment of skin injuries: they represent approximately 50% of tissue engineering and regenerative medicine market revenues. In 2009, the potential United States market for tissue-engineered skin replacements and substitutes totaled approximately $18.9 billion, based on a target patient population of approximately 5.0 million. By the year 2019, the total potential target population for the use of tissue-engineered skin replacements and substitutes is expected to increase to 6.4 million, resulting in a potential US market of approximately $24.3 billion. Tissue Engineering and Cell Transplantation: US Markets for Skin Replacements and Substitutes ; Report #A426; Medtech Insight: Bridgeport, PA, USA, August 2010.

 

Government Regulation

 

The Pediatric Medical Device Safety and Improvement Act of 2007 (Public Law 110-85) provides that Orphan Product applications for pediatric use only, or for use in both pediatric and adult patients, that are approved on or after September 27, 2007, are assigned an annual distribution number (ADN) and may be sold for profit (subject to the upper limit of the ADN). In addition, once a product receives an Orphan BLA, the developer of the product receives up to seven years market exclusivity for a specific indication following the product’s approval by the FDA.

 

Unrestricted sales of our cultured skin substitute will require full approval after data for safety and efficacy are collected from a multi-center study. Once an IND is submitted, we expect enrollment and treatment are expected to require a one year evaluation on each patient. The final 9 months of the evaluation is expected to be only a monitoring period. After collection of data from the clinical trial and submission to FDA, six months is typically planned for FDA’s review and decision. Having an Orphan designation of which the indication is life threatening and there is an unmet need for catastrophic burns, the review time may be reduced significantly.

 

Intellectual Property

 

In August 2010, we paid $7,500 and obtained the rights to the trademarks PermaDerm® and TempaDerm® from KJR-10 Corp. In November of 2014, we sold the PermaDerm® trademark to Amarantus Biosciences as part of an Asset Purchase Agreement whereby they purchase all our rights to the Lonza lawsuit. In 2016, we received a registered trademark for NovaDerm ® .

 

Employees

 

As of September 30, 2016, we had 3  employees. 

 

Subsidiaries

 

On September 11, 2013 we completed formation documents with respect to the formation of a wholly-owned subsidiary created with the sole purpose of conducting research in the State of Georgia.

 

The subsidiary was given the name, Regenicin Research of Georgia, LLC, and was accepted by the Georgia Secretary of State on September 25, 2013, with an official certificate of formation being issued on September 26, 2013.

  5  

 

Item 1A. Risk Factors.

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 1B. Unresolved Staff Comments .

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 2. Properties

 

Our principal executive offices are located at 10 High Court, Little Falls, NJ 07424. Our headquarters is located in the offices of McCoy Enterprises LLC, an entity controlled by Randall McCoy, our Chief Executive Officer. The office is attached to his residence but has its own entrances, restroom and kitchen facilities. No rent is charged.

 

We also maintain an office at 3 Arvida Drive, Pennington NJ 08534, which is an FDA registered, cGMP compliant FDA audited facility. This office is owned by Materials Testing Laboratory, and the principal is an employee of our company. No rent is charged.

 

Item 3. Legal Proceedings

 

On September 30, 2013, we filed a lawsuit against Lonza Walkersville and others in Fulton County Superior Court in the State of Georgia.

 

On November 7, 2014, we entered into an Asset Purchase Agreement (“the Agreement”) with Amarantus Bioscience Holdings, Inc., (“Amarantus”) and others in which we agreed to sell to Amarantus all of our rights and claims in our litigation currently pending in the “Lonza Litigation”. This included all of our Cutanagen intellectual property rights and any Lonza manufacturing know-how technology. In addition, we agreed to transfer Amarantus our PermaDerm trademark and related intellectual property rights associated with it. The purchase price paid by Amarantus consisted of: (i) $3,500,000 in cash, and (ii) shares of common stock in Amarantus having a value of $3,000,000 at the time of the closing. A portion of the cash purchase price was allocated to our sole senior secured creditor.

 

The cash portion of the purchase price was paid to us over time and was fully consummated in February 2015.

 

In addition to the purchase price, Amarantus paid our attorneys in the Lonza Litigation, Gordon & Rees, $450,000 at closing. The payment to Gordon & Rees satisfied in full all obligations for litigation fees and costs owed to Gordon & Rees in connection with the Lonza Litigation.

 

In addition, we 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 Regenicin. Amarantus can exercise this option at a cost of $10,000,000 USD plus a royalty of 5% on gross revenues in excess of $150M USD.

 

Other than as mentioned above, we have no threatened or pending litigation.

 

Item 4. Mine Safety Disclosures

 

N/A

 

  6  

 

PART II

 

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities

 

Market Information

Our common stock is quoted under the symbol “RGIN” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc. Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA. Consequently, market makers that once quoted our shares on the OTCBB system may no longer be posting a quotation for our shares. As of the date of this report, however, our shares are quoted by several market makers on the OTCQB. The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting.

Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. 

Fiscal Year Ending September 30, 2016
Quarter Ended   High $   Low $
  September 30, 2016       0.06       0.02  
  June 30, 2016       0.03       0.03  
  March 31, 2016       0.03       0.01  
  December 31, 2015       0.03       0.02  
Fiscal Year Ending September 30, 2015
Quarter Ended   High $   Low $
  September 30, 2015       0.03       0.02  
  June 30, 2015       0.04       0.01  
  March 31, 2015       0.04       0.01  
  December 31, 2014       0.03       0.01  

 

Penny Stock

 

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

  7  

 

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

 

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

 

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

 

Holders of Our Common Stock

 

As of December 31, 2016, we had 153,483,050 shares of our common stock issued and outstanding, held by one hundred ninety-five (195) shareholders of record, with others holding shares in street name. 

 

Dividends

 

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

 

1.     we would not be able to pay our debts as they become due in the usual course of business, or;

2.     our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

 

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

 

Recent Sales of Unregistered Securities  

 

For the year ended September 30, 2015, we issued 7,920,291 shares of its common stock for the conversion of notes payable and accrued interest.

 

For the year ended September 30, 2015, we issued 10,392,967 shares of common stock for the conversion of principal and accreted interest owed.

 

For the year ended September 30, 2016, we did not issue common stock.

 

  8  

 

Shares and Warrants to be issued:  

 

No warrants were issued in 2015-2016.

  

These securities were issued pursuant to Section 4(2) of the Securities Act and/or Rule 506 promulgated thereunder. The holders represented their intention to acquire the securities for investment only and not with a view towards distribution. The investors were given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. We directed our transfer agent to issue the stock certificates with the appropriate restrictive legend affixed to the restricted stock.

 

Securities Authorized for Issuance under Equity Compensation Plans

 

The following table provides information about our compensation plans under which shares of common stock may be issued upon the exercise of options as of September 30, 2016.

 

Plan Category   Number of securities to be issued upon exercise of outstanding option, warrants and rights  

Weighted-average exercise price

of outstanding options,

warrants and rights

 

Number of securities remaining available for future issuances

under equity compensation plans

Equity compensation plans approved by security holders     0       0       0  
Equity compensation plans not approved by security holders     13,542,688     $ 0.02       0  
Total     13,542,688      $ 0.02       0  

 

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 our employees, officers, directors and consultants, including incentive stock options, non-qualified stock options, restricted stock, and other benefits. The Plan provides for the issuance of up to 4,428,360  shares of our common stock.

 

On January 6, 2011, we approved the issuance of 885,672 options to each of the four members of the board of directors at an exercise price is $0.62 per share. The options vest over a three-year period and expire on December 22, 2015. On May 11, 2011, the terms of the options were amended to allow for immediate vesting. On December 10, 2013, we approved the amendment to those options to change the exercise price to $0.035 per share. On December 22, 2015 the Board extended the term of the options to December 31, 2018.

 

In addition, In November of 2010, we 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 on November 2015.

 

In addition, 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, and expires January 15, 2019 .

  9  

 

Warrants Issued and Outstanding  

 

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

Warrants  

Exercise

Price

 

Expiration

Date

  50,000       Varies       2018  
  672,500     $ 0.15       2018  
  722,500                  

 
Item 6. Selected Financial Data

 

A smaller reporting company is not required to provide the information required by this Item.

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

 

See discussion in section marked: ‘ Our Business Moving Forward In 2017’

  10  

 

Results of Operations for the Years Ended September 30, 2016 and 2015  

 

We generated no revenues from September 6, 2007 (date of inception) to September 30, 2016. We do not expect to generate revenues until we are able to obtain FDA approval of cell therapy and biotechnology products and thereafter successfully market and sell those products.

   

We incurred operating expenses of $1,195,917 for the year ended September 30, 2016, compared with operating expenses of $1,215,197 for the year ended September 30, 2015. Our operating expenses decreased in 2016 from 2015, and are compared as follows:

 

Operating Expenses September 30, 2015   September 30, 2016
Research and Development $ 38,401     $ 1,445
General and Administrative $ 1,144,431       1,126,577  
Stock Based Compensation $ 32,365       67,895  

 

We incurred net other expense of $310,048 for the year ended September 30, 2016, as compared to net other income of $3,313,422 for the year ended September 30, 2015. Our other income and expenses for 2016 consisted of interest expenses of $17,548, and a loss on other than temporary decline in fair value of Amarantus investment of $292,500. Our other  income and expenses for 2015 consisted of interest expenses of $62,779, gain on sale of assets to Amarantus of $6,604,431, a loss on other than a temporary decline in fair value of Amarantus investment of $2,700,000, and a loss on derivative liabilities of $528,230.

 

We had a loss before income tax of $1,089,902 for the year ended September 30, 2016, as compared with a income of $3,071,599 for the prior year. The primary reasons for our income before taxes in fiscal 2015 was the sale of assets to Amarantus of $6,604,431.

 

For the year ended September 30, 2015, we recorded a provision for income tax in the amount of $2,829,000. Footnote J to our financial statements should be reviewed for further information.

 

Our net loss for the year ended September 30, 2016 was $1,089,902, compared to a net income of $242,599 for the year ended September 30, 2015.

 

Liquidity and Capital Resources

 

As of September 30, 2016, we had cash of $218,847, prepaid expenses and other current assets of $66,218, and investments of $7,500, for total current assets of $292,565. Our total current liabilities as of September 30, 2016 were $1,827,841. We had a working capital deficit of $1,535,276 as of September 30, 2016.

 

Operating activities used a net $693,272 in cash for the year ended September 30, 2016. Financing activities used $81,990 for the year ended September 30, 2016 and consisted of $107,490 in repayment of loans payable, and $25,500 received from related parties. Investing activities used $67,268 for advances to a related party for the year ended September 30, 2016.

 

We have issued various promissory notes over the course of the last several fiscal years in order to continue funding our operations. The terms of these promissory notes are detailed in Note H to the financial statements accompanying this Annual Report. While this financing has been helpful in the short term to meet our financial obligations and even with the Sale of Assets to Amarantus, we will need additional financing to fund our operations, continue with the FDA approval process, and implement our business plan over the long term.

 

For the near future, contrary to our earlier expectation, we believe that the net $3 million in cash received under the Asset Purchase Agreement with Amarantus, the potential of additional funding to be received from sales of the Amarantus common stock granted to us under the Agreement (depending on the market value of the Amarantus stock), and the anticipated reversal of our liability to Lonza, will not be enough to enable us to fund our operations up to at least the initiation of the clinical trials on our Cultured Skin Substitute. We will thus be seeking additional financing during the fiscal year end September 30, 2017. 

  11  

 

Going Concern

 

Our financial statements have been prepared assuming that we will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have incurred cumulative losses to date, expect to incur further losses in the development of our business, and have been dependent on funding operations through the issuance of convertible debt and private sale of equity securities. These conditions raise substantial doubt about our ability to continue as a going concern. Management’s plans include continuing to finance operations through the private or public placement of debt and/or equity securities and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives. The financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

 

Critical Accounting Policies

 

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

 

Development Stage Activities and Operations:

 

The Company is in the development stage and has had no revenues other than the sale of its assets to Amarantus. A development stage company is defined as one in which all efforts are devoted substantially to establishing a new business and even if planned principal operations have commenced, revenues are insignificant.

 

Intangible Assets:

 

Intangible assets, which include purchased licenses, patents and patent rights, are stated at cost and will be amortized using the straight-line method over their useful lives based upon the pattern in which the expected benefits will be realized, or on a straight-line basis, whichever is greater.

 

We review our intangible assets subject to amortization whenever events or changes in circumstances indicate that the carrying amount of such an asset may not be recoverable. Recoverability of these assets is measured by comparison of their carrying amount to the future undiscounted cash flows the assets are expected to generate. If such assets are considered impaired, the impairment to be recognized is equal to the amount by which the carrying value of the assets exceeds their fair value determined by either a quoted market price, if any, or a value determined by utilizing a discounted cash flow technique. In assessing recoverability, we must make assumptions regarding estimated future cash flows and discount factors. If these estimates or related assumptions change in the future, we may be required to record impairment charges.

  12  

 

Recently Issued Accounting Pronouncements

 

In August 2014, the FASB issued ASU 2014-15, “ Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern .” Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this Update provide that guidance. In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this Update are effective for public and nonpublic entities for annual periods ending after December 15, 2016 and early adoption is permitted.

 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations. This ASU is intended to clarify revenue recognition accounting when a third party is involved in providing goods or services to a customer. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing. This ASU is intended to clarify two aspects of Topic 606: identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients. This ASU amends certain aspects of ASU 2014-09, addresses certain implementation issues identified and clarifies the new revenue standards’ core revenue recognition principles. The new standards will be effective for the Company on January 1, 2018 and early adoption is permitted on the original effective date of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that new standards will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of this standard on its Consolidated Financial Statements and its ongoing financial reporting. 

 

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810) (“ASU 2015-02”), to address financial reporting considerations for the evaluation as to the requirement to consolidate certain legal entities. ASU 2015-02 is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2015. We are evaluating the impact of ASU 2015-02 and if early adoption is appropriate in future reporting periods.

 

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) (“ASU 2015-03”), as part of the initiative to reduce complexity in accounting standards. The update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual periods beginning after December 15, 2015 and for interim periods within those fiscal years.

 

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.

 

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 February 2016, the FASB issued ASU 2016-02, Leases , (Topic 842). This new ASU represents a wholesale change to lease accounting and introduces a lease model that brings most leases on the balance sheet. It also eliminates the required use of bright-line tests in current U.S. GAAP for determining lease classification. This ASU is effective for annual periods beginning after December 15, 2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods thereafter. Earlier application is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements.

 

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.

  

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 condensed financial statements of the Company.

 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 

A smaller reporting company is not required to provide the information required by this Item.

 

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, 2016 and 2015
F-3 Consolidated Statements of Operations for the years ended September 30, 2016 and September 30, 2015
F-4 Consolidated Statement of Stockholders’ (Deficiency) Equity for period from September 30, 2015 to September 30, 2016
F-5 Consolidated Statements of Cash Flows for the years ended September 30, 2016 and September 30, 2015
F-6 Notes to Consolidated Financial Statements

 

  13  

 

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, 2016 and 2015 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, 2016 and 2015 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 13, 2017

  F- 1  

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

 

  September 30,   September 30,
  2016   2015
            (Restated)  
ASSETS              
CURRENT ASSETS              
     Cash $ 218,847     $ 1,061,377  
     Prepaid expenses and other current assets   66,218       119,236  
     Common stock of Amarantus Corporation   7,500       300,000  
               Total current assets   292,565       1,480,613  
     Due from related party   67,268       —    
               Total assets $ 359,833     $ 1,480,613  
LIABILITIES AND STOCKHOLDERS' DEFICIENCY              
CURRENT LIABILITIES              
     Accounts payable $ 262,934     $ 360,228  
     Accrued expenses   230,897       484,635  
     Accrued salaries   1,136,001       801,751  
     Bridge financing   175,000       175,000  
     Loan payable   10,000       10,000  
     Loans payable - related parties   13,009       95,000  
               Total current and total liabilities   1,827,841       1,926,614  
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       10,109,620  
     Accumulated deficit   (11,799,894 )     (10,709,992 )
      Less: treasury stock; 4,428,360 shares at par   (4,428 )     (4,428 )
               Total stockholders' deficiency   (1,468,008 )     (446,001 )
               Total liabilities and stockholders' deficiency $ 359,833     $ 1,480,613  

 

See Notes to Consolidated Financial Statements.

  F- 2  

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

 

  Year   Year
  Ended   Ended
  September 30,   September 30,
  2016   2015
Revenues $ —       $ —    
Operating expenses              
Research and development   1,445       38,401  
General and administrative   1,126,577       1,144,431  
Stock based compensation - general and administrative   67,895       32,365  
Total operating expenses   1,195,917       1,215,197  
Operating loss before other operating income   (1,195,917 )     (1,215,197 )
Other operating income - reversal of accounts payable   416,063       973,374  
Loss from operations   (779,854 )     (241,823 )
Other income (expenses)              
Interest expense, including amortization of debt discounts   (17,548 )     (62,779 )
Gain on sale of assets   —         6,604,431  
Loss on other than temporary decline in fair value of investment   (292,500 )     (2,700,000 )
Loss on derivative liabilities   —         (528,230 )
Total other income (expenses)   (310,048 )     3,313,422  
Income (loss) before income tax   (1,089,902 )     3,071,599  
Income tax expense   —         2,829,000  
Net income (loss)   (1,089,902 )     242,599  
Preferred stock dividends   (70,994 )     (70,800 )
Net income (loss) attributable to common stockholders $ (1,160,896 )   $ 171,799  
Income (loss) per share:              
   Basic $ (0.01 )   $ 0.00  
   Diluted $ (0.01 )   $ 0.00  
Weighted average number of shares outstanding              
   Basic   153,483,050       153,262,851  
   Diluted   153,483,050       162,114,351  

 

See Notes to Consolidated Financial Statements.

  F- 3  

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY

 

  Convertible Preferred Stock   Common Stock   Common Stock To   (Restated)
Additional
Paid-in 		  Accumulated   Treasury   (Restated)
  Shares   Amount   Shares   Amount   Be Issued   Capital   Deficit   Stock   Total
                                   
Balances at October 1, 2014   885,000     $ 885       139,598,152     $ 139,601     $ 402,040     $ 8,897,799     $ (10,952,591 )   $ (4,428 )   $ (1,516,694 )
   Reversal of preferred stock dividends   —         —         —         —         —         251,242       —         —         251,242  
Balances at October 1, 2014 - restated   885,000     885       139,598,152     139,601     402,040     9,149,041     (10,952,591 )   (4,428 )     (1,265,452 )
   Shares issued in connection with conversion of debt and accrued interest   —         —         7,920,291       7,920               3,171       —         —         11,091  
Issuance of common stock   —         —         10,392,967       10,393       (402,040 )     391,649       —         —         2  
Write off of derivative from payoff of host convertible debt   —         —         —         —         —         165,072       —         —         165,072  
Derivative liabilities   —         —         —         —         —         368,322       —         —         368,322  
Stock compensation expense   —         —         —         —         —         32,365       —         —         32,365  
Net income   —         —         —         —         —         —         242,599       —         242,599  
Balances at September 30, 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 )

 

See Notes to Consolidated Financial Statements.

  F- 4  

REGENICIN, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

  Year   Year
  Ended   Ended
  September 30,   September 30,
  2016   2015
      (Restated)
CASH FLOWS FROM OPERATING ACTIVITIES      
     Net income (loss) $ (1,089,902 )   $ 242,599  
     Adjustments to reconcile net income to net cash              
used in operating activities:              
         Deferred income taxes   —         2,829,000  
         Unrealized loss on investment   292,500       2,700,000  
         Amortization of debt discounts   —         7,675  
         Accrued interest on notes and loans payable   17,548       (2,704 )
         Stock based compensation - general and administrative   67,895       32,365  
         Loss on derivative liabilities   —         528,230  
         Gain on sale of assets   —         (6,604,431 )
         Reversal of accounts payable   (416,063 )     (973,374 )
         Expenses paid directly by officer   —         95,000  
         Changes in operating assets and liabilities              
              Prepaid expenses and other current assets   53,018       (69,774 )
              Accounts payable   318,768       (380,251 )
              Accrued expenses   (271,286 )     (21,882 )
              Accrued salaries   334,250       (379,138 )
Net cash used in operating activities   (693,272 )     (1,996,685 )
CASH FLOWS FROM INVESTING ACTIVITIES              
         Proceeds from sale of assets   —         3,600,000  
         Due from Pure Med Farma, LLC   (67,268 )     —    
         Purchase of intangible asset   —         (10,000 )
Net cash provided by (used in) investing activities   (67,268 )     3,590,000  
CASH FLOWS FROM FINANCING ACTIVITIES              
         Repayments of notes payable   —         (275,000 )
         Proceeds from loans from related parties   25,500       23,330  
         Repayments of loans from related party   (107,490 )     (229,147 )
         Repayments of notes payable - insurance financing   —         (51,613 )
Net cash used in financing activities   (81,990 )     (532,430 )
NET INCREASE (DECREASE) IN CASH   (842,530 )     1,060,885  
CASH - BEGINNING OF PERIOD   1,061,377       492  
CASH - END OF PERIOD $ 218,847     $ 1,061,377  
Supplemental disclosures of cash flow information:              
       Cash paid for interest $ —       $ 107,830  
       Cash paid for taxes $ —       $ —    
Non-cash activities:              
Sale of assets $ —         6,600,000  
Common Stock of Amarantus received   —         (3,000,000 )
Cash received $ —       $ 3,600,000  
Shares issued/to be issued in connection with conversion of debt and accrued interest $ —       $ 11,091  
Derivative liabilities reclassified to additional paid-in capital $ —       $ 533,394  

  

See Notes to Consolidated Financial Statements.

  F- 5  

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. See Note D for a further discussion.

 

The Company is using the net proceeds of the transaction to fund development of cultured cell technology and to pursue approval of the products through the U.S. Food and Drug Administration. We have been developing our own unique cultured skin substitute since we 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 of approximately $11.8 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 sales of its intangible assets. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company is currently using the proceeds from the Asset Sale to fund operations. Once the funds are exhausted, 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. 

  F- 6  

Intangible assets:

 

As discussed below in Note D, the Company sold its intangible assets on November 7, 2014. Intangible assets, which included purchased licenses, patents and patent rights, were stated at cost and amortized using the straight-line method over their useful lives based upon the pattern in which the expected benefits will be realized, or on a straight-line basis, whichever is greater. Costs of internally developing intangibles (i.e. trademarks) are expensed as incurred and included in general and administrative expenses.

 

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,
  2016   2015
Income Per Common Share - Basic:      
Net income (loss) available to common stockholders $ (1,160,896 )   $ 171,799  
Weighted-average common shares outstanding   153,483,050       153,262,851  
Basic income (loss) per share $ (0.01 )   $ 0.00  
Income Per Common Share - Diluted:              
Net income (loss) $ (1,160,896 )   $ 171,799  
Weighted-average common shares outstanding   153,483,050       153,262,851  
Convertible preferred stock   -----       8,850,000  
Stock options   -----       1,500  
Weighted-average common shares outstanding and common share equivalents   153,483,050       162,114,351  
Diluted income (loss) per share $ (0.01 )   $ 0.00  

 

  F- 7  

 

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

 

  2016   2015
Options   3,542,688       5,542,688  
Warrants   722,500       3,611,167  

 

The following 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 2016:

 

  2016
Options   10,000,000  
Convertible Preferred Stock   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, 2016 and 2015 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, 2016 and 2015 is $7,500 and $300,000, respectively. 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. During the fiscal year ended September 30, 2015, the Company recognized an other than temporary loss on the stock in the amount of $2.7 million which was recognized in the statement of operations for that fiscal year. 

  F- 8  

 

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 February 2016, the FASB issued ASU 2016-02, Leases , (Topic 842). This new ASU represents a wholesale change to lease accounting and introduces a lease model that brings most leases on the balance sheet. It also eliminates the required use of bright-line tests in current U.S. GAAP for determining lease classification. This ASU is effective for annual periods beginning after December 15, 2018 (i.e., calendar periods beginning on January 1, 2019), and interim periods thereafter. Earlier application is permitted for all entities. The Company is currently evaluating the impact of ASU 2016-02 on its consolidated financial statements.

 

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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606) - Principal versus Agent Considerations. This ASU is intended to clarify revenue recognition accounting when a third party is involved in providing goods or services to a customer. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606) - Identifying Performance Obligations and Licensing. This ASU is intended to clarify two aspects of Topic 606: identifying performance obligations and licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606) - Narrow-Scope Improvements and Practical Expedients. This ASU amends certain aspects of ASU 2014-09, addresses certain implementation issues identified and clarifies the new revenue standards’ core revenue recognition principles. The new standards will be effective for the Company on January 1, 2018 and early adoption is permitted on the original effective date of January 1, 2017. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that new standards will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of this standard on its Consolidated Financial Statements and its ongoing financial reporting. 

 

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810) (“ASU 2015-02”), to address financial reporting considerations for the evaluation as to the requirement to consolidate certain legal entities. ASU 2015-02 is effective for fiscal years and for interim periods within those fiscal years beginning after December 15, 2015. We are evaluating the impact of ASU 2015-02 and if early adoption is appropriate in future reporting periods.

 

In April 2015, the FASB issued ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30) (“ASU 2015-03”), as part of the initiative to reduce complexity in accounting standards. The update requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for annual periods beginning after December 15, 2015 and for interim periods within those fiscal years.

 

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.

 

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 condensed financial statements of the Company.

  F- 9  

 

NOTE C - Immaterial Error Correction

 

During the fourth quarter of 2016, the Company identified an error in the recording of accrued dividends on the Series A Convertible Preferred Stock. An immaterial error correction was made in the consolidated balance sheet at September 30, 2015 and in the consolidated statements of changes in Stockholders’ Equity as of October 1, 2014. Current liabilities in the consolidated balance sheet at September 30, 2015 was decreased by $322,042, with a corresponding increase made to additional paid-in capital representing the reversal of accrued dividends of $251,242 as of September 30, 2014 plus reversal of $70,800 accrued during the year ended September 30, 2015. This immaterial error correction had no impact on the accumulated deficit, consolidated statements of operation, the computations of basic and diluted earnings per share, or the consolidated statements of cash flows for the years ended September 30, 2016 or 2015 or for the interim periods during those years.

 

NOTE D - SALE OF ASSET

 

On November 7, 2014, the Company entered into a Sale Agreement, as amended on January 30, 2015, with Amarantus, Clark Corporate Law Group LLP ("CCLG") and Gordon & Rees, LLP (“Gordon & Rees”). 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 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. A portion of the cash purchase price was used to repay debt. The final payment of $2,500,000 was received on February 24, 2015. 

 

During fiscal 2015, the Company recorded a gain on sale of assets in the amount of $6,604,431. In addition, as a result of the Sale Agreement, the Company determined that it was no longer liable for accounts payable to Lonza in the amount of $973,374. The liability was reversed and is included in other operating income in fiscal 2015.

 

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.  

 

NOTE E – 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 and other costs through that date. Under the terms of the note, interest will accrue at 8% per annum. The balance of the note plus accrued interest is payable or before December 15, 2017. Additionally, the note provides the Company with the option to convert up $42,500 of the balance owed into 17 Membership Interest Units of PureMed at a conversion price of $2,500 per unit. The note is collateralized by PureMed’s assets. 

  F- 10  

NOTE F - ACCRUED EXPENSES

 

Accrued expenses consisted of the following:

 

  2016   2015
Registration penalty $ —       $ 250,203  
Professional fees   156,007       177,090  
Interest   74,890       57,342  
  $ 230,897     $ 484,635  

  

In Fiscal 2016, management determined that certain accruals on the balance sheet for over six years totaling $416,063 were no longer due and payable. This amount has been reversed and is included in operating expenses as an item of income.

 

NOTE G - 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, 2016 and 2015, the loan payable totaled $10,000.

 

Loans Payable - Related Parties:

 

During the year ended September 30, 2015, the Company recorded expenses that were paid directly by Randall McCoy, the Company’s Chief Executive Officer in prior years and were submitted for reimbursement in the amount of $95,000. During fiscal 2016 the Company repaid $81,991 of this loan. At September 30, 2016 and 2015, the outstanding balance was $13,009 and $95,000, respectively. The loan does not bear interest and is due on demand.

 

During the year ended December 31, 2015, $15,500 of Company expenses were paid directly by John Weber, the Company’s Chief Financial Officer and were submitted for reimbursement and were repaid during fiscal 2016.

 

  F- 11  

 

NOTE H - 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% will be charged on any late payments. The note was not paid at the maturity date and the Company is incurring additional interest described above. At both September 30, 2016 and 2015, the Note balance was $175,000. Accrued interest was $74,890 and $57,342 at September 30, 2016 and 2015, respectively, which is included in accrued expenses on the accompanying consolidated balance sheets.

 

In May 2013, the Company issued a convertible promissory note totaling $25,000 to an individual. The note bore interest at the rate of 8% per annum and was due in November 2013. The note and accrued interest thereon were convertible into shares of common stock at the rate of $0.05 per share and automatically converted on the maturity date unless paid sooner by the Company. The Company did not record a discount for the conversion feature as the conversion price was greater than the price of the common stock on the issuance date. At maturity, the principal and interest were scheduled to convert to 520,055 shares of common stock but the individual waived the conversion of the principal and accrued interest. In February 2015 the note was repaid in full.

 

In August 2013, the Company issued convertible promissory notes totaling $250,000 to two individuals. The notes bore interest at the rate of 8% per annum and were due in August 2014. The principal and accrued interest thereon were convertible into shares of common stock at the rate of $0.03 per share and automatically convert on the maturity dates unless paid sooner by the Company. The Company did not record discounts for the conversion features as the conversion prices were greater than the prices of the common stock on the issuance dates. At maturity, the principal and interest were scheduled to automatically convert into 4,500,000 shares of common stock but the individuals waived the conversion of the principal and accrued interest. In February 2015 the notes were repaid in full.

 

The Company held a convertible promissory note that was paid in full during the year ended September 30, 2015 and a convertible promissory note that was converted into common stock during the year ended September 30, 2015. The conversion features contained in the promissory notes were considered embedded derivatives. Upon conversion and payment of the notes, losses on the derivatives were recognized and included in other income (expense) on the statement of operations for the year ended September 30, 2015 in the amount of $528,230. 

 

NOTE I - 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 employee of the Company is an owner of CPR.  No rent is charged for either premise.

 

On May 16, 2016, the Company entered into an agreement with CPR in which CPR will supply the collagen scaffolds used in the Company's production of the skin tissue. The contract contains a most favored customer clause guaranteeing the Company prices equal or lower than those charged to other customers. The Company has not yet made purchases from CPR. 

 

See Note E regarding amounts due from related party and Note G for loans payable to related parties. 

  F- 12  

 

NOTE J - INCOME TAXES

 

The Company did not incur current tax expense for year ended September 30, 2016. The provision for income taxes of $2,829,000 for the year ended September 31, 2015, represents deferred taxes.

 

At September 30, 2016, the Company had available approximately $4.1 million of net operating loss carry forwards which expire in the years 2029 through 2035. 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, 2016 and 2015 are as follows:

 

  2016   2015
Net operating loss carry forwards $ 1,630,872     $ 2,574,628  
Unrealized loss   1,197,000       1,080,000  
Stock based compensation   40,104       227,201  
Accrued expenses   424,544       355,265  
Total deferred tax assets   3,292,520       4,237,094  
Valuation allowance   (3,292,520 )     (4,237,094 )
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, 2016 and 2015:

 

  2016   2015
Federal tax rate   34 %     34 %
Effect of state taxes   6 %     6 %
Adjustment of valuation allowance   40 %     92 %
Permanent differences   —   %     7 %
Net operating loss carry forward   —   %     (47 )%
Total   0 %     92 %

 

At September 30, 2016 and 2015, 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, 2016 and 2015 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 2013 through 2016 tax years generally remain subject to examination by federal tax authorities. 

  F- 13  

 

NOTE K - 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, 2016 and 2015 plus dividends in arrears as per below). Each share of Preferred Stock has a stated value of $1 and was convertible into shares of the Company’s common stock at the rate of 10 for 1.

 

The dividends are cumulative commencing on the issue date when and if declared by the Board of Directors. As of September 30, 2016 and 2015, dividends in arrears were $393,037 ($.44 per share) and $322,042 ($.36 per share), respectively. 

 

At both September 30, 2016 and 2015, 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, 2016, and 2015 no shares of Series B Preferred are outstanding.

 

Common Stock Issuances:  

 

2015 Transactions

 

  1. The Company issued 7,920,291 shares of its common stock for the conversion of principal and accreted interest owed to a lender. $7,920 was credited to common stock and $3,171 to additional paid in capital.

 

  2. The Company issued 10,392,967 shares of its common stock that had previously been classified as common stock to be issued upon conversion of principal and accrued interest owed to lenders. $10,393 was credited to common stock and $391,649 was credited to additional paid in capital with a corresponding decrease in “common stock to be issued”.

 

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, including incentive stock options, non-qualified stock options, restricted stock, and other benefits. 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, 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.

 

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 $67,895 and $32,365 for the years ended September 30, 2016 and 2015, respectively.

  F- 14  

 

Option activity for 2015 and 2016 is summarized as follows:

 

        Weighted
        Average
    Options   Exercise Price
  Options outstanding, October 1, 2015       5,542,688     $ 0.19  
  Granted       10,000,000     $ 0.02  
  Forfeited                  
  Options outstanding, September 30, 2015       15,542,688     $ 0.08  
                     
  Granted                  
  Forfeited       2,000,000       .46  
  Options outstanding, September 30, 2016       13,542,688     $ 0.02  
                     
  Aggregate intrinsic value     $ 216,359          

 

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, 2016:

 

        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       2.29     $ 0.020       10,000,000     $ 0.020  
$ 0.035       3,542,688       2.22     $ 0.035       3,542,688     $ 0.035  
  $0.020-$0.035       13,542,688       2.27     $ 0.024       13,542,688     $ 0.024  

 

As of September 30, 2016, there was no unrecognized compensation cost related to non-vested options granted.

 

Warrants:

  

A summary of the warrants outstanding at September 30, 2016 and 2015 is as follows :

 

    Exercise   Expiration
Warrants   Price   Date
  50,000       Various       2018  
  672,500     $ 0.15       2018  
  722,500                  

 

No warrants were issued or exercised during the years ended September 30, 2016 and 2015.

 

NOTE L - SUBSEQUENT EVENTS

 

Management has evaluated subsequent events and except as provided in Note E, there are no additional subsequent events through the date of this filing. 

  F- 15  

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

 

No events occurred requiring disclosure under Item 304 of Regulation S-K during the fiscal year ending September 30, 2016.

 

Item 9A. Controls and Procedures

 

Disclosure Controls and Procedures

 

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being September 30, 2016. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report.

 

Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of September 30, 2016 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of September 30, 2016, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending September 30, 2017, depending on available funds: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

  14  

 

Remediation of Material Weakness

 

We are unable to remedy our controls related to the inadequate segregation of duties and ineffective risk management until we receive financing to hire additional employees.

 

Limitations on the Effectiveness of Internal Controls

 

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting are or will be capable of preventing or detecting all errors or all fraud. Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements, due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns may occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risk.

 

Item 9B. Other Information

 

None 

 

PART III

 

Item 10. Directors, Executive Officers and Corporate Governance  

 

The following table contains information with respect to our current executive officers and directors:

 

Name   Age   Principal Positions With Us
Randall McCoy     67     Chief Executive Officer and Director
John J. Weber     67     Chief Financial Officer and Director
Dr. J. Roy Nelson     68     Chief Science Officer
Craig Eagle     48     Director

 

Randall McCoy has served as our Chief Executive Officer and director since July 2010. Prior to joining the Company, Mr. McCoy served as President of McCoy Enterprises LLC since its founding in May 2002. Mr. McCoy has more than 42 years of experience in the healthcare industry and has assisted both small and major pharmaceutical/device companies address FDA issues. He served as Laboratory Manager and Instructor at both George Washington University and Temple Medical School, and served as Program Manager at the Stanford Research Institute, Healthcare Division, of the David Sarnoff Research Center. Mr. McCoy has also helped over 225 foreign and domestic companies introduce their FDA regulated drug and medical device products into the US and world market. He currently holds over 30 US and international patents.

 

John J. Weber has served as our Chief Financial Officer and Director since September 13, 2010. Mr. Weber served as the Executive Vice President of Fujifilm Medical Systems, USA from 2006 until 2009. While at Fujifilm he was responsible for overseeing all corporate activity with the exception of R&D. In previous positions at Fujifilm he served as Senior Vice President of Operations as well as Chief Financial Officer.

 

Mr. Weber brings over 20 years of medical-related corporate, operational and financial management experience to the Company.

 

Dr. Craig Eagle was appointed to our board of directors on September 7, 2010. He currently serves as Vice President of Strategic Alliances and Partnerships for the Oncology business unit at Pfizer Inc. Dr. Eagle joined Pfizer Australia in 2001 as part of the medical group and has held various positions and over the years including his appointment in 2003 as the worldwide leader for development of Celecoxib in oncology to oversee the global research program. In 2007, he became head of the oncology therapeutic area medical group for Pfizer, including the United States oncology business.

 

We acknowledge Dr. Eagle’s wealth of experience in pharmaceutical product development as well as his extensive experience in forming strategic alliances and partnerships and believe he will provide us with critical guidance as we seek to maximize the commercialization potential of our products.

  15  

 

Dr. J. Roy Nelson Chief Science Officer owns and operates a FDA registered cGMP audited laboratory. The Material Testing Laboratory holds a Schedule I-V DEA drug license and with an electronic FDA submission portal. His laboratory provides material science supports for new medical devices and drug support for major pharmaceutical as well as smaller companies. In addition to numerous medical device and drug developmental projects, he has been on two FDA consent decree remediations writing SOPs and other FDA compliance documents. He has eight years experience working with various collagen products, such as sponges. Prior to 1988 Dr. Nelson was a senior material scientist at RCA/SRI in Princeton, NJ. He has more than twenty US patents. Dr. Nelson and Mr. McCoy have worked on numerous projects together since 1979 and share co-inventor positions on various patents.

 

Our former director Dr. Joseph Rubinfeld passed away on December 26, 2016.

 

 Term of Office

 

Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

 

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 ten years, none of the following occurred with respect to a present or former director, executive officer, or employee: (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.

 

Committees of the Board

 

Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our directors believe that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the board of directors.

  

Our company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

 

A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our CEO and director, Randall McCoy, at the address appearing on the first page of this annual report.

  16  

 

Code of Ethics

 

We have adopted a Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the Code of Ethics is attached to our Annual Report on Form 10-K for the year ended September 30, 2011 as Exhibit 14.1.

 

Item 11. Executive Compensation

 

Compensation Discussion and Analysis

 

Employment Agreement with Randall McCoy  

 

On July 16, 2010, we entered into an employment agreement with Mr. Randall McCoy. The employment agreement has a three-year term that automatically extends in three-year increments unless notice of non-renewal is given by either party at least ninety (90) days prior to the expiration of the then current term.

 

The July 16, 2010, employment agreement provided for an initial annual base salary of $250,000. Under an addendum to the employment agreement, however, dated August 2, 2010, Mr. McCoy will earn an annual base salary of $125,000 until such time as we achieve a positive net income for the preceding calendar quarter as determined in accordance with GAAP and reported in our financial statements filed with the Securities and Exchange Commission under the Securities and Exchange Act of 1934, as amended. Immediately upon our attaining such positive net income, Mr. McCoy’s annual base salary will be increased to $250,000 as stated in the July 16, 2010 employment agreement.

 

The annual base salary will be reviewed each year by our board of directors (or compensation committee, if we then have one), but cannot be decreased from the amount in effect in the previous year. Pursuant to the employment agreement, Mr. McCoy is eligible for an annual bonus determined by our board of directors (or compensation committee, if any). The employment agreement also provides that Mr. McCoy is eligible to participate in our equity incentive plans and other employee benefit programs.

 

Mr. McCoy’s employment agreement imposes on him post-termination non-competition, non-solicitation and confidentiality obligations. Under the agreement, he agrees not to compete with our business in the United States, subject to certain limited exceptions, for a period of one year after termination of his employment. Mr. McCoy further agrees, for a period of one year after termination of his employment, to refrain from (i) soliciting, inducing, encouraging or attempting to induce or encourage any employee, contractor or consultant of the Company to terminate his or her employment or relationship with Company, or to breach any other obligation to Company; and (ii) soliciting, interfering with, disrupting, altering or attempting to disrupt or alter the relationship, contractual or otherwise, between the Company and any other person including, without limitation, any consultant, contractor, customer, potential customer, or supplier of the Company. He also agrees to maintain the confidentiality of all confidential or proprietary information of our company, and assign to us any inventions which pertain to or relate to our business or any of the work or businesses carried on by us that are discovered, conceived, reduced to practice, developed, made or produced by him during and as a result of his employment.

 

The employment agreement provides for payments and benefits upon termination of employment in addition to those previously accrued. If Mr. McCoy is terminated due to death, the salary payable to Mr. McCoy thereunder (in addition to items previously accrued, but excluding medical plan and other benefits) shall continue to be paid at the then current rate for three (3) months after the termination of employment in accordance with normal Company payroll practices. In addition, any bonuses actually earned prior to the termination (including, as reasonably determined by the Board of Directors or its Compensation Committee, a pro-rated amount of any annual bonus for the portion of the fiscal year during which termination takes place) shall be paid to Mr. McCoy.

 

In the event of the termination of Mr. McCoy’s employment due to disability, the salary payable thereunder (inclusive of paid medical plan then in effect and available, if any) shall continue to be paid at the then current rate for three (3) months after the termination of employment in accordance with normal Company payroll practices; provided, however, that the Company may deduct from such payments the amount of any and all disability insurance benefits paid during such three-month period with respect to Mr. McCoy that were paid for by the Company during any period for which payment was made by the Company during the term of the and prior to the termination. In addition, any bonuses actually earned prior to the termination (including, as reasonably determined by the Board of Directors or its Compensation Committee, a pro-rated amount of any annual bonus for the portion of the fiscal year during which termination takes place) which shall be paid to Mr. McCoy.

 

The table below summarizes all compensation awarded to, earned by, or paid to our officers for all services rendered in all capacities to us for our fiscal years ended September 30, 2015 and 2014.

 

SUMMARY COMPENSATION TABLE   
Name and principal position Year Salary ($)

Bonus

($)

 

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($)

Nonqualified

Deferred

Compensation

Earnings ($)

All Other

Compensation

($)

Total

($)

Randall McCoy

Chief Executive Officer, Principal Executive Officer and Director

2016

2015

$250,000 1)

$218,750 (2)

0

0

0

0

0

0

 0

0

0

0

0

0

$250,000

$218,750 

John J. Weber

Interim Chief Financial Officer, and Director

2016

2015

$125,000 (5)

$125,000 (6)

0

0

0

0

0

0

0

0

0

0

0

0

$125,000

$125,000

Dr. J. Roy Nelson Chief Science Officer

2016

2015

$150,000 (3)

$50,000 (4)

0

0

0

0

0

0

0

0

0

0

0

0

$ 150,000

$150,000

 

  (1) Of the $250,000 in salary to Mr. McCoy, $145,833 remains unpaid as accrued compensation.
(2) Of the $218,750 in salary to Mr. McCoy, $114,583 remains unpaid as accrued compensation.
(3) Of the $150,000 in salary to Mr. Nelson, $87,500 remains unpaid as accrued compensation.
(4) Of the $150,000 in salary to Mr. Nelson, $87,500 remains unpaid as accrued compensation.

(4) Of the $125,000 in salary to Mr. Nelson, $72,917 remains unpaid as accrued compensation.

(4) Of the $125,000 in salary to Mr. Nelson, $78,125 remains unpaid as accrued compensation.

 

  17  

 

Outstanding Equity Awards at Fiscal Year-End

 

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of September 30, 2016.

 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
    OPTION AWARDS STOCK AWARDS
Name  

Number of Securities Underlying Unexercised Options

(#) Exercisable

 

Number of Securities Underlying Unexercised Options

(#) Unexercisable

 

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options

(#)

  Option Exercise Price ($) (1)   Option Expiration Date  

Number of Shares or Units of Stock That Have Not Vested

(#)

  Market Value of Shares or Units of Stock That Have Not Vested ($)   Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)  

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested

(#)

Randall McCoy     885,672       —         —       $ 0.035     12/31/18     —         —         —       —  
John J. Weber     885,672       —         —       $ 0.035     12/31/18     —         —         —       —  
John J. Weber     10,000,000       —         —        $ 0.02     01/15/2019     —         —         —       —  

(1) On December 22, 2015 the Board extended the term of the options from December 22, 2015 to December 31, 2018.

 

Director Compensation

 

The table below summarizes all compensation of our directors during the fiscal year ended September 30, 2015.

 

DIRECTOR COMPENSATION  
Name    

Fees Earned or

Paid in

Cash

($)

     

 

 

Stock Awards

($)

     

 

 

Option Awards

($)

     

Non-Equity

Incentive

Plan

Compensation

($)

     

Non-Qualified

Deferred

Compensation

Earnings

($)

     

 

All

Other

Compensation

($)

     

 

 

 

Total

($)

 
Dr. Joseph Rubinfeld     —         —         —         —         —         —         —    
Dr. Craig Eagle     —         —         —         —         —         —         —    

 

  18  

 

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

The following table sets forth, as of January 8, 2017, certain information as to shares of our common stock owned by (i) each person known by us to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, and (iii) all of our executive officers and directors as a group.

 

Unless otherwise indicated below, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares of Common Stock, except to the extent authority is shared by spouses under applicable law. Unless otherwise indicated below, each entity or person listed below maintains an address of 10 High Court, Little Falls, NJ 07424.

 

The number of shares beneficially owned by each stockholder is determined under rules promulgated by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting or investment power and any shares as to which the individual or entity has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right. The inclusion in the following table of those shares, however, does not constitute an admission that the named stockholder is a direct or indirect beneficial owner.

 

Beneficial owner   Number of shares beneficially owned (1)   Percentage Owned (2)  
Officers and Directors                
Randall McCoy     21,207,313 (3)     13.74 %
John J. Weber     10,935,672 (4)     6.65  
Craig Eagle     1,935,672 (6)     1.65  
Officers and Directors collectively     35,014,329       22.68 %
5 Percent Shareholders                

Christopher Brown

100 N Tryon St. #4700

Charlotte, NC 28200

    10,000,000       6.52 %
*       Less than 1%                

 

(1) Unless otherwise indicated, each person or entity named in the table has sole voting power and investment power (or shares that power with that person’s spouse) with respect to all shares of common stock listed as owned by that person or entity.

(2) A total of 8,850,000  shares of the Company’s common stock and Series A Convertible Preferred Stock, on an as converted basis, are considered to be outstanding pursuant to Rule 13d-3(d)(1) under the Securities Exchange Act of 1934.

(3) Includes 20,321,641 shares of common stock held in his name and options to purchase 885,672 shares of common stock.

(4) Includes 50,000 shares of common stock held in his name and options to purchase 885,672 shares of common stock.

(5) Includes 1,050,000 shares of common stock held in his name and options to purchase 885,672 shares of common stock.

(6) Includes 50,000 shares of common stock held in his name and options to purchase 885,672 shares of common stock.

  19  

 

Item 13. Certain Relationships and Related Transactions, and Director Independence  

 

Other than the transactions described below and under the heading “Executive Compensation” (or with respect to which such information is omitted in accordance with SEC regulations), since October 1, 2012 there have not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a participant in which the amount involved exceeded or will exceed $120,000, and in which any director, executive officer, holder of 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest:

 

1. Our 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.

2. We also maintain an office in Pennington, New Jersey, which is the materials and testing laboratory. This office is owned by Materials Testing Laboratory, and the principal is an employee. In 2016, we entered into a supply agreement to supply collagen scafolds from a company owned by the same employee.

3. We have an employment agreement with our CEO, Randall McCoy, as discussed above.

 

4.        Randall McCoy, our Chief Executive Officer, made advances to us . The loans do not bear interest and are due on demand. At September 30, 2016 and 2015, the loan balance was $13,009 and $95,000, respectively.

 

5.        John Weber, our Chief Financial Officer, has made advances to us. The loans do not bear interest and are due on demand. At September 30, 2016 and 2015, the loan balance was $0 and $0, respectively.

 

6.        Randall McCoy and John Weber are principals and partners in Pure Med Farma, a Limited Liability Company which we have engaged to provide our Closed Herd collagen, see discussion above.

 

Director Independence

 

We are not a “listed issuer” within the meaning of Item 407 of Regulation S-K and there are no applicable listing standards for determining the independence of our directors. Applying the definition of independence set forth in Rule 4200(a)(15) of The Nasdaq Stock Market, Inc., we believe that Craig Eagle is an independent director.

 

Item 14. Principal Accounting Fees and Services

 

We do not have an audit committee. Our Board of Directors pre-approves all services, including both audit and non-audit services, provided by our independent accountants. For audit services, each year the independent auditor provides our Board of Directors with an engagement letter outlining the scope of the audit services proposed to be performed during the year, which must be formally accepted by the Board of Directors before the audit commences. The independent auditor also submits an audit services fee proposal, which also must be approved by the Board of Directors before the audit commences.

 

Aggregate fees for professional services rendered for the Company by Rotenberg Meril Solomon Bertiger & Guttilla, P.C., our independent registered public accounting firm, for the years ended September 30, 2016 and 2015 are set forth below:

 

  Financial Statements for the Year Ended September 30       Audit Services       Audit Related Fees       Tax Fees       Other Fees  
  2016     $ 96,546     $ 0      $ 0     $ 0  
  2015     $ 88,500     $ 0      $ 0     $ 0  

 

Audit Fees were for professional services rendered for the audits of our financial statements, quarterly review of the financial statements included in Quarterly Reports on Form 10-Q, consents, and other assistance required to complete the year-end audit of the financial statements.

 

Audit-Related Fees were for assurance and related services reasonably related to the performance of the audit or review of financial statements and not reported under the caption Audit Fees. 

 

Tax Fees were for professional services related to tax compliance, tax authority audit support and tax planning.

 

All Other Fees include any other fees charged that are not otherwise specified.

  20  

 

PART IV

 

Item 15. Exhibits, Financial Statements Schedules

 

(a) Financial Statements and Schedules

 

The following financial statements and schedules listed below are included in this Form 10-K.

 

Financial Statements (See Item 8)

 

(b) Exhibits

 

Exhibit Number Description
3.1 Articles of Incorporation, as amended (1)
3.2 Bylaws, as amended (1)
10.4 Know-How License and Stock Purchase Agreement (2)
10.5 Form of Stock Option Agreement (3)
10.6 Employment Agreement for Randall McCoy (4)
10.7 Asset Purchase Agreement (6)
14.1 Code of Ethics (5)
31.1 Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

      

  (1) Incorporated by reference to the Registration Statement on Form SB-2 filed on October 25, 2006; also incorporated by reference to the Current Report on Form 8-K filed on October 29, 2010.
  (2) Incorporated by reference to the Current Report on Form 8-K/A filed on April 27, 2011.
  (3) Incorporated by reference to the Annual Report on Form 10-K filed on January 13, 2011.
  (4) Incorporated by reference to the Current Report on Form 8-K filed on July 22, 2010.
  (5) Incorporated by reference to the Current Report on Form 8-K filed on May 17, 2011.
(6) Incorporated by reference to the Current Report on Form 8-K filed November 17, 2014.

 

  21  

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 13, 2017

 

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 13, 2017

 

By: /s/ John J. Weber
 

John J. Weber

Interim Chief Financial Officer, Principal Financial and Accounting Officer, and Director

  January 13, 2017

 

  22  
 

  

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