UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For
the quarterly period ended
OR
For the transition period from ________________ to ________________
Commission
File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act: None
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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | 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). Yes ☐
The number of shares of the issuer’s common stock, $0.0001 par value per share, outstanding at November 16, 2022 was .
PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
RETINALGENIX TECHNOLOGIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2022 (Unaudited) | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Total Current Assets | ||||||||
| Equipment, net of accumulated depreciation of $ | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Liabilities | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Due to Sanovas | ||||||||
| Due to related parties | $ | $ | ||||||
| Shareholders’ notes payable | ||||||||
| Accrued interest payable | ||||||||
| Total Liabilities | ||||||||
| Stockholders’ Deficit: | ||||||||
| Preferred stock, $ par value; shares authorized; Series F preferred stock - shares designated, issued and outstanding at September 30, 2022 and December 31, 2021, respectively | ||||||||
| Common stock, $ par value; shares authorized; shares issued and outstanding at September 30, 2022 and shares issued and outstanding at December 31, 2021 | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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RETINALGENIX TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For The Three Months Ended | For The Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | $ | $ | $ | ||||||||||||
| Expenses: | ||||||||||||||||
| General and administrative expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| Acquired in-process research and development | ||||||||||||||||
| Stock-based compensation | ||||||||||||||||
| Total Expenses | ||||||||||||||||
| Interest expense | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average number of common shares outstanding during the period- basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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RETINALGENIX TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Unaudited)
| Common Stock | Preferred Stock Series F | Subscription Receivable | Additional | |||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Preferred Stock | Paid-in Capital | Accumulated Deficit | Total | |||||||||||||||||||||||||
| Balance as at December 31, 2021 | $ | | $ | | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Stock purchased by investors | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as at March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Retirement of due to Sanovas through the issuance of shares of common stock to Sanovas Ophthalmology LLC | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as at June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Stock based compensation | - | - | ||||||||||||||||||||||||||||||
| Exercise of warrants and options | ||||||||||||||||||||||||||||||||
| Issuance of shares upon acquisition of DNA/GPS | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as at September 30, 2022 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||
| Common Stock | Preferred Stock Series F | Subscription Receivable | Additional | |||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Preferred Stock | Paid-in Capital | Accumulated Deficit | Total | |||||||||||||||||||||||||
| Balance as at December 31, 2020 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock purchased by investors | ||||||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as at March 31, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock purchased by investors | ||||||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||
| Exercise of warrants | ||||||||||||||||||||||||||||||||
| Retirement of due to Sanovas through the issuance of shares of common stock to Sanovas Ophthalmology LLC | ||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as at June 30, 2021 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock purchased by investors | ||||||||||||||||||||||||||||||||
| Stock based compensation | ||||||||||||||||||||||||||||||||
| Deferred costs | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as at September 30, 2021 | $ | | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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RETINALGENIX TECHNOLOGIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For The Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flows From (Used In) Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||
| Non-cash items: | ||||||||
| Stock based compensation expense | ||||||||
| Acquired In-process research and development through issuance of common stock | ||||||||
| Depreciation expense | ||||||||
| Expenses paid by Sanovas on behalf of Company, net | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase (decrease) in accounts payable and accrued liabilities | ||||||||
| Increase in accrued interest | ||||||||
| Total Adjustments | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash Flows (Used In) Investing Activities | ||||||||
| Equipment purchase | ( | ) | ||||||
| Cash Flows From (Used In) Financing Activities | ||||||||
| Proceeds from common stock sold, net of costs | ||||||||
| Proceeds from exercise of warrants and options | ||||||||
| Proceeds from shareholder notes | ||||||||
| Advances from related parties | ||||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental information: | ||||||||
| Retirement of due to Sanovas through the issuance of common stock to Sanovas Ophthalmology LLC (Note C) | $ | $ | ||||||
| Offset of note payable -affiliates through the exercise of warrants | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
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RETINALGENIX TECHNOLOGIES INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A – HISTORY, BUSINESS PURPOSE, LIQUIDITY AND GOING CONCERN
RetinalGenix Technologies Inc. (the “Company”), a Delaware corporation, was formed in November 2017 by Sanovas Ophthalmology, LLC (“Sanovas Ophthalmology”), a majority owned subsidiary of Sanovas Inc. (“Sanovas”), a privately held research and development incubator. At September 30, 2022, Sanovas Ophthalmology owned a majority of the outstanding stock of the Company. During the nine months ended September 30, 2022 and year ended December 31, 2021, substantially all of the operations of the Company were conducted by Sanovas, who invoices the Company for costs and expenses paid for on behalf of the Company and costs and expenses allocated to the Company for services performed on behalf of the Company.
The Company was formed to develop technologies to diagnose and treat ophthalmic disorders. The Company sublicensed certain technology initially developed by Sanovas from Sanovas Ophthalmology – See Note C. Since 2018, the Company has been developing its screening device and home monitoring and physician alert system.
In October 2021, the Company filed a registration statement on Form S-1 (the “Registration Statement”) with the Securities and Exchange Commission pursuant to which it registered for resale shares of common stock, including shares of common stock issuable upon exercise of outstanding options and warrants. The Company did not raise any cash from the resale of the securities offered by the Registration Statement, and accordingly, the previously deferred offering costs were applied against the proceeds of the shares of common stock sold in 2021 pursuant to the Company’s previous private offering of securities.
On October 8, 2019, the Company entered into an option exchange agreement (the “Option Exchange Agreement”) with Diopsys, Inc. (“Diopsys”) pursuant to which the Company shall issue Diopsys an option to purchase up to % of its issued and outstanding shares of common stock and Diopsys shall grant the Company an option to purchase up to % of the issued and outstanding shares of common stock of Diopsys on the Closing Date (the “Option Exchange”). “Closing Date” means a date that is within 30 days of the date that all of the contingencies set forth in the Option Exchange Agreement are satisfied including, but not limited to, approval of a product by the U.S. Food and Drug Administration. In addition, pursuant to the Option Exchange Agreement, upon the closing of the Option Exchange, the Company shall enter into an exclusive distribution agreement with Diopsys pursuant to which Diopsys shall act as the Company’s exclusive distributor of such product. On February 14, 2022, the Company entered into a Termination of Option Exchange Agreement (the “Termination Agreement”) with Diopsys pursuant to which the prior Option Exchange Agreement between the Company and Diopsys dated October 8, 2019 (the “Option Exchange Agreement”) was terminated effective immediately and of no further force and effect, and neither party has any past, current or future obligations or liabilities to the other (or any other person or entity) with respect to any rights, obligations or any of the transactions contemplated in the Option Exchange Agreement. At the time of such termination, none of the conditions in the Option Exchange Agreement were satisfied and no options thereunder had been issued to either the Company or Diopsys. In addition, the Exclusive Distribution Agreement to be entered into between the Company and Diopsys and referred to in the Option Exchange Agreement has not been negotiated and as of the second quarter of 2022, there are no plans to move forward with Diopsys..
On
December 27, 2021, RetinalGenix Technologies Inc. entered into an exchange agreement (the “Exchange Agreement”) with Sanovas
Ophthalmology pursuant to which the Company exchanged shares of common stock held by Sanovas Ophthalmology for a pre-funded
warrant (the “Pre-funded Warrant”) to purchase up to an aggregate of
On
July 5, 2022, RetinalGenix Technologies Inc. entered into Exchange Agreement (the “Exchange Agreement”) with Dr. Lawrence
Perich pursuant to which it acquired all the outstanding shares of DNA/GPS Inc., a pharmacogenetics company based in Tampa, Florida (“DNA/GPS”),
in exchange for the issuance of shares of the Company’s common stock. The acquisition of DNA/GPS combines DNA/GPS’
genetic mapping capabilities with the Company’s retinal imaging capabilities. The combined technology is expected to have the ability
to provide diagnoses of systemic and retinal diseases. The Company accounted for this transaction as an asset acquisition in the quarter
ending September 30, 2022. The estimated fair value of the transaction was $
Liquidity and Going Concern
The
Company has had net losses since inception and has an accumulated deficit of approximately $
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Sanovas
has paid a significant portion of the Company’s operating expenses through September 2022, and was owed $
As of the date of this report, the Company does not have adequate resources to fund its operations through November 2023 without considering any potential future milestone payments that it may receive under any new collaborations that it may enter into in the future or any future capital raising transactions. The Company will need to raise additional funding to complete the development of its products and commence the market launch, assuming regulatory approval is obtained. The Company does not know whether additional financing will be available when needed, whether it will be available on favorable terms, or if it will be available at all. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the preparation of the accompanying financial statements is as follows:
1. Basis of Presentation
The Company’s financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
The Company’s unaudited condensed financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2021 and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on April 18, 2022 (the “2021 Annual Report”).
The unaudited condensed financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the nine months ended September 30, 2022 are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period.
As of September 30, 2022, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2021 Annual Report.
2. Cash Equivalents
For purpose of the statements of cash flows, the Company considers all short-term investments purchased with a maturity of three months or less to be cash equivalents.
3. Offering Costs
Deferred offering costs are expenses directly related to an expected financing. These costs consisted of legal fees that the Company capitalized. These costs are offset against the resultant capital raised.
4. Use of Estimates
In preparing the Company’s financial statements in conformity with US GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
5. Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740-10 Income Taxes. ASC Topic 740-10 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on the recognition, measurement, and classification of amounts relating to uncertain tax positions, accounting for and disclosure of interest and penalties, accounting in interim periods and disclosures. The application of that guidance did not result in the recognition of any unrecognized tax benefits At September 30, 2022 or December 31, 2021. The Company’s policy is to expense any penalties and interest associated with this topic. At September 30, 2022 and December 31, 2021, there were no amounts accrued for penalties and interest.
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The Company computes net income (loss) per share in accordance with ASC 260, Earnings Per Share (“EPS”). Under the provisions of ASC 260, basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted-average number of common and common equivalent shares outstanding during the period. However, common shares that are considered anti-dilutive are excluded from the computation of diluted EPS. Since the Company had a loss during the nine months ended September 30, 2022 and 2021, the basic and diluted net loss per share is the same.
Potentially dilutive securities not included in the computation of loss per share for the nine months ended September 30, 2022, include stock options to purchase shares of common stock, pre-funded warrant to purchase shares of common stock, and warrants to purchase shares of common stock. Potentially dilutive securities not included in the computation of loss per share for the nine months ended September 30, 2021 included shares of Series F preferred stock, stock options to purchase shares of common stock, and warrants to purchase shares of common stock. The shares of common stock potentially issuable to Diopsys upon the resolution of specified contingencies and exercise of stock options are also excluded from the loss per share calculation for the nine months ended September 30, 2021.
7. Stock-based compensation:
The Company recognizes expense for stock-based compensation in accordance with ASC Topic 718, Stock-Based Compensation. For stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black Scholes option-pricing model. The expense is recognized over the service period for awards expected to vest. The estimate of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period the estimates are revised. Stock options granted to non-employee consultants are revalued at the end of each reporting period until vested and the changes in their fair value are recorded as adjustments to expense over the related vesting period.
8. Research and Development costs:
Research and development costs are expensed as incurred. Costs incurred in obtaining technology licenses outside of business combinations are charged to research and development expense as acquired in-process research and development if the technology licensed has not reached technological feasibility and has no alternative future use.
9. Property and Equipment:
Property
and equipment are stated at cost, net of accumulated depreciation using the straight-line method over their estimated useful lives (
The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.
10. Recent Accounting Pronouncements:
The following pronouncement may have an impact on the accounting policies of the Company:
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. ASU 2016-02 will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) in July 2018, and ASU No. 2018-20 “Leases (Topic 842) - Narrow Scope Improvements for Lessors” (“ASU 2018-20”) in December 2018. ASU 2018-10 and ASU 2018-20 provide certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Pursuant to ASU 2019-10 the effective date for ASC 842 was deferred an additional year. The Company expects to recognize operating lease right-of-use assets and lease liabilities on the balance sheet upon adoption of this ASU for its 2022 financial period. The Company is currently evaluating these ASUs and their impact on its financial statements, but does not expect it will have a material effect on the consolidated financial statements.
A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether the implementation of such proposed standards would be material to the financial statements of the Company.
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NOTE C - RELATED PARTY TRANSACTIONS
Sanovas
The Company is related to Sanovas through common ownership and management. Sanovas Opthalmology is a majority owned subsidiary of Sanovas and Jerry Katzman, the Company’s Chief Executive Officer, is also a director of Sanovas Ophthalmology and in such capacity has the right to vote and dispose of the securities held by such entity.
Commencing
in 2019, Sanovas began paying expenses on behalf of the Company, and began allocating a portion of salaries and infrastructure costs
to the Company and other entities where Sanovas was performing shared services. Included in such allocated costs is approximately $
The following summarizes the transactions between the Company and Sanovas for the nine months ended September 30, 2022 and December 31, 2021:
| Nine months Ended | ||||||||
| September 30, | September 30, | |||||||
| 2022 | 2021 | |||||||
| Balance due to (from) Sanovas – beginning of period | $ | $ | ( | ) | ||||
| Costs paid by Sanovas on the Company’s behalf | ||||||||
| Costs of Sanovas allocated to the Company | ||||||||
| Proceeds from (repayment of) costs charged by Sanovas to the Company, net | ( | ) | ||||||
| Retirement of due to Sanovas through the issuance of shares to Sanovas Ophthalmology | ( | ) | ( | ) | ||||
| Balance due to Sanovas - end of period | $ | $ | ||||||
The
Company also issued shares of its common stock to offset amounts due to Sanovas for payment of expenses on behalf of the Company of $
Sublicense
On June 24, 2021, the Company entered into a sublicense agreement (“Sublicense Agreement”) with Sanovas Ophthalmology pursuant to which Sanovas Ophthalmology granted the Company an exclusive worldwide (“Territory”) license to certain intellectual property licensed to Sanovas Ophthalmology by Sanovas Intellectual Property LLC relating to certain technologies for eye and ocular visualization and monitoring (“Licensed IP”) for uses related to the screening, examination, diagnosis, prevention and/or treatment of any eye disease, medical condition or disorder, or any disease, medical condition or disorder affecting the eye. Pursuant to the Sublicense Agreement, commencing on the date of the first commercial sale of a Licensed Product (as defined in the Sublicense Agreement), in each country in the Territory and continuing on a country by country basis until the expiration or termination of the last Valid Claim (as defined in the Sublicense Agreement) of a licensed patent in such country (the “Royalty End Date”), the Company shall pay Sanovas Ophthalmology a royalty equal to a mid-single digit percentage of any Net Sales (as defined in the Sublicense Agreement) of any Licensed Product. The Sublicense Agreement shall continue until the Royalty End Date, unless earlier terminated pursuant to its terms. The Sublicense Agreement may be terminated by either party if the other party materially breaches the Sublicense Agreement in a manner that cannot be cured, or materially breaches the Sublicense Agreement in a manner that can be cured and such breach remains uncured for more than 30 days after the receipt by the breaching party of notice specifying the breach. Furthermore, the Company may terminate the Sublicense Agreement at any time upon 90 days written notice to Sanovas Ophthalmology. No royalties have been paid through September 30, 2022 under this Sublicense Agreement.
| 9 |
Due to affiliates
From
time to time, an officer of the Company, a shareholder of the Company and affiliates of Sanovas advances funds or paid expenses on behalf
of the Company. There is no formal notes or repayment plan for such advances. At September 30, 2022, the Company had received $
Stockholders’ notes payable – See Note G
NOTE D - COMMON AND PREFERRED STOCK
Pursuant to the Company’s Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), filed with the Delaware Secretary of State on January 8, 2018, the Company is authorized to issue shares of preferred stock and shares of common stock each with a par value of $ per share. The Company has designated shares of preferred stock as Series F preferred stock.
Pursuant to the terms of an employment agreement dated January 1, 2012 (the “Effective Date”) by and between Sanovas and Lawrence Gerrans, the then President and Chief Executive Officer of Sanovas (the “Original Employment Agreement”), in consideration for Mr. Gerrans’ services, Mr. Gerrans was to receive, among other consideration, the following equity securities: (i) shares of restricted common stock of each of the wholly-owned subsidiaries of Sanovas, as of the Effective Date (the “Affiliate Subsidiaries”), representing % of the total equity capital of each such subsidiary issued and outstanding as of the date of grant; and (ii) shares of Series F preferred stock of Sanovas and each of the Affiliate Subsidiaries. The Company was incorporated in Delaware on November 17, 2017, subsequent to the Effective Date, and as such these shares were never issued by the Company because the Company was not an Affiliate Subsidiary of Sanovas. Thereafter, in May 2015, Mr. Gerrans’ Original Employment Agreement was amended and restated with an effective date of January 1, 2012 (the “Amended and Restated Employment Agreement”), the same as the Effective Date of the Original Employment Agreement. Pursuant to the Amended and Restated Employment Agreement, in consideration for Mr. Gerrans’ services, Mr. Gerrans was to receive, among other consideration, the following equity securities: (i) % of the total equity capital of each of Sanovas’ Affiliate Subsidiaries as of the Effective Date or thereafter formed (collectively, the “New Subsidiaries”); and (ii) shares of Series F preferred stock of Sanovas, each of the Affiliate Subsidiaries and each of the New Subsidiaries, including the Company. Subsequently, pursuant to a board resolution dated December 1, 2017 approved by Lawrence Gerrans, the Company’s then Chief Executive Officer, President and sole director, in 2018 the Company issued shares of its common stock to Sanovas Ophthalmology LLC, and issued shares of its Series F preferred stock to Halo Management LLC (“Halo”), an entity owned by Mr. Gerrans, for certain enumerated consideration that was purported to have been provided. Thereafter, and in part based upon the evidence and testimony presented, and verdict and conviction rendered, in the Criminal Action (discussed below), including, but not limited to, the fact that Mr. Gerrans misled and coerced the board of Sanovas regarding the terms and need for approval of the Amended and Restated Employment Agreement, the Company’s board of directors, acting in concert with the board of directors of Sanovas, carried out an investigation with respect to actions taken by Mr. Gerrans and have determined that Halo did not provide the Company with valid consideration for the Series F preferred stock, and the Company disputes whether any of the shares of the Company issued to Halo were validly issued.
In January 2020, a jury in the United States District Court for the Northern District of California found Mr. Gerrans guilty, in a criminal proceeding (the “Criminal Action”), on 12 felony counts of wire fraud, money laundering, perjury, contempt of court, witness tampering, and obstruction of justice in connection with his activities as an officer and director of Sanovas. Thereafter, in November 2020, Sanovas commenced an action in the Court of Chancery of the State of Delaware (the “Delaware Action”) against Halo and Mr. Gerrans seeking an order declaring that any rights that Halo and/or Mr. Gerrans may have with respect to any equity securities in Sanovas and each of its affiliated subsidiaries (including, but not limited to, the Company) are void or voidable and may be cancelled. The Delaware Action is currently still pending.
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On November 21,2021, the Company’s Board of Directors resolved to rescind the shares of Series F preferred stock purported to be issued to Halo Management Group LLC for lack of contract consideration. The Company is aware that the management/ownership of Halo Management Group LLC may dispute this decision however, the Company is prepared to defend its decision in this case. In addition, the Company reserves the right to void the shares and adjust its filings accordingly if necessary.
Common Stock
During 2019, the Company commenced a private offering of its shares of common stock at a purchase price of $ per share. For the nine months ended September 30, 2022 and 2021, the Company sold an aggregate of and shares of its common stock, respectively.
The common stockholders, voting as a separate class, are entitled to elect one member of the Board of Directors.
Preferred Stock
As of September 30, 2022, there were shares of preferred stock designated as Series F preferred stock, of which were outstanding.
The rights and privileges of the Series F preferred stock are summarized as follows:
Voting Privileges and Protective Features:
Each
holder of outstanding shares of Series F preferred stock is entitled to cast the number of votes equal to the number of whole shares
of common stock into which the Series F preferred stock held by such holder are convertible as of the record date for determining stockholders
entitled to vote on such matter. The holders of record of a majority of outstanding Series F preferred stock shall be entitled to elect
two of the members of the Board of Directors of the Company.
For so long as at least shares of Series F preferred stock remain outstanding, the vote or written consent of the holders of the majority of the outstanding shares of Series F preferred stock is necessary for the Company to conduct certain corporate actions, including, but not limited to, merger, consolidation or dissolution of the Company; certain amendments to the Certificate of Incorporation or bylaws of the Company; authorization or issuance of shares of any additional class or series of capital stock unless the same ranks on parity or junior to the Series F preferred stock with respect to voting rights.
Redemption:
The Series F preferred stock does not have redemption features.
Dividends:
There
are
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Conversion:
Each
share of Series F preferred stock is convertible, at the option of the holder, at any time and from time to time into shares of common
stock at a conversion rate as is determined by dividing the Series F Original Issue Price by the Series F Conversion Price. “Series
F Original Issue Price” initially means $ and “Series F Conversion Price” initially means $
All
of the outstanding shares of Series F preferred stock will automatically convert into shares of the Company’s common stock upon
the consummation of an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933,
as amended, resulting in gross proceeds of at least $
The Company has reserved shares of common stock for issuance to employees or consultants from the RetinalGenix Technologies Inc. 2017 Equity Incentive Plan (the “Plan”). The Company may grant stock options, restricted stock or other types of equity incentive instruments under the Plan.
In November 2019, the Company issued stock options to purchase up to shares of common stock at an exercise price of $ per share to members of the Company’s medical advisory board and consultants pursuant to the Plan. The options vest over a period and were unexercised At September 30, 2022 and December 31, 2021. The estimated aggregate fair value of the stock options was determined to be $ using a Black Scholes model.
In the nine months ended September 30, 2021, the Company issued stock options to purchase up to shares of common stock at an exercise price of $ per share to members of the Company’s medical advisory board and consultants pursuant to the Plan. The options vest immediately and were unexercised at December 31, 2021. The estimated aggregate fair value of the stock options was determined to be approximately $ using a Black Scholes model.
In August 2022, the Company issued stock options to purchase up to shares of common stock at an exercise price of $ per share to members of the Company’s medical advisory board and consultants pursuant to the Plan. The options vest over a period and were unexercised At September 30, 2022. The estimated aggregate fair value of the stock options was determined to be $ using a Black Scholes model.
The Company recognized approximately $ and $ of stock-based compensation expense during the nine months ended September 30, 2022 and 2021, respectively, related to stock options which is included in the accompanying statements of operations. As of September 30, 2022, there was approximately $ of total unrecognized compensation expense related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of approximately years.
At December 31, 2021, there were shares available to be issued under the Plan. The following table summarizes stock option activity of the Plan through September 30, 2022:
| Options Issued | Weighted-Average Exercise Price | |||||||
| Options outstanding – December 31, 2020 | | |||||||
| Granted | ||||||||
| Canceled | ||||||||
| Exercised | ||||||||
| Options outstanding – December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Canceled | ||||||||
| Exercised | ( | ) | ||||||
| Options outstanding – September 30, 2022 | $ | |||||||
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| Exercise Price | Number Outstanding | Weighted Average Remaining Contractual Life | Number September 30, 2022 | Number December 31, 2021 | ||||||||||||||
| $ | Years | |||||||||||||||||
| Risk-free interest rates | % - | % | ||
| Expected life in years | ||||
| Expected volatility | % | |||
| Expected dividend yield | % | |||
| Fair value common stock | $ | |||
The fair value of each option grant was estimated on the date of grant to be $ per share using the Black-Scholes option-pricing model with the following assumption weighted-averages in 2022:
| Risk-free interest rates | % | |||
| Expected life in years | ||||
| Expected volatility | % | |||
| Expected dividend yield | % | |||
| Fair value common stock | $ |
The risk-free interest rate assumption is determined using the yield currently available on U.S. Treasury zero-coupon issues with a remaining term commensurate with the expected term of the award. Management has estimated expected volatility based on similar comparable industry sector averages. Expected life of the option represents the period of time options are expected to be outstanding. The estimate for dividend yield is % because the Company has not historically paid, and does not intend to pay a dividend on its common stock in the foreseeable future.
NOTE F - WARRANTS
In
2021, the Company finalized the issuance of warrants to purchase
| Risk-free interest rates | % | |||
| Expected life in years | ||||
| Expected volatility | % | |||
| Expected dividend yield | % | |||
| Fair value common stock | $ |
The risk-free interest rate assumption is determined using the yield currently available on U.S. Treasury zero-coupon issues with a remaining term commensurate with the expected term of the award. Management has estimated expected volatility based on similar comparable industry sector averages. Expected life of the option represents the period of time options are expected to be outstanding. The estimate for dividend yield is % because the Company has not historically paid, and does not intend to pay a dividend on its common stock in the foreseeable future. The Company recognized stock-based compensation expense of approximately $ and $ in the nine months ended September 30, 2021 and 2022, respectively. At December 31, 2021 and September 30, 2022, there is remaining compensation expense to be recognized.
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The following table summarizes warrant activity through September 30, 2022 (there was no activity for the nine months ended September 30, 2022):
| Warrants Issued | Weighted- Average Exercise Price | |||||||
| Warrants outstanding – December 31, 2020 | $ | |||||||
| Granted | ||||||||
| Canceled | ||||||||
| Exercised | ( | ) | ||||||
| Warrants outstanding – December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Canceled | ( | ) | ||||||
| Exercised | ( | ) | ||||||
| Warrants outstanding – September 30, 2022 | $ | |||||||
Additional information regarding the warrants outstanding as of September 30, 2022 is as follows:
| Exercise Price | Number Outstanding | Weighted Average Remaining Contractual Life | Number Exercisable | |||||||||||
| $ | Years | |||||||||||||
| $ | Years | |||||||||||||
Pre-funded Warrant
On
December 27, 2021, the Company entered into an exchange agreement with Sanovas Ophthalmology (the “Exchange Agreement”) pursuant
to which it exchanged
NOTE G – NOTES PAYABLE – Shareholder’s
During
2021, the Company borrowed an aggregate of $
NOTE H - CONTINGENCY
The Company received a claim against it relating to a former indirect vendor. The Company believes the claim is without merit and intends to vigorously defend itself. The Company does not believe the claim would have a material impact on the financial condition of the Company.
NOTE I - SUBSEQUENT EVENTS
Subsequent
events were reviewed through November 15, 2022, the date these financial statements were available for issuance. The Company issued
shares of its common stock to offset amounts due to Sanovas for payment of expenses on behalf of the Company of $
| 14 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission on April 15, 2022 (the “Annual Report”). All amounts in this report are in U.S. dollars, unless otherwise noted.
Overview
We are an ophthalmic research and development company focused on developing technologies to screen, monitor, diagnose and treat ocular, optical, and sight-threatening disorders. Our mission is to prevent vision loss and blindness due to diabetic retinopathy and maculopathy through two devices: (1) Retinal Imaging Screening Device, a portable, retinal imaging system providing a 200-degree field of view without requiring pupil dilation; and (2) RetinalCamTM, a home monitoring and imaging device offering real-time communication with physicians available 24/7.
To date, we have devoted substantially all of our resources to organizing, business planning, raising capital, designing and developing product candidates, and securing manufacturing and sales/distribution partners. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations primarily through the private placement of common stock.
We anticipate that we will need an additional $10,000,000 to (i) complete product design and testing for RetinalGenixTM and RetinalCamTM and submit RetinalGenixTM for FDA clearance (we anticipate that the RetinalCamTM will not require FDA clearance); (ii) complete the development and expansion of the software tools around the recently acquired DNA/GPS’ genetic mapping technology; and (iii) build the infrastructure for our sustained growth. We intend to obtain such funds through the sales of our equity and debt securities and/or through potential strategic partnerships; however, no assurance can be provided that funds will be available to us on acceptable terms, if at all.
We do not expect to generate any revenues from product sales unless and until we successfully complete development of RetinalCamTM, and we do not expect to generate any revenues from product sales unless and until we successfully obtain regulatory clearance for RetinalGenixTM. In addition, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations, compliance and other expenses.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through public or private equity offerings, debt financings, strategic partnerships, collaborations and licensing arrangements or other capital sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms or at all.
Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates.
We have been issuing shares of our common stock pursuant to a private placement raising approximately $3.0 million from the sale of 3,010,000 shares of common stock from 2019 through December 31, 2021. An additional 60,500 shares were sold in January 2022 pursuant to this private placement. In October 2021, the registration statement on Form S-1 (the “Registration Statement”) that we filed with the SEC pursuant to which we registered for resale shares of common stock, including shares of common stock issuable upon exercise of outstanding options and warrants was declared effective. No funds were raised by the Company pursuant to the Registration Statement.
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Because of the numerous risks and uncertainties we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
On July 5, 2022, RetinalGenix Technologies Inc. (the “Company”) entered into Exchange Agreement (the “Exchange Agreement”) with Dr. Lawrence Perich pursuant to which it acquired all the outstanding shares of DNA/GPS Inc., a pharmacogenetics company based in Tampa, Florida (“DNA/GPS”), in exchange for the issuance of 2,000,000 shares of the Company’s common stock (the “Shares”). The acquisition of DNA/GPS combines DNA/GPS’ genetic mapping capabilities with the Company’s retinal imaging capabilities. The combined technology is expected to have the ability to provide diagnoses of systemic and retinal diseases. The Company accounted for this transaction as an asset acquisition in the quarter ending September 30, 2022, and recorded the estimated purchase consideration and related expenses as in process research and development in the accompanying consolidated statement of operations..
Trends and Uncertainties—COVID-19
The global COVID-19 pandemic continues to evolve, and we continue to monitor the COVID-19 situation closely. The extent of the impact of COVID-19 on our business, operations, research and development timelines and plans remains uncertain, and will depend on certain developments, including the duration and spread of the outbreak and its future impact on our operations, including our ability to obtain components such as sensors and other materials in a timely manner required to complete the development of RetinalGenixTM and RetinalCamTM and seek 510(k) regulatory clearance from the FDA for RetinalGenixTM . The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee travel and with many of our employees and consultants working remotely. We will continue to actively monitor the evolving situation related to COVID-19 and may take further actions that alter our operations, including those that may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and other third parties with whom we do business. At this point, the extent to which the COVID-19 pandemic may affect our business, operations and clinical development timelines and plans, including the resulting impact on our expenditures and capital needs, remains uncertain.
Basis of presentation:
These accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) including all pronouncements of the SEC applicable to annual financial statements.
Components of Results of Operations
Revenue
We have not generated any revenue since our inception.
Research and Development Expenses
Research and development expenses include personnel costs associated with research and development activities, including third-party contractors to perform research, product and prototype development, and testing of materials. Research and development expenses are charged to operations as incurred.
| 16 |
We accrue for costs incurred by external service providers based on our estimates of services performed and costs incurred. These estimates include the level of services performed by third parties and other indicators of the services completed.
We cannot determine with certainty the duration and costs of future clinical trials and product development or if, when or to what extent we will generate revenue from the commercialization and sale of any product candidate for which we obtain marketing clearance. We may never succeed in obtaining marketing approval for any product candidate. The duration, costs and timing of product development will depend on a variety of factors, including:
| ● | the scope, rate of progress, expense and results of product development, as well as of any future clinical trials of other product candidates and other research and development activities that we may conduct; | |
| ● | the actual probability of success for our product candidates, including their safety and efficacy, early clinical data, competition, manufacturing capability and commercial viability; | |
| ● | significant and changing government regulation and regulatory guidance; | |
| ● | the timing and receipt of any marketing approvals; and | |
| ● | the expense of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights. |
A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.
Administrative Expenses
Administrative expenses consist primarily of compensation and consulting related expenses. Administrative expenses also include professional fees and other corporate expenses, including legal fees relating to corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses, marketing activities and other operating costs that are not specifically attributable to research activities.
We expect that our administrative expenses will increase in the future as we increase our personnel headcount to support our continued research activities and development of our product candidates. We also expect increased expenses associated with being a public company, including costs related to accounting, audit, legal, regulatory and tax-related services associated with compliance with SEC requirements; director and officer insurance costs; and investor and public relations costs.
Interest Expense
Interest expense is the coupon interest rate charged on loans from stockholders.
| 17 |
Results of Operations
Comparison of the nine months ended September 30, 2022 and 2021
The following table sets forth key components of our results of operations for the nine months ended September 30, 2022 and 2021.
| For The Nine months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2022 | 2021 | Change | % Change | |||||||||||||
| Revenues | $ | - | $ | - | ||||||||||||
| Expenses | ||||||||||||||||
| General and Administrative Expenses | 529,728 | 949,945 | (420,217 | ) | (44 | )% | ||||||||||
| Research and Development | 491,436 | 565,564 | (74,128 | ) | (13 | )% | ||||||||||
| Acquired In-process research and development | 2,032,889 | - | 2,032,889 | 100 | % | |||||||||||
| Stock-based compensation | 180,791 | 252,867 | (72,076 | ) | (29 | )% | ||||||||||
| Total Expenses | 3,234,844 | 1,768,376 | 1,466,467 | 83 | % | |||||||||||
| Interest expense | 4,180 | 1,180 | 3,000 | 100 | % | |||||||||||
| Net Loss | $ | (3,239,024 | ) | $ | (1,769,556 | ) | (1,469,467 | ) | 83 | % | ||||||
Revenues
We did not recognize revenues for the nine months ended September 30, 2022 and 2021.
Research and Development Expenses
| For the nine months ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Direct costs | $ | 479,936 | $ | 547,734 | ||||
| Allocated costs from Sanovas | 11,500 | 17,830 | ||||||
| Total Research and Development expenses | $ | 491,436 | $ | 565,564 | ||||
Research and development expenses decreased by $74,128, or 13%, to $491,436 for the nine months ended September 30, 2022 from $565,564 for the nine months ended September 30, 2021. The decrease was primarily the result of a decrease in prototype related expense, engineering and technology consultants, and pilot manufacturing due to delay in delivery of parts.
| 18 |
Stock Based Compensation Expenses
Stock-based compensation expenses decreased by $72,076, or 29%, to $180,791 for the nine months ended September 30, 2022 from $252,867 for the nine months ended September 30, 2021. The decrease was primarily due to the recognition of expense for fully vested warrants issued in the first quarter of 2021.
General and Administrative Expenses
| For the nine months ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Direct costs | $ | 184,543 | $ | 217,135 | ||||
| Allocated costs from Sanovas | 345,185 | 732,810 | ||||||
| Total general and administrative expenses | $ | 529,728 | $ | 949,945 | ||||
Administrative expenses decreased by $420,217 or 44%, to $529,728 for the nine months ended September 30, 2022 from $949,945 for the nine months ended September 30, 2021. The Company has no full-time employees. The decrease in administrative expenses was primarily due to a decrease in compensation allocated to the Company from Sanovas from $620,000 to $223,000 during the nine months ended September 30, 2022 and 2021, respectively due to a total lower quantity of Sanovas employees in total and an increase in Sanovas staff working on other projects. Administrative costs consisting of costs related to executives and employees from Sanovas, were allocated based upon the amount of effort spent by such personnel on our business. Other administrative expenses were lower due to a lack of funding. This decrease was offset by increases corporate professional fees of approximately $43,000 during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021.
Acquired in-process research and development
Acquired in-process research and development presents the estimated fair value of the acquired technology held by GPS/DNA when we acquired that company in July 2022. The transaction met the screen test as an asset acquisition for accounting purposes. The estimated fair value of the transaction ($2 million) plus direct costs to complete the transaction of $32,889 are classified within this account in the statement of operations.
Comparison of the three months ended September 30, 2022 and 2021
The following table sets forth key components of our results of operations for the three months ended September 30, 2022 and 2021.
| For The Three Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2022 | 2021 | Change | % Change | |||||||||||||
| Revenues | $ | - | $ | - | ||||||||||||
| Expenses | ||||||||||||||||
| General and Administrative Expenses | 201,148 | 293,893 | (92,745 | ) | (32 | )% | ||||||||||
| Research and Development | 198,504 | 200,899 | (2,395 | ) | (1 | )% | ||||||||||
| Acquired In process Research and Development | 2,032,889 | - | 2.032,889 | 100 | % | |||||||||||
| Stock-based compensation | 70,689 | 55,051 | 15,638 | 28 | % | |||||||||||
| Total Expenses | 2,503,230 | 549,843 | 1,953,386 | 355 | % | |||||||||||
| Interest expense | 1,261 | 1,180 | 81 | 7 | % | |||||||||||
| Net Loss | $ | (2,504,491 | ) | $ | (551,023 | ) | (1,953,467 | ) | 355 | % | ||||||
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Revenues
We did not recognize revenues for the three months ending September 30, 2022 and 2021.
Research and Development Expenses
| For the three months ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Direct costs | $ | 198,504 | $ | 200,899 | ||||
| Allocated costs from Sanovas | - | $ | - | |||||
| Total Research and Development expenses | $ | 198,504 | $ | 200,899 | ||||
Research and development expenses decreased by $2,395 or 9%, to $198,504 for the three months ended September 30, 2022 from $200,899 for the three months ended September 30, 2021.
Stock Based Compensation Expenses
Stock-based compensation expenses increased by $15,638, or 28%, to $70,689 for the three months ended September 30, 2022 from $55,051 for the three months ended September 30, 2021. The increase was primarily due to the recognition of expense for options issued in the third quarter of 2022.
General and administrative Expenses
| For the three months ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Direct costs | $ | 49,454 | $ | 64,902 | ||||
| Allocated costs from Sanovas | 151,694 | 228,991 | ||||||
| Total general and administrative expenses | $ | 201,148 | $ | 293,893 | ||||
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Administrative expenses decreased by $92,745, or 32%, to $201,148 for the three months ended September 30, 2022 from $293,893 for the three months ended September 30, 2021. The Company has no full-time employees. The decrease in administrative expenses was primarily due to a total lower quantity of Sanovas employees and a decrease in compensation allocated to the Company from Sanovas from $197,000 to $124,000 during the three months ended September 30, 2022 and 2021, respectively. Overall administrative expenses also decreased due to a lack of available funding. There was also a decrease in professional fees of approximately $11,000 during the nine months ended September 30, 2022 as compared to the quarter ended September 30, 2021. Administrative costs consisting of costs related to executives and employees from Sanovas, were allocated based upon the amount of effort spent by such personnel on our business.
Acquired in-process research and development
Acquired in-process research and development presents the estimated fair value of the acquired technology held by GPS/DNA when we acquired that company in July 2022. The transaction met the screen test as an asset acquisition for accounting purposes. The estimated fair value of the transaction ($2 million) plus direct costs to complete the transaction of $32,889 are classified within this account in the statement of operations.
Liquidity and Capital Resources
To date, we have devoted substantially all of our resources to organizing, business planning, raising capital, designing and developing product candidates, and securing manufacturing and sales/distribution partners. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations primarily from the sale of common stock and by utilizing Sanovas personnel and facilities. We have settled a portion of the amounts due to Sanovas through the periodic issuance of shares of common stock, including 353,432 shares issued in May 2022 in settlement of the amounts due to Sanovas of $353,432.
We anticipate that we will need $10,000,000 in operating capital to (i) complete product design and testing for RetinalGenixTM and RetinalCamTM and submit RetinalGenixTM for FDA approval (we anticipate that the RetinalCamTM will not require FDA approval); (ii) complete the development and expansion of the software tools around the recently acquired DNA/GPS’ genetic mapping technology; and (iii) build the infrastructure for our sustained growth. We do not expect to generate any revenues from product sales unless and until we successfully complete development of RetinalGenixTM and RetinalCamTM and obtain regulatory approval for RetinalGenixTM. We will also require additional operating capital as a result of us operating as a public company, including for legal, accounting, investor relations, compliance and other expenses.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through public or private equity offerings, debt financings, strategic partnerships, collaborations and licensing arrangements or other capital sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed, on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates.
Because of the numerous risks and uncertainties, we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
Cash Flow Activities for the nine months ended September 30, 2022 and 2021
The following table sets forth a summary of our cash flows for the periods presented:
| For The Nine months Ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Net cash used in operating activities | $ | (166,042 | ) | $ | (876,406 | ) | ||
| Net cash used in/provided by investing activities | (307 | ) | - | |||||
| Net cash provided by financing activities | 165,034 | 910,765 | ||||||
| Net increase (decrease) in cash | (1,315 | ) | 34,359 | |||||
| Cash at beginning of the period | 4,947 | 2,219 | ||||||
| Cash at end of the period | $ | 3,632 | $ | 36,578 | ||||
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Operating Activities
Net cash used in operating activities was $166,042 for the nine months ended September 30, 2022 and $876,406 for the nine months ended September 30, 2021, the decrease driven by a reduction in salaries allocated from Sanovas to the Company and expenditures by third-party consultants and engineers on the prototype development due to a lack of funding. The cash flow used in operating activities in 2022 was driven by the net loss of $3,239,024 offset in part by non-cash expenses of $2,180,816 and an increase in accounts payable and accrued interest payable of $119,585. In addition, Sanovas billed us for allocated costs and expenses paid on behalf of and allocated to us in the amount of $371,742 during the nine months ended September 30, 2022, and we received $400,839 of net advances from Sanovas, for a net change in cash of $772,581.
The cash flow used in operating activities in 2021 was driven by the net loss of $1,769,556 offset in part by non-cash stock-based compensation expense of $252,867 and an increase in accounts payable and other current liabilities/assets of $70,626 for the nine months ended September 30, 2021. In addition, Sanovas billed us for allocated costs and expenses paid on behalf of and allocated to us in the amount of $785,149 during the nine months ended September 30, 2021, and we paid $215,486 of net advances from Sanovas, for a net change in cash of $569,657.
In each of the years, 2019-2022, the Company has settled a portion of the amounts due to Sanovas through the issuance of common stock. The Company issued 586,370 shares of its common stock to offset amounts due to Sanovas for payment of expenses on behalf of the Company of $586,370 on November 14, 2022 (see Note C).
Investing Activities
There was no cash used in or provided by investing activities for the nine months ended September 30, 2022 and 2021, except an equipment purchase in third quarter of 2022.
Financing Activities
Net cash provided by financing activities was $165,034 and $910,765 during the nine months ended September 30, 2022 and 2021, respectively, attributable primarily to the sale of common stock and proceeds from shareholder loans in the 2021 period, and advances from an officer of $54,534, proceeds from the exercise of options and warrants and the sale of common stock of $110,500 in the nine months ended September 30, 2022.
Critical Accounting Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures in the financial statements and accompanying notes. Management bases it estimates on historical experience and on assumptions believed to be reasonable under the circumstances. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. Estimates are used in areas including, but not limited to: research and development expense recognition, valuation of stock options, allowances of deferred tax assets, accrued expenses and liabilities, and cash flow assumptions regarding going concern considerations.
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Stock-based Compensation
Stock-based compensation represents the cost related to stock-based awards granted to employees. We measure stock-based compensation costs at the grant date, based on the estimated fair value of the award and recognize the cost (net of estimated forfeitures) over the vesting period. Forfeitures are estimated on the date of grant and revised if actual or expected forfeiture activity differs materially from the original estimates. We estimate the fair value of stock options using a Black-Scholes valuation model. The cost is recorded in the consolidated statements of operations based on the employees’ respective function. The fair value of common stock was determined based upon the sale of common stock to third parties pursuant to the offering which commenced in 2019, which offering continued through January 2022.
The risk-free interest rate assumption is determined using the yield currently available on U.S. Treasury zero-coupon issues with a remaining term commensurate with the expected term of the award. Management has estimated expected volatility based on similar comparable industry sector averages. Expected life of the option represents the period of time options are expected to be outstanding. The estimate for dividend yield is 0% because the Company has not historically paid and does not intend to pay a dividend on its common stock in the foreseeable future.
Allocated costs from Sanovas
A substantial portion of our expenses are costs and expenses paid by Sanovas and costs and expenses allocated to the Company by Sanovas. We expect that to continue until we have sufficient resources to build our own team and infrastructure to support our operations. The allocations our payroll related expenses are based upon the estimated percentage of effort incurred by each employee on operations. Allocation of non-payroll related expenses are based upon whether the expense related to our operations.
Income taxes
We account for income taxes using the asset-and-liability method in accordance with Accounting Standards Codification 740, Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the enactment date. A valuation allowance has been recorded for all of the deferred tax assets.
Recently Issued and Adopted Accounting Standards
The following pronouncement may have an impact on the accounting policies of the Company:
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842),” (“ASU 2016-02”). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. ASU 2016-02 will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The FASB issued ASU No. 2018-10 “Codification Improvements to Topic 842, Leases” (“ASU 2018-10”), ASU No. 2018-11 “Leases (Topic 842) Targeted Improvements” (“ASU 2018-11”) in July 2018, and ASU No. 2018-20 “Leases (Topic 842) - Narrow Scope Improvements for Lessors” (“ASU 2018-20”) in December 2018. ASU 2018-10 and ASU 2018-20 provide certain amendments that affect narrow aspects of the guidance issued in ASU 2016-02. ASU 2018-11 allows all entities adopting ASU 2016-02 to choose an additional (and optional) transition method of adoption, under which an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Pursuant to ASU 2019-10 the effective date for ASC 842 was deferred an additional year. The Company expects to recognize operating lease right-of-use assets and lease liabilities on the balance sheet upon adoption of this ASU for its 2022 financial period. The Company is currently evaluating these ASUs and their impact on its consolidated financial statements, but does not expect it to have a significant impact on its financial statements.
A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether the implementation of such proposed standards would be material to the financial statements of the Company.
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JOBS Act
We are an “emerging growth company,” as defined in Section 2(a) the Securities Act, as modified by the JOBS Act. For as long as we continue to be an emerging growth company, we also intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory stockholder vote on executive compensation and any golden parachute payments not previously approved, exemption from the requirement of auditor attestation in the assessment of our internal control over financial reporting and exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). We will remain an emerging growth company until the earliest of (i) the end of the fiscal year in which the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of the second fiscal quarter, (ii) the end of the fiscal year in which we have total annual gross revenues of $1.325 billion or more during such fiscal year, (iii) the date on which we issue more than $1 billion in non-convertible debt in a three-year period or (iv) the end of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement filed under the Securities Act.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a smaller reporting company, we are not required to provide the information required by this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
We are required to maintain disclosure controls and procedures (as defined in Rules 13a-15(e)€ and 15d-15(e) of the Exchange Act) that are designed to be effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
In connection with the preparation of this Quarterly Report on Form 10-Q, we carried out an evaluation based on the criteria in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, due to a material weakness in our internal control over financial reporting relating to a lack of segregation of duties, management concluded that our disclosure controls and procedures were ineffective as of September 30, 2022.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of our financial statements would not be prevented or detected on a timely basis. We are considering various remediation measures, including hiring internal accounting resources or using outside providers to provide additional resources and capabilities as well as implementing a more formal accounting and financial reporting system to mitigate such material weakness, but have not yet adopted or implemented any such measures. When we have sufficient business activity and funding available, we intend to begin to implement remediation measures to address our material weakness and improve our internal control over financial reporting and disclosure controls and procedures. We hope to complete the implementation, remediation and test of the new procedures in the first half of 2022, as resources permit us to spend time and money on building finance infrastructure.
Management is actively engaged in the planning for, and implementation of, remediation efforts to address our material weakness and improve our internal control over financial reporting and disclosure controls and procedures. We are developing procedures for the most critically-needed processes that we hope to have implemented by the end of the year.
Changes in Internal Controls over Financial Reporting
As of the September 30, 2022 , there have been no changes in our internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may be subject to litigation and claims arising in the ordinary course of business. We are not currently a party to any material legal proceedings and we are not aware of any pending or threatened legal proceeding against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial condition. Notwithstanding the foregoing, Sanovas, Inc. (“Sanovas”), the majority stockholder of Sanovas Ophthalmology, LLC which is our majority stockholder, commenced an action in the Court of Chancery of the State of Delaware against Halo Management LLC (“Halo”) and Lawrence Gerrans seeking an order declaring that any rights that Halo and/or Mr. Gerrans may have with respect to any equity securities in Sanovas and each of its affiliated subsidiaries (including, but not limited to, our Company) are void or voidable and may be cancelled.
Pursuant to the terms of an employment agreement dated January 1, 2012 (the “Effective Date”) by and between Sanovas, the majority stockholder of Sanovas Ophthalmology, LLC which is our majority stockholder, and Lawrence Gerrans, the then President and Chief Executive Officer of Sanovas (the “Original Employment Agreement”), in consideration for Mr. Gerrans’ services, Mr. Gerrans was to receive, among other consideration, the following equity securities: (i) 441,177 shares of restricted common stock of each of the wholly-owned subsidiaries of Sanovas, as of the Effective Date (the “Affiliate Subsidiaries”), representing 7.5% of the total equity capital of each such subsidiary issued and outstanding as of the date of grant; and (ii) 5,000 shares of Series F Preferred Stock of Sanovas and each of the Affiliate Subsidiaries. We were incorporated in Delaware on November 17, 2017, subsequent to the Effective Date, and as such these shares were never issued by us because we were not an Affiliate Subsidiary of Sanovas. Thereafter, in May 2015, Mr. Gerrans’ Original Employment Agreement was amended and restated with an effective date of January 1, 2012 (the “Amended and Restated Employment Agreement”), the same as the Effective Date of the Original Employment Agreement. Pursuant to the Amended and Restated Employment Agreement, in consideration for Mr. Gerrans’ services, Mr. Gerrans was to receive, among other consideration, the following equity securities: (i) 7.5% of the total equity capital of each of Sanovas’ Affiliate Subsidiaries as of the Effective Date or thereafter formed (collectively, the “New Subsidiaries”); and (ii) 5,000 shares of Series F Preferred Stock of Sanovas, each of the Affiliate Subsidiaries and each of the New Subsidiaries, including our Company. Subsequently, pursuant to a board resolution dated December 1, 2017 approved by Lawrence Gerrans, our then Chief Executive Officer, President and sole director, in 2018 we issued 27,000,000 shares of our common stock to Sanovas Ophthalmology LLC, and issued 3,000,000 shares of our Series F Preferred Stock to Halo Management LLC (“Halo”), an entity owned by Mr. Gerrans, for certain enumerated consideration that was purported to have been provided. Thereafter, and in part based upon the evidence and testimony presented, and verdict and conviction rendered, in the Criminal Action (discussed below), including, but not limited to, the fact that Mr. Gerrans misled and coerced the board of Sanovas regarding the terms and need for approval of the Amended and Restated Employment Agreement, our board of directors, acting in concert with the board of directors of Sanovas, carried out an investigation with respect to actions taken by Mr. Gerrans and have determined that Halo did not provide us with valid consideration for the Series F Preferred Stock, and we dispute whether any of the shares of the Company issued to Halo were validly issued.
In January 2020, a jury in the United States District Court for the Northern District of California found Mr. Gerrans guilty, in a criminal proceeding (the “Criminal Action”), on 12 felony counts of wire fraud, money laundering, perjury, contempt of court, witness tampering, and obstruction of justice in connection with his activities as an officer and director of Sanovas. Thereafter, in November 2020, Sanovas commenced an action in the Court of Chancery of the State of Delaware (the “Delaware Action”) against Halo and Mr. Gerrans seeking an order declaring that any rights that Halo and/or Mr. Gerrans may have with respect to any equity securities in Sanovas and each of its affiliated subsidiaries (including, but not limited to, our Company) are void or voidable and may be cancelled. The Delaware Action is currently still pending. We intend to take any and all actions required to assist Sanovas in obtaining a judgement against Halo and Mr. Gerrans in the Delaware Action declaring any shares issued to them void or voidable.
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On November 21, 2021, our board of directors resolved to rescind the 3,000,000 shares of Series F Preferred Stock purported issued to Halo for lack of contract consideration. We recorded this action into our accounts in the fourth quarter of 2021.We are aware that the management/ownership of Halo may dispute this decision however, we are prepared to defend our decision in this case. In addition, we reserve the right to void the shares ab initio and adjust our filings accordingly if necessary.
ITEM 1A. RISK FACTORS.
Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item 1A, “Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2021. Except as described below, our risk factors as of the date of this Report have not changed materially from those described in “Part I, Item 1A. Risk Factors” of the Annual Report.
Risks Relating to Our Business
We have generated no revenue from commercial sales to date and our future profitability is uncertain.
We were incorporated in November 2017 and have a limited operating history, and our business is subject to all of the risks inherent in the establishment of a new business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with development and expansion of a new business enterprise. Since inception, we have incurred losses and expect to continue to operate at a net loss for at least the next several years. Our net losses for the year ended December 31, 2021 and December 31, 2020, were $2,179,294 and $2,077,993, respectively, and our accumulated deficit as of December 31, 2021 and December 31, 2020 was $5,104,316 and $2,925,022, respectively. Our net losses for the nine months ended September 30, 2022 and 2021, were $3,329,024 and $1,769,556, respectively, and our accumulated deficit as of September 30, 2022 was $8,343,340. There can be no assurance that the products under development by us will be cleared for sale in the U.S. or elsewhere. Furthermore, there can be no assurance that if such products are cleared they will be successfully commercialized, and the extent of our future losses and the timing of our profitability are highly uncertain. If we are unable to achieve profitability, we may be unable to continue our operations.
There is substantial doubt about our ability to continue as a going concern.
As of September 30, 2022, we had cash of $3,632. In addition, as of September 30, 2022 and December 31 2021, we had liabilities of $1,062.890 and $469,622, respectively. In the event that we are unable to obtain additional financing, we may be unable to continue as a going concern. There is no guarantee that we will be able to secure additional financing. Changes in our operating plans, our existing and anticipated working capital needs, costs related to legal proceedings we might become subject to in the future, the acceleration or modification of our development activities, any near-term or future expansion plans, increased expenses, potential acquisitions or other events may further affect our ability to continue as a going concern. Similarly, the report of our independent registered public accounting firm on our financial statements as of and for the year ended December 31, 2021 includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in us.
Because certain of our stockholders control a significant number of shares of our common stock, they may have effective control over actions requiring stockholder approval.
As of November 16, 2022, our directors, executive officers and principal stockholders, and their respective affiliates, beneficially own approximately 83% of our outstanding shares of common stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:
| ● | delaying, deferring or preventing a change in corporate control; |
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| ● | impeding a merger, consolidation, takeover or other business combination involving us; or | |
| ● | discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. |
Failure to maintain effective internal control over our financial reporting in accordance with Section 404 of Sarbanes-Oxley could cause our financial reports to be inaccurate.
We are required pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to maintain internal control over financial reporting and to assess and report on the effectiveness of those controls. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Although we prepare our financial statements in accordance with accounting principles generally accepted in the United States, our internal accounting controls may not meet all standards applicable to companies with publicly traded securities. If we fail to implement any required improvements to our disclosure controls and procedures, we may be obligated to report control deficiencies, in which case we could become subject to regulatory sanction or investigation. Further, such an outcome could damage investor confidence in the accuracy and reliability of our financial statements.
Our management has concluded that our internal controls over financial reporting were, and continue to be, ineffective, and as of September 30, 2022 as a result of a material weakness in our internal controls due to the lack of segregation of duties. While management is working to remediate the material weakness, there is no assurance that such changes, when economically feasible and sustainable, will remediate the identified material weaknesses or that the controls will prevent or detect future material weaknesses. If we are not able to maintain effective internal control over financial reporting, our financial statements, including related disclosures, may be inaccurate, which could have a material adverse effect on our business.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Except as previously reported in prior filings with the Securities and Exchange Commission and as reported below, there were no sales of unregistered securities for the three-month ended September 30, 2022.
During the quarter ended September 30, 2022, an option and a warrant to purchase an aggregate of 50,000 shares of common stock was exercised upon the payment of $50,000. The shares were issued in reliance upon an exemption provided by Section 4(a)(2) of the Securities Act promulgated thereunder for the offer and sale of securities not involving a public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS.
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
| RETINALGENIX TECHNOLOGIES INC. | ||
| Date: November 17, 2022 | By: | /s/ Jerry Katzman |
| Jerry Katzman, | ||
| Chief Executive Officer | ||
| (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
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