UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For
the quarterly period ended
For the transition period from __________ to __________
Commission
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Indicate
by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Emerging growth company |
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The number of shares outstanding of the registrant’s $0.001 par value common stock as of May 13, 2022, was shares (includes common stock to be issued of 627,281 shares).
Vicapsys Life Sciences, Inc.
TABLE OF CONTENTS
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “outlook,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth or anticipated in our forward-looking statements. Factors that could have a material adverse effect on our forward- looking statements and upon our business, results of operations, financial condition, funds derived from operations, cash available for dividends, cash flows, liquidity and prospects include, but are not limited to, the factors referenced in this document, including those set forth below:
● | our lack of an operating history; | |
● | the net losses that we expect to incur as we develop our business; | |
● | Obtaining U.S. Food and Drug Administration (“FDA”) or other regulatory approvals or clearances for our technology; | |
● | implementing and achieving successful outcomes for clinical trials of our products; | |
● | convincing physicians, hospitals and patients of the benefits of our technology and to convert from current technology; | |
● | the ability of users of our products (when and as developed) to obtain third-party reimbursement; | |
● | any failure to comply with rigorous FDA and other government regulations; and | |
● | securing, maintaining and defending patent or other intellectual property protections for our technology. | |
● | decline in global financial markets and economic downturn resulting from the coronavirus COVID-19 global pandemic; | |
● | business interruptions resulting from the coronavirus COVID-19 global pandemic. |
Forward-looking statements include risks and uncertainties and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks and uncertainties can be found in Company’s Annual Report filed on Form 10-K filed with the Securities and Exchange Commission on March 16, 2022, (the “Form 10-K”) for the fiscal year ended December 31, 2021, as the same may be updated from time to time, including in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this document. The matters discussed herein and elsewhere in this document could cause our actual results and performance to differ materially from those set forth or anticipated in forward-looking statements. Accordingly, we cannot guarantee future results or performance. Furthermore, except as required by law, we are under no duty to, and we do not intend to, update any of our forward-looking statements after the date of this document, whether as a result of new information, future events or otherwise.
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VICAPSYS LIFE SCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2022 | December 31, 2021 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash | $ | $ | ||||||
Prepaid Expenses | ||||||||
Total Current Assets | ||||||||
Intangible asset, net of accumulated amortization of $ | ||||||||
Total Assets | $ | $ | ||||||
Liabilities and Stockholders’ Deficit | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accounts payable, related parties | ||||||||
Accrued salaries, related party | ||||||||
Total Current Liabilities | ||||||||
Stockholders’ Deficit: | ||||||||
Common Stock, par value $ | ; shares authorized; and shares issued and outstanding, respectively||||||||
Common stock to be issued, par value $ | ; and shares outstanding, respectively||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | $ |
See accompanying notes to unaudited condensed consolidated financial statements.
4 |
VICAPSYS LIFE SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Revenues | $ | $ | ||||||
Operating Expenses: | ||||||||
Personnel costs | ||||||||
Research and development expenses, related party | ||||||||
Professional fees | ||||||||
General and administrative expenses | ||||||||
Total operating expenses | ||||||||
Loss from operations | ( | ) | ( | ) | ||||
Other income: | ||||||||
Other income | ||||||||
Total other income | ||||||||
Income (loss) before income taxes | ( | ) | ||||||
Income taxes | ||||||||
Net income (loss) available to common shareholders | $ | ( | ) | $ | ||||
Net income (loss) per common share: | ||||||||
Basic | $ | ( | ) | $ | ||||
Diluted | $ | ( | ) | $ | ||||
Weighted average common shares outstanding: | ||||||||
Basic | ||||||||
Diluted |
See accompanying notes to unaudited condensed consolidated financial statements.
5 |
VICAPSYS LIFE SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2022 and 2021
(Unaudited)
Series A Preferred Stock | Series B Preferred Stock | Common Stock | Common Stock to be Issued | Additional Paid-in | Accumulated | Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||||||||||||||
Balance December 31, 2020 | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||
Conversion of Series A Preferred Stock to common stock to be issued | ( | ) | ( | ) | - | - | - | - | ( | ) | - | - | ||||||||||||||||||||||||||||||||
Conversion of Series B Preferred Stock to common stock to be issued | - | - | ( | ) | ( | ) | - | - | - | - | - | |||||||||||||||||||||||||||||||||
Common stock issued fom common stock to be issued | - | - | - | - | ( | ) | ( | ) | - | - | - | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Balance March 31, 2021 | $ | $ | $ | | $ | | $ | | $ | ( | ) | $ | ( | ) |
Series A Preferred Stock | Series B Preferred Stock | Common Stock | Common Stock to be Issued | Additional Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||||||||||||||
Balance December 31, 2021 | $ | - | $ | - | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||
Common stock issued from common stock to be issued | - | - | - | - | ( | ) | ( | ) | - | - | - | |||||||||||||||||||||||||||||||||
Stock-based compensation expense | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Net income | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||||||||||||||
Balance March 31, 2022 | $ | $ | $ | | $ | $ | | $ | ( | ) | $ | ( | ) |
See accompanying notes to unaudited condensed consolidated financial statements.
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VICAPSYS LIFE SCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended March 31, | ||||||||
2022 | 2021 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | ( | ) | $ | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Amortization | ||||||||
Stock-based compensation | ||||||||
Gain on sale of equity method investment | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid Expenses | ( | ) | ( | ) | ||||
Accounts payable | ( | ) | ||||||
Accounts payable, related parties | ||||||||
Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Proceeds from sale of equity method investment | ||||||||
Net Cash Used in Investing Activities | ||||||||
Net increase (decrease) in Cash | ( | ) | ||||||
Cash, Beginning of period | ||||||||
Cash, End of period | $ | $ | ||||||
Supplementary Cash Flow Information | ||||||||
Cash paid for interest | $ | $ | ||||||
Cash paid for income taxes | $ | $ |
See accompanying notes to unaudited condensed consolidated financial statements.
7 |
VICAPSYS LIFE SCIENCES, INC.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
Business
Vicapsys
Life Sciences, Inc. (“VLS”) was incorporated in the State of Florida on July 8, 1997 under the name All Product Distribution
Corp. On August 19, 1998, the Company changed its name to Phage Therapeutics International, Inc. On November 13, 2007, the Company changed
its name to SSGI, Inc.
The Company’s strategy is to develop and commercialize, on a worldwide basis, various intellectual property rights (patents, patent applications, know how, etc.) relating to a series of encapsulated products that incorporate proprietary derivatives of the chemokine CXCL12 for creating a zone of immunoprotection around cells, tissues, organs and devices for therapeutic purposes. The product name VICAPSYN™ is the Company’s proprietary product line that is applied to transplantation therapies and related stem-cell applications in the transplantation field.
NOTE 2 – GOING CONCERN AND MANAGEMENT’S PLANS
The
accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern,
which assumes the realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company
experienced a net loss of $
In
March 2020, the World Health Organization declared the novel COVID-19 virus as a global pandemic. The COVID-19 outbreak in the United
States negatively impacted to the Company’s ability to secure additional debt or equity funding to support operations in 2020 and
2021. In 2021, the Company raised an aggregate of $
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements in this report have been prepared by the Company without audit. In the opinion of management, all adjustments necessary to present the financial position, results of operations and cash flows for the stated periods have been made. Except as described below, these adjustments consist only of normal and recurring adjustments. Certain information and note disclosures normally included in the Company’s consolidated annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted.
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These unaudited condensed consolidated financial statements should be read in conjunction with a reading of the Company’s consolidated audited financial statements and notes thereto for the year ended December 31, 2021, filed with the Company’s annual report on Form 10-K with the Securities and Exchange Commission (the “SEC”) on March 16, 2022. Interim results of operations for the three months ended March 31, 2022, and 2021, are not necessarily indicative of future results for the full year. The unaudited condensed consolidated financial statements of the Company include the consolidated accounts of VLS and its’ wholly owned subsidiary VI. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP 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 date of the financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. Significant estimates included in the financial statements, include useful the life of intangible assets, valuation allowance for deferred tax assets and non-cash equity transactions and stock-based compensation.
Cash
The
Company considers all highly liquid investments with an original term of three months or less to be cash equivalents. The Company held
Intangible Assets
Costs of intangible assets are accounted for through the capitalization of those costs incurred in connection with developing or obtaining such assets. Capitalized costs are included in intangible assets in the unaudited condensed consolidated balance sheets. The Company’s intangible assets consist of costs incurred in connection with securing an Exclusive Patent License Agreement with The General Hospital Corporation, d/b/a Massachusetts General Hospital (“MGH”), as amended (the “License Agreement”). These costs are being amortized over the term of the License Agreement which is based on the remaining patent life of the related patents being licensed.
The Company reviews these intangible assets for possible impairment when events or changes in circumstances indicate that the assets carrying amount may not be recoverable. In evaluating the future benefit of its intangible assets, management performs an analysis of the anticipated undiscounted future net cash flows of the intangible assets over the remaining estimated useful life. An impairment loss is recorded if the carrying value of the asset exceeds the expected future cash flows.
Long-Lived Assets
The Company reviews long-lived assets at least annually or when events or changes in circumstances reflect the fact that the recorded value may not be recoverable for impairment and recognizes impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying values.
Equity Method Investment
The
Company accounts for investments in which the Company owns more than
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The amount of the adjustment is included in the determination of net income by the investor, and such amount reflects adjustments similar to those made in preparing consolidated statements including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between investor cost and underlying equity in net assets of the investee at the date of investment. The investment of an investor is also adjusted to reflect the investor’s share of changes in the investee’s capital. Dividends received from an investee reduce the carrying amount of the investment. A series of operating losses of an investee or other factors may indicate that a decrease in value of the investment has occurred which is other than temporary, and which should be recognized even though the decrease in value is in excess of what would otherwise be recognized by application of the equity method.
In accordance with ASC 323-10-35-20 through 35-22, the investor ordinarily shall discontinue applying the equity method if the investment (and net advances) is reduced to zero and shall not provide for additional losses unless the investor has guaranteed obligations of the investee or is otherwise committed to provide further financial support for the investee. An investor shall, however, provide for additional losses if the imminent return to profitable operations by an investee appears to be assured. For example, a material, nonrecurring loss of an isolated nature may reduce an investment below zero even though the underlying profitable operating pattern of an investee is unimpaired. If the investee subsequently reports net income, the investor shall resume applying the equity method only after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended.
Equity and cost method investments are classified as investments. The Company periodically evaluates its equity and cost method investments for impairment due to declines considered to be other than temporary. If the Company determines that a decline in fair value is other than temporary, then a charge to earnings is recorded as an impairment loss in the accompanying consolidated statements of operations.
The
Company’s equity method investment consisted of equity owned in Athens Encapsulation Inc. (“AEI”), a Company controlled
by former directors of the Company which was given to the Company as part of an investment and restructuring agreement entered into in
May 2019. In January 2021, the Company sold its’ equity investment in AEI, back to AEI for $
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2022.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities, payables with related parties, approximate their fair values because of the short maturity of these instruments.
Revenue Recognition
Revenue recognition is accounted for under ASC Topic 606, “Revenue from Contracts with Customers” (“ASC 606”) and all the related amendments. The core principle of ASC 606 requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. ASC 606 defines a five-step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation.
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The Company’s contracts with customers are generally on a contract and work order basis and represent obligations that are satisfied at a point in time, as defined in the new guidance, generally upon delivery or has services are provided. Accordingly, revenue for each sale is recognized when the Company has completed its performance obligations. Any costs incurred before this point in time, are recorded as assets to be expensed during the period the related revenue is recognized. The Company did not generate any revenue for the three months ended March 30, 2022, and 2021.
Stock-Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 – “Compensation –Stock Compensation,” which requires recognition in the financial statements of the cost of employee, director and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on the grant-date fair value of the award. The Company has elected to recognize forfeitures as they occur as permitted under the FASB’s Accounting Standards Update ASU 2016-09 Improvements to Employee Share-Based Payment.
Research and Development
Costs
and expenses that can be clearly identified as research and development are charged to expense as incurred. For the three months ended
March 31, 2022, and 2021, the Company incurred $
Income Taxes
The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure, and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties.
Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized.
The Company reports earnings (loss) per share in accordance with ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share is computed by dividing net loss by the weighted-average number of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period using the treasury stock method and as-if converted method. For the period ended March 31, 2022, and 2021, the Company’s dilutive securities are convertible into and shares of common stock, respectively. The amount for the three months ended March 31, 2022, are not included in the computation of dilutive loss per share because their impact is antidilutive. For the three months ended March 31, 2021, the dilutive securities are included in diluted net income per share.
For the three months ended March 31, | ||||||||
2022 | 2021 | |||||||
Net income (loss) per common share - basic: | ||||||||
Net income (loss) available to common shareholders | $ | ( | ) | $ | ||||
Weight average common shares outstanding - basic | ||||||||
Net income (loss) per common share - basic | $ | ( | ) | $ | ||||
Net income (loss) per common share - diluted: | ||||||||
Net income (loss) available to common shareholders | $ | ( | ) | $ | ||||
Add: stock- based compensation | -- | |||||||
Numerator for income (loss) per common share - diluted | $ | ( | ) | $ | ||||
Weight average common shares outstanding - diluted | ||||||||
Basic | ||||||||
Stock Options | -- | |||||||
Warrants | -- | |||||||
Common stock to be issued | -- | |||||||
Denominator weighted average common shares outstanding - diluted | ||||||||
Net income (loss) per common share - diluted | $ | ( | ) | $ |
11 |
March 31, 2022 | March 31, 2021 | |||||||
Common stock to be issued | ||||||||
Stock options | ||||||||
Warrants to purchase common stock | ||||||||
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements for the three months ended March 31, 2022, and 2021.
NOTE 4 – INTANGIBLE ASSETS
The
Company’s intangible assets consist of costs incurred in connection with the License Agreement with MGH (See Note 5).
The consideration paid for the rights included in the License Agreement was in the form of common stock shares which resulted in MGH
receiving approximately
The Company’s intangible assets consisted of the following at March 31, 2022, and December 31, 2021:
March 31, 2022 | December 31, 2021 | |||||||
Licensed patents | $ | $ | ||||||
Accumulated amortization | ( | ) | ( | ) | ||||
Balance | $ | $ |
The
Company recognized $
Future expected amortization of intangible assets is as follows:
Fiscal year ending December 31, | ||||
2022 (months remaining) | $ | |||
2023 | ||||
2024 | ||||
2025 | ||||
2026 | ||||
Thereafter | ||||
$ |
12 |
NOTE 5 – RELATED PARTY TRANSACTIONS
Consulting Agreements
On
November 5, 2021, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Mark Poznansky, MD, (the
“Consultant”) a minority stockholder and former Director. The Company engaged the Consultant to render consulting services
with respect to informing, guiding, and supervising the development of antagonists to immune repellents or anti-fugetaxins for the treatment
of cancer. The initial term of the Consulting Agreement is for six months (the “Initial Term”) and the Company agreed to
pay the Consultant $
On
January 1, 2022, the Company entered into a consulting agreement (the “Consulting Agreement”) with Frances Toneguzzo, Ph.D.,
the Company’s former CEO. Pursuant to the one-year term of the Consulting Agreement in exchange for services in leading the research
and development teams and laboratory work, the consultant will receive $
MGH License Agreement
On May 8, 2013, VI and MGH, a principal stockholder (see Note 6), entered into the License Agreement, pursuant to which MGH granted to the Company, in the field of coating and transplanting cells, tissues and devices for therapeutic purposes, on a worldwide basis: (i) an exclusive, royalty-bearing license under its rights in Patent Rights (as defined in the License Agreement) to make, use, sell, lease, import and transfer Products and Processes (each as defined in the License Agreement); (ii) a non-exclusive, sub-licensable (solely in the License Field and License Territory (each as defined in the License Agreement)) royalty-bearing license to Materials (as defined in the License Agreement) and to make, have made, use, have used, Materials for only the purpose of creating Products, the transfer of Products and to use, have used and transfer processes; (iii) the right to grant sublicenses subject to and in accordance with the terms of the License Agreement, and (iv) the nonexclusive right to use technological information (as defined in the License Agreement) disclosed by MGH to the Company under the License Agreement, all subject to and in accordance with the License Agreement (the “License”).
As amended by the Eighth Amendment to the License Agreement on March 14, 2022 (“Effective Date”), which replaces the prior pre-sales due diligence requirements in their entirety, the License Agreement requires that the Company satisfy the following requirements prior to the first sale of Products (“MGH License Milestones”), by certain dates.
Pre-Sales Diligence Requirement:
(x) | The Company shall provide a detailed business plan and development plan by June 1st, 2022. | |
(xi) | The Company shall raise
$ | |
(xii) | The Company shall raise
an additional $ | |
(xiii) | The Company shall initiate research regarding the role of CXCL12 in beta cell function and differentiation by January 1st, 2023. | |
(xiv) | The Company shall initiate diabetic non-human primate studies using cadaveric islets encapsulated in the CXCL12 technology by March 1st, 2023. | |
(xv) | The Company shall initiate research regarding other applications of the CXCL12 platform by June 1st, 2023. | |
(xvi) | The Company shall initiate a Phase I clinical trial of a Product or Process by March 1st, 2024. | |
(xvii) | The Company shall initiate a Phase II clinical trial of a Product or Process within thirteen (13) years from Effective Date. | |
(xviii) | The Company shall initiate Phase III clinical trial of a Product or Process within sixteen (16) years from Effective Date. |
13 |
Additionally, as amended by the Eighth Amendment to the License Agreement on March 14, 2022, which replaces the prior post-sales due diligence requirements in their entirety, the License Agreement requires that the Company satisfy the following requirements post-sales of Products (“MGH License Milestones”), by certain dates.
Post-Sales Diligence Requirements:
(i) | The Company shall itself or through an Affiliate or Sublicensee make a First Commercial Sale within the following countries and regions in the License Territory within eighteen (18) years after the Effective Date of this Agreement: US and Europe and China or Japan. | |
(ii) | Following the First Commercial Sale in any country in the License Territory, Company shall itself or through its Affiliates and/or Sublicensees use commercially reasonable efforts to continue to make Sales in such country without any elapsed time period of one (1) year or more in which such Sales do not occur due to lack such efforts by Company. |
In consideration of the update to the diligence milestones, the Company shall pay the following Annual Minimum Royalty payments:
(i) | Prior
to the First Commercial Sale, the Company shall pay to Hospital a non-refundable annual license fee of ten thousand dollars ($ | |
(ii) | Following the First Commercial
Sale, Company shall pay Hospital a non-refundable annual minimum royalty in the amount of one hundred thousand dollars United States
Dollars ($ |
The
License Agreement also requires VI to pay to MGH a
The License Agreement expires on the later of (i) the date on which all issued patents and filed patent applications within the Patent Rights have expired (November 2033) or have been abandoned, and (ii) one year after the last sale for which a royalty is due under the License Agreement.
The License Agreement also grants MGH the right to terminate the License Agreement if VI fails to make any payment due under the License Agreement or defaults in the performance of any of its other obligations under the License Agreement, subject to certain notice and rights to cure set forth therein. MGH may also terminate the License Agreement immediately upon written notice to VI if VI: (i) shall make an assignment for the benefit of creditors; or (ii) or shall have a petition in bankruptcy filed for or against it that is not dismissed within 60 days of filing. As of the date of this filing, this License Agreement remains active and the Company has not received any termination notice from MGH.
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VI may terminate the License Agreement prior to its expiration by giving 90 days’ advance written notice to MGH, and upon such termination shall, subject to the terms of the License Agreement, immediately cease all use and sales of Products and Processes.
The
Company incurred costs to MGH of $-
During the three months ended March 31, 2022, and 2021, there have not been any sales of Product or Process under this License Agreement.
Accounts Payable, related parties and Accrued Salaries, related party
The
Company incurred director fees of $
The
Company incurred consulting fees of $
In
August 2020, Frances Tonneguzzo, the Company’s Chief Executive Officer (the “former CEO”) tendered her resignation
as CEO. For the three months ended March 31, 2022, and 2021, the Company did not incur any expenses to the former CEO. As of March 31,
2022, and December 31, 2021, $
Sale of Equity Method Investment
In
January 2021, the Company sold its’ equity investment in AEI back to AEI for $
NOTE 6– COMMITMENTS AND CONTINGENCIES
Legal Matters
The Company is not aware of any material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
MGH License Agreement
As
discussed in Note 5,
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The
License Agreement also requires VI to pay to MGH a
Consulting Agreements
On
January 12, 2022, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Donohoe Advisory Associates,
LLC. (the “Consultant”). The Company engaged the Consultant to provide assistance and advice to the Company in support of
the Company’s efforts to obtain a listing on a national securities exchange. The Company agreed to pay the Consultant a retainer
fee of $
On
March 7, 2022, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Alpha IR Group, LLC. (the
“Consultant”). The Company engaged the Consultant to provide consulting, investor relations, and corporate and transaction
communication related services. The initial term of the Consulting Agreement is for three months (the “Initial Term”) beginning
March 1, 2022, and the Company agreed to pay compensation equal to the sum of $
NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred Stock
The Company has authorized shares of preferred stock, $ par value per share.
Series A Preferred Stock
On
December 19, 2017, the Company amended its articles of incorporation by filing a certificate of designation with the Secretary of State
of Florida therein designating a class of preferred stock as Series A Preferred Stock, $
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In
the event of liquidation, dissolution or winding up of the Company, either voluntarily or involuntarily, the holders of Series
A Preferred Stock shall be entitled to receive, prior and in preference to any common stock holders, distribution of any surplus funds
equal to the greater of (i) the sum of $
Pursuant to the Articles of Incorporation, the shares of Series A Preferred Stock automatically converted into shares of common stock to be issued on February 12, 2021, (the one-year anniversary of the initial filing by the Company of the Form 10 filed with the SEC). The common stock shares for the conversion of the Series A Preferred Stock were issued on January 13, 2022.
As of March 31, 2022, and December 31, 2021, there were -- shares of Series A Preferred Stock issued and outstanding.
Series B Preferred Stock
On December 19, 2017, the Company amended the articles of incorporation by filing a certificate of designation with the Secretary of State of Florida therein designating a class of preferred stock as Series B Preferred Stock, $ par value per share, consisting of million ( ) shares (the “Series B Preferred Stock Certificate of Designation”).
Pursuant to the Articles of Incorporation, the shares of Series B Preferred Stock automatically converted into shares of common stock to be issued on February 12, 2021, the one-year anniversary of the initial filing by the Company of the Form 10 filed by the Company with the SEC. The common stock shares for the conversion of the Series B Preferred Stock were issued on January 13, 2022.
As of March 31, 2022, and December 31, 2021, there were -- shares of Series B Preferred Stock issued and outstanding.
Common Stock
The Company has authorized shares of common stock, $ par value per share. As of March 31, 2022, and December 31, 2021, there were and shares, respectively, of common stock outstanding.
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Common Stock Issuances
On February 11, 2021, the Company issued shares to an investor. The shares were previously included in common stock to be issued.
On February 12, 2021, the Company issued shares of common stock to the holders of Series A Preferred Stock, pursuant to the automatic conversion feature of the Series A Certificate of Designation, whereby, the Series A shares are to automatically convert on the one-year anniversary of the Company filing its Registration Statement on Form 10. The Form 10 Registration Statement was filed with the SEC on February 12, 2020. The common stock shares for the conversion of the Series A Preferred Stock were issued on January 13, 2022.
On February 12, 2021, the Company issued shares of common stock to the holders of Series B Preferred Stock, pursuant to the automatic conversion feature of the Series B Certificate of Designation, whereby, the Series B shares are to automatically convert on the one-year anniversary of the Company filing its Registration Statement on Form 10. The Form 10 Registration Statement was filed with the SEC on February 12, 2020. The common stock shares for the conversion of the Series B Preferred Stock were issued on January 13, 2022.
During the three months ended March 31, 2022, the Company determined that the former Series B Preferred Stockholders, subsequent to all Series B Preferred Stock having previously been converted to shares of common stock in 2021, were owed additional shares of common stock due to an adjustment to the conversion price that occurred as a result of a down round trigger event that occurred in 2019 when the Company sold shares of common stock and a warrant in a private placement at a price of $ , which was below the original conversion ratio of the Series B Preferred Stock. Management determined the total additional shares owed to the Preferred B Stockholders to be as a result of the down round trigger. The financial statement impact of this down round trigger was not significant. The shares owed to the Series B Preferred Stockholders due to the 2019 trigger event have been presented on the statement of stockholders’ equity retrospectively as common stock to be issued with no impact on total stockholders’ deficit. The Company issued the additional shares to the Series B Preferred Stockholders on March 24, 2022.
Common Stock to be issued
As of March 31, 2022, and March 31, 2021, there were and , respectively, shares of common stock to be issued. The March 31, 2022, amount relates to shares to be issued pursuant to a Stock Issuance and Release Agreement (“SRI Agreement”) executed by the Company in February 2019 to stockholders for no consideration who purchased shares in 2018 at $ , and shares of common stock to be issued to two initial shareholders of VI.
The March 31, 2021, amount related to shares of common stock be issued for the automatic conversion of the Series A Preferred Stock, shares of common stock to be issued for the automatic conversion of the Series B Preferred Stock (see above), shares of common stock to be issued as a result of the down round trigger event that occurred in 2019 (see above), shares to be issued pursuant to a SRI Agreement executed by the Company in February 2019 to stockholders for no consideration who purchased shares in 2018 at $ , and shares of common stock to be issued to two initial shareholders of VI.
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Stock Options
Number of Options | Weighted- Average Exercise Price per Share | Weighted- (Years) | Aggregate Intrinsic Value | |||||||||||||
Outstanding at December 31, 2021 | $ | $ | ||||||||||||||
Outstanding at March 31, 2022 | $ | $ | ||||||||||||||
Exercisable at March 31, 2022 | $ | $ |
The Company did t grant any options to purchase shares of common stock during the three months ended March 31, 2022.
The Company recorded stock compensation expense of $ and $ for the three months ended March 31, 2022, and 2021, respectively. As of March 31, 2022, options to purchase shares of common stock remain unvested and $ of stock compensation expense remains unrecognized and will be expensed over a weighted average period of years.
Warrants
The following table summarizes activities related to warrants of the Company for the nine months ended March 31, 2022:
Number of Warrants | Weighted- Average Exercise Price per Share | Weighted- (Years) |
Aggregate Intrinsic Value | |||||||||||||
Outstanding and exercisable at December 31, 2021 | $ | $ | ||||||||||||||
Outstanding and exercisable at March 31, 2022 | $ | $ |
The Company did not issue any warrants during the three months ended March 31, 2022.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report. Historical results and trends that might appear in this Quarterly Report should not be interpreted as being indicative of future operations.
Overview
Vicapsys Life Sciences, Inc. (“VLS”) was incorporated in the State of Florida on July 8, 1997 under the name All Product Distribution Corp. On August 19, 1998, the Company changed its name to Phage Therapeutics International, Inc. On November 13, 2007, the Company changed its name to SSGI, Inc. On September 13, 2017, the Company changed its name to Vicapsys Life Sciences, Inc., effected a 1-for-100 reverse stock split of its outstanding common stock, increased the Company’s authorized capital stock to 300,000,000 shares of common stock, par value $0.001 per share, and 20,000,000 shares of “blank check” preferred stock, par value $0.001 per share. On December 22, 2017, pursuant to a Share Exchange Agreement (the “Exchange Agreement”) by and among VLS, Michael W. Yurkowsky, ViCapsys, Inc. (“VI”) and the shareholders of VI, a private company, VI became a wholly owned subsidiary of VLS. We refer to VLS and VI together as the “Company”.
The Company’s strategy is to develop and commercialize, on a worldwide basis, various intellectual property rights (patents, patent applications, know how, etc.) relating to a series of encapsulated products that incorporate proprietary derivatives of the chemokine CXCL12 for creating a zone of immunoprotection around cells, tissues, organs and devices for therapeutic purposes. The product name VICAPSYN™ is the Company’s proprietary product line that is applied to transplantation therapies and related stem-cell applications in the transplantation field.
COVID-19
The coronavirus outbreak (“COVID-19”) adversely affected the Company’s financial condition and results of operations. The impact of the COVID-19 outbreak on businesses and the economy in the United States is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact businesses and the economy is highly uncertain. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected.
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency caused by a new strain of the coronavirus and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain states and municipalities have enacted quarantining regulations which severely limit the ability of people to move and travel.
In addition, the Company is uncertain of the full effect the pandemic will have on it for the longer term since the scope and duration of the pandemic is unknown, and evolving factors such as the level and timing of the distribution of efficacious vaccines across the world and the extent of any resurgences of the virus or emergence of new variants of the virus, such as the Delta variant and the Omicron variant, will impact the stability of economic recovery and growth. The Company may experience long-term disruptions to its operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic; and closures of businesses or manufacturing facilities critical to its business.
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Results of Operations – Three Months Ended March 31, 2022, and 2021
Revenues
The Company did not have any revenues for the three months ended March 31, 2022, and 2021.
Operating Expenses
We classify our operating expenses into four categories: personnel costs, research and development expenses, professional fees, and general and administrative expenses. The Company’s total operating expenses for the three months ended March 31, 2022, were $167,047, compared to $49,770, for the three months ended March 31, 2021.
The monthly increase in Director fees for our CEO commencing in January 2022, resulted in an increase in personnel costs to $30,369 from $22,808 for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, respectively. We incurred $10,000 in research and development expenses during the three months ended March 31, 2022, related to a non-refundable royalty fee we agreed to pay upon execution of the Eighth Amendment to the License Agreement with MGH, which is a slight increase from $2,307 in research in development expenses incurred during the three months ended March 31, 2021. Research and development expenses remained consistently low as the Company continued ongoing financing efforts in the wake of the negative impact of COVID-19, which continued to hinder the Company’s ability to raise the additional capital necessary to maintain regular operating activities. The increase in general and administrative costs to $12,793 from $8,573 for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, respectively, was due to expenses incurred operating as a publicly traded entity. The increase in professional fees to $113,885 from $16,092 for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, respectively, was primarily attributable to the legal, accounting, and consulting and investor relations costs incurred in support of the Company’s efforts to obtain a listing on a national securities exchange.
Funding Requirements
We anticipate that substantial additional equity or debt financings or funding from collaborative agreements or from foundations, government grants or other sources, will be needed to complete preclinical and animal testing necessary to file an Investigational New Drug Application with the U.S. Food and Drug Administration, and that further funding beyond such amounts will be required to commence trials and other activities necessary to begin the process of development and regulatory approval of a product for the continued growth of the Company. Additional capital will also be required for the clinical development of the recently discovered anti-fibrotic applications and corporate partnerships will be necessary to move Company products into advanced clinical development and commercialization. We also anticipate our cash expenditures will increase as we continue to operate as a publicly traded entity.
Liquidity and Capital Resources
At March 31, 2022, we had $101,319 of cash on hand and an accumulated deficit of $14,296,672.
We do not believe that we have enough cash on hand to operate our business during the next 12 months. We anticipate we will need to raise an additional $1 million through the issuance of debt or equity securities to sustain base operations during the next 12 months, excluding development work. There can be no assurance that we will be able to obtain additional funding on commercially reasonable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include conversion discounts or covenants limiting or restricting our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third-party funding, marketing and distribution arrangements or other collaborations, or strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our future revenue streams, products or therapeutic candidates or to grant licenses on terms that may not be favorable to us.
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To date, we have financed our operations through our sale of equity and debt securities. Failure to generate revenue or to raise funds could cause us to go out of business, which would result in the complete loss for investors in our Company.
To date, we have generated no revenues, and no substantial revenues are anticipated until we have implemented our full plan of operations. To implement our strategy to grow and expand per our business plan, we intend to generate working capital via a private placement of equity or debt securities, or to secure a loan. If we are unsuccessful in raising capital or securing a loan, we could be required to cease business operations and investors would lose all of their investment.
In January 2021, the Company sold its equity investment in AEI, back to AEI for $100,000, which is included in other income for the three months ended March 31, 2021. During the year ended December 31, 2021, the Company entered into Securities Purchase Agreements with select accredited investors in connection with a private offering by the Company to raise a maximum of $1,000,000 through the sale of common stock of the Company at $0.25 per share. As of December 31, 2021, the Company had raised an aggregate amount of $560,000 from the sale of 2,240,000 shares of common stock. The Company did not raise any additional capital during the three month period ended March 21, 2022.
Additionally, we will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. Our management will have to spend additional time on policies and procedures to make sure our Company is compliant with various regulatory requirements.
This additional corporate governance time required of management could limit the amount of time management has to implement our business plan and may impede the speed of our operations.
Working Capital Deficit
March 31, 2022 | December 31, 2021 | |||||||
Current Assets | $ | 114,497 | $ | 222,793 | ||||
Current Liabilities | 765,812 | 715,964 | ||||||
Working Capital Deficit | $ | (651,315 | ) | $ | (493,171 | ) |
Cash Flows
Cash activity for the three months ended March 31, 2022, and 2021 is summarized as follows:
Three Months Ended March 30, | ||||||||
2022 | 2021 | |||||||
Net cash used in operating activities | $ | (115,976 | ) | $ | (70,806 | ) | ||
Net cash provided by investing activities | — | 100,000 | ||||||
Net increase (decrease) in cash | $ | (115,976 | ) | $ | 29,194 |
As of March 31, 2022, the Company had $101,319 of cash on hand.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4) during the periods presented, investments in special-purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.
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Contractual Obligations
MGH License Agreement
Prior to the first commercial sale, the License Agreement requires the Company to pay MGH a non-refundable annual license fee of $10,000 by June 30, 2022, and on each subsequent anniversary of the Effective Date thereafter. Additionally, following the first commercial sale, the License agreement requires the Company to pay MGH a non-refundable annual minimum royalty in the amount of $100,000 per year within sixty days after each annual anniversary of the Effective Date.
The Company executed a License Agreement with MGH. The License Agreement also requires VI to pay to MGH a 1% royalty rate on net sales related to the first license sub-field, which is the treatment of T1D. Future sub-fields shall carry a reasonable royalty rate, consistent with industry standards, to be negotiated at the time the first such royalty payment shall become due with respect to the applicable Products and Processes (as defined in the License Agreement).
The License Agreement additionally requires VI to pay to MGH a $1.0 million “success payment” within 60 days after the first achievement of total net sales of Product or Process equal or exceeding $100,000,000 in any calendar year and $4,000,000 within 60 days after the first achievement of total net sales of Product or Process equal to or exceeding $250,000,000 in any calendar year. The Company is also required to reimburse MGH’s expenses in connection with the preparation, filing, prosecution and maintenance of all Patent Rights. No expense reimbursements were paid to MGH during the three months ended March 31, 2022, and 2021.
Consulting Agreements
On November 5, 2021, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Mark Poznansky, MD, (the “Consultant”) a minority stockholder and former Director. The Company engaged the Consultant to render consulting services with respect to informing, guiding, and supervising the development of antagonists to immune repellents or anti-fugetaxins for the treatment of cancer. The initial term of the Consulting Agreement is for six months (the “Initial Term”) and the Company agreed to pay the Consultant $2,000 per month commencing November 5, 2021, with consideration for an increase in the monthly fee following the completion for the Company’s successful up listing to the NASDAQ Stock Market.
On January 1, 2022, the Company entered into a consulting agreement (the “Consulting Agreement”) with Frances Toneguzzo, Ph.D., the Company’s former CEO. Pursuant to the one-year term of the Consulting Agreement in exchange for services in leading the research and development teams and laboratory work, the consultant will receive $5,000 per month.
On January 12, 2022, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Donohoe Advisory Associates, LLC. (the “Consultant”). The Company engaged the Consultant to provide assistance and advice to the Company in support of the Company’s efforts to obtain a listing on a national securities exchange. The Company agreed to pay the Consultant a retainer fee of $17,500, which is to be applied to the Company’s monthly invoices until such time as the retainer fee is exhausted or the engagement under the agreement ends.
On March 7, 2022, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Alpha IR Group, LLC. (the “Consultant”). The Company engaged the Consultant to provide consulting, investor relations, and corporate and transaction communication related services. The initial term of the Consulting Agreement is for three months (the “Initial Term”) beginning March 1, 2022, and the Company agreed to pay compensation equal to the sum of $50,000 payable in cash or stock options.
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Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities. We evaluate, on an ongoing basis, our estimates and judgments, including those related to the useful life of the assets. We base our estimates on historical experience and assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results that we report in our consolidated financial statements. The Securities and Exchange Commission (the “SEC”), considers an entity’s most critical accounting policies to be those policies that are both most important to the portrayal of a company’s financial condition and results of operations and those that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about matters that are inherently uncertain at the time of estimation.
We believe the following critical accounting policies, among others, require significant judgments and estimates used in the preparation of our interim condensed consolidated financial statements.
Our significant accounting policies are described in more detail in the notes to our consolidated financial statements for the fiscal year ended December 31, 2021, included in the Company’s Annual Report filed on Form 10-K with the SEC on March 16, 2022.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
The Company maintains “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
In designing and evaluating the Company’s disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and the Company necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2022, and concluded that the Company has a material weakness in its disclosure controls and procedures as of March 31, 2022.
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The Company has an ineffective control environment due to a lack of internal resources with expertise to determine entries and disclosures related to some of the Company’s more complex equity transactions. Management believes this lack of internal expertise has been historically mitigated by continuing to retain consultants with this expertise when needed. This material weakness in the Company’s disclosure controls and procedures will be further remediated with future capital raises.
Changes in Internal Control Over Financial Reporting
During the three months ended March 31, 2022, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is not a party to any pending legal proceeding, nor is the Company’s property the subject of a pending legal proceeding. None of the Company’s directors, officers or affiliates are involved in a proceeding adverse to our business or has a material interest adverse to the Company’s business.
ITEM 1A. RISK FACTORS.
As a smaller reporting company, the Company is not required to disclose material changes to the risk factors that were contained in the Company’s Form 10 registration statement originally filed with the SEC on February 12, 2020, as amended (the “Form 10”). However, in light of the recent coronavirus (COVID-19) pandemic, set forth below is a risk factor relating to COVID-19. Other than as set forth below, as of the filing date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors faced by the Company from those previously disclosed in the Form 10.
COVID-19
The coronavirus outbreak (“COVID-19”) adversely affected the Company’s financial condition and results of operations. The impact of the COVID-19 outbreak on businesses and the economy in the United States is expected to continue to be significant. The extent to which the COVID-19 outbreak will continue to impact businesses and the economy is highly uncertain. Accordingly, the Company cannot predict the extent to which its financial condition and results of operation will be affected.
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency caused by a new strain of the coronavirus and advised of the risks to the international community as the virus spread globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in exposure globally. The spread of COVID-19 coronavirus has caused public health officials to recommend precautions to mitigate the spread of the virus, especially as to travel and congregating in large numbers. In addition, certain states and municipalities have enacted quarantining regulations which severely limit the ability of people to move and travel.
In addition, the Company is uncertain of the full effect the pandemic will have on it for the longer term since the scope and duration of the pandemic is unknown, and evolving factors such as the level and timing of the distribution of efficacious vaccines across the world and the extent of any resurgences of the virus or emergence of new variants of the virus, such as the Delta variant and the Omicron variant, will impact the stability of economic recovery and growth. The Company may experience long-term disruptions to its operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the pandemic; and closures of businesses or manufacturing facilities critical to its business.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.
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ITEM 6. EXHIBITS.
Exhibit No. | Description | |
10.1 | ||
31.1 | Section 302 Certification of Principal Executive Officer* | |
31.2 | Section 302 Certification of Principal Financial Officer* | |
32.1 | Section 906 Certification of Principal Executive Officer and Principal Financial Officer*** | |
101.INS | Inline XBRL Instance Document ** | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document ** | |
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document ** | |
101.LAB | Inline XBRL Taxonomy Labels Linkbase Document ** | |
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document ** | |
101.DEF | Inline XBRL Definition Linkbase Document ** | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* | Filed herewith. |
** | This certification is being furnished solely to accompany this Quarterly Report pursuant to 18 U.S.C. Section 1350, and it is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 13, 2022
Vicapsys Life Science, Inc. | ||
By: | /s/ Federico Pier | |
Federico Pier | ||
Chief Executive Officer and Executive Chairman of the Board (Principal Executive Officer) | ||
By: | /s/ Jeffery Wright | |
Jeffery Wright | ||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
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