ITEM
1. FINANCIAL STATEMENTS
SIGYN
THERAPEUTICS, INC.
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
See
accompanying notes to unaudited condensed consolidated financial statements.
SIGYN
THERAPEUTICS, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
See
accompanying notes to unaudited condensed consolidated financial statements.
SIGYN
THERAPEUTICS, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
See
accompanying notes to unaudited condensed consolidated financial statements.
SIGYN
THERAPEUTICS, INC.
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
See
accompanying notes to unaudited condensed consolidated financial statements.
SIGYN
THERAPEUTICS, INC.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – ORGANIZATION AND PRINCIPAL ACTIVITIES
Corporate
History and Background
Sigyn
Therapeutics, Inc. (“Sigyn”, the “Company”, “we,” “us,” or “our”) is a development-stage
company focused on creating therapeutic solutions that address unmet needs in global health.
Sigyn
Therapy™, our lead product candidate, is a broad-spectrum blood purification technology designed to treat pathogen-associated inflammatory
disorders that are not addressed with approved drug therapies. Candidate treatment indications include endotoxemia and inflammation in
end-stage renal disease (dialysis) patients, sepsis (a leading cause of hospital deaths), community acquired pneumonia (a leading cause
of death among infectious diseases), and emerging pandemic threats.
Our
development pipeline includes a cancer treatment system comprised of ChemoPrep™ to enhance the tumor site delivery of chemotherapy,
and ChemoPure™ to reduce treatment toxicity and inhibit the spread of cancer metastasis.
Merger
Transaction
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 by the Company as a reverse merger in accordance with accounting principles generally accepted in the United States of America
(“GAAP”). For accounting purposes, Sigyn is considered to have acquired Reign Resources Corporation as the accounting acquirer
because: (i) Sigyn stockholders own 75% of the combined company, on an as-converted basis, immediately following the Closing Date, (ii)
Sigyn directors hold a majority of board seats in the combined company and (iii) Sigyn management held all key positions in the management
of the combined company. Accordingly, Sigyn’s historical results of operations will replace Reign Resources Corporation’s
historical results of operations for all periods prior to the Acquisition and, for all periods following the Acquisition, the results
of operations of the combined company will be included in the Company’s financial statements. 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 (established on October 29, 2019) to become a wholly owned subsidiary of Reign Resources
Corporation. Among the conditions for closing the acquisition, the Reign Resources Corporation extinguished all previously reported liabilities,
its preferred class of shares, and all stock purchase options. As a result, the reported liabilities totaling $3,429,516 were converted
into a total of 7,907,351 common shares. Additionally, assets held on the books of Reign Resources
Corporation, such as Gem inventory, was kept in the Company and therefore recorded as assets on the Share Exchange date. Upon
the closing of the Acquisition, we appointed James A. Joyce and Craig P. Roberts to serve as members of our Board of Directors.
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 $8,536,612 at March 31, 2023, had a working capital deficit of approximately $2,420,960 at March 31, 2023, had net losses
of $1,341,036 and $678,046 for the three months ended March 31, 2023 and 2022, respectively, and net cash used in operating activities
of $562,573 and $459,571 for the three months ended March 31, 2023 and 2022, 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 public 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
for a year from the date of issuance.
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 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 relate to common stock valuation. 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 ASC 740, 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. As a result of the implementation
of ASC 740-10 and currently, 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 $184 and $250 of advertising expenses
for the three months ended March 31, 2023 and 2022, respectively.
Research
and Development
All
research and development costs are expensed as incurred. The Company incurred research and development expense of $147,843 and $228,342
for the three months ended March 31, 2023 and 2022, 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 March 31, 2023 and December 31, 2022, 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 March 31, 2023. 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.
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.
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 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. As of March 31, 2023 and December 31, 2022, the Company had
not experienced impairment losses on its long-lived assets.
Fair
Value of Financial Instruments
The
provisions of accounting guidance, FASB Topic ASC 825 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 March 31, 2023 and December 31, 2022, 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.
Debt
The
Company issues debt that may have separate warrants, conversion features, or no equity-linked attributes.
Embedded
Conversion Features
The
Company evaluates embedded conversion features within convertible debt under ASC 815, Derivatives and Hedging, to determine whether
the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with
changes in fair value recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument
is evaluated under ASC 470-20, Debt with Conversion and Other Options, for consideration of any beneficial conversion feature.
Derivative
Financial Instruments
The
Company evaluates all of it financial instruments, including stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities,
the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair
value reported as charges or credits to income.
For
option-based simple derivative financial instruments, the Company uses the Monte Carlo simulations to value the derivative instruments
at inception and subsequent valuation dates. The classification of derivative instruments, including whether such instruments should
be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. There were no derivative financial instruments
as of March 31, 2023 and December 31, 2022 and no charges or credits to income for the three months ended March 31, 2023 and 2022.
Debt
Issue Costs and Debt Discount
The
Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs
may be paid in the form of cash or equity (such as warrants). These costs are amortized to interest expense through the maturity of the
debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately
expensed. Any unamortized debt issue costs and debt discount are presented net of the related debt on the consolidated balance sheets.
Original
Issue Discount
For
certain convertible debt issued, the Company may provide the debt holder with an original issue discount. The original issue discount
would be recorded to debt discount, reducing the face amount of the note and is amortized to interest expense through the maturity of
the debt. If a conversion of the underlying debt occurs prior to maturity a proportionate share of the unamortized amounts is immediately
expensed. Any unamortized original issue discounts are presented net of the related debt on the consolidated balance sheets.
If
the conversion feature does not qualify for either the derivative treatment or as a beneficial conversion feature, the convertible debt is treated as traditional
debt.
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.
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 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. The Company adopted ASU No. 2020-06 in the first quarter
of fiscal 2021, coinciding with the standard’s effective date, and had an immaterial impact from this standard.
Other
recently issued accounting updates are not expected to have a material impact on the Company’s consolidated financial statements.
NOTE
4 – PROPERTY AND EQUIPMENT
Property
and equipment consisted of the following as of:
SCHEDULE
OF PROPERTY AND EQUIPMENT
| | |
| |
March 31, | | |
December 31, | |
| | |
Estimated Life | |
2023 | | |
2022 | |
| | |
| |
| | |
| |
| Office equipment | |
5 years | |
$ | 29,041 | | |
$ | 29,041 | |
| Computer equipment | |
3 years | |
| 3,157 | | |
| 3,157 | |
| Accumulated depreciation | |
| |
| (11,861 | ) | |
| (10,146 | ) |
| | |
| |
$ | 20,337 | | |
$ | 22,052 | |
Depreciation
expense was $1,715 and $1,704 for the three months ended March 31, 2023 and 2022, respectively, and is classified in general and administrative
expenses in the Consolidated Statements of Operations.
NOTE
5 – INTANGIBLE ASSETS
Intangible
assets consisted of the following as of:
SCHEDULE
OF INTANGIBLE ASSETS
| | |
Estimated life | |
March 31,
2023 | | |
December 31,
2022 | |
| Website | |
3 years | |
$ | 10,799 | | |
$ | 10,799 | |
| Accumulated amortization | |
| |
| (9,599 | ) | |
| (8,699 | ) |
| Intangible assets, net | |
| |
$ | 1,200 | | |
$ | 2,100 | |
As
of March 31, 2023, estimated future amortization expenses related to intangible assets were as follows:
SCHEDULE
OF ESTIMATED AMORTIZATION EXPENSES RELATED TO INTANGIBLE ASSETS
| | |
Intangible Assets | |
| 2023 | |
$ | 1,200 | |
| Intangible assets, net | |
$ | 1,200 | |
The
Company had amortization expense of $900 and $900 for the three months ended March 31, 2023 and 2022, respectively.
NOTE
6 – CONVERTIBLE PROMISSORY DEBENTURES
Convertible
notes payable consisted of the following:
SCHEDULE
OF CONVERTIBLE NOTES PAYABLE
| | |
March 31, 2023 | | |
December 31, 2022 | |
| | |
| | |
| |
| January 28, 2020 ($457,380) – 0% interest per annum outstanding principal and interest due October 20, 2022 (“Note 1”) | |
$ | 457,380 | | |
$ | 457,380 | |
| January 28, 2020 ($457,380) – 0% interest per annum outstanding principal and interest due October 20, 2022 (“Note 1”) | |
$ | 457,380 | | |
$ | 457,380 | |
| June 23, 2020 ($60,500) – 0% interest per annum outstanding principal and interest due October 20, 2022 (“Note 2”) | |
| 60,500 | | |
| 60,500 | |
| September 17, 2020 ($182,936) – 0% interest per annum outstanding principal and interest due October 20, 2022. 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 (“Note 3”). | |
| 182,936 | | |
| 182,936 | |
| March 23, 2022 ($220,000) – 0% interest per annum outstanding principal and interest due March 23, 2023 (“Note 4”) | |
| 220,000 | | |
| 220,000 | |
| April 28, 2022 ($110,000) – 0% interest per annum outstanding principal and interest due April 28, 2023 (“Note 5”) | |
| 110,000 | | |
| 110,000 | |
| May 10, 2022 ($110,000) – 0% interest per annum outstanding principal and interest due May 10, 2023 (“Note 6”) | |
| 110,000 | | |
| 110,000 | |
| June 1, 2022 ($55,000) – 0% interest per annum outstanding principal and interest due June 1, 2023 (“Note 7”) | |
| 55,000 | | |
| 55,000 | |
| June 22, 2022 ($82,500) – 0% interest per annum outstanding principal and interest due June 22, 2023 (“Note 8”) | |
| 82,500 | | |
| 82,500 | |
| July 2022 ($341,000) – 0% interest per annum outstanding principal and interest due various dates July 2023 (“Note 9”) | |
| 341,000 | | |
| 341,000 | |
| August 31, 2022 ($110,000) – 0% interest per annum outstanding principal and interest due August 31, 2023 (“Note 10”) | |
| 110,000 | | |
| 110,000 | |
| September 9, 2022 ($82,500) – 0% interest per annum outstanding principal and interest due September 9, 2023 (“Note 11”) | |
| 82,500 | | |
| 82,500 | |
| September 20, 2022 ($110,000) – 0% interest per annum outstanding principal and interest due September 20, 2023 (“Note 12”) | |
| 110,000 | | |
| 110,000 | |
| October 20, 2022 ($110,000) – 0% interest per annum outstanding principal and interest due October 20, 2023 (“Note 13”) | |
| 110,000 | | |
| 110,000 | |
| November 9, 2022 ($82,500) – 0% interest per annum outstanding principal and interest due November 9, 2023 (“Note 14”) | |
| 82,500 | | |
| 82,500 | |
| November 14, 2022 ($55,000) – 0% interest per annum outstanding principal and interest due November 14, 2023 (“Note 15”) | |
| 55,000 | | |
| 55,000 | |
| December 22, 2022 ($110,000) – 0% interest per annum outstanding principal and interest due December 22, 2023 (“Note 16”) | |
| 110,000 | | |
| 110,000 | |
| During the three months ended March 31, 2023 ($970,200) – 0% interest per annum outstanding principal and interest due on various dates from January 2024 through March 27, 2024 (“Note 17”) | |
| 970,200 | | |
| - | |
| | |
| | | |
| | |
| Total convertible notes payable | |
| 3,249,516 | | |
| 2,279,316 | |
| Original issue discount | |
| (119,965 | ) | |
| (74,502 | ) |
| Beneficial conversion feature | |
| (398,528 | ) | |
| (175,275 | ) |
| Debt discount | |
| (259,922 | ) | |
| (392,883 | ) |
| | |
| | | |
| | |
| Total convertible notes payable | |
$ | 2,471,101 | | |
$ | 1,636,656 | |
Principal
payments on convertible promissory debentures are due as follows:
SCHEDULE OF PRINCIPAL PAYMENTS DUE ON CONVERTIBLE PROMISSORY DEBENTURES
| Year ending December 31, | |
| |
| 2023 (9 months remaining) | |
$ | 2,279,316 | |
| 2024 | |
$ | 970,200 | |
| Long-Term
Debt | |
$ | 3,249,516 | |
Changes
in convertible notes were as follows:
SCHEDULE
OF CHANGES IN CONVERTIBLE NOTES
| | |
Note 1 | | |
Note 2 | | |
Note 3 | | |
Note 4 | | |
Note 5 | | |
Note 6 | | |
Note 7 | | |
Note 8 | | |
Note 9 | | |
Note 10 | | |
Note 11 | | |
Note 12 | | |
Note 13 | | |
Note 14 | | |
Note 15 | | |
Note 16 | | |
Note 17 | | |
Other | | |
Totals | |
| Convertible notes payable, net, as of December 31, 2021 | |
| 457,380 | | |
| 60,500 | | |
| 182,936 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 700,816 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Convertible notes payable issued in 2022 | |
| - | | |
| - | | |
| - | | |
| 220,000 | | |
| 110,000 | | |
| 110,000 | | |
| 55,000 | | |
| 82,500 | | |
| 341,000 | | |
| 110,000 | | |
| 82,500 | | |
| 110,000 | | |
| 110,000 | | |
| 82,500 | | |
| 55,000 | | |
| 110,000 | | |
| - | | |
| - | | |
| 1,578,500 | |
| Convertible notes payable as of December 31, 2022 | |
$ | 457,380 | | |
$ | 60,500 | | |
$ | 182,936 | | |
$ | 220,000 | | |
$ | 110,000 | | |
$ | 110,000 | | |
$ | 55,000 | | |
$ | 82,500 | | |
$ | 341,000 | | |
$ | 110,000 | | |
$ | 82,500 | | |
$ | 110,000 | | |
$ | 110,000 | | |
$ | 82,500 | | |
$ | 55,000 | | |
$ | 110,000 | | |
$ | - | | |
$ | - | | |
$ | 2,279,316 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Convertible notes payable issued in 2023 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 970,200 | | |
| - | | |
| 970,200 | |
| Convertible notes payable as of March 31, 2023 | |
$ | 457,380 | | |
$ | 60,500 | | |
$ | 182,936 | | |
$ | 220,000 | | |
$ | 110,000 | | |
$ | 110,000 | | |
$ | 55,000 | | |
$ | 82,500 | | |
$ | 341,000 | | |
$ | 110,000 | | |
$ | 82,500 | | |
$ | 110,000 | | |
$ | 110,000 | | |
$ | 82,500 | | |
$ | 55,000 | | |
$ | 110,000 | | |
$ | 970,200 | | |
$ | - | | |
$ | 3,249,516 | |
Changes
in note discounts were as follows:
SCHEDULE OF CHANGES IN NOTE DISCOUNTS
| | |
Note 1 | | |
Note 2 | | |
Note 3 | | |
Note 4 | | |
Note 5 | | |
Note 6 | | |
Note 7 | | |
Note 8 | | |
Note 9 | | |
Note 10 | | |
Note 11 | | |
Note 12 | | |
Note 13 | | |
Note 14 | | |
Note 15 | | |
Note 16 | | |
Note 17 | | |
Other | | |
Totals | |
| Note discounts as of December 31, 2021 | |
| 34,176 | | |
| 4,521 | | |
| 14,917 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 53,614 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Note discounts issued in conjunction with debt in 2022 | |
| - | | |
| - | | |
| - | | |
| 113,418 | | |
| 44,786 | | |
| 44,787 | | |
| 22,794 | | |
| 34,861 | | |
| 140,289 | | |
| 64,104 | | |
| 82,500 | | |
| 110,000 | | |
| 110,000 | | |
| 82,500 | | |
| 55,000 | | |
| 110,000 | | |
| - | | |
| - | | |
| 1,015,039 | |
| 2022 accretion of note discounts | |
| (34,176 | ) | |
| (4,521 | ) | |
| (14,917 | ) | |
| (87,938 | ) | |
| (30,308 | ) | |
| (28,836 | ) | |
| (13,301 | ) | |
| (18,336 | ) | |
| (70,720 | ) | |
| (32,316 | ) | |
| (39,994 | ) | |
| (49,874 | ) | |
| (23,671 | ) | |
| (12,822 | ) | |
| (7,726 | ) | |
| (6,537 | ) | |
| - | | |
| 50,000 | | |
| (425,993 | ) |
| Note discounts as of December 31, 2022 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 25,480 | | |
$ | 14,478 | | |
$ | 15,951 | | |
$ | 9,493 | | |
$ | 16,525 | | |
$ | 69,569 | | |
$ | 31,788 | | |
$ | 42,506 | | |
$ | 60,126 | | |
$ | 86,329 | | |
$ | 69,678 | | |
$ | 47,274 | | |
$ | 103,463 | | |
$ | - | | |
$ | 50,000 | | |
$ | 642,660 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Note discounts issued in conjunction with debt in 2023 | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 970,200 | | |
| - | | |
| 970,200 | |
| 2023 accretion of note discounts | |
| - | | |
| - | | |
| - | | |
| (25,480 | ) | |
| (11,043 | ) | |
| (11,044 | ) | |
| (5,621 | ) | |
| (8,596 | ) | |
| (61,527 | ) | |
| (15,807 | ) | |
| (22,192 | ) | |
| (29,590 | ) | |
| (29,590 | ) | |
| (22,191 | ) | |
| (14,794 | ) | |
| (29,589 | ) | |
| (547,381 | ) | |
| - | | |
| (834,445 | ) |
| Note discounts as of March 31, 2023 | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 3,435 | | |
$ | 4,907 | | |
$ | 3,872 | | |
$ | 7,929 | | |
$ | 8,042 | | |
$ | 15,981 | | |
$ | 20,314 | | |
$ | 30,536 | | |
$ | 56,739 | | |
$ | 47,487 | | |
$ | 32,480 | | |
$ | 73,874 | | |
$ | 422,819 | | |
$ | 50,000 | | |
$ | 778,415 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Convertible notes payable, net, as of December 31, 2021 | |
$ | 423,204 | | |
$ | 55,979 | | |
$ | 168,019 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 647,202 | |
| Convertible notes payable, net, as of December 31, 2022 | |
$ | 457,380 | | |
$ | 60,500 | | |
$ | 182,936 | | |
$ | 194,520 | | |
$ | 95,522 | | |
$ | 94,049 | | |
$ | 45,507 | | |
$ | 65,975 | | |
$ | 271,431 | | |
$ | 78,212 | | |
$ | 39,994 | | |
$ | 49,874 | | |
$ | 23,671 | | |
$ | 12,822 | | |
$ | 7,726 | | |
$ | 6,537 | | |
$ | - | | |
$ | (50,000 | ) | |
$ | 1,636,656 | |
| Convertible notes payable, net, as of March 31, 2023 | |
$ | 457,380 | | |
$ | 60,500 | | |
$ | 182,936 | | |
$ | 220,000 | | |
$ | 106,565 | | |
$ | 105,093 | | |
$ | 51,128 | | |
$ | 74,571 | | |
$ | 332,958 | | |
$ | 94,019 | | |
$ | 62,186 | | |
$ | 79,464 | | |
$ | 53,261 | | |
$ | 35,013 | | |
$ | 22,520 | | |
$ | 36,126 | | |
$ | 547,381 | | |
$ | (50,000 | ) | |
$ | 2,471,101 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 2021 Effective interest rate | |
| 11 | % | |
| 11 | % | |
| 12 | % | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | | |
| -% | |
| 2022 Effective interest rate | |
| 7 | % | |
| 7 | % | |
| 8 | % | |
| 40 | % | |
| 28 | % | |
| 26 | % | |
| 24 | % | |
| 22 | % | |
| 21 | % | |
| 29 | % | |
| 48 | % | |
| 45 | % | |
| 22 | % | |
| 16 | % | |
| 14 | % | |
| 6 | % | |
| -% | | |
| -% | | |
| 19 | % |
| 2023 Effective interest rate | |
| -% | | |
| -% | | |
| -% | | |
| 12 | % | |
| 10 | % | |
| 10 | % | |
| 10 | % | |
| 10 | % | |
| 18 | % | |
| 14 | % | |
| 27 | % | |
| 27 | % | |
| 27 | % | |
| 27 | % | |
| 27 | % | |
| 27 | % | |
| 56 | % | |
| -% | | |
| 26 | % |
Current
Noteholders
2023
Notes – $970,200 (Note 17)
During
the three months ended March 31, 2023, the Company entered into an Original Issue Discount Senior Convertible Debentures (the “2023
Notes”) with a third party investors totaling (i) $970,200 aggregate principal amount of Note due on various dates from January
2024 through March 27, 2024 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 6,468,000 shares of the Company’s Common Stock at an exercise
price of $0.25 per share. The aggregate cash subscription amount received by the Company from the previous noteholder for the issuance
of the Note and Warrants was $882,000 which was issued at a $88,200 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $110,000 (Note 16)
On
December 22, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due December 22, 2023 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 733,333 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Osher 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $55,000 (Note 15)
On
November 14, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $55,000 aggregate principal amount of Note due November 14, 2023 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 366,667 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Osher 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.
The conversion price for the principal in connection with voluntary conversions by a holder of
the convertible notes is $0.15 per share, subject to adjustment as provided therein, such as stock splits and stock dividends.
Brio
– $82,500 (Note 14)
On
November 9, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Brio Capital Master Fund Ltd (“Brio”)
of (i) $82,500 aggregate principal amount of Note due November 9, 2023 based on $1.00 for each $0.90909 paid by Brio and (ii) five-year
Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 550,000 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Brio for the issuance
of the Note and Warrants was $75,000 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $110,000 (Note 13)
On
October 20, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due October 20, 2023 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 733,333 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Osher 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $110,000 (Note 12)
On
September 20, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due September 20, 2023 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 733,333 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Osher 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Brio
– $82,500 (Note 11)
On
September 9, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Brio Capital Master Fund Ltd. (“Brio”)
of (i) $82,500 aggregate principal amount of Note due September 9, 2023 based on $1.00 for each $0.90909 paid by Brio and (ii) five-year
Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 550,000 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Brio for the issuance
of the Note and Warrants was $75,000 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $110,000 (Note 10)
On
August 31, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due August 31, 2023 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 733,333 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Osher 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Other
– $341,000 (Note 9)
In
July 2022, the Company entered into an Original Issue Discount Senior Convertible Debentures (the “July 2022 Notes”) totaling
(i) $341,000 aggregate principal amount of Note (total of $310,000 cash was received) due in various dates in July 2023 based on $1.00
for each $0.90909 paid by the noteholder and (ii) five-year Common Stock Purchase Warrants (“Warrants’) to purchase up to
an aggregate of 676,936 shares of the Company’s Common Stock at an exercise price of $0.50 per share. The
conversion price for the principal in connection with voluntary conversions by the holders of the convertible notes is $0.50 per share.
Osher
– $82,500 (Note 8)
On
June 22, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $82,500 aggregate principal amount of Note due June 22, 2023 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 165,000 shares of the Company’s Common
Stock at an exercise price of $0.50 per share. The aggregate cash subscription amount received by the Company from Osher for the issuance
of the Note and Warrants was $75,000 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 $0.50 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $55,000 (Note 7)
On
June 1, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $55,000 aggregate principal amount of Note due June 1, 2023 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 110,000 shares of the Company’s Common
Stock at an exercise price of $0.50 per share. The aggregate cash subscription amount received by the Company from Osher 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. The
conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $0.50 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Brio
– $110,000 (Note 6)
On
May 10, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Brio Capital Master Fund Ltd. (“Brio”)
of (i) $110,000
aggregate principal amount of Note due May
10, 2023 based on $1.00 for each $0.90909 paid by Brio and (ii) five-year
Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 220,000
shares of the Company’s Common Stock at an exercise price of $0.50
per share. The aggregate cash subscription amount received by the Company from Brio 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 $0.50
per share, subject to adjustment as provided therein, such as stock splits and stock dividends.
The Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to
restructure the terms of the note.
Osher
– $110,000 (Note 5)
On
April 28, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with
respect to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000
aggregate principal amount of Note due April
28, 2023 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 220,000
shares of the Company’s Common Stock at an exercise price of $0.50
per share. The aggregate cash subscription amount received by the Company from Osher 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 $0.50
per share, subject to adjustment as provided therein, such as stock splits and stock dividends.
The Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to
restructure the terms of the note.
Osher
– $110,000 (Note 4)
On
March 23, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due March 23, 2023 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 220,000 shares of the Company’s Common
Stock at an exercise price of $0.50 per share. The aggregate cash subscription amount received by the Company from Osher 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 $0.50 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
The
Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to restructure
the terms of the note.
Brio
– $110,000 (Note 4)
On
March 23, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Brio Capital Master Fund Ltd. (“Brio”)
of (i) $110,000 aggregate principal amount of Note due March 23, 2023 based on $1.00 for each $0.90909 paid by Brio and (ii) five-year
Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 220,000 shares of the Company’s Common
Stock at an exercise price of $0.50 per share. The aggregate cash subscription amount received by the Company from Brio 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 $0.50 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
The
Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to restructure
the terms of the note.
Osher
– $182,936 (Note 3)
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 follows 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.
The
Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to restructure
the terms of the note.
Osher
– $60,500 (as amended on October 20, 2020 to $55,000) (Note 2)
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 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
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 (see Note 12):
| |
● |
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. |
The
Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to restructure
the terms of the note.
Osher
– $457,380 (Note 1)
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 follows 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 to provide for interest at 8% per annum. |
| |
● |
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. |
The
Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to restructure
the terms of the note.
Previous
Noteholders
Other
– $145,200
On
November 21, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with a third
party investor of (i) $145,200 aggregate principal amount of Note due November 21, 2023 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 968,000
shares of the Company’s Common Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by
the Company from the previous noteholder for the issuance of the Note and Warrants was $132,000 which was issued at a $13,200 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 $0.15 per share, subject to adjustment as provided therein,
such as stock splits and stock dividends.
On
November 23, 2022, third party investor elected to convert the aggregate principal amount of the Note, $145,200, into 968,000 common
shares.
All
other previous notes were detailed in our Form 10-K filed on March 31, 2023. No changes occurred related to these notes during the period
covered by this Form 10-Q.
NOTE
7 – STOCKHOLDERS’ DEFICIT
Preferred
Stock
The
Company authorized 10,000,000 shares of par value $0.0001 preferred stock, of which none are issued and outstanding at March 31, 2023
and December 31, 2022, respectively.
Common
Stock
The
Company has authorized 1,000,000,000 shares of par value $0.0001 common stock, of which 42,804,825 and 38,263,813 shares are outstanding
as of March 31, 2023 and December 31, 2022, respectively.
Restricted
Stock Units
Effective
October 10, 2022, the Company’s Board of Directors appointed Ms. Richa Nand, Mr. Jim Dorst, and Mr. Chris Wetzel as non-executive
members to the Company’s Board of Directors (“Director”). Each Director shall receive a grant of restricted
stock units of $50,000 (see Note 11).
Warrants
In
accordance with ASC 718-20, Compensation – Stock Compensation, a modification of a stock award is treated as an exchange
of the original award for a new award incurring additional compensation cost for any incremental value resulting from the modification.
Incremental compensation cost shall be measured as the excess of the fair value of the modified award over the fair value of the original
award immediately before its terms are modified and recognized over the vesting period. A short-term inducement shall be accounted for
as a modification of the terms of only those that accept the inducement.
In
March 2023, the Company offered a short-term inducement to the Company’s warrant holders in which the Company will issue one share
of the Company’s common stock in exchange for each two warrants returned to the Company to be cancelled. All other terms of the
original grants remain the same. A total of 9,082,024
warrants were exchanged for 4,541,012
shares of the Company’s common stock through
March 31, 2023. The Company recognized $15,806
as modification of warrants in the three months
ended March 31, 2023 as a result of the modification.
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 accreted the value of the warrants ratably through October 20, 2022. The Company
recorded $0 and $48,699 for the three months ended March 31, 2023 and 2022, respectively, and is classified in other expenses in the
consolidated Statements of Operations. See Notes 6 for further warrant discussions.
NOTE
8 – OPERATING LEASES
On
May 27, 2021, the Company entered into a sixty-three month lease for its corporate office at $5,955 per month commencing June 15, 2021
maturing September 30, 2026. The Company accounts for this lease in accordance with ASC 842. Adoption
of the standard resulted in the initial recognition of operating lease ROU asset of $290,827 and
operating lease liability of $290,827 as of June 15, 2021.
Operating
lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease
payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent
our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest in arrangements is not readily
determinable and the Company utilizes its incremental borrowing rate in determining the present value of lease payments. The Company’s
incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The operating lease
ROU asset includes any lease payments made and excludes lease incentives. Our variable lease payments primarily consist of maintenance
and other operating expenses from our real estate leases. Variable lease payments are excluded from the ROU assets and lease liabilities
and are recognized in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend
or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for minimum lease payments is recognized
on a straight-line basis over the lease term.
We
have lease agreements with lease and non-lease components. We have elected to account for these lease and non-lease components as a single
lease component. We are also electing not to apply the recognition requirements to short-term leases of twelve months or less and instead
will recognize lease payments as expense on a straight-line basis over the lease term.
The
components of lease expense and supplemental cash flow information related to leases for the period are as follows:
In
accordance with ASC 842, the components of lease expense were as follows:
SCHEDULE OF OPERATING LEASE COST AND SUPPLEMENTAL CASH FLOW INFORMATION
| | |
2023 | | |
2022 | |
| | |
Three Months ended March 31, | |
| | |
2023 | | |
2022 | |
| Operating lease expense | |
$ | 17,919 | | |
$ | 17,919 | |
| Short term lease cost | |
$ | - | | |
$ | - | |
| Total lease expense | |
$ | 17,919 | | |
$ | 17,919 | |
In
accordance with ASC 842, other information related to leases was as follows:
| Three Months ended March 31, | |
2023 | | |
2022 | |
| Operating cash flows from operating leases | |
$ | 18,402 | | |
$ | 17,866 | |
| Cash paid for amounts included in the measurement of lease liabilities | |
$ | 18,402 | | |
$ | 17,866 | |
| | |
| | | |
| | |
| Weighted-average remaining lease term—operating leases | |
| 3.42 years | | |
| 4.67 years | |
| Weighted-average discount rate—operating leases | |
| 10 | % | |
| 10 | % |
In
accordance with ASC 842, maturities of operating lease liabilities as of March 31, 2023 were as follows:
SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES
| | |
Operating | |
| Year ending: | |
Lease | |
| 2023 (remaining 9 months) | |
$ | 56,493 | |
| 2024 | |
| 77,142 | |
| 2025 | |
| 79,456 | |
| 2026 | |
| 54,225 | |
| Total undiscounted cash flows | |
$ | 267,316 | |
| | |
| | |
| Reconciliation of lease liabilities: | |
| | |
| Weighted-average remaining lease terms | |
| 3.42
years | |
| Weighted-average discount rate | |
| 10 | % |
| Present values | |
$ | 228,136 | |
| | |
| | |
| Lease liabilities—current | |
| 55,099 | |
| Lease liabilities—long-term | |
| 173,037 | |
| Lease liabilities—total | |
$ | 228,136 | |
| | |
| | |
| Difference between undiscounted and discounted cash flows | |
$ | 39,180 | |
Operating
lease cost was $17,919 and $17,919 for the three months ended March 31, 2023 and 2022, respectively.
NOTE
9 – RELATED PARTY TRANSACTIONS
Other
than as set forth below, and as disclosed in Note 7, there have not been any transaction entered into or been a participant in which
a related person had or will have a direct or indirect material interest.
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. The Company
incurred compensation expense of $113,750 and $117,319, and employee benefits of $10,058 and $12,835, for the three months ended March
31, 2023 and 2022, respectively.
Sigyn
had no employment agreement with its CTO but still incurred compensation on behalf of the CTO. The Company incurred compensation expense
of $61,000 and $58,810, and employee benefits of $5,394 and $6,434, for the three months ended March 31, 2023 and 2022, respectively.
NOTE
10 – EARNINGS PER SHARE
FASB
ASC Topic 260, Earnings Per Share, requires a reconciliation of the numerator and denominator of the basic and diluted earnings
(loss) per share (EPS) computations.
Basic
earnings (loss) per share are computed by dividing net earnings available to common stockholders by the weighted-average number of common
shares outstanding during the period. Diluted earnings (loss) per share is computed similar to basic earnings per share except that the
denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive. 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.
The
following potentially dilutive securities were excluded from the calculation of diluted net loss per share because the effects were anti-dilutive
based on the application of the treasury stock method and because the Company incurred net losses during the period:
SCHEDULE
OF ANTI DILUTIVE SECURITIES
| | |
2023 | | |
2022 | |
| | |
For the Three Months Ended March 31, | |
| | |
2023 | | |
2022 | |
| Convertible notes payable | |
| 18,194,940 | | |
| 5,929,940 | |
| Warrants to purchase shares of common stock | |
| 12,578,478 | | |
| 8,432,558 | |
| Total potentially dilutive shares | |
| 30,773,418 | | |
| 14,362,498 | |
The
following table sets forth the computation of basic and diluted net income per share:
SCHEDULE OF COMPUTATION OF BASIC AND DILUTED NET INCOME PER SHARE
| | |
2023 | | |
2022 | |
| | |
Three Months Ended March 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Net loss attributable to the common stockholders | |
$ | (1,341,036 | ) | |
$ | (678,046 | ) |
| | |
| | | |
| | |
| Basic weighted average outstanding shares of common stock | |
| 38,465,636 | | |
| 37,295,813 | |
| Dilutive effect of options and warrants | |
| - | | |
| - | |
| Diluted weighted average common stock and common stock equivalents | |
| 38,465,636 | | |
| 37,295,813 | |
| | |
| | | |
| | |
| Loss per share: | |
| | | |
| | |
| Basic and diluted | |
$ | (0.03 | ) | |
$ | (0.02 | ) |
NOTE
11 – COMMITMENTS AND CONTINGENCIES
Legal
From
time to time, various lawsuits and legal proceedings may arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. We are
currently not aware of any legal proceedings or claims that it believes will have a material adverse effect on its business, financial
condition or operating results.
Board
of Directors Compensation
Effective
October 10, 2022, the Company’s Board of Directors appointed Ms. Richa Nand, Mr. Jim Dorst, and Mr. Chris Wetzel as non-executive
members to the Company’s Board of Directors (“Director”). Each Director shall receive an annual retainer of $30,000
paid in equal quarterly amounts at the end of each quarter. In addition, each Director shall receive a grant of restricted stock units
of $50,000, or at the discretion of the Board of Directors, options to acquire shares of common stock. Restricted stock units will be
valued based on the average of the five trading days preceding and including the date of grant and will vest at a rate determined by
the Board of Directors over one year. If options are granted, the options will be valued at the exercise price based on the average of
the five trading days preceding and including the date of grant, have a ten year term, and will vest at a rate determined by the Board
of Directors.
NOTE
12 – SUBSEQUENT EVENTS
The
Company evaluated all events or transactions that occurred after March 31, 2023 up through the date the financial statements were available
to be issued. During this period, the Company did not have any material recognizable subsequent events required to be disclosed as of
and for the period ended March 31, 2023, except for the following:
Employment
Agreement
On
April 1, 2023, the Company entered into an Employment Agreement with Dr. Annette Marleau whereby Dr. Marleau became the Company’s
Chief Scientific Officer. Dr. Marleau receives an annual base salary of $300,000, with automatic 3% annual increases plus bonus compensation
not to exceed 40% of salary. Dr. Marleau’s employment also provides for medical insurance, disability benefits and up to six months
of severance pay if her employment is terminated by the Company.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You
should read the following discussion of our financial condition and results of operations in conjunction with our financial statements
and the notes included elsewhere in this Form 10-Q. The following discussion contains forward-looking statements that involve certain
risks and uncertainties. Our actual results could differ materially from those discussed in these statements. Factors that could cause
or contribute to these differences include those discussed below and elsewhere in this Form 10-Q and our Annual Report on Form 10-K for
the year ended December 31, 2022 particularly under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking
Statements and Risk Factors Summary” sections.
Recent
Developments
Members
of the Board of Directors
Effective
October 10, 2022, the Company’s Board of Directors appointed Ms. Richa Nand, Mr. Jim Dorst, and Mr. Chris Wetzel as non-executive
members to the Company’s Board of Directors (“Director”). Each Director shall receive an annual retainer of $30,000
paid in equal quarterly amounts at the end of each quarter. In addition, each Director shall receive a grant of restricted stock units
of $50,000, or at the discretion of the Board of Directors, options to acquire shares of common stock. Restricted stock units will be
valued based on the average of the five trading days preceding and including the date of grant and will vest at a rate determined by
the Board of Directors over one year. If options are granted, the options will be valued at the exercise price based on the average of
the five trading days preceding and including the date of grant, have a ten year term, and will vest at a rate determined by the Board
of Directors.
Warrants
In
March 2023, the Company offered a short-term inducement to the Company’s warrant holders in which the Company will issue one share
of the Company’s common stock in exchange for each two warrants returned to the Company to be cancelled. All other terms of the
original grants remain the same. A total of 9,082,024 warrants were exchanged for 4,541,012 shares of the Company’s common stock
through March 24, 2023. The Company recognized $15,806 as modification of warrants in the three months ended March 31, 2023 as a result
of the modification.
Employment
Agreement
On
April 1, 2023, the Company entered into an Employment Agreement with Dr. Annette Marleau whereby Dr. Marleau became the Company’s
Chief Scientific Officer. Dr. Marleau receives an annual base salary of $300,000, with automatic 3% annual increases plus bonus compensation
not to exceed 40% of salary. Dr. Marleau’s employment also provides for medical insurance, disability benefits and up to six months
of severance pay if her employment is terminated by the Company.
Convertible
Promissory Debentures
2023
Notes – $970,200
During
the three months ended March 31, 2023, the Company entered into an Original Issue Discount Senior Convertible Debentures (the “2023
Notes”) with a third party investors totaling (i) $970,200 aggregate principal amount of Note due on various dates from January
2024 through March 27, 2024 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 6,468,000 shares of the Company’s Common Stock at an exercise
price of $0.25 per share. The aggregate cash subscription amount received by the Company from the previous noteholder for the issuance
of the Note and Warrants was $882,000 which was issued at a $88,200 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $110,000
On
December 22, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due December 22, 2023 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 733,333 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Osher 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $55,000
On
November 14, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $55,000 aggregate principal amount of Note due November 14, 2023 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 366,667 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Osher 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.
The conversion price for the principal in connection with voluntary conversions by a holder of
the convertible notes is $0.15 per share, subject to adjustment as provided therein, such as stock splits and stock dividends.
Brio
– $82,500
On
November 9, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Brio Capital Master Fund Ltd (“Brio”)
of (i) $82,500 aggregate principal amount of Note due November 9, 2023 based on $1.00 for each $0.90909 paid by Brio and (ii) five-year
Common Stock Purchase Warrants (“Warrants’) to purchase up to an aggregate of 550,000 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Brio for the issuance
of the Note and Warrants was $75,000 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $110,000
On
October 20, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due October 20, 2023 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 733,333 shares of the Company’s Common
Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from Osher 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 $0.15 per share,
subject to adjustment as provided therein, such as stock splits and stock dividends.
Osher
– $110,000
On
September 20, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due September 20, 2023 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 733,333 shares of the Company’s
Common Stock at an exercise price of $0.25 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 $0.15 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends.
Brio
– $82,500
On
September 9, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Brio Capital Master Fund Ltd. (“Brio”)
of (i) $82,500 aggregate principal amount of Note due September 9, 2023 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 550,000 shares of the Company’s
Common Stock at an exercise price of $0.25 per share. The aggregate cash subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $75,000 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 $0.15 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends.
Osher
– $110,000
On
August 31, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due August 31, 2023 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 733,333 shares of the Company’s
Common Stock at an exercise price of $0.25 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 $0.15 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends.
Other
– $341,000
In
July 2022, the Company entered into an Original Issue Discount Senior Convertible Debentures (the “July 2022 Notes”) totaling
(i) $341,000 aggregate principal amount of Note (total of $310,000 cash was received) due in various dates in July 2023 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 676,936 shares of the Company’s Common Stock at an exercise price of $0.50 per share. The
conversion price for the principal in connection with voluntary conversions by the holders of the convertible notes is $0.50 per share.
Osher
– $82,500
On
June 22, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $82,500 aggregate principal amount of Note due June 22, 2023 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 165,000 shares of the Company’s
Common Stock at an exercise price of $0.50 per share. The aggregate cash subscription amount received by the Company from the previous
noteholder for the issuance of the Note and Warrants was $75,000 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 $0.50 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends.
Osher
– $55,000
On
June 1, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $55,000 aggregate principal amount of Note due June 1, 2023 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 110,000 shares of the Company’s
Common Stock at an exercise price of $0.50 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. The conversion price for the principal in connection with voluntary conversions by
a holder of the convertible notes is $0.50 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends.
Brio
– $110,000
On
May 10, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Brio Capital Master Fund Ltd. (“Brio”)
of (i) $110,000 aggregate principal amount of Note due May 10, 2023 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 220,000 shares of the Company’s
Common Stock at an exercise price of $0.50 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 $0.50 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends. The Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to
restructure the terms of the note.
Osher
– $110,000
On
April 28, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due April 28, 2023 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 220,000 shares of the Company’s
Common Stock at an exercise price of $0.50 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 $0.50 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends. The Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to
restructure the terms of the note.
Osher
– $110,000
On
March 23, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”)
of (i) $110,000 aggregate principal amount of Note due March 23, 2023 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 220,000 shares of the Company’s
Common Stock at an exercise price of $0.50 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 $0.50 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends. The Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to
restructure the terms of the note.
Brio
– $110,000
On
March 23, 2022, the Company entered into an Original Issue Discount Senior Convertible Debenture (the “Note”) with respect
to the sale and issuance to institutional investor Brio Capital Master Fund Ltd. (“Brio”)
of (i) $110,000 aggregate principal amount of Note due March 23, 2023 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 220,000 shares of the Company’s
Common Stock at an exercise price of $0.50 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 $0.50 per share, subject to adjustment as provided therein, such as stock splits and stock
dividends. The Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to
restructure the terms of the note.
Osher
– $182,936
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 follows 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.
The
Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to restructure
the terms of the note.
Osher
– $60,500 (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 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 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 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 (see Note 12):
| |
● |
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. |
The
Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to restructure
the terms of the note.
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 follows 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 to provide for interest at 8% per annum. |
| |
● |
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. |
The
Company has not repaid this convertible note and the convertible note is now in default. The Company is currently in discussions to restructure
the terms of the note.
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.
Business
Overview
Sigyn
Therapeutics, Inc. (“Sigyn”, the “Company”, “we,” “us,” or “our”) is a development-stage
company focused on creating therapeutic solutions that address unmet needs in global health. Our corporate address is 2468 Historic Decatur
Road, Suite 140, San Diego, California, 92106.
Sigyn
Therapy™, our lead product candidate, is a broad-spectrum blood purification technology designed to treat pathogen-associated inflammatory
disorders that are not addressed with approved drug therapies. Candidate treatment indications include endotoxemia and inflammation in
end-stage renal disease (dialysis) patients, sepsis (a leading cause of hospital deaths), community acquired pneumonia (a leading cause
of death among infectious diseases), and emerging pandemic threats.
Our
development pipeline includes a cancer treatment system comprised of ChemoPrep™ to enhance the tumor site delivery of chemotherapy,
and ChemoPure™ to reduce treatment toxicity and inhibit the spread of cancer metastasis.
Merger
Transaction
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 by the Company as a reverse merger in accordance with accounting principles generally accepted in the United States of America
(“GAAP”). For accounting purposes, Sigyn is considered to have acquired Reign Resources Corporation as the accounting acquirer
because: (i) Sigyn stockholders own 75% of the combined company, on an as-converted basis, immediately following the Closing Date, (ii)
Sigyn directors hold a majority of board seats in the combined company and (iii) Sigyn management held all key positions in the management
of the combined company. Accordingly, Sigyn’s historical results of operations will replace Reign Resources Corporation’s
historical results of operations for all periods prior to the Acquisition and, for all periods following the Acquisition, the results
of operations of the combined company will be included in the Company’s financial statements. 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 (established on October 29, 2019) to become a wholly owned subsidiary of Reign Resources
Corporation. Among the conditions for closing the acquisition, the Reign Resources Corporation extinguished all previously reported liabilities,
its preferred class of shares, and all stock purchase options. As a result, the reported liabilities totaling $3,429,516 were converted
into a total of 7,907,351 common shares. Additionally, assets held on the books of Reign Resources
Corporation, such as Gem inventory, was kept in the Company and therefore recorded as assets on the Share Exchange date. 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 May 15, 2023, we had a total 42,981,659 shares issued and outstanding, of which 27,176,159 shares are held by non-affiliate shareholders.
Post-Merger
Developments
Since
the consummation of the Acquisition on October 19, 2020, we have advanced Sigyn Therapy from conceptual design through completion of
in vitro studies that have quantified the reduction of relevant therapeutic targets from human blood plasma with small-scale versions
of Sigyn Therapy. These include 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); 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 studies, we disclosed the completion of in vivo animal studies. In these 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
feasibility and refine pre-treatment set-up and operating procedures. There were no serious adverse events reported in any of the treated
animal subjects. Of the eight treatments, seven were administered for the entire six-hour treatment period. One treatment was halted
early due to the observation of a clot in the device, which was believed to be the result of a procedural deviation in the pre-treatment
set-up. Important criteria for treatment feasibility – 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. The treatment protocol of the study was reviewed and approved by the University of Michigan Institutional
Animal Care and Use Committee (IACUC).
The
animal studies were conducted to correspond with FDA’s best practice guidance. The number of animals enrolled in our study and
the amount of data collected was based on the ethical and least burdensome principles that underly the FDA goal of using the minimum
number of animals necessary to generate valid scientific data to demonstrate reasonable feasibility and performance of a medical device
prior to human study consideration. A porcine animal model is a generally accepted model for the study of extracorporeal blood purification
devices intended to treat infectious disease and inflammatory disorders. Regardless of these factors, FDA may require that we conduct
additional animal studies.
The
data resulting from our in vivo and in vitro studies is being incorporated 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 a
human feasibility study in End-Stage Renal Disease (ESRD) patients with endotoxemia and elevated inflammatory cytokine production. As
per the study protocol, Sigyn Therapy is to be administered in combination with the regularly scheduled dialysis treatments of enrolled
subjects. The primary study objective will be to evaluate the safety of Sigyn Therapy in health compromised ESRD patients. A secondary
objective will be to quantify changes in circulating levels of endotoxin, tumor necrosis factor-αlpha (TNF-α), interleukin-1β
(IL-1β), and interleukin-6 (IL-6) before and after each Sigyn Therapy administration. Endotoxin and excess TNF-α, IL-1β,
and IL-6 production are commonly associated with each of our candidate treatment indications, including sepsis and community-acquired
pneumonia.
Based
on our previous experience in developing extracorporeal blood purification therapies, we believe that we have collected sufficient data
to support first-in-human studies of Sigyn Therapy. In this regard, we plan to submit an IDE application to FDA related to the potential
initiation of a human feasibility study during the 2023 calendar year. However, there is no assurance that FDA will approve the initiation
of our feasibility study. Additionally, while we believe the data from our in vivo and in vitro studies provides support for our
IDE submission, FDA may request that we conduct additional animal or pre-clinical studies prior to approving our IDE. Among our previous
experiences in developing extracorporeal blood purification therapies, our CEO oversaw the development of the Aethlon Hemopurifier, a
first-in-industry device that received an FDA “Breakthrough Device” designation for the treatment of life-threatening viruses
and was awarded a second FDA “Breakthrough Device” designation related to the treatment of cancer.
Sigyn
Therapy Mechanism of Action
We
designed Sigyn Therapy to be a candidate to treat pathogen-associated inflammatory conditions that are life-threatening. To date, pre-clinical
in vitro studies have quantified the reduction of viral pathogens, bacterial toxins, and inflammatory mediators from human blood
plasma with small-scale versions of Sigyn Therapy. Such capabilities establish Sigyn Therapy as a candidate to treat pathogen-associated
conditions that precipitate Sepsis, Community Acquired Pneumonia, Emerging Bioterror and Pandemic threats, and End-Stage Renal Disease
patients with endotoxemia and elevated inflammatory cytokine production.
To
support widespread implementation, Sigyn Therapy is 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. To reduce the risk of
blood clotting and hemolysis, the anticoagulant heparin is administered, which is the standard-of-care drug administered in dialysis
and CRRT therapies. During animal studies conducted at the University of Michigan, Sigyn Therapy was deployed for use on a hemodialysis
machine manufactured by Fresenius Medical Care, the global leader in the dialysis industry.
Incorporated
within Sigyn Therapy is a “cocktail” of adsorbent components formulated to optimize the broad-spectrum reduction 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 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 active adsorbent components are maintained within Sigyn Therapy and not introduced
into the body. As a result, we are able to incorporate a substantial quantity of adsorbent components to capture therapeutic targets
outside of the body as they circulate through Sigyn Therapy. Each adsorbent component has differing capture characteristics that contribute
to optimizing the potential of Sigyn Therapy to reduce the presence of pathogenic and inflammatory targets that precipitate the cytokine
storm that underlies sepsis and other life-threatening inflammatory disorders.
The
adsorbent components incorporated within Sigyn Therapy provide more than 200,000 square meters (~50 acres) of surface area on which to
adsorb and remove circulating viruses, bacterial toxins, and inflammatory mediators. Beyond a potential capacity to reduce therapeutic
targets from human blood plasma, we believe that Sigyn Therapy offers an efficient treatment methodology. Based on targeted blood flow
rates of 350ml/min, a patient’s entire bloodstream can pass through Sigyn Therapy more than fifteen times during a single four-hour
treatment period.
From
a technical perspective, Sigyn Therapy is a 325mm long polycarbonate column that internally contains polyethersulphone hollow fibers
that have porous walls with a median pore size of ~200 nanometers (nm). As blood flows into Sigyn Therapy, plasma and therapeutic targets
below 200nm travel through the porous walls as a result of blood-side pressure. As the hollow fiber bundle within Sigyn Therapy creates
a resistance to the flow of blood, a pressure drop is created along the length of the device such that the blood-side pressure is higher
at the blood inlet and lower at the blood outlet. This allows for plasma and therapeutic targets to flow away from the blood and into
the extra-lumen space (inside the polycarbonate shell, yet outside the hollow-fiber bundle) to interact with Sigyn Therapy’s adsorbent
components in a low shear force environment. In the distal third of the fiber bundle, the pressure gradient is reversed, which allows
for plasma to flow back through the fiber walls to be reconvened into the bloodstream without the presence of therapeutic targets that
were captured or bound by adsorbent components housed in the extra-lumen space of Sigyn Therapy.
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;
pathogen-associated inflammatory conditions that precipitate Sepsis (leading cause of hospital deaths worldwide), Community Acquired
Pneumonia (a leading cause of death among infectious diseases), Emerging Bioterror and Pandemic threats, and endotoxemia and inflammation
in End-Stage Renal Disease (ESRD) patients. However, there is no assurance that human feasibility and pivotal studies will demonstrate
Sigyn Therapy to be a safe and efficacious treatment for any treatment indications.
End-Stage
Renal Disease, Endotoxemia and Inflammation
According
to the United States Renal Data System (USRDS), more than 550,000 individuals suffer from end-stage renal disease (ESRD), which results
in approximately 85 million kidney dialysis treatments being administered in the United States each year. Persistent inflammation is
a hallmark feature of ESRD as reflected by the excess production of inflammatory cytokines, including tumor necrosis factor-α (TNF-α),
interleukin-1β (IL-1β) and interleukin-6 (IL-6), which contribute to increased all-cause mortality. ESRD inflammation also
induces intestinal permeability, which allows endotoxin (gram-negative bacterial toxin) to translocate from the gut and into the bloodstream.
Beyond fuelling further inflammation, endotoxin is potent activator of sepsis, which can lead to multiple organ failure and ultimately
death.
Sigyn
Therapy establishes a candidate strategy to improve the health and quality-of-life of ESRD patients. Beyond its potential to reduce endotoxin,
TNF-α, IL-1β, and IL-6 from human blood plasma, Sigyn Therapy can be administered in series with regularly scheduled dialysis
therapy.
We
are currently preparing an Investigational Device Exemption (IDE) for submission to the U.S. Food and Drug Administration (“FDA”)
related to a human feasibility study of Sigyn Therapy in ESRD patients with endotoxemia and elevated inflammatory cytokine production.
As per the study protocol, Sigyn Therapy will be administered in combination with the regularly scheduled dialysis treatments of enrolled
subjects. The primary study objective will be to evaluate the safety of Sigyn Therapy in health compromised ESRD patients. A secondary
objective is to quantify changes in circulating levels of endotoxin, tumor necrosis factor-α (TNF-α), interleukin-1β
(IL-1β), and interleukin-6 (IL-6) before and after each Sigyn Therapy administration. Endotoxin and excess TNF-α, IL-1β,
and IL-6 production are commonly associated with each of our candidate treatment indications, including sepsis and community-acquired
pneumonia.
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
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 use of extracorporeal blood purification as a first-line countermeasures to treat an emerging pandemic threat not addressed
with an approved drug or vaccine at the outset of an outbreak. On March 24, 2020, the U.S. Department of Health and Human Services (HHS)
declared that the emergence of COVID-19 justified the Emergency-Use Authorization (EUA) of drugs, biological products, and medical devices
to combat the pandemic. Within a month of this HHS declaration, FDA awarded an EUA to blood purification therapies from Terumo BCT, ExThera
Medical Corporation, CytoSorbents, Inc., and Baxter Healthcare Corporation. In connection with these authorizations, FDA published a
statement that blood purification devices may be effective at treating patients with confirmed COVID-19 by reducing various pathogens,
cytokines, and other inflammatory mediators from the bloodstream.
Consistent
with FDA’s statement, small-scale versions of Sigyn Therapy have been quantified to reduce the presence of various pathogens, cytokines,
and other inflammatory mediators from human blood plasma during in vitro studies. As such, we believe that Sigyn Therapy could
provide a candidate strategy to treat future pandemic outbreaks, which are increasingly being fuelled by a confluence of global warming,
urban crowding, and intercontinental travel.
Additionally,
as a majority of infectious human viruses are not addressed with a corresponding drug or vaccine, there may be an ongoing need for blood
purification technologies that offer to 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 Sigyn Therapy aligns
with HHS initiatives established through the Public Health Emergency Medical Countermeasure Enterprise (PHEMCE) that support the development
of broad-spectrum medical countermeasures that can mitigate the impact of an emerging pandemic or bioterror threat, yet also have viability
in established disease indications.
Candidate
Pipeline Product
Beyond
our focus to clinically advance Sigyn Therapy, we intend to develop a pipeline of extracorporeal blood purification therapies. In this
regard, we have designed a therapeutic system to enhance the benefit of cancer chemotherapy. To support this endeavor, we disclosed on
October 6, 2022, that a patent application entitled: “SYSTEM AND METHODS TO ENHANCE CHEMOTHERAPY DELIVERY AND REDUCE TOXICITY”
had been filed with the United States Patent and Trademark Office (“USPTO”). On October 13, 2022, we subsequently disclosed
that trademark applications to register ChemoPrepTM and ChemoPureTM were filed with the USPTO”.
Chemotherapeutic
agents are the most commonly administered drugs to treat cancer, which is the second leading cause of death in the United States. Despite
therapeutic advances, treatment toxicity, drug resistance and inadequate tumor site delivery restrict the benefit of chemotherapy. To
overcome these challenges, our patent submission describes a therapeutic device system whose primary objective is to enhance tumor site
delivery of chemotherapy and reduce its toxicity. A secondary objective of the system is to reduce treatment dosing without sacrificing
patient benefit, or conversely increase chemotherapy dosing without added toxicity. In concert with these objectives, our candidate therapeutic
system offers to inhibit the spread of cancer metastasis that can be induced by the administration of chemotherapy.
Our
proposed chemotherapy enhancement system is comprised of two blood purification technologies. ChemoPrepTM, administered prior
to chemotherapy to optimize tumor site delivery and improve the benefit of ChemoPureTM, which is deployed post-chemotherapy
to reduce treatment toxicity and inhibit the potential spread of cancer metastasis.
To
improve the delivery of chemotherapeutic agents, we designed ChemoPrepTM with an objective to reduce the bloodstream presence
of tumor-derived extracellular vesicles or exosomes (Tumor-EXs) that diminish the efficacy of chemotherapy. As compared to non-cancer
subjects, Tumor-EXs are highly concentrated in the bloodstream of those suffering from cancer. Tumor-EXs decoy and directly inhibit chemotherapeutic
agents from reaching tumor cell targets. Tumor-EXs have also been reported to export chemotherapeutic agents out of cancer cells. Based
on these factors, we believe the pre-chemo depletion of circulating Tumor-EXs could establish a novel, yet practical strategy to increase
tumor-site saturation of chemotherapy, which in turn may permit for lower doses of chemotherapy to be administered without diminishing
patient benefit.
ChemoPrepTM
may also improve the performance of ChemoPureTM as a reduced bloodstream presence of Tumor-EXs, which are competitive
binding and adsorption factors based on similar size and structural characteristics, would likely increase the efficiency of ChemoPureTM
to reduce the presence of off-target chemotherapeutic agents that remain circulating in the bloodstream.
ChemoPureTM
was designed to perform two critical functions after chemotherapy administration. To reduce treatment toxicity by lowering the
bloodstream presence of chemotherapeutic agents that are not delivered to the target tumor site, and to reduce the circulating presence
of chemotherapy-induced Tumor-EXs that may promote the spread of cancer metastases.
Unlike
Sigyn TherapyTM, which is a candidate to treat life-threatening conditions that are not addressed with approved drug therapies,
the intent of the ChemoPrepTM and ChemoPureTM is to enhance the delivery of market-cleared chemotherapeutic drugs
and reduce their toxicity. Additionally, while Sigyn TherapyTM is a hollow-fiber based device designed for use on dialysis
and continuous renal replacement machines, ChemoPrepTM and ChemoPureTM do not contain hollow-fibers and are intended
for use on portable blood processing systems that can be located within the clinical sites where chemotherapy is administered. During
treatment, the functionality of the blood processing system allows for patient blood plasma to flow through our devices, which contain
formulations of adsorbent and binding components intended deplete Tumor-EXs and chemotherapeutic agents from the bloodstream.
In
an in vitro study conducted by researchers at Innovative Biotherapies, we obtained pre-clinical insight that liposomal nanoparticles,
commonly used to deliver chemotherapeutic agents, can be reduced from human blood plasma with a formulation of adsorbent components.
In the study, liposome concentrations in human blood plasma were reduced by 92.5% after a two-hour interaction with the adsorbent components.
Beyond providing initial support for our candidate strategy to remove liposomal drug agents, the study established the possibility that
Tumor-EXs may also be reduced from blood plasma as liposomes have previously served as a research model system for isolating extracellular
vesicles and exosomes based on a similarity of size and structural characteristics.
Overview
of Presentation
The
following Management’s Discussion and Analysis (“MD&A”) or Plan of Operations includes the following sections:
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Results of Operations |
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Liquidity and Capital Resources |
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Capital Expenditures |
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Going Concern |
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Critical Accounting Policies |
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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
Three
Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
The
following discussion represents a comparison of our results of operations for the three months ended March 31, 2023 and 2022. The
results of operations for the periods shown in our audited condensed consolidated financial statements are not necessarily indicative
of operating results for the entire period. In the opinion of management, the audited condensed 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.
| | |
Three Months Ended March 31, | |
| | |
2023 | | |
2022 | |
| | |
| | |
| |
| Net revenues | |
$ | - | | |
$ | - | |
| Cost of sales | |
| - | | |
| - | |
| Gross Profit | |
| - | | |
| - | |
| Operating expenses | |
| 521,258 | | |
| 609,236 | |
| Other expense | |
| 819,778 | | |
| 68,810 | |
| Net loss before income taxes and discontinued operations | |
$ | (1,341,036 | ) | |
$ | (678,046 | ) |
Net
Revenues
For
the three months ended March 31, 2023 and 2022, we had no revenues.
Cost
of Sales
For
the three months ended March 31, 2023 and 2022, we had no cost of sales as we had no revenues.
Operating
expenses
Operating
expenses decreased by $87,978, or 14.4%, to $521,258 for three months ended March 31, 2023 from $609,236 for the three months ended March
31, 2022 primarily due to decreases in research and development costs of $80,499, investor relations costs of $6,579, consulting fees
of $51,610, insurance costs of $11,585, marketing costs of $66, and compensation costs of $4,021,offset primarily by increases in professional
fees of $26,663, depreciation costs of $11, rent expenses of $1,395, stock based compensation of $37,500, and general and administration
costs of $813, as a result of adding administrative infrastructure for our anticipated business development.
For
the three months ended March 31, 2023, we had marketing expenses of $184, research and development costs of $147,843, stock based compensation
of $37,500, and general and administrative expenses of $335,731 primarily due to professional fees of $80,157, compensation costs of
$140,873, rent expense of $19,314, depreciation costs of $1,715, amortization costs of $900, investor relations costs of $3,526, consulting
fees of $55,642, insurance expense of $29,488, and general and administration costs of $4,116, as a result of adding administrative infrastructure
for our anticipated business development.
For
the three months ended March 31, 2022, we had marketing expenses of $250, research and development costs of $228,342, and general and
administrative expenses of $380,644 primarily due to professional fees of $53,494, compensation costs of $144,894, rent of $17,919, depreciation
costs of $1,704, amortization costs of $900, investor relations costs of $10,105, consulting fees of $107,252, insurance expense of $41,073,
and general and administration costs of $3,303, as a result of adding administrative infrastructure for our anticipated business development.
Other
Expense
Other
expense for the three months ended March 31, 2023 totaled $819,778 primarily due to interest expense of $791,708 in conjunction with
accretion of debt discount, interest expense of $42,737 in conjunction with accretion of original issuance discount, interest expense
of $1,139, and modification of warrants of $15,806, compared to other expense of $68,810 for the three months ended March 31, 2022 primarily
due to interest expense of $52,257 in conjunction with accretion of debt discount and interest expense of $16,522 in conjunction with
accretion of original issuance discount.
Net
loss before income taxes
Net
loss before income taxes and discontinued operations for the three months ended March 31, 2023 totaled $1,341,036 primarily due to (increases/decreases)
in compensation costs, professional fees, marketing costs, investor relations costs, consulting fees, research and development costs,
rent, insurance, stock based compensation, and general and administration costs compared to a loss of $678,046 for the three months ended
March 31, 2022 primarily due to (increases/decreases) in compensation costs, professional fees, marketing costs, investor relations costs,
consulting fees, research and development costs, rent, insurance, stock based compensation, and general and administration costs .
Assets
and Liabilities
Assets
were $660,447 as of March 31, 2023. Assets consisted primarily of cash of $322,327, inventories of $50,000, other current assets of $40,161,
equipment of $20,337, intangible assets of $1,200, operating lease right-of-use assets of $205,711, and other assets of $20,711. Liabilities
were $3,006,485 as of March 31, 2023. Liabilities consisted primarily of accounts payable of $265,085, accrued payroll and payroll taxes
of $41,124, other current liabilities of $1,039, convertible notes of $2,471,101, net of $778,415 of unamortized debt discount and debt
issuance costs, and operating lease liabilities of $228,136.
Liquidity
and Capital Resources
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 $8,536,612 at March 31, 2023, had a working capital deficit of $2,420,960 and $1,978,396 at March 31, 2023 and December 31,
2022, respectively, had a net loss of $1,341,036 and $678,046 for the three months ended March 31, 2023 and 2022, respectively, and net
cash used in operating activities of $562,573 and $459,571 for the three months ended March 31, 2023 and 2022, 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 public 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
condensed consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a
going concern.
General
– Overall, we had an increase in cash flows for the three months ended March 31, 2023 of $313,971 resulting from cash provided
by financing activities of $876,544, offset partially by cash used in operating activities of $562,573.
The
following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods indicated:
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Three Months Ended March 31, | |
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2023 | | |
2022 | |
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| Net cash provided by (used in): | |
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| Operating activities | |
$ | (562,573 | ) | |
$ | (459,571 | ) |
| Investing activities | |
| - | | |
| - | |
| Financing activities | |
| 876,544 | | |
| 200,000 | |
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$ | 313,971 | | |
$ | (259,571 | ) |
Cash
Flows from Operating Activities – For the three months ended March 31, 2023, net cash used in operations was $562,573 compared
to net cash used in operations of $459,571 for the three months ended March 31, 2022. Net cash used in operations was primarily due to
a net loss of $1,341,036 for three months ended March 31, 2023 and the changes in operating assets and liabilities of $80,291, primarily
due to the decrease in accounts payable of $62,432 other current liabilities of $640, and the increase in other current assets of $28,219,
offset partially by the increase in accrued payroll and payroll taxes of $11,000. In addition, net cash used in operating activities
includes adjustments to reconcile net profit from depreciation expense of $1,715, amortization expense of $900, stock based compensation
of $37,500, accretion of original issuance costs of $42,737, accretion of debt discount of $791,708, and modification of warrants of
$15,806.
For
the three months ended March 31, 2022, net cash used in operations was $459,571. Net cash used in operations was primarily due to a net
loss of $678,046 for three months ended March 31, 2022 and the changes in operating assets and liabilities of $147,092, primarily due
to the increase in accounts payable of $156,473, other current liabilities of $789, and other current assets of $10,170. In addition,
net cash used in operating activities includes adjustments to reconcile net profit from depreciation expense of $1,704, amortization
expense of $900, accretion of original issuance costs of $16,522, and accretion of debt discount of $52,257.
Cash
Flows from Investing Activities – For the three months ended March 31, 2023 and 2022, the Company had no cash flows from
investing activities.
Cash
Flows from Financing Activities – For the three months ended March 31, 2023, net cash provided by financing was $876,544,
due to proceeds from short term convertible notes of $882,000 and fees associated with the filing of the Company’s Form S-1 of
$5,456 compared to cash provided by financing activities of $200,000 for the three months ended March 31, 2022 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. As stated above, Management intends to raise additional funds
by way of a public offering or an asset sale transaction, however there can be no assurance that we will be successful in completing
such transactions.
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 stockholders,
in the case of equity financing.
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.
Critical
Accounting Policies
Refer
to Note 3 in the accompanying notes to the unaudited condensed consolidated financial statements for critical accounting policies.
Recent
Accounting Pronouncements
Refer
to Note 3 in the accompanying notes to the condensed consolidated financial statements.
Off-Balance
Sheet Arrangements
As
of March 31, 2023, we have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated
under which it has:
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a retained or contingent
interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit; |
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liquidity or market risk
support to such entity for such assets; |
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an obligation, including
a contingent obligation, under a contract that would be accounted for as a derivative instrument; or |
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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.