SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: _____________to______________
(Commission File Number)
(Exact name of registrant as specified in its charter)
(State or Other Jurisdiction
of Incorporation or Organization)
600 3rd Ave Floor 10
New York, NY 10016
(Address of Principal Executive Office) (Zip Code)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☒ No ☐
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. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
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” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Smaller reporting 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 ☐ No ☒
As of August 11th, 2021, there were 22,950,000 shares of common stock issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K (this “Report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Report. These factors include:
the need for additional funding;
our lack of a significant operating history;
the fact that our majority stockholder has significant control over our voting stock;
the loss of key personnel or failure to attract, integrate and retain additional personnel;
corporate governance risks;
the level of competition in our industry and our ability to compete;
our ability to respond to changes in our industry;
our ability to protect our intellectual property and not infringe on others’ intellectual property;
our ability to scale our business;
our ability to maintain supplier relationships;
our ability to obtain and retain customers;
our ability to execute our business strategy in a very competitive environment;
changes in laws and regulations;
the market for our common stock;
our ability to effectively manage our growth;
dilution to existing stockholders;
costs and expenses associated with being a public company;
economic downturns both in the United States and globally;
risk of increased regulation of our operations; and
other risk factors included under “Risk Factors” below.
You should read the matters described and incorporated by reference in “Risk Factors” and the other cautionary statements made in this Report, and incorporated by reference herein, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.
This information should be read in conjunction with the audited financial statements and the notes thereto included in this Annual Report on Form 10-K.
In this Annual Report on Form 10-K, we may rely on and refer to information regarding the industries in which we operate in general from market research reports, analyst reports and other publicly available information. Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified any of it.
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Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “Regnum”, and “Regnum Corp.” refer specifically to Regnum Corp.
In addition, unless the context otherwise requires and for the purposes of this Report only:
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
“SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and
“Securities Act” refers to the Securities Act of 1933, as amended.
Where You Can Find Other Information
We file annual, quarterly, and current reports and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us at http://www.sec.gov. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report. The information on, or that may be accessed through, our website is not incorporated by reference into this Report and should not be considered a part of this Report.
Regnum Corp. was organized on March 31, 2016 under the laws of the State of Nevada. We were formed for the primary business purpose of servicing the increasing demand for premium entertainment content and becoming a depository of unpublished intellectual properties for resale with a focus on achieving profitability and sustaining business growth. Our business model was, until April 2020, based on acquiring unproduced and unpublished quality intellectual properties at a discount from studios, agencies and production companies, for subsequent recycling or production in a wide variety of media, with the intent to resell such works back to the entertainment community for a profit. See “Recent Transactions and Changes of Control” below.
Recent Transactions and Changes of Control
On February 5, 2020, Ocean Ave Holdings, LLC (“Ocean”) which is owned and controlled by Ms. Tiffani Jones, the former sole director and officer of the Company, sold 20,000,000 shares of restricted common stock of the Company in consideration for $345,000, to Tri Capital Energy Corporation (“Tri Capital”), pursuant to an Agreement for the Purchase of Common Stock. The shares which were sold represented 87% of the Company’s then outstanding shares, which resulted in a change of control of the Company. Tri Capital is controlled by Mr. Gary Allen and Mr. Mark Gustavson.
On February 26, 2020, Tri Capital sold all 20,000,000 shares of the restricted common stock of Regnum Corp. (acquired on 02/05/2020) for the Purchase of Common Stock to Wookey Search Technologies Corporation, a Delaware corporation (“Wookey”), pursuant to a Stock Purchase Agreement. Consideration for the acquisition of the shares was $50,000 in cash and a Promissory Note (secured by the 20 million shares of Regnum purchased pursuant to the agreement) in the amount of $400,000, which note has been repaid. Wookey is a company controlled by Mr. Mark Gustavson, a former CEO and Director of Regnum Corp.
On April 7, 2021, Wookey, the previous majority shareholder of the Company, entered into a stock purchase agreement for the sale of 20,000,000 shares of Common Stock of the Company, to Phoenixus AG, an accredited investor. Phoenixus AG also acquired an additional 2,680,000 shares of common stock from three minority shareholders. In connection with the sale of such shares, an aggregate of 1,000,000 shares of common stock held by Gary Allen were returned to the Company for cancellation. As a result of the acquisition of 22,680,000 shares of common stock, and the cancellation of 1,000,000 shares, Phoenixus AG holds approximately 99% of the issued and outstanding shares of Common Stock of the Company, and as such it is able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.
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Also, on April 7, 2021, Mark Gustavson, former Chief Executive Officer, Secretary and Director of the Company, and Ross Meador, former Vice President and General Counsel of the Company, resigned their positions with the Company. Upon such resignations, Anne Kirby was appointed as Chief Executive Officer, President and sole Director. Rob Stubblefield remains the Chief Financial Officer of the Company.
On May 13, 2021, Regnum entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SevenScore Pharmaceuticals, LLC, a Delaware limited liability company (“SevenScore”).
The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, (a) SevenScore will be merged with and into Regnum (the “Merger”), with Regnum being the surviving corporation in the Merger, and (b) at the effective time of the Merger (the “Effective Time”), membership interests in SevenScore will be converted into the right to receive an aggregate of 25,878,168 shares of common stock of Regnum (the “Merger Consideration”). Each SevenScore membership interest shall by virtue of the Merger and without any action on the part of the holder thereof, be automatically converted into and exchangeable for a fraction of a fully paid and nonassessable share of Regnum Common Stock equal to one multiplied by a fraction obtained by dividing (A) 25,878,168 by (B) 26,128,168 (the “Exchange”). There are currently 22,950,000 shares of common stock of Regnum issued and outstanding, of which 22,700,000 shares are owned by Phoenixus AG, a company organized under the laws of Switzerland (“PAG”). Upon effectiveness of the Merger, (i) each share of Regnum Common Stock issued and outstanding and owned by PAG as of immediately prior thereto shall be cancelled and extinguished without any conversion thereof, and (ii) 22,730,409 shares of Regnum Common Stock will be owned by PAG as a result of conversion of SevenScore membership interests; (ii) 3,147,759 shares of Regnum Common Stock being owned by several other SevenScore members; and (iii) 250,000 shares of Regnum Common Stock being owned by the Regnum shareholders, other than PAG, prior to effectiveness of the Merger. As a result of the current ownership of control shares of Regnum by PAG, as well as the membership interest in SevenScore owned by PAG, the Merger will not affect a change of control of Regnum.
Notice of the merger, as well as the Company’s intention to change the name of the Company to SevenScore Pharmaceuticals Inc., was provide to FINRA on June 10, 2021.
Description of Business Operations:
Our prior business model was based on procuring unproduced and unpublished quality intellectual properties at a discount from independent writers, filmmakers, studios, agencies and production companies for subsequent reworking and/or production in a wide variety of media with intent to resell back to the entertainment community for profit.
As discussed herein, in April 2021, the prior business model was abandoned and the Company entered into that certain Management Agreement (the “Management Agreement”) with SevenScore, pursuant to which officers of the Company undertook management responsibilities for the operations of SevenScore. The Management Agreement was entered into in contemplation of a proposed business combination between the Company and SevenScore set forth in the Merger Agreement.
SevenScore is focused on developing and commercializing therapeutics that treat rare and infectious diseases, specifically in populations that are neglected or face adherence challenges. SevenScore’s primary asset is commercial rights of leronlimab (PRO 140) in all HIV indications within the United States. Leronlimab (PRO 140) is a CCR5 antagonist expected to receive an indication to treat Multi-Drug Resistant HIV infection, with the potential for multiple additional therapeutic indications in HIV. The names leronlimab and PRO 140 will be used interchangeably throughout this report.
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Our prior business process entailed seeking out and acquiring low budget unproduced and unpublished quality intellectual properties at a discount from independent writers, filmmakers, studios, agencies and production companies, reworking them into new commercially viable projects, and lastly, marketing and selling them back to the entertainment industry for a profit. During 2020, we acquired options for six scripts from two writers [production companies] in Southern California for $1,000 each and subsequently sold four of them before the end of 2020 for $2,250 each.
We are currently operating under the Management Agreement, pursuant to which our CEO is assisting SevenScore as it is preparing for the commercialization of leronlimab for Multi-Drug Resistant HIV. Ongoing efforts include, the development of marketing strategies and market access plans, establishing strategic partnerships with specialty pharmacies and patient services companies, and headcount planning. The Company is also looking to in-license developmental and commercial stage products.
The preclinical and clinical development of PRO 140 was led by Progenics Pharmaceuticals, Inc. (“Progenics”) through 2011. CytoDyn, Inc (“CytoDyn”) acquired the asset from Progenics in October 2012. In February 2018, CytoDyn announced they had met the primary endpoint in its Phase 3 trial for leronlimab as a combination therapy with HAART for highly treatment experienced HIV patients and filed the non-clinical portion of the Biologics License Application (“BLA) on March 18, 2019. Vyera Pharmaceuticals (“Vyera”) acquired the marketing rights from CytoDyn for leronlimab in all HIV related indications with terms described in “Marketing and Sales Agreement” below. These rights were later assigned from Vyera to SevenScore. CytoDyn filed with the FDA the clinical and Chemistry, Manufacturing, and Controls (“CMC”) portions of the BLA in April and May of 2020. In July 2020, CytoDyn received a Refusal to File letter from the FDA regarding the BLA filing, and a Type A meeting was held in September 2020 to discuss the re-submission with the FDA.
Leronlimab as a CCR5 Antagonist
SevenScore’s main focus is commercialization of a monoclonal antibody C—C chemokine receptor type 5 (“CCR5”) receptor antagonist, to be used as a platform drug for a variety of HIV indications. The target of leronlimab is the immunologic receptor CCR5. Leronlimab prevents certain strains of HIV from using the CCR5 receptor as an entry gateway for healthy cells.
Leronlimab binds to the second extracellular loop and N-terminus of the CCR5 receptor, and due to its selectivity and target-specific mechanism of action, leronlimab does not appear to activate the immune function of the CCR5 receptor through agonist activity. This apparent target specificity differentiates leronlimab from other CCR5 antagonists.
Leronlimab and Human Immunodeficiency Virus (“HIV”)
Leronlimab has shown promise as an antiviral agent with the advantage of fewer side effects, less toxicity and less frequent dosing requirements, as compared to daily drug therapies currently in use for the treatment of HIV. The leronlimab antibody belongs to a class of HIV therapies known as entry inhibitors that block HIV from entering into and infecting certain cells. Leronlimab blocks HIV from entering a cell by binding to a molecule called CCR5, a normal cell surface receptor protein to which certain strains of HIV, referred to as “R5” strains, attach as part of HIV’s entry into a cell.
Leronlimab does not appear to affect the normal function of the CCR5 co-receptor for HIV. Instead, leronlimab binds to a precise site on CCR5 that R5 strains of HIV use to enter the cell and, in doing so, inhibits the ability of these strains of HIV to infect the cell without appearing to affect the cell’s normal function. As a result, we believe leronlimab represents a distinct class of CCR5 inhibitors with advantageous virological and immunological properties and may provide a unique tool to treat HIV infected patients.
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To date, leronlimab has been tested and administered to patients predominantly as a subcutaneous injection. We believe that if leronlimab is approved by the FDA for use as an injectable for HIV, it may be an attractive and marketable therapeutic option for patients, particularly in the following scenarios:
|Patients with difficulty adhering to daily drug regimens;|
|Patients who poorly tolerate existing therapies;|
|Patients with compromised organ function, such as hepatitis C (“HCV”) co-infection; and|
|Patients with complex concomitant medical requirements.|
Clinical trials for leronlimab have demonstrated potent antiretroviral activity (as compared to optimized background therapy alone) and has demonstrated a clean safety profile.
CytoDyn’s ongoing HIV-related clinical trials have been designed to demonstrate the proof of concept that leronlimab monotherapy can continue to suppress the viral load in certain HIV-infected, treatment-experienced patients who had suppressed viral load on HAART, but would like an alternative treatment that provides a higher quality of life with one dose through a weekly self-injection. Once the viral load is undetectable, administration of leronlimab can help maintain the suppressed viral load in a subpopulation of R5 patients over an extended period of time (currently shown to be in excess of six years).
The pharmaceutical, biotechnology and diagnostic industries are characterized by rapidly evolving technology and intense competition. Our commercial efforts may compete with more established biotechnology companies that have significantly greater financial and managerial resources than we do.
We face competition from both very large, multi-national corporations with significant resources, and small start-up organizations. Our potential competitors include entities that develop and produce therapeutic agents. These include numerous public and private academic and research organizations and pharmaceutical and biotechnology companies pursuing production of, among other things, biologics from cell cultures, genetically engineered drugs and natural and chemically synthesized drugs. Our competitors may succeed in developing potential drugs or processes that are more effective or less costly than any that may be developed by us or that gain regulatory approval prior to our potential drug candidates. Worldwide, there are many antiviral drugs for treating HIV. SevenScore will face competition from established pharmaceutical companies. Many of these potential competitors have substantially greater capital resources, management expertise, research and development capabilities, manufacturing and marketing resources and experience than we do.
Leronlimab blocks a cell receptor called CCR5, which is the entry point for most strains of HIV virus. ViiV Healthcare’s Maraviroc (Selzentry®) is the only currently approved CCR5 blocking agent. Maraviroc must be taken daily and is believed to have side effects and toxicity. For these reasons, we believe that leronlimab, a monoclonal antibody, may prove to be useful in patients that cannot tolerate existing HIV therapies or desire a respite from those therapies. Nonetheless, manufacturers of current therapies, such as Gilead Sciences, Merck, Bristol-Myers Squibb and ViiV Healthcare, are very large, multi-national corporations with significant resources. We expect that these companies will compete fiercely to defend and expand their market share.
To construct a HAART regimen, three drugs from two classes of drugs are typically needed. Currently there are only five different classes of drugs from which four are primarily used to construct a HAART regimen. Each of these four classes of drugs has many drugs available in its respective class, except the entry inhibitor (“EI”) class, which has only four drugs available.
Acquisition and Licensing Arrangements
The commercialization and licensing agreement between SevenScore and CytoDyn gives SevenScore the rights to market leronlimab in all HIV related indications in United States in exchange for milestones that include payment of $500,000 due upon BLA acceptance, $2,000,000 upon FDA approval and $1,000,000 upon first sale of leronlimab and a 50% royalty.
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Protection of the Company’s and its partner’s intellectual property rights is important to our business. We may file patent applications in the U.S., Canada, China, and Japan, European countries that are party to the European Patent Convention and other countries on a selective basis in order to protect inventions we consider to be important to the development of our business.
Generally, patents issued in the U.S. are effective for either (i) 20 years from the earliest asserted filing date, if the application was filed on or after June 8, 1995, or (ii) the longer of 17 years from the date of issue or 20 years from the earliest asserted filing date, if the application was filed prior to that date. A U.S. patent, to be selected by the grantee upon receipt of FDA regulatory approval, may be subject to up to a five-year patent term extension in certain instances. While the duration of foreign patents varies in accordance with the provisions of applicable local law, most countries provide for a patent term of 20 years measured from the application filing date and some may also allow for patent term extension to compensate for regulatory approval delay. We pursue opportunities for seeking new meaningful patent protection on an ongoing basis. Through the agreement with CytoDyn, SevenScore will leverage CytoDyn’s existing leronlimab intellectual property to commercialize the product.
The research, development, testing, manufacture, quality control, packaging, labeling, storage, record-keeping, distribution, import, export, promotion, advertising, marketing, sale, pricing and reimbursement of pharmaceutical products are extensively regulated by governmental authorities in the United States and other countries. The processes for obtaining regulatory approvals in the United States and in foreign countries and jurisdictions, along with compliance with applicable statutes and regulations and other regulatory requirements, both pre-approval and post-approval, require the expenditure of substantial time and financial resources. The regulatory requirements applicable to product development, approval and marketing are subject to change, and regulations and administrative guidance often are revised or reinterpreted by the agencies in ways that may have a significant impact on our business.
Licensure and Regulation of Biological Products in the United States
In the United States, the FDA regulates human drugs under the Federal Food, Drug, and Cosmetic Act, or the FDCA, and in the case of biological products, also under the Public Health Service Act, or the PHSA, and their implementing regulations. We believe that our products will be regulated as biological products, or biologics. The failure to comply with the applicable U.S. requirements may result in FDA refusal to approve pending BLAs or delays in development and may subject an applicant to administrative or judicial sanctions, such as issuance of warning letters, or the imposition of fines, civil penalties, product recalls, product seizures, total or partial suspension of production or distribution, injunctions and/or civil or criminal prosecution brought by the FDA and the U.S. Department of Justice or other governmental entities.
The FDA must approve our product candidates for therapeutic indications before they may be marketed in the United States. For biologic products, the FDA must approve a BLA. An applicant seeking approval to market and distribute a new biologic in the United States generally must satisfactorily complete each of the following steps:
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|completion of pre-clinical laboratory tests, animal studies and formulation studies according to good laboratory practices, or GLP, regulations or other applicable regulations;|
|submission to the FDA of an IND, which must become effective before human clinical trials may begin and must be updated when certain changes are made;|
|approval by an independent institutional review board, or IRB, or ethics committee representing each clinical trial site before each clinical trial may be initiated;|
|performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practices, or GCPs, and other clinical-trial related regulations to evaluate the safety and efficacy of the investigational product for each proposed indication;|
|preparation and submission to the FDA of a BLA requesting marketing approval for one or more proposed indications, including payment of application user fees;|
|review of the BLA by an FDA advisory committee, where applicable;|
|satisfactory completion of one or more FDA inspections of the manufacturing facility or facilities at which the biologic is produced to assess compliance with cGMP requirements to assure that the facilities, methods and controls are adequate to preserve the product’s identity, strength, quality and purity;|
|satisfactory completion of any FDA audits of clinical trial sites to assure compliance with GCPs and the integrity of the clinical data submitted in support of the BLA; and|
|FDA review and approval of the BLA, which may be subject to additional post- approval requirements, including the potential requirement to implement a REMS, and any post- approval studies required by the FDA.|
SevenScore does not own or operate manufacturing facilities responsible for the production of leronlimab. As such, the Company must depend on CytoDyn and its third-party manufacturing organizations and suppliers for all our commercial grade quantities of leronlimab.
We currently have two executive officers and no other employees. The Company has several independent consultants assisting us with the Company’s upcoming launch. There can be no assurances that we will be able to identify or hire and retain additional employees or consultants on acceptable terms in the future.
Risks Related to Our Business Operations:
We may require additional financing, and we may not be able to raise funds on favorable terms or at all.
We had working capital of <$50,393> as of December 31, 2020. With our current cash on hand, expected revenues, and based on our current average monthly expenses, we anticipate the need for additional funding in order to continue our operations at their current levels, and to pay the costs associated with being a public company, for the next 12 months, and may require additional funding in the future to support our operations and/or may seek to raise additional funding in the future to expand or complete acquisitions. The sources of this capital are expected to be equity investments and notes payable.
We have net losses from operations and there is substantial doubt about our ability to continue as a going concern. If we are not able to generate positive cash flow, our business operations may fail.
The Company has incurred a net loss of $117,673 for the year ended December 31, 2020 and had an accumulated deficit of $150,760 on December 31, 2019. In addition, the Company has a history of losses. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to meet its obligations in the ordinary course of business is dependent upon its ability to establish profitable operations and obtain additional funds when needed. We may not be able to generate sufficient revenues to support our operations or continue as a going concern. As a result, the opinion the Company received from its independent registered public accounting firm on its December 31, 2020 financial statements contains an explanatory paragraph stating that there is substantial doubt regarding the Company’s ability to continue as a going concern. If we become unable to continue as a going concern, we may have to liquidate our assets, and may realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock. The accompanying financial statements do not contain any adjustments for this uncertainty.
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The most likely source of future funds presently available to us will be through the sale of equity capital. Any sale of share capital will result in dilution to existing stockholders. Furthermore, we may incur debt in the future, and may not have sufficient funds to repay our future indebtedness or may default on our future debts, jeopardizing our business viability.
We may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to expand our operations and business, which might result in the value of our common stock decreasing in value or becoming worthless. Additional financing may not be available to us on terms that are acceptable. Consequently, we may not be able to proceed with our intended business plans. Substantial additional funds will still be required if we are to reach our goals that are outlined in this Report. Obtaining additional financing contains risks, including:
additional equity financing may not be available to us on satisfactory terms and any equity we are able to issue could lead to dilution for current stockholders;
loans or other debt instruments may have terms and/or conditions, such as interest rate, restrictive covenants and control or revocation provisions, which are not acceptable to management or our sole Director;
the current environment in capital markets combined with our capital constraints may prevent us from being able to obtain adequate debt financing; and
if we fail to obtain required additional financing to grow our business, we would need to delay or scale back our business plan, reduce our operating costs, or reduce our headcount, each of which would have a material adverse effect on our business, future prospects and financial condition.
SevenScore is a pre-revenue stage biotechnology company and has a history of operating losses; SevenScore expects to continue to incur operating losses, and SevenScore may never achieve or maintain profitability.
Since our inception, SevenScore has incurred operating losses each year due to costs incurred in connection with research and development activities and general and administrative expenses associated with our operations. Leronlimab is in the later stages of clinical development for multiple indications. CytoDyn submitted a BLA for leronlimab as a combination therapy with highly active antiretroviral therapy (HAART) for HIV patients to the FDA for review on May 11, 2020. In July 2020, the Company received a Refusal to File letter from the FDA regarding the BLA filing. CytoDyn had a type A meeting on September 11, 2020 and has agreed to a pathway to refile the BLA.
SevenScore has a limited operating history.
SevenScore has been in existence for approximately three years. Our limited operating history means that there is a high degree of uncertainty in our ability to: (i) develop and commercialize drug candidates; (ii) achieve FDA approval; and (iii) respond to competition. Additionally, even if we do implement our business plan, we may not be successful. No assurances can be given as to exactly when, if at all, we will be able to recognize revenues or profits high enough to sustain our business. We face all the risks inherent in a new business, including the expenses, difficulties, complications and delays frequently encountered in connection with conducting operations, including capital requirements. Given our limited operating history, we may be unable to effectively implement our business plan which would result in a loss of your investment.
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SevenScore will need additional funding to launch leronlimab; such financing is likely to substantially dilute our existing stockholders.
Until SevenScore can generate enough product revenue to finance our cash requirements, which SevenScore may never achieve, SevenScore expects to finance our cash needs primarily through public or private equity offerings, debt financings or through strategic alliances. SevenScore cannot be certain that additional funding will be available on acceptable terms or at all. In addition, any additional funding that SevenScore does obtain will dilute the ownership held by our existing security holders.
SevenScore has no clinical development authority related to leronlimab. If CytoDyn is unable to secure FDA approval, SevenScore may not be able to successfully commercialize leronlimab.
Approval of leronlimab is no guarantee of commercial success. The sale and marketing of drug products is a complicated and multifaceted process, and many approved drugs are not commercially successful.
If CytoDyn is not able to obtain any required regulatory approvals for leronlimab, SevenScore will not be able to commercialize leronlimab, which would materially and adversely affect our business, financial condition and stock price.
Failure of CytoDyn to obtain regulatory approval for leronlimab will prevent us from commercializing such product candidate as a prescription product, and our ability to generate revenue will be materially impaired. The FDA has substantial discretion in the approval process and may refuse to accept any application or may decide that CytoDyn’s data is insufficient for approval and require additional clinical trials, pre-clinical data or other studies.
Clinical trials may fail to demonstrate the desired safety and efficacy of product candidates, which could prevent or significantly delay completion of clinical development and regulatory approval.
Any product candidate, including leronlimab, is subject to the risks of failure inherent in drug-related product development. In addition, even if we believe the data collected from clinical trials of the product candidate are promising, these data may not be sufficient to support approval by the FDA. If regulatory authorities do not approve leronlimab, SevenScore would be unable to commercialize the product and our business operations and financial condition would be harmed.
The commercialization of leronlimab is subject to several risks.
Regulatory approval of leronlimab is no guarantee of commercial success. The sale and marketing of drug products is a complicated and multifaceted process, and many approved drugs are not commercially successful. If approved for marketing, the commercial success of leronlimab will depend upon its acceptance by customers and other stakeholders, including physicians, patients and health insurers. The degree of market acceptance of leronlimab will depend on a number of factors, including:
|demonstration of clinical safety and efficacy;|
|relative convenience and ease of administration;|
|the prevalence and severity of any adverse effects;|
|safety, tolerability and efficacy of leronlimab compared to competing products;|
|pricing and cost-effectiveness;|
|the inclusion or omission of leronlimab in applicable treatment guidelines;|
|the effectiveness of our or any future collaborators’ sales and marketing strategies;|
|limitations or warnings contained in FDA approved labeling; and|
|our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including Medicare and Medicaid, private health insurers and other third-party payors.|
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SevenScore’s ability to successfully commercialize and generate revenues from leronlimab depends on a number of factors, including SevenScore’s ability to:
|develop and execute its sales and marketing strategies for leronlimab;|
|achieve, maintain and grow market acceptance of, and demand for, leronlimab; and|
|obtain and maintain adequate coverage, reimbursement and pricing from managed care, government and other third-party payors.|
CytoDyn may fail to comply with its obligations under the License Agreement and related agreements. Any of the preceding factors could affect CytoDyn’s commitment to, and ability to perform, its obligations under the License Agreement, which could adversely affect the commercial success of leronlimab
Certain agreements and related license agreements require us to make significant milestone, royalty and other payments, which will require additional funding.
SevenScore owes Cytodyn development and sales milestones.
SevenScore expects to rely on third-party manufacturers and will be dependent on their quality and effectiveness.
SevenScore cannot guarantee its supply partner, CytoDyn, will be able to supply the drug.
Future sales of our securities could adversely affect the market price of our common stock and our future capital-raising activities could involve the issuance of equity securities, which would dilute your investment and could result in a decline in the trading price of our common stock.
SevenScore may sell securities in the public or private equity markets if and when conditions are favorable, or at prices per share below the current market price of our common stock. SevenScore may issue additional shares of common stock in future financing transactions or as incentive compensation for our executive management and other key personnel, consultants and advisors.
We rely on key personnel and, if we are unable to retain or motivate key personnel or hire qualified personnel, we may not be able to grow effectively.
Our success depends in large part upon the abilities and continued service of our executive officers and other key employees. There can be no assurance that we will be able to retain the services of such officers and employees. Our failure to retain the services of our key personnel could have a materially adverse effect on our business. In order to support our projected growth, we will be required to effectively recruit, hire, train and retain additional qualified management personnel. Our inability to attract and retain the necessary personnel could have a materially adverse effect on our business.
There is no guarantee that SevenScore will be able to in-license clinical or commercial drugs in the future.
Our current pipeline is only leronlimab and its various indications in order to operate a diversified and sustainable business SevenScore will need in-license or buy in the future commercial drugs and clinical programs.
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We may have difficulty obtaining future funding sources, if needed, and we may have to accept terms that would adversely affect stockholders.
We will need to raise funds from additional financing in the future to complete our business plan and may need to raise additional funding in the future to support our operations. We have no commitments for any financing and any financing commitments may result in dilution to our existing stockholders. We may have difficulty obtaining additional funding, and we may have to accept terms that would adversely affect our stockholders. For example, the terms of any future financings may impose restrictions on our right to declare dividends or on the manner in which we conduct our business. Additionally, we may raise funding by issuing convertible notes, which if converted into shares of our common stock would dilute our then stockholders’ interests. Lending institutions or private investors may impose restrictions on a future decision by us to make capital expenditures, acquisitions or significant asset sales. If we are unable to raise additional funds, we may be forced to curtail or even abandon our business plan.
Our ability to grow and compete in the future will be adversely affected if adequate capital is not available.
The ability of our business to grow and compete depends on the availability of adequate capital, which in turn depends in large part on our cash flow from operations and the availability of equity and debt financing. Our cash flow from operations may not be sufficient or we may not be able to obtain equity or debt financing on acceptable terms or at all to implement our growth strategy. As a result, adequate capital may not be available to finance our current growth plans, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.
If we are unable to manage future growth effectively, our profitability and liquidity could be adversely affected.
Our ability to achieve our desired growth depends on our execution in functional areas such as management, sales and marketing, finance and general administration and operations. To manage any future growth, we must continue to improve our operational and financial processes and systems and expand, train and manage our employee base and control associated costs. Our efforts to grow our business, both in terms of size and in diversity of customer bases served, will require expansion in certain functional areas and put a significant strain on our resources. We may incur significant expenses as we attempt to scale our resources and make investments in our business that we believe are necessary to achieve long-term growth goals. If we are unable to manage our growth effectively, our expenses could increase without a proportionate increase in revenue, our margins could decrease, and our business and results of operations could be adversely affected.
We rely on our management and if they were to leave our company our business plan could be adversely affected.
We are largely dependent upon the personal efforts and abilities of our existing management, including Ms. Anne Kirby, our current Chief Executive Officer, and Mr. Robert J. Stubblefield, our Chief Financial Officer and Treasurer, each of whom plays an active role in our operations. Moving forward, should the services of any of such persons be lost for any reason, the Company will incur costs associated with recruiting replacements and any potential delays in operations which this may cause. If we are unable to replace such individual with a suitably trained alternative individual(s), we may be forced to scale back or curtail our business plan.
We do not currently have any employment agreements or maintain key person life insurance policies on our executive officers.
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We do not currently have any employment agreements in place with management.
The Company has not entered into an employment agreement with Ms. Anne Kirby, our current Chief Executive Officer, or Mr. Robert J. Stubblefield, our Chief Financial Officer. As such, there are no contractual relationships guaranteeing that Ms. Anne Kirby or Mr. Stubblefield will stay with the Company and continue its operations. In the event any of such persons were to resign, the Company may be unable to get another officer to fill the void and performance may be significantly affected.
Our majority stockholder controls a majority of our voting securities and therefore has the ability to influence matters affecting our stockholders.
Phoenixus AG, our majority stockholder, which holds approximately 99% of our outstanding shares of common stock, has the ability, to influence matters affecting our stockholders and will therefore exercise control in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. Any investor who purchases shares will be a minority stockholder and as such will have little to no say in the direction of the Company and the election of directors. Additionally, it will be difficult if not impossible for investors to remove our current Director, which will mean she will remain in control of who serves as officers of the Company as well as whether any changes are made in the Board of Directors. As a potential investor in the Company, you should keep in mind that even if you own shares of the Company’s common stock and wish to vote them at annual or special stockholder meetings, your shares will likely have little effect on the outcome of corporate decisions. Investors may find it difficult to replace our management if they disagree with the way our business is being operated.
Our officers and directors lack experience in and with publicly traded companies.
Ms. Anne Kirby, our Chief Executive Officer, has not served as an officer or director of a publicly traded company. Mr. Robert J. Stubblefield, our Chief Financial Officer, has served in senior level financial, accounting, and operations roles for public companies. However, Mr. Stubblefield has limited experience with the financial accounting and preparation requirements of financial statements which we are required to file on a quarterly and annual basis under the Exchange Act and will rely on outside legal advisors for guidance regarding such requirements. We plan to initially rely on outside accountants and bookkeepers to help us create a system of accounting controls and procedures to maintain the Company’s accounting records with appropriate internal controls. As a result of the above, our operations, earnings and ultimate financial success could suffer irreparable harm due to our executives’ inexperience with publicly traded companies and especially in connection with the financial accounting and preparation requirements of the Exchange Act.
We May Choose to Enter into a Merger and/or Acquisition Transaction in the Future.
While we have not entered into any definitive agreements or understandings to merge with or acquire any entity, in the event that we do enter into a merger and/or acquisition with a separate company in the future, new shares of common stock could be issued resulting in substantial dilution to our then current stockholders. Additionally, our business focus will likely change and we can make no assurances that our management will be able to properly manage our direction or that a change in our business focus will be successful. If we do enter into a merger or acquisition, and our management fails to properly manage and direct our operations, we may be forced to scale back or abandon our operations, which will cause the value of our common stock to decline or become worthless. We have not entered into any merger or acquisition agreements as of the date of this filing.
Corporate governance and reporting risks:
We have identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting. If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.
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Maintaining effective internal control over financial reporting and effective disclosure controls and procedures are necessary for us to produce reliable financial statements. As reported under “Part II” - “Item 9A. Controls and Procedures”, as of December 31, 2020, our CEO and CFO determined that our disclosure controls and procedures were not effective, and such disclosure controls and procedures have not been deemed effective for several quarters. Separately, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 and determined that such internal control over financial reporting was not effective as a result of such assessment.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future. Any failure to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a material adverse effect on our financial condition and the trading price of our common stock, and/or result in litigation against us or our management. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or facilitate the fair presentation of our financial statements or our periodic reports filed with the SEC.
Because we are not subject to compliance with rules requiring the adoption of certain corporate governance measures, our stockholders have limited protections against interested director transactions, conflicts of interest and similar matters.
The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York Stock Exchange and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.
Because we only have one Director, who is not independent, we do not currently have an independent audit or compensation committee. As a result, our Director has the ability to, among other things, determine her own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and any potential investors may be reluctant to provide us with funds necessary to expand our operations.
We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain qualified officers, directors and members of board committees required to provide for our effective management as a result of the Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.
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We incur ongoing costs and expenses for SEC reporting and compliance and without sufficient revenues we may not be able to remain in compliance, making it difficult for investors to sell their shares, if at all.
In order for us to remain in compliance with our on-going reporting requirements, we may require additional capital and/or future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources or require us to obtain additional capital through the sale of equity or debt. If we are unable to further capitalize the Company or generate sufficient revenues to remain in compliance, it may be difficult for you to resell any shares you may purchase, if at all. There are ongoing costs and expenses for SEC reporting, including the general bookkeeping and accounting costs for the preparation of the financial quarterly (Form 10-Qs) and annual filings (Form 10-Ks), and auditor’s fees. Further, there are processing costs in preparing and converting documents and disclosures through the EDGAR filing system, including certain costs for the XBRL that are required as part of the EDGAR filing. We estimate that these costs could result in up to $50,000 per year of ongoing costs.
Risks relating to our common stock:
Stockholders may be diluted significantly through our efforts to obtain financing and satisfy obligations through the issuance of additional shares of our common stock.
We have no committed source of financing. Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our Board of Directors has authority, without action or vote of the stockholders, to issue all or part of the authorized but unissued shares of common stock. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing stockholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.
Nevada law and our articles of incorporation authorize us to issue shares of stock, which shares may cause substantial dilution to our existing stockholders.
We have authorized capital stock consisting of 80,000,000 shares of common stock, $0.001 par value per share and 5,000,000 shares of preferred stock, $0.001 par value per share. As of the date of this Report, we have 22,950.000 shares of common stock issued and outstanding and no shares of preferred stock issued and outstanding. As a result, our Board of Directors has the ability to issue a large number of additional shares of common stock without stockholder approval, which if issued could cause substantial dilution to our then stockholders. The issuance of shares of common stock and/or preferred stock may cause the value of our securities to decrease and/or become worthless.
There is no material public market for our common stock.
Although our common stock is quoted on the OTC Pink Market maintained by OTC Markets, to date only a limited number of shares of our common stock have traded and a significant market may not develop in the future. If for any reason a public trading market does not develop, stockholders may have difficulty selling their common stock should they desire to do so.
Even if a more significant trading market develops, we cannot predict how liquid that market might become. The trading price of our common stock, if any, in the future, is likely to be highly volatile and could be subject to wide fluctuations in price in response to various factors, some of which are beyond our control.
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These factors include:
Quarterly variations in our results of operations or those of our competitors;
Announcements by us or our competitors;
Disruption to our operations;
Commencement of, or our involvement in, litigation;
Any major change in our board or management;
Changes in governmental regulations or in the status of our regulatory approvals; and
General market conditions and other factors, including factors unrelated to our own operating performance.
In addition, the stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such public companies. Such fluctuations may be even more pronounced in the future. These broad market and industry factors may seriously harm the market price of our common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities, securities class action litigation has often been instituted against these companies. This type of litigation, if instituted against us, could result in substantial costs and a diversion of our management’s attention and resources.
There is currently a volatile, sporadic and illiquid market for our common stock.
Our securities are currently quoted on the OTC Pink Market maintained by OTC Markets under the symbol “RGMP,” however, we currently have a volatile, sporadic and illiquid market for our common stock, which is subject to wide fluctuations in response to several factors, including, but not limited to:
actual or anticipated variations in our results of operations;
our ability or inability to generate new revenues;
increased competition; and
conditions and trends in the market for our services and products.
Furthermore, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, global epidemics or pandemics, interest rates or international currency fluctuations may adversely affect the market price and liquidity of our common stock.
We have not paid any cash dividends in the past and have no plans to issue cash dividends in the future, which could cause the value of our common stock to have a lower value than other similar companies which do pay cash dividends.
We have not paid any cash dividends on our common stock to date and do not anticipate any cash dividends being paid to holders of our common stock in the foreseeable future. While our dividend policy will be based on the operating results and capital needs of the business, it is anticipated that any earnings will be retained to finance our future expansion. As we have no plans to issue cash dividends in the future, our common stock could be less desirable to other investors and as a result, the value of our common stock may decline, or fail to reach the valuations of other similarly situated companies who have historically paid cash dividends in the past.
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Stockholders may face significant restrictions on the resale of our common stock due to federal regulations of penny stocks.
Our common stock will be subject to the requirements of Rule 15g-9, promulgated under the Exchange Act, as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser’s consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990 also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of Company stockholders to sell their securities in the secondary market.
Sales of our common stock could reduce the price of our stock.
As of the date of this Report, we have 22,950,000 shares of our common stock which were registered under the Securities Act.
Risks relating to the JOBS Act:
The JOBS Act allows us to postpone the date by which we must comply with certain laws and regulations and to reduce the amount of information provided in reports filed with the SEC. We cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.
We are and we will remain an “emerging growth company” until the earliest to occur of (i) the last day of the fiscal year during which our total annual revenues equal or exceed $1.07 billion (subject to adjustment for inflation), (ii) the last day of the fiscal year following the fifth anniversary of our initial public offering (which went effective on April 9, 2018), (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt securities, or (iv) the date on which we are deemed a “large accelerated filer” (with at least $700 million in public float) under the Exchange Act. For so long as we remain an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” as described in further detail in the risk factors below. We cannot predict if investors will find our common stock less attractive because we will rely on some or all of these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We have availed ourselves of certain exemptions from various reporting requirements which are allowed pursuant to the JOBS Act and our reduced disclosure may make it more difficult for investors and securities analysts to evaluate us and may result in less investor confidence.
Our election not to opt out of JOBS Act extended accounting transition period may not make our financial statements easily comparable to other companies.
Pursuant to the JOBS Act, as an “emerging growth company”, we can elect to opt out of the extended transition period for any new or revised accounting standards that may be issued by the Public Company Accounting Oversight Board (PCAOB) or the SEC. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an “emerging growth company”, can adopt the standard for the private company. This may make a comparison of our financial statements with any other public company which is not either an “emerging growth company” nor an “emerging growth company” which has opted out of using the extended transition period difficult or impossible as possible different or revised standards may be used.
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The JOBS Act also allows us to postpone the date by which we must comply with certain laws and regulations intended to protect investors and to reduce the amount of information provided in reports filed with the SEC.
The JOBS Act is intended to reduce the regulatory burden on “emerging growth companies”. The Company meets the definition of an “emerging growth company” and so long as it qualifies as an “emerging growth company,” it will, among other things:
be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting;
be exempt from the “say on pay” provisions (requiring a non-binding stockholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding stockholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of The Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and certain disclosure requirements of the Dodd-Frank Act relating to compensation of Chief Executive Officers;
be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Exchange Act and instead provide a reduced level of disclosure concerning executive compensation; and
be exempt from any rules that may be adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report on the financial statements.
The Company intends to take advantage of all of the reduced regulatory and reporting requirements that will be available to it so long as it qualifies as an “emerging growth company”. The Company has elected not to opt out of the extension of time to comply with new or revised financial accounting standards available under Section 102(b)(1) of the JOBS Act. Among other things, this means that the Company’s independent registered public accounting firm will not be required to provide an attestation report on the effectiveness of the Company’s internal control over financial reporting so long as it qualifies as an “emerging growth company”, which may increase the risk that weaknesses or deficiencies in the internal control over financial reporting go undetected. Likewise, so long as it qualifies as an “emerging growth company”, the Company may elect not to provide certain information, including certain financial information and certain information regarding compensation of executive officers, which it would otherwise have been required to provide in filings with the SEC, which may make it more difficult for investors and securities analysts to evaluate the Company. As a result, investor confidence in the Company and the market price of its common stock may be adversely affected.
Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $250 million and annual revenues of less than $100 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time are we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.
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Our principal office space is located at 600 3rd Ave floor 10, New York, NY 10016. Regnum has occupied this space since April 7, 2021. Vyera Pharmaceuticals, LLC, has provided us the use of approximately 11,000 square feet of office space free of charge.
We consider our current principal office space arrangement adequate for our needs through the next six months, and should it be needed, suitable additional or alternate space will be available to accommodate expansion of the Company’s operations on commercially reasonable terms, although there can be no assurance in this regard.
Although we may, from time to time, be involved in litigation and claims arising out of our operations in the normal course of business, we are not currently a party to any material legal proceeding. In addition, we are not aware of any material legal or governmental proceedings against us or contemplated to be brought against us.
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Market for Common Stock
Our common stock has been quoted on the OTC Pink Market maintained by OTC Markets under the symbol “RGMP” since approximately May 2019. Notwithstanding such quotations, only an extremely limited number of shares of common stock have traded to date and the Company does not believe that high and low bid information relating to the historical trading results of the Company would provide meaningful information to readers. In the calendar year 2020, the Company’s common stock has traded from between $0.06 and $1.50 per share on very limited volume. The market for our common stock is likely to be highly illiquid and sporadic for the foreseeable future.
Holders of Our Common Stock and Preferred Stock
As of August 11, 2021, we had 22,950,000 shares of common stock outstanding, held by 3 stockholders of record, and no shares of Preferred Stock issued or outstanding.
To date, we have not declared or paid any dividends on our outstanding shares. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings to finance our operations and future growth, our Board of Directors will have discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements and other factors, which our Board of Directors may deem relevant.
There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:
We would not be able to pay our debts as they become due in the usual course of business, or;
Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.
Recent Sales of Unregistered Securities
The following discussion of the Company’s historical performance and financial condition should be read together with the financial statements and related notes in “Item 8. Financial Statements and Supplemental Data” of this Report. This discussion contains forward-looking statements based on the views and beliefs of our management, as well as assumptions and estimates made by our management. These statements by their nature are subject to risks and uncertainties, and are influenced by various factors. As a consequence, actual results may differ materially from those in the forward-looking statements. See “Item 1A. Risk Factors” of this report for the discussion of risk factors.
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Plan of Operations
We had working capital of <$50,393> as of December 31, 2020. We anticipate the need for additional funding in order to continue our operations at their current levels, and to pay the costs associated with being a public company. As announced on April 7, 2021, we may also require additional funding in the future to expand or complete acquisitions. In the event we require additional funding, we plan to raise that through the sale of debt or equity, which may not be available on favorable terms, if at all, and may, if sold, cause significant dilution to existing stockholders. If we are unable to access additional capital moving forward, it may hurt our ability to grow and to generate future revenues.
We reiterate that the Company’s business plan changed significantly and materially in April 2021, after the period for which the financial statements presented hereby cover. As a result, these results do not represent the Company’s potential results in the future.
RESULTS OF OPERATIONS
Results of Operations for the Year Ended December 31, 2020 compared to the Year Ended December 31, 2019
We had $9,000 in revenues for the year ended December 31, 2020 and $6,300 for the year ended December 31, 2019. Our revenue change is a result of securing different sources for scripts and a new customer in 2020.
Our operating expenses for the year ended December 31, 2020 were $124,445 which consisted of amortization of intangible assets of $4,808 legal and professional fees of $54,715 and general and administrative expenses of $64,922. For the year ended December 31, 2019, our operating expenses were $41,880 which consisted of amortization of intangible assets of $364, legal and professional fees of $38,151 and general and administrative expenses of $3,365. Our operating expenses are primarily due to normal business operations and increased due to professional fees incurred in listing the Company’s stock and the expense related to granting 1 million shares of Stock to Gary Allen during the first quarter of 2020.
We had a net loss of $117,673 for the year ended December 31, 2020, compared to net loss of $35,580 for the year ended December 31, 2019. The increase in net loss is primarily due to the increase in legal and professional fees and increase in general and administrative expenses.
Liquidity and Capital Resources
The Company’s cash position was $0 at December 31, 2020, compared to $7,444 at December 31, 2019. During 2020, the company’s cash needs were met via payments made on its behalf by Wookey Search Technologies Corporation and Wookey Project Corp, which are related parties of the company and were recorded as accounts payable – related party. As of December 31, 2020, the Company had current assets of $4,500 and current liabilities of $54,893 compared to $7,444 and $800, respectively, as of December 31, 2020. This resulted in working capital of <$50,393> at December 31, 2020, and $6,644 at December 31, 2019.
Net cash used in operating activities amounted to $3,672 for the year ended December 31, 2020, compared to using net cash of $38,851 for the year ended December 31, 2019. This is primarily due to common stock issued for services and accounts payable – related party during the year ended December 31, 2020.
Net cash used in investing activities amounted to $3,772 and $1,000 for the years ended December 31, 2020 and 2019, respectively, solely representing the purchase of intangible assets.
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Net cash provided by financing activities was $0 for the years ended December 31, 2020 and 2019.
We do not currently have any additional commitments or identified sources of additional capital from third parties or from our officers, directors or majority stockholders. Additional financing may not be available on favorable terms, if at all.
In the future, we may be required to seek additional capital by selling additional debt or equity securities, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then stockholders. Financing may not be available in amounts or on terms acceptable to us, or at all. In the event we are unable to raise additional funding and/or obtain revenues sufficient to support our expenses, we may be forced to curtail or abandon our business operations, and any investment in the Company could become worthless.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We monitor our estimates on an on-going basis for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are recorded in the period in which they become known. We base our estimates on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.
Certain of our accounting policies are particularly important to the portrayal and understanding of our financial position and results of operations and require us to apply significant judgment in their application. As a result, these policies are subject to an inherent degree of uncertainty. In applying these policies, we use our judgment in making certain assumption and estimates. Our critical accounting policies are outlined in “Note 1 - Summary of Significant Accounting Policies” to the financial statements included herein.
Critical Accounting Policies:
Emerging Growth Company. Section 107 of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
RECENTLY ISSUED ACCOUNTING STANDARDS
For more information on recently issued accounting standards, see “Note 1 - Summary of Significant Accounting Policies” to the Notes to Financial Statements included herein.
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
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TABLE OF CONTENTS TO FINANCIAL STATEMENTS
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To the Board of Directors and Shareholders
of Regnum Corp.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Regnum Corp. as of December 31, 2020, and the related statements of income, comprehensive income, stockholders’ equity, and cash flows year ended December 31, 2020, and the related notes collectively referred to as the financial statements.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there were no critical audit matters.
We have served as the Company’s auditor since 2020.
Los Angeles, California
July 31, 2021
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Total Current Assets
Total Other Assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accrued taxes payable
Account payable - related party
Total Current Liabilities
Common stock: $0.001 par value, 80,000,000 shares authorized, 23,950.000 shares issued and outstanding, respectively
Additional paid-in capital
Total Stockholders’ Equity
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
The accompanying notes are an integral part of these financial statements.
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For the Years Ended
COST OF SALES
Amortization of intangible assets
Legal and professional fees
General and administrative
Total Operating Expenses
INCOME (LOSS) FROM OPERATIONS
INCOME (LOSS) BEFORE TAXES
INCOME TAX EXPENSE
NET INCOME (LOSS)
BASIC AND DILUTED INCOME PER COMMON SHARE
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
The accompanying notes are an integral part of these financial statements
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Statements of Stockholders’ Equity (Deficit)
Balance, December 31, 2017
Common stock issued for cash
Net income for the year ended December 31, 2018
Balance, December 31, 2018
Net loss for the year ended December 31, 2019
Balance, December 31, 2019
Common shares issued for services rendered
Net loss for the year ended December 31, 2020
Balance, December 31, 2020
The accompanying notes are an integral part of these financial statements.
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Statements of Cash Flows
For the Years Ended
Net income (loss)
Adjustments to reconcile net loss to net cash provided by operating activities:
Common stock issued for services
Amortization of intangible assets
Changes in operating assets and liabilities:
Accrued Taxes Payable
Account payable - related party
Net Cash Provided By (Used In) Operating Activities
Purchase of intangible assets
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Net Cash Used in Investing Activities
NET INCREASE (DECREASE) IN CASH
CASH AT BEGINNING OF PERIOD
CASH AT END OF PERIOD
The accompanying notes are an integral part of these financial statements.
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Nature of Business
Regnum Corp. (“The Company”) was organized on March 31, 2016, under the laws of the State of Nevada. The Company was formed for a primary business purpose of servicing the increasing demand for premium entertainment content and becoming a depository of unpublished intellectual properties for resale with focus on achieving profitability and sustaining business growth. The Company’s business model has been based on acquiring unproduced and unpublished quality intellectual properties at a discount from studios, agencies and production companies for subsequent recycling or production in wide variety of media with the intent to resell back to the entertainment community for a profit.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Basic Loss per Common Share
Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are 80,000,000 common stock shares authorized at $0.001 par value and 23,950,000 shares of common stock outstanding as of December 31, 2020. The Company had no potential dilutive shares of common stock as of December 31, 2020.
The basis is accounting principles generally accepted in the United States of America. The Company has adopted a December 31 fiscal year-end.
Cash and Cash Equivalents
Cash and cash equivalents include cash in banks and financial instruments which mature within six months of the date of purchase.
Revenues from the sale of intellectual property are recognized when persuasive evidence of an arrangement exists, the intellectual property has been delivered or is made available for delivery, the customer can begin the use of the intellectual property, the fee is fixed or determinable and collectability is reasonably assured, which is generally upon execution of a purchase agreement and delivery of the intellectual property.
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
The Company capitalizes the costs of acquiring intellectual property. The Company amortizes these costs over the costs in the same expected ratio as the associated ultimate revenue.
Impairment of Long-Lived Assets
The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.
The Company provides for income taxes under ASC 740, Accounting for Income Taxes. ASC 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax basis of assets and liabilities and the tax rates in effect when these differences are expected to reverse.
ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
If applicable, the Company would classify interest and penalties related to uncertain tax positions in income tax expense. Through December 31, 2020, there has been no interest expense or penalties related to unrecognized tax benefits.
Recent Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09 “Revenue from Contracts with Customers” which supersedes the most current revenue recognition requirements. This ASU requires entities to recognize revenue in a way that depicts the transfer of goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange for those goods or services. The Company adopted the pronouncement under the modified retrospective method of transition in the first quarter of 2018. The adoption of the new standard did not have a material effect on the overall timing or amount of revenue recognized.
Management has considered all recent accounting pronouncements issued since the last audit of the Company’s financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.
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2. GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a limited operating history and has not yet established strong liquidity or a reliable ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern over an extended period of time. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until its operations become established enough to be considered reliably profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. These factors raise substantial doubts about the Company’s ability to continue as a going concern for one year from the issuance date from these financial statements. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
3. STOCKHOLDERS’ EQUITY
As of December 31, 2020, the Company has authorized 80,000,000 shares of $0.001 par value common stock, of which 23,950,000 shares are issued and outstanding.
On March 3, 2020, the Company issued 1,000,000 shares of common stock for services rendered. The shares were valued at $0.06 per share, based upon the market closing price on the date of issuance.
4. RELATED PARTY TRANSACTIONS
During the year ended December 31, 2020, the Company paid $6,877 to its President and Chief Executive Officer as compensation for executive services rendered through March 31, 2020. Additionally, Wookey, a related party, made $48,570 in payments on behalf of the Company for trade accounts payable during the year ended December 31, 2020
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5. INCOME TAXES
Income tax expense consists of the following:
Income tax expense differed from the amounts computed by applying the U.S. federal statutory tax rate applicable to the Company’s level of pretax income as a result of the following:
Federal tax at statutory rate
State taxes, net of federal benefit
Net operating loss carryforward
For the years ended December 31, 2020 and 2019, revenues consisted of sales to six and five customers, respectively.
7. SUBSEQUENT EVENTS
On April 7, 2021, Wookey Technologies Corporation, a Delaware corporation, the previous majority shareholder of the Company, entered into a stock purchase agreement for the sale of 20,000,000 shares of Common Stock of the Company, to Phoenixus AG, an accredited investor. Phoenixus AG also acquired an additional 2,680,000 shares of common stock from three minority shareholders. In connection with the sale of such shares, an aggregate of 1,000,000 shares of common stock held by Gary Allen were returned to the Company for cancellation. As a result of the acquisition of 22,680,000 shares of common stock and the cancellation of 1,000,000 shares, Phoenixus AG holds approximately 99% of the issued and outstanding shares of Common Stock of the Company, and as such it is able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company.
On May 13, 2021, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SevenScore Pharmaceuticals, LLC, a Delaware limited liability company (“SevenScore”).
The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, (a) SevenScore will be merged with and into the Company (the “Merger”), with the Company being the surviving corporation in the Merger, and, (b) at the effective time of the Merger (the “Effective Time”), membership interests in SevenScore will be converted into the right to receive an aggregate of 25,878,168 shares of common stock of the Company (the “Merger Consideration”). Each SevenScore membership interest shall by virtue of the Merger and without any action on the part of the holder thereof, be automatically converted into and exchangeable for a fraction of a fully paid and nonassessable share of the Company’s Common Stock equal to one multiplied by a fraction obtained by dividing (A) 25,878,168 by (B) 26,128,168 (the “Exchange”).
In accordance with SFAS 165 Company management reviewed all material events through the date of this report and there are no additional material subsequent events to report.
Also, on April 7, 2021, Mark Gustavson, Chief Executive Officer, Secretary and Director of the Company, and Ross Meador, Vice President and General Counsel of the Company, resigned their positions with the Company. Upon such resignations, Anne Kirby was appointed as Chief Executive Officer, President and sole Director. Rob Stubblefield remains the Chief Financial Officer of the Company.
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Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and that such information is accumulated and communicated to management, including the Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Annual Report on Form 10-K, our management, with the participation of our Principal Executive Officer and Principal Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2019, as required by Rule 13a-15 of the Exchange Act. Based on the evaluation described above, our management, including our Principal Executive Officer and Principal Financial Officer, concluded that, as of December 31, 2019, our disclosure controls and procedures were not effective.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act and is a process designed by, or under the supervision of, our \ Principal Executive Officer and Principal Financial Officer and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Based on its evaluation, our management has concluded that, as of December 31, 2019, our internal controls over financial reporting were not effective, due to the same material weaknesses that rendered our disclosure controls and procedures ineffective. The Company’s internal control over financial reporting was not effective during 2019 due to a lack of sufficient resources to hire a support staff in order to separate duties between different individuals. During 2019, the Company lacked the appropriate personnel to handle all the varying recording and reporting tasks on a timely basis. The Company has begun to address these material weaknesses as resources become available by hiring additional professional staff, such as a Chief Financial Officer, which was appointed on February 27, 2020, outsourcing certain aspects of the recording and reporting functions, and separating responsibilities.
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We are a smaller reporting company and are exempt from the requirement for an attestation report on the Company’s internal controls over financial reporting by our registered public accounting firm.
Limitations on the Effectiveness of Controls
The Company’s disclosure controls and procedures are designed to provide the Company’s Principal Executive Officer and Principal Financial Officer with reasonable assurances that the Company’s disclosure controls and procedures will achieve their objectives. However, the Company’s management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within the Company are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and such design may not succeed in achieving its stated objectives under all potential future conditions.
Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over financial reporting during the year ended December 31, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Information about our Executive Officers and Directors
The following table sets forth the name, age and position of each director and executive officer of the Company. The officers and director of the Company are as follows:
Chief Executive Officer, President and Director
April 7, 2021
Robert J. Stubblefield
Chief Financial Officer and Treasurer
Our director(s) and any additional directors we may appoint in the future are elected annually (or as often as we hold meetings of shareholders) and will hold office until our next annual meeting of the shareholders and until their successors are elected and qualified. Officers will hold their positions at the pleasure of the Board of Directors, absent any employment agreement. Our officers and directors may receive compensation as determined by us from time to time by vote of the Board of Directors. Such compensation might be in the form of stock or stock options. Directors may be reimbursed by the Company for expenses incurred in attending meetings of the Board of Directors. Vacancies in the Board are filled by majority vote of the remaining directors.
The business experience of the person listed above is as follows:
Anne Kirby, Chief Executive Officer, President and Director
Anne Kirby was appointed as the Company’s Chief Executive Officer, President and Director on April 7, 2021. Ms. Kirby has worked in commercial roles in the pharmaceutical industry for seventeen years. From October of 2018 until April of 2021, she served as the Executive Vice President of Commercial & Operations, where she led Marketing, Sales, Market Access and Commercial Operations for Vyera Pharmaceuticals. Previously, Ms. Kirby served as the Director of Trade and Distribution with a focus on optimizing channel strategy for rare disease products. She has also held various Sales and Marketing positions at Pfizer, Amgen, CNS Therapeutics (acquired by Mallinckrodt) and Innerspace Neuro Solutions. Ms. Kirby holds a Masters in Business Administration and a Bachelors of Science in Marketing from the University of Akron.
Robert J. Stubblefield, Chief Financial Officer and Treasurer
Robert Stubblefield has served as the Company’s Chief Financial Officer and Treasurer since February 27, 2020. Since February of 2019, Mr. Stubblefield has served as the Chief Financial Officer of Sherpa Digital Media Inc., a company providing a platform for secure live and on-demand enterprise video communications based in San Mateo, California. From November of 2017 to January of 2019, Mr. Stubblefield served on a contract basis as the Chief Financial Officer of Opya, Inc., a company providing clinical services to autistic children and youth and developing software and digital tools to help clinicians and parents create the best outcomes. Prior to that, from July 2016 to June 2017, Mr. Stubblefield served as the Chief Financial Officer and Chief Operating Officer of Job science, Inc., a company providing staffing and recruitment software based in San Francisco, California. From 2014 to June of 2016, Mr. Stubblefield served as a contract Chief Financial Officer and Vice President of Finance to multiple start-ups and a growth company including Rafter, Inc. (September 2014 to November 2015), a venture capital-backed managed services growth company providing textbooks and courseware for higher education with four lines of business with both B2B and B2C revenue. From 2013 to 2014, Mr. Stubblefield served as the Chief Financial Officer of Findly Talent LLC, a private equity-backed provider of SaaS-based recruiting and talent management applications located in San Francisco, California. From 2006 to 2012, Mr. Stubblefield served as the Senior Director of Finance (2006-2008), Vice President of Finance (2008-2010) and Chief Financial Officer and Corporate Secretary (2010-2012) of Qumu, Inc., a venture capital-backed early stage enterprise software company offering perpetual, SaaS and appliance licensing models located in San Bruno, California. From 2001 to 2006, Mr. Stubblefield served as the Director of Sales Operations for iManage Inc. (purchased by Interwoven in 2003) and Interwoven, Inc., both of which were publicly-traded enterprise software companies with a perpetual license model located in Foster City and Santa Clara California, respectively. Prior to that, he provided services as a Controller of Sales and Professional Services (Mycio.com/Network Associates); as Division Finance Officer and Controller (Wells Fargo Bank N.A. - San Francisco, California), and served as an Audit Supervisor (Hemming Morse, Inc. in San Francisco, California). Mr. Stubblefield obtained his Bachelors of Science degree in Business Administration from California State University, East Bay (Hayward, California) with a focus in accounting.
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Board Leadership Structure
Our Board of Directors has the responsibility for selecting the appropriate leadership structure for the Company. In making leadership structure determinations, the Board of Directors considers many factors, including the specific needs of the business and what is in the best interests of the Company’s shareholders. Currently the Board of Directors has determined not to appoint a Chairman of the Board of Directors.
Effective risk oversight is an important priority of the Board of Directors. Because risks are considered in virtually every business decision, the Board of Directors discusses risk throughout the year generally or in connection with specific proposed actions. The Board of Directors’ approach to risk oversight includes understanding the critical risks in the Company’s business and strategy, evaluating the Company’s risk management processes, allocating responsibilities for risk oversight, and fostering an appropriate culture of integrity and compliance with legal responsibilities. The directors exercise direct oversight of strategic risks to the Company.
Arrangements between Officers and Directors
To our knowledge, there is no arrangement or understanding between any of our officers and any other person, including directors, pursuant to which the officer was selected to serve as an officer.
No director of the Company is also a director of issuers with a class of securities registered under Section 12 of the Exchange Act (or which otherwise are required to file periodic reports under the Exchange Act).
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors or executive officers were involved in any of the following during the past ten years: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being a named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, (5) being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (i) any Federal or State securities or commodities law or regulation; (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (6) being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
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Committees of the Board
Our Company currently does not have nominating, compensation or audit committees or committees performing similar functions, nor does our Company have a written nominating, compensation or audit committee charter. Our sole Director believes that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by our Board of Directors.
Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. Our sole Director believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.
Board meetings; annual meeting attendance
In 2020, the Board of Directors met in February and March in connection with the acquisition of the company by Tri Capital Energy and the transition to new corporate officers. Meetings were attended by the Directors including Ms. Jones, Mr. Allen, and Mr. Gustavson. There were no meetings held during the remainder of 2020
Shareholder Communications with the Board
A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our Board of Directors at 600 3rd Ave Floor 10, New York, NY 10016, who, upon receipt of any communication other than one that is clearly marked “Confidential,” will note the date the communication was received, open the communication, make a copy of it for our files and promptly forward the communication to the director(s) to whom it is addressed. Upon receipt of any communication that is clearly marked “Confidential,” our secretary will not open the communication, but will note the date the communication was received and promptly forward the communication to the director(s) to whom it is addressed.
The Company promotes accountability for adherence to honest and ethical conduct and strives to be compliant with applicable governmental laws, rules and regulations.
In lieu of an Audit Committee, the Company’s Board of Directors is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Board of Directors reviews the Company’s internal accounting controls, practices and policies.
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Our common stock is currently quoted on the OTC Pink Market maintained by OTC Markets. The OTC Pink Market does not require us to have independent members of our Board of Directors. We do not identify the members of our Board of Directors as being independent.
As described above, we do not currently have a separately designated audit, nominating or compensation committee.
Code of Ethics and Code of Conduct
We have not adopted a Code of Ethics, as required by Sections 406 and 407 of the Sarbanes-Oxley Act of 2002. Our management believes that the size of our company and current operations at this time do not require a code of ethics to govern the behavior of our officer. We anticipate that we will adopt a code of ethics once we are in a position to do so.
Delinquent Section 16(a) Reports
Not applicable as the Company does not have any securities registered under Section 12 of the Exchange Act.
The following table sets forth information concerning the compensation of (i) all individuals serving as our principal executive officer or acting in a similar capacity during the last completed fiscal year (“PEO”), regardless of compensation level; (ii) our two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year, if any; and (iii) up to two additional individuals for whom disclosure would have been provided pursuant to paragraph (ii) but for the fact that the individual was not serving as an executive officer at the end of the last completed fiscal year (collectively, the “Named Executive Officers”).
Summary Compensation Table*
Name And Principal Position
Mark J. Gustavson, CEO
Ross Meador, VP & GC
Robert J. Stubblefield, CFO
Tiffany Jones, Former CEO
We do not provide our officers or employees with pension, stock appreciation rights, long-term incentive, profit sharing, retirement or other plans, although we may adopt one or more of such plans in the future.
We do not maintain any life or disability insurance on any of our officers.
We do not have any outstanding options, warrants or other securities which provide for the issuance of additional shares of our common stock as compensation for services of directors or officers.
No officer or director has received annual compensation since the inception of the Company. There has been no compensation awarded to, earned by, or paid to the named executive officer or director.
As our business progresses and grows, we expect to hire and begin paying salaries to other officers and directors. We also expect to hire part-time and full-time employees and consultants who will be paid compensation and consulting fees.
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Employee Pension, Profit Sharing or other Retirement Plans
We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.
At present we do not pay our Director for attending meetings of our Board of Directors, although we may adopt a director compensation policy in the near future.
Equity Compensation Plan Information - Employment Agreements
The Company’s policy is to not establish employment agreements, and no employment agreements were in place on December 31, 2020 or through the date of this report.
The following table presents certain information regarding the beneficial ownership of all shares of common stock as of August 11, 2021 by (i) each person who owns beneficially more than five percent (5%) of the outstanding shares of common stock based on 22,950.000 shares outstanding as of August 2, 2021, (ii) each of our directors, (iii) each named executive officer and (iv) all directors and officers as a group. Except as otherwise indicated, all shares are owned directly.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting and/or investing power with respect to securities. We believe that, except as otherwise noted and subject to applicable community property laws, each person named in the following table has sole investment and voting power with respect to the shares of common stock shown as beneficially owned by such person. Additionally, shares of common stock subject to options, warrants or other convertible securities that are currently exercisable or convertible, or exercisable or convertible within 60 days of December 31, 2020, are deemed to be outstanding and to be beneficially owned by the person or group holding such options, warrants or other convertible securities for the purpose of computing the percentage ownership of such person or group, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or group.
We believe that, except as otherwise noted and subject to applicable community property laws, each person named in the following table has sole investment and voting power with respect to the shares of common stock shown as beneficially owned by such person. Unless otherwise indicated, the address for each of the officers or directors listed in the table below is 600 3rd Ave Floor 10, New York, NY 10016
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Robert J. Stubblefield
All of the officers and director as a group (two persons)
Phoenixus AG (1)
Address is Haldenstreasse 6, 6340 Baar, Switerzland
Change in Control Arrangements
On February 5, 2020, Ocean Ave Holdings, LLC which is owned and controlled by Ms. Jones, our former sole officer and director, sold 20,000,000 shares of restricted common stock of the Company in consideration for $345,000, to Tri Capital Energy Corporation (“Tri Capital”), pursuant to an Agreement for the Purchase of Common Stock. The shares which were sold represented 87% of the Company’s then outstanding shares, which resulted in a change of control of the Company.
On April 7, 2021, Wookey Technologies Corporation, a Delaware corporation, the previous majority shareholder of the Company, entered into a stock purchase agreement for the sale of 20,000,000 shares of Common Stock of the Company, to Phoenixus AG, an accredited investor. Phoenixus AG also acquired an additional 2,680,000 shares of common stock from three minority shareholders. In connection with the sale of such shares, an aggregate of 1,000,000 shares of common stock held by Gary Allen were returned to the Company for cancellation. As a result of the acquisition of 22,680,000 shares of common stock, and the cancellation of 1,000,000 shares, Phoenixus AG holds approximately 99% of the issued and outstanding shares of Common Stock of the Company, and as such it is able to unilaterally control the election of our board of directors, all matters upon which shareholder approval is required and, ultimately, the direction of the Company
Equity Compensation Plan Information
We have no equity compensation plans or outstanding options or restricted stock.
To the best of the Company’s knowledge, there have been no transactions since January 1, 2017, and there is not currently any proposed transaction, in which the Company was or is to be a participant, where the amount involved exceeds the lesser of $120,000 or one percent of the average of the Company’s total assets at year end, for the last two completed fiscal years, and in which any officer, director, or any shareholder owning greater than five percent (5%) of our outstanding voting shares, nor any member of the above referenced individual’s immediate family, had or will have a direct or indirect material interest, except as disclosed below or as set forth above under “Item 1. Business” – “Recent Transactions and Changes of Control”, which information and disclosures are incorporated in this Item 13. Certain Relationships and Related Transactions and Director Independence by reference in their entirety.
During the year ended December 31, 2019, the Company paid $1,325 to its sole officer and director, Tiffani Jones, as a full reimbursement for advances made to the Company and organizational expenses paid for on the Company’s behalf in 2016.
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Currently, none of the member(s) of the Board of Directors are considered “independent” board members.
Conflict of Interest
The officers and directors of the Company are not involved in other business activities but may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The policy of the Board is that any personal business or corporate opportunity incurred by an officer or director of the Company must be examined by the Board and turned down by the Board in a timely basis before an officer or director can engage or take advantage of a business opportunity which could result in a conflict of interest.
The following table sets forth the aggregate fees paid during the years ended December 31, 2020 and 2019 for professional services rendered by Boyle CPA, LLC, our independent public accountant, for the audit and reviews of our financial statements for the periods ended March 31, June 30, September 30, and December 31, 2019 and 2018:
Accounting Fees and Services
Audit Related Fees
All Other Fees
The category of “Audit Fees” includes fees for our annual audit and services rendered in connection with regulatory filings with the SEC, such as the issuance of comfort letters and consents.
The category of “Audit-related Fees” includes employee benefit plan audits, internal control reviews and accounting consultation.
All above audit services and audit-related services were pre-approved by the Board of Directors, which concluded that the provision of such services by all parties was compatible with the maintenance of the respective firm’s independence in the conduct of its audits.
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(a) Documents filed as part of this Annual Report:
The following is an index of the financial statements, schedules and exhibits included in this Form 10-K or incorporated herein by reference.
(1) Financial Statements
(2) Financial Statement Schedules
See the Exhibit Index following the signature page to this Annual Report on Form 10-K for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 11, 2021
/s/ Anne Kirby
Chief Executive Officer
(Principal Executive Officer)
Date: August 11, 2021
/s/ Robert J. Stubblefield
Robert J. Stubblefield
Chief Financial Officer
(Principal Accounting/Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Anne Kirby
/s/ Robert J. Stubblefield
Chief Executive Officer
(Principal Executive Officer)
Robert J. Stubblefield
Chief Financial Officer
August 11, 2021
August 11, 2021
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XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Definition Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase
* Filed herewith.
** Furnished herewith.
(1) Filed as an exhibit to the Company’s Registration Statement on Form S-1 on December 15, 2017.
(2) Filed as an exhibit to the Form 10-Q, filed on May 9, 2018 and incorporated herein by reference.
(3) Filed as an Exhibit to the Form 8-K, filed May 15, 2018 and incorporated herein by reference.
(4) Filed as an Exhibit to the Form 8-K, filed on June 6, 2018 and incorporated herein by reference.
(5) Filed as an Exhibit to the Form 8-K, filed on June 29, 2018 and incorporated herein by reference.
(6) Filed as an Exhibit to the Form 8-K, filed on October 2, 2018 and incorporated herein by reference.
(7) Filed as an Exhibit to the Form 8-K, filed on December 3, 2018 and incorporated herein by reference.
(8) Filed as an Exhibit to the Form 8-K, filed on December 31, 2018 and incorporated herein by reference.
(9) Filed as an Exhibit to the Form 8-K, filed on March 6, 2019 and incorporated herein by reference.
(10) Filed as an Exhibit to the Form 8-K, filed on May 17, 2019 and incorporated herein by reference.
(11) Filed as an Exhibit to the Form 8-K, filed on August 22, 2019 and incorporated herein by reference.
(12) Filed as an Exhibit to the Form 8-K, filed on September 25, 2019 and incorporated herein by reference.
(13) Filed as an Exhibit to the Form 8-K, filed on December 18, 2019 and incorporated herein by reference.
(14) Filed as an Exhibit to the Form 8-K, filed on March 31, 2020 and incorporated herein by reference.