10-Q 1 rgbp063020form10q.htm 10-Q

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 June 30, 2020

 

 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 For the transition period from

 

 Commission File No. 333-191725

 

 REGEN BIOPHARMA, INC.

(Exact name of small business issuer as specified in its charter) 

 

Nevada 45-5192997
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

 

4700 Spring Street, St 304, La Mesa, California 91942

(Address of Principal Executive Offices)

619 722-5505

(Issuer’s telephone number)

None

(Former name, address and fiscal year, if changed since last report)  

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the issuer 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☐  No ☒

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

☐  Large accelerated filer ☐  Accelerated filer
☐  Non-accelerated filer ☒  Smaller reporting company

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

As of May 14, 2021 Regen Biopharma, Inc. had 3,746,423788 common shares outstanding.

 

As of May 25, 2021 Regen Biopharma, Inc. had 414, 147,858 shares of Series A Preferred Stock outstanding.

 

As of May 25, 2021 Regen Biopharma, Inc. had 50,000 shares of Series AA Preferred Stock outstanding.

 

As of May 25,2021 Regen Biopharma, Inc. had 44,000,000 shares of Series M Preferred Stock outstanding.

 

As of May 25,2021 Regen Biopharma, Inc. had 10,000 shares of Series NC Preferred Stock outstanding

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐  No ☒

1 
 

 

PART I - FINANCIAL INFORMATION

Item 1. - Financial Statements

REGEN BIOPHARMA , INC.      
CONSOLIDATED CONDENSED BALANCE SHEETS      
       
   As of  As of
  

June 30,

2020

  September 30, 2019
   (unaudited)   
ASSETS      
CURRENT ASSETS          
Cash  $—     $7,855 
Accounts Receivable, Related Party   75,466    71,186 
Prepaid Expenses   40    76 
     Total Current Assets   75,506    79,117 
           
OTHER ASSETS          
Investment Securities   19,969    19,969 
Total Other Assets   19,969    19,969 
TOTAL ASSETS  $95,475   $99,087 
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities:          
Accounts payable   107,430    92,000 
Notes Payable   62,127    88,627 
Accrued payroll taxes   4,241    4,241 
Accrued Interest   754,951    525,335 
Accrued Rent   23,548    5,000 
Accrued Payroll   1,148,819    972,158 
Other Accrued Expenses   41,423    41,423 
Bank Overdraft   854      
Due to Investor   20,000    20,000 
Derivative Liability   4,020,486    7,200,528 
Convertible Notes Payable Less  unamortized discount   2,454,604    2,051,537 
Unearned Income        0 
Convertible Notes Payable, Related Parties Less  unamortized discount   16,061    2,056 
Total Current Liabilities   8,654,546    11,002,904 
Long Term Liabilities:          
Convertible Notes Payable less  unamortized discount          
Convertible Notes Payable, Related Parties Less  unamortized discount        4,978 
Total Long Term Liabilities        4,978 
Total Liabilities   8,654,546    11,007,882 
           
STOCKHOLDERS' EQUITY (DEFICIT)          
Common Stock ($.0001 par value) 500,000,000 shares authorized; 4,800,000,000 authorized and    1,605,000,246 issued and outstanding as of June 30, 2020 and 4,800,000,000 authorized and 600,001,406 shares issued and outstanding September 30, 2019   160,498    59,998 
Preferred Stock, 0.0001 par value, 800,000,000 authorized as of September 30, 2019  and June 30,2020 respectively          
Series A Preferred 300,000,000 authorized, 353,615,105 and 348,376,230 outstanding as of  June 30,2020 and September 30, 2019 respectively   35,362    34,838 
Series AA Preferred $0.0001 par value 600,000 authorized and 50, 000 and 50,000   outstanding as of September 30, 2019 and June 30,2020 respectively   5    5 
Series M Preferred $0.0001 par value 300,000,000 authorized and and 38,000,000  and 44,000,000 outstanding as of September 30, 2019 and June 30, 2020 respectively   4,400    3,800 
Additional Paid in capital   8,298,393    8,261,993 
Contributed Capital   728,791    728,658 
Retained Earnings (Deficit)   (17,786,519)   (19,998,086)
Total Stockholders' Equity (Deficit)   (8,559,071)   (10,908,795)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)  $95,475   $99,087 
           
The Accompanying Notes are an Integral Part of These Financial Statements

2 
 

 

REGEN BIOPHARMA , INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(unaudited)        

 

   Quarter Ended June 30 2020  Quarter Ended June 30 2019  Nine Months  Ended June 30 2020  Nine Months  Ended June 30 2019
REVENUES            
Revenues, Related Party  $27,425   $27,425   $82,274   $82,274 
                     
COST AND EXPENSES                    
Research and Development   12    15,328    10,354    23,268 
General and Administrative   43,749    111,292    205,994    396,708 
Consulting and Professional Fees        23,525    37,786    184,645 
Rent        15,000    18,548    45,000 
Total Costs and Expenses   43,761    165,145    272,682    649,621 
                     
OPERATING INCOME (LOSS)  $(16,336)  $(137,720)  $(190,408)  $(567,347)
                     
OTHER INCOME & (EXPENSES)                    
Interest Income                  1,302 
Other Income                    
Dividend Income                    
Loss on Sale of Securities                  (57,697)
Unrealized Gain(Loss) Investment Securities        56277         (2,870)
Interest Expense   (81,343)   (70,685)   (252,000)   (212,626)
Refunds of amounts previously paid                  115 
Interest Expense attributable to                    
Amortization of Discount   (137,603)   (482,036)   (526,422)   (1,160,136)
Gain (Loss) on Early Extinguishment Convertible Debt        33,567         33,567 
Bad Debt Expense                  (118,121)
Other Than Temporary Impairment Recognized                    
Derivative Income (Expense)   3,441,227    (3,804,486)   3,180,398    (2,409,391)
TOTAL OTHER INCOME (EXPENSE)   3,222,281    (4,267,363)   2,401,975    (3,925,856)
                     
NET INCOME (LOSS)  $3,205,944   $(4,405,083)  $2,211,567   $(4,493,203)
Less:Net (Income) Loss attributable to KCL, Therapeutics, Inc.        (4,791)        (7,291)
NET INCOME (LOSS) attributable to common shareholders  $2,564,755   $(4,409,874)  $1,769,254   $(4,500,494)
                     
BASIC AND FULLY DILUTED EARNINGS (LOSS) PER SHARE  $0.0016   $(0.0514)  $0.0007   $(0.01362)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING   1,605,000,246    85,870,762    2,414,039,326    330,314,186 
                     
The Accompanying Notes are an Integral Part of These Financial Statements

3 
 

REGEN BIOPHARMA , INC.

Condensed Consolidated Statement of Shareholder's Deficit

Nine Months Ended June 30,2019

(unaudited)

 

      Series A  Preferred  Series AA Preferred  Common  Series M Preferred               
      Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount  Additional Paid-in Capital  Retained Earnings  Contributed Capital  Accumulated  Other Comprehensive Income (Loss)  Noncontrolling Interest  Total
    Balance September 30, 2018   140,434,496   $14,044    50,000   $5    180,315,107   $18,030    38,000,000   $3,800   $7,517,888   $(17,457,044)  $728,658   $52,948   $0   $(9,121,670)
10/1/2018   5128205 shares issued for debt                       5,128,205    513              29,487                       30,000
10/18/2018   8961988 shares issued for debt                       8,961,988    896              29,754                       30,650
10/23/2018   2019140 shares issued for debt                       2,019,140    202              7,410                       7,612
10/29/2018   3015618 shares issued for debt                       3,015,618    302              11,066                       11,368
11/15/2018   7100591 shares issued for debt                       7,100,591    710              29,290                       30,000
11/20/2018   3656020 shares issued for debt   3,656,020    366                                  5,099                       5,465
11/28/2018   9198923 shares issued for debt                       29,033,181    2,903              47,813                       50,716
11/28/2018   286232 shares issued for expenses                       286,232    29              471                       500
12/19/2018   5184674 shares issued for debt                       5,184,674    518              9,929                       10,447
12/26/2018   617283 shares issued for expenses                       617,283    62              438                       500
12/26/2018   10382717 shares issued for debt                       10,382,717    1,038              7,372                       8,410
12/31/2018   Derecognition of Accumulated Other Comprehensive Income                                                52,948         (52,948)       0
12/31/2019   Adjustment for Adoption ASU 2014 -09                                                29,186                  29,186
12/31/2018   Net Income for the Quarter Ended December 31, 2019                                                245,057                  245,057
    Balance 12/31/2018   144,090,516    14,409    50,000    5    252,044,737    25,203    38,000,000    3,800    7,696,017    (17,129,853)   728,658    0    0   (8,661,761)
1/3/2019   10585123 shares issued for debt                       10,585,123    1,059              12,692                       13,751
1/9/2019   10000000 shares issued for services   10,000,000    1,000                                  48,000                       49,000
1/23/2019   5774947 shares issued for debt                       5,774,947    577              6,555                       7,132
1/25/2019   877310 shares issued for expenses                       877,310    88              412                       500
1/25/2019   12222690 shares issued for debt                       12,222,690    1,222              5,744                       6,966
2/11/2019   10473668 shares issued for debt                       10,473,668    1,047              11,887                       12,934
2/13/2019   Shares of subsidiary issued for services                                           441                       441
2/15/2019   13821193 shares isued for debt                       13,821,193    1,382              14,374                       15,756
2/19/2019   13790783 shares issued for debt                       13,790,783    1,379              18,341                       19,720
3/1/2019   8004463 shares issued for debt                       8,004,463    800              7,844                       8,644
3/4/2019   694508 shares issued for expenses                       694,508    69              431                       500
3/4/2019   14305492 shares issued for debt                       14,305,492    1,431              8,868                       10,299
3/19/2019   833449 shares issued for expenses                       833,449    83              417                       500
3/19/2019   27377166 shares issued for debt                       27,377,166    2,738              19,766                       22,504
3/22/2019   6309524 shares issued for debt                       6,309,524    631              4,669                       5,300
3/31/2019   Adjustment for noncontrolling Interest KCL Therapeutics, Inc.                                           (2,934)                  2,934   0
3/31/2019   Net Loss for Quarter Ended March 31 2019                                                (333,177)                 (333,177)
    Balance March 31 2019   154,090,516   $15,409    50,000   $5    377,115,053   $37,710    38,000,000   $3,800.00   $7,853,523   $(17,463,031)  $728,658   $0   $2,934   $(8,820,991)
4/1/2019   895116 shares issued for debt                       8,958,116    896              3,403                       4,299
4/1/2019   1041884 shares issued for expenses                       1,041,884    104              396                       500
4/2/2019   12992389 shares issued for debt                       12,992,389    1,299              8,055                       9,354
4/8/2019   17971064 shares issued for debt                       17,971,064    1,797              12,220                       14,017
4/9/2019   11832569 shares issued for debt                       11,832,569    1,183              7,336                       8,519
4/11/2019   19472820 shares issued for debt                       19,472,820    1,947              13,241                       15,188
4/18/2019   14824958 shares issued for debt                       14,824,958    1,482              9,191                       10,673
4/29/2019   22243153 shares issued for debt                       22,243,153    2,224              15,125                       17,349
4/30/2019   895116 shares issued for debt                       8,958,116    896              3,403                       4,299
4/30/2019   1041884 shares issued for expenses                       1,041,884    104              396                       500
5/18/2019   1253847 shares issued for expenses                       1,253,847    125              375                       500
5/18/2019   20746153 shares issued for debt                       20,746,153    2,075              6,198                       8,273
6/27/2019   104285714 shares issued for debt   194,285,714    19,429                                  320,571                       340,000
6/30/2019   Adjustment for noncontrolling Interest KCL Therapeutics, Inc.                                           (12,708)                  12,708 
6/30/2019   Net Loss for Quarter ended June 30, 2019                                                (4,405,083)                 (4,405,083)
    Balance June 30, 2019   348,376,230   $34,838              518,452,006   $51,843    38,000,000   $3,800.00   $8,240,724   $(21,868,114)  $728,658   $0   $15,642   $(12,792,604)
                                                                      
The Accompanying Notes are an Integral Part of These Financial Statements

 

4 
 

 

REGEN BIOPHARMA , INC.

Condensed Consolidated Statement of Shareholder's Deficit

Nine Months Ended June 30,2020

(Unaudited)                              

 

      Series A  Preferred  Series AA Preferred  Common  Series M Preferred               
      Shares  Amount  Shares  Amount  Shares  Amount  Shares  Amount  Additional Paid-in Capital  Retained Earnings  Contributed Capital  Accumulated Other Comprehensive Income (Loss)  Noncontrolling Interest  Total
    Balance September 30, 2019   348,376,230   $34,838    50,000    5    600,001,406   $59,998    38,000,000   $3,800   $8,261,993   $(19,998,086)  $728,658   $—     $—     $(10,908,795)
10/29/2019   Shares issued for Debt                       15,100,608    1,510              3,397                       4,907
10/29/2019   Shares issued for Interest                       4,376,007    438              984                       1,422
10/29/2019   Shares issued for debt                       20,834,497    2,083              7,917                       10,000
10/29/2019   Shares Issued for Interest                       3,418,941    342              1,299                       1,641
11/5/2019   Shares issued for Debt                       25,002,163    2,500              6,500                       9,000
11/5/2019   Shares Issued for Interest                       4,217,031    422              1,096                       1,518
11/5/2019   Shares issued for Debt                       19,254,584    1,925              3,850                       5,775
11/5/2019   Shares Issued for Interest                       8,745,416    875              1,750                       2,625
11/5/2019   Shares issued for Debt                       30,555,555    3,056              7,944                       11,000
11/15/2019   Shares isued for Services                                 6,000,000    600                            600
11/27/2019   Shares issued for Interest                       30,946,444    3,095              (310)                      2,785
11/27/2019   Shares issued for Fees                       5,555,556    556              (56)                      500
11/27/2019   Shares issued for Debt                       36,500,000    3,650              2,920                       6,570
11/27/2019   Shares Issued for Debt                       31,251,177    3,125              3,625                       6,750
11/27/2019   Shares issued for Interest                       4,393,684    439              510                       949
12/3/2019   Shares Issued for Debt                       30,558,094    3,056              2,444                       5,500
12/3/2019   Shares issued for Interest                       5,556,017    556              444                       1,000
12/4/2019   Shares Issued for Debt                       31,234,276    3,123              2,967                       6,090
12/4/2019   Shares issued for Interest                       5,308,288    531              504                       1,035
12/5/2019   Shares Issued for Debt                       41,922,222    4,192              3,354                       7,546
12/6/2019   Shares Issued for Debt                       10,064,761    1,006              (99)                      907
12/6/2019   Shares issued for Interest                       26,310,416    2,631              (260)                      2,371
12/6/2019   Shares issued for Fees                       5,548,380    555              (55)                      500
12/10/2019   Shares Issued for Debt                       49,729,272    4,973              905                       5,878
12/13/2019   Shares Issued for Debt                       37,777,157    3,778              (1,512)                      2,266
12/13/2019   Shares issued for Interest                       6,101,694    610              (244)                      366
12/13/2019   Shares issued for Fees                       8,335,648    834              (334)                      500
12/13/2019   Shares Issued for Debt                       52,200,000    5,220              (2,088)                      3,132
12/16/2019   Shares Issued for Debt                       42,081,411    4,208              1,262                       5,470
12/16/2019   Shares issued for Interest                       7,677,742    768              230                       998
12/19/2019   Shares Issued for Debt                       41,433,258    4,143              3,314                       7,457
12/19/2019   Shares issued for Interest                       566,742    57              45                       102
12/20/2019   Shares Issued for Debt                       50,462,834    5,046              (1,766)                      3,280
12/20/2019   Shares issued for Interest                       9,477,166    948              (332)                      616
12/20/2019   Dhares issued for Debt                       59,900,000    5,990              (2,396)                      3,594
12/23/2019   Shares issued for Debt                       31,421,505    3,142              (2,200)                      942
12/23/2019   Shares issued for Interest                       11,808,081    1,181              (827)                      354
12/23/2019   Shares issued for Fees                       16,678,081    1,668              (1,168)                      500
    Capital contribution quarter ended 12/31/2019                                                     133             133
    Net Income Quarter Ended 12/31/2019                                                3,082,768                  3,083,375
    Balance December 31, 2019   348,376,230   $34,838    50,000    5    1,422,306,114   $142,228    44,000,000   $4,400   $8,305,608.88   $(16,915,318)  $728,791             $(7,699,447)
1/2/2020                           69,685,185    6,969              (3,206)                      3,763
1/2/2020                           36,826,333    3,683              (2,578)                      1,105
1/2/2020                           17,480,000    1,748              (1,224)                      524
1/2/2020                           16,666,667    1,667              (1,167)                      500
1/23/2020                           6,739,096    674              (472)                      202
1/23/2020                           18,615,919    1,862              (1,304)                      558
1/23/2020                           16,680,931    1,668              (1,168)                      500
    Net Loss Quarter Ended March 31,2020                                                (4,077,145)                 (4,077,145)
    Balance March  31, 2020   348,376,230   $34,838    50,000    5    1,605,000,246   $160,498    44,000,000   $4,400   $8,294,491   $(20,992,464)  $728,791             $(11,769,440)
5/12/2020   Preferred Shares issued for Debt   3550977.18    355.097718                                  2,645                       3,000
5/12/2020   Preferred Shares issued for Interest   1687897.82    168.789782                                  1,257                       1,426
    Net Income ( Loss) Quarter Ended June 30, 2020                                                3,205,944                  3,205,944
    Balance June 30, 2020   353,615,105   $35,362    50,000    5    1,605,000,246   $160,498    44,000,000   $4,400   $8,298,393   $(17,786,519)  $728,791             $(8,559,070)
                                                                      
The Accompanying Notes are an Integral Part of These Financial Statements

5 
 

REGEN BIOPHARMA , INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(unaudited)

 

   Nine Months Ended June 30  Nine Months Ended June 30
   2020  2019
CASH FLOWS FROM OPERATING ACTIVITIES          
           
Net Income (loss)  $2,211,567   $(4,493,203)
Adjustments to reconcile net Income to net cash          
Preferred Stock issued to Consultants   600    49,000 
Common Stock issued to consultants          
Common Stock issued for interest          
Preferred Stock issued for interest          
Subsidiary Stock issued to consultants        46 
Subsidiary Stock issued as compensation        294 
Common Stock issued for Expenses   3,000    4,000 
Preferred Stock Issued For Interest          
Increase (Decrease) in Interest expense attributable to amortization of Discount   526,422    1,160,136 
(Gain) Loss on Sale of Investment Securities        57,697 
Increase(Decrease) in (Gain)/Loss on early extinguishment of debt        (33,567)
Increase ( Decrease) in Recognition of Other than Temporary Impairment          
Changes in operating assets and liabilities:          
Unrealized (Gain) Loss on Investment Securities        2,870 
Increase (Decrease) in Accounts Payable   15,431    13,977 
Increase ( Decrease) in Bank Overdraft          
increase (Decrease) Unearned Income        (38,814)
(Increase) Decrease in Accounts Receivable   (6,374)   (43,460)
Increase (Decrease) in accrued Expenses   447,373    432,102 
(Increase) Decrease in Prepaid Expenses   36    13,271 
Increase ( Decrease) in Contributed Capital   133      
Increase in Derivative Expense   (3,180,398)   2,409,391 
(Increase) Decrease in Interest Receivable        (1,303)
(Increase) Decrease  in Notes Receivable        4,551 
Increase (Decrease) in Bad Debt Expense        118,121 
Increase (Decrease) in Bank Overdraft   854    63 
Net Cash Provided by (Used in) Operating Activities  $18,645   $(344,828)
           
Cash Flows from Investment Activities          
           
Increase(Decrease) in Sale of Investment Securities        49,858 
Dividend Income          
Net Cash Provided By Investment Activities        49,858 
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Common Stock issued for Cash          
Preferred Stock issued for Cash          
Increase ( Decrease)  in Notes Payable   (26,500)   62,513 
Increase in Convertible Notes payable        226,250 
Increase in Due to Investor          
Net Cash Provided by (Used in) Financing Activities   (26,500)   288,763 
Net Increase (Decrease) in Cash  $(7,855)  $(6,207)
           
Cash at Beginning of Period  $7,855   $8,019 
Cash at End of Period  $(0)  $1,812 
           
Supplemental Disclosure of Noncash investing and financing activities:          
Common shares Issued for Debt  $111,133   $355,938 
Preferred Shares Issued for Debt  $3,000   $345,000 
Cash Paid for Interest       $11,520 
Common shares Issued for Interest  $18,864   $38,242 
Preferred Shares issued for Interest  $1,426      
           
The Accompanying Notes are an Integral Part of These Financial Statements 

6 
 

REGEN BIOPHARMA, INC.

Notes to Condensed Consolidated Financial Statements

As of June 30, 2020

 

(Unaudited)

 

The accompanying unaudited interim condensed consolidated financial statements of Regen Biopharma , Inc. (“Regen” or “the Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the United States Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K for the year ended September 30, 2019. In general, interim disclosures do not repeat those contained in the annual statements. In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.   

 

NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company was organized April 24, 2012 under the laws of the State of Nevada 

The Company intends to engage primarily in the development of regenerative medical applications which we intend to license from other entities up to the point of successful completion of Phase I and or Phase II clinical trials after which we would either attempt to sell or license those developed applications or, alternatively, advance the application further to Phase III clinical trials.

The Company is currently engaged in actively identifying small molecules that inhibit or express NR2F6 leading to immune cell activation for oncology applications and immune cell suppression for autoimmune disease.

The Company is in the early stages of development of its proposed products and therapies. The Company will be required to obtain approval from the FDA in order to market any of The Company’s products or therapies. No approval has been granted by the FDA for the marketing and sale of any of the Company’s products and therapies and no assurance may be given that any of the Company’s products or therapies will be granted such approval. The Company’s current plans include the development of regenerative medical applications up to the point of successful completion of Phase I and/ or Phase II clinical trials after which the Company would either attempt to sell or license those developed applications or, alternatively, advance the application further to Phase III clinical trials. The Company can provide no assurance that the Company will be able to sell or license any product or that, if such product is sold or licensed, such sale or license will be on terms favorable to the Company.

A. BASIS OF ACCOUNTING

The financial statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has adopted a September 30 year-end.

B. PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of KCL Therapeutics, Inc., a Nevada corporation and wholly owned subsidiary of Regen. Significant inter-company transactions have been eliminated.

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The Company analyzes the conversion feature of Convertible Notes for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging. ASC 815-15 requires that the conversion features are bifurcated and separately accounted for as an embedded derivative contained in the Company’s convertible debt. The embedded derivative is carried on the balance sheet at fair value. Any unrealized change in fair value, as determined at each measurement period, is recorded as a component of the income statement and the associated carrying amount on the balance sheet is adjusted by the change. The Company values the embedded derivative using the Black-Scholes pricing model.  

The Black Scoles pricing model used to determine the Derivative Liability on convertible notes issued by the Company in which an embedded derivative is recognized as of June 30,2020 utilized the following inputs:

Risk Free Interest Rate     1.75 %
Expected Term     – 0.41 Yrs  
Expected Volatility     273 – 312 %
Expected Dividends        

H. INCOME TAXES

The Company accounts for income taxes using the liability method prescribed by ASC 740, “Income Taxes.” Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company applied the provisions of ASC 740-10-50, “Accounting For Uncertainty In Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of September 30, 2020 the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

The Company generated a deferred tax credit through net operating loss carry forward.  However, a valuation allowance of 100% has been established.

Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

I.  BASIC EARNINGS (LOSS) PER SHARE

The Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) 260, “Earnings Per Share”, which specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. ASC 260 requires the presentation of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of ASC 260 effective from inception.

Basic net loss per share amounts is computed by dividing the net income by the weighted average number of common shares outstanding.

8 
 

J. ADVERTISING

Costs associated with advertising are charged to expense as incurred. Advertising expenses were $0 for the quarters ended June 30, 2020 and 2019.

K. NOTES RECEIVABLE

Notes receivable are stated at cost, less impairment, if any.

L. REVENUE RECOGNITION

Sales of products and related costs of products sold are recognized when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the price is fixed or determinable; and (iv) collectability is reasonably assured. These terms are typically met upon the prepayment or invoicing and shipment of products.

The Company determines the amount and timing of royalty revenue based on its contractual agreements with intellectual property licensees. The Company recognizes royalty revenue when earned under the terms of the agreements and when the Company considers realization of payment to be probable. Where royalties are based on a percentage of licensee sales of royalty-bearing products, the Company recognizes royalty revenue by applying this percentage to the Company’s estimate of applicable licensee sales. The Company bases this estimate on an analysis of each licensee’s sales results. Where warranted, revenue from licensees for contractual obligations such as License Initiation Fees are recognized upon satisfaction of all conditions required to be satisfied in order for that revenue to have been earned by the Company.

M. INTEREST RECEIVABLE

Interest receivable is stated at cost, less impairment, if any.

NOTE 2.  RECENT ACCOUNTING PRONOUNCEMENTS

In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as “Development Stage Entities” (Topic 915). The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted this standard.

As of the fiscal year ending September 30, 2019 the Company has adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this Update supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the Codification.

The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.

9 
 

In June 2014, FASB issued Accounting Standards Update (ASU) No. 2014-12 Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. A performance target in a share-based payment that affects vesting and that could be achieved after the requisite service period should be accounted for as a performance condition under Accounting Standards Codification (ASC) 718, Compensation — Stock Compensation. As a result, the target is not reflected in the estimation of the award’s grant date fair value. Compensation cost would be recognized over the required service period, if it is probable that the performance condition will be achieved. The guidance is effective for annual periods beginning after 15 December 2015 and interim periods within those annual periods. Early adoption is permitted. The Company has reviewed the applicable ASU and has not, at the current time, quantified the effects of this pronouncement, however it believes that there will be no material effect on the consolidated financial statements.

In August2014, FASB issued Accounting Standards Update (ASU) No. 2014-15 Preparation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Under generally accepted accounting principles (GAAP), continuation of a reporting entity as a going concern is presumed as the basis for preparing financial statements unless and until the entity’s liquidation becomes imminent. Preparation of financial statements under this presumption is commonly referred to as the going concern basis of accounting. If and when an entity’s liquidation becomes imminent, financial statements should be prepared under the liquidation basis of accounting in accordance with Subtopic 205-30, Presentation of Financial Statements—Liquidation Basis of Accounting. Even when an entity’s liquidation is not imminent, there may be conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern. In those situations, financial statements should continue to be prepared under the going concern basis of accounting, but the amendments in this Update should be followed to determine whether to disclose information about the relevant conditions and events. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU, however, at the current period, management does not believe that it has met the conditions which would subject these financial statements for additional disclosure.

On January 31, 2013, the FASB issued Accounting Standards Update [ASU] 2013-01, entitled Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The guidance in ASU 2013-01 amends the requirements in the FASB Accounting Standards Codification [FASB ASC] Topic 210, entitled Balance Sheet. The ASU 2013-01 amendments to FASB ASC 210 clarify that ordinary trade receivables and receivables in general are not within the scope of ASU 2011-11, entitled Disclosure about Offsetting Assets and Liabilities, where that ASU amended the guidance in FASB ASC 210. As those disclosures now are modified with the ASU 2013-01 amendments, the FASB ASC 210 balance sheet offsetting disclosures now clearly are applicable only where reporting entities are involved with bifurcated embedded derivatives, repurchase agreements, reverse repurchase agreements, and securities borrowing and lending transactions that either are offset using the FASB ASC 210 or 815 requirements, or that are subject to enforceable master netting arrangements or similar agreements. ASU 2013-01 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The adoption of this ASU is not expected to have a material impact on our financial statements.

On February 28, 2013, the FASB issued Accounting Standards Update [ASU] 2013-04, entitled Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The ASU 2013-04 amendments add to the guidance in FASB Accounting Standards Codification [FASB ASC] Topic 405, entitled Liabilities and require reporting entities to measure obligations resulting from certain joint and several liability arrangements where the total amount of the obligation is fixed as of the reporting date, as the sum of the following:

The amount the reporting entity agreed to pay on the basis of its arrangement among co-obligors.

Any additional amounts the reporting entity expects to pay on behalf of its co-obligors.

While early adoption of the amended guidance is permitted, for public companies, the guidance is required to be implemented in fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments need to be implemented retrospectively to all prior periods presented for obligations resulting from joint and several liability arrangements that exist at the beginning of the year of adoption. The adoption of ASU 2013-04 is not expected to have a material effect on the Company’s operating results or financial position.

10 
 

On April 22, 2013, the FASB issued Accounting Standards Update [ASU] 2013-07, entitled Liquidation Basis of Accounting. With ASU 2013-07, the FASB amends the guidance in the FASB Accounting Standards Codification [FASB ASC] Topic 205, entitled Presentation of Financial Statements. The amendments serve to clarify when and how reporting entities should apply the liquidation basis of accounting. The guidance is applicable to all reporting entities, whether they are public or private companies or not-for-profit entities. The guidance also provides principles for the recognition of assets and liabilities and disclosures, as well as related financial statement presentation requirements. The requirements in ASU 2013-07 are effective for annual reporting periods beginning after December 15, 20