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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
☒ ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For
the fiscal year ended
December 31,
2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For
the transition period from __________ to _________
Commission
File Number
333-204486
SIGYN THERAPEUTICS, INC.
(Exact
name of registrant as specified in its charter)
Delaware |
|
47-2573116 |
(State
or other jurisdiction
of
incorporation)
|
|
(IRS Employer
File
Number)
|
2468 Historic Decatur Road Ste.,
140,
San Diego,
California |
|
92106
|
(Address
of principal executive offices) |
|
(zip
code) |
(619)
353-0800
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
None |
|
|
|
|
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, $0.0001 Par Value
Indicate
by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes ☐
No ☒
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 ☐
No ☒
Indicate
by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒ No ☐
Indicate
by checkmark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
rule 405 of Regulation S-T during the preceding 12 months (or for
such shorter period that the registrant was required to submit such
files).
Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
Non-accelerated filer |
☒ |
Smaller
reporting company |
☒ |
(Do
not check if a smaller reporting company) |
|
|
|
|
|
Emerging
Growth Company |
☒ |
If an
emerging growth company, indicate by check mark if the Registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards pursuant to
Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant has filed a report on and
attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
☐
Indicate
by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
As of
June 30, 2021 (the last business day of the registrant’s most
recently completed second fiscal quarter), the aggregate market
value of the issued and outstanding common stock held by
non-affiliates of the registrant was $12,821,383.
For purposes of the above statement only, all directors, executive
officers and 10% shareholders are assumed to be affiliates. This
determination of affiliate status is not necessarily a conclusive
determination for any other purpose.
As of
March 14, 2022, there were
37,295,803 shares of common stock outstanding.
SIGYN
THERAPEUTICS, INC.
2021
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
DISCLOSURE
REGARDING FORWARD LOOKING STATEMENTS
This
report contains forward-looking statements. The forward-looking
statements are contained principally in the sections entitled
“Description of Business,” “Risk Factors,” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.” These statements involve known and unknown risks,
uncertainties and other factors which may cause our actual results,
performance or achievements to be materially different from any
future results, performances or achievements expressed or implied
by the forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as “anticipates,”
“believes,” “seeks,” “could,” “estimates,” “expects,” “intends,”
“may,” “plans,” “potential,” “predicts,” “projects,” “should,”
“would” and similar expressions intended to identify
forward-looking statements. Forward-looking statements reflect our
current views with respect to future events and are based on
assumptions and subject to risks and uncertainties. These risks and
uncertainties include, but are not limited to, the factors
described in the section captioned “Risk Factors” below. Given
these uncertainties, you should not place undue reliance on these
forward-looking statements. Such statements may include, but are
not limited to, information related to: anticipated operating
results; licensing arrangements; relationships with our customers;
consumer demand; financial resources and condition; changes in
revenues; changes in profitability; changes in accounting
treatment; cost of sales; selling, general and administrative
expenses; interest expense; the ability to secure materials and
subcontractors; the ability to produce the liquidity or enter into
agreements to acquire the capital necessary to continue our
operations and take advantage of opportunities; legal proceedings
and claims.
Also,
forward-looking statements represent our estimates and assumptions
only as of the date of this report. You should read this report and
the documents that we reference and filed as exhibits to this
report completely and with the understanding that our actual future
results may be materially different from what we expect. Except as
required by law, we assume no obligation to update any
forward-looking statements publicly, or to update the reasons
actual results could differ materially from those anticipated in
any forward-looking statements, even if new information becomes
available in the future.
USE
OF CERTAIN DEFINED TERMS
Except
as otherwise indicated by the context, references in this report to
“we,” “us,” “our,” “our Company,” or “the Company” is of Sigyn
Therapeutics, Inc.
In
addition, unless the context otherwise requires and for the
purposes of this report only:
|
● |
“Sigyn”
refers to Sigyn Therapeutics, Inc., a Delaware
corporation; |
|
● |
“Commission”
refers to the Securities and Exchange Commission; |
|
● |
“Exchange
Act” refers to the Securities Exchange Act of 1934, as amended;
and |
|
● |
“Securities
Act” refers to the Securities Act of 1933, as amended. |
PART
I
Item
1. Business
Background
Business Overview
Sigyn
Therapeutics, Inc. (“Sigyn” or the “Company”) is a
development-stage therapeutic technology company headquartered in
San Diego, California USA. Our business focus is the clinical
advancement of Sigyn Therapy, a multi-function blood purification
technology designed to overcome the limitations of previous drugs
and devices to treat life-threatening inflammatory disorders,
including sepsis, the leading cause of hospital deaths
worldwide.
About Sigyn Therapy – Candidate Treatment
Indications
We
are advancing Sigyn Therapy to treat pathogen-associated conditions
that precipitate sepsis and other high-mortality disorders that are
not addressed with approved drug therapies. To address these unmet
therapeutic needs, we designed Sigyn Therapy to extract pathogen sources
of life-threating inflammation from the bloodstream in concert with
the depletion of pro-inflammatory cytokines, whose dysregulated
production (the cytokine storm) plays a prominent role in each of
our therapeutic indication opportunities.
In
addition to sepsis, our candidate treatment indications include,
but are not limited to; emerging pandemic threats, drug resistant
pathogens, hepatic encephalopathy, bridge to liver transplant, and
community-acquired pneumonia (“CAP”), which is a leading cause of
death among infectious diseases, the leading cause of death in
children under five years of age, and a catalyst for approximately
50% of sepsis and septic shock cases.
Public Merger Agreement
On
October 19, 2020, Sigyn Therapeutics, Inc, a Delaware corporation
(the “Registrant”) formerly known as Reign Resources Corporation,
completed a Share Exchange Agreement (the “Agreement”) with Sigyn
Therapeutics, Inc., a private entity incorporated in the State of
Delaware on October 19, 2019.
In
the Share Exchange Agreement, we acquired 100% of the issued and
outstanding shares of privately held Sigyn Therapeutics common
stock in exchange for 75% of the fully paid and nonassessable
shares of our common stock outstanding (the “Acquisition”). In
conjunction with the transaction, we changed our name from Reign
Resources Corporation to Sigyn Therapeutics, Inc. pursuant to an
amendment to our articles of incorporation that was filed with the
State of Delaware. Subsequently, our trading symbol was changed to
SIGY. The Acquisition was
treated as a “tax-free exchange” under Section 368 of the Internal
Revenue Code of 1986 and resulted in the private Sigyn
Therapeutics corporate entity becoming a wholly owned subsidiary
known as Sigyn Medical Corporation. Upon the closing of the
Acquisition, we appointed James A. Joyce and Craig P. Roberts to
serve as members of our Board of Directors.
As of
March 14, 2022, we have a total 37,295,803 shares issued and
outstanding, of which 11,655,803 shares are held by non-affiliate
shareholders.
Post Public Merger Developments
Since
the consummation of our public merger on October 19, 2020, we have
advanced Sigyn Therapy from conceptual design to clinical
application. We initiated and completed six (6) in vitro
blood plasma studies that have validated the ability of Sigyn
Therapy to address a broad-spectrum of relevant therapeutic
targets, including endotoxin
(gram-negative bacterial toxin); peptidoglycan and lipoteichoic
acid (gram-positive bacterial toxins); viral pathogens (including
SARS-CoV-2); hepatic toxins (ammonia, bile acid, and bilirubin);
CytoVesicles (extracellular vesicles that transport inflammatory
cytokine cargos); and tumor necrosis factor alpha (TNF alpha),
interleukin-1 beta (IL-1b), and interleukin 6 (IL-6), which are
pro-inflammatory cytokines whose dysregulated production (the
cytokine storm) precipitate sepsis and play a prominent role in
each of our therapeutic opportunities.
Subsequent to these milestone achievements, we announced the
completion of in vivo animal studies on February 23, 2022,
that demonstrated
Sigyn Therapy to be safe and well tolerated.
In
the studies, Sigyn Therapy was administered via standard dialysis
machines utilizing conventional blood-tubing sets, for periods of
up to six hours in eight (8) porcine (pig) subjects, each weighing
approximately 40-45 kilograms. The studies were comprised of a
pilot phase (two subjects), which evaluated the feasibility of the
study protocol in the first-in-mammal use of Sigyn Therapy; and an
expansion phase (six subjects) to further assess treatment safety
and refine pre-treatment set-up and operating procedures. Sigyn
Therapy was well tolerated by all eight animal subjects and no
serious adverse events were reported in any treated animal subject.
Important criteria for treatment safety – including hemodynamic
parameters, serum chemistries and hematologic measurements – were
stable across all subjects.
The
studies were conducted by a clinical team at Innovative
BioTherapies, Inc. (“IBT”), under a contract with the University of
Michigan to utilize animal care, associated institutional review
oversight, as well as surgical suite facilities located within the
North Campus Research Complex. IBT is uniquely experienced in
providing development services that support the clinical
advancement of extracorporeal devices. The treatment protocol of
the study was reviewed and approved by the University of Michigan
Institutional Animal Care and Use Committee (IACUC).
We
plan to incorporate the data resulting from our in vivo and
invitro studies into an Investigational Device Exemption (IDE)
that we are drafting for submission to the U.S. Food and Drug
Administration (“FDA”) to support the potential initiation of human
clinical studies.
Sigyn
Therapy Mechanism of Action
To
overcome the limitations of previous drug and device therapies, we
created Sigyn Therapy with a novel multi-function mechanism of
action. Based on the results of studies conducted to date, our
expansive mechanism establishes Sigyn Therapy as an emerging
candidate to treat a wide-range of pathogen-associated conditions
that precipitate sepsis and other life-threatening
disorders.
To
support widespread implementation, we designed Sigyn Therapy to be
a single-use disposable device that is deployable on the global
infrastructure of hemodialysis and continuous renal replacement
therapy (CRRT) machines already located in hospitals and
clinics.
Incorporated
with Sigyn Therapy is a “cocktail” of adsorbent components
formulated to optimize the broad-spectrum extraction of therapeutic
targets from the bloodstream. In the medical field, the term
“cocktail” is a reference to the simultaneous administration of
multiple drugs (a drug cocktail) with differing mechanisms of
actions. While drug cocktails are emerging as potential mechanisms
to treat cancer, they are proven life-saving countermeasures to
treat HIV and Hepatitis-C viral infections. However, dosing of
multi-drug agent cocktails is limited by toxicity and adverse
events that can result from deleterious drug
interactions.
Sigyn
Therapy is not constrained by such limitations as our adsorbent
components are not introduced into the body. As a result, we are
able to incorporate a substantial dose of multiple adsorbents, each
with differing mechanisms and capabilities to optimize Sigyn
Therapy’s ability to address a broad-spectrum of pathogenic and
inflammatory targets that precipitate the cytokine storm that
underlies sepsis and other acute life-threatening
disorders.
The
adsorbent components that we incorporate in Sigyn Therapy provide
more than 200,000 square meters (~50 acres) of surface area on
which to adsorb and remove circulating pathogens, toxins,
inflammatory mediators, and other relevant targets below 200nm in
diameter. Beyond an immense capacity to remove therapeutic targets,
Sigyn Therapy is also highly efficient. Based on blood flow rates
of 350ml/min, a patient’s entire bloodstream can pass through Sigyn
Therapy up to seventeen (17) times during a single four-hour
treatment period.
Overview of Candidate Treatment Indications
Based
on data resulting from in vitro blood purification studies,
our candidate treatment indications include, but are not limited
to; sepsis, community-acquired pneumonia, emerging pandemic
threats, hepatic encephalopathy, bridge to liver transplant, and
drug resistant pathogens. However, there is no assurance that
controlled human studies will demonstrate Sigyn Therapy to be an
efficacious treatment for any of these indications.
Sepsis
Sepsis
is defined as a life-threatening organ dysfunction caused by a
dysregulated host response to infection. In January of 2020, a
report entitled; “Global, Regional, and National Sepsis
Incidence and Mortality, 1990-2017: Analysis for the Global Burden
of Disease Study,” was published in the Journal Lancet. The
publication reported 48.9 million cases of sepsis and 11 million
deaths in 2017. In that same year, an estimated 20.3 million sepsis
cases and 2.9 million deaths were among children younger than
5-years old. The report included a reference that sepsis kills more
people around the world than all forms of cancer combined. In the
United States, sepsis was reported to be the most common cause of
hospital deaths with an annual financial burden that exceeds $24
billion.
To
date, more than 100 human studies have been conducted to evaluate
the safety and efficacy of candidate drugs to treat sepsis. With
one brief exception (Xigris, Eli Lilly), none of these studies
resulted in a market cleared therapy.
As
sepsis remains beyond the reach of single-target drugs, there is an
emerging interest in multi-mechanism therapies that can target both
inflammatory and pathogen associated targets. Sigyn Therapy
addresses a broad-spectrum of pathogen sources and the resulting
dysregulated cytokine production (the cytokine storm) that is the
hallmark of sepsis. Additionally, we believe that inflammatory
cytokine cargos transported by CytoVesicles may represent a novel,
yet important therapeutic target.
Community-acquired
Pneumonia
CAP
represents a significant opportunity for Sigyn Therapy to reduce
the occurrence of sepsis. CAP is a leading cause of death among
infectious diseases, the leading cause of death in children under
five years of age, and a catalyst for approximately 50% of sepsis
and septic shock cases.
In
the United States, more than 1.5 million individuals are
hospitalized with CAP each year, resulting in an annual financial
burden that exceeds $10 billion.
Statistically,
a therapeutic strategy that reduced the incidence of CAP related
sepsis and septic shock would save thousands of lives each year. In
a study of 4,222 patients, the all-cause mortality for adult
patients with CAP was reported to be 6.5% during hospitalization.
However, the mortality of patients with CAP related sepsis and
septic shock rose to 51% during hospitalization.
CAP
is further complicated by the fact that the pathogen sources of CAP
are identified in only 38% of patients, based on a study of 2,259
subjects whose pneumonia diagnosis was confirmed by chest x-ray. Of
the source pathogens identified in the study, ninety seven percent
(97%) were either viral or bacterial in origin.
To
reduce the occurrence of CAP related sepsis and septic shock, Sigyn
Therapy offers a broad-spectrum mechanism to reduce the circulating
presence of viral pathogens and bacterial toxins before and if they
are identified as the CAP pathogen source. Additionally, Sigyn
Therapy may help to control the excess production of inflammatory
cytokines (the cytokine storm) that precipitate sepsis and septic
shock.
Emerging
Pandemic Threats
Covid-19
affirmed the role of extracorporeal blood purification as a basis
for first-line countermeasures to treat newly emerging viral
threats, whose presence are increasingly being fueled by a
confluence of global warming, urban crowding, and intercontinental
travel.
On
March 24, 2020, the U.S. Department of Health and Human Services
(HHS) declared the emergence of COVID-19 to justify the
Emergency-Use Authorization (“EUA”) of drugs, biological products,
and medical devices to combat the pandemic. The first four (4)
therapies to receive EAU approval to treat COVID-19 were not
antiviral drug or biological products, they were blood purification
technologies.
In
connection with these EUA awards, FDA published a statement that
blood purification devices may be effective at treating certain
patients with confirmed COVID-19 by reducing pathogens and
inflammatory cytokines from the bloodstream.
Consistent
with FDA’s statement, Sigyn Therapy has been validated to deplete
circulating viral pathogens, including COVID-19, and inflammatory
cytokines whose levels correlate with disease severity and
increased mortality rates. Inversely, declining levels of these
same inflammatory cytokines are associated with patient
recovery.
As a
majority of human viruses are not addressed with a corresponding
drug or vaccine, there may also be an ongoing need for blood
purification technologies that reduce the severity of infection and
mitigate the excess production of inflammatory cytokines (the
cytokine storm) associated with high mortality in non-pandemic
viral infections. In this regard, we believe that Sigyn Therapy
aligns with U.S. Government initiatives that support the
development of broad-spectrum medical countermeasures that can
mitigate the impact of emerging pandemic threats, yet also have
viability in established disease indications.
Hepatic
Encephalopathy
Based
on the results of invitro blood purification studies
conducted to date, we consider Sigyn Therapy to be a compelling
strategy to reverse the length and severity of Hepatic
Encephalopathy (“HE”), a frequent and serious complication of both
chronic liver disease and acute liver failure. A hallmark
characteristic of HE is the accumulation of neurotoxic substances
in the bloodstream that translocate through the blood-brain
barrier, which can result in a hepatic coma in severe cases and
ultimately cause death.
The
three-year survival rate following the first episode of HE is
approximately 15%. The clinical and economic burden of HE is
considerable as it contributes to an impaired quality of life,
morbidity, and mortality. In the United States, HE is a significant
public health concern that results in 100,000–115,000 yearly
hospital admissions.
The
severity of Hepatic Encephalopathy is often correlated with
elevated concentrations of hepatic toxins, pro-inflammatory
cytokines, and bacterial toxins in the bloodstream. In vitro
blood plasma studies have validated the ability of Sigyn Therapy to
address hepatic toxins (ammonia, bile acid, and bilirubin),
relevant pro-inflammatory cytokines (TNF-a, IL-1b, and IL-6),
gram-negative bacterial toxin (endotoxin), and gram-positive
bacterial toxins (peptidoglycan and lipoteichoic acid).
HE is
often a common occurrence in cirrhosis patients awaiting a donor
liver for transplant. As the reduced duration of an HE episode
correlates with higher rates of survival to transplant, Sigyn
Therapy may have potential utility as a bridge-to-liver transplant
device.
Bridge-To-Liver
Transplant
There
is an urgent need for a medical intervention that could reduce the
circulating presence of hepatic toxins, pro-inflammatory cytokines,
and pathogenic factors as a means to assist in extending the lives
to those awaiting a liver transplant. Based on these requirements,
there may be an opportunity for Sigyn Therapy to stabilize or
extend the life of a patient prior to the identification of a
matched liver for transplantation - otherwise known as a
bridge-to-liver transplant. In 2017, 8,082 U.S. patients received a
liver transplant, and 13,885 patients were on the waiting list for
a liver transplant. In that year, the average cost associated with
a liver transplant was reported to be $577,100 USD.
Competitive Landscape
In
the absence of a therapeutic drug to treat patients suffering from
sepsis and other life-threatening disorders, extracorporeal blood
purification devices are increasingly being deployed as front-line
therapies.
Four industry pioneering technologies are of particular relevance;
a cytokine adsorption technology (CytoSorb from Cytosorbents
Corporation); a technology that removes circulating endotoxin
(Toraymyxn
from Toray Industries); and
two devices that target the removal of pathogens from the
bloodstream (the Hemopurifier from Aethlon Medical) and (the
Seraph-100 Microbind Affinity Filter from Exthera
Medical).
CytoSorb is a clinical-stage therapeutic candidate in the United
States and market cleared in more than 40 countries outside the
U.S. CytoSorb was recently cleared to treat severe COVID-19
infections under FDA Emergency-Use Authorization (EUA) based on its
ability to adsorb inflammatory cytokines from the
bloodstream.
Toraymyxn
is a clinical-stage
therapeutic candidate in the United States and broadly market
cleared outside the U.S. Toraymyxn houses an immobilized
antibiotic agent with a high specificity to bind circulating
endotoxin, a potent activator of sepsis resulting from
gram-negative bacterial infections.
The Aethlon Hemopurifier is a clinical-stage therapeutic candidate
in the United States. The Hemopurifier has been cleared to treat
severe COVID-19 infections through an FDA IDE supplement and was
previously cleared under FDA Emergency-Use Authorization (EUA) to
treat Ebola virus. Immobilized within the Hemopurifier is an
affinity lectin (Galanthus Nivalis Agglutinin) that has a high
specificity to bind a broad-spectrum of viral pathogens from the
bloodstream.
The Exthera Seraph-100 Microbind Affinity Filter is a
clinical-stage therapeutic candidate in the United States and
market cleared outside the U.S. for the removal of bloodstream
pathogens. The Seraph-100 was recently cleared and broadly deployed
to treat severe COVID-19 infections under FDA Emergency-Use
Authorization (EUA). The Seraph-100 incorporates heparin-coated
polyethylene beads that bind both viral and bacterial pathogens in
the bloodstream.
We
believe Sigyn Therapy’s expansive ability to address inflammatory
cytokines, bacterial toxins (including endotoxin), hepatic toxins,
and infectious viruses provides for an advantageous strategy to
treat patients suffering from sepsis and other life-threatening
disorders. However, there is no assurance that controlled human
studies will demonstrate Sigyn Therapy to be a safe and effective
treatment for any candidate indication.
Marketing and Sales
At
present, our sole focus is the clinical and regulatory advancement
of Sigyn Therapy. As such, we do not market or sell any therapeutic
products at this time. However, we plan to forge relationships with
organizations that have established distribution channels into
markets that may have a demand for Sigyn Therapy should it receive
market clearance from FDA or other foreign regulatory
agencies.
Intellectual Property
We
own the intellectual property rights to pending royalty-free
patents that have been assigned to us by our co-founders, James A.
Joyce and Craig P. Roberts. We have also received a “Notice of
Allowance” from the United States Patent and Trademark Office
(USPTO) related to the use of Sigyn Therapeutics, Sigyn Therapy,
and the protection of our corporate logo. We plan to continually
expand our intellectual property portfolio and protect trade
secrets that are not the subject of patent submissions. However,
there is no assurance that the claims of current pending and future
patent applications will result in issued patents.
At
present, we own the rights to the following patents
pending.
DEVICES,
SYSTEMS AND METHODS FOR THE BROAD-SPECTRUM REDUCTION OF
PRO-INFLAMMATORY CYTOKINES IN BLOOD - U.S. Application No.:
62/881,740; Filing Date: 2019-08-01 - Inventors: Joyce and
Roberts
DEVICES,
SYSTEMS AND METHODS FOR THE BROAD-SPECTRUM REDUCTION OF
PRO-INFLAMMATORY CYTOKINES IN BLOOD - International Patent
Application No.: PCT/US2020/044223; Filing Date: 2020-07-30 -
Inventors: Joyce and Roberts
DEVICES,
SYSTEMS AND METHODS FOR THE BROAD-SPECTRUM REDUCTION OF
PRO-INFLAMMATORY CYTOKINES IN BLOOD - U.S. Patent Application No.:
16/943,436; Filing Date: 2020-07-30 - Inventors: Joyce and
Roberts
DEVICES,
SYSTEMS AND METHODS FOR THE BROAD-SPECTRUM REDUCTION OF
PRO-INFLAMMATORY CYTOKINES IN BLOOD - EP No.: 20757445; Filing
Date: 2022-01-24 - Inventors: Joyce and Roberts
DEVICES,
SYSTEMS AND METHODS FOR THE BROAD-SPECTRUM REDUCTION OF
PRO-INFLAMMATORY CYTOKINES IN BLOOD - CA No.: 3148773; Filing Date:
2022-01-25 - Inventors: Joyce and Roberts
DEVICES,
SYSTEMS AND METHODS FOR THE BROAD-SPECTRUM REDUCTION OF
PRO-INFLAMMATORY CYTOKINES IN BLOOD - JP No.: 2022-506670; Filing
Date: 2022-01-31 - Inventors: Joyce and Roberts
EXTRA-LUMEN
ADSORPTION OF VIRAL PATHOGENS FROM BLOOD
U.S.
Patent Application No.: 63/177,520; Filing Date:
2021-04-21
Inventor:
James A. Joyce
Government Regulation
In
the United States, Sigyn Therapy is subject to regulation by the
FDA. Should we seek to commercialize Sigyn Therapy outside the
United States, we expect to face comparable international
regulatory oversight. Based on published guidance by FDA, Sigyn
Therapy is a Class III medical device whose regulatory jurisdiction
is the Center for Devices and Radiological Health (“CDRH”), the FDA
branch that oversees the market approval of medical devices. As a
Class III device, we are subject to a Pre-Market Approval (“PMA”)
submission pathway with CDRH. The approval of a PMA application to
support market clearance of Sigyn Therapy will require extensive
data, which includes but is not limited to technical documents,
preclinical studies, animal studies, human clinical trials, the
establishment of Good Manufacturing Practice (“GMP”) standards and
labeling that fulfills FDA’s requirement to demonstrate reasonable
evidence of safety and effectiveness of a medical device product.
In this regard, there is no assurance that Sigyn Therapy will be
demonstrated to be a safe and effective product for any therapeutic
indication that we pursue.
Should
Sigyn Therapy receive market clearance, we will need to comply with
applicable laws and regulations that govern the development,
testing, manufacturing, labeling, marketing, storage, distribution,
advertising and promotion, and post-marketing surveillance
reporting for medical devices. Failure to comply with these
applicable requirements may subject a device and/or its
manufacturer to a variety of administrative sanctions, such as
issuance of warning letters, import detentions, civil monetary
penalties and/or judicial sanctions, such as product seizures,
injunctions and criminal prosecution. Our failure to comply with
any of these laws and regulations could have a material adverse
effect on our operations.
Manufacturing and Procurement
We
are advancing a manufacturing relationship with an FDA registered
Contract Manufacturing Organization (CMO) to establish GMP
compliant manufacturing to support human clinical studies and
potential commercialization should we receive clearance to market
Sigyn Therapy. We plan to establish manufacturing procedure
specifications that define each stage of our manufacturing,
inspection and testing processes and the control parameters or
acceptance criteria that apply to each activity that result in the
production of our technology.
We
have also established relationships with industry vendors that
provide components necessary to manufacture our device. Should the
relationship with an industry vendor be interrupted or
discontinued, we believe that alternate component suppliers can be
identified to support the continued manufacturing of our product.
However, delays related to interrupted or discontinued vendor
relationships could adversely impact our business.
Research and Product Development
To
date, we have outsourced our research and product development
activities, which include the performance of in vitro blood
plasma validation studies, animal studies, pre-GMP product assembly
and manufacturing through third party organizations with extensive
experience in advancing extracorporeal blood purification
technologies. At present, we do not have plans to build and staff
our own research and product development facility.
Environmental Laws and Regulations
At
present, our operations are not subject to any environmental laws
or regulations.
Employees
As of
the date of this filing, we have 5 salaried employees, whose
benefits include paid medical, dental, and vision coverage. We also
provide our employees with access to a 401(k) plan, and we
anticipate the establishment of an employee equity-stock option
plan during the 2022 calendar year. To maintain a manageable
employee headcount, we utilize non-employee consultants to perform
as-needed services and we contract with third party research
organizations to perform studies designed to support the potential
clinical advancement of Sigyn Therapy.
Available Information
We
file various reports with the SEC, including Annual Reports on Form
10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, which are available through the SEC’s electronic data
gathering, analysis and retrieval system (“EDGAR”) by accessing the
SEC’s home page (http://www.sec.gov). The documents are also
available to be read or copied at the SEC’s Public Reference Room
located at 100 F Street, NE, Washington, D.C., 20549. Information
on the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330.
Item
1A. Risk Factors
This
item is not applicable because we are a “smaller reporting company”
as defined in Exchange Act Rule 12b-2.
Item
1B. Unresolved Staff Comments
Not
applicable.
Item
2. Properties
Our
corporate address 2468 Historic Decatur Road, Suite 140, San Diego,
California, 92106.
We
believe that our existing facilities are adequate for our current
needs and that we will be able to lease suitable additional or
alternative space on commercially reasonable terms if and when we
need it.
Item
3. Legal Proceedings
From
time to time, we may become party to litigation or other legal
proceedings that we consider to be a part of the ordinary course of
our business. We are not currently involved in legal proceedings
that could reasonably be expected to have a material adverse effect
on our business, prospects, financial condition or results of
operations. We may become involved in material legal proceedings in
the future. To the best our knowledge, none of our directors,
officers or affiliates is involved in a legal proceeding adverse to
our business or has a material interest adverse to our
business.
Item
4. Mine Safety Disclosures
There
is no information required to be disclosed by us under this
Item.
PART
II
Item
5. Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
(a)
Market Information
Our
stock is quoted on the OTC markets under the symbol “SIGY.” We were
listed on May 23, 2016. There are 37,295,803 shares outstanding as
of March 14, 2022.
(b)
Transfer Agent
The
transfer agent and registrar for our common stock is VStock
Transfer, LLC located at 18 Lafayette Place, Woodmere, New
York.
(b)
Shareholders of Record
The
number of beneficial holders of record of our common stock as of
the close of business on December 31, 2021 was 108.
(c)
Dividends
We do
not expect to pay cash dividends in the next term. We intend to
retain future earnings, if any, to provide funds for operation of
our business. We currently have no restrictions affecting our
ability to pay cash dividends.
(d)
Equity Compensation Plans
The
Company does not have an equity compensation plan.
Recent
Sales of Unregistered Securities
None.
Item
6. Selected Financial Data
Because
we are a smaller reporting company, this Item 6 is not
applicable.
Item
7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
You
should read the following discussion and analysis of our financial
condition and results of operations together with our consolidated
financial statements and related notes included elsewhere in this
filing. This discussion and other parts of this filing contain
forward-looking statements that involve risk and uncertainties,
such as statements of our plans, objectives, expectations,
intentions, and beliefs. Our actual results may differ materially
from those discussed in these forward-looking statements as a
result of various factors, including those set forth under “Risk
Factors” and in other parts of this filing, and you should not
place undue certain on these forward-looking statements, which
apply only as of the date of this filing. See “Disclosure Regarding
Forward-Looking Statements”.
We
are an emerging growth company as defined in Section 2(a) (19) of
the Securities Act. Pursuant to Section 107 of the Jumpstart Our
Business Startups Act, we may take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards, meaning
that we can delay the adoption of certain accounting standards
until those standards would otherwise apply to private companies.
We have chosen to take advantage of the extended transition period
for complying with new or revised accounting standards applicable
to public companies to delay adoption of such standards until such
standards are made applicable to private companies. Accordingly,
our consolidated financial statements may not be comparable to the
financial statements of public companies that comply with such new
or revised accounting standards.
OVERVIEW:
Historical
Development
Sigyn
Therapeutics, Inc. (“Sigyn” or the “Company”) is a
development-stage therapeutic technology company headquartered in
San Diego, California USA. Our business focus is the clinical
advancement of Sigyn Therapy, a multi-function blood purification
technology designed to overcome the limitations of previous drugs
and devices to treat life-threatening inflammatory disorders,
including sepsis, the leading cause of hospital deaths
worldwide.
We
are advancing Sigyn Therapy to treat pathogen-associated conditions
that precipitate sepsis and other high-mortality disorders that are
not addressed with approved drug therapies. To address these unmet
therapeutic needs, we designed Sigyn Therapy to extract pathogen sources
of life-threating inflammation from the bloodstream in concert with
the depletion of pro-inflammatory cytokines, whose dysregulated
production (the cytokine storm) plays a prominent role in each of
our therapeutic indication opportunities.
In
addition to sepsis, our candidate treatment indications include,
but are not limited to; emerging pandemic threats, drug resistant
pathogens, hepatic encephalopathy, bridge to liver transplant, and
community-acquired pneumonia (“CAP”), which is a leading cause of
death among infectious diseases, the leading cause of death in
children under five years of age, and a catalyst for approximately
50% of sepsis and septic shock cases.
Public Merger Agreement
On
October 19, 2020, Sigyn Therapeutics, Inc, a Delaware corporation
(the “Registrant”) formerly known as Reign Resources Corporation,
completed a Share Exchange Agreement (the “Agreement”) with Sigyn
Therapeutics, Inc., a private entity incorporated in the State of
Delaware on October 19, 2019.
In
the Share Exchange Agreement, we acquired 100% of the issued and
outstanding shares of privately held Sigyn Therapeutics common
stock in exchange for 75% of the fully paid and nonassessable
shares of our common stock outstanding (the “Acquisition”). In
conjunction with the transaction, we changed our name from Reign
Resources Corporation to Sigyn Therapeutics, Inc. pursuant to an
amendment to our articles of incorporation that was filed with the
State of Delaware. Subsequently, our trading symbol was changed to
SIGY. The Acquisition was
treated as a “tax-free exchange” under Section 368 of the Internal
Revenue Code of 1986 and resulted in the private Sigyn
Therapeutics corporate entity becoming a wholly owned subsidiary
known as Sigyn Medical Corporation. Upon the closing of the
Acquisition, we appointed James A. Joyce and Craig P. Roberts to
serve as members of our Board of Directors.
As of
March 14, 2022, we have a total 37,295,803 shares issued and
outstanding, of which 11,655,803 shares are held by non-affiliate
shareholders.
About
Sigyn Therapy
To
overcome the limitations of previous drug and device therapies, we
created Sigyn Therapy with a novel multi-function mechanism of
action. Based on the results of studies conducted to date, our
expansive mechanism establishes Sigyn Therapy as an emerging
candidate to treat a wide-range of pathogen-associated conditions
that precipitate sepsis and other life-threatening
disorders.
To
support widespread implementation, we designed Sigyn Therapy to be
a single-use disposable device that is deployable on the global
infrastructure of hemodialysis and continuous renal replacement
therapy (CRRT) machines already located in hospitals and
clinics.
Incorporated
with Sigyn Therapy is a “cocktail” of adsorbent components
formulated to optimize the broad-spectrum extraction of therapeutic
targets from the bloodstream. In the medical field, the term
“cocktail” is a reference to the simultaneous administration of
multiple drugs (a drug cocktail) with differing mechanisms of
actions. While drug cocktails are emerging as potential mechanisms
to treat cancer, they are proven life-saving countermeasures to
treat HIV and Hepatitis-C viral infections. However, dosing of
multi-drug agent cocktails is limited by toxicity and adverse
events that can result from deleterious drug
interactions.
Sigyn
Therapy is not constrained by such limitations as our adsorbent
components are not introduced into the body. As a result, we are
able to incorporate a substantial dose of multiple adsorbents, each
with differing mechanisms and capabilities to optimize Sigyn
Therapy’s ability to address a broad-spectrum of pathogenic and
inflammatory targets that precipitate the cytokine storm that
underlies sepsis and other acute life-threatening
disorders.
The
adsorbent components that we incorporate in Sigyn Therapy provide
more than 200,000 square meters (~50 acres) of surface area on
which to adsorb and remove circulating pathogens, toxins,
inflammatory mediators, and other relevant targets below 200nm in
diameter. Beyond an immense capacity to remove therapeutic targets,
Sigyn Therapy is also highly efficient. Based on blood flow rates
of 350ml/min, a patient’s entire bloodstream can pass through Sigyn
Therapy up to seventeen (17) times during a single four-hour
treatment period.
Based
on data resulting from in vitro blood purification studies,
our candidate treatment indications include, but are not limited
to; sepsis, community-acquired pneumonia, emerging pandemic
threats, hepatic encephalopathy, bridge to liver transplant, and
drug resistant pathogens. However, there is no assurance that
controlled human studies will demonstrate Sigyn Therapy to be an
efficacious treatment for any of these indications.
Post Public Merger Developments
Since
the consummation of our public merger on October 19, 2020, we have
advanced Sigyn Therapy from conceptual design to clinical
application. We initiated and completed six (6) in vitro
blood plasma studies that have validated the ability of Sigyn
Therapy to address a broad-spectrum of relevant therapeutic
targets, including endotoxin
(gram-negative bacterial toxin); peptidoglycan and lipoteichoic
acid (gram-positive bacterial toxins); viral pathogens (including
SARS-CoV-2); hepatic toxins (ammonia, bile acid, and bilirubin);
CytoVesicles (extracellular vesicles that transport inflammatory
cytokine cargos); and tumor necrosis factor alpha (TNF alpha),
interleukin-1 beta (IL-1b), and interleukin 6 (IL-6), which are
pro-inflammatory cytokines whose dysregulated production (the
cytokine storm) precipitate sepsis and play a prominent role in
each of our therapeutic opportunities.
Subsequent to these milestone achievements, we announced the
completion of in vivo animal studies on February 23, 2022,
that demonstrated
Sigyn Therapy to be safe and well tolerated.
In
the studies, Sigyn Therapy was administered via standard dialysis
machines utilizing conventional blood-tubing sets, for periods of
up to six hours in eight (8) porcine (pig) subjects, each weighing
approximately 40-45 kilograms. The studies were comprised of a
pilot phase (two subjects), which evaluated the feasibility of the
study protocol in the first-in-mammal use of Sigyn Therapy; and an
expansion phase (six subjects) to further assess treatment safety
and refine pre-treatment set-up and operating procedures. Sigyn
Therapy was well tolerated by all eight animal subjects and no
serious adverse events were reported in any treated animal subject.
Important criteria for treatment safety – including hemodynamic
parameters, serum chemistries and hematologic measurements – were
stable across all subjects.
The
studies were conducted by a clinical team at Innovative
BioTherapies, Inc. (“IBT”), under a contract with the University of
Michigan to utilize animal care, associated institutional review
oversight, as well as surgical suite facilities located within the
North Campus Research Complex. IBT is uniquely experienced in
providing development services that support the clinical
advancement of extracorporeal devices. The treatment protocol of
the study was reviewed and approved by the University of Michigan
Institutional Animal Care and Use Committee (IACUC).
We
plan to incorporate the data resulting from our in vivo and
invitro studies into an Investigational Device Exemption (IDE)
that we are drafting for submission to the U.S. Food and Drug
Administration (“FDA”) to support the potential initiation of human
clinical studies.
We
began our planned principal operations, and accordingly, we have
prepared our consolidated financial statements in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”).
Recent
Developments
On
December 1, 2020, we reported the results of an in vitro
study that validated the ability of Sigyn Therapy to simultaneously
deplete a broad-spectrum of critical inflammatory targets from
human blood plasma. In the study, Sigyn Therapy reduced the
presence of endotoxin and relevant pro-inflammatory cytokines,
which included Interleukin-1 beta (IL-1b), Interleukin-6 (IL-6) and
Tumor Necrosis Factor alpha (TNF-a). Endotoxin (lipopolysaccharide
or LPS) is a well-known inflammatory trigger implicated in the
pathogenesis of sepsis and septic shock resulting from
gram-negative bacterial infections. The dysregulated
over-production of IL-1b, IL-6 and TNF-a is known to induce organ
failure and cause death. An objective of the study was to rebalance
elevated cytokine levels and optimize the elimination of endotoxin
from human blood plasma. The study was conducted in triplicate over
four-hour time periods with a pediatric version of Sigyn Therapy.
Average reduction of endotoxin load peaked at 83% during the
studies. The average reduction of IL-1b was 69%, IL-6 reduction was
59% and TNF-a reduction was 57% during the four-hour studies. We
plan to incorporate this data into an Investigational Device
Exemption (IDE) that we expect to submit to the United States Food
and Drug Administration (FDA) prior to the end of the 2021 calendar
year. Our IDE submission will request permission to initiate U.S.
human feasibility studies with a primary objective to demonstrate
that Sigyn Therapy can be safely administered to subjects diagnosed
with a Cytokine Storm Syndrome related condition. There is no
assurance that FDA will approve our IDE submission to permit human
studies.
We
are also evaluating the ability of Sigyn Therapy to address
CytoVesicles that transport inflammatory cytokine cargos throughout
the bloodstream. Based on recent peer-reviewed publications and
emerging scientific evidence, we believe the simultaneous clearance
of circulating CytoVesicles, endotoxin and inflammatory cytokines
may overcome the limitations of previous drug and medical device
candidates to treat sepsis and other life-threatening inflammatory
conditions.
On
January 6, 2021, we disclosed the results of an in vitro
pilot study that modeled the ability of the adsorbent components we
incorporate within Sigyn Therapy to address CytoVesicles.
CytoVesicles (extracellular vesicles that transport inflammatory
cytokine cargos) participate in concert with freely circulating
cytokines to further escalate the Cytokine Storm. CytoVesicles have
previously been elusive targets for extracorporeal blood
purification therapies as they can be 20-50 times larger than
cytokines themselves. In our in vitro pilot study, 104
nanometer liposomes were utilized as a model system to assess the
ability of Sigyn Therapy’s adsorbent components to deplete
CytoVesicles from human blood plasma. After a two-hour interaction
with our cocktail of adsorbent components, liposome concentrations
in human blood plasma were reduced ~90%. Previously published
studies have validated liposomes as a model for the isolation of
extracellular vesicles from blood based on the similarity of their
size and structural characteristics. There is no assurance that any
in vitro study outcome of Sigyn Therapy or its components
will translate into similar performance outcomes in human
studies.
We
began our planned principal operations, and accordingly, we have
prepared our consolidated financial statements in accordance with
accounting principles generally accepted in the United States of
America (“GAAP”).
Financing Transactions
Common
Stock
The
Company issued 500,000 restricted common shares to founders, valued
at $50 (based on the par value on the date of grant) in exchange
for patent rights. The issuance was an isolated transaction not
involving a public offering pursuant to Section 4(2) of the
Securities Act of 1933.
The
Company has authorized 1,000,000,000 shares of par value $0.0001
common stock, of which 37,295,803 shares are outstanding at
December 31, 2021.
On
November 3, 2021, the Company entered into a three-month
Advertising and Marketing Consulting Agreement (“Agreement”) with a
third party. The Company agreed to pay $20,000 per month and issue
15,000 shares of the Company’s common stock on the 60th
day of the term of the Agreement. This common stock issuance will
be pursuant to Section 4(a)(2) of the Securities Act of 1933, as
amended, in a transaction exempt from registration.
On
October 28, 2021, Osher elected to convert $16,714 of the aggregate
principal amount of the Note of $199,650, into 42,857 common
shares.
On
October 25, 2021, Osher elected to convert the aggregate principal
amount of the Note, $110,000, into 157,143 common
shares.
On
October 20, 2021, the entered into a securities purchase agreement
with an accredited investor that resulted in the issuance of
320,000 shares of common stock and warrants to purchase an
aggregate of 320,000 shares of the Company’s common stock for total
proceeds totaling $400,000. The offering allowed for qualified
investors to purchase one share of the Company’s common stock at
$1.25. For each share purchased, the investor received a five-year
warrant to purchase one share of common stock at $1.25 per share.
No commissions were paid in the offering. This issuance was
pursuant to Section 4(a)(2) of the Securities Act of 1933, as
amended, in a transaction exempt from registration.
On
October 14, 2021, the Company issued a total of 47,000 shares of
its common stock valued at $37,600 (based on the stock price of the
Company’s common stock on the date of issuance) to a third party,
for communications to the financial industry.
On
July 14, 2021, the Company issued a total of 47,000 shares of its
common stock valued at $47,000 (based on the stock price of the
Company’s common stock on the date of issuance) to a third party,
for communications to the financial industry.
On
May 10, 2021, Brio Capital elected to convert the aggregate
principal amount of a $110,000 convertible note issued on February
10, 2021 into 157,143 shares of the Company’s common
stock.
In
April 2021, the Company initiated an offering of up to $1.5 million
of the Company’s restricted common shares. The offering allowed for
qualified investors to purchase one share of the Company’s common
stock $1.25. For each share purchased, the investor received a
five-year warrant to purchase one share of common stock at $1.75
per share. On May 10, 2021, the Company closed the offering to
investors and subsequently disclosed that it had entered into
securities purchase agreements with accredited investors that
resulted in the issuance of 1,172,000 shares of common stock and
warrants to purchase an aggregate of 1,172,000 shares of the
Company’s common stock for total proceeds totaling $1,465,000. No
commissions were paid in the offering. This issuance was pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended, in a
transaction exempt from registration.
On
April 14, 2021, the Company issued a total of 47,000 shares of its
restricted common stock valued at $82,250 (based on the stock price
of the Company’s common stock on the date of issuance) to a third
party, for communications to the financial industry. This issuance
was pursuant to Section 4(a)(2) of the Securities Act of 1933, as
amended, in a transaction exempt from registration.
On
February 19, 2021, a previous noteholder exercised the warrants
pursuant to the cashless exercise provision of the warrant
agreement into 57,147 common shares. The common shares have not
been issued as of March 14, 2022.
On
January 14, 2021, the Company issued a total of 47,000 shares of
its restricted common stock valued at $82,250 (based on the stock
price of the Company’s common stock on the date of issuance) to a
third party, for communications to the financial industry. This
issuance was pursuant to Section 4(a)(2) of the Securities Act of
1933, as amended, in a transaction exempt from
registration.
During
the year ended December 31, 2020, the Company issued 1,015,344
common shares to third parties in conjunction with the exchange of
convertible promissory debentures.
On
October 19, 2020, the Company issued 33,686,169 common shares in
conjunction with acquisition.
Warrants
On
October 22, 2021, the Company and Osher amended convertible debt
agreements for the maturity date from October 20, 2021 to October
20, 2022. In exchange for the extension of the Note, the Company
issued Osher 450,000 warrants to purchase an aggregate of 450,000
shares of the Company’s common stock, valued at $197,501 (based on
the Black Scholes valuation model on the date of grant) (see Note
6). The warrants are exercisable for a period of five years at
$1.00 per share in whole or in part, as either a cash exercise or
as a cashless exercise, and fully vest at grant date. The Company
is amortizing the value of the warrants ratably through October 20,
2022. The Company recorded $40,041 and $0 for the years ended
December 31, 2021 and 2020, respectively, and is classified in
other expenses in the consolidated Statements of
Operations.
Convertible
Promissory Debentures
Current
Noteholders
Osher – $457,380
On
January 28, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $385,000 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture due January
26, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants to purchase up to an
aggregate of 80,209 shares of the Company’s Common Stock at an
exercise price of $7.00 per share. The aggregate cash subscription
amount received by the Company from Osher for the issuance of the
note and warrants was $350,005 which was issued at a $34,995
original issue discount from the face value of the Note.
The conversion price for the
principal in connection with voluntary conversions by a holder of
the convertible notes is $0.094 per share, as amended on October
20, 2020, subject to adjustment as provided therein, such as
stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Warrants dated January 28, 2020, for the number
of warrant shares from 80,209 warrant shares to 4,113,083 warrant
shares at an exercise price of $0.14 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
Osher – $60,500
On
June 23, 2020 (the “Original Issue Date”), the Company entered into
a Securities Purchase Agreement (the “Purchase Agreement”) with
respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $50,000 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture (the “Note”)
due June 23, 2021, based on $1.00 for each $0.90909 paid by Osher
and (ii) five-year Common Stock Purchase Warrants (“Warrants”) to
purchase up to an aggregate of 10,000 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The
aggregate cash subscription amount received by the Company from
Osher for the issuance of the Note and Warrants was $50,005 which
was issued at a $0 original issue discount from the face value of
the Note. The conversion
price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on
October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$50,000 to $55,000. The aggregate cash subscription amount received
by the Company from Osher for the issuance of the Note and Warrants
was $50,005 which was issued at an amended $4,995 original issue
discount from the face value of the Note. |
|
● |
The
parties amended the Warrants dated June 23, 2020, for the number of
warrant shares from 10,000 warrant shares to 141,020 warrant shares
at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
Osher – $199,650
On
September 17, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $181,500 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture (the “Note”)
due September 30, 2021, based on $1.00 for each $0.90909 paid by
Osher and (ii) five-year Common Stock Purchase Warrants
(“Warrants’) to purchase up to an aggregate of 8,250 shares of the
Company’s Common Stock at an exercise price of $30.00 per share.
The aggregate cash subscription amount received by the Company from
Osher for the issuance of the Note and Warrants was $165,000 which
was issued at a $16,500 original issue discount from the face value
of the Note. The conversion
price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on
October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 17, 2020, for the
number of warrant shares from 8,250 warrant shares to 465,366
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
On
October 28, 2021, Osher elected to convert $16,714 of the aggregate
principal amount of the Note of $199,650, into 42,857 common
shares.
Previous
Noteholders
Previous Noteholder – $50,000 (as amended on October 20, 2020 to
$55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into
a Securities Purchase Agreement (the “Purchase Agreement”) with
respect to the sale and issuance to a previous noteholder of (i)
$50,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due June 23, 2021, based
on $1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 10,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $50,000
which was issued at a $0 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$50,000 to $55,000. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $50,000 which was issued at an amended $5,000
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated June 23, 2020, for the number of
warrant shares from 10,000 warrant shares to 141,020 warrant shares
at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
December 2, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $55,000, into 141,020
common shares.
Previous Noteholder - $25,000 (as amended on October 20, 2020 to
$27,500)
On
August 18, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $25,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 18, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 5,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $25,000
which was issued at a $0 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$25,000 to $27,500. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $25,000 which was issued at an amended $2,500
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated August 18, 2020, for the number
of warrant shares from 5,000 warrant shares to 70,510 warrant
shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 28, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $27,500, into 70,510 common
shares.
Previous Noteholder – $93,500
On
September 18, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $93,500 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due September 30, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 4,250 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $85,000
which was issued at a $8,500 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 18, 2020, for the
number of warrant shares from 4,250 warrant shares to 239,734
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
December 2, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $93,500, into 239,734
common shares.
Previous Noteholder - $165,000
On
September 21, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $165,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due September 30, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 7,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $150,000
which was issued at a $15,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follow on October 20, 2020:
|
● |
The
parties amended the number of shares from the Warrants dated
September 21, 2020, for the number of warrant shares from 7,500
warrant shares to 423,060 warrant shares at an exercise price of
$0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
November 5, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $165,000, into 423,060
common shares.
Previous Noteholder – $27,500 (as amended on October 20, 2020 to
$22,000)
On
September 28, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $27,500 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 28, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 1,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $20,000
which was issued at a $7,500 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$27,500 to $22,000. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $20,000 which was issued at an amended $2,000
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated September 28, 2020, for the
number of warrant shares from 1,000 warrant shares to 56,408
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 27, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $22,000, into 56,408 common
shares.
On
February 19, 2021, the previous noteholder exercised the warrants
pursuant to the cashless exercise provision of the warrant
agreement into 57,147 common shares. The common shares have not
been issued as of March 14, 2022.
Previous Noteholder – $33,000
On
September 29, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $33,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 18, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 1,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $30,000
which was issued at a $3,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 29, 2020, for the
number of warrant shares from 1,500 warrant shares to 84,612
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 26, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $33,000, into 84,612 common
shares.
Previous Noteholder – $110,000
On
February 10, 2021, the Company entered into an Original Issue
Discount Senior Convertible Debenture (the “Note”) with respect to
the sale and issuance to a previous noteholder of (i) $110,000
aggregate principal amount of Note due February 11, 2022 based on
$1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 157,143 shares of the Company’s Common Stock
at an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $100,000
which was issued at a $10,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.70 per
share, subject to adjustment as provided therein, such as
stock splits and stock dividends.
On
May 10, 2021, the previous noteholder elected to convert the
aggregate principal amount of a $110,000 convertible note issued on
February 10, 2021 into 157,143 shares of the Company’s common
stock.
Previous Noteholder – $55,000
On
May 4, 2021, the Company repaid the aggregate principal amount of a
$55,000 convertible debenture that was entered into on April 7,
2021 with a previous noteholder. The note was a 10% Original Issue
Discount Senior Convertible Debenture (the “Note”) which included a
five-year Common Stock Purchase Warrant (“Warrants’) to purchase up
to an aggregate of 71,429 shares of the Company’s Common Stock at
an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $50,000
which was issued at a $5,000 original issue discount from the face
value of the Note.
Previous Noteholder – $110,000
On
February 10, 2021, the Company entered into an Original Issue
Discount Senior Convertible Debenture (the “Note”) with respect to
the sale and issuance to a previous noteholder of (i) $110,000
aggregate principal amount of Note due February 11, 2022 based on
$1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 157,143 shares of the Company’s Common Stock
at an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $100,000
which was issued at a $10,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.70 per
share, subject to adjustment as provided therein, such as
stock splits and stock dividends.
On
October 25, 2021, the previous noteholder elected to convert the
aggregate principal amount of the Note, $110,000, into 157,143
common shares.
Loan
Payable
The
Company borrows funds from its shareholders from time to time for
working capital purposes. On March 16, 2022, the Company borrowed
$100,000. This borrowing is non-interest bearing and due in 30
days.
Employment
Agreements
Mr.
Joyce receives an annual base salary of $455,000, plus bonus
compensation not to exceed 50% of salary. Mr. Joyce’s employment
also provides for medical insurance, disability benefits and one
year of severance pay if his employment is terminated without cause
or due to a change in control. Additionally, the Company has agreed
to maintain a beneficial ownership target of 9% for Mr. Joyce. Mr.
Joyce’s compensation was approved by the Reign Resources
Corporation Board of Directors on October 6, 2020 and was among
conditions of the Share Exchange Agreement that was completed with
Sigyn Therapeutics on October 19, 2020. The Company incurred
compensation expense of $496,125 (including $18,542 of 2020 payroll
paid in 2021) and $418,842, and employee benefits of $31,126 and
$22,516, for the years ended December 31, 2021 and 2020,
respectively.
Sigyn
had no employment agreement with its CTO but Sigyn still incurred
compensation on behalf of the CTO. The Company incurred
compensation expense of $259,000 and $233,981, and employee
benefits of $21,704 and $22,024, for the years ended December 31,
2021 and 2020, respectively.
Mr.
Ferrell was hired March 9, 2022 as the Company’s Chief Financial
Officer. Mr. Ferrell receives an annual base salary of $250,000,
plus discretionary bonus compensation not to exceed 40% of salary.
Mr. Ferrell’s employment also provides for medical insurance,
disability benefits and three months of severance pay if his
employment is terminated without cause or due to a change in
control. Additionally, Mr. Ferrell will be granted up to 600,000
options to purchase 600,000 of the Company’s common shares upon the
implementation of a Company employee option plan.
Media
Advertising Agreement
On
May 13, 2021, the Company mutually terminated the Media Relations
Agreement (“Media Agreement”) with a third party for marketing and
to promote brand awareness that was entered into on February 10,
2021. The Company agreed to pay $25,000 due in cash at the
execution of the Media Agreement. No shares were issued in
conjunction with the Media Agreement.
Bonus
On
July 21, 2021, as a result of achieving certain milestones, the
Board of Directors agreed to pay each of the Company’s CEO and CTO
a performance bonus equal to 5% of their annual salary totaling
$34,750.
Impairment
of Inventory
Based
on the significant advancement of Sigyn Therapy, the Company
decided in the 4th quarter of 2021 to assess the value
of retail business operations that were a focus of the Company
prior to the merger transaction consummated on October 19,
2020.
Related
to this assessment, management determined the wholesale liquidation
value of its sapphire gem inventory to be 5-10% of the previously
reported retail value, based on communications with certified
gemologists, the variance between retail and wholesale valuations,
and current market conditions. As a result, the Company has valued
the inventory at $50,000 and recorded an impairment of assets of
$536,047 in the year ended December 31, 2021 and is classified in
other expenses in the consolidated Statements of
Operations.
Limited
Operating History; Need for Additional Capital
There
is limited historical financial information about us on which to
base an evaluation of our performance. We cannot guarantee we will
be successful in our business operations. Our business is subject
to risks inherent in the establishment of a new business
enterprise, including limited capital resources, and possible cost
overruns due to increases in the cost of services. To become
profitable and competitive, we must receive additional capital. We
have no assurance that future financing will materialize. If that
financing is not available, we may be unable to continue
operations.
Overview
of Presentation
The
following Management’s Discussion and Analysis (“MD&A”) or Plan
of Operations includes the following sections:
|
● |
Results
of Operations |
|
|
|
|
● |
Liquidity
and Capital Resources |
|
|
|
|
● |
Capital
Expenditures |
|
|
|
|
● |
Going
Concern |
|
|
|
|
● |
Critical
Accounting Policies |
|
|
|
|
● |
Off-Balance
Sheet Arrangements |
General
and administrative expenses consist primarily of personnel costs
and professional fees required to support our operations and
growth.
Depending
on the extent of our future growth, we may experience significant
strain on our management, personnel, and information systems. We
will need to implement and improve operational, financial, and
management information systems. In addition, we are implementing
new information systems that will provide better record-keeping,
customer service and billing. However, there can be no assurance
that our management resources or information systems will be
sufficient to manage any future growth in our business, and the
failure to do so could have a material adverse effect on our
business, results of operations and financial condition.
Results
of Operations
Year Ended December 31, 2021 Compared to Year Ended December 31,
2020
The
following discussion represents a comparison of our results of
operations for the years ended December 31, 2021 and 2020. The
results of operations for the periods shown in our audited
consolidated financial statements are not necessarily indicative of
operating results for the entire period. In the opinion of
management, the audited consolidated financial statements recognize
all adjustments of a normal recurring nature considered necessary
to fairly state our financial position, results of operations and
cash flows for the periods presented.
|
|
Year Ended
December 31, 2021 |
|
|
Year Ended
December 31, 2020 |
|
|
|
|
|
|
|
|
Net revenues |
|
$ |
- |
|
|
$ |
- |
|
Cost of
sales |
|
|
- |
|
|
|
- |
|
Gross Profit |
|
|
- |
|
|
|
- |
|
Operating expenses |
|
|
2,008,217 |
|
|
|
916,434 |
|
Other
expense |
|
|
996,402 |
|
|
|
343,156 |
|
Net loss
before income taxes |
|
$ |
(3,004,619 |
) |
|
$ |
(1,259,590 |
) |
Net
Revenues
For
the years ended December 31, 2021 and 2020, we had no
revenues.
Cost
of Sales
For
the years ended December 31, 2021 and 2020, we had no cost of
sales.
Operating
expenses
Operating
expenses increased by $1,091,783, or 119.1%, to $2,008,217 for the
year ended December 31, 2021 from $916,434 for the year ended
December 31, 2020 primarily due to increases in professional fees
of $36,211, compensation costs of $259,154, consulting costs of
$112,919, research and development costs of $314,652, depreciation
and amortization costs of $7,851, investor relations costs of
$306,487, rent expenses of $45,154, and general and administration
costs of $9,355, as a result of adding administrative
infrastructure for our anticipated business development.
For
the year ended December 31, 2021, we had research and development
costs of $734,014, and general and administrative expenses of
$1,274,203 primarily due to professional fees of $123,293,
compensation costs of $451,734, consulting costs of $286,194, rent
of $46,663, depreciation and amortization costs of $19,151,
investor relations costs of $329,006, and general and
administration costs of $18,162, as a result of adding
administrative infrastructure for our anticipated business
development.
For
the year ended December 31, 2020, we had marketing expenses of
$705, research and development costs of $419,362, and general and
administrative expenses of $496,367 primarily due to professional
fees of $260,356, compensation costs of $192,580, rent of $1,509,
depreciation and amortization costs of $11,300, investor relations
costs of $22,519, and general and administration costs of $8,103,
as a result of adding administrative infrastructure for our
anticipated business development.
Other
Expense
Other
expense for the year ended December 31, 2021 totaled $996,402
primarily due to impairment of assets of $536,047, interest expense
of $429,488 in conjunction with accretion of debt discount and
original issuance discount, and interest expense of $30,867,
compared to other expense of $343,156 primarily due to interest
expense of $343,156 in conjunction with accretion of debt discount
and original issuance discount for the year ended December 31,
2020.
Net
loss before income taxes
Net
loss before income taxes for the year ended December 31, 2021
totaled $3,004,619 primarily due to (increases/decreases) in
compensation costs, professional fees, consulting costs, research
and development costs, investor relations costs, and general and
administration costs compared to a loss of $1,259,590 primarily due
to (increases/decreases) in compensation costs, professional fees,
marketing costs, research and development costs, investor relations
costs, and general and administration costs for the year ended
December 31, 2020 primarily due to professional fees.
Assets
and Liabilities
Assets
were $710,259 as of December 31, 2021. Assets consisted primarily
of cash of $340,956, inventories of $50,000, equipment of $28,046,
intangible assets of $5,700, and operating lease right-of-use
assets of $262,771. Liabilities were $974,843 as of December 31,
2021. Liabilities consisted primarily accounts payable of $39,674,
accrued payroll and payroll taxes of $1,072, convertible notes of
$647,202, net of $53,614 of unamortized debt discount, operating
lease liabilities of $286,716, and other current liabilities of
$179.
Liquidity
and Capital Resources
General – Overall, we had an increase in cash flows for the
year ended December 31, 2021 of $256,554 resulting from cash
provided by financing activities of $2,060,000, offset partially by
cash used in operating activities of $1,774,182 and cash used in
investing activities of $29,264.
The
following is a summary of our cash flows provided by (used in)
operating, investing, and financing activities during the periods
indicated:
|
|
Year Ended
December 31, 2021 |
|
|
Year Ended
December 31, 2020 |
|
|
|
|
|
|
|
|
Net cash provided by (used in): |
|
|
|
|
|
|
|
|
Operating
activities |
|
$ |
(1,774,182 |
) |
|
$ |
(829,809 |
) |
Investing activities |
|
|
(29,264 |
) |
|
|
(10,799 |
) |
Financing activities |
|
|
2,060,000 |
|
|
|
925,010 |
|
|
|
$ |
256,554 |
|
|
$ |
84,402 |
|
Year Ended December 31, 2021 Compared to Year Ended December 31,
2020
Cash Flows from Operating Activities – For the year ended
December 31, 2021, net cash used in operations was $1,774,182
compared to net cash used in operations of $829,809 for the year
ended December 31, 2020. Net cash used in operations was primarily
due to a net loss of $3,004,619 for year ended December 31, 2021
and the changes in operating assets and liabilities of $34,149,
primarily due to the increases in other current assets of $2,075
and other assets of $20,711, and a decrease in accrued payroll and
payroll taxes of $58,635, offset primarily by increases in accounts
payable of $23,669 and other current liabilities of $23,603. In
addition, net cash used in operating activities includes
adjustments to reconcile net profit from depreciation expense of
$2,946, amortization expense of $16,205, accretion of original
issuance costs of $61,283, accretion of debt discount of $368,205,
stock issued for services of $249,100, interest expense converted
to notes payable of $30,800, and impairment of assets of
$536,047.
Net
cash used in operations was primarily due to a net loss of
$1,259,590 for year ended December 31, 2020 and the changes in
operating assets and liabilities of $75,325, primarily due to the
increase in accounts payable of $15,095, accrued payroll and
payroll taxes of $59,707, and other current liabilities of $523. In
addition, net cash used in operating activities includes
adjustments to reconcile net profit from depreciation expense of
$346, amortization expense of $10,954, accretion of original
issuance costs of $67,823, and accretion of debt discount of
$275,333.
Cash Flows from Investing Activities – For the year ended
December 31, 2021, net cash used in investing was $29,264 due to
the purchase of property and equipment compared to cash flows from
investing activities of $10,799 due to the purchase of intangible
assets for the year ended December 31, 2020.
Cash Flows from Financing Activities – For the year ended
December 31, 2021, net cash provided by financing was $2,060,000
due to proceeds from short term convertible notes of $250,000,
repayments of short-term convertible notes of $55,000, and common
stock and warrants issued for cash of $1,865,000. For the year
ended December 31, 2020, net cash provided by financing was
$925,010 due to proceeds from short term convertible
notes.
Financing – We expect that our current working capital
position, together with our expected future cash flows from
operations will be insufficient to fund our operations in the
ordinary course of business, anticipated capital expenditures, debt
payment requirements and other contractual obligations for at least
the next twelve months. However, this belief is based upon many
assumptions and is subject to numerous risks, and there can be no
assurance that we will not require additional funding in the
future.
We
have no present agreements or commitments with respect to any
material acquisitions of other businesses, products, product rights
or technologies or any other material capital expenditures.
However, we will continue to evaluate acquisitions of and/or
investments in products, technologies, capital equipment or
improvements or companies that complement our business and may make
such acquisitions and/or investments in the future. Accordingly, we
may need to obtain additional sources of capital in the future to
finance any such acquisitions and/or investments. We may not be
able to obtain such financing on commercially reasonable terms, if
at all. Due to the ongoing global economic crisis, we believe it
may be difficult to obtain additional financing if needed. Even if
we are able to obtain additional financing, it may contain undue
restrictions on our operations, in the case of debt financing, or
cause substantial dilution for our shareholders, in the case of
equity financing.
Common
Stock
The
Company issued 500,000 restricted common shares to founders, valued
at $50 (based on the par value on the date of grant) in exchange
for patent rights. The issuance was an isolated transaction not
involving a public offering pursuant to Section 4(2) of the
Securities Act of 1933.
The
Company has authorized 1,000,000,000 shares of par value $0.0001
common stock, of which 37,295,803 shares are outstanding at
December 31, 2021.
On
November 3, 2021, the Company entered into a three-month
Advertising and Marketing Consulting Agreement (“Agreement”) with a
third party. The Company agreed to pay $20,000 per month and issue
15,000 shares of the Company’s common stock on the 60th
day of the term of the Agreement. This common stock issuance will
be pursuant to Section 4(a)(2) of the Securities Act of 1933, as
amended, in a transaction exempt from registration.
On
October 28, 2021, Osher elected to convert $16,714 of the aggregate
principal amount of the Note of $199,650, into 42,857 common
shares.
On
October 25, 2021, Osher elected to convert the aggregate principal
amount of the Note, $110,000, into 157,143 common
shares.
On
October 20, 2021, the entered into a securities purchase agreement
with an accredited investor that resulted in the issuance of
320,000 shares of common stock and warrants to purchase an
aggregate of 320,000 shares of the Company’s common stock for total
proceeds totaling $400,000. The offering allowed for qualified
investors to purchase one share of the Company’s common stock at
$1.25. For each share purchased, the investor received a five-year
warrant to purchase one share of common stock at $1.25 per share.
No commissions were paid in the offering. This issuance was
pursuant to Section 4(a)(2) of the Securities Act of 1933, as
amended, in a transaction exempt from registration.
On
October 14, 2021, the Company issued a total of 47,000 shares of
its common stock valued at $37,600 (based on the stock price of the
Company’s common stock on the date of issuance) to a third party,
for communications to the financial industry.
On
July 14, 2021, the Company issued a total of 47,000 shares of its
common stock valued at $47,000 (based on the stock price of the
Company’s common stock on the date of issuance) to a third party,
for communications to the financial industry.
On
May 10, 2021, Brio Capital elected to convert the aggregate
principal amount of a $110,000 convertible note issued on February
10, 2021 into 157,143 shares of the Company’s common
stock.
In
April 2021, the Company initiated an offering of up to $1.5 million
of the Company’s restricted common shares. The offering allowed for
qualified investors to purchase one share of the Company’s common
stock $1.25. For each share purchased, the investor received a
five-year warrant to purchase one share of common stock at $1.75
per share. On May 10, 2021, the Company closed the offering to
investors and subsequently disclosed that it had entered into
securities purchase agreements with accredited investors that
resulted in the issuance of 1,172,000 shares of common stock and
warrants to purchase an aggregate of 1,172,000 shares of the
Company’s common stock for total proceeds totaling $1,465,000. No
commissions were paid in the offering. This issuance was pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended, in a
transaction exempt from registration.
On
April 14, 2021, the Company issued a total of 47,000 shares of its
restricted common stock valued at $82,250 (based on the stock price
of the Company’s common stock on the date of issuance) to a third
party, for communications to the financial industry. This issuance
was pursuant to Section 4(a)(2) of the Securities Act of 1933, as
amended, in a transaction exempt from registration.
On
February 19, 2021, a previous noteholder exercised the warrants
pursuant to the cashless exercise provision of the warrant
agreement into 57,147 common shares. The common shares have not
been issued as of March 14, 2022.
On
January 14, 2021, the Company issued a total of 47,000 shares of
its restricted common stock valued at $82,250 (based on the stock
price of the Company’s common stock on the date of issuance) to a
third party, for communications to the financial industry. This
issuance was pursuant to Section 4(a)(2) of the Securities Act of
1933, as amended, in a transaction exempt from
registration.
During
the year ended December 31, 2020, the Company issued 1,015,344
common shares to third parties in conjunction with the exchange of
convertible promissory debentures.
On
October 19, 2020, the Company issued 33,686,169 common shares in
conjunction with acquisition.
Warrants
On
October 22, 2021, the Company and Osher amended convertible debt
agreements for the maturity date from October 20, 2021 to October
20, 2022. In exchange for the extension of the Note, the Company
issued Osher 450,000 warrants to purchase an aggregate of 450,000
shares of the Company’s common stock, valued at $197,501 (based on
the Black Scholes valuation model on the date of grant) (see Note
6). The warrants are exercisable for a period of five years at
$1.00 per share in whole or in part, as either a cash exercise or
as a cashless exercise, and fully vest at grant date. The Company
is amortizing the value of the warrants ratably through October 20,
2022. The Company recorded $40,041 and $0 for the years ended
December 31, 2021 and 2020, respectively, and is classified in
other expenses in the consolidated Statements of
Operations.
Convertible
Promissory Debentures
Current
Noteholders
Osher – $457,380
On
January 28, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $385,000 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture due January
26, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants to purchase up to an
aggregate of 80,209 shares of the Company’s Common Stock at an
exercise price of $7.00 per share. The aggregate cash subscription
amount received by the Company from Osher for the issuance of the
note and warrants was $350,005 which was issued at a $34,995
original issue discount from the face value of the Note.
The conversion price for the
principal in connection with voluntary conversions by a holder of
the convertible notes is $0.094 per share, as amended on October
20, 2020, subject to adjustment as provided therein, such as
stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Warrants dated January 28, 2020, for the number
of warrant shares from 80,209 warrant shares to 4,113,083 warrant
shares at an exercise price of $0.14 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
Osher – $60,500
On
June 23, 2020 (the “Original Issue Date”), the Company entered into
a Securities Purchase Agreement (the “Purchase Agreement”) with
respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $50,000 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture (the “Note”)
due June 23, 2021, based on $1.00 for each $0.90909 paid by Osher
and (ii) five-year Common Stock Purchase Warrants (“Warrants”) to
purchase up to an aggregate of 10,000 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The
aggregate cash subscription amount received by the Company from
Osher for the issuance of the Note and Warrants was $50,005 which
was issued at a $0 original issue discount from the face value of
the Note. The conversion
price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on
October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$50,000 to $55,000. The aggregate cash subscription amount received
by the Company from Osher for the issuance of the Note and Warrants
was $50,005 which was issued at an amended $4,995 original issue
discount from the face value of the Note. |
|
● |
The
parties amended the Warrants dated June 23, 2020, for the number of
warrant shares from 10,000 warrant shares to 141,020 warrant shares
at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
Osher – $199,650
On
September 17, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $181,500 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture (the “Note”)
due September 30, 2021, based on $1.00 for each $0.90909 paid by
Osher and (ii) five-year Common Stock Purchase Warrants
(“Warrants’) to purchase up to an aggregate of 8,250 shares of the
Company’s Common Stock at an exercise price of $30.00 per share.
The aggregate cash subscription amount received by the Company from
Osher for the issuance of the Note and Warrants was $165,000 which
was issued at a $16,500 original issue discount from the face value
of the Note. The conversion
price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on
October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 17, 2020, for the
number of warrant shares from 8,250 warrant shares to 465,366
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
On
October 28, 2021, Osher elected to convert $16,714 of the aggregate
principal amount of the Note of $199,650, into 42,857 common
shares.
Previous
Noteholders
Previous Noteholder – $50,000 (as amended on October 20, 2020 to
$55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into
a Securities Purchase Agreement (the “Purchase Agreement”) with
respect to the sale and issuance to a previous noteholder of (i)
$50,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due June 23, 2021, based
on $1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 10,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $50,000
which was issued at a $0 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$50,000 to $55,000. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $50,000 which was issued at an amended $5,000
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated June 23, 2020, for the number of
warrant shares from 10,000 warrant shares to 141,020 warrant shares
at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
December 2, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $55,000, into 141,020
common shares.
Previous Noteholder - $25,000 (as amended on October 20, 2020 to
$27,500)
On
August 18, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $25,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 18, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 5,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $25,000
which was issued at a $0 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$25,000 to $27,500. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $25,000 which was issued at an amended $2,500
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated August 18, 2020, for the number
of warrant shares from 5,000 warrant shares to 70,510 warrant
shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 28, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $27,500, into 70,510 common
shares.
Previous Noteholder – $93,500
On
September 18, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $93,500 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due September 30, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 4,250 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $85,000
which was issued at a $8,500 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 18, 2020, for the
number of warrant shares from 4,250 warrant shares to 239,734
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
December 2, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $93,500, into 239,734
common shares.
Previous Noteholder - $165,000
On
September 21, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $165,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due September 30, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 7,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $150,000
which was issued at a $15,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follow on October 20, 2020:
|
● |
The
parties amended the number of shares from the Warrants dated
September 21, 2020, for the number of warrant shares from 7,500
warrant shares to 423,060 warrant shares at an exercise price of
$0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
November 5, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $165,000, into 423,060
common shares.
Previous Noteholder – $27,500 (as amended on October 20, 2020 to
$22,000)
On
September 28, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $27,500 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 28, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 1,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $20,000
which was issued at a $7,500 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$27,500 to $22,000. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $20,000 which was issued at an amended $2,000
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated September 28, 2020, for the
number of warrant shares from 1,000 warrant shares to 56,408
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 27, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $22,000, into 56,408 common
shares.
On
February 19, 2021, the previous noteholder exercised the warrants
pursuant to the cashless exercise provision of the warrant
agreement into 57,147 common shares. The common shares have not
been issued as of March 14, 2022.
Previous Noteholder – $33,000
On
September 29, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $33,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 18, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 1,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $30,000
which was issued at a $3,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 29, 2020, for the
number of warrant shares from 1,500 warrant shares to 84,612
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 26, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $33,000, into 84,612 common
shares.
Previous Noteholder – $110,000
On
February 10, 2021, the Company entered into an Original Issue
Discount Senior Convertible Debenture (the “Note”) with respect to
the sale and issuance to a previous noteholder of (i) $110,000
aggregate principal amount of Note due February 11, 2022 based on
$1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 157,143 shares of the Company’s Common Stock
at an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $100,000
which was issued at a $10,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.70 per
share, subject to adjustment as provided therein, such as
stock splits and stock dividends.
On
May 10, 2021, the previous noteholder elected to convert the
aggregate principal amount of a $110,000 convertible note issued on
February 10, 2021 into 157,143 shares of the Company’s common
stock.
Previous Noteholder – $55,000
On
May 4, 2021, the Company repaid the aggregate principal amount of a
$55,000 convertible debenture that was entered into on April 7,
2021 with a previous noteholder. The note was a 10% Original Issue
Discount Senior Convertible Debenture (the “Note”) which included a
five-year Common Stock Purchase Warrant (“Warrants’) to purchase up
to an aggregate of 71,429 shares of the Company’s Common Stock at
an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $50,000
which was issued at a $5,000 original issue discount from the face
value of the Note.
Previous Noteholder – $110,000
On
February 10, 2021, the Company entered into an Original Issue
Discount Senior Convertible Debenture (the “Note”) with respect to
the sale and issuance to a previous noteholder of (i) $110,000
aggregate principal amount of Note due February 11, 2022 based on
$1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 157,143 shares of the Company’s Common Stock
at an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $100,000
which was issued at a $10,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.70 per
share, subject to adjustment as provided therein, such as
stock splits and stock dividends.
On
October 25, 2021, the previous noteholder elected to convert the
aggregate principal amount of the Note, $110,000, into 157,143
common shares.
Loan
Payable
The
Company borrows funds from its shareholders from time to time for
working capital purposes. On March 16, 2022, the Company borrowed
$100,000. This borrowing is non-interest bearing and due in 30
days.
Employment
Agreements
Mr.
Joyce receives an annual base salary of $455,000, plus bonus
compensation not to exceed 50% of salary. Mr. Joyce’s employment
also provides for medical insurance, disability benefits and one
year of severance pay if his employment is terminated without cause
or due to a change in control. Additionally, the Company has agreed
to maintain a beneficial ownership target of 9% for Mr. Joyce. Mr.
Joyce’s compensation was approved by the Reign Resources
Corporation Board of Directors on October 6, 2020 and was among
conditions of the Share Exchange Agreement that was completed with
Sigyn Therapeutics on October 19, 2020. The Company incurred
compensation expense of $496,125 (including $18,542 of 2020 payroll
paid in 2021) and $418,842, and employee benefits of $31,126 and
$22,516, for the years ended December 31, 2021 and 2020,
respectively.
Sigyn
had no employment agreement with its CTO but Sigyn still incurred
compensation on behalf of the CTO. The Company incurred
compensation expense of $259,000 and $233,981, and employee
benefits of $21,704 and $22,024, for the years ended December 31,
2021 and 2020, respectively.
Mr.
Ferrell was hired March 9, 2022 as the Company’s Chief Financial
Officer. Mr. Ferrell receives an annual base salary of $250,000,
plus discretionary bonus compensation not to exceed 40% of salary.
Mr. Ferrell’s employment also provides for medical insurance,
disability benefits and three months of severance pay if his
employment is terminated without cause or due to a change in
control. Additionally, Mr. Ferrell will be granted up to 600,000
options to purchase 600,000 of the Company’s common shares upon the
implementation of a Company employee option plan.
Media
Advertising Agreement
On
May 13, 2021, the Company mutually terminated the Media Relations
Agreement (“Media Agreement”) with a third party for marketing and
to promote brand awareness that was entered into on February 10,
2021. The Company agreed to pay $25,000 due in cash at the
execution of the Media Agreement. No shares were issued in
conjunction with the Media Agreement.
Bonus
On
July 21, 2021, as a result of achieving certain milestones, the
Board of Directors agreed to pay each of the Company’s CEO and CTO
a performance bonus equal to 5% of their annual salary totaling
$34,750.
Impairment
of Inventory
Based
on the significant advancement of Sigyn Therapy, the Company
decided in the 4th quarter of 2021 to assess the value
of retail business operations that were a focus of the Company
prior to the merger transaction consummated on October 19,
2020.
Related
to this assessment, management determined the wholesale liquidation
value of its sapphire gem inventory to be 5-10% of the previously
reported retail value, based on communications with certified
gemologists, the variance between retail and wholesale valuations,
and current market conditions. As a result, the Company has valued
the inventory at $50,000 and recorded an impairment of assets of
$536,047 in the year ended December 31, 2021 and is classified in
other expenses in the consolidated Statements of
Operations.
Capital
Expenditures
We
expect to purchase approximately $30,000 of equipment in connection
with the expansion of our business during the next twelve
months.
Fiscal
Year-End
Our
fiscal year end is December 31.
Going
Concern
The
accompanying financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates, among
other things, the realization of assets and satisfaction of
liabilities in the normal course of business. The Company had an
accumulated deficit of approximately $4,266,000 at December 31,
2021, had a working capital deficit of approximately $341,000 at
December 31, 2021, had net losses of approximately $3,005,000 and
$1,260,000 for the years ended December 31, 2021 and 2020,
respectively, and net cash used in operating activities of
approximately $1,774,000 and $830,000 for the years ended December
31, 2021 and 2020, respectively, with no revenue earned since
inception, and a lack of operational history. These matters raise
substantial doubt about the Company’s ability to continue as a
going concern.
While
the Company is attempting to expand operations and increase
revenues, the Company’s cash position may not be significant enough
to support the Company’s daily operations. Management intends to
raise additional funds by way of a private offering or an asset
sale transaction. Management believes that the actions presently
being taken to further implement its business plan and generate
revenues provide the opportunity for the Company to continue as a
going concern. While management believes in the viability of its
strategy to generate revenues and in its ability to raise
additional funds or transact an asset sale, there can be no
assurances to that effect or on terms acceptable to the Company.
The ability of the Company to continue as a going concern is
dependent upon the Company’s ability to further implement its
business plan and generate revenues.
The
consolidated financial statements do not include any adjustments
that might be necessary if we are unable to continue as a going
concern.
Critical
Accounting Policies
The
Commission has defined a company’s critical accounting policies as
the ones that are most important to the portrayal of our financial
condition and results of operations and which require us to make
its most difficult and subjective judgments, often as a result of
the need to make estimates of matters that are inherently
uncertain. Based on this definition, we have identified the
critical accounting policies and judgments addressed below. We also
have other key accounting policies that are significant to
understanding our results.
The
following are deemed to be the most significant accounting policies
affecting us.
Use
of Estimates
The
preparation of these financial statements in accordance 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
disclosures of contingent assets and liabilities at the dates of
the financial statements and the reported amounts of net sales and
expenses during the reported periods. Actual results may differ
from those estimates and such differences may be material to the
financial statements. The more significant estimates and
assumptions by management include among others: inventory
valuation, common stock valuation, and the recoverability of
intangibles. The current economic environment has increased the
degree of uncertainty inherent in these estimates and
assumptions.
Intangible
Assets
Intangible
assets consist primarily of developed technology – website. Our
intangible assets are being amortized on a straight-line basis over
a period of three years.
Assignment
of Patent
On
January 8, 2020, James Joyce, the Company’s CEO and Craig Roberts,
the Company’s COO, assigned to the Company the rights to patent
62/881,740 pertaining to the devices, systems and methods for the
broad-spectrum reduction of pro-inflammatory cytokines in
blood.
Impairment
of Long-lived Assets
We
periodically evaluate whether the carrying value of property,
equipment and intangible assets has been impaired when
circumstances indicate the carrying value of those assets may not
be recoverable. The carrying amount is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result
from the use and eventual disposition of the asset. If the carrying
value is not recoverable, the impairment loss is measured as the
excess of the asset’s carrying value over its fair value. There are
no impairments as of December 31, 2021.
Our
impairment analyses require management to apply judgment in
estimating future cash flows as well as asset fair values,
including forecasting useful lives of the assets, assessing the
probability of different outcomes, and selecting the discount rate
that reflects the risk inherent in future cash flows. If the
carrying value is not recoverable, we assess the fair value of
long-lived assets using commonly accepted techniques, and may use
more than one method, including, but not limited to, recent
third-party comparable sales and discounted cash flow models. If
actual results are not consistent with our assumptions and
estimates, or our assumptions and estimates change due to new
information, we may be exposed to an impairment charge in the
future. For the years ended December 31, 2021 and 2020, the Company
had not experienced impairment losses on its long-lived assets.
However, there can be no assurances that the demand for the
Company’s products and services will continue, which could result
in an impairment of long-lived assets in the future.
Income
Taxes
We
account for income taxes under an asset and liability approach.
This process involves calculating the temporary and permanent
differences between the carrying amounts of the assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. The temporary differences result in
deferred tax assets and liabilities, which would be recorded on our
balance sheets in accordance with Accounting Standards Codification
(“ASC”) ASC 740, Income Taxes, which established financial
accounting and reporting standards for the effect of income taxes.
We must assess the likelihood that its deferred tax assets will be
recovered from future taxable income and, to the extent we believe
that recovery is not likely, we must establish a valuation
allowance. Changes in our valuation allowance in a period are
recorded through the income tax provision on the consolidated
Statements of Operations.
ASC
740-10 clarifies the accounting for uncertainty in income taxes
recognized in an entity’s financial statements and prescribes a
recognition threshold and measurement attributes for financial
statement disclosure of tax positions taken or expected to be taken
on a tax return. Under ASC 740-10, the impact of an uncertain
income tax position on the income tax return must be recognized at
the largest amount that is more-likely-than-not to be sustained
upon audit by the relevant taxing authority. An uncertain income
tax position will not be recognized if it has less than a 50%
likelihood of being sustained. Additionally, ASC 740-10 provides
guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition. We
recognized no material adjustment in the liability for unrecognized
income tax benefits.
Fair
Value of Financial Instruments
The
provisions of accounting guidance, Financial Accounting Standards
Board (“FASB”) Topic ASC 825, Financial Instruments –
Overall, requires all entities to disclose the fair value of
financial instruments, both assets and liabilities recognized and
not recognized on the balance sheet, for which it is practicable to
estimate fair value, and defines fair value of a financial
instrument as the amount at which the instrument could be exchanged
in a current transaction between willing parties. As of December
31, 2021, the fair value of cash, accounts payable, accrued
expenses, and notes payable approximated carrying value due to the
short maturity of the instruments, quoted market prices or interest
rates which fluctuate with market rates.
Debt
We
issue debt that may have separate warrants, conversion features, or
no equity-linked attributes.
Debt with warrants – When we issue debt with warrants, we
treat the warrants as a debt discount, record as a contra-liability
against the debt, and amortize the balance over the life of the
underlying debt as amortization of debt discount expense in the
consolidated statements of operations. When the warrants require
equity treatment under ASC 815, the offset to the contra-liability
is recorded as additional paid in capital in our consolidated
balance sheet. When we issue debt with warrants that require
liability treatment under ASC 815, such as a clause requiring
repricing, the warrants are considered to be a derivative that is
recorded as a liability at fair value. If the initial value of the
warrant derivative liability is higher than the fair value of the
associated debt, the excess is recognized immediately as interest
expense. The warrant derivative liability is adjusted to its fair
value at the end of each reporting period, with the change being
recorded as expense or gain. If the debt is retired early, the
associated debt discount is then recognized immediately as
amortization of debt discount expense in the consolidated statement
of operations. The debt is treated as conventional debt.
Convertible debt – derivative treatment – When we issue debt
with a conversion feature, we must first assess whether the
conversion feature meets the requirements to be treated as a
derivative, as follows: a) one or more underlyings, typically the
price of our common stock; b) one or more notional amounts or
payment provisions or both, generally the number of shares upon
conversion; c) no initial net investment, which typically excludes
the amount borrowed; and d) net settlement provisions, which in the
case of convertible debt generally means the stock received upon
conversion can be readily sold for cash. An embedded equity-linked
component that meets the definition of a derivative does not have
to be separated from the host instrument if the component qualifies
for the scope exception for certain contracts involving an issuer’s
own equity. The scope exception applies if the contract is both a)
indexed to its own stock; and b) classified in shareholders’ equity
in its statement of financial position.
If
the conversion feature within convertible debt meets the
requirements to be treated as a derivative, we estimate the fair
value of the convertible debt derivative using Monte Carlo Method
upon the date of issuance. If the fair value of the convertible
debt derivative is higher than the face value of the convertible
debt, the excess is immediately recognized as interest expense.
Otherwise, the fair value of the convertible debt derivative is
recorded as a liability with an offsetting amount recorded as a
debt discount, which offsets the carrying amount of the debt. The
convertible debt derivative is revalued at the end of each
reporting period and any change in fair value is recorded as a gain
or loss in the statement of operations. The debt discount is
amortized through interest expense over the life of the
debt.
Convertible debt – beneficial conversion feature – If the
conversion feature is not treated as a derivative, we assess
whether it is a beneficial conversion feature (“BCF’). A BCF exists
if the conversion price of the convertible debt instrument is less
than the stock price on the commitment date. This typically occurs
when the conversion price is less than the fair value of the stock
on the date the instrument was issued. The value of a BCF is equal
to the intrinsic value of the feature, the difference between the
conversion price and the common stock into which it is convertible,
and is recorded as additional paid in capital and as a debt
discount in the consolidated balance sheet. We amortize the balance
over the life of the underlying debt as amortization of debt
discount expense in the statement of operations. If the debt is
retired early, the associated debt discount is then recognized
immediately as amortization of debt discount expense in the
statement of operations.
If
the conversion feature does not qualify for either the derivative
treatment or as a BCF, the convertible debt is treated as
traditional debt.
Reclassifications
Certain prior year amounts have been reclassified for consistency
with the current year presentation. These reclassifications had no
effect on the reported results of operations. An adjustment has
been made to the Consolidated Statements of Operations for fiscal
year ended December 31, 2020, to reclass $391,906 of costs to
research and development previously classified in general and
administrative.
Recent
Accounting Pronouncements
Refer
to Note 3 in the accompanying notes to the consolidated financial
statements.
Future
Contractual Obligations and Commitments
Refer
to Note 3 in the accompanying notes to the consolidated financial
statements for future contractual obligations and commitments.
Future contractual obligations and commitments are based on the
terms of the relevant agreements and appropriate classification of
items under U.S. GAAP as currently in effect. Future events could
cause actual payments to differ from these amounts.
We
incur contractual obligations and financial commitments in the
normal course of our operations and financing activities.
Contractual obligations include future cash payments required under
existing contracts, such as debt and lease agreements. These
obligations may result from both general financing activities and
from commercial arrangements that are directly supported by related
operating activities. Details on these obligations are set forth
below.
Convertible Promissory Debentures
Current
Noteholders
Osher – $457,380
On
January 28, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $385,000 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture due January
26, 2021, based on $1.00 for each $0.90909 paid by Osher and (ii)
five-year Common Stock Purchase Warrants to purchase up to an
aggregate of 80,209 shares of the Company’s Common Stock at an
exercise price of $7.00 per share. The aggregate cash subscription
amount received by the Company from Osher for the issuance of the
note and warrants was $350,005 which was issued at a $34,995
original issue discount from the face value of the Note.
The conversion price for the
principal in connection with voluntary conversions by a holder of
the convertible notes is $0.094 per share, as amended on October
20, 2020, subject to adjustment as provided therein, such as
stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Warrants dated January 28, 2020, for the number
of warrant shares from 80,209 warrant shares to 4,113,083 warrant
shares at an exercise price of $0.14 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
Osher – $60,500
On
June 23, 2020 (the “Original Issue Date”), the Company entered into
a Securities Purchase Agreement (the “Purchase Agreement”) with
respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $50,000 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture (the “Note”)
due June 23, 2021, based on $1.00 for each $0.90909 paid by Osher
and (ii) five-year Common Stock Purchase Warrants (“Warrants”) to
purchase up to an aggregate of 10,000 shares of the Company’s
Common Stock at an exercise price of $30.00 per share. The
aggregate cash subscription amount received by the Company from
Osher for the issuance of the Note and Warrants was $50,005 which
was issued at a $0 original issue discount from the face value of
the Note. The conversion
price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on
October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$50,000 to $55,000. The aggregate cash subscription amount received
by the Company from Osher for the issuance of the Note and Warrants
was $50,005 which was issued at an amended $4,995 original issue
discount from the face value of the Note. |
|
● |
The
parties amended the Warrants dated June 23, 2020, for the number of
warrant shares from 10,000 warrant shares to 141,020 warrant shares
at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
Osher – $199,650
On
September 17, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to institutional investor
Osher Capital Partners
LLC (“Osher”) of (i) $181,500 aggregate principal amount of
Original Issue Discount Senior Convertible Debenture (the “Note”)
due September 30, 2021, based on $1.00 for each $0.90909 paid by
Osher and (ii) five-year Common Stock Purchase Warrants
(“Warrants’) to purchase up to an aggregate of 8,250 shares of the
Company’s Common Stock at an exercise price of $30.00 per share.
The aggregate cash subscription amount received by the Company from
Osher for the issuance of the Note and Warrants was $165,000 which
was issued at a $16,500 original issue discount from the face value
of the Note. The conversion
price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.39 per share, as amended on
October 20, 2020, subject to adjustment as provided therein,
such as stock splits and stock dividends.
The
Company and Osher amended the convertible debt agreement as follow
on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 17, 2020, for the
number of warrant shares from 8,250 warrant shares to 465,366
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
October 22, 2021, the Company and Osher amended convertible debt
agreements as follows:
|
● |
The
parties amended the October 20, 2020 Notes for the maturity date
from October 20, 2021 to October 20, 2022. |
|
● |
The
parties amended the October 20, 2020 Notes for the aggregate
principal amount and accrued interest from $652,300 to $717,530
which is issued at a $65,230 original issue discount from the face
value of the October 20, 2020 Notes now due October 20,
2022. |
|
● |
In
exchange for the extension of the Note, the Company issued Osher
five-year warrants to purchase an aggregate of 450,000 shares of
the Company’s common stock at an exercise price of $1.00 per
share. |
On
October 28, 2021, Osher elected to convert $16,714 of the aggregate
principal amount of the Note of $199,650, into 42,857 common
shares.
Previous
Noteholders
Previous Noteholder – $50,000 (as amended on October 20, 2020 to
$55,000)
On
June 23, 2020 (the “Original Issue Date”), the Company entered into
a Securities Purchase Agreement (the “Purchase Agreement”) with
respect to the sale and issuance to a previous noteholder of (i)
$50,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due June 23, 2021, based
on $1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 10,000 shares of the Company’s Common Stock
at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $50,000
which was issued at a $0 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$50,000 to $55,000. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $50,000 which was issued at an amended $5,000
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated June 23, 2020, for the number of
warrant shares from 10,000 warrant shares to 141,020 warrant shares
at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from June 23, 2021
to October 20, 2021. |
On
December 2, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $55,000, into 141,020
common shares.
Previous Noteholder - $25,000 (as amended on October 20, 2020 to
$27,500)
On
August 18, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $25,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 18, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 5,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $25,000
which was issued at a $0 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$25,000 to $27,500. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $25,000 which was issued at an amended $2,500
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated August 18, 2020, for the number
of warrant shares from 5,000 warrant shares to 70,510 warrant
shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 28, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $27,500, into 70,510 common
shares.
Previous Noteholder – $93,500
On
September 18, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $93,500 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due September 30, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 4,250 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $85,000
which was issued at a $8,500 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 18, 2020, for the
number of warrant shares from 4,250 warrant shares to 239,734
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
December 2, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $93,500, into 239,734
common shares.
Previous Noteholder - $165,000
On
September 21, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $165,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due September 30, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 7,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $150,000
which was issued at a $15,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follow on October 20, 2020:
|
● |
The
parties amended the number of shares from the Warrants dated
September 21, 2020, for the number of warrant shares from 7,500
warrant shares to 423,060 warrant shares at an exercise price of
$0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from September 30,
2021 to October 20, 2021. |
On
November 5, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $165,000, into 423,060
common shares.
Previous Noteholder – $27,500 (as amended on October 20, 2020 to
$22,000)
On
September 28, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $27,500 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 28, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 1,000 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $20,000
which was issued at a $7,500 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Note for the aggregate principal amount from
$27,500 to $22,000. The aggregate cash subscription amount received
by the Company from the previous noteholder for the issuance of the
Note and Warrants was $20,000 which was issued at an amended $2,000
original issue discount from the face value of the
Note. |
|
● |
The
parties amended the Warrants dated September 28, 2020, for the
number of warrant shares from 1,000 warrant shares to 56,408
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 27, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $22,000, into 56,408 common
shares.
On
February 19, 2021, the previous noteholder exercised the warrants
pursuant to the cashless exercise provision of the warrant
agreement into 57,147 common shares. The common shares have not
been issued as of March 14, 2022.
Previous Noteholder – $33,000
On
September 29, 2020 (the “Original Issue Date”), the Company entered
into a Securities Purchase Agreement (the “Purchase Agreement”)
with respect to the sale and issuance to a previous noteholder of
(i) $33,000 aggregate principal amount of Original Issue Discount
Senior Convertible Debenture (the “Note”) due August 18, 2021,
based on $1.00 for each $0.90909 paid by the previous noteholder
and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to
purchase up to an aggregate of 1,500 shares of the Company’s Common
Stock at an exercise price of $30.00 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $30,000
which was issued at a $3,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.39 per
share, as amended on October 20, 2020, subject to adjustment as
provided therein, such as stock splits and stock
dividends.
The
Company and the previous noteholder amended the convertible debt
agreement as follows on October 20, 2020:
|
● |
The
parties amended the Warrants dated September 29, 2020, for the
number of warrant shares from 1,500 warrant shares to 84,612
warrant shares at an exercise price of $0.59 per share. |
|
● |
The
parties amended the Note for the maturity date from August 18, 2021
to October 20, 2021. |
On
October 26, 2020, the previous noteholder elected to convert the
aggregate principal amount of the Note, $33,000, into 84,612 common
shares.
Previous Noteholder – $110,000
On
February 10, 2021, the Company entered into an Original Issue
Discount Senior Convertible Debenture (the “Note”) with respect to
the sale and issuance to a previous noteholder of (i) $110,000
aggregate principal amount of Note due February 11, 2022 based on
$1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 157,143 shares of the Company’s Common Stock
at an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $100,000
which was issued at a $10,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.70 per
share, subject to adjustment as provided therein, such as
stock splits and stock dividends.
On
May 10, 2021, the previous noteholder elected to convert the
aggregate principal amount of a $110,000 convertible note issued on
February 10, 2021 into 157,143 shares of the Company’s common
stock.
Previous Noteholder – $55,000
On
May 4, 2021, the Company repaid the aggregate principal amount of a
$55,000 convertible debenture that was entered into on April 7,
2021 with a previous noteholder. The note was a 10% Original Issue
Discount Senior Convertible Debenture (the “Note”) which included a
five-year Common Stock Purchase Warrant (“Warrants’) to purchase up
to an aggregate of 71,429 shares of the Company’s Common Stock at
an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $50,000
which was issued at a $5,000 original issue discount from the face
value of the Note.
Previous Noteholder – $110,000
On
February 10, 2021, the Company entered into an Original Issue
Discount Senior Convertible Debenture (the “Note”) with respect to
the sale and issuance to a previous noteholder of (i) $110,000
aggregate principal amount of Note due February 11, 2022 based on
$1.00 for each $0.90909 paid by the previous noteholder and (ii)
five-year Common Stock Purchase Warrants (“Warrants’) to purchase
up to an aggregate of 157,143 shares of the Company’s Common Stock
at an exercise price of $1.20 per share. The aggregate cash
subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $100,000
which was issued at a $10,000 original issue discount from the face
value of the Note. The
conversion price for the principal in connection with voluntary
conversions by a holder of the convertible notes is $0.70 per
share, subject to adjustment as provided therein, such as
stock splits and stock dividends.
On
October 25, 2021, the previous noteholder elected to convert the
aggregate principal amount of the Note, $110,000, into 157,143
common shares.
Loan
Payable
The
Company borrows funds from its shareholders from time to time for
working capital purposes. On March 16, 2022, the Company borrowed
$100,000. This borrowing is non-interest bearing and due in 30
days.
Employment Agreement
Mr.
Joyce receives an annual base salary of $455,000, plus bonus
compensation not to exceed 50% of salary. Mr. Joyce’s employment
also provides for medical insurance, disability benefits and one
year of severance pay if his employment is terminated without cause
or due to a change in control. Additionally, the Company has agreed
to maintain a beneficial ownership target of 9% for Mr. Joyce. Mr.
Joyce’s compensation was approved by the Reign Resources
Corporation Board of Directors on October 6, 2020 and was among
conditions of the Share Exchange Agreement that was completed with
Sigyn Therapeutics on October 19, 2020. The Company incurred
compensation expense of $496,125 (including $18,542 of 2020 payroll
paid in 2021) and $418,842, and employee benefits of $31,126 and
$22,516, for the years ended December 31, 2021 and 2020,
respectively.
Sigyn
had no employment agreement with its CTO but Sigyn still incurred
compensation on behalf of the CTO. The Company incurred
compensation expense of $259,000 and $233,981, and employee
benefits of $21,704 and $22,024, for the years ended December 31,
2021 and 2020, respectively.
Mr.
Ferrell was hired March 9, 2022 as the Company’s Chief Financial
Officer. Mr. Ferrell receives an annual base salary of $250,000,
plus discretionary bonus compensation not to exceed 40% of salary.
Mr. Ferrell’s employment also provides for medical insurance,
disability benefits and three months of severance pay if his
employment is terminated without cause or due to a change in
control. Additionally, Mr. Ferrell will be granted up to 600,000
options to purchase 600,000 of the Company’s common shares upon the
implementation of a Company employee option plan.
Off-Balance
Sheet Arrangements
As of
December 31, 2021, we have not entered into any transaction,
agreement or other contractual arrangement with an entity
unconsolidated under which it has:
|
● |
a
retained or contingent interest in assets transferred to the
unconsolidated entity or similar arrangement that serves as
credit; |
|
|
|
|
● |
liquidity
or market risk support to such entity for such assets; |
|
|
|
|
● |
an
obligation, including a contingent obligation, under a contract
that would be accounted for as a derivative instrument;
or |
|
|
|
|
● |
an
obligation, including a contingent obligation, arising out of a
variable interest in an unconsolidated entity that is held by, and
material to us, where such entity provides financing, liquidity,
market risk or credit risk support to or engages in leasing,
hedging, or research and development services with us. |
Inflation
We do
not believe that inflation has had a material effect on our results
of operations.
Item
7A. Quantitative and Qualitative Disclosure About Market
Risk
We
are a smaller reporting company as defined by Rule 12b-2 of the
Securities Exchange Act of 1934 and are not required to provide the
information under this item.
Item
8. Financial Statements and Supplementary Data
The
financial statements and supplementary financial information which
are required to be filed under this item are presented under Item
15. Exhibits, Financial Statement Schedules and Reports on Form
10-K in this document, and are incorporated herein by
reference.
Item
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
Item
9A. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
We
maintain disclosure controls and procedures (as defined in Rule
13a-l5(e) under the Exchange Act) that are designed to ensure that
information that would be required to be disclosed in Exchange Act
reports is recorded, processed, summarized and reported within the
time period specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to our management,
including to our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required disclosure.
Our
management, under the supervision and with the participation of our
CEO and Chief Financial Officer (“CFO”), has evaluated the
effectiveness of our disclosure controls and procedures as defined
in SEC Rules 13a-15(e) and 15d-15(e) as of the end of the period
covered by this report. Based on such evaluation, management
identified deficiencies that were determined to be a material
weakness.
Management’s
Report on Internal Controls over Financial Reporting
The
Company’s management is responsible for establishing and
maintaining effective internal control over financial reporting (as
defined in Rule 13a-l5(f) of the Securities Exchange Act).
Management assessed the effectiveness of the Company’s internal
control over financial reporting as of December 31, 2021. In making
this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) (2013). Based on that assessment, management believes
that, as of December 31, 2021, the Company’s internal control over
financial reporting was ineffective based on the COSO criteria, due
to the following material weaknesses listed below.
The
specific material weaknesses identified by the company’s management
as of end of the period covered by this report include the
following:
|
● |
we
have not performed a risk assessment and mapped our processes to
control objectives; |
|
● |
we
have not implemented comprehensive entity-level internal
controls; |
|
● |
we
have not implemented adequate system and manual controls;
and |
|
● |
we do
not have sufficient segregation of duties. As such, the officers
approve their own related business expense
reimbursements |
Despite
the material weaknesses reported above, our management believes
that our consolidated financial statements included in this report
fairly present in all material respects our financial condition,
results of operations and cash flows for the periods presented and
that this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements, in light of the circumstances under which such
statements were made, not misleading with respect to the period
covered by this report.
This
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 rules of the
Commission that permit us to provide only management’s report in
this report.
Management’s
Remediation Plan
The
weaknesses and their related risks are not uncommon in a company of
our size because of the limitations in the size and number of
staff. Due to our size and nature, segregation of all conflicting
duties has not always been possible and may not be economically
feasible.
However, 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 plan to implement the following changes in the current fiscal
year as resources allow:
|
(i) |
appoint
additional qualified personnel to address inadequate segregation of
duties and implement modifications to our financial controls to
address such inadequacies; |
|
(ii) |
hire
a new Big 4 CFO with experience working in publicly traded
companies and hire a staff person to support the CFO, which was
accomplished in March 2022. |
The
remediation efforts set out herein will be implemented in the
current 2022 fiscal year. Because of the inherent limitations in
all control systems, no evaluation of controls can provide absolute
assurance that all control issues, if any, within our company have
been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns
can occur because of simple error or mistake.
Management
believes that despite our material weaknesses set forth above, our
consolidated financial statements for the year ended December 31,
2021 are fairly stated, in all material respects, in accordance
with U.S. GAAP.
Changes
in Internal Control over Financial Reporting
There
have been no changes in our internal control over financial
reporting during the fiscal year ending December 31, 2019 that have
materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
Item
9B. Other Information
There
have been no events required to be reported under this
Item.
PART
III
Item
10. Directors, Executive Officers and Corporate
Governance
The
following table sets forth the names, ages, and biographical
information of each of our current directors and executive officers
and the positions with the Company held by each person. Our
executive officers are elected annually by the board of directors.
The directors serve one-year terms until their successors are
elected. The executive officers serve terms of one year or until
their death, resignation or removal by the board of directors.
Unless described below, there are no family relationships among any
of the directors and officers.
Name |
|
Age |
|
Title |
Jim
Joyce |
|
60 |
|
Chief
Executive Officer and Chairman of the Board of Directors
(“CEO”) |
Craig
Roberts |
|
69 |
|
Chief
Technology Officer and director. |
Jeremy
Ferrell (1) |
|
52 |
|
Chief
Financial Officer |
(1)
Mr. Ferrell was hired as the Company’s Chief Financial Officer
effective March 9, 2022.
Mr.
Joyce is the Co-founder, Chairman and CEO of Sigyn Therapeutics,
Inc. He has 30+ years of diverse public market experience, which
includes two decades of public company CEO and Corporate Board
leadership roles.
Mr.
Joyce was previously the founder, Chairman and CEO of Aethlon
Medical, a therapeutic device company that he navigated from a
single shareholder start-up to Nasdaq-traded Company with 8000+
shareholders. During his tenure, Mr. Joyce oversaw the development
of the Aethlon Hemopurifier, the first and only therapeutic
candidate to receive two “Breakthrough Device” awards from the
United States Food and Drug Administration (FDA). Under his
leadership, the Hemopurifier received FDA “Emergency Use
Authorization” (EAU) approval to treat Ebola virus and was cleared
to treat Ebola by the German Government and Health Canada as well.
In response, Time Magazine named the Hemopurifier one of the “11
Most Remarkable Advances in Healthcare” and designated the device
to its “Top 25 Best Inventions” award list.
During
Mr. Joyce’s tenure, Aethlon won two Department of Defense (DOD)
contract awards, a National Cancer Institute (NCI) contract award
and a grant from the National Institutes of Health (NIH). He also
led the completion of approximately $100 million of equity
financings and originated preclinical and clinical collaborations
with more than twenty government and non-government institutes and
organizations. Mr. Joyce is also the former Executive Chairman of
Exosome Sciences, Inc., a company he founded to advance the
discovery of exosomal biomarkers to diagnose and monitor cancer and
neurological disorders.
Mr.
Roberts is an inventor of several life-saving therapeutic device
technologies. This includes the Percutaneous Adult Extracorporeal
Membrane Oxygenation (ECMO) system, which was licensed and
subsequently sold to C.R. Bard. During the current pandemic, ECMO
is being broadly deployed to treat critically ill COVID-19
patients. Additionally, Mr. Roberts is the inventor of the IMPACT
System, which received CE Mark clearance in the European Union and
was subsequently registered in 32 countries and successfully
deployed to treat cytokine storm related conditions, including
sepsis, acute respiratory distress syndrome (ARDS), acute liver
failure, severe pneumonia and H5N1 bird flu virus infection. The
IMPACT system incorporated a series of cartridges, which included
an adsorbent-based column to deplete endotoxin and inflammatory
cytokines from human blood plasma.
Mr. Ferrell has more than 25 years of finance and operations
leadership experience, with expertise in venture capital; mergers
and acquisitions; due diligence; initial public offerings;
strategic alliance negotiation; and financial planning and
reporting. He was most recently CFO at Miku, Inc, a privately held
consumer hardware and tele-health company, where he managed a
successful seed financing round and led Miku’s transition from its
parent to an independent company. Previously, he founded a
Fractional CFO Services firm, where he served as CFO for various
life sciences and technology companies, including Singular
Genomics, Inc., Aspen Neuroscience, Inc., and Hyduro, Inc. Before
that, he served as Corporate Controller for ecoATM, Inc., which was
acquired by Outerwall, Inc. in 2013. Earlier in his career, Mr.
Ferrell practiced as a certified public accountant. Mr. Ferrell
received his Bachelor of Science degree in Accountancy from Liberty
University and his Master of Business Administration degree in
International Finance from the Thunderbird School of Global
Management.
Conflicts
of Interest
Certain
potential conflicts of interest are inherent in the relationships
between our officers and directors and us.
From
time to time, one or more of our affiliates may form or hold an
ownership interest in and/or manage other businesses both related
and unrelated to the type of business that we own and operate.
These persons expect to continue to form, hold an ownership
interest in and/or manage additional other businesses which may
compete with our business with respect to operations, including
financing and marketing, management time and services and potential
customers. These activities may give rise to conflicts between or
among the interests of us and other businesses with which our
affiliates are associated. Our affiliates are in no way prohibited
from undertaking such activities, and neither we nor our
shareholders will have any right to require participation in such
other activities.
We
may transact business with some of our officers, directors and
affiliates, as well as with firms in which some of our officers,
directors or affiliates have a material interest, potential
conflicts may arise between the respective interests of us and
these related persons or entities. We believe that such
transactions will be effected on terms at least as favorable to us
as those available from unrelated third parties. As of this filing,
we have not transacted business with any officer, director, or
affiliate.
With
respect to transactions involving real or apparent conflicts of
interest, we have adopted policies and procedures which require
that: (i) the fact of the relationship or interest giving rise to
the potential conflict be disclosed or known to the directors who
authorize or approve the transaction prior to such authorization or
approval, (ii) the transaction be approved by a majority of our
disinterested outside directors, and (iii) the transaction be fair
and reasonable to us at the time it is authorized or approved by
our directors.
Our
policies and procedures regarding transactions involving potential
conflicts of interest are not in writing. We understand that it
will be difficult to enforce our policies and procedures and will
rely and trust our officers and directors to follow our policies
and procedures. We will implement our policies and procedures by
requiring the officer or director who is not in compliance with our
policies and procedures to remove himself and the other officers
and directors will decide how to implement the policies and
procedures, accordingly.
Corporate
Governance
The
Company promotes accountability for adherence to honest and ethical
conduct; endeavors to provide full, fair, accurate, timely and
understandable disclosure in reports and documents that the Company
files with the Securities and Exchange Commission (the “SEC”) and
in other public communications made by the Company; and strives to
be compliant with applicable governmental laws, rules and
regulations.
Director
Independence
We do
not have any independent directors. Because our common stock is not
currently listed on a national securities exchange, we have used
the definition of “independence” of The NASDAQ Stock Market to make
this determination. NASDAQ Listing Rule 5605(a)(2) provides that an
“independent director” is a person other than an officer or
employee of the company or any other individual having a
relationship which, in the opinion of the company’s board of
directors, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. The
NASDAQ listing rules provide that a director cannot be considered
independent if:
|
● |
the
director is, or at any time during the past three years was, an
employee of the company; |
|
● |
the
director or a family member of the director accepted any
compensation from the company in excess of $120,000 during any
period of 12 consecutive months within the three years preceding
the independence determination (subject to certain exclusions,
including, among other things, compensation for board or board
committee service); |
|
● |
a
family member of the director is, or at any time during the past
three years was, an executive officer of the company; |
|
● |
the
director or a family member of the director is a partner in,
controlling stockholder of, or an executive officer of an entity to
which the company made, or from which the company received,
payments in the current or any of the past three fiscal years that
exceed 5% of the recipient’s consolidated gross revenue for that
year or $200,000, whichever is greater (subject to certain
exclusions); |
|
● |
the
director or a family member of the director is employed as an
executive officer of an entity where, at any time during the past
three years, any of the executive officers of the company served on
the compensation committee of such other entity; or |
|
● |
the
director or a family member of the director is a current partner of
the Company’s outside auditor, or at any time during the past three
years was a partner or employee of the Company’s outside auditor,
and who worked on the company’s audit. |
Board
Composition
Our
business and affairs are managed under the direction of our board
of directors, which upon the consummation of this offering will
consist of two members. Directors serve for a term of one year and
until their successors have been duly elected and
qualified.
Director
Independence
We
are not required to have independent members of our board of
directors, and do not anticipate having independent directors until
such time as we are required to do so.
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 directors can adequately
perform the functions of such committees.
In
lieu of an audit committee, the Company’s board of directors is
responsible for reviewing and making recommendations concerning the
selection of outside auditors, reviewing the scope, results and
effectiveness of the annual audit of the Company’s consolidated
financial statements and other services provided by the Company’s
independent public accountants. The board of directors, the Chief
Executive Officer and the Chief Financial Officer of the Company
review the Company’s internal accounting controls, practices and
policies.
The
Company maintains a Scientific Advisory Board (“SAB”) to assist the
Board of Directors by reviewing and evaluating our research and
development programs. Members of the SAB receive per meeting fees
and may also be eligible to receive stock options upon approval of
the Company’s board of directors.
Audit
Committee Financial Expert
Our
board of directors has determined that we do not have a board
member that qualifies as an “audit committee financial expert” as
defined in Item 407(D)(5) of Regulation S-K, nor do we have a board
member that qualifies as “independent” as the term is used in Item
7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of
1934, as amended, and as defined by Rule 4200(a)(14) of the FINRA
Rules.
We
believe that our directors are capable of analyzing and evaluating
our consolidated financial statements and understanding internal
controls and procedures for financial reporting. The directors of
our Company do not believe that it is necessary to have an audit
committee because management believes that the board of directors
can adequately perform the functions of an audit committee. In
addition, we believe that retaining an independent director who
would qualify as an “audit committee financial expert” would be
overly costly and burdensome and is not warranted in our
circumstances given the stage of our development and the fact that
we have not generated any positive cash flows from operations to
date.
Involvement
in Certain Legal Proceedings
Our
directors and our executive officers have not been involved in or a
party in any of the following events or actions during the past ten
years:
|
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 involvement in any type of
business, securities or banking activities; or |
|
4. |
being
found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated. |
|
5. |
Such
person was found by a court of competent jurisdiction in a civil
action or by the Commission to have violated any Federal or State
securities law, and the judgment in such civil action or finding by
the Commission has not been subsequently reversed, suspended, or
vacated; |
|
6. |
Such
person was found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission to have
violated any Federal commodities law, and the judgment in such
civil action or finding by the Commodity Futures Trading Commission
has not been subsequently reversed, suspended or
vacated; |
|
7. |
Such
person was the subject of, or a party to, any Federal or State
judicial or administrative order, judgment, decree, or finding, not
subsequently reversed, suspended or vacated, relating to an alleged
violation of: (i) Any Federal or State securities or commodities
law or regulation; or (ii) Any law or regulation respecting
financial institutions or insurance companies including, but not
limited to, a temporary or permanent injunction, order of
disgorgement or restitution, civil money penalty or temporary or
permanent cease-and-desist order, or removal or prohibition order;
or (iii) Any law or regulation prohibiting mail or wire fraud or
fraud in connection with any business entity; or |
|
8. |
Such
person was the subject of, or a party to, any sanction or order,
not subsequently reversed, suspended or vacated, of any
self-regulatory organization (as defined in Section 3(a)(26) of the
Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as
defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.
1(a)(29))), or any equivalent exchange, association, entity or
organization that has disciplinary authority over its members or
persons associated with a member. |
Code
of Ethics
The
Company has not formally adopted a written Code of Ethics that
governs the Company’s employees, officers and directors as the
Company is not required to do so. The board of directors evaluated
the business of the Company and the number of employees and
determined that since the business is operated by a small number of
persons, general rules of fiduciary duty and federal and state
criminal, business conduct and securities laws are adequate ethical
guidelines. In the event our operations, employees and/or directors
expand in the future, we may take actions to adopt a formal Code of
Ethics.
Compensation
Committee Interlocks and Insider Participation
As a
smaller reporting company, the Company is not required to provide
this disclosure.
Role
of Board of Directors in Risk Oversight
Our
board of directors oversees an enterprise-wide approach to risk
management, designed to support the achievement of business
objectives, including organizational and strategic objectives, to
improve long-term organizational performance and enhance
stockholder value. The involvement of our board of directors in
setting our business strategy is a key part of its assessment of
management’s plans for risk management and its determination of
what constitutes an appropriate level of risk for our company. The
participation of our board of directors in our risk oversight
process includes receiving regular reports from members of senior
management on areas of material risk to our company, including
operational, financial, legal and regulatory, and strategic and
reputational risks.
While
our board of directors has the ultimate responsibility for the risk
management process, senior management and various committees of our
board of directors, when formed, will also have responsibility for
certain areas of risk management. Our senior management team is
responsible for day-to-day risk management and regularly reports on
risks to our full board of directors or a relevant committee. Our
finance and regulatory personnel serve as the primary monitoring
and evaluation function for company-wide policies and procedures,
and manage the day-to-day oversight of the risk management strategy
for our ongoing business. This oversight includes identifying,
evaluating, and addressing potential risks that may exist at the
enterprise, strategic, financial, operational, compliance and
reporting levels.
Director
Compensation
All
of the Company’s directors are employees of the Company and such
persons have not been separately compensated for their services to
the Company as a director.
Limitation
on Liability and Indemnification Matters
Our
Certificate of Incorporation and bylaws provide that we will
indemnify our directors and officers, and may indemnify our
employees and other agents, to the fullest extent permitted by the
Delaware General Corporation Law, which prohibits our Certificate
of Incorporation from limiting the liability of our directors for
the following:
|
● |
any
breach of the director’s duty of loyalty to the corporation or its
shareholders; |
|
● |
any
act or omission not in good faith or that involves intentional
misconduct or a knowing violation of law; |
|
● |
unlawful
payments of dividends or unlawful stock repurchases or redemptions;
or |
|
● |
any
transaction from which the director derived an improper personal
benefit. |
If
Delaware law is amended to authorize corporate action further
eliminating or limiting the personal liability of a director, then
the liability of our directors will be eliminated or limited to the
fullest extent permitted by Delaware law, as so amended. Our
Articles of Incorporation does not eliminate a director’s duty of
care and in appropriate circumstances, equitable remedies, such as
injunctive or other forms of non-monetary relief, remain available
under Delaware law. This provision also does not affect a
director’s responsibilities under any other laws, such as the
federal securities laws or other state or federal laws. Under our
bylaws, we will also be empowered to purchase insurance on behalf
of any person whom we are required or permitted to
indemnify.
In
addition to the indemnification required in our Certificate of
Incorporation and bylaws, we have entered or will enter into
indemnification agreements with each of our directors and officers.
These agreements provide indemnification for certain expenses and
liabilities incurred in connection with any action, suit,
proceeding, or alternative dispute resolution mechanism, or
hearing, inquiry, or investigation that may lead to the foregoing,
to which they are a party, or are threatened to be made a party, by
reason of the fact that they are or were a director, officer,
employee, agent, or fiduciary of our company, or any of our
subsidiaries, by reason of any action or inaction by them while
serving as an officer, director, agent, or fiduciary, or by reason
of the fact that they were serving at our request as a director,
officer, employee, agent, or fiduciary of another entity. In the
case of an action or proceeding by, or in the right of, our company
or any of our subsidiaries, no indemnification will be provided for
any claim where a court determines that the indemnified party is
prohibited from receiving indemnification. We believe that these
bylaw provisions and indemnification agreements are necessary to
attract and retain qualified persons as directors and officers. We
also maintain directors’ and officers’ liability
insurance.
The
limitation of liability and indemnification provisions in our
Certificate of Incorporation and bylaws may discourage shareholders
from bringing a lawsuit against directors for breach of their
fiduciary duties. They may also reduce the likelihood of derivative
litigation against directors and officers, even though an action,
if successful, might benefit us and our shareholders. A
shareholder’s investment may be harmed to the extent we pay the
costs of settlement and damage awards against directors and
officers pursuant to these indemnification provisions. Insofar as
we may provide indemnification for liabilities arising under the
Securities Act to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been
advised that, in the opinion of the SEC, such indemnification is
against public policy as expressed in the Securities Act, and is,
therefore, unenforceable. There is no pending litigation or
proceeding naming any of our directors or officers as to which
indemnification is being sought, nor are we aware of any pending or
threatened litigation that may result in claims for indemnification
by any director or officer.
Item
11. Executive Compensation
The
following is a discussion and analysis of compensation arrangements
of our named executive officers, or NEOs. This discussion contains
forward looking statements that are based on our current plans,
considerations, expectations and determinations regarding future
compensation programs. Actual compensation programs that we adopt
may differ materially from currently planned programs as summarized
in this discussion. As an “emerging growth company” as defined in
the JOBS Act, we are not required to include a Compensation
Discussion and Analysis section and have elected to comply with the
scaled disclosure requirements applicable to emerging growth
companies.
Summary Compensation Table
The
particulars of the compensation paid to the following persons: (1)
our principal executive officer; and (2) each of our two most
highly compensated executive officers who were serving as executive
officers at the end of the fiscal year ended December 31, 2021, who
we will collectively refer to as the “named executive officers” of
the Company, are set out in the following summary compensation
table:
SUMMARY COMPENSATION TABLE |
Name and Principal Position |
|
|
Year |
|
|
|
Salary
($) |
|
|
|
Bonus
($) |
|
|
|
Stock
Awards
($) |
|
|
|
Option
Awards
($) |
|
|
|
Non-Equity
Incentive Plan
Compensation
($) |
|
|
|
Change
in
Pension
Value and
Nonqualified
Deferred
Compensation Earnings ($) |
|
|
|
All
Other
Compensation
($) (1) |
|
|
|
Total
($) |
|
Jim Joyce |
|
|
2021 |
|
|
|
496,125 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
31,126 |
|
|
$ |
527,251 |
|
CEO |
|
|
2020 |
|
|
|
418,842 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
22,516 |
|
|
$ |
440,866 |
|
|
|
|
2019 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig Roberts |
|
|
2021 |
|
|
|
259,000 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
|
0 |
|
|
$ |
21,704 |
|
|
$ |
280,704 |
|
Chief Technology Officer |
|
|
2020 |
|
|
|
233,981 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
$ |
22,024 |
|
|
$ |
256,497 |
|
|
|
|
2019 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
(1) |
amounts
include health insurance and employer matched 401(k)
costs. |
Other
than as disclosed below, there are no compensatory plans or
arrangements with respect to our executive officers resulting from
their resignation, retirement or other termination of employment or
from a change of control.
Grants of Plan-Based Awards Table
None
of our named executive officers received any grants of stock,
option awards or other plan-based awards during the years ended
December 31, 2021 and 2020, except as described below in “Equity
Compensation Plans and Other Benefit Plans” below.
Options Exercised and Stock Vested Table
None
of our named executive officers exercised any stock options or
restricted stock units during the years ended December 31, 2021 and
2020.
Outstanding Equity Awards at 2021 Year End
Except
as described below in “Equity Compensation Plans and Other Benefit
Plans”, the Company has not issued any awards to its named
executive officers. The Company and its board of directors may
grant awards as it sees fit to its employees as well as key
consultants. See the discussion of “Equity Compensation Plans and
Other Benefit Plans” below.
Agreements with Executive Officers
Jim
Joyce
Mr.
Joyce receives an annual base salary of $455,000, plus bonus
compensation not to exceed 50% of salary. Mr. Joyce’s employment
also provides for medical insurance, disability benefits and one
year of severance pay if his employment is terminated without cause
or due to a change in control. Additionally, the Company has agreed
to maintain a beneficial ownership target of 9% for Mr. Joyce. Mr.
Joyce’s compensation was approved by the Reign Resources
Corporation Board of Directors on October 6, 2020 and was among
conditions of the Share Exchange Agreement that was completed with
Sigyn Therapeutics on October 19, 2020.
Jeremy
Ferrell
Mr.
Ferrell was hired March 9, 2022 as the Company’s Chief Financial
Officer. Mr. Ferrell receives an annual base salary of $250,000,
plus discretionary bonus compensation not to exceed 40% of salary.
Mr. Ferrell’s employment also provides for medical insurance,
disability benefits and three months of severance pay if his
employment is terminated without cause or due to a change in
control. Additionally, Mr. Ferrell will be granted up to 600,000
options to purchase 600,000 of the Company’s common shares upon the
implementation of a Company employee option plan.
Equity
Compensation Plans and Other Benefit Plans
The
Company does not currently have any equity compensation plans and
there are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers.
We have no material bonus or profit-sharing plans.
Indebtedness
of Directors, Senior Officers, Executive Officers and Other
Management
None
of our directors or executive officers or any associate or
affiliate of the Company during the last two fiscal years, is or
has been indebted to the Company by way of guarantee, support
agreement, letter of credit or other similar agreement or
understanding currently outstanding.
Outstanding
Equity Awards at Fiscal Year-End Table
The
following table sets forth certain information concerning
outstanding stock awards held by the Named Executive Officers for
our year ended December 31, 2021:
|
|
Option Awards |
|
|
Stock Awards |
|
Name |
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
|
|
Number
of Securities Underlying Unexercised Options
(#)
Unexercisable
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
(#)
|
|
|
Option
Exercise Price
($)
|
|
|
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
($)
|
|
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other
Rights That Have Not Vested
(#)
|
|
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares,
Units or Other Rights That Have Not Vested
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None. |
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
|
|
-0- |
|
Item
12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
The
following table sets forth information relating to the beneficial
ownership our common stock as of February 28, 2022 by (i) each
person known to be the beneficial owner of more than 5% of the
outstanding shares of common stock and (ii) each of our directors
and executive officers. Unless otherwise noted below, we believe
that all persons named in the table have sole voting and investment
power with respect to all shares of common stock beneficially owned
by them. For purposes hereof, a person is deemed to be the
beneficial owner of securities that can be acquired by such person
within 60 days from the date hereof upon the exercise of warrants
or options or the conversion of convertible securities. Each
beneficial owner’s percentage ownership is determined by assuming
that any warrants, options or convertible securities that are held
by such person (but not those held by any other person) and which
are exercisable within 60 days from the date hereof, have been
exercised.
Name
and Address (2) |
|
Amount of Beneficial Ownership |
|
|
Percent
of
Class
(1)
|
|
|
|
|
|
|
|
|
Jim
Joyce (3) |
|
|
12,820,000 |
|
|
|
34.4 |
% |
Craig
Roberts (4) |
|
|
12,820,000 |
|
|
|
34.4 |
% |
|
|
|
|
|
|
|
|
|
All Officers and Directors as a
Group (2 Persons) |
|
|
25,640,000 |
) |
|
|
68.8 |
% |
|
|
|
|
|
|
|
|
|
Osher
Capital Partners LLC (5) |
|
|
3,050,658 |
|
|
|
8.2 |
% |
(1) |
Based
on 37,295,803 shares of common stock issued and
outstanding. |
|
|
(2) |
Unless
otherwise noted, the address of each beneficial owner is c/o Sigyn
Therapeutics, Inc., 2468 Historic Decatur Road, Suite 140, San
Diego, CA 92106. |
|
|
(3) |
Mr.
Joyce is the Company’s CEO. |
|
|
(4) |
Mr.
Roberts is the Company’s CTO. |
|
|
(5) |
Consists
of 3,050,658 common shares as of the date of this filing. Osher
Capital Partners LLC (“Osher”) is contractually limited to
beneficial ownership of our common shares not to exceed
9.99%. |
We
are not aware of any person who owns of record, or is known to own
beneficially, five percent or more of our outstanding securities of
any class, other than as set forth above. We do not have an
investment advisor. There are no current arrangements which will
result in a change in control.
Equity
Compensation Plans
The
following represents a summary of the Equity Compensation grants
and options awards outstanding at December 31, 2021 and 2020 and
changes during the years then ended:
2021 and 2020 |
Plan category |
|
Number of securities to be issued upon exercise of outstanding
options, warrants and rights |
|
|
Weighted-average exercise price of outstanding options, warrants
and rights |
|
|
Number of securities remaining available for future issuance under
equity compensation plan (excluding securities reflected in column
(a)) |
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation
plans approved by security holders |
|
|
-0- |
|
|
$ |
-0- |
|
|
|
-0- |
|
Equity compensation plans not
approved by security holders |
|
|
0 |
|
|
$ |
- |
|
|
|
- |
|
Total |
|
|
-0- |
|
|
$ |
-0- |
|
|
|
-0- |
|
Item
13. Certain Relationships and Related Transactions, and Director
Independence
Other
than compensation arrangements, we describe below transactions and
series of similar transactions, since January 1, 2019 (i.e., the
last two completed fiscal years), to which we were a party or will
be a party, in which the amounts involved exceeded or will exceed
the lesser of $120,000 or 1% of the average of our total assets at
year-end for the last two completed fiscal years; and any of our directors,
executive officers, or holders of more than 5% of our capital
stock, or any member of the immediate family of the foregoing
persons, had or will have a direct or indirect material interest.
Compensation arrangements, including employment agreements, for our
directors and named executive officers are described elsewhere in
“Executive Compensation - Agreements with Executive Officers.”
Neither of our directors is independent.
Employment
Agreement
Mr.
Joyce receives an annual base salary of $455,000, plus bonus
compensation not to exceed 50% of salary. Mr. Joyce’s employment
also provides for medical insurance, disability benefits and one
year of severance pay if his employment is terminated without cause
or due to a change in control. Additionally, the Company has agreed
to maintain a beneficial ownership target of 9% for Mr. Joyce. Mr.
Joyce’s compensation was approved by the Reign Resources
Corporation Board of Directors on October 6, 2020 and was among
conditions of the Share Exchange Agreement that was completed with
Sigyn Therapeutics on October 19, 2020. The Company incurred
compensation expense of $496,125 (including $18,542 of 2020 payroll
paid in 2021) and $418,842, and employee benefits of $31,126 and
$22,516, for the years ended December 31, 2021 and 2020,
respectively.
Sigyn
had no employment agreement with its CTO but Sigyn still incurred
compensation on behalf of the CTO. The Company incurred
compensation expense of $259,000 and $233,981, and employee
benefits of $21,704 and $22,024, for the years ended December 31,
2021 and 2020, respectively.
Mr.
Ferrell was hired March 9, 2022 as the Company’s Chief Financial
Officer. Mr. Ferrell receives an annual base salary of $250,000,
plus discretionary bonus compensation not to exceed 40% of salary.
Mr. Ferrell’s employment also provides for medical insurance,
disability benefits and three months of severance pay if his
employment is terminated without cause or due to a change in
control. Additionally, Mr. Ferrell will be granted up to 600,000
options to purchase 600,000 of the Company’s common shares upon the
implementation of a Company employee option plan.
Indemnification
Agreements
We
have entered or intend to enter into indemnification agreements
with each of our directors and executive officers. These
agreements, among other things, will require us to indemnify each
individual to the fullest extent permitted by Delaware law,
including indemnification of expenses such as attorneys’ fees,
judgments, fines and settlement amounts incurred by the individual
in any action or proceeding, including any action or proceeding by
or in right of us, arising out of the person’s services as a
director, officer or other employee.
Policies
and Procedures for Related Party Transactions
Given
our small size and limited financial resources, we have not adopted
formal policies and procedures for the review, approval or
ratification of transactions with our executive officer(s),
director(s) and significant shareholders. We rely on our board to
review related party transactions on an ongoing basis to prevent
conflicts of interest. Our board reviews a transaction in light of
the affiliations of the director, officer or employee and the
affiliations of such person’s immediate family. Transactions are
presented to our board for approval before they are entered into
or, if this is not possible, for ratification after the transaction
has occurred. If our board finds that a conflict of interest
exists, then it will determine the appropriate remedial action, if
any. Our board approves or ratifies a transaction if it determines
that the transaction is consistent with the best interests of the
Company. We intend to establish formal policies and procedures in
the future, once we have sufficient resources and have appointed
additional directors, so that such transactions will be subject to
the review, approval or ratification of our board of directors, or
an appropriate committee thereof.
Item
14. Principal Accounting Fees and Services
The
aggregate fees billed for the most recently completed fiscal period
for the audit of our annual financial statements and services
normally provided by the independent registered public accounting
firm for this fiscal period were as follows:
|
|
FY 2021 |
|
|
FY 2020 |
|
Audit Fees |
|
$ |
35,000 |
|
|
$ |
10,000 |
|
Total
Fees |
|
$ |
35,000 |
|
|
$ |
10,000 |
|
In
the above table, “audit fees” are fees billed by our external
auditor for services provided in auditing our annual financial
statements for the subject year. The fees set forth on the
foregoing table relate to the audit as of and for the years ended
December 31, 2021 and 2020 which were performed by Paris, Kreit
& Chiu CPA LLP (formerly Benjamin & Ko). All of the
services described above were approved in advance by the Board of
Directors or the Company’s Audit Committee.
PART
IV
Item
15. Exhibits, Financial Statement Schedules.
(a) |
The
following documents are filed as a part of this Annual
Report: |
1. |
Financial
Statements. The following consolidated financial statements of the
Company are included below: |
Report
of Independent Registered Public Accounting Firm.
Consolidated
Balance Sheets as of December 31, 2021 and 2020.
Consolidated
Statement of Operations for the Years ended December 31, 2021 and
2020.
Consolidated
Statements of Shareholders’ Deficit for the Years ended December
31, 2021 and 2020.
Consolidated
Statements of Cash Flows for the Years ended December 31, 2021
and.
Notes
to Consolidated Financial Statements.
2. |
Financial
Statement Schedule(s): |
All
schedules are omitted for the reason that the information is
included in the consolidated financial statements or the notes
thereto or that they are not required or are not
applicable.
Exhibit
No. |
|
Description |
Exhibit
Number |
|
Description |
3.1* |
|
Amended
and Restated Certificate of Incorporation, as filed with the
Secretary of State of the State of Delaware on December 22, 2015
and as currently in effect. (Filed as Exhibit 3.1 to the Current
Report on Form 8-K filed by the Registrant on December 24, 2015 and
incorporated herein by reference) |
|
|
|
3.2* |
|
Bylaws
of the Registrant, as currently in effect (Filed as Exhibit 3.2 to
the Registration Statement on Form S-1 filed by the Registrant on
May 27, 2015, and incorporated herein by
reference). |
|
|
|
10.1*+ |
|
Form
of Indemnification Agreement between the Registrant and each of its
directors and executive officers (Filed as Exhibit 10.1 to the
Registration Statement on Form S-1 filed by the Registrant on May
27, 2015, and incorporated herein by reference). |
|
|
|
10.2*+ |
|
Employment
Agreement, dated April 1, 2015, between the Registrant and Joseph
Segelman (Filed as Exhibit 10.2 to the Registration Statement on
Form S-1 filed by the Registrant on May 27, 2015, and incorporated
herein by reference). |
|
|
|
10.3*+ |
|
Employment
Agreement, dated April 1, 2015, between the Registrant and Chaya
Segelman (Filed as Exhibit 10.3 to the Registration Statement on
Form S-1 filed by the Registrant on May 27, 2015, and incorporated
herein by reference). |
|
|
|
10.4*+ |
|
2015
Equity Incentive Plan, as amended and currently in effect (Filed as
Exhibit 10.8 to the Current Report on Form 8-K filed by the
Registrant on December 24, 2015 and incorporated herein by
reference) |
|
|
|
10.5*+ |
|
Share
Option Agreement, dated May 1, 2015, between the Registrant and
Joseph Segelman (Filed as Exhibit 10.5 to the Registration
Statement on Form S-1 filed by the Registrant on May 27, 2015, and
incorporated herein by reference). |
|
|
|
10.6* |
|
Securities
Purchase Agreement dated as of December 23, 2015 by and among the
Registrant and the Purchasers defined and identified therein (Filed
as Exhibit 10.1 to the Current Report on Form 8-K filed by the
Registrant on December 24, 2015 and incorporated herein by
reference) |
|
|
|
10.7* |
|
Form
of Secured Convertible Note issued under the Securities Purchase
Agreement included as Exhibit 10.6 (Filed as Exhibit 10.2 to the
Current Report on Form 8-K filed by the Registrant on December 24,
2015 and incorporated herein by reference) |
|
|
|
10.8* |
|
Security
Agreement dated as December 23, 2015 by and among the Company and
the Collateral Agent and Secured Parties defined and identified
therein. (Filed as Exhibit 10.3 to the Current Report on Form 8-K
filed by the Registrant on December 24, 2015 and incorporated
herein by reference) |
|
|
|
10.9* |
|
Corporate
Guaranty dated as December 23, 2015 entered into by Australian
Sapphire Corporation as guarantor for the benefit of the Collateral
Agent and the Lenders defined and identified therein. (Filed as
Exhibit 10.4 to the Current Report on Form 8-K filed by the
Registrant on December 24, 2015 and incorporated herein by
reference) |
10.10* |
|
Guarantor
Security Agreement dated as December 23, 2015 by and among
Australian Sapphire Corporation as guarantor and the Collateral
Agent and Secured Parties defined and identified therein delivered
in connection with the Corporate Guaranty included as Exhibit 10.9.
(Filed as Exhibit 10.5 to the Current Report on Form 8-K filed by
the Registrant on December 24, 2015 and incorporated herein by
reference) |
|
|
|
10.11* |
|
Personal
Guaranty dated as December 23, 2015 entered into by Joseph Segelman
as guarantor for the benefit of the Collateral Agent and the
Lenders defined and identified therein. (Filed as Exhibit 10.6 to
the Current Report on Form 8-K filed by the Registrant on December
24, 2015 and incorporated herein by reference) |
|
|
|
10.12* |
|
Form
of Common Stock Purchase Warrant issued under the Securities
Purchase Agreement included as Exhibit 10.6 (Filed as Exhibit 10.7
to the Current Report on Form 8-K filed by the Registrant on
December 24, 2015 and incorporated herein by
reference) |
|
|
|
10.13* |
|
Asset
Purchase Agreement dated December 1, 2016 (Filed as Exhibit 10.1 to
the Current Report on Form 8-K filed by the Registrant on December
1, 2016 and incorporated herein by reference) |
|
|
|
10.14* |
|
Assignment
and Assumption Agreement under the Asset Purchase Agreement dated
December 1, 2016 (Filed as Exhibit 10.2 to the Current Report on
Form 8-K filed by the Registrant on December 1, 2016 and
incorporated herein by reference) |
|
|
|
10.15* |
|
Bill
of Sale under the Asset Purchase Agreement dated December 1, 2016
(Filed as Exhibit 10.3 to the Current Report on Form 8-K filed by
the Registrant on December 1, 2016 and incorporated herein by
reference) |
|
|
|
10.16* |
|
Confidentiality
and Proprietary Rights Agreement under the Asset Purchase Agreement
dated December 1, 2016 (Filed as Exhibit 10.4 to the Current Report
on Form 8-K filed by the Registrant on December 1, 2016 and
incorporated herein by reference) |
|
|
|
10.17* |
|
Intellectual Property Assignment Agreement under
the Asset Purchase Agreement dated December 1, 2016 (Filed as
Exhibit 10.5 to the Current Report on Form 8-K filed by the
Registrant on December 1, 2016 and incorporated herein by
reference) |
|
|
|
10.18* |
|
Securities
Purchase Agreement dated as of November 10, 2016 by and among the
Registrant and the Purchasers defined and identified therein (Filed
as Exhibit 10.1 to the Current Report on Form 8-K filed by the
Registrant on November 10, 2016 and incorporated herein by
reference) |
|
|
|
10.19* |
|
Form
of Secured Convertible Note issued under the Securities Purchase
Agreement included as Exhibit 10.1 (Filed as Exhibit 10.2 to the
Current Report on Form 8-K filed by the Registrant on November 10,
2016 and incorporated herein by reference) |
|
|
|
10.20* |
|
Form
of Common Stock Purchase Warrant issued under the Securities
Purchase Agreement included as Exhibit 10.1 (Filed as Exhibit 10.7
to the Current Report on Form 8-K filed by the Registrant on
November 10, 2016 and incorporated herein by
reference) |
|
|
|
31.1 |
|
Certification by Principal Executive Officer pursuant to Rule
13a-14(a). |
|
|
|
31.2 |
|
Certification by Principal Financial and
Accounting Officer pursuant to Rule 13a-14(a). |
|
|
|
32.1 |
|
Certification by Principal Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002. |
|
|
|
32.2 |
|
Certification by Principal Financial and
Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
101 |
|
The
following materials from Reign Resources’ Annual Report on Form
10-K for the year ended December 31, 2016 are formatted in XBRL
(Extensible Business Reporting Language): (i) the Balance Sheets,
(ii) the Statements of Operations, (iii) Statement of Shareholders’
Deficit, (iv) the Statements of Cash Flow, and (v) Notes to
Financial Statements. |
|
|
|
101.INS |
|
Inline
XBRL Instance Document |
|
|
|
101.SCH |
|
Inline
XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
|
Inline
XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.DEF |
|
Inline
XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
101.LAB |
|
Inline
XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
|
Inline
XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
104 |
|
Cover
Page Interactive Data File (embedded within the Inline XBRL
document) |
* |
|
Previously
filed. |
|
|
|
+ |
|
Management
contract or compensatory plan |
All
references to Registrant’s Forms 8-K, 10-K and 10-Q include
reference to File No. 000-55575
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
|
Sigyn
Therapeutics, Inc.
|
|
a
Delaware corporation |
|
|
|
Dated:
March 21, 2022 |
By: |
/s/
James Joyce |
|
|
James
Joyce |
|
|
Chief
Executive Officer and Director
|
|
|
(Principal
Executive Officer) |
|
|
|
Dated: March 21, 2022 |
By: |
/s/ Jeremy Ferrell |
|
|
Jeremy Ferrell |
|
|
Chief Financial Officer |
|
|
(Principal Financial and Accounting Officer) |
|
|
|
Dated: March 21, 2022 |
By: |
/s/ Craig Roberts |
|
|
Craig Roberts |
|
|
Chief Technology Officer and Director |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates
indicated.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/ James Joyce |
|
Chief Executive Officer and
Chairman |
|
March 21, 2022 |
James Joyce |
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
/s/ Jeremy Ferrell |
|
Chief Financial Officer |
|
March 21, 2022 |
Jeremy Ferrell |
|
(Principal Financial and Accounting
Officer) |
|
|
|
|
|
|
|
/s/ Craig Roberts |
|
CTO and Director |
|
March 21, 2022 |
Craig Roberts |
|
|
|
|
SIGYN
THERAPEUTICS, INC.
Index
to Financial Statements
CONTENTS
Report
of Independent Registered Public Accounting Firm
To
the Board of Directors and
Stockholders
of Sigyn Therapeutics, Inc.
Opinion on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Sigyn
Therapeutics, Inc. (the Company) as of December 31, 2021 and 2020,
and the related consolidated statements of operations, changes in
shareholders’ equity, and cash flows for each of the two years
ended December 31, 2021, and the related notes (collectively
referred to as the financial statements) . In our opinion, the
financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2021 and 2020,
and the results of its operations and its cash flows for each of
the two years in the period ended December 31, 2021, in conformity
with accounting principles generally accepted in the United States
of America.
The Company’s Ability to Continue as a Going
Concern
The
accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 2 to the financial statements, the Company has
suffered recurring losses from operations, has a net capital
deficiency, and negative cash flows from operating activities,
therefore, the Company has stated that substantial doubt exists
about its ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Basis for Opinion
These
financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these
financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting.
As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose
of expressing an opinion on the effectiveness of the entity’s
internal control over financial reporting. Accordingly, we express
no such opinion.
Our
audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matters
The
critical audit matters communicated below are matters arising from
the current period audit of the financial statements that were
communicated or required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are material
to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of
critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or
disclosures to which they relate.
Going
Concern
As
described further in Note 2 to the consolidated financial
statements, the Company has incurred losses each year from
inception through December 31, 2021 and expects to incur additional
losses in the future.
We
determined the Company’s ability to continue as a going concern is
a critical audit matter due to the estimation and uncertainty
regarding the Company’s future cash flows and the risk of bias in
management’s judgments and assumptions in estimating these cash
flows.
Our
audit procedures related to the Company’s assertion on its ability
to continue as a going concern included the following, among
others:
We
reviewed the Company’s working capital and liquidity ratios and
forecasted revenue, operating expenses, and uses and sources of
cash used in management’s assessment of whether the Company has
sufficient liquidity to fund operations for at least one year from
the financial statement issuance date. This testing included
inquiries with management, comparison of prior period forecasts to
actual results, consideration of positive and negative evidence
impacting management’s forecasts, the Company’s financing
arrangements in place as of the report date, market and industry
factors and consideration of the Company’s relationships with its
financing partners.
Inventory
Valuation
As
described in Note 3 to the consolidated financial statements, based
on the significant advancement of Sigyn Therapy, the Company
decided in the 4th quarter of 2021 to assess the value of retail
business operations that were a focus of the Company prior to the
merger transaction consummated on October 19, 2020. Related to this
assessment, management determined the wholesale liquidation value
of its sapphire gem inventory to be 5-10% of the previously
reported retail value, based on communications with certified
gemologists, the variance between retail and wholesale valuations,
and current market conditions. As a result, the Company has valued
the inventory at $50,000 and recorded an impairment of assets of
$536,047 in the year ended December 31, 2021 and is classified in
other expenses in the Consolidated Statements of
Operations.
We
evaluated and tested the certified gemologists inventory valuation
report and subsequent company communications with this
expert.
Paris Kreit & Chiu CPA LLP
(formerly
known as Benjamin & Ko)
We
have served as the Company’s auditor since 2021.
New York, New York
March
21, 2022
SIGYN
THERAPEUTICS, INC.
CONSOLIDATED
BALANCE SHEETS
See
accompanying notes to consolidated financial statements
SIGYN
THERAPEUTICS, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
See
accompanying notes to consolidated financial statements
SIGYN
THERAPEUTICS, INC.
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
See
accompanying notes to consolidated financial statements
SIGYN
THERAPEUTICS, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
See
accompanying notes to consolidated financial statements
SIGYN
THERAPEUTICS, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2021 AND 2020
NOTE
1 – ORGANIZATION AND PRINCIPAL
ACTIVITIES
Corporate
History and Background
Sigyn
Therapeutics, Inc. (“Sigyn” or the “Company”) is a
development-stage therapeutic technology company headquartered in
San Diego, California USA. Our business focus is the clinical
advancement of Sigyn Therapy, a multi-function blood purification
technology designed to overcome the limitations of previous drugs
and devices to treat life-threatening inflammatory disorders,
including sepsis, the leading cause of hospital deaths
worldwide.
We
are advancing Sigyn Therapy to treat pathogen-associated conditions
that precipitate sepsis and other high-mortality disorders that are
not addressed with approved drug therapies. To address these unmet
therapeutic needs, we designed Sigyn Therapy to extract pathogen sources
of life-threating inflammation from the bloodstream in concert with
the depletion of pro-inflammatory cytokines, whose dysregulated
production (the cytokine storm) plays a prominent role in each of
our therapeutic indication opportunities.
In
addition to sepsis, our candidate treatment indications include,
but are not limited to; emerging pandemic threats, drug resistant
pathogens, hepatic encephalopathy, bridge to liver transplant, and
community-acquired pneumonia (“CAP”), which is a leading cause of
death among infectious diseases, the leading cause of death in
children under five years of age, and a catalyst for approximately
50% of sepsis and septic shock
cases.
Public Merger Agreement
On
October 19, 2020, Sigyn Therapeutics, Inc, a Delaware corporation
(the “Registrant”) formerly known as Reign Resources Corporation,
completed a Share Exchange Agreement (the “Agreement”) with Sigyn
Therapeutics, Inc., a private entity incorporated in the State of
Delaware on October 19, 2019.
In
the Share Exchange Agreement, we acquired 100% of
the issued and outstanding shares of privately held Sigyn
Therapeutics common stock in exchange for 75% of the
fully paid and nonassessable shares of our common stock outstanding
(the “Acquisition”). In conjunction with the transaction, we
changed our name from Reign Resources Corporation to Sigyn
Therapeutics, Inc. pursuant to an amendment to our articles of
incorporation that was filed with the State of Delaware.
Subsequently, our trading symbol was changed to SIGY. The Acquisition was treated as a
“tax-free exchange” under Section 368 of the Internal Revenue Code
of 1986 and resulted in the private Sigyn Therapeutics
corporate entity becoming a wholly owned subsidiary known as Sigyn
Medical Corporation. Upon the closing of the Acquisition, we
appointed James A. Joyce and Craig P. Roberts to serve as members
of our Board of Directors.
As of
March 14, 2022, we have a total 37,295,803
shares issued and outstanding, of which 11,655,803 shares are held
by non-affiliate shareholders.
About
Sigyn Therapy
Our
business focus is the clinical advancement of Sigyn Therapy, a
multi-function blood purification technology designed to overcome
the limitations of previous drugs and devices to treat
life-threatening inflammatory disorders, including sepsis, the
leading cause of hospital deaths worldwide.
We
are advancing Sigyn Therapy to treat pathogen-associated conditions
that precipitate sepsis and other high-mortality disorders that are
not addressed with approved drug therapies. To address these unmet
therapeutic needs, we designed Sigyn Therapy to extract pathogen sources
of life-threating inflammation from the bloodstream in concert with
the depletion of pro-inflammatory cytokines, whose dysregulated
production (the cytokine storm) plays a prominent role in each of
our therapeutic indication opportunities.
In
addition to sepsis, our candidate treatment indications include,
but are not limited to; emerging pandemic threats, drug resistant
pathogens, hepatic encephalopathy, bridge to liver transplant, and
CAP, which is a leading cause of death among infectious diseases,
the leading cause of death in children under five years of age, and
a catalyst for approximately 50% of sepsis and septic shock
cases.
Post Public Merger Developments
Since
the consummation of our public merger on October 19, 2020, we have
advanced Sigyn Therapy from conceptual design to clinical
application. We initiated and completed six (6) in vitro
blood plasma studies that have validated the ability of Sigyn
Therapy to address a broad-spectrum of relevant therapeutic
targets, including endotoxin
(gram-negative bacterial toxin); peptidoglycan and lipoteichoic
acid (gram-positive bacterial toxins); viral pathogens (including
SARS-CoV-2); hepatic toxins (ammonia, bile acid, and bilirubin);
CytoVesicles (extracellular vesicles that transport inflammatory
cytokine cargos); and tumor necrosis factor alpha (TNF alpha),
interleukin-1 beta (IL-1b), and interleukin 6 (IL-6), which are
pro-inflammatory cytokines whose dysregulated production (the
cytokine storm) precipitate sepsis and play a prominent role in
each of our therapeutic opportunities.
Subsequent to these milestone achievements, we announced the
completion of in vivo animal studies on February 23, 2022,
that demonstrated
Sigyn Therapy to be safe and well tolerated.
In
the studies, Sigyn Therapy was administered via standard dialysis
machines utilizing conventional blood-tubing sets, for periods of
up to six hours in eight (8) porcine (pig) subjects, each weighing
approximately 40-45 kilograms. The studies were comprised of a
pilot phase (two subjects), which evaluated the feasibility of the
study protocol in the first-in-mammal use of Sigyn Therapy; and an
expansion phase (six subjects) to further assess treatment safety
and refine pre-treatment set-up and operating procedures. Sigyn
Therapy was well tolerated by all eight animal subjects and no
serious adverse events were reported in any treated animal subject.
Important criteria for treatment safety – including hemodynamic
parameters, serum chemistries and hematologic measurements – were
stable across all subjects.
The
studies were conducted by a clinical team at Innovative
BioTherapies, Inc. (“IBT”), under a contract with the University of
Michigan to utilize animal care, associated institutional review
oversight, as well as surgical suite facilities located within the
North Campus Research Complex. IBT is uniquely experienced in
providing development services that support the clinical
advancement of extracorporeal devices. The treatment protocol of
the study was reviewed and approved by the University of Michigan
Institutional Animal Care and Use Committee (IACUC).
We
plan to incorporate the data resulting from our in vivo and
invitro studies into an Investigational Device Exemption (IDE)
that we are drafting for submission to the FDA to support the
potential initiation of human clinical studies.
NOTE
2 – BASIS OF
PRESENTATION
The
accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United States
of America and include all adjustments necessary for the fair
presentation of the Company’s financial position and results of
operations for the periods presented.
The
Company currently operates in one business segment. The Company is
not organized by market and is managed and operated as one
business. A single management team reports to the chief operating
decision maker, the Chief Executive Officer, who comprehensively
manages the entire business. The Company does not currently operate
any separate lines of businesses or separate business
entities.
Going Concern
The
accompanying financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates, among
other things, the realization of assets and satisfaction of
liabilities in the normal course of business. The Company had an
accumulated deficit of $4,265,759 at
December 31, 2021, had a working capital deficit of approximately
$341,000 at
December 31, 2021, had net losses of $3,004,619 and
$1,259,590 for
the years ended December 31, 2021 and 2020, respectively, and net
cash used in operating activities of $1,774,182
and
$829,809
for
the years ended December 31, 2021 and 2020, respectively, with no
revenue earned since inception, and a lack of operational history.
These matters raise substantial doubt about the Company’s ability
to continue as a going concern.
While
the Company is attempting to expand its research and development
activities, the Company’s cash position may not be significant
enough to support the Company’s daily operations. Management
intends to raise additional funds by way of a private offering or
an asset sale transaction. Management believes that the actions
presently being taken to further implement its business plan and
generate revenues provide the opportunity for the Company to
continue as a going concern. While management believes in the
viability of its strategy to generate revenues and in its ability
to raise additional funds or transact an asset sale, there can be
no assurances to that effect or on terms acceptable to the Company.
The ability of the Company to continue as a going concern is
dependent upon the Company’s ability to further implement its
business plan and generate revenues.
The
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going
concern.
NOTE
3 – SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies of the Company is
presented to assist in understanding the Company’s financial
statements. The financial statements and notes are representations
of the Company’s management, which is responsible for their
integrity and objectivity. These accounting policies conform to
GAAP and have been consistently applied in the preparation of the
financial statements.
Use of Estimates
The
preparation of these consolidated financial statements in
accordance 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 disclosures of contingent assets and liabilities at
the dates of the consolidated financial statements and the reported
amounts of net sales and expenses during the reported periods.
Actual results may differ from those estimates and such differences
may be material to the consolidated financial statements. The more
significant estimates and assumptions by management include among
others: realizability of inventory, common stock valuation, and the
recoverability of intangibles. The current economic environment has
increased the degree of uncertainty inherent in these estimates and
assumptions.
Cash
The
Company’s cash is held in bank accounts in the United States and is
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to
$250,000. The Company has
not experienced any cash losses.
Income Taxes
Income
taxes are accounted for under an asset and liability approach. This
process involves calculating the temporary and permanent
differences between the carrying amounts of the assets and
liabilities for financial reporting purposes and the amounts used
for income tax purposes. The temporary differences result in
deferred tax assets and liabilities, which would be recorded on the
Balance Sheets in accordance with Accounting Standards Codification
(“ASC”) ASC 740, Income Taxes, which established financial
accounting and reporting standards for the effect of income taxes.
The likelihood that its deferred tax assets will be recovered from
future taxable income must be assessed and, to the extent that
recovery is not likely, a valuation allowance is established.
Changes in the valuation allowance in a period are recorded through
the income tax provision in the consolidated Statements of
Operations.
ASC
740-10 clarifies the accounting for uncertainty in income taxes
recognized in an entity’s consolidated financial statements and
prescribes a recognition threshold and measurement attributes for
financial statement disclosure of tax positions taken or expected
to be taken on a tax return. Under ASC 740-10, the impact of an
uncertain income tax position on the income tax return must be
recognized at the largest amount that is more-likely-than-not to be
sustained upon audit by the relevant taxing authority. An uncertain
income tax position will not be recognized if it has less than a 50% likelihood of
being sustained. Additionally, ASC 740-10 provides guidance on
derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. The Company does not
have a liability for unrecognized income tax benefits.
Advertising and Marketing Costs
Advertising
expenses are recorded as general and administrative expenses when
they are incurred. The Company had no advertising expenses for
year ended December 31, 2021 and had $705 for the year ended December
31, 2020.
Research and Development
All
research and development costs are expensed as incurred. The
Company incurred research and development expense of $734,014 and
$419,362 for the
years ended December 31, 2021 and 2020, respectively.
Inventories
In
conjunction with the October 19, 2020 Share Exchange Agreement, the
Company kept the gem inventory of Reign Resources Corporation.
Inventories are stated at the lower of cost or market (net
realizable value) on a lot basis each quarter. A lot is determined
by the cut, clarity, size, and weight of the sapphires. Inventory
consists of sapphire jewels that meet rigorous grading criteria and
are of cuts and sizes most commonly used in the jewelry industry.
As of December 31, 2021 and 2020, the Company carried primarily
loose sapphire jewels, jewelry for sale on our website, and jewelry
held as samples. Samples are used to show potential customers what
the jewelry would look like. Promotional items given to customers
that are not expected to be returned will be removed from inventory
and expensed. There have been no promotional items given to
customers as of December 31, 2021. The Company performs its own
in-house assessment based on gem guide and the current market price
for metals to value its inventory on an annual basis or if
circumstances dictate sooner to determine if the estimated fair
value is greater or less than cost. In addition, the inventory is
reviewed each quarter by the Company against industry prices from
gem-guide and if there is a potential impairment, the Company would
appraise the inventory. The estimated fair value is subject to
significant change due to changes in popularity of cut, perceived
grade of the clarity of the sapphires, the number, type and size of
inclusions, the availability of other similar quality and size
sapphires, and other factors. As a result, the internal assessed
value of the sapphires could be significantly lower from the
current estimated fair value. Loose sapphire jewels do not degrade
in quality over time.
Based
on the significant advancement of Sigyn Therapy, the Company
decided in the 4th quarter of 2021 to assess the value
of retail business operations that were a focus of the Company
prior to the merger transaction consummated on October 19,
2020.
Related
to this assessment, management determined the wholesale liquidation
value of its sapphire gem inventory to be 5-10% of the previously
reported retail value, based on communications with certified
gemologists, the variance between retail and wholesale valuations,
and current market conditions. As a result, the Company has valued
the inventory at $50,000 and recorded an impairment of
assets of $536,047 in the year ended
December 31, 2021 and is classified in other expenses in the
consolidated Statements of Operations.
Property and Equipment
Property
and equipment are carried at cost and are depreciated on a
straight-line basis over the estimated useful lives of the assets,
generally five
years. The
cost of repairs and maintenance is expensed as incurred; major
replacements and improvements are capitalized. When assets are
retired or disposed of, the cost and accumulated depreciation are
removed from the accounts, and any resulting gains or losses are
included in income in the year of disposition.
Intangible Assets
Intangible
assets consist primarily of website development costs. Our
intangible assets are being amortized on a straight-line basis over
a period of three
years.
Assignment
of Patent
On
January 8, 2020, James Joyce, the Company’s CEO and Craig Roberts,
the Company’s CTO, assigned to the Company the rights to patent
62/881,740 pertaining to the devices, systems and methods for the
broad-spectrum reduction of pro-inflammatory cytokines in blood in
exchange for founder’s shares.
Impairment of Long-lived Assets
We
periodically evaluate whether the carrying value of property,
equipment and intangible assets has been impaired when
circumstances indicate the carrying value of those assets may not
be recoverable. The carrying amount is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result
from the use and eventual disposition of the asset. If the carrying
value is not recoverable, the impairment loss is measured as the
excess of the asset’s carrying value over its fair
value.
Our
impairment analysis requires management to apply judgment in
estimating future cash flows as well as asset fair values,
including forecasting useful lives of the assets, assessing the
probability of different outcomes, and selecting the undiscounted
rate that reflects the risk inherent in future cash flows. If the
carrying value is not recoverable, we assess the fair value of
long-lived assets using commonly accepted techniques, and may use
more than one method, including, but not limited to, recent
third-party comparable sales and discounted cash flow models. If
actual results are not consistent with our assumptions and
estimates, or our assumptions and estimates change due to new
information, we may be exposed to an impairment charge in the
future. As of December 31, 2021 and 2020, the Company had
not
experienced impairment losses on its long-lived assets.
Fair Value of Financial Instruments
The
provisions of accounting guidance, Financial Accounting Standards
Board (“FASB”) Topic ASC 825, Financial Instruments –
Overall, requires all entities to disclose the fair value of
financial instruments, both assets and liabilities recognized and
not recognized on the balance sheet, for which it is practicable to
estimate fair value, and defines fair value of a financial
instrument as the amount at which the instrument could be exchanged
in a current transaction between willing parties. As of December
31, 2021 and 2020, the fair value of cash, accounts payable,
accrued expenses, and notes payable approximated carrying value due
to the short maturity of the instruments, quoted market prices or
interest rates which fluctuate with market rates.
Fair Value Measurements
Fair
value is defined as the exchange price that would be received for
an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability,
in an orderly transaction between market participants on the
measurement date. Valuation techniques used to measure fair value
must maximize the use of observable inputs and minimize the use of
unobservable inputs. The fair value hierarchy is based on three
levels of inputs, of which the first two are considered observable
and the last unobservable, as follows:
|
● |
Level
1 – Quoted prices in active markets for identical assets or
liabilities. |
|
|
|
|
● |
Level
2 – Inputs other than Level 1 that are observable, either directly
or indirectly, such as quoted prices for similar assets or
liabilities; quoted prices in markets that are not active; or other
inputs that are observable or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities. |
|
|
|
|
● |
Level
3 – Unobservable inputs that are supported by little or no market
activity and that are significant to the measurement of the fair
value of the assets or liabilities |
The
carrying value of financial assets and liabilities recorded at fair
value are measured on a recurring or nonrecurring basis. Financial
assets and liabilities measured on a non-recurring basis are those
that are adjusted to fair value when a significant event occurs.
There were no financial assets or liabilities carried and measured
on a nonrecurring basis during the reporting periods. Financial
assets and liabilities measured on a recurring basis are those that
are adjusted to fair value each time a financial statement is
prepared. There have been no transfers between levels.
Basic and Diluted Earnings Per Share
Basic
net loss per share is calculated by dividing the net loss by the
weighted-average number of common shares outstanding for the
period, without consideration for common stock equivalents. Diluted
earnings (loss) per share are computed on the basis of the weighted
average number of common shares (including common stock subject to
redemption) plus dilutive potential common shares outstanding for
the reporting period. In periods where losses are reported, the
weighted-average number of common stock outstanding excludes common
stock equivalents, because their inclusion would be
anti-dilutive.
Basic
and diluted earnings (loss) per share are the same since net losses
for all periods presented and including the additional potential
common shares would have an anti-dilutive effect.
Stock-Based Compensation
In
accordance with ASC No. 718, Compensation – Stock
Compensation (“ASC 718”), we measure the compensation costs of
share-based compensation arrangements based on the grant-date fair
value and recognize the costs in the financial statements over the
period during which employees are required to provide services.
Share-based compensation arrangements include stock options,
restricted share plans, performance-based awards, share
appreciation rights and employee share purchase plans. As such,
compensation cost is measured on the date of grant at their fair
value. Such compensation amounts, if any, are amortized over the
respective vesting periods of the option grant.
Non-Employee Stock-Based Compensation
In
accordance with ASC 505, Equity Based Payments to
Non-Employees, issuances of the Company’s common stock or
warrants for acquiring goods or services are measured at the fair
value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable. The
measurement date for the fair value of the equity instruments
issued to consultants or vendors is determined at the earlier of
(i) the date at which a commitment for performance to earn the
equity instruments is reached (a “performance commitment” which
would include a penalty considered to be of a magnitude that is a
sufficiently large disincentive for nonperformance) or (ii) the
date at which performance is complete. Although situations may
arise in which counter performance may be required over a period of
time, the equity award granted to the party performing the service
is fully vested and non-forfeitable on the date of the agreement.
As a result, in this situation in which vesting periods do not
exist as the instruments fully vested on the date of agreement, the
Company determines such date to be the measurement date and will
record the estimated fair market value of the instruments granted
as a prepaid expense and amortize such amount to general and
administrative expense in the accompanying statement of operations
over the contract period. When it is appropriate for the Company to
recognize the cost of a transaction during financial reporting
periods prior to the measurement date, for purposes of recognition
of costs during those periods, the equity instrument is measured at
the then-current fair values at each of those interim financial
reporting dates.
Reclassifications
Certain prior year amounts have been reclassified for consistency
with the current year presentation. These reclassifications had no
effect on the reported results of operations. An adjustment has
been made to the Consolidated Statements of Operations for fiscal
year ended December 31, 2020, to reclass $391,906 of costs to
research and development previously classified in general and
administrative.
Concentrations, Risks, and Uncertainties
Business Risk
Substantial
business risks and uncertainties are inherent to an entity,
including the potential risk of business failure.
The
Company is headquartered and operates in the United States. To
date, the Company has generated no revenues from operations. There
can be no assurance that the Company will be able to raise
additional capital and failure to do so would have a material
adverse effect on the Company’s financial position, results of
operations and cash flows. Also, the success of the Company’s
operations is subject to numerous contingencies, some of which are
beyond management’s control. Currently, these contingencies include
general economic conditions, price of components, competition, and
governmental and political conditions.
Interest Rate Risk
Financial
assets and liabilities do not have material interest rate
risk.
Credit Risk
The
Company is exposed to credit risk from its cash in banks. The
credit risk on cash in banks is limited because the counterparties
are recognized financial institutions.
Seasonality
The
business is not subject to substantial seasonal
fluctuations.
Major Suppliers
Sigyn
Therapy is comprised of components that are supplied by various
industry vendors. Additionally, the Company is reliant on
third-party organizations to conduct clinical development studies
that are necessary to advance Sigyn Therapy toward the
marketplace.
Should
the relationship with an industry vendor or third-party clinical
development organization be interrupted or discontinued, it is
believed that alternate component suppliers and third-party
clinical development organizations could be identified to support
the continued advancement of Sigyn Therapy.
Recent Accounting Pronouncements
In August 2018, the FASB issued ASU No. 2018-13, Fair Value
Measurements (Topic 820): Disclosure Framework—Changes to the
Disclosure Requirements for Fair Value Measurement. This
standard removes, modifies, and adds certain disclosure
requirements for fair value measurements. This pronouncement is
effective for fiscal years, and for interim periods within those
fiscal years, beginning after December 15, 2019, with early
adoption permitted. The Company adopted ASU No. 2018-13 in the
first quarter of fiscal 2020, coinciding with the standard’s
effective date, and had an immaterial impact from this
standard.
In August 2018, the FASB issued ASU No. 2018-15,
Intangibles—Goodwill and Other—Internal-Use Software (Subtopic
350-40): Customer’s Accounting for Implementation Costs Incurred in
a Cloud Computing Arrangement That Is a Service Contract. This
standard aligns the requirements for capitalizing implementation
costs incurred in a hosting arrangement that is a service contract
with the requirements for capitalizing implementation costs
incurred to develop or obtain internal-use software (and hosting
arrangements that include an internal-use software license). The
Company’s accounting for the service element of a hosting
arrangement that is a service contract is not affected by the
proposed amendments and will continue to be expensed as incurred in
accordance with existing guidance. This standard does not expand on
existing disclosure requirements except to require a description of
the nature of hosting arrangements that are service contracts. This
standard is effective for fiscal years, and for interim periods
within those fiscal years, beginning after December 15, 2019. Early
adoption is permitted, including adoption in any interim period for
which financial statements have not been issued. Entities can
choose to adopt the new guidance prospectively or retrospectively.
The Company adopted the updated disclosure requirements of ASU No.
2018-15 prospectively in the first quarter of fiscal 2020,
coinciding with the standard’s effective date, and had an
immaterial impact from this standard.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying
the Accounting for Income Taxes. This standard simplifies the
accounting for income taxes by removing certain exceptions to the
general principles in ASC 740, Income Taxes, while also
clarifying and amending existing guidance, including interim-period
accounting for enacted changes in tax law. This standard is
effective for fiscal years, and for interim periods within those
fiscal years, beginning after December 15, 2020, with early
adoption permitted. The Company adopted ASU No. 2019-12 in the
first quarter of fiscal 2021, coinciding with the standard’s
effective date, and had an immaterial impact from this
standard.
In
August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity, which simplifies accounting for convertible instruments
by removing major separation models required under current GAAP.
The ASU removes certain settlement conditions that are required for
equity contracts to qualify for the derivative scope exception and
it also simplifies the diluted earnings per share calculation in
certain areas. This ASU is effective for annual reporting periods
beginning after December 15, 2021, including interim periods within
those fiscal years. Early adoption is permitted, but no earlier
than fiscal years beginning after December 15, 2020. This update
permits the use of either the modified retrospective or fully
retrospective method of transition. The Company is currently
evaluating the impact this ASU will have on its consolidated
financial statements and related disclosures.
Other
recently issued accounting updates are not expected to have a
material impact on the Company’s consolidated financial
statements.
NOTE
4 – EQUIPMENT
Equipment
consisted of the following as of:
SCHEDULE OF PROPERTY AND
EQUIPMENT
|
|
|
|
December 31, |
|
|
December 31, |
|
|
|
Estimated Life |
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Office equipment |
|
5 years |
|
$ |
28,181 |
|
|
$ |
1,787 |
|
Computer equipment |
|
3 years |
|
|
3,157 |
|
|
|
287 |
|
Accumulated depreciation |
|
|
|
|
(3,292 |
) |
|
|
(346 |
) |
|
|
|
|
$ |
28,046 |
|
|
$ |
1,728 |
|
Depreciation
expense was $2,946 and $