Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview of key events of the first quarter ended December 31, 2022

During the first quarter ended December 31, 2022, we began a program of pre-packaging and transferring materials and rights to set amounts of our NovaDerm® product to certain individuals through new series LLCs. These individuals were interested in acquiring our product materials and rights for the purpose of transferring them to charitable foundations interested in medical solutions for burn victims.

As part of this process, in October 2022, we set up a new Nevada Series LLC called NovaDerm Product Package, LLC ("NPP LLC"). During November and December 2022, consistent with Nevada law governing this Master Series LLC, we establish twenty-five (25) individual series LLCs, identifying each with a series letter of A through T or AA through EE. Thus, each of these sub-entities were named NovaDerm Product Package Series A, LLC through Series T, LLC, and then Series AA to Series EE, LLC (or NPP-A through NPP-T and NPP-AA through NPP-EE for short).

Into each of these twenty-five individual Series LLCs, we contributed the right and exclusive ownership to a fixed amount of the bovine hides and corium we currently own and use as key materials in the preparation of our NovaDerm® product, as well as the right to designate: (a) the specific patient cultured skin to be prepared from these materials; (b) the amount of this cultured skin to be prepared up to a designated amount and (c) the medical facility to receive the fully prepared and processed NovaDerm® cultured skin from these materials (these materials and combined designation rights are collectively referred to herein as the "NovaDerm® Product Rights"). For NPP-A through NPP-T and NPP-AA through NPP-CC we designated 33,333 cm2 of these NovaDerm® Product Rights. For NPP-DD we designated 30,625 cm2 of NovaDerm® Product Rights and for NPP-EE we designated 54,950 cm2 of NovaDerm® Product Rights. Each contribution of each of the NovaDerm® Product Rights was provided in exchange for 100 membership interests in the Series LLC which represented 100% of all membership interests issued.

We subsequently transferred 99% of our membership interests (or 99 membership interests) in each of these Series LLC to various Limited Liability Companies, held by individual's unknown to us, in exchange for a pre-agreed payment.

While we retain possession of the materials transferred in each Series LLC contribution, we have a continuing obligation to segregated and manage those materials as well as to prepare the NovaDerm® cultured skin product as designated by each Series LLC holder or their designate. The identified materials are currently set apart from other such materials and are being held by us pending the identification of the patient and medical facility as instructed by each NovaDerm® Product Rights holder. Notwithstanding this retention of possession by us, the ownership and legal title to the materials are retained and fully vested in the individual Series LLC or its designate.

The above-described transfers of membership interests in the Series LLCs generated a substantial amount of cash which we are obligated to use for the completion of our NovaDerm IND and the administration of our product clinical trials. No assurance, however, can be given as to the success or failure of such IND or clinical trials, or as to any future FDA decisions made following these trials.





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Our major objective for 2023 remains to complete the requirements of our NovaDerm IND application and begin our clinical trials. It is estimated that the cost to finalize the IND will be approximately $1.9 million dollars, and the cost to complete Phase 1/2 of the clinical trial will be approximately 5.0 million dollars. There can be no assurance that we will be able to complete these tasks for these estimated amounts or that we will be successful in the proving out our NovaDerm® Product in this process. Indeed, clinic trials are notoriously difficult and expensive and are likely to result in additional unplanned costs and a denial of FDA approval.

As previously reported, our goal in obtaining funding for this process has been to minimize shareholders' dilution as much as possible. We believe the manner in which we structured our transfer of NovaDerm® Product Rights has successfully achieved this objective. We will continue to work with potential investors, as necessary, in order to pursue other necessary funding based on our stated objective of successfully completing our planned clinical trials and obtaining FDA approval for the commercial sale of our NovaDerm® Product. It has taken longer to raise the funds than originally estimated; however, we remain hopeful that our goal is now achievable.

In the preparation of the IND application, we will continue to develop the testing suggested by the FDA during our Pre-IND meeting. Our scaffold supplier continues to perform the FDA suggested testing on collagen processing which addresses Bovine Closed Herd requirements for the enhanced safety and traceability of the collagen scaffolds used to produce NovaDerm®. We will be entering into discussions and evaluation of possible clinical trial sites for NovaDerm® as we proceed through the FDA approval process. Our discussions so far have confirmed that patient recruitment and enrollment should be faster and less complicated than other clinical trials because of our Orphan Designation and the fact that the surgical protocol will be similar to the grafting procedures currently in use at most facilities. NovaDerm® should thus require minimal physician training and documentation to complete the clinical trial, when and if conducted.

We are in the process of preparing a detailed plan and timeline for the filing of our IND and commencement of clinical trials and will provide this information when complete and approved by our board of directors. Our initial trials are planned to begin with a total of ten subjects and an Initial Data Safety Monitoring Board, (DSMB), review of safety on the first three subjects once they have reached 6 months follow-up. We do not intend to interrupt our trial waiting for the DSMB report. Our management's approach is to set up the trials so as to allow for a seamless transition into commercial production upon approval. We have arranged for sufficient Bovine Closed Herd corium to produce sufficient collagen scaffolds to meet our needs for the clinical trials once the IND is approved.

Three board positions remain open on our Board of Directors.

Importantly, we are filing this annual report without our auditor's review or any audit of our financial information or this report. Our reason for doing this is that we are still negotiating with our potential auditors for the completion of an audit and review of our unaudited past years reports prior to obtaining an audit of this current 10K filing. Instead, we have provided herein information as typically presented in our 10Q quarterly report, including financial information, which has not been reviewed or audited by any independent outside source.

We intend, if and when complete, to file an amendment to this 10Q filing with such reviewed and audited information. We are unaware at this time when we will obtain the necessary review and audit of the current and past filings; however, we will continue to provide current information to investors and the public when we are able through either our EDGAR filings and/or through postings on our website.



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Results of Operations for the Three Months Ended December 31, 2022 and 2021

We generated no revenues from September 6, 2007 (date of inception) to December 31, 2022. We do not expect to generate revenue until we are able to obtain FDA approval of our product.

We incurred operating expenses of $267,619 for the three months ended December 31, 2022, compared with operating expenses of $146,532 for the three months ended December 31, 2021. General and administrative expenses accounted for all of our operating expenses. The major difference and shift in operating expenses from the three months ended December 31, 2021 was accounted for by lower general and administrative expense. Otherwise, all operating expenses during the three months ended December 31, 2022 were from general and administrative expenses in the amount of $267,619.

Net other expense was $9,895 for the three months ended December 31, 2022, as compared to net other expense of $7,593 for the three months ended December 31, 2021. Other income and expenses for the three months ended December 31, 2022 consisted of interest expenses of $9,395 and an unrealized loss on securities of $500. Other income and expenses for the same period ended 2021 consisted of interest expense of $8,943 and an unrealized gain on securities of $1,350.

After provision for preferred stock dividends of $17,845,we recorded net loss of $295,359 for the three months ended December 31, 2022. By comparison, we recorded net loss of $171,970 for the three months ended December 31, 2021. Our net loss for the quarter ended December 31, 2021 was primarily the result of general and administrative expense.

Liquidity and Capital Resources

As of December 31, 2022, we had cash of $11,793,901 and total current assets of $11,794,326. As of December 31, 2022, we had current liabilities of $17,668,980. We therefore had a working capital deficit of $5,874,654.

Operating activities used $361,792 in cash for the three months ended December 31, 2022. The decrease in cash was primarily attributable to funding the loss for the period.

Investing activities and financing activities provided no cash or cost during the reported period. We note that the value of the shares of Amarantus we obtained and which created income from that sale of assets transaction have declined significantly in value since the consummation of the agreement.

We have issued various promissory notes to meet our short-term demands, the terms of which are provided in the notes to the consolidated financial statements accompanying this report. While this source of bridge financing has been helpful in the short term to meet our financial obligations, we will need additional financing to fund our operations, continue with the FDA approval process, and implement our business plan. Our long-term financial needs are estimated at about $8-10 million.





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Off Balance Sheet Arrangements

As of December 31, 2022, there were no off-balance sheet arrangements.





Going Concern

Our consolidated financial statements have been prepared assuming that we will continue as a going concern which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. We have incurred operating losses from inception, expect to incur further losses in the development of our business, and have been dependent on funding operations through the issuance of convertible debt and private sale of equity securities. These conditions raise substantial doubt about our ability to continue as a going concern. Management's plans include continuing to finance operations through the private or public placement of debt and/or equity securities and the reduction of expenditures. However, no assurance can be given at this time as to whether we will be able to achieve these objectives. The consolidated financial statements do not include any adjustment relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

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