As confidentially submitted to the Securities and Exchange Commission on February 16, 2021, pursuant to the Jumpstart our Business Startups Act of 2012.
Registration Statement No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RETINALGENIX TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
| Delaware | 3841 | 82-3936890 | ||
| (State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
1450 North McDowell Boulevard, Suite 150
Petaluma, CA 94954
(415) 578-9583
(Address and telephone number of registrant’s principal executive offices)
Jerry Katzman
Chief Executive Officer
Retinalgenix Technologies Inc.
1450 North McDowell Boulevard, Suite 150
Petaluma, CA 94954
(415) 578-9583
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Richard Friedman, Esq.
Nazia J. Khan, Esq.
Sheppard, Mullin, Richter & Hampton LLP
30 Rockefeller Plaza
New York, NY 10112-0015
Tel.: (212) 653-8700
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] | Non-accelerated filer [X] | Smaller reporting company [X] | |||
| Emerging growth company [X] |
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 to Section 7(a)(2)(B) of the Securities Act. [X]
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered | Shares to be Registered (1) | Proposed Maximum Aggregate Offering Price per Security (2) | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee | ||||||||||||
| Common Stock, par value $0.0001 | 2,558,661 | $ | (2) | $ | $ | |||||||||||
| Shares of Common Stock, par value $0.0001, underlying Warrants (3) | 61,500 | $ | (4) | $ | $ | |||||||||||
| Shares of Common Stock par value $0.0001 underlying Options (5) | 6,146,000 | (6) | ||||||||||||||
| TOTAL | $ | $ | $ | |||||||||||||
(1) Pursuant to Rule 416, there are also being registered such additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions as a result of the anti-dilution provisions contained in the warrants.
(2) This offering price is solely for the purpose of calculating the registration fee in accordance with Rule 457 under the Securities Act of 1933, as amended (the “Act”) and is based, in part, upon the last private sale of the Company’s common stock.
(3) Shares issuable upon exercise of warrants held by selling stockholders.
(4) Pursuant to Rule 457(g) under the Act, the offering price is based upon the average exercise price.
(5) Shares issuable upon exercise of options held by selling stockholders.
(6) Pursuant to Rule 457(g) under the Act, the offering price is based upon the average exercise price.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or jurisdiction where the offer or sale is not permitted.
| PRELIMINARY PROSPECTUS | SUBJECT TO COMPLETION | DATED February 16, 2021 |
8,766,561 Shares of Common Stock
This prospectus relates to the sale by the selling stockholders named in this prospectus (the “Selling Stockholders”) of Retinalgenix Technologies Inc. (the “Company”) of 8,766,561 shares of common stock, par value $0.0001 per share, including 2,558,661 outstanding shares of common stock 6,146,400 shares of common stock issuable upon exercise of outstanding options and 61,500 shares of common stock issuable upon exercise of outstanding warrants (collectively, the “Resale Shares”). We will not receive any of the proceeds from the sale by Selling Stockholders of the Resale Shares. However, we will receive proceeds from the exercise of the warrants if they are exercised for cash by the Selling Stockholders.
The Selling Stockholders will sell their Resale Shares at $1.00 per share until our shares are quoted on the OTCQB, OTCQX or listed on a national securities exchange, such as the NYSE American or The Nasdaq Capital Market, and thereafter at prevailing market prices or in privately negotiated transactions. We provide more information about how a Selling Stockholder may sell its Resale Shares in the section titled “Plan of Distribution” on page 29. We intend to apply to list our common stock on the OTCQB under the symbol “RTNL,” if available; however, no assurance can be given that our application will be approved or that a public trading market for our common stock will ever develop.
The Selling Stockholders and any broker-dealers that participate in the distribution of the securities may be deemed to be “underwriters” as that term is defined in Section 2(a)(11) of the Securities Act of 1933, as amended.
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and may elect to comply with certain reduced public company reporting requirements. See the section titled “Implications of Being an Emerging Growth Company.”
Investing in our securities is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading “Risk Factors” beginning on page 9 of this prospectus before making a decision to purchase our securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is , 2021.
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ABOUT THIS PROSPECTUS
In this prospectus, unless the context suggests otherwise, unless otherwise noted, references to “the Company,” “we,” “us,” and “our” refer to Retinalgenix Technologies Inc.
This prospectus describes the specific details regarding this offering and the terms and conditions of the securities being offered hereby and the risks of investing in our securities. You should read this prospectus, any free writing prospectus and the additional information about us described in the section entitled ‘‘Where You Can Find More Information’’ before making your investment decision.
Neither we, nor any of our officers, directors, agents, representatives or underwriters, make any representation to you about the legality of an investment in our securities. You should not interpret the contents of this prospectus or any free writing prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our securities.
ADDITIONAL INFORMATION
You should rely only on the information contained in this prospectus and in any accompanying prospectus supplement. No one has been authorized to provide you with different or additional information. The securities are not being offered in any jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of such documents.
TRADEMARKS AND TRADE NAMES
This prospectus includes trademarks which are protected under applicable intellectual property laws and are our property. This prospectus also contains trademarks, service marks, trade names and/ or copyrights of other companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the respective owners of the trademarks and trade names will not assert, to the fullest extent under applicable law, their rights thereto.
INDUSTRY AND MARKET DATA
Unless otherwise indicated, information contained in this prospectus concerning our industry and the markets in which we operate, including market position and market opportunity, is based on information from our management’s estimates, as well as from industry publications and research, surveys and studies conducted by third parties. The third-party sources from which we have obtained information generally state that the information contained therein has been obtained from sources believed to be reliable, but we cannot assure you that this information is accurate or complete. We have not independently verified any of the data from third-party sources nor have we verified the underlying economic assumptions relied upon by those third parties. Similarly, internal company surveys, industry forecasts and market research, which we believe to be reliable, based upon management’s knowledge of the industry, have not been verified by any independent sources. Our internal company surveys are based on data we have collected over the past several years, which we believe to be reliable. Management estimates are derived from publicly available information, our knowledge of our industry, and assumptions based on such information and knowledge, which we believe to be reasonable and appropriate. However, assumptions and estimates of our future performance, and the future performance of our industry, are subject to numerous known and unknown risks and uncertainties, including those described under the heading “Risk Factors” in this prospectus and those described elsewhere in this prospectus. These and other important factors could result in our estimates and assumptions being materially different from future results. You should read the information contained in this prospectus completely and with the understanding that future results may be materially different and worse from what we expect. See the information included under the heading “Cautionary Note Regarding Forward-Looking Statements.”
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TABLE OF CONTENTS
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The following summary is qualified in its entirety by, and should be read together with, the more detailed information and financial statements and related notes thereto appearing elsewhere in this prospectus. Before you decide to invest in our securities, you should read the entire prospectus carefully, including the risk factors and the financial statements and related notes included in this prospectus.
Unless the context indicates or otherwise requires, the “Company,” “we,” “us,”, “our” “Retinalgenix” or the “Registrant” refer to Retinalgenix Technologies Inc., a Delaware corporation.
Business Overview
We are an ophthalmic research and development company focused on developing technologies to screen, monitor, diagnose and treat ocular, optical, and sight-threatening disorders. Our mission is to prevent vision loss and blindness due to diabetic retinopathy and maculopathy through two devices: (1) Retinal Imaging Screening Device, a portable, retinal imaging system providing a 200-degree field of view without requiring pupil dilation; and (2) RetinalCamTM, a home monitoring and imaging device offering real-time communication with physicians available 24/7.
One of the effects of diabetes is retinopathy, and subsequent diabetic maculopathy, characterized by loss of visual function through occlusion of image transmission externally, internally or by destruction of the image sensors in the macula themselves. The macula contains the majority and highest density of color and vision light sensors with providing maximum visual image resolution. Signals are passed through the retinal nerve fiber layer to the optic nerve, an extension of the brain, accumulating retinal nerve bundles forming trunks of connections to pass signals to the brain. The final images pass via the occipital lobe, then processed by the brain. When the retina degenerates on itself, as a degenerative process, patients experience loss of vision due to bleeding, retinal detachment, and other factors. Retinopathy in diabetes can also lead to a degenerative maculopathy, a progressive disease that can lead to vision loss and permanent blindness. Early detection for all causes of visual loss leading to macula disruption, destruction and occlusion are critical in preventing blindness in any form, and most importantly where progression is possible. We believe if detected early and properly treated, the progression of retinopathy can be slowed or even stopped, so that vision can be maintained.
Currently, the standard of care requires patients physically go into an office to have their pupil dilated, which, among other things, is costly, time consuming and may cause the patient discomfort. Instead of dilating pupils, some physicians opt to instead use a microscope-like device to detect early signs of diabetic retinopathy, but most such devices have a fixed field of view, typically between 20 to 50 degrees and therefore, because the limited field of view does not allow view of the periphery, where retinopathy typically begins, may not detect signs of retinopathy. By the time the retinopathy reaches the center of the eye and can be seen by such instruments with a limited field of view, it can be too late to treat and may result in blindness. Currently, the only way for a physician to see changes in the periphery of the eye is by an exam after dilation through use of an instrument that has a 200 degree field of view. A patient, when seen without a dilated eye exam, may be misled to believe there is no evidence of retinopathy during the early stages, because without dilation, such diagnosis can be easily missed.
We have developed two products aimed at preventing loss of vision. Specifically, we have developed: (1) the RetinalGeniXTM Imaging System, a mass retinal imaging screening device; and (2) the RetinalCamTM, an in-home retinal monitoring, imaging, and physician alert system.
RetinalGeniXTM Imaging System – Mass Retinal Imaging Screening Device
RetinalGeniXTM Imaging System (“RetinalGeniXTM) is a patented portable mass retinal imaging screening device with a high resolution 200-degree field of view. It is intended to be a cost-effective, ultra-wide imaging technology used to examine the periphery of the retina, without the need for dilation. It can also be used to screen patients for neurological diseases n and detect early signs of diabetic retinopathy. We believe RetinalGeniXTM may detect a variety of health issues including diabetes, retinopathy, ocular tumors, Alzheimer’s and autoimmune diseases, without the discomfort associated with pupil dilation. We believe RetinalGeniXTM will enable ophthalmologists, retinal specialists and optometrists to perform a more accurate screening and with an improved field of view.
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RetinalCamTM – In-Home Retinal Monitoring, Imaging, and Physician Alert System
RetinalCamTM is a patented in-home ocular and retinal monitoring device. On a real time basis and from their homes, individuals at high risk of vision loss or blindness can alert their physician of any vision changes. The images may provide critical information in detecting abnormalities upon onset, potentially preventing degradation of a patient’s ocular health that might result in vision loss or blindness, if left untreated. The device connects directly to the internet or uses Wi-Fi to capture and transmit high resolution digital images directly to their doctors from the patients home. Patients at risk include those with obesity, diabetes, cardiovascular disorders, macular degeneration, neurological disorders, ocular tumors, physical disabilities and individuals that lack regular access to eye. The images captured by RetinalCamTM may provide patients with the opportunity to detect if any changes have occurred since their prior screenings.
We believe RetinalCamTM may offer an opportunity to prevent blindness by early detection or progression in high-risk individuals. We believe, future treatments targeted at COVID-19 may have toxic effects on the macula, which would result in an increased need for close monitoring of patients ocular health. In July 2020, a study published in the European Association for the Study of Diabetes Journal, reported 46% of COVID-19 patients with diabetic maculopathy experienced vascular changes in the retina periphery. We anticipate the high incidence of microvascular changes may demonstrate a potential sign of the severity and a risk factor for death in COVID-19 patients with diabetic maculopathy.
Risks Associated with Our Business
| ● | We have generated no revenue from commercial sales to date and our future profitability is uncertain. If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development. | |
| ● | There is substantial doubt about our ability to continue as a going concern. | |
| ● | Our revenues from sales of our products will be dependent upon market acceptance and pricing and reimbursement guidelines, and if we do not achieve market acceptance of our products or pricing and reimbursement levels are inadequate to achieve profitability, our operations will suffer. | |
| ● | Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop. | |
| ● | Our intellectual property may not be sufficient to protect our products from competition, which may negatively affect our business. | |
| ● | We are subject to stringent domestic and foreign medical device regulations. Our failure to obtain and maintain clearances or approvals or any regulatory action against us may materially and adversely affect our financial condition and business operations. | |
| ● | If we fail to develop and successfully introduce new products and applications or fail to improve our existing products, our business prospects and operating results may suffer. | |
| ● | Our shares of common stock are not publicly traded and there can be no assurance that there will be an active market for our shares of common stock in the future. | |
| ● | As of February 1, 2021, our directors, executive officers and principal stockholders, and their respective affiliates, beneficially own approximately 27.37% of our outstanding shares of common stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to our stockholders for approval. | |
| ● | Our First Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. |
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Corporate Information
We were incorporated in Delaware on November 17, 2017. Our principal executive offices are located at 1450 North McDowell Boulevard, Suite 150, Petaluma, CA 94954 and our telephone number is (415) 578-9583. Our website address is https://retinalgenix.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our securities.
Implications of Being an Emerging Growth Company
We qualify as an emerging growth company as defined in the Jumpstart our Business Startups Act of 2012 (“JOBS Act”). As an emerging growth company, we expect to take advantage of reduced reporting requirements that are otherwise applicable to public companies. These provisions include, but are not limited to:
| ● | being permitted to present only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure in this prospectus; | |
| ● | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley”); | |
| ● | reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and | |
| ● | exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. |
We may use these provisions until the last day of our fiscal year following the fifth anniversary of the completion of our initial public offering. However, if certain events occur prior to the end of such five-year period, including if we become a “large accelerated filer,” our annual gross revenues exceed $1.07 billion or we issue more than $1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period.
As an emerging growth company, we intend to take advantage of an extended transition period for complying with new or revised accounting standards as permitted by the JOBS Act. To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (i) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (ii) scaled executive compensation disclosures; and (iii) the requirement to provide only two years of audited financial statements, instead of three years.
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THE OFFERING
| Common stock offered by Selling Stockholders: | shares of common stock, par value $0.0001 per share, which includes outstanding shares of common stock and shares of common stock issuable upon exercise of warrants (collectively, the “Resale Shares”). | |
| Offering price: | The Selling Stockholders will sell their Resale Shares at $1.00 per share until our shares are quoted on the OTCQB, OTCQX or listed on a national securities exchange, such as the NYSE American or The Nasdaq Capital Market, and thereafter at prevailing market prices or in privately negotiated transactions. | |
| Common stock outstanding: | 2,558,661 shares | |
| Use of proceeds: | We will not receive any of the proceeds from the sale of the Resale Shares by the Selling Stockholders. Any proceeds received from the exercise of warrants by Selling Stockholders will be used by us for working capital purposes. See “Use of Proceeds.” | |
| Risk factors: | An investment in our securities involves a high degree of risk and could result in a loss of your entire investment. Prior to making an investment decision, you should carefully consider all of the information in this prospectus and, in particular, you should evaluate the risk factors set forth under the caption “Risk Factors” beginning on page 9. | |
| Market for our common stock: | There is currently no market for our securities. Our common stock is not currently listed for trading on any exchange. It is our intention to seek quotation on the OTCQB; however, there can be no assurance that our common stock will be approved for trading on the OTCQB or any other trading exchange. |
The number of shares of common stock outstanding is based on 46,041,327 shares of common stock issued and outstanding as of February 1, 2021 and excludes as of that date:
| ● | 61,500 shares of common stock issuable upon exercise of warrants with an exercise price of $0.0001 per share; | |
| ● | 6,146,400 shares of common stock issuable upon exercise of options with an exercise price of $0.0001 per share; | |
| ● | 3,000,000 shares of common stock issuable upon conversion of 3,000,000 outstanding Series F Preferred Stock; and | |
| ● | 10,000,000 shares of common stock reserved for future issuance under our 2017 Equity Incentive Plan. |
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An investment in our securities involves a high degree of risk. This prospectus contains the risks applicable to an investment in our securities. Prior to making a decision about investing in our securities, you should carefully consider the specific factors discussed under the heading “Risk Factors” in this prospectus. The risks and uncertainties we have described are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our operations. The occurrence of any of these known or unknown risks might cause you to lose all or part of your investment in the offered securities.
Risks Relating to Our Business
We have generated no revenue from commercial sales to date and our future profitability is uncertain.
We were incorporated in November 2017 and have a limited operating history, and our business is subject to all of the risks inherent in the establishment of a new business enterprise. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with development and expansion of a new business enterprise. Since inception, we have incurred losses and expect to continue to operate at a net loss for at least the next several years. Our net losses for the year ended December 31, 2019, were $805,815, and our accumulated deficit as of December 31, 2019 was $847,029. There can be no assurance that the products under development by us will be approved for sale in the U.S. or elsewhere. Furthermore, there can be no assurance that if such products are approved they will be successfully commercialized, and the extent of our future losses and the timing of our profitability are highly uncertain. If we are unable to achieve profitability, we may be unable to continue our operations.
If we fail to obtain the capital necessary to fund our operations, we will be unable to continue or complete our product development and you will likely lose your entire investment.
We will need to continue to seek capital from time to time to continue development of our products and we cannot provide any assurances that any revenues they may generate in the future will be sufficient to fund our ongoing operations. We believe that we will need to raise substantial additional capital to fund our continuing operations and the development and commercialization of our products.
Our business or operations may change in a manner that would consume available funds more rapidly than anticipated and substantial additional funding may be required to maintain operations, fund expansion, develop new or enhanced products, acquire complementary products, business or technologies or otherwise respond to competitive pressures and opportunities, such as a change in the regulatory environment. In addition, we may need to accelerate the growth of our sales capabilities and distribution beyond what is currently envisioned, and this would require additional capital. However, we may not be able to secure funding when we need it or on favorable terms. We may not be able to raise sufficient funds to commercialize the products we intend to develop.
If we cannot raise adequate funds to satisfy our capital requirements, we will have to delay, scale back or eliminate our research and development activities or future operations. We may also be required to obtain funds through arrangements with collaborators, which arrangements may require us to relinquish rights to certain technologies or products that we otherwise would not consider relinquishing, including rights to certain major geographic markets. This could result in sharing revenues which we might otherwise retain for ourselves. Any of these actions may harm our business, financial condition and results of operations.
The amount of capital we may need depends on many factors, including the progress, timing and scope of our product development programs; the time and cost necessary to obtain regulatory approvals; our ability to enter into and maintain collaborative, licensing and other commercial relationships; and our partners’ commitment of time and resources to the development and commercialization of our products.
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Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our products on unfavorable terms to us.
We may seek additional capital through a variety of means, including through private and public equity offerings and debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms of such financings may include liquidation or other preferences, anti-dilution rights, conversion and exercise price adjustments and other provisions that adversely affect the rights of our stockholders, including rights, preferences and privileges that are senior to those of our holders of common stock in the event of a liquidation. In addition, debt financing, if available, could include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures, or declaring dividends and may require us to grant security interests in our assets. If we raise additional funds through collaborations, strategic alliances, or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, or products or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may need to curtail or cease our operations.
There is substantial doubt about our ability to continue as a going concern.
As of December 31, 2019, we had cash of $54,381. In addition, as of December 31, 2019, we had current liabilities of $30,249. In the event that we are unable to obtain additional financing, we may be unable to continue as a going concern. There is no guarantee that we will be able to secure additional financing. Changes in our operating plans, our existing and anticipated working capital needs, costs related to legal proceedings we might become subject to in the future, the acceleration or modification of our development activities, any near-term or future expansion plans, increased expenses, potential acquisitions or other events may further affect our ability to continue as a going concern. Similarly, the report of our independent registered public accounting firm on our financial statements as of and for the year ended December 31, 2019 includes an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. If we cannot continue as a viable entity, our stockholders may lose some or all of their investment in us.
Our revenues from sales of our products will be dependent upon pricing and reimbursement guidelines, and if pricing and reimbursement levels are inadequate to achieve profitability, our operations will suffer.
Our financial success will be dependent on our ability to price our products in a manner acceptable to government and private payors while still maintaining our profit margins. Numerous factors that may be beyond our control may ultimately impact the pricing of our products and determine whether we are able to obtain reimbursement or reimbursement at adequate levels from governmental programs and private insurance. If we are unable to obtain reimbursement or our products are not adequately reimbursed, we will experience reduced sales, our revenues likely will be adversely affected, and we may not become profitable. Obtaining reimbursement approvals is time consuming, requires substantial management attention and is expensive. Our business will be materially adversely affected if we do not receive approval for reimbursement of our products under government programs and from private insurers on a timely or satisfactory basis. If reimbursement for our products is unavailable, limited in scope or amount, or if pricing is set at unsatisfactory levels, our business may be materially harmed.
Our commercial and financial success depends on our products being accepted in the market, and if not achieved will result in our not being able to generate revenues to support our operations.
Even if we are able to obtain favorable reimbursement within the markets that we serve, commercial success of our products will depend, among other things, on their acceptance by retinal specialists, ophthalmologists, general practitioners, low vision therapists and mobility experts, hospital purchasing and controlling departments, patients, and other members of the medical community. The degree of market acceptance of any of our potential products will depend on factors that include:
| ● | cost of treatment; | |
| ● | pricing and availability of alternative products; | |
| ● | the extent of available third-party coverage or reimbursement; |
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| ● | perceived efficacy of our products relative to other products and medical solutions; and | |
| ● | prevalence and severity of adverse side effects associated with treatment. |
We may face substantial competition in the future and may not be able to keep pace with the rapid technological changes which may result from others discovering, developing or commercializing products before or more successfully than we do.
In general, the development and commercialization of new medical devices is highly competitive and is characterized by extensive research and development and rapid technological change. Our customers consider many factors including product reliability, product availability, inventory consignment, price and product services provided by the manufacturer. Market share can shift as a result of technological innovation and other business factors. Major shifts in industry market share have occurred in connection with product related problems, physician advisories and safety alerts and quality problems with processes, goods and services, any of which could harm our reputation and have a material adverse effect on our operations. Our competitors may develop products or other novel technologies that are more effective, safer or less costly than our products. If we fail to develop new products or enhance our existing products, our business, financial condition and results of operations may be adversely affected.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related to our products. Product liability claims may be brought against us by patients, healthcare providers or others using, administering or selling our products. If we cannot successfully defend ourselves against claims that our products caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
| ● | decreased demand for our products; | |
| ● | injury to our reputation and significant negative media attention; | |
| ● | significant costs to defend the related litigation; | |
| ● | substantial monetary awards; | |
| ● | loss of revenue; | |
| ● | diversion of management and scientific resources from our business operations; and | |
| ● | the inability to commercialize any products that we may develop. |
Prior to commercializing our products, we intend to obtain product liability insurance coverage at a level that we believe is customary for similarly situated companies and adequate to provide us with insurance coverage for foreseeable risks; however, we may be unable to obtain such coverage at a reasonable cost, if at all. If we are able to obtain product liability insurance, we may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise and such insurance may not be adequate to cover all liabilities that we may incur. A successful product liability claim or series of claims brought against us, particularly if judgments exceed our insurance coverage, could decrease our cash and adversely affect our business.
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We are dependent on information technology systems, including systems from third parties, and if we fail to properly maintain the integrity of our data or if our products do not operate as intended, our business could be materially and adversely affected.
We are dependent on information technology systems for our products and infrastructure, and we rely on these information technology systems, including technology from third-party vendors, to process, transmit and store electronic information in our day-to-day operations. We continuously monitor, upgrade and expand the systems we operate to improve information systems capabilities. Our information systems require an ongoing commitment of significant resources to maintain, protect, and enhance existing systems and develop or contract new systems to keep pace with continuing changes in information processing technology, evolving systems and regulatory standards, and the increasing need to protect patient and customer information. In addition, third parties may attempt to hack into our products or systems and may obtain data relating to patients or proprietary information. If we fail to protect our information systems and data integrity, we could lose existing customers; have difficulty attracting new customers; have difficulty preventing, detecting, and controlling fraud; be subject to regulatory sanctions, fines or penalties; be subject to increases in operating expenses; incur expenses or lose revenue; or suffer other adverse consequences.
If the quality or delivery of our products does not meet our customers’ expectations, our reputation could suffer and ultimately our sales and operating earnings could be negatively impacted.
In the course of conducting our business, we will need to adequately address quality issues associated with our products, including in our engineering, design, manufacturing and delivery processes, as well as issues in third-party components included in our products. Because our products are highly complex, the occurrence of performance issues may increase as we continue to introduce new products and as we rapidly scale up manufacturing to meet increased demand for our products. There can be no assurance that we will be able to eliminate or mitigate occurrences of these issues and associated liabilities. In addition, identifying the root cause of performance or quality issues, particularly those affecting third-party components, may be difficult, which increases the time needed to address quality issues as they arise and increases the risk that similar problems could recur. Finding solutions to quality issues can be expensive, and we may incur significant costs or lost revenue in connection with, for example, shipment holds, product recalls and warranty or other service obligations. In addition, quality issues can impair our relationships with new or existing customers and our reputation as a producer of high quality products could suffer, which could adversely affect our business, financial condition or results of operations.
Failure to comply with data privacy and security laws could have a material adverse effect on our business.
We are subject to state, federal and foreign laws relating to data privacy and security in the conduct of our business, including state breach notification laws, the Health Insurance Portability and Accountability Act, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and the California Consumer Privacy Act. These laws affect how we collect and use data of our employees, consultants, customers and other parties. Furthermore, these laws impose substantial requirements that require the expenditure of significant funds and employee time to comply, and additional states are enacting new data privacy and security laws, which will require future expansion of our compliance efforts. We also rely on third parties to host or otherwise process some of this data. Any failure by a third party to prevent security breaches could have adverse consequences for us. We will need to expend additional resources and make significant investments to comply with data privacy and security laws. Our failure to comply with these laws or prevent security breaches of such data could result in significant liability under applicable laws, cause disruption to our business, harm our reputation and have a material adverse effect on our business.
We may not be successful in hiring and retaining key employees, including executive officers.
Our future operations and successes depend in large part upon the strength of our management team. We rely heavily on the continued service of Jerry Katzman, our President and Chief Executive Officer. Accordingly, if Mr. Katzman terminates his employment with us, such a departure may have a material adverse effect on our business. Our future success also depends on our ability to identify, attract, hire or engage, retain and motivate other well-qualified financial, managerial, technical and regulatory personnel. There can be no assurance that these professionals will be available in the market, or that we will be able to retain existing professionals or to meet or to continue to meet their compensation requirements. Furthermore, the cost base in relation to such compensation, which may include equity compensation, may increase significantly, which could have a material adverse effect on us. Failure to establish and maintain an effective management team and work force could adversely affect our ability to operate, grow and manage our business.
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We may acquire other businesses, form joint ventures or make investments in other companies or technologies that could negatively affect our operating results, dilute our stockholders’ ownership, increase our debt or cause us to incur significant expense.
We may pursue acquisitions of businesses and assets. We also may pursue strategic alliances and joint ventures that leverage our proprietary technology and industry experience to expand our offerings or distribution. We have no experience with acquiring other companies and limited experience with forming strategic partnerships. We may not be able to find suitable partners or acquisition candidates, and we may not be able to complete such transactions on favorable terms, if at all. If we make any acquisitions, we may not be able to integrate these acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. Any future acquisitions also could result in the incurrence of debt, contingent liabilities or future write-offs of intangible assets or goodwill, any of which could have a negative impact on our cash flows, financial condition and results of operations. Integration of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing our existing business. We may experience losses related to investments in other companies, which could harm our financial condition and results of operations. We may not realize the anticipated benefits of any acquisition, strategic alliance or joint venture.
To finance any acquisitions or joint ventures, we may choose to issue shares of common stock as consideration, which could dilute the ownership of our stockholders. Additional funds may not be available on terms that are favorable to us, or at all. If the price of our common stock is low or volatile, we may not be able to acquire other companies or fund a joint venture project using our stock as consideration.
If we fail to accurately forecast demand for our product, we could incur additional costs or experience lost sales.
It will be very important that we accurately predict the demand for our products. If we overestimate the demand for our product, we may have excess inventory, which would increase our costs. If we underestimate demand for our product, we may have inadequate inventory, which could delay delivery of our products to our customers and result in the loss of customer sales. Any of these occurrences would negatively impact our business and operating results.
If our facilities were to experience catastrophic loss, our operations would be seriously harmed.
Our facilities could be subject to catastrophic loss such as fire, flood, unpredictable power outages or earthquakes. All of our research and development activities, our corporate headquarters and other critical business operations are located in California. California can experience catastrophic wildfires, as well as intermittent power outages. Any such loss at any of our facilities caused by fires, flooding, power outages or earthquakes could disrupt our operations and may have a material adverse effect on our business.
A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, a novel strain of coronavirus, may materially and adversely affect our business and our financial results.
Public health epidemics or widespread outbreaks of contagious diseases could adversely impact our business. Any outbreak of contagious diseases, and other adverse public health developments, such as the novel strain of coronavirus (COVID-19), initially limited to a region in China and now affecting the global community, could impact our operations depending on future developments, which are highly uncertain, largely beyond our control and cannot be predicted with certainty. These uncertain factors include the duration of the outbreak, potential impact to our employees who may contract the disease or be subject to quarantine, new information which may emerge concerning the severity of the disease and the actions to contain or treat its impact, such as the temporary closure of facilities. These factors may cause disruptions or restrictions on our employees’ ability to work which may disrupt our research and development efforts. These or other currently unforeseen consequences of a health epidemic, pandemic or other outbreak, including the current COVID-19 outbreak, may have a material adverse effect on our business, financial condition and results of operations.
Market and economic conditions may negatively impact our business, financial condition and share price.
Concerns over medical epidemics, energy costs, geopolitical issues, the mortgage market and a deteriorating real estate market, unstable global credit markets and financial conditions, and volatile oil prices have led to periods of significant economic instability, diminished liquidity and credit availability, declines in consumer confidence and discretionary spending, diminished expectations for the global economy and expectations of slower global economic growth, increased unemployment rates, and increased credit defaults in recent years. Our general business strategy may be adversely affected by any such economic downturns (including the current downturn related to the current COVID-19 pandemic), volatile business environments and continued unstable or unpredictable economic and market conditions. If these conditions continue to deteriorate or do not improve, it may make any necessary debt or equity financing more difficult to complete, more costly and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and share price and could require us to delay or abandon development or commercialization plans.
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Risks Relating to Intellectual Property
Our intellectual property may not be sufficient to protect our products from competition, which may negatively affect our business.
We may be subject to competition despite the existence of intellectual property we may license or may, in the future, own. We can give no assurances that our intellectual property claims will be sufficient to prevent third parties from designing around patents we license, or may in the future own or developing and commercializing competitive products. The existence of competitive products that avoid our intellectual property rights could materially adversely affect our operating results and financial condition. Furthermore, limitations, or perceived limitations, in our intellectual property rights may limit the interest of third parties to partner, collaborate or otherwise transact with us, if third parties perceive a higher than acceptable risk to commercialization of our products.
We may elect to sue a third party, or otherwise make a claim, alleging infringement or other violation of patents, trademarks, trade dress, copyrights, trade secrets, domain names or other intellectual property rights that we license from a third party or may, in the future own. If we do not prevail in enforcing our intellectual property rights in this type of litigation, we may be subject to:
| ● | paying monetary damages related to the legal expenses of the third party; | |
| ● | facing additional competition that may have a significant adverse effect on our product pricing, market share, business operations, financial condition and the commercial viability of our product; and | |
| ● | restructuring our company or delaying or terminating select business opportunities, including, but not limited to, research and development and commercialization activities, due to a potential deterioration of our financial condition or market competitiveness. |
A third party may also challenge the validity, enforceability or scope of the intellectual property rights that we may license or may, in the future, own; and, the result of these challenges may narrow the scope or claims of or invalidate patents that are integral to our products in the future. There can be no assurance that we will be able to successfully defend our intellectual property rights in an action against third parties due to the unpredictability of litigation and the high costs associated with intellectual property litigation, amongst other factors.
Intellectual property rights and enforcement may be less extensive in jurisdictions outside of the U.S. Thus, we may not be able to protect our intellectual property rights and third parties may be able to market competitive products that may use some or all of our intellectual property rights.
Changes to patent law, including the Leahy-Smith America Invests Act, AIA or Leahy-Smith Act, of 2011 and the Patent Reform Act of 2009 and other future article of legislation, may substantially change the regulations and procedures surrounding patent applications, issuance of patents, and prosecution of patents. We can give no assurances that the patents of our licensor can be defended or will protect us against future intellectual property challenges, particularly as they pertain to changes in patent law and future patent law interpretations.
In addition, enforcing and maintaining our intellectual property protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by the USPTO, courts and foreign government patent agencies, and patent protection could be reduced or eliminated for non-compliance with these requirements which may have a material adverse effect on our business.
Litigation or third-party claims of intellectual property infringement or challenges to the validity of our patents would require us to use resources to protect our technology and may prevent or delay the development, regulatory approval or commercialization of our products.
If we are the target of claims by third parties asserting that our products or intellectual property infringe upon the rights of others we may be forced to incur substantial expenses or divert substantial employee resources from our business and, if successful, those claims could result in our having to pay substantial damages or prevent us from developing one or more of our products. Further, if a patent infringement suit were brought against us or our licensors, we or they could be forced to stop or delay research, development, manufacturing or sales of the product that is the subject of the lawsuit.
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If we experience patent infringement claims, or if we elect to avoid potential claims others may assert, we or our licensors may choose to seek, or be required to seek, a license from the third-party and would most likely be required to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if we or our licensors were able to obtain a license, the rights may be non-exclusive, which would give our competitors access to the same intellectual property. Ultimately, we may be prevented from commercializing a product, or be forced to cease some aspect of our business operations if, as a result of actual or threatened patent infringement claims, we or our licensors are unable to enter into licenses on acceptable terms. This could harm our business significantly. The cost to us of any litigation or other proceeding, regardless of its merit, even if resolved in our favor, could be substantial and may result in a diversion of our management’s attention. Some of our competitors may be able to bear the costs of such litigation or proceedings more effectively than we can because they may have greater financial resources than us. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our business.
We may become involved in future lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time consuming and unsuccessful.
Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may file infringement claims, which can be expensive and time consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or of our licensors is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
The U.S. Patent and Trademark Office may initiate interference proceedings to determine the priority of inventions described in or otherwise affecting our patents and patent applications or those of our licensors. An unfavorable outcome could require us to cease using the technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if a prevailing party does not offer us a license on terms that are acceptable to us. Litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distraction of our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our proprietary rights, particularly in countries where the laws may not protect those rights as fully as in the U.S.
We may not be able to enforce our intellectual property rights throughout the world.
The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This could make it difficult for us to stop the infringement of our patents, if obtained, or the misappropriation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against certain third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.
Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our products and the enforcement of intellectual property.
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Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
We may employ individuals who were previously employed at universities or other medical device companies, including our competitors or potential competitors. Although we intend to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and result in a diversion of management’s attention.
We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.
We rely on trade secrets to protect our proprietary know-how and technological advances, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. We rely in part on confidentiality agreements with our employees, consultants, outside scientific collaborators and other advisors to protect our trade secrets and other proprietary information. However, any party with whom we have executed such an agreement may breach that agreement and disclose our proprietary information, including our trade secrets. Accordingly, these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights. Failure to obtain or maintain trade secret protection could enable competitors to use our proprietary information to develop products that compete with our products or cause additional, material adverse effects upon our competitive business position and financial results.
Risks Relating to Government Regulations
Our failure to obtain and maintain FDA clearances or approvals on a timely basis, or at all, would prevent us from commercializing our products in the U.S., which could severely harm our business.
Unless an exemption applies, each medical device that we market in the U.S. must first undergo premarket review pursuant to the Federal Food, Drug, and Cosmetic Act (“FDCA”) by receiving clearance of a 510(k) premarket notification, receiving clearance through the de novo review process, or obtaining approval of a premarket approval (“PMA”) application. Even if regulatory clearance or approval of a product is granted, the FDA may clear or approve our products only for limited indications for use. Additionally, the FDA may not grant 510(k) clearance on a timely basis, if at all, for new products or uses that we propose. The traditional FDA 510(k) clearance process for our products may take between four to nine months. However, in some cases, the FDA is requiring applicants to provide additional or different information and data for 510(k) clearance than it had previously required, and that the FDA may not rely on approaches that it had previously accepted to support 510(k) clearance. As a result, FDA 510(k) clearance can be delayed for our products in some cases.
To support our product applications to the FDA, we frequently are required to conduct clinical testing of our products. Such clinical testing must be conducted in compliance with FDA requirements pertaining to human research. Among other requirements, we must obtain informed consent from study subjects and approval by institutional review boards before such studies may begin. We must also comply with other FDA requirements such as monitoring, record-keeping, reporting and the submission of information regarding certain clinical trials to a public database maintained by the National Institutes of Health. In addition, if the study involves a significant risk device, we are required to obtain the FDA’s approval of the study under an Investigational Device Exemption. Compliance with these requirements can require significant time and resources. If the FDA determines that we have not complied with such requirements, the FDA may refuse to consider the data to support our applications or may initiate enforcement actions. Even if we obtain 510(k) clearance, if safety or effectiveness problems are identified with our products, we may need to initiate a recall of such devices. Furthermore, our products may be denied 510(k) clearance and be required to undergo the more burdensome PMA or de novo review processes. The process of obtaining a de novo classification or PMA approval is much more costly, lengthy and uncertain than the process for obtaining 510(k) clearance. De novo classification generally takes six months to one year from the time of submission of the de novo request, although it can take longer. Approval of a PMA generally takes one year from the time of submission of the PMA, but may be longer.
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Some of our products or product features may also be exempted from the 510(k) process and/or other regulatory requirements in accordance with specific FDA guidance and policies. If the FDA changes its policy or concludes that our marketing of these products is not in accordance with its current policy, we may be required to seek clearance or approval of these devices through the 510(k), de novo or PMA processes.
Our promotional practices will be subject to extensive government scrutiny. We may be subject to governmental, regulatory and other legal proceedings relative to advertising, promotion, and marketing that could have a significant negative effect on our business.
We will be subject to governmental oversight and associated civil and criminal enforcement relating to medical device advertising, promotion, and marketing, and such enforcement is evolving and intensifying. In the United States, we are subject to potential enforcement from the FDA, the U.S. Federal Trade Commission, the Department of Justice, the CMS, other divisions of the Department of Health and Human Services and state and local governments. Other parties, including private plaintiffs, also are commonly bringing suit against medical device companies, alleging off-label marketing and other violations. We may be subject to liability based on the actions of individual employees and contractors carrying out activities on our behalf, including sales representatives who may interact with healthcare professionals.
Legislative or regulatory reform of the health care system in the U.S. may adversely impact our business, operations or financial results.
Our industry is highly regulated and changes in law may adversely impact our business, operations or financial results. In March 2010, the Patient Protection and Affordable Care Act, and a related reconciliation bill were signed into law. This legislation changes the current system of healthcare insurance and benefits intended to broaden coverage and control costs. The law also contains provisions that will affect companies in the medical device industry and other healthcare related industries by imposing additional costs and changes to business practices. We cannot predict what healthcare reform initiatives may be adopted in the future. These reforms could have an adverse effect on our ability to obtain timely regulatory approval for new products and on anticipated revenues from our products, both of which may affect our overall financial condition.
We are subject to stringent domestic and foreign medical device regulations and any unfavorable regulatory action may materially and adversely affect our financial condition and business operations.
Our products, development activities and manufacturing processes are subject to extensive and rigorous regulation by numerous government agencies, including the FDA and comparable foreign agencies. To varying degrees, each of these agencies monitors and enforces our compliance with laws and regulations governing the development, testing, manufacturing, labeling, marketing, distribution, and the safety and effectiveness of our medical devices. The process of obtaining marketing approval or clearance from the FDA and comparable foreign bodies for new products, or for enhancements, expansion of the indications or modifications to existing products, could:
| ● | take a significant, indeterminate amount of time; | |
| ● | result in product shortages due to regulatory delays; | |
| ● | require the expenditure of substantial resources; | |
| ● | involve modifications, repairs or replacements of our products; | |
| ● | require design changes of our products; |
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| ● | result in limitations on the indicated uses of our products; and | |
| ● | result in our never being granted the regulatory approval we seek. |
Any of these occurrences that we might experience will cause our operations to suffer, harm our competitive standing and result in further losses that adversely affect our financial condition.
We will be subject to ongoing responsibilities under FDA and international regulations, both before and after a product is commercially released. For example, we are required to comply with the FDA’s Quality System Regulation which mandates that manufacturers of medical devices adhere to certain quality assurance requirements pertaining, among other things, to validation of manufacturing processes, controls for purchasing product components and documentation practices. As another example, the Medical Device Reporting regulation requires us to provide information to the FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury, or that a malfunction occurred which would be likely to cause or contribute to a death or serious injury upon recurrence. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA. If the FDA were to conclude that we are not in compliance with applicable laws or regulations, or that any of our medical devices are ineffective or pose an unreasonable health risk, the FDA could ban such medical devices, detain or seize such medical devices, order a recall, repair, replacement, or refund of such devices, or require us to notify health professionals and others that the devices present unreasonable risks of substantial harm to the public health. The FDA has been increasing its scrutiny of the medical device industry and the government is expected to continue to scrutinize the industry closely with inspections and possibly enforcement actions by the FDA or other agencies. Additionally, the FDA may restrict manufacturing and impose other operating restrictions, enjoin and restrain certain violations of applicable law pertaining to medical devices and assess civil or criminal penalties against our officers, employees, or us. Any adverse regulatory action, depending on its magnitude, may restrict us from effectively manufacturing, marketing and selling our products. In addition, negative publicity and product liability claims resulting from any adverse regulatory action could have a material adverse effect on our financial condition and results of operations.
We will also be subject to stringent government regulation in foreign countries, which could delay or prevent our ability to sell our products in those jurisdictions.
We intend to pursue market authorizations for our products in foreign countries. For us to market our products in international jurisdictions, we and our distributors and agents must obtain required regulatory registrations or approvals. The approval procedure varies among countries and jurisdictions and can involve additional testing, and the time and costs required to obtain approval may differ from that required to obtain an approval by the FDA. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or jurisdictions or by the FDA. Violations of foreign laws governing use of medical devices may lead to actions against us by the FDA as well as by foreign authorities. We must also comply with extensive regulations regarding safety, efficacy and quality in those jurisdictions. We may not be able to obtain all the required regulatory registrations or approvals, or we may be required to incur significant costs in obtaining or maintaining any regulatory registrations or approvals we receive. Delays in obtaining any registrations or approvals required for marketing our products, failure to receive these registrations or approvals, or future loss of previously obtained registrations or approvals would limit our ability to sell our products internationally and may have a material adverse effect on our business.
Failure by us or our distributors to comply with foreign regulations applicable to the products we design, manufacture, install or distribute could expose us to enforcement actions or other adverse consequences.
We may be subject to the European Medical Device Regulation, which was adopted by the European Union (“EU”) as a common legal framework for all EU member states. These regulations require companies that wish to manufacture and distribute medical devices in EU member states to meet certain quality system and safety requirements and ongoing product monitoring responsibilities, and obtain a “CE” marking (i.e., a mandatory conformity marking for certain products sold within the European Economic Area) for their products. Various penalties exist for non-compliance with the laws implementing the European Medical Device Regulations which if incurred, could have a material adverse impact on our business, results of operations and cash flows.
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Even if we obtain clearance or approval to sell our products, we are subject to ongoing requirements and inspections that could lead to the restriction, suspension or revocation of our clearance.
We, as well as any potential collaborative partners such as distributors, will be required to adhere to applicable FDA regulations regarding good manufacturing practice, which include testing, control, and documentation requirements. We are subject to similar regulations in foreign countries. Even if regulatory approval of a product is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval or contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product. Ongoing compliance with good manufacturing practice and other applicable regulatory requirements is strictly enforced in the United States through periodic inspections by state and federal agencies, including the FDA, and in international jurisdictions by comparable agencies. Failure to comply with these regulatory requirements could result in, among other things, warning letters, fines, injunctions, civil penalties, recall or seizure of products, total or partial suspension of production, failure to obtain pre-market clearance or pre-market approval for devices, withdrawal of approvals previously obtained and criminal prosecution. The restriction, suspension or revocation of regulatory approvals or any other failure to comply with regulatory requirements would limit our ability to operate and could increase our costs which may have a material adverse effect on our business.
We could be subject to substantial fines or damages and possible exclusion from participation in federal or state health care programs if we fail to comply with the laws and regulations applicable to our business.
We are subject to stringent laws and regulations at both the federal and state levels governing the participation of durable medical equipment suppliers in federal and state health care programs. From time to time, the government may seek additional information related to our claims submissions, and in some instances government contractors may perform audits of payments made to us under Medicare, Medicaid, and other federal health care programs. These reviews may identify overpayments for which we submit refunds. We believe the frequency and intensity of government audits and review processes has intensified, and we expect this will continue in the future, due to increased resources allocated to these activities at both the federal and state Medicaid level, and greater sophistication in data review techniques.
If we are considered to have violated these laws and regulations, we could be subject to substantial fines, damages, possible exclusion from participation in federal health care programs such as Medicare and Medicaid and possible recoupment of any overpayments related to such violations. Failure to comply with applicable laws and regulations, even if inadvertent, could have a material adverse impact on our business.
If we fail to develop and successfully introduce new products and applications or fail to improve our existing products, our business prospects and operating results may suffer.
Our ability to generate incremental revenue growth will depend, in part, on the successful outcome of research and development activities, which may include clinical trials that lead to the development of new products and new applications using our products. Our research and development process is expensive, prolonged, and entails considerable uncertainty. Due to the complexities and uncertainties associated with ophthalmic research and development, products we are currently developing may not complete the development process or obtain the regulatory approvals required to market such products successfully. In addition, our research and development process has been slowed by the impact of COVID-19, and should the COVID-19 economic restrictions worsen, it could delay and disrupt our research and development processes even further.
Successful commercialization of new products and new applications will require that we effectively transfer production processes from research and development to manufacturing and effectively coordinate with our suppliers. In addition, we must successfully sell and achieve market acceptance of new products and applications and enhanced versions of existing products. The extent of, and rate at which, market acceptance and penetration are achieved by future products is a function of many variables, which include, among other things, price, safety, efficacy, reliability, marketing and sales efforts, the development of new applications for these products, the availability of third-party reimbursement of procedures using our new products, the existence of competing products and general economic conditions affecting purchasing patterns.
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Our ability to market and sell new products is subject to government regulation, including approval or clearance by the FDA and foreign government agencies. Any failure in our ability to successfully develop and introduce new products or enhanced versions of existing products and achieve market acceptance of new products and new applications could have a material adverse effect on our operating results and would cause our net revenues to decline.
Risks Related to Owning our Securities and this Offering
Our shares of common stock are not publicly traded and there can be no assurance that there will be an active market for our shares of common stock in the future.
Our shares of common stock are not currently publicly traded and timing for the commencement of trading is uncertain. An active trading market for shares of our common stock may never develop or be sustained if developed. If an active trading market does not develop, you may have difficulty selling your shares of common stock at an attractive price, or at all. An inactive market may also impair our ability to raise capital by selling our common stock, and it may impair our ability to attract and motivate our employees through equity incentive awards and our ability to acquire other companies, products or technologies by using our common stock as consideration.
Our stock price may be volatile and you may not be able to resell your shares at or above the purchase price.
The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following:
| ● | our ability to execute our business plan; | |
| ● | changes in our industry; | |
| ● | competitive pricing pressures; | |
| ● | our ability to obtain working capital financing; | |
| ● | additions or departures of key personnel; | |
| ● | sales of our common stock; | |
| ● | operating results that fall below expectations; | |
| ● | regulatory developments; | |
| ● | economic and other external factors; | |
| ● | period-to-period fluctuations in our financial results; | |
| ● | the public’s response to press releases or other public announcements by us or third parties, including filings with the SEC; | |
| ● | changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock; | |
| ● | the development and sustainability of an active trading market for our common stock; and | |
| ● | any future sales of our common stock by our officers, directors and significant stockholders. |
In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock.
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Future sales and issuances of our common stock could result in additional dilution of the percentage ownership of our stockholders.
We expect that significant additional capital will be needed in the future to continue our planned operations. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution.
We have never paid cash dividends and have no plans to pay cash dividends in the future.
Holders of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends on our capital stock and we do not expect to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our capital stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock.
Our common stock is subject to the “penny stock” rules of the SEC and the trading market in the securities is limited, which makes transactions in the stock cumbersome and may reduce the value of an investment in the stock.
Rule 15g-9 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (a) that a broker or dealer approve a person’s account for transactions in penny stocks; and (b) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must: (a) obtain financial information and investment experience objectives of the person and (b) make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form: (a) sets forth the basis on which the broker or dealer made the suitability determination; and (b) confirms that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our common stock.
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker or dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because certain of our stockholders control a significant number of shares of our common stock, they may have effective control over actions requiring stockholder approval.
As of February 1, 2021, our directors, executive officers and principal stockholders, and their respective affiliates, beneficially own approximately 27.37% of our outstanding shares of common stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs of our company. Accordingly, this concentration of ownership might harm the market price of our common stock by:
| ● | delaying, deferring or preventing a change in corporate control; |
| -21- |
| ● | impeding a merger, consolidation, takeover or other business combination involving us; or | |
| ● | discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us. |
We are an “emerging growth company” and will be able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, pursuant to Section 107 of the JOBS Act, as an “emerging growth company” we intend to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (“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 cannot predict if investors will find our common stock less attractive because we may rely on 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 may take advantage of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.
Our First Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) and our bylaws (the “Bylaws”) and Delaware law may have anti-takeover effects that could discourage, delay or prevent a change in control, which may cause our stock price to decline.
Our Certificate of Incorporation and our Bylaws and Delaware law could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our stockholders. We are authorized to issue up to 40 million shares of preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our board of directors without further action by stockholders. The terms of any series of preferred stock may include voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. As of February 1, 2021, we have designated 3,000,000 shares of preferred stock as Series F Preferred Stock, of which 3,000,000 share are issued and outstanding. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.
Provisions of our Certificate of Incorporation and our Bylaws and Delaware law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. Such provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. In particular, our Certificate of Incorporation and our Bylaws and Delaware law, as applicable, among other things:
| ● | provide the board of directors with the ability to alter the bylaws without stockholder approval; and | |
| ● | provide that vacancies on the board of directors may be filled by a majority of directors in office, although less than a quorum. |
| -22- |
Financial reporting obligations of being a public company in the U.S. are expensive and time-consuming, and our management will be required to devote substantial time to compliance matters.
As a publicly traded company we will incur significant additional legal, accounting and other expenses that we did not incur as a private company. The obligations of being a public company in the U.S. require significant expenditures and will place significant demands on our management and other personnel, including costs resulting from public company reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act. These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance with. Moreover, despite recent reforms made possible by the JOBS Act, the reporting requirements, rules, and regulations will make some activities more time-consuming and costly, particularly after we are no longer an “emerging growth company.” In addition, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance. Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all of these requirements and to keep pace with new regulations, otherwise we may fall out of compliance and risk becoming subject to litigation, among other potential problems.
If we fail to comply with the rules under Sarbanes-Oxley related to accounting controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult.
Section 404 of Sarbanes-Oxley requires annual management assessments of the effectiveness of our internal control over financial reporting. If we fail to comply with the rules under Sarbanes-Oxley related to disclosure controls and procedures in the future, or, if we discover material weaknesses and other deficiencies in our internal control and accounting procedures, our stock price could decline significantly and raising capital could be more difficult. If material weaknesses or significant deficiencies are discovered or if we otherwise fail to achieve and maintain the adequacy of our internal control, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of Sarbanes-Oxley. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our common stock could drop significantly.
Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of our Company to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law (“DGCL”) of our Certificate of Incorporation or Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine. This exclusive forum provision would not apply to suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find our choice of forum provisions contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.
| -23- |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Any statements in this prospectus about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements. These statements are often, but not always, made through the use of words or phrases such as “believe,” “will,” “expect,” “anticipate,” “estimate,” “intend,” “plan” and “would.” For example, statements concerning financial condition, possible or assumed future results of operations, growth opportunities, industry ranking, plans and objectives of management and market for our common stock are all forward-looking statements. Forward-looking statements are not guarantees of performance. They involve known and unknown risks, uncertainties and assumptions that may cause actual results, levels of activity, performance or achievements to differ materially from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statement.
Any forward-looking statements are qualified in their entirety by reference to the risk factors discussed throughout this prospectus. You should read this prospectus and the documents that we reference herein and have filed as exhibits to the registration statement, of which this prospectus is part, completely and with the understanding that our actual future results may be materially different from what we expect. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only. Because the risk factors referred to on page 9 of this prospectus could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by us or on our behalf, you should not place undue reliance on any forward-looking statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for us to predict which factors will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of the information presented in this prospectus, and particularly our forward-looking statements, by these cautionary statements.
The Selling Stockholders will receive all of the proceeds from the sale of the Resale Shares offered by them pursuant to this prospectus. We will not receive any proceeds from the sale of the Resale Shares by the Selling Stockholders covered by this prospectus. However, we will receive proceeds from the exercise of the Options and Warrants if they are exercised for cash by the Selling Stockholders, and will use such proceeds for working capital purposes.
This prospectus relates to the resale from time to time by the Selling Stockholders identified herein of up to an aggregate of 8,766,561 shares of common stock, including 2,558,661 outstanding shares of common stock, 6,146,400 shares of common stock issuable upon exercise of outstanding Options and 61,500 shares of common stock issuable upon exercise of outstanding Warrants.
The transactions by which the Selling Stockholders acquired their securities from us were exempt under the registration provisions of the Securities Act.
The Resale Shares are being registered to permit public sales of such securities, and the Selling Stockholders may offer the Resale Shares for resale from time to time pursuant to this prospectus. The Selling Stockholders may also sell, transfer or otherwise dispose of all or a portion of their Resale Shares in transactions exempt from the registration requirements of the Securities Act or pursuant to another effective registration statement covering the sale of such securities.
The following table sets forth, based on information provided to us by the Selling Stockholders or known to us, the names of the Selling Stockholders, the nature of any position, office or other material relationship, if any, which the Selling Stockholders have had, within the past three years, with us or with any of our predecessors or affiliates, and the number of shares of our common stock beneficially owned by the Selling Stockholders before and after this offering. The number of shares owned are those beneficially owned, as determined under the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under these rules, beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment power and any shares of common stock that the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement. Except as otherwise set forth herein, none of the Selling Stockholders are a broker-dealer or an affiliate of a broker-dealer.
| -24- |
We have assumed all of the Resale Shares reflected on the table will be sold from time to time in the offering covered by this prospectus. Because the Selling Stockholders may offer all or any portions of the Resale Shares listed in the table below, no estimate can be given as to the amount of those Resale Shares covered by this prospectus that will be held by the Selling Stockholders upon the termination of the offering.
Except as otherwise noted below, the address for each person or entity listed in the table is c/o Retinalgenix Technologies Inc., 1450 North McDowell Boulevard, Suite 150, Petaluma, CA 94954.
| Beneficial Ownership of | Common Stock | Beneficial Ownership | ||||||||||||||||||
| Common Stock Prior | Saleable | of Common Stock | ||||||||||||||||||
| to the Offering | Pursuant | After the Offering (1) | ||||||||||||||||||
| Number of | Percent of | to This | Number of | Percent of | ||||||||||||||||
| Name of Selling Shareholder | Shares | Class (2) | Prospectus | Shares | Class (2) | |||||||||||||||
| Morland G. McManigal Trust (3) | 50,000 | * | 50,000 | 0 | 0 | % | ||||||||||||||
| Christopher Elbers | 28,500 | * | 28,500 | 0 | 0 | % | ||||||||||||||
| David Nissen | 50,000 | * | 50,000 | 0 | 0 | % | ||||||||||||||
| Karl Moll | 35,000 | * | 35,000 | 0 | 0 | % | ||||||||||||||
| Michael Sordelli | 50,000 | * | 50,000 | 0 | 0 | % | ||||||||||||||
| IRA Services Trust Co. CFBO, Philip Petruzzelli (4) | 16,500 | * | 16,500 | 0 | 0 | % | ||||||||||||||
| IRA Services Trust Co. CFBO Jeffrey N. Allen SEP IRA561009 (5) | 125,000 | * | 125,000 | 0 | 0 | % | ||||||||||||||
| Gary LeBlanc | 25,000 | * | 25,000 | 0 | 0 | % | ||||||||||||||
| James and Michele Banister | 25,000 | * | 25,000 | 0 | 0 | % | ||||||||||||||
| Amido Rapkin & James Suess | 8,371 | * | 8,371 | 0 | 0 | % | ||||||||||||||
| William J. Wilson and Carolyn G. Wilson | 9,000 | * | 9,000 | 0 | 0 | % | ||||||||||||||
| Steven Hawthorne | 15,000 | * | 15,000 | 0 | 0 | % | ||||||||||||||
| Steven M. Nass & Suzanne M. Nass | 15,000 | * | 15,000 | 0 | 0 | % | ||||||||||||||
| The Rostad Family Trust (6) | 30,000 | * | 30,000 | 0 | 0 | % | ||||||||||||||
| Richard Waltz & Martha Waltz | 5,000 | * | 5,000 | 0 | 0 | % | ||||||||||||||
| Jeffrey and Milissa Banister | 12,500 | (7) | * | 12,500 | (7) | 0 | 0 | % | ||||||||||||
| Basem & Josephine Kandah | 5,000 | * | 5,000 | 0 | 0 | % | ||||||||||||||
| Bill and Tracie Pelzl | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| Theresa D. Gifford Revocable Trust (8) | 35,000 | * | 35,000 | 0 | 0 | % | ||||||||||||||
| David Rodin as Trustee under trust instrument dated March 2, 2010 and Heather Yeckes Rodin as Trustee under trust instrument dated March 1, 2010 (9) | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| Lawrence Pabst | 100,000 | * | 100,000 | 0 | 0 | % | ||||||||||||||
| Barbara T. Maddox Revocable Living Trust dated March 13, 2000 (10) | 6,667 | * | 6,667 | 0 | 0 | % | ||||||||||||||
| Dianne C. DeBoest Revocable Trust, dated January 28, 2013 (11) | 25,069 | * | 25,069 | 0 | 0 | % | ||||||||||||||
| Survivors Trust of the Hans & Elsie Van Boldrik Trust of 1982 (12) | 5,000 | * | 5,000 | 0 | 0 | % | ||||||||||||||
| Provident Trust Group FBO, Douglas Bertsch ROTH IRA3201389 (13) | 23,333 | * | 23,333 | 0 | 0 | % | ||||||||||||||
| Hayden Hosford | 100,000 | * | 100,000 | 0 | 0 | % | ||||||||||||||
| Mark M. Manning | 45,000 | * | 45,000 | 0 | 0 | % | ||||||||||||||
| Nestor Ricardo Sala II | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| The Liza and Steve Trust of 2013 (14) | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| Greg L. & Diane M. Schultz | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| The Boston Strong Trust (15) | 115,000 | * | 115,000 | 0 | 0 | % | ||||||||||||||
| Patricia A. Skovron | 11,670 | * | 11,670 | 0 | 0 | % | ||||||||||||||
| Gary A. Banister and Janice D. Banister Trust dated February 2000 (16) | 35,000 | * | 35,000 | 0 | 0 | % | ||||||||||||||
| IRA Services Trust Co. CFBO Monique Slone IRA747130 (17) | 25,000 | * | 25,000 | 0 | 0 | % | ||||||||||||||
| Dana Seymour | 7,850 | * | 7,850 | 0 | 0 | % | ||||||||||||||
| Joseph Caprioni | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| Deborah Gisonni & Joseph Prestipino TTEE’s (18) | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| The Raymond William Kaliski and Carla Daro Kaliski Family Trust (19) | 16,667 | * | 16,667 | 0 | 0 | % | ||||||||||||||
| The Donald and Joan Hansen Trust dated 06/01/1993 (20) | 8,600 | * | 8,600 | 0 | 0 | % | ||||||||||||||
| Nick & Andrea Moudakis | 8,000 | * | 8,000 | 0 | 0 | % | ||||||||||||||
| The Kinnear Trust dated July 13, 2000 (21) | 5,000 | * | 5,000 | 0 | 0 | % | ||||||||||||||
| Clark W. Nicholls | 5,000 | * | 5,000 | 0 | 0 | % | ||||||||||||||
| Jillian Ottney Eddy | 5,000 | * | 5,000 | 0 | 0 | % | ||||||||||||||
| Emad & Ruba Nimri | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| Isaac Triscell | 5,000 | * | 5,000 | 0 | 0 | % | ||||||||||||||
| Kristine Cesena | 13,333 | * | 13,333 | 0 | 0 | % | ||||||||||||||
| Fred Chasalow & Sandra Chasalow | 12,500 | (22) | * | 12,500 | (22) | 0 | 0 | % | ||||||||||||
| Richard & Pamela Wyatt | 12,500 | (23) | * | 12,500 | (23) | 0 | 0 | % | ||||||||||||
| Diopsys (24) | 3,846,400 | (25) | 8.71 | % | 3,846,400 | (25) | 0 | 0 | % | |||||||||||
| Frank Wang | 600,000 | (26) | 1.47 | % | 600,000 | (26) | 0 | 0 | % | |||||||||||
| Ahmed Mouhiuddin, M.D. | 600,000 | (27) | 1.47 | % | 600,000 | (27) | 0 | 0 | % | |||||||||||
| Holly Sargent | 300,000 | (28) | * | 300,000 | (28) | 0 | 0 | % | ||||||||||||
| Margureite B. McDonald, M.D. | 100,000 | (29) | * | 100,000 | (29) | 0 | 0 | % | ||||||||||||
| Lawrence A. Yannuzzi, M.D. | 100,000 | (30) | * | 100,000 | (30) | 0 | 0 | % | ||||||||||||
| Jack M. Dodick, M.D. | 100,000 | (31) | * | 100,000 | (31) | 0 | 0 | % | ||||||||||||
| Benchmark (32) | 500,000 | (33) | 1.22 | % | 500,000 | (33) | 0 | 0 | % | |||||||||||
| Jerry Katzman, M.D. (34) | 5,720,000 | 14.18 | % | 572,000 | 5,148,000 | 12.77 | % | |||||||||||||
| Steven Bayern (35) | 4,920,000 | 12.20 | % | 492,000 | 4,428,000 | 10.9 | % | |||||||||||||
| Herbert Gould, M.D. (36) | 400,000 | * | 40,000 | 360,000 | * | |||||||||||||||
| PDS Trust, dated 10/18/2000 (37) | 95,000 | * | 95,000 | 0 | 0 | % | ||||||||||||||
| Patricia Sheehan CFBO, Ashley Godshall (38) | 3,333 | * | 3,333 | 0 | 0 | % | ||||||||||||||
| Patricia Sheehan CFBO, James Sanborn (39) | 3,333 | * | 3,333 | 0 | 0 | % | ||||||||||||||
| Patricia Sheehan CFBO, Lindsay Doyle (40) | 3,334 | * | 3,334 | 0 | 0 | % | ||||||||||||||
| Patricia Sheehan CFBO THE SANBORN REVOCABLE LIVING TRUST (41) | 10,000 | * | 10,000 | 0 | 0 | % | ||||||||||||||
| Patricia Sheehan CFBO William C. Frankmore and Shelby S. Frankmore (42) | 22,500 | (43) | * | 22,500 | (43) | 0 | 0 | % | ||||||||||||
| Patricia Sheehan CFBO Sheehan Family Trust, December 6, 2008 (44) | 27,500 | (45) | * | 27,500 | (45) | 0 | 0 | % | ||||||||||||
| Bruce Blakely | 75,000 | (46) | * | 25,000 | 50,000 | * | ||||||||||||||
| IRA Services Trust CO. CFBO Bruce W. Blakely ROTH IRA613009 (47) | 50,000 | * | 50,000 | 0 | 0 | % | ||||||||||||||
| Charles Dorn | 27,601 | (48) | * | 20,601 | 7,000 | * | ||||||||||||||
| Provident Trust Group FBO, Chuck Dorn ROTH IRA3201358 (49) | 7,000 | * | 7,000 | 0 | 0 | % | ||||||||||||||
| Scott Fenning | 30,000 | (50) | * | 10,000 | 20,000 | * | ||||||||||||||
| Scott & Sharon Fenning | 20,000 | * | 20,000 | 0 | 0 | % | ||||||||||||||
| Marcia M. Fenning Trust UA dated 11/19/73 (51) | 7,500 | * | 7,500 | 0 | 0 | % | ||||||||||||||
| TOTAL | 46,536,713 | 8,766,561 | 9,936,000 | |||||||||||||||||
* Less than 1%.
| -25- |
(1) Assumes that all of the Resale Shares held by the Selling Stockholders covered by this prospectus are sold and that the Selling Stockholders acquire no additional shares of common stock before the completion of this offering. However, as the Selling Stockholders can offer all, some, or none of their Resale Shares, no definitive estimate can be given as to the number of Resale Shares that the Selling Stockholders will ultimately offer or sell under this prospectus.
(2) Calculated based on 46,041,327 shares of common stock issued and outstanding as of February 1, 2021.
(3) Morland McManigalis the Trustee of Morland G. McManigal Trust and in such capacity has the right to vote and depose of the securities held by such trust.
(4) Philip Petruzzelli is the Beneficiary IRA Services Trust Co. CFBO, Philip Petruzzelli and in such capacity has the right to vote and depose of the securities held by such trust.
(5) Jeffrey Allen is the Beneficiary of IRA Services Co. CFBO Jeffrey N. Allen SEP IRA561009 and in such capacity has the right to vote and depose of the securities held by such trust.
(6) Michael Rostad is the Trustee and Sandra Rostad is the Trustee of The Rostad Family Trust and in such capacity has the right to vote and depose of the securities held by such trust.
(7) Includes (i) 1,000 shares of common stock and (ii) 11,500 shares of common stock issuable upon exercise of warrants.
(8) Marshall Gifford is the Trustee of Theresa D. Gifford Revocable Trust and in such capacity has the right to vote and depose of the securities held by such trust.
(9) David Rodin is the Trustee under trust instrument dated March 2, 2010 and Heather Yeckes Rodin is Trustee under trust instrument dated March 1, 2010 and in such capacity have the right to vote and depose of the securities held by such trust.
(10) Barbara Maddox is the Trustee of Barbara T. Maddox Revocable Living Trust dated March 13, 2000 and in such capacity has the right to vote and depose of the securities held by such trust.
(11) Dianne C. DeBoest is the Trustee of the Dianne C. DeBoest Revocable Trust, dated January 28, 2013, as amended and in such capacity that has the right to vote and depose of the securities held by such trust.
(12) Hans Van Bolrik is the Trustee of Survivors Trust of the Hans & Elsie Van Boldrick Trust of 1982 and in such capacity has the right to vote and depose of the securities held by such trust.
| -26- |
(13) Douglas Bertsch is the Beneficiary of Provident Trust Group FBO, Douglas Bertsch ROTH IRA3201389 and in such capacity has the right to vote and depose of the securities held by such trust.
(14) Steven H. Wilhelm is the Trustee of the Liza and Steve Trust of 2013 and in such capacity has the right to vote and depose of the securities held by such trust.
(15) Dessislava Boneva, M.D. is the Trustee of The Boston Strong Trust and in such capacity has the right to vote and depose of the securities held by such trust.
(16) Gary Banister is the Trustee of Gary A. Banister and Janice D. Banister Trust dated February 2000 and in such capacity has the right to vote and depose of the securities held by such trust.
(17) Monique Slone is the Beneficiary of IRA Services Trust Co. CFBO Monique Slone IRA747130 and in such capacity has the right to vote and depose of the securities held by such trust.
(18) Deborah Gissoni is the Trustee of Deborah Gisonni & Joseph Prestipino TTEE’s and in such capacity has the right to vote and depose of the securities held by such trust.
(19) Raymond Kaliski is the Trustee of The Raymond William Kaliski and Carla Daro Kaliski Family Trust and in such capacity has the right to vote and depose of the securities held by such trust.
(20) Donald C. Hansen and Joan C. Hansen are the Co-Trustees of The Donald and Joan Hansen Trust dated 06/01/1993 and in such capacity have the right to vote and depose of the securities held by such trust.
(21) John C. Kinnear III & Barbara E. Kinnear are the Co-Trustees of the Kinnear Trust, dated July 13, 2000 and in such capacity have the right to vote and depose of the securities held by such trust.
(22) Includes (i) 12,500 shares of common stock issuable upon exercise of warrants.
(23) Includes (i) 12,500 shares of common stock issuable upon exercise of warrants.
(24) Joseph Fontanetta is the Chief Executive Officer of Diopsys and in such capacity has the right to vote and depose of the securities held by such trust. The address of Diopsys is 16 Chapin Road Suite 911-912, Pine Brook, New Jersey 07058.
(25) Includes (i) 3,846,400 shares of common stock issuable upon exercise of option shares.
(26) Includes (i) 600,000 shares of common stock issuable upon exercise of option shares.
(27) Includes (i) 600,000 shares of common stock issuable upon exercise of option shares.
(28) Includes (i) 300,000 shares of common stock issuable upon exercise of option shares.
(29) Includes (i) 100,000 shares of common stock issuable upon exercise of option shares.
(30) Includes (i) 100,000 shares of common stock issuable upon exercise of option shares.
(31) Includes (i) 100,000 shares of common stock issuable upon exercise of option shares.
(32) Robert L. Brisotti is the Managing Director of Benchmark and in such capacity has the right to vote and depose of the securities held by such trust. The address of Benchmark is The Benchmark Company, LLC – Member FINRA, SIPC, 150 East 58th Street, 17th Floor, New York, NY 10155.
(33) Includes (i) 500,000 shares of common stock issuable upon exercise of option shares.
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(34) Jerry Katzman is the President of the board of directors and Chief Executive Officer of Retinalgenix Technologies Inc. effective as of April 15, 2019.
(35) Steven Bayern is a consultant of Retinalgenix Technologies Inc. effective as of July 5, 2018.
(36) Herbert L. Gould is a member of the board of directors of Retinalgenix Technologies Inc. effective as of April 15, 2019.
(37) Patricia D. Sheehan is the Trustee of PDS Trust dated 10/18/2000 and in such capacities has the right to vote and depose of the securities held by such trust.
(38) Patricia Sheehan is the Custodian of Patricia Sheehan CFBO, Ashley Godshall and in such capacity has the right to vote and depose of the securities held by such trust.
(39) Patricia Sheehan is the Custodian of Patricia Sheehan CFBO, James Sanborn and in such capacity has the right to vote and depose of the securities held by such trust.
(40) Patricia Sheehan is the Custodian of Patricia Sheehan CFBO, Lindsay Doyle and in such capacity has the right to vote and depose of the securities held by such trust.
(41) Patricia Sheehan is the Custodian of Patricia Sheehan CFBO THE SANBORN REVOCABLE LIVING TRUST and in such capacity has the right to vote and depose of the securities held by such trust.
(42) Patricia Sheehan is the Custodian of Patricia Sheehan CFBO William C. Frankmore and Shelby S. Frankmore and in such capacity has the right to vote and depose of the securities held by such trust.
(43) Includes (i) 10,000 shares of common stock and (ii) 12,500 shares of common stock issuable upon exercise of warrants.
(44) Patricia Sheehan is the Custodian of Patricia Sheehan CFBO Sheehan Family Trust, December 6, 2008 and in such capacity has the right to vote and depose of the securities held by such trust.
(45) Includes (i) 15,000 shares of common stock and (ii) 12,500 shares of common stock issuable upon exercise of warrants.
(46) Includes (i) 25,000 shares of common stock held by Bruce Blakely and (ii) 50,000 shares of common stock held by IRA Services Trust Co. CFBO Bruce W. Blakely ROTH IRA613009. Bruce Blakely is the Beneficiary of IRA Services Trust Co. CFBO Bruce W. Blakely ROTH IRA613009 and in such capacity has the right to vote and depose of the securities held by such trust.
(47) Bruce Blakely is the Beneficiary of IRA Services Trust Co. CFBO Bruce W. Blakely ROTH IRA613009 and in such capacity has the right to vote and depose of the securities held by such trust.
(48) Includes (i) 20,601 shares of common stock held by Charles Dorn and (ii) 7,000 shares of common stock held by Provident Trust Group FBO, Chuck Dorn ROTH IRA3201358. Charles Dorn is the Beneficiary of Provident Trust Group FBO, Chuck Dorn ROTH IRA3201358 and in such capacity has the right to vote and depose of the securities held by such trust.
(49) Charles Dorn is the Beneficiary of Provident Trust Group FBO, Chuck Dorn ROTH IRA3201358 and in such capacity has the right to vote and depose of the securities held by such trust.
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(50) Includes (i) 10,000 shares of common stock held by Scott Fenning and (ii) 20,000 shares of common stock held by Scott and Sharon.
(51) Marcia M. Fenning is the Trustee of Marcia M. Fenning Trust UA dated 11/19/73 and in such capacity has the right to vote and depose of the securities held by such trust.
Up to 8,766,561 shares of common stock are being offered by this prospectus, all of which are being registered for sale for the accounts of the Selling Stockholders. We will not receive any of the proceeds from the sale by the Selling Stockholders of the Resale Shares. Any proceeds received from exercise of Options or Warrants by the Selling Stockholders will be used for working capital purposes. We will bear all fees and expenses incident to this registration.
The Selling Stockholders may sell all or a portion of the Resale Shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the Resale Shares are sold through underwriters or broker-dealers, the Selling Stockholders will be responsible for underwriting discounts or commissions or agent’s commissions. The Selling Stockholders will sell their Resale Shares at $1.00 per share until our shares are quoted on the OTCQB, OTCQX or listed on a national securities exchange, such as the NYSE American or The Nasdaq Capital Market. After such time as we are listed on a national securities exchange, or quoted on the OTCQB or OTCQX, the Resale Shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale (if a public market exists), at varying prices determined at the time of sale, or at negotiated prices. All sales may be effected in transactions, which may involve crosses or block transactions:
| ● | on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; | |
| ● | in the over-the-counter market; | |
| ● | in transactions otherwise than on these exchanges or systems or in the over-the-counter market; | |
| ● | through the writing of options, whether such options are listed on an options exchange or otherwise; | |
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; | |
| ● | block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; | |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; | |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; | |
| ● | privately negotiated transactions; | |
| ● | settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part; | |
| ● | sales pursuant to Rule 144, Rule 144A or Regulation S under the Securities Act, if available, rather than under this prospectus; | |
| ● | broker-dealers may agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per share; |
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| ● | a combination of any such methods of sale; and | |
| ● | any other method permitted pursuant to applicable law. |
If the Selling Stockholders effect such transactions by selling Resale Shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the Selling Stockholders or commissions from purchasers of the Resale Shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of the Resale Shares or otherwise, the Selling Stockholders may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of shares of common stock in the course of hedging in positions they assume. The Selling Stockholders may also sell shares of common stock short and deliver Resale Shares covered by this prospectus to close out short positions and to return borrowed common stock in connection with such short sales. The Selling Stockholders may also loan or pledge common stock to broker-dealers that in turn may sell such shares of common stock.
The Selling Stockholders may pledge or grant a security interest in some or all of the Resale Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Resale Shares from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending, if necessary, the list of Selling Stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus. The Selling Stockholders also may transfer and donate the Resale Shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The Selling Stockholders and any broker-dealer participating in the distribution of the Resale Shares may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the Resale Shares is made, a prospectus supplement, if required, will be distributed which will set forth the aggregate amount of Resale Shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the Selling Stockholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers.
Under the securities laws of some states, the Resale Shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the Resale Shares may not be sold unless such securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There can be no assurance that any Selling Stockholders will sell any or all of the Resale Shares registered pursuant to the registration statement, of which this prospectus forms a part.
The Selling Stockholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Resale Shares stock by the Selling Stockholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the Resale Shares to engage in market-making activities with respect to the Resale Shares. All of the foregoing may affect the marketability of the Resale Shares and the ability of any person or entity to engage in market-making activities with respect to the Resale Shares.
General
Our authorized capital stock consists of 80,000,000 shares of common stock, par value $0.0001 per share, and 40,000,000 shares of preferred stock, par value $0.0001 per share.
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As of February 1, 2021, there were 75 record holders of our securities. As of February 1, 2021 there were 46,041,327 shares of common stock and 3,000,000 shares of Series F Preferred Stock issued and outstanding.
The following description of our capital stock and provisions of our Certificate of Incorporation and Bylaws. You should also refer to our Certificate of Incorporation and Bylaws copies of which are filed as exhibits to the registration statement of which this prospectus is a part.
Common Stock
We are authorized to issue up to a total of 80,000,000 shares of common stock, par value $0.0001 per share. Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of our stockholders. Holders of our common stock have no cumulative voting rights.
Further, holders of our common stock have no preemptive or conversion rights or other subscription rights. Upon our liquidation, dissolution or winding-up, holders of our common stock are entitled to share in all assets remaining after payment of all liabilities and the liquidation preferences of any of our outstanding shares of preferred stock. Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of our common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors out of our assets which are legally available.
The holders of a majority of the shares of our capital stock, represented in person or by proxy, are necessary to constitute a quorum for the transaction of business at any meeting. If a quorum is present, an action by stockholders entitled to vote on a matter is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action, with the exception of the election of directors, which requires a plurality of the votes cast.
Preferred Stock
Our board of directors will have the authority, without further action by the stockholders, to issue up to 40,000,000 shares of preferred stock in one or more series and to fix the designations, powers, preferences, privileges, and relative participating, optional, or special rights as well as the qualifications, limitations, or restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, and liquidation preferences, any or all of which may be greater than the rights of the common stock. Our board of directors, without stockholder approval, will be able to issue preferred stock with voting, conversion, or other rights that could adversely affect the voting power and other rights of the holders of common stock. Preferred stock could be issued quickly with terms calculated to delay or prevent a change of control or make removal of management more difficult. Additionally, the issuance of preferred stock may have the effect of decreasing the market price of our common stock, and may adversely affect the voting and other rights of the holders of common stock.
Series F Preferred Stock
We are authorized to issue up to a total of 3,000,000 shares of Series F Preferred Stock, par value $0.0001 per share, of which all 3,000,000 shares are issued and outstanding as of February 1, 2021.
Voting
Holders of the Series F Preferred Stock are entitled to such number of votes equal to the number of shares of common stock issuable upon conversion of such preferred stock. Holders of our Series F Preferred Stock shall vote together, as a single class, with all holders of our common stock; provided, however, that the holders of Series F Preferred Stock may, exclusively and as a separate class, elect two directors. The right to elect two directors shall terminate on the date upon which there are less than 25,000 shares of Series F Preferred Stock issued and outstanding.
Conversion
Holders of the Series F Preferred Stock may, at any time, convert such preferred stock into such number of common stock as is determined by dividing the Series F Original Issue Price by the Series F Conversion Price. “Series F Original Issue Price” initially means $0.01. “Series F Conversion Price” initially means $0.01.
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Upon either (i) the closing of the sale of shares of our common stock to the public in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, resulting in at least $15 million of gross proceeds, provided that after such offering, our common stock is traded on a U.S. national securities exchange or (ii) the date and time or occurrence of an event specified by vote or written consent of the holders of at least a majority of the Series F Preferred Stock then outstanding, all outstanding shares of Series F Preferred Stock shall automatically be converted into shares of our common stock at the then effective conversion rate. Furthermore, the Series F Preferred Stock shall automatically convert into shares of our common stock immediately upon the earliest of (i) the date specified by written consent of at least 67% of the holders of the Series F Preferred Stock or (ii) the transfer of shares of Series F Preferred Stock other to a Permitted Transferee (as defined in the Certificate of Incorporation).
Protective Provisions
At any time when there is at least 25,000 shares of Series F Preferred Stock outstanding, we shall not, among other things, take any of the following actions without the prior written consent or vote of the holders of at least a majority of the then outstanding shares of Series F Preferred Stock:
| ● | effect any amendment, modification, alteration or repeal of any provision of our Certificate of Incorporation or Bylaws that would adversely affect any right, preference or privilege of the Series F Preferred Stock; | |
| ● | increase or decrease the total number of authorized shares of Series F Preferred Stock; | |
| ● | authorize or issue any other security convertible into or exercisable for any equity security, having rights, preferences or privileges senior to or on parity with the Series F Preferred Stock with respect to directors or voting rights; | |
| ● | increase or decrease the authorized number of directors constituting the board; or | |
| ● | effect a recapitalization of our outstanding capital stock, including the Series F Preferred Stock. |
Options
Our 2017 Equity Incentive Plan provides for us to sell or issue up to 10,00,000,000 reserved shares of common stock or to grant incentive stock options or nonqualified stock options, stock appreciation rights and restricted stock unit awards for the purchase of shares of common stock, to our and our subsidiaries’ employees, members of the board of directors and consultants. As of February 1, 2021, no options to purchase common stock pursuant to our 2017 Equity Incentive Plan were outstanding. For additional information regarding the terms of the 2017 Equity Incentive Plan, see “Executive and Director Compensation — 2017 Equity Incentive Plan.”
Exclusive Forum
Our Certificate of Incorporation provides that unless we consent in writing to the selection of an alternative forum, the State of Delaware is the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of our Company to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL of our Certificate of Incorporation or Bylaws or (iv) any action asserting a claim governed by the internal affairs doctrine.
Anti-Takeover Provisions of Delaware Law, our Certificate of Incorporation and our Bylaws
Delaware Law
We are governed by the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly traded Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A business combination includes mergers, asset sales or other transactions resulting in a financial benefit to the stockholder. An interested stockholder is a person who, together with affiliates and associates, owns (or within three years, did own) 15% or more of the corporation’s voting stock, subject to certain exceptions. The statute could have the effect of delaying, deferring or preventing a change in control of our Company.
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Special Meeting of Stockholders
Our Bylaws provide that special meetings of our stockholders may be called by our board, the Chairman of the board, or, in the absence or disability of the Chairman (including an absence because no Chairman shall have been designated), the President. In addition, stockholders having, in the aggregate, the right to cast more than 25% of the votes, may request a special meeting.
Authorized but Unissued Shares
Our authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval and may be utilized for a variety of corporate purposes, including future public offerings to raise capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Continental Stock Transfer and Trust at 1 State St., Floor 30, New York, Ny 10004.
Business Overview
We are an ophthalmic research and development company focused on developing technologies to screen, monitor, diagnose and treat ocular, optical, and sight-threatening disorders. Our mission is to prevent vision loss and blindness due to diabetic retinopathy and maculopathy through two devices: (1) Retinal Imaging Screening Device, a portable, retinal imaging system providing a 200-degree field of view without requiring pupil dilation; and (2) RetinalCamTM, a home monitoring and imaging device offering real-time communication with physicians available 24/7.
One of the effects of diabetes is retinopathy, and subsequent diabetic maculopathy, characterized by loss of visual function through occlusion of image transmission externally, internally or by destruction of the image sensors in the macula themselves. The macula contains the majority and highest density of color and vision light sensors with providing maximum visual image resolution. Signals are passed through the retinal nerve fiber layer to the optic nerve, an extension of the brain, accumulating retinal nerve bundles forming trunks of connections to pass signals to the brain. The final images pass via the occipital lobe, then processed by the brain. When the retina degenerates on itself, as a degenerative process, patients experience loss of vision due to bleeding, retinal detachment, and other factors. Retinopathy in diabetes can also lead to a degenerative maculopathy, a progressive disease that can lead to vision loss and permanent blindness. Early detection for all causes of visual loss leading to macula disruption, destruction and occlusion are critical in preventing blindness in any form, and most importantly where progression is possible. We believe if detected early and properly treated, the progression of retinopathy can be slowed or even stopped, so that vision can be maintained.
Currently, the standard of care requires patients physically go into an office to have their pupil dilated, which, among other things, is costly, time consuming and may cause the patient discomfort. Instead of dilating pupils, some physicians opt to instead use a microscope-like device to detect early signs of diabetic retinopathy, but most such devices have a fixed field of view, typically between 20 to 50 degrees and therefore, because the limited field of view does not allow view of the periphery, where retinopathy typically begins, may not detect signs of retinopathy. By the time the retinopathy reaches the center of the eye and can be seen by such instruments with a limited field of view, it can be too late to treat and may result in blindness. Currently, the only way for a physician to see changes in the periphery of the eye is by an exam after dilation through use of an instrument that has a 200 degree field of view. A patient, when seen without a dilated eye exam, may be misled to believe there is no evidence of retinopathy during the early stages, because without dilation, such diagnosis can be easily missed.
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We have developed two products aimed at preventing loss of vision. Specifically, we have developed (1) the RetinalGeniXTM Imaging System, a mass retinal imaging screening device and (2) the RetinalCamTM, an in-home retinal monitoring, imaging, and physician alert system.
RetinalGeniXTM Imaging System – Mass Retinal Imaging Screening Device
RetinalGeniXTM is a patented portable mass retinal imaging screening device with a high resolution 200-degree field of view. It is intended to be a cost-effective, ultra-wide imaging technology used to examine the periphery of the retina, without the need for dilation. It can also be used to screen patients for neurological diseases and detect early signs of diabetic retinopathy. We believe RetinalGeniXTM may detect a variety of health issues including diabetes, retinopathy, ocular tumors, Alzheimer’s and autoimmune diseases, without the discomfort associated with pupil dilation. We believe RetinalGeniXTM will enable ophthalmologists, retinal specialists and optometrists to perform a more accurate screening in less than one minute at a low-cost and with an improved field of view.
RetinalCamTM – In-Home Retinal Monitoring, Imaging, and Physician Alert System
RetinalCamTM is a patented in-home ocular and retinal monitoring device. On a real time basis and from their homes, individuals at high risk of vision loss or blindness can alert their physician of any vision changes. The images may provide critical information in detecting abnormalities upon onset, potentially preventing degradation of a patient’s ocular health that might result in vision loss of blindness, if left untreated. The device connects directly to the internet or uses Wi-Fi to capture and transmit high resolution digital images directly to their doctors from the patient’s home. Patients at risk include those with obesity, diabetes, cardiovascular disorders, macular degeneration, neurological disorders, ocular tumors, physical disabilities and individuals that lack regular access to eye. The images captured by RetinalCamTM may provide patients with the opportunity to detect if any changes had occurred since their prior screenings.
We believe RetinalCamTM may offer an opportunity to prevent blindness by early detection of progression by high-risk individuals. We believe, future treatments targeted at COVID-19 may have toxic effects on the macula, which would result in a patient requiring close monitoring of their eyes. In July 2020, a study published in the European Association for the Study of Diabetes Journal, reported 46% of COVID-19 patients with diabetic maculopathy experienced vascular changes in the retina periphery. We anticipate the high incidence of microvascular changes may demonstrate a potential sign of the severity and a risk factor for death in COVID-19 patients with diabetic maculopathy.
Market Opportunity
According to Reuters, 2.1 billion people, or nearly 30% of the world’s population is obese or overweight, and according to the World Health Organization, obesity has reached epidemic proportions with at least 2.8 million people dying each year as a result of being overweight or obese. Obesity is a major risk factor in diseases including, but not limited to, diabetes. Globally, 39% of adults and 18% of children and adolescents are overweight or obese. In most high income countries, about two-thirds of adults are overweight or obese, and in the U.S. 70% are overweight or obese. According to The International Federation of Diabetes, there were 463 million adults worldwide with diabetes in 2019, and it is estimated that by 2045, there will be 700 million adults worldwide with diabetes. Furthermore, a 2017 study published by the National Institutes of Health indicated that diabetic retinopathy affects approximately 35% of diabetics and is a leading cause of blindness worldwide. According to the Centers for Disease Control and Prevention, 34.2 million patients in the U.S. have diabetic maculopathy, with 26.9 million diagnosed, and 7.3 million undiagnosed. In addition, 88 million are pre-diabetics of which 84%, or 74 million, are undiagnosed. Diabetic maculopathy effects 500 million patients globally.
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Competition
The ophthalmic medical technology industries utilize rapidly advancing technologies and are characterized by intense competition. There is a strong emphasis on intellectual property and proprietary products. We face competition from different sources including ophthalmic medical technology companies, academic institutions, government agencies, and public and private research institutions. Specifically, we face competition from Optomed plc. and Optos plc. Many of our competitors have significantly greater financial resources and expertise in research and development, medical device development and obtaining regulatory approvals than us as well as more established distribution networks and relationships with healthcare providers. Mergers and acquisitions in the ophthalmic medical technology industries may result in even more resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified personnel, as well as in acquiring technologies complementary to our products.
Manufacturing and Distribution
We have engaged ADM Tronics, Inc. to design, engineer and provide regulatory services related to RetinalGenixTM and RetinalCam.TM In addition, we have engaged Diopsys, Inc. to serve as the exclusive distributor of RetinalGenixTM and RetinalCam TM in the United States and Europe if and when our products available for commercialization. Pursuant to our Option Exchange Agreement with Diopsys, we granted Diopsys the right to act as the exclusive distributor of our products and issued Diopsys an option to purchase up to 10% of our issued and outstanding shares of common stock. In addition, Diopsys granted us an option to purchase up to 10% of the issued and outstanding shares of common stock of Diopsys. Both options expire on October 8, 2022.
Intellectual Property Portfolio
Our success depends in large part on our ability to protect our proprietary technologies and information, and to operate without infringing the proprietary rights of third parties. We rely on a combination of patent, trade secret, trademark, and copyright laws, as well as confidentiality and other agreements, to establish and protect our proprietary rights. In addition to patent protection, we rely on trade secrets, proprietary know-how, and continuing technological advances to develop and maintain our competitive position. Our goal is to obtain, maintain and enforce patent protection for our products, preserve our trade secrets, and operate without infringing on the proprietary rights of other parties.
Government Regulations
Our business is subject to extensive, complex, and rapidly changing federal and state laws and regulations. Various federal and state agencies have discretion to issue regulations any interpret and enforce healthcare laws. While we believe we comply in all material respects with applicable healthcare laws and regulations, these regulations can vary significantly from jurisdiction, and interpretation of existing laws and regulations may change periodically. Federal and state legislatures also may enact various legislative proposals that could materially impact certain aspects of our business.
In the United States, medical devices are classified into one of three classes (e.g., Class I, II or III). The class to which the device is assigned determines, among other things, the type of pre-marketing submission and application required for FDA clearance to market. If the device is classified as Class I or II, unless otherwise exempt, requires a 510(k) pre-market notification be received prior to marketing. Under FDA regulations, Class I devices are subject to general controls (e.g., labeling, pre-market notification and adherence to Quality System Regulations (“QSRs”) requirements). Class II devices receive marketing clearance through a 510(k) pre-market notification. For Class III devices, a PMA application will be required unless the device is a pre-amendments device (on the market prior to the passage of the medical device amendments in 1976, or substantially equivalent to such a device) and PMAs have not been called for. In that case, a 510(k) will be the route to market. A 510(k) clearance will be granted if the submitted information establishes that the proposed device is substantially equivalent to a legally marketed Class I or II medical device, or to a Class III medical device for which the FDA has not called for a PMA. The FDA may determine that a proposed device is not substantially equivalent to a legally marketed device or that additional information or data are needed before a substantial equivalence determination can be made. A request for additional data may require that clinical studies of the device’s safety and efficacy be performed.
Commercial distribution of a device for which a 510(k) notification is required can begin only after the FDA issues an order finding the device to be substantially equivalent to a previously cleared device. Even in cases where the FDA grants a 510(k) clearance, it may take the FDA between four and nine months from the date of submission to grant a 510(k) clearance, but may take longer.
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A “not substantially equivalent” determination, or a request for additional information, could delay the market introduction of new products that fall into this category and could have a material adverse effect on our business, financial condition and results of operations. For any of our products that are cleared through the 510(k) process, modifications or enhancements that could significantly affect the safety or efficacy of the device or that constitute a major change to the intended use of the device will require new 510(k) submissions.
Any products manufactured or distributed by us pursuant to FDA clearances or approvals are subject to pervasive and continuing regulation by the FDA, including record keeping requirements and reporting of adverse experiences with the use of the device. Device manufacturers are required to register their establishments and list their devices with the FDA and certain state agencies, and are subject to periodic inspections by the FDA and certain state agencies. The Federal Food, Drug and Cosmetic Act (“FD&C Act”) requires devices to be manufactured to comply with applicable QSR regulations which impose certain procedural and documentation requirements upon us with respect to design, development, manufacturing and quality assurance activities. We are subject to unannounced inspections by the FDA and the Food and Drug Branch of the California Department of Public Health, to determine our compliance with the QSR and other regulations, and these inspections may include the manufacturing facilities of our subcontractors.
Labeling and promotion activities are subject to scrutiny by the FDA and in certain instances, by the Federal Trade Commission. The FDA actively enforces regulations prohibiting marketing of products for unapproved uses. We and our products are also subject to a variety of state laws and regulations in those states or localities where our products will be marketed. Any applicable state or local regulations may hinder our ability to market our products in those states or localities. Manufacturers are also subject to numerous federal, state and local laws relating to such matters as safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances. We may be required to incur significant costs to comply with such laws and regulations now or in the future. Such laws or regulations may have a material adverse effect upon our ability to do business.
Export of our products is regulated by the FDA and subject to the FD&C Act, 21 U.S.C. §§321-397, and other statutes FDA administers, which greatly expanded the export of approved and unapproved United States medical devices. However, some foreign countries require manufacturers to provide a specific type of FDA export certificate (such as a Certificate to Foreign Government or Certificate of Exportability) which requires the device manufacturer to certify to the FDA that the product has been granted pre-market clearance in the United States and that the manufacturing facilities appeared to be in compliance with QSR at the time of the last QSR inspection. The FDA will refuse to issue any export certificate if significant outstanding QSR violations exist.
We believe RetinalGenixTM will require 510(k) clearance, and we intend to file a submission seeking such clearance accordingly. However, we believe RetinalCamTM will be considered an exempt device because it is non-diagnostic in nature and do not anticipate needing 510(k) clearance to market such product. We believe our device will fall as a Class II Medical Device under the FDA Medical Device Classification system. PJZ cameras are prescription devices indicated only for the capture and storage of images of the eye and surrounding area in the general population. PJZ cameras cannot be indicated for any specific population (e.g., pediatrics, AMD patients, etc.), cannot contain any type of “diagnostic” or “aid in diagnosis” claims in the indication for use, and cannot reference any specific disease. PJZ cameras do not exceed group 1 radiant exposure limits for ultraviolet, visible, and infrared radiation under all light energy conditions, as defined in the ANSI Z80.36-2016 standard Light Hazard Protection for Ophthalmic Instruments. PJZ cameras are designed for true color or monochrome imaging in visible spectrum of light and consists of an incoherent light source, image forming lens, aperture, and a sensitive photodetector array (e.g., a CCD or CMOS array) in the image plane. PJZ excludes cameras that make use of advanced imaging technology (e.g., confocal imaging, adaptive optics, two photon imaging, stroboscopic or scanning illumination). PJZ excludes cameras that feature any special imaging modalities, such as multispectral imaging, fluorescence, autofluorescence, fluorescein angiography, indocyanine green (ICG) angiography, etc. PJZ exclude cameras that designed to contact cornea or any other ocular structure for imaging. PJZ cameras shall meet optical performance characteristics stated in the ISO 10940-2009 standard, Ophthalmic instruments— Fundus cameras. PJZ cameras are limited to basic processing of the displayed image (brightness, contrast, white balance) and does not include any advanced software capabilities (e.g., image feature measurements, cup-to-disc ratio analysis, image feature extractions, segmentation, image registration, analysis of oxygen saturation, blood flow velocity) or reference database. Image storage capability should include read-only raw data format. If compressed images are saved, they must be distinguished from and traceable to the raw source image. PJZ cameras are normally considered Class II medical devices in the FDA’s Medical Device Classification system. These devices are not exempt for GMP (Good Manufacturing Procedures), or Summary Malfunction Reporting.
If we were to be classified as a Class II Medical Device, such classification would require us to show our device bears a “substantial equivalence” to a predicate medical device in order to qualify for an inclusion pursuant a FDA 510(k) Premarket Notification submission. We anticipate this showing will require clinical evidence of safety and efficacy, generated through a regulated, randomized clinical trial or field evaluation. Class II medical devices are more complicated than Class I devices and present a higher category of risk because they are more likely to come into sustained contact with a patient. The FDA defines Class II devices as “devices for which general controls are insufficient to provide reasonable assurance of the safety and effectiveness of the device. We will need to obtain FDA clearance pursuant to all applicable medical device standards prior to the device’s release to market. FDA clearance for ophthalmological devices usually require about 170 days. We expect to launch product says by January 2022.
We will need to present a Device History File recording any clinical evidence collected through trials or field evaluations to demonstrate the RetinalCam’s FDA market clearance prior to the device’s release in the EU market. However, we believe the RetinalCam will be considered an exempt device. In the EU, RetinalCam would be considered a normal Class 2a medical device, and would be subject to the normal accession requirements. EU Class 2a is equivalent to the US FDA Class II medical device and EU CE Mark is granted once FDA Class II is approved. There are no “exemptions” in the Medical Device Directive (MDD). The manufacturer will have to be certified to ISO 13485, and the product will have to be qualified to, and certified with, the appropriate CE mark. Therefore, the product will need to be developed, tested and pass all appropriate harmonized standards. If the manufacturer is not self-certifying, outside agencies will be required to test and certify that the device will be safe and effective. That will include providing clinical evidence of safe and effective use prior to the product being released for general market introduction.
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Employees
As of February 1, 2021, we had 0 full-time employees and 1 part-time employee. We are not a party to any collective bargaining agreements. We believe that we maintain good relations with our employee.
Legal Proceedings
From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings or claims that will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.
Corporate Information
We were incorporated in Delaware on November 17, 2017. Our principal executive offices are located at 1450 North McDowell Boulevard, Suite 150, Petaluma, CA 94954 and our telephone number is (415) 578-9583. Our website address is https://retinalgenix.com. The information contained on our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our securities.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is currently no public market for our shares of common stock. We intend to seek a listing of our common stock on the OTCQB under the symbol “RTNL,” if available; however, we cannot assure you that our listing will be approved or that a public trading market for our common stock will ever develop.
Dividend Policy
We have not paid any cash dividends on our capital stock and we do not expect to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business. The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors considers significant.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and results of operations in conjunction with our financial statements and notes thereto, as well as the “Risk Factors” and “Description of Business” sections included elsewhere in this prospectus. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in “Risk Factors.”
We are a medical device company developing a novel approach to early diagnosis of retinopathy and other ocular diseases. Our mission is to create two products. The first product RetinalGeniXTM Imaging System, is for office use to identify early onset retinopathy using a wide field of view diagnostic camera that does not require patient pupil dilation. The second product, RetinalCamTM, is for home use for early detection of retinopathy and physician alert.
We were incorporated under the laws of the State of Delaware on November 17, 2017. We anticipate having patented technology that will allow us to produce an office device superior to those on the market at an attractive price point. We believe our home device will allow patients to immediately provide a scan the eye and notify the doctor’s office with a cost-effective product superior to anything currently on the market.
To date, we have devoted substantially all of our resources to organizing, business planning, raising capital, designing and developing product candidates, and securing manufacturing and sales/distribution partners. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations primarily through the private placement of common stock.
We will need $5,000,000 to complete product design and testing for both devices and submit the office device for FDA approval. We anticipate the home device will not require need FDA approval. We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for our home device. In addition, if we obtain marketing approval for any product candidate, we expect expenses to be minimal and born by our sales and distribution partner in exchange for a piece of the profit. Furthermore, upon completion of this offering, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations, compliance and other expenses that we did not incur as a private company.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through public or private equity offerings, debt financings, collaborations and licensing arrangements or other capital sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates.
Because of the numerous risks and uncertainties we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
As of February 8, 2021, we had cash and cash equivalents of $54,000.
We currently have no debt.
Cash Flows from Operating Activities
To date, we have devoted substantially all of our resources to organizing, business planning, raising capital, designing and developing product candidates, and securing manufacturing and sales/distribution partners. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations to private investors.
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There is currently no debt. We will need $5,000,000 in operating capital to complete both products design, development and testing as well as complete any FDA requirements for the RetinalGeniXTM Imaging System device. We anticipate the RetinalCamTM device will not require FDA 510(k) pre market clearance. We do not expect to generate any revenues from product sales unless and until we successfully complete development and obtain regulatory approval for our home device. In addition, due to a marketing and sales agreement between Diopsys and Retinalgenix, all sales and marketing as well as customer service, accounting and collections will be provided at the expense of Diopsys. Only the cost of goods and commissions are paid out prior to a revenue split with Diopsys of 50/50. The operating capital will be needed for any additional costs upon completion of this offering, associated with operating as a public company, including significant legal, accounting, investor relations, compliance and other expenses that we did not incur as a private company.
As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from sales of our product candidates, if ever, we expect to finance our cash needs through public or private equity offerings, debt financings, collaborations and licensing arrangements or other capital sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and could force us to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates.
Because of the numerous risks and uncertainties we are unable to accurately predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
Off-Balance Sheet Arrangements; Commitments and Contractual Obligations
As of December 31, 2019, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
Set forth below is certain information regarding our executive officers and directors. Each of the directors listed below was elected to our board of directors to serve until our next annual meeting of stockholders or until his or her successor is elected and qualified. The following table sets forth information regarding the members of our board of directors and our executive officers:
| Name | Age | Position | ||
| Jerry Katzman | 68 | Chief Executive Officer, President and Director | ||
| Herbert Gould | 91 | Chief Science Officer and Director |
Biographies for the members of our board of directors and our management team are set forth below.
Jerry Katzman. Jerry Katzman has served as the Company’s Chief Executive Officer and President since December 2018 and a member of the Company’s board of directors since August 2018. In addition, since December 2018, he has served as the Chief Executive Officer, President and Chairman of the board of directors of Sanovas Inc., our parent company. In 2013, he founded Disruptor Technologies, a marketing and consulting company and served as founder, Chief Executive Officer and President. Dr. Katzman previously served in various capacities including ophthalmologist and founder of the Ophthalmology department at Brandon Surgical Center in Brandon, FL. Founder and Chief Medical Officer of Eye Care International, a national discount network of eye care professionals; Chief Executive Officer and President of Clinical Control Systems, Inc., an electronic medical record development and marketing firm; and Executive Vice President of Strategic Development of Comprehensive Behavioral Care. Dr. Katzman received his bachelor of science in biomedical engineering from Boston University and his M.D. from Universidad de Guadalajara in Jalisco, Mexico. We believe Dr. Katzman is qualified to serve as a member of our board of directors because of his proven track record as a leader within the Ophthalmology field.
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Herbert Gould. Herbert Gould has served as the Company’s Chief Science Officer since April 2019 and a member of the Company’s board of directors since April 2019. Since 2007, he has served as a Medical Director of Naturaceutical Delivery Corporation, a drug delivery system company. He previously served in various capacities including Medical Director of Diamond Vison Laser Center; Teaching Fellow and Assistant Clinical Professor in Ophthalmology at State University of New York; Associate Clinical Professor at New York Medical College; Instructor at American Academy of Ophthalmology; and Attending Surgeon at Westchester County Medical Center and New York Eye & Ear Infirmary. Dr. Gould also served as a Flight Surgeon for the U.S. Air Force. Dr. Gould received his bachelor of arts from Bowdoin College and his M.D. from Columbia University. We believe Dr. Gould is qualified to serve as a member of our board of directors because of his expertise and professional contacts in the Ophthalmology field.
Family Relationships
There are no family relationships among our executive officers and directors.
Involvement in Certain Legal Proceedings
We are not aware of any of our directors or officers being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings (other than traffic and other minor offenses), or being subject to any of the items set forth under Item 401(f) of Regulation S-K.
Corporate Governance
Board Committees
We presently do not have an audit committee, compensation committee or nominating and corporate governance committee or committee performing similar functions, as management believes that we are in an early stage of development to form an audit, compensation, or nominating committee. We currently do not have an audit committee financial expert for the same reason that we do not have board committees. Currently, our board of directors acts as our audit, nominating, corporate governance and compensation committees. We intend to appoint persons to the board of directors and committees of the board of directors as required to meet the corporate governance requirements of a national securities exchange, although we are not required to comply with these requirements until we are listed on a national securities exchange. We intend to appoint directors in the future so that we have a majority of our directors who will be independent directors, and of which at least one director will qualify as an “audit committee financial expert,” prior to a listing on a national securities exchange.
Medical Advisory Board
In 2019, the board of directors formed a Medical Advisory Board. The members of such board are Jack M. Dodick, M.D., Marguerite B. McDonald, M.D., Lawrence A. Yannuzzi, M.D. and Ahmed Mohiuddin, M.D.
In the year ended December 31, 2020, no officers or directors of the Company received compensation.
Outstanding Equity Awards at December 31, 2020
As of December 31, 2020, there were no outstanding equity awards held by any of our named executive officers or directors.
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Non-Employee Director Compensation
In the year ended December 31, 2020, no non-employee directors of the Company received compensation.
Employment Agreements
In the year ended December 31, 2020, the Company was not party to any employment agreement.
2017 Equity Incentive Plan
Summary
Our 2017 Equity Incentive Plan (the “2017 Plan”) was adopted by our board of directors on December 1, 2017 and by our stockholders on December 1, 2017. Having an adequate number of shares available for future equity compensation grants is necessary to promote our long-term success and the creation of stockholders value by:
| ● | Enabling us to continue to attract and retain the services of key service providers who would be eligible to receive grants; | |
| ● | Aligning participants’ interests with stockholders’ interests through incentives that are based upon the performance of our common stock; | |
| ● | Motivating participants, through equity incentive awards, to achieve long-term growth in the Company’s business, in addition to short-term financial performance; and | |
| ● | Providing a long-term equity incentive program that is competitive as compared to other companies with whom we compete for talent. |
The 2017 Plan permits the discretionary award of options, including non-qualified stock options (“NSOs”) and incentive stock options (“ISOs”), restricted shares, deferred stock, restricted stock units (“RSUs”), or stock appreciation rights (“SARs”). The 2017 Plan will remain in effect until the earlier of (i) December 1, 2027 and (ii) the date upon which the 2017 Plan is terminated pursuant to its terms, and in any event subject to the maximum share limit of the 2017 Plan. The 2017 Plan provides for the reservation of 10,000,000 shares of common stock for issuance thereunder.
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Key Features of the 2017 Plan
Certain key features of the 2017 Plan are summarized as follows:
| ● | If not terminated earlier by our board of directors, the 2017 Plan will terminate on December 1, 2027. | |
| ● | Up to a maximum aggregate of 10,000,000 shares of common stock may be issued under the 2017 Plan. The maximum aggregate fair market value with respect to ISOs are exercisable for the first time by such grantee during any calendar year may not exceed $100,000. | |
| ● | The 2017 Plan will generally be administered by a committee (the “Committee”), comprised of two or more directors who may be appointed by the board from time to time. | |
| ● | Employees, consultants and board members are eligible to receive awards, provided that the Committee has the discretion to determine (i) who shall receive any awards, and (ii) the terms and conditions of such awards. | |
| ● | Awards may consist of ISOs, NQSOs, restricted shares, deferred stock, RSUs and SARs. | |
| ● | Stock options and SARs may not be granted at a per share exercise price below the fair market value of a share of our common stock on the date of grant. If stock options or SARs are granted to a ten percent owner, they may not be granted at a per share exercise price below 110% of the fair market value of a share of our common stock on the date of grant. |
● The maximum exercisable term of stock options and SARs may not exceed ten years (five years if the grantee is a ten percent owner).Eligibility to Receive Awards. Employees, consultants and board members of the Company and its subsidiaries are eligible to receive awards under the 2017 Plan. The Committee determines, in its discretion, the selected participants who will be granted awards under the 2017 Plan.
Shares Subject to the 2017 Plan. The maximum number of shares of common stock that can be issued under the 2017 Plan is 10,000,000 shares.
The shares underlying forfeited or terminated awards (without payment of consideration), or unexercised awards become available again for issuance under the 2017 Plan.
Administration of the 2017 Plan. The 2017 Plan will be administered by the Committee, which shall consist of two or more directors who may be appointed by the board from time to time Subject to the terms of the 2017 Plan, the Committee has the sole discretion, among other things, to:
| ● | Select the individuals who will receive awards; | |
| ● | Determine the terms and conditions of awards (including the number of shares to which an award will relate, any option price, grant price or purchase price, any limitation or restriction, any performance conditions, forfeiture restrictions, any performance goals and/or vesting schedules and the terms of the grants); | |
| ● | Determine whether or not specific awards shall be granted in connection with other specific awards, and if so, whether they shall be exercisable cumulatively with, or alternatively to, such other specific awards and all other matters to be determined in connection with an award; | |
| ● | Offer to exchange or buy out any previously granted award for a payment of cash, shares or other award; and |
● Interpret the provisions of the 2017 Plan and outstanding awards.
Types of Awards.
Stock Options. A stock option is the right to acquire shares at a fixed exercise price over a fixed period of time, not to exceed ten years from its grant date. The Committee will determine, among other terms and conditions, the number of shares covered by each stock option and the exercise price of the shares subject to each stock option, but such per share exercise price cannot be less than the fair market value of a share of our common stock on the date of grant of the stock option. The exercise price of each stock option granted under the 2017 Plan must be paid in full at the time of exercise, either with cash or through another method approved by the Committee. Stock options granted under the 2017 Plan may be either ISOs or NQSOs.
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SAR. A SAR is the right to receive, upon exercise, an amount equal to the difference between the fair market value of the shares on the date of the SAR’s exercise and the aggregate exercise price of the shares covered by the exercised portion of the SAR. The Committee determines the terms of SARs, including the exercise price (provided that such per share exercise price cannot be less than the fair market value of a share of our common stock on the date of grant), the vesting and the term of the SAR. Settlement of a SAR may be in shares of common stock, in cash, or in other property or any combination thereof, as the Committee may determine.
Restricted Shares. A restricted share award is the grant of shares of our common stock to a selected participant and such shares may be subject to a substantial risk of forfeiture until specific conditions or goals are met. The restricted shares may be issued with or without cash consideration being paid by the selected participant as determined by the Committee. The Committee also will determine any other terms and conditions of an award of restricted shares.
Deferred Stock. Deferred stock is a right to receive shares at the end of a specified deferral period.
RSUs. RSUs are the right to receive an amount equal to the fair market value of the shares covered by the RSU at some future date after the grant. The Committee will determine all of the terms and conditions of an award of RSUs. Payment for vested RSUs may be in shares of common stock or in cash, or any combination thereof, as the Committee may determine. RSUs represent an unfunded and unsecured obligation for us, and a holder of a stock unit has no rights other than those of a general creditor.
Limited Transferability of Awards. Awards granted under the 2017 Plan generally are not transferrable other than by will or by the laws of descent and distribution. In addition, in the event a holder desires at any time to sell or otherwise transfer all or part of his shares (the “Offered Shares”) under the 2017 Plan, then such holder shall first give us written notice of such proposed sale or transfer including the terms of such sale or transfer, and we shall have the right at any time, within 30 days after receipt of such notice, to elect to purchase all or any portion of the Offered Shares at the price and on the terms set forth in the notice. Furthermore, in the event the holders of a majority of our voting capital then outstanding determine to sell or otherwise dispose or all or substantially all of our assets or all or 50% or more of our capital stock to any person (other than to our affiliate(s) or to the Majority Shareholders (as defined in the 2017 Plan)), or to cause us to merge with or into or consolidate with any person (other than to our affiliate(s) or to the Majority Shareholders) in a bona fide negotiated transaction, each holder of shares issued under the 2017 Plan shall be obligated to and shall upon written request of the Majority Shareholders sell, transfer and deliver to the buyer his shares under the 2017 Plan.
Change in Control. In the event that we are a party to a merger or consolidation or similar transaction (“Corporate Transaction”), unless an outstanding award under the 2017 Plan is assumed by the surviving company or replaced with an equivalent award granted by the surviving company in substitution for such outstanding award, such award shall be vested and non-forfeitable and any conditions with respect to such award shall lapse. If an award becomes exercisable or non-forfeitable, the Committee may (i) permit the grantee to exercise such award of options or SARs within a reasonable period prior to the consummation of the Corporate Transaction and cancel any outstanding awards that remain unexercised upon consummation of such transaction or (ii) cancel any or all outstanding awards of options and SARs in exchange for a payment (in cash, securities or other property) in an amount equal to the amount that the grantee would have received (net of the option price and/or grant price) if such options and SARs were fully vested and exercised immediately prior to the consummation of the Corporate Transaction; provided, however, if the option price with respect to any outstanding option or grant price with respect to any outstanding SAR exceeds the fair market value of the shares immediately prior to the consummation of the Corporate Transaction, such awards shall be cancelled without any payment to the grantee.
Amendment and Termination of the 2017 Plan. The board generally may amend or terminate the 2017 Plan at any time and for any reason, except that it must obtain stockholder approval if required pursuant to federal or state laws or the rules of any stock exchange or quotation system on which our shares are then listed or quoted.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our capital stock outstanding as of February 1, 2021 by:
| ● | each person, or group of affiliated persons, known by us to beneficially own more than 5% of our shares of common stock; | |
| ● | each of our directors; | |
| ● | each of our named executive officers; and | |
| ● | all of our directors and named executive officers as a group. |
The percentage ownership information is based on 46,041,327 shares of common stock outstanding as of February 1, 2021. The number of shares owned are those beneficially owned, as determined under the rules of the SEC. Under these rules, beneficial ownership includes any shares of common stock as to which a person has sole or shared voting power or investment power and any shares of common stock that the person has the right to acquire within 60 days through the exercise of any option, warrant or right, through conversion of any security or pursuant to the automatic termination of a power of attorney or revocation of a trust, discretionary account or similar arrangement. These shares are deemed to be outstanding and beneficially owned by the person holding such option, warrants or other derivative securities for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Except as otherwise noted below, the address for each person or entity listed in the table is c/o Retinalgenix Technologies Inc., 1450 North McDowell Boulevard, Suite 150, Petaluma, CA 94954.
| Name and Address of Beneficial Owner | Number of shares beneficially owned | Percentage of shares beneficially owned | ||||||
| Directors and Named Executive Officers: | ||||||||
| Jerry Katzman (1) | 5,720,000 | 14.18 | % | |||||
| 5% or greater stockholders: | ||||||||
| Steven Bayern (2) | 4,920,000 | 12.20 | % | |||||
* less than 1%.
(1) Jerry Katzman is the Chief Executive Officer of Retinalgenix Technologies Inc. effective as of December 2018.
(2) Steven Bayern is a consultant of Retinalgenix Technologies Inc. effective as of July 5, 2018.
.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE
The following includes a summary of transactions during our fiscal years ended December 31, 2019 and December 31, 2018 to which we have been a party, including transactions in which the amount involved in the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or, to our knowledge, beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described elsewhere in this prospectus. We are not otherwise a party to a current related party transaction, and no transaction is currently proposed, in which the amount of the transaction exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two completed fiscal years and in which a related person had or will have a direct or indirect material interest.
Director Independence
Although our common stock is not listed on any national securities exchange, for purposes of independence we use the definition of independence applied by The Nasdaq Stock Market. Our board of directors has determined that Herbert Gould is “independent” in accordance with such definition.
Unless otherwise indicated, Sheppard, Mullin, Richter & Hampton LLP, New York, New York, will pass upon the validity of the shares of the Resale Shares to be sold in this offering.
The financial statements of RetinalGenix Technologies Inc. for the years ended December 31, 2019 and December 31, 2018 have been included herein in reliance upon the reports of Liebman Goldberg & Hymowitz LLP, independent registered public accounting firm, upon the authority of said firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the Resale Shares offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information about us and the Resale Shares offered hereby, we refer you to the registration statement and the exhibits and schedules filed thereto. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. Upon the completion of this offering, we will be required to file periodic reports, proxy statements, and other information with the SEC pursuant to the Exchange Act. You may read and copy this information at the Public Reference Room of the Securities and Exchange Commission, 100 F Street, N.E., Room 1580, Washington, D.C.
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8,766,561 Shares of Common Stock
PROSPECTUS
, 2021
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RetinalGenix Technologies Inc.
Financial Statements
TABLE OF CONTENTS
| F-1 |
LIEBMAN GOLDBERG & HYMOWITZ LLP
Certified Public Accountants
595 Stewart Avenue, Suite 420
Garden City, New York 11530
____________
Tel (516) 228-6600
Fax (516) 228-6664
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of RetinalGenix Technologies, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of RetinalGenix Technologies, Inc. (the “Company”) as of December 31, 2019 and 2018, and the related statements of operations, stockholders’ equity, and cash flows for each of the years then ended, 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, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note A to the financial statements, based on its projections, the Company anticipates that during 2020, it will not have sufficient capital. Furthermore, the Company’s losses from operations and working capital deficiency raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note A. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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.
| F-2 |
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.
/s/ Liebman Goldberg & Hymowitz, LLP
Liebman Goldberg & Hymowitz, LLP
We have served as the Company’s auditor since 2019.
Garden City, New York
October 27, 2020
| F-3 |
RETINALGENIX TECHNOLOGIES, INC.
DECEMBER 31,
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 54,381 | $ | - | ||||
| Total assets | $ | 54,381 | $ | - | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 5,217 | $ | - | ||||
| Stockholder refund payable | 25,032 | - | ||||||
| Total liabilities | 30,249 | - | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.0001 par value; 40,000,000 shares authorized; Series F preferred stock, 3,000,000 shares designated, issued and outstanding at December 31, 2019 and 2018 | 300 | 300 | ||||||
| Common stock, $0.0001 par value; 80,000,000 shares authorized; 38,591,056 shares issued and outstanding at December 31, 2019 and 27,000,000 shares issued and outstanding at December 31, 2018 | 3,860 | 2,700 | ||||||
| Additional paid-in capital | 867,301 | 284 | ||||||
| Preferred stock subscription receivable | (300 | ) | (300 | ) | ||||
| Accumulated deficit | (847,029 | ) | (2,984 | ) | ||||
| Total stockholders’ equity | 24,132 | - | ||||||
| Total liabilities and stockholders’ equity | $ | 54,381 | $ | - | ||||
The accompanying notes are an integral part of these financial statements.
| F-4 |
RETINALGENIX TECHNOLOGIES, INC.
YEARS ENDED DECEMBER 31,
| 2019 | 2018 | |||||||
| Revenues | $ | - | $ | - | ||||
| Costs and expenses | ||||||||
| Administrative expenses | 527,259 | 535 | ||||||
| Research and development costs | 250,780 | - | ||||||
| Stock based compensation | 27,776 | 929 | ||||||
| Total costs and expenses | 805,815 | 1,464 | ||||||
| Net (loss) | $ | (805,815 | ) | $ | (1,464 | ) | ||
| Net (loss) per share - basic and diluted | $ | (0.02 | ) | $ | (0.00 | ) | ||
| Weighted average number of common shares outstanding during the period-basic and diluted | 35,147,382 | 27,000,000 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-5 |
RETINALGENIX TECHNOLOGIES, INC.
STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2019 AND 2018
| Common Stock | Series F Common Stock | Subscription Receivable – Series F Preferred | Additional Paid-in | Accumulated | ||||||||||||||||||||||||||||
| Shares | Par Value | Shares | Par Value | Stock | Capital | Deficit | Total | |||||||||||||||||||||||||
| Balance at December 31, 2017 | 27,000,000 | $ | 2,700 | 3,000,000 | $ | 300 | (300 | ) | $ | (1,180 | ) | $ | (1,520 | ) | $ | - | ||||||||||||||||
| Costs paid by Parent company | - | - | - | - | - | 535 | - | 535 | ||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | - | 929 | - | 929 | ||||||||||||||||||||||||
| Net (loss) | - | - | - | - | - | - | (1,464 | ) | (1,464 | ) | ||||||||||||||||||||||
| Balance at December 31, 2018 | 27,000,000 | 2,700 | 3,000,000 | 300 | (300 | ) | 284 | (2,984 | ) | - | ||||||||||||||||||||||
| Stock purchased by investors | 185,000 | 19 | - | - | - | 184,981 | - | 185,000 | ||||||||||||||||||||||||
| Stock based compensation | - | - | - | - | - | 27,776 | - | 27,776 | ||||||||||||||||||||||||
| Capital contribution by Sanovas | - | - | - | - | - | 350,000 | - | 350,000 | ||||||||||||||||||||||||
| Deemed Dividend | - | - | - | - | - | 38,230 | (38,230 | ) | - | |||||||||||||||||||||||
| Contribution of due to Sanovas to capital (see Note C) | 266,056 | 27 | - | - | - | 266,030 | - | 266,057 | ||||||||||||||||||||||||
| Exercise of warrants | 8,640,000 | 864 | - | - | - | - | - | 864 | ||||||||||||||||||||||||
| Exercise of stock options | 2,500,000 | 250 | - | - | - | - | 0 | 250 | ||||||||||||||||||||||||
| Net (loss) | - | - | - | - | - | - | (805,815 | ) | (805,815 | ) | ||||||||||||||||||||||
| Balance at December 31, 2019 | $ | 38,591,056 | $ | 3,860 | 3,000,000 | $ | 300 | $ | (300 | ) | $ | 867,301 | $ | (847,029 | ) | $ | 24,132 | |||||||||||||||
The accompanying notes are an integral part of these financial statements.
| F-6 |
RETINALGENIX TECHNOLOGIES, INC.
YEARS ENDED DECEMBER 31,
| 2019 | 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) | $ | (805,815 | ) | $ | (1,464 | ) | ||
| Adjustments to reconcile net (loss) to net cash flows used in operating activities: | ||||||||
| Stock based compensation expense | 27,776 | 929 | ||||||
| Costs and expenses paid on behalf of Company by Sanovas, net | 616,057 | 535 | ||||||
| Increase in liabilities: | ||||||||
| Accounts payable | 5,217 | - | ||||||
| Net cash (used in) operating activities | (156,765 | ) | - | |||||
| Net cash provided by investing activities | - | - | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sale of common stock | 185,000 | - | ||||||
| Proceeds from exercise of stock options | 250 | - | ||||||
| Stockholder refund payable | 25,032 | - | ||||||
| Proceeds from exercise of warrants | 864 | - | ||||||
| Net cash provided by financing activities | 211,146 | - | ||||||
| Net increase in cash | 54,381 | - | ||||||
| Cash: | ||||||||
| Beginning of year | - | - | ||||||
| End of year | $ | 54,381 | $ | - | ||||
| Supplemental information: | ||||||||
| Contribution of due to Sanovas to capital | $ | 266,57 | ||||||
| Capital contribution by Sanovas | $ | 350,000 | ||||||
The accompanying notes are an integral part of these financial statements.
| F-7 |
RETINALGENIX TECHNOLOGIES, INC.
DECEMBER 31, 2019 AND 2018
NOTE A - BUSINESS, LIQUIDITY AND GOING CONCERN
RetinalGenix Technologies, Inc. (the “Company”), a Delaware corporation, was formed in November 2017 by a Sanovas Ophthalmology LLC, a majority owned subsidiary of Sanovas Corporation (“Sanovas”), a privately held research and development incubator. At December 31, 2019 and 2018, Sanovas Ophthalmology LLC owns a majority of the outstanding stock of the Company. RetinalGenix Technologies, Inc. was formed to develop technologies to diagnose and treat optical disorders. The Company may license technology initially developed by Sanovas, depending on negotiation and execution of a technology license or it may develop/license technologies from other parties. Through 2018, the Company was inactive except for certain filing fees and other administrative costs paid by Sanovas on its behalf.
In October 2019, the Company entered into a series of agreements with Diopsys, Inc., a manufacturer and distributor of medical products (“Diopsys”), to work together with the Company on the development and commercialization of optical medical products. Such products are still under development, and therefore there were no transactions related to these arrangements recorded through December 31, 2019. Diopsys would be the exclusive distributor of the product pursuant to these agreements. Through December 31, 2019, there were no significant costs paid by the Company to Diopsys. Further, upon approval of the product by the FDA, the Company and Diopsys will exchange 10% of the issued and outstanding common stock of each company. The transactions will be recognized as a tax-free exchange, if and when the exchange occurs.
Liquidity and Going Concern
The Company expects that operating losses and negative cash flows from operations will occur for at least the next several years and the Company will need to access additional funds to achieve the Company’s strategic goals with respect to the licensed technology. The Company did not open a bank account until March 2019. Sanovas has paid most of the Company’s operating expenses through December 2019. The Company commenced a common stock fundraising transaction in November 2019 raising $185,000 through December 31, 2019, which fundraising transaction continued into 2020. The Company also received a capital contribution of $350,000 from Sanovas and issued common stock to offset amounts due to Sanovas for payment of bills on behalf of the Company of $266,057 (See Note C).
The Company will seek to raise substantial funds through the sale of common stock, through debt financing or through establishing additional strategic collaboration agreements. In February 2020, the Company has entered into an agreement with an investment banker to support fundraising or strategic transactions - see Note H. The Company does not know whether additional financing will be available when needed, or whether it will be available on favorable terms, or at all. As of the date of this report, the Company does not have adequate resources to fund our operations through September 2021, without considering any potential future milestone payments that we may receive under any new collaborations that the Company may enter into in the future or any future capital raising transactions. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| F-8 |
RETINALGENIX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
A summary of significant accounting policies consistently applied in the preparation of the accompanying financial statements follows:
1. Basis of Presentation:
The Company’s financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”).
2. Cash Equivalents:
For purpose of the statements of cash flows, the Company considers all short-term investments purchased with a maturity of three months or less to be cash equivalents. The Company did not open a bank account until 2019.
3. Use of Estimates:
In preparing the Company’s financial statements in conformity with US GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
4. Income Taxes:
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740-10 Income Taxes. ASC Topic 740-10 clarifies the accounting for income taxes, by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. It also provides guidance on the recognition, measurement, and classification of amounts relating to uncertain tax positions, accounting for and disclosure of interest and penalties, accounting in interim periods and disclosures. The application of that guidance did not result in the recognition of any unrecognized tax benefits at December 31, 2019 and 2018. The Company’s policy is to expense any penalties and interest associated with this topic. As of December 31, 2019 and 2018, there were no amounts accrued for penalties and interest.
| F-9 |
RETINALGENIX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
5. Income (Loss) Per Common Share:
The Company computes net income (loss) per share in accordance with ASC 260, Earnings Per Share (“EPS”). Under the provisions of ASC 260, basic net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) for the period by the weighted-average number of common and common equivalent shares outstanding during the period. However, common shares that are considered anti-dilutive are excluded from the computation of diluted EPS. Since the Company had a loss during the years ended December 31, 2019 and 2018, the basic and diluted net loss per share are the same.
Potentially dilutive securities not included in the computation of loss per share at December 31, 2018 included 3,000,000 shares of preferred stock and warrants to purchase 8,640,000 shares of common stock.
Potentially dilutive securities not included in the computation of loss per share for the year ended December 31, 2019 were 3,000,000 shares of preferred stock and 62,500 warrants to purchase common stock. The shares potentially issuable to Diopsys upon attainment of specified milestone are also excluded from the loss per share calculation.
6. Stock-Based Compensation:
The Company recognizes expense for stock-based compensation in accordance with ASC Topic 718, Stock-Based Compensation. For stock-based awards, the Company calculates the fair value of the award on the date of grant using the Black Scholes option-pricing model; the expense is recognized over the service period for awards expected to vest. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period the estimates are revised. Stock options granted to non-employee consultants are revalued at the end of each reporting period until vested and the changes in their fair value are recorded as adjustments to expense over the related vesting period.
7. Research and Development costs:
Research and development costs are expensed as incurred.
| F-10 |
RETINALGENIX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
8. Recent Accounting Pronouncements:
The following pronouncements may have an impact on the accounting policies of the Company:
In August 2016, the FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). ASU 2016-15 is intended to reduce diversity in practice on how certain cash receipts and payments are presented and classified in the statement of cash flows. The standard provides guidance in a number of situations including, among others, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and distributions received from equity method investees. ASU 2016-15 also provides guidance for classifying cash receipts and payments that have aspects of more than one class of cash flows. ASU 2016-15 is effective for the Company’s fiscal year beginning January 1, 2019. Early adoption is permitted. The standard requires application using a retrospective transition method. The impact of adoption on the Company’s financial statements was not significant.
In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (“ASU 2017-09”), to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 was adopted on January 1, 2018. The adoption of ASU 2017-09 did not have a material impact on the Company’s financial position or results of operations.
A variety of proposed or otherwise potential accounting standards are currently under study by standard- setting organizations. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether the implementation of such proposed standards would be material to the financial statements of the Company.
NOTE C - RELATED PARTY TRANSACTIONS
The Company is related to Sanovas through common ownership and management. Sanovas paid $535 in various expenses on behalf of the Company during the year ended December 31, 2018. There was no intent for the repayment of such expenses, and accordingly they are considered capital contributions.
Commencing in 2019, Sanovas paid various expenses on behalf of the Company, and began allocating a portion of salaries and infrastructure costs to the Company and other entities where Sanovas was performing shared services. The Company did not have any specific repayment terms for such costs. The table below describes the transactions between the Company and Sanovas during 2019. At December 31, 2019, Sanovas retired the amount due from the Company through the issuance of 266,056 shares of common stock to Sanovas Ophthalmology LLC. See also Note F.
| F-11 |
RETINALGENIX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
| Costs paid by Sanovas on the Company’s behalf | $ | 26,837 | ||
| Costs of Sanovas allocated to the Company | 692,420 | |||
| Repayment of costs charged by Sanovas to the Company | (103,200 | ) | ||
| Subtotal | 616,057 | |||
| Capital contribution during 2019 by Sanovas (see Note D) | (350,000 | ) | ||
| Retirement of due to Sanovas through issuance of 266,056 shares of common stock to Sanovas Ophthalmology LLC | (266,057 | ) | ||
| Balance due to Sanovas at December 31, 2019 | $ | 0 |
NOTE D - COMMON AND PREFERRED STOCK
Pursuant to an Amended and Restated Certificate of incorporation (the “Certificate of Incorporation”), filed with the Delaware Secretary of State on January 8, 2018, the Company is authorized to issue 40,000,000 shares of preferred stock and 80,000,000 shares of common stock. The Company has designated 3,000,000 shares of preferred stock as Series F preferred stock.
In 2018, the Company issued 27,000,000 shares of common stock to Sanovas Ophthalmology, LLC, a Nevada limited liability company and majority-owned subsidiary of Sanovas for $2,700 and issued 3,000,000 shares of Series F preferred stock to Halo Management LLC (“Halo”) for $300. Halo did not pay the stock purchase price, and accordingly the Company recognized a stock subscription receivable for the balance due at December 31, 2019 and 2018. Management of the Company is disputing whether the shares were validly issued, however no contractual or judicial decision has been reached with respect to the matter. Accordingly, the share issuance and stock subscription remain on the books of the Company at December 31, 2019 and 2018.
Common Stock:
During 2019, the Company commenced a common stock offering at $1.00 price per share, pursuant to which the Company sold 185,000 shares of common stock (net of $25,000 stockholder refund payable due to a cancelled stock purchase agreement) during the year ended December 31, 2019. See also Note H for subsequent amounts raised.
During 2019, Sanovas commenced a $5 million offering designed to raise funds for both Sanovas and the Company. Pursuant to a special offer issued by Sanovas, if an investor in Sanovas exercised their Series A, A-1, or A-2 warrants between December 24, 2018 and September 1, 2019, then a portion of the proceeds would be used to fund the business of RetinalGenix through a capital contribution. A total of $350,000 was contributed to the capital of the Company pursuant to this investment option. The Company did not receive the proceeds from this offering, but instead offset amounts due to Sanovas (see Note C). Further, certain investors in this special offering also received warrants to purchase an aggregate of 62,500 shares of the Company’s common stock at $1.00 per share for 3 years. The fair value of such warrants (calculated under the Black Scholes model) of $38,230 is treated as a deemed dividend for financial reporting purposes.
| F-12 |
RETINALGENIX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
The rights and privileges of the Series F preferred stock are summarized as follows:
Voting Privileges and Protective Features:
Each holder of outstanding shares of Series F preferred stock are entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series F preferred stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. The holders of record of a majority of outstanding Series F preferred stock shall be entitled to elect two members of the Board of Directors of the Company. The common shareholders, voting as a separate class, are entitled to elect one member of the Board of Directors.
For so long as at least 25,000 shares of Series F preferred stock remain outstanding, the vote or written consent of the holders of the majority of the outstanding shares of Series F preferred stock is necessary for the Company to conduct certain corporate actions, including but not limited to merger, consolidation or dissolution of the Company; certain amendments to the Certificate of Incorporation or bylaws of the Company; authorization or issuance of shares of any additional class or series of capital stock unless the same ranks junior to the Series F preferred stock with respect to liquidation preference.
Dividends:
There is no stated dividends on the Series F preferred stock.
Conversion:
Each share of Series F preferred stock is convertible, at the option of the holder, at any time and from time to time into shares of common stock at a conversion rate based upon the original issue price ($0.0001 per share), adjusted for any dilutive transaction such as stock splits, certain dividends, mergers or acquisitions or the issuance of common stock at a price less than the original issue price of each of the above offering prices. The fair value of such contingent beneficial conversion feature will be recorded as additional paid-in capital and a deemed dividend to the preferred shareholders when, and if, the contingency occurs.
All of the outstanding shares of preferred stock will automatically convert into shares of common stock immediately prior to a merger or acquisition or a Qualified Public Offering in an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, resulting in at least $15,000,000 in gross proceeds.
Redemption:
The Series F preferred stock does not have redemption features.
| F-13 |
RETINALGENIX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
NOTE E - STOCK PLAN
The Company has reserved 10,000,000 shares of common stock for issuance to employees or consultants from the Company’s 2017 Equity Incentive Plan. The Company may grant stock options, restricted stock or other types of equity incentive instruments under the plan. There were no stock option awards issued through December 31, 2018.
During the year ended December 31, 2019, the Company issued stock options for the issuance of 2,500,000 shares of common stock at an exercise price of $0.0001 per share to consultants. The shares were fully vested upon issuance and were exercised in the second quarter of 2019. The estimated fair value of the stock options of $250 was recognized as an expense in 2019, since they were fully vested upon issuance.
During the year ended December 31, 2019, the Company issued stock options for the issuance of 1,800,000 shares of common stock at an exercise price of $1.00 per share to consultants. The shares vest over a five year period. These shares remain outstanding at December 31, 2019. The estimated aggregate fair value of the stock options was determined via a Black Scholes model using the following assumptions (fair value common stock $1.00 per share, volatility 74%, discount rate 2.38%, expected term 5.1 years) of $1,101,028, of which $27,776 was recognized as an expense in 2019, and $1,073,502 will be recognized over 4.7 years.
NOTE F - WARRANTS
During the year ended December 31, 2018, the Company issued warrants for the issuance of 9,288,000 shares of common stock at an exercise price of $0.0001 per share to two consultants. The Company recognized the estimated fair value of the warrants granted as an expense during 2018, as the shares were fully vested upon issuance. This resulted in the recognition of stock based compensation charges of $929 during the year ended December 31, 2018.
In March 2019, the warrant holders paid $929 to exercise their outstanding 9,288,000 common stock warrants. In May 2019, the Company adjusted the warrants issued (due to a previous mathematical error in the computation of the amount of the awards) to such consultants, decreasing the awards by 324,000 in the aggregate to each consultant. The Company refunded the excess purchase price of these 324,000 shares (or $32) to one of the consultants in May 2019 and the second refund remains outstanding and is included in stockholder refund payable in the accompanying balance sheet as of December 31, 2019. Therefore during 2019, the net amount of shares issued were 8,640,000 shares of common stock for proceeds of $864.
At December 31, 2019, there are 62,500 three-year warrants outstanding to purchase common stock at $1.00 per share (see Note D).
NOTE G - INCOME TAXES
At December 31, 2019, the Company has net operating loss carryforwards of approximately $775,000 for Federal income tax purposes which begins to expire in 2034 and $775,000 for state income tax purposes which begins to expire in 2020. The resultant net deferred tax assets of approximately $232,000 has been fully reserved due to the uncertainty of future realization. The valuation allowance increased by approximately $232,000 since December 31, 2018.
| F-14 |
RETINALGENIX TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2019 AND 2018
Due to the change in ownership provisions of the Internal Revenue Code, the availability of the Company’s net operating loss carryforwards may be subject to annual limitations against taxable income in future periods, which could substantially limit the eventual utilization of such carryforwards. The Company has not analyzed the historical or potential impact of its equity financings on beneficial ownership and therefore no determination has been made whether the net operating loss carryforward is subject to any Internal Revenue Code Section 382 limitation. To the extent there is a limitation, there would be a reduction in the deferred tax asset with an offsetting reduction in the valuation allowance.
The open years for tax examination are 2017 and thereafter.
NOTE H - SUBSEQUENT EVENTS
Subsequent events were reviewed through October 27, 2020, the date these financial statements were available for issuance.
At July 31, 2020, Sanovas retired the debt due then due from the Company of $568,096 (which arose from transactions between the two entities from January 1, 2020 through July 31, 2020) through the issuance of 568,096 shares to Sanovas Ophthalmology LLC.
From January 2020 through October 27, 2020, the Company sold approximately 1,130,000 shares of common stock at $1.00 per share pursuant to the offering described in Note D.
In February 2020, the Company entered into an agreement with Benchmark Financial (“Benchmark”), to serve as a placement agent for the Company’s targeted fundraising (“Offering”). In addition to a cash placement agent fee specified in the agreement, the Company shall issue Benchmark warrants to purchase that number of shares of common stock of the Company equal to 10% of the aggregate number of shares (or convertible shares) placed in the Offering. The Benchmark warrants shall have the same terms, including exercise price and exercise terms, as the warrants issued to investors in the Offering. If no warrants are issued to investors, the Benchmark warrants shall have an exercise price equal to 1.10% of the price at which the shares are issued to investors for an exercise period of 10 years. There has not been a closing of the fund raising transaction through the date of this report.
| F-15 |
PART II- INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by the Company in connection with the issuance and distribution of the securities being registered hereunder. All amounts are estimates except the SEC registration fee.
| SEC registration fees | $ | * | ||
| Printing expenses | $ | * | ||
| Accounting fees and expenses | $ | * | ||
| Legal fees and expenses | $ | * | ||
| Blue sky fees | $ | * | ||
| Miscellaneous | $ | * | ||
| Total | $ | * |
* To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102 of the Delaware General Corporation Law (“DGCL”) permits a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our Certificate of Incorporation provides that no director of the Company shall be personally liable to it or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability, except to the extent that the DGCL prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty.
Section 145 of the DGCL provides that a corporation has the power to indemnify a director, officer, employee, or agent of the corporation, or a person serving at the request of the corporation for another corporation, partnership, joint venture, trust or other enterprise in related capacities against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he was or is a party or is threatened to be made a party to any threatened, ending or completed action, suit or proceeding by reason of such position, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Our Certificate of Incorporation and Bylaws provide indemnification for our directors and officers to the fullest extent permitted by the DGCL. We will indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to as an “Indemnitee”), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom, if such Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. Our Certificate of Incorporation and Bylaws provides that we will indemnify any Indemnitee who was or is a party to an action or suit by or in the right of us to procure a judgment in our favor by reason of the fact that the Indemnitee is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys’ fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal therefrom, if the Indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any Indemnitee has been successful, on the merits or otherwise, he or she will be indemnified by us against all expenses (including attorneys’ fees) actually and reasonably incurred in connection therewith. Expenses must be advanced to an Indemnitee under certain circumstances.
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As of the date hereof, we have entered into separate indemnification agreements with each of our directors and executive officers. Each indemnification agreement provides, among other things, for indemnification to the fullest extent permitted by law and our Certificate of Incorporation against any and all expenses, judgments, fines, penalties and amounts paid in settlement of any claim. The indemnification agreements provide for the advancement or payment of all expenses to the indemnitee and for the reimbursement to us if it is found that such indemnitee is not entitled to such indemnification.
In addition, we have a general liability insurance policy that covers certain liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
The exhibit index attached hereto is incorporated herein by reference.
(b) Financial Statement Schedule
All schedules have been omitted because the information required to be set forth in the schedules is either not applicable or is shown in the financial statements or notes thereto.
| EXHIBIT INDEX | ||
| Exhibit No. | Description | |
| 3.1* | First Amended and Restated Certificate of Incorporation of RetinalGenix Technologies Inc. | |
| 3.2* | Bylaws of RetinalGenix Technologies Inc. | |
| 5.1* | Opinion of Sheppard, Mullin, Richter & Hampton LLP | |
| 10.1* | Option Exchange Agreement by and between the Company and Diopsys, Inc. dated October 8, 2019 | |
| 10.2*+ | RetinalGenix Technologies Inc. 2017 Equity Incentive Plan | |
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| 23.1* | Consent of Liebman Goldberg & Hymowitz LLP, independent registered public accounting firm | |
| 23.2* | Consent of Sheppard, Mullin, Richter & Hampton, LLP (included in Exhibit 5.1) | |
| 24.1 | Power of Attorney (included on the signature page to this registration statement) |
* To be filed by amendment.
+ Indicates a management contract or any compensatory plan, contract or arrangement.
Financial Statement Schedules
Schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Petaluma, State of California, on the day of , 2021.
| RETINALGENIX TECHNOLOGIES INC. | ||
| By: | ||
| Jerry Katzman | ||
| Chief Executive Officer | ||
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jerry Katzman, his true and lawful attorney-in-fact and agent with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities to sign any or all amendments (including, without limitation, post-effective amendments) to this Registration Statement, any related Registration Statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and any or all pre- or post-effective amendments thereto, and to file the same, with all exhibits thereto, and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming that said attorney-in-fact and agent, or any substitute or substitutes for him, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, as amended, the following persons in the capacities and on the dates indicated have signed this Registration Statement below.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated below.
| Signature | Title | Date | ||
| Chief Executive Officer, President and Director | , 2021 | |||
| Jerry Katzman | (Principal Executive Officer and Principal Financial and Accounting Officer) | |||
| Chief Science Officer and Director | , 2021 | |||
| Herbert Gould |
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