UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-30156
RENOVACARE, INC. |
(Exact name of registrant as specified in its charter) |
Nevada | 98-0384030 | |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) | |
9375 E. Shea Blvd., Suite 107-A, Scottsdale, AZ | 85260 | |
(Address of principal executive offices) | (Zip Code) |
888-398-0202
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒ | No ☐ |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ | No ☐ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 | ☒ | ||
Smaller reporting company | ☒ | Emerging Growth Company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act):
Yes ☐ | No ☒ |
Securities registered pursuant to Section 12(b) of the Act: None.
As of November 12, 2019, the registrant had 87,352,364 shares of its common stock, par value $0.00001 per share, issued and outstanding.
RENOVACARE, INC.
FORM 10-Q
For The Quarter Ended September 30, 2019
TABLE OF CONTENTS
RENOVACARE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
ASSETS | (Unaudited) | |||||||
Current assets | ||||||||
Cash | $ | 13,374,382 | $ | 15,397,524 | ||||
Prepaid expenses and deposits | 100,000 | 168,707 | ||||||
Total current assets | 13,474,382 | 15,566,231 | ||||||
Equipment, net of accumulated depreciation of $924 and $687, respectively | 27 | 264 | ||||||
Intangible assets | 152,854 | 152,854 | ||||||
Total assets | $ | 13,627,263 | $ | 15,719,349 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | $ | 413,088 | $ | 222,163 | ||||
Accounts payable - related parties | 69,474 | 3,000 | ||||||
Interest payable to related parties | - | 167,497 | ||||||
Total current liabilities | 482,562 | 392,660 | ||||||
Total liabilities | 482,562 | 392,660 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity (deficit) | ||||||||
Preferred stock: $0.0001 par value; 10,000,000 shares authorized, no shares issued and outstanding | - | - | ||||||
Common stock: $0.00001 par value; 500,000,000 shares authorized, 87,352,364 and 87,175,522 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively | 874 | 872 | ||||||
Additional paid-in capital | 32,188,410 | 32,187,580 | ||||||
Retained deficit | (19,044,583 | ) | (16,861,763 | ) | ||||
Total stockholders' equity | 13,144,701 | 15,326,689 | ||||||
Total liabilities and stockholders' equity | $ | 13,627,263 | $ | 15,719,349 |
(See accompanying notes to unaudited consolidated financial statements)
1
RENOVACARE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
Operating expenses | ||||||||||||||||
Research and development | 130,467 | 45,683 | 504,169 | 279,000 | ||||||||||||
General and administrative | 1,070,314 | 386,809 | 1,944,111 | 1,176,242 | ||||||||||||
Total operating expenses | 1,200,781 | 432,492 | 2,448,280 | 1,455,242 | ||||||||||||
Loss from operations | (1,200,781 | ) | (432,492 | ) | (2,448,280 | ) | (1,455,242 | ) | ||||||||
Other income (expense) | ||||||||||||||||
Interest income | 84,731 | 4,564 | 265,460 | 13,990 | ||||||||||||
Interest expense | - | (21,652 | ) | - | (63,167 | ) | ||||||||||
Accretion of debt discount | - | - | - | (58,438 | ) | |||||||||||
Total other income (expense) | 84,731 | (17,088 | ) | 265,460 | (107,615 | ) | ||||||||||
Net loss | $ | (1,116,050 | ) | $ | (449,580 | ) | $ | (2,182,820 | ) | $ | (1,562,857 | ) | ||||
Basic and Diluted Loss per Common Share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.02 | ) | ||||
Weighted average number of common shares outstanding - basic and diluted | 87,243,352 | 76,840,522 | 87,198,132 | 76,727,802 |
(See accompanying notes to unaudited consolidated financial statements)
2
RENOVACARE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019
Common Stock | Additional Paid-in | Retained | Total Stockholders' | |||||||||||||||||
Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
BLANCE JANUARY 1, 2019 | 87,175,522 | $ | 872 | $ | 32,187,580 | $ | (16,861,763 | ) | $ | 15,326,689 | ||||||||||
Stock based compensation due to common stock purchase options | - | - | 832 | - | 832 | |||||||||||||||
Net loss for the three months ended March 31, 2019 | - | - | - | (519,266 | ) | (519,266 | ) | |||||||||||||
BALANCE MARCH 31, 2019 | 87,175,522 | 872 | 32,188,412 | (17,381,029 | ) | 14,808,255 | ||||||||||||||
Net loss for the three months ended June 30, 2019 | - | - | - | (547,504 | ) | (547,504 | ) | |||||||||||||
BALANCE JUNE 30, 2019 | 87,175,522 | 872 | 32,188,412 | (17,928,533 | ) | 14,260,751 | ||||||||||||||
Issuance of common stock from the exercise of warrants | 176,842 | 2 | (2 | ) | - | - | ||||||||||||||
Net loss for the three months ended September 30, 2019 | - | - | - | (1,116,050 | ) | (1,116,050 | ) | |||||||||||||
BALANCE SEPTEMBER 30, 2019 | 87,352,364 | $ | 874 | $ | 32,188,410 | $ | (19,044,583 | ) | $ | 13,144,701 |
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2018
BLANCE JANUARY 1, 2018 | 76,145,418 | $ | 762 | $ | 16,404,673 | $ | (14,740,922 | ) | $ | 1,664,513 | ||||||||||
Issuance of common stock from the exercise of warrants | 569,797 | 6 | 109,994 | - | 110,000 | |||||||||||||||
Issuance of common stock from the exercise of stock options | 125,307 | 1 | (1 | ) | - | - | ||||||||||||||
Stock based compensation due to common stock purchase options | - | - | 122,497 | - | 122,497 | |||||||||||||||
Net loss for the three months ended March 31, 2018 | - | - | - | (649,147 | ) | (649,147 | ) | |||||||||||||
BALANCE MARCH 31, 2018 | 76,840,522 | 769 | 16,637,163 | (15,390,069 | ) | 1,247,863 | ||||||||||||||
Stock based compensation due to common stock purchase options | - | - | 47,649 | - | 47,649 | |||||||||||||||
Net loss for the three months ended June 30, 2018 | - | - | - | (465,479 | ) | (465,479 | ) | |||||||||||||
BALANCE JUNE 30, 2018 | 76,840,522 | 769 | 16,684,812 | (15,855,548 | ) | 830,033 | ||||||||||||||
Adjustment related to Q1 | - | - | - | 1,349 | 1,349 | |||||||||||||||
Stock based compensation due to common stock purchase options | - | - | 371 | - | 371 | |||||||||||||||
Net loss for the three months ended September 30, 2018 | - | - | - | (449,580 | ) | (449,580 | ) | |||||||||||||
BALANCE SEPTEMBER 30, 2018 | 76,840,522 | $ | 769 | $ | 16,685,183 | $ | (16,303,779 | ) | $ | 382,173 |
(See accompanying notes to unaudited consolidated financial statements)
3
RENOVACARE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
Nine Months Ended | ||||||||
September 30, | ||||||||
2019 | 2018 | |||||||
Cash flows used in operating activities | ||||||||
Net loss | $ | (2,182,820 | ) | $ | (1,562,857 | ) | ||
Adjustments to reconcile net loss to net cash flows used in operating activities | ||||||||
Depreciation | 237 | 238 | ||||||
Stock based compensation expense | 832 | 170,517 | ||||||
Accretion of debt discount | - | 58,438 | ||||||
Changes in operating assets and liabilities: | ||||||||
Decrease (increase) in prepaid expenses | 68,707 | (17,184 | ) | |||||
Increase (decrease) in accounts payable | 190,925 | 64,818 | ||||||
Increase (decrease) in accounts payable - related parties | 66,474 | (41,500 | ) | |||||
Increase (decrease) in interest payable - related parties | (167,497 | ) | 63,168 | |||||
Increase (decrease) in contract payable | - | (100,000 | ) | |||||
Net cash flows used in operating activities | (2,023,142 | ) | (1,364,362 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from exercise of warrants and issuance of common stock | - | 110,000 | ||||||
Net cash flows from financing activities | - | 110,000 | ||||||
Decrease in cash and cash equivalents | (2,023,142 | ) | (1,254,362 | ) | ||||
Cash at beginning of period | 15,397,524 | 2,906,237 | ||||||
Cash at end of period | $ | 13,374,382 | $ | 1,651,875 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid in cash | $ | 167,497 | $ | - | ||||
Income taxes paid in cash | $ | - | $ | - |
(See accompanying notes to unaudited consolidated financial statements)
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RENOVACARE, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation, Organization, Nature and Continuance of Operations, Recent Accounting Standards and Earnings (Loss) Per Share
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements of RenovaCare, Inc. and Subsidiary (the “Company”) as of September 30, 2019, and for the three and nine months ended September 30, 2019 and 2018, include the accounts of the Company and its wholly-owned and controlled subsidiary, RenovaCare Sciences Corp., and have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”), for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. Actual results may differ from those estimates. The interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited financial statements and include all adjustments (including normal recurring adjustments) necessary for the fair presentation of the Company’s financial position as of September 30, 2019, results of operations for the three and nine months ended September 30, 2019 and 2018, and stockholders’ equity and cash flows for the nine months ended September 30, 2019 and 2018. The Company did not record an income tax provision during the periods presented due to net taxable losses. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.
Organization
RenovaCare, Inc. focuses on the acquisition, research, development and, if warranted, commercialization of autologous (using a patient's own cells) cellular therapies that can be used for medical and aesthetic applications.
The Company, through its wholly owned subsidiary, RenovaCare Sciences Corp., owns the CellMistTM System which is comprised of (a) a treatment methodology for cell isolation for the regeneration of human skin cells (the “CellMistTM Solution”) and (b) a solution sprayer device (the “SkinGunTM”) for delivering the cells to the treatment area. Along with US patent applications that were granted on November 29, 2016 (Patent No. US 9,505,000) and on April 4, 2017 (Patent No. US 9,610,430), the Company has filed additional patent applications related to the CellMistTM Solution and SkinGunTM technologies.
Nature and Continuance of Operations
The Company does not have any commercialized products. The Company's activities have consisted principally of performing research and development activities and raising capital. These development activities are subject to significant risks and uncertainties, including possible failure of preclinical testing. The Company has not generated any revenue since inception and has sustained recurring losses and negative cash flows from operations since inception. The Company expects to incur losses as it continues development of its products and technologies and expects that it will need to raise additional capital through the sale of its securities to accomplish its business plan and failing to secure such additional funding before achieving sustainable revenue and profit from operations poses a significant risk. The Company's ability to fund the development of its cellular therapies will depend on the amount and timing of cash receipts from future financing activities. There can be no assurance as to the availability or terms upon which such financing and capital might be available.
5
As of September 30, 2019, the Company had $13,374,382 of cash on hand. As a result of the cash on hand, the Company believes it currently has sufficient cash to meet its funding requirements over the next twelve months following the issuance of this Quarterly Report on Form 10-Q. However, the Company has experienced and continues to experience negative cash flows from operations, as well as an ongoing requirement for substantial additional capital investment. The Company expects that it may need to raise additional capital to accomplish its business plan over the next several years. If additional funding is required, the Company expects to seek to obtain that funding through private equity or convertible debt. There can be no assurance as to the availability or terms upon which such financing and capital might be available.
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with US GAAP, which contemplates continuation of the Company as a going concern, which is dependent upon the Company’s ability to establish itself as a profitable business.
Recent Accounting Standards
Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative non-governmental US GAAP as found in the Financial Accounting Standards Board's Accounting Standards Codification.
In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, which supersedes ASC Topic 840, Leases, and creates a new topic, ASC Topic 842, Leases. ASU 2016-02 requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. ASU 2016-02 also expands the required quantitative and qualitative disclosures surrounding leases. ASU 2016-02 is effective for the Company beginning January 1, 2019. Early adoption is permitted. The Company has determined that the adoption of ASU 2016-02 did not have an impact on its consolidated financial statements.
The Company reviews new accounting standards as issued. Although some of these accounting standards issued or effective after the end of the Company’s previous fiscal year may be applicable, the Company has not identified any standards that the Company believes merit further discussion other than as discussed above. The Company believes that none of the new standards will have a significant impact on the financial statements.
Earnings (Loss) Per Share
The Company presents both basic and diluted earnings per share ("EPS") amounts. Basic EPS is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period presented. Diluted EPS amounts are based upon the weighted average number of common and common equivalent shares outstanding during the period presented. The Company has not included the effects of warrants, stock options and convertible debt on net loss per share because to do so would be antidilutive.
6
Following is the computation of basic and diluted net loss per share for the three and nine months ended September 30, 2019 and 2018:
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Basic and Diluted EPS Computation | ||||||||||||||||
Numerator: | ||||||||||||||||
Loss available to common stockholders' | $ | (1,116,050 | ) | $ | (449,580 | ) | $ | (2,182,820 | ) | $ | (1,562,857 | ) | ||||
Denominator: | ||||||||||||||||
Weighted average number of common shares outstanding | 87,243,352 | 76,840,522 | 87,198,132 | 76,727,802 | ||||||||||||
Basic and diluted EPS | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.02 | ) | ||||
The shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented: | ||||||||||||||||
Stock options | 317,500 | 357,500 | 317,500 | 357,500 | ||||||||||||
Warrants | 13,106,912 | 3,011,912 | 13,106,912 | 3,011,912 | ||||||||||||
Convertible debt | - | 682,591 | - | 682,591 | ||||||||||||
Total shares not included in the computation of diluted losses per share | 13,424,412 | 4,052,003 | 13,424,412 | 4,052,003 |
Note 2. Common Stock and Warrants
Common Stock
At September 30, 2019, the Company had 500,000,000 authorized shares of common stock with a par value of $0.00001 per share, 87,352,364 shares of common stock outstanding and 19,440,765 shares reserved for issuance under the Company’s 2013 Long-Term Incentive Plan (the “2013 Plan”) as adopted and approved by the Company’s Board of Directors (the “Board”) on June 20, 2013 that provides for the grant of stock options to employees, directors, officers and consultants. No stock awards were made during the nine months ended September 30, 2019. See “Note 4. Stock Options” for further discussion.
Warrants
The following table summarizes information about warrants outstanding at September 30, 2019 and December 31, 2018:
Shares of Common Stock Issuable from Warrants Outstanding as of | |||||||||||||||||
September 30, | December 31, | Weighted Average | |||||||||||||||
Description | 2019 | 2018 |
Exercise Price | Expiration | |||||||||||||
Series A | - | 240,000 | $ | 0.35 | July 12, 2019 | ||||||||||||
Series D | 810,000 | 810,000 | $ | 1.10 | June 5, 2020 | ||||||||||||
Series E | 584,416 | 584,416 | $ | 1.54 | September 8, 2021 | ||||||||||||
Series F | 7,246 | 7,246 | $ | 3.45 | February 23, 2022 & March 9, 2022 | ||||||||||||
Series G | 460,250 | 460,250 | $ | 2.68 | July 21, 2022 | ||||||||||||
Series H | 910,000 | 910,000 | $ | 2.75 | October 16, 2022 | ||||||||||||
Series I | 10,335,000 | 10,335,000 | $ | 2.00 | November 26, 2025 | ||||||||||||
Total | 13,106,912 | 13,346,912 |
During the three months ended September 30, 2019, Jörg Gerlach exercised the remaining 240,000 Series A warrants on a cashless basis resulting in the issuance of 176,842 shares of common stock.
7
Note 3. Stock Options
The following table summarizes stock option activity for the period ended September 30, 2019:
Number of Options | Weighted Average Exercise Price ($) | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value ($) | ||||||||||||||
Outstanding at December 31, 2018 | 317,500 | 3.41 | |||||||||||||||
Outstanding at September 30, 2019 | 317,500 | 3.41 | 6.93 | 53,450 | |||||||||||||
Exercisable at September 30, 2019 | 317,500 | 3.41 | 6.93 | 53,450 |
There were no options granted during the nine months ended September 30, 2019.
The share-based compensation cost resulting from stock option grants, including those previously granted and vesting over time is expensed ratably over the respective vesting periods. During the three months ended September 30, 2019 and 2018, the Company recognized $0 and $371, respectively, in share-based compensation related to stock options. During the nine months ended September 30, 2019 and 2018, the Company recognized $832 and $170,517, respectively, in share-based compensation related to stock options. As of September 30, 2019, the Company had no unrecognized compensation cost related to unvested stock options. Stock-based compensation has been included in the unaudited consolidated statement of operations as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Research and development | $ | - | $ | - | $ | - | $ | 27,966 | ||||||||
General and administrative | - | 371 | 832 | 142,551 | ||||||||||||
Total | $ | - | $ | 371 | $ | 832 | $ | 170,517 |
The following table summarizes information about stock options outstanding and exercisable at September 30, 2019:
Stock Options Outstanding | Stock Options Exercisable | ||||||||||||||||||||||||
Range of Exercise Prices | Number of Shares Subject to Outstanding Options | Weighted Average Contractual Life (years) | Weighted Average Exercise Price | Number of Shares Subject to Options Exercise | Weighted Average Remaining Contractual Life (years) | Weighted Average Exercise Price | |||||||||||||||||||
1.05 | 55,000 | 4.50 | 1.05 | 55,000 | 4.50 | 1.05 | |||||||||||||||||||
1.25 | 7,500 | 5.71 | 1.25 | 7,500 | 5.71 | 1.25 | |||||||||||||||||||
1.34 | 7,500 | 5.75 | 1.34 | 7,500 | 5.75 | 1.34 | |||||||||||||||||||
1.70 | 7,500 | 6.04 | 1.70 | 7,500 | 6.04 | 1.70 | |||||||||||||||||||
2.28 | 7,500 | 6.81 | 2.28 | 7,500 | 6.81 | 2.28 | |||||||||||||||||||
4.20 | 232,500 | 7.62 | 4.20 | 232,500 | 7.62 | 4.20 | |||||||||||||||||||
Total | 317,500 | 6.93 | $ | 3.41 | 317,500 | 6.93 | $ | 3.41 |
Note 4. Commitments
In connection with the Company’s anticipated regulatory filings and ongoing investigations of new product development and expanded clinical indications, the Company has engaged StemCell Systems GmbH (“StemCell Systems”) to provide design and engineering services, prototypes, testing, and documentation under various agreements. Pursuant to these engagements the Company incurred expenses of $100,000 and $14,315 during the three months ended September 30, 2019 and 2018, respectively, and $223,175 and $39,499 during the nine months ended September 30, 2019 and 2018, respectively. Dr. Gerlach, from whom the Company purchased the CellMistTM System technologies, is a principal of StemCell Systems.
8
On June 3, 2019, the Company entered into a Charitable Gift Agreement with the University of Pittsburgh (the "University"), pursuant to which the Company committed to provide a charitable donation to the University in the aggregate amount of $250,000 (the "Grant"). The Company will pay the Grant in four quarterly installments with the first payment made on or before July 1, 2019. During the three and nine months ended September 30, 2019, the Company made payments totaling $0 and $62,500, respectively. At September 30, 2019, the balance remaining under this gift was $187,500. Due to the terms of the Grant, the Company will recognize the related expense upon payment. Dr. Gerlach, from whom the Company purchased the SkinGunTM technology, is a professor at the University.
See also “Note 5. Related Party Transactions.”
Note 5. Related Party Transactions
As compensation for his service on the Board, Dr. Kirkland receives an annual retainer of $6,000, payable in equal quarterly installments in arrears. Additionally, on May 11, 2017, the Company granted to Dr. Kirkland an incentive stock option to purchase up to 75,000 shares of the Company’s common stock at an exercise price of $4.20 per share. The options vested 50% on the date of grant and 50% one year hence on May 11, 2018. The options may be exercised on a cashless basis. Compensation expense of $0 and $43,163 was recorded with respect to the May 11, 2017 grant during the three and nine months ended September 30, 2018, respectively. No compensation costs were recorded in 2019 due to completion of vesting on May 11, 2018.
In connection with the Company’s anticipated FDA and other regulatory filings, the Company engaged StemCell Systems to provide it with prototypes and related documents. Pursuant to these engagements the Company incurred expenses of $100,000 and $14,315 during the three months ended September 30, 2019 and 2018, respectively, and $223,175 and $39,499 during the nine months ended September 30, 2019 and 2018, respectively. Dr. Gerlach, from whom the Company purchased the CellMistTM System technologies, is a principal of StemCell Systems.
Dr. Gerlach is entitled to payments for consulting services. During the three months ended September 30, 2019 and 2018, the Company recognized expenses related to Dr. Gerlach services of $0 and $0, respectively, and $0 and $7,020 during the nine months ended September 30, 2019 and 2018, respectively. Accounts payable to Dr. Gerlach amounted to $0 at September 30, 2019 and December 31, 2018. Additionally, during the three months ended September 30, 2019, Jörg Gerlach exercised the remaining 240,000 Series A warrants on a cashless basis resulting in the issuance of 176,842 shares of common stock.
On August 1, 2013, the Company entered into a consulting agreement, as amended on May 1, 2016, with Jatinder Bhogal, an individual owning in excess of 5% of our issued and outstanding shares of common stock, to provide consulting services to the Company through his wholly owned company, Vector Asset Management, Inc. (“VAM”). Pursuant to the consulting agreement Vector assisted the Company with identifying subject matter experts in the medical device and biotechnology industries and assisted the Company with the ongoing research, development, patents, and strategic positioning of its technologies. Pursuant to an amendment dated May 1, 2016, the VAM monthly consulting fee was increased from $5,000 to $6,800. On June 22, 2018, the Company and VAM entered into an Executive Consulting Agreement (“ECA”) whereby Mr. Bhogal will serve as the Company’s Chief Operating Officer. The ECA supersedes the prior consulting agreement. Pursuant to the ECA, VAM will receive compensation of $120,000 per year. For consulting services provided by VAM, during the three months ended September 30, 2019 and 2018, the Company recognized expenses of $30,000 and $30,000, respectively, and $90,000 and $73,467 during the nine months ended September 30, 2019 and 2018, respectively.
During the year ended December 31, 2018, the Company was offered executive office space located at 9375 E. Shea Blvd., Suite 107-A, Scottsdale, AZ 85260 for consideration of $1 per year. The executive office space is owned indirectly by Harmel S. Rayat, the Company’s majority shareholder and Chairman and CEO.
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On November 26, 2018, the Company entered into Subscription Agreements with Kalen Capital Corporation (“KCC”) for the purchase and sale of 10,335,000 Units of the Company's equity securities at a price of $1.50 per Unit, pursuant to a private placement offering conducted by the Company for (i) aggregate cash proceeds of $14,407,500 and (ii) conversion of $1,095,000 principal amount of outstanding loan indebtedness. The unpaid interest related to the loan indebtedness totaled $167,497 and was paid in July 2019. Each Unit consisted of: (i) one (1) share of common stock; and (ii) one (1) Series I Stock Purchase Warrant to purchase one (1) share of common stock at a price of $2.00 per share for a period of seven (7) years commencing on the date the Warrants were first issued. The Series I Warrants do not have a cashless exercise provision. KCC does not have any registration rights with respect to the shares comprising a part of the Units or issuable upon exercise of the Series I Warrants.
On June 3, 2019, the Company entered into the Grant with the University. During the three and nine months ended September 30, 2019, the Company made payments totaling $0 and $62,500, respectively. At September 30, 2019, the balance remaining under this gift was $187,500. Dr. Gerlach, from whom the Company purchased the SkinGunTM technology, is a professor at the University. See Note 4 above for additional information.
Note 6. Subsequent Events
Management has reviewed material events subsequent of the period ended September 30, 2019 and prior to the filing of financial statements in accordance with FASB ASC 855 “Subsequent Events”.
On October 1, 2019, the Company made a payment to the University pursuant to the Charitable Gift Agreement in the amount of $62,500.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this Quarterly Report filed on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors.
This discussion and analysis should be read in conjunction with the accompanying unaudited interim condensed consolidated financial statements and related notes. The discussion and analysis of the financial condition and results of operations are based upon the unaudited interim condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis we review our estimates and assumptions. The estimates were based on historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but we do not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies us believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments, are outlined below in "Critical Accounting Policies," and have not changed significantly.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, as well as information relating to RenovaCare, Inc. and its subsidiaries that is based on management's exercise of business judgment and assumptions made by and information currently available to management. Although forward-looking statements in this Quarterly Report on Form 10-Q reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. When used in this document and other documents, releases and reports released by us, the words "anticipate," "believe," "estimate," "expect," "intend," "the facts suggest" and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect our current view of future events and are subject to certain risks and uncertainties as noted below. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results could differ materially from those anticipated in these forward-looking statements. Actual events, transactions and results may materially differ from the anticipated events, transactions or results described in such statements. Although we believe that our expectations are based on reasonable assumptions, we can give no assurance that our expectations will materialize. Many factors could cause actual results to differ materially from our forward looking statements and unknown, unidentified or unpredictable factors could materially and adversely impact our future results. We undertake no obligation and do not intend to update, revise or otherwise publicly release any revisions to our forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of any unanticipated events. Several of these factors include, without limitation:
· | our ability to meet requisite regulations or receive regulatory approvals in the United States, and our ability to retain any regulatory approvals that we may obtain; and the absence of adverse regulatory developments in the United States and abroad; | |
· | new entrance of competitive products or further penetration of existing products in our markets; | |
· | the effect on us from adverse publicity related to our products or the company itself; and | |
· | any adverse claims relating to our intellectual property. |
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The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by us. The reader is cautioned that no statements contained in this Form 10-Q should be construed as a guarantee or assurance of future performance or results. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks described in this report and matters described in this report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur.
Overview
RenovaCare, Inc. (together with its wholly owned subsidiary, “RenovaCare” the “Company” “we” “us” and “our”) was incorporated under the laws of the State of Nevada and has an authorized capital of 500,000,000 shares of $0.00001 par value common stock, of which 87,352,364 shares are outstanding as of September 30, 2019, and 10,000,000 shares of $0.0001 par value preferred stock, of which none are outstanding.
Our principal executive offices are located at 9375 East Shea Blvd., Suite 107-A, Scottsdale, AZ 85260. Our telephone number is (888) 398-0202.
Description of Business
We are a development-stage company focusing on the development and commercialization of autologous (using a patient’s own cells) cellular therapies for medical and aesthetic applications. The Company, through its wholly owned subsidiary, RenovaCare Sciences Corp., owns the CellMistTM System which is comprised of (a) a treatment methodology for cell isolation for the regeneration of human skin cells (the “CellMistTM Solution”) and (b) a solution sprayer device (the “SkinGunTM”) for delivering the cells to the treatment area. Along with US patent applications that were granted on November 29, 2016 (Patent No. US 9,505,000) and on April 4, 2017 (Patent No. US 9,610,430), the Company has filed additional patent applications related to the CellMistTM Solution and SkinGunTM technologies.
In the case of U.S. patents, a typical utility patent term is 20 years from the date on which the application for the patent was filed in the United States or, if the application contains a specific reference to an earlier filed application or applications, from the date on which the earliest such application was filed. Patents filed outside of the U.S. have a patent term typically running 20 years from the date of first filing, but which are determined by the law of the country in which they issue. Patent term may be affected by events such as maintenance (or annuity) fee payment, terminal or statutory disclaimer, post-grant proceedings, patent term adjustment, and/or patent term extension.
The development of our CellMistTM System is in the early stage and we anticipate that we will be required to expend significant time and resources to further develop our technology and determine whether a commercially viable product can be developed. Research and development of new technologies involves a high degree of risk and there is no assurance that our development activities will result in a commercially viable product. The long-term profitability of our operations will be, in part, directly related to the cost and success of our development programs, which may be affected by a number of factors.
The average adult human has a skin surface area of between 16 - 21 square feet, which protects all other organs against the external environment. When a person’s skin is assailed by trauma or exposed to extreme heat, the skin’s various layers may be destroyed and depending on the severity of the injury, might cause life-threatening conditions. Currently, severe trauma to the skin, such as second or third degree burns, requires surgical mesh-grafting of skin, whereby healthy skin is removed from one area of the patient’s body (a “donor site”) and implanted on the damaged area.
While mesh grafting is often the method of choice, there are significant deficiencies with this method. The surgical procedure to remove healthy skin from the donor site can be painful and leaves the patient with a new wound that must also be attended to. In many instances the aesthetic results are not satisfying, as the color of the skin from the donor site may not match the skin color of the damaged skin. Additionally, the size of the donor skin removed must be substantially equal in size to the damaged skin area. These donor and injury sites can take weeks to heal, requiring expensive hospital stays, ongoing wound dressing management, and in some cases, complex anti-infection strategies.
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We are currently evaluating the potential of our CellMistTM System in the treatment of tissue that has been subject to severe trauma such as second degree burns. The CellMistTM System utilizes the patient’s own skin stem cells, reduces the size of the donor site, and decreases scarring. Furthermore, we believe the CellMistTM System could enable treatment of other skin disorders.
Our Market Opportunity
According to medical market research firm, Transparency Market Research, the global market for wound healing products is projected to grow to approximately $35.0 Billion by 2025.
Burn Wounds
Burns are one of the most common and devastating forms of trauma. Patients with serious thermal injury require immediate specialized care in order to minimize morbidity and mortality. Data from the National Center for Injury Prevention and Control in the U.S. show that approximately 2 million fires are reported each year which result in 1.2 million people with burn injuries (see American Burn Association Burn Incidence and Treatment in the US: 2000 Fact Sheet, available at: http://www.ameriburn.org). Moderate to severe burn injuries requiring hospitalization account for approximately 100,000 of these cases, and about 5,000 patients die each year from burn-related complications (see Church D, Elsayed S, Reid O, Winston B, Lindsay R “Burn wound infections” Clinical Microbiology Reviews 2006;19(2):403–34, available at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1471990).
The prevalence of patients with severe burns is even higher in emerging economies. For example, according to the World Health Organization over 1,000,000 people in India are moderately to severely burnt every year and approximately 265,000 people worldwide die from burn related injuries (see World Health Organization “Burns: Fact Sheet No. 365,” reviewed September 2016, available at: http://www.who.int/mediacentre/factsheets/fs365/en/). According to Critical Care, an international clinical medical journal, burns are also among the most expensive traumatic injuries because of long and costly hospitalization, rehabilitation and wound and scar treatment (see Brusselaers, N., Monstrey, et al, “Severe Burn Injury in Europe: A systematic Review of the Incidence, Etiology, Morbidity, and Mortality” available at: http://ccforum.com/content/14/5/R188).
Burn injuries account for a significant cost to the health care system in North America and worldwide. In the U.S. there are currently 127 centers specializing in burn care. Recent estimates in the U.S. show that 40,000 patients are admitted annually for treatment with burn injuries, over 60% of the estimated U.S. acute hospitalizations related to burn injury were admitted to burn centers. Such centers now average over 200 annual admissions for burn injury and skin disorders requiring similar treatment. The other 4,500 U.S. acute care hospitals average less than 3 burn admissions per year (see American Burn Association Burn Incidence and Treatment in the US: 2013 Fact Sheet, available at: http://www.ameriburn.org).
Initial hospitalization costs and physicians' fees for specialized care of a patient with a major burn injury are currently estimated to be $200,000. Overall, costs escalate for major burn cases because of repeated admissions for reconstruction and rehabilitation therapy. In the U.S., current annual estimates show that more than $18 billion is spent on specialized care of patients with major burn injuries (see Church D, Elsayed S, Reid O, Winston B, Lindsay R “Burn wound infections” Clinical Microbiology Reviews 2006;19(2):403–34, available at: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1471990).
Most burn injuries involve layers of the upper skin, the epidermis. Severe major trauma involves a complete loss of the entire thickness of the skin and often requires major surgery involving split-skin mesh-grafting. Skin grafting is a procedure where healthy skin is removed from one area of the body and transplanted to a wound site.
Our Technology
Our cell isolation methodology is referred to as the CellMistTM process, and our cell deposition device is referred to as the SkinGunTM. We isolate a patient's stem cells from a small biopsy of the patient's skin. The stem cells are placed into a liquid solution, which is then filled into a sterile syringe. The syringe is inserted into the SkinGunTM, which then sprays the stem cell-loaded liquid solution into the wound.
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The first phase of gathering the patient's stem cells, creating a liquid solution, and applying the stem cells takes approximately 1.5–2 hours. Published studies show that within days following the wound treatment procedure, the skin cells generate a protective skin layer (re-epithelialization), and within months the skin regains its color and texture.
Our cell isolation procedure and the cell spraying are performed on the same day, in an on-site setting. Because the skin cells sprayed using the SkinGunTM are actually the patient's own cells, the skin that is regenerated looks more natural than artificial skin replacements. During recovery, the skin cells grow into fully functional layers of the skin and the regenerated skin leaves minimal scarring. Additionally, our methods require substantially smaller donor areas than skin grafting, reducing donor area burden such as pain and the risk of complications.
The CellMistTM System remains an experimental, unproven methodology and we continue to evaluate its efficacy. There is no guarantee that we will able to develop a commercially viable product based upon the CellMistTM System and its underlying technology.
Domestic Regulation
Governmental authorities in the U.S., at the federal, state and local level, and in other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, packaging, promotion, storage, advertising, distribution, marketing and export and import of products or devices such as those we are attempting to develop. Our device candidates, to the extent they are developed, will be subject to pre-market approval by the FDA prior to their marketing for commercial use in the U.S., and to any approvals required by foreign governmental entities prior to their marketing outside the U.S. In addition, any changes or modifications to a device that has received regulatory clearance or approval that could significantly affect its safety or effectiveness, or would constitute a major change in its intended use, may require the submission of a new application in the U.S. for pre-market approval, or for foreign regulatory approvals outside the U.S.. The process of obtaining foreign approvals, can be expensive, time consuming and uncertain.
Premarket Approval
We will be required to file for premarket approval (“PMA”) for the SkinGunTMor any other device that we commercialize if it is deemed a Class III medical device. PMA is the FDA process of scientific and regulatory review to evaluate the safety and effectiveness of Class III medical devices. Class III devices are those that support or sustain human life, are of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury. Due to the level of risk associated with Class III devices, the FDA has determined that general and special controls alone are insufficient to assure the safety and effectiveness of class III devices. Therefore, these devices require a PMA application under section 515 of the Federal Food, Drug and Cosmetic Act in order to obtain marketing clearance.
PMA is the most stringent type of device marketing application required by the FDA. The applicant must receive FDA approval of its PMA application prior to marketing the device. PMA approval is based on a determination by FDA that the PMA contains sufficient valid scientific evidence to assure that the device is safe and effective for its intended use(s). An approved PMA is, in effect, a private license granting the applicant (or owner) permission to market the device.
Investigational Device Exemption (“IDE”)
Among the data required in a PMA application is human clinical test data. The FDA’s regulation that governs the human testing is the IDE and other patient protection regulations. For devices that are considered Significant Risk, an IDE application is required. It consists of the proposed clinical protocol and all supporting study documentation and must be submitted and approved by FDA and an Institutional Review Board (IRB) prior to initiation of the human testing. Since the CellMistTM System employs the use of stem cells taken from the patient, it is considered Significant Risk by the FDA; therefore, we will be required to file an IDE application prior to conducting a clinical study for any application, such as for treatment of severe burns. The FDA has a specified review timeline and process for IDE reviews - each review phase takes 30 days and if the FDA has questions or concerns about the study design, there may be multiple review rounds until FDA either: (a) conditionally approves, (b) approves or (c) denies approval of the clinical study conduct under the submitted IDE. There is no guarantee that any IDE application we submit will be approved by the FDA.
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HIPAA Requirements
Other federal legislation may affect our ability to obtain certain health information in conjunction with any research activities we conduct. The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), mandates, among other things, the adoption of standards designed to safeguard the privacy and security of individually identifiable health information. In relevant part, the U.S. Department of Health and Human Services (“HHS”), has released two rules to date mandating the use of new standards with respect to such health information. The first rule imposes new standards relating to the privacy of individually identifiable health information. These standards restrict the manner and circumstances under which covered entities may use and disclose protected health information so as to protect the privacy of that information. The second rule released by HHS establishes minimum standards for the security of electronic health information. While we do not believe we are directly regulated as a covered entity under HIPAA, the HIPAA standards impose requirements on covered entities conducting research activities regarding the use and disclosure of individually identifiable health information collected in the course of conducting the research.
Other U.S. Regulatory Requirements
In the U.S., the research, manufacturing, distribution, sale, and promotion of drug and biological products are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare and Medicaid Services (formerly the Health Care Financing Administration), other divisions of the U.S. Department of Health and Human Services (e.g., the Office of Inspector General), the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice, and state and local governments. For example, sales, marketing and scientific/educational grant programs must comply with the anti-fraud and abuse provisions of the Social Security Act, the False Claims Act, and similar state laws, each as amended. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990 and the Veterans Health Care Act of 1992, each as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection, unfair competition, and other laws.
International Regulation
The regulation of any potential product candidates we may produce outside of the U.S. varies by country. Certain countries regulate human tissue products as a biological product, which would require us to make extensive filings and obtain regulatory approvals before selling our product candidates. Certain other countries may classify our product candidates as human tissue for transplantation but may restrict its import or sale. Other countries have no application regulations regarding the import or sale of products similar to potential product candidates, creating uncertainty as to what standards we may be required to meet.
Competition
The biotechnology, medical device, and wound care industries are characterized by intense competition, rapid product development and technological change. Our CellMistTM System competes with a variety of companies in the wound care markets, many of which offer substantially different treatments for similar problems. Currently Avita Medical Limited has received regulatory approvals for ReCell, a cell spray device and a cell isolation procedure for autologous cells. Integra Lifesciences Holding Corp. sells Integra Dermal Regeneration Template, which does not use autologous cells, but instead uses an animal-derived intercellular matrix with an artificial waterproof barrier. Other competitors include: MiMedx Group, Inc.; Kinetic Concepts Inc.; Fibrocell Science, Inc.; Shire Plc and Organogenesis, Inc.
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Many of our competitors are large, well-established companies with considerably greater financial, marketing, sales and technical resources than those available to us. Additionally, many of our present and potential competitors have research and development capabilities that may allow them to develop new or improved products that may compete with our product lines. Our potential products could be rendered obsolete or made uneconomical by the development of new products to treat the conditions addressed by our products, technological advances affecting the cost of production, or marketing or pricing actions by one or more of our competitors.
Intellectual Property
General
In the course of conducting our business, we from time to time create inventions. Obtaining, maintaining and protecting our inventions, including seeking patent protection, might be important depending on the nature of the invention. To that end, we seek to implement patent and other intellectual property strategies to appropriately protect our intellectual property. While we file and prosecute patent applications to protect our inventions, our pending patent applications might not result in the issuance of patents or issued patents might not provide competitive advantages. Also, our patent protection might not prevent others from developing competitive products using related or other technology.
The scope, enforceability and effective term of issued patents can be highly uncertain and often involve complex legal and factual questions. Moreover, the issuance of a patent in one country does not assure the issuance of a patent with similar claim scope in another country, and claim interpretation and infringement laws vary among countries, so we are unable to predict the extent of patent protection in any country. The patents we obtain and the unpatented proprietary technology we hold might not afford us significant commercial protection or advantage.
In addition to issued patents, we plan to file additional patent applications that, if issued, would provide further protection for The CellMistTM System. Although we believe the bases for these patents and patent applications are sound, they are untested; and there is no assurance that they will not be successfully challenged. There can be no assurance that any patent previously issued will be of commercial value, that any patent applications will result in issued patents of commercial value, or that our technology will not be held to infringe patents held by others.
Strategy
Our ultimate goal is to leverage the potential of our CellMistTM System, together with our cell isolation method, as cutting edge treatments in skin therapy. Before we can do so, however, there are a number of steps we must first take, including:
• | initiating a series of clinical trials to determine the CellMistTM System’s safety and efficacy for treating wounds and burns; | |
• | formalizing collaborations with universities and scientific partners; | |
• | creating a network of clinical and research partners; | |
• | achieving FDA and other regulatory clearance; and | |
• | expanding the range of possible applications. |
Additionally, we will likely continue to raise significant capital in order to fund our ongoing research and development operations, and there is no guarantee that we will be able to continue to raise capital on acceptable terms, if at all.
Results of Operations
Three and Nine Months Ended September 30, 2019 Compared with the Three and Nine Months Ended September 30, 2018
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Operating Expenses
A summary of our operating expenses for the three and nine months ended September 30, 2019 and 2018 follows:
Three Months Ended September 30, | Increase / | Percentage | ||||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||||
Operating expenses | ||||||||||||||||
Research and development | $ | 130,467 | $ | 45,683 | $ | 84,784 | 186 | % | ||||||||
General and administrative | 1,070,314 | 386,438 | 683,876 | 177 | % | |||||||||||
Stock compensation | - | 371 | (371 | ) | -100 | % | ||||||||||
Total operating expenses | $ | 1,200,781 | $ | 432,492 | $ | 768,289 | 178 | % |
Nine Months Ended September 30, | Increase / | Percentage | ||||||||||||||
2019 | 2018 | (Decrease) | Change | |||||||||||||
Operating expenses | ||||||||||||||||
Research and development | $ | 504,169 | $ | 251,034 | $ | 253,135 | 101 | % | ||||||||
General and administrative | 1,943,279 | 1,033,691 | 909,588 | 88 | % | |||||||||||
Stock compensation | 832 | 170,517 | (169,685 | ) | -100 | % | ||||||||||
Total operating expenses | $ | 2,448,280 | $ | 1,455,242 | $ | 993,038 | 68 | % |
Research and Development
Research and development (“R&D”) costs represent costs incurred to develop our CellMistTM System and are incurred pursuant to agreements with third party providers and certain internal R&D cost allocations. Payments under these agreements include salaries and benefits for R&D personnel, allocated overhead, contract services and other costs. R&D costs are expensed when incurred. R&D costs, excluding stock based compensation, increased during the three and nine months ended September 30, 2019 compared to 2018, as a result of the company’s regulatory, product development, and product expansion efforts.
General and Administrative
General and administrative costs include all expenditures incurred other than research and development related costs, including costs related to personnel, professional fees, travel and entertainment, public company costs, insurance and other office related costs. Costs increased during the three months ended September 30, 2019 compared to 2018 and included an increase of $54,000 related to personnel costs, $596,000 related to professional fees and $44,000 related to travel expenses offset by a $10,000 net reduction in various other general costs. Costs increased during the nine months ended September 30, 2019 compared to 2018 and included an increase of $63,000 related to personnel costs, $890,000 related to professional fees, $42,000 related to travel expenses, $62,500 related to the Charitable Grant Agreement with the University of Pittsburgh offset by a $25,500 net reduction in various other general costs and $122,000 decrease in investor communications costs.
Stock Compensation
Expense associated with equity based transactions is calculated and expensed in our financial statements as required pursuant to various accounting rules and is non-cash in nature. Stock compensation represents the expense associated with the amortization of our stock options. Stock compensation expense decreased during the three and nine months ended September 30, 2019 compared to 2018 primarily due to the May 11, 2017 grant of 310,000 stock options with a weighted average grant date fair value of $3.38 per share whereby one-half vested on the date of grant and the second half vested on May 11, 2018; combined with no subsequent option grants, resulted in virtually no expense in 2019 compared to 2018.
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Other Income (Expense)
Other income relates to interest earned on bank account deposits. Other expense related to our convertible promissory notes. Interest expense relates to the stated interest of the convertible promissory notes. Accretion of debt discount represents the accretion of the discount applied to the notes as a result of the issuance of detachable warrants and the beneficial conversion feature contained in the notes.
Liquidity and Capital Resources
The Company does not have any commercialized products, has not generated any revenue since inception and has sustained recurring losses and negative cash flows since inception. The Company has incurred recurring operating losses of $2,448,280 and $1,455,242 for the nine months ended September 30, 2019 and 2018, respectively. The Company expects to incur losses as it continues development of its products and technologies. The Company has been funded through the sale of equity securities. As of September 30, 2019, the Company had $13,374,382 of cash. The Company believes that it currently has sufficient cash to meet its funding requirements over the next year.
Net cash used in operating activities was $2,023,142 during the nine months ended September 30, 2019, compared to net cash used in operating activities of $1,364,362 during the nine months ended September 30, 2018. The increase in cash used in operating activities is primarily due to the increase in professional fees.
There was no net cash used in investing activities during the nine months ended September 30, 2019 and 2018.
Net cash provided by financing activities was $0 during nine months ended September 30, 2019, compared to $110,000 during the nine months ended September 30, 2018. During the nine months ended September 30, 2018, the Company received $110,000 from the exercise of 100,000 Series D Warrants at an exercise price of $1.10
On November 26, 2018, the Company 1) issued 9,605,000 units of the Company’s equity securities at a price of $1.50 per unit, pursuant to a private placement offering conducted by the Company resulting in $14,407,500 of proceeds to the Company; and 2) issued 730,000 units of the Company’s equity securities at a price of $1.50 per unit, pursuant to a private placement offering conducted by the Company resulting in conversion of $1,095,000 principal amount of loan indebtedness.
On February 13, 2018, the Company issued 100,000 shares of common stock upon the exercise of a Series D Warrant at an exercise price of $1.10 per share resulting in $110,000 of proceeds to the Company.
Fair Value of Financial Instruments and Risks
The carrying value of cash and cash equivalents, accounts payable, and contract and contribution payable, approximate their fair value because of the short-term nature of these instruments and their liquidity. It is not practical to determine the fair value of the Company’s notes payable and accrued interest due to the complex terms. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Recent Accounting Standards
See Note 1 to our Unaudited Condensed Consolidated Financial Statements for more information regarding recent accounting standards and their impact to our consolidated results of operations and financial position.
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Related Party Transactions
Our proposed business raises potential conflicts of interests between certain of our officers and directors and us. Certain of our directors are employees or consultants to other companies in the healthcare industry and, to the extent that such other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation. In the event that such a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. Other than as indicated, we have no other procedures or mechanisms to deal with conflicts of interest. We are not aware of the existence of any conflict of interest as described herein.
The Board is responsible for review, approval, or ratification of “related-person transactions” involving RenovaCare, Inc. or its subsidiaries and related persons. Under SEC rules (Section 404 (d) of Regulation S-K), a related person is a director, officer, nominee for director, or 5% stockholder of the company since the beginning of the previous fiscal year, and their immediate family members. RenovaCare, Inc. is required to report any transaction or series of transactions in which the company or a subsidiary is a participant, and a related person has a direct or indirect material interest where the amount involved exceeds the lesser of $120,000 or one percent of the average of the smaller reporting company’s total assets at year end for the last two completed fiscal years.
During the nine months ended September 30, 2019, none of our current directors, officers or principal shareholders, nor any family member of the foregoing, nor, to the best of our information and belief, any of our former directors, senior officers or principal shareholders, nor any family member of such former directors, officers or principal shareholders, has or had any material interest, direct or indirect, in any transaction, or in any proposed transaction which has materially affected or will materially affect us.
For a complete description of the Company’s related party transactions, see “Note 5. Related Party Transactions” included above under the “NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS”.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company maintains “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) of the Exchange Act, that are designed to provide reasonable assurance that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any control and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective.
As required by SEC Rule 13a-15(b), the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2019. Based on this evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that the Company’s disclosure controls and procedures were not sufficiently effective as of September 30, 2019 because of the following material weakness in our internal control over financial reporting:
· | Ineffective control environment due to an insufficient number of independent board members; and | |
· | Ineffective design, implementation, and documentation of internal controls impacting financial statement accounts |
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Changes in Internal Control over Financial Reporting
As of our fiscal year ended December 31, 2018 and based on the COSO criteria, management identified control deficiencies that constituted material weaknesses. A “material weakness”, as defined by COSO, is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is more than a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management identified the following material weaknesses in our internal control over financial reporting as of December 31, 2018:
· | Ineffective control environment due to an insufficient number of independent board members, insufficient oversight of work performed, and the lack of compensating controls over financial reporting due to limited personnel; | |
· | Ineffective design, implementation, and documentation of internal controls impacting financial statement accounts and general controls over technology pertaining to user access and segregation of duties, banking and disbursements, and financial accounting system applications; and | |
· | Ineffective monitoring controls related to the financial close and reporting process, including management’s risk assessment process and its identification, evaluation, and timely remediation of control deficiencies. |
The Company has begun implementing new and more robust internal controls and continues to take actions to remediate the material weaknesses in our internal controls over financial reporting identified above, including implementing additional processes and controls designed to address the underlying causes associated with the above mentioned material weaknesses. The Company’s internal control implementation and remediation efforts include the following:
· | On October 22, 2018, we appointed Steve Yan-Klassen, CPA, CMA as our CFO in an effort to provide senior financial oversight and increased segregation of duties; |
· | Since March 31, 2019, we have been performing more extensive and frequent reviews of critical estimates, journal entries, complex calculations, the financial close and financial reporting processes; |
· | Realigning certain roles to provide better segregation of duties and implementing stronger user access controls; |
· | Implementation of new policies and procedures related to controls over various operating activities; |
· | The hiring of additional staff and modification of duties of existing staff in connection with our remediation efforts; |
· | Regular onsite and offsite backups of critical electronic data; |
· | Regular informal and formal meetings of Board members who also have been incorporated into the review process of all financial statement filings. |
We continue to monitor our control environment and will implement additional controls and processes utilizing internal resources, and outside resources (when deemed necessary) to strengthen our controls over the financial reporting and disclosure process as applicable in order to meet the needs of our growing organization.
None.
Smaller reporting companies are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
20
_______________
* | Filed herewith. |
** | Furnished herewith. XBRL (eXtensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections. |
21
Pursuant to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
RenovaCare, Inc.
(Registrant)
Date: November 14, 2019 | By | /s/ Harmel S. Rayat | |
Name: | Harmel S. Rayat | ||
Title: | Chief Executive Officer and Director | ||
(Principal Executive Officer) | |||
Date: November 14, 2019 | By: | /s/ Stephen Yan-Klassen | |
Name: | Stephen Yan-Klassen | ||
Title: | Chief Financial Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |
22
Exhibit 10.7
RENOVACARE, INC. EXECUTIVE SERVICES CONSULTING AGREEMENT This Executive Services Consulting Agreement (this "Agreement") is dated August 15, 2019, by and between RenovaCare, Inc., a Nevada corporation (the "Company''), and Robin Robinson, Ph . D., an individual having his place of business at 20419 Peach Tree Road, Dickerson, MD 20842 ("Consultant"). Recitals: A. The Company wishes to engage Consultant to provide consulting services on the terms set forth on Exhibit A, attached hereto and incorporated herein in full (collectively, the "Services"), and Consultant is willing to provide the Services on such terms; and B. Since the introduction of the parties there have been various discussions, negotiations, understandings and agreements between them relating to the terms and conditions of the Services and, correspondingly, that it is their intention by the terms and conditions of this Agreement to hereby replace, in their entirety, all such prior agreements, discussions, negotiations and understandings with respect to the Services to be provided, all in accordance with the terms and conditions of this Agreement. Accordingly, the Company and the Consultant agree as follows: I. Consulting Relationship. During the term of this Agreement, Consultant will provide consulting Services to the Company as described in Exhibit A hereto. Consultant represents that Consultant is duly licensed (as applicable) and has the qualifications, the experience and the ability to properly perform the Services. 2. Fees and Benefits. As consideration for the Services to be provided by Consultant and other obligations, the Company shall pay to Consultant the amounts specified in Exhibit B attached hereto and incorporated herein in full, at the times specified therein . Consultant acknowledges and agrees that Consultant shall have only such benefits as are specified in Exhibit B hereto. 3. Exn.mm - Consultant shall not be authorized to incur on behalf of the Company any expenses and will be responsible for all expenses incurred while performing the Services except as expressly specified in Exhibit C hereto unless otherwise agreed to by the Company's Chief Executive Officer, Chief Operating Officer, or ChiefFinancial Officer, which consent shall be evidenced in writing for any such expenses in excess of $250. As a condition to receipt of reimbursement, Consultant shall be required to submit to the Company reasonable evidence that the amount involved was both reasonable and necessary to the Services provided under this Agreement. 4. Term and Termination. Consultant shall serve as a consultant to the Company commencing on the Effective Date (as de.fined below) and shall cease to provide such Services on the date that this Agreement is terminated as provided below (the "Consulting Period"): This Agreement shall terminate (i) on a date which is 5 Business Days' following the date of written notice by either party to this Agreement terminating this Agreement. or (ii) at any time by the mutual written consent of the Consultant and the Company. In the event of such termination, Consultant shall be paid for any portion of the Services that have been perfonned prior to the date of termination. For purposes of this Agreement, the term "Business Day" means any day on which the New York Stock Exchange is open for business. Termination off this Agreement shall constitute the Consultant's notice ofresignation from any and all directorships, officerships, or other positions held in the Company. 5. Independent Contractor. Consultant's relationship with the Company will be that of an independent contractor and not thc1t of an employee. 6. Method of Provisjon of Services . Consultant shall provide the Services primarily
from his place of business in Maryland, and &om time to time, as required, in the Company's offices in the United States and in Canada. (a) No Authority to Bind Comp..filU'.. Consultant acknowledges and agrees that Consultant has no authority to enter into contracts that bind the Company or create obligations on the part of the Company without the prior written authorization of the Company. (b) Taxes; Indemnification . Consultant shall have full responsibility for all applicable taxes for all compensation paid to Consultant or its Assistants under this Agreement, including any withholding requirements that apply to any such taxes, and for compliance with all applicable labor and employment requirements with respect to Consultant's self - employment, sole proprietorshipor other form of business organization. Consultant agrees to indemnify, defend and ho l d the Company harmless from any liability for, or assessment of, any claims or penalties or interest with respect to such taxes, labor or employment requirements, including any liability for, or assessment of, taxes imposed on the Company by the relevant taxing authorities with respect to any compensation paid to Consultant or its Assistants or any liability related to the withholding of such taxes . 7. fumervision of Consultant's Services . All of the services to be performed by Consultant, including but not limited to the Services, will be as agreed between Consultant and the Company's Chief Executive Officer or Chief Operating Officer. Consultant will be required to report to the Company's Chief Executive Officer or Chief Operating Officer concerning the Services perfonned under this Agreement. The nature and frequency of these reports will be left to the discretion of the Chief Operating Officer. 8. Consulting orOther Services for Com . Consultant represents and warrants that Consultant does not presently perform or intend to perform, during the term of the Agreement, consulting or other services for, or engage in or intend to engage in an employment relationship with, companies whose businesses or proposed businesses in any way involve products or services which would be competitive with the Company's products or services, or those products or services proposed or in development by the Company during the term of the Agreement (except for those companies, if any, listed on Exhibit C hereto). If, however, Consultant decides to do so, Consultant agrees that, in advance of accepting such work, Consultant will promptly notify the Company in writing, specifying the organization with which Consultant proposes to consult, provide services, or become employed by and to provide information sufficient to allow the Company to determine if such work would conflict with the terms ot'this Agreement, including the terms of the Confidentiality Agreement (defined below). the interests of the Company or further services which the Company might request of Consultant. If the Company detennines that such work conflicts with the terms of this Agreement, the Company reserves the right to terminate this Agreement immediately. Except as provided herein, the Services shall not be performed for the Company at the facilities of a third party or u sing the resources of a third party. 9. Confidential Information and Invention AssigQment Agreement. As a condition to the Consultant's engagement pursuant to this Agreement, Consultant shall sign, or has signed, a Confidential Information and Invention Assignment Agreement in the form set forth as Exhibit D hereto (the "Confidentiality Agreement"), on or before the date Consultant begins providing the Services . 10. Conflicts with this Agreement. Consultant represents and warrants that he is not under any pre - existing obligation in conflict or in any way inconsistent with the provisions of this Agreement. Consultant represents and warrants that Consultant's performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by Consultant in confidence or in trust prior to commencement of this Agreement. Consultant warrants that Consultant has the right to disclose and/or or use all ideas, processes, techniques and other information, if any, which Consultant has gained from third parties, and which Consultant discloses to the Company or uses in the course of performance of this Agreement, without liability to such third parties. Notwithstanding the foregoing, Consultant agrees that Consultant shall not bundle with or incorporate into any deliveries provided to the Company herewith any third party products, ideas, processes, or other techniques, without the express, written prior approval of the Company. Consultant represents and warrants that Consultant has not granted and will not grant any rights or licenses to any intellectual property or technology that would conflict with Consultant's obligations under this Agreement. Consu l tant will not knowingly in.fringe upon any copyright, patent, trade secret or other property right of any former client, employer or third party in the performance of the Services. 11. Trading In the Company's Securities . Consultant acknowledges that the Company is a U . S. "public" company with its common stock currently quoted for trading on the OTC Markets Group Inc. Pink Sheets . As the Company's independent contractor, the Consultant
acknowledges that he may have access to certain material, non - public information of the Company that, if used in connection with any transaction in the Company's securities , could constitute a violation of the securitie s laws of the United States. As such, the Consultant agrees that he shall not engage, directly or indirectly , in any transactions in the Company's securities on the basis of any such information , including , but not limited to, providing any other individual with such information. Additionally, the Consultant acknowledges and agrees that in order to sell any Company s ecurities he owns he may be required to enter into an insider trading plan that complies with the requirements of, among others , Rule IOb - 1 of the Securities Act. Without limiting the foregoing , the Consultant agrees that during the term of this Agreement he will not, and will not direct any broker, dealeror other individual on his behalf, to engage in any transactions related to the Company' s securities except in compliance with applicable laws. 12. Miscellaneous . ( a ) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and supersedes all prior or contemporaneou s di s cus s ion s , understandings and agreements, whether oral or written, between them relating to the subject matter hereof . (b) Further assurances. The Parties will from time to time after the execution of this Agreement make, do , execute or cau s e or permit to be made , done or executed, all such further and other acts, deeds, things, devices and assurances in law whatsoever as may be required to carry out the true intention and to give full force and effect to this Agreement. ( c ) Amendments and Waivers . No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement , shall be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a wai v er of that provision as to that or any other instance. (d) Successors and Assigns . Except as otherwise provided in this Agreement, thi s Agreement, and the rights and o bligationsof the parties hereunder, will be binding upon and inure to the benefit of their re s pective successors, assigns, heirs, executors , administrators and legal representatives. The Company may a s sign any of it s rights and obligations under this Agreement. No other party to this Agreement may assign, whether voluntarily or by operation of law , any of its rights and obli g ations under this Agreemen , t except with the prior written consent of the Company. (e) Notices. Any notice, demand or request required or permitted to be given under this Agre e ment s hall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or s ent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid , addressed to the party to be notified at such party's address as set forth on the signature page to thi s Agreement, as subsequently modified by written notice , or if no addre s s i s specified on the s ignature page, at the mo s t recent addre s s set forth in the Company 's book s and records. (t) SeverabilitY, . If one or more provisions of this Agreement are held to be_unenforceable under applicable law , the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from thi s Agreement, (ii) the balance of the Agreement shall be interpreted as if such provi s ion were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms. (g) Construction. This Agreement i s the re s ult of n e gotiations between and has been r e viewed b y each of the parties hereto and their respective counsel , if any ; accordingly , this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity s hall be con s trued in favor of or against any one of the parties hereto .
(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute on e and the same agreement. Execution of a facsimile or scanned copy will have the same force and effect as execution of an original, and a facsimile or scanned signature will be deemed an original and valid signature. (i) Electronic Delivery. The Company may , in its sole discretion , decide to deliver any documents related to this Agreement or any notices required by applicable law or the Company's Certificate of Incorporation or Bylaws by email or any other electronic means. Consultant hereby consents to (i) conduct business electronically (ii) receive s uch documents and notices by such electronic delivery and (iii) sign documents electronically and agrees to participate through an on - line or electronic system established and maintained by the Company or a third party designated by the Company. G ) Currencr. . Unless otherwise stipulated, all payments required to be made pursuant to the provisions of this Agreement and all money amount references contained herein are in lawful currency of the United States. (k) Voluntary Execution. Consultant certifies and acknowledges tha t Consultant has carefully read all of the provisions of this Agreement, that Consultant understands and has voluntarily accepted such provisions , and that Consultant will fully and faithfully comply with such provisions. (1) Public Comment. The Consultant, during the Consulting Period and at all times thereafter , s hall not make any derogatory comment con c erning the Company or any of its current or former directors, officers , stockholders or employees. Similarly, the then current (i) members of the Board and (ii) members of the Company's senior management shall not make any derogatory comment concerning the Consultant. Notwithstanding anything to the contrary herein, the Consultant understands that nothing in this Agreement restricts or prohibits the Consultant from initiating communications directly with, responding to any inquirie s from, providing testimony before , providing confidential information to , reporting possible violations of law or regulation to , or from filing a claim or assisting with an investigation directly with a self - regulatory authority or a government agency or entity (collectively, "Government Agencies"), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation, and pursuant to 18 USC 1833(b), an individual may not be held liable under any criminal or civil federal or state trade secret law for disclosure of a trade secret: (i) made in confidence to a government official, either directly or indirectly, or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law or (ii) in a complaint or other document filed in a law s uit or other proceeding, if such filing is made under seal. Additionally, an individual suing an entity for retaliation based on the reporting of a suspected violation of law may disclose a trade secret to the individual's attorney and use the trade secret information in the court proceeding , so long as any document containing the trade secret is filed under seal and the individual does not disclose the trade secret except pursuant to court order. Nothing in this Agreement is intended to conflict with 18 USC 1833(b) or create liability for disclosures of trade secrets that are expressly allowed by 18 USC 1833(b). ( m ) Advice of Counsel. CONSULTANT ACKNOWLEDGES IBA T , IN EXECUTING TIIIS AGREEMENT , CONSULTANT HAS HAD TilE OPPORTIJNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND CONSULTANT HAS READ AND UNDERSTANDS ALL OF THE TERMS AND PROVISIONS OF TIIlS AGREEMENT . rms AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF . (n) Effective Date. Regardless of the date on which this Agreement is executed by the parties hereto, the effective date of this Agreement is August 15, 2019. (o) Non - Competition, Non - Competition and Non - Solicitation and Non - Circumvention .
(i) Non - Competition. Except as authorized by the Company's Board of Directors, during the Consulting Period and for a period of twelve (12) months thereafter, the Consultant will not (except as an officer, director , stockholder, employee, agent or consultant of the Company or any subsidiary or affiliate thereof) either directly or indirectly, whether or not for consideration, (i) in any way, directly or indirectly , solicit, divert, or take away the business of any person who is or was a c ustomer of the Company, or in any manner influence such person to cease doing business in part or in whole with Company; (ii) engage in a Competing Business; or (iii) except for investments or ownership in public entities , mutual funds and similar investments, none of which constitute more than 5% of the ownership (provided such ownership interest is acquired solely for investment purposes) or control of such entities, own, operate, control, finance, manage, advise, be employed by or engaged by, perform any services for, invest or otherwise become associated in any capacity with any person engaged in a Competing Business; or (iv) engage in any practice the purpose or effect of which is to intentionally evade the provisions of this covenant. For purposes of this section, "Competing Business" means any company or business which is engaged directly or indirectly in any Company Business carried on or planned to be carried on (if such plans were developed the term of the Relationship) by the Company; and "C ompany Business" means the Company's business activities and operations as conducted during the term of the Relationship and all products conceived, planned, researched, developed, tested, manufactured , sold, licensed, leased or otherwise distributed or put into use by the Company, together with all services provided or planned by the Company, during your relationship with the Company. (ii) Non - Solicitation and Non - Circumvention. For a period of twelve (12) months following the termination of the Consulting Period, the Consultant will not directly or indirectly, whether for your account or for the account of any other individual or entity, solicit or canvas the trad , e business or patronage of, or sell to, any individuals or entities that were investors, customers or employees of the Company during the Consulting Period, or prospective customers with respect to whom a s ales effort, presentation or proposal was made by the Company or its affiliates, during the one year period prior to the termination of the Consulting Period. Without limiting the foregoing, the Consultant shall not, directly or indirectly (i) solicit, induce , enter into any agreement with, or attempt to influence any individual who was an employee or consultant of the Company at any time during the Consulting Period, to terminate his or her employment relationship with the Company or to become employed or engaged by the Consultant or any individual or entity by which the Consultant are employed or for which you are acting as a consultant or other advisory capacity, and/or (ii) interfere in any other way with the employment, or other relationship, of any employee of, or consultant to, the Company. ( iii ) Jn.iunctive Relief. The Consultant acknowledges and agrees that the covenants and obligations of the Consultant set forth in this Agreement relate to special, unique and extraordinary Services rendered by the Consultant to the Company and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, the Consultant agrees that the Company shall be entitled to seek an injunction, restraining order or other temporary or permanent equitable relief (without the requirement to post bond) restraining the Consultant from committing any violation of the covenants and obligations contained herein. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity . (p) Governing Law . The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of Nevada without giving effect to principles of conflicts oflaw. {Signature Page Follows} SIGNATURES The parties have executed this Agreement as of the date first written above . THE COMPANY:
RENOVACARE, INC. By; (Signature) Name: Jatinder (Jay) S. Bhogal Title: Chief Operating Officer Address: RenovaCare, Inc. 9375 East Shea Blvd., Suite 107 - A Sco ttsdale , AZ. 85260 Attention: Jay S. Bhogal Facsimile: 604 - 866 - 5432 Email Address: jsbhogal@renovacareinc.com CONSULTANT: ROBIN ROBINSON,.flil1 (Signature) 20419 Peach Tree Road Dickerson , :MD 20842 301 - 349 - 4035 (home) 240 - 330 - 9951 (mobile) Email: robjnsorl@comcast.net 1 EXHIBITA TO THE RENOVACARE, INC. - ROBIN ROBINSON CONSULTING AGREEMENT DATED AUGUST 15 , 2019 **** DESCRIPTION OF CONSULTING SERVICES I. Description of Duties. During the term of this Consulting Agreement, it is expected that Consultant will serve as Vice President, Scientific Affairs and expend about 4 hours per week on behalf of the Company on matters related to the Company's scientific affairs, as follows: Interface with the Company's scientific, technology, engineering, regulatory, intellectual property, and business teams on matters relevant to each team Pursue and arrange for scientific , technology, government, regulatory, and business introductions to the Company in support of its mandate Help identify personnel, contractors, advisors, and service providers to enable improvements and efficiencies in the Company's product development, engineering, clinical, regulatory, and government relations programs
When appropriate, provide reports, advice, guidance, and insights to Company Officers, Directors, scientists, investors, attorneys, and auditors on matters related to the Consultant's expertise Assist the Company with s trategy,tactical execution , and the preparation and presentation of materials to key opinion leaders, industry influencers , academic institutions , commercial research groups, and government agencies in furtherance of the Company's government relations program Consultant shall use Consultant's reasonable efforts to perform the Services such that the results are satisfactory to the Company. 2. Place of Services. The Company anticipates that Consultant will perform his seivices principally from the Consultant's offices located in Dickerson , MD. 3. Code of Ethics. Consultant agrees to abide by the Code of Ethic s and Business Conduct, a copy of which is attached as Appendix 1 to this Exhibit A hereto. 1 APPENDIX 1 TO EXHIBIT A TO THE RENOVACARE, INC. - ROBINROBINSON CONSULTING AGREEMENT DATED AUGUST 15, 2019 CODE OF CORPORATE GOVERNANCE AND ETHICS This Employee Code of Corporate Governance and Ethics applies to all employees, officers and directors of RenovaCare Technologies , Inc . , its subsidiaries and affiliates (collectively , "RenovaCare" or the "ComDfil!Y . ") RenovaCare i s proud of its reputation for integrity and h o nesty and is c ommitted to these core values . Personal responsibility is at the core of the Company's principle s and culture . RenovaCare's reputation depends on you maintaining the highest s tandard s of conduct in all business endeavors . You have a personal responsibility to protect this reputation, to "do the right thing," and to act with honesty and integrity in all dealings with customers, business partners and each other . You should not take unfair advantage of anyone through manipulation , concealment , abuse of privileged information, misrepresentation of material facts, or any other unfair - dealing practice . The principles set forth in this document describe how you should conduct yourself . This Code does not address every expectation or condition regarding proper and ethical business conduct Good common sense is your best guide . It does not substitute for Company policies and procedures . In every bu s iness - relatedendeavo , r you must foll o w the ethics and compliance principles set forth in this Code as well as all other applicable corporate policies and procedures . You are accountable for reading, understanding and adhering to this Code . Further, compliance with all laws, rule s and regulations related to Company activitie s is mandatory and your conduct must be such as to avoid even the appearance o f impropriety . Failure to so comply could re s ult in disciplinary action, up to and including termination of employment .
If you are uncertain about what to do, refer to the relevant section of this Code . If you are still unsure, speak with your supervisor or, if you prefer, a member of the Company's Corporate Ethics and Compliance Committee, if any . In the Workplace RenovaCare is committed to providing a diverse and inclusive work environment, free of all forms of unlawful discrimination, including any type of harassment . Respect The Company's greatest strength lies in the talent and ability of its associates . Since working in partnership is vital to RenovaCare's continued success, mutual respect must be the basis for all work relationships . Engaging in behavior that ridicules, belittles, intimidates, threatens or demeans, affects productivity, can negatively impact the Company's reputation and may violate the law . You are expected to treat others with the same respect and dignity that any reasonable person may wish to receive, creating a work environment that is inclusive, supportive and free of harassment and unlawful discrimination . Equal Employment Opportunity The talents and skills needed to conduct business successfully are not limited to any particular group of people . RenovaCare has a long - standing commitment to a meaningful policy of equal employment opportunity . The Company's policy is to ensure equal employment and advancement opportunity for all qualified individuals without distinction or discrimination because of race, color, religion, gender, sexual orientation, gender identity, age, national origin, disability, covered veteran status, marital status or any other unlawful basis . As part of this commitment, RenovaCare will make reasonable accommodations for applicants and qualified employees. Sexual Harassment and Other Discriminatory Harassment Sexual harassment and other discriminatory harassment are illegal and violate Company policies . Actions or words of a sexual nature that harass or intimidate others are prohibited . Similarly, actions or words that harass or intimidate based on race, color, religion, gender, sexual orientation, gender identity, age, national origin, disability, covered veteran status, marital status or any other unlawful basis are also prohibited . Corporate Governance Certification Program The responsibility for maintaining the Company's reputation for integrity and compliance rests in large measure on associates who guide its operations and others in particularly sensitive positions . The Corporate Governance Certification Program is designed to have you affirm your compliance with the standards contained in this Code and to help identify situations that may in fact, or in appearance, involve conflicts of interest or other improper conduct . If you are required to complete or update a Corporate Governance Certificate, you must do so in a timely and forthright manner with accurate responses . Above all, you must remember that any act that gives the appearance of being improper can damage RenovaCare's reputation and impair the public's confidence in the Company . All such acts must be avoided . You must acknowledge that you have read and understand this Employee Code of Corporate Governance and Ethics . Conflicts of Interest Company policy prohibits conflicts of interest . A "conflict of interest" occurs when your private interest interferes in any way with the interests of RenovaCare . In addition to avoiding conflicts of interest, you should also avoid even the appearance of a conflict . A conflict situation can arise when you or a member of your family takes actions or has interests that may make it difficult for you to perform your work for the Company objectively and effectively . A conflict of interest can aJso arise when you or a member of your family receives improper personal benefits as a result of your position at RenovaCare . Though it is impossible to list every activity or situation that could present a problem, certain of the more obvious ones are noted below . Corporate Opportunities You owe a duty to RenovaCare to advance its legitimate interests . You are prohibited from competing with the Company and from using corporate property, infonnation or position
for personal opportunities or gain. You may not use or offer for use RenovaCare resources (time, technology, property or information) for non - RenovaCare business. Outside Activities Officer or Director of Another Business Officers and employees may not serve as a director, officer, trustee, partner or in any other principal position of another for - profit or publicly held organization or company without the prior approval of RenovaCare's Chief Executive Officer (or a designee) . Such requests for approval should be directed through the office of the Chief Compliance Officer . You should obtain approval from RenovaCare's Chief Executive Officer (or a designee) , before agreeing to serve on the board or in a principal position of a trade or professional association or of a non profit organization . In any event, these outside activities must not impact in any way your daily job responsibilities in your current position . Second Job Your first loyalty as an employee is to the Company . Because employment outside of RenovaCare could interfere with your responsibilities to RenovaCare or be detrimental to the Company, you are encouraged to discuss the situation with the Chief Executive Officer or the Chairperson of the Corporate Ethics and Compliance Committee . Communication of Conflicts All potential and actual conflicts of interest or material transactions or relationships that reasonably could be expected to give rise to such a conflict or the appearance of such a conflict must be disclosed . If you have any doubt about whether a conflict of interest exists after consulting this Code, you should seek as s istance from the Corporate Ethics and Compliance Committee . Compliance with Laws, Rules and Regulations You are required to comply fully with all laws, rules and regulations affecting RenovaCare's business and its conduct in business matters . Regarding international operations, it is expected that the Company will comply with the laws of the countries in which we operate . Where Company policy differs from local law or custom, you should follow the more restrictive policy . Because the laws that are applicable to the Company's businesses are often very complex and penalties for violations are severe, you should consult the Chief Executive Officer, who may direct you to our legal counsel, if you have any questions or concerns . If you suspect or become aware of a violation by an employee or the Company, it is your responsibility to report this immediately . Certain key laws are listed below . Insider Trading It is unlawful to buy or sell securities on the basis of material , non - public infonnation (whether such information is gained in the course of employment or otherwise) for Company owned or managed accounts, for personal accounts, or for any accounts that associates may influence, including, but not limited to, accounts of family members . This type of activity is known as "insider trading'' and is prohibited by sec urities laws and Company policy . Information may be material if there is a substantial likelihood that the information would affect the price of the security or that a reasonable investor would consider the information significant in deciding whether to buy or sell a security . Information is considered to be non - public if it has not been disclo se d t o the public . Generally, information is considered disclosed to the public if it has been published in newspapers or other media, has been the s ubject of a press release or a public filing with the SEC and , in all cases, at least 48 hours has passed since the publication, release or filing . Substantial penalties may be assessed against people who trade while in possession of material inside information and can also be imposed upon companies and so - called controlling persons such as officers and directors, who fail to take appropriate s teps to prevent or detect insider trading violations by their employees or subordinates . If you violate the Company's insider trading policy, sanctions imposed by law enforcement officials, as well as Company imposed sanc tions , up to and including termination of employment , could result . Antitrust
Antitrust laws are designed to preserve and foster free and open competition and thereby assure reasonable prices, efficient services and a productive economy . Any activity that reduces or limits free and open competition is subject to antitrust scrutiny . Deliberate or even accidental violations of these laws must not occur . For example, the Company may not agree with competitors to fix prices or terms of financial services, to designate pre - determined geographical areas where each will do business or to boycott anyone . Money Laundering Money laundering involves an attempt to conceal the true source of funds and typically takes one of two forms . There are transactions used to transform the proceeds from illicit activities into funds with an apparently legal source and there are transactions that take legitimate funds and funnel them through organizations to fund illegitimate activities, such as terrorism . Money laundering often involves complex financial transactions and encompasses many different typ e s of financial products and services . Under the existing money laundering laws of the U . S . , it is a crime if you engage knowingly in a financial transaction that involves proceeds from criminal activities or is intended to promote illegal activity . Such knowledge includes "willful blindness" to the legitimacy of the source of the funds . Severe penalties, including substantial fines and even imprisonment, can be imposed on companies and their associates for involvement in or failure to report actual or even suspicious activities relating to money laundering . Foreign Corrupt Practices Act The Foreign Corrupt Practices Act (FCPA) prohibits the giving or offering of money or anything of value, including gifts or services : · directly or indirectly to a foreign official, a foreign political party or an official or candidate of that party , an officer or employee of the United Nations or other public international organization or a representative of any foreign official, · for the purpose of influencing any act or decision by a foreign official, or for the purpose of persuading a foreign official to use the official's influence to affect any act or decision of a foreign government or agency or public international organization, or for the purpose of securing any improper advantage, and · to assist the Company in doing business . Toe FCPA does not prohibit any of the following: · payments of reasonable and bona fide expenses, such as travel and lodging, that are directly related to the promotion, demonstration or explanation of a product or service , so long as the payment is not for a corrupt purpose, · payments that are legal under a foreign country ' s written laws or regulations, and · "facilitating" or "expediting" payments of small value to effect routine, non - discretionary governmental action (unrelated to the process of awarding business), such as obtaining visas, arrangin g for utility hookups or the like, where the practice is usual or customary in the country concerned . While the law allows certain payment s to foreign officials to facilitate routine government actions, determining what is a permissible "facilitating" payment involves difficult legal judgments . Therefore, except for legally prescribed fees and similar payments, no payment or gift may be made to a foreign official related to business activities unless the tran s action is approved in advance by the General Counsel or a designee . You should make ev e ry effort to eliminate or minimize such payments . If such payments are approved , they must be properly recorded in the Company ' s books and records . RenovaCare and its associates will not directly or indirectly eng a ge in bribe , ry kickbac , ks payoffs or other corrupt busine s s practice s, in their relations with governmental agencies or customers . Boycotts U.S. anti - boycott laws and regulations prohibit or severely restrict the Company from
participating in boycotts against countries friendly to the U.S. and require us to report both legal and illegal boycott requests to the government. Financial Management and Disclosure The Company's goal and intention is to comply with the laws, rules and regulations by which we are governed . In fact, we strive to comply not only with requirements of the law but also with recognized compliance practices . All illegal activities or illegal conduct are prohibited whether or not they are specifically set forth in this Code . Where law does not govern a situation or where the law is unclear or conflicting, you should discuss the situation with the Chief Financial Officer or Chief Executive Officer and management should seek advice from the Company's General Counsel . Business should always be conducted in a fair and forthright manner . Directors, officers and employees are expected to act according to high ethical standards . The continuing excellence of the Company ' s reputation depends upon our full and complete disclosure of important information about the Company that is used in the securities marketplace . Our financial and non - financial disclosures and filings with the SEC must be transparent, accurate and timely . Proper reporting of reliable, truthful and accurate information is a complex process involving cooperation between many departments and disciplines . We must all work together to insure that reliable, truthful and accurate information is disclosed to the public . The Company must disclose to the SEC, current security holders and the investing public information that is required, and any additional information that may be necessary to ensure the required disclosures are not misleading or inaccurate . The Company requires you to participate in the disclosure process, which is overseen by the Chief Financial Officer and/or Chief Executive Officer . The disclosure process is designed lo record, process, summarize and report material information as required by all applicable laws, rules and regulations . Participation in the disclosure process is a requirement of a public company , and full cooperation and participation by Chief Financial Officer, Chief Executive Officer and , upon request, other employees in the disclosure process is a requirement of this Code . Officers and employees must fulJy comply with their disclosure responsibilities in an accurate and timely manner or be subject to discipline of up to and including termination of employment . Accounting Standards RenovaCare maintains its accounting records and prepares its financial statements in accordance with accounting principles generally accepted in the U.S. (GAAP) and with statutory accounting principles, as promulgated by the Securities and Exchange Commission and other regulating authorities. If you are aware or have reason to believe that there are violations of either law or policy regarding the Company's financial records or operations, you are obligated to report such information promptly. Audits and Outside Examinations There may be occasions when the operations ofRenovaCare are subject to audit or examination. These reviews may be conducted by the Company's external auditor , state and federal regulatory agencies. Both the law and RenovaCare policy require that you cooperate fully with all appropriate requests for information, and prohibit attempting to influence, interfere with or provide inaccurate information in response to a legitimate audit or examination request. You may not fraudulently influence, mislead, manipulate or coerce outside auditors if you know or you are unreasonable in not knowing that by doing so you could render the financial statements materially misleading or affect the auditors in other ways. If you are contacted by an outside agency regarding a financial examination or audit, you must immediately notify the Chief Executive Officer or the Chief Financial Officer before responding. If the contact is initiated by a state or federal agency you should contact the Corporate Ethics & Compliance Committee. Protection and Proper Use of Company Assets Safeguarding and appropriately using Company assets , whether those assets take the form of paper files, electronic data, computer resources , trademark s or otherwise, is critical. Confidentiality
RenovaCare is committed to preserving customer and employee trust. All information, whether it is business, customer or employee - related, must be treated in a confidential manner, and disclosing it is limited to those people who have an appropriate business or legal reason to have access to the information. You need to take spec ial precautions when transmitting information via e - mail, fax, the Internet or other media. Remember to treat all such communications as if they were public documents and printed on letterhead. In addition, Company meetings are confidential. You may not use audio or video equipment to record these meetings without the specific prior authorization of the head of your department. Technology Safeguarding computer resources is critical because the Company relie s on technology to conduct daily busine ss. Software is provided to enable you to perform your job and is covered by federal copyright law s. You cannot duplicate, distribute or lend software to anyone unless permitted by the license agreement. RenovaCare provides electronic mail (e - mail) and Internet access to assist and facilitate business communications. All information stored, transmitted, received, or contained in these systems is the Company's sole property and is subject to its review at any time. All e - mail and Internet use must be consistent with RenovaCare's policies, practices and commitment to ensuring a work environment where all persons are treated with respect and dignity. Because these systems provide access to a worldwide audience, you shou ld act at all times as if you are representing RenovaCare to the public, and should preserve RenovaCare's system sec urity and protect its name and trademarks. You must act responsibly and adhere to all laws and Company policies when using e - mail or the Internet. You must use your computer appropriately in accordance with Company standards and be sure to secure both the computer and all data from loss, damage or unauthorized access. Intellectual Property: Patents, Copyrights and Trademarks Except as otherwise agreed to in writing between the Company and an officer or employee, all intellectual property you conceive or develop during the course of your employment shall be the sole property of the Company. The term intellectual property includes any invention, discovery, concept, idea, or writing whether protectable or not by any United States or foreign copyright, trademark, patent, or common law including, but not limited to designs, materials, compositions of matter, machines, manufactures, processes, improvements, data, computer software, writings, formula, techniques, know - how, methods, as well as improvements thereof or know - how related thereto concerning any past, present, or prospective activities of the Company. Officers and employees must promptly disclose in writing to the Company any intellectual property developed or conceived either solely or with others during the course of your employment and must render any and all aid and assistance, at our expense to secure the appropriate patent, copyright, or trademark protection for such intellectual property. Works of authorship including literary works such as books, articles, and computer programs; musical works, including any accompanying words; dramatic works, including any accompanying music; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound recordings; and architectural works are protected by United States and foreign copyright law as soon as they are reduced to a tangible medium perceptible by humans with or without the aid of a machine. A work does NOT have to bear a copyright notice in order to be protected and without the copyright owner's permission , no one may make copies of the work, create derivative works, distribute the work, perfonn the work publicly, or display the work publicly. Copyright laws may protect items posted on a website. Unless a website grants permission to download tbe Internet content you generally only have the legal right to view the content. If you do not have permis sion to download and distribute specific website content you should contact the Company's General Counsel. If you are unclear as to the application of this Intellectual Property Policy, or if questions arise, please consult with the Company's General Counsel. Additional Matters Pertaining to Directors Annex A hereto, which is incorporated herein by reference, applies to the Company's
directors. Administration Reporting of Any Illegal or Unethical Behavior; Points of Contact If you are aware of any illegal or unethical behavior or if you believe that an applicable law, rule or regulation or this Code has been violated, the matter must be promptly reported t o the Chief Executive Officer, the Chief Financial Officer or the C o rporate Ethic s & Compliance Committee. In addition, if you have a concern about the Company's accounting practices , internal controls or auditing matters , you should report your concerns to these same persons or entities. If you have questions about anything in this Code or if you believe RenovaCare or an associate is violating the law or Company policy or engaging in conduct that appears unethical you may contact anyone of the foregoing entities. You should take care to report violations to a person who you believe is not involved in the alleged violation. All reports of alleged violations will be promptly investigated and, if appropriate, remedied, and if legally required , immediately reported to the proper governmental authority. You will be expected to cooperate in assuring that violations of this Code are promptly addressed. RenovaCare has a policy of protecting the confidentiality of those making reports of possible misconduct to the maximum extent permitted by law. In no event will there be any retaliation against someone for reporting an activity that he or she in good faith believes to be a violation of any law, rule, regulation, internal policy or this Code. Any supervisor intimidating or imposing sanctions on someone for reporting a matter will be subject to discipline up to and including termination. You should know that it is unlawful to retaliate against a person, including with respect to their employment, for providing truthful information to a law enforcement officer relating to the possible commission of any federal offense . Employees who allege that they have been retaliated against for providing information to a federal agency , Congress or a person with supervi s ory authority over the employee about suspected fraud may file a complaint with the Department of Labor, or in federal court if the Department ofLabor does not take action. Responding to Improper Conduct This Code will be enforced on a uniform basis for everyone without regard to hisor her position. Violators of this Code will be s ubject to disciplinary action. Supervisors and managers of a di s ciplined employee or an employee reporting a violation may also be subject to disciplinary action for failure to properly oversee an employee's conduct , or for retaliation against an employee who reports a violation. The response will depend upon a number of factors including whether the improper behavior involved illegal conduct. Disciplinary action may include , but is not limited to , reprimands and warnings, probation, suspension, demotion, reassignment , reduction in compensation or termination . In any disciplinary action arising from violation s of this Code, prior truthful disclosure, or the failure to fully disclose the issue and all pertinent information with respect to the issue , will weigh heavily in the disposition of the matter. Certain actions and omissions prohibited by the Code might also be unlawful and could lead to individual criminal prosecution and, upon conviction, to fines and imprisonment. Waivers of or exceptions to this Code will be granted only under exceptional circumstances. There shall be no amendment or modification to this Code except by a vote of the Board of Directors or a designated board committee that will ascertain whether an amendment or modification is appropriate. In case of any amendment or modifi c ationof this Code that applies to an offic e r or director of the Company , the amendment or modification shall be made publicly available. Annex A To RENOVCARE, INC. AMENDED CODE OF CORPORATE Go VERNAN C E AND ETHICS PROVISIONS RELATED TO DIRECTORS I . ResRQnsibilitiesand Functions of Board of Directors
The Board of Directors, elected each year by the Company's stockholders at an annual meeting of stockholders, fosters and encourages an environment of strong disclosure controls and procedures, including internal controls, financial accountability, high ethical standards and compliance with applicable policies, laws and regulations . The primary responsibility of members of the Company's Board of Directors is to uphold the best interests of the Company and its stockholders as a whole by overseeing the management of the Company's business and affairs . While the Board may call special meetings in order to address specific needs of the Company from time to time, it is generally expected that the Board of Directors will meet at regular intervals and are expected to hold approximately four meetings or more per fiscal year during which the Board will perform a number of specific functions, including but not limited to : a. Reviewing and discussing the performance of the Company, as well as any immediate issues facing the company; b. Reviewing, approving and monitoring fundamental financial and business strategies and major corporate actions; c. Ensuring processes are in place for maintaining the integrity of its financial statements, the integrity of compliance with law and ethics and d. Assessing and reviewing major risks facing the Company and planning options, if any, for their mitigation. Board members are encouraged to suggest the inclusion of item(s) for the agenda for each quarterly meeting of the Board of Directors in consultation with each other and senior management of the Company . It is expected that each Director will make every effort to attend each Board meeting . While attendance in person is preferred, attendance by teleconference is permitted if necessary under the circumstances . The proceedings and deliberations of the Board are confidential . Each Director will maintain the confidentiality of information received in connection with his or her service as a Director . 2. Board Access to Managi:ment At all times, Board members shall be able to freely access Company management without hindrance or undue delay while ensuring that such contact is not distracting to the business operations of the Company and that such contact, if in writing, is copied to the Chairman and Chief Executive Officer . In addition , management may be invited to attend Board meetings, during which time management may brief the Board on items of particular interest and/or concern . Senior management is encouraged to offer presentations at such meetings by individuals who can provide additional insight into items being considered or who may have potential for greater responsibility and should be given exposure to the Board . 3. Board Access to Independent/Outside Advisors As may be required by applicable law or rule, the Board of Directors has the authority , when it should be deemed necessary to carry out its duties, to retain independent legal, financial or other advisors and to approve each such advisor's fees and other retention terms at the expense of the Company . 4. Size of Board The Company's Bylaws provides that the number of Directors shall be fixed from time to time by the Board of Directors, but in no event shall be less than the minimum required by law . The Board should be large enough to maintain the Company's required expertise but not too large to function efficiently . At this time, the Board of Directors believes that the optimal number of Board members is five ( 5 ), while recognizing and allowing however , for changing circumstances that may warrant a higher or lower number from time to time . 5. Ethics and Conflicts of Interest of the Board All Directors, as well as officers and employees, are expected to act ethically at all times and to acknowledge their adherence to the policies comprising the Company's Code of Ethics . At any time that a Board member develops an actual or potential conflict of interest with the Company , the conflict should be reported without delay to the Chairman of the Board and Chief Executive Officer . fu the event that a conflict of interest cannot be effectively resolved, the Board member shall resign . Should a member of the Board or any member of his or her immediate fami l y have a matter before the Board in which they have a personal interest, then this interest and the material facts and relationships relating thereto must be disclosed promptly . Furthermore , if a Board member becomes aware of a business opportunity that could be of potential benefit to
the Company, then he or she must first introduce this opportunity to the Board of Directors for consideration and not endeavor to profit personally from the opportunity unless the Company declines to pursue it . 6. Criteria and Selection of Board Membership The Board of Directors is responsible to the Company's stockholders for identifying and recommending the most qualified Director candidates to fill newly created directorship positions and vacancies and further recommend these candidates for election by stockholders . Directors should possess the highest personal and professional ethics, responsibility , fairness , integrity and values and be committed to representing the long - term interests of the Company's stockholders . They must also have an inquisitive and objective perspective, practical wisdom and mature judgment . The Company's general counsel or its Chief Financial Officer shall be responsible for providing an orientation for all new Directors and for periodically providing materials or briefing sessions on subjects that would assist Directors in discharging their duties . Each new Director shall, within six weeks of election to the Board, spend a reasonable amount of time at corporate headquarters for an in - depth overview of the Company's strategic plans, its financial statements and key policies and practices . Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serve on the Board for an extended period of time . Directors should offer their resignation in the event of any significant change in their personal circumstances, including a change in their principal job responsibilities or in the event that a conflict of interest cannot be effectively resolved . 7. Term Limit'I for Board Members There is no time term - limit for service to the Board, nor does the Board believe that a tenn limit should be established . By abstaining from term limits, the Company believes it can successfully retain Board members who, over time, have been able to gamer industry knowledge and are intimate with the Company's operations . Such Directors are able to significantly contribute to the Board's function since they have helped to foster the Company's corporate vision and better understand industry trends . 8. Outside Board Directorship Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively . Since service to the Company's Board of Directors may require significant time and responsibility commitments, although not mandatory, Board members are encouraged to limit the number of public company boards that they may concurrently serve on to four . Board members shall notify the Chairman and Chief Executive Officer of any and/or all other public company boards on which they may serve or to which they have received an invitation to serve prior to accepting such positions . 9. Board Performance Assessment and Review Meaningful Board evaluation may require a self - assessment of the effectiveness of the full Board and individual Directors . Accordingly , the Board shall perform an annual self evaluation through its Directors . This review may require establishing protocols and procedures for evaluation of individual Board members in order to ensure that each sitting member brings expertise that is relevant to the Company's needs at that time and that the skills and contributions of the Directors are conducive to the Board's function as a group . While individual Board member review may be of value, the purpose of this evaluation is to increase the effectiveness of the Board, not to focus on the performance of individual Board members . 10. Stock O[!tion Grants and Cash Com12ensation Directors, Officers, employees of and consultants to the Company, selected by the Board of Directors may be eligible to receive stock grants in accordance with the terms of the Company's Incentive Stock Compensation Plan, as in effect from time to time . The grant may be in the form of a stock award , restricted stock purchase offer, incentive stock option or a non statutory option . The Board of Directors designates the times at which the grant will be made, the type and number of options (and the number of shares subject to those options) or stock awards to be granted . In addition Board members may be eligible for cash compensation in accordance with the Company's compensation guidelines . All Board members will be reimbursed for travel and related meeting attendance expenses . 11. Prohibition on Personal Loans The Company and the Board of Directors will not engage in offering or making available credit or loan arrangements to any member of the Board or the Company's executive
Simature: ,P...&..,.rl/U u, - 4Z - .lf1 Date: August 15, 201S Name (print): Robin Robinson Title: Vice President , Scientific Affairs management. ACKNOWLEDGMENT OF RECEIPT OF ConE oF CORPORATE GOVERNANCE AND ETmcs I have received and read the Company's Code of Corporate Governance and Ethics (including to the extent applicable, Annex A thereto) . I understand the standards and policies contained in the Company Code of Corporate Governance and Ethics and understand that there may be additional policies or laws specific to my job . I further agree to comply with the Company Code of Corporate Governance and Ethics . If I have questions eoneeming the meaning or application of the Company Code of Corporate Governance and Ethics, any Company policies, or the legal and regulatory requirements applicable to my job, I know I can consult the Chief Executive Officer, Chief Financial Officer or a member of the Corporate Ethics & Compliance Committee, if any, knowing that my questions or reports to these sources will be maintained in confidence . EXHIBIJB TO THE RENOVACARE, INC. - ROBIN ROBINSON CONSULTING AGREEMENT DATED AUGUST 15, 2019 **** COMPENSATION The parties agree that fees for the Services and any subsequently agreed upon Services to be provided shall be paid to Consultant as follows: 1. Cash Compensation. C onsultant shall receive $5 , 000.00 monthly. Additionally, any work perfonned in excess of sixteen hours will be compensated at the rate of $500.00 per hour to a maximum of $10 , 000 per month . Consultant will track time spent on projects and provide a summary and invoice when compensation exceeds $5,000.00 in a month. Consultant will provide a summary for any month if requested by the Company.
2. Eitl!itY. Compensation. At the discretion of the Company's Board of Directors, Consultant shall be eligible for equity stock options or equity awards pursuant to the Company's equity incentive compensation plans in effect from time to time. 3. Other Benefits. [None] 1 EXHIBITC TO THE RENOVCARE, INC. - ROBIN ROBINSON CONSULTING AGREEMENT DATED AUGUST 15, 2019 **** ALLOWABLE EXPENSES The Company shall reimburse the Consultant for reasonable costs associated with the Consultant's travel on behalf of the Company and for such other reasonable expenses incurred by the Executive on behalf of the Company ; provided, however, that any expenditure in excess of $ 250 will first require the Company's approval . EXHIBITD TO THE RENOVACARE, INC. - ROBIN ROBINSON CONSULTING AGREEMENT DATED AUGUST 15, 2019 **** CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT [See Attached} RENOVACARE, INC. CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT IS DATED AS OF AUGUST 15, 2019, BY AND BETWEEN RENOVACARE, INC., A NEVADA CORPORATION (THE "RCAR"), AND ROBIN ROBINSON, AN INDIVIDUAL HAVING HIS PLACE OF BUSINESS IN DICKERSON, MARYLAND ("CONSULTANT"). As a condition of becoming retained (or Consultant's consulting relationship being continued) by RCAR, or any of its current or future subsidiaries, affiliates, successors or assigns (collectively, the "Company"), and in consideration of Consultant's consulting relationship with the Company and receipt of the compensation now and hereafter paid by the Company, the receipt of Confidential Information (as defined below) while associated with the Company, and
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Consultant hereby agrees to the following: 1. Relationship. This Confidential Information and Invention Assignment Agreement (this "Agreement") will apply to Consultant's consulting relationship with the Company. If that relationship ends and the Company, within one (1) year thereafter, either employs Consultant or re - engages Consultant as a consultant, this Agreement will also apply to such later employment or consulting relationship , unless the parties hereto otherwise agree in writing. Any employment or consulting relationship between the parties hereto, whether commenced prior to , upon or after the date ofthis Agreement, is referred to herein as the "Relationship." 2. AJ2plicability to Past Activities. The Company and Consultant acknowledge that Consultant may have performed work, activities, services or made efforts on behalf of or for the benefit of the Company, or related to the current or prospective business of the Company in anticipation of Consultant's involvement with the Company, that would have been "Services" if performed during the term of this Agreement, for a period of time prior to the Effective Date of this Agreement (the "Prior Consulting Period"). Accordingly, if and to the extent that, during the Prior Consulting Period: (i) Consultant received access to any information from or on behalf of the Company that would have been Confidential Information (as defined below) if Consultant received access to such infonnation during the tenn of this Agreement; or (ii) Consultant (a) conceived, created, authored, invented, developed or reduced to practice any item (including any intellectual property rights with respect thereto) on behalf of or for the benefit of the Company, or related to the current or prospective business of the Company in anticipation of Consultant's involvement with the Company, that would have been an Invention (as defined below) if conceived, created, authored , invented, developed or reduced to practice during the term of this Agreement; or (b) incorporated into any such item any pre - existing invention, improvement, development, concept , discovery or other proprietary information that would have been a Prior Invention (as defined below) if incorporated into such item during the term of this Agreement; then any such information shall be deemed "Confidential Information" hereunder and any such item shall be deemed an " Invention" or "Prior Invention" hereunder, and this Agreement shall apply to such activities, information or item as if disclosed, conceived , created, authored, invented, developed or reduced to practice during the term of this Agreement. 3. Executive Services Consulting Agreement. Consultant has entered into an agreement with the Company on or about the date hereof to provide various services to the Company (the "Consulting Agreement"). The services rendered by Consultant under the Consulting Agreement are referred to herein as the "Services" and this Agreement is intended to supplement and form an integral part of the Consulting Agreement. 4. Confidential Information. (a) Protection oflnformation . Consultant understands that during the Relationship, the Company intend s to provide Consultant with certain infonnation, including Confidential Information (as defined below), without which Consultant would not be able to perform Consultant's duties to the Company. Consultant further acknowledges and understands that , at all times during the term of the Relationship and thereafter, Consultant shall hold in strictest confidence, and not use, except for the benefit of the Company to the extent necessary to perform the Services and in pursuance of his relationship with the Company, and, accordingly, will not disclose to any person, fmn, corporation or other entity, without written authorization from the Company in each instance, any Confidential Information that Consultant obtains from the Company or otherwise obtains, accesses or creates in connection with, or as a result of, the Services during the term of the Relationship, whether or not during working hours, until such Confidential Information becomes publicly and widely known and made generally available through no wrongful act of Consultant or of others who were under confidentiality obligations as to the item or items involved. Consultant shall not make copies of such Confidential Information except as authorized by the Company or in the ordinary course of the provision of Services. Consultant will segregate Confidential Information from the confidential materials of third parties to prevent commingling. (b) Confidential Information. Consultant understands that "Confidential Information" means any and all information and physical manifestations thereof not generally known or available outside the Company and information and physical manifestations thereof entrusted to the Company in confidence by third parties , whether or not such information is patentable, copyrightable;;or otherwise legally protectablc . Confidential Information includes, without limitation: (i) Company Inventions (as defined below); and (ii) technical data, trade secrets, know - how, research, product or service ideas or plans, software codes and designs, algorithms, developments, inventions, patent applications, laboratory notebooks, processes, formulas, techniques , biological materials, mask works, engineering designs and drawings, hardware configuration information, agreements with third parties, lists , of or information relating to, employees and consultants of the Company (including, but not limited to , the name s,
contact information, jobs, compensation, and expertise of such employees and consultants), lists of, or information relating to, suppliers and customers (including, but not limited to, customers of the Company on whom Consultant called or with whom Consultant became acquainted during the Relationship), price lists, pricing methodologies, cost data, market share data, marketing plans, licenses, contract information, business plans, financial forecasts, historical financial data, budgets or other business information disclosed to Consultant by the Company either directly or indirectly, whether in writing, electronically, orally, or by observation. The Consultant understands that the above list is not exhaustive, and that Confidential Information also includes other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used. The Consultant understands and agrees that Confidential Information developed by him or her in the course of his engagement with the Company shall be subject to the terms and conditions of this Agreement as if the Company furnished the same Confidential Information to the Consultant in the first instance. Confidential Information shall not include information that is generally available to and known by the public, provided that such disclosure to the public is through no direct or indirect fault of the Consultant or person(s) acting on the Consultant's behalf. (c) Third Party Information. Consultant's agreements in this Agreement are intended to be for the benefit of the Company and any third party that has entrusted information or physical material to the Company in confidence. During the term of the Relationship and thereafter, Consultant will not improperly use or disclose to the Company any confidential, proprietary or secret information of Consultant's former clients or any other person, and Consultant will not bring any such information onto the Company's property or place of business. (d) Other Rights . This Agreement is intended to supplement, and not to supersede, any rights the Company may have in law or equity with respect to the protection of trade secrets or confidential or proprietary information. (e) U.S. Defend Trade Secrets Act . Notwithstanding the foregoing, the U.S. Defend Trade Secrets Act of2016 ("DTSA") provides that an individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation oflaw; or (iii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. In addition, DTSA provides that an individual who files a lawsuit for retaliation by an employer for reporting a suspected violation oflaw may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does not disclose the trade secret, except pursuant to court order. (f) Disclosure Required by Law . Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation or order. The Consultant shall provide written notice of any such order to the Company's Chief Executive Officer or Chief Operating Officer within forty - eight (48) hours of receiving such order, but in any event sufficiently in advance of making any disclosure to permit the Company to contest the order or seek confidentiality protections, as determined in the Company's sole discretion. 5. Ownership oflnventions. (a) Inventions Retained and Licensed. Consultant has attached hereto, as Exhibit A . a complete list describing with particularity all Inventions (as defined below) that, as of the Effective Date: (i) have been created by or on behalf of Consultant, and/or (ii) are owned exclusively by Consultant or jointly by Consultant with others or in which Consultant has an interest, and that relate in any way to any of the Company's actual or proposed businesses, products, services, or research and development, and which are not assigned to the Company hereunder ( collectively "Prior Inventions"); or, if no such list is attached, Consultant represents and warrants that there are no such Inventions at the time of signing this Agreement, and to the extent such Inventions do exist and are not listed on Exhibit A , Consultant hereby forever waives any and all rights or claims of ownership to such Inventions. Consultant understands that Consultant's listing of any Inventions on Exhibit A does not constitute an acknowledgement by
the Company of the existence or extent of such Inventions, nor of Consultant's ownership of such Inventions. (b) Use or Incorporation of Inventions. (i) Consultant shall not use, disclose or disseminate any of the Company's Confidential Information except as specifically permitted in this Section 5. Consultant may use the Confidential Information of the Company solely to perform the Services, his obligations under this Agreement, and in pursuance of Relationship, for the benefit of the Company. Consultant will exercise the same degree of care as it takes to protect his own confidential information, but in no event less than reasonable care.. (ii) If in the course of the Relationship, Consultant uses or incorporates into any of the Company's products, services , processes or machines any Invention not assigned to the Company pursuant to Section S(d).. of this Agreement in which Consultant has an interest, Consultant will promptly so inform the Company in writing. Whether or not Consultant gives such notice, Consultant hereby irrevocably grants to the Company a nonexclusive, fully paid - up, royalty - free, assumable, perpetual, worldwide license, with right to transfer and to sublicense, to practice and exploit such Invention and to make, have made , copy, modify, make derivative works of, use, sell , import, and otherwise distribute such Invention under all applicable intellectual property laws without restriction of any kind. The Consultant may not incorporate any Inventions into any business , venture, academic, other pursuit that Consultant may engage in during or following the termination of the Relationship. The Consultant may not incorporate any Company Inventions into any business, venture, academic, other pursuit that Consultant may engage in during or following the termination of the Relationship. (c) Inventions. Consultant understands that "Inventions" means discoveries, developments, concepts, designs, ideas, know how, modifications, improvements, derivative works , inventions, trade secrets and/or original works of authorship, whether or not patentable, copyrightable or otherwise legally protectable. Consultant understands this includes, but is not limited to, any new product , machine, article of manufacture, biological material, method, procedure, process, technique, use, equipment , device, apparatus, system, compound, formulation, composition of matter, design or configuration of any kind, or any improvement thereon. Consultant understands that "Company Inventions" means any and all Inventions that Consultant or Consultant's personnel may solely or jointly author, discover, develop, conceive, or reduce to practice in connection with, or as a result of, the Services performed for the Company or otherwise in connection with the Relationship, except as otherwise provided in Section S(i) below. (d) Assignment of CompJIDy Inventions. Consultant will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and hereby assigns and agrees to assign to the Company, or its designee, all of Consultant's right, title and interest throughout the world in and to any and all Company Inventions and all patent, copyright, trademark, trade secret and other intellectual property rights and other proprietary rights therein. Consultant hereby waives and irrevocably quitclaims to the Company or its designee any and all claims, of any nature whatsoever , that Consultant now has or may hereafter have for infringement of any and all Company Inventions. Any assignment of Company Inventions includes all rights of attribution, paternity, integrity, modification, disclosure and withdrawal, and any other rights throughout the world that may be known as or referred to as "moral rights," "artist's rights," "droit moral, " or the like (collectively, "Mora l RiglUf'). To the extent that Moral Rights cannot be assigned under applicable law, Consultant hereby waives and agrees not to enforce any and all Moral Rights, including, without limitation, any limitation on subsequent modification , to the extent permitted under applicable law. If Consultant has any rights to the Company Inventions, other than Moral Rights, that cannot be assigned to the Company, Consultant hereby unconditionally and irrevocably grants to the Company during the tenn of such rights, an exclusive, irrevocable , perpetual, worldwide, fully paid and royalty - free license, with rights to sublicense through multiple levels of sublicensees , to reproduce, distribute, display, perfor , m prepare derivative works of and otherwise modify, make, have made, sell , offer to sell, import, practice methods, processes and procedures and otherwise use and exploit , such Company Inventions. (e) Work for Hire. The Consultant agrees that all marketing, operating and training ideas, sourcing data, processes and materials, including all inventions, discoveries , improvements, enhancements , written materials and development related to the business of the Company ("Proprietary Materials") to which the Consultant may have access or that the Consultant may develop or conceive while employed by the Company shall be considered works made for hire for the Company and prepared within the scope of employment and shall belong exclusively to the Company. Any Proprietary Materials developed by the Consultant that, under
applicable law, may not be considered works made for hire, are hereby assigned to the Company without the need for any further consideration , and the Consultant agrees to take such further action, including executing such instruments and documents as the Company may reasonably request , to evidence such assignment. (f) No License . The Consultant understands that this Agreement does not, and shall not be construed to, grant the Consultant any license or right of any nature with respect to any Proprietary Materials, Moral Rights, any Confidential Information, materials , software or other tools made available to him or her by the Company, or other intellectual property rights relating thereto. (g) Maintenance of Records. Consultant shall keep and maintain adequate and current written records of all Company Inventions made or conceived by Consultant or Consultant's personnel (solely or jointly with others) during the term of the Relationship. The records may be in the form of notes, sketches , drawings , flow charts , electronic data or recordings , laboratory notebooks , or any other format. The records will be available to and remain the sole property of the Company at all times . Consultant shall not remove such records from the Company's place of business or systems except as expressly permitted by Company policy which may, from time to time , be revised at the sole electi o n of the Company for the purpose of furthering the Company's business. Consultant shall deliver all such records (including any copies thereof) to the Company at the time of termination of the Relationship a s provided for in Section 6 and Section 7. (h) Intellectual PropertyjljgJw . Consultant shall assist the Company , or its designee, at its expense, in every proper way in securing the Company ' s, or it s designee's, rights in the Company Inventions and any c opyrights, patents , trademarks, mask work rights, Moral Rights, or other intellectual property rights relating thereto in any and all countries, including the disclosure to the Company or its designee of all pertinent information and data with respect thereto , the execution of all applications , specifications, oaths, assignments, recordations, and all other instruments which the Company or its designee shall deem necessary in order to apply for, obtain , maintain and transfer such rights , or if not transferable , waive and shall never assert such rights, and in order to assign and convey to the Company or its designee, and any s uccessors , assigns and nominees the sole and exclusive right, title and interest in and to such Company Inventions , and any copyrights, patents, mask work rights or other intellectual property rights relating thereto. Consultant's obligation to execute or cause to be executed, when it is in Consultant's power to do so, any such instroment or papers shall continue during and at all times after the end of the Relationship and until the expiration of the last such intellectual property right to expire in any country of the world. Consultant hereby irrevocably designates and appoints the C ompany and its duly authorized officers and agents as Consultant's agent and attorney - in - fact, to act for and in Consultant's behalf and stead to execute and file any such instruments and papers and to do all other lawfully permitted acts to further the application for, prosecution, issuance, maintenance or transfer of letters patent, copyright, mask work and other registrations related to such Company Inventions. This power of attorney is coupled with an interest and shall not be affected by Consultant's s ubsequentincapacity. (i) Exception to Assignments. Subject to the requirements o f applicable state law, if any , exempting certain Company Inventions, from the assignment provisions of this Agreement, Consultant understands that all Company Inventions must be, and are , assigned to the Company pursuant to this Agreement In order to assist in the detennination of which inventions qualify for such state law exclusion, Consultant will advise the Company promptly in writing, during and for a period of forty - eight ( 48) months immediately following the termination of the Relationship, of all Inventions solely or jointly conceived or developed or reduced to practice by Consultant or Consultant's personnel during the period of the Relationship. 6. Comv.any Property: Returning Company Documents. Consultant acknowledges that Consultant has no expectation of privacy with respect to the Company's telecommunications, networking or information processing systems (including , without limitation, files, e - mail messages , and voice messages) and that Consultant ' s activity and any filesor messages on or using any of those systems may be monitored or reviewed at any time without notice. Consultant further acknowledge s that any property situated on the Company's premi s es or systems and owned by the Company, including disks and other storage media, filing cabinets or other work areas , is subject to inspection by Company personnel at any time with or without notice. At the time of termination of the Relation s hip, Consultant will deliver to the Company (and will not keep in Consultant's possession, recreate or deliver to anyone else) any and all devices, records, data , notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches , laboratory notebooks, materials, flow charts, equipment, other documents or property, or reproductions of any of the aforementioned items developed by Consultant or Consultant's personnel pursuant to the Relationship or otherwise belonging to the
Company, its successors or assigns. 7. Termination Certification . In the event of the termination of the Relationship, Consultant shall sign and deliver the "Termination Certification" attached hereto as Exhibit B: however, Consultant's failure to sign and deliver the Termination Certification shall in no way diminish Consultant's continuing obligations under th.is Agreement. 8. Notice to Third Parties. During the periods of time during which Consultant is re stric ted in talcing certain actions by the terms of Section 9. of this Agreement (the "Restriction Period"), Consultant shall inform any entity or person with whom Consultant may seek to enter into a busine ss relationship (whether as an owner, employee, independent contractor or otherwise) of Consultant's contractual obligations under th.is Agreement. Consultant acknowledges that the Company may, with or without prior notice to Consultant and whether during or after the term of the Relationship, notify third parties of Consultant's agreements and obligations under th.is Agreement. Upon written request by the Company, Consultant will re spon d to the Company in writing regarding the status of Consultant's engagement or proposed engagement with any party during the Restriction Period. 9. Soljcitation ofEm s. Consultants and Other Parties . As described above, Consultant acknowledges that the Company's Confidential Information includes information relating to the Company's employees, consultants, customers and others, and Consultant will not useor disclose such Confidential Information except as authorized by the Company in advance in writing. Consultant further agrees as follows: (a) EmP - loy , Consultants. During the term of the Relationship, and for a period of twelve (12) months immediately following the termination of the Relationship for any reason , whether with or without cause, Consultant shall not, directly or indirectly, solicit any of the Company's employees or consultants to terminate their relationship with the Company, or attempt to solicit employees or consultants of the Company, either for Consultant or for any other person or entity. (b) Other Parties . During the term of the Relationship, Consultant will not influence any of the Company's clients, Iicensors , licensees or customers from purchasing Company products or services or solicit or influence or attempt to influence any client, licen sor, licensee, customer or other person either directly or indirectly, to direct any purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company. 10. No Change to Duration of Relationship. Consultant understands and acknowledges that this Agreement does not alter, amend or expand upon any rights Consultant may have to continue in the consulting relationship with, or in the duration of Consultant's consulting relationship with, the Company under any existing agreements between the Company and Consultant, including without limitation the Consulting Agreement, or under applicable law. 11. Representationsand Covenants. (a) Facilitation of Agreement. Consultant shall execute promptly, both during and after the end of the Relationship, any proper oath, and to verify any proper document , required to carry out the terms of this Agreement, upon the Company's written request to do so . (b) No Conflicts. Consultant represents and warrants that Consultant's performance of all the tenns of this Agreement does not and will not breach any agreement Consultant has entered into, or will enter into, with any third party, including without limitation any agreement to keep in confidence proprietary information or materials acquired by Consultant in confidence or in trust prior to o r during the Relationship. Consultant will not disclose to the Company or use any inventions, confidential or non - public proprietary information or material belonging to any previous client, employer or any other party. Consultant will not induce the Company to use any invention s, confidential or non - public proprietary information, or material belonging to any previous client, employer or any other party . Consultant represents and warrants that Consultant has listed on Exhibit Call agreements (e.g., non - competition agreements, non - solicitation of customers agreements, non - solicitation of employees agreements, confidentiality agreements, inventions agreements, etc.), if any, with a current or former client, employer, or any other person or entity, that may restrict Consultant's ability to perform services for the Company or Consultant's ability to recruit or engage customers or service providers on behalf of the Co mpany , or otherwise relate to or restrict Consultant's ability to perform Consultant's duties for the Company or any obligation Consultant may have to the Company. Consultant shall not enter into any written or ora l
agreement that conflicts with the provisions of this Agreement. (c) No Other Consulting 4greements. Consultant represents and warrants that Consultant does not presently perform nor will he perform, during the term of the Agreement, consulting or other services for, or engage in or intend to engage in an employment relationship with, companies whose businesses or proposed businesses in any way, in the opinion of the Company, involve products or se rvices which would be competitive with the Company's products or services, or those products or services proposed or in development by the Company during the term of the Agreement or would adversely affect the Consult's ability to perform the Services hereunder. If, however , Consultant desire to perform such services for a third party , Consultant agrees that, in advance of accepting such work , Consultant will promptly notify the Company in writing, specifying the organization with which Consultant proposes to consult, provide services, or become employed by and to provide information sufficient to allow the Company to determine if such work would conflict with the terms of this Agreement, the interests of the Company or further services which the Company might request of Consultant. If the Company determines, in its so discretion, that such work conflicts with the terms of this Agreement, the Consultant shall not undertake such engagements. Nothing herein shall be deemed to release the Consultant with respect to his obligation s with respect to the Confidential Information pursuant to this Agreement. (d) Non - Competition and Non - Solicitation and Non - Circumvention. 13. (i) Non - Competition. Except as authorized by the Company 's Board of Directors, during the term of the Relationship and for a period of twelve (12) months thereafter, the Consultant will not (except as an officer, director, stockholder, employee, agent or consultant of the Company or any subsidiary or affiliate thereof) either directly or indirectly, whether or not for consideration, (i) in any way , directly or indirectly , solicit, divert, or take away the business of any person who is or was a customer of the Company, or in any manner influence such person to cease doing business in part or in whole with Company; (ii) engage in a Competing Business; or (iii) except for investments or ownership in public entities, mutual funds and similar investments, none of which constitute more than 5% of the ownership (provided s uch ownership interest is acquired solely for investment purposes) or control of such entities, own, operate, control, finance, manage, advise, be employed by or engaged by, perform any services for, invest or otherwise become associated in any capacity with any person engaged in a Competing Business; or (iv) engage in any practice the purpose or effect of which is to intentionally evade the provisions of this covenant. For purposes of this section, "Competing Business" means any company or business which is engaged directly or indirectly in any Company Business carried on or planned to be carried on (if such plan s were developed the term of the Relationship) by the Company; and "Company Business" means the Company's business activities and operations as conducted during the term of the Relationship and all products conceived, planned, researched, developed, tested, manufactured , sold, licensed , leased or otherwise distributed or put into use by the Company, together with all services provided or planned by the Company, during your relationship with the Company. The Company acknowledges that Consultant is engaged in the investigation and development of technologies and products for wound healing and diabetic ulcers. (ii) Non - Solicitation and Non - Circumvention. For a period of twelve (12) months following the termination of the Relationship, the Consultant will not directly or indirectly , whether for your account or for the account of any other individual or entity, solicit or canvas the trade, business or patronage of, or sell to, any individuals or entities that were investors, customers or employees of the Company during the tenn of this Agreement, or prospective customers with respect to whom a sales effort, presentation or proposal was made by the Company or its affiliates, during the one year period prior to the termination of the Relationship. Without limiting the foregoing, the Consultant shall not, directly or indirectly (i) solicit, induce, enter into any agreement with, or attempt to influence any individual who was an employee or consultant of the Company at any time during the term of Relationship, to terminate his or her employment relationship with the Company or to become employed or engaged by the Consultant or any individual or entity by which the Consultant are employed or for which you are acting as a consultant or other advisory capacity, and/or (ii) interfere in any other way with the employment , or other relationship , of any employee of, or consultant to, the Company. ( iii ) Injunctive Relief . The Consultant acknowledges and
agrees that the covenants and obligations of the Consultant set forth in this Agreement relate to special, unique and extraordinary Services rendered by the Consultant to the Company and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, the Consultant agrees that the Company shall be entitled to seek an injunction, restraining order or other temporary or permanent equitable relief (without the requirement to post bond) restraining the Consultant from committing any violation of the covenants and obligations contained herein. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity. ( e) Voluntaey Execution. Consultant certifies and acknowledges that Consultant has carefully read all of the provisions of this Agreement, that Consultant understands and has voluntarily accepted such provisions, and that Consultant will fully and faithfully comply with such provisions. 12. Electronic Deliveey. Nothing herein is intended to imply a right to participate in any of the Company's equity incentive plans, however, if Consultant does participate in such plan(s), the Company may , in its sole discretion, decide to deliver any documents related to Consultant ' s participation in the Company's equity incentive plan(s) by electronic means or to request Consultant's consent to participate in such plan(s) by electronic means. Consultant hereby consents to receive such documents by electronic delivery and agrees, if applicable, to participate in such plan(s) through an on - line or electronic system established and maintained by the Company or a third party designated by the Company. 13. Miscellaneous . (a) Governing Law . The validity , interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of Nevada, without giving effect to principles of conflicts of law. Consultant acknowledges that he may not have the rights and privileges under applicable Nevada law that he might otherwise have under the applicable laws of the United Kingdom with respect to this Agreement which he hereby knowingly and willingly waives. (b) Entire Agreement. Except as described in Section Section 3, this Agreement sets forth the entire agreement and understanding between the Company and Consultant relating to its subject matter and merges all prior discussions between the parties to this Agreement. No amendment to this Agreement will be effective unless in writing signed by both parties to this Agreement. The Company shall not be deemed hereby to have waived any rights or remedies it may have in law or equity , nor to have given any authorizations or waived any of its rights under this Agreement, unless, and only to the extent, it does so by a specific writing signed by a duly authorized officer of the Company. Any subsequent change or changes in Consultant's duties, obligations, rights or compensation will not affect the validity or scope of this Agreement. (c) Successors and Assigns . This Agreement will be binding upon Consultant ' s successors and assigns , and will be for the benefit of the Company, its successors, and its assigns. (d) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party's address as set forth on the signature page, as subsequently modified by written notice , or if no address is specified on the signature page, at the most recent address set forth in the Company's books and records. (e) Seyerability . If one or more of the provisions in this Agreement are deemed void or unenforceable to any extent in any context, such provisions shall nevertheless be enforced to the fullest extent allowed by law in that and other contexts, and the validity and force of the remainder of this Agreement shall not be affected. The Company and Consultant have attempted to limit Consultant ' s right to use, maintain and disclose the Company's Confidential Information, and to limit Consultant ' s right to solicit employees and customers only to the extent neces s ary to protect the Company from unfair competition. Should a court of competent jurisdiction determine that the scope of the covenants contained in Section 9 and 11 exceed the maximum restrictiveness such court deems reasonable and enforceable, the parties intend that the court should reform, modify and enforce the provision to such narrower scope as it determines to be reasonable and enforceable under the circumstances existing at that time. In the event that any court or government agency of competent jurisdiction determines that, notwithstanding the terms of the Consulting Agreement specifying Consultant's Relationship with the Company as
that of an independent contractor, Consultant's provision of services to the Company is not as an independent contractor but instead as an employee under the applicable laws, then solely to the extent that such determination is applicable, references in this Agreement to the Relationship between Consultant and the Company shall be interpreted to include an employment relationship, and this Agreement s hall not be invalid and unenforceable but shall be read t o the fullest extent as may be valid and enforceable under the applicable laws to carry out the intent and purpose of this Agreement. (f) Remedies. Consultant acknowledges that violation of this Agreement by Consultant may cause the Company irreparable harm , and therefore Consultant agrees that the Company will be entitled to seek extraordinary relief in court , including, but not limited to, temporary restraining orders , preliminary injunction s and permanent injunctions without the necessity of posting a bond or other s e curity (or, where such a bond or security is required , that a $1,000 bond will be adequate), in addition to and without prejudice to any other rights or remedies that the Company may have for a breach of this Agreement. (g) Advice of Counsel . CONSULTANT ACKNOWLEDGES THAT, IN EXECUTING 1HIS AGREEMENT, C ONSULTANT HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL C OUNSEL , AND CONSULTANT HAS READ AND UNDERSTANDS ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF. (h) Countei:pl!.JY . This Agre e ment may be executed in any number of counterparts , each of which when so executed and delivered shall be deemed an original , and all of which together shall constitute one and the same agreement. Execution of a facsimile or scanned copy will have the same force and effect as execution of an original, and a facsimile or scanned s ignature will be deemed an original and valid signature. (i) Effective Date. Regardless of the date on which this Agreement is executed by the parties hereto, the effective date of this Agreement is August 15, 2019. [Signature Page Followsj SIGNATURES The parties have executed this Confidential Information and Invention Assignment Agreement on the respective dates set forth below, to be effective as of the Effective Date. THE COMPANY: RE NOVACARE , INC. By; (Signature) Name: Jatinder (Jay) S. Bhogal Title: Chief Operating Officer Address: RenovaCare , Inc. 9375 East Shea Blvd., Suite 107 - A Scottsdale , AZ 85260 Attention: Jay S. Bhogal Facsimile: 604 - 336 - 8609 Email Addre ss : jsbhogal @ renovacareinc . com CONSULTANT: ROBIN ROBINSON , PH.D .
Title n!>tP Identifying Number nr Bri,.fn,. mntinr (Signature) 20419 Peach Tree Road Dickerson, MD 20842 301 - 349 - 4035 (home) 240 - 330 - 9951 (mobile) Email: robinsorl@comcast.net EXHIBIT A TO THE CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT DATED AUGUST 15, 2019 BY AND BETWEEN RENOVACARE, INC., AND ROBIN ROBINSON LIST OF PRIOR INVENTIONS AND ORIGINAL WORKS OF AUTHORSHIP EXCLUDED UNDER SECTION The following is a list of all Inventions that, as of the Effective Date: (A) have been created by Consultant or on Consultant's behalf, and/or (B) are owned exclusively by Consultant or jointly by Consultant with others or in which Consultant has an interest, and that relate in any way to any of the Company's actual or proposed businesses, products, services, or research and development, and which are not assigned to the Company hereunder: NONE Except as indicated above on this Exhibit A, Consultant has no inventions, improvements or original works to disclose pursuant to Section 5(a) of this Agreement. Additional sheets attached Signature of Consultant: Print Name of Consultant: ROBIN ROBINSON Date: August 15, 2019
1 EXHIBITB TO THE CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT DATED AUGUST 15, 2019 BY AND BETWEEN RENOVACARE, INC., AND ROBIN ROBINSON TERMINATION CERTIFICATION This is to certify that Consultant does not have in Consultant's possession, nor has Consultant failed to return , any devices , records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, laboratory notebooks , flow charts , materials , equipment, other documents or property , or copies or reproductions of any aforementioned items belonging to RenovaCare , Inc., a Nevada corporation, its subsidiaries, affiliates, successors or assigns (collectively, the "Qun.W!J!Y."). Consultant further certifies that Consultant has complied with all the terms of the Company's Confidential Information and Invention Assignment Agreement (the "Confidentiality Agr:ttnWlt") signed by Consultant, including the reporting of any Inventions (as defined therein), conceived or made by Consultant or Consultant's personnel (solely or jointly with others) covered by the Confidentiality Agreement , and Consultant acknowledges Consultant's continuing obligations under the Confidentiality Agreement. Consultant further agrees that, in compliance with the Confidentiality Agreement, Consultant will preserve as confidential all trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know - how, designs , formu las , developmental or experimental work , computer programs , data bases, other original works of authorship, customer lists , business plans , fmancial information or other subject matter pertaining to any business of the Company or any of its employees , clients , consultants or licensees. Consultant further agrees that for twelve (12) months immediately following the termination of Consultant's Relationship with the Company, Consultant shall not either directly or indirectly solicit any of the Company's employees or consultants to terminate their relationship with the Company, or attempt to solicit employees or consultants of the Company, either for Consultant or for any other person or entity. Further , Consultant agrees that Consultant shall not use any Confidential Information of the Company to influence any of the Company's clients or customers from purchasing Company product s or services or to solicit or influence or attempt to influence any client, customer or other person either directly or indirectly, to direct any purchase of products and/or services to any person, firm, corporation, institution or other entity in competition with the business of the Company. CONSULTANT: - t>/1' - /Z - /, ROBIN ROBINSON (Signature) EXHIBITC TO THE CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT DATED AUGUST 15, 2019 BY AND BE1WEEN RENOVACARE, INC., AND ROBIN ROBINSON LIST OF CONFLICTS AND AGREEMENTS PURSUANT TO SECTION ll(b)
_ X _ No conflicts _ X _ No agreements under Section ll(b). Additional sheet s attached Consultant agrees: o/J - /2 - 19 (Signature) Print Name: ROBIN ROBINSON Date: August 15, 2019
EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Harmel S. Rayat, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of RenovaCare, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 14, 2019 | By | /s/ Harmel S. Rayat | |
Name: | Harmel S. Rayat | ||
Title: | Chief Executive Officer and Director | ||
(Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO RULE 13A-14(A) OR RULE 15D-14(A)
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Stephen Yan-Klassen, certify that:
1. | I have reviewed this quarterly report on Form 10-Q of RenovaCare, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and | |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: November 14, 2019 | By: | /s/ Stephen Yan-Klassen | |
Name: | Stephen Yan-Klassen | ||
Title: | Chief Financial Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
The undersigned, as the Chief Executive Officer and the Chief Financial Officer of RenovaCare, Inc., respectively, certifies that, to the best of their knowledge and belief, the Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2019 that accompanies this certification fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in the quarterly report fairly presents, in all material respects, the financial condition and results of operations of RenovaCare, Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and shall not be relied upon for any other purpose.
Date: November 14, 2019 | By | /s/ Harmel S. Rayat | |
Name: | Harmel S. Rayat | ||
Title: | Chief Executive Officer and Director | ||
(Principal Executive Officer) | |||
Date: November 14, 2019 | By: | /s/ Stephen Yan-Klassen | |
Name: | Stephen Yan-Klassen | ||
Title: | Chief Financial Officer | ||
(Principal Financial Officer and Principal Accounting Officer) |
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