Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (the "Quarterly Report") contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
forward-looking statements are not statements of historical fact and involve a
number of risks and uncertainties. We caution the readers that forward-looking
statements are not a guarantee of future performance and that actual results
could differ materially from those contained in such forward-looking statements.
All statements, other than statements of historical fact included in this
Quarterly Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements.
Words such as "anticipate," "believe," "could," "estimate," "expect," "intend,"
"plan," "seek," "should," "will," and variations and other similar words and
expressions are intended to identify such forward-looking statements.
These forward-looking statements are based on the current beliefs and
expectations of our management, and are subject to significant risks and
uncertainties. If the underlying assumptions prove incorrect or unknown risks or
uncertainties materialize, actual results could differ materially from our
current expectations. These risks and uncertainties include those factors
described in "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the
year ended December 31, 2021. Should one or more of these risks or uncertainties
materialize, or should any of our assumptions prove incorrect, actual results
may vary in material respects from those anticipated in these forward-looking
statements. All subsequent written or oral forward-looking statements
attributable to us or any person acting on our behalf are expressly qualified in
their entirety by the cautionary statements contained in this section. The
Company undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise,
except as may be required under applicable securities laws. You are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date of this Quarterly Report.
Business Overview
Regnum Corp. was incorporated on March 31, 2016, under the laws of the State of
Nevada. The Company was formed for a primary business purpose of servicing the
increasing demand for premium entertainment content and becoming a depository of
unpublished intellectual properties for resale with focus on achieving
profitability and sustaining business growth. Following the acquisition by
Phoenixus AG ("Phoenixus") on April 7, 2021, the Company's prior business model
was abandoned.
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Business Outlook
Since April 2021, the Company's business model is focused on developing and
commercializing therapeutics that treat rare and infectious diseases,
specifically in populations that are neglected or face adherence challenges due
to inconvenient dosing or delivery system, tolerability, or cost and
accessibility of available therapeutic options. Under certain license and
commercial agreements with CytoDyn which were assigned to the Company in January
2022, the Company's primary asset is the commercial rights to leronlimab (also
known as "PRO 140") in all human immunodeficiency virus ("HIV") indications
within the United States. Leronlimab is the subject of a current Biologics
License Application ("BLA") that has been submitted in part to the U.S. Food and
Drug Administration ("FDA") with an indication to treat Multi-Drug Resistant HIV
infection, with the potential for multiple additional therapeutic indications in
HIV. As of the date of this report, the FDA's review of the BLA is ongoing.
Since the FDA approval process is ongoing and its outcome is uncertain, we are
also seeking to acquire or in-license other pharmaceutical products or product
candidates, although no products have been identified to date.
The Company is party to the following service agreements with Vyera, which is a
subsidiary of Phoenixus: (i) a Management and Business Consulting Agreement,
wherein Vyera is the service provider; (ii) a Shared Services Agreement; and
(iii) a Research and Development Services Agreement (collectively, the "Shared
Services Agreements"). Through these Shared Services Agreements, Regnum can
receive and provide general and administrative support, and Regnum is able to
receive management level business strategy consulting and research and
development services. Services are invoiced to each party at an arm's length
markup. Disruption or interruption of any of these Shared Services Agreements,
while not anticipated, could interfere in continuity of our operations.
Trends Affecting Our Business
Our industry is highly dynamic and competitive, with technological and
scientific innovation paving the way for new products that may transform our
industry. We anticipate the recent capital markets downturn in the biotechnology
sector to affect our ability to secure additional funding. We do not currently
generate revenue from product sales and anticipate we will need additional
funding in order to continue our operations at their current levels, to conduct
our commercialization activities for leronlimab if it is approved by the FDA,
and to pay the costs associated with being a public company, for the next 12
months. To the extent we in-license or acquire additional products or
technologies, we will also require additional funding in the future to support
our operations. Additional financing may not be available to us on terms that
are acceptable or at all.
Plan of Operations
We had negative working capital of $851,619 as of June 30, 2022. We anticipate
the need for additional funding in order to continue our operations at their
current levels, and to pay the costs associated with being a public company. We
may also require additional funding in the future to expand or complete
acquisitions. In the event we require additional funding, we plan to raise the
necessary funding through the sale of debt or equity, which may not be available
on favorable terms, if at all, and may, if sold, cause significant dilution to
existing stockholders. If we are unable to access additional capital moving
forward, it may hurt our ability to grow and to generate future revenues.
We reiterate that the Company's business plan changed significantly and
materially in April 2021, during the period for which the comparative financial
statements presented hereby cover. As a result, financial results for 2021 do
not represent the Company's potential results in the future.
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RESULTS OF OPERATIONS
Comparison of the six month period ended June 30, 2022 with the six month period
ended June 30, 2021
Revenue
We had no revenue for the six months ended June 30, 2022, or June 30, 2021,
which was the result of a change in business model as Wookey sold the
controlling shares to Phoenixus in April of 2021.
Our operating expenses for the six months ended June 30, 2022 were $449,481,
which consisted of $164,110 for legal and professional fees, general and
administrative expenses of $285,371, and interest expense of $22,315. For the
six months ended June 30, 2021, operating expenses were $15,849, which consisted
of legal and professional fees of $14,384, and general and administrative
expenses of $1,465. The majority of legal and professional fees in the first six
months of 2022 were related to assignment of Commercial and License Agreement
and Supply Agreement, due diligence related to business development efforts, and
auditing. The increase in general and administrative expenses is related to
services provided under shared services agreements entered in September of 2021.
The Company had a net loss of $471,796 for the six months ended June 30, 2022,
as compared to net income of $93,175 for the six months ended June 30, 2021. The
net income for the first six months of 2021 was the result of accounting entries
recorded to Other Income in connection with forgiveness of debt by Wookey
Project and Wookey Search (both related parties) and reversal of an expense upon
cancellation of 1,000,000 shares of stock granted to Gary Allen for services.
The increase in net loss is due to increased expenses for legal and professional
fees and general and administrative expenses as the Company works to execute its
new business model and identify business development opportunities.
Liquidity and Capital Resources
The Company's cash position was $1,263,133 on June 30, 2022, and $0 on June 30,
2021. The increase in cash is the result of funds received in October of 2021
under a promissory note from the Company's principal shareholder, Phoenixus, to
support clinical development and general expenses. As of June 30, 2022, the
Company had current assets of $1,357,808 and current liabilities of $2,209,427
as compared to $1,488,919 and $1,868,742, respectively, as of December 31, 2021.
This resulted in negative working capital of $851,619 on June 30, 2022, and
$379,823 on December 31, 2021.
Net cash (used in) provided by operating activities
For the six months ended June 30, 2022, net cash used in operating activities
amounted to $225,286, as compared to using $0 net cash for the six months ended
June 30, 2021. The increase in net cash used is a result of payments made to
third parties for Legal and Professional and General and Administrative
expenses.
Net cash (used in) provided by investing activities
Net cash used in investing activities was $0 for the six months ended June 30,
2022 and 2021.
Net cash used in financing activities
Net cash provided by financing activities was $0 for the six months ended June
30, 2022 and 2021.
Net cash (used in) provided by financing activities
We do not currently have any additional commitments or identified sources of
additional capital from third parties or from our officers, directors, or
majority stockholders. Additional financing may not be available on favorable
terms, if at all.
In the future, we may be required to seek additional capital by selling
additional debt or equity securities, or otherwise be required to bring cash
flows in balance when we approach a condition of cash insufficiency. The sale of
additional equity or debt securities, if accomplished, may result in dilution to
our then stockholders. Financing may not be available in amounts or on terms
acceptable to us, or at all. In the event we are unable to raise additional
funding and/or obtain revenues sufficient to support our expenses, we may be
forced to curtail or abandon our business operations, and any investment in the
Company could become worthless.
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Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with U.S. GAAP. The preparation of these financial statements requires us to
make assumptions, estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosure of contingent
assets and liabilities. We monitor our estimates on an ongoing basis for changes
in facts and circumstances, and material changes in these estimates could occur
in the future. Changes in estimates are recorded in the period in which they
become known. We base our estimates on historical experience and other
assumptions that we believe to be reasonable under the circumstances. Actual
results may differ from our estimates if past experience or other assumptions do
not turn out to be substantially accurate.
Certain of our accounting policies are particularly important to the portrayal
and understanding of our financial position and results of operations and
require us to apply significant judgment in their application. As a result,
these policies are subject to an inherent degree of uncertainty. Our critical
accounting policies are outlined in "Note 1 - Summary of Significant Accounting
Policies" to the financial statements included elsewhere in this Quarterly
Report.
Emerging Growth Company
Section 107 of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act")
provides that an "emerging growth company" can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for
complying with new or revised accounting standards. In other words, an "emerging
growth company" can delay the adoption of certain accounting standards until
those standards would otherwise apply to private companies. We have elected to
take advantage of the benefits of this extended transition period. Our financial
statements may therefore not be comparable to those of companies that comply
with such new or revised accounting standards.
Recently Issued Accounting Standards
For more information on recently issued accounting standards, see "Note 1 -
Summary of Significant Accounting Policies" to the financial statements included
elsewhere in this Quarterly Report.
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