UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
or
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ____________
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered | ||
| OTC Capital Markets |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ |
| Smaller
Reporting Company | |
| Emerging
Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes ☒
As of November 10, 2023, shares of the registrant’s common stock were outstanding.
INNOVEREN SCIENTIFIC, INC AND SUBSIDIARIES
TABLE OF CONTENTS
| Page | ||
| PART I – FINANCIAL INFORMATION | ||
| Special Note Regarding Forward-looking Statements | 3 | |
| Item 1. | Financial Statements | 4 |
| Consolidated Balance Sheets | 4 | |
| Consolidated Statements of Operations | 5 | |
| Consolidated Statements of Stockholders’ Deficit | 6 | |
| Consolidated Statements of Cash Flows | 7 | |
| Notes to Consolidated Financial Statements | 8 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risks | 29 |
| Item 4. | Controls and Procedures | 29 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 30 |
| Item 1A. | Risk Factors | 30 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 30 |
| Item 3. | Defaults Upon Senior Securities | 30 |
| Item 4. | Mine Safety Disclosures | 30 |
| Item 5. | Other Information | 30 |
| Item 6. | Exhibits | 30 |
| SIGNATURES | 31 | |
| 2 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined under United States federal securities laws. These statements involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about:
| ● | the Company’s ability to market, commercialize, and achieve broader market acceptance for its products; | |
| ● | the Company’s ability to successfully expand and achieve full productivity from its sales, clinical support, and marketing capabilities; | |
| ● | the Company’s ability to successfully complete the development of, and obtain regulatory clearance or approval for its products; and | |
| ● | the estimates regarding the sufficiency of the Company’s cash resources, the ability to obtain additional capital, or the ability to maintain or grow sources of revenue. |
In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although the Company believes that it has a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by the Company and its projections of the future, about which it cannot be certain. As a result of these factors, the Company cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by the Company, or any other person, that it will achieve its objectives and plans in any specified time frame, or at all. The Company does not undertake to update any of the forward-looking statements after the date of this Quarterly Report, except to the extent required by applicable securities laws.
| 3 |
Item 1. Financial Statements
INNOVEREN SCIENTIFIC, INC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| (Unaudited) | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Patient financing receivable, current portion | ||||||||
| Other receivable | ||||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Patient financing receivable, net of current portion | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and Stockholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Other current liabilities | ||||||||
| Notes payable, current portion | ||||||||
| Convertible notes payable, related parties | ||||||||
| Convertible notes payable | ||||||||
| Convertible notes payable carried at fair value, related parties | ||||||||
| Convertible notes payable carried at fair value | ||||||||
| Lease liability, current portion | ||||||||
| Anti-dilution share contingent consideration liability | ||||||||
| Deferred gain on redemption of equity method investment | ||||||||
| Deferred gain on sale of IP | ||||||||
| Interest payable, related parties | ||||||||
| Interest payable | ||||||||
| Total Current Liabilities | ||||||||
| Long-term Liabilities | ||||||||
| Royalty liability | ||||||||
| Milestone payment contingent consideration liability | ||||||||
| Total Long-term Liabilities | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Equity (Deficit) | ||||||||
| Preferred Stock - $ par value: shares authorized; Series A Preferred Stock - $ par value: shares authorized, shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively. | ||||||||
| Common stock - $ par value: shares authorized, and shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
See accompanying notes to the consolidated financial statements
| 4 |
INNOVEREN SCIENTIFIC, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Cost of Sales | ( | ) | ||||||||||||||
| Gross Profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Salaries and related costs | ||||||||||||||||
| Share based compensation | ||||||||||||||||
| Loss on disposal of property and equipment | ||||||||||||||||
| Acquired in process research and development | ||||||||||||||||
| Other general and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Warrant expense | ( | ) | ( | ) | ||||||||||||
| Inducement expense | ( | ) | ||||||||||||||
| Day one loss on convertible notes carried at fair value | ( | ) | ||||||||||||||
| Gain on convertible notes carried at fair value | ||||||||||||||||
| Loss on extinguishment of convertible notes payable | ( | ) | ||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense) | ( | ) | ||||||||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net (Loss) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net (Loss) attributable to common stockholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| (Loss) per share – basic and diluted | $ | ) | $ | ) | $ | ) | $ | ) | ||||||||
| Weighted average outstanding shares - basic | ||||||||||||||||
See accompanying notes to the consolidated financial statements
| 5 |
INNOVEREN SCIENTIFIC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
For the three months and nine months ended September 30, 2023 and 2022
(Unaudited)
| Three months ended | Preferred Series A Stock | Common Stock | Additional Paid-in | Accumulated | Stockholders’ | |||||||||||||||||||||||
| September 30, 2022 and 2023 | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | |||||||||||||||||||||
| Balances - June 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of Series A Preferred Stock to Common Stock | ( | ) | ( | ) | ||||||||||||||||||||||||
| Issuance of Common Stock pursuant to securities purchase agreement | - | |||||||||||||||||||||||||||
| Issuance of Common Stock pursuant to Jantibody acquisistion | - | |||||||||||||||||||||||||||
| Warrant expense | - | - | ||||||||||||||||||||||||||
| Share based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances - September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
Preferred Series A Stock | Common Stock | Additional Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balances - June 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of convertible notes payable to Common Stock | - | |||||||||||||||||||||||||||
| Share based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances - September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Nine months ended | Preferred Series A Stock | Common Stock | Additional Paid-in | Accumulated | Stockholders’ | |||||||||||||||||||||||
| September 30, 2022 and 2023 | Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | |||||||||||||||||||||
| Balances - December 31, 2021 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Conversion of Series A Preferred Stock to Common Stock | ( | ) | ( | ) | ||||||||||||||||||||||||
| Adjustment for | - | - | ( | ) | ||||||||||||||||||||||||
| Issuance of Common Stock pursuant to securities purchase agreement | - | |||||||||||||||||||||||||||
| Issuance of Common Stock pursuant to Jantibody acquisistion | - | |||||||||||||||||||||||||||
| Inducement expense | - | - | ||||||||||||||||||||||||||
| Warrant expense | - | - | ||||||||||||||||||||||||||
| Conversion of warrants to Common Stock | - | |||||||||||||||||||||||||||
| Share based compensation | - | - | ||||||||||||||||||||||||||
| Net Loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances - September 30, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
Preferred Series A Stock | Common Stock | Additional Paid-in | Accumulated | Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balances - December 31, 2022 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of warrants pursuant to convertible notes payable | - | - | ||||||||||||||||||||||||||
| Conversion of convertible notes payable to Common Stock | - | |||||||||||||||||||||||||||
| Share based compensation | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Balances - September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
See accompanying notes to the consolidated financial statements
| 6 |
INNOVEREN SCIENTIFIC, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of debt premium | ( | ) | ||||||
| Inducement expense | ||||||||
| Share based compensation expense | ||||||||
| Loss on debt extinguishment | ||||||||
| Warrant expense | ||||||||
| Bad debt expense | ||||||||
| Loss on disposal of property and equipment | ||||||||
| Expense of acquired IP, R&D | ||||||||
| Day one loss on derivative liabilities | ||||||||
| Gain on convertible notes payable carried at fair value | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Patient financing receivable, current portion | ||||||||
| Patient financing receivable, net of current portion | ||||||||
| Other assets | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Interest payable | ||||||||
| Interest payable, related parties | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities | ||||||||
| Other current liabilities | ( | ) | ||||||
| Deferred revenue | ( | ) | ||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Proceeds from redemption of equity method investment | ||||||||
| Cash acquired in asset acquisition | ||||||||
| Net Cash Provided By Investing Activities | ||||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from notes payable | ||||||||
| Proceeds from convertible notes payable | ||||||||
| Payment on PPP Loan | ( | ) | ||||||
| Payment on note payable | ( | ) | ( | ) | ||||
| Proceeds from warrants exercised | ||||||||
| Proceeds from issuance of common stock | ||||||||
| Payment on debt financing costs | ( | ) | ||||||
| Payments on convertible notes | ( | ) | ||||||
| Proceeds from convertible notes carried at fair value, related parties | ||||||||
| Proceeds from convertible notes carried at fair value | ||||||||
| Net Cash Provided by Financing Activities | ||||||||
| Net Change in Cash | ( | ) | ||||||
| Cash - Beginning of period | ||||||||
| Cash - End of period | $ | $ | ||||||
| Supplementary Cash Flow Information | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Non Cash Investing & Financing Activity | ||||||||
| Conversion of Series A Preferred Stock to Common Stock | $ | $ | ||||||
| Issuance of warrants pursuant to inducement agreements | $ | $ | ||||||
| Issuance of warrants for services rendered | $ | $ | ||||||
| Issuance of warrants pursuant to securities purchase agreement | $ | $ | ||||||
| Issuance of Common Stock pursuant to SkinDisc acquisition | $ | $ | ||||||
| Conversion of convertible notes payable to Common Stock | $ | $ | ||||||
| Issuance of warrants pursuant to convertible notes payable - related parties | $ | $ | ||||||
| Issuance of warrants pursuant to convertible notes payable | $ | $ | ||||||
See accompanying notes to the consolidated financial statements
| 7 |
INNOVEREN SCIENTIFIC, INC
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Description of the Company
On July 5, 2023, Innoveren Scientific, Inc. (the “Company formerly known as H-Cyte, Inc.”) filed with the Secretary of State of the State of Nevada a Certificate of Amendment to Second Amended and Restated Article of Incorporation to change the corporate name from H-Cyte, Inc. to Innoveren Scientific, Inc. The name change and Company’s new symbol, IVRN, became effective with FINRA on July 10, 2023.
Innoveren Scientific, Inc (“the Company”) has evolved from focusing on treating chronic lung conditions after the closure of its lung treatment clinics due to COVID-19. The Company is currently focusing on acquiring and developing early-stage companies or their technologies in the areas of therapeutics, medical devices, and diagnostics. The goal is to develop these companies and incubate their technologies to meaningful clinical inflection points.
On June 3, 2022, the Company closed its clinic in Scottsdale, Arizona. The Company has closed all of its clinical operations in the autologous infusion therapy business which delivered treatments for patients with chronic respiratory and pulmonary disorders. The Company will continue to pursue Food and Drug Administration (“FDA”) approval of the device that was utilized in the treatment provided at the clinics. The Company has implemented the transition into a biologics and therapeutic device incubator company to bring new technologies to market.
The consolidated results for Innoveren Scientific, Inc include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, LLC (“LI Dallas”), Lung Institute Nashville, LLC (“LI Nashville”), Lung Institute Pittsburgh, LLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC was the operator and manager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI Pittsburgh clinics did not reopen in 2020 after the temporary closure of all LI clinics due to COVID-19. During the first quarter of 2022, the Company closed the LI Tampa and LI Nashville clinics. During the second quarter of 2022, the Company closed the LI Scottsdale clinic. All LHI clinics are closed as of September 30, 2023. The Company leases a shared office space for its corporate address as the Company’s employees continue to work remotely.
On June 10, 2022, the Company amended (the “Amendment”) its Articles of Incorporation to effectuate a one-for-one thousand reverse stock split (the “Reverse Split”) of its common stock. The Reverse Split was approved by FINRA on June 10, 2022 and effectuated on June 13, 2022. Pursuant to the Amendment, the Company also reduced the authorized shares of common stock to . As a result of the Reverse Split, as of September 30, 2023, the Company has shares of common stock outstanding and shares of Series A Preferred Stock outstanding. As a result of the Reverse Stock Split, the Series A Preferred Stock conversion ratio is now one thousand shares of Series A Preferred Stock converts into one share of common stock. Accordingly, the outstanding shares of Series A Preferred Stock are now convertible into an aggregate of shares of common stock.
On September 7, 2022, the Company acquired all of the membership interests, with common stock, of Jantibody LLC (“Jantibody”), a Nevada limited liability company. Jantibody is focused on the development of novel proprietary immunotherapies targeted towards ovarian cancer, pancreatic cancer, and mesothelioma (see Note 9).
On December 22, 2022, the Company acquired all the membership interests, with common stock, in Scion Solutions, LLC (“Scion”). Scion is a life sciences company that has developed a new technology in regenerative medicine specifically for limb salvage. Their proprietary product SkinDisc (patent pending) is a combination of stem cells and several other molecular components that stimulate tissue regeneration (see Note 9).
Effective
September 21, 2023, Corp (as “Seller”) entered into a Membership Interest and LLCA Rights Redemption Agreement (“Redemption
Agreement”) with JV for the redemption (purchase) by JV of all of Corp’s membership interests outstanding with the JV, as
well as the purchase all of the rights of Corp under the Amended and Restated Limited Liability Company Agreement (“LLCA”)
dated April 2, 2021 (the “LLCA Rights”), for a purchase price of approximately $
The
sale of membership interests in the JV and the IP under the DenerveX device and technology was recorded as deferral on gain on
redemption of equity method investment of approximately $
Note 2 – Basis of presentation
The accompanying interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of the Company’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. The Company filed audited consolidated financial statements as of and for the fiscal years ended December 31, 2022 and 2021, which included all information and notes necessary for such complete presentation in conjunction with its 2022 Annual Report on Form 10-K.
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
| 8 |
The results of operations for the interim period ended September 30, 2023, are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022, which are contained in the Company’s 2022 Annual Report on Form 10-K. For further discussion refer to Note 2 – “Basis Of Presentation And Summary of Significant Accounting Policies” to the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Note 3 – Liquidity, Going Concern and Sources of Liquidity
The
Company incurred net losses of approximately $
The
Company had cash on hand of approximately $
There can be no assurance that the Company will be able to raise additional funds or that the terms and conditions of any future financings will be workable or acceptable to the Company or its shareholders. If the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings, or raising equity capital, the Company may be forced to cease operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
On
February 24, 2023, the Company and certain investors entered into Securities Purchase Agreements (the “SPA”), whereby the
Company sold and issued to the certain investors an aggregate of three hundred thousand dollars ($
Further,
in connection with the SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or
prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares
of Common Stock, with % of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the
Holder, pursuant to the SPA between the Holder and the Company, dated February 24, 2023. The Company issued Warrants to purchase an aggregate
of
On
February 28, 2023, the Company entered into a securities purchase agreement for a total of $
| 9 |
On
March 27, 2023, the Company and three related party investors entered into Securities Purchase Agreements (the “SPA”), whereby,
the Company sold and issued to the certain investors, an aggregate of one hundred twenty five thousand dollars ($
Further,
in connection with the SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or
prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares
of Common Stock, with % of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the
Holder, pursuant to the SPA between the Holder and the Company. The Company issued Warrants to purchase an aggregate of
Note 4 – Fair Value of Financial Instruments
The Company measures certain financial instruments and certain financial instruments with related parties at fair value on a recurring basis. The Company elected the fair value option of accounting for certain debt instruments. Under the fair value option, the financial instrument is initially measured at its issue date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis each reporting period with the resulting fair value adjustment recognized as other income (expense) in the consolidated statement of operations. As of September 30, 2023, the fair value of these instruments was as follows:
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Convertible Notes at fair value | $ | $ | $ | $ | ||||||||||||
The following is a reconciliation of the beginning and ending balances for the Convertible Notes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2023:
| Balance at December 31, 2022 | $ | |||
| Fair value of Convertible Notes issued | ( | ) | ||
| Gain on change in fair value of Convertible Notes | ||||
| Balance at September 30, 2023 | $ | ( | ) |
The estimated fair values reported utilize the Company’s common stock price along with certain Level 3 inputs, as discussed below, in the development of Monte Carlo simulation models. The estimated fair values are subjective and are affected by changes in inputs to the valuation models /analyses, including the Company’s common stock price, the Company’s dividend yield, risk-free rates based on U.S. Treasury security yields, and certain other Level-3 inputs including, assumptions regarding the estimated volatility in the value of the Company’s common stock price, the probability of a Qualified Offering, the estimated price of a Qualified Offering, and credit-risk adjusted discount rates. Changes in these assumptions can materially affect the estimated fair values.
| 10 |
Note 5 – Related Party Transactions
Officers and Board Members and Related Expenses
On
January 12, 2021, Mr. Raymond Monteleone was appointed as Chairman of the Board, Audit Committee Chair, and Compensation Committee Chair.
There are understandings between the Company and Mr. Monteleone for him to receive $
On
January 12, 2021, Mr. William Horne stepped down as Chairman of the Board. Mr. Horne will remain a member of the Board. Mr. Horne agreed
to continue to defer the $
Mr.
Richard Rosenblum entered into an oral agreement with the Company effective January 17, 2022, in which Mr. Rosenblum will receive $
Mr.
Matthew Anderer entered into an oral agreement with the Company effective January 17, 2022, in which Mr. Anderer will receive $
Debt and Other Obligations
Convertible Notes Payable
On
April 1, 2021, the Company, entered into a Secured Convertible Note Purchase Agreement (the “April 2021 Note Purchase
Agreement”) with five (5) related party investors (the “Holders”). Pursuant to the terms of the April 2021 Note
Purchase Agreement, the Company sold promissory notes in the aggregate principal amount of $
| 11 |
On
October 14, 2021, the Company entered into the Second Closing Bring Down Agreement (the “October 2021 Note Purchase Agreement”)
whereby the five (5) related party investors who had entered into the April 2021 Note Purchase Agreement purchased new notes in the Company
in the aggregate principal amount of $
On
February 22, 2022, the Company entered into a Debt Conversion Agreement (the “Amendment Agreement”) which i) provided for
an additional round of convertible debt financing (“Tranche 2 Notes”) of up to $
| 1) | $ | |
| 2) | Following
the closing of a Qualified Financing, |
The
Milestone Payments are not to exceed $
The Company evaluated the Amendment Agreement under ASC 470-50, “Debt – Modification and Extinguishment”, and concluded that probability of having to pay a Milestone payment was minimal and the change in the fair value of the conversion feature was not material. The Amendment did not cause a material change in cash flows so extinguishment accounting was not applicable.
On
April 29, 2022, the Company entered into an Amended and Restated Note Conversion Agreement (the “Note Conversion Agreement”)
with certain holders of its Tranche 1 Notes (i) providing for a conversion price equal to the lesser of (x) $0.002 per share (pre-split)
and (y) the price per share paid by the investors in a Qualified Financing for such New Securities purchased for cash and not through
conversion of Notes (as such terms are defined in the Note Conversion Agreement), in each case subject to appropriate adjustment in the
event of any stock dividend, stock split, combination or other similar recapitalization, (ii) automatic conversion upon the occurrence
of a Qualified Financing, and (iii) amendment of the maturity date from March 31, 2022 to June 17, 2022 (the “New Notes”).
Due
to changes in key provisions of the Tranche 1 Notes, the Company analyzed the before and after cash flows between the (i) fair value
of the New Notes and (ii) reacquisition price of the Tranche 1 Notes prior to the (A) change in the maturity date from March 31, 2022
to June 17, 2022, (B) change in the conversion price to the lesser of (x) $
| 12 |
The
Company used a discounted cash flow method with Monte Carlo Simulation to value the Royalty Payments. Future Royalty Payments were estimated
based on management’s best estimate of future cash flows under various scenarios which were discounted to present value using a
risk-adjusted rate of
Based
on the before and after cash flows of each note, the change was considered significantly different. Consequently, the New Notes were
accounted for as a debt extinguishment of the Tranche 1 Notes and a new debt issuance of the New Notes. The Company recorded a $
| Carrying value of Tranche 1 Notes | $ | |||
| Less: Fair value of New Notes | ( |
) | ||
| Less: Fair value of Royalty Payments | ( |
) | ||
| Loss on Extinguishment | $ | ( |
) |
The
Note Conversion Agreement also provided for the consummation of a Tranche 2 Financing (the “Tranche 2 Notes”) subject to
(i) the aggregate principal amount of indebtedness represented by the Tranche 2 Notes being capped at $
On
February 24, 2023, the Company and certain investors entered into Securities Purchase Agreements (the “SPA”), whereby the
Company sold and issued to the certain investors an aggregate of three hundred thousand dollars ($
| 13 |
On
March 27, 2023, the Company and three related party investors entered into Securities Purchase Agreements (the “SPA”), whereby,
the Company sold and issued to the certain investors, an aggregate of one hundred twenty five thousand dollars ($
On
April 12, 2023, the Company and an additional investor entered into the SPA, whereby the Company sold and issued thirty five thousand
dollars ($
We evaluated the February 2023, March 2023, and April 2023 SPA in accordance with ASC Topic 815, Derivatives and Hedging, and determined that they contained a variable share settlement feature tied to the price of a future financing which functions as a redemption option. FASB ASC 825-10-25 allows the Company to elect the fair value option for recording financial instruments when they are initially recognized or if there is an event that requires re-measurement of the instruments at fair value, such as a significant modification of the debt. The Company elected to initially and subsequently measure the Convertible Notes in their entirety at fair value, with changes in fair value recognized in earnings. Management believes the fair value option best reflects the underlying economics of these Convertible Notes.
Because
these Convertible Notes are carried in their entirety at fair value, the value of the contingent conversion feature is embodied in that
fair value. The Company estimates the fair value based on a probability weighted analysis which considers the present value of the cash
flows using a credit risk adjusted rate enhanced by the conversion feature valued using a Monte Carlo model. This method was considered
by management to be the most appropriate method of encompassing the credit risk and exercise behavior that a market participant would
consider when valuing a hybrid financial instrument. Inputs used to value the Convertible Notes as of September 30, 2023 included,
At
inception, the fair value of the Convertible Notes using the fair value option was $
| 14 |
Other Obligations
During
the year ending December 31, 2022, Michael Yurkowsky, CEO, advanced the Company approximately $
Note 6 - Equity Transactions
In
January 2022, the Company offered certain warrant holders the opportunity to receive an additional warrant to purchase the Company’s
Common Stock at $
On June 10, 2022, the Company amended (the “Amendment”) its Articles of Incorporation to effectuate a one-for-one thousand reverse stock split (the “Reverse Split”) of its common stock. The Reverse Split was approved by FINRA on June 10, 2022, and effectuated on June 13, 2022. Pursuant to the Amendment, the Company also reduced the authorized shares of common stock to . As a result of the Reverse Split, the Company had approximately shares of common stock outstanding and shares of Series A Preferred Stock outstanding as of December 31, 2022. As a result of the Reverse Stock Split, the Series A Preferred Stock is convertible at a ratio of one thousand shares of Series A Preferred Stock into one share of common stock. Accordingly, the outstanding shares of Series A Preferred Stock are now convertible into an aggregate of shares of common stock.
On
September 29, 2022, the Company entered into a securities purchase agreement with two related party accredited investors for the sale
of shares of Common Stock and warrants (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company sold an
aggregate of shares of common stock and warrants to purchase
On
November 14, 2022, pursuant to the Purchase Agreement, the Company sold an aggregate of shares of common stock and warrants to
purchase
On
March 17, 2023, the Company issued shares of Common Stock to a convertible noteholder who, at the request of the noteholder, converted
$
On May 23, 2023, the Company issued shares
of Common Stock to a convertible noteholder who, at the request of the noteholder, converted $
On June 8, 2023, the Company issued shares of Common Stock to a
convertible noteholder who, at the request of the noteholder, converted $
On July 10, 2023, the Company issued shares
of Common Stock to a convertible noteholder who, at the request of the noteholder, converted $
On July 20, 2023, the Company issued shares
of Common Stock to a convertible noteholder who, at the request of the noteholder, converted $
| 15 |
The following table summarizes the Company’s common and preferred stock outstanding by class. The number of common stock shares has been adjusted to reflect a one-for-one thousand reverse stock split that became effective on June 13, 2022.
| September 30, 2023 | December 31, 2022 | |||||||
| Common Stock | ||||||||
| Series A Preferred Stock | ||||||||
Series A Preferred Stock
During the nine months ended September 30, 2023, shares of Series A Preferred Stock were converted to Common Stock.
Voting Rights
Conversion
Series
A Preferred Stock
Liquidation, Dissolution, or Winding Up
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders and, in the event of a Deemed Liquidation Event (as defined in the Second Amended and Restated Articles of Incorporation), the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the consideration received by the Company for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Company), together with any other assets of the Company available for distribution to its stockholders, all to the extent permitted by Nevada law governing distributions to stockholders, as applicable, before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to one (1) times the Series A Original Issue Price for such share of Series A Preferred Stock, plus any Series A Accruing Dividends accrued but unpaid thereon, whether or not declared. If upon any such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled under subsection 2.1 of the Second Amended and Restated Articles of Incorporation, the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after the payment in full of all Series A Liquidation Amounts (as defined in the Second Amended and Restated Articles of Incorporation) required to be paid to the holders of shares of Series A Preferred Stock the remaining assets of the Company available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Series A Preferred Stock shall be distributed among the holders of the shares of Series A Preferred Stock and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose all shares of Series A Preferred Stock as if they had been converted to Common Stock pursuant to the terms of the Second Amended and Restated Articles of Incorporation immediately prior to such liquidation, dissolution or winding up of the Company.
| 16 |
Share-Based Compensation Plan
The Company utilizes the Black-Scholes valuation method to recognize share-based compensation expense over the vesting period. The expected life represents the period that the share-based compensation awards are expected to be outstanding.
Stock Option Activity
On April 1, 2021, the Board of Directors of the Company approved and granted certain directors and officers of the Company an aggregate of stock options of which were immediately vested on the date of grant. Each option granted has an exercise price of $ per share and an expiration date of ten years from the date of grant. These options are not included in the Company’s current stock option plan as they were granted outside of the plan.
On June 10, 2022, the Company amended its Articles of Incorporation to effectuate a one-for-one thousand reverse stock split of its common stock. The Reverse Split was approved by FINRA on June 10, 2022 and effectuated on June 13, 2022.
As of September 30, 2023, options were outstanding and were vested. As of September 30, 2022, options were outstanding and were vested. For the three and nine months ended September 30, 2023, the Company recognized an expense related to stock options of approximately $ and $, respectively, which is included in share-based compensation. For the three months and nine months ended September 30, 2022, the Company recognized approximately $ and $ in stock-based compensation expense, respectively, which is included in share-based compensation. As of September 30, 2023, the Company has approximately $ of unrecognized compensation costs related to non-vested stock options, which is expected to be recognized over a weighted average period of approximately years.
| 2021 Grants | ||||||||||||
| Option value | $ | to | $ | |||||||||
| Risk Free Rate | % | to | % | |||||||||
| Expected Dividend- yield | to | |||||||||||
| Expected Volatility | % | to | % | |||||||||
| Expected term (years) | to | |||||||||||
| Shares | Weighted Average Exercise Price | Weighted Average Term (Years) | ||||||||||
| Outstanding at December 31, 2021 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Outstanding at September 30, 2022 | $ | |||||||||||
| Exercisable at September 30, 2022 | $ | |||||||||||
| Outstanding at December 31, 2022 | $ | |||||||||||
| Granted | - | |||||||||||
| Exercised | - | |||||||||||
| Outstanding at September 30, 2023 | $ | |||||||||||
| Exercisable at September 30, 2023 | $ | |||||||||||
| 17 |
| Shares | Weighted Average Grant Date Fair Value | |||||||
| Non-vested at December 31, 2022 | $ | |||||||
| Vested | ( | ) | ||||||
| Non-vested at September 30, 2023 | $ | |||||||
Net Loss Per Share
Basic loss per share is computed on the basis of the weighted average number of shares outstanding for the reporting period. Diluted loss per share is computed on the basis of the weighted average number of common shares plus dilutive potential common shares outstanding using the treasury stock and if-converted methods, as applicable. Any potentially dilutive securities are antidilutive due to the Company’s net losses.
| For the Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Warrants to purchase common stock (in the money) | ||||||||
| Series A Preferred Stock convertible to common stock | ||||||||
| Total | ||||||||
Excluded
from the above table are warrants and stock options for the nine months ended September 30, 2023 and warrants and
stock options for the nine months ended September 30, 2022 as they are out of the money (exercise price greater than the stock
price). Inclusion of such would be anti-dilutive.
Note 7 – Commitments & Contingencies
CEO Compensation Agreement
On
December 23, 2021, the Company entered into an employment agreement (the “Employment Agreement”) with Michael Yurkowsky,
the Company’s Chief Executive Officer, to continue to serve as the Chief Executive Officer of the Company. Under the Employment
Agreement, which commenced on December 1, 2021 (the “Effective Date”) and has a term of one year from the Effective Date
(the “Employment Period”), Mr. Yurkowsky will receive a base salary of $
In
addition to his base salary, Mr. Yurkowsky may receive a one-time cash bonus in gross amount equal to $
| 18 |
These market conditions were reflected in the grant date fair value of the award as required under ASC 718 Compensation-Stock Compensation.
The
Equity Award was measured at fair value on its grant date using a Monte Carlo simulation model. The Monte Carlo simulation model
includes assumptions for the expected term, volatility, and dividend yield, each of which are determined in reference to the
Company’s historical results. The Company will recognize aggregate share-based compensation expense of approximately $
related to the Equity Award on a straight-line basis over the derived service period determined by the Monte Carlo simulation model,
which was
Consulting Agreements
The
Company entered into a consulting agreement with Tanya Rhodes of Rhodes & Associates, Inc, effective June 15, 2020, to serve as
the Chief Science Officer of the Company. The agreement has a minimum term of six months with an average fee of $
Litigation
From time to time, the Company may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect the Company’s financial condition, results of operations, and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect the Company due to legal costs and expenses, diversion of management attention, and other factors. The Company expenses legal costs in the period incurred. The Company cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against the Company in the future, and these matters could relate to prior, current or future transactions or events.
The
Company is involved in a lawsuit with Sinclair Broadcast Group, Inc. (“Sinclair”) which was filed on September 8, 2020, in
the Circuit Court for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. Sinclair has obtained a legal judgment
for breach of contract for advertising services in the amount of approximately $
The
Company is involved in a lawsuit with ITN Networks, LLC (“ITN”) which was filed on July 22, 2021, in the Circuit Court for
the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. ITN has obtained a legal judgment for breach of contract for
advertising services in the amount of approximately $
| 19 |
Note 8 – Debt
Notes Payable
Notes
payable were assumed in the Merger (for further discussion, see Note 1 - “Overview” to the consolidated financial statements
in the Company’s 2020 Annual Report on Form 10-K) and are due in aggregate monthly installments of approximately $
On
June 9, 2022, the Company entered into a securities purchase agreement for a total of $
The
Company also issued a promissory note for $
On
August 8, 2022, the Company entered into a securities purchase agreement for a total of $
On
February 28, 2023, the Company entered into a securities purchase agreement for a total of $
The embedded features in the June 2022, August 2022, and February 2023 convertible notes were analyzed under ASC 815 to determine if they required bifurcation as derivative instruments. To be a derivative, one of the criteria is that the embedded component must be net-settleable. While the Company’s Common Stock was traded on an exchange at the time of the transaction, the underlying shares are not readily convertible into cash since there is insufficient daily trading volume for the holders to convert the convertible notes into Common Stock without significantly affecting the share price. Accordingly, the embedded derivatives, including the embedded conversion feature, did not meet the definition of a derivative, and therefore, did not require bifurcation from the host instrument. Certain default put provisions, including a default put and default interest, were not considered to be clearly and closely related to the host instrument but the Company concluded that the value of these provisions was de minimus at inception. The Company will reconsider the value of these provisions each reporting period to determine if the value becomes material to the financial statements.
Note 9 – Acquisitions
The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.
| 20 |
If an acquisition is determined to be a business combination as indicated in ASC 805, Business Combinations, the assets acquired, and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. The Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.
If an acquisition is determined to be an asset acquisition, the Company accounts for the transaction under ASC 805-50, which requires the cost of the asset acquisition, including transaction costs, to be allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis. Assets acquired as part of an asset acquisition that are considered to be in-process research and development (IPR&D) are immediately expensed unless there is an alternative future use in other research and development projects. Goodwill is not recognized in an asset acquisition and any excess consideration transferred over the fair value of the net assets acquired is allocated to the identifiable assets based on relative fair values (excluding non-qualifying assets). If the cost of the asset acquisition is less than the fair value of the net assets acquired, no gain is recognized in earnings.
Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable (unless the contingent consideration meets the definition of a derivative, in which case the amount becomes part of the basis in the asset acquired). Upon recognition of the contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets.
On
September 7, 2022, the Company acquired all of the membership interests, with Common Stock, of Jantibody LLC (“Jantibody”),
a Nevada limited liability company. Jantibody is focused on the development of novel proprietary immunotherapies targeted towards ovarian
cancer, pancreatic cancer, and mesothelioma. Prior to the acquisition, Michael Yurkowsky, CEO, had approximately
Pursuant to the Jantibody Agreement, the Company issued the equity holders of Jantibody an aggregate of shares of the Company’s common stock which represented 15% of the Company’s common stock on a fully diluted basis at the time of the transaction. In addition, for every share of the Company’s common stock issued as a result of the future conversion of the Company’s dilutive instruments, including Series A preferred stock, warrants, stock options, and convertible notes, the Jantibody members will receive 15% of the aggregate number of shares issued (the “Anti-Dilution” shares). The Anti-Dilution shares will be issued before the end of each fiscal quarter.
The Company has agreed to issue the Jantibody holders an additional 2.0% of the Company’s common stock then outstanding upon the enrollment of the first patient in a Phase I FDA trial and additional 3.0% of the Company’s then outstanding common stock on a fully diluted basis upon the enrollment of the first patient in a Phase [III] FDA trial. The Company determined the contingent consideration was not subject to derivative accounting and will be recognized when the contingency is resolved, and the consideration is paid or becomes payable as outlined in ASC 450, Contingencies.
The
Company determined this transaction represented an asset acquisition as defined by ASC 805, Business Combinations, as substantially
all of the value was in a single in-process research and development (“IPR&D”) group, which included the small molecule
drug CXCR4 inhibitor, AMD3100, and/or checkpoint inhibitors (CPI) for anti-cancer immune modulation. As a result, the consideration transferred
was allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their relative fair values
resulting in approximately $
| 21 |
The
purchase price of approximately $
| Consideration: | ||||
| Common stock | $ | |||
| Common stock (anti-dilution shares, to be issued – included in other current liabilities) | ||||
| Direct transaction costs | ||||
| Total costs of the asset acquisition | $ | |||
| Assets acquired | ||||
| Cash | $ | |||
| Liabilities assumed – legal and administrative costs | ( | ) | ||
| Intangible assets: IPR&D | ||||
| Net identifiable assets acquired | $ |
The IPR&D had not yet reached technological feasibility and had no alternative future use; thus, the purchased IPR&D asset and related costs were expensed immediately subsequent to the acquisition within the consolidated statements of operations.
On
December 22, 2022, the Company acquired a
Pursuant to the terms of the Scion Agreement, the Company issued the equity holders of Scion an aggregate of shares of the Company’s common stock. In addition, for every share of the Company’s common stock issued within 18-months of the Effective Date of the transaction, as a result of the future conversion of the Company’s dilutive instruments, including Series A preferred stock, warrants, stock options, and convertible notes, the Scion members will receive 20% of the aggregate number of shares issued (the “Anti-Dilution” shares). The Anti-Dilution shares will be issued before the end of each fiscal quarter.
In addition, the former shareholders of Scion are eligible to receive Performance Payments consisting of the following:
| Performance Milestone | Performance Payment | |||
| Qualified Funding/Uplisting of Innoveren Scientific | $ | |||
| 1-Year Anniversary of Uplisting of Innoveren Scientific | $ | |||
| 2-Year Anniversary of Uplisting of Innoveren Scientific | $ | |||
| Initiation of SkinDisc Study | $ | |||
| Receipt of De Novo or any other approval/clearance that would allow SkinDisc to go to market | $ | |||
| Submission for specific and individual reimbursement codes relating to SkinDisc | $ | |||
| Receipt of specific and individual reimbursement codes relating to SkinDisc | $ | |||
| Completion of SkinDisc Study | $ | |||
| Launch of any additional SkinDisc product line extension (e.g., SkinDisc Lite)* | $ | |||
| Annual net sales from SkinDisc (including SkinDisc extensions) (2023 and each subsequent calendar year)* | ||||
| Cumulative net sales from SkinDisc (including SkinDisc extensions) of $ | $ | |||
| Cumulative net sales from SkinDisc (including SkinDisc extension) of $ | $ | |||
| Cumulative net sales from SkinDisc (including SkinDisc extension) of $ | $ | |||
| Net sales from SkinDisc (including SkinDisc extensions) of $ | $ | |||
| 22 |
Substantially all of the value acquired was concentrated in a single in-process research and development (“IPRD”) asset, which included license rights, clinical trial data, clinical trial development plans, research and development materials, formulations and intellectual property related to SkinDisc. There was no workforce, and no outputs were present. Accordingly, the acquired set of assets and activities did not meet the definition of a business as defined by ASC 805, Business Combinations and was considered an asset acquisition. In an asset acquisition, the consideration transferred is allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on their relative fair values. In the Scion acquisition, the only asset or liability acquired was IPR&D. As a result, the consideration transferred was recorded fully to the IPR&D asset.
In an asset acquisition, cash-settled contingent consideration is measured when probable and estimable, unless the contingent consideration falls under the guidance of ASC 815. The Company determined the contingent consideration was not subject to ASC 815 and thus, the performance payments which were estimable and probable (i.e., more than 50% likely to occur) were recorded on the acquisition date. The fair value was estimated based on a probability weighting of the present value of cash flows over the expected time period until payment, using a credit-risk adjusted interest rate. Each reporting period, the Company will determine if the performance payments are estimable and probable and will record them as a liability at that time.
The purchase price was allocated, as follows:
| Consideration: | ||||
| Common stock | $ | |||
| Anti-Dilution share liability | ||||
| Contingent Performance payment liability | ||||
| Direct transaction costs | ||||
| Total costs of the asset acquisition | $ |
The
common stock value was recorded as equity. The remaining consideration was recorded as IPR&D, since the
SkinDisc technology was still in the research and development stage and had no alternative future use. The purchased IPR&D asset
of $
Note 10- Redemption of Medovex, LLC Membership Interest and Sale of IP
Effective April 2, 2021, and in conjunction with the Amended and Restated Limited Liability Company Agreement of Medovex, LLC (“JV”) (the “LLC Agreement”), Innoveren, Scientific, Inc., through its wholly-owned subsidiary, Medovex Corp. (“Corp”), entered into a Contribution Agreement with JV to pursue a joint venture regarding the continued development and commercialization of the Company’s DenerveX Device. In connection with the Contribution Agreement, Corp and JV entered into an Intellectual Property (“IP”) License Agreement (“License Agreement”) in part to permit Corp to license the IP to JV for use in commercializing the DenerveX Device. The IP and related assets were previously deemed fully impaired by the Company in a prior year. Pursuant to the Contribution Agreement, the JV issued certain membership interests in the JV to Corp in exchange for the contributed IP assets. The effects of the Contribution Agreement on the Company’s consolidated financial statements were deemed immaterial.
Effective
September 21, 2023, Corp (as “Seller”) entered into a Membership Interest and LLCA Rights Redemption Agreement (“Redemption
Agreement”) with JV for the redemption (purchase) by JV of all of Corp’s membership interests outstanding with the JV, as
well as the purchase all of the rights of Corp under the Amended and Restated Limited Liability Company Agreement (“LLCA”)
dated April 2, 2021 (the “LLCA Rights”), for a purchase price of approximately $
The
sale of membership interests in the JV and the IP under the DenerveX device and technology was recorded as a deferred gain on
redemption of equity investment of approximately $
Note 11- Common Stock Warrants
A summary of the Company’s warrant issuance activity and related information for the nine months ended September, 2022 and 2023 is as follows:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||
| Outstanding at December 31, 2021 | $ | |||||||||||
| Expired | ( | ) | - | |||||||||
| Exercised | ( | ) | - | |||||||||
| Granted | ||||||||||||
| Outstanding and exercisable at September 30, 2022 | $ | |||||||||||
| Outstanding at December 31, 2022 | $ | |||||||||||
| Expired | ( | ) | ( | ) | - | |||||||
| Granted | ||||||||||||
| Outstanding and exercisable at September 30, 2023 | $ | |||||||||||
| 23 |
The fair value of all warrants issued are determined by using the Black-Scholes valuation technique. The inputs used in the Black-Scholes valuation technique to value each of the warrants as of their respective issue dates are as follows:
| Event Description | Date | Number of Warrants | Innoveren Scientific Stock Price | Exercise Price of Warrant | Grant Date Fair Value | Life of Warrant | Risk Free Rate of Return (%) | Annualized Volatility Rate (%) | ||||||||||||||||||||
| Granted for inducement agreement | 1/19/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 1/20/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 1/20/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 1/24/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 1/25/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 2/02/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 2/04/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 2/04/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for services provided | 2/09/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 2/22/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 2/22/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for inducement agreement | 3/21/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for securities purchase agreement | 9/27/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for securities purchase agreement | 11/14/2022 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for convertible note agreement | 2/21/2023 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for convertible note agreement | 3/27/2023 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for convertible note agreement | 3/28/2023 | $ | $ | $ | ||||||||||||||||||||||||
| Granted for convertible note agreement | 4/12/2023 | $ | $ | $ | ||||||||||||||||||||||||
The
fair value of warrants issued during the three and nine months ended September 30, 2023, totaled approximately $
Note 12 - Subsequent Events
The Company recently received notice from Mass General Hospital (MGH) that the Company was in default in its obligations to fund certain Jantibody activities and obligations and was terminating the license agreement between Innoveren and The General Hopsital Corporation d/b/a MGH. The Company was sent an initial breach notice on February 24, 2023, following which Company met with MGH and negotiated a Second Amendment (MGH Agreement No. 2023-2413) effective April 24, 2023. MGH notified the Company of breach for a second time on September 11, 2023, indicating grounds for termination of the Agreement unless the breach was cured. To date, the breach has not been cured and MGH has not received payment. Consequently, the Agreement is hereby terminated effective immediately as of November 6, 2023.
| 24 |
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 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
Innoveren Scientific, Inc (“the Company”) has evolved from focusing on treating chronic lung conditions after the closure of its lung treatment clinics due to COVID-19. The Company is currently focusing on acquiring and developing early-stage companies or their technologies in the areas of therapeutics, medical devices, and diagnostics. The goal is to develop these companies and incubate their technologies to meaningful clinical inflection points.
On June 3, 2022, the Company closed its clinic in Scottsdale, Arizona. The Company has now closed all of its clinical operations in the autologous infusion therapy business which delivered treatments for patients with chronic respiratory and pulmonary disorders. The Company will continue to pursue Food and Drug Administration (“FDA”) approval of the device that was utilized in the treatment provided at the clinics. The Company also has a continued interest in the commercialization of the DenerveX device through a joint venture. The Company has implemented the transition into a biologics and therapeutic device incubator company to bring new technologies to market.
The consolidated results for Innoveren Scientific include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, LLC (“LI Dallas”), Lung Institute Nashville, LLC (“LI Nashville”), Lung Institute Pittsburgh, LLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC was the operator and manager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI Pittsburgh clinics did not reopen in 2020 after the temporary closure of all LI clinics due to COVID-19. During the first quarter of 2022, the Company closed the LI Tampa and LI Nashville clinics. During the second quarter of 2022, the Company closed the LI Scottsdale clinic. All LHI clinics are closed as of September 30, 2023.
As of September 30, 2023, the Company has closed all of the LHI clinics and has moved away from the Infusion Division as part of its future plans. The Company has transformed into a medical biosciences incubator focusing on bringing new biologics and therapeutic device technologies to market for various health conditions.
Effective September 21, 2023, Corp (as “Seller”) entered into a Membership Interest and LLCA Rights Redemption Agreement (“Redemption Agreement”) with JV for the redemption (purchase) by JV of all of Corp’s membership interests outstanding with the JV, as well as the purchase all of the rights of Corp under the Amended and Restated Limited Liability Company Agreement (“LLCA”) dated April 2, 2021 (the “LLCA Rights”), for a purchase price of approximately $869,000. In addition, Corp and JV have agreed in principle for the assignment and transfer of the DenerveX IP (the “2023 IP Agreement”) by Corp to JV for the rights to IP under the DenerveX device and technology and all trade names, patents, trademarks, and other IP under the Medovex and Medovex Corp names, for a purchase price of approximately $56,000. The Company and Corp will no longer be a party to any rights or obligations associated with the DenerveX IP or associated assets.
The sale of membership interests in the JV and the IP under the DenerveX device and technology was recorded as a deferred gain on redemption of equity investment of approximately $869,000 and a deferred gain on sale of asset of approximately $56,000, for the three and nine months ended September 30, 2023, on the accompanying consolidated statements of operations as the Company awaits the final transfer of IP to Medovex LLC. The IP that was sold as part of the Redpemtion Agreement had a net book value of $0.
Critical Accounting Policies and Estimates
The Company’s discussion and analysis of its financial condition and results of operations are based on its consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods.
The Company bases our estimates on historical experience and on various other factors that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Results of Operations - Three and nine months ended September 30, 2023 and 2022
Revenue, Cost of Sales and Gross Profit
The Company recorded no revenue for the three and nine months ended September 30, 2023. The Company recorded revenue of approximately $0 and $453,000 for the three and nine months ended September 30, 2022, respectively.
For the three and nine months ended September 30, 2023 the Company generated a gross profit totaling approximately $0. For the three and nine months ended September 30, 2022, the Company generated a gross profit totaling approximately $0 and $337,000, respectively. The Company has closed all of the LHI Clinics, which was the Company’s only source of revenue. The Company has transformed itself into a biologics and therapeutic device incubator company to bring new technologies to market.
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Operating Expenses
Salaries and Related Costs
For the three and nine months ended September 30, 2023 the Company incurred approximately $106,000 and $433,000 in salaries and related costs, respectively. For the three and nine months ended September 30, 2022, the Company incurred approximately $221,000 and $848,000 in salaries and related costs, respectively. The decrease in salaries and related costs for the three and nine months ended September 30, 2023, as compared to the prior year, is due to the adjustments to the Company’s corporate structure by reducing expenses as part of the transition into a biologics and therapeutic incubator company to bring new technologies to market. As of September 30, 2023, due to lack of financial resources, the Company has incurred $513,000 in unpaid salaries and wages.
Other General and Administrative
For the three and nine months ended September 30, 2023 the Company incurred approximately, $290,000 and $718,000, in other general and administrative costs, respectively. For the three and nine months ended September 30, 2022, the Company incurred approximately, $268,000 and $1,173,000, in other general and administrative costs, respectively. The Company adjusted its corporate structure by reducing expenses as part of the transition into a biologics and therapeutic incubator company to bring new technologies to market.
Other Income/Expense
For the three months and nine months ended September 30, 2023, the Company incurred approximately $0 and $1,527,000 in day one loss expense related to the convertible notes payable carried at fair value.
For the three and nine months ended September 30, 2023 interest expense was approximately $100,000 and $348,000 respectively. For the three and nine months ended September, 2022 interest expense was approximately $91,000 and $279,000 respectively.
For the three and nine months ended September 30, 2023 the Company did not incur inducement expense. For the three and nine months ended June 30, 2022 inducement expense was approximately $0 and $3,025,000 respectively.
Funding Requirements
The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as the Company implements its business plan to focus on acquiring and developing early-stage companies or their technologies in the areas of therapeutics, medical devices, and diagnostics. The Company will need to raise cash from debt and equity offerings to continue its operations. There can be no assurance that the Company will be successful in doing so.
Liquidity, Going Concern, and Sources of Liquidity
The Company generated net income (loss) of approximately $429,000 and $(841,000) for the nine months ended September 30, 2023 and 2022, respectively. The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as it implements the transition into a biologics and therapeutic incubator company to bring new technologies to market. The consolidated financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) as applicable to a going concern.
The Company had cash on hand of approximately $544,000 as of September 30, 2023 and approximately $150,000 as of November 9, 2023. The Company’s cash is insufficient to fund its operations over the next year and the Company is currently working to obtain additional debt or equity financing to help support short-term working capital needs.
There can be no assurance that the Company will be able to raise additional funds or that the terms and conditions of any future financings will be workable or acceptable to the Company or its shareholders. If the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings, or raising equity capital, the Company may be forced to discontinue operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
On February 24, 2023, the Company and certain investors entered into Securities Purchase Agreements (the “SPA”), whereby the Company sold and issued to the certain investors an aggregate of three hundred thousand dollars ($300,000) of the Company’s convertible promissory notes (the “Note” or “Notes”), which are convertible into the Company’s Common Stock, $0.001 par value (“Common Stock”). In connection with the aforementioned Notes, the Company also issued to the investors a warrant to purchase (the “Purchase Warrant”) a certain number of shares of Common Stock, which are equal to 20% of the shares of Common Stock issuable upon conversion of the Note, based on a price of $2.00 per share. These warrants have a term of five (5) years, with an exercise price of $2.00 per share. Unless the Company chooses to terminate earlier, the offering and the sale of the Notes shall terminate on the sooner of the sale of the maximum offering amount or April 30, 2023. However, the Company extended this offering to June 30, 2023.
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The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price.
Further, in connection with the February 2023 SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares of Common Stock, with 20% of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company, dated February 24, 2023. The Company issued Warrants to purchase an aggregate of 30,000 shares of Common Stock. The exercise price per share of the Common Stock under this Warrant is $2.00.
On February 28, 2023, the Company entered into a securities purchase agreement for a total of $150,000 with an accredited investor. The note issued is convertible into common stock at a 65% discount to the lowest trading price in the 20-day period prior to conversion. The note bears interest at 10% and is due one year from issuance. For the first six months, the Company has the right to prepay the note at a premium of between 25% and 40% depending on when it is repaid.
On March 27, 2023, the Company and three related party investors entered into Securities Purchase Agreements (the “SPA”), whereby, the Company sold and issued to the certain investors, an aggregate of one hundred twenty five thousand dollars ($125,000) of the Company’s convertible promissory notes (the “Note” or “Notes”), which are convertible into the Company’s Common Stock, $0.001 par value (“Common Stock”). On April 12, 2023, the Company and an additional investor entered into the SPA, whereby, the Company sold and issued an aggregate of thirty five thousand dollars ($35,000) of the Company’s Notes. In connection with the aforementioned Notes, the Company also issued to the investors warrants to purchase (the “Purchase Warrant”) a certain number of shares of Common Stock, which are equal to 20% of the shares of Common Stock issuable upon conversion of the Note, based on a price of $2.00 per share. These warrants have a term of five (5) years, with an exercise price of $2.00 per share. Unless the Company chooses to terminate earlier, the offering and the sale of the Notes shall terminate on the sooner of the sale of the maximum offering amount or April 30, 2023. The Company entered into an agreement with the noteholders to extend the maturity of the outstanding notes until July 31, 2024.
The March 27, 2023 Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023 Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price.
Further, in connection with the March 2023 and April 2023 SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares of Common Stock, with 20% of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company. The Company issued Warrants to purchase an aggregate of 12,500 shares of Common Stock. The exercise price per share of the Common Stock under this Warrant is $2.00.
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Cash activity for the nine months ended September 30, 2023 and December 31, 2022 is summarized as follows:
Working Capital Deficit
| As Of | ||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| Current Assets | $ | 749,486 | $ | 83,845 | ||||
| Current Liabilities | 9,661,036 | 7,476,893 | ||||||
| Working Capital Deficit | $ | (8,911,550 | ) | $ | (7,393,048 | ) | ||
Cash Flows
Cash activity for the nine months ended September 30, 2023 and 2022 is summarized as follows:
| Nine months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash used in operating activities | $ | (826,371 | ) | $ | (1,822,004 | ) | ||
| Cash used in investing activities | 869,249 | |||||||
| Cash provided by financing activities | 501,004 | 1,763,086 | ||||||
| Net increase (decrease) in cash | $ | 543,882 | $ | (58,449 | ) | |||
As of September 30, 2023, the Company had approximately $544,000 of cash on hand.
Off-Balance Sheet Arrangements
The Company does 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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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal accounting officer, as appropriate to allow timely decisions regarding disclosure.
The Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of September 30, 2023. 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.
Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2023, due to the lack of working capital, the Company’s disclosure controls and procedures were not as effective as desired because of the material weakness in our internal control over financial reporting as discussed below, and as a result, the Company engaged consultants, implemented a number of new entity and process level controls and installed a new accounting software system to help mitigate this material weakness.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. In our assessment of the effectiveness of internal control over financial reporting as of September 30, 2023, we determined that internal control deficiencies relating to a lack of segregation of duties and knowledge related to more complex accounting transactions still exist. Management believes these deficiencies mainly relate to the Company employing a limited number of accounting and finance personnel. The aggregation of these deficiencies is considered to be a material weakness in internal control over financial reporting.
In light of the conclusion that our disclosure controls and procedures were ineffective as of September 30, 2023, we have applied additional procedures and processes as necessary to ensure the reliability of our financial reporting in regard to this quarterly report. Accordingly, the Company believes, based on its knowledge, that: (i) this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the period covered by this report; and (ii) the financial statements, and other financial information included in this quarterly report, fairly present in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in this quarterly report.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is involved in a lawsuit with Sinclair Broadcast Group, Inc. (“Sinclair”) which was filed on September 8, 2020, in the Circuit Court for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. Sinclair has obtained a legal judgment for breach of contract for advertising services in the amount of approximately $75,000 plus interest and costs. The Company has retained legal counsel for guidance in this matter. The amount is recorded in accounts payable as of September 30, 2023.
The Company is involved in a lawsuit with ITN Networks, LLC (“ITN”) which was filed on July 22, 2021, in the Circuit Court for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. ITN has obtained a legal judgment for breach of contract for advertising services in the amount of approximately $45,000 plus interest and costs. The Company has retained legal counsel for guidance in this matter. The amount is recorded in accounts payable as of September 30, 2023.
ITEM 1A. RISK FACTORS.
We are a smaller reporting company as defined by 17 CFR 229.10(f)(1). Thus, we are not required to provide information under this item.
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.
ITEM 6. EXHIBITS.
The exhibits listed in the accompanying Exhibit Index are filed, furnished or incorporated by reference as part of this Quarterly Report on Form 10-Q.
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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: November 14, 2023
| INNOVEREN SCIENTIFIC, INC | ||
| By: | /s/ Michael Yurkowsky | |
| Michael Yurkowsky | ||
Chief Executive Officer (Principal Executive Officer) | ||
| By: | /s/ Jeremy Daniel | |
| Jeremy Daniel | ||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | ||
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EXHIBIT INDEX
| 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. |
| ** | Pursuant to Rule 406T of Regulation S-T adopted by the SEC, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise are not subject to liability under these sections. |
| *** | 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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EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934
I, Michael Yurkowsky, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2023 of INNOVEREN SCIENTIFIC, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2023 | /s/ Michael Yurkowsky |
| Michael Yurkowsky | |
| Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a) UNDER
THE SECURITIES EXCHANGE ACT OF 1934
I, Jeremy Daniel, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q for the quarter ended September 30, 2023 of INNOVEREN SCIENTIFIC, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14, 2023 | /s/ Jeremy Daniel |
| Jeremy Daniel, | |
| Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(b) UNDER
THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 1350 OF
CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE
Each of the undersigned, Michael Yurkowsky and Jeremy Daniel, certifies pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, that (1) this quarterly report on Form 10-Q for the quarter ended September 30, 2023, of INNOVEREN SCIENTIFIC, INC, Inc. (the “Company”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, and (2) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: November 14, 2023
| /s/ Michael Yurkowsky | |
| Michael Yurkowsky | |
| Chief Executive Officer | |
| /s/ Jeremy Daniel | |
| Jeremy Daniel, | |
| Chief Financial Officer |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 500,000,000 | 500,000,000 |
| Common stock, shares issued | 712,170 | 618,506 |
| Common stock, shares outstanding | 712,170 | 618,506 |
| Series A Preferred Stock [Member] | ||
| Preferred stock, par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 800,000,000 | 800,000,000 |
| Preferred stock, shares issued | 438,776,170 | 438,776,170 |
| Preferred stock, shares outstanding | 438,776,170 | 438,776,170 |
Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Income Statement [Abstract] | ||||
| Revenues | $ 453,460 | |||
| Cost of Sales | (116,602) | |||
| Gross Profit | 336,858 | |||
| Operating Expenses | ||||
| Salaries and related costs | 105,534 | 221,304 | 432,510 | 848,036 |
| Share based compensation | 26,232 | 120,448 | 100,759 | 535,481 |
| Loss on disposal of property and equipment | 9,610 | |||
| Acquired in process research and development | 1,245,948 | 1,245,948 | ||
| Other general and administrative | 289,504 | 268,076 | 717,518 | 1,172,738 |
| Total Operating Expenses | 421,270 | 1,855,776 | 1,250,787 | 3,811,813 |
| Operating Loss | (421,270) | (1,855,776) | (1,250,787) | (3,474,955) |
| Other Income (Expense) | ||||
| Warrant expense | (334,238) | (334,238) | ||
| Inducement expense | (3,024,872) | |||
| Day one loss on convertible notes carried at fair value | (1,527,239) | |||
| Gain on convertible notes carried at fair value | 14,792 | 1,329,629 | ||
| Loss on extinguishment of convertible notes payable | (2,196,100) | |||
| Interest income | 446 | 1,756 | 1,941 | 506,795 |
| Interest expense | (99,587) | (91,186) | (348,447) | (278,665) |
| Other income (expense) | 9,844 | 29,388 | (4,457) | |
| Total Other Income (Expense) | (74,505) | (423,668) | (514,728) | (5,331,537) |
| Net (Loss) | (495,775) | (2,279,444) | (1,765,515) | (8,806,492) |
| Net (Loss) attributable to common stockholders | $ (495,775) | $ (2,279,444) | $ (1,765,515) | $ (8,806,492) |
| (Loss) per share - basic | $ (0.73) | $ (8.04) | $ (2.69) | $ (34.07) |
| (Loss) per share - diluted | $ (0.73) | $ (8.04) | $ (2.69) | $ (34.07) |
| Weighted average outstanding shares - basic | 682,209 | 283,579 | 655,783 | 258,483 |
Consolidated Statements of Stockholders' Equity (Deficit) (Parenthetical) |
9 Months Ended |
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Sep. 30, 2022 | |
| Statement of Stockholders' Equity [Abstract] | |
| Stockholders' Equity, Reverse Stock Split | 1-for-1,000 |
DESCRIPTION OF THE COMPANY |
9 Months Ended |
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Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| DESCRIPTION OF THE COMPANY | Note 1 - Description of the Company
On July 5, 2023, Innoveren Scientific, Inc. (the “Company formerly known as H-Cyte, Inc.”) filed with the Secretary of State of the State of Nevada a Certificate of Amendment to Second Amended and Restated Article of Incorporation to change the corporate name from H-Cyte, Inc. to Innoveren Scientific, Inc. The name change and Company’s new symbol, IVRN, became effective with FINRA on July 10, 2023.
Innoveren Scientific, Inc (“the Company”) has evolved from focusing on treating chronic lung conditions after the closure of its lung treatment clinics due to COVID-19. The Company is currently focusing on acquiring and developing early-stage companies or their technologies in the areas of therapeutics, medical devices, and diagnostics. The goal is to develop these companies and incubate their technologies to meaningful clinical inflection points.
On June 3, 2022, the Company closed its clinic in Scottsdale, Arizona. The Company has closed all of its clinical operations in the autologous infusion therapy business which delivered treatments for patients with chronic respiratory and pulmonary disorders. The Company will continue to pursue Food and Drug Administration (“FDA”) approval of the device that was utilized in the treatment provided at the clinics. The Company has implemented the transition into a biologics and therapeutic device incubator company to bring new technologies to market.
The consolidated results for Innoveren Scientific, Inc include the following wholly-owned subsidiaries: H-CYTE Management, LLC, Medovex Corp, Cognitive Health Institute, LLC, and Lung Institute Tampa, LLC and the results include Lung Institute Dallas, LLC (“LI Dallas”), Lung Institute Nashville, LLC (“LI Nashville”), Lung Institute Pittsburgh, LLC (“LI Pittsburgh”), and Lung Institute Scottsdale, LLC (“LI Scottsdale”), as Variable Interest Entities (“VIEs”). Additionally, H-CYTE Management, LLC was the operator and manager of the various Lung Health Institute (LHI) clinics: LI Dallas, LI Nashville, LI Pittsburgh, and LI Scottsdale. The LI Dallas and LI Pittsburgh clinics did not reopen in 2020 after the temporary closure of all LI clinics due to COVID-19. During the first quarter of 2022, the Company closed the LI Tampa and LI Nashville clinics. During the second quarter of 2022, the Company closed the LI Scottsdale clinic. All LHI clinics are closed as of September 30, 2023. The Company leases a shared office space for its corporate address as the Company’s employees continue to work remotely.
On June 10, 2022, the Company amended (the “Amendment”) its Articles of Incorporation to effectuate a one-for-one thousand reverse stock split (the “Reverse Split”) of its common stock. The Reverse Split was approved by FINRA on June 10, 2022 and effectuated on June 13, 2022. Pursuant to the Amendment, the Company also reduced the authorized shares of common stock to . As a result of the Reverse Split, as of September 30, 2023, the Company has shares of common stock outstanding and shares of Series A Preferred Stock outstanding. As a result of the Reverse Stock Split, the Series A Preferred Stock conversion ratio is now one thousand shares of Series A Preferred Stock converts into one share of common stock. Accordingly, the outstanding shares of Series A Preferred Stock are now convertible into an aggregate of shares of common stock.
On September 7, 2022, the Company acquired all of the membership interests, with common stock, of Jantibody LLC (“Jantibody”), a Nevada limited liability company. Jantibody is focused on the development of novel proprietary immunotherapies targeted towards ovarian cancer, pancreatic cancer, and mesothelioma (see Note 9).
On December 22, 2022, the Company acquired all the membership interests, with common stock, in Scion Solutions, LLC (“Scion”). Scion is a life sciences company that has developed a new technology in regenerative medicine specifically for limb salvage. Their proprietary product SkinDisc (patent pending) is a combination of stem cells and several other molecular components that stimulate tissue regeneration (see Note 9).
Effective September 21, 2023, Corp (as “Seller”) entered into a Membership Interest and LLCA Rights Redemption Agreement (“Redemption Agreement”) with JV for the redemption (purchase) by JV of all of Corp’s membership interests outstanding with the JV, as well as the purchase all of the rights of Corp under the Amended and Restated Limited Liability Company Agreement (“LLCA”) dated April 2, 2021 (the “LLCA Rights”), for a purchase price of approximately $869,000. In addition, Corp and JV have agreed in principle for the assignment and transfer of the DenerveX IP (the “2023 IP Agreement”) by Corp to JV for the rights to IP under the DenerveX device and technology and all trade names, patents, trademarks, and other IP under the Medovex and Medovex Corp names, for a purchase price of approximately $56,000. The Company and Corp will no longer be a party to any rights or obligations associated with the DenerveX IP or associated assets.
The sale of membership interests in the JV and the IP under the DenerveX device and technology was recorded as deferral on gain on redemption of equity method investment of approximately $869,000 and deferral on gain on sale of IP of approximately $56,000, for the three and nine months ended September 30, 2023, on the accompanying consolidated statements of operations.
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BASIS OF PRESENTATION |
9 Months Ended |
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Sep. 30, 2023 | |
| Accounting Policies [Abstract] | |
| BASIS OF PRESENTATION | Note 2 – Basis of presentation
The accompanying interim consolidated financial statements have been prepared based upon U.S. Securities and Exchange Commission rules that permit reduced disclosure for interim periods. Therefore, they do not include all information and footnote disclosures necessary for a complete presentation of the Company’s financial position, results of operations and cash flows, in conformity with generally accepted accounting principles. The Company filed audited consolidated financial statements as of and for the fiscal years ended December 31, 2022 and 2021, which included all information and notes necessary for such complete presentation in conjunction with its 2022 Annual Report on Form 10-K.
Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.
The results of operations for the interim period ended September 30, 2023, are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022, which are contained in the Company’s 2022 Annual Report on Form 10-K. For further discussion refer to Note 2 – “Basis Of Presentation And Summary of Significant Accounting Policies” to the consolidated financial statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
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LIQUIDITY, GOING CONCERN AND SOURCES OF LIQUIDITY |
9 Months Ended |
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Sep. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| LIQUIDITY, GOING CONCERN AND SOURCES OF LIQUIDITY | Note 3 – Liquidity, Going Concern and Sources of Liquidity
The Company incurred net losses of approximately $496,000 and $1,766,000 for the three and nine months ended September 30, 2023. The Company has historically incurred losses from operations and expects to continue to generate negative cash flows as it implements its plan around acquiring and developing early-stage companies or their technologies in the areas of therapeutics, medical devices, and diagnostics. The consolidated financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) as applicable to a going concern.
The Company had cash on hand of approximately $544,000 as of September 30, 2023 and approximately $150,000, as of November 9, 2023. The Company’s cash is insufficient to fund its operations over the next year and the Company is currently working to obtain additional debt or equity financing to help support short-term working capital needs.
There can be no assurance that the Company will be able to raise additional funds or that the terms and conditions of any future financings will be workable or acceptable to the Company or its shareholders. If the Company is unable to fund its operations from existing cash on hand, operating cash flows, additional borrowings, or raising equity capital, the Company may be forced to cease operations. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
On February 24, 2023, the Company and certain investors entered into Securities Purchase Agreements (the “SPA”), whereby the Company sold and issued to the certain investors an aggregate of three hundred thousand dollars ($300,000) of the Company’s convertible promissory notes (the “Note” or “Notes”), which are convertible into the Company’s Common Stock, $ par value (“Common Stock”). In connection with the aforementioned Notes, the Company also issued to the investors a warrant to purchase (the “Purchase Warrant”) a certain number of shares of Common Stock, which are equal to 20% of the shares of Common Stock issuable upon conversion of the Note, based on a price of $2.00 per share. These warrants have a term of five (5) years, with an exercise price of $2.00 per share. Unless the Company chooses to terminate earlier, the offering and the sale of the Notes shall terminate on the sooner of the sale of the maximum offering amount or April 30, 2023. However, the Company extended this offering to June 30, 2023, per terms of agreement.
The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price.
Further, in connection with the SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares of Common Stock, with % of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company, dated February 24, 2023. The Company issued Warrants to purchase an aggregate of 30,000 shares of Common Stock. The exercise price per share of the Common Stock under these Warrants is $2.00.
On February 28, 2023, the Company entered into a securities purchase agreement for a total of $150,000 with an accredited investor. The note issued is convertible into common stock at a 65% discount to the lowest trading price in the 20-day period prior to conversion. The note bears interest at 10% and is due one year from issuance. For the first six months, the Company has the right to prepay the note at a premium of between 25% and 40% depending on when it is repaid.
On March 27, 2023, the Company and three related party investors entered into Securities Purchase Agreements (the “SPA”), whereby, the Company sold and issued to the certain investors, an aggregate of one hundred twenty five thousand dollars ($125,000) of the Company’s convertible promissory notes (the “Note” or “Notes”), which are convertible into the Company’s Common Stock, $ par value (“Common Stock”). On April 12, 2023, the Company and an additional investor entered into the SPA, whereby, the Company sold and issued an aggregate of thirty five thousand dollars ($35,000) of the Company’s Notes. In connection with the aforementioned Notes, the Company also issued to the investors a warrant to purchase (the “Purchase Warrant”) a certain number of shares of Common Stock, which are equal to 20% of the shares of Common Stock issuable upon conversion of the Note, based on a price of $2.00 per share. These warrants have a term of five (5) years, with an exercise price of $2.00 per share. Unless the Company chooses to terminate earlier, the offering and the sale of the Notes shall terminate on the sooner of the sale of the maximum offering amount or April 30, 2023. However, the Company extended this offering to June 30, 2023, per terms of agreement.
The March 27, 2023 Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023 Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price.
Further, in connection with the SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares of Common Stock, with % of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company. The Company issued Warrants to purchase an aggregate of 12,500 shares of Common Stock. The exercise price per share of the Common Stock under these Warrants is $2.00.
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FAIR VALUE OF FINANCIAL INSTRUMENTS |
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| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FAIR VALUE OF FINANCIAL INSTRUMENTS | Note 4 – Fair Value of Financial Instruments
The Company measures certain financial instruments and certain financial instruments with related parties at fair value on a recurring basis. The Company elected the fair value option of accounting for certain debt instruments. Under the fair value option, the financial instrument is initially measured at its issue date estimated fair value and subsequently remeasured at estimated fair value on a recurring basis each reporting period with the resulting fair value adjustment recognized as other income (expense) in the consolidated statement of operations. As of September 30, 2023, the fair value of these instruments was as follows:
The following is a reconciliation of the beginning and ending balances for the Convertible Notes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2023:
The estimated fair values reported utilize the Company’s common stock price along with certain Level 3 inputs, as discussed below, in the development of Monte Carlo simulation models. The estimated fair values are subjective and are affected by changes in inputs to the valuation models /analyses, including the Company’s common stock price, the Company’s dividend yield, risk-free rates based on U.S. Treasury security yields, and certain other Level-3 inputs including, assumptions regarding the estimated volatility in the value of the Company’s common stock price, the probability of a Qualified Offering, the estimated price of a Qualified Offering, and credit-risk adjusted discount rates. Changes in these assumptions can materially affect the estimated fair values.
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RELATED PARTY TRANSACTIONS |
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Sep. 30, 2023 | |||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | Note 5 – Related Party Transactions
Officers and Board Members and Related Expenses
On January 12, 2021, Mr. Raymond Monteleone was appointed as Chairman of the Board, Audit Committee Chair, and Compensation Committee Chair. There are understandings between the Company and Mr. Monteleone for him to receive $7,500 per month to serve on the Board of Directors and an additional $2,500 per quarter to serve as Chairman of the Board, Audit Committee Chair, and Compensation Committee Chair. Effective July 1, 2022, due to lack of working capital, Mr. Monteleone receives $3,750 per month to serve on the Board of Directors and to serve as Chairman of the Board, Audit Committee Chair, and Compensation Committee Chair. For the three months and nine months ended September 30, 2023 the Company expensed $11,250 and $33,750, respectively, for board of director fees to Mr. Monteleone. For the three months and nine months ended September 30, 2022 the Company expensed $13,750 and $63,750, respectively, for board of director fees to Mr. Monteleone. Due to lack of financial resources, the Company has been unable to pay Mr. Monteleone for his services totaling $57,500, which is included in accounts payable as of September 30, 2023.
On January 12, 2021, Mr. William Horne stepped down as Chairman of the Board. Mr. Horne will remain a member of the Board. Mr. Horne agreed to continue to defer the $108,000 in base salary deferred by him in 2018 until such time as there is a positive cash flow to meet the Company’s financial obligations and then the Company and Mr. Horne will work together in good faith to negotiate a payment plan for such deferred salary. Effective December 1, 2021, Mr. Horne will receive $5,000 per month to serve on the Board of Directors. Effective July 1, 2022, due to lack of working capital, Mr. Horne receives $2,500 per month to serve on the Board of Directors. For the three months and nine months ended September 30, 2023, the Company expensed approximately $7,500 and $22,500, respectively, in compensation and board of director fees to Mr. Horne. For the three months and nine months ended September 30, 2022 the Company expensed $7,500 and $42,500 respectively, for board of director fees to Mr. Horne. Due to lack of financial resources, the Company has been unable to pay Mr. Horne for his services totaling $37,500, which is included in accounts payable as of September 30, 2023.
Mr. Richard Rosenblum entered into an oral agreement with the Company effective January 17, 2022, in which Mr. Rosenblum will receive $5,000 per month to serve on the Board of Directors. Effective July 1, 2022, due to lack of working capital, Mr. Rosenblum receives $2,500 per month to serve on the Board of Directors. For the three and nine months ended September 30, 2023 the Company expensed $7,500 and $22,500, for board of director fees to Mr. Rosenblum. For the three months and nine months ended September 30, 2022 the Company expensed $7,500 and $35,000, respectively, for board of director fees to Mr. Rosenblum. Due to lack of financial resources, the Company has been unable to pay Mr. Rosenblum for his services totaling $37,500, which is included in accounts payable as of September 30, 2023.
Mr. Matthew Anderer entered into an oral agreement with the Company effective January 17, 2022, in which Mr. Anderer will receive $5,000 per month to serve on the Board of Directors. Effective July 1, 2022, due to lack of working capital, Mr. Anderer receives $2,500 per month to serve on the Board of Directors. For the three month and nine months ended September 30, 2023 the Company expensed $7,500 and $22,500, respectively, for board of director fees to Mr. Anderer. For the three months and nine months ended September 30, 2022 the Company expensed $7,500 and $35,000, respectively, for board of director fees to Mr. Anderer. Due to lack of financial resources, the Company has been unable to pay Mr. Anderer for his services totaling $37,500, which is included in accounts payable as of September 30, 2023.
Debt and Other Obligations
Convertible Notes Payable
On April 1, 2021, the Company, entered into a Secured Convertible Note Purchase Agreement (the “April 2021 Note Purchase Agreement”) with five (5) related party investors (the “Holders”). Pursuant to the terms of the April 2021 Note Purchase Agreement, the Company sold promissory notes in the aggregate principal amount of $2,575,000 maturing on June 17, 2022 with an annual interest rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next round of financing that meets the definition of Qualified Financing as defined in the April 2021 Note Purchase Agreement. The Notes are secured by the assets of the Company under a security agreement with the Holders. The lead investor of the April 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $1,500,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $25,000 as part of the April 2021 Note Purchase Agreement. The Company entered into an agreement with the noteholders to extend the maturity of the outstanding notes until July 31, 2024.
On October 14, 2021, the Company entered into the Second Closing Bring Down Agreement (the “October 2021 Note Purchase Agreement”) whereby the five (5) related party investors who had entered into the April 2021 Note Purchase Agreement purchased new notes in the Company in the aggregate principal amount of $750,000. The Notes are due and payable on June 17, 2022 and bear interest at an annual rate of 8%. The Notes are convertible into shares of Common Stock at a discount of 20% to the price paid for such New Securities in the next financing that meets the definition of a Qualified Financing as defined in the Note Purchase Agreement. The Notes are secured by all of the assets of the Company under a security agreement with the Holders. The lead investor of the October 2021 Note Purchase Agreement, FWHC Bridge, LLC, advanced $437,000 of the total amount to the Company. FWHC Bridge, LLC is an affiliated entity of FWHC, LLC, which is a principal stockholder and related party of the Company. An additional affiliate of FWHC, LLC provided an additional $7,000 as part of the October 2021 Note Purchase Agreement. The Company entered into an agreement with the noteholders to extend the maturity of the outstanding notes until July 31, 2024.
On February 22, 2022, the Company entered into a Debt Conversion Agreement (the “Amendment Agreement”) which i) provided for an additional round of convertible debt financing (“Tranche 2 Notes”) of up to $500,000 and ii) amended the conversion price on the convertible notes issued April 1, 2021 and October 8, 2021 (“Tranche 1 Notes”) from % of the price paid in a Qualified Financing (proceeds of at least $ million), to the lesser of (x) $0.002 and (y) the price paid in a Qualified Financing (proceeds of at least $10 million). The Amendment Agreement also provides the following Milestone Payments:
The Milestone Payments are not to exceed $2 million, and the Amendment Agreement also specifies that a Qualified Financing will not occur prior to the closing of the acquisition of Jantibody, LLC.
The Company evaluated the Amendment Agreement under ASC 470-50, “Debt – Modification and Extinguishment”, and concluded that probability of having to pay a Milestone payment was minimal and the change in the fair value of the conversion feature was not material. The Amendment did not cause a material change in cash flows so extinguishment accounting was not applicable.
On April 29, 2022, the Company entered into an Amended and Restated Note Conversion Agreement (the “Note Conversion Agreement”) with certain holders of its Tranche 1 Notes (i) providing for a conversion price equal to the lesser of (x) $0.002 per share (pre-split) and (y) the price per share paid by the investors in a Qualified Financing for such New Securities purchased for cash and not through conversion of Notes (as such terms are defined in the Note Conversion Agreement), in each case subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization, (ii) automatic conversion upon the occurrence of a Qualified Financing, and (iii) amendment of the maturity date from March 31, 2022 to June 17, 2022 (the “New Notes”). Upon the effective date of the Company’s 1,000-1 reverse split, the conversion price adjusted to the lesser of (a) the price in the Qualified Financing or (b) $2.00 per share. The New Notes also provided the investors with Royalty Payments equal to 15% of all net sales generated by the Company with respect to the sale of products or services associated with the 510(k) Notification related to the Company’s autologous cellular therapy (PRP-PBMC) to treat chronic lung disorder. The Royalty Payments are in lieu of the Milestone Payments but are perpetual and there is no limit to the aggregate amount of Royalty Payments that may be paid. It is the intent of the Company to pay the royalty payments even though the required conditions were not met. The Company entered into an agreement with the noteholders to extend the maturity of the outstanding notes until July 31, 2024.
Due to changes in key provisions of the Tranche 1 Notes, the Company analyzed the before and after cash flows between the (i) fair value of the New Notes and (ii) reacquisition price of the Tranche 1 Notes prior to the (A) change in the maturity date from March 31, 2022 to June 17, 2022, (B) change in the conversion price to the lesser of (x) $2.00 and (y) the price paid in a Qualified Financing, and (C) the fair value of the potential Royalty Payments, to determine whether these changes resulted in a modification or extinguishment of the Tranche 1 Notes. The Company entered into an agreement with the noteholders to extend the maturity of the outstanding notes until July 31, 2024
The Company used a discounted cash flow method with Monte Carlo Simulation to value the Royalty Payments. Future Royalty Payments were estimated based on management’s best estimate of future cash flows under various scenarios which were discounted to present value using a risk-adjusted rate of 70%.
Based on the before and after cash flows of each note, the change was considered significantly different. Consequently, the New Notes were accounted for as a debt extinguishment of the Tranche 1 Notes and a new debt issuance of the New Notes. The Company recorded a $2.2 million loss upon extinguishment of debt in the year ended December 31, 2022, which was comprised of the following:
The Note Conversion Agreement also provided for the consummation of a Tranche 2 Financing (the “Tranche 2 Notes”) subject to (i) the aggregate principal amount of indebtedness represented by the Tranche 2 Notes being capped at $500,000 and (ii) Tranche 2 Notes’ being an unsecured obligation of the Company and expressly subordinate in all respects to all indebtedness of the Company under the Notes and including language in which the holders of such Tranche 2 Notes acknowledge, confirm and agree to the foregoing subordination terms. Pursuant to the terms of the Note Conversion Agreement, the Investors have agreed not to sell any capital stock of the Company for a period of 12 months following the Qualified Financing. For the year ended December 31, 2022, approximately $499,000 of amortization of the debt premium is included in interest income. The Company entered into an agreement with the noteholders to extend the maturity of the outstanding notes until July 31, 2024.
On February 24, 2023, the Company and certain investors entered into Securities Purchase Agreements (the “SPA”), whereby the Company sold and issued to the certain investors an aggregate of three hundred thousand dollars ($300,000) of the Company’s convertible promissory notes (the “Note” or “Notes”), which are convertible into the Company’s Common Stock, $ par value (“Common Stock”). In connection with the aforementioned Notes, the Company also issued to the investors a warrant to purchase (the “Purchase Warrant”) a certain number of shares of Common Stock, which are equal to % of the shares of Common Stock issuable upon conversion of the Note, based on a price of $2.00 per share. These warrants have a term of five (5) years, with an exercise price of $2.00 per share. Unless the Company chooses to terminate earlier, the offering and the sale of the Notes shall terminate on the sooner of the sale of the maximum offering amount or April 30, 2023. However, the Company extended this offering to June 30, 2023 per terms of agreement.
The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price.
Further, in connection with the February 2023 SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares of Common Stock, with 20% of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company, dated February 24, 2023. The Company issued Warrants to purchase an aggregate of 30,000 shares of Common Stock. The exercise price per share of the Common Stock under these Warrants is $2.00.
On March 27, 2023, the Company and three related party investors entered into Securities Purchase Agreements (the “SPA”), whereby, the Company sold and issued to the certain investors, an aggregate of one hundred twenty five thousand dollars ($125,000) of the Company’s convertible promissory notes (the “Note” or “Notes”), which are convertible into the Company’s Common Stock, $ par value (“Common Stock”).
On April 12, 2023, the Company and an additional investor entered into the SPA, whereby the Company sold and issued thirty five thousand dollars ($35,000) of the Company’s Notes. In connection with the aforementioned Notes, the Company also issued to the investors a warrant to purchase (the “Purchase Warrant”) a certain number of shares of Common Stock, which are equal to % of the shares of Common Stock issuable upon conversion of the Note, based on a price of $2.00 per share. These warrants have a term of five (5) years, with an exercise price of $2.00 per share. Unless the Company chooses to terminate earlier, the offering and the sale of the Notes shall terminate on the sooner of the sale of the maximum offering amount or April 30, 2023. However, the Company extended this offering to June 30, 2023 per terms of the agreement.
The March 27, 2023, Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023, Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price.
Further, in connection with the March 2023 and April 2023 SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares of Common Stock, with 20% of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company. The Company issued Warrants to purchase an aggregate of 12,500 shares of Common Stock. The exercise price per share of the Common Stock under these Warrants is $2.00.
We evaluated the February 2023, March 2023, and April 2023 SPA in accordance with ASC Topic 815, Derivatives and Hedging, and determined that they contained a variable share settlement feature tied to the price of a future financing which functions as a redemption option. FASB ASC 825-10-25 allows the Company to elect the fair value option for recording financial instruments when they are initially recognized or if there is an event that requires re-measurement of the instruments at fair value, such as a significant modification of the debt. The Company elected to initially and subsequently measure the Convertible Notes in their entirety at fair value, with changes in fair value recognized in earnings. Management believes the fair value option best reflects the underlying economics of these Convertible Notes.
Because these Convertible Notes are carried in their entirety at fair value, the value of the contingent conversion feature is embodied in that fair value. The Company estimates the fair value based on a probability weighted analysis which considers the present value of the cash flows using a credit risk adjusted rate enhanced by the conversion feature valued using a Monte Carlo model. This method was considered by management to be the most appropriate method of encompassing the credit risk and exercise behavior that a market participant would consider when valuing a hybrid financial instrument. Inputs used to value the Convertible Notes as of September 30, 2023 included, (i) present value of future cash flows using a credit risk adjusted rate of 20.0%, (ii) remaining term of approximately five months, (iii) volatility of 322%, (iv) closing stock price on the valuation date, and (v) the conversion price based on the estimated price of a Qualified Offering, less a 20% discount, in accordance with the terms of the Note. Changes due to instrument-specific credit risk are recorded in Other Comprehensive Income with all other changes in value being recorded in net income.
At inception, the fair value of the Convertible Notes using the fair value option was $1,913,367, and the fair value of the related Warrants issued was approximately $73,872. Because the fair value of the hybrid instrument was in excess of the proceeds received of $460,000, the Company recorded a day one loss on convertible notes of $1,521,768. On September 30, 2023, the debt instruments were revalued at approximately $584,000 resulting in a gain of approximately $1,330,000 for the nine months ended September 30, 2023.
Other Obligations
During the year ending December 31, 2022, Michael Yurkowsky, CEO, advanced the Company approximately $40,000 as a non-interest-bearing note with no established repayment terms. During the nine months ended September 30, 2023, approximately $13,000 in net additional advances were made. The balance owed is approximately $53,000 as of September 30, 2023.
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EQUITY TRANSACTIONS | Note 6 - Equity Transactions
In January 2022, the Company offered certain warrant holders the opportunity to receive an additional warrant to purchase the Company’s Common Stock at $14.00 per share, for a period of five (5) years from issuance for the exercise by March 31, 2022 of each existing warrant originally issued in April 2020. As of December 31, 2022, the Company had eleven warrant holders exercise an aggregate of 83,579 warrants at $14.00 per share resulting in cash proceeds of approximately $1,170,000 to the Company.
On June 10, 2022, the Company amended (the “Amendment”) its Articles of Incorporation to effectuate a one-for-one thousand reverse stock split (the “Reverse Split”) of its common stock. The Reverse Split was approved by FINRA on June 10, 2022, and effectuated on June 13, 2022. Pursuant to the Amendment, the Company also reduced the authorized shares of common stock to . As a result of the Reverse Split, the Company had approximately shares of common stock outstanding and shares of Series A Preferred Stock outstanding as of December 31, 2022. As a result of the Reverse Stock Split, the Series A Preferred Stock is convertible at a ratio of one thousand shares of Series A Preferred Stock into one share of common stock. Accordingly, the outstanding shares of Series A Preferred Stock are now convertible into an aggregate of shares of common stock.
On September 29, 2022, the Company entered into a securities purchase agreement with two related party accredited investors for the sale of shares of Common Stock and warrants (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company sold an aggregate of shares of common stock and warrants to purchase 56,250 shares of Common Stock exercisable at $2.50 per share for gross proceeds of approximately $225,000.
On November 14, 2022, pursuant to the Purchase Agreement, the Company sold an aggregate of shares of common stock and warrants to purchase 7,250 shares of Common Stock exercisable at $2.50 per share for gross proceeds of $30,000.
On March 17, 2023, the Company issued shares of Common Stock to a convertible noteholder who, at the request of the noteholder, converted $10,000 of convertible notes into the Company’s Common Stock.
On May 23, 2023, the Company issued shares of Common Stock to a convertible noteholder who, at the request of the noteholder, converted $14,000 of convertible notes into the Company’s Common Stock.
On June 8, 2023, the Company issued shares of Common Stock to a convertible noteholder who, at the request of the noteholder, converted $20,000 of convertible notes into the Company’s Common Stock.
On July 10, 2023, the Company issued shares of Common Stock to a convertible noteholder who, at the request of the noteholder, converted $6,000 of convertible notes into the Company’s Common Stock.
On July 20, 2023, the Company issued shares of Common Stock to a convertible noteholder who, at the request of the noteholder, converted $8,700 of convertible notes into the Company’s Common Stock.
The following table summarizes the Company’s common and preferred stock outstanding by class. The number of common stock shares has been adjusted to reflect a one-for-one thousand reverse stock split that became effective on June 13, 2022.
Series A Preferred Stock
During the nine months ended September 30, 2023, shares of Series A Preferred Stock were converted to Common Stock.
Voting Rights
Holders of Series A Preferred Stock (“Series A Holders”) have the right to receive notice of any meeting of holders of common stock and to vote upon any matter submitted to a vote of the holders of common stock. Each Series A Holder shall vote on each matter on an as converted basis submitted to them with the holders of common stock.
Conversion
Series A Preferred Stock converts to common stock at a 1000:1 ratio immediately upon request of the Series A Holder.
Liquidation, Dissolution, or Winding Up
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders and, in the event of a Deemed Liquidation Event (as defined in the Second Amended and Restated Articles of Incorporation), the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the consideration payable to stockholders in such Deemed Liquidation Event or out of the consideration received by the Company for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Company), together with any other assets of the Company available for distribution to its stockholders, all to the extent permitted by Nevada law governing distributions to stockholders, as applicable, before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to one (1) times the Series A Original Issue Price for such share of Series A Preferred Stock, plus any Series A Accruing Dividends accrued but unpaid thereon, whether or not declared. If upon any such liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the assets of the Company available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled under subsection 2.1 of the Second Amended and Restated Articles of Incorporation, the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, after the payment in full of all Series A Liquidation Amounts (as defined in the Second Amended and Restated Articles of Incorporation) required to be paid to the holders of shares of Series A Preferred Stock the remaining assets of the Company available for distribution to its stockholders or, in the case of a Deemed Liquidation Event, the consideration not payable to the holders of shares of Series A Preferred Stock shall be distributed among the holders of the shares of Series A Preferred Stock and Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose all shares of Series A Preferred Stock as if they had been converted to Common Stock pursuant to the terms of the Second Amended and Restated Articles of Incorporation immediately prior to such liquidation, dissolution or winding up of the Company.
Share-Based Compensation Plan
The Company utilizes the Black-Scholes valuation method to recognize share-based compensation expense over the vesting period. The expected life represents the period that the share-based compensation awards are expected to be outstanding.
Stock Option Activity
On April 1, 2021, the Board of Directors of the Company approved and granted certain directors and officers of the Company an aggregate of stock options of which were immediately vested on the date of grant. Each option granted has an exercise price of $ per share and an expiration date of ten years from the date of grant. These options are not included in the Company’s current stock option plan as they were granted outside of the plan.
On June 10, 2022, the Company amended its Articles of Incorporation to effectuate a one-for-one thousand reverse stock split of its common stock. The Reverse Split was approved by FINRA on June 10, 2022 and effectuated on June 13, 2022.
As of September 30, 2023, options were outstanding and were vested. As of September 30, 2022, options were outstanding and were vested. For the three and nine months ended September 30, 2023, the Company recognized an expense related to stock options of approximately $ and $, respectively, which is included in share-based compensation. For the three months and nine months ended September 30, 2022, the Company recognized approximately $ and $ in stock-based compensation expense, respectively, which is included in share-based compensation. As of September 30, 2023, the Company has approximately $ of unrecognized compensation costs related to non-vested stock options, which is expected to be recognized over a weighted average period of approximately years.
Net Loss Per Share
Basic loss per share is computed on the basis of the weighted average number of shares outstanding for the reporting period. Diluted loss per share is computed on the basis of the weighted average number of common shares plus dilutive potential common shares outstanding using the treasury stock and if-converted methods, as applicable. Any potentially dilutive securities are antidilutive due to the Company’s net losses.
Excluded from the above table are warrants and stock options for the nine months ended September 30, 2023 and warrants and stock options for the nine months ended September 30, 2022 as they are out of the money (exercise price greater than the stock price). Inclusion of such would be anti-dilutive. As a result of the Reverse Stock Split, the Series A Preferred Stock is convertible at a ratio of one thousand shares of Series A Preferred Stock into one share of common stock. Accordingly, the outstanding shares of Series A Preferred Stock are convertible into an aggregate of shares of common stock at September 30, 2023.
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COMMITMENTS & CONTINGENCIES |
9 Months Ended |
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Sep. 30, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS & CONTINGENCIES | Note 7 – Commitments & Contingencies
CEO Compensation Agreement
On December 23, 2021, the Company entered into an employment agreement (the “Employment Agreement”) with Michael Yurkowsky, the Company’s Chief Executive Officer, to continue to serve as the Chief Executive Officer of the Company. Under the Employment Agreement, which commenced on December 1, 2021 (the “Effective Date”) and has a term of one year from the Effective Date (the “Employment Period”), Mr. Yurkowsky will receive a base salary of $180,000 per year. Upon the expiration of the Employment Period, Mr. Yurkowsky’s employment with the Company will be on an at-will basis.
In addition to his base salary, Mr. Yurkowsky may receive a one-time cash bonus in gross amount equal to $100,000 if (i) the Company’s stock is listed and quoted on the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, or the New York Stock Exchange; or (ii) the Company secures and receives financing of at least $10,000,000.
These market conditions were reflected in the grant date fair value of the award as required under ASC 718 Compensation-Stock Compensation.
The Equity Award was measured at fair value on its grant date using a Monte Carlo simulation model. The Monte Carlo simulation model includes assumptions for the expected term, volatility, and dividend yield, each of which are determined in reference to the Company’s historical results. The Company will recognize aggregate share-based compensation expense of approximately $ related to the Equity Award on a straight-line basis over the derived service period determined by the Monte Carlo simulation model, which was 0.71 years. During the three and nine month period ending September 30, 2022, the Company recognized approximately $0 and $114,000 in compensation expense related to the Equity Award, respectively. If the market capitalization targets are met sooner than the derived service period, the Company will adjust its stock-based compensation to reflect the cumulative expense associated with the vested Equity Award. The Company will recognize expense if the requisite service is provided, regardless of whether the market conditions are achieved.
Consulting Agreements
The Company entered into a consulting agreement with Tanya Rhodes of Rhodes & Associates, Inc, effective June 15, 2020, to serve as the Chief Science Officer of the Company. The agreement has a minimum term of six months with an average fee of $21,000 per month plus expenses which increases 5% per month on January 1 of each calendar year unless an alternative retainer amount is negotiated and agreed upon by both parties. The Company extended the contract on January 1, 2021, resulting in monthly expenses of $22,500 plus expenses for services rendered. Due to lack of financial resources, the Company has been unable to pay Ms. Rhodes for her services totaling approximately $220,000, which has been accrued as part of accrued liabilities as of September 30, 2023.
Litigation
From time to time, the Company may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect the Company’s financial condition, results of operations, and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect the Company due to legal costs and expenses, diversion of management attention, and other factors. The Company expenses legal costs in the period incurred. The Company cannot assure that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against the Company in the future, and these matters could relate to prior, current or future transactions or events.
The Company is involved in a lawsuit with Sinclair Broadcast Group, Inc. (“Sinclair”) which was filed on September 8, 2020, in the Circuit Court for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. Sinclair has obtained a legal judgment for breach of contract for advertising services in the amount of approximately $75,000 plus interest and costs. The Company has retained legal counsel for guidance in this matter. The amount is recorded in accounts payable as of September 30, 2023.
The Company is involved in a lawsuit with ITN Networks, LLC (“ITN”) which was filed on July 22, 2021, in the Circuit Court for the Thirteenth Judicial Circuit in and for Hillsborough County, Florida. ITN has obtained a legal judgment for breach of contract for advertising services in the amount of approximately $45,000 plus interest and costs. The Company has retained legal counsel for guidance in this matter. The amount is recorded in accounts payable as of September 30, 2023.
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DEBT |
9 Months Ended |
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Sep. 30, 2023 | |
| Debt Disclosure [Abstract] | |
| DEBT | Note 8 – Debt
Notes Payable
Notes payable were assumed in the Merger (for further discussion, see Note 1 - “Overview” to the consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K) and are due in aggregate monthly installments of approximately $5,800 and carry an interest rate of 5%. Each note originally had a maturity date of August 1, 2019. The Company finalized an eighteen-month extension to March 1, 2021. The promissory notes have an aggregate outstanding balance of approximately $69,000 at September 30, 2023 and December 31, 2022. The Company has not made payments on these notes since February 10, 2020, due to the Company’s lack of working capital. On April 19, 2022, the Company entered into a promissory note modification agreement with the Lender extending the maturity date of the notes to April 1, 2024. The modification agreement also reduces the interest rate from 5% to 3% and requires a monthly payment of $1,000 per month with a balloon payment at the end of the modified term.
On June 9, 2022, the Company entered into a securities purchase agreement for a total of $272,500 with two accredited investors. The notes issued are convertible into common stock at a 65% discount to the lowest trading price in the 20-day period prior to conversion. The notes bear interest at 10% and are due one year from issuance. For the first six months, the Company had the right to prepay the notes at a premium of between 25% and 35% depending on when it is repaid.
The Company also issued a promissory note for $100,000, on June 9, 2022, to another accredited investor. This note bears interest at 15% (no matter when repaid) and converts at a discount of 25% of the price of a public offering or a 25% discount to the Volume Average Weighted Price (“VWAP”) of the five (5) days prior to conversion.
On August 8, 2022, the Company entered into a securities purchase agreement for a total of $65,000 with an accredited investor. The note issued is convertible into common stock at a 65% discount to the lowest trading price in the 20-day period prior to conversion. The note bears interest at 10% and is due one year from issuance. For the first six (6) months, the Company had the right to prepay the notes at a premium of between 25% and 40% depending on when it is repaid.
On February 28, 2023, the Company entered into a securities purchase agreement for a total of $150,000 with an accredited investor. The note issued is convertible into common stock at a 65% discount to the lowest trading price in the 20-day period prior to conversion. The note bears interest at 10% and is due one year from issuance. For the first six months, the Company has the right to prepay the note at a premium of between 25% and 40% depending on when it is repaid.
The embedded features in the June 2022, August 2022, and February 2023 convertible notes were analyzed under ASC 815 to determine if they required bifurcation as derivative instruments. To be a derivative, one of the criteria is that the embedded component must be net-settleable. While the Company’s Common Stock was traded on an exchange at the time of the transaction, the underlying shares are not readily convertible into cash since there is insufficient daily trading volume for the holders to convert the convertible notes into Common Stock without significantly affecting the share price. Accordingly, the embedded derivatives, including the embedded conversion feature, did not meet the definition of a derivative, and therefore, did not require bifurcation from the host instrument. Certain default put provisions, including a default put and default interest, were not considered to be clearly and closely related to the host instrument but the Company concluded that the value of these provisions was de minimus at inception. The Company will reconsider the value of these provisions each reporting period to determine if the value becomes material to the financial statements.
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| ACQUISITIONS | Note 9 – Acquisitions
The Company evaluates acquisitions of assets and other similar transactions to assess whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. If the screen is not met, further determination is required as to whether or not the Company has acquired inputs and processes that have the ability to create outputs which would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.
If an acquisition is determined to be a business combination as indicated in ASC 805, Business Combinations, the assets acquired, and liabilities assumed are recorded at their respective estimated fair values at the date of the acquisition. The Company recognizes and measures goodwill as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.
If an acquisition is determined to be an asset acquisition, the Company accounts for the transaction under ASC 805-50, which requires the cost of the asset acquisition, including transaction costs, to be allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis. Assets acquired as part of an asset acquisition that are considered to be in-process research and development (IPR&D) are immediately expensed unless there is an alternative future use in other research and development projects. Goodwill is not recognized in an asset acquisition and any excess consideration transferred over the fair value of the net assets acquired is allocated to the identifiable assets based on relative fair values (excluding non-qualifying assets). If the cost of the asset acquisition is less than the fair value of the net assets acquired, no gain is recognized in earnings.
Contingent consideration payments in asset acquisitions are recognized when the contingency is resolved and the consideration is paid or becomes payable (unless the contingent consideration meets the definition of a derivative, in which case the amount becomes part of the basis in the asset acquired). Upon recognition of the contingent consideration payment, the amount is included in the cost of the acquired asset or group of assets.
On September 7, 2022, the Company acquired all of the membership interests, with Common Stock, of Jantibody LLC (“Jantibody”), a Nevada limited liability company. Jantibody is focused on the development of novel proprietary immunotherapies targeted towards ovarian cancer, pancreatic cancer, and mesothelioma. Prior to the acquisition, Michael Yurkowsky, CEO, had approximately 17.5% ownership interest in Jantibody.
Pursuant to the Jantibody Agreement, the Company issued the equity holders of Jantibody an aggregate of shares of the Company’s common stock which represented 15% of the Company’s common stock on a fully diluted basis at the time of the transaction. In addition, for every share of the Company’s common stock issued as a result of the future conversion of the Company’s dilutive instruments, including Series A preferred stock, warrants, stock options, and convertible notes, the Jantibody members will receive 15% of the aggregate number of shares issued (the “Anti-Dilution” shares). The Anti-Dilution shares will be issued before the end of each fiscal quarter.
The Company has agreed to issue the Jantibody holders an additional 2.0% of the Company’s common stock then outstanding upon the enrollment of the first patient in a Phase I FDA trial and additional 3.0% of the Company’s then outstanding common stock on a fully diluted basis upon the enrollment of the first patient in a Phase [III] FDA trial. The Company determined the contingent consideration was not subject to derivative accounting and will be recognized when the contingency is resolved, and the consideration is paid or becomes payable as outlined in ASC 450, Contingencies.
The Company determined this transaction represented an asset acquisition as defined by ASC 805, Business Combinations, as substantially all of the value was in a single in-process research and development (“IPR&D”) group, which included the small molecule drug CXCR4 inhibitor, AMD3100, and/or checkpoint inhibitors (CPI) for anti-cancer immune modulation. As a result, the consideration transferred was allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their relative fair values resulting in approximately $1,240,000 being assigned to the IPR&D asset and approximately $1,000,000 to assumed liabilities. The liabilities assumed were current accounts payable and as such were recorded a book value.
The purchase price of approximately $247,000 represented shares of the Company’s common stock, Anti-Dilution shares, and direct transaction costs of $21,600. The purchase price was allocated, on a relative fair value basis, to the acquired intellectual property, and the acquired net assets as follows:
The IPR&D had not yet reached technological feasibility and had no alternative future use; thus, the purchased IPR&D asset and related costs were expensed immediately subsequent to the acquisition within the consolidated statements of operations.
On December 22, 2022, the Company acquired a 100% interest, with Common Stock, in Scion Solutions, LLC (“Scion”). Scion is a life sciences company that has developed a new technology in regenerative medicine specifically for limb salvage. Their proprietary product SkinDisc (patent pending) is a combination of stem cells and several other molecular components that stimulate tissue regeneration. Prior to the acquisition, Tanya Rhodes, CSO, had approximately 33.3% ownership interest in Scion.
Pursuant to the terms of the Scion Agreement, the Company issued the equity holders of Scion an aggregate of shares of the Company’s common stock. In addition, for every share of the Company’s common stock issued within 18-months of the Effective Date of the transaction, as a result of the future conversion of the Company’s dilutive instruments, including Series A preferred stock, warrants, stock options, and convertible notes, the Scion members will receive 20% of the aggregate number of shares issued (the “Anti-Dilution” shares). The Anti-Dilution shares will be issued before the end of each fiscal quarter.
In addition, the former shareholders of Scion are eligible to receive Performance Payments consisting of the following:
Substantially all of the value acquired was concentrated in a single in-process research and development (“IPRD”) asset, which included license rights, clinical trial data, clinical trial development plans, research and development materials, formulations and intellectual property related to SkinDisc. There was no workforce, and no outputs were present. Accordingly, the acquired set of assets and activities did not meet the definition of a business as defined by ASC 805, Business Combinations and was considered an asset acquisition. In an asset acquisition, the consideration transferred is allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on their relative fair values. In the Scion acquisition, the only asset or liability acquired was IPR&D. As a result, the consideration transferred was recorded fully to the IPR&D asset.
In an asset acquisition, cash-settled contingent consideration is measured when probable and estimable, unless the contingent consideration falls under the guidance of ASC 815. The Company determined the contingent consideration was not subject to ASC 815 and thus, the performance payments which were estimable and probable (i.e., more than 50% likely to occur) were recorded on the acquisition date. The fair value was estimated based on a probability weighting of the present value of cash flows over the expected time period until payment, using a credit-risk adjusted interest rate. Each reporting period, the Company will determine if the performance payments are estimable and probable and will record them as a liability at that time.
The purchase price was allocated, as follows:
The common stock value was recorded as equity. The remaining consideration was recorded as IPR&D, since the SkinDisc technology was still in the research and development stage and had no alternative future use. The purchased IPR&D asset of $792,256 was expensed immediately subsequent to the acquisition within our consolidated statements of operations.
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REDEMPTION OF MEDOVEX LLC MEMBERSHIP INTEREST AND SALE OF IP |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Redemption Of Medovex Llc Membership Interest And Sale Of Ip | |
| REDEMPTION OF MEDOVEX LLC MEMBERSHIP INTEREST AND SALE OF IP | Note 10- Redemption of Medovex, LLC Membership Interest and Sale of IP
Effective April 2, 2021, and in conjunction with the Amended and Restated Limited Liability Company Agreement of Medovex, LLC (“JV”) (the “LLC Agreement”), Innoveren, Scientific, Inc., through its wholly-owned subsidiary, Medovex Corp. (“Corp”), entered into a Contribution Agreement with JV to pursue a joint venture regarding the continued development and commercialization of the Company’s DenerveX Device. In connection with the Contribution Agreement, Corp and JV entered into an Intellectual Property (“IP”) License Agreement (“License Agreement”) in part to permit Corp to license the IP to JV for use in commercializing the DenerveX Device. The IP and related assets were previously deemed fully impaired by the Company in a prior year. Pursuant to the Contribution Agreement, the JV issued certain membership interests in the JV to Corp in exchange for the contributed IP assets. The effects of the Contribution Agreement on the Company’s consolidated financial statements were deemed immaterial.
Effective September 21, 2023, Corp (as “Seller”) entered into a Membership Interest and LLCA Rights Redemption Agreement (“Redemption Agreement”) with JV for the redemption (purchase) by JV of all of Corp’s membership interests outstanding with the JV, as well as the purchase all of the rights of Corp under the Amended and Restated Limited Liability Company Agreement (“LLCA”) dated April 2, 2021 (the “LLCA Rights”), for a purchase price of approximately $869,000. In addition, Corp and JV have agreed in principle for the assignment and transfer of the DenerveX IP (the “2023 IP Agreement”) by Corp to JV for the rights to IP under the DenerveX device and technology and all trade names, patents, trademarks, and other IP under the Medovex and Medovex Corp names, for a purchase price of approximately $56,000. The Company and Corp will no longer be a party to any rights or obligations associated with the DenerveX IP or associated assets.
The sale of membership interests in the JV and the IP under the DenerveX device and technology was recorded as a deferred gain on redemption of equity investment of approximately $869,000 and a deferred gain on sale of asset of approximately $56,000, for the three and nine months ended September 30, 2023, on the accompanying consolidated statements of operations as the Company awaits the final transfer of IP to Medovex LLC. The IP that was sold as part of the Redpemtion Agreement had a net book value of $0.
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COMMON STOCK WARRANTS |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Warrants | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMON STOCK WARRANTS | Note 11- Common Stock Warrants
A summary of the Company’s warrant issuance activity and related information for the nine months ended September, 2022 and 2023 is as follows:
The fair value of all warrants issued are determined by using the Black-Scholes valuation technique. The inputs used in the Black-Scholes valuation technique to value each of the warrants as of their respective issue dates are as follows:
The fair value of warrants issued during the three and nine months ended September 30, 2023, totaled approximately $0 and $74,000, respectively. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
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SUBSEQUENT EVENTS |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | Note 12 - Subsequent Events
The Company recently received notice from Mass General Hospital (MGH) that the Company was in default in its obligations to fund certain Jantibody activities and obligations and was terminating the license agreement between Innoveren and The General Hopsital Corporation d/b/a MGH. The Company was sent an initial breach notice on February 24, 2023, following which Company met with MGH and negotiated a Second Amendment (MGH Agreement No. 2023-2413) effective April 24, 2023. MGH notified the Company of breach for a second time on September 11, 2023, indicating grounds for termination of the Agreement unless the breach was cured. To date, the breach has not been cured and MGH has not received payment. Consequently, the Agreement is hereby terminated effective immediately as of November 6, 2023.
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FAIR VALUE INSTRUMENT |
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| SCHEDULE OF CONVERTIBLE NOTE MEASURED AT FAIR VALUE | The following is a reconciliation of the beginning and ending balances for the Convertible Notes measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2023:
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RELATED PARTY TRANSACTIONS (Tables) |
9 Months Ended | ||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||
| SCHEDULE OF LOSS UPON EXTINGUISHMENT |
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EQUITY TRANSACTIONS (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF COMMON AND PREFERRED STOCK OUTSTANDING | The following table summarizes the Company’s common and preferred stock outstanding by class. The number of common stock shares has been adjusted to reflect a one-for-one thousand reverse stock split that became effective on June 13, 2022.
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| SCHEDULE OF ASSUMPTIONS USED TO CALCULATE FAIR VALUE OF STOCK OPTIONS |
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| SUMMARY OF STOCK OPTION ACTIVITY |
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| SUMMARY OF STOCK OPTION ACTIVITY NON-VESTED |
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| SCHEDULE OF ANTI-DILUTIVE SECURITIES OF BASIC AND DILUTED NET LOSS PER SHARE |
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ACQUISITIONS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF PERFORMANCE PAYMENTS |
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| Jantibody LLC [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF NET IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED |
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| Scion Agreement [Member] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF NET IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED |
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COMMON STOCK WARRANTS (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common Stock Warrants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF ISSUANCE OF WARRANTS | A summary of the Company’s warrant issuance activity and related information for the nine months ended September, 2022 and 2023 is as follows:
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| SCHEDULE OF ISSUANCE OF WARRANTS VALUATION TECHNIQUE | The fair value of all warrants issued are determined by using the Black-Scholes valuation technique. The inputs used in the Black-Scholes valuation technique to value each of the warrants as of their respective issue dates are as follows:
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DESCRIPTION OF THE COMPANY (Details Narrative) - USD ($) |
9 Months Ended | ||||
|---|---|---|---|---|---|
Sep. 21, 2023 |
Jun. 10, 2022 |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 10, 2022 |
|
| Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 | ||
| Common stock, shares, outstanding | 712,170 | 618,506 | |||
| Conversion of stock, shares converted | 438,776 | ||||
| Limited Liability Company Agreement [Member] | |||||
| Purchase price | $ 869,000 | ||||
| Redemption Agreement [Member] | |||||
| Purchase price | $ 56,000 | ||||
| Redemption of equity investment | $ 869,000 | ||||
| Sale of assets | $ 56,000 | ||||
| Series A Preferred Stock [Member] | |||||
| Preferred stock, shares outstanding | 438,776,170 | 438,776,170 | 438,776,170 | ||
| Common Stock [Member] | |||||
| Common stock, shares, outstanding | 712,710 | 618,506 |
LIQUIDITY, GOING CONCERN AND SOURCES OF LIQUIDITY (Details Narrative) |
3 Months Ended | 9 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mar. 27, 2023
USD ($)
$ / shares
shares
|
Mar. 27, 2023
USD ($)
$ / shares
shares
|
Feb. 28, 2023
USD ($)
|
Feb. 24, 2023
USD ($)
$ / shares
shares
|
Feb. 24, 2023
USD ($)
$ / shares
shares
|
Sep. 30, 2023
USD ($)
$ / shares
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
$ / shares
|
Sep. 30, 2022
USD ($)
|
Nov. 09, 2023
USD ($)
|
Apr. 12, 2023
USD ($)
$ / shares
|
Dec. 31, 2022
$ / shares
|
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||
| Net income (loss) | $ 495,775 | $ 2,279,444 | $ 1,765,515 | $ 8,806,492 | ||||||||
| Cash on hand | $ 544,000 | $ 544,000 | $ 150,000 | |||||||||
| Common stock par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |||||||||
| Debt instrument description | The March 27, 2023, Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023, Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | ||||||||||
| Convertible shares percentage | 20.00% | |||||||||||
| Proceeds from issuance of common stock | $ 225,001 | |||||||||||
| Securities purchase agreement [Member] | ||||||||||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||||||
| Debt instrument, face amount | $ 125,000 | $ 125,000 | $ 300,000 | $ 300,000 | $ 35,000 | |||||||
| Common stock par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||
| Debt Instrument Convertible Conversion Price | $ / shares | $ 2.00 | $ 2.00 | ||||||||||
| Warrant term | 5 years | 5 years | 5 years | |||||||||
| Warrant exercise price | $ / shares | $ 2.00 | $ 2.00 | $ 2.00 | $ 2.00 | $ 2.00 | |||||||
| Debt instrument description | The March 27, 2023 Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023 Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | ||||||||||
| Convertible shares percentage | 20.00% | |||||||||||
| Exercise on aggregate of warrants | shares | 12,500 | 12,500 | 30,000 | 30,000 | ||||||||
| Proceeds from issuance of common stock | $ 150,000 | |||||||||||
| Common stock discount percentage | 65 | |||||||||||
| Debt instrument, convertible description | The note bears interest at 10% and is due one year from issuance. For the first six months, the Company has the right to prepay the note at a premium of between 25% and 40% depending on when it is repaid | |||||||||||
SCHEDULE OF CONVERTIBLE NOTE MEASURED AT FAIR VALUE (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
USD ($)
| |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Fair value of Convertible Notes issued | $ 1,913,367 |
| Gain on change in fair value of Convertible Notes | 1,330,000 |
| Balance at September 30, 2023 | (583,738) |
| Fair Value, Inputs, Level 3 [Member] | |
| Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
| Balance at December 31, 2022 | |
| Fair value of Convertible Notes issued | (1,913,367) |
| Gain on change in fair value of Convertible Notes | 1,329,629 |
| Balance at September 30, 2023 | $ (583,738) |
SCHEDULE OF LOSS UPON EXTINGUISHMENT (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Loss on Extinguishment | $ (2,196,100) | ||||
| Note Conversion Agreement [Member] | |||||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
| Carrying value of Tranche 1 Notes | $ 3,580,738 | ||||
| Less: Fair value of New Notes | (4,079,838) | ||||
| Less: Fair value of Royalty Payments | (1,697,000) | ||||
| Loss on Extinguishment | $ (2,196,100) | ||||
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 12, 2023 |
Mar. 27, 2023 |
Feb. 24, 2023 |
Apr. 29, 2022 |
Feb. 22, 2022 |
Jan. 17, 2022 |
Oct. 14, 2021 |
Apr. 02, 2021 |
Jan. 12, 2021 |
Jan. 02, 2021 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Jul. 02, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
Jul. 02, 2022 |
|
| Related Party Transaction [Line Items] | |||||||||||||||||
| Professional fees | $ 22,500 | ||||||||||||||||
| Reverse stock split | 1-for-1,000 | ||||||||||||||||
| Loss extinguishment of debt | $ 2,200,000 | ||||||||||||||||
| Debt discount | $ (499,100) | ||||||||||||||||
| Common stock par value | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||||||
| Debt instrument description | The March 27, 2023, Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023, Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | |||||||||||||||
| Related party transaction description of transaction | (i) present value of future cash flows using a credit risk adjusted rate of 20.0%, (ii) remaining term of approximately five months, (iii) volatility of 322%, (iv) closing stock price on the valuation date, and (v) the conversion price based on the estimated price of a Qualified Offering, less a 20% discount, in accordance with the terms of the Note. Changes due to instrument-specific credit risk are recorded in Other Comprehensive Income with all other changes in value being recorded in net income. | ||||||||||||||||
| Fair value of convertible notes issued | $ 1,913,367 | ||||||||||||||||
| Warrants issued | 73,872 | ||||||||||||||||
| Investment owned at fair value | $ 460,000 | 460,000 | |||||||||||||||
| Loss on convertible notes | 1,521,768 | ||||||||||||||||
| Financial liabilities fair value disclosure | 583,738 | 583,738 | |||||||||||||||
| Gain on convertible notes at fair value | 1,330,000 | ||||||||||||||||
| Related Party [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Other liabilities | 13,000 | 13,000 | |||||||||||||||
| Common Stock [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Warrants issued | |||||||||||||||||
| Secured Convertible Note Agreement [Member] | FWHC Bridge LLC [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Proceeds from convertible debt | $ 1,500,000 | ||||||||||||||||
| Secured Convertible Note Agreement [Member] | Common Stock [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Debt effective rate | 20.00% | ||||||||||||||||
| Second Closing Bring Down Agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Debt instrument, face amount | $ 750,000 | ||||||||||||||||
| Interest rate | 8.00% | ||||||||||||||||
| Debt effective rate | 20.00% | ||||||||||||||||
| Proceeds from convertible debt | $ 437,000 | ||||||||||||||||
| Debt Conversion Agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Proceeds from convertible debt | $ 10,000,000 | ||||||||||||||||
| Convertible debt | $ 500,000 | ||||||||||||||||
| Conversion price percentage | 25.00% | ||||||||||||||||
| Debt instrument convertible conversion price | $ 0.002 | ||||||||||||||||
| Milestone payments | $ 1,000,000 | ||||||||||||||||
| Debt Conversion Agreement [Member] | Minimum [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Proceeds from convertible debt | 1,000,000 | ||||||||||||||||
| Debt Conversion Agreement [Member] | Maximum [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Milestone payments | 2,000,000 | ||||||||||||||||
| Debt Conversion Agreement [Member] | Share-Based Payment Arrangement, Tranche One [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Proceeds from convertible debt | $ 15,000,000 | ||||||||||||||||
| Conversion price percentage | 80.00% | ||||||||||||||||
| Note Conversion Agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Debt instrument convertible conversion price | $ 2.00 | ||||||||||||||||
| Risk adjusted percentage | 70.00% | ||||||||||||||||
| Debt instrument, decrease, forgiveness | $ 500,000 | ||||||||||||||||
| Debt discount | $ 499,000 | ||||||||||||||||
| Note Conversion Agreement [Member] | New Notes [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Debt instrument convertible conversion price | $ 2.00 | ||||||||||||||||
| Reverse stock split | Upon the effective date of the Company’s 1,000-1 reverse split, the conversion price adjusted to the lesser of (a) the price in the Qualified Financing or (b) $2.00 per share. | ||||||||||||||||
| Royalty percentage | 15.00% | ||||||||||||||||
| Securities purchase agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Debt instrument, face amount | $ 35,000 | $ 125,000 | $ 300,000 | ||||||||||||||
| Debt instrument convertible conversion price | $ 2.00 | ||||||||||||||||
| Convertible notes payable current | $ 300,000 | ||||||||||||||||
| Common stock par value | $ 0.001 | $ 0.001 | |||||||||||||||
| Number of shares isuued and outstanding percentage | 20.00% | ||||||||||||||||
| Warrant term | 5 years | ||||||||||||||||
| Warrant exercise price per share | $ 2.00 | $ 2.00 | $ 2.00 | ||||||||||||||
| Debt instrument description | The March 27, 2023 Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023 Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | |||||||||||||||
| Number of warrants to purchase aggregate | 12,500 | 30,000 | |||||||||||||||
| Raymond Monteleone [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Professional fees | $ 7,500 | ||||||||||||||||
| Additional fees | 2,500 | ||||||||||||||||
| Debt instrument periodic payment | $ 3,750 | ||||||||||||||||
| Officers compensation | 11,250 | $ 13,750 | 33,750 | 63,750 | |||||||||||||
| Accrued salaries | 57,500 | 57,500 | |||||||||||||||
| William Horne [Member] | Oral Agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Professional fees | 5,000 | $ 2,500 | |||||||||||||||
| Officers compensation | 7,500 | 7,500 | 22,500 | 42,500 | |||||||||||||
| Accrued salaries | 37,500 | 37,500 | |||||||||||||||
| Deferred salary and compensation | $ 108,000 | ||||||||||||||||
| Richard Rosenblum [Member] | Oral Agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Professional fees | $ 5,000 | ||||||||||||||||
| Debt instrument periodic payment | 2,500 | ||||||||||||||||
| Officers compensation | 7,500 | 7,500 | 22,500 | 35,000 | |||||||||||||
| Accrued salaries | 37,500 | 37,500 | |||||||||||||||
| Matthew Anderer [Member] | Oral Agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Professional fees | $ 5,000 | ||||||||||||||||
| Debt instrument periodic payment | $ 2,500 | ||||||||||||||||
| Officers compensation | 7,500 | $ 7,500 | 22,500 | $ 35,000 | |||||||||||||
| Accrued salaries | $ 37,500 | $ 37,500 | |||||||||||||||
| Investor [Member] | Secured Convertible Note Agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Debt instrument, face amount | $ 2,575,000 | ||||||||||||||||
| Debt Instrument, Maturity Date | Jun. 17, 2022 | ||||||||||||||||
| Interest rate | 8.00% | ||||||||||||||||
| Investor [Member] | Secured Convertible Note Agreement [Member] | FWHC Bridge LLC [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Proceeds from convertible debt | $ 25,000 | ||||||||||||||||
| Investor [Member] | Second Closing Bring Down Agreement [Member] | FWHC Bridge LLC [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Proceeds from convertible debt | $ 7,000 | ||||||||||||||||
| Investor [Member] | Securities purchase agreement [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Debt instrument convertible conversion price | $ 2.00 | ||||||||||||||||
| Convertible notes payable current | $ 35,000 | $ 125,000 | |||||||||||||||
| Common stock par value | $ 0.001 | ||||||||||||||||
| Number of shares isuued and outstanding percentage | 20.00% | ||||||||||||||||
| Warrant term | 5 years | ||||||||||||||||
| Warrant exercise price per share | $ 2.00 | $ 2.00 | $ 2.00 | $ 2.00 | |||||||||||||
| Debt instrument description | Further, in connection with the March 2023 and April 2023 SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares of Common Stock, with 20% of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company. | Further, in connection with the February 2023 SPA, the Company also issued Common Stock Purchase Warrants to certain investors, which are exercisable on or prior to the close of business on the five (5) year anniversary of the initial issue date, to purchase up to a certain amount of shares of Common Stock, with 20% of the shares of Common Stock issuable upon conversion of the Convertible Promissory Note purchased by the Holder, pursuant to the SPA between the Holder and the Company, dated February 24, 2023. | |||||||||||||||
| Number of warrants to purchase aggregate | 12,500 | 30,000 | 30,000 | ||||||||||||||
| Chief Executive Officer [Member] | |||||||||||||||||
| Related Party Transaction [Line Items] | |||||||||||||||||
| Repayments of related party debt | $ 53,000 | $ 40,000 | |||||||||||||||
SCHEDULE OF COMMON AND PREFERRED STOCK OUTSTANDING (Details) - shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 10, 2022 |
|---|---|---|---|
| Class of Stock [Line Items] | |||
| Common stock, shares outstanding | 712,170 | 618,506 | |
| Series A Preferred Stock [Member] | |||
| Class of Stock [Line Items] | |||
| Preferred stock, shares outstanding | 438,776,170 | 438,776,170 | 438,776,170 |
| One for Thousand Reverse Stock Split [Member] | |||
| Class of Stock [Line Items] | |||
| Common stock, shares outstanding | 712,710 | 618,506 | |
| One for Thousand Reverse Stock Split [Member] | Series A Preferred Stock [Member] | |||
| Class of Stock [Line Items] | |||
| Preferred stock, shares outstanding | 438,776,170 | 438,776,170 |
SCHEDULE OF ASSUMPTIONS USED TO CALCULATE FAIR VALUE OF STOCK OPTIONS (Details) - 2021 Grants [Member] |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
| |
| Minimum [Member] | |
| Option value | $ 54.00 |
| Risk Free Rate | 0.90% |
| Expected Dividend- yield | |
| Expected Volatility | 173.99% |
| Expected term (years) | 5 years |
| Maximum [Member] | |
| Option value | $ 56.00 |
| Risk Free Rate | 1.37% |
| Expected Dividend- yield | |
| Expected Volatility | 176.04% |
| Expected term (years) | 7 years |
SUMMARY OF STOCK OPTION ACTIVITY (Details) - $ / shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Equity [Abstract] | ||
| Shares, Outstanding Balance | 29,385 | 29,635 |
| Weighted Average Exercise Price, Outstanding Balance | $ 83.81 | $ 86.48 |
| Weighted Average Remaining Term (Years), Outstanding | 8 years 2 months 19 days | 9 years 2 months 12 days |
| Shares, Exercised | ||
| Weighted Average Exercise Price, Granted | ||
| Shares, Exercised | ||
| Weighted Average Exercise Price, Exercised | ||
| Shares, Outstanding Balance | 29,385 | 29,635 |
| Weighted Average Exercise Price, Outstanding Balance | $ 83.81 | $ 86.48 |
| Weighted Average Remaining Term (Years), Outstanding | 7 years 5 months 23 days | 8 years 8 months 15 days |
| Shares, Exercisable Balance | 24,843 | 20,510 |
| Weighted Average Exercise Price, Exercisable Balance | $ 86.33 | $ 93.81 |
| Weighted Average Remaining Term (Years), Exercisable | 7 years 5 months 19 days | 8 years 5 months 8 days |
SUMMARY OF STOCK OPTION ACTIVITY NON-VESTED (Details) |
9 Months Ended |
|---|---|
|
Sep. 30, 2023
$ / shares
shares
| |
| Equity [Abstract] | |
| Shares Non-vested, Balance | shares | 7,979 |
| Weighted Average Grant Date Fair Value Non-vested, Balance | $ / shares | $ 55.70 |
| Shares Non-vested, Vested | shares | (3,437) |
| Weighted Average Grant Date Fair Value Non-vested, Vested | $ / shares | $ 55.46 |
| Shares Non-vested, Balance | shares | 4,542 |
| Weighted Average Grant Date Fair Value Non-vested, Balance | $ / shares | $ 69.88 |
SCHEDULE OF ANTI-DILUTIVE SECURITIES OF BASIC AND DILUTED NET LOSS PER SHARE (Details) - shares |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 438,776 | 900,907 |
| Warrants to Purchase Common Stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 385,033 | |
| Series A Preferred Stock Convertible to Common Stock [Member] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
| Total | 438,776 | 515,874 |
DEBT (Details Narrative) - USD ($) |
9 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Mar. 27, 2023 |
Feb. 28, 2023 |
Feb. 24, 2023 |
Aug. 08, 2022 |
Jun. 09, 2022 |
Jun. 09, 2022 |
Sep. 30, 2023 |
Apr. 12, 2023 |
Feb. 02, 2023 |
Dec. 31, 2022 |
|
| Short-Term Debt [Line Items] | ||||||||||
| Debt instrument description | The March 27, 2023, Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023, Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | ||||||||
| Securities purchase agreement [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Debt instrument description | The March 27, 2023 Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. The April 12, 2023 Note has a maturity date 60 days from issuance. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum and will be calculated on an actual/365-day basis. The Company defaulted on this note on June 12, 2023 which triggered an increase in interest from 8% to 12%. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid Interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | The Notes have a maturity date of the earlier of (i) one year from issuance; or (ii) upon the closing of a qualified offering. Interest on the Note shall accrue on the unpaid principal balance of this Note at the rate of eight percent (8%) per annum, and will be calculated on an actual/365-day basis. In the event that the Company moves forward with a qualified offering, as referenced in the SPA, the Holder may convert the unpaid and outstanding principal plus any accrued and unpaid interest into shares of the Company’s Common Stock at a conversion price equal to a 20% discount to the offering price. | ||||||||
| Debt instrument, face amount | $ 125,000 | $ 300,000 | $ 35,000 | |||||||
| Two accredited investors [Member] | Securities purchase agreement [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Interest rate | 10.00% | 10.00% | ||||||||
| Debt instrument, face amount | $ 272,500 | $ 272,500 | ||||||||
| Debt effective rate | 65.00% | 65.00% | ||||||||
| Accredited investors [Member] | Securities purchase agreement [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Debt instrument description | This note bears interest at 15% (no matter when repaid) and converts at a discount of 25% of the price of a public offering or a 25% discount to the Volume Average Weighted Price (“VWAP”) of the five (5) days prior to conversion. | For the first six months, the Company had the right to prepay the notes at a premium of between 25% and 35% depending on when it is repaid. | ||||||||
| Debt instrument, face amount | $ 100,000 | $ 100,000 | ||||||||
| Accredited investor [Member] | Securities purchase agreement [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Interest rate | 10.00% | 10.00% | ||||||||
| Debt instrument description | For the first six months, the Company has the right to prepay the note at a premium of between 25% and 40% depending on when it is repaid | For the first six (6) months, the Company had the right to prepay the notes at a premium of between 25% and 40% depending on when it is repaid. | ||||||||
| Debt instrument, face amount | $ 150,000 | $ 65,000 | ||||||||
| Debt effective rate | 65.00% | 65.00% | ||||||||
| Notes Payable [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Debt instrument periodic payment | $ 5,800 | |||||||||
| Interest rate | 5.00% | |||||||||
| Debt instrument description | The Company finalized an eighteen-month extension to March 1, 2021. | |||||||||
| Debt instrument periodic payment | $ 1,000 | |||||||||
| Notes Payable [Member] | Maximum [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Interest rate | 5.00% | |||||||||
| Notes Payable [Member] | Minimum [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Interest rate | 3.00% | |||||||||
| Notes Payable [Member] | Merger [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Maturity date | Aug. 01, 2019 | |||||||||
| Promissory Note [Member] | ||||||||||
| Short-Term Debt [Line Items] | ||||||||||
| Notes payable | $ 69,000 | $ 69,000 | ||||||||
SCHEDULE OF NET IDENTIFIABLE ASSETS ACQUIRED (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 22, 2022 |
Sep. 07, 2022 |
|---|---|---|---|
| Acquired Finite-Lived Intangible Assets [Line Items] | |||
| Total costs of the asset acquisition | $ 792,256 | ||
| Intellectual Property [Member] | |||
| Acquired Finite-Lived Intangible Assets [Line Items] | |||
| Common stock | $ 54,070 | $ 29,557 | |
| Common stock (anti-dilution shares, to be issued – included in other current liabilities) | 305,998 | 195,532 | |
| Direct transaction costs | 14,338 | 21,600 | |
| Total costs of the asset acquisition | $ 792,256 | 246,689 | |
| Cash | 469 | ||
| Liabilities assumed – legal and administrative costs | (999,728) | ||
| Intangible assets: IPR&D | 1,245,948 | ||
| Net identifiable assets acquired | $ 246,689 |
SCHEDULE OF PERFORMANCE PAYMENTS (Details) (Parenthetical) - Scion Agreement [Member] |
Dec. 22, 2022
USD ($)
|
|---|---|
| Cumulative Net Sales from SkinDisc of $600,000 [Member] | |
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
| Net sales | $ 600,000 |
| Cumulative Net Sales from SkinDisc of $2,000,000 [Member] | |
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
| Net sales | 2,000,000 |
| Cumulative Net Sales from SkinDisc of $4,000,000 [Member] | |
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
| Net sales | 4,000,000 |
| Net Sales from SkinDisc of $6,000,000 [Member] | |
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
| Net sales | $ 6,000,000 |
SCHEDULE OF NET IDENTIFIABLE ASSETS ACQUIRED AND LIABILITIES ASSUMED (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 22, 2022 |
Sep. 07, 2022 |
|---|---|---|---|
| Acquired Finite-Lived Intangible Assets [Line Items] | |||
| Total costs of the asset acquisition | $ 792,256 | ||
| Intellectual Property [Member] | |||
| Acquired Finite-Lived Intangible Assets [Line Items] | |||
| Common stock | $ 54,070 | $ 29,557 | |
| Anti-Dilution share liability | 305,998 | 195,532 | |
| Contingent Performance payment liability | 417,850 | ||
| Direct transaction costs | 14,338 | 21,600 | |
| Total costs of the asset acquisition | $ 792,256 | $ 246,689 |
REDEMPTION OF MEDOVEX LLC MEMBERSHIP INTEREST AND SALE OF IP (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 21, 2023 |
Sep. 30, 2023 |
|
| Limited Liability Company Agreement [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Purchase price | $ 869,000 | |
| Redemption Agreement [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Purchase price | $ 56,000 | |
| Redemption of equity investment | $ 869,000 | |
| Sale of assets | 56,000 | |
| Sold net book value | $ 0 |
COMMON STOCK WARRANTS (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2023 |
|
| Common Stock Warrants | ||
| Fair value of warrants | $ 0 | $ 74,000 |
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