10-Q: Regenerex Pharma Reports Increased Net Loss in Q3 2023 Amidst Intellectual Property Investments

Regenerex Pharma's Q3 2023 report reveals a significant increase in net loss due to intellectual property acquisition and increased operating expenses.

Summary

• Regenerex Pharma, Inc. filed its quarterly report on Form 10-Q for the period ended December 31, 2023.
• The company reported a net loss of $263,976 for the three months ended December 31, 2023, compared to a net loss of $49,400 for the same period in 2022.
• For the nine months ended December 31, 2023, the net loss was $3,251,000, a significant increase from the $91,040 loss in the corresponding period of 2022.
• The increased losses are attributed to the purchase of intellectual property, recorded as research and development expenses, as well as higher payroll and lease costs.
• The company's management expresses substantial doubt about its ability to continue as a going concern, citing operating losses and excess liabilities over assets of $3,876,063 as of December 31, 2023.
• Regenerex is actively seeking capital to launch its business, add new products/services, and ultimately achieve profitability.
• The company is developing wound care products and protocols, targeting a significant market share in the U.S. and global markets.
• The company is negotiating managed care agreements with southeastern states for Medicaid wound care patients and with distributors in Middle Eastern countries.
• The company expects to launch its sales initiative during the first quarter of the fiscal year ending March 31, 2025.
• The company's internal controls over financial reporting were deemed ineffective as of December 31, 2023, due to a lack of in-house personnel with the technical knowledge to address complex reporting issues.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the significant increase in net loss, the going concern warning, and the ineffective internal controls. However, there are some positives related to the company's product development and market targeting.

Positives

• The company is developing managed care agreements with southeastern states to manage their Medicaid wound care patients.
• The company is in the process of negotiating with several distributors in various Middle Eastern countries to provide the company's products.
• The company has three technologies for different types of wound conditions.
• The company has purchased proprietary wound care formulations, and has entered into an agreement, dated June 10, 2023, with Woundcare Labs, LLC to lease a plant and equipment in Tennessee.

Negatives

• The company's net loss significantly increased to $3,251,000 for the nine months ended December 31, 2023, compared to $91,040 for the same period in 2022.
• Management expresses substantial doubt about the company's ability to continue as a going concern due to significant losses and liabilities.
• The company's internal controls over financial reporting were deemed ineffective as of December 31, 2023.
• The company has a lack of revenue history and has had a limited history of operations.
• The company requires significant cash to launch its business and reduce its liabilities.

Risks

• The company's ability to raise sufficient capital to fund operations and achieve profitability is uncertain.
• The company's reliance on notes payable as a primary source of liquidity is not sustainable.
• The company's internal control weaknesses could lead to errors in financial reporting.
• The company faces risks and uncertainties related to the impacts of COVID-19 or other future pandemics on its business.
• The company's success depends on its ability to develop and market its wound care products effectively.
• The company's success depends on its ability to maintain its relationships, and establish or maintain future collaborations or strategic relationships or obtain additional funding.

Future Outlook

The company expects COVID-19 to continue to affect global economic conditions during the fourth quarter. The company expects to launch its sales initiative during the first quarter of the fiscal year ending March 31, 2025.

Management Comments

• Management's plans are to actively seek capital to enable the Company to add new products and/or services to ultimately achieve profitability.
• Management cannot provide assurance that they can raise sufficient capital and whether the Company will ultimately achieve profitability, become cash flow positive, or raise additional debt and/or equity capital.

Industry Context

The company is targeting the wound care market, which is facing cost pressures and a shift towards pay-for-performance models due to the Affordable Healthcare Act. The company is focusing on home health and nursing homes, which are the fastest-growing segments in the U.S. wound market due to the aging population.

Comparison to Industry Standards

• The report mentions that Regenerex System has been shown in many clinical trials to successfully close up to 95% of non-responding chronic wounds within 90 days.
• The report claims that competitive clinical trials indicated there isn't another System that has the ability to close chronic wounds at these levels and speed.
• The report claims that QBx technology is the most efficacious, and clinically proven Chronic wound Care product in the world.

Legal Proceedings

• As of December 31, 2023, the Company is not involved in any material litigation.

Related Party Transactions

• The Company purchased assets from the Companys current Chief Executive Officer (CEO) and Secretary/Treasurer.
• On June 10, 2023, the Company has entered into an agreement with Woundcare Labs, LLC, a party related to the CFO and CEO of the company, to lease a plant and to lease equipment in Tennessee.
• During the nine months ended December 31, 2023, this note was transferred to a relative of the former CFO and was renewed upon maturity in the principal amount of $131,687 plus interest accrued as at June 30, 2023 in the amount of $52,545.
• During the nine-month periods ended December 31, 2023 and 2022, the Companys Chief Financial Officer (CFO) and the Companys Chief Executive Officer (CEO) advanced the Company monies for operating expenses in the amount of $4,557 and $200, respectively.
• During the year ended March 31, 2023, the Companys CFO and the Companys CEO advanced the Company monies for operating expenses in the amount of $40,500.
• Payments made to the Companys CEO and CFO in connection with the Asset Purchase Agreement are $43,500 and $0 during the nine-month period December 31, 2023 and December 31, 2022, respectively.

Stakeholder Impact

• Shareholders face significant risk due to the company's financial instability and going concern warning.
• Employees' job security is uncertain due to the company's financial difficulties.
• Customers may be affected by potential disruptions in the company's operations.
• Suppliers and creditors face increased risk of non-payment due to the company's financial situation.

Next Steps

• The company will continue to seek guidance from third-party experts and consultants to gain a thorough understanding of these transactions.
• The company will continue to monitor peer companies and other relevant factors used to measure expected volatility for future equipment award grants, until such time that the Company's Common Stock has enough market history to use historical volatility.
• The company will continue to monitor and evaluate the designation, implementation and effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implement additional enhancements or improvements, as necessary.

Key Dates

Keywords

wound care, intellectual property, net loss, going concern, Regenerex Pharma, financial results, internal controls, Medicaid, promissory notes, capital raise