VICAPSYS LIFE SCIENCES, INC. The accompanying unaudited condensed consolidated financial statements have been
prepared assuming the Company will continue as a going concern, which assumes
the realization of assets and satisfaction of liabilities and commitments in the
normal course of business. The Company experienced a net loss of
In
NOTE 3 - INVESTMENT AND RESTRUCTURING AGREEMENT
On
? Messrs. McCormack and Gorlin resigned from the Board of Directors of the
Company and from all positions as officers or employees of the Company.
8
? Federico Pier was appointed as the Executive Chairman of the Board of
Directors of the Company. Michael Yurkowsky and Frances Toneguzzo were
appointed to the Board of Directors of the Company. Ms. Toneguzzo was
appointed as the Chief Executive Officer of the Company.
? YPH and the Additional Investors (together, the "Investors") purchased an
aggregate of 3,980,000 shares of common stock of the Company at a purchase
price of $0.25 per share and warrants to purchase 3,980,000 shares of
common stock exercisable from the date of their respective investment
dates (ranging from July 14, 2019 to September 9, 2019 ) (the "Investment
Date") until the third anniversary of the Investment Date for $0.50 per
share. The Company received $971,500 net proceeds from the sale of the
common stock and warrants.
? The Company assigned all of the Company's right, title and interest in a
Master Services Agreement, dated October 25, 2018 between the Company and
Otsuka Pharmaceutical Factory, Inc. ("Otsuka") related work orders with
its customer, Otsuka, to AEI.
? VI assigned its lease to the Athens, Georgia Laboratory and office (the
"Athens Facility") to AEI.
? The Company contributed to AEI all physical assets located at the Athens
Facility. These contributed assets did not include intellectual property
related to the use of CXCL12, and the AEI Parties agreed that neither they
nor any affiliated party will use CXCL12 or any analogues in any of its
activities. The Company retained the right to use any of the
"encapsulation technology" utilized or developed at the Athens Facility
before the IAR Agreement was executed.
? AEI assumed certain liabilities of the Company , including, but not
limited to, $189,922 owed by the Company to Aperisys, Inc. , an aggregate
of $353,092 in advances made by Messrs. Gorlin, Farrahar and McCormack to
the Company an aggregate of $395,833 in accrued salaries owed by the
Company to Messrs. McCormack and Farrahar; and an aggregate of $150,395 in
trade payables attributable to the Athens Facility (the "AEI Assumed
Liabilities").
? AEI issued an aggregate of 1,600 shares of AEI common stock (the "AEI
Common Stock") to the officer and employees of AEI (the "AEI
Shareholders"), representing 80% of the outstanding capital stock of AEI.
The AEI Shareholders were Messrs. Gorlin, McCormack, and Farrahar, each of
which is a current shareholder of the Company, and two of whom were former
Directors of the Company.
? AEI issued 400 shares of its preferred stock (the "AEI Preferred Stock"),
to the Company. Once AEI pays the AEI Assumed Liabilities noted above, the
Certificate of Designation for the AEI Preferred Stock entitles the holder
to receive all distributions made by AEI on any of its equity securities
up to a total of $4,000,000 (the "AEI Preferred Payment"). Following the
full payment of the AEI Preferred Payment, the AEI Preferred Stock shall
automatically be converted into a number of shares of AEI Common Stock
such that it is equal to 20% of all issued and outstanding AEI Common
Stock at such time.
? Mr. McCormack and the Company amended Mr. McCormack's original option
agreement dated March 20, 2017 , to (i) reduce the number of Mr.
McCormack's option shares from 1,440,000 to 600,000; and (ii) extend the
exercise period of Mr. McCormack's options from three (3) months to three
(3) years following the Closing Date.
Due to the related party nature of the transactions described above, the net
liabilities transferred in the IAR Agreement of
Pursuant to the
9
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Basis of Presentation and Principles of Consolidation
The accompanying condensed consolidated financial statements in this report have
been prepared by the Company without audit. In the opinion of management, all
adjustments necessary to present the financial position, results of operations
and cash flows for the stated periods have been made. Except as described below,
these adjustments consist only of normal and recurring adjustments. Certain
information and note disclosures normally included in the Company's consolidated
annual financial statements prepared in accordance with accounting principles
generally accepted in
Use of Estimates
The preparation of financial statements in conformity with
Cash
The Company considers all highly liquid investments with an original term of
three months or less to be cash equivalents. The Company held no cash
equivalents as of
Intangible Assets
Costs of intangible assets are accounted for through the capitalization of those
costs incurred in connection with developing or obtaining such assets.
Capitalized costs are included in intangible assets in the unaudited condensed
consolidated balance sheets. The Company's intangible assets consist of costs
incurred in connection with securing an Exclusive Patent License Agreement with
The Company reviews these intangible assets for possible impairment when events or changes in circumstances indicate that the assets carrying amount may not be recoverable. In evaluating the future benefit of its intangible assets, management performs an analysis of the anticipated undiscounted future net cash flows of the intangible assets over the remaining estimated useful life. An impairment loss is recorded if the carrying value of the asset exceeds the expected future cash flows.
10 Long-Lived Assets
The Company reviews long-lived assets at least annually or when events or changes in circumstances reflect the fact that the recorded value may not be recoverable for impairment and recognizes impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying values.
Discontinued Operations
In accordance with ASC 205-20 Presentation of Financial Statements: Discontinued Operations, a disposal of a component of an entity or a group of components of an entity is required to be reported as discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results when the components of an entity meet the criteria in paragraph 205-20-45-10.
In the period in which the component meets held-for-sale or discontinued operations criteria the major current assets, other assets, current liabilities, and noncurrent liabilities shall be reported as components of total assets and liabilities separate from those balances of the continuing operations.
At the same time, the results of all discontinued operations, less applicable income taxes (benefit), shall be reported as components of net income (loss) separate from the net income (loss) of continuing operations.
The Company disposed of a component of its business pursuant to the IAR
Agreement (see Note 3) in
Equity Method Investment
The Company accounts for investments in which the Company owns more than 20% or
has the ability to exercise significant influence of the investee, using the
equity method in accordance with ASC Topic 323,
The amount of the adjustment is included in the determination of net income by the investor, and such amount reflects adjustments similar to those made in preparing consolidated statements including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between investor cost and underlying equity in net assets of the investee at the date of investment. The investment of an investor is also adjusted to reflect the investor's share of changes in the investee's capital. Dividends received from an investee reduce the carrying amount of the investment. A series of operating losses of an investee or other factors may indicate that a decrease in value of the investment has occurred which is other than temporary, and which should be recognized even though the decrease in value is in excess of what would otherwise be recognized by application of the equity method.
In accordance with ASC 323-10-35-20 through 35-22, the investor ordinarily shall discontinue applying the equity method if the investment (and net advances) is reduced to zero and shall not provide for additional losses unless the investor has guaranteed obligations of the investee or is otherwise committed to provide further financial support for the investee. An investor shall, however, provide for additional losses if the imminent return to profitable operations by an investee appears to be assured. For example, a material, nonrecurring loss of an isolated nature may reduce an investment below zero even though the underlying profitable operating pattern of an investee is unimpaired. If the investee subsequently reports net income, the investor shall resume applying the equity method only after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended.
Equity and cost method investments are classified as investments. The Company periodically evaluates its equity and cost method investments for impairment due to declines considered to be other than temporary. If the Company determines that a decline in fair value is other than temporary, then a charge to earnings is recorded as an impairment loss in the accompanying consolidated statements of operations.
11
The Company's equity method investment consisted of equity owned in AEI which
was given to the Company as part of an investment and restructuring agreement
(see Note 3). In
Fair Value of Financial Instruments
ASC 825, "Disclosures about Fair Value of Financial Instruments," requires
disclosure of fair value information about financial instruments. ASC 820, "Fair
Value Measurements" defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosures
about fair value measurements. Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to
management as of
The carrying amounts of the Company's financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued liabilities, payables with related parties, approximate their fair values because of the short maturity of these instruments.
Revenue Recognition
Effective
The core principle of ASC 606 requires that an entity recognize revenue to
depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the company expects to be entitled in
exchange for those goods or services. ASC 606 defines a five-step process to
achieve this core principle and, in doing so, it is possible more judgment and
estimates may be required within the revenue recognition process than required
under
The Company's contracts with customers are generally on a contract and work order basis and represent obligations that are satisfied at a point in time, as defined in the new guidance, generally upon delivery or has services are provided. Accordingly, revenue for each sale is recognized when the Company has completed its performance obligations. Any costs incurred before this point in time, are recorded as assets to be expensed during the period the related revenue is recognized.
Stock Based Compensation
Stock-based compensation is accounted for based on the requirements of ASC 718 - "Compensation -Stock Compensation," which requires recognition in the financial statements of the cost of employee, director and non-employee services received in exchange for an award of equity instruments over the period the employee, director, or non-employee is required to perform the services in exchange for the award (presumptively, the vesting period). The ASC also requires measurement of the cost of employee, director, and non-employee services received in exchange for an award based on the grant-date fair value of the award. The Company has elected to recognize forfeitures as they occur as permitted under ASU 2016-09 Improvements to Employee Share-Based Payment.
Research and Development
Costs and expenses that can be clearly identified as research and development
are charged to expense as incurred. For the nine months ended
12 Income Taxes
The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. Deferred tax assets and liabilities are recognized to reflect the estimated future tax effects, calculated at the tax rate expected to be in effect at the time of realization. A valuation allowance related to a deferred tax asset is recorded when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment.
ASC 740-10 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Interest and penalties are classified as a component of interest and other expenses. To date, the Company has not been assessed, nor paid, any interest or penalties.
Uncertain tax positions are measured and recorded by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may be recognized or continue to be recognized.
Earnings (Loss) Per Share
The Company reports earnings (loss) per share in accordance with ASC 260,
"Earnings per Share." Basic earnings (loss) per share is computed by dividing
net income (loss) by the weighted-average number of shares of common stock
outstanding during each period. Diluted earnings per share is computed by
dividing net loss by the weighted-average number of shares of common stock,
common stock equivalents and other potentially dilutive securities outstanding
during the period. As of
September 30, September 30,
2020 2019
Common stock to be issued 651,281 4,884,431
Convertible preferred stock 10,440,000 10,440,000
Stock options 2,193,750 2,450,000
Warrants to purchase common stock 4,146,725 4,146,725
17,431,756 21,921,156
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
NOTE 5 - INTANGIBLE ASSETS
The Company's intangible assets consist of costs incurred in connection with the License Agreement with MGH, as amended (See Note 7). The consideration paid for the rights included in the License Agreement was in the form of common stock shares which resulted in MGH receiving approximately 20% of the total outstanding shares of common stock of VI. The estimated value of the common stock is being amortized over the term of the License Agreement which is based on the remaining life of the related patents being licensed which is approximately 16 years.
The Company's intangible assets consisted of the following at
September 30,
2020 December 31, 2019
Licensed patents $ 492,514 $ 492,514
Accumulated Amortization (81,828 ) (58,241 )
Balance $ 410,686 $ 434,273
13
The Company recognized
Future expected amortization of intangible assets is as follows:
Fiscal year ending December 31, 2020 (months remaining)$ 7,862 2021 31,299 2022 31,299 2023 31,299 2024 31,299 Thereafter 277,628$ 410,686
NOTE 6 - RELATED PARTY TRANSACTIONS
Consulting Agreement
On
MGH License Agreement
On
14
As amended by the Seventh Amendment to the License Agreement on
MILESTONE: STATUS:
(i) Provide a detailed business and The Company has provided MGH with a
development plan. completed Corporate pitch deck which
outlines the Company's business and
development plans has been provided to
MGH.
(ii) Raise $2 million in a financing The Company has raised $1 million and
round. is currently in the process of raising
the second $1 million . The Company and
MGH are currently negotiating
extending this milestone.
(iii) Initiate and finance research Milestone completed.
regarding the role of CXCL12 in
minimizing fibrosis formation.
(iv) Initiate and finance research Dr. Poznansky's lab was focusing on
regarding the role of CXCL12 in beta this as part of the academic project.
cell function and differentiation. The Company therefore made the
strategic decision to fund another
aspect of CXCL12 biology which focuses
on the role of CXCL12 in wound
healing. For the time being, the
Company is excused from meeting this
milestone as it has provided an
alternative milestone as well as a
justification for not pursuing this
particular milestone.
The Company and MGH have agreed to work together to restate the License Agreement, incorporating all the relevant provisions from the seven amendments and agreeing on a new set of milestones for future development.
The License Agreement also requires VI to pay to MGH a one percent (1%) royalty rate on net sales related to the first license sub-field, which is the treatment of Type 1 Diabetes. Future sub-fields shall carry a reasonable royalty rate, consistent with industry standards, to be negotiated at the time the first such royalty payment shall become due with respect to the applicable Products and Processes (as defined in the License Agreement).
The License Agreement additionally requires VI to pay to MGH a
The License Agreement expires on the later of (i) the date on which all issued patents and filed patent applications within the Patent Rights have expired or been abandoned, and (ii) one (1) year after the last sale for which a royalty is due under the License Agreement.
The License Agreement also grants MGH the right to terminate the License Agreement if VI fails to make any payment due under the License Agreement or defaults in the performance of any of its other obligations under the License Agreement, subject to certain notice and rights to cure set forth therein. MGH may also terminate the License Agreement immediately upon written notice to VI if VI: (i) shall make an assignment for the benefit of creditors; or (ii) or shall have a petition in bankruptcy filed for or against it that is not dismissed within sixty (60) days of filing. As of the date of this filing, this License Agreement remains active and the Company has not received any termination notice from MGH.
VI may terminate the License Agreement prior to its expiration by giving ninety (90) days' advance written notice to MGH, and upon such termination shall, subject to the terms of the License Agreement, immediately cease all use and sales of Products and Processes.
15
The Company incurred research and development expenses to MGH of
During the three and nine months ended
Investment and Restructuring Agreement (IAR Agreement)
As discussed in Note 3, the Company transferred certain assets and liabilities to AEI, a company majority owned by three current stockholders of the Company, two of which were also former Directors and one was an officer of the Company. As a result of the IAR Agreement, the Company received 400 shares of preferred stock in AEI (see Note 10).
Accounts Payable and Accrued Salaries
The Company incurred director fees of
The Company incurred consulting fees of
In
NOTE 7- COMMITMENTS AND CONTINGENCIES
Lease Agreements
On
16
On
Legal Matters
The Company is not aware of any material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
MGH License Agreement
As discussed in Note 7, the Company executed a License Agreement with MGH. The License Agreement also requires VI to pay to MGH a one percent (1%) royalty rate on net sales related to the first license sub-field, which is the treatment of Type 1 Diabetes. Future sub-fields shall carry a reasonable royalty rate, consistent with industry standards, to be negotiated at the time the first such royalty payment shall become due with respect to the applicable Products and Processes (as defined in the License Agreement).
The License Agreement additionally requires VI to pay to MGH a
Consulting Agreement
On
NOTE 8 - STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock
The Company has 20,000,000 authorized shares of preferred stock,
Series A Preferred Stock
On
17
The holder of Series A Preferred Stock may elect at any time to convert such
shares into common stock of the Company. Each share of Series A Preferred Stock
is convertible into shares of common stock at a conversion Rate of 2:1 (the
"Series A Conversion Rate"). The Series A Conversion Rate shall be adjusted for
stock splits, stock combinations, stock dividends or similar recapitalizations.
The shares of Series A Preferred Stock shall automatically convert into shares
of common stock on
The holders of the Series A Preferred Stock shall be entitled to participate with the holders of the common stock in any dividends paid or set aside for payment (other than dividends payable solely in shares of common stock) so that the holders of the Series A Preferred Stock shall receive with respect to each share of Series A Preferred Stock an amount equal to (x) the dividend payable with respect to each share of common stock multiplied by (y) the number of share of common stock into which such share of Series A Preferred Stock is convertible as of the record date for such dividend. Any such dividend shall be paid with respect to all then outstanding shares of common stock and Series A Preferred Stock on a pari passu basis and on as-converted basis. No dividends shall be paid on the common stock or the Series B Preferred Stock unless an equivalent dividend is paid with respect to the Series A Preferred Stock.
In addition to any other rights and restrictions provided by applicable law, without first obtaining the affirmative vote or written consent of the holders of a majority of the then-outstanding shares of Series A Preferred Stock, the Company shall not amend or repeal any provision of, add any provision to, the Company's Articles of Incorporation or the Series A Preferred Stock Certificate of Designation if such action would adversely alter or change the preferences, rights, privileges or power of, or restrictions provided for the benefit of, the Series A Preferred Stock.
Unless otherwise prohibited by applicable law, the Board of Directors of the Company shall have the authority to repeal any provision of, or add any provision to, the Company's Articles of Incorporation or Series A Preferred Stock Certificate of Designation if such action would not adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Preferred Stock.
As of
Series B Preferred Stock
On
Each holder of shares of Series B Preferred Stock shall be entitled to the
number of votes equal to the number of votes held by the number of shares of
common stock into which such share of Series B Preferred Stock could be
converted, and except as otherwise required by applicable law, shall have the
voting rights and power equal to the voting rights and powers of the common
stock. The holders of the Series B Preferred Stock shall vote together with the
holders of the common stock of the Company as a single class and as single
voting group upon all matters required to be submitted to a class or series vote
pursuant to the protective provisions of the Series B Preferred Stock
Certificate of Designation or under applicable law. In the event of liquidation,
dissolution or winding up of the Corporation, either voluntarily or
involuntarily, the holders of Series A Preferred Stock shall be entitled to
receive, prior and in preference to any common stock holders, distribution of
any surplus funds equal to the greater of : the sum of
18
The holder of Series B Preferred Stock may elect at any time to convert such
sharers into common stock of the Company. Each share of Series B Preferred Stock
is convertible into shares of common stock at a conversion rate of 1:1 (the
"Series B Conversion Rate"). The Series B Conversion Rate shall be adjusted for
stock splits, stock combinations, stock dividends or similar recapitalizations.
The shares of Series B Preferred Stock shall automatically convert into shares
of common stock on
The holders of the Series B Preferred Stock shall be entitled to participate with the holders of the common stock in any dividends paid or set aside for payment (other than dividends payable solely in shares of common stock) so that the holders of the Series B Preferred Stock shall receive with respect to each share of Series B Preferred Stock an amount equal to (x) the dividend payable with respect to each share of common stock multiplied by (y) the number of share of common stock into which such share of Series B Preferred Stock is convertible as of the record date for such dividend. Any such dividend shall be paid with respect to all then outstanding shares of common stock and Series B Preferred Stock on a pari passu basis and on as-converted basis. No dividends shall be paid on the common stock or the Series B Preferred Stock unless an equivalent dividend is paid with respect to the Series B Preferred Stock.
In addition to any other rights and restrictions provided by applicable law,
without first obtaining the affirmative vote or written consent of the holders
of a majority of the then-outstanding shares of Series B Preferred Stock, the
Company shall not amend or repeal any provision of, add any provision to, the
Company's Articles of Incorporation or the Series B Preferred Stock Certificate
of Designation if such action would adversely alter or change the preferences,
rights, privileges or power of, or restrictions provided for the benefit of, the
Series B Preferred Stock. Unless otherwise prohibited by applicable law, the
Board of Directors of the Company shall have the authority to repeal any
provision of, or add any provision to, the Company's Articles of Incorporation
or Series B Preferred Stock Certificate of Designation if such action would not
adversely alter or change the preferences, rights, privileges or powers of, or
restrictions provided for the benefit of the Series B Preferred Stock. As of
Common Stock
The Company has 300,000,000 authorized shares of common stock,
Common Stock Issuance
The Company did not issue any shares of common stock during the nine months
ended
During the nine months ended
Common Stock to be issued
As of
As of
19 Stock Options
The following table summarizes activities related to stock options of the
Company for the nine months ended
Weighted- Weighted-
Average Average
Exercise Remaining
Number of Price per Life
Options Share (Years)
Outstanding at December 31, 2019 2,450,000 $ 0.57 8.20
Forfeited (256,250 ) - -
Outstanding at September 30, 2020 2,193,750 $ 0.61 7.32
Exercisable at September 30,2020 2,135,417 $ 0.62 7.29
The Company did not grant any options to purchase shares of common stock during
the three and nine months ended
The Company recorded stock compensation expense of
Warrants
The following table summarizes activities related to warrants of the Company for
the nine months ended
Weighted- Weighted-
Average Exercise Average
Number of Price per Remaining Life
Warrants Share (Years)
Outstanding and exercisable at December
31, 2019 4,146,725 $ 0.53 2.50
Outstanding and exercisable at September
30, 2020 4,146,725 $ 0.53 1.75
The Company did not issue any warrants during the nine month period ended
NOTE 9 - DISCONTINUED OPERATIONS
In
ASC 205-20 "Discontinued Operations" establishes that the disposal or
abandonment of a component of an entity or a group of components of an entity
should be reported in discontinued operations if the disposal represents a
strategic shift that has (or will have) a major effect on an entity's operations
and financial results. As a result, the component's results of operations as of
20
A reconciliation of the major classes of line items constituting the loss from
discontinued operations, net of income taxes as is presented in the unaudited
condensed consolidated statements of operations for the three and nine months
ended
Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Revenues $ - $ - $ - $ 50,000
Operating expenses:
Personnel costs - - - 291,453
Travel expenses - - - 20,892
Laboratory expenses - - - 55,227
General and administrative expenses - - - 58,215
Total operating expenses - - - 425,787
Loss from discontinued operations $ - $ - $ -
There were no carrying amounts of major classes of assets and liabilities of the
Company classified as discontinued operations in the unaudited condensed
consolidated balance sheets at
NOTE 10 - SUBSEQUENT EVENTS
In
On
In
21
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes thereto appearing in Part I, Item 1 of this Quarterly Report. Historical results and trends that might appear in this Quarterly Report should not be interpreted as being indicative of future operations.
Overview
On
The Company's strategy is to develop and commercialize, on a worldwide basis, various intellectual property rights (patents, patent applications, know how, etc.) relating to a series of encapsulated products that incorporate proprietary derivatives of the chemokine CXCL12 for creating a zone of immunoprotection around cells, tissues, organs and devices for therapeutic purposes. The product name VICAPSYN™ is the Company's proprietary product line that is applied to transplantation therapies and related stem-cell applications in the transplantation field.
COVID-19
In
Results of Operations - Three and Nine Months Ended
Revenues
The Company did not have any revenues from continuing operations for the three
and nine months ended
22 Operating Expenses
We classify our operating expenses from continuing operations into four
categories: personnel costs, research and development expenses, professional
fees, and general and administrative expenses. The Company's total operating
expenses for the three and nine months ended
The decrease in operating expenses was primarily due to the negative impact of
COVID-19, which hindered the Company's ability to raise the additional capital
necessary to maintain operations and continue research and development
activities. The impact of COVID-19 resulted in a decrease in personnel costs
from
Funding Requirements
We anticipate that substantial additional equity or debt financings or funding
from collaborative agreements or from foundations, government grants or other
sources, will be needed to complete preclinical and animal testing necessary to
file an Investigational New Drug Application with the
Liquidity and Capital Resources
At
We do not believe that we have enough cash on hand to operate our business
during the next 12 months. We anticipate we will need to raise an additional
To date, we have financed our operations through our sale of equity and debt securities. Failure to generate revenue or to raise funds could cause us to go out of business, which would result in the complete loss for investors in our Company.
We have no revenues as of the date of this quarterly report, and no substantial revenues are anticipated until we have implemented our full plan of operations. To implement our strategy to grow and expand per our business plan, we intend to generate working capital via a private placement of equity or debt securities, or secure a loan. If we are unsuccessful in raising capital, we could be required to cease business operations and investors would lose all of their investment.
23
In
Additionally, we will have to meet all the financial disclosure and reporting requirements associated with being a publicly reporting company. Our management will have to spend additional time on policies and procedures to make sure our Company is compliant with various regulatory requirements.
This additional corporate governance time required of management could limit the amount of time management has to implement our business plan and may impede the speed of our operations.
Working Capital (Deficit) Surplus
September 30, 2020 December 31, 2019
Current Assets $ 3,596 $ 264,166
Current Liabilities 783,921 396,482
Working Capital (Deficit) $ (780,325 ) $ (132,316 )
Cash Flows
Cash activity for the six months ended September 30, 2020 and 2019 is summarized
as follows:
Nine Months Ended September 30,
2020 2019
Net Cash used in operating activities - continued
operations $ (262,512 ) $ (590,954 )
Net Cash used in operating activities -
discontinued operations - (132,830 )
Net Cash used in operating activities (262,512 ) (723,784 )
Cash provided by financing activities - continued
operations - 971,500
Cash provided by financing activities -
discontinued operations - 176,600
Net Cash provided by financing activities - 1,148,100
Net (decrease) increase in cash $ (262,512 ) $ 424,316
As of
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements as defined in Regulation S-K Item 303(a)(4) during the periods presented, investments in special-purpose entities or undisclosed borrowings or debt. Additionally, we are not a party to any derivative contracts or synthetic leases.
Contractual Obligations MGH License Agreement
The Company executed a License Agreement with MGH, a principal stockholder. The
License Agreement also requires VI to pay to MGH a one (1%) royalty rate on net
sales related to the first license sub-field, which is the treatment of Type 1
Diabetes. Future sub-fields shall carry a reasonable royalty rate, consistent
with industry standards, to be negotiated at the time the first such royalty
payment shall become due with respect to the applicable Products and Processes
(as defined in the License Agreement). The License Agreement additionally
requires VI to pay to MGH a
24
Critical Accounting Policies and Estimates
Our discussion and analysis of financial condition and results of operations is
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in
The methods, estimates and judgments we use in applying our most critical
accounting policies have a significant impact on the results that we report in
our consolidated financial statements.
We believe the following critical accounting policies, among others, require significant judgments and estimates used in the preparation of our interim condensed consolidated financial statements.
Our significant accounting policies are described in more detail in the notes to
our consolidated financial statements for the fiscal year ended
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
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